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Hofstrom v. Pacific Employers Insurance Co.

July 16, 2010


On appeal from Superior Court of New Jersey, Law Division, Civil Part, Gloucester County, Docket No. L-946-09.

Per curiam.


Argued June 3, 2010

Before Judges Stern and Graves.

In this automobile insurance coverage case, plaintiff Neil Hofstrom appeals from an order dated August 27, 2009, that denied his request for arbitration of an uninsured motorist (UM) claim and dismissed his complaint. Plaintiff sustained personal injuries in a one-car accident on May 27, 2002, while working on assignment in St. Croix, U.S. Virgin Islands. The court determined the rental car plaintiff was driving was not covered under a commercial automobile insurance policy issued by defendants to plaintiff's employer, Praxair, Inc. (Praxair).

Plaintiff argues on appeal, as he did below, that he is entitled to UM benefits because the policy issued to Praxair contains an ambiguity, which must be resolved in his favor. After carefully considering the record, we find the policy is not ambiguous when read as a whole and we affirm the order denying plaintiff's demand for arbitration of his UM claim.

In 2002, plaintiff, a New Jersey resident, was employed by Ucisco, an entity owned by Praxair. Praxair's principal place of business is in Danbury, Connecticut, and its insurance provider in 2002 was Marsh U.S., Inc., a business entity in New York. Plaintiff reported to an office in Burlington, New Jersey. Defendant carrier Pacific Employers Insurance Company and defendants ACE USA CLAIMS and ESIS (collectively, defendants or PEIC) provided Praxair with commercial business auto insurance through Policy No. SCA H07970316 (the policy) for the period from June 30, 2001, through June 30, 2002. Therefore, the policy was in effect when plaintiff was injured on May 27, 2002. Plaintiff also had a personal automobile insurance policy with AIG at the time of the accident.

On May 27, 2002, plaintiff was operating a 2002 four-door Chevy Cavalier leased from Hertz*fn1 while he was on assignment in St. Croix, U.S. Virgin Islands. Plaintiff was traveling westbound on Route 62 in St. Croix when he took evasive action to avoid an unidentified vehicle traveling eastbound that crossed the center line. Plaintiff sustained personal injuries when the car he was driving rolled over.

In a verified complaint and order to show cause filed pursuant to N.J.S.A. 2A:24-3 and Rule 4:67-1(a), plaintiff claimed he was entitled to uninsured motorist benefits under the policy issued by defendants, and sought an order compelling defendants "to appoint an arbitrator and appear for a UM hearing." Plaintiff claimed "[s]everal demands for arbitration have been made upon Defendants to appoint an arbitrator in order to commence UM proceedings but to no avail. The carrier has failed or refused to respond in any regard. . . . [i]n violation of its obligations under the policy." On June 5, 2009, the trial court ordered defendants to file a response by July 7, 2009, and to appear on July 24, 2009, to show cause why the matter should not proceed to arbitration. On July 7, 2009, defendants filed an answer with nine affirmative defenses.

At oral argument on July 24, 2009, plaintiff claimed the automobile insurance policy issued to Praxair was ambiguous, because the Business Auto Declarations page referenced a "Truckers Coverage Form" not included in the policy to define the vehicles with UM coverage. Plaintiff argued that this created an ambiguity and that the vehicle he was driving was covered for UM purposes.

Defendants argued the policy was not ambiguous and directed the court to a different page of the policy, the Business Auto Coverage Form. This form indicated plaintiff was not entitled to UM benefits because Praxair did not "own" the vehicle and because the car was principally registered and garaged in the U.S. Virgin Islands, which, unlike New Jersey, does not require motorists to carry UM coverage.

At a subsequent hearing on August 26, 2009, the court considered a certification by Thomas Groves, an underwriter manager for defendant ACE USA. Groves stated: "As a general matter, commercial auto insurance policies do not provide uninsured motorist coverage for hired non-owned vehicles," and he concluded that Praxair's policy did "not provide uninsured motorist coverage for hired non-owned vehicles."

Following oral argument, the court rendered an oral decision, which included the following:

And then, there's a form 00010797 that is the Business Auto Coverage form. It lists the various symbols, which are basically numerics, and you go back to the [declaration] page, and the uninsured motorist, which is the insurance coverage at play, references just the number 6. And, 6, when you look at the Business Auto Coverage form, defines autos as you own, that because of the law of the state where you are licensed or principally garaged are required to have and cannot reject uninsured motorist coverage. This includes ...

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