GUISEPE A. IELLIMO VS. AMICA MUTUAL INSURANCE COMPANY (L-3123-16, BERGEN COUNTY AND STATEWIDE) ( 2018 )


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  •                                 NOT FOR PUBLICATION WITHOUT THE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-4975-16T1
    GUISEPE A. IELLIMO a/k/a
    JOSEPH IELLIMO and
    BARBARA IELLIMO, his wife,
    Plaintiffs-Appellants,
    v.
    AMICA MUTUAL INSURANCE
    COMPANY,
    Defendant-Respondent.
    ___________________________________
    Argued October 18, 2018 – Decided December 21, 2018
    Before Judges O'Connor and DeAlmeida.
    On appeal from Superior Court of New Jersey, Law
    Division, Bergen County, Docket No. L-3123-16.
    Nabil N. Kassem argued the cause for appellants
    (Kassem & Associates, PC, attorneys; Nabil N. Kassem
    and Dominique J. Carroll, on the brief).
    Steven M. Pardalis argued the cause for respondent
    (Smith Mazure Director Wilkins Young & Yagerman,
    PC, attorneys; Steven M. Pardalis, on the brief).
    PER CURIAM
    Plaintiffs Guisepe A. Iellimo (Iellimo) and Barbara Iellimo appeal from
    the June 8, 2017 order of the Law Division granting summary judgment in favor
    of defendant Amica Mutual Insurance Company (Amica) on plaintiffs' claims
    for underinsured motorist (UIM) coverage. We affirm.
    I.
    On December 1, 2012, Iellimo, while walking in Manhattan, was struck
    and injured by a motor vehicle owned and operated by Saul Casiano. On the
    date of the incident, Casiano's vehicle was insured by GEICO Insurance
    Company (GEICO) under a policy with a liability limit of $25,000. Iellimo was
    insured under an automobile policy issued by Amica with UIM coverage with a
    limit of $250,000.
    In 2015, Iellimo initiated a legal action against Casiano in New York
    Supreme Court for damages resulting from the accident. There is no evidence
    in the record that Iellimo's counsel notified Amica of the New York action.
    On January 11, 2016, Iellimo executed a release of all of his claims arising
    from the December 1, 2012 accident against Casiano in exchange for Casiano's
    policy limit of $25,000. On that date, Iellimo's counsel sent the signed release
    to GEICO with a signed stipulation of dismissal of the New York action. The
    A-4975-16T1
    2
    letter requested that a representative of Casiano sign the release and file the
    stipulation. Iellimo's counsel also stated, "[t]hank you in advance for promptly
    forwarding the settlement check made payable to this firm and Mr. Guisepe A.
    Iellimo."
    The following day, January 12, 2016, Iellimo's counsel sent a letter to
    Amica. The letter provides, in relevant part:
    As you are aware, this firm represents the claimant, Mr.
    Guisepe (a.k.a. Joseph) A. Iellimo, for personal injuries
    he sustained in the December 1, 2012 motor vehicle
    accident. By way of this letter, I am hereby putting you
    on notice of my client's intent to immediately file an
    Underinsured Motorist Claim in this matter. This is due
    to the fact that Mr. Iellimo was involved in an accident
    with a motor vehicle that was insured by GEICO
    Insurance Company, which policy has limited bodily
    injury coverage.
    Accordingly, I would request that upon receipt of the
    within correspondence that you kindly acknowledge
    this UIM Claim.
    The January 12, 2016 letter does not alert Amica that the prior day Iellimo
    released Casiano from all claims arising from the December 1, 2012 accident in
    exchange for $25,000, or that Iellimo had filed a complaint against Casiano in
    New York Supreme Court, and had signed a stipulation of dismissal in that
    action. On January 19, 2016, GEICO issued a settlement check to Iellimo and
    his counsel for $25,000.
    A-4975-16T1
    3
    On January 22, 2016, Iellimo's counsel again wrote to Amica. Counsel
    stated that "Mr. Casiano's carrier has tendered their policy limit to Mr. Iellimo
    in settlement of his claims. Additionally, enclosed for your review is their
    January 13, 2016 correspondence offering their policy limit of $25,000.00. In
    light of the above, I would ask that you review Longworth et al. v. Ohio
    Casualty, et al.[,] 223[] N.J. Super. 174 (App. Div. 1988)." The January 13,
    2016 correspondence referenced in counsel's letter is not included in the record.
    It is not possible, therefore, for us to review the letter to determine why a GEICO
    representative would write a letter offering to settle Iellimo's claims two days
    after Iellimo had executed a release in favor of Casiano and a stipulation of
    dismissal of the pending New York action.
    The omission of a copy of the January 13, 2016 letter is troubling in light
    of the following statement in the January 22, 2016 letter:
    Please allow this letter to serve as formal notice that it
    is our client's intention to accept the tendered policy
    limit of $25,000.00 under the policy of the tortfeasor in
    full and final settlement of any and all claims against
    the tortfeasor. If, however, you should desire to protect
    your subrogation interests, please be advised that our
    client will assign their claim against Saul Casiano to
    your company in exchange for payment of the
    settlement offer of $25,000.00. It is our client's
    intention to accept this offer any time after thirty (30)
    days from the date of this correspondence. If your
    company intends to pay the policy limits and accept an
    A-4975-16T1
    4
    assignment of Mr. Guisepe A. Iellimo's claim against
    Saul Casiano, you should notify our offices, in writing,
    within that thirty (30) day period. In the absence of any
    such notice, the settlement from GEICO Indemnity
    Company will be accepted as indicated above.
    These statements are obviously false. As of January 22, 2016, Iellimo had
    already accepted $25,000 as a settlement from GEICO. He had executed a
    release in favor of Casiano with respect to all claims arising from the December
    1, 2012 accident, and his counsel had signed a stipulation of dismissal of the
    New York action. In addition, GEICO had already issued a $25,000 settlement
    check to Iellimo and his counsel. Thus, the offer by Iellimo's counsel to assign
    Amica his client's claims against Casiano in the event that Amica elected to
    pursue its subrogation claim was illusory. Counsel's reference to the January
    13, 2016 letter appears to be designed to create the impression that a settlement
    offer from GEICO was pending at the time of the January 22, 2016 letter when,
    in fact, the settlement had already been completed.
    On February 11, 2016, Amica acknowledged in writing having received
    the January 22, 2016 letter. Amica stated that "[b]efore we are able to make a
    decision with regard to our subrogation rights, we require the following
    information." Amica requested a copy of the GEICO declarations page for
    Casiano's policy, a copy of the complaint filed against Casiano "protecting the
    A-4975-16T1
    5
    statute of limitations" and an "affidavit of available assets from Saul Casiano,
    as it appears from our initial investigation that he owns a rental income
    generating property."
    On February 18, 2016, Amica again wrote to Iellimo's counsel. The letter
    provided:
    In the process of investigating the assets of the
    tortfeasor in this matter, Saul Casiano, we have
    determined that he appears to reside in and own a multi-
    unit property which we assume generates rental
    income. As such, it appears he may have assets with
    which he could contribute something toward settlement
    of this claim.
    However, in speaking with GEICO, Mr. Casiano's
    insurer, we have been advised that your client has
    executed a release against Mr. Casiano, and
    extinguished any and all claims. We believe that doing
    so may have prejudiced our right of subrogation against
    Mr. Casiano. Also, your Longworth letter is void, as
    Longworth provides us with 30 days to investigate
    assets and either tender on behalf of the tortfeasor
    policy, or waive our rights. We are unable to do either
    of those options as you have already released the
    tortfeasor from any further involvement in this matter.
    On April 21, 2016, Iellimo and his spouse filed a complaint in the Law
    Division against Amica seeking UIM benefits for Iellimo's injuries from the
    December 2, 2012 accident. On October 20, 2016, Amica moved for summary
    judgment.    The trial court denied Amica's motion without prejudice on
    A-4975-16T1
    6
    December 2, 2016. The court gave plaintiffs' counsel sixty days to conduct
    discovery on the question of whether Amica was prejudiced by Iellimo's failure
    to provide notice prior to settling his claims against Casiano.
    Following the close of discovery, Amica again moved for summary
    judgment. At oral argument on the motion, plaintiffs' counsel admitted a failure
    to comply with the procedures established in Longworth. The parties agreed
    that the only issue before the court was whether the failure to comply with
    Longworth prejudiced Amica. The court, therefore, examined only whether
    Casiano had assets available to compensate Amica in the event it paid Iellimo
    UIM benefits.
    In its bench opinion, the court found that plaintiffs' "former counsel lied
    [when he] sent a notice saying we're thinking about accepting this after their
    release had already been signed in an attempt retroactively to create a Longworth
    record to support the U.I.M. claim." However, noting precedents permitting an
    insured who failed to comply with Longworth to pursue UIM benefits in some
    circumstances, the court held that "the burden of proof is on the plaintiff who
    did [not] give the proper notice to demonstrate the lack of prejudice" to the
    carrier.   Having reviewed evidence of Casiano's income, car, and income-
    producing, multi-unit home, the court held that it was "not satisfied that the
    A-4975-16T1
    7
    plaintiff has shown a lack of prejudice." The trial court, therefore, granted
    Amica's motion in a June 8, 2017 order. This appeal followed.
    II.
    We review the trial court's decision granting summary judgment de novo,
    using "the same standard that governs trial courts in reviewing summary
    judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 
    307 N.J. Super. 162
    , 167 (App. Div. 1998). Rule 4:46-2 provides that a court should grant
    summary judgment when "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 a judgment or order as a matter of law." "Thus, the movant must
    show that there does not exist a 'genuine issue' as to a material fact and not
    simply one 'of an insubstantial nature'; a non-movant will be unsuccessful
    'merely by pointing to any fact in dispute.'" Prudential, 307 N.J. Super. at 167
    (quotation omitted).
    Self-serving assertions that are unsupported by evidence are insufficient
    to create a genuine issue of material fact. Miller v. Bank of Am. Home Loan
    Servicing, L.P., 
    439 N.J. Super. 540
    , 551 (App. Div. 2015).           "Competent
    opposition requires 'competent evidential material' beyond mere 'speculation'
    A-4975-16T1
    8
    and 'fanciful arguments.'" Hoffman v. Asseenontv.Com, Inc., 
    404 N.J. Super. 415
    , 426 (App. Div. 2009) (quotations omitted). We review the record "based
    on our consideration of the evidence in the light most favorable to the parties
    opposing summary judgment." Brill v. Guardian Life Ins. Co., 
    142 N.J. 520
    ,
    523-24 (1995).
    The relationship between an insured and an insurance carrier is
    contractual. The obligation to offer UIM coverage, however, is statutory. Zirger
    v. General Accident Ins. Co., 
    144 N.J. 327
    , 333 (1996). Insurance carriers are
    required to offer each insured the option of purchasing coverage up to the limits
    of liability coverage, but not exceeding $250,000 per person and $500,000 per
    accident against the risk of injury caused by underinsured tortfeasors . N.J.S.A.
    17:28-1.1(b). An individual against whom recovery is sought after an accident
    is considered "underinsured" when his or liability limits are "at the time of the
    accident, less than the applicable limits for underinsured motorist coverage
    afforded under the motor vehicle insurance policy held by the person seeking
    that recovery." N.J.S.A. 17:28-1.1(e)(1).
    A UIM carrier who pays benefits to an insured has the right to subrogate
    the insured's claim against the tortfeasor to permit the carrier to recover from
    the tortfeasor the UIM benefits paid to its insured. To effectuate this right, a
    A-4975-16T1
    9
    UIM carrier may intervene in an insured's trial against a tortfeasor as a way to
    avoid relitigating the insured's claim, and to bind the tortfeasor to the issues
    decided at trial. Zirger, 
    144 N.J. at 340-42
    .
    In Longworth, we held that, in order to protect the UIM carrier's
    subrogation interest
    an insured receiving an acceptable settlement offer
    from the tortfeasor should notify his UIM carrier. The
    carrier may then promptly offer its insured that sum in
    exchange for assignment to it by the insured of the
    claim against the tortfeasor. While promptness is to be
    ultimately determined by the circumstances, [thirty]
    days should be regarded as the presumptive time period
    if the insured notices his carrier prior to assignment of
    a trial date.
    [223 N.J. Super. at 194.]
    Our Supreme Court endorsed this approach, holding that there are three
    notices that an insured must give to a UIM carrier. Rutgers Cas. Ins. Co. v.
    Vassas, 
    139 N.J. 163
    , 174 (1995). First, the insured must notify the carrier when
    the insured commences a legal action against the tortfeasor. 
    Ibid.
     Second, the
    insured must advise the carrier when he determines the tortfeasor's insurance
    coverage is insufficient to compensate the insured for his injuries. 
    Ibid.
     Third,
    the insured must notify the insurer of any settlement offer or arbitration award
    A-4975-16T1
    10
    that does not satisfy the insured's damages. 
    Id. at 174-75
    . This is commonly
    known as a Longworth notice.
    We addressed the consequences of the insured's failure to follow the
    holding in Vassas in several cases. In Breitenbach v. Motor Club of Am. Ins.
    Co., 
    295 N.J. Super. 328
     (App. Div. 1996), we held that an insured who accepted
    a settlement offer after informing his UIM carrier of the offer, but before he
    received permission from the UIM carrier to do so and before the thirty-day
    period had expired, was not necessarily precluded from receiving UIM benefits.
    
    Id. at 332-34
    . We reasoned that the carrier's failure to object to the settlement
    in the thirty-day period, even though the settlement had already been accepted,
    effectively extinguished its right to subrogation. 
    Id. at 335
    .
    In Rivers v. Allstate Ins. Co., 
    312 N.J. Super. 379
    , 381 (App. Div. 1998),
    an insured informed her UIM carrier of a suit she filed against a tortfeasor, and
    the likelihood that the tortfeasor's insurance coverage would be inadequate to
    cover her damages. This satisfied the first two notice requirements established
    in Vassas. Id. at 383-84. The insured, however, settled her suit against the
    tortfeasor without sending her UIM carrier a Longworth notice, or securing the
    carrier's permission to do so. Id. at 381, 384-84. The insured sent a letter to the
    carrier after executing a general release in favor of the tortfeasor. Id. at 381.
    A-4975-16T1
    11
    The letter falsely stated that the tortfeasor had offered to settle the matter and
    that it was the insured's "intention" to accept the settlement, when insured had
    already signed the release and received the settlement proceeds. Id. at 384. In
    addition, the letter stated that if the carrier elected to preserve its subrogation
    rights, the insured would refrain from signing the release, and assign her rights
    to recover from the tortfeasor to the UIM carrier. Ibid. This promise was
    misleading, as the insured had already released all of her claims.
    The carrier responded within thirty days of the notice, requesting more
    information before it could decide whether to exercise its rights to subrogation.
    Id. at 385. The carrier later denied UIM coverage, having discovered that the
    insured had released her claims prior to the Longworth notice. Id. at 381.
    When determining whether the insured was precluded from recovering
    UIM benefits, we explained that
    [t]he Breitenbach court would apparently also allow an
    insured relief if the insured was capable of proving "a
    lack of prejudice" to the insurer, even though the
    insurer's subrogation right had been extinguished by the
    release. [
    295 N.J. Super. at 334
    ]. Presumably, this
    means, by way of example, if an insured can
    demonstrate that the underinsured tortfeasor is
    assetless, and that it is improbable that an insurer would
    choose to subrogate against the tortfeasor, UIM
    benefits should not be withheld from the insured.
    ....
    A-4975-16T1
    12
    We do not read the Supreme Court's opinion in Vassas
    to create a bright-line rule that the insured's failure to
    protect the insurer's right of subrogation amounts to
    prejudice per se, sufficient under all circumstances to
    deny the insured UIM benefits and excuse the insurer
    from its coverage obligation.
    [Id. at 385-86.]
    Because the insured "failed to advance any facts demonstrating a lack of
    prejudice to" the UIM carrier, we affirmed the trial court order dismissing the
    insured's claim for UIM benefits. Rivers, 312 N.J. Super. at 386; accord CNA
    Ins. Cos. v. Cave, 
    332 N.J. Super. 185
    , 186-88 (App. Div. 2000) (holding an
    insured's release of claims against one of two alleged tortfeasors with no notice
    to the UIM carrier is not per se preclusive of a claim for UIM benefits where it
    was not clear that the released party was actually liable for the insured's
    injuries). It was under this line of precedents that the trial court resolved
    Amica's summary judgment motion.
    After the trial court's decision, the Supreme Court issued its opinion in
    Ferrante v. N.J. Mfrs. Ins. Grp., 
    232 N.J. 460
     (2018). In that case, the insured
    plaintiff was injured by an underinsured tortfeasor. Without informing his UIM
    carrier, the insured initiated a negligence action against the tortfeasor, who was
    insured with a limit of $100,000. Id. at 464. The insured entered into a high-
    low agreement with the tortfeasor with a floor of $25,000 and a ceiling of
    A-4975-16T1
    13
    $100,000, and proceeded to trial. Ibid. A jury found the tortfeasor liable and
    awarded $250,000 in damages. Because of the high-low agreement, the court
    entered a judgment for $100,000. Id. at 465.
    The day after the judgment was entered, the insured's counsel sent the
    UIM carrier a letter falsely stating that the tortfeasor "tendered the policy limits
    of $100,000 in exchange for execution of a Release in favor of the tortfeasor"
    and requesting that the carrier consent to settle on those terms. The letter did
    not mention the suit the insured had filed, the high-low agreement, the trial, or
    the verdict. Ibid.
    The carrier, having conducted an investigation into the tortfeasor's assets,
    authorized the "settlement" described in counsel's letter. Ibid. Three years later,
    the insured informed the carrier about the $250,000 judgment in the suit against
    the tortfeasor. The insured's counsel later informed the carrier of the high-low
    agreement. Ibid. The carrier subsequently filed suit to bar the insured's claims
    for UIM benefits, arguing that the insured had improperly waived the carrier's
    subrogation rights, and failed to comply with the notice requirements established
    by the Supreme Court. Id. at 465-66.
    The trial court ultimately agreed with the carrier, granting its motion in
    limine for dismissal. We reversed and our majority panel remanded the matter
    A-4975-16T1
    14
    to the trial court for it to consider whether the carrier had been prejudiced by
    plaintiff's failure to provide it with a timely Longworth notice. The dissenting
    member of our panel disagreed, asserting that the carrier need not demonstrate
    prejudice where the insured failed to provide notice of the suit against the
    tortfeasor, the high-low agreement, and the trial verdict, causing an irretrievable
    loss of the carrier's subrogation rights. Because of the dissent, the carrier filed
    an appeal as of right pursuant to Rule 2:2-1(a)(2).
    The Supreme Court reversed our judgment and reinstated the trial court's
    order of dismissal. The Court rejected our majority panel's holding that the
    insured was required to show the carrier was prejudiced before the insured's
    UIM claim could be barred. Id. at 466-67. The Court began its analysis by
    noting that
    [o]ur case law has routinely emphasized the importance
    of candor by insureds and the obligation to act in a
    forthright, open, and honest manner with their carriers
    throughout the entire process of their claim. See
    Longobardi v. Chubb Ins. Co. of N.J., 
    121 N.J. 530
    , 539
    (1990) ("[A]n insured's commitment not to
    misrepresent material facts extends beyond the
    inception of the policy to a post-loss investigation.")[.]
    We have provided insureds "an incentive to tell the
    truth. It would dilute that incentive to allow an insured
    to gamble that a lie will turn out to be unimportant." 
    Id. at 541-42
    . Although this case arises in a different
    context, we seek to avoid rewarding insureds for
    omitting key details in a UIM claim.
    A-4975-16T1
    15
    [Id. at 468-69.]
    After reviewing the precedents concerning the duties of an insured to keep
    a UIM carrier apprised of potential claims, the Court concluded that Ferrante's
    UIM claim was barred
    [d]espite Ferrante's efforts to distinguish his case from
    Vassas, we find Vassas precludes him from recovering
    UIM benefits. Like in Vassas, where the insured
    initiated a lawsuit and received an arbitration award
    without informing the carrier, Ferrante did the same.
    He further violated his duty to inform [his UIM carrier]
    by entering into a high-low agreement and taking the
    matter through a full jury trial without informing [his
    UIM carrier.]
    [Id. at 473.]
    The Court also held that
    the cited Appellate Division cases are distinguishable
    due to the numerous times Ferrante failed to inform [his
    UIM carrier]. In Breitenbach and Rivers, the insured
    informed the carrier during litigation, and both cases
    dealt more with at which point, if any, it was
    appropriate for the insured to accept the settlement
    offer without the carrier's consent. Here, we never
    reach that point because Ferrante did not inform [his
    UIM carrier] of the litigation until more than two years
    after it was initiated and actually completed. Similarly,
    this case did not involve a day-of-trial settlement or
    include multiple tortfeasors, as in Cave; here, the single
    tortfeasor was well known, and [the UIM carrier] was
    still kept in the dark throughout.
    A-4975-16T1
    16
    [Id. at 473-74.]
    The Court also rejected the argument that a negligent, rather than
    intentional, violation of Longworth warranted a prejudice analysis. Id. at 474.
    The Court instead adopted the following approach:
    If . . . the insured, regardless of his state of mind, fails
    to give the UIM carrier any notice of the UIM claim
    until after the final resolution of the underlying tort
    action, thereby causing the irretrievable loss of the
    carrier's rights to subrogation and intervention before
    the carrier has ever learned of the existence of the
    claim, coverage is forfeited.
    [Ibid. (quotations omitted).]
    After a careful review of the record, we conclude that the holding in
    Ferrante precludes plaintiffs' claim for UIM benefits from Amica. The record
    contains no evidence that Iellimo's counsel notified Amica of the filing of the
    New York Supreme Court action against Casiano. In addition, it is undisputed
    that Iellimo's counsel accepted a settlement offer from Casiano, submitted an
    executed release of all of Iellimo's claims against Casiano, and signed a
    stipulation of dismissal of the New York action without notifying Amica. By
    doing so, he caused the irretrievable loss of Amica's subrogation rights.
    In addition, after having released all of Iellimo's claims against Casiano,
    plaintiffs' counsel sent a letter to Amica falsely claiming that his client was
    A-4975-16T1
    17
    considering a settlement offer from Casiano, and offering to assign his client's
    claims against Casiano to Amica should the carrier elect to exercise its rights to
    subrogation. That offer was misleading, at best, given counsel's knowledge that
    Iellimo had already signed a release in favor of Casiano. Moreover, counsel
    enclosed with his correspondence to Amica what he described as a letter dated
    January 13, 2016, containing a settlement offer from Iellimo's carrier. As noted
    above, the January 13, 2016 letter is not included in the record in this appeal.
    What is clear from the record, however, is that Iellimo's counsel failed to
    comply with the procedures set forth in Longworth and Vassas, and, like the
    counsel in Ferrante, caused the UIM carrier to lose its subrogation rights. The
    fact that counsel thereafter sent misleading correspondence to Amica only
    exacerbated the situation. Iellimo's counsel, in fact, never notified Amica of the
    settlement of his client's claims against Casiano. The carrier was infor med of
    the settlement by Casiano's insurance carrier. As a result, as held in Ferrante,
    plaintiffs' UIM claim is barred, and a showing by plaintiffs that Amica was not
    prejudiced by the settlement of Iellimo's claims will not salvage his UIM claim.
    We have considered the remaining arguments raised on appeal, and
    conclude they lack sufficient merit to warrant discussion in a written opinion.
    R. 2:11-3(e)(1)(E).
    A-4975-16T1
    18
    Affirmed.
    A-4975-16T1
    19