Title: Ferrante v. New Jersey Manufacturers Insurance Group
Citation: N/A
Docket Number: 
State: new-jersey
Issuer: new-jersey Supreme Court
Date: April 11, 2018

Ferrante v. New Jersey Manufacturers Insurance Group Annotate this Case Justia Opinion Summary Plaintiff Robert Ferrante was involved in an automobile accident in 2006 where the other motorist caused the collision. Without informing his auto insurance carrier, defendant New Jersey Manufacturers Insurance Group (“NJM”), Ferrante initiated a negligence lawsuit against the tortfeasor, who had a liability limit of $100,000 on his insurance policy. The parties participated in mandatory arbitration, which set Ferrante’s damages at $90,000. Again, without informing NJM and allowing it to exercise its subrogation rights, Ferrante rejected the award, and sought a trial de novo. He also refused a $50,000 settlement offer without notifying NJM. Prior to the trial, Ferrante entered into a high-low agreement with the tortfeasor, which set the range of damages between $25,000 and $100,000, notwithstanding a jury verdict. Ferrante did not communicate this agreement or the trial itself to NJM, either. Following the trial, a jury awarded plaintiff $200,000 in damages, but the Law Division entered a judgment of $100,000 based on the high-low agreement. For the first time in 2011, Ferrante sent NJM a letter required by Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), stating that he was seeking UIM benefits. In the letter, Ferrante wrote that the other motorist was willing to settle for $100,000. However, Ferrante failed to mention the arbitration, high-low agreement, completed trial, or jury verdict. Based on this information, NJM told Ferrante to accept the offer. NJM and Ferrante proceeded to litigation over UIM coverage; only during a pretrial discovery exchange did Ferrante finally disclose his past dealings. NJM moved to dismiss the complaint, and the Law Division granted the motion, finding that Ferrante violated Longworth by not notifying NJM of any of the proceedings with the other motorist. On appeal, a split panel of the Appellate Division reversed. The majority held that because the trial court did not consider if NJM was actually prejudiced by the lack of notice, a remand was needed to determine if NJM sustained any prejudice. The New Jersey Supreme Court reversed: due to the complete absence of notice by Ferrante to NJM at any point over years of litigation, including the lack of notice about the high-low agreement or completed jury trial during the UIM process, NJM could refuse to pay the UIM benefits. Read more Want to stay in the know about new opinions from the Supreme Court of New Jersey? Sign up for free summaries delivered directly to your inbox. Learn More › You already receive new opinion summaries from Supreme Court of New Jersey. Did you know we offer summary newsletters for even more practice areas and jurisdictions? Explore them here . SYLLABUS(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interest of brevity, portions of any opinion may not have been summarized.) Robert Ferrante v. New Jersey Manufacturers Insurance Group (A-87-16) (078496)Argued January 3, 2018 -- Decided April 11, 2018FERNANDEZ-VINA, J., writing for the Court. In this appeal, the Court considers what impact a driver’s failure to inform his auto insurance carrier about litigation against an underinsured tortfeasor has on the driver’s later ability to collect on his underinsured motorist (“UIM”) policy. Specifically, the Court addresses to what extent a carrier is required to pay a UIM claim when its subrogation rights are totally nullified. Plaintiff Robert Ferrante was involved in an automobile accident in 2006 where the other motorist (“the tortfeasor”) caused the collision. Without informing his auto insurance carrier, defendant New Jersey Manufacturers Insurance Group (“NJM”), Ferrante initiated a negligence lawsuit against the tortfeasor, who had a liability limit of $100,000 on his insurance policy. The parties participated in mandatory arbitration, which set Ferrante’s damages at $90,000. Again, without informing NJM and allowing it to exercise its subrogation rights, Ferrante rejected the award, and sought a trial de novo. He also refused a $50,000 settlement offer without notifying NJM. Prior to the trial, Ferrante entered into a high-low agreement with the tortfeasor, which set the range of damages between $25,000 and $100,000, notwithstanding a jury verdict. Ferrante did not communicate this agreement or the trial itself to NJM, either. Following the trial, a jury awarded plaintiff $200,000 in damages, but the Law Division entered a judgment of $100,000 based on the high-low agreement. For the first time in 2011, Ferrante sent NJM a letter required by Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), stating that he was seeking UIM benefits. In the letter, Ferrante wrote that the tortfeasor was willing to settle for $100,000. However, Ferrante failed to mention the arbitration, high-low agreement, completed trial, or jury verdict. Based on this information, NJM told Ferrante to accept the offer. NJM and Ferrante proceeded to litigation over UIM coverage in the Law Division. Only during a pretrial discovery exchange did Ferrante finally disclose his past dealings with the tortfeasor. NJM moved to dismiss the complaint, and the Law Division granted the motion, finding that Ferrante violated Longworth by not notifying NJM of any of the proceedings with the tortfeasor. On appeal, a split panel of the Appellate Division reversed. The majority held that because the trial court did not consider if NJM was actually prejudiced by the lack of notice, a remand was needed to determine if NJM sustained any prejudice. In a dissent, Judge Accurso disagreed that NJM must demonstrate prejudice in order to void the UIM claim. Rather, she found that Ferrante’s failure to provide any notice to NJM during the initial suit and his later omission of the trial proceedings and high-low agreement caused NJM’s subrogation rights to be “irretrievably lost.” NJM filed its appeal as of right under Rule 2:2-1(a)(2). The Court’s review is limited to the issue raised by Judge Accurso.HELD: Due to the complete absence of notice by Ferrante to NJM at any point over years of litigation, including the lack of notice about the high-low agreement or completed jury trial during the UIM process, NJM may refuse to pay the UIM benefits.1. New Jersey case law has routinely emphasized the importance of candor by insureds and the obligation to act in a forthright, open, and honest manner with their carriers throughout the entire process of their claim. The relationship between an insurer and the insured is contractual, but the obligation to offer UIM coverage is derived from statute. In Zirger v. General Accident Insurance Co., 144 N.J. 327 (1996), the Court outlined the right of UIM carriers to 1 intervene in trials against tortfeasors as a way to avoid relitigating a plaintiff’s claim and as a method of binding them to the issues at trial. Id. at 340-42. Thus, plaintiffs are affirmatively obligated to provide their carriers with notice “of the institution of suit against the tortfeasor.” Id. at 340-41. This duty to notify in the UIM context is intended to protect a carrier’s right of subrogation. (pp. 10-13)2. In Longworth, the Appellate Division grappled with an insured’s initial obligation to attempt to recover from a tortfeasor prior to pursuing UIM benefits from his carrier. 223 N.J. Super. at 177-78. The court recognized that the carrier’s pursuit of subrogation against the wrongdoer has an “adverse effect . . . on the statutorily-accorded competing and paramount right of the insured victim to seek as full a recovery as possible from the combined resources of the tortfeasor’s liability carrier and his own UIM carrier.” Id. at 183. Longworth noted the tension in this process, as the insurer would inevitably seek to keep the damages low, thus providing the insured with minimal recovery for his injuries. Ibid. Regardless of those conflicts, the court determined that when the insured received “an acceptable settlement offer” from the tortfeasor, he must notify the UIM carrier. Id. at 194. Then, the carrier may decide either to allow the insured to accept the offer or provide the insured with the same amount in exchange for the assignment of the subrogation right against the tortfeasor. Ibid. (pp. 13-14)3. The Court sought to balance the tensions of UIM subrogation cases in Rutgers Casualty Insurance Co. v. Vassas,139 N.J. 163, 171-72 (1995), in which it identified the occasions when the insured must notify the carrier: (1) when he or she takes 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,” id. at 174. The Court ratified the Longworth holding. Id. at 174-75. In Vassas, the insured filed a suit against the tortfeasor without informing the carrier, and, after later receiving an award from an arbitrator, he again failed to notify the carrier. Id. at 175. The Court held that his failure “to comply with the provisions of his insurance contract and the dictates of Longworth” barred him from recovering UIM benefits. Id. at 176. (pp. 14-16)4. Unlike in Green v. Selective Insurance Co. of America, 144 N.J. 344, 346 (1996), where the carrier had the opportunity to exercise its subrogation rights after the initial settlement offer and chose not to, NJM here was never told about the arbitration, high-low agreement, jury verdict, or judgment until after the events occurred. A prejudice determination here is not needed unlike in Green, where the carrier waived its subrogation rights, because NJM never had the opportunity to exercise its rights. Due to the numerous landmarks where Ferrante could have, and should have, but did not notify NJM, the Court does not address his state of mind or weigh any potential prejudice to the carrier. By delaying notice to NJM, Ferrante violated the terms of his policy, Longworth, Vassas, and Zirger, which required him to inform NJM as soon as the lawsuit was brought—not after arbitration, a high-low agreement, or a jury trial. Those requirements seek to protect NJM’s right to subrogation, which was clearly extinguished by Ferrante’s actions, irrespective of his state of mind. (pp. 16-19) The judgment of the Appellate Division is REVERSED and the trial court’s order is REINSTATED. CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, SOLOMON, and TIMPONE join in JUSTICE FERNANDEZ-VINA’s opinion. 2 SUPREME COURT OF NEW JERSEY A- 87 September Term 2016 078496ROBERT FERRANTE, Plaintiff-Respondent, v.NEW JERSEY MANUFACTURERS INSURANCE GROUP, Defendant-Appellant. Argued January 3, 2018 – Decided April 11, 2018 On appeal from the Superior Court, Appellate Division. Daniel J. Pomeroy argued the cause for appellant (Pomeroy Heller & Ley, attorneys; Daniel J. Pomeroy and Karen E. Heller on the briefs). Joseph P. Grimes argued the cause for respondent (Joseph P. Grimes, Esq., attorney; Joseph P. Grimes on the brief). JUSTICE FERNANDEZ-VINA delivered the opinion of the Court. In this appeal, we consider what impact a driver’s failureto inform his auto insurance carrier about litigation against anunderinsured tortfeasor has on the driver’s later ability tocollect on his underinsured motorist (“UIM”) policy.Specifically, we address to what extent a carrier is required topay a UIM claim when its subrogation rights are totallynullified. 1 Plaintiff Robert Ferrante was involved in an automobileaccident in 2006 where the other motorist (“the tortfeasor”)indisputably caused the collision. Without informing his autoinsurance carrier, defendant New Jersey Manufacturers InsuranceGroup (“NJM”), Ferrante initiated a negligence lawsuit againstthe tortfeasor, who had a liability limit of $100,000 on hisinsurance policy. The parties participated in mandatoryarbitration, which set Ferrante’s damages at $90,000. Again,without informing NJM and allowing it to exercise itssubrogation rights, Ferrante rejected the award, and sought atrial de novo. He also refused a $50,000 settlement offerwithout notifying NJM. Prior to the trial, Ferrante entered into a high-lowagreement with the tortfeasor, which set the range of damagesbetween $25,000 and $100,000, notwithstanding a jury verdict.Ferrante did not communicate this agreement or the trial itselfto NJM, either. Following the trial, a jury awarded plaintiff$200,000 in damages, but the Law Division entered a judgment of$100,000 based on the high-low agreement. For the first time in 2011, Ferrante sent NJM a letterrequired by Longworth v. Van Houten, 223 N.J. Super. 174 (App.Div. 1988), stating that he was seeking UIM benefits. In theletter, Ferrante wrote that the tortfeasor was willing to settlefor $100,000. However, Ferrante failed to mention the 2 arbitration, high-low agreement, completed trial, or juryverdict. Based on this information, NJM told Ferrante to acceptthe offer. NJM and Ferrante proceeded to litigation over UIMcoverage in the Law Division. Only during a pretrial discoveryexchange did Ferrante finally disclose his past dealings withthe tortfeasor. NJM moved to dismiss the complaint, and the Law Divisiongranted the motion, finding that Ferrante violated Longworth bynot notifying NJM of any of the proceedings with the tortfeasor.On appeal, a split panel of the Appellate Division reversed.The majority held that because the trial court did not considerif NJM was actually prejudiced by the lack of notice, a remandwas needed to determine if NJM sustained any prejudice. We disagree. In Zirger v. General Accident Insurance Co.,144 N.J. 327 (1996), we imposed a duty on insureds to notifytheir carriers at the initiation of litigation with tortfeasors;Longworth and our later opinion in Rutgers Casualty InsuranceCo. v. Vassas, 139 N.J. 163 (1995), mandated that insuredsinform their carriers of settlement offers. Our precedent wasnot followed here. Due to the complete absence of notice byFerrante to NJM at any point over years of litigation, includingthe lack of notice about the high-low agreement or completedjury trial during the UIM process, NJM may refuse to pay the UIM 3 benefits. Therefore, we reverse the Appellate Divisionjudgment. I. A. Ferrante was in a motor vehicle collision with thetortfeasor on October 2, 2006. The parties do not dispute thatthe tortfeasor was at fault for the collision and that hispolicy’s limit was $100,000. Aside from the tortfeasor’sinsurance coverage, he is essentially without assets to paydamages that exceed $100,000. At the time of the accident, Ferrante’s policy with NJMprovided for $300,000 in UIM coverage. The policy requiredFerrante to “promptly” send NJM any legal papers regardinglitigation and to “notify [NJM] in writing of a tentativesettlement” with the underinsured motorist’s insurance carrier.This process gave NJM thirty days to pay the insured thetortfeasor’s insurance carrier’s offer in order to preserve itssubrogation rights. The policy also required Ferrante to do“whatever is necessary to enable NJM to exercise” itssubrogation rights and do “[n]othing after loss to prejudice”those rights. Instead of contacting NJM, Ferrante and his wife initiateda lawsuit against the tortfeasor in 2008, asserting negligenceclaims and the wife’s per quod claims. Ferrante did not notify 4 NJM of the suit. The parties proceeded to arbitration. In May2010, the arbitrator awarded Ferrante $90,000 for his injuriesand $10,000 in lost wages, but he rejected that offer withoutnoticing NJM. He moved for a trial de novo in the Law Divisionin June 2010. The tortfeasor offered to settle with Ferrante for $50,000.He alternately proposed a high-low agreement that would limitdamages notwithstanding the exact amount of the verdict. Theagreement set the floor of damages at $25,000 and the ceiling at$100,000. Ferrante rejected the settlement offer, but acceptedthe high-low agreement. He did not notify NJM of eitherproposal, or of his acceptance of the high-low agreement. At the ensuing trial de novo in January 2011, in which NJMdid not participate, a jury found the tortfeasor one hundredpercent liable. The jury awarded Ferrante $200,000 in damages,and his wife $50,000 on her claim. However, due to the high-lowagreement, the trial court molded the entire award to $100,000,and entered judgment. On January 12, 2011, the day after the judgment, Ferrante’scounsel sent NJM a letter. He told NJM that “the tortfeasor’scarrier has tendered the policy limits of $100,000 in exchangefor execution of a Release in favor of the tortfeasor,” andrequested NJM’s consent to settle. Additionally, he informedNJM that Ferrante would pursue UIM arbitration for his injuries 5 beyond the $100,000. The letter failed to mention any of theprior offers, the high-low agreement, the arbitration, thecompleted trial with a molded award or the judgment. Two weeks later, NJM responded and indicated it hadperformed an asset investigation regarding the tortfeasor. NJMauthorized Ferrante to settle, and waived its subrogationrights. It then began to seek information about the UIM claim. B. In October 2012, Ferrante filed the instant UIM claim inthe Law Division, and the parties engaged in discovery. Notuntil 2014 did Ferrante inform NJM about the $250,000 judgmentin the prior litigation. NJM filed a motion in limine seekingto limit Ferrante’s recovery to $50,000 -- what NJM consideredto be the difference between the tortfeasor judgment and the$300,000 UIM policy limit. Shortly thereafter, Ferrante’s attorney disclosed to NJMthat his client had entered into the high-low agreement with thetortfeasor that capped damages at $100,000. NJM then amendedits motion in limine to instead move for a dismissal, claimingthat Ferrante had improperly waived NJM’s subrogation rights.NJM argued that Ferrante had violated Zirger, 144 N.J. at 340,which obligated insureds to inform their UIM carriers of suitsagainst tortfeasors. 6 The Law Division dismissed the complaint in an oraldecision on February 28, 2014.1 The court found that Ferrantefailed to provide any notice of settlement offers, as requiredby Longworth, 223 N.J. Super. at 194-95, and the eventual noticeto NJM was “grossly incomplete” and “woefully deficient.” Thecourt ruled that by entering into a high-low agreement, Ferrantehad waived future UIM claims against NJM. Ferrante appealed, arguing that NJM had waived itssubrogation rights by authorizing him to accept the tortfeasor’ssettlement offer. Further, he alleged that NJM waived itsLongworth defense by not raising it during discovery. In a two-to-one decision, with Judge Accurso dissenting,the Appellate Division reversed the trial court. The majorityfirst found that Ferrante did not waive his UIM coverage byentering into the high-low agreement. The court noted that theagreement did not reflect the value of the case, but rather wasa contractual protection that Ferrante entered into to mitigatethe inherent risk of a jury trial. The $100,000 range, thecourt wrote, was a logical cap because it was the limit of thetortfeasor’s policy, as Ferrante had determined his adversarywas without assets.1 After oral argument, the trial court granted summary judgment in favor of NJM in an oral decision. The granted order noted it as a motion in limine. 7 The majority next determined that NJM needed to demonstrateprejudice from the deficient Longworth notice in order to voidthe UIM policy. The court distinguished Ferrante’s situationfrom the setting of this Court’s opinion in Vassas, 139 N.J. at 175-76, in which we released the carrier from its UIMobligation. The court found that because Ferrante contendedthat NJM was not prejudiced by his actions, the case wasdifferent from Vassas, in which prejudice was assumed. Thecourt determined that even though NJM was not in a position toexercise its right to subrogation because of Ferrante’s conduct,it was not necessarily excused from paying UIM benefits. Because the trial judge did not address the issue ofprejudice, the court remanded the matter to analyze whetherFerrante’s failure to provide a timely Longworth notice actuallyprejudiced NJM. In that deliberation, the court placed theburden on Ferrante. In a dissent, Judge Accurso disagreed that NJM mustdemonstrate prejudice in order to void the UIM claim. Rather,she found that Ferrante’s failure to provide any notice to NJMduring the initial suit and his later omission of the trialproceedings and high-low agreement caused NJM’s subrogationrights to be “irretrievably lost.” She concluded the case fitsquarely within Vassas and thus would have ruled in favor ofNJM. 8 NJM filed its appeal as of right under Rule 2:2-1(a)(2).Our review is limited to the issue raised by Judge Accurso. II. NJM argues that this Court should adopt Judge Accurso’sreasoning in her dissenting opinion and reverse the AppellateDivision’s judgment. It advocates that delaying disclosure andomitting information were intentional acts that robbed NJM ofits rights to subrogation or participation in the trial with thetortfeasor. NJM argues that Ferrante cannot be entitled to UIMbenefits because he sent the required Longworth letter two yearsafter the initial settlement offer. Although NJM concedes thatan insured who negligently did not send a Longworth notice maybe entitled to UIM benefits, in Ferrante’s situation, where hestrategically opted against sending the notice, the right to UIMcoverage is destroyed. Ferrante, on the other hand, denies deceiving NJM and urgesthis Court to affirm the Appellate Division’s opinion and allowthe trial court to determine if NJM was prejudiced. Ferranteadmits that his Longworth notice was defective, but faults NJMfor failing to raise this deficiency until after discovery andonly on the eve of trial. Additionally, Ferrante asserts that he was not required tonotify NJM at all prior to an offer from the tortfeasor, whichhe says did not occur until immediately prior to the tortfeasor 9 trial. He also argues that Vassas only requires the insured tonotify a carrier when there is an offer for the policy limits ofthe tortfeasor. Further, he argues the notice requirement inZirger gives him the option of informing NJM of a settlementoffer, and is not a mandate. Prior to the judgment, he argues,he had no reason to believe that the claim would be worth thetortfeasor’s $100,000 policy limit. III. A. When reviewing a grant of summary judgment, an appellatecourt employs the same standards used by the motion judge.Bhagat v. Bhagat, 217 N.J. 22, 38 (2014) (citing W.J.A. v. D.A.,210 N.J. 229, 237-38 (2012)). The reviewing court must firstdetermine whether the moving party has demonstrated there wereno genuine issues of material fact. Ibid. If not, then theCourt must decide “whether the moving party is entitled tosummary judgment as a matter of law.” Ibid. Absent factualquestions, this Court reviews legal determinations de novo.Templo Fuente De Vida Corp. v. Nat’l Union Fire Ins. Co. ofPittsburgh, 224 N.J. 189, 199 (2016) (citing Manalapan Realty,L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)). B. Our case law has routinely emphasized the importance ofcandor by insureds and the obligation to act in a forthright, 10 open, and honest manner with their carriers throughout theentire process of their claim. See Longobardi v. Chubb Ins. Co.of N.J., 121 N.J. 530, 539 (1990) (“[A]n insured’s commitmentnot to misrepresent material facts extends beyond the inceptionof the policy to a post-loss investigation.”) We have providedinsureds “an incentive to tell the truth. It would dilute thatincentive to allow an insured to gamble that a lie will turn outto be unimportant.” Id. at 541-42. Although this case arisesin a different context, we seek to avoid rewarding insureds foromitting key details in a UIM claim. The relationship between an insurer and the insured iscontractual, but the obligation to offer UIM coverage is derivedfrom statute. See Zirger, 144 N.J. at 333; N.J.S.A. 17:28-1.1(b). An individual against whom recovery is sought after anaccident is considered “underinsured” when his or her liabilitylimits are, “at the time of the accident, less than theapplicable limits for underinsured motorist coverage affordedunder the motor vehicle insurance policy held by the personseeking that recovery.” N.J.S.A. 17:28-1.1(e)(1). The Legislature requires carriers “to offer each insuredthe option of purchasing coverage up to the limits of liabilitycoverage, but not exceeding $250,000 per person and $500,000 peraccident against the risk of injury caused by underinsuredtortfeasors or a single limit of $500,000.” Zirger, 144 N.J. at 11 333 (citing N.J.S.A. 17:28-1.1(b)). The availability of UIMcoverage “reflects a strong public-policy interest in providing. . . adequate compensation to New Jersey Motorists for injuriessustained in accidents with underinsured motorists.” Id. at334. In Zirger, we outlined the right of UIM carriers tointervene in trials against tortfeasors as a way to avoidrelitigating a plaintiff’s claim and as a method of binding themto the issues at trial. Id. at 340-42. Thus, plaintiffs areaffirmatively obligated to provide their carriers with notice“of the institution of suit against the tortfeasor.” Id. at340-41 (citing Vassas, 139 N.J. at 174). To what extent thecarrier will participate in the underlying trial is determinedby the trial court, see Rule 4:33-2, but there is no flexibilityin an insured’s obligation to communicate the lawsuit to thecarrier. Zirger, 144 N.J. at 340-41. This duty to notify in the UIM context is intended toprotect a carrier’s right of subrogation. Ferrante’s policywith NJM specifically provided for a subrogation right, whichallows the “subrogee in effect [to] step into the shoes of theinsured and . . . recover only if the insured likewise couldhave recovered.” Standard Accident Ins. Co. v. Pellecchia, 15 N.J. 162, 172 (1954) (citations omitted). The law “highlyfavors” subrogation as “a device of equity to compel the 12 ultimate discharge of an obligation by the one who in goodconscience ought to pay it.” Holloway v. State, 125 N.J. 386,394 (1991) (quoting Pellecchia, 15 N.J. at 171). In practice,the insurer may choose to pay out the insured for the loss andretain a cause of action against the tortfeasor. Ibid. In Longworth, the Appellate Division grappled with aninsured’s initial obligation to attempt to recover from atortfeasor prior to pursuing UIM benefits from his carrier. 223 N.J. Super. at 177-78. To protect itself from paying out a fullclaim, an insurance carrier could seek reimbursement from thetortfeasor who caused the loss. Id. at 183. However, the courtrecognized that the carrier’s pursuit of subrogation against thewrongdoer has an “adverse effect . . . on the statutorily-accorded competing and paramount right of the insured victim toseek as full a recovery as possible from the combined resourcesof the tortfeasor’s liability carrier and his own UIM carrier.”Ibid. This issue arises because the insured must seek “recoveryfrom the tortfeasor’s insurer as a prerequisite to recourse tothe UIM coverage.” Ibid. Longworth noted the tension in this process, as the insurerwould inevitably seek to keep the damages low, thus providingthe insured with minimal recovery for his injuries. Ibid.Regardless of those conflicts, the court determined that whenthe insured received “an acceptable settlement offer” from the 13 tortfeasor, he must notify the UIM carrier. Id. at 194. Then,the carrier may decide either to allow the insured to accept theoffer or provide the insured with the same amount in exchangefor the assignment of the subrogation right against thetortfeasor. Ibid. We sought to balance the tensions of UIM subrogation casesin Vassas. 139 N.J. at 171-72. Importantly, the issue therewas protecting the insured’s ability to recover from thetortfeasor in addition to his own UIM coverage, while allowingthe carrier the opportunity to evaluate the merits of the UIMclaim while “maintaining a subrogation action against thetortfeasor.” Id. at 175. To protect those interests, we identified the occasionswhen the insured must notify the carrier: (1) when he or shetakes legal action against the tortfeasor; (2) “[i]f, during thependency of the claim, the tortfeasor’s insurance coverageproves 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 doesnot completely satisfy the claim, because the tortfeasor isunderinsured.” Id. at 174. In explicitly ratifying the Longworth holding, we held thatafter receiving notice in the third scenario, the carrier eithercan “offer to pay the insured the amount of the tortfeasor’s 14 settlement offer or the arbitration award, usually thetortfeasor’s policy limit, in exchange for subrogation of theinsured’s rights against the tortfeasor; or, allow the insuredto settle.” Id. at 174-75. Based on the facts presented in Vassas, we found in favorof the carrier. Id. at 175-76. The insured filed a suitagainst the tortfeasor without informing the carrier, and, afterlater receiving an award from an arbitrator, he again failed tonotify the carrier. Id. at 175. We held that his failure “tocomply with the provisions of his insurance contract and thedictates of Longworth” barred him from recovering UIM benefits.Id. at 176. Following Vassas, the Appellate Division analyzed severalcases involving disputed UIM benefits. The Appellate Divisionhas found that an insured who accepted a settlement offer afterinforming his carrier of the offer, but before he receivedpermission, did not necessarily violate Longworth. Breitenbachv. Motor Club of Am. Ins. Co., 295 N.J. Super. 328, 332-34 (App.Div. 1996). There, the court remanded for a determination ofprejudice, which it reasoned, the Vassas court did not prohibit.Id. at 335. In Rivers, the Appellate Division found for the carrierwhen the insured sent two letters informing the carrier oflitigation but failed to detail that he had already settled the 15 case. Rivers v. Allstate Ins. Co., 312 N.J. Super. 379, 381(App. Div. 1998). Because the insured did not show why thecarrier was not prejudiced by losing its subrogation rights, thecourt denied him UIM benefits. Id. at 386. And in Cave, the insured initiated a lawsuit against twotortfeasors and properly informed the carrier. CNA Ins. Cos. v.Cave, 332 N.J. Super. 185, 186-88 (App. Div. 2000). The carrierwaived its subrogation rights against one tortfeasor but nevermade a decision as to the other tortfeasor, so the matterproceeded to trial. Id. at 188. Before trial, the insuredaccepted a settlement offer without consulting the carrier, andlater sought UIM benefits. Id. at 189. Although the courtfound the insured violated Longworth, it held that unlike inVassas where the carrier was unfairly prejudiced by the loss ofits subrogation rights, it was less clear there who was atfault. Id. at 193. UIM arbitration was appropriate, the courtheld, because if only one tortfeasor was found to be at fault,the carrier could not be prejudiced. Ibid. IV. With those principles in mind, we turn to whetherFerrante’s actions violated Longworth and Vassas to the extentthat they vitiated his ability to seek UIM benefits from NJM. Despite Ferrante’s efforts to distinguish his case fromVassas, we find Vassas precludes him from recovering UIM 16 benefits. Like in Vassas, where the insured initiated a lawsuitand received an arbitration award without informing the carrier,Ferrante did the same. He further violated his duty to informNJM by entering into a high-low agreement and taking the matterthrough a full jury trial without informing NJM. In addition, Ferrante improperly extinguished NJM’s rightunder Zirger to participate in the trial and mitigate damages insome way. Zirger is not premised on the idea that the insuredhas to give notice to the carrier only if he thinks the UIMclaim will exceed the policy limit. The purpose of this noticeis to give a carrier the opportunity to pay the insured thesettlement proceeds and then try the case itself as if in theinsured’s shoes. At minimum, the notice allows the carrier toparticipate in the trial to whatever extent the trial courtallows. By virtue of Ferrante’s actions in this case, NJM lostthat subrogation option. Ferrante has also attempted to rely on our precedent inGreen v. Selective Insurance Co. of America, 144 N.J. 344, 346(1996). However, those facts are inapposite to the facts here. A plaintiff’s duty to notify the UIM carrier is notmitigated by plaintiff’s earlier notice of a PIP claim. Aninsurer’s handling of an earlier PIP claim does not create apresumption that the insurer has received notice of the laterclaim against the tortfeasors. 17 Unlike in Green, where the carrier had the opportunity toexercise its subrogation rights after the initial settlementoffer and chose not to, NJM here was never told about thearbitration, high-low agreement, jury verdict, or judgment untilafter the events occurred. A prejudice determination here isnot needed unlike in Green, where the carrier waived itssubrogation rights, because NJM never had the opportunity toexercise its rights. Further, the cited Appellate Division cases aredistinguishable due to the numerous times Ferrante failed toinform NJM. In Breitenbach and Rivers, the insured informed thecarrier during litigation, and both cases dealt more with atwhich point, if any, it was appropriate for the insured toaccept the settlement offer without the carrier’s consent.Here, we never reach that point because Ferrante did not informNJM of the litigation until more than two years after it wasinitiated and actually completed. Similarly, this case did notinvolve a day-of-trial settlement or include multipletortfeasors, as in Cave; here, the single tortfeasor was wellknown, and NJM was still kept in the dark throughout. As a defense to his actions, Ferrante has argued that if henegligently, rather than intentionally, violated Longworth, thetrial court should conduct a prejudice analysis. We concludethat due to the numerous landmarks where Ferrante could have, 18 and should have, but did not notify NJM, we need not address hisstate of mind or weigh any potential prejudice to the carrier.2 Our decision here is not rooted in Ferrante’s state ofmind, but rather in his actions. We ratify the followingapproach suggested by the dissenting judge: 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 carrier’s rights to subrogation and intervention before the carrier has ever learned of the existence of the claim, coverage is forfeited. By delaying notice to NJM, Ferrante violated the terms ofhis policy, Longworth, Vassas, and Zirger, which required him toinform NJM as soon as the lawsuit was brought -- not afterarbitration, a high-low agreement, or a jury trial. Thoserequirements seek to protect NJM’s right to subrogation, whichwas clearly extinguished by Ferrante’s actions, irrespective ofhis state of mind. V. Accordingly, we reverse the judgment of the AppellateDivision and reinstate the trial court’s order.2 Counsel for NJM suggests that if the insured’s failure to provide notice was the result of pure negligence, and there was no misleading conduct, it may be appropriate to impose a rebuttable presumption of prejudice and place the burden on the insured to show the absence of prejudice. We need not resolve that issue in this case. 19 CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, SOLOMON, and TIMPONE join in JUSTICE FERNANDEZ-VINA’s opinion. 20