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Schaser v. State Farm Insurance Co.

Decided: February 19, 1992.

ROBIN L. SCHASER, PLAINTIFF,
v.
STATE FARM INSURANCE COMPANY, THE HARLEYSVILLE INSURANCE COMPANIES, AND NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANTS. NATIONAL UNION FIRE INSURANCE COMPANY, INTERVENING DEFENDANT



Kleiner, J.s.c.

Kleiner

KLEINER, J.S.C.

In a suit for a declaratory judgment, plaintiff, Robin L. Schaser, has filed a motion for summary judgment requiring this court to construe N.J.S.A. 17:28-1.1(c) as it pertains to the computation and award of multiple uninsured motorist coverages. The court must also analyze the effect upon the ultimate award of N.J.S.A. 34:15-40 as it pertains to liens of workers' compensation insurance carriers against uninsured motorist coverage benefits payable to an injured employee. Although the issues raised do not appear to be factual oddities, nevertheless, the precise facts have not as yet been addressed in any reported New Jersey judicial decision.

On November 7, 1986, plaintiff was a passenger in an insured motor vehicle owned and operated by Thomas L. Lucas which was insured by defendant, Harleysville Insurance Company, (hereafter Harleysville). The Harleysville policy provided single limit uninsured motorist coverage of $100,000. Lucas' vehicle was involved in a collision with a vehicle owned and operated by David L. Tucker which was uninsured.

Plaintiff and her host driver, Lucas, were co-employees of J.C. Erlich, and were engaged in the course of their employment when the accident occurred. Erlich was insured for workers' compensation by defendant, National Union Fire Insurance Company, (hereafter National Union.)*fn1

Plaintiff was also the named insured on her personal automobile liability insurance policy issued by defendant, State Farm Insurance Company (hereafter State Farm) which provided $15,000.00 uninsured motorist coverage.

Additionally, plaintiff was a resident of her father's household. Plaintiff's father, John Schaser, was the named insured on an automobile liability insurance policy issued by defendant, New Jersey Manufacturers Insurance Company, (hereafter N.J.M.), which provided a $35,000.00 single limit uninsured motorist endorsement. As a resident relative, plaintiff is entitled to uninsured motorist insurance coverage provided by N.J.M.

Plaintiff and her host driver, Lucas, were both severely injured in this collision. Plaintiff, who was barred from asserting any claim against Lucas, N.J.S.A. 34:15-8, did assert the following claims: (a) workers' compensation claim against her employer, insured by National Union; (b) negligence claim against the uninsured motorist, Tucker;*fn2 (c) claims for uninsured motorist coverage against Harleysville (Lucas' insurer), State Farm (plaintiff's personal automobile insurer) and N.J.M. (plaintiff's father's insurer).

Lucas, also asserted a claim for uninsured motorist coverage under his own Harleysville policy. That policy required all automobile uninsured motorist claims to be arbitrated.

Recognizing that the Harleysville policy afforded single limit coverage of $100,000. and that both plaintiff and Lucas were severely injured, their respective counsel agreed to submit the claims to arbitration and agreed to divide the single limit insurance coverage pro rata, based upon the amount of each award in proportion to the total of both awards.

The arbitrators awarded plaintiff $400,000. and awarded Lucas $910,000. Thus, by agreement, plaintiff was entitled to receive 400/1310ths or .30534 percent of the $100,000. coverage

or $30,534. and Lucas was entitled to receive 910/1310ths or $69,466.

N.J.S.A. 17:28-1.1(c) provides:

". . . c. 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 or coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, 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 . . ."

All parties contend correctly that an insured cannot collect a sum greater than, "the higher of the applicable limits of the respective coverages" or, in this case, $100,000. However, the parties cannot agree as to the respective contribution of each insurance carrier. Plaintiff contends she is entitled, pursuant to N.J.S.A. 17:28-1.1(c) to $30,534. from Harleysville, $15,000. from State Farm and $35,000. from N.J.M. or uninsured benefits totalling $80,534. This contention which is disputed necessitated this declaratory judgment proceeding.

Defendant, National Union, has filed a separate cross-motion for summary judgment in which it argues that pursuant to N.J.S.A. 34:15-40 et seq. any sum awarded plaintiff for uninsured motorist coverage is subject to its lien, less deductions up to 33 1/2 percent of the award, representing attorney's fees, and up to $200.00 representing reimbursable litigation expenses of its employee (Schaser) in pursuing a successful third party claim against the tortfeasor Tucker.

I. UNINSURED MOTORIST COVERAGE

Plaintiff contends she should recover $80,534. computed as follows: $30,534. payable by Harleysville ($100,000. single limit policy divisible between plaintiff and Lucas pursuant to arbitration), $15,000. payable by State Farm and $35,000. payable by N.J.M.

State Farm, however, stresses that the language of N.J.S.A. ...


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