April 16, 2010
JANET MEAD, INDIVIDUALLY AND JANET MEAD, AS GENERAL ADMINISTRATRIX AND ADMINISTRATRIX AD PROSEQUENDUM OF THE ESTATE OF TIMOTHY J. MEAD, DIANE HESLEY MEAD, JESSICA LYNN MEAD, AND BRYAN PATRICK MEAD, PLAINTIFFS,
THOMAS SCHOENBORN, DEFENDANT.
JAMES WATSON AND RITA WATSON, H/W, PLAINTIFFS-APPELLANTS,
THOMAS SCHOENBORN, DEFENDANT, AND HIGH POINT PREFERRED INSURANCE COMPANY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Gloucester County, Docket Nos. L-144-09 and L-328-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Telephonically Argued: April 8, 2010
Before Judges Axelrad and Fisher.
Plaintiff James Watson*fn1 appeals from an order of the Law Division granting the motion of defendant, High Point Insurance Company (High Point), dismissing his complaint with prejudice for failure to state a claim pursuant to Rule 4:6-2(e). We affirm.
We briefly recite the procedural history and undisputed facts. On April 5, 2008, plaintiff was a passenger in a vehicle operated by defendant, Thomas Schoenborn. At that time, both plaintiff and Schoenborn were insured by High Point; plaintiff's underinsured motorist (UIM) coverage limit was $100,000/$300,000, and Schoenborn's liability coverage limit was $300,000/$300,000. Schoenborn disregarded a stop sign and violently collided with a vehicle operated by Timothy Mead. As a result of the accident, Mead died and plaintiff suffered personal injuries.
Mead's Estate filed wrongful death and survival actions against Schoenborn for compensatory damages. Plaintiff and his wife also instituted a personal injury action against Schoenborn, and in the fourth count of his complaint pled a claim against High Point for UIM benefits. Schoenborn filed an answer to the complaint. High Point filed a motion to dismiss plaintiff's claim against it for failure to state a claim arguing that because Schoenborn had a $300,000 per person liability limit, and that amount was greater than plaintiff's per person UIM limit of $l00,000, Schoenborn was not an underinsured motorist at the time of the accident as defined in N.J.S.A. l7:28-1.1e. In opposition, plaintiff urged that because of the multiple claimants, the tortfeasor's vehicle was underinsured because the amount of the tortfeasor's coverage actually made "available" to him under the statute was less than the amount of plaintiff's UIM coverage. Following oral argument on May l, 2009, the court granted High Point's motion, memorialized in an order.
Schoenborn then filed a motion to deposit his $300,000 policy limits into court that was granted by order of May 28, 2009. Following a hearing, the court entered an order on August 28, 2009, distributing the $300,000 deposited liability insurance funds between Mead's Estate and plaintiff by allocating $275,000 to Mead's Estate and $25,000 to plaintiff. This appeal ensued.
On appeal, plaintiff argues:
I. The trial court misconstrued the word "available" in N.J.S.A. l7:28-l.le(l), a statute that is ambiguous, when it failed to find the vehicle operated by the tortfeasor to be "underinsured" as to the plaintiff-victim in a multiple victim accident when the single limit liability coverage of the tortfeasor was significantly reduced by the payment of the claim of another accident victim's estate, thereby making the amount of the insurance "available" for the actual payment of the plaintiff-victim's claim lower than his personal underinsured motorist coverage.
II. The trial court disregarded the legislative intent of N.J.S.A. l7:28-1.1e(l) by failing to apply the doctrine of the reasonable expectations of the plaintiffs-victims by disallowing them access to their underinsured motorist coverage with the defendant for the unpaid balance of plaintiffs' claims due to the tortfeasor's available liability limit becoming exhausted by a pro rata distribution between the multiple victims.
We find plaintiff's arguments unpersuasive in light of the applicable law.
The question before us concerns the interpretation of N.J.S.A. l7:28-1.1e, when there are multiple claimants whose damages exceed the amount of liability coverage available to a tortfeasor. The statute provides, in pertinent part:
A motor vehicle is underinsured when the sum of the limits of liability under all bodily injury and property damage liability bonds and insurance policies available to a person against whom recovery is sought for bodily injury or property damage is, at the time of the accident, less than the applicable limits for underinsured motorist coverage afforded under the motor vehicle insurance policy held by the person seeking that recovery. [N.J.S.A. l7:28-1.1e(1).]
Plaintiff argues the motion judge erred by misconstruing the word "available" in what he urges is an ambiguous statute because she failed to conclude that the tortfeasor was an underinsured motorist as to the plaintiff, one of two victims in the accident. According to plaintiff, the sum of the limits of liability insurance covering the tortfeasor was reduced by the payment of claims to the Mead Estate, thereby making the amounts of insurance "available" for actual payment to plaintiff less than the amount of the UIM coverage for which he paid a premium. Thus plaintiff urges that in the context of multiple claimants against a single tortfeasor, considerations of the legislative intent and public policy compel a common sense and less restrictive interpretation of the word "available" in N.J.S.A. l7:28-1.1e(l) to mean the amount of the tortfeasor's coverage that is actually made "collectible" by the injured victim making a claim as opposed to the tortfeasor's coverage limits.
Plaintiff acknowledges his requested interpretation runs counter to well established case law where there were multiple claimants whose total damages exceeded the amount of insurance coverage available under a tortfeasor's liability coverage. See David v. Geico, 360 N.J. Super. 127, 149-51 (App. Div.), certif. denied, 178 N.J. 251 (2003); Harmon v. N.J. Auto. Full Ins. Underwriting Ass'n, 268 N.J. Super. 434, 437-38 (App. Div. l993); Tyler v. N.J. Auto. Full Ins. Underwriting Ass'n, 228 N.J. Super. 463 (App. Div. l988). In Tyler, supra, which involved four claimants and one tortfeasor, two of the claimants received from the tortfeasor's policy less than their per person UIM coverage limit. 228 N.J. Super. at 465-66. In denying UIM coverage, we held:
The plain meaning of [N.J.S.A. l7:28-1.1e] is that underinsured motorist benefits are available if (and to the extent that) the tortfeasor's liability limits are lower than the limits of the underinsured motorist coverage contained in the plaintiffs' policy. Here, the tortfeasor's liability limits were $25/50,000 while plaintiffs' underinsured motorist limits were $15/30,000. For that reason, plaintiffs' underinsured motorist coverage did not apply.
The statute produces the same result if there is one injured claimant or many, or if the amount of damages exceed the tortfeasor's liability limits, or even if multiple claims against one tortfeasor are, because of his liability limits, settled for amounts which are individually less than the underinsured motorist coverage available from the claimants' policy. A tortfeasor is not underinsured relative to plaintiffs' damages, or relative to the judgment or judgments against him, but rather relative to the limits of the underinsured motorist coverage purchased by or for the person seeking recovery. [Id. at 466.]
UIM was also denied in Harmon, supra, which involved multiple claimants, a tortfeasor with $15,000/$30,000 liability coverage limits and plaintiff with UIM coverage limits in the same amount. 268 N.J. Super. at 436. The plaintiff received a settlement of less than $15,000 in light of the payments to the other claimants and sued for UIM benefits. Ibid. We accepted the Tyler rationale and determined the plaintiff had no UIM claim, stating:
The plain language of the statute provides that a tortfeasor is not an underinsured motorist unless the tortfeasor has "less" coverage "at the time of the accident" than the person seeking UIM benefits. The comparison of policy limits required by N.J.S.A. l7:28-1.1e is determined by the "actual tortfeasor's policy limits and not by the settlement amounts paid to the insured party." Gold v. Aetna Life & Casualty Ins. Co., 233 N.J. Super. 271, 277 (App. Div. l989). [Id. at 438.]
In David, supra, the plaintiff, who had UIM coverage of $250,000/$500,000, received less than the tortfeasor's liability limit of $300,000/$300,000 because of a PIP reimbursement award to the plaintiff's carrier. 360 N.J. Super. at 132, 149. Again expressly following the Tyler rationale, we found because the tortfeasor's per person liability limit was greater than the plaintiff's per person UIM limit, the tortfeasor was not an underinsured motorist as defined by N.J.S.A. l7:28-1.1e. Id. at l49-50. Referencing Tyler, we reiterated that "there is no recovery at all from the underinsured motorist coverage unless it has higher limits than the liability coverage." Id. at l51. In French v. New Jersey School Board Ass'n Insurance Group, 149 N.J. 478, 483 (l997), the Supreme Court cited Tyler with approval.
In construing a statute, our function is to interpret the intent of the Legislature, not rewrite it, and "generally the best indicator of that intent is the statutory language." DiProspero v. Penn, 183 N.J. 477, 492 (2005). It is not the function of a court to "presume that the Legislature intended something other than that expressed by way of the plain language." Lee v. First Union Nat'l Bank, 199 N.J. 251, 258 (2009). As we have held previously, we are satisfied that N.J.S.A. l7:28-l.le is clear and unambiguous and requires no other interpretation than as written.
Plaintiff also argues the motion judge erred by failing to apply the doctrine of reasonable expectations of the plaintiff-insured, that he could recover under the UIM provision of his policy for the unpaid balance of his claim when the tortfeasor's available liability limits were exhausted due to the sharing of proceeds with the Mead Estate claimant. Courts apply the "reasonable expectations" doctrine when interpreting ambiguities in insurance contracts. See Meier v. N.J. Life Ins. Co., 101 N.J. 597, 612-13 (1986) ("Application of this doctrine leads to a basic tenet of insurance law that in interpreting insurance contracts any ambiguities should be construed against the insurer and in favor of the insured.").
Plaintiff concedes that N.J.S.A. l7:28-1.1e(l) is unambiguous when an analysis is performed to determine if UIM coverage shall apply when there is only one claimant seeking recovery against a tortfeasor. He argues, however, the statute becomes ambiguous when there are multiple claimants seeking coverage from the tortfeasor's policy which renders the tortfeasor liability limits unavailable, i.e., uncollectible, to those claimants as they can only receive a pro rata share of the tortfeasor's coverage. We discern no basis in statutory construction to make this distinction and reject plaintiff's argument based on our finding that N.J.S.A. l7:28-1.1e(1) is clear and unambiguous regardless of the number of claimants seeking a recovery against a tortfeasor.
When analyzing legislative intent and public policy, we also note that the goals of uninsured (UM) and UIM coverage are completely different. Statutes mandate the inclusion of UM protection in insurance policies written in New Jersey. See N.J.S.A. 39:6A-14; N.J.S.A. 17:28-1.1. The purpose of UM coverage is to protect New Jersey residents from non-insured, financially irresponsible motorists and "subserve the socially desirable policy of adequate indemnification of innocent automobile accident victims . . . ." Fernandez v. Selected Risks Ins. Co., 82 N.J. 236, 240-41 (1980).
In contrast, UIM coverage is optional. Hesser v. Harleysville-Garden State Ins. Co., 287 N.J. Super. 47, 50 (App. Div. l996). "The purpose of the UIM feature is to provide as much coverage as an insured is willing to purchase, up to the available limits, against the risk of an underinsured claim. The purchaser decides the amount of the coverage[.]" Nikiper v. Motor Club of Am. Cos., 232 N.J. Super. 393, 399 (App. Div.), certif. denied, 117 N.J. 139 (1989). The Supreme Court elaborated that:
UIM is meant to serve a limited purpose. It is not intended to provide coverage to compensate injured parties for the full value of the injuries caused by the tortfeasors. The clear Legislative intent is that UIM should serve as a "gapfiller." . . . The principle of UIM coverage is not to make the injured party whole, but to put that person in as good a position as if the tortfeasor had possessed an amount of liability insurance equal to the UIM coverage of an "insured" under the policy in question. [Selective Ins. Co. v. Thomas, 179 N.J. 6l6, 620 (2004) (quoting Vassiliu v. Daimler Chrysler Corp., 356 N.J. Super. 447, 456 (App. Div. 2002), aff'd in part and rev'd in part, 178 N.J. 286 (2004)) (internal citations omitted).]
We further note that although the Legislature has amended N.J.S.A. 17:28-1.1 on several occasions since Tyler was decided in l988, the last time being in 2007, the Legislature has chosen not to modify subsection "e" in response to our decisions. As our Supreme Court stated in Massachusetts Mutual Life Insurance Co. v. Manzo, 122 N.J. 104, 116 (199l), "[t]he Legislature's failure to modify a judicial determination, while not dispositive, is some evidence of legislative support for the judicial construction of a statute. White v. Township of N. Bergen, 77 N.J. 538, 576 (1978); Quaremba v. Allen, 67 N.J. 1, 14 (1975); Lemke v. Bailey, 41 N.J. 295, 301 (1963)." The inference of acquiescence by the Legislature to our interpretation in Tyler is fortified by the fact that the Legislature has amended N.J.S.A. l7:28-1.1 several times without altering the judicial construction of the word "available."*fn2 See Lemke, supra, 41 N.J. at 301-02.
We conclude that the prior opinions of this court in David, Harmon and Tyler are consistent with the aforementioned principles of statutory construction, as well as the legislative intent and public policy surrounding UIM benefits. Accordingly, we decline to interpret N.J.S.A. l7:28-1.1e more liberally or expansively as urged by plaintiff.