Appellate Division Affirms the Importance of Preserving the Statute of Limitations Defense in UM/UIM Claims

The Appellate Division in Pereira v. N.J. Mfrs. Ins. Co., A-2039-22 (Jan. 3, 2024) has recently reinforced the power of the statute of limitations defense in pre-suit Uninsured and Underinsured Motorist (UM/UIM) claims. Most importantly, the Court made it clear that the best way for auto insurers to preserve this defense is to assert it from the very beginning.

Pereira involved a rear end collision that occurred on September 10, 2014. The at fault driver had $15,000 in coverage and tendered the policy. The plaintiff, Concetta Pereira, thereafter sought UIM coverage from New Jersey Manufacturers Insurance Company (NJM), her insurance provider. On February 13, 2017, Pereira’s attorney sent a letter to NJM advising of their representation and the claim. In response, NJM provided a letter authorizing the acceptance of the $15,000 from the other driver. However, that letter included an additional critical detail – it advised that NJM would rely on the six-year statute of limitations and was not waiving that defense.

The matter proceeded over the next few years with NJM and Pereira’s attorneys communicating about the claim. However, Pereira’s attorneys did not provide an acceptable medical expert report until November 20, 2020, approximately two months after the expiration of the statute of limitations.

A month later, on December 29, 2020, Pereira requested that the statute of limitations be tolled. This was denied without prejudice and the Court instructed Pereira to file a complaint within fourteen days. Pereira did so on February 10, 2021. Following discovery, NJM moved to dismiss the complaint as the statute of limitations expired. The trial court granted the motion and the Appellate Court agreed.

This case highlights the importance for auto insurers to act in good faith as well as to inform early, clearly, and expressly the opposing party of the intention to apply the statute of limitations defense. Previously, per Price v. N.J. Mfrs. Ins. Co., the Supreme Court had permitted relaxation of the statute of limitations. In Price, NJM had received the plaintiff’s medical examination and other materials necessary to evaluate the claim and had filed several requests for additional information from the plaintiff including just before the statute of limitations was set to expire. This led the Supreme Court to conclude that NJM may not have acted in good faith, intentionally dragging the communication with the plaintiff until the statute of limitations had nearly passed.

The Pereira and Price decisions shed light on the role that clarity of communication around the statute of limitations plays in motor vehicle claims. What matters is the filing of a complaint, not merely informing the other party of impending claims. In fact, in Pereira, NJM promptly advised the plaintiff that they would rely on the statute of limitations and immediately denied Pereira’s belated claim.

In conclusion, Pereira offers two lessons for auto insurers looking to protect their right to assert the statute of limitations defense in the future:

  1. Assert immediately that the statute of limitations defense will be relied on and will not be waived.
  2. Demonstrate that there is good faith by responding promptly and by not dragging out requests.

The plaintiff is responsible to file a complaint in due course. However, insurers should be aware that their actions in the early stages of the claim filing may determine the outcome of the case and whether the Court will rule in their favor or the plaintiff’s favor.

If you have any questions about the statute of limitations in UM/UIM claims, contact Amelia R. Lyte, Joseph V. Leone and William G. McGuinn or call as at 732-545-4717.