December 9, 2010
FRANK W. MESSINA, AS ADMINISTRATOR AD PROSEQUENDUM, AND GENERAL ADMINISTRATOR OF THE ESTATE OF CHRISTINE M. MESSINA, DECEASED, FRANK W. MESSINA, INDIVIDUALLY AND FRANK W. MESSINA AS GUARDIAN AND NATURAL PARENT OF RACHEL MESSINA AND FRANK A. MESSINA, PLAINTIFFS-APPELLANTS,
HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket No. L-1290-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 20, 2010 - Decided Before Judges Axelrad, R. B. Coleman and Lihotz.
In this insurance coverage dispute we review plaintiffs' claims of error in the summary judgment dismissal of their complaint seeking coverage for damages resulting from an October 20, 2002 motor vehicle accident. The Law Division concluded the identified policy did not cover the vehicle driven by the tortfeasor, precluding the insurer's obligation to satisfy plaintiffs' judgment. We affirm.
On October 20, 2002, a 1995 Ford Explorer driven by Christine Messina was struck by a 1987 Chevy van (the 1987 van), which was owned by Broadway Finishing Company, Inc. (Broadway) and driven by Broadway's employee, William Stranahan. Messina died as a result of her injuries.
At the time of the accident, Broadway was a party to a commercial automobile liability policy issued by defendant Harleysville Insurance Company of New Jersey (Harleysville). A summary of Broadway's efforts to secure automobile insurance coverage prior to executing the Harleysville policy adds the necessary context to plaintiffs' arguments.
Nearly one year prior to the accident, Michael Pfeiffer, Broadway's owner, hired the Peter Dee Agency (the Agency) to secure more economical automobile insurance coverage of the company vehicles. In November 2001, Pfeiffer told Peter DiGiambattista, owner of the Agency, Broadway needed to switch carriers because its current insurer, CGU the Camden Fire Insurance Association (CGU), was canceling coverage based on Broadway's nonpayment. CGU was insuring six vehicles: a 1987 Chevrolet van, a 1985 Chevrolet C30 van (the 1985 van), a 1989 Kenworth van, a 1989 Mack truck, a 1991 Volvo truck, and a 1994 Nissan truck. Pfeiffer desired to lower his costs by reducing the number of insured business vehicles, downsizing to three. However, CGU would not issue a fleet policy for such a limited number of vehicles.
Pfeiffer stated that after his initial conversation with DiGiambattista, he had a telephone conversation with an unidentified woman at the Agency. During that call he believes he stated he was seeking coverage for the 1987 van, the 1991 Volvo truck, and the 1994 Nissan truck. Pfeiffer's deposition testimony relating this conversation is as follows:
Q. You personally spoke to some person at the [A]gency? Yes?
Q. And it was a woman?
A. I believe so.
Q. And you told her what vehicles you wanted covered?
A. I believe so.
Q. Okay. And do you recall when this was?
A. No, I do not.
Q. Do you have any records you kept concerning that conversation?
Q. But it was over the phone?
A. Yes, I believe so.
Q. Okay. And can you tell me what vehicles you asked to have insured?
A. I told her I needed . . . the van involved in the accident . . . . I needed the big Volvo truck and I needed the Nissan [truck].
Q. So you advised whoever that person was that you wanted those three vehicles to be insured?
A. I believe so.
On November 21, 2001, the Agency submitted Broadway's application for commercial auto insurance to Farmers of Salem Insurance Company (Farmers). The application, signed by Pfeiffer, sought coverage for Broadway's 1985 Chevy van, 1991 Volvo truck, and 1994 Nissan truck. Farmers declined to issue the insurance.
"[U]sing the same information that Pfeiffer had just recently provided[,]" the Agency prepared an application, signed by Pfeiffer, seeking coverage from Harleysville. After its review, Harleysville agreed to bind coverage and issued Broadway a commercial automobile policy for the period of February 12, 2002 to February 12, 2003 (the Harleysville policy).
The Harleysville policy extended liability coverage to "all sums an 'insured' legally must pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies, caused by an 'accident' and resulting from the ownership, maintenance or use of a covered 'auto.'" The three "covered autos" listed in item three of the policy declarations of the Harleysville policy were the 1985 Chevy van, the 1994 Nissan truck, and the 1991 Volvo truck. The term "covered auto" is defined as the autos "described in Item Three of the Declarations for which a premium charge is shown[.]"
Broadway made several changes to the Harleysville policy prior to the accident. For example, on April 17, 2002, Broadway requested the removal of the 1994 Nissan truck; on May 14, 2002, it requested the removal of the 1991 Volvo truck and on August 6, 2002, it added a 1987 Ford E350 truck. At no time did Broadway alter the inclusion of the 1985 van. At the time of the accident, the two covered vehicles insured by the Harleysville policy listed under "Item Three - Schedule of Covered Autos You Own" were the 1987 Ford E350 truck and the 1985 van.
Broadway notified Harleysville of its claim for bodily injury and property damage suffered following Stranahan's collision with Messina's vehicle. Harleysville disclaimed coverage explaining, "The vehicle involved in the loss is not listed on the policy and therefore not a covered vehicle under the terms and conditions of [Broadway's] policy."
In the underlying wrongful death action brought by plaintiffs on behalf of Messina, Harleysville and the Agency were named third-party defendants by Broadway. Harleysville was granted summary judgment, which was not opposed by Broadway. Following a bench trial, the court determined Stranahan and Broadway were solely liable for the accident and awarded $1,500,000 damages. At that time, Broadway and Stranahan were insolvent and did not pay the judgment.
On August 4, 2008, plaintiffs initiated the current action asserting Harleysville was liable for the amount of the unsatisfied judgment pursuant to N.J.S.A. 17:28-2*fn1 and seeking, if necessary, to reform the Harleysville policy to provide coverage for the vehicle involved in the accident. Plaintiffs, relying on Pfeiffer's deposition testimony, argued the misstatement in covered autos under the policy -- listing the 1985 van rather than the 1987 van -- resulted from a mutual mistake. According to Pfeiffer, the 1985 van was inoperable at the time the Harleysville policy was issued. In fact, he explained Broadway had not used the 1985 van since early 2001, sold the van in March 2002, and surrendered the license plates in June 2002.
On November 20, 2009, Harleysville filed a motion for summary judgment. Harleysville argued it had no obligation to satisfy the judgment against Broadway because the policy did not provide coverage of the vehicle involved and plaintiffs' claim to reform the policy was not supported.
On February 3, 2010, Judge McDonnell determined there was no clear and convincing evidence of a mistake on the part of Harleysville because Pfeiffer had signed the Harleysville application and the policy did not list the 1987 van as a covered vehicle. She concluded "Harleysville has no duty to provide any indemnification to plaintiff for the . . . judgment" and granted Harleysville's motion and dismissed plaintiff's amended complaint with prejudice. This appeal ensued.
A motion for summary judgment should be granted only when the moving party establishes the absence of any genuine issue as to a material fact. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 539-40 (1995). In our review of a grant or denial of summary judgment, we apply the same standard as the trial court. Moore v. Woman to Woman Obstetrics & Gynecology, L.L.C., 416 N.J. Super. 30, 40 (App. Div. 2010). We first decide whether there was a genuine issue of fact. If none is presented we decide whether the lower court's ruling on the law was correct. Brill, supra, 142 N.J. at 538-41.
In this examination, we viewed the record in the light most favorable to plaintiff along with all reasonable inferences that can be drawn from those facts. Baliko v. Stecker, 275 N.J. Super. 182, 186 (App. Div. 1994). We owe no special deference to the trial judge's interpretation of the law and the legal consequences that flow from the established facts. Zabilowicz v. Kelsey, 200 N.J. 507, 512-13 (2009); Manalapan Realty L.P. v. Twp. of Manalapan, 140 N.J. 366, 378 (1995); Homesite Ins. Co. v. Hindman, 413 N.J. Super. 41, 46 (App. Div. 2010); Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601 (2008); Spring Creek Holding Co. v. Shinnihon U.S.A. Co., 399 N.J. Super. 158, 190 (App. Div.), certif. denied, 196 N.J. 85 (2008).
Also, our review is guided by well-settled principles governing the interpretation of insurance contracts. Primarily, we note "the words of an insurance policy are to be given their plain, ordinary meaning. In the absence of any ambiguity, courts should not write for the insured a better policy of insurance than the one purchased." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001) (internal quotations and citations omitted). "A liberal construction of an insurance policy is not warranted when the policy is clear on its face." Cassilli v. Soussou, 408 N.J. Super. 147, 154 (App. Div. 2009) (internal quotation omitted). "In the absence of ambiguity,  a court must enforce the policy as written." Ibid. (internal quotation omitted).
However, when an ambiguity is discerned, such as, "the text appears overly technical or contains hidden pitfalls, cannot be understood without employing subtle or legalistic distinctions, is obscured by fine print, or requires strenuous study to comprehend[,]" we "will depart from the literal text and interpret it in accordance with the insured's understanding, even when that understanding contradicts the insurer's intent[.]" Zacarias, supra, 168 N.J. at 601 (internal quotations and citations omitted); see also Cassilli, supra, 408 N.J. Super. at 154 (stating courts will generally "construe ambiguous language in favor of coverage for the insured").
Plaintiffs' arguments on appeal mirror those advanced before the trial court. Following our review, we affirm substantially for the reasons recited by Judge McDonnell in her written bench memorandum accompanying the February 3, 2010 order.
Plaintiffs seek reversal of summary judgment maintaining Pfeiffer's recollection of the telephone call to the agency along with the lack of business use of the 1985 van sufficiently showed Broadway intended to obtain insurance coverage for the 1987 van. Plaintiffs assert this evidence warranted application of reformation. Citing Parrette v. Citizen's Casualty, 128 N.J. Eq., 206, 210 (E & A 1940), plaintiffs maintain the misidentification of Broadway's vehicle constituted mutual mistake and the intention of both parties was to cover the 1987 van.
In Parrette, the plaintiff owned three cars which were used in connection with a taxicab business, identified as cars A, B, and C. Id. at 207. The plaintiff owned a fourth car, car D, which he began using as a taxicab after car A was sold. Ibid. The plaintiff requested substitution of car D for car A, and that request was properly endorsed by the carrier, which ceased operations. Ibid. In search of a new policy, the plaintiff's insurance broker communicated with Citizens' Casualty regarding coverage for plaintiff's cabs. Ibid. The broker mistakenly submitted the VIN number of car A rather than car D so that Citizens' issued the policy covering car A. Ibid. Once the broker realized its mistake, it attempted to correct the error by notifying Citizens' of the necessity to change the policy to bind coverage for car D. Id. at 207-208. Citizens' issued an endorsement covering car D, but not before car D was involved in an accident, for which Citizens' denied coverage. Ibid.
The Court of Errors and Appeals determined mutual mistake had occurred. Based on conversations with the broker, Citizens knew which cars the plaintiff operated in the taxi business.
Id. at 209. Further, the plaintiff provided the correct information to the broker and it was the broker's error that resulted in the wrong vehicle identification numbers being given to Citizens. Ibid. Therefore, the court concluded both parties intended to cover the plaintiff's correct cabs, but by mutual mistake the intent was not correctly expressed in the policy. Ibid. Accordingly, the court held the plaintiff was entitled to have the policy reformed. Id. at 210.
We reject plaintiffs' assertions that "the facts and circumstances of [Parrette] are virtually identical to the facts of the case at bar." Rather, we agree with Judge McDonnell that Broadway's mistake in the identification of the vehicles to be insured was not shared by Harleysville or the Agency, defeating the applicability of reformation to these facts.
In granting summary judgment, Judge McDonnell agreed Broadway's mistake was shown when it overlooked that the Harleysville policy identified coverage for the 1985 van instead of the 1987 van even though it was not utilizing the 1985 van in the business. Judge McDonnell also found the only fact touching on Harleysville's alleged mistake was Pfeiffer's highly equivocal telephone conversation to an unnamed Agency employee. Not persuaded by plaintiffs' arguments to the contrary to urge rescission, Judge McDonnell found the evidence neither clear nor convincing. Further, the fact that the 1985 van was sold, "but the insurance coverage was never canceled and [the] premiums were not refunded, [was] not evidence of a mistake on the part of Harleysville" as it is "the insured's responsibility to cancel coverage for a vehicle that is no longer in service."
We concur with Judge McDonnell's denial of plaintiffs' request to apply reformation to modify the Harleysville policy. The "extraordinary remedy of reformation" is available "only where there is mutual mistake or where a mistake on the part of one party is accompanied by fraud or other unconscionable conduct of the other party." Heake v. At. Cas. Ins. Co., 15 N.J. 475, 481 (1954); see also Phillips v. Metlife Ins. Co., 378 N.J. Super. 101, 104 (App. Div. 2005). "[A]n insured is bound by the terms of the policy that he has received and had an opportunity to read, and reformation will be denied if he has been negligent in failing to apprise himself of its contents[.]" Heake, supra, 15 N.J. at 483.
Although Broadway may have assumed the Harleysville policy covered the 1987 van (or possibly that it was using a 1985 van), plaintiffs offer no evidence to evince this mistake was shared by Harleysville. The insurance application executed by Pfeiffer listed the 1985 van. The Agency's knowledge that "Broadway wanted insurance for the two vehicles it was using in its business" cannot be converted to the Agency's knowledge that coverage was supposed to be extended to the 1987 van. Also, DiGiambattista certified, "Pfeiffer never asked me, and to my knowledge never asked a member of my staff[,] to add coverage for a 1987 Chevy van during the course of the 2002-2003 Harleysville policy period." As Judge McDonnell correctly concluded, a mutual mistake was not established, making the remedy of reformation unavailable.
We reject as without merit plaintiffs assertion that a dispute of material facts obviates summary judgment. R. 2:11-3(e)(1)(E). Further, based on our opinion we need not address defendant's assertion of collateral estoppel.