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Arroyo v. First Trenton Indemnity Co.

December 17, 2008

ELIZABETH ARROYO AND JUANITO ARROYO, PLAINTIFFS-RESPONDENTS,
v.
FIRST TRENTON INDEMNITY COMPANY, DEFENDANT-APPELLANT, AND STATE FARM INSURANCE COMPANY, DEFENDANT.



On appeal from Superior Court of New Jersey, Law Division, Camden County, Docket No. L-4621-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued: October 16, 2008

Before Judges Parrillo, Lihotz and Messano.

Defendant, First Trenton Indemnity Company (FTIC), appeals from a November 2, 2007 Law Division judgment entered in favor of plaintiffs, following a bench trial, on plaintiffs' declaratory judgment action.

The underlying litigation resulted following a head-on three-vehicle accident that occurred on February 13, 2000. The intoxicated tortfeasor, Peter Favuzzi, first rear-ended one vehicle operated by Edward Smith, and then crossed the center line of travel and struck the vehicle operated by plaintiff Juanito Arroyo and occupied by his wife, plaintiff Elizabeth Arroyo. Six other passengers were injured in the collisions.

The Arroyos' vehicle was insured pursuant to an automobile insurance policy issued by FTIC. The policy provided underinsured motorists (UIM) benefits in the amount of $100,000 per person and $300,000 per occurrence. Favuzzi's vehicle was insured by State Farm with liability coverage of $100,000 per person and $300,000 per occurrence. Smith's car was insured by Liberty Mutual and provided minimum liability coverage, that is, $15,000 per person and $30,000 per occurrence. Both Smith's and Favuzzi's carrier tendered the policy limits to resolve plaintiffs' and the other injured passengers' claims. A binding arbitration award assessed each claimant's request for damages consisting of pain, suffering, permanency, and economic loss. Ultimately, the court ordered a proportionate distribution of the monies paid into court.

The compensable loss resulting from plaintiffs' injuries exceeded their share of the sums received. Thus, they requested UIM benefits from FTIC. In final correspondence following arbitration but preceding suit, Elizabeth Arroyo explained she "recovered $58,500.00 from the tortfeasors and demanded the balance of her policy limits or $31,500.00."*fn1 Similarly, Juanito Arroyo sent post-arbitration correspondence advising he recovered "$32,000.00 from the tortfeasors and demanded $68,000.00 in UIM benefits."

FTIC repeatedly declined plaintiffs' requests for UIM benefits. FTIC's position was, "[t]he tortfeasor's $300,000 liability limit is not less than the insured's $100,000/$300,000 Underinsured Motorist Insurance limit."

Following a bench trial on plaintiffs' complaint, the court awarded Elizabeth Arroyo "$31,500.00 plus pre-judgment interest . . . in the amount of $3,399.09 for a total judgment in her favor in the amount of $34,899.09" and Juanito Arroyo "$68,000.000 plus pre-judgment interest in the amount of $7,337.73 . . . for a total judgment in the amount of $75,337.73."

On appeal, FTIC argues:

I. AS A MATTER OF LAW, TORTFEASOR FAVUZZI IS NOT UNDERINSURED AND NO CLAIM FOR UIM BENEFITS IS ALLOWED BY REASON OF HIS NEGLIGENCE.

II. A CLAIM FOR UIM BENEFITS BASED ON THE SMITH POLICY MUST BE PREMISED ON A FINDING OF LIABILITY, A PRESCRIBED PERCENTAGE OF LIABILITY, A QUANTUM OF DAMAGES AND A COMPARISON OF THE POLICY LIMITS.

III. NO DISPUTE OF MATERIAL FACT EXISTED AT THE MOTION STAGE, SO SUMMARY JUDGMENT SHOULD HAVE BEEN GRANTED ...


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