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Erica Dimarco v. Donald A. Ferguson


August 27, 2012


On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-3127-08.

Per curiam.


Submitted August 22, 2012

Before Judges J. N. Harris and Fasciale.

Plaintiff Erica DiMarco appeals from a November 4, 2011 order declaring that a "step-down" clause contained in a policy of insurance issued by Indiana Insurance Company (IIC) applies to her underinsured motorist (UIM) claim. The judge properly resolved the dispute over the amount of UIM benefits available to plaintiff. We affirm.

Plaintiff operated a motor vehicle owned by her father's business, Neemar, Inc., and sustained injuries as a result of an accident with another vehicle. Plaintiff filed a complaint against the other driver, defendant Richard Ferguson, and sought compensation for her pain and suffering.*fn1 Ferguson tendered to plaintiff his insurance policy limits of $50,000 and settled plaintiff's lawsuit.*fn2 Thereafter, plaintiff pursued her UIM claim against IIC.

IIC issued an insurance policy to Neemar (the Indiana policy), which provided $1,000,000 in UIM coverage. The Indiana policy contained a step-down clause*fn3 that limited the amount of UIM benefits available. The clause provided:

D. Limit of Insurance

1. [T]he Limit of Insurance [($1,000,000)] shown in the Schedule of Declarations for . . . [UIM benefits] is the most we will pay . . . .

b. However, subject to our maximum Limit of Insurance for this coverage, if:

(1) An "insured" is not the individual named insured under this policy or any other policy;

(2) That "insured" is insured as a "family member" 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 UIM benefits] shall not exceed the highest applicable limit of insurance under any coverage . . . providing coverage to that "insured" as a "family member."

Plaintiff's mother, with whom plaintiff resided on the date of the accident, maintained automobile insurance through Palisades Insurance Company (Palisades). The Palisades policy contained a UIM limit of $250,000, an amount less than the $1,000,000 UIM limit offered in the Indiana policy. Plaintiff is not a named insured in either policy.

Plaintiff and IIC agreed to dismiss her complaint without prejudice and proceed to UIM arbitration. Because the parties thereafter disputed the applicability of the step-down clause, the court reinstated plaintiff's complaint, plaintiff and IIC engaged in motion practice, and the court resolved the contested issue.

Plaintiff filed a motion seeking a declaration that the step-down clause is inapplicable to her UIM claim. She maintained that she is considered an insured under the Indiana policy and therefore entitled to the full UIM limits of $1,000,000. She relied on another endorsement in the Indiana policy,*fn4 which provides:

C. Changes in [UIM] Coverage[]

The following is added to Who Is An Insured: Any individual named in the Schedule and his or her "family members" are "insured" while "occupying" . . . when being struck by an "auto" [Neemar does not] own

Plaintiff contended that she is considered an "insured" under the Indiana policy because she resides with her mother. Plaintiff asserted that because her mother is listed on the schedule of the Indiana policy, the step-down clause is inapplicable and plaintiff is entitled to the $1,000,000 of available UIM benefits. She also argued, alternatively, that if endorsements CA 21 and CA 99 are ambiguous, then the ambiguity should be resolved in her favor.

IIC filed a cross-motion, asserted that the endorsements to the Indiana policy were clear, and contended that the step-down clause applied because (1) plaintiff is not listed as a "named insured" in either policy, (2) plaintiff is insured as a "family member" under the Palisades policy, and (3) the Palisades policy offered plaintiff UIM benefits in the amount of $250,000, an amount less than that provided under the Indiana policy.

Judge Patricia Richmond issued a tentative decision in which she applied the step-down clause to plaintiff's UIM claim. The judge forwarded the decision to the parties, conducted oral argument, and then issued a five-page oral opinion. The judge maintained that the step-down clause applied, and found no ambiguity between CA 21 and CA 99. She found that "[i]t is . . . clear that [plaintiff] is not a named insured under the Indiana policy. The named insured is Neemar . . . ." The judge noted that CA 99 includes as "insured" any individual named in the schedule and his or her family members. She also observed that plaintiff's mother is listed in the schedule and that plaintiff is therefore considered a family member of her mother because they reside together. Judge Richmond concluded:

But[,] going back [to CA 99], if any individual named in the schedule and his or her family members are insured while occupying and auto you don't own, you being Neemar . . . , and that's exactly what this broadened coverage [under CA 99] is for. It's for when you're not driving a car owned by Neemar . . . . It does not add to the initial CA-21 [step-down] endorsement anything at all other than to add coverage when you're driving a car or an auto that is not owned by the named insured.

The judge then denied plaintiff's motion and granted the cross-motion filed by IIC. This appeal followed.

On appeal, plaintiff argues that the judge erred by (1) holding CA 99 was inapplicable to her UIM claim, (2) concluding that the step-down clause reduced the amount of UIM coverage from $1,000,000 to $250,000, and (3) failing to apply the reasonable expectations doctrine*fn5 to ambiguous insurance endorsements contained in the Indiana policy.

We have carefully considered the record and find insufficient merit in plaintiff's arguments to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons expressed by Judge Richmond in her November 4, 2011 oral opinion. We add only the following brief comments.

The judge properly construed CA 21 and CA 99, two unambiguous endorsements contained in the Indiana policy. It is undisputed that plaintiff is not a "named insured" under either the Indiana policy or Palisades policy, that she is an "insured" as a "family member" under one or more policies providing similar UIM coverage, and that the Palisades policy provides for UIM benefits less than the amount provided for under the Indiana policy. Construing CA 99, plaintiff is an "insured" under the Indiana policy; however, she is not a "named insured." Therefore, CA 21 applies and reduces the amount of plaintiff's available UIM coverage under the Indiana policy.


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