On certification to the Superior Court, Appellate Division, whose opinion is reported at 280 N.J. Super. 525 (1995).
Chief Justice Wilentz and Justices Handler, Pollock, O'hern, Garibaldi, Stein and Coleman join in this opinion.
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Concetta Marotta v. New Jersey Automobile Full Insurance Underwriting Association (A-135-95)
(NOTE: This Court wrote no full opinion in this case. Rather, the Court's affirmance of the judgment of the Appellate Division is based substantially on the reasons expressed in Judge Kleiner's written opinion below.)
Argued April 30, 1996 -- Decided June 11, 1996
On October 5, 1987, Anthony Marotta and Concetta Marotta were residents of Philadelphia. Anthony also owned a condominium in Wildwood, which the Marottas used regularly during the summer and occasionally on non-summer weekends. On October 5, Anthony, representing himself as a New Jersey resident, applied for a $500,000 single limit automobile liability insurance policy issued by New Jersey Automobile Full Insurance Underwriting Association (NJAFIUA) by its servicing carrier, Liberty Mutual Insurance Company. That policy was renewed on October 5, 1988.
On October 10, 1988, Anthony, while traveling to Philadelphia, struck a motor vehicle operated by Jack Berk, in which Eileen Berk was a passenger. The Berk vehicle was insured by International Insurance Company (International). The Berk vehicle also was insured under a business policy by American Insurance Company (American). Both of the Berk's insurance policies provided uninsured/underinsured (UM/UIM) motorist coverage with policy coverage limits less than the liability insurance coverage limits insuring the Marotta vehicle.
In June 1989, the Berks filed a complaint against Anthony Marotta in the Court of Common Pleas in Philadelphia, seeking compensatory damages. The NJAFIUA, through Liberty Mutual, answered that lawsuit, which is still pending.
Thereafter, based on its investigation, NJAFIUA concluded that Marotta had misrepresented facts that it contended rendered Marotta ineligible for a policy of liability insurance issued by NJAFIUA. NJAFIUA contended that Marotta was not a "qualified applicant" because his motor vehicle was not registered or principally garaged in New Jersey, and that his domicile was in Pennsylvania. Therefore, NJAFIUA filed a declaratory judgment action seeking to avoid all claims against the policy of liability insurance it had issued Marotta, or alternatively, to limit the extent of insurance coverage to the statutory mandatory compulsory insurance of $15,000 per person, $30,000 per accident and $5,000 in property damages pursuant to N.J.S.A. 39:6A-3 of the New Jersey Automobile Reparation Reform Act and N.J.S.A. 39:6B-1 of the Compulsory Motor Vehicle Insurance Act.
At the Conclusion of discovery, NJAFIUA filed a motion for summary judgment. International and American filed separate cross-motions for summary judgment, seeking an order declaring that NJAFIUA's entire policy limit of $500,000 must be provided to indemnify Marotta against the Berks' pending claims. The motion Judge denied NJAFIUA's motion but granted summary judgment on both International's and American's cross-motions.
NJAFIUA appealed. The Appellate Division affirmed that portion of the summary judgment order imposing liability on NJAFIUA. The court, however, reversed the decision of the motion Judge, concluding that NJAFIUA must indemnify Marotta only to the extent of its compulsatory insurance required by N.J.S.A. 39:6A-3 and N.J.S.A. 39:6B-1. Both of those statutory provisions contain identical language: "every owner or registered owner of an automobile registered or principally garaged in this State shall maintain automobile coverage." The mandated coverage is $15,000 per person, $30,000 per accident, and $5,000 for property damage.
The Appellate Division noted that under N.J.S.A. 39:6-48, an automobile insurer cannot, on the ground of fraud or misrepresentation relating to the inception of the policy, retroactively avoid coverage under a compulsory or financial insurance law so as to escape liability to a third party. Section 48 also provides that a liability carrier may plead against a judgment creditor of its insured any defense that the insurance carrier had against its insured when the judgment creditor seeks to recover any sum in excess of mandatory insurance coverage. However, no defense is available to the insurance carrier for the mandated insurance coverage. Based on that statutory language, the Appellate Division determined that NJAFIUA owes an obligation to provide indemnity to Marotta against the Berks' claims equivalent to New Jersey compulsory insurance law, which established the NJAFIUA. The court reasoned that a driver like Berk has the right to expect that all other drivers will be insured to the extent required by compulsory insurance. If additional protection is required, the vehicle owner may purchase UM/UIM coverage through his or her own insurance company. Because the Berks acquired additional protection, the Appellate Division found that the Berks may look to their own carriers for the payment of any claims that exceed the non-cancellable coverage on the Marotta vehicle.
The matter was remanded to the trial court to determine the extent of insurance coverage. The Appellate Division noted that if it is ultimately determined on remand that NJAFIUA was entitled to retroactively void its policy as issued to Marotta, then insurance coverage will be $15,000 per person, $30,000 per occurrence and $5,000 property damage. However, if the NJAFIUA is unsuccessful in ...