November 28, 2012
AUGUSTINE W. BADIALI, PLAINTIFF-APPELLANT,
NEW JERSEY MANUFACTURERS INSURANCE GROUP, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-1751-11.
The opinion of the court was delivered by: Fisher, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
APPROVED FOR PUBLICATION
Argued October 10, 2012
Before Judges Fisher, Alvarez and Waugh.
The opinion of the court was delivered by
In a prior appeal, we considered whether defendant New Jersey Manufacturers Insurance Group (NJM), an uninsured motorist (UM) insurer -- barred by its policy from rejecting an arbitration award under $15,000 -- was entitled to reject a $29,148.62 award when only liable to pay half. In adhering to D'Antonio v. State Farm Mut. Auto. Ins. Co., 262 N.J. Super. 247 (App. Div. 1993), which considered the same situation in an underinsured motorist (UIM) setting, we concluded that the insurer was bound to the award and, therefore, affirmed a judgment that precluded NJM's demand for a trial de novo. Badiali v. N.J. Manufacturers Ins. Grp., No. A-4870-09 (App. Div. Feb. 28, 2011) (Badiali I).
Badiali I did not end the controversy. On March 29, 2011, plaintiff filed another complaint against NJM, asserting various legal theories in pursuing damages, mainly counsel fees incurred in pursuit of the judgment obtained in Badiali I. NJM successfully moved for summary judgment, leading to this appeal in which plaintiff argues: he was wrongfully denied discovery into how NJM formed its position in the earlier suit; the judge erred in concluding, as a matter of law, that NJM's position in Badiali I was fairly debatable; and questions of fact precluded summary judgment. We agree that absent a conclusive and precedential determination by this court or the Supreme Court, NJM's position was fairly debatable -- a holding that bars plaintiff's recovery of the counsel fees incurred in Badiali I or this case, or any other consequential damages.
In Badiali I, we considered the following undisputed facts and circumstances:
Plaintiff, who was injured as the result of the negligence of an uninsured driver, had UM coverage from policies issued by both Harleysville Insurance Company and [NJM]. An arbitration resulted in an award of $29,148.62 in plaintiff's favor. Harleysville paid its half; NJM rejected the award and demanded a trial.
Consequently, plaintiff commenced this suit, claiming that NJM's responsibility was less than $15,000, because NJM was only obligated to pay half of the $29,148.62 award, and that NJM was precluded from demanding a trial regardless of the size of the award. Chiefly relying upon our decision in D'Antonio, the trial judge agreed with plaintiff's contention that the award was final because NJM was liable for less than $15,000 notwithstanding that the award was in excess of that amount.
In its appeal in Badiali I, NJM argued the order under review was based on an erroneous interpretation of the critical portion of its policy, which focuses not on NJM's liability, but on the size of the arbitration award itself:
[Badiali I, supra, slip op. at 2]
[T]he arbitrators' [decision] will be binding unless the arbitration award exceeds the minimum limit for liability specified by the Financial Responsibility Law of New Jer- sey.[*fn1 ] If the arbitration award exceeds that limit, either party may demand the right to a trial by jury on all issues.
[Emphasis added.] NJM did not contest that its liability was limited to half the arbitration award because Harleysville also provided UM coverage, See N.J.S.A. 17:28-1.1(c), and acknowledged that its ultimate liability did not exceed $15,000, but claimed that "those circumstances [were] irrelevant" and insisted "the monetary threshold for fixing the finality of an arbitration award was exceeded because it is the amount of the award -- not the extent of its liability -- that matters." Badiali I, supra, slip op. at 3.
In rejecting NJM's argument in Badiali I, we explained why the principles outlined in D'Antonio were applicable: We considered a similar argument in D'Antonio, where plaintiff was injured in an automobile accident, settled with the tortfeasor for $25,000, which was the limit of the tortfeasor's insurance coverage, and then made a claim against her own insurer for UIM benefits. 262 N.J. Super. at 248. The arbitrators "found defendant '100% liable' and awarded plaintiff 'the gross sum of $40,000.'" Ibid. Because the parties agreed the award "contemplated that the $25,000 recovered from [the tortfeasor] was to be credited against the $40,000 'gross sum,'" id. at 249, the insurer was ultimately liable for only $15,000 in UIM benefits -- an amount which did not exceed the minimum for rejecting the award. As a result, we concluded that the insurer did not have the right to reject the award because its liability for UIM payments was determinative. Id. at 250.
NJM argues that D'Antonio is distinguishable because it concerned a UIM arbitration award rather than a UM arbitration award and because the phrasing of the UIM policy provision in question there differs from the phrasing of the UM policy provision in question here. Those circumstances are certainly true, but they do not prompt a different result here.
In ascertaining the parties' intent in D'Antonio, we recognized that the UIM provision's phrase -- "amount of damages" --was not defined by the policy and that "its meaning must be drawn from the setting in which it is used." Id. at 249. Reasoning that arbitration "is conducted to determine the carrier's liability for UIM payments," and "[i]f a trial is available, it too will determine only the carrier's UIM obligation," ibid., Judge Gaulkin explained for this court
that the extent of the carrier's
UIM liability -- not the tortfeasor's liability -- should determine whether the case is of sufficient magnitude to justify a trial. The parties' purpose in foreclosing trials in modest cases would be substantially frustrated if the right to demand a trial turned on the damages attributable to the underinsured tortfeasor.
[Id. at 249-50.]
[Badiali I, supra, slip op. at 3-5]
Based on this understanding of D'Antonio and the similarity of the matter at hand, we held in Badiali I:
Even though the policy here utilized a different phrase in fixing the threshold for preserving a right to trial, the parties' purpose was unmistakably the same as in D'Antonio, and we can find no principled reason to adopt NJM's request for an alternative approach -- based solely on minor differences in the policy language --to govern the same essential circumstances.
[Badiali I, supra, slip op. at 3-5]
Because Badiali I was not published, our prior decision did not carry precedential value. R. 1:36-3.
With Badiali I providing the background, we turn to the crux of this appeal. Citing statutory*fn2 and common law*fn3 grounds, plaintiff chiefly argues that NJM failed to act in good faith when it refused to pay its share of the arbitration award and, instead, advocated an interpretation of the insurance policy that we ultimately rejected in Badiali I in further litigating this dispute. In arguing here that it acted in good faith in Badiali I, NJM relies upon a 2004 unpublished decision in which another panel of this court held, in essentially the same circumstances, that D'Antonio was distinguishable and that the insurer (also NJM) was entitled to reject the arbitration award and demand a trial de novo. Geiger v. N.J. Manufacturers Ins. Co., No. A-5135-02 (App. Div. Mar. 22, 2004).*fn4
Interestingly, NJM offered no sworn statement or evidential material to suggest that it relied upon Geiger in refusing to pay its share of the arbitration award and in taking the position that culminated in our decision in Badiali I.*fn5
Notwithstanding its peculiar late appearance in the discourse, Geiger's mere existence precludes a finding that NJM's position was either instituted or pursued in bad faith. That is, plaintiff cannot persuasively argue that NJM's position was posited or prosecuted in bad faith when that very position was endorsed by another panel of this court. Accordingly, the trial judge properly entered summary judgment in NJM's favor.
Because, if we did not do more, the dueling unpublished opinions in Geiger and Badiali I would allow insurers to continue to reject arbitration awards that result in liability less than $15,000 in similar circumstances, we have deemed it appropriate to iterate our holding in Badiali I as part of our published disposition of this appeal. See R. 1:36-2(a). Affirmed.