AMERICAN INTERNATIONAL INSURANCE COMPANY OF DELAWARE, Plaintiff-Respondent,
4M INTERPRISE, INC., Defendant, and OCEAN RISK RETENTION GROUP, INC., Defendant-Appellant, and NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION AS STATUTORY ADMINISTRATOR OF UNSATISFIED CLAIM AND JUDGMENT FUND, Defendant-Respondent.
Argued February 6, 2013
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1666-10.
John M. Bashwiner argued the cause for appellant (Bashwiner and Deer, LLC, attorneys; Mr. Bashwiner, of counsel; Joseph A. Deer, on the brief).
Sandra S. Grossman argued the cause for respondent American International Insurance Company of Delaware (Law Offices of Steven G. Kraus, attorneys; Ms. Grossman, on the brief).
Mark M. Tallmadge argued the cause for respondent New Jersey Property-Liability Insurance Guaranty Association (Bressler, Amery & Ross, attorneys; Mr. Tallmadge, on the brief).
Before Judges Grall, Simonelli and Koblitz.
The Federal Liability Risk Retention Act of 1986 (LRRA), 15 U.S.C.S. §§ 3901 to 3906, exempts risk retention groups from many, but not all, state laws regulating insurers. The primary issues on this appeal are whether New Jersey violates LRRA by requiring risk retention groups to provide pedestrian personal injury protection (pedestrian-PIP) benefits in conformity with N.J.S.A. 17:28-1.3 or by precluding them from participating in the New Jersey Property-Liability Insurance Guaranty Association (PLIGA), N.J.S.A. 17:47A-9, which pays pedestrian-PIP benefits for commercial liability insurers who are members. Because LRRA does not exempt risk retention groups from the coverage requirements of a state motor vehicle no-fault insurance law, 15 U.S.C.S. § 3905(a), and precludes a state from requiring or permitting a risk retention group to participate in PLIGA, an insurance insolvency guaranty association, 15 U.S.C.S. § 3902(a)(2), we reject these claims.
Caple Guthrie, who was insured under an automobile liability policy issued by plaintiff American International Insurance Company of Delaware (AIG), was struck and injured by a taxicab insured by defendant Ocean Risk Retention Group, Inc. (ORRG). AIG paid over $200, 000 of Guthrie's medical expenses before realizing that the vehicle involved was a taxi and its insurer, not AIG, was obligated to pay Guthrie's pedestrian-PIP benefits. After discovering its error, demanding payment from ORRG and receiving no response, AIG filed this suit seeking reimbursement from ORRG, defendant 4M Interprises, Inc. — the owner of the taxi insured by ORRG — and, in the event ORRG was not responsible, defendant PLIGA. Neither AIG nor ORRG filed a cross-claim.
The trial court determined that ORRG, not AIG, owed the pedestrian-PIP benefits, compelled ORRG and AIG to arbitrate ORRG's equitable share pursuant to N.J.S.A. 39:6A-11 and dismissed AIG's claim against PLIGA. ORRG appeals.
There is no dispute that Guthrie's policy with AIG did not provide pedestrian-PIP benefits. Nor is there any question that ORRG's policy with 4M covered Guthrie's pedestrian-PIP claim.
Pedestrian-PIP coverage in a standard policy of automobile liability insurance applies to an insured or a household member of the insured who sustains "bodily injury . . . as a pedestrian, caused by an automobile." N.J.S.A. 39:6A-4. But a taxi "used as a public or livery conveyance for passengers" is excluded from the statutory definition of "automobile" under a policy of automobile insurance. N.J.S.A. 39:6A-2a; Jones v. Naser City Transp. Corp., 388 N.J.Super. 513, 515 (App. Div. 2006).
In contrast, policies of "liability insurance . . . on a motor vehicle, exclusive of an automobile as defined in [N.J.S.A. 39:6A-2a] . . . shall provide personal injury protection coverage benefits in accordance with [N.J.S.A. 39:6A-4], to pedestrians who sustain bodily injury in the State caused by the named insured's motor vehicle . . . ." N.J.S.A. 17:28-1.3 (emphasis added). For the purposes of N.J.S.A. 17:28-1.3, the term "motor vehicle" includes taxis. See N.J.S.A. 39:6A-2j (assigning "motor vehicle" the meaning given in N.J.S.A. 39:1-1 — "all vehicles propelled otherwise than by muscular power, excepting such vehicles as run only upon rails or tracks and motorized bicycles" — but excluding automobiles as defined in N.J.S.A. 39:6A-2a).
The mandatory pedestrian-PIP coverage in both auto and motor vehicle polices is no-fault insurance. It must be provided "without regard to negligence, liability or fault of any kind." N.J.S.A. 39:6A-4; see also N.J.S.A. 17:28-1.3 (requiring pedestrian-PIP coverage "in accordance with N.J.S.A. 39:6A-4"); State Farm Mut. Auto. Ins. Co. v. Licensed Beverage Ins. Exch., 146 N.J. 1, 12 (1996) (noting that the Legislature required pedestrian-PIP coverage in N.J.S.A. 17:28-1.3 "'to comport with the original intent of the no-fault law'" (quoting Statement to Assembly Bill No. 3981, at 405 (Oct. 4, 1983), reprinted in N.J.S.A. 17:28–1.1)).
ORRG does not deny that the policy it sold to 4M conforms with N.J.S.A. 17:28-1.3. It includes an endorsement asserting that ORRG "will pay Pedestrian Personal Injury Protection benefits pursuant to N.J.S.A. 17:28-1.3, " and the text of the statute ...