APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW JERSEY (D.C. Civ. No. 00-cv-05764 District Judge: Honorable Jerome B. Simandle
Before: Scirica, Chief Judge,*fn1 Ambro and Weis, Circuit Judges.
The opinion of the court was delivered by: Weis, Circuit Judge
This case is a declaratory judgment action originally filed in the New Jersey Superior Court and later removed to the United States District Court for the District of New Jersey. The primary issue is the applicability of New Jersey's "deemer statute," N.J.S.A. 17:28-1.4, a provision of that state's automobile insurance legislation. In general, the "deemer statute" requires companies authorized to transact insurance business in New Jersey to provide in their policies personal injury protection benefits such as medical bills and funeral expenses. The statute makes such coverage available to accident victims injured within New Jersey, regardless of their domicile and whether the insurance policy covering the accident was purchased outside the state.
The plaintiffs in this case were the driver and passengers of a car leased in Virginia from the Enterprise Leasing Company, a Virginia corporation wholly owned by Enterprise Rent-A-Car, a Delaware Corporation. To insure the vehicle, Rent-A-Car filed a certificate of self-insurance with the New Jersey Department of Insurance in accordance with that state's requirements. Plaintiffs filed suit against Rent-A-Car as the vehicle's insurer to recover personal injury protection benefits.
The District Court, in a well-reasoned opinion, concluded that it had personal jurisdiction over Rent-A-Car by virtue of its New Jersey registration, that New Jersey rather than Virginia law should apply, and that under New Jersey law, self insurance is the equivalent of a policy of insurance. See Ryer/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., Inc., 575 A.2d 416 (N.J. 1990). As a result, Rent-A-Car was required to pay personal injury protection benefits to the plaintiffs, all of whom were non-residents of New Jersey.
After careful review of the record, including the thorough briefs of counsel, and having had the benefit of excellent oral argument, we conclude that the District Court arrived at the correct result in determining eligibility for PIP benefits. The District Court's careful and comprehensive opinion analyzed the contested issues and, in our view, accurately predicted what the New Jersey Supreme Court would hold in a similar case.
We point out once again that the grant of a declaratory judgment in the federal courts is discretionary, and must "yield to considerations of practicality and wise judicial administration." State Auto Ins. Cos. v. Summy, 234 F.3d 131, 134 (3d Cir. 2000) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)). Particularly when the issue is the novel interpretation of a state statute concerned with the terms of insurance policies, disputes are better resolved in the first instance in the state system. Those courts can issue a definitive ruling on the legal contentions, rather than render a prediction of what the highest court of the state would decide.
A certification procedure to the state supreme court is an option in resolving the issues here. However, we deem it inappropriate particularly in this case where the defendant removed the declaratory judgment from the state court where it was originally filed, and chose to litigate the issue in the federal courts.
The District Court denied plaintiffs' request for attorneys' fees under New Jersey Court Rule 4:49(a)(6), noting that the plaintiffs are first-party claimants seeking direct benefits from the defendant. The Rule provides that: "[no] fee for legal services shall be allowed in the taxed costs or otherwise, except... [i]n an action upon a liability or an indemnity policy of insurance, in favor of a successful claimant." On its face, the Rule would prohibit the award of attorneys' fees in cases such as the one before us.
The New Jersey Supreme Court has only obliquely addressed the issue. In Darel v. Pennsylvania Mfg. Assoc. Ins. Co., 555 A.2d 570 (N.J. 1989), the Court conceded that although the propriety of the award of fees in that PIP case had neither been briefed nor argued, the "exercise of discretion" in awarding the fee "is sustainable." The Court did not discuss the Rule or even cite to it.
In Maros v. Transamerican Ins. Co., 388 A.2d 971, 974 (N.J. 1978), the Court stated that "counsel fees are discretionary when actions on an insurance policy is involved." Again, the Court did not cite to the Rule, and it is clear that the expansive offhand comment is inconsistent with the text and the Court's subsequent actions. See also Enright v. Labou, 521 A.2d 1300 (N.J. App. Div. 1987) (observing that the Supreme Court Committee on Counsel Fee Awards had recommended the Rule not be changed to allow ...