March 4, 2010
SEAN D. NAVE, PLAINTIFF-APPELLANT,
VINCENT GONZALEZ AND SOPHIE NAVE, DEFENDANTS, AND PROFORMANCE INSURANCE COMPANY, INTERVENOR-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-6761-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: January 5, 2010
Before Judge Fuentes, Gilroy and Simonelli.
Plaintiff appeals from the March 9, 2009 Law Division order granting summary judgment to intervenor Proformance Insurance Co. (Proformance). We affirm.
The following facts are derived from evidence submitted by the parties in support of, and in opposition to, the summary judgment motion, viewed in a light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Defendant Sophie Nave (Nave),*fn1 owned a 1997 Ford Taurus, which her son, plaintiff Sean D. Nave, primarily drove. Proformance insured the car under a policy issued to Nave and her husband. Plaintiff is a named insured on the policy.
The policy provides four types of automobile coverage: (1) personal liability coverage of $250,000/$500,000/$100,000; (2) uninsured/underinsured motorist coverage of $250,000/$500,000/$100,000; (3) medical expense coverage of $10,000; and (4) optional excess liability coverage of $1 million.
The optional excess liability coverage provision states that [Proformance] will pay damages for which a covered person becomes legally liable due to personal injury, bodily injury or property damage up to the limit of liability shown in the coverage summary for "Optional Excess Liability" subject to the minimum retained limit and to the provisions listed in the "Excess Liability Losses We Do Not Cover" section.
Because coverage under this provision depends on the legal liability of a "covered person," the policy's definition of that term is crucial, and is the subject of this dispute.
Contrary to plaintiff's interpretation of the definition of "covered person", section 8 of the policy has two definitions for that term," one for personal liability coverage, medical expense coverage and uninsured/underinsured motorists coverage, and the other for optional excess liability coverage. Section 8 provides, in relevant part as follows:
8. "Covered Person(s): means you and the following residents of your household:
a. Your family members;
Under "Personal Liability Coverage," "Medical Expense Coverage" and "Uninsured/Underinsured Motorists Coverage," covered person also means:
f. Any other person using or occupying your motor vehicle or boat, if there is expressed written consent by the owner for that person to use it.
Under "Optional Excess Liability Coverage," covered person also includes:
g. Family members for their use of an automobile:
(1) Owned by a family member; or
(2) Furnished or available for the regular use of a family member; which is insured for his or her use of that automobile under one or more underlying policies, but only for amounts exceeding the minimum retained limit and the automobile is shown in the coverage summary:
"Covered Person" does not include the owner or lessor of a motor vehicle or boat loaned to or hired for use by a covered person or on a covered person's behalf. [(underline added.)]
The policy defines "family member" as "a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child."
On the evening of February 10, 2005, defendant Vincent Gonzalez, who is not a family member of the named insured, was driving plaintiff's car while intoxicated and/or under the influence of marijuana. He lost control of the car when attempting to make a lane change, causing it to strike a tree and fence, flip over, and land overturned in the roadway. Plaintiff, who was a passenger and also intoxicated, was thrown from the car and suffered a serious brain injury.
Plaintiff sought compensation for his injuries under the policy. Proformance agreed that Gonzalez was a permissive user of plaintiff's car under the personal liability coverage's definition of a "covered person," and thus, plaintiff was entitled to $250,000. However, it denied plaintiff's claim for compensation under the optional excess liability coverage because Gonzalez was not a "covered person" under that provision.
Proformance moved for summary judgment on this issue, arguing that Gonzalez is not entitled to coverage under the optional excess liability coverage because he is not a covered person, as defined in sections 8.a. and 8.g., i.e., the named insureds and their resident family members.
Plaintiff countered that the policy does not expressly exclude optional excess liability coverage for permissive users, and that a "covered person" under that provision includes all persons listed in section 8.a. through 8.g, i.e., the named insured, their resident family members and permissive users. Quoting Martusus v. Tartaamosa, 150 N.J. 148, 159 (1997), plaintiff argued that umbrella policies are subject to the initial permission rule,*fn2 and that "'[u]nless umbrella policies clearly and unambiguously state that permission to use the covered vehicle can only come from a named insured and that there is no coverage for any other user, a named insured's reasonable expectation may be otherwise." Proformance responded that the policy is not ambiguous and that Nave could not have reasonably expected that the $1 million optional excess liability coverage would extend to anyone other the named insureds and resident family members.
Judge Currier agreed with Proformance, concluding that the language of the "policy intends for the [optional] excess liability coverage to only apply to family members residing in the household [section 8.a.] and the situations listed in [section 8.g.]." The judge distinguished Martusus, finding that, unlike the optional excess liability coverage provision, the umbrella policy in Martusus contained a permissive user clause. This appeal followed.
The court's interpretation of an insurance contract is a determination of law. Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.) (contract construction and interpretation subject to de novo review on appeal), certif. denied, 196 N.J. 601 (2008). We afford no special deference to a trial court's interpretation of the law and the legal consequences that flow from the established facts. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Accordingly, we review Judge Currier's interpretation of the policy de novo. Sealed Air Corp., supra, 404 N.J. Super. at 375.
Insurance policies are contracts of adhesion, Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990), and as such they should be "construed liberally in [the insured's] favor." Kievet v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961). However,
[l]iberal rules of construction of insurance policies do not sanction . . . emasculation of the clear language of the policy. Unambiguous insurance contracts are enforced in accordance with the reasonable expectations of the insured. The court should read policy provisions so as to avoid ambiguities, if the plain language of the contract permits. The court should not torture the language of the policy to create an ambiguity. [Stiefel v. Bayly, Martin and Fay, 242 N.J. Super. 643, 651 (App. Div. 1990) (citations omitted).]
"'In the absence of any ambiguity, courts should not write for the insured a better policy of insurance than the one purchased.'" Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001) (quoting Gibson v. Callaghan, 158 N.J. 662, 670 (1999)). "A 'genuine ambiguity' arises only 'where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage.'" Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 274 (2001) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)). In those instances, the court looks to the insured's reasonable expectations and resolves any genuine ambiguities against the insurer. Zacarias, supra, 168 N.J. at 595; DiOrio v. New Jersey Mfrs. Ins. Co., 79 N.J. 257, 269 (1979). Courts will also interpret an insurance policy in accordance with the insured's understanding if the text appears overly technical or contains hidden pitfalls, cannot be understood without employing subtle or legalistic distinctions, is obscured by fine print, requires strenuous study to comprehend, . . . . [or is] . . . so confusing that the average policyholder cannot make out the boundaries of coverage[.] [Zacarias, supra, 168 N.J. at 601 (citations and quotations omitted).]
Applying these tenets, we conclude that the terms of the policy are unambiguous and must be enforced. There are no technicalities or hidden pitfalls in the policy, the print is entirely legible, and the words are clear and can be easily understood. The policy defines a "covered person" under the optional excess liability coverage provision as the insured and resident family members. That definition, unlike the definition of "covered person" under the personal liability coverage, the medical expense coverage and the uninsured/underinsured motorists coverage provisions, does not include permissive users. Accordingly, Gonzalez is not entitled to coverage under the optional excess liability coverage provision.