On appeal from Superior Court, Law Division, Camden County.
Lora, Michels and Larner. The opinion of the court was delivered by Larner, J.A.D.
This appeal presents the question whether an injured person can recover under the uninsured motorist endorsement of his automobile liability policy where he has covered claim against the New Jersey Property Liability Insurance Guaranty Association (Association) as a consequence of the insolvency of the tortfeasor's insurance carrier.
Earl R. Kiser and his wife Rosemary Kiser sustained personal injuries as a result of an automobile accident with the vehicle of Doris S. Greenberg, a Pennsylvania resident, on September 10, 1972. The Kisers were covered by two automobile policies issued by plaintiff State Farm Mutual Liability Insurance Company (State Farm), which contained uninsured motorist (UM) coverage mandated by N.J.S.A. 39:6A-14 and N.J.S.A. 17:28-1.1. Greenberg's vehicle was insured at the time of the accident through a policy issued by Gateway Insurance Company (Gateway).
In August 1974 Gateway was declared insolvent by a court of competent jurisdiction of Pennsylvania, which triggered the involvement of the Association and its duty to undertake the obligations of Gateway, the insolvent insurer, with respect to payment of covered claims. N.J.S.A. 17:30A-8.
The Kisers filed a claim with the Association and were advised on March 25, 1975 that "the claim must be handled by the Pennsylvania Guarantee Association." A subsequent letter of May 16, 1975 from the Association explained that when there are two such associations involved, the claimant shall seek recovery first from the Association of the place
of residence of the assured -- namely, Pennsylvania. Further inquiry of the Pennsylvania Association elicited the response that under the Pennsylvania statute the claimants must exhaust their remedies under the uninsured motorist coverage of State Farm.*fn1 40 Pa. Stat. Ann. § 1701.503.
Faced with the prima facie rejection of the claim by the Associations of both states, the Kisers made a demand for arbitration under their State Farm policies. This was followed by the filing of a declaratory judgment complaint by State Farm and an order staying the arbitration pending disposition of the litigation in the Law Division.
The matter was heard by the trial judge on cross-motions for summary judgment. After an appropriate hearing he granted judgment for the Kisers and dissolved the stay of arbitration. Upon filing of the notice of appeal by State Farm the trial judge again ordered a stay of arbitration pending disposition of the appeal. The rationale underlying the decision below is that the policy language clearly mandates coverage under the undisputed facts herein.
The key clause of the policy relates to the following definition of an "uninsured highway vehicle":
"uninsured highway vehicle" means:
(a) a highway vehicle with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured highway vehicle is principally garaged, no bodily injury and property damage liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such vehicle, or with respect to which there is a bodily injury and property damage liability bond or ...