On appeal from the Superior Court of New Jersey, Law Division, Burlington County.
Dreier and Havey. The opinion of the court was delivered by Havey, J.A.D.
[230 NJSuper Page 56] This appeal raises a choice-of-law question in deciding whether plaintiff, Colonial Penn Insurance Company (Colonial Penn), has a right of subrogation to recover against a tortfeasor underinsured motorist (UIM) payments made to Colonial Penn's insured. Specifically, the issue is whether Pennsylvania or New Jersey law applies where the UIM policy was written in
Pennsylvania and the accident, involving Pennsylvania residents, occurred in that state. The motion judge concluded that, since the tortfeasor, defendant Richard L. Gibson, moved to New Jersey after the accident and Colonial Penn's subrogation action against Gibson was instituted in this state, New Jersey law applies. The motion judge found that New Jersey's statutory and decisional law provides for no subrogation rights to recover UIM payments, and accordingly dismissed Colonial Penn's subrogation action against Gibson. We conclude that Pennsylvania law applies and that under that state's common law and the terms of the insurance contract, Colonial Penn has a subrogation right to recover UIM payments against a tortfeasor. We therefore reverse and remand for further proceedings.
Colonial Penn issued an automobile liability policy in Pennsylvania to its insured, June M. Cullen, which included UIM coverage. Cullen was involved in an accident in Morrisville, Pennsylvania, with defendant Richard L. Gibson. Both Cullen and Gibson were Pennsylvania residents, and both vehicles involved in the accident were registered in Pennsylvania. At the time of the accident, Gibson was insured by the Travelers Indemnity Company, having maximum liability coverage in the amount of $15,000. Under the terms of its UIM coverage, Colonial Penn paid to Cullen the sum of $32,500 for the injuries she sustained in the accident. In turn, Cullen subrogated her claim against Gibson under the terms of the subrogation clause of Colonial Penn's policy. Subsequently, Travelers tendered to Colonial Penn the amount of $15,000, representing the policy limits under its policy issued to Gibson. Colonial Penn then instituted the present action as Cullen's subrogee against Gibson to recover $17,500, representing the difference between the sum Colonial Penn paid to Cullen and the amount it received from Travelers.
In granting Gibson's motion for summary judgment, the motion judge concluded that New Jersey law applied because of our State's overriding interest in enforcing our no-fault laws.
Citing the Law Division decision in Longworth v. Ohio Casualty Gp. of Ins. Co., 213 N.J. Super. 70 (Law Div.1986), aff'd sub nom. Longworth v. Van Houten, 223 N.J. Super. 174 (App.Div.1988), he also concluded that there was no right of subrogation in New Jersey to recover UIM payments.
This case involves the subrogation rights of an insurer under the terms of an insurance contract issued in Pennsylvania in accordance with that State's underinsured statute. See 75 Pa.C.S.A. § 1731-1736. Our Supreme Court has adopted the rule, in resolving conflict of law issues involving liability insurance contract controversies, that:
State Farm, supra, recognized that such a rule will:
See also Buzzone v. Hartford Accident and Indemnity Co., 23 N.J. 447, 458 (1957).
In adopting the rule, State Farm incorporated the "most significant relationship" standard of the Restatement, Conflict of Laws 2d, § 188 at 575 (1971), which identifies the seven considerations pertinent to a conflict-of-law analysis: (1) the needs of the interstate and international systems; (2) the relevant policies of the forum; (3) the relevant policies of other affected states and the relevant interests of those states in the determination of the particular issue; (4) the protection of justified expectations; (5) the basic policies underlying the particular field of law; (6) certainty, predictability, and uniformity ...