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Perez v. State Farm Indemnity Co.

July 19, 2007

DIONISIO "DANNY" PEREZ, PLAINTIFF-RESPONDENT,
v.
STATE FARM INDEMNITY COMPANY,*FN1 DEFENDANT-APPELLANT.



On appeal from Superior Court of New Jersey, Law Division, Middlesex County, L-7470-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued April 17, 2007

Before Judges Payne and Lihotz.

Plaintiff, Dionisio Perez, was injured in an auto accident when riding as a passenger in a truck owned by Perez's employer, Union Pipe, Inc. Following settlement with the tortfeasor for $14,500, an amount that was $500 less than the tortfeasor's policy limits, Perez sought underinsured motorist (UIM) coverage from defendant, State Farm Indemnity Company, claiming coverage pursuant to the terms of a policy issued to Union Pipe and its owner, Ronald Desclafani. When coverage was denied, Perez filed suit. State Farm thereupon moved for summary judgment. This appeal arises from the denial of State Farm's motion by the motion judge and his determination that Perez was entitled to coverage under the State Farm policy under the doctrine of reasonable expectations. We reverse.

State Farm's standard car policy was issued to named insureds Union Pipe Inc. and Ronald Desclafani for the period of December 1, 2000 to June 1, 2001 and later extended to cover the period in which the accident occurred. The policy afforded coverage to four Ford vans that included uninsured and underinsured motorist (UM/UIM) benefits, in the amount of $250,000 per person and $500,000 per accident, at a total premium of $33.20 per vehicle. A definitional section at the front of the policy included a definition of "insured," as follows:

Insured -- means the person, persons or organization defined as insureds in the specific coverage. After stating various other terms and conditions applicable to the policy as a whole, the policy then contained sections denominated "SECTION I -- LIABILITY -- COVERAGE A," "SECTION II -- PERSONAL INJURY PROTECTION -- COVERAGE P AND MEDICAL PAYMENTS -- COVERAGE C," "SECTION III -- UNINSURED AND UNDERINSURED MOTORIST COVERAGE U," "SECTION IV -- PHYSICAL DAMAGE COVERAGES," "SECTION V -- DEATH, DISMEMBERMENT AND LOSS OF SIGHT -- COVERAGE S," and a concluding section labeled "CONDITIONS."

Section III, containing the terms of the UM/UIM coverage afforded by State Farm, commenced with an insuring clause that provided:

We will pay damages for bodily injury or property damage an insured is legally entitled to collect from the owner or driver of an uninsured motor vehicle or an underinsured motor vehicle. The bodily injury or property damage must be caused by accident arising out of the ownership, maintenance or use of an uninsured motor vehicle or an underinsured motor vehicle. The bodily injury must be sustained by an insured.

The Section then defined who was an insured separately under the UM and UIM coverages, stating:

Who Is an Insured

1. When the bodily injury or property damage arises out of the ownership, maintenance or use of an uninsured motor vehicle, Insured means:

a. you;

b. your ...


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