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Christafano v. New Jersey Manufacturers Insurance Company

June 17, 2003

MICHELE CHRISTAFANO, PLAINTIFF-RESPONDENT,
v.
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANT-APPELLANT.



On appeal from the Superior Court, Law Division, Essex County, L-9205-02.

Before Judges Braithwaite, Lintner and Parker.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued June 2, 2003

We granted defendant New Jersey Manufacturers Insurance Company's (NJM) motion for leave to appeal from a Law Division order setting NJM's pro rata exposure to plaintiff Michele Christafano's claim for uninsured motorist (UM) benefits coverage at $211,500. We hold that the step-down provision contained in the NJM policy is valid and limits NJM's exposure to its prorated share of $25,000. Accordingly, we reverse and remand.

On March 6, 2002, at approximately 2:00 a.m., plaintiff Michele Christafano was traveling west on Route 495 in North Bergen when he was cut off by an unidentified vehicle causing him to swerve and lose control of his vehicle. The car flipped five times and plaintiff was thrown from the vehicle. He suffered a fracture of the cervical spine and a comminuted fracture of the right femur. He was treated at Jersey City Medical Center where a rod was inserted in his right upper leg.

Plaintiff was insured for UM benefits by three separate insurance policies. He was the named insured under a policy issued by State Farm covering his own vehicle with UM limits of $25,000. Additionally, he was covered by a policy issued to his sister by Allstate with UM limits of $100,000*fn1 and a policy written by NJM issued to his mother covering him as a "family member," with limits of $300,000.*fn2 Plaintiff requested that each of these companies pay their prorated shares of the highest applicable limit, the $300,000 limit in the NJM policy, pursuant to N.J.S.A. 17:28-1.1c.*fn3 He also demanded that his claims be arbitrated under the policies' arbitration clauses.

On September 17, 2002, NJM notified plaintiff that its policy"possess[es] a valid step-down provision as approved by the New Jersey Commissioner of Insurance" that limited UM coverage available to plaintiff to the amount available in plaintiff's State Farm policy, $25,000.*fn4 NJM also advised plaintiff that the $25,000 limit should be prorated among the three insurance companies. The"step-down" provision in the NJM policy reads as follows:

LIMIT OF LIABILITY

A. The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. However, subject to our maximum limit of liability for this coverage:

1. If:

a. An insured is not the named insured under this policy;

b. That insured is a named insured under one or more other policies providing similar coverage; and

c. All such other policies have a limit of liability for similar coverage which is less than the limit of ...


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