On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Approved for Publication March 20, 1995
The opinion of the court was delivered by Keefe, J.A.D. Before Judges Michels, Keefe and Humphreys.
The opinion of the court was delivered by: Keefe
The issue to be decided is whether an agreement by a named insured to submit all underinsured motorist (UIM) benefits disputes to binding arbitration precludes a minor, family member of the insured from seeking trial by jury as to such a dispute. The Law Division held that the minor was not bound by his father's agreement with the insurer, and denied the insurer's motion for summary judgment. The insurer appeals from that judgment which we now reverse for reasons stated herein. *fn1
The facts are not in dispute. Thomas W. Allgor, father of plaintiff Michael Allgor, purchased an automobile insurance policy from defendant Travelers Insurance Company (Travelers). The policy provided for, among other things, UIM coverage in the amount of $250,000 for each person and $500,000 for each accident.
On August 10, 1986, plaintiff, then a minor, was operating his father's vehicle when he was involved in a motor vehicle accident with Laura Overton. Ms. Overton's auto insurance policy provided the minimum liability limits of $15,000 per person per accident. Unfortunately, the injuries sustained by plaintiff were substantial. Ms. Overton's automobile insurer paid the limits of her liability policy in settlement of the claim.
Plaintiff had previously placed Travelers on notice of his UIM claim. Plaintiff was qualified to make such a claim because he was a "relative" of the named insured under the policy, and, thus, considered an "insured" for the purpose of making such a claim.
The matter eventually proceeded to arbitration and resulted in an award of $100,000 for plaintiff's non-economic loss. The arbitrators appropriately reduced the award by $15,000, the sum paid to plaintiff by Overton's insurer, and entered a net award of $85,000. Plaintiff rejected Travelers' tender of payment of the $85,000.
Thereafter, plaintiff instituted suit against Travelers and demanded a trial by jury "as to the value of his claim to the extent (sic) limit of the policy of insurance[.]" Travelers moved for summary judgment relying upon the provisions of the policy which provided that any disagreement as to the "amounts of damages" would be settled by arbitration. After providing the procedure by which three arbitrators would be appointed, the expense of arbitration, and its venue, the policy provided:
The written decision of any two arbitrators will be binding on both parties, subject to the terms of this insurance. Judgment on the award made by the arbitrators may be entered in any court having jurisdiction.
In a six page letter opinion, the Law Division Judge held that "an insured who is not a party to a contract of insurance does not waive the right to trial by jury." The crux of the trial Judge's reason for coming to that Conclusion is found in the following passage from his opinion.
The arbitration clause, as it applies to an insured who is not the named insured or owner of the insurance policy, is violative of public policy. There can be no public policy consideration greater than that which is expressed in the Constitution of New Jersey, N.J. Const. 1947 Art. 1, P 9. The right to trial by jury is inviolable. The right is a personal right which can only be waived by the individual who asserts the right. The right "in law" cannot be bargained away without the consent or the knowledge of the individual who asserts the right.
The Judge's opinion appears to apply to all insureds regardless of age, other than the name insured. On appeal, however, plaintiff focuses his argument on the ...