The opinion of the court was delivered by: Hon. Joseph H.
RODRIGUEZ, SENIOR DISTRICT JUDGE
This matter is before the Court on a motion for summary judgment filed by Defendant Zurich American Insurance Co. ("Zurich") [Dkt. Entry No. 25] and a cross- motion for summary judgment filed by Plaintiffs Sean M. Sexton and Patricia Sexton ("Plaintiffs") [Dkt. Entry No. 26]. The Court has considered the written submissions of the parties and heard oral argument on the motions on April 6, 2011. For the reasons stated below, Defendant's motion will be denied and Plaintiffs' cross-motion will be granted.
On December 18, 2007, Plaintiff Sean M. Sexton was injured as a result of a motor vehicle accident in which the tractor-trailer he was operating collided with the vehicle of an uninsured motorist, Hope Balcerak. The tractor-trailer Sexton was operating was owned by his employer, Casie Pro Tank ("Casie"). At the time of the accident, Casie was a named insured under a policy of insurance issued by Defendant Zurich, effective from August 18, 2007 until August 18, 2008 ("Zurich policy"). Sexton was an "insured" under the Zurich policy because he was occupying a vehicle owned by a named insured. At the time of the accident, Sexton was also a named insured under a personal automobile insurance policy issued by Citizens United Reciprocal Exchange ("CURE policy").
The Zurich policy provided uninsured/underinsured motorist ("UM/UIM") coverage up to a maximum amount of $1,000,000. The CURE policy provided a maximum of $15,000 in UM/UIM coverage. The Zurich policy contained a "Limit of Insurance" provision, which provided:
. . . However, subject to our maximum Limit of Insurance for this coverage, if:
(1) An "insured" is not the individual named insured under this policy;
(2) That "insured" is an individual named insured under one or more other policies providing similar coverage; and
(3) All such other policies have a limit of insurance for similar coverage which is less than the Limit of Insurance for this coverage; then the most we will pay for all damages resulting from any one 'accident' with an 'uninsured motor vehicle' or an 'underinsured motor vehicle' shall not exceed the highest applicable limit of insurance under any coverage form or policy providing coverage to that 'insured' as an individual named insured. (Zurich's S.J. Br., Ex. B.) This provision, otherwise known as a "step-down" clause, is a commonly used contractual device contained in motor vehicle liability policies issued to business entities. The purpose of the step-down provision is to lower the UM/UIM coverage available to an employee to the amount of coverage available under the employee's personal motor vehicle insurance policy. On September 11, 2007, the New Jersey Legislature passed a law prohibiting the use of step-down clauses within the State.
On August 5, 2009, Plaintiffs filed a civil action in the Superior Court of New Jersey, Law Division, Atlantic County, against Balcerak and other parties alleged to have caused the accident. The action was properly removed to this Court on November 16, 2009 [Dkt. Entry No. 1]. Plaintiffs filed an Amended Complaint on May 31, 2010, adding claims against Zurich and CURE for UM/UIM benefits under their respective policies [Dkt. Entry No. 12].
Zurich now moves for summary judgment, arguing that if Balcerak is found liable for any of Sexton's injuries, the maximum amount of UM/UIM benefits Sexton can recover under the Zurich policy is $15,000 pursuant to the policy's step-down clause because the policy was entered into before the prohibitory law was passed. Plaintiffs cross-move for summary judgment, arguing that the Zurich policy's step-down clause in unenforceable because the accident at issue occurred after the law was passed. "The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). There are no genuine issues of material fact in this case. The only question to be decided at this time is ...