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Lidia Rozek v. Metlife Insurance Company


March 23, 2011


On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket No. L-2447-09.

Per curiam.


Telephonically argued March 4, 2011

Before Judges Payne and Baxter.

Plaintiff, Lidia Rozek, appeals from a January 22, 2010 order granting summary judgment to defendant, MetLife Insurance Company (MetLife), thereby dismissing her complaint to compel defendant to participate in an underinsured motorists (UIM) arbitration. We affirm the order under review.

I. On April 29, 2001, plaintiff was injured in an automobile accident when her vehicle collided with a vehicle operated by Jia Wang, whose automobile insurance policy with GEICO provided $20,000 maximum liability coverage. At the time of the accident, plaintiff had an auto insurance policy with defendant, MetLife, which provided a maximum UIM benefit of $50,000.

On August 2, 2002, plaintiff submitted a UIM claim to MetLife concerning the April 29, 2001 accident. A few months later, MetLife authorized plaintiff to settle her personal injury claim against Wang for GEICO's policy limits.

On January 14, 2003, plaintiff's attorney notified MetLife that she had selected Eric Schwab as her UIM arbitrator, and she requested counsel for MetLife to notify her of MetLife's selection so that a neutral arbitrator could also be chosen. Within a few days, MetLife appointed Martha Lynes as its arbitrator and submitted a list of three potential neutral arbitrators. Shortly thereafter, MetLife demanded that plaintiff provide a description of all her medical bills and a description of her medical treatment, and supply copies of any expert reports upon which she intended to rely at the time of the arbitration. MetLife also demanded that plaintiff supply answers to interrogatories and submit to a deposition. MetLife's letter concluded with the statement, "this request [for discovery] is made without prejudice to any questions of coverage that may exist in this matter and we expressly reserve our right to contest all coverage questions at any time during the course of the arbitration process." Discovery continued through the spring of 2004.

While discovery was ongoing, plaintiff submitted an application for personal injury protection (PIP) benefits to MetLife. In answer to one of the questions on the PIP application, plaintiff stated that her husband, Maksym Rozek, had a commercial policy with Liberty Mutual covering his limousine business. By letter of July 22, 2003, plaintiff notified MetLife that because the Liberty Mutual policy was a commercial policy, it did not afford UIM coverage. On December 18, 2003, MetLife demanded that plaintiff provide a copy of the Liberty Mutual policy, and any declarations page for such policy, to enable MetLife to makes its own coverage determination.

Approximately one month later, on February 24, 2004, MetLife notified plaintiff that Liberty Mutual's endorsement CA 21 14 03 99 would indeed afford coverage to a spouse, and therefore UIM coverage was potentially available to her through her husband's policy with Liberty Mutual. A month or so later, MetLife reiterated its position that the Liberty Mutual policy would afford UIM coverage to plaintiff, noting that any "issues of primacy" were "controlled by the 'Other Insurance' clauses in each policy." Approximately eight months later, plaintiff acknowledged that Liberty Mutual would, in fact, provide UIM coverage.

Plaintiff notified MetLife's attorney that she sought to schedule the arbitration for November 16, 2004. The record does not indicate MetLife's response to plaintiff's request; however, there were apparently informal discussions between plaintiff's attorney and MetLife's attorney in the summer of 2005 concerning plaintiff's earlier promise to file an order to show cause to compel Liberty Mutual to provide concurrent, pro rata coverage.

Other than the informal discussion in August 2005 concerning Liberty Mutual, there was no communication between the parties from October 13, 2004, when plaintiff's counsel notified MetLife of her intention to schedule the arbitration, and March 10, 2006, at which time plaintiff agreed to the appointment of Robert McCutcheon as a neutral arbitrator. The UIM arbitration was thereafter scheduled for May 9, 2006. However, before the arbitration could take place, MetLife notified plaintiff on May 2, 2006 that MetLife would not proceed with the arbitration until all matters of coverage were resolved with Liberty Mutual. MetLife's May 2, 2006 letter stated:

In reviewing our file in the above matter, it is noted that you had advised me in August 2005 that you would be filing an Order to Show Cause to compel Liberty Mutual Insurance Company to provide concurrent, pro-rata coverage. However, there is no indication in my file that such an Order to Show Cause was ever filed, nor is there any indication that Liberty Mutual Insurance Company was placed on notice of your client's claim.

If you have placed Liberty Mutual Insurance Company on notice of this claim, kindly advise the name and address of the attorneys who are representing Liberty Mutual Insurance Company in this matter.

Please be advised that I shall not be in a position to proceed with the arbitration of this matter until all issues of coverage are resolved, particularly the question of concurrent, pro-rata coverage afforded by Liberty Mutual Insurance Company. [(Emphasis added).]

Despite MetLife's May 2, 2006 letter insisting that it would not participate in the arbitration unless Liberty Mutual was made a party, it was not until March 24, 2008, almost two years later, that plaintiff filed an order to show cause with a verified complaint seeking to compel Liberty Mutual to participate in the UIM arbitration under Docket No. L-987-08.

Notably, plaintiff's verified complaint against Liberty Mutual did not name MetLife as a defendant.

On April 9, 2008, MetLife notified plaintiff that it had no intention of participating in the UIM arbitration. Its April 9, 2008 letter stated:

Please be advised that MetLife will not voluntarily consent to participate in UIM arbitration in the within matter.

Please be guided accordingly.

MetLife reiterated its refusal to participate in arbitration by sending yet another letter to plaintiff on May 28, 2008, which provided:

Please be advised that Met[Life] will not arbitrate absent a court order compelling Met[Life] to participate in same.

Given the recent unpublished appellate case,*fn1 latches [sic] now bars the claim as against Met[Life].

Liberty Mutual ultimately filed a motion for summary judgment, which was heard on January 9, 2009. At the conclusion of oral argument, the judge granted summary judgment in favor of Liberty Mutual, based, in part, upon a step-down provision in the Liberty Mutual policy, which limited the amount of insurance coverage to that available under plaintiff's own policy. The January 9, 2009 order granting summary judgment in favor of Liberty Mutual expressly extinguished the third-party complaint Liberty Mutual had filed against MetLife.

On January 15, 2009, for the first time, plaintiff moved to name MetLife as a direct defendant; however, the motion was denied because, in light of the January 9, 2009 order dismissing plaintiff's complaint against Liberty Mutual under Docket No. L-987-08, there was no longer any pending action in which MetLife could be named as a direct defendant. The judge also denied plaintiff's motion to name MetLife as a direct defendant for a second reason, namely, because plaintiff had not annexed to the motion the proposed amended complaint required by Rule 4:9-1. At the same time, MetLife's motion to dismiss plaintiff's claims based on laches was denied, because there were no direct claims pending against it.

On February 20, 2009, plaintiff again moved to amend her complaint to add MetLife as a direct defendant. For a reason not explained in the record, the motion was not heard until May 15, 2009, and was again denied because of the lack of any pending complaint. Plaintiff filed no appeal from the May 15, 2009 order.

On June 26, 2009, plaintiff filed a new action against MetLife, bearing Docket No. L-2447-09. Thereafter, MetLife moved for summary judgment on the grounds of the entire controversy doctrine, the statute of limitations and laches. At the conclusion of oral argument on January 22, 2010, the judge granted MetLife's motion on the first two grounds, not reaching Metlife's additional claim of laches. In particular, the judge held that the entire controversy doctrine barred the filing of the second complaint under Docket No. L-2447-09 because plaintiff should have litigated MetLife's obligation to provide UIM coverage in the prior action under Docket No. L-987-08, and her failure to have named MetLife as a defendant in that action was without justification.

As to the statute of limitations, the judge concluded that MetLife's letter of May 2, 2006, which was issued long before the statute of limitations expired on April 29, 2007, put plaintiff on notice that there was "a problem" with her UIM claim. According to the judge, MetLife's May 2, 2006 letter notified plaintiff that MetLife had reversed course and was "not gonna keep going on." The judge expressly rejected plaintiff's argument that because MetLife's May 2, 2006 letter was not an unequivocal and express repudiation of its earlier agreement to arbitrate, MetLife had, in effect, "lulled" plaintiff into a false sense of security. The judge concluded that the May 2, 2006 letter served as a repudiation of MetLife's earlier agreement to arbitrate, and that plaintiff should have filed suit after receiving the letter, which was before the statute of limitations expired on May 29, 2007.

The judge also reasoned that after repudiating its agreement to arbitrate in May 2006, MetLife had done nothing to in any way suggest that it had changed, or even softened, its position. The judge stated:

[T]here's no facts to support lulling. . . . There is this '06 statement and there's nothing else where they're sending things and picking arbitrators or . . . exchanging documents or something on the side after they sent that notice. There's nothing that would confuse her that they changed their position ever for two years.. . . .

She knows that . . . they've got this [position]. Nobody does anything for two years. The statute runs.

On appeal, plaintiff maintains she is entitled to reversal of the grant of summary judgment to MetLife because neither the entire controversy doctrine nor the statute of limitations warranted the dismissal of her June 26, 2009 complaint against MetLife.

II. When determining a motion for summary judgment, the trial judge must decide whether "the competent evidential materials presented, when viewed in the light most favorable to the non moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."

R. 4:46-2. When reviewing an order granting or denying summary judgment, we apply the same standard used by the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

The six-year statute of limitations applicable to breach of contract actions, see N.J.S.A. 2A:14-1, applies to uninsured and underinsured motorists claims. Green v. Selective Ins. Co. of Am., 144 N.J. 344, 354 (1996). The statute of limitations begins to run from the date of the accident, not from the date the carrier repudiates the claim. Ibid. Therefore, absent some form of equitable exception, the six-year statute of limitations bars plaintiff's claim against MetLife because the accident in question occurred on April 29, 2001, and she did not file her complaint against MetLife until June 26, 2009, more than eight years later.

The "primary purpose of the statute of limitations is to provide defendants a fair opportunity to defend and to prevent plaintiffs from litigating stale claims." Price v. N.J. Mfrs. Ins. Co., 182 N.J. 519, 524 (2005) (internal quotation marks and citations omitted). "[W]here defendants are on notice of the claims, and no significant prejudice results, the policy reasons for upholding a strict statute of limitations recede." Ibid. The Supreme Court observed:

To avoid harsh results from a mechanical application of the statute of limitations, this Court has applied equitable principles to conclude that the statute should yield to other considerations. . . . Flexible applications of procedural statutes of limitations may be based on equitable principles, such as the discovery rule, . . . or estoppel . . . . [Id. at 524-25 (internal quotation marks and citations omitted).]

In Price, the Court held that equitable tolling of the statute of limitations applied. Id. at 525. The plaintiff's attorney first notified the carrier, New Jersey Manufacturers Insurance Company (NJM), of the UIM claim on February 12, 1998, and during the next several years, NJM sought, and obtained, the information that was necessary to assist it in evaluating plaintiff's claim, including a medical examination of the plaintiff. Ibid. NJM's final request for information was submitted to the plaintiff on August 21, 2001, nine days before the expiration of the six-year statute of limitations, when NJM asked for the insured's complete worker's compensation file and the original MRI films. Id. at 525-26. Plaintiff's counsel responded with most of the requested information on September 20, 2001, and continued thereafter to forward information pertinent to the claim. Id. at 526. It was not until October 28, 2002, "more than a year after the statute would have otherwise run, that NJM notified plaintiff that the statute of limitations barred his claim." Ibid.

The Court held that in dealing with its insured, the insurer "was required to act in a fair manner and inform plaintiff if there were any deficiencies in his claim or if he needed to file a request for arbitration by a certain date." Ibid. The Court observed that it "was not reasonable for NJM to sit back, request and receive various documents over a three and one-half year period, and then deny plaintiff's claim because he failed to file a complaint in Superior Court or request arbitration prior to the running of the six-year statute of limitations." Ibid. The Court held that the record amply supported the trial court's finding that "NJM's conduct lulled plaintiff and his counsel into believing that the uninsured motorists claim had been properly filed" and the plaintiff "reasonably relied on NJM's conduct in failing to file a complaint or to request arbitration within the statute of limitations period." Id. at 527. For that reason, equitable tolling applied, and the Court held that the statute of limitations should not bar the filing of the plaintiff's complaint against NJM. Ibid.

In reaching that determination, the Court emphasized that "NJM never disclaimed or even questioned coverage until after the statute of limitations expired." Ibid. In affirming the trial court's rejection of NJM's statute of limitations defense, the Court concluded that the opinion in Mortara v. Cigna Property and Casualty Insurance Company, 356 N.J. Super. 1 (App. Div. 2001), aff'd o.b., 174 N.J. 566 (2002), did not require a different result. Id. at 526. The Court noted that in Mortara, the carrier had expressly denied coverage before the statute of limitations ran, and in such circumstances, to avoid a dismissal of the complaint under the statute of limitations, a plaintiff must file the complaint before the period established by the statute of limitations expires. Id. at 527 (citing Mortara, supra, 356 N.J. Super. at 3-4). The Court held in Price that unlike the carrier in Mortara, which had disclaimed coverage before the statute of limitations expired, NJM was not entitled to avail itself of that defense because it had "never disclaimed or even questioned coverage until after the statute of limitations expired." Ibid.

Thus, as is evident from both Price and Mortara, the ability of an insurer to avail itself of the defense of the statute of limitations depends upon when the carrier notified its insured that it was "disclaim[ing] or . . . question[ing] coverage." Ibid.

In support of her argument that MetLife was not entitled to summary judgment, plaintiff relies on our opinion in Estate of Hainthaler v. Zurich Commercial Insurance Co., 387 N.J. Super. 318 (App. Div.), certif. denied, 188 N.J. 577 (2006), in which we held that because the carrier, Zurich, had agreed to arbitrate the plaintiff's uninsured motorists (UM) claim, the carrier's later refusal to participate in the arbitration should not be resolved pursuant to "the statute of limitations at all." Id. at 327. We observed that because "there was no attempt by [Zurich] to withdraw its recognition of its duty to arbitrate[,]" id. at 328, but instead an allegation by Zurich that plaintiff had abandoned her right to an arbitration by failing to cooperate with pre-arbitration discovery, the plaintiff's complaint "should more properly have been considered an application to compel completion of the proceedings to which [Zurich] had agreed." Id. at 328. We reasoned:

The proper analysis involves consideration of whether plaintiff abandoned the arbitration or is otherwise prevented from pursuing it.

We agree that plaintiff may not delay indefinitely the arbitration simply by refusing to comply with discovery demands. To the extent she unduly delayed the presentation of her claim to the arbitrator and thereby prejudiced [Zurich], she may be estopped from seeking to compel [Zurich] to complete the arbitration to which [the carrier] previously agreed.

The controversy must be analyzed in terms of the reasons for the delay in presenting the matter, including the reasons for the inaction of the named arbitrators and their apparent failure to discharge the duties of their office. The analysis will also necessarily require an inquiry into the ability of plaintiff to comply with the discovery demands requested and whether there were extenuating circumstances that would excuse plaintiff's delay. The record suggests that plaintiff's counsel may have been ill and, under those circumstances, it may not be appropriate to penalize the client for the condition of counsel. . . .

Accordingly, we view the dispute here not as to whether plaintiff timely sought arbitration. She did. Rather, we take this to be a question of whether plaintiff has failed sufficiently to prosecute the arbitration so as to forfeit her right to pursue it further. Accordingly, we remand for consideration of that issue. [Id. at 328-31.]

Thus, as is evident from the portion of Hainthaler that we have quoted, plaintiff's reliance on Hainthaler is misplaced. In declining in Hainthaler to analyze the facts presented within the analytical framework of the statute of limitations, we did not hold the statute of limitations inapplicable in all instances where the carrier has named an arbitrator, and thereafter reverses course and refuses to participate in the arbitration. Instead, we observed that because there had been "no attempt by defendant to withdraw its recognition of its duty to arbitrate," id. at 328, the statute of limitations was inapplicable, and the relationship of the parties should have been analyzed from the perspective of whether the plaintiff "abandoned the arbitration." Id. at 329.

Stated differently, Hainthaler does not stand for the proposition that an insurer's appointment of an arbitrator prevents the carrier from later asserting the statute of limitations as a defense. Yet, that is the interpretation of Hainthaler that plaintiff urges us to adopt. Such a reading is unwarranted and erroneously ignores the enormous differences between the factual scenario in Hainthaler and the facts presented here. Hainthaler was a case where the carrier agreed to participate in arbitration and only withdrew its consent because of the plaintiff's refusal to cooperate with discovery.

Id. at 323. It was for those reasons that we held that the proper analysis was whether plaintiff was entitled to compel the arbitration to which Zurich had already agreed. Id. at 328-29. This is not such a case. We therefore decline to view Hainthaler as helpful in resolving the present appeal.

Instead, we conclude that the present matter is governed by application of the principles articulated in Price, supra, and Mortara, supra. Our focus must be upon whether MetLife repudiated its agreement to participate in arbitration before the statute of limitations expired, in which case plaintiff's failure to commence an action against MetLife within the six-year period of limitations would be fatal, Mortara, supra, 356 N.J. Super. at 3-4, or, whether instead, MetLife did not repudiate its agreement to participate until after the statute of limitations expired, in which case equitable principles would bar its reliance on that defense. Price, supra, 182 N.J. at 527.

Plaintiff concedes that MetLife's April 9, 2008 letter was an unambiguous repudiation of its agreement to arbitrate. She argues, however, that because the April 2008 repudiation occurred after the statute of limitations had expired in April 2007, she is entitled to the benefit of the holding in Price. MetLife, in contrast, urges us to affirm the trial judge's conclusion that MetLife's May 2, 2006 letter, although not as direct and straightforward as the April 2008 letter, nonetheless constituted a notification that unless certain steps were taken by plaintiff, MetLife was withdrawing its previous consent to participate in arbitration. Therefore, according to MetLife, its May 2006 letter constituted a repudiation, that repudiation occurred eleven months before the running of the statute of limitations, and plaintiff's failure to file its complaint against MetLife during the remaining eleven months should result in a finding that the statute of limitations bars plaintiff's June 2009 complaint against it.

MetLife's May 2, 2006 letter unambiguously notified plaintiff that she had failed to take any steps to make Liberty Mutual a party to the action. The May 2, 2006 letter also notified plaintiff that unless and until Liberty Mutual was made a party to the arbitration proceeding, MetLife had no intention of proceeding with the arbitration. Thus, a fair reading of MetLife's May 2, 2006 letter required plaintiff to do one of two things before the statute of limitations expired: either bring Liberty Mutual into the arbitration by filing a complaint against it before the running of the statute of limitations, or file a complaint against MetLife to resolve the impasse created by MetLife's May 2, 2006 letter. Plaintiff did neither.

Instead, plaintiff did nothing for nearly two years, waiting until March 24, 2008 to file a complaint against Liberty Mutual, and waiting until June 26, 2009 before filing a complaint naming MetLife as a defendant.

We agree with the judge's determination that the May 2, 2006 letter clearly notified plaintiff that there "was a problem" and that MetLife had substantially retreated from its earlier agreement to arbitrate plaintiff's UIM claim. Merely because MetLife's April 9, 2008 letter was more direct than its earlier May 2, 2006 letter does not lead to a conclusion that the earlier letter did not constitute a repudiation. We therefore conclude, in keeping with Mortara, supra, 357 N.J. Super. at 3-4, that MetLife's repudiation of its agreement to arbitrate occurred before the statute of limitations ran, and therefore plaintiff's failure to file suit against MetLife before the running of the statute justified the trial court's conclusion that plaintiff's 2009 complaint against MetLife was barred by the statute of limitations.

In light of our agreement with the judge's conclusion that the statute of limitations barred plaintiff's June 2009 complaint, we need not reach the judge's additional conclusion that the entire controversy doctrine likewise barred the 2009 complaint. We note, however, that even if plaintiff had joined MetLife in the March 2008 complaint she had filed against Liberty Mutual, by then the statute of limitations would already have expired. Thus, we do not view the entire controversy doctrine as a vehicle for resolving the conflicting contentions raised in this appeal. As we have already noted, we do, however, agree with the judge's conclusion that plaintiff's June 2009 complaint against MetLife was barred by the statute of limitations.


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