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Mangiaracina v. American Casualty Company of Reading

April 16, 2008


On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-424-04.

Per curiam.


Argued January 16, 2008

Before Judges Wefing, Parker and R. B. Coleman.

Defendant American Casualty Company (American)*fn1 was granted leave to appeal from an order entered on January 5, 2007 denying its motion for summary judgment and an order entered on April 10, 2007 denying its motion for reconsideration. We affirm.

At issue here is American's underinsured motorist (UIM) step-down provision in an employer's business auto policy. The employer's UIM coverage was limited to the amount provided by the employee's personal auto insurance.

Plaintiff Michelle Mangiaracina was involved in an automobile accident on January 8, 2002. She claimed to have suffered injuries and economic damages exceeding $1 million. The tortfeasor settled through its carrier, State Farm, for his policy limit of $250,000.

At the time of the accident, plaintiff was driving a 2001 Chevy Suburban owned by her employer, Rockledge Nursery, Inc. (Rockledge), and insured under the American policy. Rockledge is wholly owned by plaintiff's husband, George. Plaintiff worked part-time for the business and the Chevy Suburban was purchased for her use going to and from the business and making deliveries for the business. It was principally garaged at plaintiff's home. Rockledge was the only "named insured" on the policy. The policy provided for $1 million in UM/UIM coverage. Plaintiff handled the insurance for the business and used defendant Clark & Morrison as an agent. Morrison, one of the owners of the agency, testified that he believed the policy provided $1 million in UIM coverage. Plaintiff also had a Prudential policy covering personal family vehicles in the amount of $100,000/$300,000.

American declined coverage for plaintiff's accident based upon the step-down provision, which plaintiff claims is "hidden" in the policy. The step-down provision capped UIM coverage at the amount of plaintiff's personal policy.

After hearing arguments, the trial court denied defendant's summary judgment motion, finding that there was no evidence to support American's position that plaintiff's Prudential policy would provide coverage or limits on coverage for the Chevy Suburban insured by American.


In this appeal, defendant argues that the trial court erred in its determination that plaintiff was a "named insured" under the American policy because (1) it "overlooked the controlling Supreme Court directive in Pinto v. New Jersey Mfrs. Ins. Co., 365 N.J. Super. 378 (App. Div. 2004), aff'd, 183 N.J. 405, 417 (2005);" (2) plaintiff is not a "named insured" because she is not individually named on the policy; and (3) plaintiff "does not meet the narrow and limited fact pattern to transform an 'insured' into a 'named insured' as enunciated by the Supreme Court in [Pinto]." Plaintiff responds that, under both Pinto and Macchi v. Connecticut General Ins., Co., 354 N.J. Super. 64 (App. Div. 2002), she is a named insured, entitled to UIM coverage under the policy.

In Pinto, the Court held that motor vehicle liability insurance policies, which name a business or corporate entity as a named insured, may include a step-down provision limiting UM and UIM coverage for employees who are not individually named on the corporate policy and who are named individually on a personal policy. 183 N.J. at 417. The Court held these step-down provisions valid and enforceable, limiting an employee's coverage under an employer's business auto policy to the lower limits of the UM/UIM coverage in the employee's individual auto policy, even if the employee is injured in a covered vehicle in a work-related accident. Id. at 412.

In Macchi, we considered whether the plaintiff, who was injured while driving a vehicle owned by her husband or his business and insured under her husband's business auto policy, was covered under the policy, and whether the step-down provision in the UM/UIM endorsement applied to her. 354 N.J. Super. at 67-76. At the time of the accident, the plaintiff and her husband were separated and living apart. Id. at 68. The vehicle she was driving, a Corvette, was considered her car, and she used it daily to commute to and from her job in Pennsylvania. Id. at 68-69. The plaintiff's husband owned the business, the named insured on the policy, which provided $1 million in both UM and UIM coverage. Id. at 73. The policy also included a step-down ...

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