Plaintiff’s UM/UIM Claim Found To Be Barred Due To Plaintiff’s Failure To Sue Tortfeasor Within Statute Of Limitations

Plaintiff Sang Park was rear ended by a vehicle driven by the defendant Michelle Wragge on January 11, 2018.  As a result, Park claimed to have suffered painful injuries from the collision.  Thereafter, on June 1, 2018, Park, filed a complaint against GEICO (her insurance company) for uninsured or underinsured motorist coverage benefits (UM/UIM). But, the plaintiff did not move to amend her complaint to add the defendant Wragge until November 18, 2019 and did not file the Amended Complaint against Wragge until February 12, 2020, after the two year statute of limitations had run.  The issue in Park v. Government Employee’s Insurance Co., 2021 N.J. Super. Unpub. LEXIS 1303 (App. Div. June 29, 2021), was whether plaintiff’s UM/UIM claim against GEICO was barred because of her failure to preserve GEICO’s subrogation rights against the defendant tortfeasor Wragge due to her failure to timely file suit against Wragge.

At the trial court level, GEICO filed a motion to dismiss plaintiff’s UM claim against it because of Park’s failure to amend the complaint against Wragge until after the statute of limitations ran.  The trial court ruled that plaintiff’s UM complaint against GEICO should be dismissed with prejudice because of plaintiff’s failure to protect GEICO’s subrogation interests against the defendant tortfeasor.  This appeal ensued. 

The Appellate Division pointed out that the relationship between an insured and its insurance carrier is contractual but the obligation to offer UIM coverage is statutory.  A UIM carrier that pays benefits to an insured has the right to subrogate against the tortfeasor for the monies that paid to its insured.  Under New Jersey case law, “[t]o effectuate this right, a UM carrier may intervene in an insured’s trial against a tortfeasor as a way to avoid relitigating the insured’s claim and bind the tortfeasor to the issues decided at trial.”

The Appellate Division pointed out that the plaintiff’s insurance policy here was clear and unambiguous.  It required that the plaintiff protect GEICO’s subrogation rights, which the plaintiff failed to do by not filing suit against Wragge within the applicable statute of limitations.

The plaintiff argued that she was entitled to the protection of the relation back doctrine.  However, the Court found that the plaintiff did not establish the requirements necessary to benefit her under that theory.  This doctrine is governed by court rule, R. 4:9-3.  Based upon this rule, when a plaintiff adds a new party after the statute of limitations has run “she must establish: (1) the claim asserted in the Amended Complaint arose from the same conduct, transaction or, occurrence alleged in the original; (2) the new defendant had notice of the potential complaint prior to the expiration of the SOL so as not to be prejudiced in maintaining a defense; and (3) the new defendant knew or should have known that, but for the misidentification, the action would have been brought against him or her.”

The Appellate Division ruled that the plaintiff’s complaint did not relate back, because although her UM claim arose from the accident, plaintiff pleaded a completely new cause of action against Wragge.  As the Court pointed out, the relation back rule does not authorize amendment of the pleading to allege a new cause of action against another party to the litigation which is barred by the running of the statute of limitations.

The Appellate Division held that the plaintiff should have initiated her suit against Wragge while filing her UM claim.  Further, the plaintiff should have kept GEICO apprised as to her progress in the case against Wragge, including any arbitration or settlement offers.

The Court noted that GEICO had subrogation rights in plaintiff’s suit against Wragge regarding benefits it paid to plaintiff, which the plaintiff had the obligation to preserve.  Thus, GEICO did show that it suffered significant prejudice by being unable to subrogate a claim against Wragge (based upon that claim being barred by the statute of limitations). 

The Appellate Division held that “plaintiff extinguished any right of subrogation GEICO may have had against Wragge by failing to file a lawsuit that GEICO could have assumed control of after compensating her.”  Thus, the Court found that this “irretrievable loss of those rights resulted in a forfeiture of coverage.”  Hence, the Appellate Division affirmed the trial court’s decision dismissing the plaintiff’s complaint against the defendant GEICO with prejudice.

Tags: subrogation, UM/UIM, underinsured motorist coverage, uninsured motorist coverage