On certification to the Superior Court, Appellate Division, whose opinion is reported at 391 N.J. Super. 113 (2007).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
In this matter, the Court is called upon to determine the scope of the statute granting automobile insurers immunity from suit arising from an insured's election of coverage. See N.J.S.A. 17:28-1.9(a).
In 1987, plaintiff Michael Pizzullo (Michael) telephoned his automobile insurance carrier, defendant New Jersey Manufacturers Insurance Company (NJM) to obtain coverage for his wife, plaintiff Dorothea Pizzullo (Dorothea). The couple was purchasing a new car for Dorothea and, as part of the plan to establish a separate identity for his wife's credit and financial transactions, Michael wanted to acquire insurance coverage for her that was as good as the coverage that he then had for himself.
Michael discussed his request with Linda Middleton, a customer service representative at NJM. Michael specifically asked to purchase a separate policy that would ensure that Dorothea had the same protections that his policy afforded him. In response, Middleton advised that it was not NJM's practice to write separate policies for married couples, but that he could accomplish "the same exact coverage" for her simply by adding her new car to the existing policy. NJM does not contest Michael's assertion that he was assured that by adding Dorothea and her new vehicle to the existing policy, he would accomplish his goal of creating the same coverage for her as he had. NJM conceded that it had a policy of discouraging the purchase of separate insurance policies by spouses unless the couple was separated or divorced, and it trained its customer service representatives to respond to any inquiries of this kind just as Middleton did when Michael asked about coverage for his wife.
Having been assured that by adding his wife to his existing policy he would be obtaining coverage for her that was equal to what he already had for himself, Michael acquiesced in Middleton's statement about coverage. Significantly, NJM charged separate premiums for his car and for his wife's car, the new total being approximately double the premium that Michael had been paying for the prior policy. The policy was renewed every year thereafter, and the same documents were sent each year. Each time, the Pizzullos received a declarations page that showed $500,000 for liability coverage, per car, per accident; and $500,000 per car for Uninsured/Underinsured Motorist (UM/UIM) coverage. The declarations page did not contain an explicit notation that the UM/UIM coverage was provided on a per accident basis. The policy document itself, however, contained a separate UM/UIM provision, stating that the UM/UIM benefits were provided on a per accident basis.
In actuality, the assurance given by NJM through its customer service representative was not accurate. Rather than providing the same level of coverage for each of the spouses, the effect of adding Dorothea to Michael's policy was to bring both of them within one $500,000 per accident coverage limit for UM/UIM purposes. The result was that their UM/UIM coverage limit was, potentially, only half of that for each of them in the event that they were both injured in a single accident. Had Michael been permitted to purchase a separate policy for his wife as he requested, each would have been able to obtain the maximum UM/UIM benefits of $500,000 to cover injuries suffered in a common accident.
In 1998, the Pizzullos were both severely injured when they were involved in a single accident while using the same vehicle, and they collected all of the available insurance from sources other than the policy issued by NJM. Believing that they each had $500,000 UIM coverage, the maximum amount allowed by their policy, they each sought the full benefit of that UIM limit. NJM denied that claim, asserting that $500,000 was the total amount they could recover for their injuries under the UIM provision.
The Pizzullos filed a declaratory judgment action seeking a determination that each was entitled to UM/UIM benefits up to $500,000. NJM argued that even though the advice given by its customer service representative was erroneous, and even though the Pizzullos had relied on that inaccurate representation when they agreed to forgo the purchase of a separate policy for Dorothea, NJM was nonetheless immune from liability under N.J.S.A. 17:28-1.9(a).
Following a two-day bench trial, the trial court held that the immunity statute did not apply. It reasoned that the statute was enacted to limit litigation over an insurer's failure to inform insureds of coverage options, and the Pizzullos' claim was not based on that type of failure, but rather on NJM's misrepresentations in response to their questions about coverage. The trial court also held that NJM was equitably estopped to deny coverage.
NJM appealed and the Appellate Division, in a published opinion, Pizzullo v. N.J. Mfrs. Ins. Co., 391 N.J. Super. 113 (App. Div. 2007), reversed. The panel reasoned that NJM was entitled to the protection of the immunity statute because it satisfied the following three requirements of the statute: the policy provided well in excess of the minimum coverage required by law; NJM complied with the notice requirements; and, although NJM's erroneous advice might well be regarded as simple negligence, nothing in the record suggested that NJM was engaged in willful, wanton or grossly negligent conduct. The Appellate Division also rejected the trial court's estoppel analysis.
The Supreme Court granted the Pizzullos' petition for certification. 192 N.J. 71 (2007).
HELD: Under the unique factual record of this case, which demonstrates that the Pizzullos requested certain coverage and NJM promised to provide that coverage but then failed to do so, NJM is not entitled to immunity from suit under N.J.S.A. 17:28-1.9(a).
1. The statute provides an insurer with immunity from suit "in an action for damages on account of the election of a given level of motor vehicle insurance coverage . . . ." N.J.S.A. 17:28-1.9(a). The Court's analysis of this matter cannot be based on the words used by the Legislature alone, because as this dispute illustrates, the language chosen, that is, use of the word "election," is not, at least in this situation, clear. Instead, the argument before the Court requires that it consider the Legislature's intent by attempting to understand the immunity statute in the context of the history of UM/UIM coverage. Prior to 1972, UM coverage was entirely optional. Beginning in 1972, it was no longer optional and automobile insurers were required to offer $30,000 in UM coverage. In 1984, insurers were required to offer insureds up to $500,000 in UM/UIM coverage, depending on the limits of the liability coverage that the particular insured carried. Thereafter, courts were clogged with claims by insureds that they received improper or insufficient advice from insurance agents or brokers concerning the options available to them. In 1993, the Leg islature passed the immunity statute, N.J.S.A. 17:28-1.9, in direct response to this flood of litigation. The statute therefore was enacted to abrogate the duty imposed on insurers, insurance agents, and brokers by earlier judicial decisions making them liable for failing to advise their customers of the availability of additional underinsured and uninsured motorist coverage. The inclusion of the exception to immunity based on "willful, wanton or gross negligence" created an important safety valve for purchasers of insurance in those few situations in which the loss should appropriately fall on the insurer. (pp. 13-20)
2. Subsection (b) of the immunity statute included another requirement as a condition of the grant of immunity -- the insurer was required to secure an acknowledgement by the insured that the available UM and UIM coverage limits had been explained and that the insurer would not be liable based on the insured's selection of coverage in accordance with subsection (a) of the immunity statute. Far, then, from the sort of blanket immunity that reaches well beyond the circumstances that give rise to this legislative response, this legislative history denotes a careful and reasoned consideration of an appropriate solution to a then-overwhelming problem posed by the litigation explosion and the efforts by the courts to find the balance between the competing interests of insurers and those who purchase insurance. The Court concludes that the Legislature meant the statute to confer immunity in circumstances relating to an insured's election of UIM coverage when the insured attempts to later shift the blame for a decision to opt for any level of coverage less than the maximum back onto the insurer, as long as the insurer has complied with its obligations to make known the availability of all possible limits as required by the statute. The circumstances the Court confronts here, however, are unlike those that the Legislature addressed in responding to the litigation explosion. Michael asked for precisely the level of coverage he wanted, was promised that coverage, and simply seeks to hold NJM to that agreement. To the extent that Michael elected, he seeks only to enforce that choice, not, as the statute would prohibit, to avoid it. (pp. 20-23)
3. Even if the Court was not persuaded that its reading and understanding of the scope of the immunity statute is fully consistent with the Legislature's intent, it would nonetheless find no ground on which to impose a bar against the Pizzullos' recovery here. Because of the substantial disparity in the sophistication of the parties, and because of the highly technical nature of insurance policies, the Court has long assumed a particularly vigilant role in ensuring their conformity to public policy and principles of fairness. When there is ambiguity in an insurance contract, courts interpret the contract to comport with the reasonable expectations of the insured, even if a close reading of the written text reveals a contrary meaning. As the trial court pointed out, even though the policy itself is clear in its language applying a per accident limitation to the UIM coverage, prior to the date of the accident, the declarations pages the Pizzullos received omitted that important aspect of the coverage, implying that they had received the protection for which they had bargained. Similarly, the Buyer's Guide and Coverage Selection Form were, in this context, ambiguous. In addition, even though a careful and searching review of the policy itself would have disclosed that the per accident limitation applied to UIM coverage, it could not have overcome the ambiguity on the face of the declarations sheet. Here, Michael specifically asked for a separate policy for Dorothea that would give her the same coverage that he had, and he was assured that by adding Dorothea to the existing policy, each of the spouses would have the same coverage that Michael had preceding Dorothea's addition to the policy. The declarations page did not dispel the inaccurate advice that Michael had been given. Under these circumstances, and in light of the great importance of the declarations page in determining the reasonable expectations of the insured, the Court concludes both that the policy documents were ambiguous and that it was reasonable for the Pizzullos to believe that they had secured the "double coverage" that they thought they had been promised. In light of the Court's analysis of the scope of the statute, it need not address the trial court's alternate equitable estoppel analysis or the Appellate Division's rejection thereof. (pp. 23-29)
The judgment of the Appellate Division is REVERSED, and the judgment of the Law Division is REINSTATED.
CHIEF JUSTICE RABNER and JUSTICES LONG, LaVECCHIA, ALBIN, WALLACE, and RIVERASOTO join in JUSTICE HOENS's opinion.
The opinion of the court was delivered by: Justice Hoens
In this matter, we are called upon to determine the scope that our Legislature intended to be afforded to the statute enacted in June 1993, which granted automobile insurers immunity from suit arising from an insured's election of coverage. See N.J.S.A. 17:28-1.9(a). The trial court, after first concluding that the statute did not provide the insurer with immunity, determined that the insurer was equitably estopped to decline coverage. The Appellate Division reversed, finding that the statute afforded the insurer immunity and rejecting the application of the estoppel doctrine as having been abrogated by the passage of the immunity statute itself.
Our analysis of the intent and meaning of the statute compels us to conclude that, notwithstanding its apparently broad wording, this record presents us factual circumstances that place the insurer outside of the statute's protective scope. The factual record, which is truly unique, demonstrates that the insured requested certain coverage and that the insurer promised to provide it, but did not do so. The record further reflects that the insurer misrepresented the coverage to the insured and that the documents issued to the insured were inherently ambiguous. In these unusual circumstances, we conclude that the insurer was not entitled to claim the immunity afforded by the statute. We further conclude that because of the ambiguity in the documents, the insured's expectation of coverage was reasonable.
The facts are not a matter of controversy. In 1987, plaintiff Michael Pizzullo ("Michael") telephoned his automobile insurance carrier, defendant New Jersey Manufacturers Insurance Company ("NJM"), to obtain coverage for his wife, plaintiff Dorothea Pizzullo ("Dorothea"). The couple was purchasing a new car for Dorothea and, as part of their plan to establish a separate identity for his wife's credit and financial transactions, Michael wanted to acquire insurance coverage for her that was as good as the coverage that he then had for himself. He telephoned defendant and discussed his request with Linda Middleton, a customer service representative. He ...