DANIEL M. YABLONSKY VS. ENCOMPASS INSURANCE COMPANY OF NEW JERSEY (L-1974-14, MORRIS 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NOT FOR PUBLICATION WITHOUT THE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 NOS. A-2938-17T3
A-3099-17T3
DANIEL M. YABLONSKY,
Plaintiff-Appellant,
v.
ENCOMPASS INSURANCE
COMPANY OF NEW JERSEY,
ANGELO LOBOSCO and
LOBOSCO INSURANCE GROUP,
LLC,
Defendant-Respondents.
_______________________________
DANIEL M. YABLONSKY,
Plaintiff,
v.
ENCOMPASS INSURANCE
COMPANY OF NEW JERSEY,
Defendant-Respondent,
and
ANGELO LOBOSCO and
LOBOSCO INSURANCE GROUP,
LLC,
Defendants-Appellants.
_______________________________
Argued May 8, 2019 – Decided December 24, 2019
Before Judges Alvarez, Nugent and Mawla.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-1974-14.
Francis X. Garrity and Thomas D. Flinn argued the
cause for appellant Daniel M. Yablonsky in A-2938-17
(Garrity Graham Murphy Garofalo & Flinn, attorneys;
Francis X. Garrity and Thomas D. Flinn, of counsel;
Jane G. Glass, on the briefs).
Syed S. Ahmad (Hunton Andrews Kurth, LLP) of the
District of Columbia and Virginia bars, admitted pro
hac vice, argued the cause for appellants Angelo
Lobosco and Lobosco Insurance Group in A-3099-17
and respondents Angelo Lobosco and Lobosco
Insurance Company in A-2938-17 (Sullivan & Klein,
LLP, and Syed S. Ahmad, attorneys; Frederick Miles
Klein, Syed S. Ahmad, and Geoffrey B. Fehling
(Hunton Andrews Kurth, LLP) of the District of
Columbia and Pennsylvania bars, admitted pro hac
vice, on the briefs).
Richard J. Mirra argued the cause for respondent
Encompass Insurance Company of New Jersey
(Hoagland Longo Moran Dunst & Doukas, attorneys;
Richard J. Mirra, of counsel and on the briefs).
The opinion of the court was delivered by
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NUGENT, J.A.D.
These appeals, which we consolidate for this opinion, center around
plaintiff Daniel M. Yablonsky's claim that his parents' automobile insurance
policy should have included $1,000,000 in excess underinsured motorist (UIM)
coverage on the date Daniel was injured in an accident involving a motor
vehicle. In No. A-2938-17, Daniel appeals both the summary judgment
dismissal of his claim that the trial court should have construed his parents'
insurance policy to provide $1,000,000 excess UIM coverage and the
involuntary dismissal at trial of his professional negligence claim against his
parents' insurance producer for failing to inform them excess UIM coverage was
available. In No. A-3099-17, Daniel's parents' insurance producer appeals the
summary judgment dismissal of its contractual indemnification claim against
the insurance company that issued the automobile insurance policy to Daniel's
parents.
We must decide three issues on these two appeals. First, we must decide
whether Daniel's parents' insurance policy should be construed to provide excess
UIM coverage due to an alleged ambiguity in its coverage summary, even
though Daniel's father, who purchased the policy, knew the policy did not
include excess UIM coverage. Given the father's undisputed knowledge the
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policy did not provide excess UIM coverage, we decline to construe the policy
to provide it.
Next, we must decide whether the trial court erred by dismissing at the
close of Daniel's proofs at trial his professional negligence claim against his
father's insurance producer for failing to inform his parents of the availability of
excess UIM coverage when such coverage became available. We conclude
Daniel established a prima facie case of professional negligence that should have
been submitted to the jury.
Last, we must decide whether the trial court erred by dismissing on
summary judgment the insurance producer's contractual indemnification claim
against the company that issued the insurance policy to Daniel's parents. We
conclude the plain and unambiguous terms of the contractual indemnification
clause preclude indemnification and the trial court did not err in so finding.
I. Background and Procedural History.
Daniel possessed a valid driver's license, but was riding a bicycle on May
13, 2012, when he was struck by a Jeep insured under a policy with $15,000
liability limits. For purposes of this appeal only, there is no serious dispute that
the compensable value of Daniel's injuries equals or exceeds $1,250,000. Daniel
collected the tortfeasor's $15,000 liability limits. He also collected the balance
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of the $250,000 UIM limits he was entitled to collect under his parents'
insurance policy, which covered Daniel and the vehicle he owned. His parents
had purchased the policy, an Encompass Insurance Co. of NJ (Encompass) USP
Elite-Package (Encompass Policy), through defendants Angelo Lobosco (Mr.
Lobosco) and Lobosco Insurance Group, LLC (Lobosco Group). The
Encompass Policy included motor vehicle, homeowners, fire, and personal
umbrella coverage, but no UIM or uninsured (UM) umbrella coverage.
In May 2014, Daniel filed a three-count complaint against the Lobosco
defendants and alleged causes of action for negligence, breach of contract, and
breach of fiduciary duty. Daniel based his claims on these defendants' failure
to inform his parents that excess UIM and UM coverage had become available.
The following month, Daniel filed an amended four-count complaint.
The amended complaint's first count, which stated a cause of action
against Encompass for breach of contract, alleged the Encompass Policy in
effect when Daniel was struck by the Jeep included a coverage summary that
suggested the policy included $1,000,000 of Personal Umbrella UIM coverage.
Daniel sought a declaration that he was afforded $1,250,000 under the
Encompass Policy. The remaining three counts, against the Lobosco defendants
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but not Encompass, repeated the causes of action pled against the Lobosco
defendants in the original complaint.
After Daniel filed his amended complaint, the Lobosco defendants filed
an answer with affirmative defenses. Thereafter, they amended their answer and
included, among other things, a cross-claim for contractual indemnification
against Encompass.
Following discovery and some motion practice not relevant to this appeal,
all the parties moved for summary judgment. The trial court denied Daniel's
motion, granted Encompass's motion, and granted the Lobosco defendants'
motion in part. The court dismissed Daniel's claims against the Lobosco
defendants for breach of contract and breach of fiduciary duty but denied the
Lobosco defendants' motion to dismiss the professional negligence claim. The
court also denied the Lobosco defendants summary judgment on their
contractual indemnification claim.
During the ensuing trial, following the close of Daniel's case, the Lobosco
defendants moved for, and the court granted, an involuntary dismissal of
Daniel's remaining claim. The court denied Daniel's motion for reconsideration.
Daniel filed this appeal.
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Following the trial, the Lobosco defendants renewed their summary
judgment motion seeking contractual indemnification from Encompass.
Encompass cross-moved for summary judgment. The trial court denied the
Lobosco defendants' motion and granted Encompass's motion. The Lobosco
defendants appealed from the ensuing order.
II. The Motion and Trial Records.
For purposes of the summary judgment motions and the motion for
involuntary dismissal at trial, the parties did not seriously dispute that the Jeep's
driver caused the accident, Daniel was entitled to UIM coverage under his
parents' Encompass Policy, and the compensable value of Daniel's injuries
exceeded $250,000. Daniel and Encompass sharply disputed the clarity of the
Encompass Policy, the Lobosco defendants denied any wrongful conduct, and
Encompass disputed it was required to indemnify the Lobosco defendants under
the terms of the indemnification provision of the Lobosco-Encompass agency
agreement.
A. The Encompass Policy.
The Encompass Policy, entitled "USP Elite-Package," renewed on
December 19, 2011, expired on December 19, 2012, and was in effect when
Daniel's accident occurred in May 2012. The policy included a nine-page
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"Renewal Policy Coverage Summary" (Coverage Summary) and 170 pages of
terms and conditions. The Coverage Summary section entitled "Motor Vehicle
Protection" identified four vehicles and provided an overview of the coverage
for each, including the coverage limits and premiums. The parties do not dispute
that each vehicle was insured for UM and UIM coverage with split limits of
$250,000 per person, $500,000 per accident.
The Coverage Summary included a section entitled "Personal Umbrella
Coverage," which stated:
PERSONAL UMBRELLA COVERAGE (Coverage
applies only if a premium or limit is shown)
COVERAGES
PERSONAL UMBRELLA COVERAGE: applies to all
"covered exposures" and "additional covered
exposures"
The Personal Umbrella Coverage Summary section showed coverage of
$1,000,000 and specified the "Minimum Retained Limit" the insured was
required to maintain in underlying insurance: a combined single limit of
$500,000 each accident or a split basis limit of $250,000 bodily injury each
person, $500,000 bodily injury each accident, and $100,000 property damage
each accident. The Personal Umbrella Coverage Summary section also
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specified the premium for the coverage. The terms "covered exposures" and
"additional covered exposures" were undefined.
The Coverage Summary ended with a statement that the policy was subject
to "the following forms and endorsements" and was followed by thirty -five
forms and endorsements. The "Personal Umbrella Coverage Endorsement-New
Jersey" expressly excluded UM and UIM benefits.
Representatives of Encompass and its parent company conceded during
depositions that someone reading the Coverage Summary would also have to
read the policy endorsements to understand that umbrella coverage was provided
for liability, but not UM or UIM claims. In 2014, Encompass changed the
Coverage Summary's Personal Umbrella Coverage section to read:
THIS PERSONAL UMBRELLA SEGMENT DOES
NOT PROVIDE COVERAGE FOR EXCESS
UNINSURED OR UNDERINSURED MOTORIST
COVERAGE EXCEPT FOR VEHICLES WHERE A
LIMIT IS SHOWN FOR EXCESS UNINSURED OR
UNDERINSURED MOTORISTS COVERAGE.
According to the representative of Encompass's parent company, the language
was changed in 2014 to "reinforce" that there was no UM or UIM umbrella
coverage.
When deposed, Daniel's father could not recall the year he first purchased
the umbrella policy through the Lobosco Group but did remember that Mr.
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Lobosco told him the policy did not provide UM or UIM coverage. Mr. Lobosco
testified in his deposition that he did not remember such a conversation. He did
remember that he procured an umbrella policy for Daniel's father in 1997.
B. Summary Judgment as to Daniel's Claims.
The trial court dismissed on summary judgment Daniel's claims against
Encompass. The court also dismissed on summary judgment Daniel's breach of
contract and breach of fiduciary duty claims, but not his professional negligence
claim, against the Lobosco defendants. As to Encompass, the trial court found
no ambiguity in the Encompass Policy and no inconsistency between the
Encompass Policy's Coverage Summary and its insuring provisions. The court
also found the Coverage Summary notified the insureds the personal umbrella
coverage was subject to the restrictions, conditions, and exclusions found in the
body of the policy and its endorsements. According to the trial court, nothing
in the Coverage Summary would give the insured a reasonable expectation of
excess UIM coverage. Moreover, Daniel's father, who purchased the policy
through Mr. Lobosco, was aware from the policy's inception the policy
contained no UIM coverage and thus had no reasonable expectation to the
contrary.
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Daniel does not challenge on appeal the grant of partial summary
judgment to the Lobosco defendants.
C. Trial and Dismissal of Daniel's Claims
Against the Lobosco Defendants.
Daniel and the Lobosco defendants stipulated at trial that: Daniel
sustained injuries in an accident caused by a negligent driver whose liability
limits were $15,000, which the driver's insurer paid; Daniel was insured under
his parents' Encompass Policy and Encompass paid the $250,000 UIM limits
less the credit for the negligent driver's $15,000 liability limit; and Daniel's
damages were sufficiently severe to support a recovery of $1,250,000. Daniel
testified about the accident and confirmed he had received the available liability
and UIM insurance coverage.
Daniel's father testified he had obtained insurance through the Lobosco
Group since 1986 or 1987. After Daniel's father bought a home, Mr. Lobosco
recommended he purchase an Encompass umbrella policy. Daniel's father said
he appreciated the additional coverage and was pleased that it would protect
him, among other things, against an uninsured or underinsured driver. Mr.
Lobosco corrected this assumption and explained the umbrella policy did not
provide excess UM or UIM coverage. Daniel's father was upset and expressed
his disbelief that an umbrella policy would not fully protect his family, but he
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purchased the Encompass Policy and renewed it yearly through the date of his
son's accident.
According to Daniel's father, after he purchased the policy from Mr.
Lobosco, Mr. Lobosco never discussed the availability of excess UM or UIM
coverage. Having expressed his desire for such coverage, Daniel's father
expected that Mr. Lobosco would advise him of its availability as soon as it
became available. Had Mr. Lobosco done so, Daniel's father "absolutely" would
have bought it.
Daniel also presented the testimony of a licensed insurance broker, Frank
Seigel, who had worked in the industry for forty-five years and currently did
expert consulting, continuing education, and insurance consulting. The court
found Seigel qualified as an expert "in the field of property and casualty
insurance, and the responsibility of insurance producers, agents and brokers."
Seigel testified that though the Encompass Policy did not provide excess UM or
UIM coverage, such coverage was readily available in December 2011, before
Daniel's accident, when the Yablonskys' Encompass Policy came up for renewal.
Such excess UIM coverage, if purchased when the Encompass Policy renewed
in December 2011, would have been available to Daniel following his accident.
Specifically, when asked, "was there available in 2011 or in 2012 when young
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Dan had his accident, was there available the type of coverage that [Daniel's
father] had asked [Mr. Lobosco] about when he first bought his umbrella,"
Seigel said there was, and it was easily accessible.
Seigel explained that he belonged to an organization known as the "Big
I," the Independent Insurance Agents and Brokers Association, a "countrywide
organization." The Big I provided its member insurance agents and brokers
continuing education, member services, and products the member agents and
brokers could sell to the public. The Lobosco Agency was a member of the Big
I.
According to Seigel, an umbrella policy with excess UM and UIM
coverage up to $1,000,000 was available in 2011—when the Yablonskys
renewed their Encompass Policy before Daniel's accident—from a company
named RLI. The umbrella policy was a product available to independent
insurance agents through "Big I," which administered the program. Seigel
confirmed with the Big I the umbrella policy was available in 2011. In addition,
Seigel testified the Lobosco defendants' expert had noted in his report that the
RLI Umbrella had its filing approved in New Jersey in the spring of 2011.
Seigel testified that because the Lobosco defendants had been members of
the Big I for years, Mr. Lobosco would have had access to Big I advertising and
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emails regarding the availability of excess UM and UIM coverage. The
coverage was easily accessible through the Big I. A member needed only to
"call[] up the Big I, get[] an on-line access code, go[] on line to [a company
called] RLI, and get[] all the information that you needed from them."
Seigel explained that an insurance agent could send an application directly
to RLI, and if "all the boxes are checked off the way they should be, it just goes
- - the policy is issued just like that." If something about an application is
questionable, an agent would call the administrator—not the insurance
company—who would "get the answer" as to whether the policy would be
issued.
Based on the materials he received from the Big I and reviewed, Seigel
explained certain features of the RLI UIM umbrella policy. One million dollars
of UIM umbrella coverage was available. The policy was a "stand-alone
product," that is, it could be purchased as a product separate from an automobile
policy. Seigel reviewed 2014 and 2015 underwriting guidelines. Comparing
the 2014 and 2015 documents, he confirmed the underwriting guidelines had
remained consistent. He explained that in a state like New Jersey coverage is
unlikely to become broader over the years; rather, if anything, coverage narrows.
Considering the "liberal" RLI underwriting guidelines, the Yablonsky "risk,"
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and the absence of disqualifying factors in the Yablonsky family, Seigel
concluded the Yablonsky account was a "standard" account that would have
qualified for coverage under the RLI program.
Seigel at times gave seemingly conflicting testimony about the terms of
the RLI UIM coverage. Asked about the difference between an excess policy
and an umbrella policy, Seigel explained that an excess policy is typically a
"following form" policy, that is, "it's tailored to meet the same terms and
conditions as the underlying policy, the policy for which it stands over, and it
drops down for the limits, but it doesn't change terms and conditions." In other
words, the excess policy will have the same terms and conditions as the
underlying policy. In contrast, "[a]n umbrella policy[] not only provides the
excess limits, but it also provides broader terms and conditions than the primary
policies." The confusion in Seigel's testimony was caused by his and the
attorneys' use of the terms "excess" and "umbrella" without regard to Seigel's
explanation, and at times as if the terms were interchangeable.
When asked if he knew if "RLI's umbrella policies at any point in time
provided umbrella UM/UIM coverage[,]" Seigel responded, "it has its own
policy language." When asked what he meant by that, Seigel explained that
"[i]nstead of saying in its policy form that if you have uninsured/underinsured
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motorists, our policy provides the same terms and conditions as what you have
in the primary[,] [i]t attaches a form that says excess uninsured/underinsured
motorists, and has its own policy language attached to it." However, when
asked, "[a]nd in your report you did not provide an opinion about what that
umbrella policy language would cover or would not cover, did you[,]" Seigel
responded, "[w]ell, I actually did by saying that the coverage was available. My
opinion was that the coverage was available. It was excess
uninsured/underinsured motorist coverage in the RLI policy."
As to the duty the Lobosco defendants owed Daniel's father, Seigel
testified that in view of the duration of their relationship and Daniel's father
following Mr. Lobosco's advice without question—for example, applications for
insurance were signed and processed by the Lobosco Group without Daniel's
father seeing them—Mr. Lobosco owed Daniel's father a higher standard of care.
The standard of care expected of an insurance broker required that Mr. Lobosco
be aware of products in the marketplace available to meet his clients' needs. In
Seigel's opinion, Mr. Lobosco's failure to offer "the product," namely, excess
UM and UIM insurance, to Daniel's father in 2011, violated the standard of care.
The trial court found Daniel's proofs insufficient to survive the Lobosco
defendants' motion for an involuntary dismissal. The court determined the
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evidence presented a jury issue as to whether a special relationship existed
between Daniel's father and Mr. Lobosco that created a heightened duty of care.
The court also deemed Daniel's evidence sufficient to create a jury question as
to the availability of excess UIM coverage when the Encompass Policy renewed
in December 2011. The court granted the motion, however, because Daniel had
not produced evidence of the underwriting guidelines that existed in 2011.
Daniel had produced no evidence as to whether his family would have me t such
guidelines, what the terms of a 2011 excess UM/UIM RLI policy would have
been, and whether Daniel's claim would have been covered under such a policy.
The trial court dismissed Daniel's claim against the Lobosco defendants
and denied his motion for reconsideration.
D. Disposition of the Lobosco Defendants' Indemnification Claim.
Following the trial, the Lobosco defendants renewed their summary
judgment motion seeking indemnification against Encompass. Under the terms
of the agency agreement between the Lobosco Group and Encompass,
Encompass agreed to indemnify the Lobosco Group under certain
circumstances. This is the relevant part of the indemnification provision:
We will Indemnify and hold you harmless from and
against all claims, losses, damages, liabilities,
judgments or settlements, including reasonable costs,
expenses and attorneys' fees . . . arising out of the
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relationship of the parties under the terms of this
Agreement . . . caused by our act, error or omission,
except to the extent that you have caused, contributed
to or compounded such act, error or omission.
Finding the indemnification provision unambiguous, the trial court
granted Encompass's cross-motion for summary judgment and dismissed the
Lobosco defendants' indemnification claim. The court determined the Lobosco
defendants' claim for indemnification arose not out of the relationship between
them and Encompass but rather out of Mr. Lobosco's relationship with Daniel's
father and Mr. Lobosco's alleged negligence in failing to advise him of the
availability of additional UIM coverage. The court determined that such
professional liability was not a liability that fell within the scope of t he agency
agreement's indemnification provision.
III.
We first consider Daniel's appeal of the summary judgment dismissal of
his claims against Encompass.
A.
Daniel asserts the Encompass Policy's Coverage Summary created a
reasonable expectation that excess UIM coverage was included in the umbrella
coverage and such an expectation was contradicted by the umbrella
endorsement, which excluded UM and UIM coverage. Daniel argues that
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contrary to the trial court's conclusion, the insured's reasonable expectation of
UIM umbrella coverage, created by the ambiguity in the Coverage Summary,
could not be remedied by the plain exclusion of UIM umbrella coverage in the
umbrella endorsement. Daniel emphasizes that Encompass's post-accident
amendment in 2014 to the Coverage Summary—clearly and expressly excluding
UM and UIM coverage—demonstrates the pre-2014 ambiguity. Daniel also
argues the court erred by considering his father's subjective knowledge, rather
than interpreting the policy objectively.
Encompass argues the Coverage Summary contains no ambiguity. Rather,
Daniel overlooks the Encompass policy's plain language and the purpose of
Umbrella coverage, which is to provide excess liability insurance, not first-party
UM or UIM coverage. Encompass emphasizes that the umbrella endorsement
is plain and unambiguous, a proposition Daniel cannot reasonably dispute.
Encompass also emphasizes that the named insureds had no reasonable
expectation of umbrella UIM coverage, as Mr. Lobosco specifically advised
Daniel's father that the umbrella endorsement did not include UM and UIM
excess coverage. Encompass argues that the 2014 amendment to the Coverage
Summary is irrelevant and inadmissible.
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B.
Appellate courts "review[] an order granting summary judgment in
accordance with the same standard as the motion judge." Bhagat v. Bhagat, 217
N.J. 22, 38 (2014) (citations omitted). Our function is not "to weigh the
evidence and determine the truth of the matter but to determine whether there is
a genuine issue for trial." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520,
540 (1995) (quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249
(1986)); accord R. 4:46-2(c). A trial court's determination that a party is entitled
to summary judgment as a matter of law is not entitled to any "special
deference," and is subject to de novo review. Cypress Point Condo. Ass'n v.
Adria Towers, L.L.C., 226 N.J. 403, 415 (2016) (citation omitted).
Basic legal principles guide courts construing language in insurance
policies. "The doctrine that courts do not lightly interfere with freedom of
contract must be applied cautiously and realistically with regard to complex
contracts of insurance, since such contracts are highly technical, extremely
difficult to understand, and not subject to bargaining over the terms." Sparks v.
St. Paul Ins. Co., 100 N.J. 325, 335 (1985). Insurance policies "are contracts of
adhesion, prepared unilaterally by the insurer, and have always been subject ed
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to careful judicial scrutiny to avoid injury to the public." Ibid. (citing Di Orio
v. N.J. Mfrs. Ins. Co., 79 N.J. 257, 269 (1979)).
"The fundamental principle of insurance law is to fulfill the objectively
reasonable expectations of the parties." Werner Indus., Inc. v. First State Ins.
Co., 112 N.J. 30, 35 (1988). Generally, when interpreting an insurance policy,
we give its words their plain, ordinary meaning. Kimber Petroleum Corp. v.
Travelers Indem. Co., 298 N.J. Super. 286, 300 (App. Div. 1997). Courts should
not "engage in a strained construction to support the imposition of liability."
Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 273 (2001) (citation omitted).
If a policy's language is clear, the policy should be enforced as written to
fulfill the reasonable expectations of the parties. Passaic Valley Sewerage
Comm'rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596, 608 (2011). Courts
must "'avoid writing a better insurance policy than the one purchased.'" Villa v.
Short, 195 N.J. 15, 23 (2008) (quoting President v. Jenkins, 180 N.J. 550, 562
(2004)).
On the other hand, if a policy's terms are ambiguous "they are construed
against the insurer and in favor of the insured, in order to give effect to the
insured's reasonable expectations." Flomerfelt v. Cardiello, 202 N.J. 432, 441
(2010) (citing Doto v. Russo, 140 N.J. 544, 556 (1995)).
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Here, the parties' dispute as to whether ambiguities exist in the Encompass
Policy's Coverage Summary concerning umbrella coverage appears to turn on
terms of art undefined in the policy. The Coverage Summary states umbrella
coverage "applies to all 'covered exposures' and 'additional covered exposures.'"
Encompass claims the language is clear because the purpose of umbrella
coverage is to provide excess liability insurance, not first party UM or UIM
coverage. Thus, according to Encompass, there is no ambiguity in the Coverage
Summary. Moreover, the umbrella endorsement plainly and clearly excludes
UM and UIM coverage.
It is questionable whether an unsophisticated insured would understand
industry terminology undefined in an insuring agreement. Nevertheless, we
conclude the trial court's decision was correct. Daniel's mother and father were
the policyholders. They had no expectation of umbrella UIM coverage. Mr.
Lobosco had specifically informed Daniel's father the policy did not include
umbrella UIM coverage. Daniel's father never forgot that disclosure, nor did he
ever entertain any contrary belief. To the contrary, his knowledge that the policy
contained no umbrella UM or UIM coverage, and his expressed desire to obtain
such coverage if available, were critical elements of Daniel's claim against the
Lobosco defendants. Under such circumstances, we will not "engage in a
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strained construction to support the imposition of liability." Progressive Cas.
Ins. Co., 166 N.J. at 273.
Daniel has cited no New Jersey case, or any case for that matter, in which
a court has declared that an insurance policy includes coverage the parties to the
insurance contract know does not exist. We decline to do so. Daniel's parents,
who purchased the Encompass Policy, had no belief that the policy provided
UIM umbrella coverage, let alone an objectively reasonable belief. They knew
the Encompass Policy provided no such coverage. We decline to write a better
insurance policy than the one Daniel's parents knew they purchased. See Villa,
195 N.J. at 23.
IV.
Next, Daniel argues that the trial court erred by failing to apply the correct
burden of proof when it granted the Lobosco defendants' motion for an
involuntary dismissal at the close of Daniel's proofs. Daniel asserts the burden
of proof did not require him to establish both the terms and conditions of the
insurance policy Lobosco should have procured and the underwriting guidelines
in effect for such policies. Daniel adds the trial court did not give him the benefit
of all reasonable inferences as required by the applicable standard of review.
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The Lobosco defendants respond that Daniel invited the trial court to
require prima facie evidence of causation and is thus barred from taking a
different position on appeal. In addition, the Lobosco defendants argue the court
correctly followed well-settled causation principles in determining that Daniel
failed to establish a prima facie case of professional negligence, as Daniel
offered no admissible evidence of the terms of the 2011 coverage or the
underwriting guidelines that applied to it.
Daniel replies that the doctrine of invited error is inadmissible and
reiterates that the trial court misapplied the burden of proof.
The Supreme Court has explained the duty owed by an insurance broker
to a member of the public.
When engaged by a member of the public to obtain
insurance, the law holds [an insurance broker] to the
exercise of good faith and reasonable skill, care and
diligence in the execution of the commission. He is
expected to possess reasonable knowledge of the types
of policies, their different terms, and the coverage
available in the area in which his principle seeks to be
protected.
[Rider v. Lynch, 42 N.J. 465, 476 (1964).]
If the broker "neglects to procure the insurance, or if the policy is void or
materially deficient, or does not provide the coverage [the broker] undertook to
supply, because of his failure to exercise the requisite skill of diligence, he
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becomes liable to his principal for the loss sustained thereby." Sobotor v.
Prudential Prop. & Cas. Ins. Co., 200 N.J. Super. 333, 338 (App. Div. 1984). A
duty of an insurance broker is no different than the duty owed by an insurance
agent. "The difference between a broker and an agent lies in the duties and
responsibilities owed to the insurance carrier, not to the insured." Id. at 337 n.1.
Significantly,
[i]t is not necessary for the client in order to establish a
breach of duty to prove that he laid out for the broker
the elements of a contract of insurance. It is sufficient
to show that he authorized procurement of the insurance
needed to cover the risks indicated and that the broker
agreed to do so but failed or neglected to perform his
duty. The terms of the contract to procure the
insurance, the scope of the risk and subject matter to be
covered, may be found by implication. The principal
does not sue on the contract of insurance; he seeks
recovery for the loss occasioned by the failure to
procure such a contract or such a valid contract.
[Lynch, 42 N.J. at 477.]
The trial court determined Daniel's proofs were sufficient to show that
RLI coverage was available when the Encompass policy renewed in 2011, and
that the Lobosco defendants had a special relationship with Daniel's father,
which they breached. The court further determined, however, that Daniel had
failed to establish the terms of the policy and the underwriting criteria. We agree
with Daniel that the court erred in doing so.
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"A motion for involuntary dismissal only should be granted where no
rational juror could conclude that the plaintiff marshaled sufficient evidence to
satisfy each prima facie element of a cause of action." Dutton v. Rando, 458
N.J. Super. 213, 230 (App. Div. 2019) (quoting Godfrey v. Princeton
Theological Seminary, 196 N.J. 178, 197 (2008)). Thus, when deciding a Rule
4:37-2(b) motion for involuntary dismissal at the end of the plaintiff's case, a
court must decide "whether 'the evidence, together with the legitimate inferences
therefrom, could sustain a judgment in . . . favor' of the party opposing the
motion." Dolson v. Anastasia, 55 N.J. 2, 5 (1969) (quoting Rule 4:37-2(b)).
"[I]f, accepting as true all the evidence which supports the position of the party
defending against the motion and according him the benefit of all inferences
which can reasonably and legitimately be deduced therefrom, reasonable minds
could differ, the motion must be denied." Ibid. (citing Bozza v. Vornado, Inc.,
42 N.J. 355 (1964)). We apply the same standard as the motion judge. Dutton,
458 N.J. Super. at 230.
Daniel's expert, Seigel, testified about the RLI underwriting guidelines for
2014 and 2016, and testified based on his broad experience in the insurance
industry that the 2011 guidelines would have been at least as broad, not
narrower. This testimony was not stricken as a net opinion. Evaluating the
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testimony under the standard that governs a motion for a voluntary dismissal, a
reasonable juror could have readily inferred the underwriting guidelines for the
RLI policy would have not excluded Daniel's parents or their family members.
Seigel testified expressly that such disqualifiers as youthful operators or
operators with previous DWI charges did not exist. Seigel added that as the
Yablonskys presented no more than standard risks, they would have fit within
the RLI program.
In addition, Seigel testified that an excess policy, as distinguished from
an umbrella policy, generally tracked the terms of the underlying coverage.
Although his testimony on this point was at times ambiguous, he testified
expressly that in his opinion the coverage was available: "it was excess
uninsured/underinsured motorist coverage in the RLI policy."
Seigel's testimony supported a reasonable inference that the RLI policy
would have provided the Yablonskys with $1,000,000 in excess umbrella
coverage. Daniel had no burden to disprove policy exclusions. Generally, a
defendant asserting an insurance policy's exclusion has the burden of proving i t.
In view of the Supreme Court's holding in Lynch concerning a broker's
duty and proof of breach of that duty, 42 N.J. at 477, Seigel's testimony, and our
standard of review, we conclude Daniel's proofs should have survived the
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Lobosco defendants' involuntary dismissal motion. Daniel having established
through Seigel that excess UM coverage was available to the Yablonskys, it was
incumbent upon the Lobosco defendants to prove RLI underwriting guidelines
or policy exclusions would have precluded coverage.
The Lobosco defendants emphasize general principles of proximate
causation and strenuously argue that without proving the terms and conditions
of a policy, neither Daniel nor any similarly situated plaintiff can sustain the
burden of proving causation. We reject that argument for two reasons. First,
considering Daniel's expert's testimony, Daniel submitted proofs that, when
viewed under the liberal standard governing involuntary dismissal motions,
established a factual dispute for the jury to resolve. Second, as the Supreme
Court made clear in Lynch, the insured does not sue on a contract of insurance;
rather, the insured seeks recovery for the loss occasioned by the failure to
procure such a contract. Ibid. Seigel's testimony established that a $1,000,000
excess UIM policy was available to the Yablonsky family and the Lobosco
defendants breached their duty by failing to procure it. Under the standard
applicable to a motion for an involuntary dismissal at trial, Daniel's claim should
have survived the motion.
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We have considered the Lobosco defendants' remaining arguments and
found them to be without sufficient merit to warrant further discussion. R. 2:11-
3(e)(1)(E). Accordingly, we reverse the order involuntarily dismissing Daniel's
case and remand the case for retrial.
V.
Last, we address the order that granted summary judgment to Encompass
and dismissed the Lobosco complaint for contractual indemnification. Our
review of the trial court's grant of summary judgment to Encompass is de novo,
Cypress Point Condo. Ass'n, 226 N.J. at 415, as is our interpretation of the
agency agreement, Kieffer v. Best Buy, 205 N.J. 213, 222-23 (2011).
The indemnification agreement requires, as a prerequisite, that any
"claims, losses, damages, liabilities, judgments or settlements, including
reasonable costs, expenses and attorneys' fees . . . aris[e] out of the relationship
of the parties under the terms of this Agreement." Daniel's claim against the
Lobosco defendants did not arise out of the Encompass-Lobosco Group agency
agreement. Rather, they arose out of a separate and independent duty Mr.
Lobosco owed to Daniel's father, and concerned Mr. Lobosco's failure to inform
Daniel's father of an insurance product provided not by Encompass, but by RLI
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through the Big I, as evidenced by the first complaint Daniel filed, which did
not include Encompass.
The agency agreement's indemnification provision also required that the
claim against the Lobosco Group be caused by an act or omission of Encompass,
and not by any conduct of the Lobosco Group that caused, contributed to or
compounded such act, error or omission. Here it was not an act or omission by
Encompass, but an omission by Mr. Lobosco that gave rise to Daniel's claim
against the Lobosco defendants. The clear and unambiguous terms of the
indemnification provision thus preclude the Lobosco defendants'
indemnification claim. See Kieffer, 205 N.J. at 223 ("If an indemnity provision
is unambiguous, then the words presumably will reflect the parties'
expectations."). Accordingly, we affirm the trial court's order that granted
summary judgment to Encompass and dismissed the Lobosco defendants'
indemnification claim against Encompass.
Affirmed in part, reversed in part, and remanded for retrial of plaintiff's
claim against the Lobosco defendants. We do not retain jurisdiction.
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