On certification to the Superior Court, Appellate Division, whose opinion is reported at 397 N.J. Super. 574 (2008).
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
WALLACE, J., writing for a majority of the Court.
The issue presented in this appeal is whether a passenger who did not know the vehicle he was in was stolen is entitled to Personal Injury Protection (PIP) benefits under an insurance policy with an exclusion that tracks the language of N.J.S.A. 39:6A-7(b)(2), which authorizes insurers to deny benefits to someone who "was occupying or operating an automobile without the permission of the owner or other named insured."
On October 20, 2004, sixteen-year-old Humza Abdul-Matin and twenty-four-year-old Alquan Edwards arrived in a Subaru at fourteen-year-old Tyrell Hardy's home in East Orange. Unknown to Hardy, the owner of the Subaru had reported the car stolen earlier that day. While in the vehicle, Hardy did not notice anything that might have alerted him that the car was stolen. The three young men were driving towards a nearby luncheonette when the Subaru collided with a Public Service Electric and Gas truck and burst into flames.
Hardy suffered a broken leg and other injuries.
At the time of the accident, Hardy lived with his grandmother, who had auto insurance coverage with Liberty Mutual Insurance Company (Liberty). She sought PIP benefits for Hardy's injuries, but Liberty rejected the claim because Hardy sustained his injuries while riding in a stolen vehicle without the owner's consent.
On May 2, 2006, Hardy's grandmother, as his guardian, filed a suit on his behalf against Liberty and others. Liberty filed a motion for summary judgment. The trial court concluded that a plain reading of the policy exclusion barred coverage because plaintiff did not have permission to occupy the stolen vehicle. The trial court granted Liberty's motion for summary judgment.
Plaintiff appealed. In a published opinion, the Appellate Division reversed. The panel noted that although the language of the exclusion in the policy and in N.J.S.A. 39:6A-7 could be read otherwise, it would be appropriate to read into the statute and the insurance policy an additional scienter requirement. The panel concluded that the issue of whether plaintiff was entitled to PIP benefits turned on whether he knew he did not have permission from the owner to occupy the vehicle. The panel also reversed the trial court's denial of UM benefits.
Liberty filed a petition for certification, but did not challenge the Appellate Division's decision with regard to the UM claim. The Supreme Court granted Liberty's petition.
HELD: The unambiguous language in N.J.S.A. 39:6A-7(b)(2) and the Liberty Mutual insurance policy make it clear that the plaintiff may not receive Personal Injury Protection (PIP) benefits because he did not have the permission of the owner to occupy the vehicle in which he was injured.
1. In interpreting a statute, the primary objective of the court is to ascertain the intent of the Legislature; the best indicators of that intent are the plain words of the statute. The court, however, may rely on "extrinsic evidence" to resolve any ambiguities or conflicts with the overall statutory scheme. Those same principles generally apply to the interpretation of an insurance policy. The court must start with the plain language and if the policy terms are not clear or are ambiguous, courts should "interpret the contract to comport with the reasonable expectations of the insured." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). Moreover, when the plain language of a policy provision is based on statutory authority, the policy must be interpreted and construed in a manner consistent with the statute. (Pp. 7-9)
2. The Liberty insurance policy exclusion tracks the language of N.J.S.A. 39:6A-7(b)(2), which authorizes insurers to deny benefits to someone who "was occupying or operating an automobile without the permission of the owner or other named insured." The clear, unambiguous language of the policy exclusion requires that before an insured may recover PIP benefits, the insured must have occupied the covered vehicle with the permission of the owner or named insured. The language for UM coverage in the policy further supports the Court's conclusion that it should not impose a scienter requirement in determining whether an injured person may recover PIP benefits. The Liberty policy provides that UM coverage is excluded when the insured has a "reasonable belief" that the insured's presence in the vehicle was not with the owner's permission. The lack of similar language in the PIP exclusion is ample evidence that a reasonable belief or knowledge is not part of the PIP requirements. A knowing requirement is also written into section 7(a) of the statute, providing further support that the Legislature did not include a scienter requirement in section 7(b). In addition, to impose a scienter requirement in a private insurance policy where the express terms of the policy do not impose such a requirement would be inconsistent with the intent of the Legislature to reduce insurance premiums under the Insurance Freedom of Choice and Cost Containment Act of 1984. Rather, consistent with the Legislative intent to reduce costs, the Court holds that the Legislature intended to authorize insurance companies to exclude PIP claims when the injured person did not have the permission of the owner to occupy the vehicle. Consequently, the exclusion for PIP benefits in Liberty's policy operates to deny plaintiff's claim. (Pp. 9-14)
The judgment of the Appellate Division is REVERSED in part and the matter is REMANDED for entry of judgment in favor of Liberty on the PIP claim.
JUSTICE LONG filed a separate, DISSENTING opinion, in which JUSTICE ALBIN joins, stating that the PIP statute does not require the exclusion from coverage of every single citizen who accepts a ride from a friend or relative who later is shown to lack permission from the owner.
CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, RIVERA-SOTO, and HOENS join in JUSTICE WALLACE's opinion. JUSTICE LONG filed a separate, dissenting opinion, in which JUSTICE ALBIN joins.
The opinion of the court was delivered by: Justice Wallace, Jr.
This is an insurance coverage case. The question presented is whether a passenger who did not know the vehicle he was in was stolen is entitled to Personal Injury Protection (PIP) benefits under an insurance policy with an exclusion that tracks the language of N.J.S.A. 39:6A-7(b)(2), which authorizes insurers to deny benefits to someone who "was occupying or operating an automobile without the permission of the owner or other named insured." Plaintiff, a juvenile, was injured while riding in a stolen vehicle. He asserted that he did not know the vehicle was stolen, and sought PIP benefits from his guardian's insurance company. We hold that the unambiguous language in both the statute ...