Retail Clerks Welfare Fund, Local No. 1049, AFL-CIO v. Continental Cas. Co.

• Decision Date: 21 December 1961
• Docket Number: No. A--415,AFL-CIO,A--415
• Citation: 71 N.J.Super. 221,176 A.2d 524
• Parties: RETAIL CLERKS WELFARE FUND, LOCAL NO. 1049,, an unincorporated trust fund, Plaintiff-Appellant and Cross-Respondent, v. CONTINENTAL CASUALTY COMPANY, a stock company of the State of Indiana, duly licensed as an insurance company in the State of New Jersey, Defendant-Respondent and Cross-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 221

71 N.J.Super. 221

176 A.2d 524

RETAIL CLERKS WELFARE FUND, LOCAL NO. 1049, AFL-CIO, an unincorporated trust fund, Plaintiff-Appellant and Cross-Respondent, v. CONTINENTAL CASUALTY COMPANY, a stock company of the State of Indiana, duly licensed as an insurance company in the State of New Jersey Defendant-Respondent and Cross-Appellant.

No. A--415.

Superior Court of New Jersey Appellate Division.

Argued Oct. 23, 1961.

Decided Dec. 21, 1961.

Richard P. Weitzman, Newark, for appellant and cross-respondent (Parsonnet, Weitzman & Oransky, Newark, attorneys).

Nicholas Scalera, Newark, for respondent and cross-appellant (George D. McLaughlin, Newark, attorney).

Before Judges PRICE, SULLIVAN and LEONARD.

The opinion of the court was delivered by

SULLIVAN, J.A.D.

Plaintiff is an unincorporated trust fund set up as an adjunct to a labor union for the purpose of providing certain welfare benefits to eligible employees. From 1947 to 1959 plaintiff contracted with defendant insurance company for accident and health group coverage for such employees and paid premiums called for by the insurance contracts.

In the instant suit the plaintiff charges that during the years in question defendant had followed the practice of granting experience refunds to plaintiff and to holders of similar group insurance policies. However, plaintiff charged that defendant had improperly, unfairly and illegally calculated the experience refund due plaintiff from the date of inception of its group insurance policies, and had discriminated in its rebates based on the experience refund as between plaintiff and other policyholders covering insureds of the same class and of essentially the same risks and hazards to the defendant, in violation of law and contract.

Defendant, in its answer, admitted issuing the policies in question, but denied the balance of the allegations of the complaint, and by way of separate defense, Inter alia, pleaded that plaintiff failed to state a claim upon which relief could be granted.

After issue joined, plaintiff served three sets of interrogatories upon defendant, the first of which was answered, but supplemental interrogatories (1) and supplemental interrogatories (2) were stricken by court order.

Thereafter defendant moved for an order dismissing the complaint and for summary judgment in favor of defendant upon the ground that the complaint failed to state a claim upon which relief could be granted.

The trial court denied the motion to dismiss, holding that the complaint stated a cause of action, but granted defendant's motion for summary judgment on the ground that there was 'no genuine issue of fact.'

Plaintiff appeals from that part of the ruling which granted a summary judgment in favor of defendant, and also appeals from the order striking its supplemental interrogatories (2). Defendant cross-appeals from that part of the trial court's ruling which denied defendant's motion to dismiss the complaint.

A proper consideration of this matter requires that the cross-appeal be considered first.

We hold that the complaint does not state a cause of action upon which relief may be granted by civil action. Plaintiff concedes that the policies issued to it by defendant make no provision for experience refunds, and plaintiff does not contend that defendant is under an obligation to issue any refunds whatsoever. Nor does plaintiff claim that in the absence of statutory prohibition, discrimination in the making of refunds between insureds of the same class is illegal. Cf. 29 Am.Jur., Insurance, § 61, § 506; 44 C.J.S. Insurance § 342. The theory of plaintiff's cause of action is that once defendant determined to issue experience refunds to its policyholders, it was prohibited by N.J.S.A. 17:29B--4(7)(b) from discriminating against New Jersey policyholders. In other words, plaintiff contends that the provisions of N.J.S.A. 17:29B are incorporated by reference into its contract of insurance with defendant and give plaintiff a cause of action for breach of contract which it otherwise would not have.

The pertinent provisions of N.J.S.A. 17:29B are as follows:

Section 1. 'The purpose of this act is to regulate trade practices in the business of insurance * * *.'

Section 3. 'No person shall engage in this State in any trade practice which is defined in this act as or determined pursuant to this act to be an unfair method of competition or an unfair or deceptive act or practice in the business of insurance.'

Section 4. 'The following are hereby defined as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance:

(7) Unfair discrimination. * * *

(b) Making or permitting any unfair discrimination between individuals of the same class and of essentially the same hazard in the amount of premium, policy fees, or rates charged for any policy or contract of accident or health insurance or in the benefits payable ...