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Connelly v. McVeigh1/7/2005
F959552 to the three Hundred Thousand ($300,000.00) Dollar limits of the underinsured motorist coverage provided in said NJM Policy, subject only to NJM's credit in the amount of coverage available under the McVeigh policy, or One Hundred Thousand ($100,000.00) Dollars.
Paragraph 2 of the Agreement provided for NJM to pay Connelly $100,000 in exchange for his assignment of"all rights of recovery" against McVeigh. The Agreement, however, did not allow NJM to control Connelly's negligence suit for damages unless he received a UIM arbitration award that satisfied him prior to his trial against McVeigh. In that event, Paragraph 7 provided that NJM would have the right to try Connelly's case against McVeigh.
Neither party moved to enforce its right to arbitrate Connelly's UIM claim prior to trial, a right which Paragraphs 3 and 4 of the Agreement together had preserved. Paragraph 5 preserved the right of both NJM and Connelly to a trial de novo if a UIM arbitration award exceeded $15,000. Paragraph 6 provided that if UIM arbitration did not produce an outcome acceptable to both parties, Connelly's counsel would try the case against McVeigh, and NJM would intervene on the side of the defense in that action. In fact, that is what occurred. Because neither party sought arbitration, NJM intervened as a defendant in Connelly's negligence suit against McVeigh. The result was a single trial of Connelly's damages claims against both McVeigh and NJM. Significantly, the Agreement provided, without condition, that NJM would be obligated to Connelly for at least $100,000 (the amount of the Allstate offer to settle), an obligation consistent with Vassas and Longworth.
Both parties to the Agreement obviously contemplated that Connelly's injuries would result in a recovery in excess of $100,000, whether by trial or settlement, and whether against McVeigh or NJM or both. The Agreement did not explicitly recognize the possibility that Connelly could recover nothing in a trial against McVeigh. At trial, however, that is what happened when the jury found that Connelly failed to meet the verbal threshold. After the jury verdict, Allstate was permitted to withdraw the $100,000 it had deposited into court. NJM's motion to recover the $100,000 it had paid to Connelly was denied.
On appeal, NJM makes these arguments:
POINT I
WHEN THE INSURANCE COMPANY FOR A DEFENDANT IN A PERSONAL INJURY ACTION DEPOSITS ITS APPLICABLE POLICY LIMIT PURSUANT TO R. 4:57, DOING SO MUST BE REGARDED AS THE MEMORIALIZATION OF AN OFFER WHICH, UPON DEPOSIT, BECOMES IRREVOCABLE, AND ONLY SUBJECT TO WITHDRAWAL IN ACCORDANCE WITH THE PROCEDURES SET FORTH THEREIN (THIS POINT MIGHT BE REGARDED AS AN ISSUE NOT RAISED BELOW).
POINT II
THE TRIAL COURT ERRED BY NOT IMPRESSING A CONSTRUCTIVE TRUST UPON THE $100,000.00 NJM WAS DIRECTED TO PAY THE PLAINTIFF PURSUANT TO DECEMBER 11, 2001 ORDER.
After careful review of the record, the briefs, and the arguments of counsel, we are convinced that NJM's arguments are without merit. See R. 2:11-3(e)(1)(E). We affirm. Nonetheless, some discussion is appropriate.
NJM takes the position in Point I that"once a tortfeasor's carrier offers its policy limit" and deposits its policy with the court, its offer is irrevocable and can be withdrawn only in accordance with the procedures set forth in Rule 4:57. We disagree, finding no support for NJM's position. Rule 4:57 does not govern the substantive rights of the parties. NJM's argument in effect would turn a rejected settlement offer into a guaranteed minimum recovery, available as a safety net to a plaintiff (and its UIM carrier) right up until the jury announc
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