SELECTIVE CASUALTY INSURANCE COMPANY VS. EXCLUSIVE AUTO COLLISION CENTER, INC. (L-0359-15, SUSSEX COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0568-17T1
SELECTIVE CASUALTY INSURANCE
COMPANY,
Plaintiff-Appellant,
v.
EXCLUSIVE AUTO COLLISION
CENTER, INC., ANTHONY LAKE,
GERALD HEYMACH, and ARTHUR
LAKE,
Defendants-Respondents.
___________________________________
Argued July 16, 2018 – Decided August 16, 2018
Before Judges Whipple and Suter.
On appeal from Superior Court of New Jersey,
Law Division, Sussex County, Docket No. L-
0359-15.
Gordon S. Graber argued the cause for
appellant (Sullivan and Graber, attorneys;
Gordon S. Graber, of counsel and on the
briefs; Rafael A. Llano, on the briefs).
James E. Mackevich argued the cause for
respondents (Mackevich, Burke & Stanicki,
attorneys; James E. Mackevich, on the brief).
PER CURIAM
Plaintiff Selective Casualty Insurance Company (Selective)
appeals from the July 24, 2017 order dismissing counts one, three,
four, and five of its complaint against defendants, Exclusive Auto
Collision Center, Inc. (Exclusive), Anthony Lake, Gerald Heymach,
and Arthur Lake, and the September 15, 2017 order denying
reconsideration. We affirm.
Defendant Anthony Lake and his wife own Exclusive. Defendant
Gerald Heymach is Exclusive's general manager, and defendant
Arthur Lake, Anthony's brother, also worked for Exclusive.
In 2013, Selective issued a Garagekeeper's insurance policy
to Exclusive for liability and casualty claims. It provided
coverage for vehicles in the care, custody, and control of
Exclusive and general commercial liability coverage.
On May 17, 2013, Exclusive filed a complaint against Selective
for failure to make insurance payments. The suit was settled,
effective November 16, 2014. Included was a release that provided:
Selective releases and gives up any and all
claims and rights that it may have against
Exclusive, its successors, agents or assigns.
This releases all claims including those of
which Selective is not aware of and those not
mentioned in this [r]elease. This [r]elease
applies to all claims resulting from anything
which has happened up to now. This settlement
and release are a resolution of all issues
between Selective and Exclusive in the
litigation entitled Exclusive Auto Collision
Center v. Selective Auto Insurance Company of
New Jersey, Docket No. L-3672-13.
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On November 24, 2013, a strong windstorm caused tree branches
to fall on vehicles in Exclusive's lot. Exclusive filed a claim
with Selective with a list of vehicles; Selective received notice
of the claim on November 26, 2013. Selective's adjuster inspected
the listed vehicles and agreed to pay for the damage.
The list did not include a 2011 BMW owned by Gianinder Singh
(the Singh BMW). According to Exclusive, in 2011, the Singh BMW
was damaged and brought to Exclusive for repairs. Exclusive
repaired the damage and was paid by GEICO. Selective was not
involved in that.
On December 19, 2013, Singh brought the vehicle to Morristown
BMW because something was wrong. A mechanic for Morristown BMW
thought a leak in the vehicle's rear quarter panel that Exclusive
repaired two years prior might have been responsible for the Singh
BMW's electrical problems. At the direction of Morristown BMW,
the Singh BMW was sent to Exclusive to be inspected. The vehicle
arrived on either Thursday, January 9 or Friday, January 10, 2014.
Defendant Heymach prepared an estimate to repair some damage but
did not examine the leaking rear quarter panel.
That weekend, there was another strong storm with wind and
rain. According to Exclusive, during this storm, a falling tree
limb hit the Singh BMW, damaging a tail light and causing water
to enter the trunk. Exclusive dried out the trunk, repaired the
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tail light, and returned the vehicle to Morristown BMW. Defendant
Anthony Lake told Morristown BMW to instruct Singh to file a claim
with his insurance company for the electrical damage. Exclusive
also advised Selective of a potential claim when it became apparent
that Morristown BMW blamed Exclusive for the damage.
Selective adjuster Wendy Doyle entered the following notes
in Selective's claim log on January 27, 2014:
[Heymach] called me earlier and said that
there was one other vehicle involved.
Returned call left message.
Spoke to [Heymach] obtained information from
him on the 6th vehicle. Order inspection. He
said the tail light was broken from the tree
and water got into the trunk. They replaced
the light themselves and dried out the trunk.
Apparently, there was more water in the trunk
than thought now the wires are corroded and
have to be replaced.
After the Singh BMW was returned to Morristown BMW, Selective
appraiser Eugenio Santos inspected the vehicle. Doyle filled out
an assignment sheet for Santos, which indicated the vehicle was
damaged during the November 2013 storm. Santos confirmed the
replacement of the tail light and prepared an estimate. Santos
determined the vehicle was a total loss and issued a check to BMW
North America for $37,805.83, and to Morristown BMW for $13,938.58.
Selective then sold the vehicle for salvage value.
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Selective's claim log notes, dated January 29, 2014, indicate
Morristown BMW attributed the vehicle's damage to Exclusive. In
particular, Santos wrote that Morristown BMW noted "MUST SEND TO
BODY SHOP FIRST TO FIX WATER LEAK FROM REPAIR WELDS IN REPAIR!!!"
When Santos asked for clarification, Morristown BMW stated "this
was how the water got into the trunk due to poor workmanship by
the shop." Also on January 29, 2014, Doyle entered the following
note in the claim log:
I called [Heymach] at insured. He was and
wasn't surprised. He said Yeah it was some
storm we had. He said there was water in the
trunk and it got into the electrical
compartment.
Exclusive asserts the November storm was a windstorm without rain,
and there was over a 1/2 inch of rain during the January storm.
On February 19, 2014, Doyle received a telephone call from
"Art from BMW." Art explained the electrical damage was caused
by the broken tail light and had nothing to do with faulty welding.
"Art from BMW" was defendant Arthur Lake, Anthony's brother. At
that time, Arthur was a liaison between Exclusive and Morristown
BMW and had a desk at Morristown BMW's offices. In his deposition,
Arthur confirmed he spoke with Doyle regarding the Singh BMW.
Selective reviewed the Singh BMW claim and became suspicious
after learning that Exclusive performed welding work on the vehicle
in 2011. According to Singh, Morristown BMW told him the damage
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was likely due to "continuous water leakage" because "whoever
fixed the car probably did not do a good job."
On June 4, 2015, Selective filed a complaint against
defendants, alleging violations of the New Jersey Insurance Fraud
Prevention Act, breach of contract, breach of good faith and fair
dealing, and unjust enrichment. Selective maintains Exclusive
fraudulently represented that the Singh BMW was damaged during the
November 2013 storm. Defendants filed an answer and counterclaim,
asserting claims for breach of contract and breach of fiduciary
duties. According to Exclusive, whether the source of the damage
to the Singh BMW was the defective repair in 2011, or water
infiltration when the tail light was broken by the falling tree
limb, its insurance policy with Selective would have covered both
causes of damage.
On October 31, 2016, defendants moved for summary judgment.
The court denied defendants' motion without prejudice on January
6, 2017, to allow for the completion of discovery. On June 19,
2017, defendants filed a second motion for summary judgment,
arguing, among other things, the previously executed release
barred Selective's current cause of action. On July 11, 2017,
Selective filed a cross-motion for partial summary judgment,
seeking a declaration that defendants violated the New Jersey
Insurance Fraud Prevention Act and to dismiss the counterclaims.
6 A-0568-17T1
On July 24, 2017, the trial court issued an order with a
statement of reasons. Regarding the Singh BMW, the court found
the November 16, 2014 release barred Selective's cause of action.
In particular, the court noted the language of the release broadly
included "all claims, including those of which Selective is not
aware and those not mentioned in this release." The court
determined the Singh BMW was included because "the language of the
release clearly refers to all possible claims arising out of
actions occurring prior to the release date November 16, 2014."
The court dismissed defendants' counterclaims for breach of
contract and bad faith.
On August 7, 2017, defendants moved for frivolous litigation
sanctions, and on August 9, 2017, Selective moved for
reconsideration of the July 24, 2017 order. On September 15,
2017, the judge delivered his decision from the bench, denying
both motions. This appeal followed.
When we review a grant of summary judgment, we use the same
standard as the trial court. Globe Motor Co. v. Igdalev, 225 N.J.
469, 479 (2016) (citations omitted). A court should grant summary
judgment, "if the pleadings, depositions, answers to
interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact challenged and that the moving party is entitled to
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a judgment or order as a matter of law." Ibid. (citing R. 4:46-
2(c)). The evidence must be viewed in "the light most favorable
to the non-moving party and analyze whether the moving party was
entitled to judgment as a matter of law." Mem'l Props., LLC v.
Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012) (citation omitted).
"Rule 4:46-2(c)'s 'genuine issue [of] material fact' standard
mandates that the opposing party do more than 'point[] to any fact
in dispute' in order to defeat summary judgment." Igdalev, 225
N.J. at 479 (quoting Brill v. Guardian Life Ins. Co. of Am., 142
N.J. 520, 529 (1995)) (alteration in original).
Selective argues the trial court engaged in improper fact-
finding when it determined Selective was aware of a potential
fraud claim against Exclusive when it executed the release and
erroneously interpreted the release. Selective contends it was
not on notice of the true nature of the Singh BMW claim because
Exclusive intentionally and materially misrepresented the claim
was from the November 2013 storm. Selective asserts after the
release was executed, it discovered the Singh BMW was involved in
a prior accident, Exclusive performed repairs on it for the prior
accident, and it was not present at Exclusive's lot during the
November storm.
In his statement of reasons, the judge stated:
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Defendants claim that in late January of 2014
BMW notified Plaintiff of a possible claim due
to Defendants' defective welding repair. It
is apparent from an email exchange between
Selective adjuster Wendy Doyle and Selective
appraiser Eugenio Santos that Selective was
aware of the alleged claim for defective
welding by the Defendants. . . . Despite
knowing this, Selective settled the claim and
destroyed the vehicle, all prior to the
release date.
The court concluded any claim regarding the Singh BMW was swept
up in the broad language of the release since Selective knew of
an issue with that claim in January 2014 - before it executed the
release.
We agree the record supports the conclusion Selective was on
notice that the Singh BMW's damage may have been attributable to
something other than tree limb damage. Selective's own claim log
illustrates on January 29, 2014, Santos wrote Morristown BMW
reported "MUST SEND TO BODY SHOP FIRST TO FIX WATER LEAK FROM
REPAIR WELDS IN REPAIR!!!"
Moreover, while Selective continually alleges Exclusive
misrepresented the Singh BMW was damaged in the November storm,
it provided no evidence Exclusive representatives made such a
statement. There may have been confusion since there were two
separate incidents in which falling tree limbs damaged vehicles
during a storm. Furthermore, because the Singh BMW was destroyed,
it is impossible to now determine if the damage was caused by
9 A-0568-17T1
Exclusive's repair in 2011 or by the January storm that broke the
tail light, causing water to enter the vehicle. Since the release
broadly covered "any and all claims . . . including those of which
Selective is not aware," the trial court correctly determined it
covered the Singh BMW claim.
Selective contends the release only applied to claims that
accrued at execution, and the parties only intended to settle the
unrelated prior litigation. However, the express language of the
release broadly encompasses any and all claims Selective had or
may have had with Exclusive. "A basic principle of contract
interpretation is to read the document as a whole in a fair and
common sense manner." Hardy ex rel. Dowdell v. Abdul-Matin, 198
N.J. 95, 103 (2009) (citing DiProspero v. Penn, 183 N.J. 477, 496-
97 (2005)). A court does not "make a better contract for either
of the parties than the one which the parties themselves have
created." Maglies v. Estate of Guy, 193 N.J. 108, 143 (2007)
(Hoens, J., dissenting) (citation omitted). "[W]hen the terms of
a contract are clear and unambiguous, there is no room for
construction and the court must enforce those terms as written."
Watson v. City of E. Orange, 175 N.J. 442, 447 (2003) (citations
omitted). As the trial court determined, the release's broad,
clear, and unambiguous language includes the Singh BMW claim,
which was known, when Selective executed the release.
10 A-0568-17T1
Selective compares this matter to Central Paper Distribution
Services. v. International Records Storage & Retrieval Service,
Inc., 325 N.J. Super. 225 (App. Div. 1999), arguing a plenary
hearing was required to determine the scope of the release. In
Central Paper, we reversed a grant of summary judgment, finding
the trial court improperly determined whether the dealings between
the parties constituted an offer and acceptance to create a
contract, without a plenary hearing. Id. at 232-33. We determined
there were genuine issues of material fact precluding summary
judgment. Here, there is no genuine issue of material fact. The
release's language expressly details that all of Selective's
claims against Exclusive up to the effective date were subject to
the release. The release broadly covered all claims, including
those unknown.
Selective argues the trial court should have held a plenary
hearing to ascertain whether the parties intended to waive claims
procured by fraud when executing the release. It asserts the
court ignored the interpretive principles for construing a general
release established in Bilotti v. Accurate Forming Corp., 39 N.J.
184, 203 (1963). Reliance on Bilotti, however, is misplaced.
There, our Supreme Court held a general release could not shield
the defendants from liability when there was fraud in the
inducement. Id. at 204-05. It concluded that agreement did not
11 A-0568-17T1
provide for a release from "[a] fraud claim arising out of the
transaction." Id. at 205. Here, Selective does not allege
Exclusive fraudulently induced it to enter into the release, but
that the scope of the release does not cover fraudulent
transactions.
Selective contends the court should have allowed extrinsic
evidence to discover the parties' intent under Atlantic Northern
Airlines, Inc. v. Schwimmer, 12 N.J. 293 (1953). Selective has
not illustrated how extrinsic evidence could aid in the
interpretation of the release, while not altering its clear
language. If Selective expected the release to encompass only the
prior litigation, it could have executed a limited release or
included exclusion provisions. We examine a release as we would
any other contract to discern the intention of the parties. When
express language defines the terms, the parties are bound and
precluded from alleging a contrary intent in order to vary the
terms. Domanske v. Rapid-American Corp., 330 N.J. Super. 241, 246
(App. Div. 2000).
Finally, we note Selective's representative, Doyle, testified
Exclusive's policy would have covered defective repairs or damage
from a falling tree branch. As such, it is unclear why Exclusive
would intentionally misrepresent that the Singh BMW was involved
12 A-0568-17T1
in the November 2013 windstorm since the insurance policy should
have covered the damage anyway.
Affirmed.
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