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The Appellate Division, affirming a trial court's decision, has ruled that an insured forfeited his claim for uninsured motorist benefits by causing the "irretrievable loss" of his insurer's subrogation rights.

The Case

On January 4, 2014, James Ryan DiMaria, a fire inspector in Paterson, collided with a vehicle operated by Michelle Rodriguez and owned by her mother. Mr. DiMaria, who was driving his city vehicle at the time, claimed the accident caused permanent neck and head injuries.

The parties disputed Ms. Rodriguez's fault. According to the police report, which referenced city video surveillance footage, Mr. DiMaria collided with the Rodriguez vehicle after he proceeded through a red light into an intersection. Although Mr. DiMaria's siren and emergency lights were activated, the police report stated that Mr. DiMaria's inattention was an "apparent contributing circumstance[]" of the accident.

Mr. DiMaria contended that Ms. Rodriguez was at fault for failing to yield to an emergency vehicle.

Mr. DiMaria viewed the surveillance footage but it was not preserved and was erased as a matter of course after 30 days.

On September 9, 2016, Mr. DiMaria's counsel notified his automobile insurance carrier, Travelers Insurance Group, of his claim for UM benefits.

On May 8, 2017, Travelers denied the UM claim, asserting that its "right of subrogation [had] been foreclosed due to the failure to file suit against the alleged tortfeasor within the two year statute of limitations."

In response to Travelers' denial of coverage, Mr. DiMaria sued.

The parties moved for summary judgment.

Mr. DiMaria argued that Travelers had suffered no prejudice from his delay. He alleged, based on an investigator's report, that Ms. Rodriguez was then an unemployed 18-year-old student who lacked assets and had educational and credit card debt.

Travelers argued that it suffered prejudice from Mr. DiMaria's delay because its subrogation action was barred and because the failure to preserve the surveillance video impaired its ability to assess fault for the accident.

The trial court held that Mr. DiMaria's delay in notifying Travelers of the accident resulted in its irretrievable loss of subrogation rights against the alleged tortfeasor or others potentially responsible, thus barring his UM claim.

Mr. DiMaria appealed.

The Appellate Court's Decision

The appellate court affirmed.

In its decision, the appellate court explained that whether Mr. DiMaria had filed suit against the alleged tortfeasor "was not critical." Rather, the appellate court continued, Mr. DiMaria's "material breach of his duties under the policy was his failure to notify Travelers of the accident in a timely way."

The appellate court rejected Mr. DiMaria's argument that he only had an obligation to "do whatever [was] necessary to secure" Travelers' subrogation rights after it paid UM benefits to him. It found that his obligation to do nothing to prejudice those rights was "not conditioned on the insurer's prior payment."

Finally, the appellate court said that it was not persuaded by Mr. DiMaria's argument that Travelers was obliged to show that it had suffered appreciable prejudice as a result of his breach of his duties under the policy, and that it had not done so. "Travelers was not obliged to demonstrate prejudice," where it never had the opportunity to exercise its subrogation rights, the appellate court concluded.

The case is Dimaria v. Travelers Ins. Group, No. A-0728-18T4 (N.J. Super. Ct. Oct. 4, 2019). Attorneys involved include The Di Maria Law Firm, LLC, attorneys for appellant (Diana Di Maria, of counsel and on the briefs). Methfessel & Werbel, attorneys for respondent (Stephen Robert Katzman, of counsel and on the brief; Christian R. Baillie, on the brief).

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Mr. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He may be contacted at [email protected].