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Sergio Monroy and Mildred Monroy v. Allstate Insurance Company and Jonathan Callands

May 2, 2011


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3064-09.

Per curiam.


Submitted March 23, 2011

Before Judges Cuff and Fasciale.

Plaintiff Sergio Monroy, an unlicensed driver, appeals from an order denying him Uninsured Motorists (UM) benefits, and an order denying reconsideration. The question is whether an unlicensed driver can be considered a permissive user under the UM policy issued by defendant Allstate Insurance Company (Allstate). Conferring permissive user status on a driver presumes that the driver is licensed to operate a motor vehicle, and thus an owner cannot grant permissive user status to an unlicensed driver. Therefore, we affirm the order denying plaintiff's first-party UM claim, which effectively dismissed his case.

This appeal arises from an accident involving two vehicles. Plaintiff operated a car owned by Nelson Salguero and insured by Allstate. Plaintiff obtained Salguero's consent to use the car to transport his son to a doctor's appointment. The other car was operated by an uninsured tortfeasor, co-defendant Jonathan Callands.*fn1 Plaintiff sustained injuries as a result of a rear-end collision caused by the tortfeasor.

Plaintiff filed a complaint against Allstate seeking to compel UM arbitration against Allstate.*fn2 Allstate answered the complaint but did not select an arbitrator. As a result, plaintiff filed a motion seeking to compel Allstate to select an arbitrator or "file papers . . . if it intends not to process UM benefits . . . ." Allstate opposed the motion.

At oral argument, plaintiff contended that he was entitled to UM benefits because he claimed to be a permissive user of Salguero's vehicle. Allstate argued that plaintiff was not an "insured person" under its UM policy because he was an unlicensed driver and, therefore, could not be a permissive user. The motion judge agreed with Allstate and entered an order denying plaintiff's UM claim and dismissing the case.

Plaintiff filed a motion for reconsideration, acknowledged that Allstate's UM policy required that he have permission to drive Salguero's car, but contended that "[the policy] doesn't say [the] permission needs to be lawful . . . ." Allstate maintained its position that plaintiff did not fit within the UM policy definition of an insured person. Allstate pointed to the "Additional Definitions For Part 4" language in the policy which stated that "1. 'Insured Person' means . . . (b) any other person while in, on, getting into or out of, or getting on or off, an Insured auto [w]ith your permission." Allstate argued that plaintiff could not have permission because he knew that he was an unlicensed driver. The judge denied the reconsideration motion and stated:

Because the plaintiff was an unlicensed driver, he was unauthorized to operate the motor vehicle and, therefore, he cannot satisfy the policy's requirement that a claimant be a user of the vehicle. And as in the past case -- past decision, we rely upon Rutgers Casualty Insurance [v.] Collins, 158 N.J. 542 [(1999)] and Martin [v.] Rutgers Casualty Insurance Company, 346 N.J. Super. 320 [(App. Div. 2002)].

On appeal, plaintiff argues that the judge failed to read the UM policy liberally to find coverage, an unlicensed driver may pursue a claim for personal injuries, and that the Allstate policy does not expressly contain applicable exclusionary language.

We begin by addressing plaintiff's argument that the judge did not read the policy liberally. A ruling that denies coverage to plaintiff is not contrary to New Jersey's strong public policy of construing insurance policies in favor of coverage. Motor Club of Am. Ins. Co. v. Phillips, 66 N.J. 277, 293 (1974). We view such a ruling to be consonant with the policies articulated in N.J.S.A. 17:29C-7, permitting an insurance company to decline coverage if the named insured has had his license revoked or suspended, and N.J.S.A. 17:33B-13, excluding drivers whose licenses have been revoked or suspended from being eligible to purchase insurance.

If Salguero had his license revoked or suspended and sought UM benefits, then Allstate would have the right to decline coverage. N.J.S.A. 17:29C-7. If Salguero's license was suspended or revoked, then he would be excluded from purchasing insurance. N.J.S.A. 17:33B-13. Salguero cannot confer a greater benefit on plaintiff than possessed by Salguero. In other words, Salguero cannot permit an unlicensed driver - -plaintiff - - to drive when such permission would exceed Salguero's own driving and insurance restrictions imposed by the State. See Reilly v. AAA Mid-Atl. Ins. Co. of N.J., 194 N.J. 474, 478, 495 (2008) (stating the general proposition that an entity cannot exceed the scope of its statutory authority, and is therefore, restricted from overstepping the limitations imposed on it by the State).

Just as Allstate could decline coverage if Salguero's license had been revoked or suspended, Allstate can decline coverage for plaintiff because he was an unlicensed driver. Sergio cannot benefit from his own illegal conduct of ...

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