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Ifa Insurance Company v. Mercury Indemnity Company of America

August 4, 2011


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-2606-09.

Per curiam.


Argued May 17, 2011

Before Judges Carchman and Waugh.

Plaintiff IFA Insurance Company (IFA) appeals the order of the Law Division dismissing its complaint seeking a declaratory judgment that defendant Mercury Indemnity Company of America (Mercury) was precluded from rescinding an automobile insurance policy issued to defendant Jennice McElyea. We affirm.


We discern the following facts and procedural history from the record on appeal.

On January 8, 2007, defendant Carolyn LeFever was driving her vehicle on the Atlantic City Expressway when she was struck by a vehicle owned by Jennice and driven by defendant Kenneth McElyea, causing her injury and damaging her car.*fn1 The Dodge Ram driven by Kenneth was insured by Mercury at the time of the accident.

Jennice obtained the policy at issue from Mercury in May 2004, when she applied for insurance coverage on the two cars she owned at that time, a Chevrolet Blazer and a Nissan Maxima. The Dodge Ram subsequently replaced the Maxima on the policy.

Jennice's application stated that her "[c]urrent policy [from Prudential Insurance Company was] being cancelled due to [her] husband. Insured and husband are separated[.] [H]e resides [on] Chatham Rd. [in] Turnersville . . . [and] he has his own auto insurance." Prudential had sent Jennice a notice of non-renewal on March 11, 2004. The notice stated that the policy would not be renewed because, in February 2004, Kenneth was involved in an accident in which he was at fault and had received nine points for operating a vehicle while his license was suspended in December 2002. The notice was received by Mercury on June 8, 2004. An additional policy change letter from Prudential, which was also received by Mercury on June 8, 2004, indicated that Kenneth was a licensed operator under Jennice's Prudential policy.

Jennice placed an "S" under the marital status section of the Mercury application, and listed her address as being on Whitman Terrace in Turnersville. Jennice did not list the names of any other persons who would be driving the insured vehicles in response to the question asking for that information. Jennice also wrote "separated" in a space provided for listing the insured's spouse's name. In a section titled "UNDISCLOSED DRIVER CERTIFICATION," Jennice certified that "there are no additional relatives living in my household or regular operators of the insured vehicles that are not listed as drivers on my automobile policy with the Company," except any relatives not of driving age or those who maintain their own automobile insurance.

After receiving a claim regarding the January 8, 2007 accident, Mercury began an investigation. On April 17, 2007, the testimony of both Jennice and Kenneth*fn2 was taken by way of examinations under oath. Jennice testified that she obtained insurance from Mercury in May 2004 because the rates were less expensive. She further testified that she had no knowledge that Prudential had determined not to renew her insurance policy as of May 2004, and claimed that she had never seen the notice of non-renewal. Jennice also testified that she was separated when she submitted the Mercury application on May 25, 2004. Although she could not at first recall when she and Kenneth separated, she later testified that they separated around July 2003.

According to Jennice, Kenneth "was in and out of" her residence after they separated. He would also visit, typically on the weekends, staying a couple nights. When he was not staying with Jennice on Whitman Terrace, he would stay with friends or at motels. She testified that this arrangement continued beyond May 2004. She also testified that, following the separation, Kenneth never stayed at her parents' residence, located on the Chatham Road address in Turnersville listed on the policy application.

Jennice also testified that in May 2004 Kenneth would take the Blazer from the Whitman Terrace residence to work, and would keep the vehicle wherever he was staying. Jennice eventually replaced the Blazer with a Ford Expedition, and the Maxima was traded in for the Dodge Ram in April 2006. According to Jennice, Kenneth contributed to the purchase of the vehicles. Jennice also testified that Kenneth would seek her permission to use the Dodge Ram prior to driving the vehicle.

Jennice testified more specifically that, from about September or October 2006 through the date of the accident, Kenneth was living with her because he did not have a place to stay. During that time, the Dodge Ram became Kenneth's primary vehicle, which he kept at Whitman Terrace. Jennice testified that between July 2003 and the date ...

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