On certification to the Superior Court, Appellate Division.
For affirmance -- Chief Justice Wilentz and Justices Clifford, Handler, Pollock, O'Hern and Garibaldi. For reversal -- None.
Rather than obtain from an insurance company a liability insurance policy covering its motor vehicles, defendant City of Newark established an insurance fund under N.J.S.A. 40A:10-6.*fn1 The Appellate Division determined that under that statutory funding arrangement, the City is obligated to furnish uninsured motorist benefits to plaintiff, a Newark police officer. We granted certification, 96 N.J. 262 (1984), to review that determination, and now affirm.
Plaintiff, Michael Christy, was injured when a "hit-and-run" vehicle struck a police car that he was operating in the course of his duties. Plaintiff was an insured within the meaning of the uninsured motorist (UM) endorsement of his own automobile insurance policy issued by defendant State Farm Insurance Company (State Farm). He was also entitled to, and eventually obtained, benefits pursuant to the Workers' Compensation Act, N.J.S.A. 34:15-1 to -127. In addition, plaintiff sought UM protection from the City under its insurance fund, created by
the municipality under the authority of N.J.S.A. 40A:10-6. That enactment reads in full as follows:
The governing body of any local unit may establish an insurance fund for the following purposes:
a. To insure against any loss or damage however caused to any property, motor vehicles, equipment or apparatus owned by it, or owned by or under the control of any of its departments, boards, agencies or commissions;
b. To insure against liability resulting from the use or operation of motor vehicles, equipment or apparatus owned by or controlled by it, or owned by or under the control of any of its departments, boards, agencies or commissions;
c. To insure against liability for its negligence and that of its officers, employees and servants, whether or not compensated or part-time, who are authorized to perform any act or services, but not including an independent contractor within the limitations of the "New Jersey Tort Claims Act" (N.J.S.A. 59:1-1 et seq.).
The governing body may appropriate the moneys necessary for the purposes of this section.
Our focus here is on subsection b., the provision for "insur[ance] against liability resulting from the use or operation of motor vehicles, equipment or apparatus" owned by the municipality.
Because the City rejected the claim for UM coverage, plaintiff made demand for arbitration. In a letter of November 17, 1981, the City declared its refusal to participate in arbitration proceedings because it was "not a party to any arbitration agreements." It further took the position that plaintiff's claim was "clearly barred by the provisions of the New Jersey Tort Claims Act," N.J.S.A. 59:1-1 to :12-3.
Despite the City's declared position, plaintiff's claims for UM benefits went to arbitration against both State Farm, plaintiff's own carrier, and Newark. As it had indicated it would, the City refused to participate in the arbitration proceedings, but it did nothing to protect its position in respect of the issue of arbitrability. See In re Grover, 80 N.J. 221, 230 (1979) (insurer could have instituted action for judicial decision on arbitrability issue and requested that arbitration be stayed, or could have objected to propriety of arbitration as to it and participated in arbitration proceedings on issues of plaintiff's damages and liability of "hit-and-run" driver). The arbitrator found liability on the part
of the hit-and-run driver and fixed plaintiff's damages at $26,500. He specifically refused to decide which source of UM benefits, the City or State Farm, was primary and which was secondary, inasmuch as the question was "not within the jurisdiction of the Arbitrator to decide."
Plaintiff then started this suit in the Law Division, seeking to apportion between State Farm and the City the gross award resulting from arbitration, and to compel Newark to pay its share of UM benefits. As to the City, plaintiff's complaint alleged, without reference to any statutory provision or other source, that the City was "[a]t the time of the accident * * * a self-insurer of its vehicles," and was therefore "required to provide all benefits set forth in law including Uninsured Motorists Protection Benefits * * *." The City's answer set up separate defenses under the New Jersey Tort Claims Act, the Workers' Compensation Act, the Motor Vehicle Security-Responsibility Law (N.J.S.A. 39:6-23 to -91), and, significantly for our purposes, N.J.S.A. 40A:10-6.
The City and plaintiff both moved for summary judgment. The trial court denied plaintiff's motion against Newark and granted the City's motion; the court entered judgment in favor of plaintiff against State Farm for $11,500, "subject to workers' compensation lien, if any." The court concluded that the City was under no obligation to provide UM coverage for its employees. It thus limited plaintiff's remedy to his workers' compensation claim and his UM coverage with State Farm.
On plaintiff's appeal to the Appellate Division he claimed that Newark was required to furnish UM protection under N.J.S.A. 39:6A-14, which requires "[e]very owner or registrant of an automobile registered or principally garaged in this State [to] maintain uninsured motorist coverage" as provided by N.J.S.A. 17:28-1.1. Plaintiff argued in addition that the City was "certainly a self-insured pursuant to N.J.S.A. 40A:10-6," the "insurance fund" ...