On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3822-11.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Harris and Hoffman.
This appeal arises from the Law Division's declaration that defendant ARI Mutual Insurance Company (ARI Mutual) is obliged to reimburse plaintiff AIG Centennial Insurance Company (AIG) for personal injury protection (PIP) medical expense benefits paid to AIG's insured under N.J.S.A. 39:6A-9.1. We reverse because the benefits were not paid in accordance with the policy covering the insured, but instead exceeded the policy limits due to AIG's error.
The dispute between the insurers has its genesis in an automobile accident that occurred on September 11, 2006. On that date, Dorothy Davis was the driver of a private passenger automobile owned by Sherman Harris, AIG's named insured. According to a police report, Davis's vehicle was struck by a dump truck operated by William H. Kanauss, III, a driver for Thompson Trucking.
At the time of the accident, Thompson Trucking's liability insurer was ARI Mutual. Because the dump truck was a commercial vehicle, see N.J.S.A. 39:6A-2(a) and -4, there was no PIP coverage provided by ARI Mutual's Business Auto Policy, except for injuries suffered by pedestrians. See N.J.S.A. 17:28-1.3.
Harris, however, had procured from AIG a basic automobile insurance policy, N.J.S.A. 39:6A-3.1, which provided PIP medical expense coverage of $15,000 per person, per accident. By letter dated September 18, 2006, AIG mistakenly notified Davis that Harris's policy provided her with PIP coverage of $250,000. After submitting her written application for PIP benefits to AIG on September 25, 2006, Davis relied on AIG's $250,000 representation and obtained medical treatment costing far in excess of the basic automobile insurance policy's $15,000 PIP medical expense limitation. At some point, AIG realized that it had mistakenly advised Davis about the policy's limit of liability and declined to provide further PIP benefits beyond what it had already expended. ARI Mutual reimbursed AIG $15,000 pursuant to N.J.S.A. 39:6A-9.1.
Davis filed a personal injury lawsuit against Kanauss, Gregory Thompson, and Thompson Trucking (the Thompson defendants) in August 2008. ARI Mutual provided a defense to the Thompson defendants pursuant to its Business Auto Policy.
In December 2009, Davis commenced a separate action against AIG, ARI Mutual, and the Thompson defendants, which sought, among other things, a declaration that "AIG is to afford coverage for any medical and/or hospital expenses up to $250,000 under the policy it issued and defendant AIG should be estopped from denying PIP benefits in excess of $15,000."*fn1 The complaint also sought a judgment "declaring that defendant AIG's policy is reformed to include PIP coverage in the amount of $250,000." Among the reasons for bringing this declaratory judgment action was Davis's claimed inability "to resolve the third party case since she is uncertain as to whether or not said third party defendants and their carrier ARI [Mutual] would be responsible for the unpaid medical and surgical expenses." Although AIG and ARI Mutual were co-defendants in Davis's declaratory judgment action, they did not file cross-claims against each other relating to the ultimate responsibility for PIP payments under N.J.S.A. 39:6A-9.1.
In October 2010, Davis settled her personal injury lawsuit against the Thompson defendants for $225,000. In March 2011, Davis's claims against ARI Mutual and the Thompson defendants in the declaratory judgment action were dismissed. In like vein, but on a date not disclosed in the record, Davis separately settled her dispute with AIG, wherein AIG agreed to pay for all of Davis's requested PIP expenses. The record is silent about the specific details concerning that settlement. AIG refers to having "reformed" the insurance contract, but it does not appear that Harris was a party to the "reformation" of his basic automobile insurance policy.
On April 28, 2011, AIG demanded reimbursement from ARI Mutual for the PIP benefits paid on Davis's behalf in excess of $15,000, a sum totaling $75,634.29. On May 4, 2011, ARI Mutual declined to reimburse AIG for ...