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Cirelli v. Ohio Casualty Insurance Co.

Decided: February 28, 1977.

ALBERTO CIRELLI, PLAINTIFF-RESPONDENT-CROSS-APPELLANT,
v.
THE OHIO CASUALTY INSURANCE CO., DEFENDANT-APPELLANT-CROSS-RESPONDENT, AND RICHARD C. MCDONOUGH, NEW JERSEY COMMISSIONER OF INSURANCE, DEFENDANT-RESPONDENT



For affirmance as modified -- Chief Justice Hughes, Justices Mountain, Sullivan, Pashman, Clifford and Schreiber and Judge Conford. For reversal -- None. The opinion of the court was delivered by Schreiber, J.

Schreiber

The primary issue in this case concerns the validity of reimbursement and subrogation provisions in an automobile liability insurance policy with respect to personal injury benefits paid to the assured as required by the New Jersey Automobile Reparation Reform Act (No Fault Law), N.J.S.A. 39:6A-1 et seq.

The facts are undisputed. The plaintiff Alberto Cirelli, while a passenger in an automobile owned by him and driven by his son, Emilio Cirelli, was injured when his car collided with a vehicle owned by Mary Natelli and operated by her husband Thomas. The accident occurred in Clarkestown, New York on March 1, 1974. Cirelli was a New Jersey resident and his liability insurance carrier was the defendant, The Ohio Casualty Insurance Co. (Ohio). The Natellis, New York residents, were insured by Boston Old Colony Insurance Co. (Boston).

Ohio's policy included an endorsement which provided for personal injury protection (PIP), a requirement of the New Jersey No Fault Law. Accordingly, Ohio was bound, inter alia, to pay its insured Cirelli for all reasonable medical expenses (his hospital and medical expenses exceeded $120,000) and wage losses (subject to a weekly maximum payment of $100 and gross limit of $5200). N.J.S.A. 39:6A-4. Ohio claimed that, since the accident had occurred in New York and the New York No Fault Law*fn1 limited the insurance company's liability for personal injury protection to $50,000, its exposure did not exceed that amount. N.Y. Ins. Law ยงยง 671, 672 (McKinney). Therefore, Ohio refused to pay more than $50,000 toward the hospital and medical expenses.

The Ohio PIP endorsement also provided that the company would be subrogated, to the extent of PIP payments made, to Cirelli's rights against a third person. The endorsement

also required Cirelli to reimburse Ohio from the proceeds of "any settlement or judgment" that Cirelli recovered from the tortfeasor who was responsible for the accident.

Cirelli*fn2 instituted a declaratory judgment proceeding against Ohio in which he sought an adjudication that Ohio was responsible for PIP expenses in excess of $50,000 and that the reimbursement provisions were invalid.*fn3

The trial court, in a written opinion, 133 N.J. Super. 492 (Law Div. 1975), found that Ohio was not entitled to the benefit of the $50,000 New York statutory limitation. The defendant is not pressing this issue on this appeal and we shall not discuss it beyond stating our conclusion that we fully concur with the trial court's determination. The court also concluded that the reimbursement provisions were unenforceable because they were repugnant to the provisions and intent of the New Jersey PIP benefits, but that Cirelli was obligated to reimburse Ohio for any medical expenses which he might recover from Natelli. The trial court also ordered Ohio to pay plaintiff's counsel a legal fee of $5,000 for services rendered in connection with the issue concerning the New York monetary ceiling, but not with respect to fees involved in the reimbursement aspect of the case.

Ohio filed an appeal in which it challenged the finding of invalidity of the reimbursement agreement and the awarding of the counsel fee. Upon motion, the matter not having been heard by the Appellate Division, we granted certification, R. 2:12-2. 69 N.J. 448.

I

The counsel fee was awarded pursuant to R. 4:42-9(a)(6), which sanctions allowance of counsel fees in an action upon a liability or ...


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