May 27, 2010
JOHN AND AMY SAUER, H/W, AS INTENDED THIRD PARTY BENEFICIARIES OF A POLICY OF INSURANCE ISSUED TO ALLIANCE CONCRETE, INC., PLAINTIFFS-APPELLANTS,
PRESERVER INSURANCE GROUP, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4426-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 4, 2010
Before Judges Skillman and Simonelli.
On March 11, 2004, plaintiffs filed a complaint against Alliance Concrete (Alliance) and others asserting claims for negligence and breach of contract in connection with the construction of plaintiffs' home in Atco, which allegedly caused substantial water damage. Alliance failed to answer plaintiffs' complaint, and on October 21, 2005, a default judgment was entered against Alliance in the amount of $118,327.40.
At the time Alliance performed work in connection with the construction of plaintiffs' home, it had a liability insurance policy issued by defendant Progressive Insurance Group (Progressive). Alliance failed to notify Progressive of the action brought by plaintiffs, and Progressive did not become aware of the action until March 13, 2006, which was nearly two years after the filing of the complaint and six months after entry of the default judgment.
On August 24, 2007, more than a year after entry of the default judgment against Alliance, plaintiffs brought this action against Progressive for recovery of the amount of the judgment. Plaintiffs claimed the status of third-party beneficiaries of the insurance policy issued to Alliance.
After discovery was conducted, the case was brought before the trial court by cross-motions for summary judgment. The court granted Progressive's motion and dismissed plaintiffs' complaint on the ground that Alliance had breached its duty to notify Progressive of plaintiffs' underlying action and that it would be "unfairly prejudicial" to hold Progressive liable for the default judgment entered against Alliance.
On appeal, plaintiffs present the following argument:
THE TRIAL COURT ERRED IN GRANTING SUMMARY JUDGMENT IN FAVOR OF THE DEFENDANT INSURANCE COMPANY BY FAILING TO RECOGNIZE THE VALIDITY OF THE CLAIMS PRESENTED BY PLAINTIFFS, AS THE THIRD-PARTY BENEFICIARY OF AN INSURANCE POLICY ISSUED TO AN ENTITY THAT ALLOWED A DEFAULT JUDGMENT TO BE ENTERED AGAINST IT AS THERE WAS NO APPRECIABLE PREJUDICE DONE TO THE INSURANCE COMPANY IN THIS MATTER.
Plaintiffs' argument is clearly without merit. R. 2:11-3(e)(1)(E). The appreciable prejudice to Progressive from Alliance's breach of its duty to provide notice of plaintiffs' underlying action is manifest based on the passage of nearly two years between the filing of the complaint and Progressive being made aware of the action, the dismissal of other potentially liable parties from the underlying action during that intervening period, and the entry of a default judgment against Alliance.
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