SELECTIVE CASUALTY INSURANCE COMPANY VS. EXCLUSIVE AUTO COLLISION CENTER, INC. (L-0359-15, SUSSEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: August 16, 2018
• Docket: A-0568-17T1
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-0568-17T1

SELECTIVE CASUALTY INSURANCE COMPANY,

Plaintiff-Appellant,

v.

EXCLUSIVE AUTO COLLISION CENTER, INC., ANTHONY LAKE, GERALD HEYMACH, and ARTHUR LAKE,

Defendants-Respondents. ___________________________________

Argued July 16, 2018 – Decided August 16, 2018

Before Judges Whipple and Suter.

On appeal from Superior Court of New Jersey, Law Division, Sussex County, Docket No. L- 0359-15.

Gordon S. Graber argued the cause for appellant (Sullivan and Graber, attorneys; Gordon S. Graber, of counsel and on the briefs; Rafael A. Llano, on the briefs).

James E. Mackevich argued the cause for respondents (Mackevich, Burke & Stanicki, attorneys; James E. Mackevich, on the brief).

PER CURIAM Plaintiff Selective Casualty Insurance Company (Selective)

appeals from the July 24, 2017 order dismissing counts one, three,

four, and five of its complaint against defendants, Exclusive Auto

Collision Center, Inc. (Exclusive), Anthony Lake, Gerald Heymach,

and Arthur Lake, and the September 15, 2017 order denying

reconsideration. We affirm.

Defendant Anthony Lake and his wife own Exclusive. Defendant

Gerald Heymach is Exclusive's general manager, and defendant

Arthur Lake, Anthony's brother, also worked for Exclusive.

In 2013, Selective issued a Garagekeeper's insurance policy

to Exclusive for liability and casualty claims. It provided

coverage for vehicles in the care, custody, and control of

Exclusive and general commercial liability coverage.

On May 17, 2013, Exclusive filed a complaint against Selective

for failure to make insurance payments. The suit was settled,

effective November 16, 2014. Included was a release that provided:

Selective releases and gives up any and all claims and rights that it may have against Exclusive, its successors, agents or assigns. This releases all claims including those of which Selective is not aware of and those not mentioned in this [r]elease. This [r]elease applies to all claims resulting from anything which has happened up to now. This settlement and release are a resolution of all issues between Selective and Exclusive in the litigation entitled Exclusive Auto Collision Center v. Selective Auto Insurance Company of New Jersey, Docket No. L-3672-13.

2 A-0568-17T1 On November 24, 2013, a strong windstorm caused tree branches

to fall on vehicles in Exclusive's lot. Exclusive filed a claim

with Selective with a list of vehicles; Selective received notice

of the claim on November 26, 2013. Selective's adjuster inspected

the listed vehicles and agreed to pay for the damage.

The list did not include a 2011 BMW owned by Gianinder Singh

(the Singh BMW). According to Exclusive, in 2011, the Singh BMW

was damaged and brought to Exclusive for repairs. Exclusive

repaired the damage and was paid by GEICO. Selective was not

involved in that.

On December 19, 2013, Singh brought the vehicle to Morristown

BMW because something was wrong. A mechanic for Morristown BMW

thought a leak in the vehicle's rear quarter panel that Exclusive

repaired two years prior might have been responsible for the Singh

BMW's electrical problems. At the direction of Morristown BMW,

the Singh BMW was sent to Exclusive to be inspected. The vehicle

arrived on either Thursday, January 9 or Friday, January 10, 2014.

Defendant Heymach prepared an estimate to repair some damage but

did not examine the leaking rear quarter panel.

That weekend, there was another strong storm with wind and

rain. According to Exclusive, during this storm, a falling tree

limb hit the Singh BMW, damaging a tail light and causing water

to enter the trunk. Exclusive dried out the trunk, repaired the

3 A-0568-17T1 tail light, and returned the vehicle to Morristown BMW. Defendant

Anthony Lake told Morristown BMW to instruct Singh to file a claim

with his insurance company for the electrical damage. Exclusive

also advised Selective of a potential claim when it became apparent

that Morristown BMW blamed Exclusive for the damage.

Selective adjuster Wendy Doyle entered the following notes

in Selective's claim log on January 27, 2014:

[Heymach] called me earlier and said that there was one other vehicle involved. Returned call left message.

Spoke to [Heymach] obtained information from him on the 6th vehicle. Order inspection. He said the tail light was broken from the tree and water got into the trunk. They replaced the light themselves and dried out the trunk. Apparently, there was more water in the trunk than thought now the wires are corroded and have to be replaced.

After the Singh BMW was returned to Morristown BMW, Selective

appraiser Eugenio Santos inspected the vehicle. Doyle filled out

an assignment sheet for Santos, which indicated the vehicle was

damaged during the November 2013 storm. Santos confirmed the

replacement of the tail light and prepared an estimate. Santos

determined the vehicle was a total loss and issued a check to BMW

North America for $37,805.83, and to Morristown BMW for $13,938.58.

Selective then sold the vehicle for salvage value.

4 A-0568-17T1 Selective's claim log notes, dated January 29, 2014, indicate

Morristown BMW attributed the vehicle's damage to Exclusive. In

particular, Santos wrote that Morristown BMW noted "MUST SEND TO

BODY SHOP FIRST TO FIX WATER LEAK FROM REPAIR WELDS IN REPAIR!!!"

When Santos asked for clarification, Morristown BMW stated "this

was how the water got into the trunk due to poor workmanship by

the shop." Also on January 29, 2014, Doyle entered the following

note in the claim log:

I called [Heymach] at insured. He was and wasn't surprised. He said Yeah it was some storm we had. He said there was water in the trunk and it got into the electrical compartment.

Exclusive asserts the November storm was a windstorm without rain,

and there was over a 1/2 inch of rain during the January storm.

On February 19, 2014, Doyle received a telephone call from

"Art from BMW." Art explained the electrical damage was caused

by the broken tail light and had nothing to do with faulty welding.

"Art from BMW" was defendant Arthur Lake, Anthony's brother. At

that time, Arthur was a liaison between Exclusive and Morristown

BMW and had a desk at Morristown BMW's offices. In his deposition,

Arthur confirmed he spoke with Doyle regarding the Singh BMW.

Selective reviewed the Singh BMW claim and became suspicious

after learning that Exclusive performed welding work on the vehicle

in 2011. According to Singh, Morristown BMW told him the damage

5 A-0568-17T1 was likely due to "continuous water leakage" because "whoever

fixed the car probably did not do a good job."

On June 4, 2015, Selective filed a complaint against

defendants, alleging violations of the New Jersey Insurance Fraud

Prevention Act, breach of contract, breach of good faith and fair

dealing, and unjust enrichment. Selective maintains Exclusive

fraudulently represented that the Singh BMW was damaged during the

November 2013 storm. Defendants filed an answer and counterclaim,

asserting claims for breach of contract and breach of fiduciary

duties. According to Exclusive, whether the source of the damage

to the Singh BMW was the defective repair in 2011, or water

infiltration when the tail light was broken by the falling tree

limb, its insurance policy with Selective would have covered both

causes of damage.

On October 31, 2016, defendants moved for summary judgment.

The court denied defendants' motion without prejudice on January

6, 2017, to allow for the completion of discovery. On June 19,

2017, defendants filed a second motion for summary judgment,

arguing, among other things, the previously executed release

barred Selective's current cause of action. On July 11, 2017,

Selective filed a cross-motion for partial summary judgment,

seeking a declaration that defendants violated the New Jersey

Insurance Fraud Prevention Act and to dismiss the counterclaims.

6 A-0568-17T1 On July 24, 2017, the trial court issued an order with a

statement of reasons. Regarding the Singh BMW, the court found

the November 16, 2014 release barred Selective's cause of action.

In particular, the court noted the language of the release broadly

included "all claims, including those of which Selective is not

aware and those not mentioned in this release." The court

determined the Singh BMW was included because "the language of the

release clearly refers to all possible claims arising out of

actions occurring prior to the release date November 16, 2014."

The court dismissed defendants' counterclaims for breach of

contract and bad faith.

On August 7, 2017, defendants moved for frivolous litigation

sanctions, and on August 9, 2017, Selective moved for

reconsideration of the July 24, 2017 order. On September 15,

2017, the judge delivered his decision from the bench, denying

both motions. This appeal followed.

When we review a grant of summary judgment, we use the same

standard as the trial court. Globe Motor Co. v. Igdalev, 225 N.J.

469, 479 (2016) (citations omitted). A court should grant summary

judgment, "if the pleadings, depositions, answers to

interrogatories and admissions on file, together with the

affidavits, if any, show that there is no genuine issue as to any

material fact challenged and that the moving party is entitled to

7 A-0568-17T1 a judgment or order as a matter of law." Ibid. (citing R. 4:46-

2(c)). The evidence must be viewed in "the light most favorable

to the non-moving party and analyze whether the moving party was

entitled to judgment as a matter of law." Mem'l Props., LLC v.

Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012) (citation omitted).

"Rule 4:46-2(c)'s 'genuine issue [of] material fact' standard

mandates that the opposing party do more than 'point[] to any fact

in dispute' in order to defeat summary judgment." Igdalev, 225

N.J. at 479 (quoting Brill v. Guardian Life Ins. Co. of Am., 142

N.J. 520, 529 (1995)) (alteration in original).

Selective argues the trial court engaged in improper fact-

finding when it determined Selective was aware of a potential

fraud claim against Exclusive when it executed the release and

erroneously interpreted the release. Selective contends it was

not on notice of the true nature of the Singh BMW claim because

Exclusive intentionally and materially misrepresented the claim

was from the November 2013 storm. Selective asserts after the

release was executed, it discovered the Singh BMW was involved in

a prior accident, Exclusive performed repairs on it for the prior

accident, and it was not present at Exclusive's lot during the

November storm.

In his statement of reasons, the judge stated:

8 A-0568-17T1 Defendants claim that in late January of 2014 BMW notified Plaintiff of a possible claim due to Defendants' defective welding repair. It is apparent from an email exchange between Selective adjuster Wendy Doyle and Selective appraiser Eugenio Santos that Selective was aware of the alleged claim for defective welding by the Defendants. . . . Despite knowing this, Selective settled the claim and destroyed the vehicle, all prior to the release date.

The court concluded any claim regarding the Singh BMW was swept

up in the broad language of the release since Selective knew of

an issue with that claim in January 2014 - before it executed the

release.

We agree the record supports the conclusion Selective was on

notice that the Singh BMW's damage may have been attributable to

something other than tree limb damage. Selective's own claim log

illustrates on January 29, 2014, Santos wrote Morristown BMW

reported "MUST SEND TO BODY SHOP FIRST TO FIX WATER LEAK FROM

REPAIR WELDS IN REPAIR!!!"

Moreover, while Selective continually alleges Exclusive

misrepresented the Singh BMW was damaged in the November storm,

it provided no evidence Exclusive representatives made such a

statement. There may have been confusion since there were two

separate incidents in which falling tree limbs damaged vehicles

during a storm. Furthermore, because the Singh BMW was destroyed,

it is impossible to now determine if the damage was caused by

9 A-0568-17T1 Exclusive's repair in 2011 or by the January storm that broke the

tail light, causing water to enter the vehicle. Since the release

broadly covered "any and all claims . . . including those of which

Selective is not aware," the trial court correctly determined it

covered the Singh BMW claim.

Selective contends the release only applied to claims that

accrued at execution, and the parties only intended to settle the

unrelated prior litigation. However, the express language of the

release broadly encompasses any and all claims Selective had or

may have had with Exclusive. "A basic principle of contract

interpretation is to read the document as a whole in a fair and

common sense manner." Hardy ex rel. Dowdell v. Abdul-Matin, 198

N.J. 95, 103 (2009) (citing DiProspero v. Penn, 183 N.J. 477, 496-

97 (2005)). A court does not "make a better contract for either

of the parties than the one which the parties themselves have

created." Maglies v. Estate of Guy, 193 N.J. 108, 143 (2007)

(Hoens, J., dissenting) (citation omitted). "[W]hen the terms of

a contract are clear and unambiguous, there is no room for

construction and the court must enforce those terms as written."

Watson v. City of E. Orange, 175 N.J. 442, 447 (2003) (citations

omitted). As the trial court determined, the release's broad,

clear, and unambiguous language includes the Singh BMW claim,

which was known, when Selective executed the release.

10 A-0568-17T1 Selective compares this matter to Central Paper Distribution

Services. v. International Records Storage & Retrieval Service,

Inc., 325 N.J. Super. 225 (App. Div. 1999), arguing a plenary

hearing was required to determine the scope of the release. In

Central Paper, we reversed a grant of summary judgment, finding

the trial court improperly determined whether the dealings between

the parties constituted an offer and acceptance to create a

contract, without a plenary hearing. Id. at 232-33. We determined

there were genuine issues of material fact precluding summary

judgment. Here, there is no genuine issue of material fact. The

release's language expressly details that all of Selective's

claims against Exclusive up to the effective date were subject to

the release. The release broadly covered all claims, including

those unknown.

Selective argues the trial court should have held a plenary

hearing to ascertain whether the parties intended to waive claims

procured by fraud when executing the release. It asserts the

court ignored the interpretive principles for construing a general

release established in Bilotti v. Accurate Forming Corp., 39 N.J.

184, 203 (1963). Reliance on Bilotti, however, is misplaced.

There, our Supreme Court held a general release could not shield

the defendants from liability when there was fraud in the

inducement. Id. at 204-05. It concluded that agreement did not

11 A-0568-17T1 provide for a release from "[a] fraud claim arising out of the

transaction." Id. at 205. Here, Selective does not allege

Exclusive fraudulently induced it to enter into the release, but

that the scope of the release does not cover fraudulent

transactions.

Selective contends the court should have allowed extrinsic

evidence to discover the parties' intent under Atlantic Northern

Airlines, Inc. v. Schwimmer, 12 N.J. 293 (1953). Selective has

not illustrated how extrinsic evidence could aid in the

interpretation of the release, while not altering its clear

language. If Selective expected the release to encompass only the

prior litigation, it could have executed a limited release or

included exclusion provisions. We examine a release as we would

any other contract to discern the intention of the parties. When

express language defines the terms, the parties are bound and

precluded from alleging a contrary intent in order to vary the

terms. Domanske v. Rapid-American Corp., 330 N.J. Super. 241, 246

(App. Div. 2000).

Finally, we note Selective's representative, Doyle, testified

Exclusive's policy would have covered defective repairs or damage

from a falling tree branch. As such, it is unclear why Exclusive

would intentionally misrepresent that the Singh BMW was involved

12 A-0568-17T1 in the November 2013 windstorm since the insurance policy should

have covered the damage anyway.

Affirmed.

13 A-0568-17T1