Victor Perez was the driver and Ismael Cuevas, Carlos Soto, Luis Soto and Juan Feliciano were passengers in a motor vehicle which was struck by an unknown hit and run motor vehicle on November 2, 1986. Victor Perez's vehicle was insured by the defendant, New Jersey Automobile Full Insurance Underwriting Association, under a policy issued through the defendant Allstate Insurance Company. The policy insuring Victor Perez's vehicle provided for uninsured motorist coverage with limits of $15,000 per person and $30,000 per accident for all the occupants.
One of the passengers, Ismael Cuevas, had uninsured motorist coverage with limits of $15,000/30,000 available to him by virtue of a different insurance policy, also issued by the defendant Allstate to Mr. Cuevas's uncle, Ignacio Feliciano. Subsequent to unsuccessful settlement negotiations and pursuant to the Allstate policies an arbitration hearing was held on July 27, 1988. Ismael Cuevas was awarded $12,000, Carlos Soto $10,500, Luis Soto $5,000, Juan Feliciano $3,000 and Victor Perez $10,000. After the arbitration awards were rendered Allstate tendered a total of $36,000, taking the position that $36,000 represented the total amount of their obligation under both policies pursuant to N.J.S.A. 17:28-1.1c. The plaintiffs rejected
the tender, contending that they, collectively, were entitled to a full award or $40,500. The matter is now before the court pursuant to two Orders to Show Cause filed on behalf of the plaintiffs and subsequent motions for summary judgment filed by all parties.
The issue before the court is the nature and extent of the uninsured motorist coverage provided to the plaintiffs under the two Allstate policies pursuant to N.J.S.A. 17:28-1.1c. N.J.S.A. 17:28-1.1a requires all motor vehicle liability policies issued in New Jersey to include bodily injury coverage with limits of $15,000/30,000 for injury to the insured by an uninsured motorist. See also N.J.S.A. 39:6A-14. N.J.S.A. 17:28-1.1c provides that:
Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, and (sic) [any] recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits. [emphasis added.]
Allstate, relying on the above cited provision, takes the position with regard to the $12,000 awarded Mr. Cuevas that $6,000, or half of the recovery is assessable against his uncle's policy, while the other half is chargeable to the Perez policy on a prorated basis thereby entitling him to 6/34.5 of $30,000 or $5,217.29. Because the recovery of the remaining plaintiffs and Mr. Cuevas's prorated share total more than the $30,000 limits available under the Perez policy, Allstate contends that judicial intervention should be sought if the plaintiffs cannot voluntarily allocate the proceeds.
The plaintiffs, seeking to recover the full extent of the arbitration award, contend that the four claimants (Carlos Soto, Luis Soto, Juan Feliciano and Victor Perez) covered by the Perez policy are entitled to their full awards as no single award is in excess of $15,000 and the four total $28,500 ($1,500 short of the $30,000 limits). They further contend that Ismael Cuevas
is entitled to $10,500 from the $15,000 available from his uncle's policy plus the $1,500 remaining in the Perez policy, thereby providing him with the full extent of the arbitration award.
N.J.S.A. 17:28-1.1c represents the codification of the so-called "anti-stacking" legislation, L. 1983, c. 362, § 2(c), which became effective on January 1, 1984 and nullified our Supreme Court's prior ruling in Motor Club of America Ins. Co. v. Phillips, 66 N.J. 277 (1974); see Christy v. City of Newark, 102 N.J. 598, 610 (1986). Phillips dealt specifically with the concept that permitted an insured claimant to "stack" multiple U.M. coverages, thereby providing recovery in excess of the coverage limits of any one uninsured motorist endorsement. N.J.S.A. 17:28-1.1c specifically prohibits the concept of stacking of limits of multiple coverages available to an insured for the purpose of increasing limits of coverage. It further clarifies the situation, where an insured has multiple U.M. coverages available with different limits, by restricting recovery to the highest coverage limits and requiring that such recovery be prorated between the applicable coverage as the limits of each coverage bear to the total of the limits.
The plain meaning of the statute is to prevent the increasing of coverage limits by "stacking" thereby restricting an insured's recovery to the limits of the policy with the highest U.M. limits, and providing for a ...