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Henriques v. New Jersey Manufacturers Insurance Co.

December 30, 2009


On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2048-06.

Per curiam.


Submitted October 5, 2009

Before Judges Lisa and Alvarez.

New Jersey Manufacturers Insurance Company (NJM) appeals from the March 14, 2008 order declaring invalid its letter of rescission to its insured, plaintiff Sonia Henriques, and ordering it to provide her uninsured motorist (UM) coverage in the amount of $300,000 under her personal automobile insurance policy with NJM. Thereafter, on January 8, 2009, the parties entered into a consent judgment, by which NJM would pay plaintiff $275,000 UM benefits. However, the judgment further provided that if NJM was successful on appeal, the judgment would be vacated and the matter would be remanded to the trial court for dismissal of plaintiff's UM claim.

The rescission had been based upon an alleged material misstatement of fact by plaintiff in her application for the policy. NJM argues that the trial court erred in ruling that a false statement made by an insured in an application for insurance must be made with the intent to deceive or defraud the insurer in order to allow rescission of a policy based on the doctrine of equitable fraud. We agree with NJM. Because the record establishes that NJM proved all of the requisite elements of equitable fraud, it was entitled to rescission. Accordingly, we reverse.

While operating her personal vehicle, which was insured under her NJM policy, plaintiff was injured in an accident on September 1, 2005. The accident was caused by an unidentified vehicle, thus triggering the applicability of UM coverage.

Prior to this accident, in January 2004, plaintiff completed an application for an NJM policy. The application form contained the following statement, all in boldface print, on the first page: "All of the requested information is important. The NJM Insurance Group pursues evidence of insurance fraud. Please answer completely and clearly to avoid a misunderstanding." Just above the signature line on the eighth and final page of the form, the following statement, all in bold face and capital letters appeared: "I UNDERSTAND THAT ANY PERSON WHO INCLUDES ANY FALSE OR MISLEADING INFORMATION ON AN APPLICATION FOR AN INSURANCE POLICY IS SUBJECT TO CRIMINAL AND CIVIL PENALTIES."

Plaintiff completed the application form and signed it. Next to her signature, she filled in the date as January 20, 2004. However, she apparently did not submit the form to NJM until March 22, 2004. Notably, on the first page of the form, in response to the inquiry regarding the desired policy effective date, plaintiff responded "ASAP." She also identified the expiration date of her current auto policy as July 19, 2004.*fn1

In two different places on the form, she identified Mohammad Azhar Ulhaq as her spouse. She further specified that Ulhaq was a resident of her household and a driver of the vehicles to be insured.

After the application was submitted, an NJM representative conducted a recorded telephone interview with plaintiff on April 22, 2004. The representative reviewed with plaintiff the information on her application. At four different times during the interview, plaintiff stated or acknowledged that Ulhaq was her husband. She also stated that she was the sole owner of the three vehicles to be insured. She requested that coverage become effective as soon as possible, and specifically requested an effective date of May 1, 2004. The NJM representative advised plaintiff to contact her current carrier "to set up the cancellation and they should be able to prorate any unused portion of the insurance that you've already paid for."

The statements regarding plaintiff's marital status were false. Although plaintiff and Ulhaq lived together and were engaged to be married, they were not married when plaintiff completed the application in January 2004, when she finalized it with the NJM representative on April 22, 2004, or when the policy went into effect on May 1, 2004, the date plaintiff requested it. Plaintiff's statement that she was the sole owner of the three vehicles to be insured was also not true. One of the vehicles was co-owned by her and Ulhaq.

Plaintiff and Ulhaq were scheduled to be married in June 2004. They had been engaged since December 31, 2000, and had been living together in a home they purchased together since 2003. Shortly before the date scheduled for the wedding in June 2004, it was postponed for family reasons, the details of which are not relevant. The wedding was rescheduled for November 2005. During the interim, plaintiff submitted a renewal application in March 2005, again identifying Ulhaq as her spouse, although they were still not married and were not then scheduled to be married until eight months later. As a result of the accident on September 1, 2005, the planned November 2005 wedding was postponed. Ultimately, during the pendency of this litigation, plaintiff and Ulhaq were married in November 2007.

On May 3, 2006, plaintiff filed a complaint against NJM claiming UM benefits. At her October 17, 2006 deposition, when asked about her marital status, plaintiff acknowledged that she was not married and had never been married. She stated ...

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