August 14, 2008
JOSE L. CHAVEZ, MARIA CHAVEZ AND MARIANA CHAVEZ, A MINOR BY HER GUARDIAN AD LITEM, MARIA CHAVEZ, PLAINTIFFS-APPELLANTS,
THE PROFORMANCE INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND EXECUTIVE RISK INDEMNITY, INC., AS SUBSIDIARY OF CHUBB GROUP OF INSURANCE COMPANIES, AND MARK T. MOOTY, DEFENDANTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-0532-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted January 16, 2008
Before Judges Sapp-Peterson and Messano.
Plaintiffs,*fn1 Jose Chavez, his spouse Maria, and daughter Marianna, appeal the grant of summary judgment to defendant, Proformance Insurance Company (Proformance), the insurer from whom plaintiffs sought uninsured motorists' benefits (UM). We affirm.
The operative facts are not disputed. Plaintiffs were involved in a motor vehicle accident with a vehicle that was uninsured. The vehicle operated by Jose was insured by Executive Risk Indemnity Company (Exeuctive), a California insurance company licensed to do business in New Jersey. The policy did not provide for personal injury protection (PIP) or UM benefits. However, because Executive was licensed to do business in New Jersey, it was obligated under N.J.S.A. 17:28-1.4, commonly known as the "deemer" statute, to provide minimum coverage for PIP and UM benefits whenever a vehicle insured under a policy it issued was involved in a motor vehicle accident in New Jersey.
When Executive issued the policy to Jose, he and his family had been living in California. At the time of the accident, however, they had relocated to New Jersey and were living with Maria's brother, Sergio Cartagena (Cartagena). Cartagena was insured under an auto policy issued by Proformance which provided liability coverage and mandatory PIP and UM coverage. Following the accident, plaintiffs received PIP benefits as well as the statutory minimum UM benefits of $15,000/$30,000*fn2 under the Executive policy. Plaintiffs, as members of Cartagena's household, also sought recovery of UM benefits from Proformance. The Proformance policy provided $100,000/$300,000 in UM benefits to members of its insured's household who sustain injuries caused by the operator of an uninsured motor vehicle. However, it contained a step-down provision that lowered benefits available to an injured party who was directly insured by that party's own policy. In such situations, the step-down provision limited coverage available to the injured party to the maximum available coverage under a similar policy. Because plaintiffs were insured by Executive and, under that policy, were subject to the statutory minimum coverage for UM benefits, Proformance denied UM benefits to plaintiffs.
Plaintiffs commenced a personal injury action in Superior Court against the driver of the uninsured vehicle, Executive and Proformance. In the fourth through the seventh counts of the complaint, plaintiffs sought various relief against Executive and Proformance, including a declaration that they were entitled to UM benefits and UM arbitration as well as compensatory damages and punitive damages resulting from the carriers' gross misconduct, bad faith, breach of their duty of good faith and fair dealing owed to plaintiffs," and their "unfair and deceptive acts and practices involving unfair claim settlement practices[.]"
Thereafter, plaintiffs moved for summary judgment against Proformance only, seeking an order requiring it to pay UM benefits. Plaintiffs urged that the step-down provisions of the Proformance policy did not apply because the coverage under their Executive policy did not contain "similar coverage." Proformance cross-moved for summary judgment, arguing that the deemer statute rewrites policies issued by out-of-state insurance companies authorized to do business in New Jersey to conform the policy to New Jersey law. In addition, Proformance argued that its policy issued to Cartagena contained an enforceable step-down provision.
In an oral decision placed on the record on May 16, and 22, 2007, the motion judge noted that "[b]oth sides agree that the deemer statute is in force and effect and has been utilized for the PIP coverage benefits and will be utilized for the uninsured motorist coverage by Executive" and therefore concluded that the only question before the court was whether the Executive policy, which concededly did not provide any PIP and UM coverage, should be construed to include New Jersey's statutorily mandated PIP and UM coverage. The judge found that the Executive policy was automatically reformed, in accordance with the deemer statute, to provide the minimum statutory UM and PIP benefits to plaintiffs, which benefits the court noted plaintiffs had already accepted. The court rejected plaintiffs' argument that they were also entitled to receive additional PIP and UM benefits under the Proformance policy and characterized plaintiffs' position as one that allowed plaintiffs to take advantage of our [deemer] statute and then say, but now that we've taken advantage of your statute, and we've received all of these benefits that we did not pay for, because no premium was ever paid for this.
But because the Legislature created an . . . automatic reformation[,] I should say of the contract, now we should be allowed to discard that reformation after we've obtained the benefits and utilized the language from California, because its advantageous to our position in order to avoid the step[-]down provision.
The judge denied plaintiffs' motion but granted defendant's cross-motion for summary judgment and dismissed the complaint against Proformance with prejudice. The present appeal followed.
On appeal plaintiffs contend the motion judge erred in finding that the step-down provision in the Proformance policy applies to them because they did not have similar coverage under the Executive policy. We reject this contention and affirm substantially for the reasons expressed by Judge Thomas W. Cavanugh, Jr., in his oral opinion delivered on May 16 and 22, 2007.
To the extent a legal issue is involved, the trial court's opinion is "not entitled to any special deference." Manalapan Realty, L.P. v. Township Committee of Manalapan, 140 N.J. 366, 378 (1995). We are, however, in complete accord with Judge Cavanaugh's determination that plaintiffs are not entitled to recover PIP and UM benefits under the Proformance policy as result of their motor vehicle accident.
N.J.S.A. 17:28-1.4 provides in pertinent part:
[A]ny insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State, or controlling or controlled by, or under common control by, or with, an insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State, which sells a policy providing automobile or motor vehicle liability insurance coverage, or any similar coverage, in any other state or in any province of Canada, shall include in each policy coverage to satisfy at least the liability insurance requirements of [N.J.S.A. 39:6B-1] or [N.J.S.A. 39:6A-3], the uninsured motorist insurance requirements of [N.J.S.A. 17:28-1.1], and personal injury protection benefits coverage pursuant to [N.J.S.A. 39:6A-4] or [N.J.S.A. 17:28-1.3], whenever the automobile or motor vehicle insured under the policy is used or operated in this State.
As the motion judge noted, plaintiffs conceded that Executive, as a subsidiary of Chubb Insurance Group of Insurance Companies, was and is authorized to transact business in New Jersey. Plaintiffs also conceded that the Executive policy was conformed to provide the standard PIP coverage and minimum liability and UM limits in accordance with the deemer statute. Likewise, plaintiffs do not dispute that they sought and received benefits under the Executive policy consistent with the $15,000/$30,000 statutory mandates. Plaintiffs urge, however, that the Executive policy did not provide coverage "similar" to the Proformance policy because it contained no contractual provisions for PIP or UM benefits. Rather, the benefits they received were pursuant to statute. We disagree.
Although the motion judge utilized the terminology "automatic reformation" to describe the mechanics of invoking the statutory provisions of the deemer statute, we have previously ruled that application of the deemer statute does not require reformation of policies to which it applies. Lusby By and Through Nicols v. Hitchner, 273 N.J. Super. 578, 589-90 (App. Div. 1994). Instead, we have interpreted those policies as being deemed to include the mandatory PIP and UM coverage.
Viewed in that context, plaintiffs' Executive policy provides similar coverage, albeit by statute rather than as part of a contractual benefit purchased by the insured.
We agree with the motion judge that the intent of the deemer statute is not to permit an insured to recover greater benefits than that which the insured has purchased. Rather, a major purpose of the deemer statute is "to ensure that New Jersey-authorized insurance companies provide to their out-of-state insureds traveling in New Jersey the same protections required of in-state insured vehicles." Gov't Employees Ins. Co. v. Allstate Ins. Co., 358 N.J. Super. 555, 561 (App. Div. 2003) (citing Martin v. Home Ins. Co., 141 N.J. 279, 282 (1995)). Thus, as an insurer authorized to do business in New Jersey, Executive's policy issued to Jose contained PIP and UM benefits. Moreover, Jose's wife and daughter, Maria and Marianna, were also insured under the Executive policy and therefore subject to application of the deemer statute. N.J.S.A. 17:28-1.4.
In view of our determination that the Executive policy provided the requisite PIP and UM benefits, we are satisfied that the step-down provisions contained in the Proformance policy issued to Cartagena are enforceable against plaintiffs. The provisions provide:
However, subject to our maximum limit of liability for this coverage:
a. An "insured" is not the named insured under this policy;
b. That "insured" is a named insured under one or more other policies providing similar coverage; and
c. All such other policies have a limit of liability for similar coverage which is less than the limit of liability for this coverage; then our maximum limit of liability for that "insured", for all damages resulting from any one accident, shall not exceed the highest applicable limit of liability under any insurance providing coverage to that "insured" as a named insured.
a. An "insured" is not the named insured under this policy or any other policy;
b. That "insured" is insured as a spouse or family member under one or more other policies providing similar coverage; and
c. All such other policies have a limit of liability for similar coverage which is less than the limit of liability for this coverage; then our maximum limit of liability for that "insured", for all damages resulting from any one accident, shall not exceed the highest applicable limit of liability under any insurance providing coverage to that "insured" as a spouse or family member.
The UM statute does not define "named insured." However, N.J.S.A. 39:6A-2(g) defines "named insured" as the "person or persons identified as the insured in the policy and, if an individual, his or her spouse[.]" In interpreting both the No Fault statute, N.J.S.A. 39:6A-1 to -35 and the UM statute, N.J.S.A. 17:28-1.1, we have construed terms in both statutes in pari materia. See State Farm Mut. Auto. Ins. Co. v. Pizzi, 208 N.J. Super. 152, 155 (App. Div. 1986); Brokenbaugh v. N.J. Mfrs. Ins. Co., 158 N.J. Super. 424, 434 (App. Div. 1978).
Under such a construction, plaintiffs are not the named insured under the Proformance policy; and, as insureds under the Executive policy, they are subject to Proformance's step-down provisions. Although plaintiffs urge that "[t]he step-down provision contained in the Proformance policy is a type of exclusionary clause that must be interpreted strictly against the insurance company[,]" the language mirrors the language of a typical policy endorsement approved by the Commissioner of Insurance pursuant to N.J.S.A. 17:28-1.1(d). See Cynthia M. Craig and Daniel J. Pomeroy, New Jersey Auto Insurance Law, § 19:3 (2008). Consequently, Judge Cavanaugh correctly concluded that the Executive policy provided similar coverage to that provided under the Proformance policy and plaintiffs were thus subject to its step-down provisions.