On appeal from the Superior Court of New Jersey, Law Division, Atlantic County.
Michels, Long and Muir, Jr. The opinion of the court was delivered by Michels, P.J.A.D.
Plaintiff Allstate Insurance Company (Allstate) appeals from a judgment of the Law Division that declared that Allstate's Automobile Liability Insurance Policy provided coverage to defendant William Shannon Brackin (Brackin) in connection with all claims arising out of an automobile accident that occurred on January 21, 1986, in Winslow Township, New Jersey.
Allstate instituted this declaratory judgment action to determine the extent of coverage afforded to defendant Armando E. Fraire, Sr. (Dr. Fraire), the person named as the insured under the policy. The Allstate policy was issued to Dr. Fraire in Pennsylvania in 1981 and provided coverage for, among other cars, Dr. Fraire's 1981 BMW. Dr. Fraire subsequently gave the car to his son, defendant Armando Fraire, Jr. (Armando), cautioning him never to lend the car to anyone. Armando had free use of the car, but title to the car remained in his father's name. Moreover, Armando had no authority to sell the car. Dr. Fraire testified that, "I would say that it [the BMW] was for his [Armando's] personal use, but it was my car, technically it was my car, not his car." In late 1983, the Fraires moved from Pennsylvania to The Woodlands, Texas. They registered the car in Texas and obtained Texas license plates. Allstate, however, continued to treat the policy as a Pennsylvania policy.
The extent of coverage afforded under the Allstate policy is at issue because of a series of events that began in January 1986 with Armando taking a trip to Mexico in the BMW with three people he had recently met, including Brackin. Armando had not informed his parents of his plans to take such a trip and left unannounced with the three passengers. The Mexican border is approximately eight hours from the Fraires' home in The Woodlands. Armando testified that he intended to drive to Mexico, but that Brackin would drive if he became tired. In Mexico, while Brackin was driving, the car was stopped by the police and all occupants of the car were taken to a police station
for interrogation. Armando became unruly and was detained by the police, who released Armando's three companions. The three took the BMW, apparently on the strength of Armando's statement previous to the stop by police that if he were detained in Mexico they should take the car and he would "catchup" with them later, without being specific as to where or when they would meet.
Defendant Barbara Nuneville, the mother of defendant Steven Nuneville (Nuneville), one of the injured parties, testified that both Brackin and Phillip Alexiou (Alexiou), the boy who died in the accident, told her when they arrived in New Jersey that Armando had told his companions that they could take the car to New Jersey, as long as they returned the car by the end of January. Armando, however, testified that the car was taken when he stopped to use the bathroom at a gas station in Mexico, leaving the keys in the car. When Armando exited the bathroom, the car and his three companions were gone.
Armando, finding himself alone in Mexico without a car, hitchhiked a ride to the border of Brownsville, Texas, and walked through customs. He then walked to his uncle's home in Brownsville and, shortly after midnight on Saturday, January 18, telephoned his parents. Sometime in the early hours of the morning, Dr. Fraire, his wife and her brother left The Woodlands to travel to Brownsville to retrieve Armando. While driving to Brownsville, the Fraires passed a BMW headed in the opposite direction that Dr. Fraire immediately recognized as his BMW. He turned his car around and pursued the BMW back toward The Woodlands.
Dr. Fraire eventually caught the BMW, recognized the license plate and pulled alongside it. Dr. Fraire ordered the occupants of the BMW to stop, but they refused to do so and told the doctor that they had purchased the car from Armando. Later, at a traffic light, the occupants of the BMW told the Fraires that the BMW would be returned to them at The Woodlands. At this point, Dr. Fraire gave up the chase.
The Fraires reported the BMW as stolen at the police station in Refugio, Texas, where they had abandoned their pursuit of the car. From there, they proceeded to Brownsville, where they picked up their son and again reported that the BMW was stolen. Dr. Fraire was advised by the Brownsville police to report the stolen car in his hometown, preferably that same day. Dr. Fraire and his family returned to The Woodlands, where his wife reported to the police that the BMW had been stolen. Despite the numerous contacts with various police departments in Texas, the BMW never was listed as stolen in the NCIC stolen car computer system.
In the meanwhile, Brackin, Alexiou and Norman Grays (Grays) headed north. The three companions possessed no money and, therefore, stole gas and food as they traveled. When they arrived in Indiana, Grays left the group. Brackin and Alexiou continued on to New Jersey, where Alexiou had relatives and friends. On the morning of the accident, January 21, 1986, Armando received a call from Alexiou. According to Armando and his mother, whose brother had listened to the conversation on another extension, Alexiou told Armando that the car would be returned if all charges were dropped. Armando agreed.
In the early evening of that same day, Brackin was driving the BMW in Winslow Township with Alexiou and two of Alexiou's friends from New Jersey, defendants Michael Scaffidi (Scaffidi) and Nuneville. The tires were badly worn and Brackin was speeding. (Although Brackin stated at the site of the accident that he had been driving within the speed limit, he subsequently contradicted that statement by claiming that he had not been driving at all.) The car swerved off the road, flipped several times, ejecting three of the four occupants, and came to rest on the side of the road. The police arrived and transported the injured boys to a hospital, where Alexiou died of chest injuries received when he was thrown from the car. At least two of the other occupants of the car, Brackin and Scaffidi, also were badly injured.
Scaffidi and Nuneville instituted suit against Brackin, Dr. Fraire and Armando to recover damages for the personal injuries they sustained in the accident. In addition, Alexiou's estate notified Dr. Fraire that a suit would be instituted against him seeking damages for the death of Alexiou. Allstate denied coverage to Brackin and instituted this declaratory judgment action, seeking a declaration as to the extent of the coverage afforded by its Automobile Liability Insurance Policy. The policy, in pertinent part, provides:
The coverages of this policy apply only when a specific premium is indicated for them on the declarations page. If more than one auto is insured, a coverage premium will be shown for each auto. Allstate, relying upon the declarations, subject to all terms of the policy and for payment of the premiums, makes the following agreements with you.
When And Where The Policy Applies
During the premium period, your policy applies to losses to the auto, accidents and occurrences within the United States of America, its territories or possessions or Canada, or between their ports.
Allstate will pay for all damages you are legally obligated to pay -- because of bodily injury or property damage meaning:
(1) Bodily injury, sickness, disease or death to any person; and
(2) Damage to or destruction of property.
Under these coverages, your policy protects you from claims for accidents arising out of the ownership, maintenance or use, loading ...