April 12, 2010
ANTHONY BIANCHI, PLAINTIFF-RESPONDENT,
PROGRESSIVE NORTHWESTERN INSURANCE COMPANY, UNDERWRITERS FOR UNITED FINANCIAL CASUALTY COMPANY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5317-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 15, 2010
Before Judges Yannotti and Chambers.
Defendant Progressive Northwestern Insurance Company (Progressive) appeals from an order entered by the trial court on August 6, 2009, which required that it provide underinsured motorist (UIM) coverage to plaintiff, Anthony Bianchi. We reverse.
The material facts are not in dispute. Progressive issued a commercial automobile insurance policy to Rental Service, Inc. (Rental Service), which was effective from June 2, 2006 through December 2, 2006. The policy provides, among other things, UIM coverage. The UIM endorsement states that Progressive will pay for damages, other than punitive or exemplary damages, which an insured is legally entitled to recover from the owner or operator of an underinsured auto due to bodily injury:
1. sustained by an insured;
2. caused by an accident; and
3. arising out of the ownership, maintenance, or use of an underinsured auto.
The term "insured" is defined in the endorsement as follows:
a. if the named insured shown on the Declarations Page is a natural person:
(i) you or a relative;
(ii) any person occupying your insured auto or a temporary substitute auto; and
(iii) any person who is entitled to recover damages covered by this endorsement because of bodily injury sustained by a person described in (i) or (ii) above; or
b. if the named insured shown on the Declarations Page is a corporation, partnership, organization or any other entity that is not a natural person:
(i) any person occupying your insured auto or a temporary substitute auto; and
(ii) any person who is entitled to recover damages covered by this endorsement because of bodily injury sustained by a person described in (i) above.
The term "insured auto" is defined in the general definitions of the policy as any auto described on the Declaration Page, as well as any auto acquired by the named insured during the policy period. In addition, the term "temporary substitute auto" is defined to include "any auto used, with the permission of its owner, as a substitute for an insured auto that has been withdrawn from normal use due to breakdown, repair, servicing, loss or destruction[.]"
On the Declaration Page, Rental Service is identified as the "[n]amed [i]nsured[.]" Plaintiff and his brother are identified on the Declaration Page as "[r]ated drivers[.]" The term "[r]ated drivers" is not defined in the policy. Four vehicles are identified on the Declaration Page as insured autos, including a 2006 Ford Mustang.
Plaintiff is the owner and president of Rental Service. On July 31, 2006, plaintiff was involved in a automobile accident. At the time, plaintiff was picking up food for himself and his acquaintances for what was apparently a social occasion. He was driving an automobile owned by Marvin Vasquez (Vasquez), and collided with a Honda owned and operated by Nikolaos A. Proestos (Proestos). Prior to the accident, plaintiff had taken the Ford Mustang that was insured under the policy to his home. The Mustang was blocked in the driveway and Vasquez gave him permission to drive his car. Plaintiff went to pick up food for himself and his friends when the Honda collided with the Proestos vehicle. Plaintiff allegedly sustained bodily injury in the accident.
Proestos only had $50,000 in coverage under his auto insurance policy. Bianchi settled his claim against Proestos for $45,000 and made a claim for UIM benefits under the policy that Progressive issued to Rental Service. Progressive denied the claim, and plaintiff commenced this declaratory judgment action by filing a verified complaint and order to show cause. The court entered an order requiring Progressive to show cause why an order should not be entered compelling it to provide UIM coverage to plaintiff.
The trial court considered the matter on August 6, 2009, and placed its decision on the record on that date. The court found that the Progressive policy was ambiguous because plaintiff was identified on the Declaration Page as a "[r]ated driver[,]" the policy failed to define the term "[r]ated driver" and the policy did not clearly identify the employees of the insured corporation who would be entitled to UIM coverage. The court found that, in light of that ambiguity, plaintiff had a reasonable expectation that he would be entitled to UIM coverage for the injuries he sustained in the accident. The court entered an order dated August 6, 2009, memorializing its decision. This appeal followed.
On appeal, Progressive argues that the trial court's order should be reversed because plaintiff is not entitled to coverage under the clear and unambiguous terms of the policy. We agree.
Insurance policies are contracts of adhesion which are "subject to special rules of interpretation." Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 537 (1990) (citing Meier v. N.J. Life Ins. Co., 101 N.J. 597, 611 (1986)). Insurance policies should be liberally construed "'to the end that coverage is afforded "to the full extent that any fair interpretation will allow."'" Ibid. (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961)).
Even so, "the words of an insurance policy should be given their ordinary meaning, and in the absence of an ambiguity, a court should not engage in a strained construction to support the imposition of liability." Ibid. (citing Brynildsen v. Ambassador Ins. Co., 113 N.J. Super. 514, 518 (Law Div. 1971)). "Although courts should construe insurance policies in favor of the insured, they 'should not write for the insured a better policy of insurance than the one purchased.'" Ibid. (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)).
We are convinced that, the trial court erred by finding that plaintiff was entitled to UIM coverage under the Progressive policy. In our view, the relevant provisions of the policy are clear and unambiguous and they do not provide UIM coverage to plaintiff under the circumstances presented here. As we stated previously, Rental Service is the only "[n]amed [i]nsured" identified in the Progressive policy. Furthermore, plaintiff does not meet the definition of an "insured" under the policy.
It is undisputed that, at the time of the accident, plaintiff was driving Vasquez's car, which was not an "insured auto" under the policy. Vasquez's car also did not meet the definition of a "temporary substitute auto" because plaintiff was not driving that vehicle as a result of a "breakdown, repair, servicing, loss or destruction" of an "insured auto." Plaintiff acknowledged that he was driving Vasquez's car because the "insured auto," the Ford Mustang, was blocked in his driveway.
As stated previously, in its decision from the bench, trial court reasoned that plaintiff was entitled to UIM coverage because the policy was ambiguous. The court stated that an ambiguity arose because the policy did not define the term "[r]ated driver" and failed to clearly identify the employees of Rental Service who would be entitled to UIM coverage under the policy. However, a "genuine ambiguity" in an insurance policy only arises when "the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979).
We are satisfied that the relevant provisions of the Progressive policy are not ambiguous. The term "rated driver" was not defined in the policy but the identification of plaintiff and his brother as "rated drivers" clearly distinguished them from the one "named insured" under the policy, Rental Services. The terms of the policy indicated that, because plaintiff was not a "[n]amed [i]nsured" under the policy, he would only be entitled to UIM coverage if he met the definition of an "insured." In our judgment, these provisions of the Progressive policy are not "so confusing that the average policyholder cannot make out the boundaries of coverage." Ibid.
We recognize that under certain circumstances, an individual's "reasonable expectation" of coverage can override the plain meaning of a policy. Voorhees by Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992) (citing Werner Indus. v. First State Ins. Co., 112 N.J. 30, 35-36 (1988)). In this case, however, there is no basis for assuming that plaintiff had a reasonable expectation that he would be entitled to UIM coverage if he was injured while driving a car which was not an "insured vehicle" under the policy nor a "temporary substitute" for such a vehicle.
In finding that plaintiff was entitled to UIM coverage under the Progressive policy, the trial court relied upon our decision in Araya v. Farm Family Cas. Ins. Co., 353 N.J. Super. 203 (App. Div.), certif. denied, 175 N.J. 77 (2002). In that case, the plaintiff was employed by a landscaping business. Id. at 206. He was struck by an automobile while trimming a lawn. Ibid. The Declaration Page of the policy identified the owner of the company, Christopher Mahon (Mahon), as the "named insured" but also mentioned the business entity, Mahon Landscaping. Id. at 208.
The plaintiff and other employees of the company were identified as "covered drivers" on the policy's Declaration Page. Ibid. Mahon testified that he wanted his employees to be covered "to the same extent" that he was covered under the policy. Id. at 208-09. The insurer took the position that plaintiff was not covered because the policy had been issued to Mahon personally. Id. at 206.
In Araya, we noted that there was nothing in the policy "that alerts a reasonable person that the intended coverage was personal to Mahon." Id. at 209. We said that there was an ambiguity in the policy because the insurer failed "to designate a natural person or persons entitled to UIM coverage under the policy." Id. at 210-11. We added that: the drafters could have easily and unambiguously identified the named insured.
If Mahon as an individual was the intended insured, the policy should not have included any reference to the business entity and should have clearly identified Mahon as an individual by including the words "individually" or "personally." Conversely, if the business entity is the insured, the employees entitled to UIM coverage should also be clearly identified.
We hold that when a business auto policy fails to designate the insured business entity's human agent or agents entitled to receive UIM benefits, we will look to the Declarations Page as the best indicator of the insured's reasonable expectations of coverage. Any ambiguity created by boilerplate provisions found elsewhere in the policy will be resolved against the drafters of the policy and in favor of coverage. In this case, the covered drivers listed in the Declarations Page provide the best indication of who is to receive UIM benefits. [Id. at 211.]
The facts in this matter are distinctly different from those present in Araya. Here, the policy clearly indicated that Realty Services was the "[n]amed [i]nsured[.]" As owner and president of the company, plaintiff knew that Rental Services is a business entity. The definition of "insured" in the UIM endorsement clearly defined the circumstances when individuals driving an insured vehicle, or temporary substitute auto, would be entitled to UIM coverage. The identification of plaintiff and his brother as "[r]ated drivers" on the Declarations Page did not create an ambiguity as to whether they were entitled to coverage as "[n]amed [i]nsured[s]," and the policy made abundantly clear that they would only be entitled to UIM coverage if they met the definition of an "insured." Therefore, the trial court's reliance upon Araya was misplaced.
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