Duddy v. Govt. Employees Ins. Co.
23 A.3d 436
| N.J. Super. Ct. App. Div. | 2011Background
- Duddy had GEICO auto policy covering two cars, including a 2004 Pontiac GTO used by her son.
- GTO was to be sold; Duddy listed it on Craigslist; Gibson agreed to buy for $15,000 and would pick up on April 4, 2008.
- Duddy notified GEICO to drop the GTO and add a replacement vehicle; GEICO indicated the action would be attended to.
- Gibson paid $2,000 in cash and a $13,000 cashier's check; Duddy delivered keys and title and Gibson drove away.
- The cashier's check was fraudulent; the car was not recovered; Richardson pleaded guilty to receiving stolen property.
- Duddy reported the loss to GEICO; GEICO later denied coverage first on sale timing, then on sale exclusion; trial court granted GEICO summary judgment; appellate reversal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does theft coverage apply despite sale-exclusion in the policy? | Duddy argues theft coverage extends to theft via fraudulent sale scheme. | GEICO contends the loss is excluded as a sale of an owned auto under the policy. | Exclusion narrowly construed; theft coverage read with ambiguity in insured's favor. |
| Should exclusions be narrowly construed against the insurer and coverage construed liberally? | Coverage provisions should be interpreted broadly in the insured's favor. Exclusions are narrowly read. | Exclusions should be applied as written to bar coverage when applicable. | Exclusionary provisions are narrowly construed; coverage favored where reasonable interpretation supports it. |
| Are the 'sale' transaction and theft concepts capable of reconciling under the policy terms? | The receipt of a fraudulent payment constitutes theft under standard understanding and policy terms. | The transaction may not fit a sale, undermining theft-type coverage under the exclusion. | The court rejected treating the transaction as a pure sale and recognized theft concepts fit within policy terms. |
Key Cases Cited
- Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530 (1990) (policy interpretations favor insured; broad coverage unless unambiguous exclusion)
- Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363 (App. Div. 2008) (contracts of adhesion; broad reading of coverage; narrow reading of exclusions)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (exclusions construed narrowly; insurer bears burden to fit within exclusion)
- Lilliston Chrysler Plymouth v. Universal Underwriters Group, 329 N.J. Super. 318 (App. Div. 2000) (question of fact on criminal scheme to induce surrender of vehicle; extended theft coverage)
- Rudolph v. Home Indemnity Co., 138 N.J. Super. 125 (Law Div. 1975) (theft and larceny terms; broad common understanding when undefined)
- State v. Washington, 408 N.J. Super. 564 (App. Div. 2009) (unification of theft offenses under criminal code)