August 9, 2007
DIANE FAILACH, PLAINTIFF,
NEW JERSEY PROPERTY LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANT-APPELLANT/THIRD-PARTY PLAINTIFF, AND ALLSTATE INSURANCE COMPANY, DEFENDANT-RESPONDENT/THIRD-PARTY DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-6314-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 17, 2007
Before Judges Coburn, Axelrad and R. B. Coleman.
Defendant, New Jersey Property Liability Insurance Guaranty Association (NJPLIGA), appeals from a June 8, 2006, order deciding cross-motions for summary judgment. That order determined that defendant Allstate New Jersey Insurance Company (Allstate) shall not owe plaintiff underinsured motorist (UIM) benefits or personal injury protection (PIP) benefits but that claims for such benefits shall be made to NJPLIGA. For the reasons that follow, we affirm.
Plaintiff, Diane Failach, who was insured by Security Indemnity, was injured in an automobile accident on January 24, 2002, when her car was struck by Jose Feliciano. Plaintiff sued and settled with Feliciano for his $15,000 policy limit and presented UIM and PIP claims to her carrier. Thereafter, on June 30, 2004, the Chancery Division of the Superior Court of New Jersey entered an order declaring Security Indemnity to be insolvent. Consequently, plaintiff filed a complaint against Security Indemnity and NJPLIGA on August 24, 2005, asking the court to require NJPLIGA to provide UIM coverage and PIP benefits.
At the time of the accident, plaintiff resided with her father, Juan Failach. Juan was the named insured under an automobile insurance policy issued by Allstate. This policy provided UIM coverage in the amount of $250,000 per person and $500,000 per accident. This policy also contained an Automobile Amendatory Endorsement. Subsection VII, Part 4, subsection C of the endorsement provided:
The following is added as Section C. under Exclusions-What is Not Covered:
C. [Allstate] will not provide underinsured motorists coverage to any resident relatives who are not occupants of the insured auto described on the Policy Declarations, including a replacement auto and an additional auto, and who are insured under another auto policy.
The Allstate policy also provided that PIP coverage does not apply to "bodily injury to any relative of the named insured, if that person is entitled to New Jersey Personal Injury Protection Coverage as a named insured under the terms of another policy."
NJPLIGA denied plaintiff's claim on the ground that she must first exhaust UIM and PIP benefits available to her from her father's Allstate policy, pursuant to the exhaustion requirements of the New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 to -20. However, Allstate denied her claims based on the "other insurance" exclusion to coverage contained in its policy. Both parties then moved for summary judgment.
The motion judge, in considering the summary judgment motions, framed the question before him as whether plaintiff was insured under a second automobile policy at the time of the accident. The judge found that Allstate's contract did not provide coverage to plaintiff because she was driving a vehicle not covered by her father's policy and that was insured under another policy, plaintiff's Security Indemnity policy, in which plaintiff was a named insured. The judge also found that the Allstate policy did not provide coverage for plaintiff's PIP claims, as N.J.S.A. 39:6A-7 provides an exclusion from providing PIP coverage to "a member of the named insured's family residing in the named insured's household, if that person is entitled to coverage . . . as a named insured under the terms of another policy." Consequently, the court denied NJPLIGA's motion for summary judgment and granted Allstate's motion requiring NJPLIGA to cover plaintiff's claims. On appeal, NJPLIGA argues that plaintiff was required to exhaust her coverage with Allstate as a resident relative of her father, the policyholder.
The New Jersey Property-Liability Insurance Guaranty Association Act, N.J.S.A. 17:30A-1 to -20,*fn1 was adopted "to protect policyholders of insurance companies which became insolvent." Lehmann v. O'Brien, 240 N.J. Super. 242, 246 (App. Div. 1989). The mechanism by which the Act effectuates this goal is the NJPLIGA, a private, nonprofit, unincorporated, legal entity. N.J.S.A. 17:30A-6. Under the Act, NJPLIGA "is required to assume the contractual obligations of an insolvent insurer and to pay certain claims of the insurer's policyholders up to the limit of a policyholder's contract, but subject to a maximum liability of $300,000." Lehmann, supra, 240 N.J. Super. at 246 (citing N.J.S.A. 17:30A-8).
NJPLIGA's "responsibility to pay claims under an insolvent insurer's policy is limited to the payment of 'covered claims.'" Ibid. A "covered claim" is defined under the Act as:
[A]n unpaid claim, including one of unearned premiums, which arises out of and is within the coverage, and not in excess of the applicable limits of an insurance policy to which this act applies, issued by an insurer, if such insurer becomes an insolvent insurer after January 1, 1974, and
(1) the claimant or insured is a resident of this State at the time of the insured event; or (2) the property from which the claim arises is permanently located in this state. [N.J.S.A. 17:30A-5(d).]
The Act also "imposes further limits on the benefits that [NJPLIGA] must pay by establishing a priority of claims." Thomsen v. Mercer-Charles, 187 N.J. 197, 205 (2006) (citing N.J.S.A. 17:30A-12(b)). The provision to which the Court referred was the "exhaustion provision," which requires that a claimant must first exhaust any rights arising under any other policy that affords coverage and that any amount payable on a covered claim under the Act will be reduced by the amount of recovery under such other insurance policy.
Summary judgment must be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law."
R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995). That is to say, accepting as true all evidence supporting the party opposing the motion and according to that party the benefit of all favorable inferences, if reasonable minds could differ, the motion must be denied. Dolson v. Anastasia, 55 N.J. 2, 5 (1969).
Upon appellate review, the court reviews the grant or denial of summary judgment applying the same standard as the trial court and, in effect, conducts a de novo review of the facts on the record. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div. 1998). The facts of this case are not disputed, thus our decision rests upon the court's application of the relevant law.
At the time of the accident, plaintiff was covered by her policy with Security Indemnity. However, because Security Indemnity was declared insolvent, NJPLIGA is "deemed the insurer" under the Property-Liability Insurance Guaranty Association Act and has the responsibility to pay "covered claims" under the Security Indemnity policy. Plaintiff's claims qualify as "covered claims" because her policy provided for PIP benefits and for UIM coverage in the amount of $100,000. Consequently, NJPLIGA is responsible for covering these claims, absent any additional policy that would cover such claims.
NJPLIGA correctly states that Allstate would be required to provide coverage if plaintiff was covered under her father's policy. However, that is not the case here. The terms of the Allstate policy, reproduced above, show that plaintiff is not entitled to benefits under her father's policy. When the accident occurred, plaintiff was not an occupant of the Allstate-insured auto. She was driving her own vehicle, an automobile insured under the Security Indemnity policy and under which she was a named insured. Thus, the Allstate UIM benefits provision does not cover the injuries plaintiff sustained in the accident, as both parts of the exclusion in the Allstate policy are met. NJPLIGA's arguments to the contrary are unavailing.
NJPLIGA argues that the exclusion of the Allstate policy is inapplicable because Security Indemnity's insolvency rendered plaintiff "uninsured" for the purposes of the exclusion. However, an insured under a policy issued by a carrier that becomes insolvent is not considered "uninsured" within the meaning of New Jersey automobile insurance statutes. Jendrzejewski v. Allstate Ins. Co., 341 N.J. Super. 460, 461 (App. Div.), certif. denied, 170 N.J. 209 (2001). In attempting to distinguish Jendrzejewski, NJPLIGA refers to the Allstate policy which defines an "uninsured motor vehicle" to include one where the insurer has become insolvent; however, a policy definition of an "uninsured motor vehicle" for the purpose of defining uninsured motorist (UM) coverage, is not necessarily controlling for purposes of UIM coverage. A significant distinction between these two types of coverage is that UM coverage is required by statute and UIM coverage is not. See N.J.S.A. 17:28-1.1(a) and (b). Thus, UIM coverage may be excluded, and because plaintiff is clearly excluded from UIM coverage under the Allstate policy, the requirement that benefits be exhausted under any policy providing coverage is inapplicable. To trigger the exhaustion requirement, there must be a covered claim under a policy issued by a solvent insurer. Because plaintiff's claim is not covered by a solvent insurer, NJPLIGA must, subject to the statutory cap, provide UIM benefits to plaintiff as her own insurer would, but for its insolvency.
NJPLIGA next argues that plaintiff is prevented from collecting PIP benefits from it because she has failed to exhaust available PIP benefits under the Allstate policy. While N.J.S.A. 39:6A-4 requires that every automobile insurance policy in New Jersey must provide PIP benefits, insurers may exclude certain individuals from PIP coverage if they are the named insureds under another policy, N.J.S.A. 39:6A-7(b).
The terms of the Allstate policy provides that PIP coverage does not apply to "bodily injury to any relative of the named insured, if that person is entitled to New Jersey Personal Injury Protection Coverage as a named insured under the terms of another policy." At the time of the accident, plaintiff was a named insured under the Security Indemnity policy and thus, she cannot recover PIP benefits under her father's policy. As a result, the exhaustion provision is not triggered, and NJPLIGA must provide PIP benefits to plaintiff. Jendrzejewski, supra, 341 N.J. Super. at 464-65.