Unger v. Afco Credit Corp, 00-6303 (MLC).
| Decision Date | 30 September 2002 |
| Docket Number | No. 00-6303 (MLC).,00-6303 (MLC). |
| Citation | 239 F.Supp.2d 447 |
| Parties | Glenda UNGER, Plaintiff, v. AFCO CREDIT CORP., et al., Defendants. |
| Court | U.S. District Court — District of New Jersey |
Harrington & Caldwell, P.C. (Sally J. Caldwell of counsel), Cherry Hill, NJ, for Plaintiff.
Budd, Larner, Gross, Rosenbaum, Greenberg & Sade, P.C. (Susanna J. Morris of counsel), Cherry Hill, NJ, for defendant Scottsdale Insurance Company.
White & Williams, LLP (Christopher P. Leise of counsel), Westmont, NJ, for defendant USI Midlantic, Inc.
This is an action, inter alia, to recover damages for breach of an insurance policy. The insurer, the defendant Scottsdale Insurance Company ("Scottsdale"), moves for summary judgment dismissing the complaint and all cross claims insofar as asserted against it. For the following reasons, the motion is denied.
The plaintiff, Glenda Unger ("Unger"), is a resident of New Jersey and allegedly held an insurable interest in a commercial building in Lakewood, New Jersey ("the Lakewood property"). (Am. Compl. at 2; Unger Cert, dated 1-28-02 ("1-28-02 Cert.") at 1-2.) Since 1986, she had an office near the Lakewood property to oversee her real estate holdings, run a taxicab company, sell cars, and receive mail. Scottsdale, an Arizonan insurer, issued policy number CPS0322732 ("the policy") to Unger in July 1999 covering, inter alia, fire damage to the Lakewood property from July 23, 1999, through July 23, 2000. (Scottsdale's Br. in Supp. of Mot. for Summ. J. ("Scottsdale Br."), Ex. C.) In a July 22, 1999, premium finance agreement ("the agreement"), Unger contracted with the defendant Afco Credit Corp. ("Afco"), a Pennsylvanian premium finance company, to finance her one-time premium payment to Scottsdale and agreed to repay Afco on a monthly basis. (Id., Ex. B.) The defendant USI Midlantic, Inc. ("USI") was Unger's insurance agent as she procured coverage and premium financing. (Am. Compl. at 5-6.)1
The agreement included: (1) a limitedpower-of-attorney provision appointing Afco as Unger's attorney-in-fact with authority to direct Scottsdale to cancel the policy—upon giving any required statutory notice—if she missed a payment, and permitting Afco to execute and deliver on her behalf all forms, instruments, and notices concerning the policy in furtherance of the agreement; and (2) a provision that New Jersey law governed. (Scottsdale Br., Ex B. at ¶ ¶ 2, 14, 23.) Thus, the manner in which Afco could direct Scottsdale to cancel the policy was to be in accordance with the New Jersey Insurance Premium Finance Company Act ("the Act"). See N.J.S.A. §§ 17:16D-1, 17:1613(a).
Afco was required under the Act to give Unger at least ten days written notice by mail of its intent to direct Scottsdale to cancel the policy if she missed a payment, unless she cured her default; Afco was also required to "send" a copy of the notice of intent to cancel to USI. N.J.S.A. § 17:16D-13(b). Afco could then request cancellation of the policy in Unger's name after the ten-day period expired by mailing to Scottsdale a notice of cancellation; the policy would then be cancelled as if the notice had been submitted by Unger herself. N.J.S.A. § 17:16D-13(c). Afco was also required to mail a notice of cancellation to Unger's last known address and to USI. Id.
Afco allegedly mailed Unger a notice of intent to cancel the policy from its Kansas office on September 1, 1999, but—according to the eventual deposition testimony of Martin Quish ("Quish"), an Afco employee working in its New York office since 1998—it failed to keep a copy. (PL's 2-8-02 Cert., Ex. C, Tr. of Quish's 8-28-01 Dep. ("Quish Dep.") at 5, 13.) Afco generated a print-out in Kansas dated September 1, 1999, entitled, "List of `Notice of Intent to Cancel'" ("the print-out"), listing several insureds, agents, and account numbers; Unger and a USI employee were included. (Scottsdale Br., Ex. G.) The print-out included no addresses and contained at the bottom the following: "I certify that notices of intent to cancel ... containing information shown above were placed in envelopes with the postage fully prepaid, sealed and deposited in the mail addressed to the insured and insurance agent at the proper addresses on the date shown above." (Id.) That statement was signed and dated by Ann James, an Afco employee in Kansas. (Id.; Quish Dep. at 11, 78.)
It was James's job—according to Quish—to review the notices, put them in envelopes, and bring them to the mail room. (Id. at 13, 81-84.) The mail-room employees, however, neither signed affidavits attesting that these notices were mailed, nor did they obtain proof of receipt from the post office. (Id. at 24-25, 84-85.) Quish also testified that he knew neither who ran the mail room nor who was in charge of affixing postage to the mail in Kansas. (Id. at 94-95.)
Unger testified at her eventual deposition that neither she nor her family-member employees received the notice of intent. (Unger Dep. at 36-38, 58.) Her sister, a former employee, agreed with this testimony at her deposition and testified that she had always referred any notices of intent to cancel policies to Unger. (PL's 2-8-02 Cert., Ex. D, Tr. of Ellen Goldberg's 8-28-01 Dep. ("Goldberg Dep.") at 31-33.)
Afco allegedly mailed notices of cancellation of the policy to Unger and Scottsdale from Kansas on October 8, 1999; the cancellation was to be effective six days later. (Scottsdale's Br., Ex. J., Notice of Cancellation; Quish Dep. at 62-63, 78-79.) Afco apparently kept a copy of the notice of cancellation allegedly mailed to Unger. (Id.) But Afco failed to keep a copy of the original notice of cancellation allegedly mailed to Scottsdale. (Id. at 66). Also, according to Scottsdale itself, Scottsdale "did not receive a copy of the Notice of Cancellation mailed on October 8, 1999, until April 3, 2000, when it was faxed to Scottsdale's broker." (PL's 2-8-02 Cert., Ex. F, Scottsdale's Resp. to PL's Req. to Admit dated 10-29-01 ("Scottsdale's Resp. to Req. to Admit").) As to a list showing Unger's notice of cancellation, Quish testified as follows:
Id. at 86-87. Apparently, Afco also had no "certification" that the notice of cancellation was mailed to Unger.
Unger testified in her deposition that neither she nor her family-member employees received a notice of cancellation from Afco. (Unger Dep. at 44-46, 58.) Her sister testified to this as well. (Goldberg Dep. at 32-33).
The Lakewood property was damaged by fire on July 12, 2000. (Am. Compl. at 2; Scottsdale Br. at 5.) Scottsdale denied coverage in September 2000, asserting that the policy had been "cancelled by [Afco] effective 10-14-99 for non-payment of premium." (PL's 2-8-02 Cert., Ex. M, letter dated 9-5-00.) Unger commenced this action in December 2000.
This Court granted Afco's earlier motion to dismiss the complaint insofar as asserted against it (see Fed.R.Civ.P. 12(b)(6)) by order dated December 21, 2001 ("12-21-01 Order"). Without considering whether Afco provided proper notices of intent to cancel or of cancellation, the Court held that Unger had no legally cognizable cause of action against Afco, even though Afco was charged with complying with the Act's notice requirements. (Id. at 10.) The Court found that under New Jersey law the Act's purpose is promoted "by treating [Afco's] failure ... to follow [the Act] as vitiating any purported cancellation of the insurance policy, thereby allowing [Unger] to pursue a cause of action against [Scottsdale]." (Id. at 18.) In addition, the Court held that under New Jersey law "an insured is best protected from an unannounced cancellation by permitting the insured to sue the insurer under the insurance policy rather than by recognizing the cancellation but permitting a claim against a premium finance company," and that Scottsdale had the burden of showing Afco's compliance. (Id. at 22-25.) The Court also found that New Jersey public policy dictated that premium finance companies be protected from liability that might otherwise cause them to cease financing premiums for those who could not otherwise afford to buy insurance. (Id.)
Scottsdale now moves for summary judgment dismissing the complaint and all cross claims insofar as asserted against it, arguing that the policy was properly cancelled. Alternatively, it argues that Unger did not have an insurable interest in the Lakewood property and, thus, is not entitled to coverage.
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