NJ Supreme Courts Rules — Put Your Settlement Agreements in Writing

October 18, 2013


  WILLINGBORO MALL, LTD. v. 240/242 FRANKLIN AVENUE LLC (A-62-11) (069082)

The New Jersey Supreme Court has held that “if the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be reduced to writing and signed by the parties before the mediation comes to a close.”

This case involves Willingboro Mall, Ltd. (Willingboro), the owner of the Willingboro Mall, selling its property to 240/242 Franklin Avenue LLC (Franklin) in February 2005.  To secure part of Franklin’s obligations, the parties executed a promissory note and mortgage on the property.  Willingboro subsequently filed a mortgage foreclosure action.  Franklin denied that it defaulted on the note.  The court subsequently referred this matter to nonbinding mediation.

 On November 6, 2007, a retired Superior Court Judge conducted the mediation.  Willingboro’s manager and attorney appeared on behalf of the Willingboro.  The mediation was held at the offices of Franklin’s attorney.  The mediator met privately with each side.  At some point, Franklin offered $100,000 to Willingboro in exchange for settlement of all claims and for a discharge of the mortgage.  On behalf of Willingboro, the manager orally accepted the offer in the presence of the mediator who presented the terms of the proposed settlement.  The Manager also affirmed that he gave his attorney authority to enter into the settlement.  The terms of the settlement were not reduced to writing before the conclusion of the mediation.

 On November 9th, Franklin forwarded to the court and Willingboro a letter announcing that the case had been “successfully settled.”  The letter also set forth the terms of the settlement.  On November 20th, Franklin’s attorney sent a separate letter to Willingboro stating he held the $100,000 in his attorney trust account to fund the settlement.  On November 30th, Willingboro’s attorney told Franklin’s attorney that Willingboro rejected the settlement terms.

 In December, Franklin filed a motion to enforce the settlement agreement.  Franklin attached certifications from its attorney and the mediator that revealed communications made between the parties during the mediation.  The mediator averred in his Certification that the parties voluntarily entered into a binding settlement agreement and that the settlement terms were accurately memorialized in Franklin’s letter to the court.

 Willingboro did not give its consent to the filing of either Certification; however, Willingboro did not move to dismiss the motion based on violations of the mediation communication privilege.  Instead, in opposition to the motion, Willingboro requested an evidentiary hearing and the taking of discovery and filed a Certification of its manager who averred that he reluctantly agreed to take part in the mediation and that he was told it was “nonbinding.”

 During discovery taken in connection with the motion to enforce, five witnesses were deposed including the mediator, Willingboro’s manager and Willingboro’s attorney.  After the close of discovery, the Honorable Michael J. Hogan conducted a four day evidentiary hearing.  Judge Hogan found that a binding settlement agreement was reached as a result of the court directed mediation.  The Appellate Division affirmed the trial court’s enforcement of the settlement agreement.

 The New Jersey Supreme Court granted Willingboro’s petition for certification.  Willingboro raised two issues:  1)  Whether R.1:40-4 (i) requires a settlement agreement reached at mediation to be reduced to writing and signed at the time of mediation and 2) whether Willingboro waived the mediation communication privilege.

 R. 1:40-4(i) states “a settlement reached at mediation is not enforceable unless it is reduced to writing at the time of the mediation signed by the parties.”  In this case, the writing memorializing the terms of the settlement was forwarded by Franklin after the mediation and never signed by Willingboro.  Accordingly, Willingboro argued that the purported settlement should not be enforced.  Franklin countered by noting that nothing in R. 1:40-4(i) requires the written settlement agreement resulting from the mediation be created or tendered on the actual day of the mediation.  Willingboro also argued that it did not waive the mediation communication privilege by presenting evidence in opposition to the motion to enforce the oral agreement.  Willingboro noted that the mediation communication privilege had “already been destroyed by Franklin’s disclosures to the court through the mediator certification.”  Thus, Willingboro’s response was simply a defensive measure and should not have been taken as a waiver.

 The Supreme Court noted that R. 1:40-4(d) provides:  “Unless the participants in a mediation agree otherwise or to the extent disclosure is permitted by this rule, no party, mediator or other participant in the mediation may disclose any mediation communication to anyone who is not a participant in the mediation.”  The purpose of the rule is that without assurance of confidentiality, participants will be unwilling to enter into candid and unrestrained communication.  In addition, the New Jersey Mediation Act (N.J.S.A. 2A:23C-1 et. seq.) and the Rules of Evidence (N.J.R.E. 519) confer a privilege on mediation communications.

 The Court noted that there are limited exceptions to the privilege which include a signed writing exception which allows a settlement agreement reduced to writing and adopted by the parties to be admitted into evidence to prove the validity of the agreement.  R.1:40-4(i) provides that “if there is an agreement, it shall be reduced to writing and a copy thereof furnished to each party.”

 The Court noted that the second exception to the mediation communication privilege is waiver.  Pursuant to statute and case law, the waiver must be express.  The Court concluded that the Certifications filed by Franklin’s attorney and the mediator in support of Franklin’s motion to enforce the oral agreement disclosed privilege mediation communications.  Despite the fact that Franklin violated the mediation communication privilege, Willingboro did not timely move to strike or suppress the disclosure of the mediation communications.  Instead, Willingboro proceeded to litigate whether it had in fact entered into a binding oral settlement agreement.  Willingboro breached the mediation communication privilege by appending to its opposition papers the manager’s Certification.  Thus, Willingboro expressly waived the mediation communication privilege in responding to the motion.

 Ultimately, the Court held that settlement agreement was enforceable.  However, in order to avoid these issues in the future, the Court concluded:   “if the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be reduced to writing and signed by the parties before the mediation comes to a close.”

NJ Supreme Court Holds that Passenger in Own Uninsured Vehicle Cannot Pursue Personal Injury Lawsuit

June 22, 2011

On June 1, 2011, the NJ Supreme Court held that N.J.S.A. 39:6A-4.5(a) bars a person who was injured while a passenger in her own uninsured automobile from pursuing a  personal injury action to recover economic and noneconomic damages for those injuries. 

On August 24, 2006, the plaintiff, Denise Perrelli and Geovanni Valverde were driving south on the Garden State Parkway in Perrelli’s uninsured vehicle.  When they left the plaintiff’s home, Perrelli was driving the vehicle but after stopping at a rest area, Valverde took over the driving.  Upon leaving the rest area, the plaintiff’s vehicle was involved in an accident with a car driven by Paul Pastorelle.  As a result of the accident, Valverde was killed and Perrelli sustained serious physical and psychological injuries.

Two years before the accident, the plaintiff had purchased a 1992 Oldsmobile Cutlass and insured it through New Jersey Manufacturers (NJM).  When the plaintiff was first insured by NJM, she lived in Paramus where she received her premium notices.  Thereafter she moved twice.  She could not recall whether she received any premium notices at her last address, but believed her insurance was in effect on the day of the accident.  Perrelli’s coverage remained in effect until August 4, 2006 when NJM canceled her policy for nonpayment of premium.

On August 22, 2008, the plaintiff filed her complaint alleging her injuries were caused by the defendant’s negligence.  The defendant filed an answer and subsequently moved for summary judgment asserting that N.J.S.A. 39:6A-4.5(a) barred the action.  The trial court denied the defendant’s motion and the Appellate Division denied defendant’s motion for leave to appeal.  The Supreme Court granted defendant’s motion for leave to appeal.

N.J.S.A. 39:6A-4.5(a) states, “any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage…(mandated by N.J.S.A. 39:6A-4 or N.J.S.A. 39:6A-3.1) shall have no cause of action for recovery of economic or non-economic loss sustained as a result of an accident while operating an uninsured automobile.”

The issue presented to the court was whether the phrase “while operating” required the plaintiff herself to have actually been driving her uninsured automobile at the time of the accident.  The defendant asserted that it was irrelevant whether the plaintiff was physically driving the car.  “The same legislative purpose of deterring the operation of uninsured motor vehicles, and precluding injured persons who caused the operation of an uninsured motor vehicle and did not contribute to the insurance pool from collecting it, apply equally whether the person seeking recovery for their injury is the driver of his or her own uninsured vehicle or a passenger in it.  Each involves an equal attempt to drain from the insurance pool without contributing to it, and each involves an equal violation of the law.”

The plaintiff argued that the statute, by its “clear and unambiguous meaning”, precludes recovery but only if the plaintiff was physically “operating the vehicle.”  The plaintiff’s noted that the statute had been amended on three occasions and the Legislature never added language to the effect of one who “operates or causes to be operated” an uninsured vehicle.  Lastly, the plaintiff argued that the Statute makes clear the uninsured person must be “culpably” or “knowingly” uninsured and in this case because the plaintiff believed she was insured, she could not be culpably uninsured.

The Supreme Court noted that in interpreting the Statute, if the language is clear on its face, courts should enforce the statute according to its terms.  However, where a literal interpretation would create a manifestly absurd result, the spirit of the law should control.  The Court noted that “to reduce the costs of automobile insurance, to protect victims of automobile accidents and reduce public expenditures when accidents are caused by judgment-proof tortfeasors, New Jersey requires all owners of motor vehicles registered or principally garaged in (the State)…to maintain minimum amounts of…insurance coverage for bodily injury, death and property damage caused by their vehicles.” N.J.S.A. 39:6A-4.5, adopted in 1985, was designed to further the costs and judicial objectives of the No Fault Act.  The Legislature wanted to ensure that an injured, uninsured driver did not draw on the pool of accident victim insurance funds to which he (or she) did not contribute.  The Court found that there was no doubt that the Legislature wanted to assure that all automobiles were covered by compulsory insurance by precluding those who do not have the required coverage from recovering from others merely by having someone else drive their vehicle.

The Court then held “that the preclusion of recovery contained in N.J.S.A. 39:6A-4.5(a) applies to the owner of an uninsured vehicle whether injured as a driver or passenger.”


June 13, 2011

As previously reported, the Appellate Division ruled that a drunk driver who is involved in an accident can sue a tavern, which allegedly over-served him, for personal injuries. At issue in this case is a provision of the New Jersey statute which provides that a driver who is convicted of, or pleads guilty to, driving while intoxicated in connection with an accident “shall have no cause of action for recovery of economic or non-economic loss sustained as a result of the accident.” The Supreme Court upheld the Appellate Division decision and has ruled that an individual who has been convicted of, or pleads guilty to, driving while intoxicated may file a Dram Shop Claim against a tavern for allegedly over-serving him.

By way of background, on November 9, 2006, Frederick Voss was injured when his motorcycle collided with a vehicle operated by Kristoffe Tranquilino. Voss claimed that prior to the accident, he had been a patron at Tiffany’s Restaurant and that Tiffany’s served him while visibly intoxicated. After the accident, Voss’ Blood Alcohol Content was .196. He was charged with and pled guilty to driving while intoxicated.

Voss filed a personal injury claim against the driver of the vehicle he struck as well as Tiffany’s. Tranquilino was dismissed from the case. Tiffany’s filed a motion for summary judgment based on N.J.S.A. 39:6A-4.5(b) which provides that an individual convicted of, or who has pled guilty to, driving while intoxicated shall have no cause of action for recovery of economic or non-economic losses. The trial court denied that motion. Tiffany’s then appealed.

In reviewing this matter, the Appellate Division noted that the Dram Shop Act, N.J.S.A. 2A:22A-1 et seq., provides the exclusive civil remedy for injuries resulting from the negligent service of alcoholic beverages by a licensed server. Under the Dram Shop Act, negligent service of alcoholic beverages occurs “only when the server serves a visibly intoxicated patron…which was in a state of intoxication accompanied by perceptual acts or series of acts which present clear signs of intoxication.” In reviewing the legislative history of the Dram Shop Act, the Appellate Division noted that prior to the Dram Shop Act being enacted, a proposed version of the bill provided that: (1) any person who became intoxicated and sustained personal injuries or property damage as a result of his actions while intoxicated would be prohibited from instituting a civil action for damages against the licensed server; and (2) a person who knowingly rode in a vehicle operated by an intoxicated person would be prohibited from instituting legal action for damages against a licensed server. Both of these proposed provisions were stricken from the final version of the Dram Shop Act.

In addressing N.J.S.A. 39:6A-4.5(b), which was passed ten years after the Dram Shop Act, the Appellate Division noted that the purpose of that section of the statute was to reduce automobile insurance premiums. Accordingly, the Court found that a unilateral bar to intoxicated drivers pursuing a dram shop claim would undermine the public policy of holding licensed alcoholic beverage servers accountable for the service of alcohol to their patrons. The Appellate Division ultimately held that the Dram Shop Act was the sole remedy for claims against licensed servers and as such does not prohibit claims made by individuals who have pled guilty to DWI. As such, the Appellate Division found that it was permissible under New Jersey law for Mr. Voss to pursue his claim against Tiffany’s.

In a two page decision, the Supreme Court affirmed the Appellate Division’s findings. The majority of the court noted that N.J.S.A. 39:6A-4.5(b) was instituted to reduce automobile insurance and applying its language strictly would repeal a portion of the Dram Shop Act. The majority opined that repeal by implication is impermissible. Additionally, the court noted that while N.J.S.A. 39:6A-4.5 was intended to further deter drunk driving, the provision of the statute can coexist with the Dram Shop Act as “permitting a drunk driver to file an action against a liquor establishment and its servers for serving a visibly intoxicated patron similarly advances the goal of deterring drunk driving.”

Justice Albin filed a dissenting opinion which accused the majority of ignoring the legislature and imposing its will in this case. Justice Albin wrote that the majority “has rewritten a clear and unambiguous statute under the dubious assumption that the legislature did not mean what it said.” Justice Albin went on to note that N.J.S.A. 39:4-6.5 was passed a number of years after the Dram Shop Act. As it is presumed the legislature knew the Dram Shop Act existed, if it wished to allow drunk drivers to pursue their own legal actions, it could have easily included such a provision in the statute. The legislature did not, and as such, Justice Alden found that Voss should not be permitted to maintain this action.

Ultimately, this means that licensed liquor servers face potential lawsuits from individuals alleging to have been over-served in their establishment even if they plead or are convicted of driving while intoxicated. However, as a practical matter, in gauging comparative fault, generally a jury should find the majority, if not all, of the happening of the accident was due to the actions of the drunk.

Commercial Driver Can Be Charged Simultaneously with General and CDL DWI

May 11, 2011

The New Jersey Appellate Division has ruled in State v. Nunnally that a commercial driver suspected of drunk driving may be charged under both the law addressing DWI for personal automobiles and the law dealing DWI and commercial drivers. In this case, a group of school children flagged down a Glen Rock police officer and reported that a DPW plow truck had hit two traffic signs and driven away. The police officer followed the truck to the DPW yard and observed the defendant emerge the truck. The defendant allegedly had bloodshot eyes, slurred speech, smelled of alcohol and could not walk or stand without assistance. He was arrested for suspicion of operating a commercial vehicle with a BAC in excess of .04% (NJSA 39:3-10.13). The defendant than repeatedly failed to blow properly into the Alcotest machine. He was then read the warnings pertaining to CDL refusal and was cited for refusal to take a breath test under the general refusal statute (NJSA 39:4-50(a)), not the CDL refusal statute.

The Municipal court (and eventually the Law Division) found that the defendant could not be charged with general refusal. Additionally, the court found that the State could not amend the general refusal charge to a CDL refusal as the 90 days statute of limitations had expired.

The Appellate Division found that the lower court’s decision was correct. Specifically, the Appellate Division found that “a driver of a commercial vehicle who is arrested and charged only with CDL DUI, and who thereafter refuses a breath test, may only be charged under the cognate CDL refusal statute, and may not be prosecuted under the general refusal statute.” However, the Appellate Division did find that the laws governing general DWI and commercial DWI are separate and distinct. Accordingly, the Court held that if a driver violates general and CDL DWI statutes, he can be arrested and charged under both sets of statutes. The Court further noted that a CDL refusal is not a lesser included offense of general refusal and an individual can be found guilty of violating each separate statute.

Finally, the Court found that the statute address commercial DUI does not allow prosecutions based only on observations.

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

Employer Not Responsible for Accident Involving Off-Duty Intoxicated Employee

May 3, 2011

The Appellate Division has ruled that an employer is not responsible for the actions of its alcoholic employee when he is not engaged in work related activities and there is no knowledge that the employee has a drinking problem.

In this matter, Eugene Baum was an employee of Future Electronics, which sells semiconductors and their components.  Initially, Baum was an “in house” salesperson.  Eventually, he was transferred to an outside sales job.

On April 20, 2006, Baum struck two teenage girls walking on the side of a road in Kinnelon, New Jersey at 7:45pm.  Earlier in the day, Baum had driven from his home in Dover, New Jersey to a business meeting in Monmouth County.  During discovery, Baum admitted to having been drinking vodka from a water bottle when he drove to and from the business meeting.  After returning home from the business meeting, Baum believes he continued to drink in his house.  Baum then decided to drive to his mother’s house in Kinnelon to get spare tire.  During his drive to his mother’s house, Baum used his cell phone at 7:19pm to check his voice mailbox at work.  The accident happened twenty-five minutes later.

During discovery it was learned that Baum was driving a rental car.  Baum admitted that he was driving the rental car due to the fact that his personal automobile was inoperable.  Baum paid for the rental out of his own funds.  Additionally, Baum noted that he had a drinking problem and had been hospitalized on three occasions for that condition from 2005 to 2006.  However, Baum’s boss testified that he had no knowledge that Baum had a drinking problem and never saw Baum in an intoxicated state.

Plaintiffs filed suit against Baum, Future and the car rental company.  The rental company was dismissed from the action via summary judgment.  At the close of discovery, Future filed a motion for summary judgment, which was also granted.  The plaintiffs appealed that ruling.

In their appeal, plaintiffs argued that the granting of summary judgment was improper as Future could have been found responsible for the happening of the accident under the theories of (1) vicarious liability, based on respondeat superior; and/or (2) negligent retention and/or supervision.

With regard to the plaintiff’s theory of respondeat superior, the Court found that there was no evidence that Baum was acting within his scope of employment when the accident.  The Court noted that Baum admitted that he was driving to his mother’s house for personal reasons.  Additionally, the Court found that Baum checking his work voicemail twenty-five minutes before the happening of the accident was insufficient to establish that he was within the scope of his employment when the accident occurred.

The Court also rejected plaintiff’s argument that Future could be found responsible for the happening of the accident due to the fact that they knew Baum had a drinking problem, but allowed him to become an outside sales person.  In rendering its decision, the Court found that there was no evidence to establish that Future knew of Baum’s drinking problem, or the state he was in at the time of the accident.  The Court wrote, “Future did not supply the vodka to Baum, Baum was not visibly intoxicated from drinking with a client for business purposes earlier in the day, and Baum was nether driving to, nor returning from work when the accident occurred.”

This decision maintains well settled case law that in examining the potential liability of an employer, the notion of fairness and public policy must be considered.  In a case where the employer has not supplied the alcohol (or venue for the consumption of alcohol) and the employee is not in the scope of his employment, an employer will generally not be held responsible for the actions of its employee.

Erik Anderson

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

Reardon Anderson Successful in having client dismissed from lawsuit seeking over $350,000 in damages

April 27, 2011

Reardon Anderson was successful in having its insurance company client and their third-party administrator dismissed from a subrogation action in which the plaintiff was seeking monetary damages in excess of $350,000.  In this matter, Reardon Anderson’s client had issued a Non-trucking Liability policy to a trucking company.  In the underlying case, a driver operating a tractor and trailer owned by the trucking company struck a personal automobile.  As a result of the accident, the occupant in the personal automobile claimed neck and back injuries resulting in a fusion.  The insurer of the personal automobile paid $250,000 in PIP benefits to their insured and $100,000 for uninsured motorist coverage.  Upon the conclusion of the underlying personal injury claim by its insured, the insurer of the personal automobile filed suit against our insurance company (and third-party administrator) client that issued the NTL policy and the insurance company which had issued a commercial auto policy to the trucking company, seeking reimbursement for those funds it had expended.

During this case, it was argued that at the time of the accident, the driver of the truck was under dispatch.  Accordingly, under the NTL policy, no coverage was available.  Interestingly, the principal for the trucking company claimed that the driver of the truck was not authorized to use his trucks as he had never heard of the driver before this accident.  Ultimately, the court granted Reardon Anderson’s summary judgment motion filed on behalf of the insurance company which issued the NTL policy and that company’s third-party administrator.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

US and Mexico Agree to Trucking Deal

March 4, 2011

The United States and Mexican governments have announced an agreement in principal to end a 20 year ban on Mexican trucks entering the United States.  Under the North American Free Trade Agreement, which went into effect in 1994, Mexican truckers were suppose to be permitted to transport goods into the United States.  However, since the enactment of NAFTA, Congress passed a series of laws to deny Mexican truckers the ability to drive into the United States.  As a result of these laws, NAFTA ruled that Mexico could impose punitive tariffs.  Despite NAFTA making this ruling in the late 1990s, the tariffs were not instituted until 2009.

Under the tentative deal reached by both countries, Mexican trucks will have to meet requirements equal to (and in some cases tougher than) those imposed on American truckers.  One of the more stringent requirements is that Mexican trucks must carry electronic recorders to ensure they only drive between the United States and Mexico and not domestically.  Additionally, the electronic records must track compliance with the United States’ hour of service laws.  Mexican truckers most also speak English and pass drug and safety tests.

It i s hoped that the Department of Transportation will have the proposed agreement available for public notice and comment by April.  Upon completing the comment period, the agreement would be formalized between the nations.  Under the agreement in principal, once the formal agreement is signed, half of the tariffs imposed on the United States will be suspended.  The remainder of the tariffs will be lifted when the first Mexican carrier complies with certification requirements.  It is estimated that $2.4 billion of United States goods would be subjected to the Mexican tariffs annually.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

Reardon Anderson’s client dismissed from Construction Accident Lawsuit

February 8, 2011

On February 4th, Reardon Anderson was successful in persuading a New Jersey Court to dismiss its client from a lawsuit involving a construction site accident.  In that matter, Reardon Anderson’s client was the owner of a multimillion dollar housing development which was being constructed in Northern New Jersey.  While working on the project as a carpenter, plaintiff alleged to have sustained injuries as a result of stepping into a plumbing hole.  Due to his injuries, plaintiff underwent two knee surgeries and claimed that he would require a total knee replacement.  At one point during the litigation, plaintiff’s demand was in excess of $500,000.

The plaintiff opposed Reardon Anderson’s motion for summary judgment arguing that the owner of the project owed a non-delegable duty to the plaintiff to provide a safe working environment.  After hearing oral argument, the judge granted Reardon Anderson’s motion for summary judgment and dismissed their client from the lawsuit.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

Gov. Christie Signs Law Giving Injured Persons Priority Over PIP Carriers

February 2, 2011

Governor Chris Christie has signed S-191 which amends the Personal Injury Protection statute (N.J.S.A. 39:6A-9.1(b)) to provide that a injured party must be made whole prior to a PIP carrier seeking recovery from an at fault party’s insurer.  As previously reported in our blog, the proposed law passed both houses of the legislature without opposition.  The newly amended law provides that “any recovery by an insurer, health maintenance organization or governmental agency…shall be subject to any claim against the insured tortfeasor’s insurer by the injured party and shall be paid on after satisfaction of that claim, up to the limits of the insured tortfeasor’s motor vehicle or other liability policy.

The amended law nullifies the Supreme Court’s decision in Fernandez v. Nationwide which held that it was proper to give priority to a carrier seeking to be reimbursed for PIP benefits it had paid out even if it reduced the amount of money which could be recovered by an injured party.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.

Court Holds that Two Year Statute of Limitations for PIP Reimbursement Claim Begins to Run Upon the Filing of a PIP Claim Form

January 28, 2011

In an unreported Appellate Division decision, the court held that the two-year Statute of Limitations for a PIP reimbursement claim is triggered upon the submission of the PIP claim form.

N.J.S.A. 39:6A-9.1 states “an insurer… paying [PIP] benefits… or medical expense benefits … as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain [PIP] protection or medical expense coverage at the time of the accident.”

On December 1, 2006, Garrison Lange was injured in an automobile accident when his vehicle was struck by a vehicle owned by Holger Trucking Company.  That day, Lange contacted his automobile insurer, New Jersey Manufacturers Insurance Group (NJM) advising of the accident and claiming he had sustained neck and back injuries.  That day, NJM created a PIP file and assigned a file number.

On December 4, 2006, the NJM adjuster mailed Lange a PIP application.  That day, Lange treated with Dr. Palluzzi.  On December 6, 2006, Dr. Palluzzi submitted bills to NJM for treatment.  On December 8, 2006, NJM received the bills.  Also on December 8, 2006, Dr. Palluzzi sent NJM a letter of medical necessity and requesting approval for a one-month treatment plan.  NJM authorized the treatment plan on December 11, 2006.

On December 20, 2006, Lange sent NJM a completed PIP application which NJM received on December 26, 2006.  It was not until December 24, 2008, that NJM filed its complaint against Holger and ARI seeking reimbursement of approximately $53,000 in PIP benefits NJM paid on Lange’s behalf.

Holger and ARI moved for Summary Judgment alleging that NJM’s suit was filed more than two years after Lange first advised NJM of the accident and more than two years after NJM opened its PIP  file.   NJM argued that the suit was timely filed because it did not receive Lange’s formal PIP application until December 26, 2006.  The trial court agreed with NJM and denied defendant’s motion.  On appeal, the Appellate Division noted that the statute does not define what is meant by “the claim.”  The court focused on the Legislatures’ use of the definite article in reference to the submission of “the claim” as the event triggering the running of the statute of limitations.  Accordingly, the court found that the Legislature likely intended to mean a single, definitive event and not any of a series of events in defining “the claim.”  The court also noted the very nature of the undertaking, (i.e., the fixing of the moment upon which the limitations period begins to run) suggests a need to provide the parties with a clear and unambiguous understanding of which of any number of occurrences is the triggering event for the statute of limitations.  The court placed significant emphasis on the fact that the Legislature described that event as the filing of “the claim” and not “a claim.”

The court then examined whether “the claim” meant the first claim (the initial telephone call); the last claim (last request for payment from a health care provider) or “the claim that is different from all others, namely, the insured’s PIP application.”  In focusing on the Legislature’s intent to fix one particular, distinguishable event as the trigger for the limitations period, the court concluded that the submission of the PIP claim form triggers the two-year Statute of Limitations.

What is interesting about the decision is that the court noted, “We are concerned by the fact – as the parties recognize – that the policy in question and perhaps others like it, do not require that an insured ever submit a PIP claim form; nor do the no fault laws compel such a filing.  As a result, the event we assume to be the triggering event for the time within which a reimbursement suit must be commenced may be something that, in many cases, may never occur.” The court then noted that “we take comfort in knowing that the Legislature is fully capable of correcting the statute’s ambiguity if it believes we have erroneously interpreted the statute.”

— Tom Reardon, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.