SUPERIOR COURT OF NEW JERSEY 

 APPELLATE DIVISION 

 DOCKET NO. A-2322-21

CHERYL SAUSELEIN-RACZ, 

 Plaintiff-Appellant, 

v.

NEW JERSEY MANUFACTURERS 

INSURANCE COMPANY, 

 Defendant-Respondent. 

________________________________ 

Argued September 20, 2023 – Decided November 17, 2023 

Before Judges Vernoia and Walcott-Henderson. 

On appeal from the Superior Court of New Jersey, 

Law Division, Cape May County, Docket No. 

L-0121-20.

Robert Alan Berns argued the cause for appellant 

(Kaufman Dolowich & Voluck, LLP, attorneys; Robert 

Alan Berns and Timothy Mark Ortolani, of counsel and 

on the briefs). 

Glenn Thomas Dyer argued the cause for the 

respondent (Dyer & Peterson, PC, attorneys; Glen 

Thomas Dyer, on the brief). 

NOT FOR PUBLICATION WITHOUT THE 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-2322-21

PER CURIAM 

In this insurance dispute over Underinsured Motorist (UIM) coverage, 

plaintiff Cheryl Sauselein-Racz appeals from an order granting defendant New 

Jersey Manufacturer's Insurance Company (NJM) summary judgment 

dismissing plaintiff's declaratory judgment action. Having considered whether 

plaintiff's obligation to notify NJM about her personal injury lawsuit under 

Ferrante v. New Jersey Mfrs. Ins. Grp., 232 N.J. 460 (2018), was obviated by 

NJM's rescission of plaintiff's policy, we conclude plaintiff's actions resulted in 

the irretrievable loss of NJM's subrogation rights and forfeiture of her UIM 

coverage. We therefore affirm. 

The relevant facts are undisputed. On March 27, 2018, while driving her 

husband and son, plaintiff was involved in a head-on collision automobile 

accident with Mary Waddell's vehicle. Following the accident, plaintiff and her 

family were transported to Cape Regional Medical Center, where they were 

treated for injuries of varying degrees of severity. 

Meanwhile, at the scene of the accident, Waddell admitted to officers that 

she was operating her vehicle after taking Methadone, and she subsequently 

failed a sobriety test. Waddell was ticketed for reckless driving in violation of 

N.J.S.A. 39:4-96, among other offenses. 
3 A-2322-21

At the time of the accident, plaintiff and her husband, having carried 

insurance with NJM since at least 2013, were insured under a one-year NJM 

policy, effective July 15, 2017, through July 15, 2018. According to plaintiff, 

that one-year NJM policy provided $300,000.00 in uninsured/underinsured 

motorist coverage (UM/UIM), as well as $250,000.00 in personal injury 

protection (PIP) benefits. 

Notably, the UM/UIM endorsement section of the policy provides that a 

UIM claimant must "promptly . . . send [NJM] copies of the legal papers if a suit 

is brought," and "notify [NJM] in writing of a tentative settlement" with the 

carrier for the underinsured motor vehicle and permit NJM thirty days to pay the 

amount "equal to the tentative settlement" in order "to preserve [its] rights 

against the insurer, owner or operator of such underinsured motor vehicle." 

The "General Provisions" section of the policy states that if NJM makes a 

payment under the policy to a claimant who has the right to recover damages 

from another, NJM shall be subrogated to that right. In that case, the policy 

requires the claimant to do "[w]hatever is necessary to enable [NJM] to exercise 

[its] rights" and "[n]othing after loss to prejudice them." The subrogation rights 

outlined in that section do not apply if NJM has been given "prompt written 

notice of a tentative settlement" between the insured and the underinsured 
4 A-2322-21

tortfeasor's carrier and NJM "failed to advance payment to the insured in an 

amount equal to the tentative settlement within [thirty] days" after receiving 

such notification. 

On June 21, 2018, approximately three months after the accident, plaintiff 

and her husband filed a personal injury suit against Waddell in Cape May 

County. Waddell filed an answer to that complaint on July 24, 2018. After 

exchanging discovery, plaintiff and her husband learned that Waddell's 

automobile liability coverage limit was $100,000.00. 

On October 18, 2018, plaintiff filed a declaratory judgment against NJM 

in Atlantic County—rather than Cape May—seeking payment of PIP benefits 

for all past and future medical bills related to the accident. Plaintiff's filing 

made no reference to her pending personal injury action in Cape May County 

against Waddell. 

On December 11, 2018, plaintiff's counsel filed a $100,000.00 offer of 

judgment against Waddell. Shortly thereafter, on January 29, 2019, the personal 

injury lawsuit settled for $95,000.00—nearly the full amount of coverage under 

the policy held by Waddell at the time of the motor vehicle accident. 

Contrary to the UM/UIM endorsement and General Provisions sections of 

her NJM policy, plaintiff did not notify NJM that she had filed a personal injury 
5 A-2322-21

action against Waddell and did not provide NJM with a copy of the complaint. 

Plaintiff also did not advise NJM of Waddell's liability coverage limits, that the 

Waddell's liability coverage was insufficient to satisfy her personal injury 

claims, or of the impending settlement. 

On December 10, 2018, NJM notified plaintiff and her husband, via letter, 

of the retroactive rescission of their automobile policy. Specifically, NJM 

advised that it rescinded the policy because of plaintiff's failure to report that 

her son was a New Jersey licensed driver residing in their home. NJM informed 

plaintiff of the following: 

The Personal Automobile Policy is hereby rescinded. 

Accordingly, all coverage under the contract is 

considered null and void, effective July 15, 2013. 

This action has been influenced by information 

obtained through the investigation of the accident that 

occurred on March 27, 2018. Our Special Investigation 

Unit has determined that a material misrepresentation 

has been committed surrounding your failure to 

disclose, at the appropriate time, that Christopher

Sauselein was a licensed resident of your household[.] 

As a result of the rescission, you have not been 

provided automobile insurance with [NJM] since July

15, 2013. You must make other insurance 

arrangements immediately. 

Our Claims Department will be advised of the 

rescission by copy of this letter. 
6 A-2322-21

Any return premium will be refunded to you under 

separate cover. 

NJM sent another letter dated December 12, 2018, advising plaintiff and 

her husband what its investigation revealed, confirming its recission of the 

policy, and explaining that: 

[they had] engaged in activity that has resulted in

[NJM's] rescinding [their] personal auto policy. The 

rescission has an effective date of July 5, 2013. 

Accordingly, the NJM policy at issue was not in force 

on the March 27, 2018 date of loss. As such, any 

coverage potentially available to you is void. 

 . . . . 

Furthermore, the grounds for our coverage position set 

forth in this letter are not intended to limit NJM's right 

to assert additional grounds for disclaiming coverage or 

all or part of the claim. 

NJM issued a $14,548.43 check to plaintiff and her husband, as a refund 

of plaintiff's annual premium payments made from 2013 to 2018. The period 

covered by the retroactive rescission of plaintiff's automobile insurance policy 

included the date of plaintiff's automobile accident with Waddell, the effect of 

which voided "any coverage available to [plaintiff]" for that accident. 

As part of her settlement of her lawsuit against Waddell, on January 8, 

2019, plaintiff executed a general release of claims against Waddell and a 

stipulation of dismissal with prejudice. On January 29, 2019, the court filed the 
7 A-2322-21

stipulation of dismissal concluding plaintiff's personal injury action against 

Waddell, who died one year later. Prior to the settlement of her claims against 

Waddell and delivery of the general release in Waddell's favor, plaintiff had 

never advised NJM about that lawsuit, settlement, or general release of claims. 

On February 15, 2019, NJM filed an answer, counterclaim and third-party 

complaint for declaratory judgment and Insurance Fraud Prevention Act relief 

in the Atlantic County PIP action. Thereafter, the parties exchanged discovery. 

On November 22, 2019, NJM filed a motion for summary judgment, which was 

denied on December 18, 2019. 

On February 19, 2020, the parties advised the court that plaintiff's claims 

and complaint against NJM had settled. Thereafter, in a stipulation finalized on

May 28, 2020, the parties laid out the material terms of the settlement, agreeing 

in pertinent part that: "NJM shall adjust claims for unpaid PIP . . . for treatment 

related to injuries sustained in an accident of March 27, 2018, including any 

bills paid by a medical insurance company subject to $250,000.00 policy limits, 

deductible, co-payment, and any and all other defenses not raised in this 

lawsuit." Furthermore, under the stipulation, plaintiff was permitted to seek up 

to $200,000.00 in UIM benefits under the policy that NJM had rescinded in 

December 2018. The stipulation effectively canceled the rescission and restored 
8 A-2322-21

the policy that was in effect at the time of the accident, and plaintiff returned to 

NJM the premium refund check they had issued at the time of the recission in 

December 2018. 

Critically, under the settlement, NJM maintained its right to "assert any 

and all defenses to the UIM claim of [plaintiff] including but not limited to 

whether she properly protected NJM's subrogation rights and afforded required 

notice and/or whether she abided by the mandates set forth in Zirger,1

Longworth2 and other decisional authority; in connection with her claim." 

Within days of signing the stipulation of settlement, on June 1, 2020, 

plaintiff filed a second action seeking a declaratory judgment that she is entitled 

to UIM coverage under the policy NJM had rescinded in 2018. 

On February 4, 2022, the parties appeared before Judge Michael 

Winkelstein for oral argument on plaintiff's motion and NJM's cross-motion for 

summary judgment. On February 17, 2022, Judge Winkelstein, in an oral 

decision, granted summary judgment to NJM, finding plaintiff's failure to notify 

her insurance carrier of her personal injury lawsuit and settlement violated the 

terms of NJM's insurance policy and the principles established in Longworth. 

1

 Zirger v. Gen. Accident Ins. Co., 144 N.J. 327 (1996). 

2

 Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988). 
9 A-2322-21

In a well-reasoned analysis of the law and facts, the court concluded that 

"it was the insured's duty . . . to notify [NJM] in sufficient time to allow [it] to 

take action in the personal injury lawsuit" and that [NJM's] actions were in 

complete accord "with the Supreme Court's directives" in Ferrante. The court 

further found "plaintiff's actions . . . caused NJM to forfeit its subrogation 

rights" and NJM was "entitled to summary judgment precluding [p]laintiff from 

receiving UIM benefits under the policy." On the issue of whether NJM was 

prejudiced by plaintiff's failure to provide it with notice of the lawsuit against 

Waddell, the court concluded that, consistent with the Court's holding in 

Ferrante, a showing of "prejudice upon the loss of subrogation rights is not a 

prerequisite" to void a claim for UIM benefits. 

This appeal followed. 

I.

We review a grant of summary judgment de novo, Branch v. Cream-OLand Dairy, 244 N.J. 567, 582 (2021), "under the same standard that govern[ed] 

the court's determination," Goldhagen v. Pasmowitz, 247 N.J. 580, 593 (2021). 

We "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 favor of the 
10 A-2322-21

non-moving party.'" Meade v. Twp. of Livingston, 249 N.J. 310, 327 (2021) 

(quoting Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995)). 

"Summary judgment should be granted . . . 'against a party who fails to make a 

showing sufficient to establish the existence of an element essential to that 

party's case, and on which that party will bear the burden of proof at trial.'" 

Friedman v. Martinez, 242 N.J. 449, 472 (2020) (quoting Celotex Corp. v. 

Catrett, 477 U.S. 317, 322 (1986)). 

However, we give no deference to a trial court's legal determinations when 

no issue of fact exist. Templo Fuente De Vida Corp. v. National Union Fire Ins. 

Co. of Pittsburgh, 224 N.J. 189, 199 (2016) (citing Manalapan Realty, L.P. v. 

Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). 

The relationship between an insured and an insurance carrier is 

contractual; the obligation to offer UIM coverage, however, is statutory. Zirger 

v. Gen. Accident Ins. Co., 144 N.J. at 333. Insurance carriers are required to 

offer each insured the option of purchasing UM/UIM coverage up to the limits 

of liability coverage, but not exceeding $250,000.00 per person and $500,000.00 

per accident against the risk of injury caused by underinsured tortfeasors. 

N.J.S.A. 17:28-1.1(b). An individual against whom recovery is sought after an 

accident is considered "underinsured" when his or her liability limits are "at the 
11 A-2322-21

time of the accident, less than the applicable limits for underinsured motorist 

coverage afforded under the motor vehicle insurance policy held by the person 

seeking that recovery." N.J.S.A. 17:28-1.1(e)(1). 

A UIM carrier who pays benefits to an insured has the right to subrogate 

the insured's claim against the tortfeasor to permit the carrier to recover from 

the tortfeasor the UIM benefits paid to its insured. To effectuate this right, "a 

UIM carrier may intervene in an insured's trial against a tortfeasor" to avoid 

"relitigating the insured's claim, and to bind the tortfeasor to the issues decided 

at trial." Zirger, 144 N.J. at 340-42.

In Longworth, we announced a notification procedure for insureds and 

insurers to follow when making UIM claims. 223 N.J. Super. at 185. The court 

observed: 

[A]n insured receiving an acceptable settlement offer 

from the tortfeasor should notify his UIM carrier. The 

carrier may then promptly offer its insured that sum in 

exchange for assignment to it by the insured of the

claim against the tortfeasor. While promptness is to be 

ultimately determined by the circumstances, [thirty] 

days should be regarded as the presumptive time period 

if the insured notices his carrier prior to assignment of 

a trial date. 

[Id. at 194.] 
12 A-2322-21

Subsequently, our Supreme Court endorsed that procedure in Rutgers Cas. 

Ins. Co. v. Vassas, 139 N.J. 163, 169 (1995). In Vassas, the insured pursued a 

claim against his insurer for UIM benefits three years after an accident. Id. at 

166. By that time, the insured had sued the tortfeasor, gone to arbitration, 

accepted an arbitration award significantly below the UIM limits, reduced the 

award to judgment, and executed a warrant of satisfaction to the tortfeasor. Ibid. 

As the limitations period for a subrogation action against the tortfeasor was the 

same two-year period that governed the insured's suit against the tortfeasor, any 

possible subrogation action taken by the insurer was time-barred. Id. at 169-70. 

Addressing our holding in Longworth, the Court identified three occasions 

when the insured must notify the UIM carrier: 

(1) when [an insured under an automobile insurance 

policy providing UIM benefits is involved in an 

accident and undertakes] legal action against the 

tortfeasor; (2) [i]f, during the pendency of the claim, 

the tortfeasor's insurance coverage proves insufficient 

to satisfy the insured's damages; and (3) if the insured 

is seeking UIM benefits because he or she "receive[d] 

a settlement offer or arbitration award that does not 

completely satisfy the claim, because the tortfeasor is 

underinsured." 

[Ferrante, 232 N.J. at 471 (quoting Vassas, 139 N.J. at 

174).] 
13 A-2322-21

In Ferrante, our Supreme Court also considered whether a finding of

prejudice was required to void a UIM claim where the insurer's subrogation 

rights were totally nullified by the insured's conduct. 232 N.J. at 471. There, 

the insured failed to notify his insurer that he was prosecuting a personal injury 

lawsuit against the tortfeasor until after the insurer waived its subrogation rights. 

Id. at 463. By that time, the insured had participated in arbitration, gone to trial, 

executed a high-low agreement for $100,000.00, and obtained a jury award of 

$250,000.00. Id. at 465-66. The insurer subsequently moved to bar the 

plaintiff's UIM claim because he effectively forfeited the insurer's subrogation 

rights and failed to comply with the notification requirements under his policy. 

Ibid. 

Although the Vassas Court held the insured's failure to comply with the 

provisions of his insurance contract "bar[red] his action to recover UIM benefits 

from [his insurer]" and the insured "unfairly prejudiced [the insurer's] 

subrogation right against [the tortfeasor]" contrary to the requirements of his 

insurance policy, 139 N.J. at 165, 176, Ferrante held that prejudice to the UIM 

carrier need not be weighed in the analysis of whether a UIM claim is barred 

where an insured "could have, should have, but did not" notify the carrier as 

required under Longworth. 232 N.J. at 474. The Court reasoned that an 
14 A-2322-21

insured's "duty to notify in the UIM context is intended to protect a carrier's 

right of subrogation." Ibid. The Court concluded the plaintiff violated that duty 

by failing to notify his UIM carrier of the lawsuit, the high-low agreement, and 

the jury trial. Id. at 473. 

In Rivers v. Allstate Ins. Co., 312 N.J. Super. 379 (App. Div. 1998), we 

addressed the consequences of the insured's failure to follow Vassas. In Rivers, 

the insured notified her UIM carrier that she had filed suit against the tortfeasor, 

which satisfied the first two notice requirements established in Vassas, but she 

executed a general release in favor of the tortfeasor without sending her UIM 

carrier a Longworth notice or securing the carrier's permission to do so. Id. at 

381, 383-84. The insured also sent a letter to the carrier falsely stating the 

tortfeasor had offered to settle the matter and it was the insured's "intention" to 

accept the settlement, when the insured had already signed a release and 

received the settlement proceeds. Id. at 384. The court determined plaintiff's 

notice to the carrier failed to comport with the requirements set forth in 

Longworth, and the insured's failure to disclose necessary information regarding 

the general release effectively extinguished the insurer's subrogation rights. 

Ibid. The court also determined that, as a result, the insured was barred from 

pursuing her UIM claim. 
15 A-2322-21

Measured against the foregoing principles, we conclude that plaintiff's 

UIM claim is barred because of her failure to inform NJM of the commencement 

of her suit against Waddell prior to NJM's recission of the policy, and plaintiff's 

failure to notify NJM of the subsequent settlement and execution of the general 

release in Waddell's favor because plaintiff's actions resulted in the irretrievable 

loss of NJM's subrogation rights. 

II. 

Racz argues her duty to inform NJM of her claim and settlement were 

extinguished by NJM's rescission of her policy; rendering her insurance policy 

void ab initio and thus relieving her of any Longworth duty. In support of the 

contention, plaintiff relies on the general contract law principle that "[r]escission 

voids [a] contract ab initio," meaning that it is considered "null from the 

beginning" and it is treated as if it does not exist for any purpose. First Am. 

Title Ins. Co. v. Lawson, 177 N.J. 125, 137 (2003).

NJM contends that "plaintiff's claim for UIM benefits is barred as a matter 

of law by virtue of her failure to abide by both the policy provisions and common 

law . . . ." Relying upon Ferrante, NJM maintains that "[w]hat plaintiff was 

surely required to do was simply notify [it] of her pending lawsuit, her intention 

to pursue UIM coverage, the settlement offer and her intent to accept the offer 
16 A-2322-21

before signing the general release, dismissing that action and pursuing this 

action." 

We reject plaintiff's claim because her obligation to inform NJM of her 

pending lawsuit against the tortfeasor arose prior to NJM's putative recission of 

the policy by over five months. More particularly, plaintiff filed her lawsuit

against Waddell in June 2018, but failed to inform NJM she had done so. In 

October 2018, plaintiff filed her action against NJM seeking enforcement of 

what she claimed was NJM's obligation under the policy to pay PIP. That is, 

plaintiff's claim against NJM was based on her contention she had enforceable 

contract rights under the NJM policy. 

During the pendency of that litigation, in which plaintiff prosecuted her 

claim the NJM policy was valid and binding, plaintiff never informed NJM of 

the pendency of the Waddell lawsuit. Also, during the pendency of her lawsuit 

against NJM, plaintiff made an offer of judgment to Waddell, settled her claims 

against Waddell, and executed a release in favor of Waddell that ended any 

potential rights of subrogation NJM would have enjoyed had plaintiff provided 

a proper Longworth notice to it. 

Plaintiff's prosecution of her claims against NJM for PIP benefits is 

inconsistent with her contention that NJM's December 2018 attempt at 
17 A-2322-21

rescinding the insurance policy relieved her of the obligation to comply with her 

obligations under Longworth. Plaintiff cannot logically claim she relied on 

NJM's recission letter as the basis for her failure to comply with Longworth's 

requirements when her position at all times, including after she received the 

notice of rescission, was that the policy was in full force and effect at the time 

of her accident with Waddell and, as such, NJM was obligated under the policy 

to pay her PIP benefits. 

Under those circumstances, it is incongruous for plaintiff to argue, as she 

does here, that despite NJM's effort to retroactively rescind the policy, she was 

entitled to coverage under it when the Waddell accident occurred but she was 

relieved of her legal duty under Longworth to notify NJM of her pending lawsuit 

against Waddell and its settlement. And, plaintiff proved to be correct about 

NJM's effort to retroactively rescind the policy—the resolution of her lawsuit 

against NJM allowed her to recover PIP benefits under the policy and to pursue 

her claims against NJM for UIM coverage. For those reasons, we are convinced 

plaintiff's reliance on NJM's effort to rescind the policy provides no refuge from 

her failure to comply with her Longworth obligations. 

 
18 A-2322-21

III. 

Plaintiff also contends the Court's holding in Ferrante inherently includes 

a "prejudice[-]to[-]the[-]insurer" analysis and that the court erred in not 

considering the tortfeasor's destitute status in this case. Plaintiff argues the lack 

of notice to NJM of the personal injury lawsuit and settlement was thus an 

immaterial breach, and the court committed reversable error in not finding 

NJM's missed opportunity to determine subrogation was in fact illusory. 

On this, the parties dispute whether Ferrante created a bright-line rule 

requiring an insured to advise the insurer of a liability claim settlement offer and 

intention to pursue UIM coverage claims, and if as NJM suggested in Ferrante, 

stands for the proposition that the presumption of prejudice is rebuttable in every 

case. 

Given our earlier interpretation of Ferrante, we are unpersuaded by 

plaintiff's argument that NJM's ability to collect from the tortfeasor was a "key 

issue" the court failed to consider. NJM was not obliged to show it suffered 

prejudice, and the fact that it failed to do so is of no consequence. As ratified 

by Ferrante Court: 

If . . . the insured, regardless of his state of mind, fails 

to give the UIM carrier any notice of the UIM claim

until after the final resolution of the underlying tort 

action, thereby causing the irretrievable loss of the 
19 A-2322-21

carrier's rights to subrogation and intervention before 

the carrier has ever learned of the existence of the 

claim, coverage is forfeited. 

[Ferrante, 232 N.J. at 474.] 

We therefore conclude plaintiff's action, in failing to notify NJM of any 

aspect of her legal action against the tortfeasor—its filing and eventual 

settlement—contrary to the requirements of her policy and legal precedent, 

caused the irretrievable loss of NJM's subrogation rights. Ibid.; see also 

Longworth, 223 N.J. Super. at 194–95.

Consequently, we need not address whether Sauselein-Racz established a 

lack of prejudice, based on her contention that a subrogation action, would have 

yielded de minimis results. See R. 2:11-3(e)(1)(E). 

Affirm.