November 12, 2009
SOLOMON M. EISENMAN AND SANDRA EISENMAN, PLAINTIFF-APPELLANT,
On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-653-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 19, 2009
Before Judges Lisa and Alvarez.
Plaintiff, Solomon M. Eisenman, appeals from a judgment denying him excess underinsured motorist (UIM) coverage under the umbrella policy issued to him by GEICO.*fn1 The judgment was entered after a bench trial based on a stipulated documentary record. Plaintiff argues that the judge erred because (1) the umbrella policy is inherently ambiguous and the insured's expectations of the added coverage were reasonable, and (2) the judge committed plain error and his conclusions of law were unsupported by the undisputed factual record. We reject plaintiff's arguments and affirm.
Plaintiff suffered serious injuries in an automobile accident on November 1, 2005. Liability was not disputed, and the tortfeasor's insurance carrier paid plaintiff the full $100,000 liability limits in settlement of the claim. Plaintiff then sought to collect UIM benefits from GEICO, which covered him as of the date of the accident with a primary automobile insurance policy and an umbrella policy.
Plaintiff's primary policy contained UIM coverage of $100,000 per person and $300,000 per accident ($100,000/$300,000). The umbrella policy contained $1 million coverage, but contained an express exclusion for UIM benefits. As a result, GEICO denied coverage.
The umbrella policy provided in relevant part:
PART III - EXCLUSIONS
We do not cover damages resulting from:
10. Personal injury to any insured. . . . .
12. Personal injury or property damage resulting from a [UIM] claim unless a premium is shown for the [UIM] coverage in the declarations.
The declaration page did not list a premium for UIM coverage. Further, the umbrella policy defined the term "Declarations" as "the declarations page or pages for this policy" (as opposed to the primary policy). In the coverage provision of the umbrella policy, GEICO agreed to pay "damages on behalf of an insured arising out of an occurrence, subject to the terms and conditions of this policy." The policy defined "damages" as "damages an insured must pay."
Based upon these policy provisions, the trial judge found there was no ambiguity and that the umbrella policy did not provide excess UIM coverage. He also found that plaintiff had no basis for a reasonable expectation of such coverage.
Plaintiff argued there was an ambiguity because the declaration page did not expressly exclude UIM coverage. Further, plaintiff testified in his deposition that when he was solicited by a GEICO representative for this policy by telephone, the representative told him that the umbrella policy would cover him "across-the-board," assuring him that "[e]verything was going to be increased up to a million dollars." Plaintiff contended that his understanding of the conversation was that insurance coverage for anything happening to him or a family member because of an automobile accident would have the $1 million added coverage under the umbrella policy.
Plaintiff acknowledged that in his conversation with the GEICO representative, there was no mention made of UIM coverage. Therefore, there was no express representation that he would receive added UIM coverage. Plaintiff further acknowledged that he was required to increase the liability limits of his primary policy from $100,000/$300,000 to $300,000/$300,000 as a prerequisite for obtaining the umbrella policy. And, he acknowledged that he was not asked or required to make a similar increase in the $100,000/$300,000 UIM coverage in his primary policy, which remained in effect at that level.
According to a GEICO underwriter, GEICO does not provide umbrella UIM coverage in New Jersey. Indeed, it provides such coverage in only eight states. GEICO trains it sales representatives to not mention UIM coverage with New Jersey insureds in connection with placing umbrella policies.
Plaintiff acknowledged in his deposition testimony that he never read the umbrella policy. When asked whether he read the declaration page, plaintiff said he had "not really" read it, but merely "scanned" it to ensure that the premium charged was consistent with what he had been quoted over the telephone.
Prior to the bench trial, both parties made summary judgment motions which were denied because of the perception of the motion judge that material facts were in dispute. When the case was scheduled for trial, however, both parties agreed that no live testimony was needed and the case could be submitted for a bench trial based upon a documentary record. The documents included the umbrella policy and declaration page, plaintiff's deposition and affidavit, the deposition of the GEICO underwriter we have previously mentioned, and a training power point presentation given by GEICO to it sales agents explaining the purpose and function of umbrella insurance.
After hearing arguments based upon the documentary record, the trial judge rendered his decision. In addition to finding no ambiguity in the umbrella policy, the judge made a factual finding rejecting plaintiff's contention that he was told that all coverages in his primary policy would be subject to the added $1 million umbrella coverage "across the board." He found it incredible that a sales agent would make such a representation knowing that GEICO does not sell such coverage in New Jersey. Such an express representation would, of course, also be directly contradicted by the policy that would be issued if the insured purchased the policy.
The finding that the policy was unambiguous was an interpretation of an insurance contract, and as such it was a determination of law, subject to de novo review. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995) ("A trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference."); Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.) ("The interpretation of contracts and their construction are matters of law for the court subject to de novo review."), certif. denied, 196 N.J. 601 (2008). Likewise, the judge's finding regarding plaintiff's objectively reasonable expectations also constituted a determination of law, subject to de novo review.
With respect to the factual finding regarding the alleged "across-the-board" representation, we view the judge's determination to be that the GEICO representative did not expressly represent to plaintiff that his UIM coverage would be increased by the umbrella policy. Thus, even if the GEICO representative used the term "across-the-board," it could not have been used in a context and manner to have applied to UIM coverage. We will not disturb factual findings of a trial judge sitting without a jury if they are supported by adequate, substantial, and credible evidence in the record. Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).
We recognize that the judge was not making a credibility determination based upon the demeanor of testifying witnesses. Indeed, the record does not contain any deposition testimony or affidavit from the sales representative. However, we reject plaintiff's argument that, because his deposition testimony was uncontroverted, the trial judge was required to accept it as part of the stipulated record. This was, after all a trial. Although on plaintiff's summary judgment motion, applying the Brill*fn2 standard, plaintiff's testimony was required to be considered in the light most favorable to him, that is not the standard in a trial. Plaintiff had the burden of proving facts by a preponderance of the evidence, and it was appropriate for the trial judge to consider all of the evidence in making his factual findings.
We now turn to the legal issue that is at the heart of this case, namely whether the umbrella policy was unambiguous and whether plaintiff had no reasonable expectation of increased UIM coverage. When the terms of an insurance contract are clear, courts must interpret the policy as written and avoid writing a better policy for the insured. President v. Jenkins, 180 N.J. 550, 562 (2004). However, because insurance contracts are contracts of adhesion, when an ambiguity exists courts should interpret the contract in accordance with the objectively reasonable expectations of the insured. Id. at 563; Doto v. Russo, 140 N.J. 544, 556 (1995); Sparks v. St. Paul Ins. Co., 100 N.J. 325, 336 (1985). The "reasonable expectations of the insured" doctrine has been explained by our Supreme Court:
When members of the public purchase policies of insurance they are entitled to the broad measure of protection necessary to fulfill their reasonable expectations. They should not be subjected to technical encumbrances or to hidden pitfalls and their policies should be construed liberally in their favor to the end that coverage is afforded "to the full extent that any fair interpretation will allow."
[Jenkins, supra, 180 N.J. at 563 (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961).]
Finally, exclusions in insurance policies must be construed narrowly; the burden is on the insurer to bring the case within the exclusion. Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997). "However, exclusions are presumptively valid and will be given effect if specific, plain, clear, prominent, and not contrary to public policy." Ibid. (citations and internal quotation marks omitted).
Plaintiff argues that the umbrella declaration page supported a reasonable expectation that his UIM coverage would increase. We first note that, although an insured has a duty to review his declaration page, Dancy v. Popp, 114 N.J. 570, 572-73 (1989), plaintiff did not do so in this case (other than to check on the amount of the premium). The umbrella policy is only six pages long. It contained a clear and specific exclusion of UIM coverage unless the declaration page listed a premium for UIM coverage. No such premium was listed on the declaration page. Indeed, the declaration page makes no reference to UIM coverage. The umbrella policy also made clear that the relevant declaration page was for the umbrella policy, not the primary policy.
We agree with the trial court that the umbrella policy unambiguously excluded UIM coverage. This was a short and uncomplicated policy. There was nothing in the body of the policy that obfuscated or contradicted any entry on the declaration page. A reasonable insured would have understood that UIM coverage was excluded. Further, it is commonly understood by the reasonable person that an umbrella policy does just what its name suggests, provides an "umbrella" over the insured's personal assets to protect those assets from being lost as a result of damages the insured must pay to another. See Doto, supra, 140 N.J. at 555 ("[U]mbrella policies serve a purpose qualitatively different from UM/UIM coverage . . . [and] the general rule appears to be that umbrella policies should not be understood to provide UM/UIM coverage.").
This fundamental characteristic of an umbrella policy is exactly what the GEICO policy in this case provided. It did so in straightforward terms, by defining "damages" that it agreed to pay as the damages "an insured must pay." Obviously, when the insured is the injured person, he or she will not face the prospect of being bankrupted by having to pay himself or herself. Again, this is consistent with exclusion number ten, which we previously quoted, which makes clear that the umbrella policy does not cover damages resulting from "[p]ersonal injury to any insured." We reject plaintiff's argument that GEICO had an obligation to clear up any "ambiguity" by stating on the declaration page that the policy did not provide additional UIM coverage. Considering the purpose of umbrella policies, there was no reason to include such language on the declaration page, especially in light of the clear exclusion of such coverage in the policy itself.
We find unpersuasive the authorities relied upon by plaintiff in support of his argument that he had a reasonable expectation of increased UIM coverage. Plaintiff relies on Lehrhoff v. Aetna Casualty and Surety Co., 271 N.J. Super. 340 (App. Div. 1994). In that case, the plaintiff was the adult son of the insured who had temporarily moved out of his father's household, and claimed uninsured motorist (UM) coverage under his father's policy. Id. at 342. The plaintiff was named on the declaration page of the policy as a regular driver. Ibid. However, buried in the policy in fine print were a group of provisions that technically, and when read together, excluded the plaintiff from UM coverage because he was not living in his father's house when he was involved in the accident. Id. at 345-46. We found in favor of the plaintiff on his UM claim because the declaration page gave him and his father a "reasonable belief" of UM coverage. Id. at 350. We stated:
The natural, sensible and wholly justifiable inference is that by listing the drivers using the vehicle, including the insured himself, the purchaser of the policy is protecting all of them equally and, presumably, protecting them equally in respect of all the stated coverages without qualification and without limitation. Nothing in the declaration page suggests to the contrary, and nothing in the UM coverage section of the policy suggests to the contrary either. Indeed, the insured's expectation would be reinforced if he got as far as reading the UM provision by its apparently unqualified reference to family member as a covered person. He would also have to find and read the general definition section and appreciate the scope of its applicability to understand otherwise. [Id. at 349.]
Lehrhoff is distinguishable from the case before us because the declaration page here did not even list UIM coverage. Therefore, unlike the plaintiff in Lehrhoff, who was explicitly listed on the declaration page, it was not reasonable for plaintiff to assume UIM coverage. In Lehrhoff, the declarations and policy language created a reasonable inference of coverage. That is not the case here. The GEICO umbrella policy did not create a "natural, sensible and wholly justifiable inference" of increased UIM coverage, especially given the fact that umbrella policies are not generally understood to provide such coverage. Doto, supra, 140 N.J. at 555.
We are also unpersuaded by plaintiff's reliance on Skeete v. Dorvius, 184 N.J. 5 (2005). That case involved a change in the insured's policy which was effected by a clause buried in a 200-page document. Id. at 9. The Court found that the manner in which the insurer attempted to change the policy was insufficient. Id. at 8-10. In the case before us, however, there was no attempted change of any coverage. Indeed, plaintiff's umbrella policy never contained UIM coverage. Further, as we have stated, the umbrella policy here was only six pages in length, not 200 as in Skeete. Therefore, unlike in Skeete, the policy here did not "drown [plaintiff] in a sea of paper." Id. at 9.
We also note that this case is readily distinguishable from Doto. In that case, the Court ordered reformation of an umbrella policy to include UM/UIM coverage because it was uncontested that the insurer's sales representative required the insured to increase its UM/UIM limits for the specific purpose of qualifying for umbrella coverage for UM/UIM; that its representative expressly represented that UM/UIM coverage would be provided in the umbrella policy; and that although the carrier possessed a standard form excluding UM/UIM coverage, it did not include it in this umbrella policy. Doto, supra, 140 N.J. at 558-60. Under those circumstances, the Court concluded that the carrier was estopped from denying coverage based upon its "course of conduct . . . that would have convinced an objectively reasonable insured to believe that the umbrella policy contained UM/UIM coverage." Id. at 560. The circumstances here materially differed. It is undisputed there was no express representation of added UIM coverage; plaintiff was not required to increase the UIM coverage in his primary policy; and, considering all of the circumstances and the clear terms of the policy itself, which did include a clear exclusionary clause, GEICO's representatives did not engage in a course of conduct that would lead an insured to reasonably believe he or she acquired the added coverage.
Lastly, plaintiff argues that the umbrella policy "is inherently ambiguous," and therefore, as a contract of adhesion, it should be interpreted in accordance with what he maintains were his reasonable expectations of $1 million additional UIM coverage. Plaintiff's argument on this point is unclear. Nowhere does he direct us to any particular provision or provisions in the policy which he claims are ambiguous. He merely states that "[t]here was no explicit language anywhere in the GEICO policy at issue nor in the declaration page at all, let alon[e] an ambiguous one." We reject this argument. For the reasons we have previously set forth, the policy language explicitly and unambiguously excluded UIM coverage.
To support his position that the policy was ambiguous, plaintiff relies on Pizzullo v. New Jersey Manufacturers Insurance Co., 196 N.J. 251 (2008). In Pizzullo, the plaintiff specifically and repeatedly asked for a separate policy for his wife but was told by the insurance agent that the same effect would be accomplished by simply adding his wife to his already existing policy. Id. at 256-58. The insurance company had a policy of discouraging (but not absolutely prohibiting) the issuance of separate policies for a married couple. Id. at 257. Eventually the plaintiff acquiesced and added his wife to his policy instead of obtaining a separate policy. Id. In actuality, the agent was mistaken, and the benefits were drastically reduced by adding his wife compared to what they would have been under a separate policy. Id. at 258.
The policy also contained ambiguities. While the declaration page indicated that his liability limits would be reduced by adding his wife, the declaration page did not indicate that UIM benefits (which were at issue in the case) would similarly be reduced.*fn3 Id. at 271. The Court ruled in favor of the plaintiff both because of the ambiguity and because of the misrepresentations by the insurance company agent. Id. at 271-74.
The "truly unique" factual circumstances in Pizzullo, id. at 256, distinguish that case from this one. A critical factor in Pizzullo involved the misrepresentations by the insurance company, which did not occur in this case. Further, the declaration page in Pizzullo contained an ambiguity, which made the plaintiff's expectation of coverage reasonable, which was not the case here. Unlike in Pizzullo, there were no contradictory terms between the declaration page and the body of the policy.
Plaintiff has failed to point to any ambiguity in the umbrella declaration page or policy. The exclusionary provision, even when narrowly read as it must be, plainly excluded UIM coverage from this policy. This exclusionary provision should therefore be given effect because it is not contrary to the public policy pertaining to umbrella insurance policies in New Jersey, and because it is clear and unambiguous. Chunmuang, supra, 151 N.J. at 95.