OCTOBER 2013 BAD FAITH CASES: COURT OF EQUITY TOLLS STATUTE ON PIP CLAIM DESPITE PLAINTIFF’S FAILURE TO DETERMINE APPROPRIATE INSURER (New Jersey Appellate Divison)

In Raviv v. Farmer’s Ins. Group, the court was asked to determine whether the statute of limitations applicable to claims for personal injury protection (PIP) benefits expires two years after the date of the accident even where the claimant is unaware of the identity of the insurance carrier. In the case, plaintiff was injured while driving a car owned by a friend and insured by GEICO (“the insurer”) in December of 2009. Plaintiff submitted an affidavit of no insurance along with a claim for benefits to the insurer, in which she provided her address and stated she lived at the address with her husband. However, three years later at her deposition, plaintiff testified she had lived at the address with her husband in 2007 and 2008, but that after separating from her husband in 2009, only plaintiff was listed on the lease and that her sister was the only person living with her at the address. After this deposition, it came to light plaintiff’s sister’s insurer, the defendant, was the primary insurer under N.J.S.A. 39:6A-4.2 because plaintiff was a resident relative in the insured’s household who was not a named insured under an automobile insurance policy of her own. On November 16, 2011, plaintiff filed a claim with defendant. On December 12, 2011, defendant issued a Reservation of Rights letter, pending its investigation of the claim. On Februrary 22, 2012, defendant issued an official claim denial, informing plaintiff the statute of limitations on her claim tolled as of December 1, 2011.

The trial court ordered defendant to provide coverage to plaintiff, finding the balance of equity compelled the tolling of the statute.  On appeal, the Appellate Division determined plaintiff promptly pursued her claim, despite her mistake concerning which insurer was truly responsible for covering her claim. Furthermore, once she learned defendant was the correct insurer, she immediately filed a claim with defendant. There was limited evidence as to the prejudice defendant would suffer from being forced to defend against a stale claim, and defendant’s continued investigation of the claim after the statute of limitations had passed led plaintiff to believe the claim had been timely filed. Based on these findings, the court determined plaintiff was not dilatory in filing her claim, plaintiff had been lulled into a false sense of security concerning defendant’s willingness to pay her claim, and that the statute of limitations should be tolled, requiring defendant to provide PIP coverage.

Date of Decision July 15, 2013

Raviv v. Farmer’s Ins. Group, No. A-5074-11T2, 2013 N.J. Super. Unpub. LEXIS 1744 (July 15, 2013 N.J. Super Ct. App. Div.) (Alvarez, J. and St. John, J.)