681 A.2d 660 | N.J. Super. Ct. App. Div. | 1996
The opinion of the court was delivered by
This appeal raises a question of first impression in New Jersey: In light of the Supreme Court’s decision in Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 658 A.2d 1246 (1995), may an individual, injured while driving the automobile of another, assert a claim for underinsured motorist (UIM) coverage purchased by a co-habitant family member of the injured individual, where that injured individual does not own an automobile and does not have her own UIM coverage? The motion judge who was called upon to decide this narrow issue concluded that the injured claimant’s demand for underinsured coverage benefits was barred by the decision in Aubrey. On the claimant’s appeal from that decision, we conclude that the claimant does, in fact, have an assertible claim for underinsurance benefits. We reverse the summary judgment granted to the insurer on its cross-motion and remand to the trial court for further proceedings.
Amgro, on behalf of Pacuta, offered to settle Lusardi’s personal injury claim for $15,000. Lusardi communicated that offer of settlement to State Farm, on behalf of Moles, and to Amgro, on behalf of Parisi. Lusardi informed both insurers of her intent to pursue a claim for underinsurance benefits. Neither insurer
Lusardi thereafter asserted a claim against State Farm and Amgro for underinsurance benefits under the endorsements to the policies issued to Moles and Parisi, respectively. She demanded that her underinsurance claim be submitted to arbitration, as required under the contractual terms of each insurance policy endorsement. Both insurers refused to submit Lusardi’s claim to arbitration. Lusardi, utilizing the docket number assigned to the Law Division complaint initially filed, proceeded to file a motion seeking to compel both insurers to submit her underinsurance coverage claim to arbitration. While that motion was pending, the Supreme Court issued its decision in Aubrey. Each insurer then filed a cross-motion for summary judgment separately contending that defendant Lusardi was not entitled to underinsurance benefits. After oral argument on each defendant’s cross-motion, the motion judge granted summary judgment to State Farm but reserved decision on Amgro’s cross-motion for summary judgment. The motion judge thereafter issued a letter opinion granting summary judgment to Amgro. In both decisions, the motion judge exclusively relied upon Aubrey. Defendant immediately appealed both decisions.
The UIM statute, N.J.S.A 17:28-l.le, provides,
A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery.
AGREEMENT
In return for payment of the premium and subject to all terms of this policy, we agree with you as follows:
A. Throughout this policy, “you” and “your” refer to:
1. The “named insured” shown in the Declarations; and
2. The spouse if a resident of the same household.
UNINSURED MOTORIST COVERAGE — NEW JERSEY
INSURING AGREEMENT
We will pay damages which an “insured” is legally entitled to recover from the owner or operator of an “uninsured motor vehicle” or “underinsured motor vehicle” where such coverage is indicated as applicable in the Schedule or Declarations because of:
1. “Bodily injury” sustained by an “insured” and caused by an accident; and
2. “Property damage” caused by an accident except under paragraph 2. of the definition of “uninsured motor vehicle.”
The owner’s or operator’s liability for these damages must arise out of the ownership, maintenance or use of the “uninsured motor vehicle” or “underinsured motor vehicle.” We will pay damages under this coverage caused by an accident with an “underinsured motor vehicle” only after the limits of liability under any applicable liability bonds or policies have been exhausted by payment of judgments or settlements.
Any judgment for damages arising out of a suit brought without our written consent is not binding on us.
“Insured” as used in this endorsement means:
1. You or any “family member.”
2. Any other person “occupying” “your covered auto.”
*476 3. Any person for damages that person is entitled to recover because of “bodily injury” to which this coverage applies sustained by a person described in 1. or 2. above.
In Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 658 A.2d 1246 (1995), the Supreme Court interpreted N.J.S.A 17:28-1.1e:
[W]e conclude that UIM coverage, which is limited to the amount contained in the insured’s policy, is “personal” to the insured. Coverage is linked to the injured person, not the covered vehicle. Fernandez v. Selected Risks Ins. Co., 82 N.J. 236, 241, 412 A.2d 755 (1980). UIM coverage provides “as much coverage as the insured is willing to purchase, for his or her protection subject only to the owner’s policy liability limits for personal injury and properly damages to others.” Prudential Property & Casualty Ins. Co. v. Travelers Ins. Co., 264 N.J.Super. 251, 259-60, 624 A.2d 600 (App.Div.1993); see also Clegg v. New Jersey Automobile Full Underwriting Ass’n, 254 N.J.Super. 634, 638, 604 A.2d 179 (App.Div.1992) (stating that UIM coverage is linked to insured); Nikiper v. Motor Club of America Cos., 232 N.J.Super. 393, 399, 557 A.2d 332 (App.Div.) (stating that “[t]he purchase determines the amount of the coverage; the number of tortfeasors does not”), certif. denied, 117 N.J. 139, 564 A.2d 863 (1989).
[Id. at 403, 658 A.2d 1246.]
We consider that the factual distinctions between this matter and Aubrey temper the effect of the above language on this matter.
In Aubrey, the injured claimant had purchased her own automobile insurance, including a UIM endorsement providing coverage of $15,000 per person/$30,000 per accident. Id. at 404, 658 A.2d 1246. Aubrey was injured while operating a vehicle that she intended to purchase from Chris Koch Toyota after securing a financing arrangement. Id. at 399, 658 A.2d 1246. Aubrey contended that she was entitled to recover UIM benefits under the UIM provisions of Koch’s garage policy, which provided $1,000,000 in UIM coverage.
In denying Aubrey’s claim, the Court concluded,
*477 Here, Aubrey purchased UIM coverage in the amount of $15,000. Thus, the amount of UIM coverage “held” by her, as “the person seeking recovery,” was $15,000. Accordingly, she could reasonable expect UIM coverage in that amount. When she purchased her UIM coverage, Aubrey could not reasonably have anticipated the possibility of receiving benefits under UIM endorsements issued in favor of Koch. To allow her to recover under Koch’s UIM policy would distort the meaning of an insured’s “reasonable expectations.”5
[Id. at 404, 658 A.2d 1246.]
The exact holding in Aubrey is underscored by the Court’s specific disapproval of a prior ruling of our court in Landi v. Gray, 228 N.J.Super. 619, 550 A.2d 768 (App.Div.1988). In Landi the plaintiff Dawn Landi, “was named as the insured in a $15,000/$30, 000 automobile liability policy insuring an automobile that she owned. The policy afforded her underinsured motorist coverage up to $15,000.” 228 N.J.Super. at 623, 550 A.2d 768 (emphasis added) (footnote omitted). Landi borrowed her brother’s motor vehicle and allowed her friend to drive while she remained a passenger. Id. at 620, 550 A.2d 768. Landi’s friend lost control of the vehicle, causing Landi’s injuries. Ibid. Landi’s brother’s insurer paid her the liability policy limits of $15,000. Id. at 620-21, 550 A.2d 768. As a member of her mother’s household, Landi then asserted a UIM claim against her mother’s UIM coverage of $100,000.5
In Aubrey, the Supreme Court expressly disapproved of our holding in Landi. 140 N.J. at 405, 658 A.2d 1246. It also disagreed with our opinion on Aubrey:
Thus, we disagree with the Appellate Division’s conclusion that UIM insurance is not personal to the insured. The Appellate Division construed the statutory phrase*478 “held by the person seeking recovery” to “include policies pursuant to which the person is an insured, regardless of who may have pm-chased the policy.” 274 N.J.Super. at 243, 643 A.2d 1043.
[Id. 140 N.J. at 404, 658 A.2d 1246.]
The Court concluded,
The right to recover UIM benefits depends on the UIM limits chosen by the insured. Recovery does not depend on the limits of other UIM policies, such as the mother’s policy in Landi or Koch’s policy in the instant case. See Harden, v. Monroe Guaranty Ins. Co., 626 N.E. 2d 814, 818 (Ind.Ct.App.1993) (holding that prospective buyer of used car could not recover under dealer’s UIM endorsement because UIM insurance is not for protection of vehicles, but of persons).
[Id. at 405, 658 A.2d 1246.]
The Supreme Court also cited Clegg v. New Jersey Auto. Full Underwriting, 254 N.J.Super. 634, 604 A.2d 179 (App.Div.1992). In Clegg, Carol Clegg was operating her husband’s vehicle while her friend Mary Smeltzer was a passenger in the vehicle. Id. at 636, 604 A.2d 179. Both women were seriously injured when the vehicle was struck by an underinsured culpable tortfeasor, William Kovalski. Ibid. Robert Clegg, the named insured who had purchased insurance coverage on the Clegg vehicle, had a UIM endorsement providing single limit UIM coverage of $500,000. Ibid. Smeltzer had her own policy of liability insurance on her personal vehicle and was also covered by a UIM endorsement providing single limit UIM coverage of $500,000. Ibid.
In explaining the dispute, we noted,
Robert Clegg, individually and 1/a Smeltzer Realty Co., is the insured named on the Declaration sheet of a policy issued by defendant Camden Fire Insurance Association (“Camden”). As we note infra, Carol is treated identically in the Camden policy with the named insured shown in the Declarations, because she is a spouse resident in the same household. By contrast, Smeltzer is an insured person under the Camden policy because of her status as an occupant of a covered auto. Smeltzer’s own UIM coverage is written under a policy issued by defendant New Jersey Full Insurance Underwriting Association (“JUA”).
The present controversy arose when the Cleggs and Smeltzer presented UIM claims to their own carriers for the full amount of their respective UIM coverages. The claims of each would exhaust their own UIM coverage. Because of proration provisions in the two policies, however, a question arose whether Smeltzer was entitled to share equally in the UIM coverage provided under the Clegg policy.
[Id. at 636-37, 604 A.2d 179.]
Given the discretionary nature of UIM coverage, a purchaser would reasonably and objectively expect that he is buying such protection up to the declared limits primarily for himself and his resident spouse. An intention to prefer passengers to the purchasers’ own interests is, in our view, unrealistic and not objectively reasonable. For most purchasers of insurance, passengers would be but incidental beneficiaries of the UIM contract. This interpretation is borne out by the automobile insurance Buyer’s Guide, mandated by N.J.S.A. 39:6A-23 and distributed to each prospective purchaser. The description of UIM emphasizes the personal nature of the security afforded and the apparent certainty of available benefits to the amount purchased:
When you buy uninsured motorist coverage, you are also provided coverage to protect you from those motorists who are underinsured. If you are in an accident caused by such a motorist, underinsured motorist coverage will pay damages up to the difference between your underinsured motorist coverage limit and the other driver’s liability coverage limit.
N.J.A.C. 11:3-15.6.
[Id. at 640, 604 A.2d 179 (footnote omitted).]
We added in a footnote, “As noted in n. 2, supra, ‘you’ means the named insured and resident spouse, at least to the holder of a Camden policy.” Ibid. We find this footnote to be significant.
The language of this pre-Aubrey opinion implies that Smeltzer would have been entitled to collect UIM benefits under the Camden policy even though she had her own UIM coverage. We recognized that Smeltzer was also a named insured under her own automobile liability insurance policy with an endorsement providing UIM coverage up to $500,000 and, moreover, that Mrs. Clegg’s injuries exceeded the UIM coverage on the Clegg policy. We therefore concluded,
To construe the policies, as JUA urges, to permit proration of benefits payable to Smeltzer operates to deny the Cleggs full benefit of the first-party coverage they were reasonably entitled to believe they had purchased. Given this construction, Smeltzer would not have “collectible” UIM insurance available from the Clegg policy, unless the Cleggs’ own damages were less than $500,000
[Ibid, (emphasis added).]7
We also find it significant that Aubrey cited with approval our decision in Prudential Property & Casualty Ins. Co. v. Travelers Ins. Co., 264 N.J.Super. 251, 624 A.2d 600 (App.Div.1993). In Prudential, the injured claimant, Chris Tucci, was employed as a police officer by the Borough of Roselle Park (Borough). Id at 253, 624 A.2d 600. Tucci was an insured under a personal insurance policy that contained a UIM endorsement providing coverage in the amount of $100,000. Id. at 254, 624 A.2d 600. The Borough police vehicle was insured with a UIM endorsement providing coverage in the amount of $1,000,000. Ibid. Tucci sustained injury when the Borough police vehicle he was operating collided with a culpable driver, Andrzej Ratkiewicz. Id. at 253, 624 A.2d 600. Ratkiewicz’s automobile indemnity policy was in the amount of $15,000 per person/$30,000 per accident. Ibid.
The dispute in Prudential, not specifically relevant in this case, required us to compare uninsured motorist coverage (UM) with UIM coverage. In our discussion, we noted,
[A]though the Legislature was aware that “multiple policies ” might provide UIM coverage, [N.J.S.A. 17:28-l.l(c) ], it specifically provided that to determine whether a motor vehicle was underinsured, the limits of liability for that vehicle should be compared against the UIM limits of the motor vehicle insurance policy “held by the person seeking that recovery,” rather than with respect to the limits of any other policies that may apply to the benefit of the claimant. See, N.J.S.A. 17:28 — 1.1(e).
[Id. at 259, 624 A.2d 600 (emphasis added).]
We also explained,
The expectation of an insured, such as Tucci, who purchases a policy of insurance containing UIM coverage is that he is buying such protection up to the declared*481 limits “primarily for himself’ and anyone else who is insured an the same basis under the policy. [Clegg, supra,] 254 N.J.Super. at 640, 604 A.2d 179. Any other policy of insurance which affords him coverage necessarily does so on the basis of his status as a third party beneficiary of the contract of insurance between the insurer and the purchaser of the policy.
[Id. at 260, 624 A.2d 600.]
Aubrey also cited with approval Nikiper v. Motor Club of America Cos., 232 N.J.Super. 393, 557 A.2d 332 (App.Div.), certif. denied, 117 N.J. 139, 564 A.2d 863 (1989). We need not review all of the essential facts of Nikiper. Suffice it to say, Joan Marie Nikiper (Joan) was seriously injured while a passenger in a vehicle owned, operated and insured by Gregory Nikiper, a non-culpable driver who collided with two other vehicles.
The common theme in Aubrey, Landi, Clegg, and Prudential is that each injured claimant had selected a UIM endorsement when purchasing their own policy of insurance and each UIM endorsement provided coverage less than the UIM coverage on a policy against which a claim was asserted. That common theme is absent here: plaintiff neither owned an automobile on the day she
Had plaintiff owned her own automobile, she clearly would have been required to purchase a comprehensive automobile liability policy. See N.J.S.A 39:6B-3. Her prospective insurer would have been required to provide plaintiff with an option to purchase optional UIM coverage. See N.J.S.A 17:28-1.1b. In turn, plaintiff would have either elected to purchase UIM coverage or she would have rejected that opportunity. Her election would have been hers, personal unto herself. In overruling Landi, Aubrey would dictate that conclusion. Although not expressly stated in Aubrey, we conclude that, had plaintiff elected not to purchase optional UIM coverage, that election would also bar her recovery of UIM benefits under Parisi’s policy.
Aubrey left uncertain, however, whether it was intended to disqualify entitlement to UIM coverage to those individuals who, like plaintiff, do not own an automobile either registered or principally garaged in New Jersey. We think not. The issue was not raised in Aubrey and, as we construe that opinion, the issue does not seem to be answered therein.
In Aubrey, and in each case cited therein, the claimant owned an automobile and, in selecting insurance coverage, specifically elected optional UIM coverage with a specified coverage limit. The individual selection clearly allows optional UIM coverage to be deemed “personal” to the insured. Aubrey, supra, 140 N.J. at 408, 658 A.2d 1246. Because of that selection process, the Supreme Court disapproved Landi, which permitted the injured claimant with her own selected UIM coverage to seek the higher UIM coverage afforded under her mother’s insurance endorsement.
If we view the issue from the perspective of the reasonable expectation of the insured, as instructed by Werner Indus. v. First State Ins. Co., 112 N.J. 30, 35, 548 A.2d 188 (1988), we reach the same conclusion. We think it is clear that Parisi, in purchasing insurance and in electing to purchase UIM coverage, would have the reasonable expectation that, under the clear language of that endorsement, he was providing UIM coverage to himself and to members of his “family.” As noted, Parisi’s endorsement stated,
“Insured” as used in this endorsement means:
1. You or any "family member. ”
2. Any other person “occupying” “your covered auto.”
3. Any person for damages that person is entitled to recover because of “bodily injury” to which this coverage applies sustained by a person described in 1. or 2. above.
[ (Emphasis Added).]
Construing Aubrey in accord with plaintiffs contention contravenes the very specific contractual terms of the endorsement that it issued to Parisi and negates the reasonable expectation of Parisi, i.e., that members of his family, including his sister who resided in his household, would be provided with the UIM benefits he purchased to protect himself and his family members. Viewing
Aubrey did not focus upon the claim of an injured party who does not own an automobile registered or principally garaged in New Jersey and who therefore has never had the opportunity to elect to purchase UIM coverage. We cannot conclude that the Supreme Court intended to exclude these individuals, such as Lusardi, from the protections afforded by UIM coverage.
Reversed and remanded for further proceedings consistent with this opinion. Amgro’s motion for summary judgment should have been denied; Lusardi’s motion to compel Amgro to submit her UIM coverage claim to arbitration should have been granted.*
Suit was originally commenced by plaintiffs State Farm Insurance Company and Market Transition Facility, by and through its servicing carrier, Amgro Insurance Company. Both insurers sought to compel Lusardi, the named defendant, to execute medical authorizations so as to permit plaintiffs to investigate Lusardi’s medical claims attributable to the April 3, 1992 collision. That aspect of the litigation was resolved and that issue has no bearing upon this appeal.
At oral argument, we were advised by counsel that State Farm has agreed to be bound by a three-person underinsured motorist arbitration subject to the limits of the policy issued to Vito Moles under policy number 2094545-513-30. The consent order specifically provides, "The issues to be determined at the aforementioned underinsured motorist arbitration are liability and damages only, the issue of coverage for Teresa Parisi-Lusardi, under the aforementioned policy having been waived by State Farm Insurance Company."
A secondary issue in Aubrey was the applicability of a "step down” provision in the garage policy. Id. at 399, 405-407, 658 A.2d 1246. The "step-down” provision reduced the UIM coverage available to Aubrey. We need not review that aspect of the opinion in our resolution of this appeal.
The concept of "the objectively reasonable expectations of the insured” is hilly discussed in Werner Indus. v. First State Ins. Co., 112 N.J. 30, 35 548 A.2d 188 (1988). Aubrey, supra, 140 N.J. at 404, 658 A.2d 1246.
The Supreme Court opinion in Aubrey indicates that Landi's mother's UIM coverage was $1,000,000. Id. at 405, 658 A.2d 1246. The decision in Landi indicates the mother's UIM coverage was $100,000. Landi, supra, 228 N.J.Super. at 621, 550 A.2d 768. The discrepancy is most likely due to a typographical error and has no bearing upon the result.
Obviously, had the Cleggs' injuries not been serious and had they not been entitled to their UIM limits of $500,000, under the decision in Clegg, Smeltzer, a
Our decision in Nikiper does not explain the relationship between Joan Nikiper, the passenger, and Gregory Nikiper, the owner and named insured. The decision also fails to include the policy language of the insurance policy purchased by Gregory and to advise whether Joan was the owner, and as such, a named insured on her own policy of insurance which may or may not have contained an optional UIM endorsement.
Although the policy language of the mother’s liability insurance policy and the UIM endorsement to that policy are not quoted within our decision in Landi, for the purposes of this opinion we may infer that the endorsement in Landi is
In plaintiff's brief on appeal, in response to a hypothetical argument raised by Lusardi that a seventeen-year child who is a licensed driver, who borrows the automobile of his insured parent, who has elected to purchase UIM coverage, would be denied coverage under a strict reading of Aubrey, plaintiff stated,
[I]t is fairly clear that the reasonable expectation of a named insured when purchasing a private passenger automobile coverage, which would include UIM, would be to cover his immediate family. A minor child is without a doubt a member of the immediate family and has been so construed in numerous cases in this State no matter what the status of the relationship to the named insured, (citations omitted).
At oral argument, plaintiff’s counsel, however, refused to concede that a sister of a named insured is a member of the "immediate family” of the named insured. We must reject that contention.
As State Farm has by consent agreed to submit plaintiff s claim to arbitration, Amgro shall participate in that same arbitration proceeding on behalf of its insured, Parish
Additionally, this opinion has not considered any argument pertinent to proration of insurance based upon contractual provisions in either policy.
