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New Jersey Manufacturers Insurance Co. v. MacVicar

February 09, 1998


Argued January 27, 1998 Before Judges Pressler, Wallace and Carchman. On appeal from the Superior Court of New Jersey, Law Division, Essex County.

The opinion of the court was delivered by: The opinion of the court was delivered by Pressler, P.j.a.d.

[9]    The question before us is whether the law of New Jersey or Pennsylvania governs the determination of defendant-insureds' entitlement to stacking of the underinsured motorist benefits afforded by the automobile policy issued to them by plaintiff New Jersey Manufacturers Insurance Company (NJM). We conclude that in the circumstances before us, Pennsylvania law, which provides for stacking, applies. Accordingly, we reverse the summary judgment entered in favor of NJM, we reverse the denial of defendant's cross motion for summary judgment, and we remand for an order submitting the matter to UIM arbitration in Pennsylvania.

The critical facts are undisputed. NJM issued a family automobile policy to Donald MacVicar on November 21, 1991. The policy covered three insureds, MacVicar, his wife Dorothy MacVicar, and his daughter Eileen MacVicar. Three vehicles were insured, a 1975 Ford, a 1970 Ford, and a 1991 Ford. The liability limits for each of the three vehicles was $500,000 for each accident, and the UIM coverage for each of the vehicles was also $500,000. The family was living in Linden, New Jersey, when the policy was issued and the three vehicles were then garaged there.

On June 30, 1992, while the policy was still in force, the MacVicar family moved to Carbon County, Pennsylvania, after having given NJM telephone notice of their proposed move. Although the record does not indicate whether there was any intervening communication between the MacVicars and NJM, it leaves no doubt that on July 27, 1992, after the move to Pennsylvania, there was a telephone conversation between Mrs. MacVicar and an NJM customer service representative, Elizabeth Landauer. We were advised by NJM's counsel at oral argument that because the MacVicars had moved to Pennsylvania, their options were either to obtain a Pennsylvania NJM policy or to obtain a Pennsylvania policy from another company. Presumably, they opted to keep their coverage with NJM, since the import of the telephone call was the making by Mrs. MacVicar of an application for a Pennsylvania policy. That application shows that the Pennsylvania coverage was not bound as of that date, apparently because the New Jersey policy had not yet been canceled and apparently too because, as Landauer explained in her certification in support of the motion, it was necessary for her to obtain a premium quotation which would take several days. In any event, it is clear that Landauer filled in the application form, which notes that it was Mrs. MacVicar who was making the oral telephone application. Landauer's certification in support of NJM's summary judgment motion, which inconsistently asserts that she took the information from Mr. MacVicar, also asserts that she fully explained all the available options to him and that he verbally waived stacking of UIM and uninsured motorist benefits. The coverage limits chosen during that telephone conversation were the same as those of the New Jersey policy, namely, $500,000 for liability and $500,000 for UIM.

On July 31, 1992, before Landauer was able to communicate a premium quotation to the MacVicars and before, therefore, she sent the application and other required forms to them for signature, the family was involved in a catastrophic accident while Mrs. MacVicar was driving one of the insured vehicles in which her husband and her daughter were passengers. The MacVicar vehicle was hit head-on in its own lane of traffic by a driver whose liability coverage was $35,000 and whose passenger also made a claim against him. In any event, as a result of the accident, Mr. MacVicar was killed and Mrs. MacVicar was so gravely injured as to have been left in a chronic vegetative state. The daughter was less seriously injured suffering a dislocated right hip and multiple abrasions.

Because the Pennsylvania coverage had not yet been bound, the New Jersey policy was still in force when this accident occurred, and this dispute immediately arose. The MacVicars' Pennsylvania lawyer asserted that the family was entitled to stacked UIM coverage of $1,500,000. NJM asserted that since the New Jersey policy was in effect, New Jersey's anti-stacking law applied, limiting UIM coverage to the $500,000 per accident provided for each vehicle. NJM then brought this action for a declaration of the applicability of New Jersey law to the policy. *fn1 On motion and cross motion for summary judgment, the trial court agreed with NJM's position and entered judgment accordingly. We conclude that it erred.

To begin with, it is clear that the respective laws of New Jersey and Pennsylvania are diametrically opposed with respect to UIM stacking. New Jersey's anti-stacking law, N.J.S.A. 17:28-1.1c, which overruled Lundy v. Aetna Cas. & Sur. Co., 92 N.J. 550 (1983), and Motor Club of America Ins. Co. v. Phillips, 66 N.J. 277 (1974), provides as follows:

Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits of coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits.

If New Jersey law were to apply to this policy, then the MacVicar family would be limited to a total UIM coverage for all three members of $500,000. Pennsylvania law, on the other hand, mandates stacking of UIM coverage unless waived in writing by the insured in the precise manner prescribed by statute. Thus, the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. Cons. Stat. Ann. § 1738 (1990), provides in full as follows:

Stacking of uninsured and underinsured benefits and option to waive.

(a) Limit for each vehicle. When more than one vehicle is insured under one or more policies providing uninsured or underinsured motorist coverage, the stated limit for uninsured or underinsured coverage shall apply separately to each vehicle so insured. The limits of coverage available under this subchapter for an insured shall be the sum of the limits for each motor vehicle as to which the injured person is an insured.

(b) Waiver. Notwithstanding the provisions of subsection (a), a named insured may waive coverage providing stacking of uninsured or underinsured coverage in which case the limit of coverage available under the policy for an insured shall be the stated limits for the motor vehicle as to which the injured person is an insured.

(c) More than one vehicle. Each named insured purchasing uninsured or underinsured motorist coverage for more than one vehicle under a policy shall be provided the opportunity to waive the stacked limits of coverage and instead purchase coverage as described in subsection (b). The premium for an insured who ...

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