On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, L-565-07.
The opinion of the court was delivered by: Winkelstein, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Winkelstein, Gilroy and Chambers.
Plaintiff, Linda Boritz, was injured in a traffic accident while a passenger in an automobile driven by Sally Iacono. She appeals from a Law Division order limiting her claim for underinsured motorist (UIM) benefits based on a "step-down" clause in a policy defendant New Jersey Manufacturers Insurance Company (NJM) issued to Iacono. The policy has a UIM limit of $100,000. The step-down clause capped plaintiff's entitlement to UIM benefits at $25,000, the coverage limit in her own automobile insurance policy issued by the Government Employees Insurance Company (GEICO).
Plaintiff does not challenge the validity of the step-down clause, but asserts that NJM should be estopped from enforcing it. She claims that she would not have settled with the tortfeasor for its $15,000 policy limits had she not been led to believe by NJM, by consenting to her settlement with the tortfeasor for the tortfeasor's policy limits, see Longworth v. Van Houton, 223 N.J. Super. 174, 194 (App.Div. 1988) (insured receiving acceptable settlement offer from tortfeasor should seek consent to settle from UIM carrier), that she would have access to the full $100,000 in UIM coverage available under its policy. The trial court rejected plaintiff's argument and limited her recovery to $10,000, the difference between the $25,000 UIM limit in her GEICO policy and the $15,000 she recovered from the tortfeasor. We reverse.
On October 9, 2005, plaintiff was injured when Iacono's vehicle was stopped at a red light and was struck in the rear by a vehicle owned and operated by Monique Vinson, who was insured by GEICO under a policy with a $15,000 liability limit. Plaintiff's attorney subsequently informed NJM of Vinson's coverage limits, and that plaintiff would look to Iacono's UIM coverage with NJM for additional compensation. Later, in a letter dated October 3, 2006, from a GEICO claims examiner, plaintiff's counsel learned that NJM had policy limits of $100,000. The letter said: "the host vehicle is primary for the UM/UIM coverage. I have contacted NJM . . . and they have accepted this claim as a valid claim, also note their limits are $100/$300 in Bodily Injury and I have lower coverage so, therefore, there is no valid [GEICO] UM/UIM coverage for this loss."
Also by letter dated October 3, 2006, Gina Grainey, an NJM claims representative, requested that plaintiff's counsel provide her with "medical reports, specials, your client's policy declaration page verifying their chosen tort threshold, and any other information you feel will assist us in evaluating your client's case." Without mentioning the step-down provision, Grainey confirmed, by telephone with plaintiff's counsel, that the NJM policy coverage was primary, with limits of $100,000 per person, $300,000 per accident.
Approximately two months later, plaintiff's counsel notified NJM that Vinson's insurance company, GEICO, had offered plaintiff the policy limit of $15,000 "in full and final settlement of the claim against [Vinson]." The letter asked for confirmation of NJM's consent to the settlement pursuant to Longworth. In response, NJM provided plaintiff's counsel with a "Consent to Settle."*fn1 Plaintiff consequently released Vinson in exchange for payment of her $15,000 policy limits.
From December 2006 through April 2007, plaintiff's counsel negotiated with NJM for UIM benefits. NJM initially offered plaintiff $17,023 to settle her UIM claim. Plaintiff rejected the offer, and counter-offered to settle for $75,000. In response, NJM increased its settlement offer to $32,023.
Meanwhile, although NJM had requested plaintiff's policy declaration page in its letter to plaintiff's counsel on October 3, 2006, NJM did not receive it until May 2007. When it did, and it discovered that plaintiff's UIM limits were $25,000, NJM notified plaintiff's counsel that it would exercise the step-down provision in Iacono's policy, which stated:
A. The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. However, subject to our ...