On appeal from the Superior Court of New Jersey, Law Division, Bergen County.
Approved for Publication February 12, 1997.
Before Judges Shebell, Baime and Braithwaite. The opinion of the court was delivered by Shebell, P.j.a.d.
The opinion of the court was delivered by: Shebell
The opinion of the court was delivered by
This appeal by defendant, Selective Insurance Company of America (Selective), involves issues pertaining to claims for underinsured motorists (UIM) coverage made by plaintiffs, three injured "family members," under two policies of insurance Selective issued. The accident in question occurred on December 4, 1993, in River Edge, when plaintiff, Rosemarie Rocchio, was operating a motor vehicle owned by her daughter, Marianne Rocchio. Three other members of Rosemarie's family, and apparently her household, were passengers in the vehicle: plaintiff, Rose Calabrese, her mother; plaintiff, Frances Pace, Rosemarie's aunt; and Rosemarie's sister, Lucy Paldino.
The Rocchio vehicle was struck by the vehicle of Albert R. Morris, which crossed into Rocchio's lane of travel and struck the vehicle head-on. Morris carried liability insurance with bodily injury coverage limits of $100,000 per person and $300,000 per accident. Lawsuits were instituted on behalf of the four injured occupants of the Rocchio vehicle, resulting in payment by Morris's insurance carrier of the entire $300,000 policy limits, with each claimant settling for $75,000. Before entering into the settlements, counsel for the injured parties notified Selective by letters of their intent to settle and Selective did not object. See Longworth v. Van Houten, 223 N.J. Super. 174, 538 A.2d 414 (App. Div. 1988).
The vehicle owned by Marianne Rocchio was covered by a policy of insurance issued by Selective, policy number F1222843, with a combined single limit (CSL) for uninsured/underinsured motorists coverage of $300,000. Selective had issued automobile policy, number F1222844, to Rosemarie Rocchio and her husband, Anthony J. Rocchio, with the same CSL coverage for uninsured/undersinsured motorists coverage of $300,000.
In January 1995, demands for arbitration were made by the Rocchios, Calabrese and Pace. Thereafter, actions were instituted by Verified Complaint and Order To Show Cause why arbitrators should not be appointed to convene UIM proceedings. In July 1995, the Law Division ordered Selective to participate in arbitration as to the UIM coverage of the two policies. Thereafter, Selective moved for reconsideration, which was denied. We denied Selective's motion for leave to appeal.
An arbitration proceeding was held on October 17, 1995, resulting in a decision that the damages suffered by Rosemarie and Anthony Rocchio amounted to $345,000, that Calabrese suffered $250,000 in damages and that Pace had $180,000 in damages. On December 14, 1995, Selective put the parties on notice that it demanded a de novo trial as to damages, based upon an alleged endorsement to the policy. The insureds deny receiving the endorsement or having any knowledge of it.
Selective moved to mold the arbitrator's award, maintaining that no sums were payable under the UIM coverage on the grounds that Morris had $300,000 in coverage for the accident, the same as the Selective limits, and therefore, he was not underinsured within the policy and statutory definitions. Plaintiffs cross-moved for an order confirming the arbitrator's award. On February 27, 1996, the Law Division entered judgment in the amount of $225,000 for the Rocchios, $175,000 in favor of Calabrese, and $125,000 in favor of Pace. Selective appeals.
The threshold question in any UIM case is whether the tortfeasor's vehicle is, in fact, underinsured. Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law, § 27:4-1 (Gann, 1997). Therefore, we first consider whether the tortfeasor was underinsured at the time of the accident within the meaning of N.J.S.A. 17:28-1.1e and the two Selective policies of insurance. We conclude that the Morris vehicle was underinsured thereby making each plaintiff eligible for UIM benefits from Selective.
N.J.S.A. 17:28-1.1e(1) defines underinsured motorist coverage as follows:
e. For the purposes of this section, (1) "underinsured motorist coverage" means insurance for damages because of bodily injury and property damage resulting from an accident arising out of the ownership, maintenance or use of an underinsured motor vehicle. A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery. A motor vehicle shall not be considered an underinsured motor vehicle under this section unless the limits of all bodily injury liability insurance or bonds applicable at the time of the accident have been exhausted by payment of settlements or judgments. The limits of underinsured motorist coverage available to an injured person shall be reduced by the amount he has recovered under all bodily injury liability insurance or bonds[.]
"In effect, the statute states that the determination whether a vehicle is underinsured requires ascertaining whether the liability limits of the person 'against whom recovery is sought' are 'less than' the amount of UIM coverage 'held by the person seeking that recovery.'" Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 403, 658 A.2d 1246 (1995). Thus, the determination of whether the Morris vehicle is underinsured requires a comparison of the liability limits of his insurance with the UIM limits of the "policy held by the person seeking that recovery." N.J.S.A. 17:28-1.1e(1).
In Tyler v. New Jersey Auto. Full Ins. Underwriting Ass'n, 228 N.J. Super. 463, 466 550 A.2d 168(App. Div. 1988), we ...