On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-0497-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Grall and LeWinn.
Defendant IFA Insurance Company (IFA) appeals from the January 9, 2008 order granting summary judgment to its co-defendant, New Jersey Indemnity Insurance Company (Indemnity). We reverse.
In May 2003, while driving her vehicle insured by IFA, plaintiff Lorraine Jackson was struck by a vehicle driven by Karen Harris. Harris had leased that vehicle from Enterprise Leasing Company (Enterprise), which is self-insured; Harris' personal vehicle was insured by Indemnity. Plaintiff sued Harris in 2004 and obtained an $86,360 default judgment.
In 2008, plaintiff sued Indemnity and IFA. She claimed Indemnity "breached its obligations of good faith and fair dealing by failing to" defend Harris and that IFA breached its contract by failing to pursue uninsured/underinsured (UM/UIM) claims on her behalf. In her complaint, plaintiff asserted that she "put IFA . . . on notice of a claim for UM/UIM [a]rbitration" by letter dated October 11, 2004. She further asserted that "[h]aving had no response to that correspondence in writing, [p]laintiff next put . . . Indemnity . . . on notice of the UM/UIM claim regarding their insured . . . Harris."
Indemnity moved for summary judgment; it submitted letters that its claims adjuster sent to Harris between February 2004 and January 2005, to which Harris apparently never responded. Indemnity claimed that it "never got proper notice pursuant to the contract of insurance[,] . . . [and] never got the cooperation required under the contract . . . ." Therefore, it denied coverage. Indemnity asserted that it first received notice of the claim when plaintiff's counsel sent it a copy of the default judgment.
IFA argued in opposition that Indemnity had failed to demonstrate "appreciable prejudice" and had not fulfilled its "reciprocal duty . . . to secure cooperation . . . that would require something more than just sending letters, as was done in this case. It would require sending out an investigator, something of that nature. And there's no indication that that was done in this case." IFA further asserted that Indemnity was notified of the claim "well before the default was entered."
In granting Indemnity's motion, the judge noted there was no question of liability as Harris had "rear-ended . . . plaintiff." The judge noted further that Harris left the scene of the accident before the police arrived, never responded to plaintiff's complaint, and never responded to the letters from Indemnity's claims representative. The judge concluded that "under the terms of the policy, there [was] definitely a failure to notice, a failure to cooperate." The judge acknowledged, however, that he did not "know if [Indemnity had] been prejudiced or not."
On appeal, IFA contends that the judge erred in granting summary judgment because Indemnity had failed to (1) demonstrate appreciable prejudice and (2) fulfill its duty of reciprocal cooperation. We concur that the motion judge failed to address either factor.
When reviewing an order granting summary judgment, we apply the same standards that are applied by the trial court. Liberty Surplus Ins. Corp., Inc. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Stoffels v. Harmony Hill Farm, 389 N.J. Super. 207, 209 (App. Div. 2006). Summary judgment may be granted when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). "Because we review issues of law de novo, we owe no deference to an interpretation of law by the trial court . . . that may differ from our own." M.S. v. Millburn Police Dep't, 197 N.J. 236, 246 n.10 (2008) (citing Manalapan, supra, 140 N.J. at 378). "Our review of the trial court's legal conclusions is de novo." Myron Corp. v. Atl. Mut. Ins. Corp., 407 N.J. Super. 302, 309 (App. Div. 2009) (citing Manalapan, supra, 140 N.J. at 378), aff'd, 203 N.J. 537 (2010).
New Jersey has long required "a showing of prejudice before a contract of insurance may be avoided." Pfizer, Inc. v. Emp'rs Ins. of Wausau, 154 N.J. 187, 206 (1998). "The reason for the New Jersey rule is to protect the interests of policyholders because insurance contracts are contracts of adhesion and policyholders should not lose the ...