February 24, 2011
DAVID TARASOFF, PLAINTIFF-APPELLANT,
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND GOVERNMENT EMPLOYEES INSURANCE COMPANY, DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-3317-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 25, 2011 - Decided Before Judges Wefing and Payne.
Following a collision between plaintiff's motorcycle and the tortfeasor's van and payment of the $25,000 policy limits maintained by the tortfeasor, plaintiff, who was substantially injured in the crash, filed an underinsured motorist (UIM) claim with his father's carrier, New Jersey Manufacturers Insurance Company (NJM), which had issued $500,000 in UIM coverage. Plaintiff was insured under NJM's policy as a family member residing with his father. At the time, plaintiff was also the named insured under a motorcycle insurance policy issued by Rider Insurance Company, with a UIM limit of $15,000.
NJM's policy defined underinsured motor vehicle as a land motor vehicle or trailer of any type to which a liability bond or policy applies at the time of the accident but its limit for liability is less than the highest applicable limit of liability under any insurance providing coverage to that insured as a named insured.
NJM denied coverage as the result of a step-down provision in the UM/UIM part of its policy, which stated:
LIMIT OF LIABILITY
A. The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident. However, subject to our maximum limit of liability for this coverage:
a. An insured is not the named insured under this policy;
b. That insured is a named insured under one or more other policies providing similar coverage; and
c. All such other policies have a limit of liability for similar coverage which is less than the limit of liability for this coverage; then our maximum limit of liability for that insured, for all damages resulting from any one accident, shall not exceed the highest applicable limit of liability under any insurance providing coverage to that insured as a named insured.
Because the operation of the step-down provision reduced plaintiff's UIM coverage under NJM's policy to $15,000 (the amount of plaintiff's UIM coverage under his motorcycle policy), and that amount was less than the tortfeasor's liability coverage of $25,000, the tortfeasor's vehicle was not underinsured for purposes of this accident.
Following the denial of UIM coverage by NJM, plaintiff filed a declaratory judgment action against it and Government Employees Insurance Company (GEICO), the insurer of plaintiff's sister, with whom plaintiff also lived.*fn1 At the conclusion of the discovery period, NJM moved for summary judgment. Plaintiff opposed the motion and cross-moved for summary judgment in his favor. Following oral argument, the motion judge granted summary judgment to NJM, finding as a matter of law that NJM's step-down provision was applicable to both uninsured motorist (UM) and UIM coverage and that the Rider motorcycle policy provided "similar coverage" to that afforded by NJM with respect to motorcycle accidents. Thus, recovery under the NJM policy was barred. This appeal followed.
On appeal, plaintiff argues that the motion judge erred in holding that the step-down provision was applicable to both UM and UIM coverages and that he erred in holding that the Rider and NJM policies provided similar coverage. Plaintiff also asserts that, based on the plain language of the NJM policy and the reasonable expectations of the insured, he was entitled to access the full limits of UIM coverage under NJM's policy. NJM asserts that the step-down clause of its policy barred coverage. We agree with NJM.
Plaintiff first argues that the step-down provision at issue is applicable only to UM coverage, not UIM coverage. He observes that the limit of liability provision at issue commences with the statement: "The limit of liability shown in the Declarations for this coverage is our maximum limit of liability for all damages resulting from any one accident." (Emphasis supplied.) He then notes that the declarations sheet lists the limits of liability for UM coverage only, not UIM coverage. As a consequence, plaintiff argues that the step-down provision is limited solely to NJM's UM coverage.
We regard plaintiff's focus as misdirected and reject his arguments. The policy construction issue presented is a pure question of contractual interpretation, as to which we have said:
Our function in construing these policies of insurance, as with any other contract, is to search broadly for the probable common intent of the parties in an effort to find a reasonable meaning in keeping with the express general purposes of the policies. . . . In this pursuit, we cannot emphasize too strongly that when an insurance policy "is clear and unambiguous . . . the court is bound to enforce the policy as it is written. It is not the function of the court to make a better contract for the parties than they themselves have seen fit to enter into or to alter it for the benefit of one party and to the detriment of the other." [Royal Ins. Co. v. Rutgers Cas. Ins. Co., 271 N.J. Super. 409, 416 (App. Div. 1994) (quoting Flynn v. Hartford Fire Ins. Co., 146 N.J. Super. 484, 488 (App. Div.), certif. denied, 75 N.J. 5 (1977) (other citationsomitted).]
The record in this matter discloses that plaintiff's father, Kenneth Tarasoff, first applied for NJM automobile coverage in December 2004. In that connection, he completed a "Request for Personal Auto Insurance Quote, Standard Policy Coverage Selection Form" that reveals that he applied for "UNINSURED/UNDERINSURED MOTORIST COVERAGE" with combined single limits of $500,000.*fn2 Tarasoff requested coverage "Same As Before" when he renewed the policy for the policy year that included the date of the accident. The language of the Standard Policy Coverage Selection Form executed by Tarasoff in connection with his policy renewal was identical to that found in the initial Selection Form as it related to UM/UIM motorist coverage.
The policy's declarations page, as plaintiff notes, lists only "Uninsured Motorists" coverage with limits of $500,000. In that respect, it is like the policy in Hesser v. Harleysville-Garden State Insurance Co., 287 N.J. Super. 47, 49 (App. Div. 1996), which we construed as offering single limit UM and UIM coverage in the amount stated on the declarations sheet as applicable to "Uninsured Motorist" coverage. Moreover, as in Hesser, in this case the following page identifying the vehicle to be insured and the coverages afforded included as a coverage selection a "per-accident limit for Uninsured/Underinsured Motorists" under the policy of $500,000.
Further, the policy itself provides clearly that NJM offered uninsured and underinsured coverage jointly while denominating the coverage "PART B - UNINSURED MOTORISTS COVERAGE NEW JERSEY (PP 04 80 02 04)." That coverage part commenced with a section titled "INSURING AGREEMENT," which provided:
We will pay compensatory damages which an insured is legally entitled to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle because of:
1. Bodily injury sustained by an insured and caused by an accident; and
2. Property damage caused by an accident except under paragraph "2." of the definition of uninsured motor vehicle.
The "INSURING AGREEMENT" section was followed by sections labeled "EXCLUSIONS," "LIMIT OF LIABILITY," "OTHER INSURANCE," "ARBITRATION," "ADDITIONAL DUTIES," and "OUR RIGHT TO RECOVER PAYMENT." Nothing in the policy's layout suggested that the applicability of the "LIMIT OF LIABILITY" section containing the step-down clause, unlike the other sections of Part B, was limited to uninsured motorist coverage, only.
As a final matter, we observe that plaintiff has sought UIM coverage from NJM under the rationale that NJM's UIM coverage of $500,000 exceeds the liability coverage of the tortfeasor, which was $25,000. Plaintiff cannot logically claim coverage on the one hand, while arguing on the other hand that the insuring provisions of NJM's policy apply to UM coverage, only.
Our consideration of NJM's policy and associated documents satisfies us that the parties clearly intended that the provisions of Part B of the policy, including the policy's step-down provisions found in the section titled "LIMIT OF LIABILITY," apply equally to UM and UIM coverage, regardless of the language of the declarations sheet. Indeed, if we were to follow plaintiff's argument that coverage is defined by the terms of the declarations sheet to its logical extreme, there would be no UIM coverage under any circumstances under NJM's policy - an untenable interpretation advocated by neither party. We thus reject plaintiff's arguments regarding the applicability of the step-down clause.
Plaintiff next argues that the motorcycle coverage afforded to him under the Rider motorcycle policy was not "similar coverage" to that afforded under NJM's automobile policy. He commences that argument by asserting that the phrase "other policies providing similar coverage" must be limited to auto policies. We see nothing in the policy language to support this claim, particularly in light of the step-down clause's concluding statement that, if the stated conditions are met, then our maximum limit of liability for that insured, for all damages resulting from any one accident, shall not exceed the highest applicable limit of liability under any insurance providing coverage to that insured as a named insured. (Emphasis supplied.)
Plaintiff also argues as a substantive matter that his motorcycle insurance did not provide "similar coverage" for purposes of the step-down provision.*fn3 We might agree with plaintiff if he had been riding in an automobile at the time of the accident, since in that circumstance, it is unlikely that the motorcycle policy would have afforded any coverage at all. However, in this case, plaintiff was injured while riding a motorcycle, and it is unquestionable that the Rider policy's terms covered his accident. The Rider policy, like that issued by NJM to plaintiff's father, provided bodily injury and property damage coverage, collision, fire, theft and comprehensive coverage and, significantly, both UM and UIM coverage for bodily injury and property damage.*fn4 Although NJM's coverage was arguably broader than that offered by Rider, NJM's step-down clause did not require that the coverage be "identical" but only "similar." We regard that condition as having been met insofar as UM/UIM coverages are concerned.
As a final matter, plaintiff argues that we have previously held that "where underinsured motorist coverage is provided through insurance policies which arise under different statutory schemes, they cannot be said to provide similar coverage." However National Union Fire Insurance Co. of Pittsburgh, Pa. v. Jeffers, 381 N.J. Super. 13 (App. Div. 2005), upon which plaintiff relies as support for this proposition, is inapposite. There, the plaintiff, who was personally insured for UM/UIM coverage under a Pennsylvania policy, sought UIM benefits under a commercial liability policy issued to his employer in New Jersey. After examining the two policies and applicable insurance statutes, we found that the two policies did not provide similar UIM coverage. Under New Jersey law, the employer's New Jersey policy provided gap coverage, whereas under Pennsylvania law, the plaintiff's personal insurance provided excess coverage. Thus, the coverages were not similar. Id. at 19-20. Plaintiff can point to no such difference in statutes or policy terms in the present case.
In his final argument, plaintiff claims that he is entitled to NJM's coverage as the result of the operation of the doctrine of reasonable expectations. However, as a factual matter, plaintiff has admitted that, prior to his accident, he had no expectations of motorcycle coverage of any kind under his father's NJM policy. Similarly, plaintiff's father admitted in his deposition that he had no expectation that his son would receive UIM coverage under the father's NJM policy for the motorcycle accident at issue in this case.
Moreover, the doctrine of reasonable expectations becomes relevant only in instances in which a policy is ambiguous so as to give effect to the insured's understanding of the coverage procured. Zacarias v. Allstate Ins. Co.. 168 N.J. 590, 595 (2001). We find no ambiguity in the step-down provision at issue that would create an expectation of coverage in the circumstances presented. We decline to give effect to the affidavit of Kenneth Tarasoff,*fn5 offered in opposition to NJM's motion for summary judgment to diminish the effect of the admission contained in his deposition testimony. Shelcusky v. Garjulio, 172 N.J. 185, 199-202 (2002).