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Cozzi v. Government Employees Insurance Co.

Decided: December 5, 1977.

ALFRED M. COZZI AND JULIET P. COZZI, PLAINTIFFS-APPELLANTS,
v.
GOVERNMENT EMPLOYEES INSURANCE CO., DEFENDANT-RESPONDENT, AND ALFRED M. COZZI AND JULIET P. COZZI, PLAINTIFFS-APPELLANTS, V. LIBERTY MUTUAL INSURANCE COMPANY AND GOVERNMENT EMPLOYEES INSURANCE CO., DEFENDANTS-RESPONDENTS



Allcorn, Morgan and Horn. The opinion of the court was delivered by Morgan, J.A.D.

Morgan

The issue on this appeal concerns which of two insurance carriers, if either, is liable to plaintiffs pursuant to their medical payments coverage for personal injuries plaintiffs sustained in an automobile accident. The amount in dispute is $1304. The trial judge, by way of summary judgment, exonerated both carriers from liability. Plaintiffs appeal.

The controlling facts are not in dispute. Plaintiffs, husband and wife, were injured while passengers in a motor vehicle owned and operated by one William J. Bozzuffi (not a party) and insured by defendant Liberty Mutual Insurance Company (Liberty) when that vehicle was struck in the rear by another vehicle, also insured by Liberty. Medical expenses incurred by plaintiffs within one year of this accident totalled $1304. Plaintiffs commenced action against the drivers and owners of both vehicles, seeking to visit liability for the medical expenses and pain and suffering upon the responsible party. Liberty, as carrier for all defendants, participated in settlement negotiations which resulted in a termination of the litigation on February 20, 1974, evidenced by a release executed by plaintiffs in favor of Bozzuffi, their host driver, and the owner and operator of the other vehicle, the one which all concede to have been at fault and on whose behalf the claim was paid. Plaintiffs admit, in their brief, that Liberty had advised them of the available medical payments coverage but that it was subect to the right of subrogation against the parties responsible for the accident.

On March 4, 1974, after termination of the litigation, plaintiffs made claim for recovery of their medical expenses

against defendant GEICO pursuant to the medical payments provision contained in the policy issued to plaintiffs with respect to their own car. Judgment by default for the full amount claimed was entered on April 22, 1974. On November 10, 1975, about a year and a half after entry of the judgment, GEICO filed a motion seeking to have the default judgment set aside, asserting that its delay in seeking that relief resulted from the file having been lost. It asserted therein a meritorious defense to plaintiffs' claim based upon the existence of other valid and collectible insurance, the Liberty policy covering Bozzuffi, and that since the GEICO medical payments coverage with respect to a nonowned automobile was excess, it was not liable to plaintiffs therefor. The motion was granted on November 21, 1975, conditioned upon GEICO depositing in court the sum of $1300, an amount sufficient to cover in full plaintiffs' entire claim. In GEICO's answer, filed thereafter, it set forth its defense that the existence of other valid and collectible insurance in the full amount of plaintiffs' claim absolved it from liability because of the alleged excess nature of the coverage. Accordingly, plaintiffs started a new lawsuit in which they made claim under the medical expense provision of the Liberty policy covering the host driver, Bozzuffi, and both suits were then consolidated. The cross-motions for summary judgment were resolved in favor of both carriers.

Liberty's medical expense coverage provides, in pertinent part, for payment of "all reasonable medical expense incurred one year from the date of accident for bodily injury caused by accident and sustained by * * * any other person while occupying the owned automobile while being used by the named insured * * *." Clearly, such coverage on the Bozzuffi car, driven by him on the date of the accident, affords coverage to plaintiffs as "any other person" occupying the owned automobile, and Liberty does not otherwise contend.

The medical payments coverage, appearing as Coverage C in Part II of the GEICO policy, affords similar coverage in substantially identical terms. There, of course, coverage

is afforded to plaintiffs as named insureds who incur medical expenses resulting from bodily injury "while occupying a non-owned automobile * * *."

Although both carriers admitted that their respective medical payments coverage applied to plaintiffs' claim, they nonetheless denied liability -- Liberty, on the ground that the prior settlement with all possible tortfeasors impaired its right of subrogation to which the coverage was subject, and GEICO, that its subrogation rights were also impaired and hence it was absolved from liability. GEICO also contended that its coverage was excess over the valid and collectible Liberty policy. The trial judge, in a brief letter opinion, apparently accepted both contentions, cited Busch v. Home Ins. Co. , 97 N.J. Super. 54 (App. Div. 1967), and granted defendants' motions for summary judgment.

The context in which the issues raised are to be considered must be stressed. Plaintiffs have never contended that the settlement of their lawsuit in February 1974 excluded therefrom the medical expenses they incurred as a result of the accident. The release evidencing the settlement is general and nothing therein suggests that medical expenses were not embraced within its terms. See Bilotti v. Accurate Forming Corp. , 39 N.J. 184, 203-204 (1963). Plaintiffs received in that settlement $7500 and are here claiming $1300 worth of medical treatment, the details of which were forwarded to Liberty at least a year before the settlement; hence, the amount of the settlement was clearly sufficient to indemnify plaintiffs for these expenses as well as for the pain and suffering incident to their injuries. Indeed, plaintiffs have never claimed throughout these proceedings, trial and appellate, that the settlement did not cover these claimed medical expenses as well as their pain ...


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