This case involved a plaintiff who was the defendant in a prior motor vehicle accident, and who had $250,000 in primary coverage. The previous action was tried before a jury and resulted in a $987,000 verdict. The carrier providing primary coverage had deposited its $250,000 into court in a timely manner before the previous trial and there was no claim for a bad faith refusal to settle. The defendant in the prior case brought this Errors and Omissions action, contending that when he inquired if he had sufficient coverage, he was advised that excess coverage would be obtained. The plaintiff in this case maintained that he relied upon this promise and that the coverage was not provided. The plaintiff in the prior motor vehicle action, who had an excess verdict for $737,000 plus interest, intervened in this Errors and Omissions case. In this article, the defendant driver in the prior case will be referred to as “the plaintiff,” the plaintiff in the prior case as “the intervener,” and the insurance agents “the defendants.” The plaintiff, who has significant assets, contended that approximately four months before the motor vehicle accident, he called his agent and inquired if he had adequate coverage. The plaintiff maintained that he was advised that the coverage was sufficient. The plaintiff indicated that he still wondered if excess coverage should be purchased and telephoned the second agent, who happened to be a personal friend. The plaintiff indicated that this second agent advised him that he should have the first agent obtain an umbrella policy.
The plaintiff also related that since the second agent was a personal friend, he conducted business on the phone only with him, and did not send confirming correspondence. The plaintiff and intervener would have pointed to internal memoranda that the plaintiff and intervener maintained supported the contention that the plaintiff was promised an umbrella policy. The plaintiff contended that although the insurance agent would have immunity for negligently failing to determine that additional coverage was necessary, the agent would not be immune if the plaintiff established that he was promised coverage and relied to his detriment on this promise.
The second agent contended that he had advised the plaintiff to obtain the coverage from the first agent, and that the plaintiff could not have relied upon this second agent to provide the umbrella policy. The plaintiff countered that the initial agent did not return a number of phone calls and that he requested that the insurance company name the second agent as his agent of record. The plaintiff established that this change was made and contended that he relied upon the promise to obtain an umbrella policy to his detriment.
The case settled for $550,000, which is payable directly to the intervener, and which consisted of $500,000 from the carrier and $50,000 from the plaintiff/prior defendant.
Reference
Marcketta vs. Goncalves. 4-09.
Attorney for intervener: Gregg Alan Stone of Kirsch, Gelband & Stone in Newark, NJ.
Attorney for plaintiff: Terry Shapiro of Newark’s Shapiro and Berezin in Newark, NJ.
Commentary
Rather than take an assignment of the plaintiff/defendant in prior motor vehicle accident’s rights against the carrier in this Errors and Omissions case, the excess verdict holder successfully moved to intervene, avoiding the need to provide consideration, such as releasing the other driver from liability, and the intervener was, thereby able to preserve his rights against the other driver in the event the Errors and Omissions case had been resolved in favor of the carrier.
It should be noted that under Wang vs. Allstate Ins Co. 125 NJ 2 (1991), the agents have immunity for failing to ascertain that a policy holder has inadequate coverage and in order to prevail, the policy holder must prove that a promise of coverage had been made and that the policy holder relied to his or her detriment on such a promise. In this case, the plaintiff and intervener pointed to internal memoranda which they contended essentially confirmed the discussions he had with the second agent, who had been named the agent of record for this customer.
The case(s) cited herein was(were) reprinted with the permission of the publisher Jury Verdict Review Publications, Inc. www.jvra.com
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