On appeal form the Superior Court of New Jersey, Law Division, Union County.
Approved for Publication by the Court April 3, 1997.
Before Judges Michels, Muir, Jr., and Coburn. The opinion of the court was delivered by Muir, Jr., J.A.D.
The opinion of the court was delivered by: Muir
The opinion of the court was delivered by
On this appeal, we are called upon to resolve the effect Aubrey v. Harleysville Ins. Co., 140 N.J. 397, 658 A.2d 1246 (1995), has on a preexisting agreement between an injured non-owner driver of an automobile and a UIM insurer for the owner where the owner's policy provides greater UIM liability coverage than the driver's policy. Prior to the decision in Aubrey and in reliance on Landi v. Gray, 228 N.J. Super. 619, 550 A.2d 768 (App. Div. 1988), which Aubrey overruled, New Jersey Manufacturers (NJM), the UIM insurer for the owner of the vehicle in which the non-owner driver, Daniel O'Connell, sustained injuries, agreed to arbitrate O'Connell's UIM claims for damages arising from injuries he sustained in a two-car accident with an alleged third-party tortfeasor.
Before arbitration commenced, but after the parties satisfied the other terms of their agreement, NJM, relying on Aubrey, filed this declaratory judgment. In its complaint, it alternatively contended the agreement either should be rescinded on mistake of law grounds or should be modified to limit O'Connell's UIM damage recovery claim to the lower liability limits of his automobile insurance policy with Parkway Insurance Company.
On stipulated facts, the trial court rejected the mistake of law-rescission contention but modified the agreement limiting the arbitration to the liability limits of O'Connell's policy. O'Connell appeals from the ensuing judgment.
We conclude the trial court properly rejected the mistake of law-rescission contention, an issue not challenged on appeal. However, we further conclude that, because the agreement was neither unconscionable nor against public policy, the contract cannot be modified by Aubrey. We hold that, unless a contract provides otherwise, the laws in existence at the time and place of making of the contract control, and subsequent decisional law changes are not part of the contract. Accordingly, we conclude the pre-Aubrey agreement between NJM and O'Connell is valid and enforceable according to its terms. We affirm the trial court's order to the extent it sustains the enforcement of the agreement but modify it to the extent it directs the pending arbitration be controlled by Aubrey.
The facts are stipulated. On January 13, 1994, O'Connell was seriously injured in a two-car automobile accident with Ann Harpootlian, the driver of the second car. The accident occurred while O'Connell was road testing a 1987 GMC truck for his employer, Jim Curley Pontiac-GMC Truck. State Leasing Corporation owned the truck and had leased it to Hovson's Incorporated.
At the time of the accident, O'Connell carried automobile insurance for his personal vehicle through Parkway Insurance Company. His policy provided $300,000 in UIM coverage. Curley Pontiac had insurance, but it provided no UIM coverage to its employees. NJM insured the GMC with Hovson's a named insured. The NJM policy provided $1 million UIM coverage. Hartford Insurance Company insured the alleged tortfeasor, Harpootlian, under a policy with $250,000 liability limits.
On April 27, 1995, Hartford offered O'Connell the full amount of Harpootlian's coverage in return for a release of his claims against Harpootlian. O'Connell's counsel then advised NJM in writing of the offer to settle and O'Connell's intention to accept the offer. See Longworth v. Van Houten, 223 N.J. Super. 174, 538 A.2d 414 (App. Div. 1988). In pertinent part, the letter provided:
I know that you are aware that your options are to either permit Mr. O'Connell to accept the third party offer [of Hartford], in which case any right of subrogation has will be extinguished or in the alternative, may pay the $250,000.00 to Mr. O'Connell in return for ...