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Walcott v. Allstate New Jersey Insurance Co.

April 13, 2005


Before Judges Skillman, Collester and Parrillo.

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


Argued March 8, 2005

On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. BER-L-7843-02.

At issue is whether New Jersey's no fault insurance law bars an insured motorist who was intoxicated at the time of the accident from collecting personal injury protection (PIP) benefits for injuries sustained therein. The motion judge answered in the affirmative, finding that N.J.S.A. 39:6A-4.5(b) precludes such first-party recovery. We now hold otherwise.

The facts are straightforward. On February 19, 2001, plaintiff, Melanie Walcott, while operating her automobile insured by defendant, Allstate New Jersey Insurance Company (Allstate), was involved in a one-car collision and sustained bodily injuries requiring medical treatment. In connection with that accident, she was charged with, and pled guilty to driving while intoxicated (DWI), N.J.S.A. 39:4-50, based on Breathalyzer readings slightly in excess of the then legal limit of 0.10%. Subsequently, she filed a claim with Allstate for PIP benefits provided for by her policy pursuant to N.J.S.A. 39:6A-4(a), seeking recovery of medical expenses in the amount of $33,472.16. Allstate refused to pay, claiming that plaintiff was convicted of DWI and, therefore, was ineligible to receive recompense based on the exclusionary language of the policy*fn1. In its denial of PIP benefits, Allstate also invoked the statutory bar of N.J.S.A. 39:6A-4.5(b), which provides, in pertinent part, that any person convicted of N.J.S.A. 39:4-50 in connection with a motor vehicle accident"shall have no cause of action for recovery of economic or non-economic loss sustained as a result of the accident." N.J.S.A. 39:6A-4.5(b).

Plaintiff thereafter filed suit seeking PIP benefits pursuant to her Allstate policy. Following Allstate's answer, both parties cross-moved for summary judgment. Plaintiff argued that N.J.S.A. 39:6A-4.5(b) was not applicable to claims for PIP benefits and that the only statutory exclusions for PIP benefits are those set forth in N.J.S.A. 39:6A-7, which does not contain the DWI disqualification. The judge disagreed and dismissed plaintiff's complaint with prejudice, finding the statutory bar of N.J.S.A. 39:6A-4.5(b) applicable to first-party claims for PIP benefits. This appeal follows.

In New Jersey, all owners of motor vehicles registered or principally garaged in this State must maintain liability insurance coverage for bodily injury, death, and property damage caused by their vehicles, N.J.S.A. 39:6B-1, and every policy also must provide"[PIP] benefits" that guarantee, without regard to fault, medical expense benefits to the named insured and his family household members in the event they suffer bodily injury in an automobile accident. N.J.S.A. 39:6A-4."This system of first-party self-insurance through PIP benefits," enacted pursuant to the New Jersey Automobile Reformation Reform Act (the No Fault Act), L. 1972, c. 70; N.J.S.A. 39:6A-1 to -35, was designed to provide benefits promptly and efficiently to all accident injury victims. Caviglia v. Royal Tours of Am., 178 N.J. 460, 466-67 (2004); Fu v. Fu, 160 N.J. 108, 121 (1999); Gambino v. Royal Globe Ins. Co., 86 N.J. 100, 105-07 (1981). To this end, first-party coverage was"intended to serve as the exclusive remedy for payment of out-of-pocket medical expenses arising from an automobile accident." Caviglia, supra, 178 N.J. at 466; see also Roig v. Kelsey, 135 N.J. 500, 503, 512 (1994). Thus, for example, an injured driver with a standard liability policy was barred from suing the tortfeasor for the very PIP benefits reimbursable through his own insurance carrier. Caviglia, supra, 178 N.J. at 467 (citing Sotomayor v. Vasquez, 109 N.J. 258, 261-62 (1988)).

Meanwhile, as the no-fault system evolved, in an effort to advance the cost-containment objective and to relieve congestion of court calendars, the Legislature periodically placed further restrictions on the right to sue in automobile accident cases involving third-party claims and uninsured motorist (UM) and underinsured motorists(UIM) claims that are treated as third party claims. See L. 1983, c. 362; L. 1985, c. 520, § 14; L. 1988, c. 119 §§ 4, 6; L. 1997, c. 151, § 13. These limitations created tort options and subjected motorists to verbal thresholds as a condition to filing a lawsuit for personal injuries. Oswin v. Shaw, 129 N.J. 290, 296 (1992). Additionally, motorists not carrying the compulsory insurance required by N.J.S.A. 39:6A-4 were restricted in their ability to sue for non-economic damages, that right conditioned at first on meeting a monetary medical expense threshold, L. 1985, c. 520, § 14, and eventually eliminated altogether, L. 1997, c. 151, § 13 (current version at N.J.S.A. 39:6A-4.5).

Significantly, the Legislature addressed exclusions from PIP coverage separately. As part of the comprehensive revision of the No Fault Act effected by the Cost Containment Act in 1984, the new legislation also enlarged the class of people to be excluded from PIP coverage entirely. L. 1983, c. 362; Caviglia, supra, 178 N.J. at 468. In particular, N.J.S.A. 39:6A-7 denied PIP benefits to those persons whose intentional or criminal conduct contributed to their own personal injuries and to those owners and registrants of New Jersey vehicles who failed to maintain PIP coverage. L. 1983, c. 362, § 10. These, however, are the exclusive statutory debarments to PIP coverage. As such, they must be narrowly construed consistent with the legislative purpose to provide prompt payment of medical expenses, by replacing third-party claims with first-party coverage. Gambino, supra, 86 N.J. at 106-07.

In fact, the"Legislature expressly considered extending the exclusion from [PIP] benefits contained in the first clause of N.J.S.A. 39:6A-7(a)(1) to a driver involved in an accident while committing a motor vehicle offense, specifically drunk driving, but declined to do so." Serio v. Allstate Ins. Co., 210 N.J. Super. 167, 172 (App. Div. 1986) (citing Iavicoli, No Fault and Comparative Negligence in New Jersey 35-36 (1973)); see also Stewart v. Royal Ins. Co., 318 N.J. Super. 479, 483 (App. Div. 1999). Thus, given the opportunity, the Legislature refused to extend the exclusion from benefits contained in N.J.S.A. 39:6A-7 to a drunk driver. Consistent therewith, we have repeatedly indicated that PIP coverage is a"social necessity" and should be given"the broadest application consistent with the statutory language." Id. at 482; Serio, supra, 210 N.J. Super. at 170.

Thereafter, the Legislature continued to grapple with the spiraling costs of automobile insurance and overburdened court calendars. Thus, in 1985, it enacted N.J.S.A. 39:6A-4.5. While Section 7 addresses limitations on first-party claims, Section 4.5 speaks generally to third-party claims and was intended to further"effect'the reduction or stabilization of the prices charged for automobile insurance' and'the streamlining of the judicial procedures involved in third-party claims.'" Rojas v. DePaolo, 357 N.J. Super. 115, 119 (Law Div. 2002) (quoting Gambino, supra, 86 N.J. at 105-06). As originally enacted, Section 4.5 required the uninsured driver to satisfy the most onerous monetary threshold before he was entitled to pursue a cause of action for non-economic damages. L. 1985, c. 520, § 14; Caviglia, supra, 178 N.J. at 469. In 1997, the Legislature comprehensively amended Section 4.5, as part of the Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, to bar causes of action for both economic and non-economic losses in automobile accident cases to three classes of people:

those who operate automobiles without insurance, those who drive under the influence or refuse to submit to a breath or blood test, and those who act with the intent to injure themselves or others while driving. The statute now provides:

a. Any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage mandated by [N.J.S.A. 39:6A-4] shall have no cause of action for recovery of economic or non-economic loss ...

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