Opinion
DOCKET NO. A-0729-13T4
08-11-2015
NELSON R. NELSON, Plaintiff, v. RIDER INSURANCE COMPANY, Defendant-Appellant, and ALLSTATE NEW JERSEY PROPERTY AND CASUALTY COMPANY, Defendant-Respondent.
Jared A. Johnson argued the cause for appellant (Johnson & Kriney, attorneys; Mr. Johnson, of counsel; Cheryl Hannon Kriney, on the brief). Kenneth N. Lipstein argued the cause for respondent.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Fuentes, Kennedy and O'Connor. On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1574-12. Jared A. Johnson argued the cause for appellant (Johnson & Kriney, attorneys; Mr. Johnson, of counsel; Cheryl Hannon Kriney, on the brief). Kenneth N. Lipstein argued the cause for respondent. PER CURIAM
On October 22, 2011, plaintiff Nelson R. Nelson was injured in a motor vehicle accident when the motorcycle he was riding was allegedly forced off the road by an unidentified vehicle. At the time of the accident, plaintiff was a named insured on a motorcycle policy issued by defendant Rider Insurance Company (Rider) that included uninsured motorist (UM) coverage with a $15,000 per person and $30,000 per accident limit. He also was a named insured on a basic automobile policy with Progressive Drive Insurance (Progressive) that did not provide UM coverage. Finally, plaintiff was insured as a resident relative under his sister's automobile policy issued by defendant Allstate New Jersey Property and Casualty Insurance Company (Allstate) that provided UM coverage with a $100,000 per person and $300,000 per accident limit. However, the Allstate policy had a step-down clause that effectively reduced the UM coverage to the $15,000 per person and $30,000 per accident limit in Rider's policy.
On June 22, 2012, plaintiff filed a complaint and order to show cause seeking UM coverage from Rider and Allstate. Initially both defendants filed responsive pleadings denying coverage. Rider amended its answer to include a cross-claim against Allstate seeking pro rata contribution pursuant to N.J.S.A. 17:28-1.1(c). Thereafter, the parties entered into a consent order that adjourned the return date on plaintiff's order to show cause, set a discovery schedule, stipulated that plaintiff was entitled to UM coverage pursuant to his Rider policy, and most relevant here, reserved to Allstate the right to file dispositive motions, including "on the basis that plaintiff held, on the date of the subject accident, a basic automobile liability policy as defined by N.J.S.A. 39:6A-3.1[.]"
Allstate filed a motion for summary judgment seeking precisely this relief. Rider opposed the motion and filed a cross-motion seeking summary judgment and a judicial declaration that under the undisputed and controlling facts of this case, N.J.S.A. 17:28-1.1 precluded Allstate from enforcing the step-down clause in plaintiff's sister's policy. The trial court granted Allstate's summary judgment motion and upheld Allstate's UM exclusion by application of its step-down clause.
On September 16, 2013, the trial court entered a consent judgment through which Rider paid plaintiff $10,000 in UM benefits. Rider now appeals from this final judgment asking this court to decide whether the Legislature's UM coverage requirement in N.J.S.A. 17:28-1.1 is violated by an insurance policy provision that excludes UM coverage in a standard automobile insurance policy when the claimant has a separate basic automobile insurance policy, as permitted by N.J.S.A. 39:6A-3.1, and the vehicle insured through the basic policy is not involved in the accident resulting in the UM claim.
We now hold that the statutory obligation of an insurance carrier to provide UM coverage in standard automobile insurance policies pursuant to N.J.S.A. 17:28-1.1 was not diminished or eliminated by the Legislature's creation of the basic automobile insurance policy in N.J.S.A. 39:6A-3.1. A step-down provision in a standard policy cannot be construed to eliminate entirely the UM coverage in the standard policy by virtue of the insured also having a basic automobile policy under N.J.S.A. 39:6A-3.1.
In the interest of clarity, we reiterate the following undisputed facts.
On October 22, 2011, plaintiff was injured while riding his motorcycle. He claimed an unidentified driver forced him off the road. Rider issued plaintiff an insurance policy specifically covering his motorcycle. The Rider policy had UM coverage with a $15,000 per person and $30,000 per accident limit. Plaintiff also had a basic automobile policy as defined in N.J.S.A. 39:6A-3.1, which was issued by Progressive to cover a "1994 Mazda B-Series Pickup." The basic policy issued by Progressive provided property damage liability with a $5000 limit per accident; personal injury protection (PIP) medical expense with a $15,000 per person limit; and extended medical payments of $1000 per person limit. The basic policy does not provide UM coverage.
Allstate issued a standard policy to plaintiff's sister that provided UM coverage with a $100,000 per person and $300,000 per accident limit. Plaintiff claimed he was covered under the Allstate policy as the brother of the named insured who was also a resident and member of her household. The Allstate policy also included a UM Exclusion Clause A.6, which provided, "We will not pay any damages an insured person is legally entitled to recover because of . . . . bodily injury to any person insured under any Basic automobile insurance policy, issued in accordance with N.J.S.A. 39:6A-3.1 and N.J.A.C. 11:3-3."
As an alternative argument, Allstate also claims plaintiff is not entitled to coverage under his sister's policy because his sister did not disclose to Allstate that he was a resident in her home. However, as Rider points out in its reply brief, Allstate's attorney specifically stated before the trial court that "we're not going to deal" with the issue of plaintiff's residency or whether he was listed as an additional driver on the policy. We thus decline to address that issue here. As the Supreme Court has recently reaffirmed,
"[I]t is a well-settled principle that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest."
[Zaman v. Felton, 219 N.J. 199, 226-27 (2014) (alteration in original) (quoting Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973)).]
Relying on our decision in Rider Ins. Co. v. First Trenton Cos., 354 N.J. Super. 491 (App. Div. 2002), the motion judge here concluded:
I'm going to decide in favor of Allstate in this case. I believe that Allstate's argument caries the day. I think that it is more attuned to the policy of the State of New Jersey under these circumstances to allow this type of exclusion than to disallow it.
When the door was opened to the basic policies the [L]egislature clearly set forth an opening, albeit, a relatively narrow opening, for these types of exclusions to be effective. Here Mr. Nelson did opt for the basic policy. Here Mr. Nelson did opt for the lower premiums. And he therefore, opted to not get the coverage. Allstate, I believe, had every right under the language in the Rider case, 354 N.J. Super. 491, App. Div. 2002, to incorporate it into its policy the particular exclusion here. Mr. Nelson should not be allowed to obtain through the back door that which he did not acquire through the front door.
In reviewing a grant or denial of summary judgment, an appellate court is bound by the same standard as the trial court under Rule 4:46-2(c). Town of Kearny v. Brandt, 214 N.J. 76, 91 (2013). We review a trial court's analysis of legal questions de novo. Ibid. "To the extent that the grant or denial of summary judgment is based on an issue of law, we owe no deference to an interpretation of law that flows from established facts." State v. Perini Corp., 221 N.J. 412, 425 (2015).
We are satisfied the motion judge misconstrued our decision in Rider. Indeed, Allstate is the one trying to accomplish through a step-down clause buried deep inside a long list of exclusions to UM coverage what it is clearly unable to accomplish through a direct frontal approach. Similar to the facts here, the plaintiff in Rider resided with his mother. Rider, supra, 354 N.J. Super. at 495. First Trenton Indemnity Company insured the mother's vehicle and had an exclusion which did not cover "'bodily injury suffered or property damage incurred by any insured other than you while occupying any vehicle insured by another motor vehicle policy in which that insured was a named insured or relative.'" Ibid.
The plaintiff's two other insurance coverage providers, Rider and New Jersey Citizens Reciprocal Exchange (CURE), sought contribution from First Trenton for UM coverage. Ibid. First Trenton denied UM coverage based on the quoted exclusion. Ibid.
The [trial] judge found the exclusion inconsistent with the statutory requirement of N.J.S.A. 17:28-1.1 that all motor vehicle insurance policies, except basic policies, must include UM coverage. Consequently, the judge found that First Trenton owed [the plaintiff] pro rata UM coverage as a
resident relative and named driver on his mother's policy.
[Ibid.]
In affirming the trial court, we emphasized the two policy goals the Legislature sought to promote when it adopted N.J.S.A. 17:28-1.1, "'namely, to ease the financial burden on the Unsatisfied Claim and Judgment Fund and to provide insured motorists with protection from uninsured, financially irresponsible motorists.'" Id. at 497 (quoting Fernandez v. Selected Risks Ins. Co., 82 N.J. 236, 240 (1980)). Thus, exclusions or other provisions in a standard policy intended to limit the class of insureds eligible for UM coverage violate the public policy goals expressed in N.J.S.A. 17:28-1.1. Ibid. We admonish our colleagues at the trial level that "N.J.S.A. 17:28-1.1 must be construed liberally to foster the protection UM affords automobile accident victims." Id. at 497-98.
Applying these principles to the facts of this case, we are satisfied the step-down provision in Allstate's policy violates N.J.S.A. 17:28-1.1. Allstate's attempt to deny plaintiff UM coverage under a standard policy because he was also an "insured under [a] Basic automobile insurance policy," regardless that such a Basic policy covers a totally different vehicle than the one involved in this accident, is contrary to the public policy concerns we explained in Rider and the Supreme Court explained in Fernandez.
Reversed and remanded for the trial court to enter judgment reflecting Allstate's pro rata obligation to the $10,000 UM settlement payment made by Rider. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION