On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-368-10.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 9, 2011 - Decided Before Judges Fisher and Simonelli.
In this appeal, we consider whether an uninsured motorist (UM) insurer -- barred by its policy from rejecting an arbitration award under $15,000 -- was entitled to reject a $29,148.62 award when only liable to pay half. In adhering to D'Antonio v. State Farm Mutual Automobile Insurance Company, 262 N.J. Super. 247 (App. Div. 1993), which considered the same situation in an underinsured motorist (UIM) setting, we conclude that the insurer was bound to the award and, therefore, affirm.
The facts are undisputed and clear. Plaintiff, who was injured as the result of the negligence of an uninsured driver, had UM coverage from policies issued by both Harleysville Insurance Company and defendant New Jersey Manufacturers Insurance Company (NJM). An arbitration resulted in an award of $29,148.62 in plaintiff's favor. Harleysville paid its half; NJM rejected the award and demanded a trial.
Consequently, plaintiff commenced this suit, claiming that NJM's responsibility was less than $15,000, because NJM was only obligated to pay half of the $29,148.62 award, and that NJM was precluded from demanding a trial regardless of the size of the award. Chiefly relying upon our decision in D'Antonio, the trial judge agreed with plaintiff's contention that the award was final because NJM was liable for less than $15,000 notwithstanding that the award was in excess of that amount. The judge also denied NJM's motion for reconsideration, and NJM appealed.
In this appeal, NJM contends the order under review was based on an erroneous interpretation of the critical portion of its policy, which focuses not on NJM's liability but on the arbitration award itself:
[T]he arbitrators' [decision] will be binding unless the arbitration award exceeds the minimum limit for liability specified by the Financial Responsibility Law of New Jersey.[*fn1 ] If the arbitration award exceeds that limit, either party may demand the right to a trial by jury on all issues. [Emphasis added.]
NJM does not contest that its liability is limited to half the arbitration award because Harleysville also provided UM coverage, see N.J.S.A. 17:28-1.1(c), and acknowledges that its liability does not exceed $15,000. NJM, however, argues those circumstances are irrelevant and insists the monetary threshold for fixing the finality of an arbitration award was exceeded because it is the amount of the award -- not the extent of its liability -- that matters.
We considered a similar argument in D'Antonio, where plaintiff was injured in an automobile accident, settled with the tortfeasor for $25,000, which was the limit of the tortfeasor's insurance coverage, and then made a claim against her own insurer for UIM benefits. 262 N.J. Super. at 248. The arbitrators "found defendant '100% liable' and awarded plaintiff 'the gross sum of $40,000.'" Ibid. Because the parties agreed the award "contemplated that the $25,000 recovered from [the tortfeasor] was to be credited against the $40,000 'gross sum,'" id. at 249, the insurer was ultimately liable for only $15,000 in UIM benefits -- an amount which did not exceed the minimum for rejecting the award. As a result, we concluded that the insurer did not have the right to reject the award because its liability for UIM payments was determinative. Id. at 250.
NJM argues that D'Antonio is distinguishable because it concerned a UIM arbitration award rather than a UM arbitration award and because the phrasing of the UIM policy provision in question there differs from the phrasing of the UM policy provision in question here. Those circumstances are certainly true, but they do not prompt a different result here.
In ascertaining the parties' intent in D'Antonio, we recognized that the UIM provision's phrase -- "amount of damages" -- was not defined by the policy and that "its meaning must be drawn from the setting in which it is used." Id. at 249. Reasoning that arbitration "is conducted to determine the carrier's liability for UIM payments," and "[i]f a trial is available, it too will determine only the carrier's UIM obligation," ibid., Judge Gaulkin explained for this court that the extent of the carrier's UIM liability -- not the tortfeasor's liability -- should determine whether the case is of sufficient magnitude to justify a trial.
The parties' purpose in foreclosing trials in modest cases would be substantially frustrated if the right to demand a trial turned on the damages attributable to the underinsured tortfeasor. [Id. at 249-50.]
Even though the policy here utilized a different phrase in fixing the threshold for preserving a right to trial, the parties' purpose was unmistakably the same as in D'Antonio, and we can find no principled reason to adopt NJM's request for an alternative approach -- based solely on minor ...