Opinion
DOCKET NO. A-4246-12T3
08-14-2014
M&S WASTE SERVICES, INC., Plaintiff-Appellant, v. PRAETORIAN INSURANCE CO., Defendant-Respondent, and RICHARD LECOMTE, Defendant.
Ralph P. Ferrara argued the cause for appellant (Ferrara Law Group, P.C., attorneys; Mr. Ferrara, of counsel and on the brief; John J. Dorsey, Jr., and Joshua H. Beisler, on the brief). Brian M. Thorn argued the cause for respondent (White Fleischner & Fino, L.L.P., attorneys; Mr. Thorn and James P. Ricciardi, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Koblitz and O'Connor. On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-1977-12. Ralph P. Ferrara argued the cause for appellant (Ferrara Law Group, P.C., attorneys; Mr. Ferrara, of counsel and on the brief; John J. Dorsey, Jr., and Joshua H. Beisler, on the brief). Brian M. Thorn argued the cause for respondent (White Fleischner & Fino, L.L.P., attorneys; Mr. Thorn and James P. Ricciardi, on the brief). PER CURIAM
Plaintiff M&S Waste Services, Inc. filed a declaratory judgment action seeking a ruling that a workers' compensation policy issued to it by defendant Praetorian Insurance Company was in effect from October 17, 2011 through April 29, 2012. The trial court denied plaintiff's cross motion for partial summary judgment, and granted defendant's motion for summary judgment dismissing the complaint. We reverse in part and affirm in part.
I
Defendant issued a worker's compensation policy to plaintiff for the period April 29, 2011 to April 29, 2012. From April 29, 2011 to October 11, 2011, plaintiff made periodic premium payments. The plaintiff's president certified that, to avoid any break in coverage, when payments were going to be late he telephoned defendant to let it know a payment would be forthcoming. Payments that came due in July, August, and September 2011 were not timely made and, according to New Jersey Compensation Rating and Inspection Bureau (CRIB) records, the policy was cancelled three times. The policy was reinstated each time, presumably because defendant received a payment.
On October 3, 2011, plaintiff received a notice of cancellation from defendant advising the policy would be cancelled for non-payment of the premium unless plaintiff paid the minimum amount due of $22,114.84 before October 17, 2011. The notice further stated that
[p]ayments received after the date and time of cancellation will be applied to any balance owed for coverage which the Company provided. Any remainder will be refunded in accordance with the policy terms. The policy will remain cancelled.
Plaintiff's president certified that when he received the notice, he telephoned defendant and advised plaintiff would send the minimum payment due by October 17, 2011. The payment was not in fact mailed out until October 17, 2011. Defendant received and cashed the check on October 26, 2011. When the check was cashed, plaintiff's president assumed coverage was continued.
On January 3, 2012, one of plaintiff's employees claimed he was injured on the job. The following day, plaintiff notified defendant of the injury. Plaintiff contends defendant commenced processing the claim as though there was coverage, but when the employee filed a petition in the Workers' Compensation court on January 27, 2012 seeking benefits, defendant issued a "returned premium" check to plaintiff for $28,299. During the first week of February 2012, plaintiff received the check and defendant advised plaintiff it did not have coverage under the policy.
As plaintiff's president expected defendant to continue coverage when it cashed plaintiff's check on October 26, 2011, plaintiff did not bother to obtain coverage from another carrier. Plaintiff asserts defendant acted in bad faith when it did not reinstate coverage and should be equitably estopped from denying coverage.
Defendant states that, consistent with the notice plaintiff received on October 3, 2011, the policy was cancelled when defendant did not receive the required minimum premium payment by October 17, 2011. Defendant's representative certified it does not have a record of plaintiff calling it in October 2011 to advise a premium payment would be forthcoming. Defendant did not immediately return the unused premium to plaintiff because it had to conduct an audit to determine the exact amount to refund. Defendant explained that the premiums paid during a policy period are merely estimates. After a policy period has concluded, the exact premium is determined once an insured is audited and the defendant ascertains, among other things, the number of employees an insured had on the payroll during a given policy period.
Plaintiff's insurance policy references the calculation of the final premium, as well as the auditing process. The policy states, in relevant part, as follows.
Final Premium
The premium . . . is an estimate. The final premium will be determined after this policy ends by using the actual, not the estimated, premium basis and the proper classifications and rates that lawfully apply to the business and work covered by this policy. If the final premium is more than the premium you paid to us, you must pay us the balance. If it is less, we will refund the balance to you. The final premium will not be less than the highest minimum premium for the classifications covered by this policy.
If this policy is cancelled, final premium will be determined in the following way unless our manuals provide otherwise:
1. If we cancel, final premium will be calculated pro rata based on the time this policy was in force. Final premium will not be less than the pro rata share of the minimum premium.
Audit
You will let us examine and audit all your records that relate to this policy. These records include ledgers, journals, [etc.] We may conduct the audits during regular business hours during the policy period and within three years after the policy period ends. Information developed by audit will be used to determine final premium.
Plaintiff did receive a letter dated December 8, 2011 from an auditing firm advising it was going to audit plaintiff's records on December 20, 2011. The letter states that "when the policy was issued, the premium basis was estimated, and it is now necessary that we review your records to determine actual exposure." The letter indicates the auditor was going to examine the period from April 29, 2011 to October 17, 2011.
Although in its brief defendant asserts the letter said the audit was being conducted to determine the "final" premium, the letter does not make any reference to a final premium. Plaintiff's president certified that he assumed the audit was to reconcile estimated premiums against actual claims in order to determine the premium payments for the upcoming renewal period. He also certified that, during the audit process, there was no mention the policy had been cancelled. Plaintiff further argues the policy language references conducting audits during a policy period; thus, the fact there was an audit did not necessarily signal that the policy had been cancelled.
The trial court found that plaintiff should have known the policy would be cancelled if the premium payment was not made by October 17, 2011, given the language in the cancellation notice plaintiff received on October 3, 2011. The trial court also found that plaintiff's representative did not explicitly state in his certification that plaintiff had in the past made premium payments after the policy had been cancelled, followed by a reinstatement of the policy. Therefore, plaintiff could not have had any expectation that if it paid a premium beyond a due date, defendant would reinstate the policy.
The certification is not a model of clarity, but we note the certification does state that plaintiff made premium payments "delinquently," and that when it did so, plaintiff contacted defendant to advise that a payment "was coming to ensure that there was no break in policy coverage." Although not conclusive, the use of the word "delinquently" suggests payments were made after the due date. In addition, if plaintiff was contacting defendant to advise a payment was forthcoming in order to avoid a lapse in coverage, then presumably plaintiff was concerned the payment was going to be late enough to trigger a cancellation of the policy. Further, the CRIB records clearly reflect the policy was cancelled and reinstated three times before October 17, 2011.
II
In reviewing a summary judgment decision, we apply the same standard as the trial court. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012). Viewing the evidence "in a light most favorable to the non-moving party," we determine "if there is a genuine issue as to any material fact or whether the moving party is entitled to judgment as a matter of law." Rowe v. Mazel Thirty, LLC, 209 N.J. 35, 38, 41 (2012) (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 529 (1995)). We review questions of law de novo, State v. Gandhi, 201 N.J. 161, 176 (2010), and need not accept the trial court's conclusions of law. Davis v. Devereux Found., 209 N.J. 269, 286 (2012).
The elements of equitable estoppel are that a party intentionally engages in conduct or makes a representation that causes another to take or refrain from taking action to its detriment. Lopez v. Patel, 407 N.J. Super. 79 (App. Div. 2009) (citing Miller v. Miller, 97 N.J. 154, 163 (1984)). In Cervone v. N.J. Auto. Full Ins. Underwriting Ass'n, 239 N.J. Super. 25, 31-32 (App. Div. 1990), we remanded a matter to the trial court to explore at a plenary hearing whether the defendant insurance company should be equitably estopped from denying coverage to the plaintiff insured, because the insurer cashed the insured's premium check after the policy had lapsed due to the failure to timely pay a renewal premium. We observed that an insurer may be deemed to have acted in bad faith if it retains but then returns an insured's unearned premium when it learns the insured was in an accident. Id. at 31; see also Englishtown Auction Sales, Inc. v. Mt. Vernon Fire Ins. Co., 112 N.J. Super. 332, 337 (App. Div. 1970) (retaining a premium payment after the policy was cancelled estopped insurer from denying coverage).
Plaintiff argues that, despite the fact the notice of cancellation said the policy would be cancelled if the premium were not paid by October 17, 2011, defendant's previous conduct led it to believe defendant would reinstate coverage after receiving a late premium check. Therefore, when defendant cashed the premium check on October 26, 2011, it was reasonable for plaintiff to conclude coverage would continue. Believing there was coverage, plaintiff did not, to its detriment, seek to obtain coverage from another carrier.
There are disputed issues of fact that require the reversal of the order granting defendant summary judgment. Viewing the evidence in a light most favorable to plaintiff, there is evidence that, before October 17, 2011, defendant reinstated plaintiff's policy after it cancelled plaintiff's policy for non-payment. If that is so, then plaintiff may have reasonably assumed, to its detriment, that the policy would be reinstated when defendant made the premium payment after October 26, 2011.
We affirm, however, the trial court's denial of plaintiff's motion for partial summary judgment. When a claim or defense involves proof of a party's state of mind, summary judgment is generally not appropriate. In re Estate of DeFrank, 433 N.J. Super. 258, 266 (App. Div. 2013). The state of mind of plaintiff's representatives insofar as what they believed defendant's reaction would be if plaintiff failed to timely pay the premium due by October 17, 2011 is highly relevant. Defendant should have the opportunity to explore the state of mind of those witnesses who testify on this issue.
The remaining arguments are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).
Reversed in part and affirmed in part.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION