September 9, 2010
ELLIOTT KOMINSKY, PLAINTIFF-APPELLANT,
C.B. PLANNING SERVICES CORPORATION, MONTE SPERLING, ROBERT BLOCK, INSURANCE INNOVATIONS AGENCY, INC., JOSEPH STRACZEWSKI AND NORMAN FELD, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-975-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted August 31, 2010
Before Judges LeWinn and J. N. Harris.
This appeal involves claims of consumer fraud*fn1 and professional negligence in the sale of four separate life insurance policies in 1989, 1992, and 1995. Plaintiff alleges that at the time he acquired the policies in question, the selling insurance agencies and their employees neglected to inform him of the availability of waiver of premiums coverage. After suffering a severe cardiac event in 1995 that ultimately led to his retirement some six years later, plaintiff continued to pay the premiums for all four of the life insurance policies. It was not until 2007 that he commenced this action, which seeks remedies for the alleged failures of his insurance advisors to give him the choice of acquiring the appropriate coverage so that he could avoid paying the life insurance premiums upon the declaration of total disability.
In response to defendants' motions for summary judgment based upon plaintiff's alleged failure to comply with the six-year limitation of actions, N.J.S.A. 2A:14-1, the Law Division determined that the motion record alone was a sufficient basis to determine that plaintiff's complaint was indeed filed too late. Without the benefit of oral argument or an evidentiary hearing under the auspices of Lopez v. Swyer, 62 N.J. 267 (1973) and its progeny, the motion judge dismissed plaintiff's complaint with prejudice, and this appeal followed. Because we do not share the Law Division's confidence that the process it used to calculate the equities was compliant with Lopez, we reverse and remand for a necessary evidentiary hearing.
Because summary judgment was granted in favor of defendants, we recite the facts most favorable to plaintiff. Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, ___ (2010) (citing Guido v. Duane Morris, LLP, 202 N.J. 79, ___ (2010) (citing Roa v. LAFE, 200 N.J. 555, 562 (2010))).
In 1989, plaintiff obtained a pair of one-million dollar life insurance policies pursuant to the advice of defendants Monte Sperling and Robert Block, both of whom were employed by defendant C.B. Planning Services Corporation. Plaintiff claims that he was not advised that he could configure these life insurance policies with a waiver of premiums option and consequently the policies did not so provide for a waiver of premiums in the event of plaintiff's disability.
In 1992, and again in 1995, plaintiff acquired two additional one-million dollar life insurance policies, this time with the advice of defendants Joseph Straczewski (in 1992) and Norman Feld (in 1995), as employees of defendant Insurance Innovations Agency, Inc. Again, plaintiff asserts that he was not offered the option to obtain a waiver of premiums provision as part of his acquisitions. Consistent with the first two life insurance policies, these latter two also failed to provide for a waiver of their premiums in the event of plaintiff's disability.
In 1995, plaintiff suffered a serious heart attack. As a result, he was unable to carry out the basic functions of his occupation for a short period of time, during which he received temporary disability insurance payments pursuant to a separate policy of disability insurance that he had procured.
Plaintiff was not medically determined to be totally disabled until 2001. At his deposition, plaintiff stated, "I had a massive heart attack in 1995, and my condition deteriorated, and the doctors basically gave me an ultimatum, either quit working or die." Choosing not to die at that time, plaintiff sold his accounting practice and "was out of business [on] June 29, 2001." Nevertheless, he continued to pay all of the required premiums for the four life insurance policies, which later constituted plaintiff's largest personal expense post-retirement.
In the Spring of 2002, plaintiff learned from a friend who was an insurance agent that certain life insurance policies provide for a waiver of premiums in the event of disability. When plaintiff asked his advisor Feld about this specific feature that was absent from the life insurance policy, Feld allegedly told plaintiff that it was not offered because plaintiff's separate disability insurance benefits were "adequate." Three years later, in another conversation with a different insurance agent, plaintiff was supposedly told that he had a cause of action against the insurance advisors who failed to tell plaintiff about the availability of waiver of premiums coverage in connection with all four of his life insurance policies. The instant action was filed two years after that, on June 14, 2007.
As part of the motions for summary judgment, defendants argued that plaintiff knew or should have known about the existence of a claim relating to waiver of premiums as early as 1995. They argued that when plaintiff first became temporarily disabled during that year, and began receiving disability insurance payments, plaintiff was made aware that the premiums for that type of insurance had been waived. Thus, according to defendants, plaintiff should have been alerted to the fact that if he again became disabled, premiums could be waived on certain policies of insurance in accordance with the terms of those policies.
As noted, the motion judge did not provide for oral argument of defendants' motions for summary judgment, even though one group of movants requested oral argument if plaintiff had filed opposition. R. 1:6-2(d). Significantly, although plaintiff claims to be aggrieved by being denied the opportunity to orally argue the motions, plaintiff more insistently argues that an evidentiary hearing was required under Lopez before the motion judge could even resolve the statute of limitations issues.
The motion judge did not conduct any adversarial proceeding regarding the motions in open court, except for placing findings and conclusions on the record. Although mentioning Lopez, the judge did not explain why a hearing was unnecessary and stated only the following as its rationale for granting defendants' motions:
In Lopez v. [Swyer], [the] New Jersey Supreme Court held that concerning the determination of the statute of limitations question should be made by the [j]udge at [a] preliminary hearing without the presence of a jury. The Court further stated that the determinant factors may be but not limited to the alleged nature - - the nature of the alleged injury, availability of witnesses, written evidence, the length of time that elapsed since the alleged wrongdoing and whether the delay had been to any extent deliberate or intentional, whether the delay may be said to have had a peculiarly or unusual prejudic[ial effect on] the defendant, 62 N.J. 267 [ ] 1973.
The [c]court has examined the circumstances of this case and examined the submissions of each party. Keeping in mind of the [c]court's role in accordance with Lopez, [I] believe that it is appropriate to grant this motion for summary judgment, dismiss the claim as being barred by the statute of limitations. Mr. Kominsky should have discovered the now complained of issue on his insurance policies prior to the deadline to file a claim under the statute of limitations. It is undeniable that the considerable amount of time has elapsed since the originating action in this case and the [c]court gives this factor in accordance with Lopez great weight. Further, nothing about this alleged injury directs that this [c]court hold for a longer statute of limitations; and therefore, the motion is granted.
Because we find that the motion judge incompletely analyzed Lopez and mistakenly exercised her discretion in not holding a formal evidentiary hearing, we reverse and remand for further proceedings.
Pursuant to the statute of limitations applicable to plaintiff's causes of action, N.J.S.A. 2A:14-1, plaintiff was required to file the complaint "within [six] years next after the cause of any such action shall have accrued." See DiIorio v. Structural Stone & Brick Co., Inc., 368 N.J. Super. 134, 140- 42 (App. Div. 2004); Holmin v. TRW, Inc., 330 N.J. Super. 30, 34-35 (App. Div. 2000), aff'd o.b., 167 N.J. 205 (2001). Consequently, the key issue is the time when plaintiff's consumer fraud and malpractice claims first accrued.
A NJCFA cause of action requires plaintiff to prove an ascertainable loss, among other things:
To state a claim under the CFA, a private "plaintiff must allege each of three elements: (1) unlawful conduct by the defendants; (2) an ascertainable loss on the part of the plaintiff; and (3) a causal relationship between the defendant's unlawful conduct and the plaintiff's ascertainable loss." [Dabush v. Mercedes-Benz USA, Inc., 378 N.J. Super. 105, 114 (App. Div.)(internal quotation and citations omitted), certif. denied, 185 N.J. 265 (2005).]
See also Weinberg v. Sprint Corp., 173 N.J. 233, 237 (2002). Likewise, in a malpractice cause of action "damage must be sustained before a cause of action accrues." Mant v. Gillespie, 189 N.J. Super. 368, 373 (App. Div. 1983). See also Grunwald v. Bronkesh, 131 N.J. 483, 492 (1993)("[A] legal-malpractice action accrues when an attorney's breach of professional duty proximately causes a plaintiff's damages."); Vision Mortgage Corp. v. Chiapperini, Inc., 156 N.J. 580, 586 (1999)(A professional negligence claim against a real estate appraiser accrues when the mortgagee learns that its "collateral has been impaired or endangered by the negligent appraisal.").
"It is also clear that the date when a cause of action is deemed to have 'accrued' is 'the date upon which the right to institute and maintain a suit first arises'." Holmin, supra, 330 N.J. Super. at 35 (quoting Hartford Accident & Indem. Co. v. Baker, 208 N.J. Super. 131, 135-36 (Law Div. 1985)). Therefore, "[u]ntil a plaintiff has suffered 'damages,'... he cannot maintain a suit for damages based on fraud since his cause of action has not yet accrued. It will accrue only when 'damage' is inflicted." Id. at 36.
In this case, the time when plaintiff first suffered ascertainable damages was likely in 2001, when he was medically determined to be totally disabled and yet continued to pay life insurance premiums. Arguably, his temporary disability in 1995 might have triggered the same economic consequences, but that disability was attenuated and short-lived. In his deposition, plaintiff testified that he was not determined to be totally disabled by his physician until March 2001, and that he sold his accounting business in June of that same year. Although the March 2001 date is more than six years before the date that the complaint was filed, it is not beyond the limitations period by much, and the June 2001 cessation of plaintiff's business was within the six-year look back period of N.J.S.A. 2A:14-1. Thus, we cannot confidently subscribe to the motion judge's seemingly off-hand conclusion that a "considerable amount of time has elapsed since the originating action in this case." If the motion judge was referring to the "originating action" as the inception of the insurance policies, then she was indubitably correct. However, it is accrual date of the cause of action that controls, not the happenstance of when the contract of insurance was first executed.
We also conclude that even if the statute of limitations would ordinarily have run from an earlier date, the discovery rule is capable of tolling the running of the limitations period until the Spring of 2002, because arguably that was the first time plaintiff had reason to know he had been injured. See Vision Mortgage, supra, 156 N.J. at 586. Under the discovery rule, "the statute of limitations begins to run only when the client suffers actual damage and discovers, or through the use of reasonable diligence should discover, the facts essential to the malpractice claim." Grunwald v. Bronkesh, supra, 131 N.J. at 495 (1993); McGrogan v. Till, 167 N.J. 414, 417 (2001). Stated another way, "in an appropriate case a cause of action will be held not to accrue until the injured party discovers, or by an exercise of reasonable diligence and intelligence should have discovered that he may have a basis for an actionable claim." Lopez, supra, 62 N.J. at 272.
"The 'discovery rule' is an equitable principle by which the accrual of a cause of action is delayed 'until the injured party discovers, or by the exercise of reasonable diligence and intelligence should have discovered[,] that he may have a basis for an actionable claim.'" Vispisiano v. Ashland Chem. Co., 107 N.J. 416, 419 (1987) (internal quotations and citations omitted). The court must undertake an individualized consideration of the facts of the case in which plaintiff seeks to invoke the rule. Id. at 420-21. It has been recognized that the limitations period "should not become a[n] instrument of injustice" when invoked to bar a claim. Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519, 527 (2005) (quoting Procanik by Procanik v. Cillo, 97 N.J. 339, 351 (1984)). Conversely, an unprincipled diffusion of the equitable power to soften the harsh consequences of statutes of limitations to permit the litigation of a stale claim would also represent an instrument of injustice. Accordingly, a "'just accommodation' of individual justice and public policy requires that 'in each case the equitable claims of opposing parties must be identified, evaluated and weighed.'" Galligan v. Westfield Centre Service, Inc., 82 N.J. 188, 193 (1980) (quoting Lopez, supra, 72 N.J. at 274).
In order to facilitate the ability of the Law Division to sift through the strands of evidence presented in this record, we believe that an evidentiary hearing is necessary and appropriate. Although there are few contested facts, the long span of years during which defendants claim plaintiff knew or should have known of his claim requires the Law Division to address the reliability of plaintiff's memory. Additionally, there needs to be an assessment of credibility, and the identification, evaluation, and weighing all of the equitable claims of the parties in detail. A cursory treatment of the extensive motion record presented by the parties is insufficient.
In sum, we reverse the dismissal of plaintiff's complaint with prejudice and remand the matter to the Law Division for further proceedings. In so doing, we do not express an authoritative opinion whether or not plaintiff's complaint is time-barred, and leave it to the principled discretion of the Law Division to apply Lopez and its progeny to the circumstances of this case after conducting an evidentiary hearing. We do not retain jurisdiction.