SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4200-16T3

DRIVE NEW JERSEY INSURANCE

COMPANY,

Plaintiff-Appellant/

Cross-Respondent,

v.

LOUIS A. D'ALESSIO, JR.,

D'ALESSIO'S BAGEL EXPRESS,

ADOLINA LOPEZ AVILA (as

Administrator ad Prosequendum

and General Administrator of

the Estate of Pedro Avidan

Reyes Tejada),

Defendants,

and

SENTINEL INSURANCE COMPANY

and/or THE HARTFORD,

Defendant-Respondent/

Cross-Appellant.

___________________________

Argued June 5, 2018 – Decided July 9, 2018

Before Judges Reisner, Mayer, and Mitterhoff.

On appeal from Superior Court of New Jersey, 

Law Division, Middlesex County, Docket No. 

L-4201-15.

NOT FOR PUBLICATION WITHOUT THE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.
2 A-4200-16T3

Daniel J. Pomeroy argued the cause for 

appellant/cross-respondent (Pomeroy Heller & 

Ley, LLC, attorneys; Daniel J. Pomeroy and 

Karen E. Heller, on the briefs).

Gerald D. Wixted argued the cause for 

respondent/cross-appellant (Dilworth Paxson, 

LLP, attorneys; Gerald D. Wixted, on the 

briefs). 

PER CURIAM

This appeal concerns an attempt by plaintiff Drive New Jersey 

Insurance Company (Drive) to disclaim $485,000 in coverage to its 

insured, and instead reduce coverage to $15,000 pursuant to a 

policy exclusion, after Drive had begun defending the insured in 

a wrongful death suit. Drive admittedly did not provide the 

insured with a reservation of rights (ROR) letter, before it 

undertook his defense. Thereafter, Drive filed a declaratory 

judgment (DJ) action against its insured, the insured's employer, 

the employer's insurer Sentinel Insurance Company (Sentinel), and 

the deceased accident victim's estate. Sentinel counterclaimed 

for declaratory and other relief. The trial court granted summary 

judgment against Drive, and subsequently denied Drive's 

reconsideration motion.1

 

1 The wrongful death suit was not settled until after the trial 

court denied the reconsideration motion. That history illustrates 

the difficulty of settling litigation when there is uncertainty 

about the litigants' insurance coverage. 
3 A-4200-16T3

Drive now appeals from an April 15, 2016 order, granting 

Sentinel's summary judgment motion, dismissing Drive's DJ 

complaint against all defendants, declaring that Drive must 

provide primary coverage and a defense to its insured and the 

employer, with $500,000 in coverage, and requiring Drive to 

reimburse Sentinel's defense costs in the underlying wrongful 

death suit. Drive also appeals from an April 15, 2016 order 

denying Drive's summary judgment motion. Lastly, Drive appeals 

from an April 18, 2017 order denying its motion for 

reconsideration. Sentinel cross-appeals from a May 3, 2017 order 

denying its motion for a counsel fee award for defending against 

the DJ action.

2 

I

We review a summary judgment order de novo, employing the 

Brill3 standard. Davis v. Brickman Landscaping, Ltd., 219 N.J. 

395, 405 (2014). We review a trial court's decision to grant or 

deny a reconsideration motion for abuse of discretion. See Hinton 

v. Meyers, 416 N.J. Super. 141, 148 (App. Div. 2010). We will 

 

2 Drive paid Sentinel approximately $23,000 in reimbursement for 

defense costs for the wrongful death action. Sentinel sought 

approximately $40,000 in additional fees for litigating the 

coverage case. 

3 Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540

(1995).
4 A-4200-16T3

not disturb a trial court's decision of a counsel fee motion, 

except in the rarest case and only if we find a clear abuse of 

discretion. Rendine v. Pantzer, 141 N.J. 292, 317 (1995). 

Finding no legal errors in the summary judgment decisions and 

no abuse of discretion in the denial of reconsideration, we affirm 

the April 15, 2016 and April 18, 2017 orders for the reasons set 

forth in this opinion. 

On the cross-appeal, we affirm the May 3, 2017 order for the 

reasons stated by the trial court. No further discussion of the 

fee issue is warranted. R. 2:11-3(e)(1)(E). 

II

Before addressing the legal issues pertaining to the summary 

judgment and reconsideration motions, we summarize the most 

pertinent evidence. The case arose from an accident in which 

Drive's insured, Louis A. D'Alessio, Jr., struck and killed a 

pedestrian. At the time, D'Alessio was using his personal vehicle 

to deliver bagels for his employer, Bagel Express. The 

pedestrian's estate sued D'Alessio and Bagel Express. 

Bagel Express had a $2,000,000 policy through Sentinel, 

which covered its employees. D'Alessio had a $500,000 policy from 

Drive, covering his personal vehicle. The Drive policy had an 

exclusion for use of the vehicle to make business-related 

deliveries. The exclusion stated that, if the vehicle was used 
5 A-4200-16T3

for that purpose, the coverage was reduced to the minimum allowed 

by law, or $15,000. Eventually, Drive would seek to invoke the 

policy exclusion, but on the summary judgment record, Drive did 

not do so until after it undertook to defend D'Alessio in the 

wrongful death lawsuit. 

The wrongful death complaint was filed on February 12, 2015.

In April 2015, Drive retained counsel for D'Alessio, and the 

attorney filed an answer on D'Alessio's behalf on April 27, 2015. 

On July 16, 2015, Drive filed the DJ action against D'Alessio, 

Bagel Express, Sentinel, and the pedestrian's estate. Drive did 

not seek a stay of the wrongful death litigation, and that lawsuit

continued, with the Drive-retained attorney representing 

D'Alessio.

After discovery closed in the DJ action, Sentinel moved for 

summary judgment. The summary judgment record discloses that 

Drive never asserted that it served D'Alessio with a ROR letter.

In fact, during discovery, Sentinel's attorney asked Drive's 

attorney multiple times to produce a ROR letter if Drive had sent 

one. Drive's attorney avoided directly answering the discovery 

demand. Finally, in response to Sentinel's summary judgment 

statement of material facts, Drive admitted that no "formal" ROR 

letter was ever sent. That response did not cite to record 

evidence of any ROR letter, formal or informal, or any attempt to 
6 A-4200-16T3

disclaim coverage or invoke the policy exclusion, other than the 

DJ complaint itself. 

At the motion argument on April 15, 2016, Drive's attorney 

did not claim that the company ever served its insured with a ROR

letter. The attorney instead contended that a ROR letter was not 

required. The motion judge noted that Drive had not raised that 

argument in its motion papers but was asserting the contention for 

the first time at oral argument. The judge granted summary 

judgment, concluding that, absent timely service of a ROR letter, 

Drive could not sue its insured to disclaim coverage, after 

commencing representation of the insured in the underlying 

wrongful death action. 

After the trial judge granted summary judgment in favor of 

Sentinel, Drive filed what it characterized as a reconsideration 

motion, seeking to re-open discovery to permit an amendment to its 

responses to Sentinel's motion to produce. In other words, after 

stalling discovery for months, Drive finally sought to produce a

letter invoking the policy exclusion. The motion sought to place 

several documents before the court, only two of which are pertinent 

here. The first document, a letter dated October 30, 2013, was 

from Mr. Orlando, a Drive claims specialist, advising D'Alessio

that he had $500,000 in coverage. The letter also stated that,

because it was possible that damages might be awarded against 
7 A-4200-16T3

D'Alessio in excess of that amount, he "may wish to retain a 

personal attorney at [his] own expense regarding this potential 

excess exposure." 

The second document was an August 1, 2014 letter from Orlando

to Andrew Statmore, an attorney who had represented D'Alessio at 

a March 5, 2014 examination under oath (EUO). The August 1, 2014 

letter stated that Drive's "coverage investigation" revealed that 

D'Alessio was using his vehicle for business purposes, and invoked

the policy exclusion for use of a vehicle for retail or wholesale 

delivery of food. The letter noted the stepdown clause, and stated 

that "[a]ny claims for damage resulting from this accident, other 

th[a]n those which fall within the minimum liability coverage 

[$15,000] are hereby denied." The letter advised that Drive would 

"proceed with the investigation and resolution of all claims which 

fall within" that liability coverage. 

The letter was unsigned, but Orlando stated that he "[could] 

certify" that he prepared it and sent it. Orlando explained that 

Drive mistakenly failed to provide the letter to its attorneys, 

thus leading to the attorneys' failure to provide the documents 

to Sentinel or to the court. 

In opposition, Sentinel's attorney produced documents 

illustrating his extensive efforts to obtain discovery from Drive, 

and Drive's repeated failure to provide discovery. In particular, 
8 A-4200-16T3

Drive refused to provide the defense file relating to the wrongful 

death action, which according to Orlando, was the file containing 

the August 1, 2014 letter.4

Sentinel also provided the court with a copy of Statmore's 

retainer letter with D'Alessio, clearly stating that Statmore was 

only retained to represent D'Alessio at the EUO and "that 

representation shall end after the formal statement is concluded."

The retainer further specified that Statmore was not retained to 

represent D'Alessio in connection with any denial or disclaimer 

of coverage, should that occur after the EUO. The EUO took place 

on March 5, 2014. Nothing in the transcript of the EUO presented 

to us reflects that Drive's attorney put Statmore or his client 

on notice that there was a coverage issue. His introductory 

explanation to D'Alessio of the EUO's purpose did not mention 

coverage. 

On July 22, 2016, the motion judge wrote to the attorneys 

that he was scheduling a testimonial hearing to resolve factual 

issues pertinent to the reconsideration motion. Those issues 

included whether D'Alessio received the August 1, 2014 letter, 

 

4 Another Drive claims specialist, Ms. Giacobbe, explained that 

when she took over the coverage file, it was empty; all the 

pertinent documents were in the wrongful death file, which was 

maintained by Orlando. She claimed that company policy precluded 

her and Orlando from sharing files. 
9 A-4200-16T3

whether Statmore continued to represent D'Alessio after the EUO, 

the circumstances under which Orlando allegedly prepared and sent 

the letter, and how the letter "finally came to be discovered" 

eight days after the court granted summary judgment. In response, 

Sentinel's attorney sent the court a certification from Statmore, 

confirming that his representation of D'Alessio ended immediately 

after the March 5, 2014 EUO. Statmore also stated his belief that 

he told Drive's attorney at or around the time of the EUO that his 

representation was limited to the EUO. Statmore further stated 

that the August 1, 2014 letter was incorrectly addressed, and he 

had no record or recollection of ever having received it. 

The trial court had some difficulty scheduling the 

testimonial hearing. Meanwhile, the wrongful death case was on 

the trial list, and the coverage issue continued to be uncertain

due to the reconsideration motion. Finally, the court set a 

peremptory date of April 18, 2017 for the hearing. On that date, 

Drive's counsel conceded that one of his witnesses, Mark Jones, 

the attorney who represented Drive at the EUO, had no recollection 

of anything relevant to the hearing.

5 Further, although the 

 

5 At a previous conference, in November 2016, Drive's counsel 

represented to the court that Jones told Statmore that there might 

be a coverage issue. However, on April 18, 2017, Drive's counsel 

told the court Jones remembered nothing pertinent. Drive's 

appellate brief now asserts – inaccurately — that Jones was 
10 A-4200-16T3

hearing was scheduled for 10:30 a.m., Statmore was not present to 

testify, apparently because Drive's attorney had told him the 

hearing would last all day and Statmore planned to appear at 2:00 

p.m. D'Alessio had very recently been subpoenaed, but told Drive's 

attorney that he could not appear on short notice, and he and his 

family were scheduled to be on vacation.

6 Drive's attorney stated 

that Orlando was unavailable due to a stomach ailment. In short, 

Drive was not prepared to proceed with the peremptory hearing, at 

which Drive had the burden of proof. 

In a brief oral opinion, the judge denied the reconsideration 

motion. The judge first noted that Drive had not shown that there 

were exceptional circumstances or that the proffered new evidence 

could not have been located earlier through diligent effort. The 

judge concluded that, even if Drive had been able to prove that 

Statmore received the letter, at a time when he was still 

representing D'Alessio, the document was not a reservation of 

rights letter. In fact, Drive's attorney admitted it was not a

 

"available in court" at the April 18, 2017 hearing date but was 

unfairly precluded from testifying.

6 We gather from the transcript that D'Alessio was served with 

the subpoena on the previous Thursday, which was the day before 

Good Friday. The hearing was on April 18, 2017, which was the 

Tuesday after Easter Sunday. 
11 A-4200-16T3

ROR letter. The judge reasoned that Drive was simply attempting 

to rehash its earlier argument that a ROR letter was not required. 

III

We begin our legal analysis by addressing the summary judgment 

motion. We agree with the motion judge that in the circumstances 

presented, Drive could not undertake the defense of its insured,

without giving the insured advance notice that Drive intended to 

deny most of the coverage the policy provided and that it would 

defend under a reservation of that right. Even if a formal ROR 

letter were not required, an insurer must timely invoke a policy 

exclusion. See Griggs v. Bertram, 88 N.J. 347, 363-64 (1982).

The undisputed summary judgment evidence established that Drive 

neither timely invoked the exclusion nor served its insured with 

a reservation of rights letter. 

We find no merit in Drive's argument that a ROR letter was 

not required because Drive was not denying coverage but was only 

reducing the coverage — from $500,000 to $15,000. Drive's argument 

is based on an unduly narrow view of the purpose of the ROR letter 

requirement. It is clear from cases as early as Merchants 

Indemnity Corp. v. Eggleston, 37 N.J. 114 (1962), that a carrier 

may not control the defense, without notice to the insured of a 

reservation of the insurer's right to disclaim coverage, and then 

eschew its obligation to provide the coverage.
12 A-4200-16T3

Relying on Burd v. Sussex Mutual Insurance Co., 56 N.J. 383 

(1970), Drive argues for a narrow construction of the obligation, 

contending that it only applies where the carrier's control of the 

defense could influence the outcome of the coverage obligation. 

First of all, Burd did not involve a reservation of rights, but 

an insurer's refusal to defend its insured. However, Burd

recognized that 

if the trial will leave the question of 

coverage unresolved so that the insured may 

later be called upon to pay, or if the case 

may be so defended by a carrier as to prejudice 

the insured thereafter upon the issue of 

coverage, the carrier should not be permitted 

to control the defense.

[Id. at 389 (emphasis added).]

Drive focuses on the second phrase in the above-quoted language 

while downplaying the first phrase. We conclude that a carrier 

that intends to defend its insured in either situation described 

in the quote above has an obligation to serve a reservation of 

rights letter. 

Burd does not hold to the contrary. Burd focused on the 

possibility of a carrier litigating the tort action in a way that 

would prejudice the insured, because that was the issue in the 

case. Burd did not hold that that was the only situation in which 

a ROR letter was required. Burd was not about an insurer's failure 

to serve a ROR letter. Instead, Burd addressed how and when an 
13 A-4200-16T3

insurer could obtain a declaration of its obligation to provide 

coverage. However, Burd reaffirmed the following basic 

principles:

[I]f a carrier defends an action in the face 

of a coverage issue, the carrier must pay the 

judgment (unless the insured expressly agreed 

to a reservation of that issue), and if the 

carrier does not defend the tort claim because 

a plaintiff's verdict will not resolve the 

coverage problem in the insured's favor or 

because the carrier cannot defend with 

complete fidelity to the insured's sole 

interest, then the carrier may be heard upon 

the coverage issue in a proceeding upon the 

policy. And of course if the carrier does not 

defend, it will have to reimburse the insured 

for the cost of defense if the tort judgment 

is held to be within the covenant to pay.

[Id. at 394 (emphasis added).]

In Griggs, the Court also recognized the requirement to issue 

a reservation of rights letter. The obligation applies to policy 

exclusions as well as claims of noncoverage.

Under certain circumstances an insurance 

carrier may be estopped from asserting the 

inapplicability of insurance to a particular 

claim against its insured despite a clear 

contractual provision excluding the claim from 

the coverage of the policy. The strongest and 

most frequent situation giving rise to such 

an estoppel is one wherein a carrier 

undertakes to defend a lawsuit based upon a 

claim against its insured. If it does so with 

knowledge of facts that are relevant to a 

policy defense or to a basis for noncoverage 

of the claim, without a valid reservation of 

rights to deny coverage at a later time, it 

is estopped from later denying coverage.
14 A-4200-16T3

[Griggs, 88 N.J. at 355-56.]

In Griggs, the Court focused on the insurer's related 

obligation to timely invoke any policy exclusion, even before 

litigation ensues:

We therefore conclude that where, after timely 

notice, adequate opportunity to investigate a 

claim, and the knowledge of a basis for 

denying or questioning insurance coverage, the 

insurance carrier fails for an unreasonable 

time to inform the insured of a potential 

disclaimer, it is estopped from later denying 

coverage under the insurance policy in the 

event a legal action is subsequently brought 

against its insured.

[Id. at 363-64.]

Accordingly, we find no merit in Drive's contention that it 

did not need to serve D'Alessio with a ROR letter. Drive's related

assertion – that D'Alessio had no right to obtain counsel of his 

own choosing – is belied by Drive's first letter to D'Alessio, 

advising him that his $500,000 coverage might be inadequate, and 

he might want to retain his own attorney to represent him with 

respect to any possible excess liability. Drive's citation to 

Sussex Mutual Insurance Co. v. Hala Cleaners, Inc., 75 N.J. 117, 

126 (1977), is inapposite, because in that case the insurer made 

its position known before the underlying tort lawsuit was filed 

and quickly obtained a stay of the tort lawsuit. In this case, 

Drive continued to represent D'Alessio in the wrongful death suit, 
15 A-4200-16T3

while also suing him in the DJ action, without his agreement to a 

reservation of rights. 

We find no abuse of the trial court's discretion in denying 

the reconsideration motion. A belated attempt to produce evidence

on a reconsideration motion, after the court has rendered judgment, 

requires a convincing explanation why the evidence could not have 

been produced earlier. See Fusco v. Bd. of Educ. of City of 

Newark, 349 N.J. Super. 455, 462-63 (App. Div. 2002).7 Likewise, 

a motion for relief from a judgment based on newly discovered 

evidence, under Rule 4:50-1(b), requires a showing that the 

evidence could not have been obtained earlier "by the exercise of 

due diligence." DEG, LLC v. Township of Fairfield, 198 N.J. 242, 

264 (2009) (citation omitted). 

We do not fault the trial judge for being skeptical about

Drive's sudden production of the documents a few days after the 

court granted summary judgment. It was not unfair to require a 

testimonial hearing, or to cancel the hearing when Drive was not 

prepared to proceed with its witnesses. At that point, the 

wrongful death case was still pending, and the settlement of that

case – which would provide compensation to the estate of the man 

 

7 Drive's merits brief does not even address the standards for a 

reconsideration motion, instead citing cases applicable to 

requests for extensions of discovery. 
16 A-4200-16T3

who was killed in the accident – was being delayed due to 

uncertainty about insurance coverage. The summary judgment record 

supported the judge's first decision, and there was no abuse of 

discretion in declining to reopen the judgment. 

We also agree with the trial judge that, even if the August 

1, 2014 correspondence had been properly addressed, mailed, and 

received by an attorney who still represented D'Alessio (none of 

which facts were proven), it was not a reservation of rights 

letter. See Sneed v. Concord Ins. Co., 98 N.J. Super. 306 (App. 

Div. 1967). In fact, Drive's counsel admitted that it was not a 

ROR letter and argued that no ROR letter was required. 

Finally, we briefly address Drive's argument that Sentinel 

had no standing to raise Drive's failure to serve D'Alessio with 

a ROR letter. Drive's brief in chief relies solely on United 

States Casualty Co. v. Hyrne, 117 N.J.L. 547, 552 (E. & A. 1937), 

a case that is not on point here. We deem the issue inadequately 

presented by the appellant. However, we add that Drive sued 

Sentinel to resolve the coverage issue, and, particularly given 

the then-pending wrongful death suit, both insurers had an interest 

in the amounts of coverage available to their insured, D'Alessio. 

In those circumstances, Sentinel had standing to raise the 

reservation of rights issue. See Potomac Ins. Co. of Ill. ex rel. 

OneBeacon Ins. Co. v. Pa. Mfrs., 425 N.J. Super. 305, 320-21 (App. 
17 A-4200-16T3

Div. 2012), aff'd, 215 N.J. 409 (2013); Marshall v. Raritan Valley 

Disposal, 398 N.J. Super. 168, 177 (App. Div. 2008). 

Affirmed.