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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 special deference." Manalapan Realty v. Township Comm. of Manalapan, 140 N.J. 366, 378 (1995).

In Olkusz v. Brown, 401 N.J. Super. 496, another panel of this court considered and rejected precisely the same argument for retroactivity that Wall makes in this appeal. In Olkusz, the plaintiff had been injured in a motor vehicle accident on April 13, 2004. Her employer's UIM coverage contained a step-down clause, which resulted in no coverage for plaintiff under the employer's policy. Arguing that N.J.S.A. 17:28-1.1(f) invalidated step-down clauses, plaintiff's personal auto insurance carrier sought an order requiring the employer's policy to provide UIM coverage.

The court in Olkusz began its retroactivity analysis with the well-settled presumption that statutes are applied prospectively unless they expressly state that they shall be effective retroactively. 401 N.J. Super. at 501-02. The court then considered each of three "judicially crafted categories favoring retroactivity," id. at 502-03, namely, (1) where the Legislature has explicitly or implicitly expressed its intent that the statute should apply retroactively, (2) where the statute is "curative," or (3) where the expectations of the parties would warrant retroactive application. The court concluded that each of those categories was inapplicable to the amendment of N.J.S.A. 17:28-1.1. It held that the amendment would apply only prospectively to motor vehicle accidents that occurred after September 10, 2007. Id. at 506.

Without repeating the same analysis here, we agree with the retroactivity discussion in Olkusz. We agree that N.J.S.A. 17:28-1.1(f) does not apply retroactively to accidents that occurred before September 10, 2007.

As an alternative argument, Wall attempts to distinguish the facts of Olkusz from this case and states that his appeal is not "Olkusz revisited." He says that because the Olkusz accident occurred after our decision in Pinto while his accident occurred before that date, his expectations were that employees such as him would be covered to the full limit of their employer's UIM coverage. To complete this argument, Wall must contend additionally that Pinto changed existing law.

That contention is not supported by the discussion of the law contained in either the Supreme Court's or our decision in Pinto. The holding of Pinto was expressly based on existing law of insurance contracts. See Magnifico v. Rutgers Cas. Ins. Co., 153 N.J. 406 (1998); New Jersey Mfrs. Ins. Co. v. Breen, 153 N.J. 424 (1998); Botti v. CNA Ins. Co., 361 N.J. Super. 217 (App. Div. 2003); Christafano v. New Jersey Mfrs. Ins. Co., 361 N.J. Super. 228 (App. Div. 2003). In fact, when the Legislature abrogated the holding of Pinto by enacting the 2007 statutory amendment, it expressly recognized that Pinto was based on existing law. See Olkusz, 401 N.J. Super. at 501 (quoting statement accompanying S-1666 of 2007).

As a third argument, Wall contends that this case is distinguishable procedurally from Olkusz because he moved to reinstate his complaint in 2008, after enactment of the statutory amendment. He says that the amendment must apply to cases filed after its effective date, and his motion to reinstate is the equivalent of filing a new complaint.

The relevant event for purposes of applying the amendment, however, is not the date on which Wall's complaint was filed, or might have been reinstated, but either the date of the accident or the date that the insurance policy was issued. Statutes applicable to auto insurance policies often designate whether they will be effective as of the date of an accident giving rise to claims controlled by the statute or the date that a policy is issued or renewed. Compare N.J.S.A. 39:6A-3.2 (requiring all policies issued or renewed after the effective date of the Automobile Insurance Cost Reduction Act (AICRA), L. 1998, c. 21, to contain certain mandatory coverages), with N.J.S.A. 17:28-1.1e(1) (defining the term "underinsured motorist coverage" based on the amount of insurance available at the time of the accident). Although the amendment in this case does not explicitly identify either event as triggering its application, Wall can point to no authority that applies a statute regulating auto insurance based on the date that a lawsuit is filed. We need not determine whether the appropriate date for potential application of the statute here is the date of Wall's accident, January 6, 2003, or the date of the Occidental policy, June 1, 2002. Both are before the effective date of the amendment, which is not applicable retroactively.



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