Price v. New Jersey Mfrs. Ins. Co.

• Decision Date: 10 March 2005
• Citation: 867 A.2d 1181,182 N.J. 519
• Parties: Theodore PRICE, Plaintiff-Respondent, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Appellant.
• Court: New Jersey Supreme Court

867 A.2d 1181

182 N.J. 519

Theodore PRICE, Plaintiff-Respondent, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Appellant.

Supreme Court of New Jersey.

Argued November 9, 2004.

Decided March 10, 2005.

Stephen O. Mortenson, Springfield, argued the cause for appellant (Mortenson and Pomeroy, attorneys; Mr. Mortenson and Karen E. Heller, on the briefs).

John R. Gorman, New Brunswick, argued the cause for respondent (Lutz, Shafranski, Gorman & Mahoney, attorneys). Justice WALLACE delivered the opinion of the Court.

The primary issue in this appeal is whether an insurer should be barred from raising the statute of limitations defense to an insured's claim for uninsured motorist benefits. The trial court found equitable reasons to reject the insurer's defense and compelled arbitration. The Appellate Division affirmed. Price v. New Jersey Mfrs. Ins. Co., 368 N.J.Super. 356, 846 A.2d 617 (2004). Because of a dissent in the Appellate Division, the case is before us as a matter of right. R. 2:2-1(a)(2). We conclude that the trial court and the Appellate Division properly applied equitable principles to bar the insurer from raising a statute of limitations defense.

I.

On August 30, 1995, plaintiff Theodore Price, a pedestrian in the course of his employment, was struck by a vehicle driven by Howard Wanderman. Plaintiff maintained insurance coverage with defendant New Jersey Manufacturers (NJM) that included uninsured motorist coverage. The policy's uninsured motorists coverage provision provides in relevant part:

If we and insured do not agree:

1. Whether that insured is legally entitled to recover damages; or

2. As to the amount of damages which are recoverable by that insured;

from the owner or operator of an uninsured motor vehicle or an underinsured motor vehicle, then the matter may be arbitrated.

Either party may make a written demand for arbitration. In this event, each party will select an arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction.

Sometime after the accident, plaintiff learned that Wanderman's insurance company had denied coverage for the accident. On February 12, 1998, plaintiff's attorney wrote to NJM alerting the company that plaintiff would be presenting an uninsured motorist claim and to "[p]lease establish an uninsured motorists claim file." By letter dated March 18, 1998, NJM's claims representative acknowledged receipt of plaintiff's letter and requested information as to plaintiff's injuries and the amount of any workers' compensation lien.

In May 1998, NJM again sought information regarding any workers' compensation lien. In a letter dated June 29, 1998, plaintiff's attorney notified NJM that plaintiff had instituted an action against Wanderman to protect NJM's subrogation interest and noted that the workers' compensation lien totaled $9,488.60. He expressly wrote that he would like "to proceed with [his] client's uninsured motorists claim" and inquired whether NJM intended to pursue subrogation against Wanderman. Plaintiff's attorney enclosed copies of plaintiff's medical records and other information to "allow [NJM] to begin to evaluate this claim." On September 24, 1998, plaintiff's attorney mailed the workers' compensation file to NJM, and the following day, NJM authorized plaintiff's attorney to dismiss the action against Wanderman.

On October 8, 1998, a different NJM claims representative requested copies of all plaintiff's medical bills and reports and his insurance declaration sheet to verify his tort threshold. Approximately four months later, plaintiff's attorney complied with that request.

On April 20, 1999, NJM scheduled a medical examination of plaintiff by its doctor for some time in September 1999. In August, NJM instructed plaintiff's attorney to place plaintiff's employer on notice of its claim, and requested a copy of the employer's workers' compensation policy. On September 14, 1999, plaintiff was examined by Dr. Bosniak. Although plaintiff's attorney sought a copy of Dr. Bosniak's medical report, NJM indicated its policy was not to provide the report. Plaintiff's attorney wrote NJM challenging its refusal to supply the doctor's report and promised to contest admission of the report at trial or arbitration if NJM continued to refuse to comply. On April 13, 2000, NJM again declined to provide plaintiff with a copy of his medical report.

On January 15, March 1, and April 5, 2001, plaintiff's attorney sent NJM various documents including medical reports, employment records, a workers' compensation lien letter, and a medical authorization form. Finally, on August 21, 2001, nine days before the expiration date of the statute of limitations, NJM requested plaintiff's complete workers' compensation file, the original MRI films dated December 20, 1996, February 12, 1998, and November 20, 1998, and his employer's "policy language regarding their UM [uninsured motorist] limits and exposure to this loss."

On September 20, 2001, plaintiff's attorney forwarded most of the requested documents and indicated he would forward the MRI films as soon as he received them. Plaintiff's counsel continued to send additional information to NJM in letters dated October 1, 2001, March 27, April 23, and September 27, 2002. In his last letter, counsel demanded that NJM evaluate the file for settlement purposes and noted that as of March 20, 2002, the workers' compensation lien exceeded $53,326. NJM did not reply to any of those letters.

On November 22, 2002, plaintiff filed a complaint and Order to Show Cause seeking to compel NJM to participate in arbitration. NJM asserted that plaintiff failed to formally request coverage or demand arbitration prior to the expiration of the statute of limitations on August 30, 2001; therefore, it was not required to participate in arbitration.

The trial court "found that NJM's course of conduct had lulled plaintiff's attorney into a false sense of having timely made a UM [uninsured motorist] claim." The Appellate Division affirmed, holding that NJM was estopped from raising the statute of limitations defense and that it should have notified plaintiff of its intent to rely on the statute of limitations. Price, supra, 368 N.J.Super. at 363, 366, 846 A.2d at 621-22,. The dissenting judge disagreed, finding no trickery or misconduct by NJM sufficient to apply equitable estoppel. Id. at 367, 846 A.2d at 624. NJM appealed as of right on that issue. We also granted NJM's separate petition for certification on the issue of whether the Appellate Division's notification rule should apply retroactively or prospectively. 181 N.J. 546, 859 A.2d 691.

II.

In Green v. Selective Insurance Co. of America, we determined that the six-year statute of limitations applied to uninsured motorist claims and that the statute begins to run from the date of the accident. 144 N.J. 344, 354, 676 A.2d 1074, 1080 (1996). Here, plaintiff was injured on August 30, 1995, and did not file his complaint until November 22, 2002. Absent some relief, the six-year statute of limitations bars plaintiff's claim.

"The primary purpose of the statute of limitations is to provide defendants a fair opportunity to defend and to prevent plaintiffs from litigating stale claims." W.V. Pangborne & Co., Inc. v. New Jersey Dep't of Transp., 116 N.J. 543, 563, 562 A.2d 222, 232 (1989) (citing Ochs v. Fed. Ins. Co., 90 N.J. 108, 112, 447 A.2d 163, 165 (1982); O'Keeffe v. Snyder, 83 N.J. 478, 490-91, 416 A.2d 862, 868-69 (1980)). Consistent with that purpose, "where defendants are on notice of the claims, and no significant prejudice results, the policy reasons for upholding a strict statute of limitations recede." Ibid. To avoid harsh results from a mechanical application of the statute of limitations, this Court has applied equitable principles to conclude that the statute should yield to other considerations. We noted in Negron v. Llarena, 156 N.J. 296, 300, 716 A.2d 1158, 1160 (1998), that "[p]rocedural statutes of limitations are not applied strictly. Flexible applications of procedural statutes of limitations may be based on equitable principles, such as the discovery rule, e.g., Lopez v. Swyer, 62 N.J. 267, 300 A.2d 563 (1973), or estoppel, e.g., O'Keeffe v. Snyder, 83 N.J. 478, 416 A.2d 862 (1980)."

In short, under varying circumstances we have recognized that tolling of the statute of limitations is the fair and responsible result, because the "[u]nswerving `mechanistic' application of statutes of limitations would at times inflict obvious and unnecessary harm upon individual plaintiffs without advancing [the] legislative purposes." Galligan v. Westfield Ctr. Serv., Inc., 82 N.J. 188, 192, 412 A.2d 122, 124 (1980). See also Peloso v. Hartford Fire Ins. Co., 56 N.J. 514, 521, 267 A.2d 498, 501 (1970) (holding fair resolution of statutory incongruity is to toll period of limitation from time insured gives notice until liability is formally declined by insurer).

III.

The undisputed facts here support an equitable tolling of the statute of limitations. Plaintiff's attorney first notified NJM on February 12, 1998, that plaintiff "would be presenting an uninsured motorists claim," and on June 29, 1998, he wrote that plaintiff "would like to proceed with [his] uninsured motorist claim[s]." In the latter letter he enclosed various documents to permit NJM "to begin to evaluate this claim." In addition, plaintiff informed NJM that he filed a lawsuit against the tortfeasor to protect the interest of NJM. A NJM claims representative wrote to plaintiff's counsel on October 8, 1998, that she was now handling plaintiff's claim and requested "copies of all medical bills and reports on [plaintiff] as they become available." During the next several years, NJM received various information necessary to evaluate plaintiff's claim, including a medical examination of plaintiff.

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