Nowell James v. New Jersey Manufacturers Insurance Company (071344)
216 N.J. 552
| N.J. | 2014Background
- James, an employee of Metric, was injured in a July 5, 2007 accident involving a theMetric vehicle insured by NJM.
- James settled with the other drivers for $100,000, the policy limit of their insurance.
- Metric’s NJM policy had a $500,000 UM/UIM limit but included a step-down provision limiting non-named insureds’ UIM to the amount available under their personal policy.
- James was insured under his wife’s personal policy with $50,000 UIM, so NJM capped his UIM recovery at $50,000 under the step-down provision.
- N.J.S.A. 17:28-1.1(f) was enacted and took effect immediately on September 10, 2007, prohibiting step-down provisions for employees and altering how such policies must treat employees going forward.
- The trial court granted summary judgment for NJM; Appellate Division reversed; the Supreme Court held the statute applies prospectively to accidents after the effective date and does not retroactively reform policies for accidents occurring before that date.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Retroactive application of 17:28-1.1(f)? | James argues the statute retroactively reformed existing policies. | NJM argues the statute should apply prospectively only. | Statute applies prospectively; not retroactive to James's pre-effect accident. |
| Effect of the statute on policies in force at enactment? | The amendment reformed Metric’s policy as of its enactment date. | Reform occurs only from the effective date forward; pre-existing policy terms remain. | Statute reformed policies as of September 10, 2007, for accidents after that date; not retroactive to James's accident. |
| Is the step-down clause enforceable for pre-enactment accidents? | Pinto supported enforceability of step-down clauses before the amendment. | Pinto’s rule is superseded by the new statute prohibiting such step-down for employees. | Pre-enactment accidents fall under the policy terms in effect at the time of occurrence; no retroactive reform. |
Key Cases Cited
- Pinto v. New Jersey Manufacturers Insurance Co., 183 N.J. 405 (2005) (upheld step-down provision for UM/UIM in employer policy (employee benefits limited))
- Magnifico v. Rutgers Casualty Ins. Co., 153 N.J. 406 (1998) (recognized legitimacy of contractual step-down provisions)
- Olkusz v. Brown, 401 N.J. Super. 496 (App. Div. 2008) (discussed retroactivity of the amended statute)
- Hand v. Philadelphia Insurance Co., 408 N.J. Super. 124 (App. Div. 2009) (held implicit retroactive intent; cert. denied)
- Sexton v. Boyz Farms, Inc., 780 F. Supp. 2d 361 (D.N.J. 2011) (federal view on retroactivity of N.J.S.A. 17:28-1.1(f))