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Donna Hand v. Philadelphia Insurance Co

July 25, 2012


On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. 1738-07.

Per curiam.


Argued December 6, 2011

Before Judges Messano, Yannotti and Espinosa.

This case is before us for a second time. We quote at length from our prior opinion to place the current appeal in proper context:

On January 19, 2005, an SUV owned and operated by Leroy Gorman crossed the median of State Highway 42 and collided with a car owned by Steininger Behavioral Care (Steininger), the employer of plaintiff Donna Hand, a passenger in the vehicle. Plaintiff was seriously injured as a result. Steininger's car was insured under a commercial automobile policy issued by defendant Philadelphia Insurance Company that provided uninsured/underinsured motorist (UM/UIM) coverage in the amount of $1 million. Named "insureds" on the declarations page of the policy included Steininger, SCBS Supportive Housing I, Inc., and Guidance Center of Camden County, Inc. The policy further provided that "[i]f the

[n]amed [i]nsured" was "[a] partnership, limited liability company, corporation or any other form of organization," then additional "insureds" under the policy included [a]nyone 'occupying' a covered 'auto' . . . ." The policy included a step-down provision that expressly limited the amount of UM/UIM coverage if

(1) An insured [wa]s not the individual named insured under th[e] policy;

(2) That "insured" [wa]s an individual named insured under one or more other policies providing similar coverage; and

(3) All such other policies ha[d] a limit of insurance for similar coverage which [wa]s less than the

[l]imit of [i]nsurance for th[e] coverage[.]

Under these circumstances, "the most [defendant] w[ould] pay for all damages resulting from any [] 'accident' with an 'uninsured' . . . or 'underinsured motor vehicle'" would be limited to "the highest applicable limit of insurance under any coverage form or policy providing coverage to that 'insured' as an individual named insured."

Gorman's insurance limit was $100,000. After receiving notification from plaintiff pursuant to Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), defendant authorized settlement with Gorman for the full policy amount. Plaintiff then made a claim for UIM benefits under Steininger's policy and demanded arbitration.

Defendant denied plaintiff's claim, contending that because plaintiff's personal automobile insurance policy, issued by third-party defendant AAA Mid-Atlantic Insurance Company (AAA), contained a UM/UIM limit of $100,000, the step-down provision in Steininger's policy became operational. As a result, the available UIM limit under the policy was $100,000, thus, Gorman's vehicle was not underinsured, and plaintiff had no claim for UIM benefits.

On April 2, 2007, plaintiff filed her complaint seeking to compel arbitration. On April 27, 2007, defendant filed its answer asserting the step-down provision as a defense. Thereafter, on September 10, 2007, the Governor signed S-1666, the so-called "Scutari Amendment" (the Amendment), ultimately codified as N.J.S.A. 17:28-1.1(f)

Defendant and plaintiff both filed motions for summary judgment. . . .

In an oral opinion placed on the record, the motion judge concluded the Amendment should be applied retroactively, and accordingly, granted summary judgment in favor of plaintiff. [Hand v. Philadelphia Ins. Co., 408 N.J.

Super. 124, 131-33 (App. Div.) (alterations in original) (footnotes and parallel citations omitted), certif. denied, 200 N.J. 506 (2009).]

We concluded that although the Legislature intended to apply the Amendment retroactively, id. at 141, "retroactive application . . . to the facts of this case would work a manifest injustice to defendant." Id. at 143. As a result, we reversed the grant of summary judgment to plaintiff. Id. at 146.

However, the motion judge denied without prejudice defendant's motion for summary judgment "on the issue of whether [plaintiff] had UM/UIM coverage on the day of the accident." We noted "[p]laintiff denied that the AAA policy was in effect on the day of the accident; however, in its answer to the third-party complaint, AAA admitted its policy with plaintiff was effective on that date." Id. at 132 n.2. Therefore, we concluded:

Since the motion judge viewed the other aspect of defendant's motion for summary judgment, in which it sought a declaration that plaintiff was covered by the AAA personal insurance policy, as moot, we remand the matter for further proceedings to resolve that issue. [Id. at 146.]

After our remand, the Law Division denied defendant's motion for summary judgment and granted plaintiff's cross-motion for summary judgment. This appeal followed.


The following facts are essentially undisputed. Plaintiff purchased the AAA policy, with an effective date of September 29, 2002, and renewed it thereafter. On June 10, 2005, less than five months after the accident, plaintiff's counsel sent defendant's claims examiner a letter advising that Gorman's insurer had tendered the full policy limits and invoking the procedure set forth in Longworth, supra, 223 N.J. Super. at 194-95. On June 13, ...

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