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Geico v. City of Newark

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


December 24, 2009

GEICO, PLAINTIFF-RESPONDENT,
v.
CITY OF NEWARK, DEFENDANT-APPELLANT.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1661-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued July 8, 2009

Before Judges R. B. Coleman and Graves.

Defendant City of Newark (the City) appeals from an order granting summary judgment in favor of plaintiff Geico, a private insurance carrier, requiring the City to pay its pro-rata share of an uninsured motorist (UM) arbitration award. After reviewing the record and applicable law in light of the arguments advanced on appeal, we affirm.

On August 17, 2005, Newark police officer Juan Gonzalez (Gonzalez) sustained personal injuries while on duty when he was struck by an unknown driver in a stolen vehicle. Following the accident, Gonzalez filed a claim with Geico for uninsured motorist benefits under his personal auto liability insurance policy, and Geico demanded that the City participate in uninsured motorist arbitration and pay its pro-rata share of any arbitration award pursuant to N.J.S.A. 17:28-1.1. Specifically, Geico claimed the City should pay a pro-rata share of any amount awarded because it employed Gonzalez and owned the vehicle involved in the accident. The City denied, however, that it was obligated to participate in the arbitration process or pay a share of the potential award based on its status as a self-insurer under N.J.S.A. 39:6-52.

The matter proceeded to arbitration against Geico on January 24, 2008. The panel determined that the unknown driver of the stolen vehicle was 100 percent liable and awarded Gonzalez damages in the amount of $100,000. Thereafter, Geico filed a complaint in the Law Division demanding judgment against the City for its pro-rata share of the arbitration award. Both parties moved for summary judgment and the court heard oral argument on September 12, 2008. On October 1, 2008, the court granted Geico's motion and ordered the City to contribute $13,043.48 toward Gonzalez's $100,000 arbitration award.

In support of their summary judgment motions, both parties relied on Christy v. City of Newark, 102 N.J. 598 (1986). The court observed in its written decision that "the strong public policy favoring UM coverage" prompted the Court in Christy to order the City to provide employees with UM coverage up to the statutory minimum "in the absence of an unmistakable legislative declaration to the contrary." Id. at 608.

In the present matter, the City argues as it did below that it is no longer required to provide UM coverage to its employees because the Legislature eliminated compulsory UM coverage for certain motorists in 1999, when the "Automobile Insurance Cost Reduction Act" (AICRA), N.J.S.A. 39:6A-1.1 to -35, went into effect. As the City points out, AICRA eliminated mandatory UM insurance coverage for policyholders who opted to purchase a new type of "basic" policy instead of a "standard" policy. N.J.S.A. 39:6A-8a. Consequently, the City contends that it is only obligated to cover employees to the minimal requirements of the "basic" policy, which does not require UM coverage.

The trial court concluded, however, it was "not logical to assume" that AICRA "demonstrate[d] a decision by our legislature to eliminate the requirement of UM coverage from all policies by a self insurer." Rather, the court found that AICRA lacked "affirmative language" that explicitly overruled Christy. The court rejected defendant's "blanket assumption that this language should apply to [the City because] the letter of the statute does not directly support their position" and because the City failed to establish that it changed its "self insurance policy to one of the new 'basic' policies."

On appeal, the City presents the following argument:

POINT I

THE TRIAL COURT ERRED IN FINDING THAT A SELF-INSURED MUNICIPALITY'S OBLIGATION TO PROVIDE UM BENEFITS CONTINUES IN LIGHT OF THE AMENDMENTS TO N.J.S.A. 17:28-1.1, WHICH ELIMINATED MANDATORY UNINSURED MOTORISTS COVERAGE.

In Christy, our Supreme Court held that the City of Newark, as a self-insurer, was obligated to provide UM coverage "to the extent of at least the statutory minimum." Christy, supra, 102 N.J. at 608. The Court recognized the strong public policy favoring UM coverage and concluded "that in the absence of an unmistakable legislative declaration to the contrary, we are certain that the foregoing principle applies to any legislatively-authorized self-insurance fund." Ibid.

The City asserts "the circumstances since the Christy case was decided have changed drastically" because AICRA allows drivers in this state to maintain a "basic" insurance policy without mandatory UM coverage. The City characterizes AICRA as the "unmistakable legislative declaration to the contrary" under Christy, supra, 102 N.J. at 608. Therefore, the City claims it is now entitled to self-insure its employees without providing UM coverage. In rejecting the City's arguments, the trial court reasoned as follows:

The AICRA amendments created basic policies of insurance which allow drivers to maintain a policy of insurance with limits of $10,000 and do no require uninsured motorist coverage (N.J. 39:6A-3.1). Plaintiff argues that these amendments make general reference to owners of autos and were not intended to allow corporate entities the right to purchase "basic" insurance policies. Defendant argues the enactment of AICRA in 1999 created the new "basic policy" and was silent as to self-insurers, leaving doubt as to whether the self insurers are permitted to choose the "basic policy" option as well. Because of the amendments to N.J.S.A. 17:28-1.1 and the creation of the new "basic policy[,]"[] the City contends that it is no longer required to provide UM to its employees . . . The decision in Christy v[.] City of Newark was backed by strong public policy concerns when the court required self insurers to provide uninsured motorist coverage. The [C]court noted that "in the absence of an unmistakable legislative decision to the contrary," Newark is obligated to provide this coverage. Christy at 608.

It is not logical to assume that the changes in the AICRA laws demonstrate a decision by our legislature to eliminate the requirement of UM coverage from all policies issued by a self insurer. The amendments only mention "drivers" and do not directly address self insurers or public entities. The City makes a blanket assumption that this language should apply to them, but the letter of the statute does not directly support their position.

It is highly improbable that our legislature intended to overrule the Christy decision without evidence of affirmative language that explicitly supports that position. Further, Newark's argument is not supported by any demonstrative evidence that it did, in fact, opt to change [its] self insurance policy to one of the new "basic" policies.

In reviewing a matter on summary judgment, we apply the same standards applicable in the trial court. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 536-37 (1995); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998); R. 4:46-2(c). Here, because the judgment presented for our review involved purely legal determinations, we owe no special deference to the trial court's analysis and ultimate legal conclusions. Manalapan Realty, L.P. v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995). Nevertheless, it is clear that AICRA's silence as to self-insurers does not transform the City's self-insurance into the equivalent of a minimal "basic" policy, which was created to relieve low income residents of the additional cost of UM coverage. N.J. Coal. of Health Care Prof'ls, Inc. v. N.J. Dep't of Banking & Ins., Div. of Ins., 323 N.J. Super. 207, 219 (App. Div.), certif. denied, 162 N.J. 485 (1999).

We agree that Geico was entitled to summary judgment as a matter of law. It is "apparent (following the logic of Christy) that, public entities are required to afford UM coverage." Craig & Pomeroy, New Jersey Auto Insurance Law, § 18:3-2 at 331 (2010).

Affirmed.

20091224

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