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Reilly v. AAA Mid-Atlantic Insurance Company of New Jersey

February 16, 2007


On appeal from a Final Decision of the New Jersey Department of Banking and Insurance, Docket No. EP04-08.

The opinion of the court was delivered by: S.L. Reisner, J.A.D



Argued January 8, 2007

Before Judges S.L. Reisner, Seltzer and C.L. Miniman.

This case concerns the definition of an "at-fault" accident for purposes of assessing eligibility points for automobile insurance, pursuant to N.J.S.A. 17:33B-14 and N.J.A.C. 11:3-34.3. We affirm the final decision of the Department of Banking and Insurance that Glenn Reilly was properly assessed five points for a one-car weather-related accident, but we conclude that the Department must revise its regulations prospectively to define the term "at-fault" and clarify its application to onecar accidents.


This case arose when Reilly's insurer, AAA Mid-Atlantic Insurance Company of New Jersey (AAA), refused to renew his insurance because Reilly had amassed seven eligibility points, the threshold at which an insurer can deny coverage. Reilly appealed the decision to the Commissioner of Banking and Insurance, contending that five of the points should not have been assessed for a one-car accident that occurred during icy weather and that he claimed was not his fault. The Commissioner initially upheld the assessment, and Reilly requested an administrative hearing.

At the hearing, Reilly testified that on the evening of January 2, 2003, he was traveling on Route 15 on his way to his home in West Orange after a skiing trip in Pennsylvania. He was traveling in a line of cars, all of which were going under the speed limit. He testified that it was cold and raining but there was no snow and neither snow nor ice had been predicted. Suddenly, "the back end of the car . . . slipped out from behind me . . . and I rotated 180 degrees and instantly I was against the barrier, there was no time to react." Reilly testified that shortly after the police arrived, it began hailing "and the road instantly froze over and traffic basically came to a standstill. So, unfortunately, I was probably the first accident, at least on that section of Route 15 that night." He also introduced in evidence, as hearsay, a Star-Ledger article describing the "Black Ice Nightmare" that befell the roads in northern New Jersey that night resulting in hundreds of accidents, although the article did not mention Route 15.

He also testified that Route 15 is a two or three lane highway with a fifty-five mile per hour speed limit, but that on this evening the traffic was moving "very slowly . . . about 45 miles per hour." He testified that he was "moving with the herd of cars . . . and . . . based on the conditions I knew it was a possibility that the rain could turn to ice based on how cold it was." He admitted that other cars traveling in front of him and behind him did not spin out of control on the icy patch on which his car slid. However, he testified that as he was driving home after the accident, he saw many other accidents on other highways.

Reilly was not charged with any moving violations nor was he ticketed as a result of the accident. Apparently, his insurer at the time, State Farm, assessed five points against his insurability as a result of this accident but did not give Reilly notice of the assessment. Consequently, he had no opportunity to challenge the assessment of the points at the time they were assessed. Reilly only found out about the assessment in 2004, when the point limit for insurability in the voluntary market was lowered from nine points to seven and his new insurer, AAA, declined to renew his insurance policy because he had seven points, including the five points for the 2003 accident. When he contacted AAA, he was told that they would only change the five point assessment if he could convince State Farm to change its assessment. Accordingly, Reilly appealed AAA's decision to the Commissioner of Banking and Insurance.*fn1

At the hearing, Reilly claimed that he was not at fault at all for the accident. AAA's attorney conceded "that we have to show that he's 50 percent or more" at fault. In an effort to address the issue of fault, AAA presented the testimony of an underwriter, Danielle Sease. She testified that she relied on an underwriting manual that defined "at-fault accident." She contended that she reviewed the police report of the accident and the application and reached an "independent judgment it was an at-fault accident." However, the ALJ did not find this testimony credible.

Sease also explained the general principle, from the insurer's perspective, that "when you get behind the wheel of a vehicle you are responsible to keep control of that vehicle at all times. . . . [T]he bottom line is he lost control of his vehicle and collided with something else." Additionally, the accident caused more than one thousand dollars worth of damage. She testified that she considered Reilly one hundred percent at-fault "[b]ecause there's no other car that can contribute any other percentage to." She did concede that in her years as an underwriter she had found "a few" single car accidents not to be "at-fault." She cited as an example an accident in which the insured hit an object left in the roadway by the "[S]tate" and the State "took a hundred percent [responsibility] for it."

The Administrative Law Judge (ALJ) found Reilly credible, found that he was blameless in the accident which occurred solely because of the icy weather, and concluded that the points should be rescinded. The Commissioner accepted the ALJ's credibility determinations, but rejected his legal conclusion. Instead, the Commissioner reasoned that the term "at-fault" accident as used in N.J.A.C. 11:3-34.3 "should not be construed solely in the sense of moral culpability or proven violations of traffic regulations, but with a common sense approach recognizing its applicability in the context of insurance rating." Hence, absent certain narrow exceptions set forth in the rule, a one-vehicle accident "such as a collision resulting from a loss of control due to road conditions such as black ice" will be deemed an "at-fault" accident even if the driver was not negligent. Thus, according to the Commissioner

[p]ursuant to N.J.A.C. 11:3-34.3, an accident is an "at-fault accident" for which eligibility points should accrue if it: involved a driver insured under the policy; resulted in payment of a claim of $500 or more . . . which payment was not recouped from another tortfeasor; is not specifically excepted as set forth in the rule; and the driver is not excused by application of the proportionate responsibility standard [pertaining to multi-car accidents].

Consequently, the Commissioner concluded that Reilly's accident was "at-fault" and coverage was properly denied.


We begin by addressing the issue of mootness. AAA contends that this case is moot, because the five points at issue have expired, and Reilly is not entitled to any further relief from the agency whose decision is on appeal.*fn2 However, we will not dismiss the case as moot, because it is clear from the oral argument that both Reilly and the Commissioner wish us to decide the case and it concerns a matter of public importance. See John F. Kennedy Mem'l Hosp. v. Heston, 58 N.J. 576, 579 (1971), overruled on other grounds by In Re Conroy, 98 N.J. 321, 351 (1985). Moreover, even if Reilly might be able to seek a monetary remedy in a separate Special Civil Part action (an issue we do not decide here), under principles of primary jurisdiction the central issue in such a case would be one more appropriately decided by the agency charged with enforcing the statute than by a trial court. See Boss v. Rockland Elec. Co., 95 N.J. 33, 39-40 (1983). Hence, even if the Commissioner's ruling did not collaterally estop Reilly's Special Civil Part action, the trial court most likely would defer to the agency's decision in this case as to the meaning of "at-fault accident." All of these factors convince us that we should decide the issue now.


Accordingly, we turn to Reilly's arguments that the Legislature intended the term "at-fault accident" to be understood in terms of driver negligence, and that either the agency's regulation is inconsistent with the statute or the agency is misconstruing its regulation.

The statute at issue was originally enacted in 1990, and was designated as the Fair Automobile Insurance Reform Act, N.J.S.A. 17:33B-1 to -64. It requires the Commissioner to adopt regulations ...

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