Court Opinion

ID: 9859246
Source: CourtListenerOpinion
Date Created: 2023-09-24 19:26:04.190877+00
Date Added: 2024-06-11T10:33:42.841163
License: Public Domain

Justice RIVERA-SOTO,
dissenting.
In this appeal, we have been asked to extend the “appreciable prejudice” rule of Cooper v. Gov’t Employees Ins. Co., 51 N.J. 86, 237 A.2d 870 (1968), to the notice-of-claim provision of an occurrence-based excess liability policy of insurance that requires, as a condition precedent to coverage, that the insured provide the insurer notice no later than 120 days after the event that causes the insured to seek coverage. On the application of The National Catholic Risk Retention Group, Inc. (National), a risk retention group consisting of defendant Archdiocese of Newark and over sixty dioceses and other Roman Catholic organizations nationwide operating pursuant to the Liability Risk Retention Act of 1986, 15 U.S.C. §§ 3901-3906, the trial court entered summary judgment in *234National’s favor. The Appellate Division reversed, Gazis v. Miller, 378 N.J.Super. 59, 874 A.2d 591 (App.Div.2005), a conclusion the majority endorses in its holding that, “in the absence of prejudice, the excess insurer could not decline coverage based on the insured’s failure to comply with the 120 day notice provision.” Ante, 186 N.J. at 225, 892 A.2d at 1278 (2005). Because I disagree with such an unwarranted extension of the Cooper rule, particularly in the circumstances presented here, I respectfully dissent.
In my view, the trial court’s analysis is the correct one:
[T]he Cooper prejudice rule and its progeny are not dispositive of the issues presented. The Cooper prejudice rule has not been extended to include reinsurance policies containing specific notice requirements ...
The Court in Pfizer stated [that] the policy behind requiring a showing of prejudice in late notice claims “is to protect the interests of policyholders because insurance contracts are contracts of adhesion and policyholders should not lose the benefits of coverage unless the delay has prejudiced the insurance company.” Pfizer,[ Inc.] v. Employers Ins. Of Wausau, 154 N.J. 187, 206, 712 A.2d 634 (1998). However, reinsurance contracts are not contracts of adhesion. Rather, they are contracts entered into between sophisticated parties bargaining at arms length.1
As the trial court held, “[t]he notice provision at the heart of this matter provides for a specific time period in which notice must be provided. Furthermore, the provision clearly enunciates those types of high-risk claims that must be reported and the consequences for failure to provide timely notice.” The trial court found that the terms of National’s excess liability insurance policy in respect of the requirement of written notice “as soon as *235practicable but no more than 120 days after receiving notice of any event which gives rise to or may give rise to a covered Loss irrespective of any apparent liability” were unambiguous. As a result, the trial court held that the insured under that policy of excess insurance, the Archdiocese of Newark, “breached the insurance contract by failing to provide notice within the 120-day timeframe. In fact, notice was not given until June 21, 2001, nearly one and one-half years after the subject accident.” In the end, the trial court concluded—in my view, correctly—that “the Cooper prejudice rule does not apply to a reinsurance contract between sophisticated parties that contains an unambiguously specified time limit of 120 days. To hold otherwise would make the reinsurance contract, which shareholders bargained for, worthless.”
Invoking “the public interest in assuring that tort victims receive compensation for injuries caused by automobile operation,” ante, 186 N.J. at 232, 892 A.2d at 1282 (2006), both the Appellate Division and the majority run roughshod over the uncontested facts and the clear and unambiguous policy language. However, that public interest cannot serve as the all-purpose excuse for a clear breach of contract. It is undisputed that the accident for which coverage is sought occurred on January 9, 2000; that a team of physicians from Kemper National Account Service Co. (Kemper), the Archdiocese’s automobile claims administrator that contractually was responsible for all appropriate notices to National, examined plaintiff and issued a report dated March 1, 2000, still well within the 120-day notice period; that, on October 2, 2000, under the heading “Future Course of Action,” Kemper’s own status report admitted that “[it] also need[ed] to alert [National] of this loss;” that Kemper’s written admission that “[it] also need[ed] to alert [National] of this loss” was a refrain that appeared in Kemper’s subsequent status reports; and that, despite those facts, Kemper did not notify National of this claim until June 21, 2001, eighteen months after the accident occurred, more than fifteen months after Kemper’s physicians filed their report concerning this accident, and more than eight months after Kemper admitted *236in writing that it was obliged to notify National concerning this claim.2
The failure to act here was not National’s but Kemper’s, the Archdiocese’s delegatee, an abject failure that remains unexplained in this record. Moreover, no satisfactory explanation has been tendered as to why the Archdiocese itself did not seek relief against Kemper for its breach of contract. When asked at oral argument, counsel for plaintiffs, who represented the interests of the insured,3 was unable to explain why the Archdiocese did not proceed directly against Kemper, and the record provides no indication that Kemper otherwise is unable to answer for its misdeeds.
Given these facts, this case presents a singularly poor candidate for the sweeping rule the majority announces, particularly in light of the majority’s exclusive reliance on the public policy favoring recovery for tort victims. Plaintiff here had a full and complete remedy: a lawsuit for damages against the tortfeasor who injured plaintiff, Father Fred B. Miller, and the owner/insured of the car, the Archdiocese. That is precisely what plaintiff did. The availability of insurance to cover the Archdiocese’s liability was the Archdiocese’s concern, and not plaintiffs. To the extent plaintiff voluntarily assumed that concern by reason of the settlement he entered into with the Archdiocese, then plaintiffs interests can rise no higher than those of the Archdiocese. Thus, the application here of our public policy that affords compensation to tort victims is misguided.
There is an additional, overarching reason that counsels strongly against the result the majority reaches. As the trial court noted, the excess liability insurance contract at issue was entered *237into between two sophisticated parties and was unambiguous in its terms. Under those circumstances, a primary obligation of the common law is to provide certainty in outcome. See, e.g., Davidson Bros., Inc. v. D. Katz & Sons, Inc., 121 N.J. 196, 225, 579 A.2d 288 (1990) (Pollock, J., concurring) (“As troublesome as uncertainty is in other areas of the law, it is particularly vexatious in the law of real property.... [T]he majority’s reasonableness test generates confusion that threatens the ability of commercial parties and their lawyers to determine the validity of such covenants.”). In a different context, we noted that
[t]he idea of black letter law seduces us. We crave coherence and certainty in the law as we do in many areas of our lives. We know better, of course. We know that legal doctrine is often indeterminate—that in a particular case, perfectly convincing arguments supporting one conclusion can often be countered by perfectly convincing arguments supporting the opposite conclusion. Yet we continue to search for rules, principles, tests, approaches—anything that will impose order on doctrine.
[Lebel v. Everglades Marina, Inc., 115 N.J. 317, 318, 558 A.2d 1252 (1989) (quoting Richard K. Greenstein, The Nature of Legal Argument:' The Personal Jurisdiction Paradigm, 38 Hastings L.J. 855, 855 (1987)).]
We should be so seduced here. Sophisticated commercial parties are entitled to rely on the commonsense notion that they will be bound by the plain meaning of the words to which they agree. When sophisticated parties covenant that an act is to be performed “no more than 120 days after receiving notice of any event which ... may give rise to a covered Loss,” they mean precisely that: one hundred twenty days. For a rationale inapplicable in this setting—that our public policy favoring compensation for victims of automobile accidents trumps clear, bargained-for contractual limitations of coverage—the majority denies National the benefit of its bargain and rewrites the contract between these parties to now read that notice must be given “no more than 120 days after receiving notice of any event which ... may give rise to a covered Loss, provided, however, that the 120 day deadline for performance will be extended to the benefit of the defaulting party and to the detriment of the non-defaulting party for so long as the non-defaulting party is not appreciably prejudiced thereby.” (added text underscored.) In so doing, the majority oversteps its *238authority, weakens the import of admittedly unambiguous and clear contractual language, and protects a wrongdoer at the expense of the innocent.
For the foregoing reasons, I respectfully dissent.
For affirmance—Chief Justice PORITZ and Justices LONG, LaVECCHIA, ZAZZALI, ALBIN and WALLACE—6.
Dissenting—Justice RIVERA-SOTO—1.

 The contract at issue between the Archdiocese, as an insured, and National, as the insurer, is a contract of excess liability insurance provided by a risk retention group of which the Archdiocese was a member. Thus, this is not a true reinsurance contract. However, to the extent this excess liability insurance policy was the result of a group of like-minded insureds banding together to create a liability pool from which covered claims were to be paid, there are parallels to a reinsurance contract. For that reason, the trial court's reference to the excess liability insurance contract here as a reinsurance contract, albeit technically incorrect, is understandable, ultimately is irrelevant to the analysis, and, in any event, was corrected by a supplementary letter issued by the trial court pursuant to R. 2:5—1(g) ("We all understand that the contract of insurance was one of 'excess' and not 'reinsurance.' ").

 The majority does not hinge its analysis on these failures. They are relevant, however, to the conclusions I advance.

 Plaintiff settled his claim against the insured, the Archdiocese of Newark, and, as part of that settlement, was assigned the Archdiocese's rights, if any, against National under the excess liability policy.