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Berger v. First Trenton Indemnity Co.

April 23, 2001


On appeal from Superior Court of New Jersey, Law Division, Burlington County, L-2111-99.

Before Judges Skillman, Conley and Lesemann.

The opinion of the court was delivered by: Conley, J.A.D.


Argued April 3, 2001 –

This is an uninsured motorist (UM) appeal. Plaintiff insured appeals an order granting defendant insurer summary judgment and dismissing her complaint that sought to compel UM arbitration. As far as we can tell from the "decision" below, the dismissal was based upon a "for fee" exclusion in the UM endorsement contained in plaintiff's automobile policy issued by defendant. We are convinced the "for fee" UM exclusion conflicts with the governing statutory provisions and, thus, is unenforceable. We remand for consideration of additional coverage issues that were not decided by the motion judge.

Preliminarily, we briefly comment on the "decision" below. There were a number of coverage issues presented by the motion. Plaintiff asserted the trial judge lacked jurisdiction to decide them as the policy's arbitration provision required they be submitted to an arbitrator. The coverage issues included not only the "for fee" exclusion but also defendant's contention that the notice and reasonable investigation obligations under its policy provisions and N.J.S.A. 39:6-78(e) had not been complied with. As to the latter, plaintiff asserted a defense of estoppel and argued that the governing policy provisions on notice and investigation were unenforceable. Following oral argument on October 15, 1999, the judge reserved decision. By letter dated October 26, 1999, the judge sent counsel "a copy of the memorandum" on the motion, directing defendant's counsel to submit a proposed order. The "memorandum" appears to be a law clerk memo and addresses only the "for fee" exclusion.

We expect all trial judges to be cognizant of and comply with their responsibility to address the issues and provide findings of fact and conclusions of law when deciding motions. R. 1:7-4; R. 4:46-2(c); Filippone v. Lee, 304 N.J. Super. 301, 306-07 (App. Div. 1997). "It should, of course, be obvious that a judge does not and may not fulfill the obligation to make fact- finding by delegating that responsibility to a law clerk. . . . " Pressler, Current N.J. Court Rules, Comment 2 on R. 1:7-4(a) (2001). See Hungerford v. Greate Bay Casino Corp., 213 N.J. Super. 398, 402 (App. Div. 1986). Sending the attorneys a copy of a clerk's memo does not comply with R. 1:7-4 or R. 4:46-2(c). Neither does it properly serve the interests of the litigants.

The facts are not particularly complex. On April 5, 1994, plaintiff and her husband, New Jersey residents, were visiting Washington, D.C. and were passengers in the backseat of a taxi cab. The cab stopped suddenly, causing plaintiff to be thrown forward thereby striking the front seat of the cab. At that time, she felt "a little" pain on her left side.

When plaintiff and her husband reached their destination, they exited the cab, and it departed. Neither the identity of the cab nor the operator was ever obtained. Plaintiff could describe the taxi cab only as a black and white station wagon and the operator as a middle-aged foreigner, possibly Arabic, who was wearing a turban. No one reported the incident to the police.

That same day, upon the couple's return to New Jersey, plaintiff's pain persisted and her family physician was called. The physician advised plaintiff to go directly to Burlington Memorial Hospital where she was hospitalized for having multiple fractured ribs and shortness of breath. On April 10, 1994, she was released from the hospital.

On April 21, 1994, plaintiff submitted to defendant an application for PIP benefits and, by counsel's letter dated July 8, 1994, defendant was advised of a claim for UM benefits. By letter dated August 3, 1994, defendant rejected the UM claim because the taxi cab did not qualify as an "uninsured motor vehicle" because "[i]t is apparent that [she] was a passenger in a taxi cab . . . and could have properly identified the taxi and driver." The record is not entirely clear as to plaintiff's PIP claim, but it does contain an August 31, 1994, note from the PIP adjuster indicating that the hospital's bill had been received and was being audited. The note further reflects "I note you were in a commercial vehicle at the time of the accident. N.J. No Fault regulations are such that only medical payments are covered. Essential services are not reimbursable."

Defendant's payment of plaintiff's PIP claim is not part of the present litigation. However, when defendant continued to deny UM coverage, plaintiff filed her complaint seeking to compel UM arbitration.


Initially, we think it clear that under the terms of the policy, the coverage issues raised by defendant were for the court to decide. While we "strongly favor[] arbitration as a means of resolving disputes without tying up limited judicial resources," Craig & Pomeroy, New Jersey Auto Insurance Law, § 23:2, at 348 (2001), "the duty to arbitrate, and the scope of the arbitration, are dependent solely on the parties agreement." United Servs. Auto. Ass'n v. Turck, 156 N.J. 480, 486 (1998) (quoting Cohen v. Allstate Ins. Co., 231 N.J. Super. 97, 100 (App. Div.), certif. denied, 117 N.J. 87 (1989)).

Under the "standard" UM arbitration clause in New Jersey "UM coverage issues are . . . decided by court and issues of liability and damages are decided by arbitrator. . . . " Id. at 486 (citing Tornatore v. Selective Ins. Co., 302 N.J. Super. 244, 246 (App. Div. 1997)). As recognized by the Court in Turck, under the "standard" UM arbitration clause, "an arbitrator is permitted to decide only two issues: the extent of liability of the tortfeasor and the total amount of damages. Id. at 486. Compare Travelers Indem. Co. v. Mongiovi, 135 N.J. Super. 452, 459 (App. Div. 1975) (under "standard" UM arbitration clause, whether disclaimer of coverage by tortfeasor's carrier for non-cooperation renders the vehicle an uninsured vehicle for UM ...

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