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Wall v. Occidental Fire & Casualty Insurance Co.

March 2, 2009


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-6791-04.

Per curiam.


Argued February 10, 2009

Before Judges Skillman and Ashrafi.

In Olkusz v. Brown, 401 N.J. Super. 496 (App. Div. 2008), this court held that an amendment of N.J.S.A. 17:28-1.1, enacted September 10, 2007, does not apply retroactively to motor vehicle accidents that occurred before that date. As amended, that statute now prohibits "step-down" provisions of uninsured or underinsured motorist coverage in a business motor vehicle policy. The amendment was the Legislature's response to the decision of the Supreme Court in Pinto v. New Jersey Manufacturers Insurance Co., 183 N.J. 405 (2005), which upheld the enforceability of such step-down provisions.

Appellant Steven T. Wall, Jr., contends that the holding of Olkusz was incorrect and asks us to reach the opposite conclusion about retroactivity of the amendment. He seeks reversal of the trial court's order dismissing with prejudice his claim against his employer's motor vehicle insurance policy.

We see no reason to depart from the holding of Olkusz and now affirm the trial court's ruling.

Respondent Occidental Fire & Casualty Insurance Company issued a business motor vehicle policy on June 1, 2002 to Hermann Services, Inc., a trucking firm that employed Steven Wall as a driver. The Occidental policy included underinsured motorist (UIM) coverage up to a maximum of $1,000,000. The amount of that coverage, however, only applied to the "named insured" of the policy, which was the corporate employer, Hermann Services, Inc. The UIM endorsement contained a step-down clause that was applicable to all other "insured" persons covered by the Occidental policy and limited coverage for each driver employed by Hermann Services to the maximum amount of UIM coverage contained in the driver's own personal auto policy. Appellant Wall's personal auto policy covered losses caused by underinsured motorists up to a maximum of $100,000.

Wall was injured in a motor vehicle accident on January 6, 2003, while driving a truck for Hermann Services. He filed a worker's compensation claim and was eventually awarded compensation of $127,500 for 50% permanent partial disability as well as medical expenses and other temporary benefits. On January 15, 2004, Wall filed a negligence lawsuit against the driver of the other vehicle in the accident, Donald B. Conrad. Subsequently, Conrad's liability insurance carrier, USAA, offered to pay the $100,000 limit of Conrad's policy to settle Wall's negligence lawsuit. Because the offer matched the maximum of Wall's personal UIM coverage, Wall could seek nothing more under his own auto policy. He sought additional coverage under the UIM endorsement of his employer's Occidental policy, but Occidental declined to provide coverage.

In September 2004, Wall filed a verified complaint against Occidental and obtained an order to show cause seeking to compel Occidental to arbitrate his UIM claim and to approve his settlement of the negligence claim against Conrad. On the return date, the trial court entered an order dismissing without prejudice Wall's verified complaint on the condition that Occidental either approve the settlement with Conrad or pay Wall $100,000 in exchange for subrogation rights to his claim against Conrad. These conditions were in accordance with the holding of Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), concerning the obligations of the UIM carrier. Occidental approved the settlement and Conrad's carrier deposited its policy limit with the court. The lawsuit against Conrad was thus settled and dismissed in February 2005. Subsequently, the deposited $100,000 of the USAA policy were distributed in part to Wall's attorney to pay his fees, lesser amounts in payment of certain liens, and the balance of more than $62,000 to the worker's compensation carrier in payment of its lien on any third-party recovery by Wall.

Before Wall's complaint in this case was filed, on January 31, 2004, this court had issued its decision in Pinto v. New Jersey Manufacturers Insurance Co., 365 N.J. Super. 378 (App. Div. 2004), holding that step-down clauses like the one in the Occidental policy are enforceable. The Supreme Court granted certification in Pinto on April 26, 2004, and affirmed that decision about a year later, on June 6, 2005. 183 N.J. 405.

Two years later, the Legislature abrogated the holding of Pinto by enacting the amendment of N.J.S.A. 17:28-1.1 prohibiting step-down clauses in a business or corporate motor vehicle policy. The amendment was made effective immediately upon its enactment on September 10, 2007. L. 2007, c. 163, § 2.

In February 2008, Wall moved to reinstate his verified complaint against Occidental. Occidental filed a cross-motion to dismiss Wall's complaint with prejudice. On April 11, 2008, the trial court heard argument and granted Occidental's cross-motion to dismiss the complaint with prejudice. The court ruled that N.J.S.A. 17:28-1.1(f) was not applicable retroactively to an accident like Wall's that had occurred before the date of its enactment. Wall filed a timely notice of appeal.

Whether a statute applies retroactively is a question of law, and so, our standard of review is plenary. See LoBiondo v. O'Callaghan, 357 N.J. Super. 488, 495 (App. Div.), certif. denied, 177 N.J. 224 (2003). "A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any ...

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