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Newark Insurance Co. v. Valora's Second Car Center

February 22, 2008

NEWARK INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
VALORA'S SECOND CAR CENTER, LUONGO TRANSMISSION, EMPIRE FIRE AND MARINE INSURANCE COMPANY, PEERLESS INSURANCE COMPANY, HARLEYSVILLE INSURANCE COMPANY AND RLMB, INC., DEFENDANTS-RESPONDENTS, AND CHRYSLER CORPORATION, DAIMLER CHRYSLER CORPORATION, DEFENDANTS.*FN1



On appeal from Superior Court of New Jersey, Law Division, Cumberland County, Docket Nos. L-808-01, L-536-02, L-236-03 and L-251-03.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 25, 2007

Before Judges Skillman, Winkelstein and Yannotti.

Defendant Valora's Second Car Center (Valora's) is a used car dealer. Valora's was insured under a policy issued by defendant Empire Fire and Marine Insurance Company (Empire). This policy provided two distinct forms of coverage pertinent to this appeal: first, "'Garage Operations' -- 'Auto' Liability" coverage for "an 'accident' . . . resulting from 'garage operations' involving the ownership, maintenance or use of [a] 'covered auto[,]'" and second, "'Garage Operations' -- Other Than 'Auto Liability'" for "an 'accident' resulting from 'garage operations' other than the ownership, maintenance or use of 'covered autos.'"

Valora's sold a used Dodge Avenger to Nicky Green. Valora's had bought this car from defendant RLMB, Inc., a wholesaler of used cars. Before RLMB acquired ownership of the car, its transmission had been repaired by defendant Luongo Transmissions.

On March 5, 2001, several weeks after buying the car from Valora's, Green was involved in an accident with a car being operated by Shirley Van Keuren. Green, Van Keuren and Tyrone Bordley, who was a passenger in Green's car, were all seriously injured in the accident.

At the time of this accident, Green had a personal automobile liability policy issued by plaintiff Newark Insurance Company (Newark Insurance). Green and Bordley submitted claims for PIP benefits to Newark Insurance, which it paid.

Newark Insurance then brought an action against Valora's, RLMB, Luongo, Chrysler and Daimler Chrysler Corporation*fn2 for reimbursement of the PIP benefits it had paid to Green and Bordley. Newark Insurance's claims were based on N.J.S.A. 39:6A-9.1, which provides that an automobile insurer that pays PIP benefits may obtain reimbursement from any tortfeasor who was not required to maintain PIP coverage at the time of the accident. Newark Insurance subsequently filed an amended complaint that added as defendants Valora's insurer Empire, RLMB's insurer Peerless Insurance Company, and Luongo's insurer Harleysville Insurance Company.

Valora's and Empire filed a motion for a summary judgment dismissing Newark Insurance's claims against them based on the part of N.J.S.A. 39:6A-9.1 that bars a claim for reimbursement of PIP benefits against a tortfeasor who is required to and did purchase PIP coverage under its own insurance policy. The trial court granted this motion, concluding that because any tort claim against Valora's would have to be based on its alleged negligence during the period it held the Dodge Avenger for sale, it would be covered under the "auto" liability coverage of its policy, which provides for PIP benefits, and therefore, it could not be subject to a claim for PIP reimbursement under N.J.S.A. 39:6A-9.1.

In addition to Newark Insurance's PIP benefits reimbursement action, Green, Bordley and Van Keuren all brought personal injury actions against Valora's and Luongo. Van Keuren and Bordley also named Green as a defendant in their actions.*fn3

Green settled his personal injury action for $175,000, and Bordley settled his action for $125,000. As a result of these settlements and the trial court's grant of summary judgment to Valora's and Empire, the only remaining claims were Van Keuren's personal injury claim and Newark Insurance's PIP reimbursement claims against RLMB and Luongo, and their insurers, Peerless and Harleysville.

Van Keuren indicated she was willing to settle her claim for $325,000, and Newark Insurance indicated it was willing to settle its claim for $30,000. However, as a result of the settlements with Green and Bordley, there was only a total of $330,000 in insurance coverage available to settle both claims. Defendants indicated they would be willing to settle both claims for a total of $325,000, and it was suggested that Van Keuren accept $305,000 to settle her claim and that Newark Insurance accept $20,000 to settle its claims.

On April 20, 2005, Newark Insurance's counsel sent a letter to the court and parties, which stated that Newark Insurance would agree to accept $20,000 to settle its PIP reimbursement claims against Luongo and RLMB. ...


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