On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-872-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 29, 2008
Before Judges Skillman and Graves.
On June 29, 2000, defendant William Butler was seriously injured in a motorcycle accident. Butler lost control of his motorcycle as it passed over a grate on one of the travel lanes of Quakerbridge Road in Lawrence Township and was thrown onto the pavement. While on the pavement, Butler was run over by another motorcyclist named James Everett.
Butler subsequently brought a personal injury action against Everett and Mercer County, which owns and maintains Quakerbridge Road. Butler settled his claim against Everett for $15,000, which was the coverage limit of Everett's policy, and also settled his claim against Mercer County for $400,000, for a total recovery of $415,000.
At the time of his accident, Butler had a motor vehicle insurance policy with plaintiff State Farm, which included $100,000 of underinsured motorist (UIM) coverage for a single occurrence. Following the settlement of his claims against Everett and Mercer County, Butler submitted a UIM claim to State Farm for $85,000, representing the difference between the $15,000 limit of Everett's policy and Butler's $100,000 of UIM coverage. State Farm denied the claim on the ground that Butler already had obtained a total recovery of $415,000 for his injuries suffered in the accident, which exceeded his $100,000 UIM coverage, and subsequently brought this action for a declaratory judgment that it had no liability for payment to Butler of UIM benefits.
State Farm brought the case before the trial court by a motion for summary judgment. The court granted the motion for the reasons set forth in an oral opinion. Butler filed a motion for reconsideration, which the court denied.
On appeal, Butler argues that under both the statute governing UIM coverage and the terms of the policy issued by State Farm, he is entitled to recover from State Farm the difference between the $15,000 limit of Everett's policy and the $100,000 of UIM coverage provided to him under the State Farm policy.
The applicable part of the statute governing UIM coverage states:
The limits of [UIM] coverage available to an injured person shall be reduced by the amount he has recovered under all bodily injury liability insurance or bonds[.] [N.J.S.A. 17:28-1.1(e).]
In Bauter v. Hanover Insurance Company, 247 N.J. Super. 94 (App. Div. 1991), certif. denied, 126 N.J. 335 (1991), we concluded that this provision requires the set-off against the UIM limits of all prior recoveries by the injured party, including recoveries from non-automobile insurance policies. In reaching this conclusion, we stated:
The purpose of New Jersey's statute is to protect the insured up to the UIM limits purchased and not to make an injured person whole again.....
Because plaintiff in this case has recovered more than his UIM limits, permitting him to recover UIM benefits from Hanover would be contrary to the language of N.J.S.A. 17:28-1.1(e). Rather, requiring a set-off of all available non-automobile liability insurance proceeds... would further the legislative intent behind N.J.S.A. 17:28-1.1(e) of providing UIM coverage merely as a gap filler and not ...