On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. DC-5728-04.
The opinion of the court was delivered by: Holston, Jr., J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff*fn1, Holston, Jr. and Gilroy.
This case presents an issue of first impression. We decide that New Jersey's compulsory motor vehicle liability insurance statute, N.J.S.A. 39:6B-1, imposes no requirement on an automobile dealer to provide collision insurance to a permissive user of the insured dealer's motor vehicle.*fn2 A permissive user of a motor vehicle is covered by the motor vehicle owner's liability policy, as directed by the compulsory motor vehicle liability insurance statute, only where an accident results in injury to the person or property of an innocent third party.
Defendant, George E. Heibel, appeals the Law Division's June 20, 2005 order for final judgment granting summary judgment in favor of plaintiff, Universal Underwriters Group (Universal) as subrogee of Harley Davidson of Edison (Harley) and against Heibel in the amount of $3,815.25. The June 20, 2005 order for final judgment amended the Law Division's order of April 4, 2005 granting summary judgment in favor of Universal and against Heibel. We affirm in part and reverse and remand in part.
On July 5, 2001, Heibel was test-driving, for possible purchase, a 2001 Buell Blast motorcycle owned by Harley. Heibel was operating the motorcycle at approximately 3:00 p.m. in an easterly direction on Wertsville Road in Ringoes at a curve in that road approximately 100 yards from Rocktown Road. Heibel was negotiating the curve at approximately forty miles per hour when the motorcycle lost traction with the road. Heibel stated to the State Trooper who investigated the accident that the tire of the motorcycle came out from under him because of loose gravel on the highway, which caused the motorcycle to fall to the ground and slide to a stop. The State Police report indicated that at the location of the accident there was "loose gravel in the area."
As a result of the accident, the motorcycle sustained property damage. The cost of parts and labor to repair the vehicle, according to a May 25, 2002 appraisal report from J's Appraisal Service, was in the amount of $3,815.25. Universal, Harley's insurance carrier, paid Harley $2,567.61 in settlement of Harley's property damage claim, and then as subrogee of Harley, sued Heibel for the $2,567.61 that it paid to Harley plus $1,247.64, for which Harley "is out of pocket."*fn3 Heibel counterclaimed for a declaratory judgment that as a permissive user of the motorcycle owned by Harley that he was entitled to coverage under the policy of insurance that Universal provided Harley and that Universal could not bring a subrogation action against him.
On February 9, 2005, Universal moved for summary judgment,*fn4 arguing that Heibel was not an insured under its policy with Harley and that Heibel's negligence proximately caused the accident. Heibel cross-moved for summary judgment contending that, as a permissive driver, he was an insured under Universal's insurance policy, in accordance with the policy's express definition of an "insured" and that N.J.S.A. 39:6B-1, New Jersey's compulsory motor vehicle liability insurance statute, mandates, as a matter of public policy, that collision coverage be provided to a permissive driver of a motor vehicle dealership's motorcycle.
The motion judge found (1) that Universal's insurance policy with Harley did not provide coverage to Heibel as a permissive driver; (2) that the owner of the motorcycle was not required pursuant to N.J.S.A. 39:6B-1 to obtain insurance covering Heibel as a permissive user; (3) that Universal as the insurer of Harley could subrogate against Heibel; and (4) that Heibel was liable for the negligent driving of the motorcycle, which proximately caused the accident and damage to the vehicle.
Heibel argues that because he did not violate the permitted use granted him by Harley to test-drive the motorcycle, he was an "insured" under the automobile dealer's insurance policy. Heibel additionally advocates an interpretation of N.J.S.A. 39:6B-1 that would require coverage, by an automobile dealer's insurance policy, of an accident involving a permissive user, where there is damage only to the insured vehicle and no injury to a third party or damage to a third party's property. Heibel further asserts that as an insured under Harley's policy, Universal cannot subrogate against him. Lastly, Heibel argues that issues of material fact, as to whether the accident occurred because of his negligence or because of the loose gravel condition on the highway, precluded the court from granting Universal's motion for summary judgment on the issue of liability.
A. EXPRESS TERMS OF THE POLICY
Heibel argues that he meets the definition of "WHO IS AN INSURED" in Section 500, which covers "OCCURRENCE[S] arising out of GARAGE OPERATIONS or AUTO HAZARD." Under "AUTO HAZARD," Subsections (2) and (4) define an insured as:
(2) Any of YOUR partners, paid employees, directors, stockholders, executive officers, a member of their household or a member of YOUR household, while using an AUTO covered by the Coverage Part, or when legally responsible for its use. The actual use of the AUTO must be by YOU or within the scope of YOUR permission;
(4) Any other person or organization required by law to be an INSURED while using an AUTO covered by this Coverage Part ...