Opinion
DOCKET NO. A-4906-13T4
08-14-2015
MITZI ROSADO, Plaintiff-Appellant, v. LISA MARSHALL and GLOBAL AUTO GROUP, Defendants, and NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent.
Vlasac & Shmaruk, LLC, attorney for appellant (John M. Vlasac, Jr., of counsel; Jenya A. Rozenfeld, on the brief). Connell Foley, LLP, attorney for respondent (Owen C. McCarthy, of counsel and on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Nugent and Accurso. On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-556-10. Vlasac & Shmaruk, LLC, attorney for appellant (John M. Vlasac, Jr., of counsel; Jenya A. Rozenfeld, on the brief). Connell Foley, LLP, attorney for respondent (Owen C. McCarthy, of counsel and on the brief). PER CURIAM
The parties remaining in this automobile negligence action present a novel issue: If a plaintiff obtains a jury verdict against an underinsured tortfeasor and an intervening underinsured motorist (UIM) carrier, the verdict is reversed on appeal, and the underinsured tortfeasor settles with plaintiff before the retrial, can the UIM carrier have the action dismissed and compel arbitration in accordance with its policy's UIM terms? The trial court answered the question in favor of the UIM carrier and dismissed plaintiff's Law Division action. Having considered the UIM carrier's contractual arbitration clause, the policy considerations favoring arbitration, and the public interest in efficient and expeditious resolution of UIM claims, we conclude the trial court erred and that the case should have been tried. Accordingly, we reverse and remand for a retrial.
The procedural history of this case is undisputed. In February 2008, a Jeep Liberty driven by Lisa Marshall and owned by Global Auto Group crashed into the rear of plaintiff Mitzi Rosado's Honda Accord. Marshall was insured under a policy with per person liability limits of $15,000. Plaintiff was insured under a personal automobile policy issued by New Jersey Manufacturers Insurance Company (NJM). The NJM policy's UIM terms permitted either party to demand arbitration if, among other reasons, NJM "and an insured do not agree . . . [a]s to the amount of damages which are recoverable by that insured[] from the owner or operator of an . . . underinsured motor vehicle . . . ." The UIM arbitration terms also provided that either party could demand the right to a jury trial within "60 days of the arbitrator's decision" if the arbitration award "exceeds the minimum limit for liability specified by the Financial Responsibility Law of New Jersey."
Nearly two years after the accident, in January 2010, plaintiff filed a personal injury action against Marshall and Global. These defendants answered and completed discovery. Following arbitration in Superior Court mandated by Rule 4:21A-1(a)(1) and the filing of a demand for trial de novo following the arbitration, Global successfully moved for summary judgment and plaintiff successfully moved for an order adjudicating Marshall 100% liable for the accident.
The next month, August 2011, plaintiff wrote a "Zirger" letter to counsel for NJM. According to the letter, NJM "was placed on notice of this claim on May 12, 2008 and has acknowledged same several times." In the letter, plaintiff informed NJM that Marshall's liability limits were $15,000, "which are insufficient to satisfy [plaintiff's] damages." The letter also stated: "Please be advised that if you do not move to intervene and participate in the litigation you will be bound by its outcome."
In response, NJM filed a motion to intervene, which the court granted. The implementing order fully protected NJM's right to take discovery: "ORDERED that should the discovery end date not be extended to allow NJM adequate time to complete discovery as required by the Rules of Court, it will not be bound by any judgment rendered[.]" The trial was adjourned. Although the record provides no competent evidence concerning the extent to which NJM participated or did not participate in additional discovery, and though the appellate record does not include the trial transcripts, the record establishes that NJM's attorney participated in the pre-trial examination of one of plaintiff's medical experts whose testimony was videotaped for trial. Nothing in the record establishes that NJM sought to further adjourn the trial to take additional discovery.
The case was tried in November 2011 and the jury returned a $925,000 verdict for plaintiff. The trial court denied motions for a new trial or remittitur and entered judgment against Marshall and NJM for the amount of the verdict, pre-judgment interest, and fees and costs to which plaintiff was entitled as the result of having filed an offer of judgment. The order for judgment states, among other things, that the case was tried by a jury "on November 9, 2011 through November 10, 2011"; and named the attorneys who appeared, including NJM's attorney. Defendant appealed.
On appeal, we reversed the judgment and remanded the case for a new trial on damages "[b]ecause plaintiff's counsel's patently inappropriate statements about the defense expert in summation were clearly capable of producing an unjust result[.]" Rosado v. Marshall, No. A-2967-11 (App. Div. September 13, 2013) (slip op. at 2). The Supreme Court denied certification. Rosado v. Marshall, 217 N.J. 294 (2014).
On remand, Marshall's carrier offered to settle the case for its $15,000 liability policy limits and informed plaintiff that if she did not accept its offer, then it would file a motion to deposit the policy limits into court. While plaintiff and Marshall's carrier engaged in motion practice concerning the propriety of the carrier depositing its policy limits, and in view of Marshall's agreement to settle for its policy limits, NJM demanded UIM arbitration under the arbitration clause in its policy. NJM first demanded arbitration in November 2013; more than five years after plaintiff was injured in the accident, nearly four years after plaintiff filed the complaint, and two months after we remanded the case for retrial. Plaintiff declined to arbitrate her UIM claim, NJM moved to dismiss the civil action and compel arbitration, and the trial court denied NJM's motion.
After additional motion practice, and after plaintiff settled the case with Marshall, NJM filed another motion to dismiss the civil action and compel arbitration in accordance with its policy's UIM terms. The trial court granted NJM's motion, dismissed the complaint without prejudice, and ordered the matter be "removed to private contractual UIM arbitration."
The trial court reasoned that "for all practical purposes, in effect, we have no underlying adjudication, because the underlying adjudication was vacated." Based on the proposition that there was no underlying adjudication, the court concluded there was no public policy reason not to enforce the UIM arbitration clause. The court granted NJM's motion. Plaintiff appealed.
On appeal, plaintiff argues that NJM: must comply with the Appellate Division's remand for a new trial because it elected Superior Court as the litigation forum and is bound by its decision; waived its contractual right to arbitration by failing to timely assert it and instead intervening in the civil action; and, is estopped from arbitrating its dispute with plaintiff because it participated in both discovery and the trial of plaintiff's civil action. Plaintiff also argues that the reversal of her verdict does not "lessen or undermine the fact that there was a prior adjudication of damages."
NJM asserts that the trial court's decision was correct because the UIM policy's unambiguous terms provide for arbitration, NJM did not waive its contractual right to arbitrate, it is not estopped from arbitrating the dispute, and "an adjudication of the amount of damages has yet to occur in this litigation."
The parties do not dispute the underlying facts. Consequently, the issues the parties have presented are legal issues and our review is plenary. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
We begin our analysis by recognizing the potentially competing policy considerations involved here. New Jersey's public policy "favors arbitration as a means of settling disputes that otherwise would be litigated[.]" Badiali v. N.J. Mfrs. Ins. Group, 220 N.J. 544, 556 (2015). At the same time, there is a "public interest in the efficient and expeditious resolution of UM/UIM claims." Zirger v. Gen. Accident Ins. Co., 144 N.J. 327, 343 (1996). Our Supreme Court has "often . . . emphasized [its] policy of construing legislation involving automobile insurance to effect 'the broadest protection of auto accident victims consistent with the language of the pertinent statute.'" Ibid. (quoting Ciecka v. Transamerica Ins. Grp., 81 N.J. 421, 428 (1979)).
Recognizing that "[t]he advantages of arbitration evaporate when arbitration is used not as a substitute for litigation, but as a supplement to litigation[,]" ibid., and considering a UM/UIM carrier's ability to intervene in litigation against a third-party tortfeasor, the Court held in Zirger "that a UM/UIM carrier that intervened in the underlying tort litigation, or declined to exercise its opportunity to intervene, is barred from enforcing the standard arbitration clause in the UM/UIM endorsement." Id. at 342. The Court cautioned, however:
We invalidate the contractual arbitration clause only to the extent that it requires an arbitration proceeding that duplicates the underlying litigation of the tort claim. For example, if the underlying tort claim does not result in an adjudication of damages, as is often the case, the arbitration clause in the UM/UIM policy will be given full force and effect. Nevertheless, we conclude that adherence to basic principles of contract law must yield to an overriding public interest in the efficient and expeditious resolution of UM/UIM claims.
[Id. at 343.]
Here, too, we conclude that "an overriding public interest in the efficient and expeditious resolution of UM/UIM claims" tips the balance of the competing public policy considerations in favor of this case being retried, rather than arbitrated and then perhaps retried.
Plaintiff was injured more than seven years ago. Although neither the time that elapsed between the accident and the filing of the complaint, nor the delay occasioned by the appeal, were attributable to NJM, plaintiff nevertheless continues to be entitled to a resolution of her UIM claim in an efficient and expeditious manner. The parties have completed discovery and tried the case once. The trial took a mere two days to complete and plaintiff's medical expert's testimony is on videotape. There is no reason why the trial cannot be rescheduled and completed within the time it will take the parties to select three arbitrators and complete the arbitration.
More significantly, the jury's verdict will likely be final, subject to appeal. Neither party can nullify the jury verdict based on mere dissatisfaction with the amount. Not so with the arbitration. If the arbitration award "exceeds the minimum limit for liability specified by the Financial Responsibility Law of New Jersey," either party can demand the right to a jury trial within "60 days of the arbitrator's decision." If that occurs - and in view of the previous jury verdict it appears to be a distinct possibility, notwithstanding that the previous verdict was influenced by plaintiff's counsel's inflammatory closing remarks - then the case will have to be retried after more months of delay.
NJM relies on the Supreme Court's example of an exception to its holding in Zirger: "if the underlying tort claim does not result in an adjudication of damages, as is often the case, the arbitration clause in the UM/UIM policy will be given full force and effect." Zirger, supra, 144 N.J. at 343. Although there was an adjudication of damages in this case, NJM asserts that because we reversed the order entering judgment, the parties were restored to their pre-judgment status, and they were therefore entitled to proceed to obtain a final determination of their rights to the same extent as if the initial case had never been tried. We disagree.
Zirger did not involve an action in which a jury's verdict had been reversed on appeal after the UIM carrier participated in a trial that had taken a mere two days to complete, and in which an arbitration rather than a retrial would likely take at least as much time to schedule and complete. A consideration underlying the Zirger decision, however, was that arbitration, "a procedure designed to expedite dispute resolution[, would have been] transformed into a mechanism for delaying and obstructing final resolution of disputes[.]" Zirger, supra, 144 N.J. at 343. That is a probable result here. Arbitration will not likely result in a more efficient and expeditious resolution of plaintiff's UIM claim and will likely result in further unnecessary delay.
NJM also relies upon our decision in Winner v. Revill, 382 N.J. Super. 399 (App. Div.), certif. denied, 186 N.J. 604 (2006). There, a UIM carrier participated in the plaintiff's civil action against an underinsured tortfeasor. Plaintiff settled with the tortfeasor before the case was tried and before mandatory, non-binding arbitration had occurred. Id. at 408. We affirmed the trial court's order granting plaintiff's motion to have the UIM claim arbitrated in accordance with the terms of the policy issued by the carrier, a motion the carrier had opposed. Unlike the case before us, the UIM carrier in Winner had not participated in any proceeding in which damages had been adjudicated. Consequently, the case fell squarely within the Supreme Court's "example" in Zirger, of an underlying tort claim not resulting in an adjudication of damages. Supra, 144 N.J. at 343.
For the foregoing reasons, we reverse, reinstate the complaint, and remand for a new trial on damages. The trial court shall schedule the retrial so that it begins within forty-five days.
Reversed and remanded. We do not retain jurisdiction. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION
Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996).