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Posso v. Acceleration National Insurance Co.

September 4, 2008

HENRY POSSO, PLAINTIFF-APPELLANT,
v.
ACCELERATION NATIONAL INSURANCE COMPANY AND REDLAND TRANSPORTATION, DEFENDANTS, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Essex County, Docket No. L-675-04.

The opinion of the court was delivered by: C.L. Miniman, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued: May 12, 2008

Before Judges Stern,*fn1 Collester and C.L. Miniman.

Plaintiff Henry Posso appeals from the October 20, 2006, dismissal of his claim against defendant New Jersey Property-Liability Insurance Guaranty Association (PLIGA). Plaintiff was rendered a quadriplegic in a work-related automobile accident on April 2, 1999, which was caused in major part by the negligence of a phantom vehicle. The New Jersey Manufacturers Insurance Company (NJM), as the workers' compensation carrier, provided medical care and wage-loss benefits to him. Plaintiff asserted an uninsured motorist (UM) claim against Acceleration National Insurance Company/Redland Insurance Company*fn2 (collectively "Acceleration")*fn3 on October 11, 2000, and NJM asserted a workers' compensation lien of almost $1.3 million. Plaintiff had $500,000 in UM coverage with Acceleration, but it was declared insolvent by the Court of Common Pleas in Ohio. As a consequence, plaintiff is limited by the New Jersey Property-Liability Insurance Guaranty Association Act (Guaranty Act), N.J.S.A. 17:30A-1 to -20, to seeking recompense from PLIGA for an amount not to exceed $300,000. N.J.S.A. 17:30A-8(a)(1).

PLIGA defended the claim and was ordered to participate in arbitration. Plaintiff received a net arbitral award of $6 million. PLIGA then filed a motion to dismiss on the ground that the workers' compensation benefits received by plaintiff extinguished any obligation of PLIGA to pay. Plaintiff cross-moved to enforce the award. The judge concluded that PLIGA was not obligated to pay because the workers' compensation lien extinguished the statutory maximum, denied plaintiff's motion to enter judgment for $300,000 and dismissed the action with prejudice. This appeal followed. We reverse and remand for entry of a judgment compelling PLIGA to pay $300,000 to plaintiff.

The scope of our review of this summary judgment is de novo because it presents only a question of law. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.").

The Guaranty Act was adopted by the Legislature to provide recovery to New Jersey residents after an insurer has been declared insolvent. The Legislature stated:

The purpose of this act is to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payment, to avoid financial loss to claimants or policyholders because of the insolvency of an insurer, to assist in the detection and prevention of insurer insolvencies, to provide an association to assess the cost of such protection among insurers, and to provide a mechanism to run off, manage, administer and pay claims asserted against the Unsatisfied Claim and Judgment Fund, created pursuant to P.L. 1952, c. 174 (C. 39:6-61, et seq.), the New Jersey Automobile Full Insurance Underwriting Association, created pursuant to P.L. 1983, c. 65 (C. 17:30E-1, et seq.), and the Market Transition Facility, created pursuant to section 88 of P.L. 1990, c. 8 (C. 17:33B-11). [N.J.S.A. 17:30A-2(a).*fn4 ]

The legislation created PLIGA, a private, "nonprofit, unincorporated association," to implement the Guaranty Act. N.J.S.A. 17:30A-6; Am. Employers' Ins. Co. v. Elf Atochem N.A., Inc., 157 N.J. 580, 587 (1999). PLIGA is financed by all New Jersey insureds through policy surcharges imposed by their automobile insurance carriers, which are paid over to PLIGA to cover claims made against it. N.J.S.A. 17:30A-8(a)(3); Carpenter Tech. Corp. v. Admiral Ins. Co., 172 N.J. 504, 508 (2002) (citing Railroad Roofing & Bldg. Supply Co. v. Fin. Fire & Cas. Co., 85 N.J. 384, 389-90 (1981)).

PLIGA is obligated to assume the contractual obligations of insolvent insurers and pay "covered claims" as defined by N.J.S.A. 17:30A-5:

"Covered claim" means an 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. "Covered claim" shall not include any amount due any reinsurer, insurer, insurance pool, or underwriting association, as subrogation recoveries or otherwise; provided, that a claim for any such amount, asserted against a person insured under a policy issued by an insurer which has become an insolvent insurer, which, if it were not a claim by or for the benefit of a reinsurer, insurer, insurance pool, or underwriting association, would be a "covered claim," may be filed directly with the receiver of the insolvent insurer, but in no event may any such claim be asserted in any legal action against the insured of such insolvent insurer[.]*fn5

There is no dispute that (1) plaintiff's UM claim is within Acceleration's UM coverage, (2) the claim is not in excess of Acceleration's policy limits, (3) the Guaranty Act applies to the policy, (4) Acceleration is an insurer as defined by the Guaranty Act, (5) Acceleration was declared insolvent after January 1, 1974, and (6) plaintiff was a New Jersey resident at the time of the accident. The sole issue in this case is whether plaintiff's UM claim is "an unpaid claim" within the ...


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