September 30, 2010
LUIS SANTANA, PLAINTIFF,
JUAN JOSE FLORES AND CYNTHIA FLORES, DEFENDANTS.
LUIS SANTANA AND CARIBE CAB TAXI CORPORATION, PLAINTIFFS-APPELLANTS,
NEW HAMPSHIRE INSURANCE COMPANY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, L-1693-06 and L-9841-07.
The opinion of the court was delivered by: Per Curaim
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 20, 2010
Before Judges Lisa and Reisner.
In this insurance coverage dispute, plaintiff Luis Santana appeals from a May 28, 2009 order granting summary judgment in favor of defendant New Hampshire Insurance Company (NH).*fn1 He also appeals from a September 25, 2009 order denying plaintiff's motion for reconsideration. Because the evidence, viewed favorably to plaintiff, could support a claim of estoppel due to NH's delay in denying coverage, we reverse the orders on appeal and remand this matter to the trial court.
Our review of the trial court's decision granting summary judgment is de novo. Agurto v. Guhr, 381 N.J. Super. 519, 525 (App. Div. 2005). Employing the Brill*fn2 standard, the same test that trial courts use in deciding summary judgment motions, we "determine whether the evidence, when viewed in a light most favorable to the non-moving party, would permit a rational fact-finder to resolve the dispute in the non-moving party's favor." Ibid. We have reviewed the record with that standard in mind.
The motion evidence, viewed in the light most favorable to plaintiff, would support the following factual findings. On August 10, 2005, plaintiff was severely injured when a vehicle driven by Juan Jose Flores collided with the taxicab plaintiff was driving. The Flores vehicle was covered by a policy with a $100,000 liability limit. The taxicab was insured by NH under a policy listing Caribe Cab Taxi Corporation (Caribe) as the only named insured. That policy included $300,000 in underinsured motorist (UIM) coverage. Plaintiff, the president and sole owner of Caribe, was a listed driver on the policy.
Because plaintiff was driving a commercial vehicle, he was not entitled to personal injury protection (PIP) coverage under either the NH policy or the Flores policy. Plaintiff had a separate insurance policy through Allstate New Jersey Insurance Company covering his personal automobile. That policy provided $50,000 in coverage, but as plaintiff's counsel advised NH's attorney on August 6, 2008, Allstate denied PIP coverage because plaintiff was driving a commercial vehicle at the time of the accident.
Plaintiff filed a personal injury lawsuit against Flores in 2006. Additionally, because he anticipated that his medical expenses alone would exceed Flores' $100,000 coverage, plaintiff sought recovery under the UIM provision of the NH policy. On November 15, 2007, plaintiff filed a verified complaint and order to show cause against NH alleging that NH had "stopped cooperating and communicating with plaintiff['s] representatives." The verified complaint sought a declaration of insurance coverage and an order requiring NH to participate in UIM arbitration.
In January 2008, NH filed an answer to the verified complaint. The answer raised sixteen boilerplate affirmative defenses which appeared primarily aimed at defending against a negligence-based personal injury claim. The answer did not assert or mention the existence of a step-down clause in the policy. In fact, nowhere in the answer did NH specifically deny that the policy provided coverage for the accident.
Both before and after filing the verified complaint, plaintiff's counsel repeatedly advised NH that plaintiff would probably need surgery to address his serious injuries. According to the attorney's certification, NH's representatives confirmed to him that there was $300,000 in UIM coverage and never suggested that there might not be coverage for plaintiff's medical expenses. In a September 6, 2007 letter to NH's claims representative, plaintiff's counsel wrote: "This confirms my conversation with New Hampshire Insurance Co. representatives today" that "[t]he coverage for the Caribe Cab Taxi vehicle is confirmed." The letter also confirmed that the attorney had told the NH representative that plaintiff would need "neck surgery" to address a herniated disc and that his overall claim would "probably be in the $300,000 to $500,000 range."*fn3
The record contains several additional letters from plaintiff's counsel to NH or its attorney advising that plaintiff was going to undergo the surgery. At no time prior to the surgery did NH's representatives advise that there was a step-down clause, deny that there was UIM coverage for the surgery, or suggest that plaintiff hold off on having the surgery because there might not be sufficient coverage. According to plaintiff's counsel, his client only had a copy of the declarations page of the Caribe policy and NH ignored the attorney's requests for a copy of the entire policy.
Plaintiff underwent the surgery in March 2009. In a certification, plaintiff attested that when, as president and sole owner of Caribe, he purchased the NH policy, he understood that the policy would provide him with $300,000 in UIM coverage. He knew that the UIM coverage was particularly important because there was no PIP coverage for a commercial vehicle. He also attested that he relied on the $300,000 UIM coverage in deciding to undergo the surgery, which cost over $100,000.
On April 1, 2009, after plaintiff had incurred more than $100,000 in medical expenses, NH finally asserted for the first time that plaintiff's UIM claim was barred by a step-down clause in the policy. In its summary judgment motion, NH contended that Caribe was the only named insured on the policy and that as a listed driver, but not a named insured, plaintiff was excluded from the $300,000 in UIM coverage because he had a personal insurance policy with only $50,000 in UIM coverage. Therefore, under the terms of the step-down clause, Flores' $100,000 coverage would be compared to plaintiff's $50,000 coverage, and the Flores vehicle would not be "underinsured" with respect to plaintiff. See Pinto v. N.J. Mfrs. Ins. Co., 183 N.J. 405, 412 (2005).
Plaintiff opposed the motion, contending, among other things, that NH was estopped from asserting the step-down clause at that late date, after its adjusters had confirmed to plaintiff's counsel that there was $300,000 in UIM coverage and plaintiff had incurred the expense of the surgery in reliance on the availability of that coverage. Evidently rejecting plaintiff's contentions, the trial judge granted summary judgment and denied plaintiff's motion for reconsideration.
On this appeal, plaintiff reiterates his estoppel claim. He also contends that he should be considered a named insured on the policy and thus excluded from the operation of the step-down clause. In support of the latter contention, plaintiff asserts: he was the sole owner of Caribe, he obtained the UIM coverage specifically to ensure that he would have medical coverage in the absence of PIP coverage, he was a listed driver on the policy, and he was never advised about the step-down clause.
The "named insured" argument may be precluded by our Supreme Court's decision in Pinto, supra, 183 N.J. at 416-17. But see Progressive Cas. Ins. v. Hurley, 166 N.J. 260, 276-78 (2001); Araya v. Farm Family Cas. Ins. Co., 353 N.J. Super. 203, 210-11 (App. Div.), certif. denied, 175 N.J. 77 (2002). However, we decline to decide the issue on this appeal. The trial court focused the motion argument entirely on the estoppel issue, did not give the attorneys an opportunity to address the "named insured" issue, and made no findings of fact or conclusions of law. The issue should be addressed on remand if plaintiff chooses to pursue it.*fn4
Thus we turn to the estoppel issue. It is well established that an insurer has an obligation to promptly assert a claim of non-coverage and may be estopped from denying coverage if it fails to do so. Griggs v. Bertram, 88 N.J. 347, 363-64 (1982). In a case involving an insurer's delay in denying liability coverage, the Supreme Court held:
Upon the receipt from its insured of a claim or notification of an incident that may give rise to a claim, an insurer is entitled to a reasonable period of time in which to investigate whether the particular incident involves a risk covered by the terms of the policy. But once an insurer has had a reasonable opportunity to investigate, or has learned of grounds for questioning coverage, it then is under a duty promptly to inform its insured of its intention to disclaim coverage or of the possibility that coverage will be denied or questioned.
Unreasonable delay in disclaiming coverage, or in giving notice of the possibility of such a disclaimer, even before assuming actual control of a case or a defense of an action, can estop an insurer from later repudiating responsibility under the insurance policy. [Id. at 357 (emphasis added) (citations omitted).]
We reached a similar conclusion in a case involving UIM coverage. Boritz v. N.J. Mfrs. Ins. Co., 406 N.J. Super. 640, 649-50 (App. Div. 2009). We held there that even if it is not clear whether a UIM step-down clause will apply, the insurer at least has an obligation to promptly notify the insured that the clause exists and may bar or limit coverage. Id. at 651. An insurer may be estopped from denying coverage if it fails to timely assert the step-down clause, particularly if the insured incurs a detriment in reliance on the existence of coverage. Id. at 649-50.
An insurance company which expressly or impliedly acknowledges that its policy provides coverage for a particular claim may be estopped from subsequently denying coverage if an insured has relied upon the availability of that coverage. In fact, even an insurer which does not acknowledge coverage may be estopped by an "[u]nreasonable delay in disclaiming coverage, or in giving notice of the possibility of such a disclaimer." This form of estoppel "does not require a showing of intentional deceit." Instead, such an estoppel simply "denies to a party the right to repudiate an act or position assumed where such repudiation would work injustice to another who rightfully relies thereon."
[Barrett v. N.J. Mfrs. Ins. Co., 295 N.J. Super. 613, 618 (App. Div. 1996) (citations omitted).]
In this case, viewing the facts in the light most favorable to plaintiff, the insurer unreasonably delayed in asserting that the step-down clause barred plaintiff from coverage. Further, knowing that plaintiff claimed serious injuries and was contemplating expensive surgery, the insurer confirmed to plaintiff's attorney that there was $300,000 in UIM coverage. The attorney relayed that information to his client, who relied on it in deciding to incur over $100,000 in medical expenses for the surgery.
We find no merit in NH's contention that plaintiff suffered no detriment in having the surgery as long as it was medically necessary. The obvious detriment to plaintiff lies in his having incurred a potentially ruinous debt for which there may be no insurance coverage. NH also contends that plaintiff or his attorney should have known about the step-down clause and therefore did not reasonably rely on the availability of the $300,000 in UIM coverage. However, the record contains no legally competent evidence that plaintiff or his attorney had a copy of the NH policy, as opposed to only the declarations page. Further, plaintiff's attorney submitted unopposed legally competent evidence that NH's representatives confirmed that there was $300,000 in coverage, but then stonewalled him when he requested a copy of the policy.
On these facts, plaintiff could establish an estoppel claim, and summary judgment should not have been granted to the insurer. Accordingly, we reverse the orders on appeal and remand this matter to the Law Division for a plenary trial on plaintiff's verified complaint including the issues of coverage and, if there is coverage, enforcement of UIM arbitration.
Reversed and remanded.