DOMENICO MASUCCI VS. NEW JERSEY MANUFACTURERS INSURANCE COMPANY (L-0364-20, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4319-19
DOMENICO MASUCCI,
Plaintiff-Appellant,
v.
NEW JERSEY
MANUFACTURERS
INSURANCE COMPANY,
Defendant-Respondent.
_________________________
Submitted April 28, 2021 – Decided May 17, 2021
Before Judges Rose and Firko.
On appeal from the Superior Court of New Jersey, Law
Division, Monmouth County, Docket No. L-0364-20.
Drazin & Warshaw, attorneys for appellant
(Christopher R. Brown, on the brief).
Dyer & Peterson, PC, attorneys for respondent (Glenn
T. Dyer, on the brief).
PER CURIAM
Plaintiff Domenico Masucci appeals from a July 24, 2020 order entering
summary judgment in favor of defendant New Jersey Manufacturers Insurance
Company (NJM) on plaintiff's claim for underinsured motorist (UIM) coverage.
We affirm.
I.
We derive the following facts from the summary judgment motion record
viewed in the light most favorable to plaintiff. Templo Fuente De Vida Corp.
v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). On
November 20, 2016, plaintiff sustained personal injuries after being struck by a
vehicle operated by Peter Smith in South Amboy. At the time of the accident,
plaintiff was insured under a motor vehicle policy issued by NJM.
In October 2017, plaintiff filed a complaint against Smith in the Law
Division for damages resulting from the accident. There is no evidence in the
record that plaintiff or his counsel notified NJM of the action. In May 2018,
plaintiff was informed that Smith was insured under a Plymouth Rock
automobile liability policy with a liability limit of $250,000. Plaintiff had a
$500,000 combined single UIM coverage limit with NJM in effect at the time of
the accident. Admittedly, plaintiff failed to notify NJM that Smith's $250,000
liability coverage limit was insufficient to satisfy his claim for damages.
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On October 28, 2019, plaintiff executed a release of all his claims arising
from the accident against Smith in the sum of $240,000. 1 The release contained
a provision stating: "In further consideration of the above described payment,
I/we release and forever discharge the Releasee(s) against any indemnity or
contribution claims that have been or may be brought by any person, firm or
corporation which may arise out of the above referenced accident or
occurrence." It is undisputed that plaintiff failed to comply with our mandate
espoused in Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988)
and did not notify NJM regarding the settlement with Smith or his intention to
pursue UIM coverage with NJM. On November 26, 2019, a stipulation of
dismissal with prejudice was filed with the clerk of the court against Smith.
On December 12, 2019, plaintiff's counsel sent a demand letter to an NJM
Personal Injury Protection (PIP) benefits claims representative enclosing
plaintiff's medical records, Smith's answers to interrogatories, and stating: "As
discussed previously, kindly forward my letter with attachments to a UIM
adjuster so that a UIM claim can be set up and have the adjuster handling this
1
The fact that plaintiff settled with Smith for less than his full $250,000 policy
limit is irrelevant to our analysis.
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matter contact [me]. You hereby have my permission for the UIM adjust er to
review all medical records in your file."
In response, on January 13, 2020, counsel for NJM sent a letter to
plaintiff's counsel advising:
In accordance with Longworth v. Van Houten,
223 N.J. Super. 174 (App. Div. 1988), Mr. Masucci was
required to notify NJM as the underinsured motorist
carrier that he received a settlement offer which he
intended to accept. Generally, this notification
provides the underinsured motorist carrier 30 days to
make a determination with regards to its subrogation
rights against the tortfeasor. Mr. Masucci has failed to
provide NJM with the required notice pursuant to
Longworth.
Additionally, under the underinsured motorist
provisions of Mr. Masucci's policy, we specifically do
not provide coverage for property damage or bodily
injury sustained by an insured, if that insured or the
legal representative settles any bodily injury or
property damage claim with the owner or operator of an
underinsured motor vehicle without our written
consent. It is my understanding that prior to your
December 12, 2019 letter requesting that a UIM claim
be established, an underlying settlement was finalized
without NJM's written consent and a general release
was executed by your client and returned to the tort
carrier, Plymouth Rock, effectively extinguishing
NJM's subrogation rights. As such, NJM is denying
your client's claim for U[I]M benefits.
On January 30, 2020, plaintiff's counsel filed a complaint for declaratory
judgment against NJM seeking UIM benefits. NJM filed an answer noting the
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request for UIM benefits "was not made until after plaintiff consummated a
settlement with the parties allegedly responsible [f]or his loss and without this
party's knowledge or consent" thereby extinguishing NJM's right of subrogation.
NJM also asserted that plaintiff's claim was barred by N.J.S.A. 17:28-1.1 and
relevant case law.
Thereafter, NJM filed a motion for summary judgment seeking dismissal
of the declaratory judgment action. Plaintiff opposed the motion. On July 24,
2020, the trial court heard oral argument on NJM's motion and reserved decision.
Later that day, the court issued a cogent statement of reasons granting NJM's
motion for summary judgment and dismissing plaintiff's complaint. Based upon
the undisputed facts of record, the trial court concluded that plaintiff violated
his duty to inform NJM of a potential UIM claim as required by Longworth and
as required by his insurance contract.
Under Ferrante v. New Jersey Mfrs. Ins. Grp., 232 N.J. 460, 473-74
(2018), the trial court emphasized that our Supreme Court "rejected the
argument that a negligent, rather than intentional, violation of Longworth
warranted a prejudice analysis." Citing Ferrante, the trial court explained:
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
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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).
The trial court held under Ferrante, plaintiff's UIM claim was barred. In
addition, the trial court found plaintiff materially breached his insurance
contract with NJM. A memorializing order was entered. This appeal followed.
On appeal, plaintiff contends the trial court erred in granting summary
judgment to NJM since NJM was not prejudiced by settlement of the underlying
claim without its consent.
II.
Our review of an order granting summary judgment is de novo. Henry v.
N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). We discern no genuine
issue of material fact, and conclude, as did the trial court, that NJM is entitled
to judgment as a matter of law. See Brill v. Guardian Life Ins. Co. of Am., 142
N.J. 520, 528-29 (1995) (setting forth summary judgment standard under R.
4:46-2).
On appeal, plaintiff argues the failure to request Longworth approval of
the settlement offer constituted negligence on the part of his counsel and not a
"strategic decision" or an attempt to "mislead" NJM. Plaintiff further asserts
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that his preliminary investigation of Smith's assets revealed he lacked sufficient
funds to provide subrogation to NJM, and therefore, NJM was not prejudiced by
plaintiff's breach of his insurance contract. We are unpersuaded by plaintiff 's
arguments.
The relationship between an insured and an insurance carrier is
contractual. The obligation to offer UIM coverage, however, is statutory. Zirger
v. Gen. 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 her 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
UIM carrier may intervene in an insured's trial against a tortfeasor as a way to
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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:
[A]n 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, 169 (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
that does not satisfy the insured's damages. Id. at 174-75. This is commonly
known as a Longworth notice.
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We addressed the consequences of the insured's failure to follow the
holding in Vassas in several cases. In Breitenbach v. Motor Club of America
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, 383-84. The insured sent a letter to
the carrier after executing a general release in favor of the tortfeasor. Id. at 381.
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
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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 rig hts
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:
The 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.
....
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
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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. Id. 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 NJM's summary judgment motion.
We also reject plaintiff's argument that NJM was required to show it was
prejudiced by his or his counsel's actions before denying UIM coverage. As the
trial court noted: "To create further exceptions to the law as outlined by Ferrante
in this case could lead to a continued unraveling of the current statutory scheme
as well as require the court [to] rewrite the contract between the parties." We
agree.
The Ferrante court rejected the insured's argument the trial court should
have considered whether "he negligently, rather than intentionally, violated
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Longworth, [and] . . . conduct a prejudice analysis [where there were] . . .
numerous landmarks where Ferrante could have, and should have, but did not
notify [his carrier of a settlement with tortfeasor]." 232 N.J. at 474. The Court
stated: "Our decision here is not rooted in Ferrante's state of mind, but rather in
his actions." Ibid.
Likewise, no such analysis was required here as plaintiff's settlement of
the case extinguished NJM's subrogation claim. No discovery was warranted.
The undisputed facts support summary judgment in NJM's favor. Plaintiff's
remaining arguments lack sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E).
Affirmed.
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