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Wendy N. Fullman v. Allstate Insurance Company of New Jersey


August 29, 2012


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4941-05.

Per curiam.


Argued May 30, 2012

Before Judges Baxter and Nugent.

Plaintiff Wendy Fullman commenced this action against defendant Allstate Insurance Company of New Jersey after Allstate, for the fourth time, stopped paying personal injury protection (PIP) income continuation benefits to which she claimed entitlement under her personal automobile insurance policy. Following a non-jury trial in the Law Division, the court entered an order awarding plaintiff PIP income continuation benefits, counsel fees, and costs. Allstate appeals from that order, contending the trial court applied the wrong measure of damages to plaintiff's claim, and failed to consider offsets for disability payments plaintiff had received from her employer and from Social Security. We affirm.


When plaintiff was injured in an automobile accident on May 4, 1998, she was insured under a personal automobile insurance policy issued by Allstate (the 1998 policy). The 1998 policy provided PIP benefits as required by the Automobile Insurance Cost Reduction Act, N.J.S.A. 39:6A-1.1 to -35, and included additional weekly income continuation benefits up to $700 with no limit on the total amount payable. In this appeal, Allstate disputes the amount of income continuation benefits plaintiff is entitled to receive under the 1998 policy for income losses she has sustained since June 9, 2003. To provide a context for the parties' arguments, we review plaintiff's employment and accident histories, and the previous litigation between the parties concerning plaintiff's income continuation benefits.

Plaintiff began working for the United States Postal Service in 1983 or 1984. She sustained injuries in an automobile accident in 1994. According to the PIP application plaintiff filed following the 1994 automobile accident, she was absent from work from January 7 through February 19, 1994. The Allstate automobile insurance policy that covered her for the 1994 accident (the 1994 policy) included a maximum weekly income continuation benefit of $500, subject to a limit of $52,000.

Plaintiff underwent neck surgery, described as a cervical diskectomy, on June 27, 1997.*fn1 She had not returned to work when, eleven months later, on May 4, 1998, she was injured in another automobile accident. As the result of the injuries sustained in that accident, she underwent another surgical procedure involving her neck, described as a cervical diskectomy and fusion, on September 11, 1998. Since that surgery, plaintiff has filed four actions, including the lawsuit now before us, to compel Allstate to resume paying income continuation benefits.

The first time Allstate stopped paying income continuation benefits, plaintiff filed a "Demand for Arbitration" with the American Arbitration Association seeking, among other things, payment of income continuation benefits from "June 28, 1997- Present." Plaintiff filed her arbitration demand on December 1, 1998. The parties settled that dispute in January 1999, and plaintiff's attorney confirmed in a letter to Allstate's claim representative that: Allstate would pay $22,000, "which represents wage loss payment up to the date of her subsequent accident of May 4, 1998"; and "[a]ll wage loss payments, due and owing after the date of May 4, 1998, shall be processed under the claim for benefits for the May 4, 1998 accident." Allstate noted on the settlement check that the payment represented "lost income from 06-28-1997 through 05-04-1998 due to an accident on 01-07-94."

During the 2009 trial of the instant action, Allstate's claims representative testified about the January 1999 settlement. She explained, "we had decided in this case that we would settle the benefits up to the second accident and then let the -- or the '98 accident and let the benefits continue through there as warranted"; but acknowledged her testimony was "only conjecture." The representative had no independent recollection, and had no access to "the file, to my notes, to anything that occurred . . . ." Nevertheless, she also testified that Allstate agreed to pay plaintiff's post-May 4, 1998 income losses under the 1998 policy "primarily [as] a matter of administrative convenience"; but subsequently acknowledged that in order to pay plaintiff's claim under the 1998 policy, there would have to be a disability emanating from the date of loss, and that "administrative convenience" would have been an insufficient reason to process a claim under that policy.

Plaintiff's former attorney contradicted the adjuster's testimony concerning the 1999 settlement and explained that when she negotiated the settlement with Allstate, plaintiff had a projected return-to-work date and had not been declared permanently disabled. Allstate agreed to pay the post-May 1998 income losses under the 1998 policy. The attorney testified, "it was an agreement we both came to." The trial court determined that plaintiff's former attorney was "very credible," and though the Allstate adjuster was truthful, "she admittedly had no memory of the Plaintiff."

Allstate stopped making PIP payments to plaintiff a second time on August 16, 2001. Plaintiff instituted a PIP action in the Superior Court, Law Division, Camden County, which the parties settled after a non-binding arbitration but before trial. On September 10, 2002, plaintiff's counsel confirmed in a letter to Allstate's counsel that Allstate would "resume payment of my client's wage loss benefits and the payments shall be retroactive to August 16, 2001, the date upon which Allstate stopped paying [plaintiff's] benefits." Thereafter, Allstate paid the income continuation benefits to plaintiff with a check bearing the notation, "Due to an accident of 05-04-1998," and on October 1, 2002, the parties filed a stipulation dismissing the lawsuit with prejudice.

Allstate stopped paying plaintiff's income continuation benefits a third time in December 2002. To compel Allstate to resume payments, plaintiff filed a motion seeking to: set aside the stipulation of dismissal that had been filed in the Superior Court action; enforce the settlement agreement; and have a judgment entered against Allstate for attorney's fees and costs. In an order dated June 6, 2003, the court set aside the stipulation of dismissal and entered judgment against Allstate in the amount of $19,808 plus attorney's fees and costs of $2,655. On June 9, 2003, Allstate issued a check to plaintiff for income continuation benefits for the period of December 14, 2002 to June 6, 2003, and noted on the check that the payments were "Due to an accident of 05-04-1998."

When Allstate stopped making income continuation benefits a fourth time, plaintiff filed the action that is now before us. In the meantime, plaintiff had filed two disability claims.

Plaintiff applied for disability benefits through her employer in January 1998, and for Social Security disability benefits in February 1999. She received disability benefits through her employer. While receiving those benefits, plaintiff periodically submitted disability insurance claim forms, which were admitted into evidence at trial. Those forms confirmed that plaintiff anticipated returning to work following the 1994 accident. On one of the forms dated January 23, 1998, in response to the question, "[W]hen does the doctor think you can go back [to work]," plaintiff wrote "5/4/98." Plaintiff testified that the date was based on her discussions with her doctor. Although the target return-to-work date changed, plaintiff testified that she always planned to return to work.

Plaintiff's claim for Social Security disability benefits was initially rejected, but she was ultimately awarded benefits after an administrative hearing. The administrative law judge determined that plaintiff was "entitled to a period of disability beginning on June 27, 1997, and to disability insurance benefits . . . and the claimant's disability has continued through at least the date of this decision." The decision was dated December 29, 1999.

Plaintiff commenced the present action for PIP benefits on June 3, 2005. Following a three-day trial in November and December 2009, the trial court issued a written decision on January 28, 2010, and thereafter reduced the decision to an order awarding plaintiff "[w]eekly income continuation benefits from June 9, 2003 to the present in the amount of $605.24 (352 weeks)," plus attorney's fees and costs.

In its written decision, the trial court concluded that Allstate was barred by the doctrines of res judicata and equitable estoppel from relitigating the "parties' settlement on the issue of whether Plaintiff was an 'income producer' at the time of the May 4, 1998 accident." The court explained: "This is not to say that if Plaintiff did not continue to qualify as 'disabled,' the Defendant could not then challenge her entitlement to benefits." Citing Gambino v. Royal Globe Insurance Companies, 86 N.J. 100 (1981), the trial court further explained that "[e]ven if [it] had not determined to enforce the prior settlement or that estoppel applied, [it] would find the Plaintiff to be an 'income producer' within the meaning of the statute." *fn2

The trial court also rejected Allstate's "invitation" to recalculate plaintiff's income continuation benefits by taking "into consideration monies received through a disability plan and Social Security." The trial court reasoned that the parties "resolved" in the previous litigation "not only the issue of Plaintiff's status as an income producer but also the appropriate rate of payment, (although Defendant is also equitably estopped from raising the same issues in this litigation)." The trial court further reasoned that the disability benefits upon which Allstate's proposed recalculation was premised were known or should have been known to Allstate "at the time of the confirmation of the settlement memorialized by [plaintiff's attorney's] letter of September 10, 2002, nearly seven and a half years ago. The only issue that would remain open would be Plaintiff's continued disability, which would be subject to medical corroboration."

Allstate appealed from the order memorializing the trial court's decision.


Allstate raises the following issue on appeal:


Allstate's argument is twofold. First, Allstate argues that the "income" plaintiff was receiving as of her May 1998 accident was the disability benefit that she received through her employer, and the weekly disability payment should therefore have been the measure of damages for her PIP income continuation claim.*fn3 Second, Allstate contends that plaintiff's income continuation benefits should have been subject to a setoff in the amount of the disability benefits she was receiving through her employer and from Social Security.

Our review of a trial court's fact-finding is narrowly circumscribed. "Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resorts, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). Our review of a trial court's conclusions of law is plenary, however. Potomac Ins. Co. v. Pa. Mfrs. Ass'n Ins. Co., 425 N.J. Super. 305, 319 (App. Div. 2012).

We conclude the trial court correctly determined that Allstate is barred as a matter of law from challenging the amount of the weekly income continuation benefits plaintiff is entitled to receive under the 1998 policy. The evidence plaintiff produced at trial, including the testimony of Allstate's representative, established that when Allstate first began processing plaintiff's income claims under the 1998 policy, Allstate paid plaintiff's weekly income continuation benefit based on her pre-accident salary. There is nothing in the record before us to suggest that Allstate raised the issue during the arbitration or in the first lawsuit. Rather, it appears that Allstate raised the argument for the first time after the close of its proofs in the 2009 trial.

Allstate had the opportunity to contest the amount of plaintiff's weekly benefit after plaintiff filed an arbitration demand with the American Arbitration Association on December 1, 1998;*fn4 in the first action plaintiff filed in Superior Court; and again when plaintiff filed her motion to enforce the settlement of the first Superior Court action. Those actions spanned four years. Allstate does not challenge the trial court's indisputable determination that Allstate knew or should have known of the "information" upon which it now bases its argument when it settled the first dispute over income continuation benefits in 2002, more than seven years before the trial of the present action.

The trial court implicitly determined that Allstate should have raised the issue in previous proceedings. If Allstate did not raise its claim in previous proceedings, it did so at its own peril.

Rule 4:30A, provides that "[n]on-joinder of claims required to be joined by the entire controversy doctrine shall result in the preclusion of the omitted claims . . . ." The entire controversy doctrine precludes a party from litigating a claim "'when a prior action based on the same transactional facts has been tried to judgment or settled.'" Allstate N.J. Ins. Co. v. Cherry Hill Pain & Rehab Inst., 389 N.J. Super. 130, 140 (App. Div. 2006) (quoting Arena v. Borough of Jamesburg, 309 N.J. Super. 106, 111 (App. Div. 1998)), certif. denied, 190 N.J. 254 (2007). "In considering fairness to the party whose claim is sought to be barred, a court must consider whether the claimant has had a fair and reasonable opportunity to have fully litigated that claim in the original action." Gelber v. Zito P'ship, 147 N.J. 561, 565 (1997) (internal quotation marks and citation omitted). Here, Allstate had such an opportunity.

The twin goals underlying the entire controversy doctrine -- judicial administration and fairness to litigants, ibid. --are served by the application of the doctrine to the facts in the case before us. Efficient judicial administration is served by the final resolution of claims in a single proceeding; it is disserved by piecemeal litigation or repeated partial litigation of claims. And it is unfair to require plaintiff to attempt to construct proofs concerning a 1998 event in a 2009 trial when the issue has been a non-issue during the intervening years.*fn5

Even if the trial court was not implicitly referring to Rule 4:30A, we agree with its determination that Allstate is equitably estopped from belatedly asserting its claim. "Estoppel is an equitable doctrine, founded in the fundamental duty of fair dealing imposed by law, . . . designed to prevent injustice by not permitting a party to repudiate a course of action on which another party has relied to his [or her] detriment." Knorr v. Smeal, 178 N.J. 169, 178 (2003) (internal quotation marks and citation omitted). Allstate's payment for more than four years of plaintiff's income continuation claim based upon her salary, induced her to believe that the amount of the weekly payment was a non-issue, and thereby rendered it unnecessary for plaintiff to investigate the issue and construct proofs while relevant evidence was available and memories were fresh.

Moreover, Allstate's argument as to the measure of damages is incorrect. "The measure of the income loss referred to in N.J.S.A. 39:6A-4(b) is the difference between what one would have earned had injury not occurred and what one did earn." Greenberg v. Great Am. Ins. Co., 158 N.J. Super. 223, 228 (App. Div. 1978), aff'd o.b., 79 N.J. 399 (1979). That "formula" would permit a worker disabled in an accident to recover income continuation benefits for a salary increase scheduled to take place after the accident. Ibid. "The inquiry is, what would the victim have earned had he not been injured. The rest is in the realm of proof, to which ordinary principles of evidence, including the necessity for reasonable certainty, apply." Id. at 230-31.

Allstate relies upon Virden v. Travelers Insurance Company, 167 N.J. Super. 209 (App. Div. 1979), for the proposition that the measure of plaintiff's income was the disability benefit she was receiving while unemployed. In Virden, the plaintiff was furloughed from work and given three weeks severance pay because of a reduction in his employer's workforce. Id. at 210. Two weeks after being furloughed, he was injured in an automobile accident. Ibid. He collected unemployment benefits until he returned to the job market six months later. Id. at 211. In determining whether income continuation benefits were payable to the plaintiff, we noted: "The fact that prior to his termination . . which occurred before the accident, plaintiff had been earning $275.94 base pay a week, . . . is of no significance. The injuries sustained in the accident did not result in a reduction of the income plaintiff was receiving at the time of said accident." Id. at 212. The plaintiff in Virden did not intend to return to his job at his pre-accident salary when he was injured in the automobile accident.

Here, plaintiff presented proofs that she intended to return to work after her 1997 surgery, that her job remained available, and that her return-to-work date was based upon, among other things, the advice of her doctor.*fn6 Unlike Virden, plaintiff in this case presented proofs that she would have returned to her job but for the 1998 accident. In view of those considerations, and contrary to Allstate's argument, the trial court could not have ruled as a matter of law that plaintiff's income loss was restricted to her disability benefits.

We also reject the second prong of Allstate's argument. Allstate argues that the court should have offset plaintiff's income loss by the amount of her disability and Social Security benefits. Allstate was required to pay PIP benefits to which plaintiff was entitled, "without regard to collateral sources, except that benefits, collectible under workers' compensation insurance, employees' temporary disability benefits statutes, Medicare provided under federal law, and benefits, in fact collected, that are provided under federal law to active and retired military personnel shall be deducted from the benefits collectible . . . ." N.J.S.A. 39:6A-6. Payments from private employer disability plans and Social Security benefits are not included in the statutory exceptions. Only those collateral sources falling within the statutory exception must be deducted from income continuation benefits. See O'Boyle v. Prudential Ins. Co. of Am., 241 N.J. Super. 503, 508-09 (App. Div. 1990).

Allstate's reliance upon Portnoff v. New Jersey Manufacturers Insurance Company, 392 N.J. Super. 377 (App. Div.), certif. denied, 192 N.J. 477 (2007), is mistaken because that case involved workers' compensation benefits, which are explicitly excepted in N.J.S.A. 39:6A-4. Thus, even if Allstate had properly preserved its argument concerning collateral sources, the argument is unpersuasive and contrary to the explicit wording of the PIP collateral source statute.


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