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Thomsen v. Mercer-Charles

June 19, 2006

CHRISTINE THOMSEN, PLAINTIFF,
v.
JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING PROJECTS INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., JOHN DOES #1-5 AND JOHN DOES #6-10, DEFENDANTS.
ALICE BROWN, AS ADMINISTRATOR AD PROSEQUENDUM FOR THE HEIRS-AT-LAW OF ALICE F. WATTS, DECEASED, AND AS ADMINISTRATOR OF THE ESTATE OF ALICE F. WATTS, DECEASED, PLAINTIFFS,
v.
JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, IRENE MCMICHAEL, R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC CO., BELL ATLANTIC-NEW JERSEY, INC., DEFENDANTS, AND BELL ATLANTIC-NJ, INC., THIRD PARTY PLAINTIFF,
v.
COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF,
v.
PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS.
LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF-APPELLANT,
v.
JANICE D. MERCER, CARING INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, IRENE MCMICHAEL, JOHN DOE, MARY ROSE, ABC PARTNERSHIPS AND XYZ CORPORATIONS, DEFENDANTS, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF,
v.
PHILADELPHIA INDEMNITIES INSURANCE COMPANY AND RELIANCE INSURANCE COMPANY, THIRD PARTY DEFENDANTS, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANT-RESPONDENT.
JANICE D. MERCER-CHARLES AND DEXTER CHARLES, HER HUSBAND, PLAINTIFFS,
v.
CHRISTINE D. THOMSEN, DEFENDANT,
v.
BELL ATLANTIC--NJ, THIRD PARTY PLAINTIFF,
v.
COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF,
v.
PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS.
LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF,
v.
R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC COMPANY, BELL ATLANTIC-NJ, WEST JERSEY HEALTH SYSTEMS, WEST JERSEY PARAMEDICS UNIT, GALLOWAY TOWNSHIP VOLUNTEER AMBULANCE SQUAD, WEST DIVISION, EGG HARBOR CITY RESCUE SQUAD, WILLIAM B. KESSLER MEMORIAL HOSPITAL, EUGENE M. MLYNARCZYK, M.D., LISA RASOM, RN, L. DEFRANCISCO, RN, JOHN DOE AMBULANCE SERVICE AND PARAMEDICS UNITS 1-10, AND JOHN DOE PHYSICIANS AND NURSES 1-10, DEFENDANTS,
v.
BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF,
v.
COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF,
v.
PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS.



On appeal from the Superior Court, Appellate Division, whose opinion is reported at 377 N.J. Super. 267 (2005).

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

The New Jersey Property-Liability Insurance Guaranty Act (the Act), which is modeled on an act (the Model Act) drafted by the National Association of Insurance Commissioners, provides a mechanism for the payment of claims on behalf of member insurers that become insolvent. This appeal involves interpretation of the Act's setoff provision under which this Court must determine whether the Act requires payment to a victim when another solvent insurer has paid the victim an amount that exceeded the Act's maximum per claim payable amount but did not fully cover the victim's damages.

In September of 1996, plaintiff Larry Spell suffered catastrophic injuries in a motor vehicle collision when he was being transported in a van driven by Janice Mercer-Charles. The van collided with a vehicle operated by Christine Thomsen. Spell's neck was fractured, leaving him a quadriplegic. Another passenger in the van, Alice Watts, died as a result of the accident.

In December 1996, Thomsen filed suit seeking damages for injuries sustained in the accident. Spell, Mercer-Charles, and the estate of Alice Watts also filed complaints seeking damages. At the time of the accident, Mercer-Charles had an aggregate of two million dollars of liability coverage through two policies, each of one million dollars. One policy was issued by Reliance Insurance Company and the other by Philadelphia Insurance Company (PIC). In February of 2000, Spell offered to settle his claim against Mercer-Charles for the aggregate two million dollar policy limits. PRC and Reliance accepted Spell's offer in June of 2001 and the parties entered into an order permitting PIC and Reliance to deposit their policy limits into court. PIC deposited its payment. However, before Reliance made its deposit, it was declared insolvent by Pennsylvania insurance regulators and placed in liquidation. As a result of Reliance's insolvency, the New Jersey Property-Liability Insurance Guaranty Association (Association) assumed responsibility for claims against Reliance's insured.

The Association subsequently filed a motion seeking a declaration that its $300,000 per claim maximum statutory obligation could be reduced by any amount that Spell received from PIC. The trial court denied the Association's motion and entered an Order of Final Judgment in favor of Spell against Mercer-Charles in the amount of $1.3 million. On the Association's appeal, in a reported opinion, the Appellate Division, with one judge dissenting, reversed and remanded for entry of judgment declaring that the Association's obligation to pay Spell's covered claim had been eliminated by PIC's payment.

Thomsen filed a Notice of Appeal as of right to this Court.

HELD: When an insured is covered by both a solvent and an insolvent insurer and the insolvent insurer has paid the insured an amount exceeding the Act's maximum payment, but which falls short of the insured's total damages, the insured may seek compensation from the Association.

1. The Legislature enacted the New Jersey Property --Liability Insurance Guaranty Act to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payment, and to minimize financial loss to claimants or policyholders because of the insolvency of an insurer. Importantly for purposes of this appeal, N.J.S.A. 17:30A-12b establishes a priority applicable when multiple insurance policies cover the claim. (pp. 11-13)

2. N.J.S.A. 17:30A-12b provides: Any person having a claim against an insurer, whether or not the insurer is a member insurer, under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim, shall be required to exhaust first his right under that other policy. An amount payable on a covered claim under this Act shall be reduced by the amount of recovery under any such insurance policy. (p.13)

3. The paramount judicial goal when interpreting a statute is to determine and fulfill the legislative intent. To achieve that goal, we first look to the statutory language and interpret the language in accordance with its plain meaning if it is clear and unambiguous on its face and admits of only one interpretation. If the statute's language is susceptible to different interpretations, the court considers extrinsic factors, such as the statute's purpose, legislative history, and statutory context to ascertain the legislature's intent. (p. 14).

4. The language at issue is susceptible of more than one interpretation. Although section 12 contemplates application of a setoff as between payments made by another solvent insurer and those due from the Association, and requires the solvent insurer's payment to be made first, it does not resolve the question in this case. The issue is whether the setoff applies to the entire amount payable on the person's loss, thereby reducing the person's claim of damages before he or she need turn to the Association for satisfaction, or whether the solvent insurer's payment is applied directly to the statutory maximum of $300,000 that the Association may pay on a claim. (pp. 15-16)

5. The last sentence of section 12b is ambiguous in respect of an amount payable on a covered claim. That language does not reveal whether or not the Legislature intended to have a covered claim remain payable by the Association to a person whose loss has not been satisfied by payment from another solvent insurer, as occurred here. Because this dispute about the legislative intent underlying Section 12b cannot be resolved by an examination of the statutory language alone, we turn to extrinsic sources for assistance. (pp. 16-17)

6. Courts of other states, in rejecting the interpretation advanced before us by the Association, have concluded that to adopt the Association's interpretation would lead to absurd results. We have no reason to believe that the Legislature intended a different interpretation of the provision than that commonly understood as having been intended by the drafters of the Model Act. The very purpose of adoption of a model act is to encourage consistency in approach in the legislative language and its application. (pp. 19-20)

7. The salutary purpose of uniformity is advanced by interpreting section 12b consistent with the nearly unanimous approach taken by our sister jurisdictions. We therefore hold that when an insured is covered by both a solvent and an insolvent insurer and the solvent insurer has paid the insured an amount exceeding the Act's maximum payment, but which falls short of the insured's total damages, the insured may seek compensation from the Association. (p. 21)

The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the Law Division for REINSTATEMENT of the judgment in favor of plaintiff.

CHIEF JUSTICE PORITZ and JUSTICES ZAZZALI, ALBIN, and WALLACE join in JUSTICE LaVECCHIA's opinion. JUSTICES LONG and ...


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