21ST Century Ins. Co. v. Felipe Express

21

CENTURY INSURANCE COMPANY, individually, and as attorney in fact for MYRIAM LEDEE, Plaintiff, v. FELIPE EXPRESS; FELIPE SANCHEZ JR.; FELIPE SANCHEZ SR.; EDWARD SANTANA;

PERFECTO HERNANDEZ; LUCIA HERNANDEZ; and MILTON SAETEROS; et al., Defendants.

PERFECTO HERNANDEZ and LUCIA HERNANDEZ, Plaintiffs, v. EDWARD SANTANA; FELIPE SANCHEZ; FELIPE TRANSPORTATION;and FARMER'S INSURANCE GROUP a/k/a 21

CENTURY INSURANCE; et al., Defendants.

Civil Action No. 15-7075 (FLW) (DEA)

UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY

September 22, 2017

*NOT FOR PUBLICATION*

OPINION

WOLFSON, United States District Judge:

Following an automobile accident on the New Jersey turnpike, Plaintiff 21^st Century Centennial Insurance Company ("21^st Century" or "Plaintiff")¹ initiated this action (the "21^st Century case") against various defendants.² The present dispute centers on 21^st Century's claims against Felipe Sanchez, Sr., Felipe Sanchez, Jr., and Felipe Express (collectively, the "Felipe Defendants") for insurance fraud under the Insurance Fraud Prevention Act ("IFPA"), N.J.S.A. 17:33A-1 et seq. and common law fraud, as well as its claim seeking a declaration that 21^st Century has no coverage obligations under a policy of insurance that it issued to Myriam Ledee. Perfecto Hernandez and Lucia Hernandez (defendants and consolidated plaintiffs, hereinafter, the "Passengers") brought a related action against 21^st Century and the Felipe Defendants, which was subsequently consolidated with the 21^st Century case.

Presently before the Court is 21^st Century's Motion for Default Judgment against the Felipe Defendants, and its Motion for Summary Judgment as to its coverage obligations. The Passengers cross-move for declaratory judgment on their entitlement to the statutory minimum coverage requirements mandated under New Jersey's comprehensive automobile insurance scheme. For the reasons that follow, 21^st Century's Motion for Default Judgment and Summary Judgment is GRANTED, and the Passengers' Motion for Declaratory Judgment is DENIED, as follows: (1) default judgment against the Felipe Defendants as to all counts asserted in Plaintiff's Amended Complaint is granted; and (2) 21^st Century owes no coverage obligation to the Passengers.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

This insurance coverage dispute arises out of a motor vehicle accident involving an Econoline van (the "Van") insured by 21^st Century. See 21^st Century's Statement of Material Facts ("21SMF") ¶¶ 15-16; Lucia and Perfecto Hernandez's Counterstatement of Material Facts ("HCMF") ¶¶ 15-16. The relevant 21^st Century policy of insurance (the "Policy" or "21^st Century Policy") lists Myriam Ledee, an Ohio resident and the ex-wife of Felipe Sanchez, Jr., as the named insured.³ 21SMF ¶ 19; HCMF ¶ 19. Defendants Felipe Sanchez, Sr. and Felipe Sanchez, Jr. are the owners of Felipe Express, a transportation company that operates out of Silver Springs, Maryland. See 21SMF ¶ 25; HCMF ¶ 25. Felipe Express provides transportation and taxi services, for a fee, to members of the public between the Washington, D.C. and New York City areas, including New Jersey. See id.

The underlying facts concerning the accident are undisputed. On March 6, 2015, Defendant Edward Santana, an employee of Felipe Express, was driving the Van on the southbound side of the New Jersey Turnpike, during the course of his employment, when he collided with a vehicle driven by a representative of the New Jersey Turnpike Authority. Deposition Transcript of Edward Santana ("Santana Dep."), at 6:15-7:14; 21SMF ¶¶ 22-23; HCMF ¶¶ 22-23. Perfecto Hernandez and Lucia Hernandez were passengers in the Van at the time of the accident. 21SMF ¶¶ 31-32; HCMF ¶¶ 31-32. Lucia alleges that she sustained personal injuries, requiring medical treatment, as a result of the accident. 21SMF ¶¶ 33-34; HCMF ¶¶ 33-34.

At the time of the accident, the Van was titled and registered to Felipe Sanchez.⁴ 21SMF ¶¶ 16-17, 22; HCMF ¶¶ 16-17, 22. It is undisputed that, at the time of the accident, the Van was being operated as a livery vehicle or taxi to transport passengers for a fee. See 21SMF ¶ 24; HCMF ¶ 24. At the scene of the accident, Santana provided police responders with an insurance card for a policy issued by Progressive Insurance (the "Progressive Policy").⁵ 21SMF ¶ 17; HCMF ¶ 17. The Progressive Policy listed Ledee as the named insured. 21SMF ¶ 18; HCMF ¶ 18.

Following the accident, Progressive contacted Ledee regarding the Progressive Policy. Deposition Transcript of Myriam Ledee ("Ledee Dep."), at 34:24-25:12. Through her conversation with Progressive, Ledee learned that she was also the named insured under the 21^st Century Policy. See 21SMF ¶ 19; HCMF ¶ 3. At the time of the accident, all vehicles listed on the 21^st Century Policy, including the Van, were registered and owned by Felipe Sanchez. 21SMF ¶ 20; HCMF ¶ 20. Additionally, at the time of the accident, Felipe Express, Felipe Sanchez, Sr., Felipe Sanchez, Jr., and Edward Santana were not insured or named insured, as those terms are defined under the 21^st Century Policy. 21SMF ¶¶ 26-29; HCMF ¶¶ 26-29.

While it is undisputed that the 21^st Century Policy was obtained by way of Internet application, the parties dispute Ledee's involvement in the procurement of the Policy. In that regard, Ledee testified that she did not submit an application for the Policy, did not give anyone, including Felipe Express, Felipe Sanchez, Jr., and Felipe Sanchez, Sr., permission to obtain the Policy in her name, and was not aware that the Policy had been applied for or obtained prior to the accident. Ledee Dep. at 24:14-25:12. Conversely, Felipe Sanchez, Jr. testified that he overheard his father, Felipe Sanchez, Sr., receive permission over the phone to use Ledee's name and information in procuring the Policy, and that Ledee provided Sanchez, Sr. with her name, date of birth, occupation, social security number, and driver's license number. Deposition Transcript of Felipe Sanchez, Jr. ("Sanchez, Jr. Dep."), at 24:16-25:14; 30:5-19; 47:4-22. Regardless of Ledee's involvement in procuring the Policy, Felipe Sanchez, Jr. testified that the Policy was procured under Ledee's name, with the intent to use the Policy to cover the Van used in the Felipe Express transportation service:

Q. Now, the insurance that you were - that was being taken out -- that you were requesting from 21st Century -

A. Uh-huh.

Q. -- was it for the operation of the vans as part of the transportation service?

A. The answer is, the way they were set up was my -- I admit that I did the wrong -- I did not know that you cannot set up, first, under somebody else's name which I assumed that wouldn't be a problem because -- I mean, she lives in Ohio, and the tags are registered there. And they're in the company's name, and she does work for the company. They were not in my dad's name. And the insurance -- your answer to the insurance is, no, they were not set up commercially which they should have been set up. They were set up as personal insurance policies.

Q. Okay. So the answer to the question there at the end I want to make sure I understand. The intent to take this policy out was to insure the vans because they were being used as part of the operation of

A. Correct.

Q. Felipe Express?

A. Correct.

Sanchez, Jr. Dep. at 36:19-37:22.

According to the testimony of Diana Yeager, an underwriting staff consultant for 21^st Century, 21^st Century conducted business in New Jersey during the relevant policy period, including the date of the subject accident. Deposition Transcript of Diana L. Yeager ("Yeager Dep."), at 22:9-16. Yeager testified that during all relevant periods, 21^st Century did not issue commercial policies, including policies covering taxis, buses, or delivery vehicles. Id. at 22:17-23:1.

The Policy's liability insuring agreement provides, in pertinent part, as follows:

INSURING AGREEMENT

A. Subject to the liability limit stated in your Declarations Page, if you pay the premium for Liability Coverage, we will pay damaged for which any insured becomes legally liable due to bodily injury or property damage caused by an accident arising out of the ownership, maintenance, or use of an auto for which coverage under this Part A applies. Subject to the limit of liability, the amount we pay will include prejudgment interest awarded in a judgment against the insured. However, we will not pay for punitive or exemplary damages. We may settle or defend any claim or lawsuit as we deem appropriate.

In addition to the limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability has been exhausted by payment of judgments or settlements. We have no duty to defend any lawsuit of settle any claim for bodily injury or property damage not covered under this policy.

Pls.' Mot. for Summary Judgment, Ex. A.

The Policy also includes two exclusions for liability coverage and medical expense benefits, which apply when the subject vehicle is being used as a public conveyance at the time of an accident. Specifically, the exclusion pertaining to liability coverage provides as follows:

A. We do not provide Liability Coverage for, nor have a duty to defend, any insured:

5. For any liability arising out of the ownership or operation of a vehicle while it is being used to carry persons or property for a fee or any compensation, or while it is available for public hire. This Exclusion (A.5) applies to, but is not limited to, delivery of goods to customers whether on a wholesale or retail basis such food, newspapers or flowers. It does not apply to a share-the-expense car pool.

Id., Ex. B. Similarly, the exclusion pertaining to medical expense benefits provides:

We do not provide Medical Payments Coverage for any insured for bodily injury:

. . .

B. Sustained while occupying your covered auto when it is being used to carry persons or property for a fee or any compensation or while it is available for public hire. This

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