On appeal from Superior Court of New Jersey, Law Division, Middlesex County.
Before Judges Michels, Skillman and Kestin.
The opinion of the court was delivered by SKILLMAN, J.A.D.
This appeal requires us to construe provisions in two automobile liability insurance policies which exclude from coverage any accident involving an automobile other than the "covered auto" which is "furnished or available for [the insured's] regular use."
Peter G. Malouf (Malouf) owned four automobiles for his personal use and that of his family. Two of these automobiles were insured under a policy issued by the Hanover Insurance Company (Hanover), as a servicing carrier for the New Jersey Automobile Full Insurance Underwriting Association (JUA), and the other two were insured under a policy issued by State Farm Mutual Automobile Insurance Company (State Farm), also as a servicing carrier for the JUA.
Malouf was the President and sole stockholder of Malouf's Driving School, Inc. (Driving School), a corporation engaged in the business of providing driver's education The Driving School owned four or five automobiles, insured by the Aetna Casualty and Surety Company (Aetna), which were used in this business. These automobiles were operated by driving instructors employed by the Driving School, two or three of whom worked full-time and the others part-time. The full-time instructors had Driving School automobiles regularly assigned to them, which they parked at their homes when they were not being used to give driving lessons. The other Driving School automobiles used by the part-time instructors were parked on the street in front of Malouf's home when they were not in use. Malouf had a set of keys to all of the Driving School's automobiles and, as the sole principal of the corporation, controlled their use.
On December 24, 1988, Malouf used one of the Driving School's automobiles to deliver holiday fruit baskets to his employees and to visit his sister. While Malouf was driving home, he was involved in an accident with an automobile operated by Randy Loniewski, which resulted in serious injuries to Randy, his wife Karen, and their children Jason and Tara.
Randy and Karen Loniewski filed separate personal injury actions on behalf of themselves and their children against Malouf and the Driving School. When questions arose regarding insurance coverage for the accident, Malouf and the Driving School filed a declaratory judgment action against Aetna, the JUA, by and through its servicing carriers, Hanover and State Farm, and the Allstate Insurance Company (Allstate), which provided one million dollars of excess coverage to the Driving School under an umbrella policy. Subsequently, Karen Loniewski, on behalf of herself and as guardian ad litem for Jason and Tara, was permitted to intervene in this action. Randy Loniewski was subsequently made a party through a third-party complaint filed by Allstate.
The coverage action was brought before the trial court on a motion by Malouf and the Driving School for summary judgment. The trial court concluded that because the Driving School's automobiles were not available to Malouf during the four-hour period each weekday afternoon when they were used for driving lessons and because Malouf did not actually make any significant personal use of those automobiles, the vehicles did not fall within the exclusion in the JUA policies for non-covered vehicles "furnished or available for [his] regular use."*fn1
The Loniewskis subsequently settled their claims against Malouf and the Driving School. Under the terms of this settlement, Aetna, Allstate, Hanover and State Farm all agreed to pay the full amount of their policies, subject to the right of Hanover and State Farm, as the JUA's servicing carriers, to appeal the judgment in the coverage action. The Loniewskis agreed that in the event the judgment against Hanover and State Farm was reversed, they would not seek to recover any further sums from Malouf personally.
State Farm and Hanover filed separate notices of appeal from the judgment in the coverage action, which we now consolidate. We conclude that the JUA policies did not provide coverage to Malouf for his operation of the Driving School's automobiles. Therefore, we reverse.
The exclusionary clauses in both the Hanover and State Farm policies are identically worded:
We do not provide Liability Coverage for the ownership, maintenance or use of: . . . Any vehicle, other than "your covered auto," which is . . . furnished or available for your regular use.
Although there is no New Jersey case law interpreting this precise exclusionary language, there is a line of cases interpreting exclusions for non-covered vehicles "furnished for the regular use" of the insured. In American Casualty Co. v. Lattanzio, 78 N.J. Super. 404, 410-12, 188 A.2d 637 (Ch. ...