PAUL J. BANACH VS. ALEX TARAKANOV(L-6238-13, BERGEN COUNTY AND STATEWIDE)
A-5505-14T1
| N.J. Super. Ct. App. Div. | Sep 12, 2017Background
- Paul Banach was severely injured in a 2013 motorcycle collision; plaintiffs settled the tortfeasor's $100,000 liability policy. Plaintiffs had an NJM commercial auto policy with $500,000 liability but only $100,000 UM/UIM limits.
- April Banach handled insurance communications with NJM; she signed a Coverage Selection Form (CSF) in blank in 2000 and later followed NJM representatives' guidance when selecting coverages.
- In 2011 an NJM call-center representative (Ennis) recommended and obtained changes to PIP/medical limits; plaintiffs contend Ennis also made coverage selections for them.
- Plaintiffs sued NJM for negligence, gross negligence, willful misconduct and sought reformation to match UM/UIM to liability limits; they later sought to amend to add a Consumer Fraud Act (CFA) claim.
- Plaintiffs produced an expert (Castellini) who reviewed voluminous records and opined NJM’s practices violated industry standards and that matching UM/UIM to liability is standard; NJM moved for summary judgment asserting immunity under N.J.S.A. 17:28-1.9.
- The trial court denied leave to amend (CFA), excluded the expert report as a net opinion, and granted NJM summary judgment based on statutory immunity. The Appellate Division reversed the denial to amend, held the expert was admissible, and reversed summary judgment, remanding for trial on factual questions about compliance with the CSF requirements and willful/wanton/gross negligence.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Leave to amend to add CFA claim | CFA applies because NJM misled/omitted material facts and acted unconscionably in selling/handling coverage | CFA barred by regulatory scheme and immunity; amendment would be futile and prejudicial | Reversed: amendment not futile; no prejudice shown; CFA claim may proceed |
| Admissibility of expert (net opinion) | Castellini relied on expertise and record review to identify industry standards and NJM practices | Expert gave conclusory opinions unsupported by factual foundation (net opinion) | Reversed: expert not a net opinion; grounded in experience, records, methodology adequate for admissibility |
| Summary judgment based on N.J.S.A. 17:28-1.9 immunity | Immunity inapplicable because insurer representatives made selections/ gave advice; CSF procedure was flawed (signed in blank), and conduct may be willful/wanton/gross negligence | Statutory immunity applies when insured completed CSF and insurer complied with notice requirements; NJM complied so shielded from liability | Reversed: factual issues exist whether insured made a knowing election and whether NJM complied with CSF obligations or acted with willful/wanton/gross negligence; remand for trial |
| Whether insured’s CSF execution triggered immunity | April did not knowingly elect coverages (signed blank; representative filled form later) | Insured completed/returned CSF; completed CSF is prima facie evidence of knowing election | Reversed on summary judgment: record raises factual dispute whether an informed election occurred; immunity not appropriate on this record |
Key Cases Cited
- Myska v. New Jersey Manufacturers Insurance Company, 440 N.J. Super. 458 (App. Div.) (limits on CFA where regulatory scheme governs insurance sales)
- Pizzullo v. New Jersey Manufacturers Insurance Company, 196 N.J. 251 (2008) (insurer not automatically immune where representative misinformation negates insured's knowing election)
- Avery v. Wysocki, 302 N.J. Super. 186 (App. Div.) (CSF completion is condition for insurer immunity; meticulous compliance required)
- Townsend v. Pierre, 221 N.J. 36 (2015) (standard for admissibility of expert testimony and net opinion rule)
- Polzo v. County of Essex, 196 N.J. 569 (foundation for expert testimony; types of data experts may rely on)
- Brill v. Guardian Life Insurance Co. of America, 142 N.J. 520 (1995) (summary judgment standard and view of record for non-moving party)
- Strube v. Travelers Indemnity Co., 277 N.J. Super. 236 (App. Div.) (legislative purpose of immunity statute and its effect on prior liability theories)