President v. Jenkins
| Decision Date | 04 August 2004 |
| Citation | 853 A.2d 247,180 N.J. 550 |
| Parties | Deborah PRESIDENT and Perry President, Plaintiffs, v. Dr. Reginald JENKINS, Defendant-Appellant, and St. Barnabas Medical Center, Dr. Lamberto Flores, Dr. Francine Hughes, Dr. John Doe, Dr. Robert Roe, (fictitious name), Sally Smith (fictitious name), XYZ Brokerage Agency, (fictitious name) and Princeton Insurance Company, Defendants, and C & R Insurance Agency and Zurich Insurance Company, Defendants-Respondents. |
| Court | New Jersey Supreme Court |
Hugh P. Francis, Morristown, argued the cause for appellant (Francis & Berry, attorneys; Peter A. Olsen, on the brief).
Eric L. Harrison, Edison, argued the cause for respondent C & R Insurance Agency (Methfessel & Werbel, attorneys).
Kevin T. Coughlin argued the cause for respondent Zurich American Insurance Company (McElroy, Deutsch & Mulvaney, attorneys; Robert W. Muilenberg and David D. Hess, Morristown, on the brief). Nooshin Namazi submitted a brief on behalf of amicus curiae, Professional Insurance agents of New Jersey (Nicoletti, Hornig, Campise, Sweeney & Paige, attorneys; David H. Paige, New York, NY, a member of the New York bar, on the brief).
In this insurance case, we consider two separate issues: (1) whether a "claims made" professional liability insurance policy issued by a successor insurer provides coverage for an asserted claim against its insured, and (2) whether the insurance agent breached its duty of care in procuring the policy for the insured. The trial court granted summary judgment in favor of both the insurer and the agent. The Appellate Division affirmed. President v. Jenkins, 357 N.J.Super. 288, 814 A.2d 1173 (2003). Because of a dissent in the Appellate Division, id. at 318-325, 814 A.2d 1173, the case is before us as a matter of right, R. 2:2-1(a)(2). Prior to argument, we accorded amicus curiae status to the Professional Insurance Agents of New Jersey (Agents). We now conclude that the insurance documents received by the insured were ambiguous and that the evidence presented an issue of material fact concerning the insured's reasonable expectations. However, we also conclude that the insurance agent breached no duty of care to the insured. Consequently, we reverse in part and affirm in part.
The material facts are these. Dr. Reginald Jenkins, a medical doctor specializing in obstetrics and gynecology, had hospital privileges at St. Barnabas Medical Center. In February 1987, he obtained medical malpractice coverage with Princeton Insurance Company (Princeton) under an "occurrence" policy that was renewed for successive one-year periods through February 1998. Generally, an "occurrence" policy provides coverage for any asserted misconduct that occurs during the policy period, even if the claim is asserted after the policy expires.
In the Fall of 1997, Princeton informed Dr. Jenkins that it would cancel his insurance policy unless he paid his overdue premium. Dr. Jenkins failed to pay and Princeton notified him of the cancellation, retroactive to October 26, 1997, in a letter dated January 9, 1998. Consequently, the Princeton policy expired on October 26, 1997, instead of February 8, 1998.
In August 1997, Dr. Jenkins had discussed obtaining replacement medical malpractice insurance with Patrick O'Brien, a sales representative for C & R Insurance Agency (C & R). O'Brien informed Dr. Jenkins that he was an agent for Zurich Insurance Company (Zurich) and offered to sell him insurance coverage. Dr. Jenkins explained that he was currently insured by Princeton, but that his policy would expire at the beginning of February 1998. He completed a "Non-Binding Information Quote Form" and indicated that he was insured with Princeton under an "occurrence plus" policy and would require new coverage effective February 1998.
On January 8, 1998, Dr. Jenkins met with O'Brien and completed and signed an insurance application. However, Dr. Jenkins did not answer the questions concerning his requested effective date of coverage, insurance history for the previous three years, and whether his present coverage was "claims made." Dr. Jenkins indicated that his Princeton insurance policy expired on February 1, 1998, and that his professional liability insurance had never been "denied, cancelled, or not renewed." His signature appeared beneath the following statement:
I understand that the coverage offered is provided by a claims-made policy and that incidents that occurred prior to the prior acts or retroactive date are not covered and claims reported after the expiration date are not covered unless I purchase or otherwise obtain an extended reporting endorsement by Zurich.
At the meeting, Dr. Jenkins also asked O'Brien what he should do about the final payment he owed Princeton. O'Brien advised him to pay the premium promptly. Dr. Jenkins failed to pay the premium and never informed O'Brien that his Princeton policy was cancelled prior to February 1, 1998.
On January 12, 1998, Dr. Jenkins applied to Credit Corporation (AFCO) to finance his Zurich premium. The finance agreement, which Dr. Jenkins signed, dated, and faxed to C & R, noted the effective date of the Zurich policy was February 1, 1998.
Sometime later, Zurich, through C & R, issued Dr. Jenkins a binder, a certificate of insurance (certificate), and an additional insured physician's endorsement # 1 (endorsement # 1). The binder listed Dr. Jenkins as the insured and Zurich as the insurer. It identified February 1, 1998, to April 1, 1998, as the binder period, January 1, 1998, to January 1, 1999, as the policy period, and February 1, 1998, as the retroactive date. The certificate, which also named Dr. Jenkins as the insured and Zurich as the insurer, set February 1, 1998, as the policy's effective date, and January 1, 1999, as the policy's expiration date. The endorsement named Garden State Physicians Alliance (GSPA)1 as the insured and Dr. Jenkins as an additional insured physician, with a retroactive date of February 1, 1998. It also set January 1, 1998, as the effective date of the policy, January 1, 1999, as the expiration date of the policy, and February 1, 1998, as the effective date of the endorsement.
C & R mailed Dr. Jenkins the Zurich insurance policy in April 1998. The cover letter declared the policy was written on a "claims-made basis" and included an extended reporting period at no additional premium charge. Further, the letter instructed Dr. Jenkins to "review the policy carefully making sure that all information disclosed on the Endorsement Pages is correct."
The Zurich policy's cover page displayed in bold print the following notice near the top of the page: Under the main heading of "Insuring Agreements" and the subheading of "Coverage Provided," the cover page contained the following:
The policy defined "policy period" as There was a reference in the coverage section limiting coverage to medical incidents that occurred after the retroactive date. However, the retroactive date was neither defined nor set forth in the policy.
With the policy, Dr. Jenkins received a declarations page for the group policy with GSPA as the named insured. It contained, in bold face, the reference to "claims made" coverage and listed a policy period from January 1, 1998, to January 1, 1999, with a retroactive date of January 1, 1997. Dr. Jenkins renewed the Zurich policy at the end of 1998 for the calendar year 1999.
A summary of the various dates on the insurance documents is as follows:
On September 20, 1999, plaintiffs, Deborah and Perry President, filed a medical malpractice complaint against Dr. Jenkins based on injuries resulting from alleged negligence that occurred on January 3 and 4, 1998. Dr. Jenkins forwarded the complaint to Zurich to provide representation. Zurich declined coverage because the incident occurred prior to the policy's February 1, 1998, retroactive date.
Thereafter, plaintiffs amended their complaint several times...
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