CAROL M. COVER VS. GOVERNMENT EMPLOYEES INSURANCEÂ COMPANY VS. JANGJUMAY DUKUREH VS. SHLOMO SINGER, ESQ. (L-4156-13, ESSEX COUNTY AND STATEWIDE), A-5734-14T1

Background

In 2008 Jangjumay Dukureh struck Carol Cover’s car while making a U-turn; Cover later had cervical surgery and obtained a default judgment against Dukureh for $260,512.38. Dukureh had a GEICO policy with $25,000/$50,000 limits.
Dukureh contends she did not understand service; GEICO’s claim file shows unsuccessful contact attempts in 2008 and no record of later 2011 letters from plaintiff’s counsel.
GEICO learned of the default judgment in November 2012, appointed counsel (Raskas/Singer), sent a reservation-of-rights (ROR) letter, then later disclaimed coverage for Dukureh for failure to cooperate.
Multiple motions and interlocutory rulings followed: motions to vacate default, motions for declaratory relief against GEICO, malpractice claims against the Raskas firm, and discovery disputes.
On summary judgment the trial court dismissed plaintiff’s declaratory/bad-faith claims, held GEICO proved appreciable prejudice from Dukureh’s lack of cooperation, found collateral estoppel/res judicata inapplicable as to notice, and granted summary judgment to GEICO; the Appellate Division affirmed.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether collateral estoppel/res judicata bar GEICO from relitigating notice of suit	The first judge’s order indicating insurer notice forecloses relitigation	Judgment against insured did not necessarily decide insurer notice; GEICO was not in privity on coverage issue	Not precluded: the negligence judgment did not decide notice as an issue necessary to the prior judgment; collateral estoppel inapplicable
Validity/effect of GEICO’s reservation-of-rights and disclaimer	ROR was deficient (didn't inform insured of right to independent counsel); therefore GEICO should be estopped/waived from disclaiming	ROR and subsequent actions did not induce insured to rely; GEICO promptly acted upon learning of default and its ROR was permissible	ROR/disclaimer upheld; no estoppel—insured did not rely and carrier did not exercise exclusive control for a substantial period
Whether GEICO proved appreciable prejudice from insured’s alleged breach of cooperation condition	Plaintiff argued GEICO failed to show irretrievable loss of substantial rights or likely defense success absent the breach	GEICO showed lack of cooperation (no responses, no HIPAA releases, no participation), impairing its ability to defend or vacate default	GEICO met Cooper standard: breach plus appreciable prejudice; summary judgment for GEICO affirmed
Legal malpractice claim against Raskas/Singer (fourth-party defendants) — damages element	Appellants argued summary judgment was premature and malpractice could have caused damages	Because Dukureh assigned rights to plaintiff and agreed plaintiff would not attempt to collect judgment, Dukureh cannot show damages from alleged malpractice	Summary judgment for Raskas defendants affirmed: no cognizable damages shown

Key Cases Cited

Velasquez v. Franz, 123 N.J. 498 (discusses res judicata/claim preclusion principles)
Cooper v. Government Employees Ins. Co., 51 N.J. 86 (insurer must show both notice breach and appreciable prejudice to disclaim)
Merchants Indem. Corp. of N.Y. v. Eggleston, 37 N.J. 114 (validity and effect of reservation-of-rights letters; consent by silence)
Griggs v. Bertram, 88 N.J. 347 (estoppel where insurer assumes control and insured reasonably relies)
Jerista v. Murray, 185 N.J. 175 (elements of legal malpractice: duty, breach, proximate causation of damages)
Globe Motor Co. v. Igdalev, 225 N.J. 469 (standard of appellate review for summary judgment)