On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2371-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Yannotti, Espinosa and Skillman.
In this matter, the Law Division determined that Jonathan Klama (Klama) is only entitled to a total of $15,000 in uninsured motorist (UM) coverage under policies issued by New Jersey Manufacturers Insurance Co. (NJM), Proformance Insurance Company (Proformance), and Foremost Insurance Group (Foremost), and that each of the three insurers is responsible for one-third of the $15,000 in coverage. Klama appeals and Foremost cross-appeals from the court's October 23, 2009, order which memorialized the court's decisions. For the reasons that follow, we affirm on the appeal and the cross-appeal.
On October 2, 2005, Klama was operating a motorcycle and collided with a van that was owned by Odania Blanco (O. Blanco) and operated by Sandro Zuniga-Elizando (Zuniga-Elizando). The van had been insured as a commercial vehicle by Johnny Blanco (J. Blanco), the principal of Blanco Construction. However, the coverage on the vehicle lapsed on August 23, 2005, because J. Blanco had not paid premiums for the coverage and did not have general liability coverage for his business.
Klama was the named insured under a motorcycle insurance policy issued by Foremost, which contained policy limits for uninsured motorist (UM), bodily injury coverage, in the amount of $15,000 per person and $30,000 per accident. At the time of the accident, Klama was a resident of the household of his mother and grandfather. Consequently, Klama also was covered under his mother's and grandfather's auto insurance policies.
Klama's mother was insured under a policy issued by NJM, and Klama's grandfather was insured under a Proformance policy.
Both policies provided UM coverage of up to $100,000 per person and $300,000 per accident. However, both policies included "step-down" clauses, which limit the amount of UM coverage available under the policy.
Klama filed a personal injury action against ZunigaElizando, O. Blanco and Blanco Construction. The trial court permitted Proformance to intervene in that action. Thereafter, NJM filed a declaratory judgment action against Klama, Foremost and Proformance, seeking to enforce the step-down clauses of the NJM and Proformance policies and limit UM coverage to the $15,000 provided under the Foremost policy. The trial court consolidated Klama's personal injury action with NJM's declaratory judgment action.
NJM and Proformance filed motions for summary judgment seeking enforcement of the step-down clauses of their policies. Foremost filed a cross-motion, in which it sought to apportion the $15,000 in UM coverage by requiring NJM and Proformance to both pay 46.5 percent of that amount, and requiring Foremost to pay the remaining seven percent.
The trial court considered the motions on October 23, 2009, and placed its decision on the record. The court found that the step-down clauses in the NJM and Proformance polices are valid and enforceable, Klama's UM coverage was limited to $15,000, and the three insurers were each obligated to pay one-third of that amount. The court entered an order dated November 10, 2009, memorializing its findings. Klama's appeal and Foremost's cross-appeal followed.
Klama argues that the trial court erred by enforcing the step-down clauses in the NJM and Proformance policies. We disagree.
All standard personal auto insurance policies issued in New Jersey, with regard to motor vehicles registered or principally garaged in this State, must provide UM coverage of at least $15,000 for injury or death to one person and $30,000 for injury or death to more than one person. N.J.S.A. 17:28-1.1(a)(1) to -(2). Insurers are required to provide the named insured with the option of electing UM coverage for bodily injury of up to $250,000 per person and $500,000 per accident. N.J.S.A. 17:28-1.1(b).
However, N.J.S.A. 17:28-1.1(c) provides that "[i]f the insured had uninsured motorist coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable ...