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Encompass Insurance Company of New Jersey As Subrogee of Natasha M. v. Trans Ware

March 30, 2011

ENCOMPASS INSURANCE COMPANY OF NEW JERSEY AS SUBROGEE OF NATASHA M. BAXTER, PLAINTIFF-RESPONDENT,
v.
TRANS WARE, INC., DANNY SINGLETARY, AND RLI INSURANCE COMPANY, DEFENDANTS-APPELLANTS,
AND STEVEN PINCKNEY, DEFENDANT.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. DC-4008-10.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued March 1, 2011 -- Decided

Before Judges Yannotti and Espinosa.

Defendants Trans Ware, Inc. (TWI), Danny Singletary (Singletary) and RLI Insurance Company (RLI) appeal from an order entered by the Law Division on April 22, 2010, granting summary judgment in favor of plaintiff Encompass Insurance Company of New Jersey (Encompass). For the reasons that follow, we reverse.

This dispute arises from the following facts. On February 7, 2008, Pinckney was operating a motor vehicle near a controlled intersection at Bergen Street and Hawthorn Avenue in Newark, New Jersey. At the time, Singletary was operating a motor bus owned by TWI. Pinckney allegedly failed to stop at a red light at the intersection and collided with the motor bus.

Natasha Baxter (Baxter) was a passenger on the bus and was injured in the accident. TWI's vehicle was insured under a commercial bus policy issued by RLI, which provided Medical Expense Benefits coverage in the amount of $250,000 for motor bus passengers.

Baxter submitted a claim to Encompass, her auto insurer, for payment of her medical expenses. Encompass paid Baxter $10,000 for medical expenses and $752 in claims expenses related to the accident pursuant to the Extended Medical Benefits Coverage or so-called "Med-Pay" coverage under the policy. On August 17, 2009, Encompass demanded that RLI reimburse it for the $10,752 it paid to Baxter or submit the claim to arbitration. RLI refused Encompass's demand.

On February 3, 2010, Encompass filed a two-count complaint in the Law Division, as Baxter's subrogee, against TWI, Singletary, Pinckney and RLI. In count one of its complaint, Encompass alleged that Baxter was riding as a passenger in the TWI motor bus, and was injured when the bus collided with Pinckney's car. Encompass claimed that Singletary and Pinckney had operated their respective vehicles negligently. It sought, as Baxter's subrogee, recovery from TWI, Singletary and Pinckney of the $10,752 in "Med-Pay" benefits that it paid to Baxter pursuant to its policy, along with interest, attorney's fees and costs of suit.

In count two of its complaint, Encompass alleged that, because Baxter was riding as a passenger in TWI's motor bus when she was injured, TWI was required to maintain insurance that provided the passengers with Medical Expense Benefits. Encompass claimed that RLI had provided TWI with the coverage for its motor bus, and that the "Med-Pay" coverage provided under plaintiff's insurance policy is "excess" to the Medical Expense Benefits to which Baxter was entitled under the RLI policy. On this claim, Encompass demanded $10,752, plus interest, attorney's fees and costs of cost.

TWI, Singletary and RLI filed a motion for summary judgment. They argued that Encompass did not have a statutory right to reimbursement of the "Med-Pay" benefits it had paid to Baxter. TWI, Singletary and RLI also argued that Encompass was precluded by N.J.S.A. 39:6A-9.1 from seeking recovery from the parties insured under the RLI policy, and Encompass had no right to reimbursement as against RLI.

Encompass opposed the motion and filed a cross-motion for summary judgment. Encompass argued that it was entitled to "equitable contribution" from RLI for the "Med-Pay" benefits it erroneously paid to Baxter. Encompass also argued that RLI was required to submit its claim to arbitration pursuant to N.J.S.A. 39:6A-11.

The trial court considered the motions on April 16, 2010, and placed a decision on the record on that date, finding that defendants' motion should be denied and plaintiff's motion granted. The court thereafter filed a written opinion dated May 4, 2010, in which it concluded that Encompass could seek recovery of the "Med-Pay" benefits erroneously paid to Baxter on the basis of unjust enrichment. The court further concluded that RLI was required to arbitrate Encompass's claim pursuant to N.J.S.A. 39:6A-11. The court entered an order dated May 4, 2010, which denied defendants' motion for summary judgment and ordered RLI to submit Encompass's contribution claim to binding arbitration. This appeal followed.

RLI argues that the trial court erred by finding that Encompass's claim should be submitted to inter-company arbitration pursuant to ...


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