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Garden State Fire & Casualty Co. v. Commercial Union Insurance Co.

Decided: October 23, 1980.

GARDEN STATE FIRE & CASUALTY COMPANY, PLAINTIFF-APPELLANT,
v.
COMMERCIAL UNION INSURANCE COMPANY, FEDERAL INSURANCE COMPANY, COSTA ICE CREAM COMPANY AND ANDREW COSTA, DEFENDANTS-RESPONDENTS



On appeal from Superior Court, Law Division, Essex County.

Bischoff, Milmed and Francis.

Per Curiam

The sole issue in this litigation is whether Garden State Fire & Casualty Company (Garden State) who paid Personal Injury Protection (PIP) benefits with respect to a certain claim is entitled to recover any portion of those benefits from a carrier who affords excess coverage to an automobile driver in an accident.

On November 11, 1974 John Matushek was struck and seriously injured by a motor vehicle owned by Costa Ice Cream Company (Costa) and operated by Andrew G. Costa with its permission. At the time of the accident Matushek was insured by Garden State for automobile liability insurance upon his own vehicle which was not involved in the accident. In accordance with N.J.S.A. 39:6A-1 et seq., the Automobile Reparation Reform Act, Garden State paid the PIP bills of Matushek in an amount exceeding $130,000 and pursuant to its right of subrogation sought arbitration from Commercial Union Insurance Company (Commercial), the primary automobile insurer of Costa, and Federal Insurance Company (Federal), the umbrella excess liability carrier. Commercial's policy provided basic liability coverage to the extent of $250,000.

Garden State pursued its claim for PIP reimbursement by way of a complaint filed against Commercial, Federal,*fn1 Costa and A.G. Costa, individually. The latter was not served and did not appear in the action. The complaint alleged that Matushek had been injured through the proximate negligence of the driver of the Costa vehicle. In addition to seeking a reimbursement

against all defendants, the complaint also sought a judgment requiring in the alternative that the defendant insurance companies submit themselves to binding arbitration.

In answering, defendants all denied that the accident was due to the negligent operation of the Costa vehicle.

In the interim, Commercial had settled Matushek's action against it for $225,000, and offered to pay Garden State the unpaid balance of its policy in the sum of $25,000. Federal denied any liability coverage. At the trial Garden State accepted the sum of $25,000 from Commercial pursuant to the holding in Pennsylvania Mfrs. Ass'n Ins. Co. v. Government Emp. Ins. Co. , 136 N.J. Super. 491 (App.Div.1975), aff'd 72 N.J. 348 (1977), which limited the liability of Commercial to the unpaid balance upon its liability policy. Garden State then voluntarily dismissed the complaint against Commercial and Costa, leaving Federal as the sole defendant in the action. The case was then submitted on a stipulation of facts and oral argument. The trial judge, in a letter opinion, entered judgment in favor of defendant Federal and the within appeal followed.

The single question to be decided here is whether Federal by its excess policy is liable to Garden State in subrogation for PIP payments made by Garden State.

We are of the view that the trial court was correct in denying the claim of Garden State.

In 1972 New Jersey adopted the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 et seq. , commonly known as the "No Fault" Law. An essential feature of this act is that it requires the insurers of private automobiles to provide Personal Injury Protection (PIP) coverage for their drivers. PIP is first-party coverage designed to compensate injured drivers for their medical expenses, lost wages and certain other expenses, without regard to ...


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