April 19, 2012
VALERIE CHEEK, PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
CITIZENS UNITED RECIPROCAL EXCHANGE (CURE), IMPROPERLY PLED AS NJ INSURANCE COMPANY, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT, AND GOVERNMENT EMPLOYEES INSURANCE COMPANY (GEICO), THIRD-PARTY DEFENDANTAPPELLANT/CROSS-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2328-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted March 27, 2012
Before Judges Reisner and Simonelli.
Third-party defendant Government Employees Insurance Company (GEICO) appeals from the June 16, 2010 final judgment, which required it to pay personal injury protection (PIP) benefits to plaintiff Valerie Cheek, and found that defendant/third-party plaintiff Citizens United Reciprocal Exchange (CURE) owed no PIP coverage to plaintiff. GEICO also appeals from the August 19, 2010 order, which denied its motion for reconsideration. Plaintiff cross-appeals from that part of the June 16, 2010 judgment, which found that CURE owed her no PIP coverage. We affirm in part, reverse in part, and remand for further proceedings.
On February 21, 2006, plaintiff slipped and fell in a parking lot while attempting to open the driver's side door of an automobile owned by her boyfriend, Grover Brown. The automobile was insured under a policy issued by CURE. Brown is listed as the "named insured" on the first page of the declarations page, and he and plaintiff are listed as "drivers" on the second page. At the time of the incident, plaintiff resided with Brown and her adult daughter, Shonda Cheek (Cheek).
Cheek owned an automobile that was insured under a policy issued by GEICO.
On May 1, 2006, plaintiff submitted a PIP claim to CURE. CURE began, but did not complete, an investigation of the claim, and it did not pay plaintiff any PIP benefits. As a result, on September 17, 2007, plaintiff filed an order to show cause (OTSC) and verified complaint, seeking a judgment requiring CURE to pay her PIP benefits pursuant to N.J.S.A. 39:6A-4.
In opposition to the OTSC, CURE argued that it was not required to provide PIP coverage under N.J.S.A. 39:6A-4 because plaintiff was not a named insured under the CURE policy or a family member of the named insured residing in his household, and she did not sustain bodily injury while occupying, entering into, alighting from or using the named insured's automobile with his permission. CURE also argued that N.J.S.A. 39:6A-7b(3) excluded plaintiff from coverage because she is a family member under the terms of Cheek's GEICO policy, and thus, Cheek's policy provided primary PIP coverage. Plaintiff responded that she is a named insured under the CURE policy because she is listed as a driver on the declarations page, and CURE should be estopped from denying coverage due to its failure to respond to her claim, which necessitated the OTSC.
The trial judge summarily entered judgment in plaintiff's favor, finding that plaintiff was an insured under the CURE policy because her injury occurred while she was entering Brown's automobile. The judge also found no reason to relieve CURE of its obligation to provide PIP coverage to plaintiff based CURE's more than a one-and-one-half year delay in investigating the claim, and failure to provide a reason for the delay.
CURE appealed. We reversed, finding that defendant did not consent to summary disposition, and there was a genuine dispute as to whether plaintiff was entering Brown's automobile when she fell, which may entitle her to PIP coverage pursuant to N.J.S.A. 39:6A-4, or whether she merely grabbed at the automobile's door handle after she began to slip, which would exclude her from coverage. Cheek v. N.J. CURE Ins. Co., No. A-2629-07 (App. Div. March 4, 2009) (slip op. at 2, 4). We remanded for a hearing to establish "the manner of plaintiff's fall and whether she was entering the vehicle at the time." Id. at 5. We expressed no view as to whether the CURE policy by its terms provided PIP coverage even if the trial court determined that plaintiff fell while entering the automobile. Ibid. We left those issues for resolution "after a more complete record is developed." Ibid. We also did not address whether CURE was estopped from denying coverage due to its alleged delay in investigating the claim or due to any delay in invoking an exclusion in the policy.
Following our decision, CURE sought, and was granted, leave to file a third-party complaint against GEICO, seeking a declaration that Cheek's GEICO policy provided primary coverage for plaintiff's PIP benefits pursuant to N.J.S.A. 39:6A-4.2. CURE filed the third-party complaint on August 17, 2009. GEICO filed an answer, and asserted a statute of limitations defense. Plaintiff did not amend her complaint to join GEICO as a direct defendant.
Prior to the start of the remand hearing before a different judge, GEICO argued that plaintiff had no direct claim against it, and the statute of limitations barred the third-party complaint. Plaintiff responded that GEICO never moved for summary judgment on its statute of limitations defense, and, in any event, the hearing was limited to determining whether the evidence established her entitlement to PIP benefits. The judge treated GEICO's statute of limitations argument as an untimely motion for summary judgment, and denied it "without prejudice." The judge agreed that GEICO could later move for summary judgment on this issue if he found the GEICO policy provided primary coverage for plaintiff's PIP claim.
Brown testified that he intended to purchase an automobile insurance policy that covered him and plaintiff, who was the primary driver of one of the three vehicles insured under the policy. He admitted that he never read the policy; however, he believed it covered plaintiff because she was listed on the declarations sheets as a driver.
Plaintiff testified that on the day of the incident, she had driven Brown's automobile to Sam's Club. After leaving the store, she went to the driver's side of the automobile, held onto the automobile with her right hand because of ice on the ground, walked toward the driver's door, and unlocked the door with her remote key. As she attempted to open the door, she slipped and fell while holding onto the door handle.
The judge concluded that plaintiff's credible testimony established her entitlement to PIP benefits; however, he also concluded that the CURE policy did not provide PIP coverage because plaintiff was not a named insured under the policy or a member of Brown's family residing in his household. In reaching this conclusion, the judge relied on two provisions in the CURE policy, which he found were unambiguous: (1) the provision that provided PIP coverage only to the named insured or any family member who sustains bodily injury while occupying or using an insured automobile; and (2) the provision that excluded PIP coverage to any insured other than the named insured or any family member if that person is entitled to PIP coverage as a named insured or family member under the terms of another policy. The judge also found the reasonable expectation doctrine did not apply because the policy was unambiguous.
The judge also concluded that the GEICO policy provided PIP coverage because plaintiff resided with her daughter at the time of the incident, and GEICO failed to present any evidence supporting its statute of limitations defense. The judge entered judgment against GEICO requiring it to pay plaintiff's PIP benefits, and judgment in CURE's favor, finding that CURE owed plaintiff no PIP coverage.
GEICO filed a motion for reconsideration, arguing that the parties understood that GEICO could move for summary judgment on its statute of limitations defense after the plenary hearing, and the judge failed to make factual findings and legal conclusions on this issue, as required by Rule 1:7-4(a). GEICO also argued that we had limited the plenary hearing to determining plaintiff's eligibility for PIP benefits; GEICO was not a party to this litigation when we rendered our opinion; the judge erred in entering judgment against it because plaintiff had asserted no direct claim against GEICO; CURE's third-party claims were extinguished when the judge found CURE had no liability for the PIP claim; and the judgment exceeded CURE's third-party claim against GEICO.
The trial judge denied the motion, concluding that GEICO failed to move for summary judgment on its statute of limitations defense prior to the plenary hearing, or present evidence supporting that defense at either the plenary hearing or motion for reconsideration. The judge did not address GEICO's other arguments. The judge memorialized his decision in the August 19, 2010 order. This appeal and cross-appeal followed.
On appeal, GEICO raises the same arguments it raised on its motion for reconsideration. In her cross-appeal, plaintiff argues that the judge erred in finding the CURE policy was unambiguous. She also contends that CURE is estopped from denying coverage due to its failure to respond to her PIP claim, including its alleged failure to invoke a policy exclusion in a timely manner. She also argues that she was not required to assert a direct claim against GEICO because CURE's third-party complaint sought a declaratory judgment that would bind GEICO.
CURE does not dispute that plaintiff is entitled to PIP benefits. The dispute is whether the judge properly construed the CURE policy to relieve CURE of its obligation to provide PIP coverage. We review the judge's construction of the CURE policy de novo. Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div. 2008), certif. denied, 199 N.J. 133 (2009).
We begin by considering the following fundamental principles applicable to the construction of insurance contracts:
[I]nsurance policy exclusions are narrowly construed and the insurer has the burden of establishing the exclusion. However, the "words of an insurance policy should be given their ordinary meaning, and in the absence of an ambiguity, a court should not engage in a strained construction to support the imposition of liability." . . . Although insurance policies should be construed in favor of the insured, courts "should not write for the insured a better policy of insurance than the one purchased." While courts "should not ignore an exclusion's clear meaning, if there is another fair interpretation, the court must construe the insurance policy in favor of coverage and against the insurer, adopting the interpretation supporting coverage." However, "[t]his does not mean . . . that any far-fetched interpretation of a policy will be sufficient to create an ambiguity requiring coverage." [Boddy v. Cigna Prop. & Cas. Cos., 334 N.J. Super. 649, 658-59 (App. Div. 2000) (citations omitted).]
If a policy provision is ambiguous, we construe the provision in favor of the insured, considering the insured's reasonable expectations. Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 270-71 (2008); Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). However, if a provision is unambiguous or not otherwise misleading, we need not consider the objectively reasonable expectation of the average policyholder in interpreting the policy. Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979); Argent v. Brady, 386 N.J. Super. 343, 351 (App. Div. 2006).
Our Supreme Court has held that in enforcing an insurance policy, courts will depart from the literal text and interpret it in accordance with the insured's understanding . . . if the text appears overly technical or contains hidden pitfalls, cannot be understood without employing subtle or legalistic distinctions, is obscured by fine print, or requires strenuous study to comprehend. [Zacarias, supra, 168 N.J. at 601 (internal citations omitted).]
Courts will enforce the plain terms of the contract "if the 'entangled and professional interpretation of an insurance underwriter is [not] pitted against that of an average purchaser of insurance,' or the provision is not so 'confusing that the average policyholder cannot make out the boundaries of coverage[.]'" Ibid. (internal citations omitted). To determine whether there is an ambiguity, courts must look to the entire policy to see if it contained any "ambiguity, inconsistency, or contradiction between the declarations sheet and the body of [the] policy." Id. at 602; see also Morrison v. Am. Int. Ins. Co. of Am., 381 N.J. Super. 532, 539-41 (App. Div. 2005).
Plaintiff contends the CURE policy must provide PIP coverage because the policy is ambiguous in that it does not define the term "driver," the PIP endorsement defines a "named insured" as a person named on the declarations page, and she is listed on the second page of the declarations page as a driver. Thus, a reasonable person reading the policy could expect that the definition of "named insured" in the PIP endorsement included drivers.
Brown never read the CURE policy beyond the declarations page. Thus, plaintiff's ambiguity argument is somewhat disingenuous. Nevertheless, we address that argument.
The PIP endorsement provides that CURE "will pay [PIP] benefits to or for an 'insured' who sustains 'bodily injury' . . . caused by an accident arising out of the ownership, maintenance or use, including loading or unloading, of an . . . automobile." The policy contains the following definitions: (1) "insured" means "[t]he named insured and any family member who sustains bodily injury while . . . [o]ccupying or using an auto; or . . . [a]ny other person who sustains bodily injury while occupying or using [a] covered auto with the permission of the named insured;" (2) "named insured" means "[t]he person named in the Declarations;" and (3) "family member" means "a person related to [the named insured] by blood, marriage or adoption who is a resident of [the named insured's] household." The policy excludes PIP coverage for "any insured . . . if that insured is entitled to [PIP] coverage as a named insured or family member under the terms of another policy" (the other coverage exclusion).
These provisions and definitions are neither technical nor confusing. A plain, common-sense reading can lead to no conclusion other than that the "named insured" is the person identified under the word "named insured" on the declarations page. Plaintiff's name does not appear there, and thus, she is not a "named insured" under the policy. She also is not Brown's family member. Accordingly, the CURE policy does not provide PIP coverage because plaintiff is entitled to PIP coverage as a family member under Cheek's GEICO policy.
Further, plaintiff does not become a "named insured" under the CURE policy because she is identified as a driver on the declarations page. See Severino v. Malachi, 409 N.J. Super. 82 (App. Div), certif. denied, 200 N.J. 505 (2009). In Severino, the plaintiff sought PIP coverage under his fiance's automobile insurance policy. The declarations page identified the fiance as the named insured and listed the plaintiff as a driver. Id. at 95. We concluded that there was no ambiguity, inconsistency, or contradiction between the declarations page and the policy because the fiance was the only "named insured" identified on the declarations page, and the plaintiff's name appeared on the declarations page only as a driver. Id. at 96-97. Thus, there was nothing in the declarations page that would give the fiance a reasonable expectation that the plaintiff was entitled to coverage as a "named insured." Id. at 99. We find this holding applicable here.*fn1
Applying the Zacarias principles to the present case, we conclude that although the CURE policy did not define the term "driver," there was no ambiguity, inconsistency, or contradiction between the declarations page and the policy. Accordingly, we affirm the judge's ruling that the CURE policy did not provide coverage to plaintiff.
However, we reverse and remand this matter for other reasons. The judge never addressed both plaintiff's claim that CURE was equitably estopped from denying coverage and GEICO's claim that the judge erred in entering judgment against it, never considered the merits of GEICO's statute of limitations defense, and made no factual findings or legal conclusions on these issues, as required by Rule 1:7-4(a). Accordingly, we remand for a determination of these issues on the merits.
For the trial court's guidance on remand, we add the following comments. The fact that the CURE policy is legally unambiguous, making the "other coverage" clause generally enforceable, does not mean that the average accident victim in plaintiff's position would understand that she must file her PIP claim with an insurance company other that the one covering the automobile involved in the accident. It would be natural for the accident victim to assume that if he or she is riding in or using a covered automobile and is involved in an accident while doing so, he or she would file a PIP claim with the insurer that wrote the coverage for that automobile. Thus, we would be inclined to conclude that, if an insurer in CURE's position intends to invoke an "other coverage" exclusion, it has the duty to do so in a timely manner to avoid prejudicing the insured's ability to make a timely claim against the correct insurer. That is also consistent with the overall policy of the PIP statute to ensure prompt payment of medical bills for an injured insured.
However, we do not need to definitively decide this issue here, or any related equitable issues, because, as noted in our earlier opinion, the first judge hearing this case mistakenly decided the matter summarily and the parties were not afforded the opportunity to make an evidentiary record on these issues. The second judge did not address these issues at all. On remand, the parties must have an opportunity to make a complete factual record, and the judge should then address the issues based that record.
On remand, the parties may engage in limited discovery with respect to these issues, and submit their legal arguments to the trial court. The court shall hold a plenary hearing to resolve these issues if there are material facts in dispute.
Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion. We do not retain jurisdiction.