PAUL J. BANACH VS. ALEX TARAKANOV(L-6238-13, BERGEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-5505-14T1

PAUL J. BANACH and APRIL
BANACH,

Plaintiffs-Appellants,

v.

ALEX TARAKANOV and ELENA
TARAKANOV,

Defendants,

and

NEW JERSEY MANUFACTURERS
INSURANCE COMPANY,

Defendant-Respondent.
——————————————————————————————————

Argued May 18, 2017 – Decided September 12, 2017

Before Judges Hoffman, O'Connor and Whipple.

On appeal from Superior Court of New Jersey,
Law Division, Bergen County, Docket No. L-
6238-13.

Barry D. Epstein argued the cause for
appellants (The Epstein Law Firm, PA,
attorneys; Mr. Epstein, of counsel and on the
brief; Michael A. Rabasca, on the brief).
 David T. Robertson argued the cause for
respondent (Harwood Lloyd, LLC, attorneys; Mr.
Robertson, of counsel and on the brief).

PER CURIAM

Plaintiffs Paul and April Banach1 filed suit against defendant

New Jersey Manufacturers Insurance Company (NJM) asserting claims

of negligence, gross negligence, and willful misconduct relating

to inadequate underinsured motorist (UIM)2 coverage in their

commercial automobile insurance policy. Plaintiffs now appeal

from two Law Division orders: the first denied their motion to

amend their complaint, and the second granted NJM's motion for

summary judgment, dismissing their complaint.

In denying plaintiffs' motion to amend their complaint, the

Law Division concluded the "purported amendment . . . would be

futile" and also "prejudicial" to NJM. From our review, the record

does not support these conclusions. We therefore reverse the

order denying plaintiffs leave to amend their complaint.

In considering NJM's summary judgment motion, the Law

Division refused to consider the report of plaintiffs' expert,

concluding it constituted a net opinion. Plaintiffs' expert based

1
For ease of reference, we refer to plaintiffs by their first
names. We do not intend any disrespect by this informality.
2
According to NJM's Commercial Auto Insurance Buyer's Guide,
uninsured motorist (UM) and UIM coverages are "sold together."
Frequently, the combined coverage is referred to as UM/UIM
coverage.
2 A-5505-14T1
his opinions upon his extensive experience in New Jersey's

insurance market and its regulation, after reviewing all relevant

parts of the record. Following our review of the expert's report,

we reject the trial court's conclusion that plaintiff's expert

offered a net opinion. The judge further concluded that

plaintiffs' claim against NJM is barred by N.J.S.A. 17:28-1.9.

Because the record reveals factual questions whether NJM satisfied

the criteria to benefit from the immunity provided by this statute,

we reverse the trial court's grant of summary judgment and remand

for trial.

I.

Viewing the record in the light most favorable to plaintiffs

as the non-moving parties, see Angland v. Mountain Creek Resort,

Inc., 213 N.J. 573, 577 (2013), we discern the following facts.

On May 27, 2013, Paul sustained serious bodily injuries while

operating his motorcycle in Paramus. The accident occurred when

defendant Elena Tarakanov, while driving a car owned by her

husband, defendant Alex Tarakanov, made an improper left-hand turn

in front of Paul. IFA Insurance Company insured the Tarakanov

vehicle, providing $100,000 of bodily injury liability coverage.

Plaintiffs ultimately settled with the Tarakanovs for their

$100,000 policy limit. Foremost Insurance Company insured Paul's

3 A-5505-14T1
motorcycle; however, the policy included only liability and

collision coverage.

On January 21, 2000, NJM issued a business auto policy to

plaintiffs' newly formed company, Paul Banach Construction LLC

(Banach Construction). The policy provided $500,000 of liability

coverage but only $100,000 of UM/UIM coverage.

April handled the insurance for Banach Construction. Before

purchasing the policy from NJM, which does not have brokers or

agents, April spoke with one of its representatives on the

telephone. According to April, "I asked them to just let me know

what I had to have. I went by their guidance[,]" and "[I] asked

them what would be my benefit to have." Referring to NJM's

coverage selection form3 (CSF), April said,

Basically they went over it and told me just
to sign my name and fax it[,] and they would
do the rest.

. . . .

After . . . a discussion[,] they advised me
that they would put what I needed.

. . . .

I didn't really understand any of the
document[,] I'm embarrassed to say. . . . I
wanted somebody to guide me[,] and I was with
them since I was 17. I wanted them to guide
me. I guess I was wrong.

3
The form is labeled, "COMMERCIAL AUTO COVERAGE SELECTION FORM."
4 A-5505-14T1
 At the end of the phone call, April followed the instructions

she received and signed the CSF in blank, before faxing the form

to NJM. At her deposition, she confirmed the coverage selections

on the form "aren't my markings[,]" expressing certainty because

"I don't do this x swirly thing."

The completed CSF selected $500,000 for liability coverage

but only $100,000 for UM/UIM coverage. The form also reflected

selection of the "No Limitation on Lawsuit Option," above a

paragraph that stated this selection will result in a higher

liability premium. Thereafter, NJM issued a policy that included

these coverages.

According to April, "in the years following[,] I would call,

ask if there were any changes I should know about, anything that

I should choose differently[,] and they would tell me to just

write no changes across the top[,] which is what I would always

do."4 In January 2011, April contacted NJM to add a vehicle to

their policy and spoke with NJM representative Ryan Ennis.5 After

4
The record indicates recordings of at least some of these
conversations are still available; however, the record only
contains the transcript of a January 6, 2011 conversation.
5
At his deposition, Stanley Brzezinski, NJM's commercial lines
underwriting manager, described Ennis as a "call center rep." All
NJM call center reps hold a New Jersey insurance producer's
license.
5 A-5505-14T1
obtaining the information regarding the additional vehicle, Ennis

initiated the following colloquy with April:

Q: Alright. I will put that on there for
you. Now do you have your own . . .
personal auto policy or is this your only
policy in the household?

A: This is it.

Q: This is it. OK . . . because what I
would suggest adding, since you don't
currently have a personal auto policy in
your household . . . there's no coverage
for yourself or . . . for your husband
for . . . personal injury protection in
case you were to . . . borrow anyone's
vehicle or be a passenger in someone
else's vehicle.

A: Hmm.

Q: What we can offer is an endorsement to
the policy which adds that coverage . . .
'cause that way you would have . . .
protection for yourself, personal injury
for no matter where you're at . . .
whoever's vehicle you're in, whether it
be a passenger or borrowing a
vehicle, . . . you would have that
coverage.

Q: How much is that?

A: Well, it depends on the . . . options
that you choose[;] it could be as low as
about $100 or up to about $200 depending
on different options that you . . . .

Q: A month?

A: Uh, no, that's per year.

Q: Oh.

6 A-5505-14T1
 A: It's not, not much money, you know,
more[,] and it does give you . . . a
benefit that way since you don't have a
personal policy, it protects you, you
know, for personal injury . . . as far
as it can go.

Q: Um. OK. Yeah, I definitely need to look
into that, well, especially with that
cost, I mean, it's really not much of a
difference . . .

A: Yeah.

Q: . . . broken down.

. . . .

A: It's taking me so long to fill out this
form. There's so many questions.

Q: I know . . . I know.

A: Because I am a generally like a
person . . . who doesn't, isn't an
insurance broker or anything, it's really
hard to understand most of it.

Q: Yeah . . . yeah. Well, I mean, what I
can do with you here, if you have a
minute, I can . . . go over the price of
what the difference would be for . . .
selecting the options and,
recommend . . . what you would want from
these.

Ennis proceeded to "suggest" that April increase the medical

expense limit on plaintiffs' policy from $250,000 to $1 million,

with a $250 deductible (the minimum deductible permitted by law).

April accepted his suggestion. Ennis then agreed to fax the

coverage selection form to April, telling her "you need to check

7 A-5505-14T1
off everything that we just discussed. So what I'll do is I'll

put an arrow next to . . . the options that I just chose for you."

April complied, checking off the coverages selected by Ennis and

faxing the form back to him.

According to Brzezinski, from the time defendant issued its

first policy to plaintiffs in 2000, to the time of Paul's accident,

NJM had a "practice and procedure" of including "a coverage

selection form (CSF) and a Buyer's Guide," as required by law,

with every application for a business auto insurance policy, and

each and every renewal. Although Brzezinski said NJM did not have

a practice or policy of aligning an insured's liability coverage

with the insured's UM/UIM coverage, he admitted he did not know

the industry standard outside of NJM. When asked if he was "aware

of any statistic at NJM of the percentage of policies that do not

match liability with UM[-]UIM," he responded, "It's low."

Additionally, Brzezinski was asked about April's testimony,

"that she was told to sign [the CSF] and send it back and the

representative would fill in the coverage and place the check

marks for the applicable coverage." Plaintiff's counsel then

inquired, "Is that the way it's supposed to go? Is that proper

procedure?" Brzezinski responded, "It's backward."

In August 2013, plaintiffs filed their complaint seeking

damages from Tarakanov, alleging she negligently caused the

8 A-5505-14T1
accident. Thereafter, plaintiffs filed an amended complaint

adding NJM as a defendant, alleging NJM "seriously and flagrantly

failed to meet its obligations to plaintiff, including its

obligation to properly advise plaintiff of coverages, the effect

of coverages, the inadequacy of coverages, has given

misinformation and has otherwise failed to properly furnish

information of proper insurance coverages in its dealing with

plaintiff." Plaintiffs further alleged NJM's conduct "represents

negligence, gross negligence, willful and wanton conduct and

malice as a matter of law."

After receiving discovery, plaintiff obtained an expert

report from Armando M. Castellini. According to his certified

biography, Castellini has been a technical consultant and expert

witness to attorneys in insurance matters and litigation involving

approximately 1700 cases in twenty-four states.6

6
Castellini's biography further states he previously served in
various positions within the insurance industry, including:
president of the Independent Insurance Agents of New Jersey; the
New Jersey Insurance Commissioner's agent representative to the
governing committee of the Automobile Insurance Plan; member of
the committees involved in the drafting, enactment, and
implementation of the New Jersey No-Fault Law; vice-president of
the Insurance Broker's Association of New Jersey; member of the
New Jersey Department of Insurance Task Force on Banking and
Insurance; Member of the New Jersey Automobile Full Insurance
Underwriting Association's Rules and Forms Committee; member of
the New Jersey Department of Insurance Commissioner's Producer
Advisory Committee; director of the New Jersey Association of
Insurance Licensing Schools.

9 A-5505-14T1
 Before issuing his report, Castellini reviewed voluminous

records, including "[a]pproximately 700 pages of documents

produced by [defendant] consisting of [c]overage [s]election

[f]orms and policy declaration pages."

According to Castellini,

Because insurance companies believed they
could not "under-write" the exposures
presented by UM and UIM coverages, they
generally tended to be adverse to selling the
coverages, and the statutory change that made
it the insured's option to purchase increased
limits of UM/UIM when prior to this it had
been the insurer's option to sell increase[d]
limits was not well received by most insurance
companies. An . . . example of this reaction
is found in [NJM's memo from around January
1974]. These memos from management to
personnel of carriers were clearly intended
to avoid the application of the statutory
change, and a direction to not "sell"
increased limits of UM/UIM – unless an insured
was wise enough to understand the coverage,
its availability, and the serious nature of
the exposure they faced absent the coverages.

Castellini attached a copy of the January 1974 NJM memo to

his report.7 Addressed to "SALES, CLAIMS & UNDERWRITING

PERSONNEL," the memo stated, in relevant part:

. . . Insureds may now purchase high limits
of coverage to protect themselves more fully
against damage or injury by an uninsured
motorist and by so doing, automatically
receive an extension of their coverage to

7
At his deposition, Brzezinski stated the individuals listed on
the memo "were attorneys with [NJM] and the president of the
company."
10 A-5505-14T1
 include Under-insured Motorist Coverage as
well.

. . . .

At present[,] it is not our intent to actively
market this new form of coverage. You
nevertheless should be aware of its existence
and the fact that on an insured's request, we
will provide it.

Castellini cited "the introduction of the Basic Auto

Policy . . . and the Special Auto Policy" as explaining "why the

very large majority [of] Insurance Producers have developed the

practice of recommending high limits of liability coverage so that

their clients may then procure up to those high limits for their

protection against [u]ninsured and [u]nderinsured drivers or

vehicles."

Castellini further opined, "[I]n today[']s insurance

environment in New Jersey, it is very rare to find a [p]ersonal

or [c]ommercial [a]uto policy that does not have UM/UIM limits

that match the policy's liability limits – and when that occurs,

it is deemed to be violative of [industry] standards and

practices." He therefore concluded, NJM

failed to conform to the generally accepted
standards and practices relative to the
matching of an insured's UM/UIM limits to the
policy's liability limits; arbitrarily and
capriciously established is own internal
processes and procedures with regard to UM/UIM
sales and limits; and did so intentionally and
willfully; in violation of the statute as well
as the industry practice.
11 A-5505-14T1
He further noted, "A very minimal increase in the UM/UIM premium

would have been charged for the increase from $100,000 to

$500,000."

In December 2014, NJM filed a motion for summary judgment.

The trial court heard oral argument on January 23, 2015, and

reserved decision.

Plaintiffs then filed their motion to amend their complaint,

seeking to include an allegation that NJM violated the New Jersey

Consumer Fraud Act8 (CFA). Following oral argument on May 29,

2015, a different judge denied plaintiffs' motion. He first noted

that in Myska v. New Jersey Manufacturers Insurance Company, 440

N.J. Super. 458, 485 (App. Div. 2015), appeal dismissed as

improvidently granted, 224 N.J. 523, 524 (2016), this court held,

"[T]he CFA is not appropriate where a regulatory scheme deals

specifically, concretely, and pervasively with a particular

activity implying a legislative intent not to subject parties to

multiple regulations that as applied will work at cross purposes."

He then concluded,

We now have a regulatory system where a party
is entitled to purchase what they call
insurance which is a basic policy which gives
people recovery for property damage of $5,000
and medical bills for $10,000 and provides no
liability insurance. People buy those
policies. They get sued. They think they

8
N.J.S.A. 56:8-1 to -206.
12 A-5505-14T1
 have insurance, but they have no liability
insurance. . . .

The fact that . . . there's no contest
and no dispute that NJM offered the option of
having the insured purchase UM/UIM coverage
to equal the amount purchased by the insured
for liability coverage. There's no dispute
as to that. That was the option of the
consumer, and the consumer chose not to do it.

. . . .

Based upon that highly regulatory and
statutory scheme, the purported amendment to
include the claim for a violation of the [CFA]
would be futile, and it would certainly be
prejudicial to this defendant who has been
litigating this case without that allegation
presented before [it] until two weeks before
trial.

On June 18, 2015, the first judge issued his reserved

decision, granting NJM's summary judgment motion and dismissing

all claims against NJM with prejudice. The judge set forth his

reasons in a thirty-eight-page written opinion. He first noted

that plaintiffs were not entitled to assert a UIM claim because

Tarakanov had $100,000 of liability coverage, and plaintiffs had

the same amount of UIM coverage. He then concluded, "Even if . . .

a mistake could be found in this case, the [c]ourt cannot find

that any fraudulent or unconscionable conduct has taken place to

merit reformation."

The judge further ruled that plaintiffs' "expert's opinion

in this case will play no part in the discussion of whether

13 A-5505-14T1
[plaintiffs] are entitled to reformation of the insurance policy

or damages, because [the expert] has rendered an inadmissible net

opinion." The judge further found that NJM was "entitled to

immunity under N.J.S.A. 17:28-1.9," providing it with "a shield

against both claims for reformation and damages." He therefore

granted NJM's summary judgment motion and dismissed plaintiffs'

complaint. This appeal followed.

II.

We first address the Law Division order denying plaintiffs'

motion to amend their complaint to assert a CFA claim. Our Supreme

Court has "made clear that 'Rule 4:9-1 requires that motions for

leave to amend be granted liberally' and that 'the granting of a

motion to file an amended complaint always rests in the court's

sound discretion.'" Notte v. Merchs. Mut. Ins. Co., 185 N.J. 490,

501 (2006) (quoting Kernan v. One Washington Park Urban Renewal

Assocs., 154 N.J. 437, 456-57 (1998)). "That exercise of

discretion requires a two-step process: whether the non-moving

party will be prejudiced, and whether granting the amendment would

nonetheless be futile." Ibid.

A plaintiff may pursue a CFA claim "against an insurance

company for 'fraudulent, deceptive or other similar kind of selling

or advertising practices,' [but] there are limits on the statute's

application." Myska, supra, 440 N.J. Super. at 485 (quoting

14 A-5505-14T1
Daaleman v. Elizabethtown Gas Co., 77 N.J. 267, 271 (1978)). "To

prevail on a CFA claim, a plaintiff must establish three elements:

'1) unlawful conduct by defendant; 2) an ascertainable loss by

plaintiff; and 3) a causal relationship between the unlawful

conduct and the ascertainable loss.'" Id. at 484 (quoting Zaman

v. Felton, 219 N.J. 199, 222 (2014)). Under the CFA, an "unlawful

practice" includes

any unconscionable commercial practice,
deception, fraud, false pretense, false
promise, misrepresentation, or the knowing,
concealment, suppression, or omission of any
material fact with intent that others rely
upon such concealment, suppression or
omission, in connection with the sale or
advertisement of any merchandise or real
estate, or with the subsequent performance of
such person as aforesaid, whether or not any
person has in fact been misled, deceived or
damaged thereby.

[N.J.S.A. 56:8-2.]

In Myska we further noted that, although "the CFA

'encompass[es] the sale of insurance policies as goods and services

that are marketed to consumers,' it was not intended as a vehicle

to recover damages for an insurance company's refusal to pay

benefits." Myska, supra, 440 N.J. Super. at 485 (quoting Lemelledo

v. Benefit Mgmt. Corp., 150 N.J. 255, 270 (1997)). We nevertheless

agreed that "Lemelledo authorizes pursuit of a private right of

action against an insurance company for 'fraudulent, deceptive or

15 A-5505-14T1
other similar kind of selling or advertising practices.'" Ibid.

(quoting Daaleman, supra, 77 N.J. at 271).

Here, plaintiffs do not seek to recover damages for an alleged

refusal to pay benefits; instead, plaintiffs seek reformation of

their NJM policy to match their UM/UIM coverage with their $500,000

of liability coverage. In their initial complaint against NJM,

plaintiffs alleged NJM's conduct represents "gross negligence,

willful and wanton conduct and malice as a matter of law." These

allegations not only loosely track the exception to the immunity

statute, N.J.S.A. 17:28-1.9, they also allege conduct that would

violate the CFA's broad proscription "of any unconscionable

commercial practice, deception . . . , misrepresentation, or the

knowing, concealment, suppression, or omission of any material

fact with intent that others rely upon such concealment,

suppression or omission." N.J.S.A. 56:8-2.

Based upon our review of the record, including the admitted

"backward" procedure followed in the initiation and amendment of

plaintiffs' policy, and the opinions of plaintiff's expert, we

reject the conclusion plaintiff's proposed amended complaint

"would be futile." Additionally, we discern no prejudice to NJM

by the proposed amendment since the CFA claim is based on the same

underlying facts and events set forth in the original pleading.

We further conclude NJM has no cause to complain of the late

16 A-5505-14T1
assertion of claims grounded on the same conduct already alleged

in the complaint. We hold that no cognizable prejudice will inure

to NJM by the amendment sought by plaintiffs. We therefore reverse

the May 29, 2015 order denying plaintiffs' motion to file an

amended complaint.

III.

We next address the rejection of the report of plaintiffs'

expert as a net opinion. The admissibility of expert testimony

is committed to the sound discretion of the trial court. Townsend

v. Pierre, 221 N.J. 36, 52 (2015). A trial court's grant or denial

of a motion to preclude expert testimony is entitled to deference

on appellate review. Ibid. Our Supreme Court has instructed us

to "apply [a] deferential approach to a trial court's decision to

admit expert testimony, reviewing it against an abuse of discretion

standard." Id. at 53 (alteration in original) (quoting Pomerantz

Paper Corp. v. New Cmty. Corp., 207 N.J. 344, 371-72 (2011)).

N.J.R.E. 702 and 703 frame our analysis for determining the

admissibility of expert testimony. N.J.R.E. 702 identifies when

expert testimony is permissible and requires the experts to be

qualified in their respective fields. N.J.R.E. 703 addresses the

foundation for expert testimony. Expert opinions must "be grounded

in 'facts or data derived from (1) the expert's personal

observations, or (2) evidence admitted at the trial, or (3) data

17 A-5505-14T1
relied upon by the expert which is not necessarily admissible in

evidence but which is the type of data normally relied upon by

experts.'" Townsend, supra, 221 N.J. at 53 (quoting Polzo v. Cty.

of Essex, 196 N.J. 569, 583 (2008)).

"The net opinion rule is a 'corollary of [N.J.R.E. 703] . . .

which forbids the admission into evidence of an expert's

conclusions that are not supported by factual evidence or other

data.'" Id. at 53-54 (alteration in original) (quoting Polzo,

supra, 196 N.J. at 583). Therefore, an expert is required to

"'give the why and wherefore' that supports the opinion, 'rather

than a mere conclusion.'" Id. at 54 (quoting Borough of Saddle

River v. 66 E. Allendale, LLC, 216 N.J. 115, 144 (2013)). The net

opinion rule directs "that experts 'be able to identify the factual

bases for their conclusions, explain their methodology, and

demonstrate that both the factual bases and the methodology are

reliable.'" Id. at 55 (quoting Landrigan v. Celotex Corp., 127

N.J. 404, 417 (1992)). In short, the net opinion rule is "a

prohibition against speculative testimony." Harte v. Hand, 433

N.J. Super. 457, 465 (App. Div. 2013) (quoting Grzanka v. Pfeifer,

301 N.J. Super. 563, 580 (App. Div. 1997), certif. denied, 154

N.J. 607 (1998)).

Plaintiffs argue the Law Division abused its discretion when

it rejected Castellini's report as a net opinion. We agree.

18 A-5505-14T1
Castellini based his report on his extensive background,

education, and experience, along with his review of the significant

record in this case. He has been actively involved in the

insurance business and its regulation for many years, dating back

to the enactment of No Fault Insurance in New Jersey. He properly

based his conclusions on these facts and experiences. See

Townsend, supra, 221 N.J. at 53 (quoting Polzo, supra, 196 N.J.

at 583).

IV.

Our review of a ruling on summary judgment is de novo.

Parsons v. Mullica Twp. Bd. of Educ., 440 N.J. Super. 79, 83 (App.

Div. 2015). We apply the same legal standard as the trial court.

Ibid. Summary judgment is appropriate when "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 a judgment or order as a matter of law." R. 4:46-

2(c). When determining whether the record contains a genuine

issue of material fact, the court must consider "whether the

competent evidential materials presented, when viewed in the light

most favorable to the non-moving party, are sufficient to permit

a rational factfinder to resolve the alleged disputed issue in

19 A-5505-14T1
favor of the non-moving party." Brill v. Guardian Life Ins. Co.

of Am., 142 N.J. 520, 540 (1995).

NJM argues the Law Division properly granted summary

judgment, claiming entitlement to immunity, pursuant to N.J.S.A.

17:28-1.9, which provides, in pertinent part:

a. [N]o . . . insurer . . . 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 [UIM]
coverage, collision coverage or comprehensive
coverage. Nothing in this section shall be
deemed to grant immunity to any person causing
damage as the result of [its] willful, wanton
or grossly negligent act of commission or
omission.

b. 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 [UM] coverage
and [UIM] coverage have been explained to him
and a statement that no . . . insurer . . .
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 [UIM] coverage, collision coverage or
comprehensive coverage, except for that person
causing damage as the result of [its] willful,
wanton or grossly negligent act of commission
or omission.

N.J.S.A. 17:28-1.9 was enacted "to abrogate prior judicial

decisions holding insurers, agents, and brokers liable for failing

20 A-5505-14T1
to advise their customers of the availability of additional

[UM/UIM] coverage" and to quell the "explosion of litigation by

providing blanket immunity except in cases of willful, wanton, or

gross negligence." Strube v. Travelers Indem. Co., 277 N.J. Super.

236, 237, 242 (App. Div. 1994), aff'd o.b., 142 N.J. 570 (1995).

Immunity applies as long as the insurer establishes the

following:

(1) the named insured's coverage limits were
at least the minimum coverage required by law;

(2) the named insured's alleged damages were
not caused by a "willful, wanton or grossly
negligent act of commission or omission;" and

(3) the carrier complied with the coverage
selection requirements of N.J.S.A. 17:28-
1.9(b).

[Baldassano v. High Point Ins. Co., 396 N.J.
Super. 448, 453-54 (App. Div. 2007).]

In addition, an insurer must have obtained an insured's

acknowledgement that the available UM/UIM coverage limits were

explained to him, and the insurer will not be liable for the

insured's selection of coverage that was chosen in accordance with

subsection (a) of the immunity statute. N.J.S.A. 17:28-1.9(b).

If applying for a new policy, the insured must check-off the

options elected on the coverage selection form and then sign and

return the form to the insurer. N.J.S.A. 39:6A-23(a); N.J.A.C.

11:3-15.7(a). A completed, executed coverage selection form is

21 A-5505-14T1
"prima facie evidence of the insured's knowing election or

rejection of any option." N.J.S.A. 39:6A-23(e).

Significantly, in Avery v. Wysocki, 302 N.J. Super. 186, 190-

192 (App. Div. 1997), we held:

[T]he insured's completion and execution of
the coverage selection form is a condition of
the grant of immunity by subsection a. It is
plain that the purpose of the immunity is to
shift the responsibility for coverage
selection from the insurer to the insured. It
is also plain that under the legislative
scheme, the mechanism by which the insured is
enabled to make an informed coverage choice
and thereby to protect himself is the coverage
selection form mandated by N.J.S.A. 39:6A-23
. . . . We think it clear that without this
protection, the grant of the immunity by
N.J.S.A. 17:28-1.9a would have far harsher
consequences than the Legislature intended.
That is to say, the subsection a immunity is
based on the assumption that the insurer will
have complied with the dictates of N.J.S.A.
39:6A-23 by providing the insured with an
adequate description of available coverages
and their limits.

. . . .

We recognize the salutary purposes of the
immunity. We also appreciate, however, that
insistence on meticulous compliance with the
applicable coverage selection form
requirements is the legislative trade-off, as
it were, for according the immunity.

In Pizzullo v. New Jersey Manufacturers Insurance Company,

196 N.J. 251 (2008), our Supreme Court addressed the immunity

provision at issue in another UIM coverage case involving NJM. In

Pizzullo, NJM argued that "because it is a direct-writing insurer
22 A-5505-14T1
and does not employ brokers or agents, it had no duty to plaintiffs

other than to comply with the statutory notification

requirements." Id. at 263 (citing Andriani v. N.J. Mfrs. Ins.

Co., 245 N.J. Super. 252, 256-57 (App. Div.), certif. denied, 126

N.J. 327 (1991)). NJM asserted "that its customer service

representatives are neither agents nor brokers, because they do

not offer recommendations or advice about insurance needs, give

counsel to the insureds, sell policies or suggest increases or

decreases to coverage." Ibid. Notwithstanding "what its customer

service representative said" to the plaintiffs in Pizzullo, NJM

argued that it was "entitled to immunity because it mailed the

plaintiffs the Buyer's Guides and Coverage Selection Forms

required by the statute." Ibid.

After reviewing the history of the immunity statute, the

Court flatly rejected the "blanket immunity" advanced by NJM. Id.

at 268. Viewed in its historical context, the Court concluded

"the Legislature meant the statute to confer immunity in

circumstances relating to an insured's election of UIM coverage

when the insured attempts to later shift the blame for a decision

to opt for any level of coverage less than the maximum back onto

the insurer." Ibid.

Because the inadequate UIM coverage in Pizzullo resulted from

inaccurate responses the plaintiff received from the NJM

23 A-5505-14T1
representative, the Court rejected NJM's argument that the

plaintiff made an "election of . . . coverage," N.J.S.A. 17:28-

1.9(b), that triggered immunity for NJM. Pizzullo, supra, 196

N.J. at 269-70. After concluding the immunity statute did not

apply, the Court reinstated the monetary judgment previously

entered by the Law Division in favor of the plaintiffs following

trial. Id. at 274.

Applying the analysis employed by the Court in Pizzullo, we

are satisfied the record here clearly raises factual questions

precluding summary judgment. Viewed in the light most favorable

to plaintiffs, April never made an election of any coverages to

trigger immunity in favor of NJM; instead, Ennis offered to make

the policy elections, and April accepted his offer. Moreover, in

2000, April signed the CSF before any selections were made, a

procedure which NJM's own underwriting manager described as

"backward." The statute grants an insurer immunity upon "the

insured's completion and execution of the coverage selection

form," Avery, supra, 302 N.J. Super. at 190, not the insurer's

"call center rep." On remand, we expect the trial court will

address, with the benefit of a full trial record, whether NJM's

handling of plaintiffs' policy resulted in the required

"meticulous compliance with the applicable coverage selection form

requirements." Id. at 192.

24 A-5505-14T1
 Of further note, the Court in Pizzullo reaffirmed well-

established principles that we find apply to the unusual factual

circumstances under review:

An insurance company is "expert in its field
and its varied and complex instruments are
prepared by it unilaterally whereas the
assured or prospective assured is a [lay
person] unversed in insurance provisions and
practices." Gibson v. Callaghan, 158 N.J.
662, 669, (1999) (quoting [Allen v. Metro.
Life Ins. Co., 44 N.J. 294, 305 (1965)]).
Because of the substantial disparity in the
sophistication of the parties, and because of
the highly technical nature of insurance
policies, we have long "assume[d] a
particularly vigilant role in ensuring their
conformity to public policy and principles of
fairness." Id. at 669-70 (quoting Voorhees
v. Preferred Mut. Ins. Co., 128 N.J. 165, 175
(1992)).

[Pizzullo, supra, 196 N.J. at 270.]

The record also contains substantial evidence that supports

the opinion of plaintiffs' expert that NJM arbitrarily established

its own internal processes and procedures regarding the sale of

UM/UIM coverage, contrary to "accepted standards and practices

relative to the matching of an insured's UM/UIM limits to the

policy's liability limits." The record contains no contrary expert

opinions.

In addition, notwithstanding the contention of NJM counsel

at oral argument that "it's NJM's practice not to advise as to

coverages," the record contains compelling evidence to the

25 A-5505-14T1
contrary. The record clearly reflects that Ennis advised April

regarding the option and the benefit of adding an endorsement to

plaintiffs' commercial auto policy that would provide plaintiffs

with personal injury protection (PIP) coverage, if they were

driving or occupying a non-owned vehicle. He also recommended

plaintiffs increase the medical expense benefits portion of their

PIP coverage from $250,000 to $1 million. April accepted these

recommendations and Ennis amended plaintiffs' policy to implement

these important changes.9

Having identified two major deficiencies in plaintiffs'

policy, and having rectified them for plaintiffs, a major issue

that remains is why Ennis failed to identify the deficiency of

plaintiffs' UM/UIM coverage not matching their liability coverage.

One possible explanation, advanced by plaintiffs' expert, is that

NJM maintained a policy, dating back to 1974, to "not . . .

actively market" UIM coverage. The record contains no

documentation announcing a change in the policy announced in NJM's

1974 memo.

We conclude the record clearly indicates factual questions

precluding summary judgment: first, whether NJM complied with the

9
We do not suggest any criticism of the changes Ennis recommended
and made to plaintiffs' policy. To the contrary, it appears these
changes reflected wise counsel and resulted in much improved
coverage for plaintiffs.
26 A-5505-14T1
coverage selection requirements of the immunity statute, and

second, whether NJM caused plaintiffs' damages by a "willful,

wanton or grossly negligent act of commission or omission."

N.J.S.A. 17:28-1.9.

Reversed and remanded. We do not retain jurisdiction.

27 A-5505-14T1