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Jennifer L. Blake v. Linda M. Bianchi


December 27, 2010


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3370-08.

Per curiam.


Submitted November 30, 2010

Before Judges Skillman and Yannotti.

Plaintiff Jennifer L. Blake appeals from orders entered by the Law Division on January 22, 2010, which granted summary judgment in favor of defendant GEICO Insurance Company (GEICO) and denied plaintiff's motion for leave to file a claim against GEICO. We affirm.

On July 5, 2007, plaintiff was driving a motor vehicle on Evesham Road in Voorhees, New Jersey when her automobile was struck in the rear by a vehicle operated by defendant Linda M. Bianchi (Bianchi). At the time, plaintiff was residing in the home of her parents.

Plaintiff had automobile insurance under a policy issued by GEICO, with underinsured motor (UIM) coverage in the amount of $15,000. Bianchi was insured by GEICO. Her policy provided liability coverage in the amount of $15,000. Plaintiff's parents were also insured under a GEICO policy, with UIM coverage of $100,000. On October 11, 2007, plaintiff asserted a claim for UIM coverage under her parents' policy.

Plaintiff filed this action against Bianchi on July 27, 2008. In October 2008, GEICO moved to intervene in the action pursuant to Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996). Among other defenses raised in its pleading, GEICO asserted that plaintiff's claim for UIM benefits was "barred by and are subject to the limitation of the polic[y] of insurance."

The time for discovery in this matter ended on October 19, 2009. On December 10, 2009, GEICO offered plaintiff the policy limits under Bianchi's policy in settlement of plaintiff's claims. On December 11, 2009, GEICO filed a motion for summary judgment and argued that plaintiff was not entitled to UIM coverage under her parents' auto insurance policy.

Plaintiff opposed GEICO's motion. Plaintiff argued that GEICO should be estopped from denying coverage because it allegedly breached its fiduciary duty to handle her claim in good faith and unreasonably delayed in disclaiming coverage. Plaintiff also filed a cross-motion seeking leave to file a bad faith claim against GEICO.

The trial court considered the motions on January 22, 2010, and placed its decision on the record on that date. The court concluded that GEICO was entitled to summary judgment and there was no factual or legal basis for the assertion by plaintiff of a bad faith claim against GEICO. The court entered orders granting GEICO's summary judgment motion and denying plaintiff's motion for leave to file a claim against GEICO. This appeal followed.

Plaintiff argues that the trial court erred by granting summary judgment in GEICO's favor. Plaintiff contends that GEICO breached its fiduciary duty to act in good faith by failing to affirm or deny her claim for UIM benefits under her parents' policy within a reasonable time. Plaintiff therefore contends that GEICO should be estopped from denying her claim. Plaintiff also argues that because GEICO breached its fiduciary duty, the trial court should have permitted her to file a bad faith claim against GEICO. We disagree.

Plaintiff concedes that she is not entitled to coverage under the plain language of her parents' policy. The policy defines the term "insured" to include the policyholder and his or her spouse, if a resident of the same household. The term "insured" also is defined to include a relative if a resident of the policyholder's household. The policy excludes, however, coverage for any "bodily injury sustained by an insured while occupying a motor vehicle owned by an insured and not described in the Declarations and not covered by the Bodily Injury and Property Damage liability coverages of this policy."

It is undisputed that plaintiff's parents are the policyholders and plaintiff was residing in their household at the time of the accident. Therefore, plaintiff met the definition of an "insured" under her parents' policy. However, plaintiff's claim was not covered because it arose from injuries that she sustained in an accident that occurred while she was occupying her own motor vehicle, which was not described in the declarations of her parents' policy, and not otherwise covered under the policy.

Plaintiff nevertheless argues that GEICO should be equitably estopped from disclaiming coverage. "To establish a claim of equitable estoppel, the claiming party must show that the alleged conduct was done, or representation was made, intentionally or under such circumstances that it was both natural and probable that it would induce action." Miller v. Miller, 97 N.J. 154, 163 (1984). The claiming party also must show that the other party's conduct or representation was "relied on, and the relying party" acted "so as to change his or her position to his or her detriment." Ibid.

Here, GEICO did not disclaim coverage until it moved for summary judgment on December 11, 2009. However, as the trial court found, plaintiff suffered no substantial detriment by reason of GEICO's failure to disclaim coverage earlier. As GEICO points out, plaintiff brought this action against Bianchi, the alleged tortfeasor, and she was obligated to participate in discovery until such time as her claims against Bianchi were resolved. That did not occur until December 8, 2009, when GEICO tendered the maximum coverage available under Bianchi's policy. GEICO disclaimed coverage shortly thereafter.

Thus, with the exception of the expense of appearing for a medical examination that GEICO had scheduled, the costs that plaintiff incurred in this case would have been incurred regardless of whether GEICO disclaimed coverage earlier. We are therefore satisfied that the trial court correctly determined that, under the circumstances, GEICO could not be estopped from denying plaintiff's UIM claim.

We note that the situation here is substantially different from that presented in Barrett v. N.J. Mfrs. Ins. Co., 295 N.J. Super. 613 (App. Div. 1996), certif. denied, 150 N.J. 29 (1997). There, the insurer authorized the plaintiff to accept a settlement with the tortfeasor and indicated that it would pay the plaintiff's UIM claim. Id. at 615-17. We held that the insurer was estopped from thereafter denying coverage because the plaintiff underwent a physical exam conducted on the insurer's behalf, had a reasonable expectation she would receive UIM benefits for more than a year, and settled her claim against the tortfeasor in reliance on the availability of UIM coverage. Id. at 619. By contrast, here, plaintiff suffered no substantial detriment as a result of GEICO's delay in disclaiming coverage.

Plaintiff additionally argues that the trial court erred by refusing to permit her to assert a bad faith claim against GEICO. Plaintiff contends that her bad faith claim is cognizable under Pickett v. Lloyd's, 131 N.J. 457 (1993).

In Pickett, an insured trucker filed a claim against his insurance carrier and alleged that the insurer acted in bad faith by delaying payment of the insured's claim for collision damage. Id. at 461. The insurer failed to pay the claim for nine months. Id. at 464. The Supreme Court held that an insured could bring a claim against his insurer for a bad faith refusal to pay or a delay in payment of a valid, uncontested claim. Id. at 468-74.

Under Pickett, however, no liability can arise if the validity of the claim is "'fairly debatable.'" Id. at 473 (quoting Bibeault v. Hanover Ins. Co., 417 A.2d 313, 319 (R.I. 1980)). Moreover, negligence or mistake is not sufficient to support a claim for bad faith denial or delay in payment of a claim. Id. at 474. To prevail on a claim under Pickett, the insured must establish that the insurer acted without a reasonable basis or in reckless indifference to the claim. Id. at 473.

In our judgment, plaintiff's reliance upon Pickett is misplaced. This dispute does not involve the bad faith denial or delay in payment of an unquestionably valid claim. Indeed, plaintiff concedes that she was not entitled to coverage under her parents' policy. As we have explained, plaintiff's UIM claim was clearly barred by the exclusion in her parents' policy.

Plaintiff also argues that a bad faith claim against GEICO could be premised on GEICO's alleged violation of N.J.S.A. 17B:30-13.1. That statute prohibits insurers from committing certain acts "with such frequency as to indicate" that the acts are part of a general business practice. N.J.S.A. 17B:30-13.1. Under the statute, prohibited acts include: "[f]ailing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed[.]" N.J.S.A. 17B:30-13.1(e).

Even if we assume that GEICO delayed in denying coverage for an unreasonable period of time, plaintiff has not shown that it is GEICO's general business practice to delay in disclaiming coverage of such claims. Moreover, a statute like N.J.S.A. 17B:30-13.1, which governs the trade practices of insurers, is regulatory in nature and is enforced by the Commissioner of Insurance rather than by means of a private right of action. See Retail Clerks Welfare Fund v. Continental Cas. Co., 71 N.J. Super. 221, 224-25 (App. Div. 1961).



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