OPINION
Plaintiff Timothy Oravsky brings this putative class action against Encompass Insurance Company and Encompass Insurance Company of New Jersey (together “Encompass” or “Defendant”) alleging that Encompass sold automobile insurance policies in New Jersey with reduced personal injury protection medical expense benefits (“PIP”) without providing certain statutorily-prescribed disclosures and without obtaining required written waivers. The Court has diversity jurisdiction over this matter pursuant to 28 U.S.C. § 1332 as Plaintiff is a citizen of New Jersey and Defendants are Illinois corporations with their principal place of business in Illinois. Presently before the Court is a motion by Defendant to dismiss the complaint pursuant to Federal Rule of Civil Procedure 12(b)(6) and ' to dismiss/strike Plaintiffs class action allegations. For the reasons below, Defendant’s motion to dismiss will be granted as to Plaintiffs claim for the breach of the covenant of good faith and fair dealing, and it will be denied in all other respects. Defendant’s motion to dismiss/strike Plaintiffs class allegations will be denied.
I. Background
A. Facts Alleged
On or about July 18, 2004, Plaintiff filled out an application on the internet and was issued “a standard automobile insurance policy a/k/a a ‘Classic Automobile Policy’ ” from non-party Continental Insurance Company of New Jersey (“Continental Insurance”). Compl. ¶ 26. The application Plaintiff completed had preselected $15,000 as the amount of medical expense PIP benefits coverage and that is the level of coverage Plaintiff received. In 2005, Plaintiffs policy was transferred to and subsequently underwritten Encompass. Plaintiffs level of medical expense benefits remained unchanged. In 2006, Plaintiff renewed his policy with Encompass, and again, the policy contained a $15,000 PIP medical expense limitation.
On or about March 3, 2007, Plaintiff was involved in an automobile accident in the insured automobile. His medical bills for the treatment of the injuries he sustained exceeded $15,000. Encompass has refused
Plaintiff filed the present action seeking declaratory and/or injunctive relief, reformation of his policy to include a maximum PIP medical expense benefit of $250,000, and payment of his medical expenses up to that amount. Plaintiffs claims rest on assertions that Encompass sold automobile insurance to Plaintiff with a PIP medical expense coverage amount of less than $250,000 without obtaining an executed “coverage selection form” containing statutorily-required disclosures and waivers. In particular, Plaintiff asserts that he did not affirmatively choose the lesser amount in writing, as is required by law when PIP coverage of less than $250,000 is provided. See N.J.S.A. 39:6A-4.3 (“If none of the [lesser available amounts of] medical expense benefits options is affirmatively chosen in writing, the policy shall provide $250,000 medical expense benefits coverage.”) Plaintiff alleges Defendant violated N.J.S.A. 39.-6A-4, which mandates PIP benefits in all “standard automobile liability policies,” and the requirements of N.J.S.A. 39:6A-4.3 and 23, which apply to an insured election of coverage limits.
B. New Jersey’s No-Fault Insurance and Applicable Statutory Provisions
Pursuant to what are known as New Jersey’s “No-Fault” statutes, automobile insurance policies in New Jersey are required to have personal injury protection (“PIP”) benefits for persons who sustain bodily injury as a result of an automobile accident regardless of negligence, liability or fault. N.J.S.A. 39:6A-4. The amount of such benefits may not exceed $250,000, and, in a change from what was previously required, may be offered in lesser amounts of $15,000, $50,000, $75,000 and $150,000 per person per accident. N.J.S.A. 39:6A-4.3. However, if the policy offers PIP benefits of less than $250,000, New Jersey law requires the insurer to provide the insured with a coverage selection form (“CSF”) containing “a statement, clearly readable and in 12-point bold type, in a form approved by the commissioner, that election of any of the [lesser PIP] benefits options results in less coverage than the $250,000 medical expense benefits coverage mandated” by prior law. N.J.S.A. 39:6A-4.3.
N.J.S.A. 39:6A-4 provides in the relevant part as follows:
Except as provided by [N.J.S.A. 39:6A-3.3] [N.J.S.A. 39:6A-3.1], every standard automobile liability insurance policy issued or renewed ... shall contain personal injury protection benefits for the payment of benefits without regard to negligence, liability or fault of any kind, to the named insured and members of his family residing in his household who sustain bodily injury as a result of an accident while occupying, entering into, alighting from or using an automobile, or as a pedestrian, caused by an automobile or by an object propelled by or from an automobile, and to other persons sustaining bodily injury while occupying, entering into, alighting from or using the automobile of the named insured, with permission of the named insured.
“Personal injury protection coverage” means and includes:
a. Payment of medical expense benefits in accordance with a benefit plan provided in the policy and approved by the commissioner, for reasonable, necessary, and appropriate treatment and provision of services to persons sustaining bodily injury, in an amount not to exceed $250,000 per person per accident....
39:6A-4.3 provides in the relevant part as follows:
With respect to personal injury protection coverage provided on an automobile in accordance. with [N.J.S.A. 39:6A-4], the automobile insurer shall provide the following coverage options:
*232 e. Medical expense benefits in amounts of $150,000, $75,000, $50,000 or $15,000 per person per accident; except that, medical expense benefits shall be paid in an amount not to exceed $250,000 for all medically necessary treatment of permanent or significant brain injury, spinal cord injury or disfigurement or for medically necessary treatment of other permanent or significant injuries rendered at a trauma center or acute care hospital immediately following the accident and until the patient is stable, no longer requires critical care and can be safely discharged or transferred to another facility in the judgment of the attending physician. The coverage election form shall contain a statement, clearly readable and in 12-point bold type, in a form approved by the commissioner, that election of any of the aforesaid medical expense benefits options results in less coverage than the $250,000 medical expense benefits coverage mandated prior to the effective date of P.L.1998, c. 21.
If none of the aforesaid medical expense benefits options is affirmatively chosen in writing, the policy shall provide $250,000 medical expense benefits coverage....
The requirements of a CSF as well as certain other written notices are found in N.J.S.A. 39:6A-23. This statute requires that all policy applications be accompanied by a “buyer’s guide,” which must briefly describe all available policy coverages and benefits limits, identify which coverages are mandatory and optional under state law, identify the options offered by the insurer, and discuss the possible coordination of other health benefits coverages with the PIP coverage options. N.J.S.A. 39:6A-23. It also requires that the insurance application contain a CSF specifying the premium rate differences between the various coverages. Id. On the CSF the applicant is to indicate the options selected, then sign and return the CSF to the insurer. Id. N.J.S.A 39:6A-23 provides in the relevant part:
a. No new automobile insurance policy shall be issued ... unless the application for the policy is accompanied by a written notice identifying and containing a buyer’s guide and coverage selection form. The buyer’s guide shall contain a brief description of all available policy coverages and benefit limits, and shall identify which coverages are mandatory and which are optional under State law, as well as all options offered by the insurer.
The buyer’s guide shall also contain a statement on the possible coordination of other health benefits coverages with the personal injury protection coverage options, the form and contents of which shall be prescribed by the Commissioner of Insurance.
The coverage selection form shall identify the range of premium rate credit or dollar savings, or both, and shall provide any other information required by the commissioner by regulation.
The applicant shall indicate the options elected on the coverage selection form which shall be signed and returned to the insurer.
e. A properly completed and executed coverage selection form shall be prima facie evidence of the named insured’s knowing election or rejection of any option.
II. Discussion
A. Motion to Dismiss Under Rule 12(b)(6)
Defendant moves to dismiss the complaint on several grounds. First, Defendant alleges that N.J.S.A. 39:6A-4, 4.3 and 23 do not apply to Plaintiffs policy because
1. Legal Standards
Under Federal Rule of Civil Procedure 12(b)(6), a court may grant a motion to dismiss if the complaint fails to state a claim upon which relief can be granted. The Supreme Court set forth the standard for addressing a motion to dismiss under Rule 12(b)(6) in Bell Atl Corp. v. Twombly,
The Supreme Court has emphasized that, when assessing the sufficiency of a civil complaint, a court must distinguish factual contentions and “[tjhreadbare recitals of the elements of a cause of action, supported by mere conclusory statements.” Ashcroft v. Iqbal,
First, the factual and legal elements of a claim should be separated. The District Court must accept all of the complaint’s well-pleaded facts as true, but may disregard any legal conclusions. Second, a District Court must then determine whether the facts alleged in the complaint are sufficient to show that the plaintiff has a “plausible claim for relief.” In other words, a complaint must do more than allege the plaintiffs entitlement to relief. A complaint has to “show” such an entitlement with its facts.
Fowler v. UPMC Shadyside,
As to the applicable substantive law, “a federal court sitting in diversity ... [is] to apply state law as interpreted by the
2. Analysis
a. Whether Plaintiffs Policy is Exempt from Insurance Laws
Defendant first argues that N.J.S.A. 39:6A-4, 4.3 and 23 do not apply to the policy at issue because it is not a “standard” automobile policy but rather is a specialty policy covering a “historic motor vehicle,” as defined by N.J.S.A. 39:3-27.3. In support of its argument, Defendant relies on Metlife Auto and Home v. Palmer,
The Court finds that Metlife provides no basis for excluding Plaintiffs policy from the requirements of the N.J.S.A. 39:6A-4, 4.3 and 23. As an initial matter, contrary to Defendant’s assertion, Metlife does not stand for the proposition that “an antique [automobile] policy is not covered by New Jersey automobile insurance laws.” Reply Brf. at 2; see also Moving Brf. at 8 (arguing that Metlife establishes that “antique automobile policies, like plaintiffs, fall outside the provisions of New Jersey’s automobile insurance laws ...). Metlife involved the apportionment of contribution between insurers providing uninsured motorist coverage. The case examined the validity of an exclusion in an antique automobile policy pursuant to which the insurer barred UM coverage for injuries sustained by any person “[w]hile ‘occupying’ ... any motor vehicle owned by [the insured] ... which is not insured for coverage” under the antique automobile policy. The Metlife court found that, given certain unique qualities of the specialty policy, the exclusion was not inconsistent with the express requirements or legislative purposes of N.J.S.A. 17:28-1.1, which mandates the inclusion of UM coverage in motor vehicle policies and establishes a statutory apportionment scheme among carriers. The court expressly noted that its determination was “limited to [the insurer’s] entitlement to a pro rata contribution” and did not address the validity of the provision in the context of potentially denying UM coverage in certain circumstances.
Further, while it is true that Metlife distinguished “standard” automobile liability policies from the specialty antique car coverage that was at issue in that case, that distinction does not further Defendant’s argument here. Where the court in Metlife states, for example, that “the policy is not a standard automobile policy but a specialty policy providing coverage for an antique automobile,” it is at best unclear as to whether the court is using the term “standard” in a more general sense
Under New Jersey’s system of insurance, there are three types of automobile insurance — standard, basic and special. Every owner of a motor vehicle “registered or principally garaged” in the state must maintain automobile insurance, and, as New Jersey’s Supreme Court has explained, “must purchase standard, basic, or special insurance coverage for their automobiles.” Zabilowicz v. Kelsey,
As to PIP benefits, the New Jersey Supreme Court has explained that the three types of insurance provide a different level of coverage:
A “standard policy” provides “personal injury protection coverage” up to $250,000 for all “reasonable, necessary, and appropriate” treatment for bodily injuries. N.J.S.A. 39:6A-4. A “basic policy,” which is available as “an alternative to the mandatory coverage[ ]” of the standard policy, affords more limited benefits. N.J.S.A. 39:6A-3.1. In particular, it provides “personal injury protection coverage” up to only $15,000 for all “reasonable and necessary treatment” for bodily injuries and up to $250,000 for specified treatments relating to certain permanent injuries. Ibid. Finally, the “special policy” provides only “emergency personal injury protection coverage” up to $250,000 for emergency treatment immediately following an automobile accident and extending until the patient is discharged from acute care. N.J.S.A. 39:6A-3.3(b)(l).
Sanders v. Langemeier,
Given the above authority, notwithstanding the fact that Plaintiffs policy insured an antique automobile, it would seem that the policy must be either a “standard,” “basic” or “special” automobile insurance policy. In arguing that Plaintiffs policy is not a standard policy, Defendant does not argue Plaintiffs policy is a basic or special policy. Rather, Defendant would have the Court read Metlife as creating an entirely new type of automobile insurance applicable to antique automobiles, to which, apparently, none of New Jersey’s insurance laws governing “standard” insurance policies would apply. Metlife simply does not go that far.
While Defendant has clearly pointed out the differences between an antique car policy and a typical automobile policy Defendant fails to explain how these differences justify excluding the policy from the
b. Whether Plaintiff has a Cause of Action
Next, Defendant argues dismissal is warranted because it contends that the statutes upon which Plaintiffs claims are premised do not allow for a private right of action. In so arguing, however, Defendant misconstrues the nature of Plaintiffs claim.
As an initial matter, Plaintiff is seeking the recovery of PIP benefits, an action clearly contemplated by the Act. See N.J.S.A. 39:6A-13.1 (applicable statute of limitations for actions to recover PIP benefits). Moreover, although the first count of Plaintiffs complaint pleads “Breach of Statutory Duty,” the nature of Plaintiffs claim is grounded in reformation, an equitable action, and the Court finds that under New Jersey law Plaintiff has stated such a claim. Plaintiff alleges in the first count of his complaint that Defendants failed to comply with N.J.S.A. 39:6A-4.3 and 39:6A-23 by (1) not providing Plaintiff with a CSF which is required to contain a “statement, clearly readable in 12-point bold type ... that election of’ PIP coverage in an amount less than $250,000 results in less coverage than had been previously mandated, N.J.S.A. 39:6A-4.3; and (2) not obtaining from Plaintiff a signed coverage selection form confirming his selection of the lesser coverage amount. Thus, the components underlying Plaintiffs claim are Defendant’s alleged failure to provide a mandated disclosure and failure to obtain an affirmative selection of medical expense benefits coverage in writing. Plaintiff seeks declaratory relief and reformation of his insurance contract to provide for a $250,000 limit for medical expense PIP benefits coverage.
Generally, the equitable remedy of reformation is available “where there is mutual mistake or where a mistake on the part of one party is accompanied by fraud or other unconscionable conduct of the other party.” Heake v. At. Cas. Ins. Co.,
Here, as noted earlier, Plaintiff alleges that he ,did not receive the requisite notice that choosing PIP medical benefit coverage in an amount under $250,000 would result in less coverage than had previously been required by law. Moreover, the Court takes particular note of Plaintiffs allegation that at no time did he ever “affirmatively select and choose in writing
c. Whether Plaintiffs Claims Require an Allegation of Negligence
For similar reasons, the Court rejects Defendant’s contention that Plaintiffs claims must be dismissed because he has failed to allege negligence on the part of Defendant. In this regard, Defendant relies upon Bilotti v. USAA Cas. Ins. Group,
We note that reformation is an equitable remedy that should only be granted where the moving party is able to show through clear and convincing proof that there is mutual mistake or a mistake on the part of one party is accompanied by fraud or other unconscionable conduct of the other party. Reformation will not be granted on the grounds of mistake resulting from the complaining party’s own negligence. This is particularly applicable when the negligence is related to the duty imposed upon an insured to examine his policy upon receipt, and if its terms are found to deviate from the original contract agreed upon, to notify the insurer immediately and refuse to accept the policy.
Bilotti,
d. Whether Defendant Was a “Renewal” Carrier
Defendant next argues that it complied with all statutory obligations as a “renewal” carrier (as opposed an insurer issuing a “new” policy) and is entitled to immunity pursuant to N.J.S.A. 17:28-1.9. According to Defendant, the only “new” policy issued to Plaintiff was the policy issued by non-party Continental Insurance, and Defendant contends that all subsequent policies it issued to Plaintiff were renewals.
The complaint alleges that Plaintiff originally purchased a classic car policy from Continental Insurance. It further alleges that “the policy” was later “transferred and underwritten by” Defendant. Compl. ¶ 30. However, in order to determine whether Defendant’s obligations were that of a “renewal” carrier or otherwise, more factual development is required regarding the circumstances of, at a minimum, the “transferí ] and underwriting]” of the policy. Consequently, the issue is inappropriate for resolution on a 12(b)(6) motion.
e. Good Faith and Fair Dealing, Breach of Contract and Consumer Fraud Act Claims
The Court next turns to Defendant’s arguments with respect to dismissal of Plaintiffs claims for breach of the covenant of good faith and fair dealing, breach of contract, and violation of the CFA. First, Defendant contends the breach of contract and breach of covenant claims must be dismissed because the facts alleged fail to state a claim. Defendant argues that Plaintiff received the benefits that were contracted for (i.e., $15,000 in PIP medical expense benefits) and, therefore, there can be no claim for bad faith denial of benefits. Second, Defendant asserts that these claims along with the CSF claim must be dismissed because the remedies provided by the No-Fault statutes for the recovery of PIP benefits are exclusive. Breach of Covenant of Good Faith and Fair Dealing
The second count of the complaint alleges that Defendant breached the covenant of good faith and fair dealing “by failing to provide Plaintiff and the Class with information in an approved form as set forth in a coverage election [sic] form, ... by failing to obtain a signed coverage selection forms,” and by failing to provide PIP coverage of $250,000 if a lesser amount was not affirmatively chosen in writing. Compl. ¶ 59. The complaint further alleges that Defendant committed a breach of the covenant “by erroneously informing Plaintiff and members of the subclass ... that their ... policies did not provide for PIP medical expense benefits coverage up to $250,000 ... and/or erroneously denying claims.” Compl. ¶ 60. Plaintiffs good faith and fair dealing claim is virtually identical to Plaintiffs breach of contract claim, the only difference being that the good faith and fair dealing claim purports to be based in part on Defendant’s alleged failure to provide a statutorily-approved CSF and failing to obtain an executed CSF.
It is well-settled that “[a] covenant of good faith and fair dealing is implied in every contract in New Jersey ...”
Breach of Contract
Turning to the third count of the complaint, Plaintiff argues that he has stated a claim for breach of contract because, taking as true Plaintiffs allegation that he did not affirmatively choose in writing a lesser level of PIP coverage, New Jersey’s No-Fault statutes as well as the terms of the policy dictate that Plaintiff was entitled to PIP benefits of $250,000 and Defendant breached the policy in refusing to provide the same. Indeed, the relevant policy (i.e., the one in effect at the time of Plaintiffs accident) expressly states that “[a]ny part of this policy that conflicts with state law is automatically changed to conform to the law.” D’Aloia Deck, Ex. D (Policy) at HIA0220. As such, as the Court at this stage is merely addressing the sufficiency of the pleadings, Defendant’s motion as to the third count of the complaint is denied.
Consumer Fraud Act
Last is Plaintiffs claim CFA claim. In arguing that Plaintiffs claim fails to state a claim upon which relief can be granted, Defendant points to a line of cases in which New Jersey courts that have recognized that PIP benefits are “statutory in nature” and have held, therefore, that the remedies for withholding such benefits provided by the No-Fault laws are “exclusive.” See Endo Surgi Ctr., P.C. v. Liberty Mutual Ins. Co.,
The Court is not persuaded by Defendant’s argument. As an initial matter, the instant matter differs from the authorities relied upon by Defendant. Here, Plaintiff alleges not merely a wrongful denial of benefits, but rather that Defendant, in contracting to provide insurance to Plaintiff, intentionally failed to furnish certain mandated disclosures to Plaintiff with regard to PIP benefits coverage and, further, that Defendant provided a policy to Plaintiff with PIP benefits of less than $250,000 without obtaining written confirmation of the Plaintiffs selection of a lesser limit.
It is clear that in New Jersey the reach of the CFA extends to “the sale of insurance policies as goods and services that are marketed to consumers.” Lemelledo v. Beneficial Management Corp. of America,
B. Motion to Dismiss/Strike Class Allegations
Plaintiff purports to bring this action on behalf of himself and all members of the following class (the “Class”):
All persons who, since at least June 21, 2004 (or such date as discovery may disclose) have been policyholders owning or beneficiaries of standard automobile liability insurance policies sold in the State of New Jersey by Defendants that have provided limits of less than $250,000 in Personal Injury Protection (PIP) medical expense benefits coverage and as to whom Defendants does not have their affirmative choice in writing in the form proscribed by N.J.S.A. 39:6A-4.3 and 39:6A-23.
Compl. ¶ 43. The action is also brought on behalf of a subclass (the “Subclass”) consisting of “[a]ll persons in the Class who, having suffered injuries in a covered accident, had incurred medical expenses in excess of the limit of the medical expense PIP coverage stated in their policies.” Id. Defendant seeks dismissal of Plaintiffs class claims arguing that the requirements for maintaining a class action under Rule 23 cannot be met. Specifically, Defendant
Plaintiff argues that Defendant’s motion is premature. Although the Court is somewhat skeptical that the facts will show that class resolution is appropriate in this case, the Court agrees that the motion is premature. Decisions from this District as well as others “have made clear that dismissal of class allegations at this sta[g]e should be done rarely and that the better course is to deny such motion because ‘the shape and form of a class action evolves only through the process of discovery.’” Myers v. MedQuist, Inc.,
[W]hile it is the plaintiffs burden to prove that the proposed class action satisfies each of the required elements of Rule 23(a) and one of the prerequisites of Rule 23(b), see Baby Neal v. Casey,43 F.3d 48 , 55 (3d Cir.1994), the “court may find it necessary ... to analyze the elements of the parties’ substantive claims and review facts revealed in discovery in order to evaluate whether the requirements of Rule 23 have been satisfied.” In re Ford Motor Ignition Switch Prods. Liab. Litig.,174 F.R.D. at 338 (citing Castano v. Am. Tobacco Co.,84 F.3d 734 , 744 (5th Cir.1996)). Moreover, “[a]s a practical matter, the court’s [certification decision] usually should be predicated on more information than the complaint itself affords ... [and] [t]hus, courts frequently have ruled that discovery relating to the issue whether a class action is appropriate needs to be undertaken before deciding whether to allow the action to proceed on a class basis.” 5C Wright, Miller & Kane, Federal Practice & Procedure Civil 3d § 1785.3.
III. Conclusion
For the reasons in this Opinion, the Court grants Defendant’s motion to dismiss as to Plaintiffs claim for breach of the covenant of good faith and fair dealing. In all other respects, Defendant’s motion to dismiss the complaint pursuant to Rule 12(b)(6) is denied. Defendant’s motion to dismiss Plaintiffs class allegations is likewise denied. An appropriate Order accompanies this Opinion.
Notes
. In addressing a motion to dismiss, the Court must accept as true the allegations contained in a complaint. See Toys "R” Us, Inc. v. Step Two, S.A.,
. N.J.S.A. 17:28-1.9 provides as follows:
The coverage selection form required pursuant to [N.J.S.A. 39:6A-23] shall contain an acknowledgement by the named insured that the limits available to him for uninsured motorist coverage and underinsured motorist coverage have been explained to him and a statement that no person, ... shall be liable in an action for damages on account of the election of a given level of motor vehicle insurance coverage by a named insured as long as those limits provide at least the minimum coverage required by law or on account of a named insured not electing to purchase underinsured motorist coverage, collision coverage or comprehensive coverage, except for that person causing damage as the result of his willful, wanton or grossly negligent act of commission or omission.
. Additionally, to the extent that the second count can be construed as asserting a cause of action for breach of an insurer’s duty of good faith in processing a claim, it must be dismissed. As summarized by New Jersey’s Appellate Division:
Pickett [v. Lloyd’s,131 N.J. 457 ,621 A.2d 445 (1993)] [held] that an insurer owes a duty of good faith to its insured in processing a first-party claim, id. at 467 [621 A.2d 445 ], and that the insurer may be liable to its insured for consequential economic losses for the insurer’s bad faith in either delaying the processing of the claim or in failing to pay benefits, id. at 481 [621 A.2d 445 ]. However, an insured’s right to pursue a common law action for consequential damages pursuant to Pickett is not applicable to PIP actions. Endo Surgi Ctr. v. Liberty Mut. Ins., 391 NJ.Super. 588, 592-96 [919 A.2d 166 ] (App.Div.2007). Rather, because PIP benefits are statutory in nature, "the sole remedy for a wrongful denial of PIP benefits is an award of the interest mandated by N.J.S.A. 39:6A-5(h) and attorney’s fees.” Id. at 594 [919 A.2d 166 ],
Endo Surgical Center v. Allstate New Jersey Ins. Co., 2009 WL 4877155, at *3 (December 18, 2009).