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Gorton v. Reliance Insurance Co.

Decided: September 18, 1978.

JEAN GORTON; MARI FERRY; AND BERNARD LEVENBERG, AS ADMINISTRATOR AD PROSEQUENDUM OF THE ESTATE OF JUDY LEVENBERG, DECEASED, PLAINTIFFS-RESPONDENTS,
v.
RELIANCE INSURANCE COMPANY, UTICA MUTUAL INSURANCE COMPANY, AND GOVERNMENT EMPLOYEES INSURANCE COMPANY, DEFENDANTS-APPELLANTS. EMPIRE MUTUAL INSURANCE COMPANY, PLAINTIFF-APPELLANT, V. PHILIP J. DEMPSEY, DEFENDANT-RESPONDENT, AND JOHN P. GILMORE, DEFENDANT



On certification to the Superior Court, Appellate Division, whose opinion is reported at 137 N.J. Super. 558 (1975) (A-65/66/67). On certification to the Superior Court, Chancery Division (A-69).

For reversal and reinstatement in Gorton and reversal and remandment in Dempsey -- Chief Justice Hughes, Justices Mountain, Sullivan, Pashman and Clifford and Judge Conford. For affirmance -- None.

Per Curiam

These two cases, argued here together but not formally consolidated, pose a common question of availability of uninsured motorist (UM) coverage. They arise out of a two-vehicular collision of July 16, 1971 in Holmdel, New Jersey. Plaintiffs Gorton and Ferry and plaintiff Levenberg's decedent, Judy Levenberg (along with another, unidentified person not here involved), were passengers in an automobile owned and operated by one Richard Chamos. Dempsey, defendant in the companion case, was operating a vehicle owned by defendant Gilmore when it was struck by the Chamos car. As a result of the accident Gorton, Ferry and Dempsey all sustained personal injuries, and Judy Levenberg, Chamos, and the fourth passenger in the Chamos vehicle were killed.

In the ensuing action for personal injuries and wrongful death the parties agreed that Chamos alone was at fault and responsible for the collision. His liability insurance carrier, which provided bodily injury liability coverage in the then statutory minimum amounts of $10,000 for each person and $20,000 per accident,*fn1 offered its policy limits in settlement of all claims against Chamos, who was otherwise judgment-proof. Of the total of $20,000 available, Gorton settled for $4285.71, Ferry for $2042.85, Levenberg for $2673.44, Dempsey

for $1000, and the balance went to the fifth claimant. It is alleged, and we assume for purposes of this litigation, that these amounts would not adequately compensate the various claimants before us for their injuries and damages.

Prior to executing releases reflecting this settlement plaintiffs Gorton, Ferry and Levenberg made a demand for arbitration, seeking recovery under the UM endorsements of their own insurance policies covering them at the time of the accident.*fn2 Gorton claimed UM coverage under a Government Employees policy, Ferry under a Utica Mutual policy, and Levenberg under a Reliance policy. After instituting arbitration proceedings (and presumably because the carriers resisted arbitration, although the record does not set this forth specifically) these plaintiffs filed a declaratory judgment suit against their insurance companies, alleging that the liability insurance on the Chamos vehicle was "so inadequate as to render [that] vehicle uninsured within the meaning of their respective policies" and seeking a judgment to that effect. They asked as well that the judgment declared each of them entitled to the difference between what they would receive under the terms of the settlement with Chamos' liability insurer and the amounts available under their respective UM endorsements ($10,000 in each instance). The carriers filed answers denying that the Chamos vehicle was uninsured, either within the meaning of the policies or of the financial responsibility law.

Thereafter the parties brought cross-motions for summary judgment. The trial court granted the carriers' motions,

holding that the Chamos vehicle was not uninsured, either within the specific language of the respective policies under which UM protection was sought or within the meaning of N.J.S.A. 39:6-46, governing the requirements for liability policies under the Motor Vehicle Security-Responsibility Law. The Appellate Division reversed, Gorton v. Reliance Insurance Co., 137 N.J. Super. 558 (1975), holding that

since the minimum statutory limit for bodily injury or death of $10,000 per person was not available to each plaintiff [from the Chamos liability policy], the Chamos automobile was actually uninsured as to the difference between the amount of insurance coverage available and the minimum statutory limit of $10,000. Each plaintiff is entitled to recover under his UM endorsement the full amount of his damages up to a total of $10,000, less the amount already received by way of settlement with Chamos' insurance company.

[137 N.J. Super. at 566.]

On defendants' petition we certified the cause to review this holding. 70 N.J. 273 (1976).

In the companion case defendant Dempsey, who, it will be recalled, settled his personal injury claim against Chamos for $1000, sought to recover under the UM provisions of the insurance policy issued by Empire Mutual Insurance Company covering the Gilmore vehicle which he, Dempsey, was driving at the time of the accident. Dempsey filed a petition in arbitration against Empire Mutual, and the carrier responded by bringing this declaratory judgment action to enjoin arbitration. The trial court found for defendant, concluding that the Chamos vehicle was ...


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