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Misner v. New Jersey Manufacturers Insurance Co.


January 15, 2009


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-1283-08.

Per curiam.


Argued December 15, 2008

Before Judges Lisa and Reisner.

Defendant, New Jersey Manufacturers Insurance Company (NJM), issued an automobile insurance policy to the employer of plaintiff, William T. Misner, Jr., for a policy period from April 22, 2006 to April 22, 2007. The policy contained underinsured motorist (UIM) coverage of $500,000, but also contained a step-down provision which limited UIM coverage available to any employee of the insured to the amount of UIM coverage in that employee's personal automobile policy, when available.

While driving his employer's motor vehicle, which was covered by the NJM policy, on June 6, 2006, Misner was involved in an accident and was injured. He settled his injury claim with the tortfeasor, the driver of the other vehicle, for that individual's $25,000 policy limit. At the time of the accident, Misner maintained a personal automobile policy with UIM limits of $15,000 per person/$30,000 total.

On March 5, 2008, Misner brought a UIM claim against NJM. An order to show cause was issued, compelling NJM to show cause why Misner was not entitled to pursue a UIM claim under the NJM policy. NJM moved for dismissal of Misner's complaint, relying on the step-down provision in its policy.

In a 2005 decision, our Supreme Court upheld the enforceability of step-down provisions such as the one in NJM's policy. Pinto v. N.J. Mfrs. Ins. Co., 183 N.J. 405 (2005). In response to that decision, the Legislature enacted a statute, N.J.S.A. 17:28-1.1(f), effective September 10, 2007, reversing the Pinto holding and rendering unenforceable step-down provisions in employers' policies such as the NJM policy in this case.

NJM's motion for dismissal came before the trial court in May 2008. The dispositive issue was whether N.J.S.A. 17:28-1.1(f) should be given retroactive application. In an oral opinion on May 16, 2008, the judge held that the statute should be given retroactive application. He therefore held that NJM's step-down provision was unenforceable and ordered NJM to participate in UIM arbitration with Misner. The judge entered an order to that effect on that date.*fn2 This appeal followed.

During the pendency of the appeal, a panel of this court issued an opinion on July 22, 2008, holding that N.J.S.A. 17:28-1.1(f) was not curative because its purpose was not to correct a misinterpretation of an existing statute, but was to break new ground by overturning Pinto, which had been based on contract principles. Olkusz v. Brown, 401 N.J. Super. 496, 503 (App. Div. 2008). The panel therefore held that the statute should be applied prospectively only, and that any UIM claim predicated upon an accident predating its adoption must be governed by the legal principles articulated in Pinto. Id. at 506.

Subsequent to oral argument in this case, Misner filed a motion seeking to allow him to withdraw as a party in the case. The motion was supported by Misner's attorney's certification, acknowledging that Olkusz is directly on point and is the controlling authority, and stating that "William T. Misner, Jr., hereby wishes to be withdrawn as a party from the above-captioned matter and hereby withdraws all requests for relief." We view this as a concession by Misner that, based upon this court's decision in Olkusz, the trial court decision in this case should be reversed.

For the reasons expressed in Olkusz, we hold that the trial judge erred in giving retroactive application to N.J.S.A. 17:28-1.1(f). Accordingly, the step-down provision in NJM's policy should have been enforced according to its terms, and it was error to order NJM to participate in UIM arbitration. Therefore, the trial court order of May 16, 2008 and the amended order of June 11, 2008 are reversed.

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