W.R. AND S.R., AS THE NATURAL GUARDIANS FOR THEIR UNEMANCIPATED MINOR SON, J.R. VS. K.G., J.G. AND S.G. (L-0584-20, SOMERSET COUNTY AND STATEWIDE) (RECORD IMPOUNDED) ( 2021 )

RECORD IMPOUNDED
NOT FOR PUBLICATION WITHOUT THE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-1154-20
W.R. and S.R., as the
natural guardians for their
unemancipated minor son, J.R.,
and W.R. and S.R., individually,
Plaintiffs-Appellants,
v.
K.G., J.G., and S.G. (a minor),
Defendants-Respondents.
____________________________
Argued March 9, 2021 – Decided April 6, 2021
Before Judges Fisher, Moynihan and Gummer.
On appeal from an interlocutory order of the Superior
Court of New Jersey, Law Division, Somerset County,
Docket No, L-0584-20.
William Strazza argued the cause for appellants (Law
Office of William Strazza, LLC, attorneys; Matthew J.
Werner, on the briefs).
James C. Jensen argued the cause for respondents
(Laufer, Dalena, Jensen, Bradley & Doran, LLC,
attorneys; James C. Jensen, of counsel and on the brief;
Kory A. Crichton, on the brief).
PER CURIAM
We granted leave to appeal to consider what rights may have accrued to
plaintiffs once defendants refused to tender the claim to their liability insurer.
Because an injured party obtains a protectable interest in a tortfeasor's liability
insurance "upon the happening" of an alleged covered event, In re Estate of
Gardinier, 40 N.J. 261, 265 (1963), we conclude plaintiffs are entitled in these
circumstances to communicate with defendants' insurer and, if necessary, file a
declaratory judgment action against the insurer without first obtaining a
judgment on their claim. In light of that holding, we need not at this time offer
an opinion on the remaining issue: whether, in these circumstances, the court
should have compelled defendants to tender the claim to their insurer.
In May 2020, plaintiffs W.R. and S.R.1 filed a verified complaint seeking
damages for injuries caused by what they alleged was an inappropriate
relationship between J.R., their minor son, and his girlfriend's mother, defendant
K.G. (Karen); Karen's husband and their daughter, S.G., were also joined as
defendants. The complaint alleged Karen's "willful and wanton psychological
1
We use initials and fictitious names because of the involvement of minors in
this litigation.
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torment and sexual grooming" of J.R., and the other defendants' negligence in
failing to report or prevent Karen's conduct. Plaintiffs also, both for themselves
and on behalf of their son, claim defendants' conduct caused them injuries and
psychological damage. The complaint's four counts consist of: two counts of
intentional infliction of emotional distress; one count of negligent failure to
warn; and one count of causing loss of affection and companionship. Karen has
vehemently denied all allegations, arguing she was merely "helping guide a
troubled minor."
Along with filing their verified complaint, plaintiffs sought and obtained
an order that temporarily restrained communications between defendants and
J.R., and required defendants to show cause why plaintiffs were not entitled to
preliminary restraints. Soon after, plaintiffs served discovery requests, which
included a demand for insurance information as permitted by Rule 4:10-2(b).
Meanwhile, defendants consented to an order extending the temporary restraints
and elected not to oppose plaintiffs' application for a preliminary injunction.
Defendants also filed an answer and counterclaim, and noticed plaintiffs'
depositions. Despite the deposition notice and defendants' subsequent motion
to compel plaintiffs' depositions, plaintiffs refused to proceed with any
substantive discovery until defendants provided insurance information as
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3
required by Rule 4:10-2(b), and until defendants submitted a copy of the verified
complaint to their insurer. Defendants, however, refused to "drag [their]
insurance company" into what they viewed as a "frivolous lawsuit" having , in
their view, the "sole purpose of . . . inflict[ing] emotional and financial harm."
This response prompted plaintiffs to move to compel production of the requested
insurance information and documents.
The trial judge granted defendants' motion to compel plaintiffs'
depositions and plaintiffs' cross-motion to compel defendants' compliance with
Rule 4:10-2(b). The judge's August 28, 2020 order expressly barred plaintiffs
from contacting defendants' insurance carrier, stating that, unless otherwise
ordered, plaintiffs "shall not contact [d]efendants' carrier for purposes of
submitting [p]laintiffs['] complaint to [d]efendants' carrier for that carrier to
consider defense or indemnification of the [d]efendants." The injunction was
not something defendants affirmatively sought; it seems to have grown
organically from the argument about the discovery motions. When the judge
asked defense counsel why he hadn't turned over to plaintiffs a copy of the
insurance policy, counsel said he would but he "just wanted to make sure
[plaintiff's counsel] is not going to contact the homeowners insur[er]." The judge
immediately responded, "he's not[;] [h]e's not going to do that." When plaintiff's
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counsel got the opportunity to speak, he said he: "respectfully disagree[d]" with
the judge's admonition; believed he "cannot be ordered not to contact the
carrier"; and revealed he had "every intention of contacting the carrier" because
his clients "are third-party beneficiaries to that policy." The judge then held that
plaintiffs are not third-party beneficiaries until "there's a judgment" and
enjoined plaintiffs from contacting the insurer.
Defendants provided some insurance information but plaintiffs responded
that the copy of defendants' homeowners' insurance policy was incomplete, the
provided "four-page declaration sheet" did not constitute the full policy, and the
effective dates of the insurance policy listed in the declaration sheet did not
cover the period of plaintiffs' alleged loss. Plaintiffs demanded that defendants
both cure these deficiencies 2 and "present[] [the claim] to [their] carrier for
coverage and defense."
Deprived by the injunction of the opportunity to engage in self-help,
plaintiffs moved for an order compelling defendants to report the claim to their
insurance carrier; plaintiffs argued they are third-party beneficiaries of
defendants' insurance contract and that a "concomitant right exists to sue the
2
We were advised during oral argument that the entire applicable homeowners'
policy has now been turned over to plaintiffs.
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insured to establish coverage in the event the insurer refuses to provide[]
liability coverage." The judge denied this motion on November 2, 2020, and, in
his oral decision, said: "[i]f the [d]efendants decide that they're simply not going
to seek coverage, and do not tender the [c]omplaint to the insurer for defe nse
and indemnity, then there is no third-party beneficiary," and defendants would
"assume the risk" of their own actions. The judge amplified this ruling by
recognizing defendants' right to "roll the dice" without interference from
plaintiffs, and by stating plaintiffs' claim to third-party-beneficiary status
accrues only "if and when there's a judgment."
We granted plaintiffs' motion for leave to appeal and now reverse in part
the August 28, 2020 order and dismiss without prejudice the appeal of the
November 2, 2020 order.
Plaintiffs' appeal is based on their claim that injured persons hold a
"special third-party beneficiary" relationship with their alleged tortfeasors'
liability insurers. This relationship, plaintiffs argue, empowered the court to
compel defendants to tender the claim to their insurer. They claim an interest
in collecting on any judgment they might ultimately obtain and are concerned
that if defendants fail to turn over the verified complaint to their insurer, their
inaction may cause a loss of that potential source for collecting on a judgment.
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A good place to start our analysis is Rule 4:10-2(b), which allows a litigant
to request and obtain "discovery of the existence and contents of any insurance
agreement under which any . . . insurance business may be liable to satisfy part
or all of a judgment . . . or to indemnify or reimburse for payments made to
satisfy the judgment." This Rule exists not just to humor curiosities; it serves
the goal of facilitating settlement by enlightening claimants about the funds
available to satisfy any judgment they might obtain. See, e.g., Moslimani v.
Union Valley Corp., 271 N.J. Super. 147, 149 (Law Div. 1993).
In most cases, the request for insurance information produces little or no
litigation, since most defendants covered by insurance for the claim asserted
recognize it is usually sensible and prudent to tender the matter to their insurer;
in those circumstances, the defendant readily provides the information and in
the vast number of cases, the plaintiff need do nothing more to protect any rights
available at the end of the day. The question presented here is whether there is
anything a plaintiff can do when a defendant chooses not to advise an insurer of
a claim, generating the possibility that the uninformed insurer will later disclaim
because of the lack of timely notice.
Defendants' decision to withhold information about this claim from its
insurer is understandably disconcerting to plaintiffs. Insurance policies
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routinely contain provisions that obligate the insured to provide timely notice of
a claim so the insurer may exercise its right to takeover and control the defense
as a means of limiting its risk and exposure. An insured's failure or refusal to
timely notify an insurer poses a risk of loss of any benefits the insurance may
provide. See, e.g., Cooper v. Gov't Emp. Ins. Co., 51 N.J. 86 (1968); Polarome
Mfg. Co. v. Commerce & Indus. Ins. Co., 310 N.J. Super. 168, 175 (App. Div.
1998). Insureds may be free to run that risk for themselves – as the trial judge
said, "roll the dice" – but an insured's decision may also put the claimant in
jeopardy of losing an avenue of recovery if the insurer is later justified in
declining coverage because of the insured's inaction. That is plaintiffs' concern.
The judge, by first enjoining plaintiffs from notifying defendants' insurer in his
August 28, 2020 order, and then by denying plaintiffs' motion to compel
defendants to notify the insurer in his November 2, 2020 order, left plaintiffs in
the precarious position of only hoping – if their suit eventually bears fruit – that
they will be able to obtain recourse from the insurer.3 It is out of concern for
these doubtful circumstances in which plaintiffs find themselves that we granted
leave to appeal.
3
We assume, without deciding, that plaintiffs have asserted a claim that falls
within the insuring clause of any insurance policies possessed by defendants.
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Plaintiffs correctly argue that, in the eyes of the law, they obtained an
interest in any contract possessed by defendants that would, in the words of Rule
4:10-2(b), make the other contracting party "liable to satisfy part or all of a
judgment which may be entered in the action." There is no novelty in this
argument; the Supreme Court has repeatedly held that "upon the happening of
an accident the injured third party acquires an interest in the [tortfeasor's]
policy." Estate of Gardinier, 40 N.J. at 265; see Feuchtbaum v. Constantini, 59
N.J. 167, 177 (1971); Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 397 (1970);
Dransfield v. Citizens Cas. Co. of N.Y., 5 N.J. 190, 194 (1950); Century Indem.
Co. v. Norbut, 117 N.J. Eq. 584, 586 (Ch. 1935), aff'd o.b., 120 N.J. Eq. 337 (E.
& A. 1936). Judge Conford expressed this concept as representing a "strong
public policy in this State favoring the availability to injured persons of the
liability insurance of those whose negligence is the cause of their plight." Sneed
v. Concord Ins. Co., 98 N.J. Super. 306, 321 (App. Div. 1967).
Although this interest has been most frequently expressed, as in all the
cases cited above, when describing an injured party's relationship to a
defendant's auto insurance – because that insurance is legislatively-mandated
and its existence and applicability of great public interest – we see no reason
why other persons injured by means other than an automobile should have a
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lesser right to protect their dormant right to recover from the tortfeasor's insurer.
See, e.g., Manukas v. Am. Ins. Co., 98 N.J. Super. 522, 525 (App. Div. 1968)
(recognizing this interest when the plaintiff was injured on church property); see
also Atl. City v. Am. Cas. Ins. Co., 254 F. Supp. 396, 398 (D.N.J. 1966)
(applying New Jersey law and recognizing the plaintiff's interest in the city's
liability insurance policy "upon the happening of [her bathing] accident" at a
city beach). And, as Judge Havey observed in Werrmann v. Aratusa, Ltd., 266
N.J. Super. 471, 475-76 (App. Div. 1993), a patron obtained an interest in a
restaurant's insurance policy at the time of the injury regardless of "whether the
insurance is mandatory or optional." In adhering to that view, we conclude –
regardless of whether mandatory or optional – that "[a] liability insurance policy
creates rights not only for the policy holder but as well for those to whom
reparations will be made." Samuel v. Doe, 158 N.J. 134, 142 (1999).
The trial judge's holding in this case was based on a view that third-party-
beneficiary status cannot serve as a basis for plaintiffs' pursuit of their rights
until they obtain a judgment. To be sure, it has been held that a plaintiff's
relationship to a tortfeasor's liability insurance does not ripen into an actionable
claim for monetary relief from an insurer until the plaintiff obtains a judgment
against the insured. See Estate of Gardinier, 40 N.J. at 266 (recognizing the
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insured has a right to pursue "an action . . . upon the policy after judgment
against the insured"); Dransfield, 5 N.J. at 194 (recognizing the insured has "'a
cause of action the moment he is injured" which ripens into a right of action
"when he recovers a judgment against the assured" on demonstrating the insured
is "insolven[t]," quoting Century Indem. Co., 117 N.J. Eq. at 587). The problem
here for plaintiffs is that there may be no recourse against the insurer if it is kept
in the dark about this suit until judgment is entered. See Cooper, 51 N.J. at 94.
In essence we are asked whether plaintiffs should be required to wait –
maybe years – until the end of this litigation, and if they prevail, only then press
their claim against the insurer. All that time plaintiffs face the potential that the
insurer might not, at the end of the day, indemnify defendants because
defendants failed to give timely notice of the claim. Milton may have said
"[t]hey also serve who only stand and wait" 4 but that was in a different context.
If plaintiffs must wait without certainty about what defendants' insurer might do
if not given timely notice, they might not be served at all.
We conclude that when an alleged tortfeasor fails or refuses to notify a
liability insurer, a plaintiff shouldn't have to just sit back and hope relief awaits
4
John Milton, On His Blindness (1655) (also known as "When I Consider How
My Light is Spent").
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at the end of the day. We are unaware of any legal or equitable impediment to
plaintiffs presently seeking a declaratory judgment against defendants' insurer;
as we said in Manukas, even though the plaintiff there could not maintain a
prejudgment action for damages against the church's insurer, the plaintiff "could
have included a declaratory judgment action against [the church's insurer] in the
action against the church, or instituted a separate declaratory judgment action
joining the church as a party." 98 N.J. Super. at 525.
The rights provided by the Declaratory Judgment Act 5 are "remedial,"
exist "to settle and afford relief from uncertainty and insecurity with respect to
rights, status and other legal relations," and should be "liberally construed and
administered" to those ends. N.J.S.A. 2A:16-51. The unusual position taken by
defendants in refusing to notify their liability insurer has generated for plaintiffs
"uncertainty and insecurity," ibid., a circumstance that creates a sufficient
justiciable controversy, see, e.g., In re Vicinage 13 of Superior Ct., 454 N.J.
Super. 330, 337-38 (App. Div. 2018), to allow plaintiffs' commencement of a
declaratory judgment action against defendants' insurer to protect their interests.
In drawing this conclusion, we remain mindful that the Supreme Court
has, in different contexts, said that "[g]enerally, plaintiffs in tort actions may not
5
N.J.S.A. 2A:16-50 to -62.
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directly sue insurers," Cruz-Mendez v. ISU/Ins. Servs. of San Francisco, 156
N.J. 556, 566-67 (1999), and "a stranger to an insurance policy has no right to
recover the policy proceeds," Ross v. Lowitz, 222 N.J. 494, 512 (2015) (quoting
Gen. Accident Ins. Co. v. N.Y. Marine & Gen. Ins. Co., 320 N.J. Super. 546,
553-54 (App. Div. 1999)). Our holding is not inconsistent with these general
principles. We acknowledge, as held in Ross, that plaintiffs are not entitled to
seek the policy proceeds until they obtain a judgment falling within the
parameters of the insurer's agreement to indemnify. It is because defendants
have refused to tender the defense to their insurer that we conclude plaintiffs are
entitled – notwithstanding the above-quoted general statement in Cruz-Mendez
– to assert a claim against the insurer that simply seeks a declaration of the
insurer's rights and obligations regarding this claim. We see nothing in any of
the cases we have cited to so limit the reach of the Declaratory Judgment Act in
these circumstances. Not one of the courts that produced the cases we have cited
was asked to consider the application of the general legal principles we have
quoted when the alleged tortfeasor had refused to advise an insurer of the claim.
And since, as we have held, plaintiffs may commence a declaratory
judgment action against defendants' insurer, then they certainly may
communicate with the insurer without further delay. Indeed, such a
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communication could – depending on the insurer's response – short-circuit
plaintiffs' need to sue for a declaratory judgment and may have the salutary
effect of avoiding unnecessary litigation. Such an approach should have been
encouraged rather than enjoined.
We, thus, reverse the judge's August 28, 2020 injunction against plaintiffs'
communication with defendants' insurer. The remainder of the interlocutory
appeal – that part in which plaintiffs seek reversal of the judge's November 2,
2020 denial of plaintiffs' motion to compel defendants to tender the claim to the
insurer – is dismissed without prejudice.
Reversed in part and dismissed without prejudice in part.6
6
The trial court also entered an order sealing the record under Rule 1:38. We
express no view as to either the propriety of that order or its impact on plaintiffs'
ability to communicate or sue the insurer.
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