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Gabriella Pannebecker v. Philadelphia Indemnity Insurance Company


March 30, 2011


On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-439-09.

Per curiam.


Argued October 27, 2010

Before Judges Cuff, Sapp-Peterson and Simonelli.

In this declaratory judgment action, plaintiff Gabriella Pannebecker, appeals from the trial court order granting summary judgment dismissing her complaint seeking an order compelling defendant, Philadelphia Indemnity Insurance Company (PIIC), to provide underinsured motorist (UIM) coverage pursuant to a policy issued to Progressive Living Units and Systems of New Jersey, Incorporated (PLUS). We affirm.

PLUS is a privately-owned residential facility that provides an array of services including housing, physical therapy, and counseling to its clientele, persons who suffer from brain injuries. It provided housing to plaintiff at a condominium it owns located in Galloway Township. Plaintiff is indigent and totally dependent upon PLUS for all of her daily needs. As part of the rehabilitation process for its clients, PLUS transports clients to the Absecon ShopRite each week for grocery shopping. The clients are transported in a Ford Econoline van insured by PIIC. The van was assigned exclusively to plaintiff's condo. PLUS was the named insured on the policy which provided uninsured and underinsured motorist (UM/UIM) coverage as well as personal injury protection (PIP) benefits.

On June 3, 2008, PLUS transported plaintiff and two other clients to the Absecon ShopRite for their regular visit. Maryann Dennis (Dennis), a life skills trainer employed by PLUS, drove the van. Before entering the store, plaintiff, who was seated in her wheel chair, and the two other clients, smoked cigarettes outside the entrance to the store. They were struck by a vehicle while being ushered into the store by Dennis. Plaintiff remembers the impact of the vehicle pushing her into the door of the store. Her wheelchair was stuck in the doorway and she was unable to move. She suffered severe injuries.

Prior to instituting litigation, plaintiff settled her claims against the driver. She then initiated a lawsuit against PIIC for UIM benefits under the policy it issued to PLUS. Defendant moved for summary judgment contending that plaintiff was not the named insured under the policy. Additionally, defendant argued that plaintiff was not among the other class of persons to whom coverage is extended.

Plaintiff cross-moved for summary judgment, contending that she was entitled to UIM coverage as an intended beneficiary because: (1) the policy named PLUS, a corporate entity, as the named insured, creating an ambiguity for which coverage should be interpreted as including individuals; (2) the purpose of the policy issued to PIIC was to protect persons like plaintiff, who are totally dependent upon PLUS to address all of their needs. Additionally, plaintiff argued that because she is an intended beneficiary under the policy, it was unnecessary to be specifically named as an insured under the policy. Finally, plaintiff urged that she was also entitled to UIM coverage because she was occupying the vehicle at the time of the accident, as the term "occupying" has been construed by our case law.

In a lengthy and well-reasoned oral opinion, Judge William E. Nugent found that based upon the undisputed facts, plaintiff was not occupying the vehicle at the time she was struck, and as such, there was no "nexus between the van and the accident that occurred and the injuries sustained by the plaintiff." Next, the judge concluded that there was no ambiguity in the language of the policy relating to the named insured, which in this case is a business entity, PLUS. Finally, Judge Nugent rejected plaintiff's argument that because she was required to give up all of her assets in order to receive Medicaid benefits, she was like the nun in Thattil v. Dominican Sisters of Charity of the Presentation of the Blessed Virgin, Inc., 601 N.E.2d 908 (Mass. 1993), who was required to surrender her assets to the church and take a vow of poverty, thereby precluding her from obtaining auto insurance. In distinguishing Thattil, Judge Nugent noted, unlike the nun, plaintiff's inability to purchase additional coverage or protection "was not by reason of any rules and regulations of PLUS, and although she may have been incapable physically or financially to do that, that wasn't an imposition or a condition of her ability to live in the PLUS arrangement." The present appeal followed.

On appeal, plaintiff raises the following points for our consideration:





Our review of a trial court order granting or denying summary judgment is de novo. Chance v. McCann, 405 N.J. Super. 547, 563 (App. Div. 2009). We therefore employ the same standard as that of the trial court in resolving summary judgment motions. Jolley v. Marquess, 393 N.J. Super. 255, 267 (App. Div. 2007). We determine whether the evidence, "when viewed in the light most favorable to the non-moving party," is "sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Thus, we consider, as the trial judge did, "'whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law.'" Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007) (quoting Brill, supra, 142 N.J. at 536).

Summary judgment must be granted "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c). If there is no genuine issue of material fact, we must then "decide whether the trial court correctly interpreted the law." Massachi v. AHL Servs., Inc., 396 N.J. Super. 486, 494 (App. Div. 2007), certif. denied, 195 N.J. 419 (2008). Applying these standards, we are satisfied that summary judgment was properly granted in favor of defendant.

It is well settled that insurance policies are contracts of adhesion and are therefore scrutinized with particularity. Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). Where there is ambiguity in the terms and conditions of the contract, "ambiguous language will be construed liberally and resolved against the insurer and in favor of coverage." Pinto v. N.J. Mfrs. Ins. Co., 365 N.J. Super. 378, 387 (App. Div. 2004), aff'd, 183 N.J. 405 (2005). In doing so, our "courts have endorsed the principle of giving effect to the 'reasonable expectations' of the insured for the purpose of rendering a 'fair interpretation' of the boundaries of insurance coverage." Di Orio v. N.J. Mfrs. Ins. Co., 79 N.J. 257, 269 (1979) (citing Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482-83 (1960)). "Thus, the insured's 'reasonable expectations' are brought to bear on misleading terms and conditions of insurance contracts and genuine ambiguities are resolved against the insurer." Ibid. (citing Remsden v. Dependable Ins. Co., 71 N.J. 587, 589 (1976); Bryan Constr. Co. v. Employers' Surplus Lines Ins. Co., 60 N.J. 375, 377-78 (1972); Gerhardt v. Cont'l Ins. Co., 48 N.J. 291, 298-300 (1966)). Under this approach, courts seek to interpret the ambiguous language of the insurance contract objectively and from the perspective of the average policy holder, as far as the language of the insurance contract will permit. Perrine v. Prudential Ins. Co. of Am., 56 N.J. 120, 126-27 (1970); Cooper v. Gov't Employees Ins. Co., 51 N.J. 86, 93-94 (1968); Linden Motor Freight Co., Inc. v. Travelers Ins. Co., 40 N.J. 511, 524-526 (1963); Karl v. N.Y. Life Ins. Co., 154 N.J. Super. 182, 186 (App. Div. 1977).

On the other hand, it is equally well settled that notwithstanding the unequal bargaining power between an insurance company and an insured, "[i]f the policy language is clear, the policy should be interpreted as written." Nav-Its, Inc. v. Selective Ins. Co., 183 N.J. 110, 118 (2005) (citing President v. Jenkins, 180 N.J. 550, 562 (2004)). Where the terms of the policy are clear and unambiguous, it is not the function of the courts to rewrite the policy "to make a better contract for either of the parties." Gibson v. Callaghan, 158 N.J. 662, 670 (1999) (citing Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960)).

Relying upon Progressive Casualty Insurance Company v. Hurley, 166 N.J. 260 (2001) and Araya v. Farm Family Casualty Insurance Company, 353 N.J. Super. 203 (App. Div.), certif. denied 175 N.J. 77 (2002), for the proposition that a policy naming a corporate entity is ambiguous and should therefore include individuals, plaintiff argues that the PIIC auto insurance policy issued to PLUS is illusory because a corporation is not an individual and, therefore, recovery for personal injuries such as were sustained by plaintiff can never occur. We disagree.

The UIM provision contained in the PLUS policy provides coverage that includes payment of "all sums the 'insured' is legally entitled to recover as compensatory damages from the owner or driver of an . . . 'underinsured motor vehicle.'" An "insured" under the policy not only includes the person named on the declaration page of the policy and that person's "family members" residing in the same household, but if the named insured on the declaration page is a corporation, then the "insured" includes "[a]nyone 'occupying' a covered 'auto.'"

The policy defines "occupying" as "in, upon, getting in, on, out of or off" of a vehicle.

The principal purpose of the "Who Is Insured" provision in the policy is to identify who is covered under the policy and who is excluded. Cassilli v. Soussou, 408 N.J. Super. 147, 156 (App. Div. 2009). Underinsured motorist coverage is extended to PLUS clients and employees who are "occupying" a covered vehicle at the time they sustain any injuries involving the Ford Econoline van. The fact that the policy limits coverage, insofar as the corporate insured, to "occupying" does not render the policy illusory. See Pinto, supra, 365 N.J. Super. at 402 (holding although named insured was corporation, insurance contract could not be considered to have "provided illusory UIM coverage" because coverage was provided to the plaintiff and anyone else injured while occupying a covered vehicle). Thus, the designation of a corporation as the sole "named insured" does not create an ambiguity in an auto insurance policy. Ibid. The unique factual circumstances evident in Araya and Hurley do not call for a contrary conclusion.

Plaintiff also urges that she is an intended beneficiary of the PLUS policy because her relationship to PLUS was that of a ward based upon the responsibility PLUS undertook to care for her and because of the compensation paid to PLUS in undertaking this responsibility. We reject this argument because one's status as a ward is conferred by court order or operation of law. Neither condition exists here. J.H. v. Mercer County Youth Det. Ctr., 396 N.J. Super. 1, 13-14 (App. Div. 2007); see also Black's Law Dictionary 1583 (6th ed. 1990) (defining "ward" as the "[g]uarding, caring, charging . . . A person, especially a child or incompetent, placed by the court under the care and supervision of a guardian or conservator").

Nor may coverage be extended to plaintiff as a member of PLUS's household. Such coverage is only extended to family members. The policy defines "family member" as "a person related to an individual Named Insured by blood, marriage, or adoption who is a resident of such Named Insured's household, including a ward or foster child." Thus, by the clear language of the policy, it is not simply any household member to whom coverage is extended, but only to those household members related to the individually named insured by blood, marriage, or adoption.

The question remains, however, whether, in the absence of any ambiguity in the policy language, there are public policy reasons that require extending coverage to persons situated as plaintiff. This is a question of first impression in New Jersey. Plaintiff points to the decision of the Massachusetts Supreme Court in Thattil to support her policy argument. There, the plaintiff was a member of the Dominican Sisters of Charity of the Presentation of the Blessed Virgin, Inc. (Dominican Sisters), a nonprofit religious order within the Roman Catholic Church. Thattil, supra, 613 N.E.2d at 909. The plaintiff was injured when struck by a vehicle while walking. Ibid. She filed a claim to recover UIM benefits under the Dominican Sister's motor vehicle insurance policy issued by Aetna Casualty and Surety Company (Aetna). Id. at 909-10. The policy listed the Dominican Sisters as the named insured. Ibid. Aetna denied the claim on the basis that the plaintiff was not an insured under the policy because she was not occupying the vehicle at the time she sustained her injuries. Id. at 911-12. Aetna moved for summary judgment on that ground, which the trial court denied. Id. at 910. In upholding the trial court ruling, the Massachusetts Supreme Court stated:

Were we to interpret this policy strictly as Aetna contends, Sister Thattil could receive under insurance motorist coverage only if she were occupying a vehicle insured by the Dominican Sisters at the time of the loss. She could never recover if she were not in one of the insured vehicles, or, as here, if she were a pedestrian at the time of the loss. Such a strict reading of the policy ignores the unique circumstances in which the Dominican Sisters lived, of which Aetna was aware, and contravenes the intended legislative policy . . . . Sister Thattil's vows precluded her from owning an automobile; all her personal possessions were given to, and retained as property of, the Dominican Sisters. It was impossible, thus, given her situation, for Sister Thattil to purchase underinsurance coverage in a personal automobile policy and provide herself with more comprehensive protection than that provided by the policy issued to the Dominican Sisters. The only policy from which she could receive underinsurance coverage was that issued to the Dominican Sisters as the named insured.

As a Dominican Sister who has renounced her right to material goods and has recognized that everything belongs to the community, Sister Thattil has merged her identity with that of the Order. In these unusual circumstances we conclude that identity exists between the Order and its individual members. This identity should not be ignored because the policy described the insured in its corporate form.

As stated by the Superior Court judge, the Dominican Sisters "is not an ordinary business corporation. . . . [It] is comprised of several nuns who make no distinction between their business and personal lives . . . [and who] turn over all of their material possessions to the community in which they live . . .."

Further, the Dominican Sisters exists as a charitable, non-profit corporation run for "religious purposes," . . . not as a business corporation formed for the purposes of making a financial profit. [Id. at 912.]

Plaintiff urges that her circumstances as a PLUS client are akin to the factual circumstances in Thattil. Specifically, plaintiff contends she is indigent and disabled and therefore without means by which to secure coverage for protection against such mishaps as pedestrian motor vehicle accidents. Next, the van was exclusively assigned to plaintiff's residence for her use and use by her roommates. Based upon these undisputed facts, plaintiff contends coverage on her behalf was intended. Finally, plaintiff asserts the Medicaid payments to PLUS for her care included paying for the policy on behalf of plaintiff.*fn1

Defendant urged the court to reject this argument and directed the court to consider the Illinois appeals court decision in Rosenberg v. Zurich American Insurance Company, 726 N.E.2d 29 (Ill. App. Ct. 2000). In Rosenberg, the plaintiff was a resident of an assisted living facility at the time of his death following fatal injuries he sustained when struck by a vehicle while a pedestrian. 726 N.E.2d at 31. His estate sought coverage under the assisted living facility's uninsured motorist coverage policy, claiming that he was a resident family member of the facility. Ibid. This argument was premised upon the undisputed fact that the facility provided boarding and all personal services to the decedent, including entertainment, transportation, and a small monthly allowance. Id. at 33. The plaintiff urged that the decedent had a unique relationship with the facility, turning over all of his public and social security checks to the facility, thus rendering the facility residents "'family members'" and the facility "not a real 'corporation' but a special entity caring for these 'family members.'" Id. at 33-34.

In affirming the trial court's dismissal of the complaint, the court reasoned that the term "family member" was only triggered in the policy if the insured "does not leave any ambiguity as to whether the 'family members' provision might also apply to corporations as well." Id. at 34. Finding that the language limited the applicability of "family members" to individual insureds, the court concluded the scope of coverage did not extend to plaintiff. Ibid. Additionally, the court found that the plaintiff's reliance upon Thattil was misplaced:

Thattil is not analogous to the case at bar. We first note that the Illinois statute pertaining to uninsured motorist coverage does not specify that pedestrians must be included in underinsured and uninsured motorist coverage as Massachusetts statute does . . . and the record does not demonstrate that Santaniello's arrangement with Hillcrest resembled that of Sister Thattil's with the Dominican Sisters. Hillcrest was not a religious order onto which its residents "merged" their identities but a private retirement home where residents received room, board, and other services in exchange for payment to Hillcrest and were otherwise free to do as they wished. Even though Santaniello turned over his public aid check and social security checks to Hillcrest, he did so as payment for the services Hillcrest provided him and was not, as the sister in Thattil, required to surrender his assets, let alone take a vow of poverty. Moreover, the record does not demonstrate that all members of the retirement village were on public aid like Santaniello rather than expending private funds for their care but only that the bulk of Santaniello's own care was paid for through his public aid checks. Santaniello's living arrangement with Hillcrest did not preclude him from purchasing extra insurance coverage or protection, as Sister's Thattil's membership in the Order did in Thattil. Therefore, Thattil is not dispositive in this case and does not prompt us to in turn construe the policy in question as providing coverage to Santaniello. [Id. at 36.]

Judge Nugent found that the facts here were more akin to Rosenberg than Thattil. He reasoned:

[T]he disability precluded . . . plaintiff from purchasing additional coverage or protection, but certainly that was not by reason of any rules and regulations of PLUS, and although she may have been incapable physically or financially to do that, that wasn't an imposition or a condition of her ability to live in the PLUS arrangement.

We are in complete agreement with this reasoning and discern no public policy considerations that warrant interference with the clear and unambiguous language contained in the policy. UIM insurance is optional in New Jersey and insurers are only required to offer UIM coverage. Selective Ins. Co. of America v. Hojnoski, 317 N.J. Super. 331, 336 (App. Div. 1998). Consequently, UIM restrictions have generally been upheld, provided the restrictions are reasonable, clearly stated, and do not contravene public policy. French v. N.J. Sch. Bd. Ass'n Ins. Group, 149 N.J. 478, 492 (1997).

There is no claim here that the language limiting UIM coverage for the corporate insured to anyone who sustains injuries while occupying a covered auto is unclear. Rather, the claim here is that the language creates an illusory policy, a contention we have rejected. Plaintiff points to her indigent status, disability, and complete dependence upon PLUS for all of her care as a basis for finding that her identity has been "merged" into that of PLUS. Thattil, supra, 613 N.E.2d at 912. There is, however, nothing in the record to suggest that indigency is a condition of eligibility for PLUS services or that the other PLUS clients are similarly situated. Ibid. As the motion judge observed, even plaintiff did not exclusively rely upon PLUS's Ford Econoline van for all of her transportation needs. Plaintiff also utilized Access Link for non-PLUS activities. While the term "household" in the context of insurance contracts has been liberally construed, such liberal construction may not serve to write a better contract than that which was bargained for by the insured. Gibson, supra, 158 N.J. at 670. Nor may a liberal construction be utilized to "'emasculat[e] . . . the clear language of the policy.'" Sierfeld v. Sierfeld, 414 N.J. Super. 85, 95 (App. Div. 2010) (quoting Stiefel v. Bayly, Martin and Fay, 242 N.J. Super. 643, 651 (App. Div. 1990)).


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