Court Opinion

ID: 8207210
Source: CourtListenerOpinion
Date Created: 2022-09-19 14:07:14.819879+00
Date Added: 2024-06-11T16:41:23.098525
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-1411-19

ULISSA POKHAN,

         Plaintiff-Appellant,

and

RONALD POKHAN,

         Plaintiff,

v.

STATE FARM FIRE AND
CASUALTY COMPANY,

     Defendant-Respondent.
________________________

                   Submitted October 25, 2021 – Decided September 19, 2022

                   Before Judges Messano and Accurso.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Hudson County, Docket No. L-0116-16.

                   Frank J. Nostrame, attorney for appellant.

                   Messineo Law, LLC, attorneys for respondent (Tariq J.
                   Messineo, on the brief).
        The opinion of the court was delivered by

ACCURSO, J.A.D.

        This is the second time we have considered an appeal relating to State

Farm's cancellation of Ulissa Pokhan's homeowner's insurance policy

following a fire loss. In an opinion issued in 2019, we reversed the

involuntary dismissal of Pokhan's complaint for breach of the policy at the end

of her case at trial pursuant to Rule 4:37-2. Pokhan v. State Farm Fire & Cas.

Co., A-3336-17 (App. Div. July 30, 2019). We concluded the trial judge erred

in finding the evidence adduced in plaintiff's case was sufficient to establish

State Farm's affirmative defense that Pokhan's misrepresentations during its

post-loss investigation barred her recovery under the policy. Id. at 9-11.

        Specifically, we recapped Pokhan's testimony at trial that her father had

given her the house in Newark in 2012, when she graduated from college, and

that she'd made two claims on a prior homeowner's policy with another

insurance company — one in 2012 when Hurricane Sandy ripped shingles

from the roof and the second in 2013, when a burst pipe caused extensive

water damage. Id. at 2-3. According to Pokhan's trial testimony, her former

carrier paid $5,000 or $6,000 on the first claim and $90,000 on the second. Id.

at 3.

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      Because her premium was scheduled to increase after those losses,

Pokhan looked for another insurance company. Ibid. She testified she applied

to State Farm over the telephone, and it issued her a policy in 2013, which she

renewed in 2014. Ibid. The fire happened in January 2015. Ibid. In a

recorded statement to State Farm the following month, Pokhan acknowledged

a prior "frozen pipe" but denied the house sustained any damage, telling the

investigator she didn't "believe any payments were made." Id. at 4. She also

failed to mention the roof damage from 2012. Ibid. Pokhan admitted on

cross-examination she'd given the investigator incorrect information about the

flood loss, explaining she'd done so because she "didn't feel" the investigator,

whom Pokhan claimed wasn't "telling [her] what's going on," "needed to know

that." Ibid. There was no dispute that Pokhan corrected her misstatements

about the prior flood loss claim in an examination under oath several weeks

later. Ibid.

      Although neither Pokhan's State Farm insurance application nor a

transcript of either recorded statement was in evidence, and acknowledging

that Pokhan denied having provided State Farm with the inaccurate statements

State Farm claimed in the application, the trial judge granted State Farm's Rule

4:37-2(b) motion for involuntary dismissal at the close of her case. Id. at 6-8,

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10. The judge found the investigator was "entitled to see if there were material

misrepresentations on the application. That's why these questions about the

prior loss — particularly, the pipe that broke in February 2013" — were "a

legitimate part of her investigation." Id. at 7. Relying on Longobardi v.

Chubb Ins. Co. of N.J., 121 N.J. 530, 533 (1990), the judge reasoned that

Pokhan's reasons for not being forthcoming with the investigator in her first

recorded statement didn't matter: "[h]er excuse for lying is not relevant. She

knew [the investigator] was from State Farm. She knew she was investigating

this claim. And she clearly tried to mislead her as to something that seemed to

justify what looked like misstatements in the application." Pokhan, slip op. at

7-8.

       We reversed, finding State Farm had not carried its burden on its

affirmative defense, which required it "to prove Pokhan 'willfully

misrepresented material facts after a loss'" under Longobardi. Id. at 9 (quoting

Longobardi, 121 N.J. at 540). Although satisfied Pokhan's statements to the

investigator qualified as willful misstatements, we found there was nothing in

the trial record to permit a factfinder to assess whether the misstatements were

material under Longobardi, that is "if when made a reasonable insurer would

have considered the misrepresented fact relevant to its concerns and important

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in determining its course of action." Id. at 9-10 (quoting Longobardi, 121 N.J.

at 542).

      We explained that "[w]ithout the original insurance application or

testimony from anyone at State Farm as to the nature of the investigation," the

trial court could only speculate about the importance of Pokhan's statements to

State Farm's investigation and thus "erred when it involuntarily dismissed

Pokhan's suit based on her willful misrepresentation of material facts

following her fire loss." Id. at 10-11. Although we "express[ed] no opinion on

the merits of such a claim, or whether the evidence admitted at a retrial will be

sufficient to permit Pokhan to survive a motion for judgment at the conclusion

of all the evidence," we concluded "a fact-finder could also consider whether

Pokhan corrected her misstatements promptly in her examination under oath in

considering their materiality" under Mariani v. Bender, 85 N.J. Super. 490,

501 (App. Div. 1964) (holding "[e]ven though an insured may have given his

insurance carrier an untrue statement of the accident, no breach of the

cooperation clause results if the untrue statement is promptly and seasonably

corrected"). Pokhan, slip op. at 11.

      The case was not retried as we anticipated. Instead, State Farm sought

summary judgment shortly before the rescheduled trial date based on

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                                        5
misstatements Pokhan allegedly made in her application for insurance as well

as the misstatements we considered in the prior appeal made during State

Farm's post-loss investigation.

      Specifically, State Farm claimed Pokhan, in her application for

insurance, misrepresented that there was no prior insurer of her home, she did

not have any losses at the property during the prior five years, there was no

damage to the dwelling that had not been repaired at the time of her

application, she never had another insurer or agency cancel or refuse to renew

similar insurance, and that her home was constructed in 1990. In support of

those allegations, State Farm submitted Pokhan's State Farm application,

documents issued by her prior insurer, including payment of prior claims, a

detailed property inspection report with photographs and a notice of

cancellation of her prior policy based on the poor physical condition of her

home, as well as the affidavits of three individuals — two State Farm

employees, an investigator and an underwriter, and the head of the State Farm

agency through which Pokhan made application for insurance.

      The investigator swore Pokhan completed the application on March 21,

2013, which was "secured over the phone" in a conversation between Pokhan

"and Kelly Smith, an employee of State Farm Agent Michael Laglia's office."

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The investigator also swore, however, that Smith is no longer employed by

Laglia, and State Farm had "been unable to secure Ms. Smith's current contact

information." Laglia swore individuals in his office "routinely complete State

Farm policy application[s] over the telephone," explaining the "regular

practice" of representatives in his office who field such applications is to ask

"standard policy application questions" that "are required for all State Farm

policy applications."

      Laglia claimed it was his office's "regular practice" to

contemporaneously record the applicant's responses to the questions in "the

application system." He also swore answers to the questions on the application

"come from the applicant" and "[u]nder no circumstance does a representative

from [his] office provide any answers to the application questions on behalf of

the applicant." He swore Pokhan completed the policy application over the

telephone with his office on March 21, 2013, that because such applications

are completed electronically, they are not signed by the applicant, and

Pokhan's attached application was "a true and accurate business record created

and maintained in the ordinary course of business."

      The underwriter averred he was responsible for setting premiums on

homeowners' policies State Farm issued in New Jersey. He certified "State

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                                        7
Farm will not issue a policy for insurance if the dwelling [is] not in good

condition, under construction or in disrepair." Asserting he had "personal

knowledge of the facts set forth in this affidavit," the underwriter averred

Pokhan completed a policy application on March 21, 2013, in which she

"represented to State Farm, during policy procurement, that she did not have a

most recent insurer."

      The underwriter also swore Pokhan "represented to State Farm, during

policy procurement, that no insurer or agency canceled or refused to issue or

renew similar insurance to her or any household member within the past 3

years," that "she did not experience any prior losses, insured or not, in the past

5 years," that "there was no damage to the dwelling that has not been

repaired," that "the dwelling was built in 1990," and that "there were no

missing or loose shingles at the time of the policy application." He swore the

policy would not have been issued had State Farm known Pokhan's home was

not in good repair, and that the policy premium would have been "significantly

greater" had "the insured disclosed the presence of prior losses," or "the

accurate year the dwelling was built," or that she "had a prior similar policy

canceled and/or non-renewed."

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                                        8
      Pokhan opposed the motion, averring she spoke to a woman named

Nicole when applying for insurance from State Farm; that she never spoke to

anyone named "Kelly Smith," as the investigator claimed in her affidavit; and

that "Nicole" asked her several questions over the course of their ten-minute

conversation, which Pokhan answered truthfully. Pokhan certified she was

never provided a copy of the application completed for her by State Farm's

agent until after the fire loss. She claimed the application "contains much

information" she "could not possibly have given because [she] had no

knowledge of it," including the rating of the electrical box in amps; the number

of circuit breakers; whether the property was within 2500 feet of water at high

tide; the "territory zone" and "sub zone"; that the heating system was updated

in 2005, when she would have been fifteen-years-old; that the "electrical year"

was "original"; what year the property was built; that the roof had been

replaced and there were no loose shingles.

      Pokhan argued she has "continually denied providing information

contained on the 'application'" and that State Farm has never produced the

person it alleges took the information from her. She also pointed out that none

of the affiants State Farm relied on had any personal knowledge as to whether

she provided the information in the application, notwithstanding their

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                                       9
averments to the contrary. While allowing "[t]he application might be a State

Farm business record," Pokhan claimed "the issue is who provided the

information contained in it." She noted the affiants' statements that the

application was completed on March 21, 2013, the day of her telephone

conversation with a State Farm agent, are contradicted by the document itself,

which states the premises were inspected on April 24, 2013, the day the policy

issued, by Michael Laglia, who failed to mention it in his affidavit. Pokhan

argued there was no basis for State Farm's claim that it would not have issued

the policy had it known the property was in disrepair, given its agent Laglia

inspected the premises before State Farm issued the policy.

      Pokhan also did not admit the authenticity of the documents allegedly

procured from her former insurer, which were simply attached to State Farm's

counsel's certification.1 She claimed there was no indication she was ever

provided a copy of the supposed notice of cancellation of her prior policy,

1
  State Farm's attempt to correct that problem on appeal by including its
subpoena duces tecum to Pokhan's prior insurer and correspondence from its
counsel, which were not supplied to the trial court, is patently improper. See
Pressler & Verniero, Current N.J. Court Rules, cmt. 1 on R. 2:5-4(a) (2023)
(noting "[i]t is, of course, clear that in their review the appellate courts will not
ordinarily consider evidentiary material which is not in the record below ").

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                                        10
which was not addressed to her or to anyone, and which stated the policy was

reinstated on the same day it was supposedly cancelled.

      After hearing argument, the motion judge, who was not the judge who

presided over the trial, issued a written opinion granting State Farm's motion

to rescind the policy. The judge found there were no genuine issues of

material fact, and that State Farm had provided the "court with the missing or

incomplete information," that is the insurance application and the investigator's

complete deposition testimony, which we held denied the trial judge the ability

to assess the materiality of Pokhan's post-loss misstatements to State Farm. 2

Without addressing the admissibility of any of the disputed documents

submitted on the motion, see Estate of Hanges v. Metro. Prop. & Cas. Ins. Co.,

202 N.J. 369, 384-85 (2010) (instructing "a trial court confronted with an

evidence determination precedent to ruling on a summary judgment motion

squarely must address the evidence decision first"), the judge relied on

Pokhan's application to find she provided untruthful answers to the questions

2
  The statement of items submitted on the summary judgment motion does not
include a reference to the investigator's deposition transcript, and sh e did not
address in her affidavit how Pokhan's post-loss misstatements "were relevant
to State Farm's concerns or important in determining its course of action ."
Pokhan, slip op. at 10. The investigator's deposition transcript is not in the
record on appeal.
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                                       11
of whether any insurer or agency had cancelled or refused to issue or renew

similar insurance to her within the past three years, whether she had any losses

in the past five years, and whether there was any damage to the dwelling that

has not been repaired. The judge also found Pokhan misstated the property

was built in 1990, "though the year provided to Omega Insurance [her prior

insurer] by plaintiff and listed on the prior Omega Insurance inspection report

is 1949."

      The judge found the underwriter explained "why the information sought

on State Farm's application for insurance is material" and that "State Farm

would not require the information sought on all of its policies if it was not

essential to its determinations of whether to insure or how much to charge in

premiums to cover its risk of loss." The judge also relied on Laglia's affidavit

averring that the questions posed to Pokhan "during her telephone application

process" were the same ones posed to all applicants and "that State Farm

employees do not input answers to policy application questions that are not

provided by the applicant."

      The judge dismissed Pokhan's certification that she did not supply the

misstatements on the application as "self-serving," finding her averments

"carry little weight in light of her other misstatements to State Farm." The

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                                       12
judge further found Pokhan's "denial does not negate the misstatements she

made after the fire loss about her prior losses and payouts, the dwelling's state

of repair when the fire loss occurred, and about losing her prior insurance

coverage." The judge found those "deceptions are material because they

concern characteristics of the dwelling which are important to State Farm's

determination of risk in providing coverage and establishing premiums, and

are germane to State Farm's evaluation [of] the damage resulting from the fire

loss." The judge found "more simply, they violate State Farm's concealment

clause."

      Finally, the judge found Pokhan's misstatements were not seasonably

corrected because the examination under oath did not occur until two years

after her application for insurance and four months after the fire, "three times

as long . . . as it did for the defendant in Mariani" to correct his misstatements.

The judge found Pokhan's "misstatements handicapped State Farm's

investigation into the extent of the fire damage and merit of the insuran ce

policy."

      Pokhan appeals, arguing the summary judgment for State Farm must be

reversed because the motion judge improperly found facts and weighed

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                                       13
evidence in determining Pokhan provided the misinformation contained in the

application and did not timely correct her post-loss statements. We agree.

      It is axiomatic that summary judgment is only appropriate where there is

no genuine issue of material fact challenged, and the moving party is entitled

to judgment as a matter of law. R. 4:46-2(c). The test is "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 non-moving party." Brill

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

      "A court deciding a summary judgment motion does not draw inferences

from the factual record as does the factfinder in a trial." Globe Motor Co. v.

Igdalev, 225 N.J. 469, 480 (2016). "The court's function is not 'to weigh the

evidence and determine the truth of the matter but to determine whether there

is a genuine issue for trial.'" Rios v. Meda Pharm., Inc., 247 N.J. 1, 13 (2021)

(quoting Brill, 142 N.J. at 540).

      We, of course, review the grant of summary judgment using the same

standard as the motion judge. Norman Int'l, Inc. v. Admiral Ins. Co., 251 N.J.

538, 549 (2022). Applying that standard, mindful of State Farm's burden to

prove its affirmative defense of fraud voiding the policy, Liberty Mut. Ins. Co.

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                                      14
v. Land, 186 N.J. 163, 177-78 (2006), convinces us the evidence, when viewed

most favorably to Pokhan as required on the motion, is insufficient to support

State Farm's rescission of the policy.

      There is obviously a material, factual dispute over whether Pokhan

provided all of the information, including the information State Farm claims is

false, on the insurance application, precluding summary judgment on State

Farm's claim of fraud in Pokhan's procurement of the policy. The application

is not signed, and there is no dispute that State Farm never provided Pokhan —

prior to the fire loss — a copy to permit her to confirm or deny the information

recorded on the form by an individual State Farm has never produced and

claims it cannot locate. State Farm was denied summary judgment based on

this dispute of fact in 2017, before the case was tried. Nothing has changed

since that time; the factual dispute remains. None of the three individuals who

swore under oath that Pokhan completed the application on March 21, 2013, or

provided the information on the application has offered any first-hand

knowledge of the telephone conversation between Pokhan and the individual

State Farm claims took Pokhan's application, which conversation was

apparently not recorded.

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                                         15
      Because the affiants had no personal knowledge of the facts surrounding

the taking of Pokhan's application, including whether she provided all of the

information recorded on the form, the affidavits did not comply with the

requirements of Rule 1:6-6, and the court erred in relying on them to conclude

Pokhan made the misstatements State Farm claims. See Jeter v. Stevenson,

284 N.J. Super. 229, 233 (App. Div. 1995) (explaining that even if the

disputed statement were to be deemed admissible on the motion, "its assertions

are not conclusive. It does no more than raise a factual issue").

      The judge's dismissal of Pokhan's certification, which was properly

made on personal knowledge in accordance with Rule 1:6-6, as nothing more

than "self-serving statements carry[ing] little weight in light of her other

misstatements to State Farm," was an obviously impermissible weighing of the

evidence on the motion. See Brill, 142 N.J. at 540 (instructing that

"[c]redibility determinations" must "be made by a jury and not the judge").

While we express no opinion on whether State Farm will be successful in

admitting the application as a business record at trial under N.J.R.E. 803(c)(6)

following a N.J.R.E. 104(a) hearing, see State v. Sweet, 195 N.J. 357, 370

(2008) (describing the three conditions a proponent must satisfy in order to

admit a document under the business record exception to the hearsay rule), we

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                                       16
are convinced the factual dispute over whether Pokhan supplied the

misstatements in the application precludes summary judgment to State Farm

on its affirmative defense of fraud in the procurement of the policy.

      That dispute also precluded State Farm from obtaining summary

judgment on its post-loss claim on this record. Although State Farm ostensibly

contended on the motion that it accepted Pokhan's position that she did not

provide the misstatements on the application, it argued the information on the

application was relevant "because some of those questions were asked during

the recorded statement or during the examination under oath." State Farm

claimed each question put to Pokhan about prior losses during the post-loss

investigation "is material because it refers to something that's on the

application." Counsel argued the misstatements are material based on the

affidavit of the underwriter who asserted "[t]he policy premium charged to

Ulissa Pokhan was set utilizing the information provided by her in her policy

application," the policy would not have issued had State Farm been aware the

premises "was not in good repair," and the premium would have been higher

had she "disclosed the presence of prior losses," the accurate age of the

building and that she "had a prior similar policy canceled and/or non-

renewed."

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      State Farm's argument and its reliance on the underwriter's affidavit led

the judge to conclude Pokhan made the misstatements State Farm claimed in

the application, and that the willful misstatements made during the post-loss

investigation were material "because they concern characteristics of the

dwelling which are important to State Farm's determination of risk in

providing coverage and establishing premiums." That finding — and State

Farm's argument based on its underwriter's affidavit — of course, presumes

Pokhan was asked the questions in the application process and provided false

information. If instead a jury were to conclude Pokhan was never asked the

questions, or if asked, answered truthfully and her answers were mis-recorded,

we would be hard pressed to understand how her post-loss misstatements could

be material to either the issuance of the policy or the premium.

      In other words, State Farm's post-loss fraud argument on the motion was

premised entirely on its contention that Pokhan provided false information in

her application, which continues to be a disputed issue of fact. Although the

motion judge also found Pokhan's post-loss misstatements were "germane to

State Farm's evaluation [of] the damage resulting from the fire loss," and

"handicapped [its] investigation into the extent of the fire damage," there is no

support for those findings in the record as State Farm never addressed on the

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motion how Pokhan's post-loss misstatements affected its post-loss

investigation. See Longobardi, 121 N.J. at 542 ("An insured's misstatement is

material if when made a reasonable insurer would have considered the

misrepresented fact relevant to its concerns and important in determining its

course of action.").

      State Farm's failure on that front also undermines the motion judge's

finding that Pokhan failed to seasonably correct her post-loss misstatements.

The motion judge found Pokhan did not seasonably correct her misstatements

because she waited two years after the application and four months after the

fire loss, which was "three times as long" as it took the plaintiff in Mariani to

correct his.

      Leaving aside the trial judge's erroneous finding on a disputed factual

record that Pokhan made the misstatements in the application that State Farm

claims, we do not understand Mariani to depend on a mechanical time

computation. The appropriate inquiry is whether the carrier "was handicapped

in its investigation." Mariani, 85 N.J. Super. at 500. Although it is clear the

carrier need not "show prejudice in establishing a breach of the cooperation

clause, absence of prejudice to the carrier may be a factor in determining

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                                       19
whether or not a misstatement was seasonably withdrawn or corrected." Id. at

501.

       As State Farm has never addressed, to our knowledge, the effect of

Pokhan's post-loss misstatements on its post-loss investigation, summary

judgment on the Mariani issue was not warranted. The motion judge's finding

that Pokhan breached the cooperation clause in her State Farm policy is

similarly unsupported because State Farm failed to establish the materiality of

the misstatements, first at trial and now on summary judgment. See

Longobardi, 121 N.J. at 533 (holding "when an insurance policy clearly states

that material misrepresentations will void the policy, the insurer need not pay

the insured for an alleged loss if the insured makes a material

misrepresentation to the insurer while it is investigating the claim").

       We reverse summary judgment to State Farm and again remand the case

for retrial. Because the motion judge made findings on Pokhan's credibility

without hearing her testify, further proceedings in the case should occur before

another judge. See R.L. v. Voytac, 199 N.J. 285, 306 (2009).

       Reversed and remanded. We do not retain jurisdiction.

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