Opinion
DOCKET NO. A-1773-12T2
05-14-2014
21st CENTURY INSURANCE COMPANY, Plaintiff-Appellant, v. NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, AS STATUTORY ADMINISTRATOR OF UNSATISFIED CLAIM AND JUDGMENT FUND, Defendant-Respondent.
Sandra S. Grossman argued the cause for appellant (Law Offices of Steven G. Kraus, attorneys; Ms. Grossman, on the briefs). Mark M. Tallmadge argued the cause for respondent (Bressler, Amery & Ross, attorneys; Mr. Tallmadge, on the brief).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Nugent and Accurso.
On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-3651-12.
Sandra S. Grossman argued the cause for appellant (Law Offices of Steven G. Kraus, attorneys; Ms. Grossman, on the briefs).
Mark M. Tallmadge argued the cause for respondent (Bressler, Amery & Ross, attorneys; Mr. Tallmadge, on the brief). PER CURIAM
Plaintiff 21st Century Insurance Company (21st Century) appeals from summary judgment dismissing its complaint against defendant New Jersey Property-Liability Insurance Guaranty Association (PLIGA) as Statutory Administrator of the Unsatisfied Claim and Judgment Fund (UCJF) for equitable reimbursement for personal injury protection (PIP) benefits 21st Century erroneously paid to its insured. Because plaintiff's claim is barred under well-settled UCJF law and the PLIGA Act, N.J.S.A. 17:30A-1 to -20, we affirm.
The essential facts are undisputed. Michael Blatz, a minor, was riding his bicycle in South Plainfield in September 2007 when he was struck by a dump truck insured by Transportation Liability Insurance Company (Translico), a South Carolina insurer registered in New Jersey as a risk retention group. Blatz's mother was insured under an auto policy issued by 21st Century, and she applied to the carrier for PIP benefits on his behalf. Within six weeks of the accident, 21st Century had paid $250,000 in pedestrian PIP benefits on Blatz's behalf and $3,029.76 in claims expenses.
21st Century subsequently discovered it had paid those benefits erroneously. Blatz was not entitled to pedestrian PIP benefits under his mother's 21st Century policy because the vehicle that injured him was not an automobile. N.J.S.A. 39:6A-4. Instead, pursuant to N.J.S.A. 17:28-1.3, Blatz's PIP benefits were the responsibility of Translico.
Approximately fifteen months after the accident, 21st Century demanded reimbursement from Translico. Four months later, before making any response to 21st Century, Translico was declared insolvent. 21st Century's $250,000 proof of claim was subsequently denied in its entirety when the liquidator determined there were not assets to pay the claim. In April 2011, 21st Century submitted a claim to PLIGA for reimbursement of the PIP benefits 21st Century erroneously paid to Blatz. PLIGA denied the claim, and, in May 2012, 21st Century filed its complaint in the Law Division.
PLIGA moved for summary judgment contending that 21st Century's claim was brought on the erroneous premise that PLIGA would have been responsible for payment of Blatz's pedestrian PIP claim had 21st Century not paid it and, alternatively, that 21st Century's claim was time-barred.
Judge Currier granted the motion, finding that PLIGA is not responsible for pedestrian PIP coverage to the insureds of risk retention groups. The judge noted that New Jersey's Director of Insurance issued a directive in March 2006 that all risk retention groups must comply with N.J.S.A. 17:28-1.3 by providing pedestrian PIP coverage for commercial vehicles in accordance with N.J.S.A. 39:6A-4. The directive further explained that because risk retention groups are not members of PLIGA pursuant to federal law, PLIGA would not provide pedestrian PIP coverage to their insureds. Translico subsequently certified to the Department of Banking and Insurance that it was in compliance with N.J.S.A. 17:28-1.4, and specifically with its provisions requiring mandatory coverage for pedestrian PIP.
The judge further noted that PLIGA is responsible only for payment of "covered claims," meaning claims arising within the coverage of an insurance policy to which the PLIGA Act applies. N.J.S.A. 17:30A-5. Relying on both the directive and the express language of the statute, the judge concluded that because risk retention groups are not eligible to derive any benefits from PLIGA, a claim for pedestrian PIP benefits under a policy issued by a risk retention group is thus not payable as a covered claim. In addition, the judge found the claim untimely, relying on the statutory time limitations for direct claims for benefits, and that 21st Century's long delay in seeking reimbursement for its erroneous payment, first from Translico and then from PLIGA, precluded its request for equitable relief.
On appeal, 21st Century argues that its claim for equitable reimbursement is not time-barred because the statutory time frames relied upon by the judge apply only to direct claims for benefits. See American Int'l Ins. Co. v. 4M Interprise, Inc., 431 N.J. Super. 514, 527-28 (App. Div.), certif. denied, 216 N.J. 366 (2013). We conclude that the issue of whether 21st Century's equitable claim was timely, however, is beside the point because we agree with Judge Currier that PLIGA had no responsibility for the PIP payments 21st Century erroneously paid on behalf of Blatz. Accordingly, we reject the underlying premise of 21st Century's equitable reimbursement claim - that PLIGA has been unjustly enriched at 21st Century's expense.
The law is now well-settled that "an insurer registered in New Jersey solely as a risk retention group is not covered by PLIGA." Aftab v. N.J. Prop.-Liab. Ins. Guar. Ass'n, 386 N.J. Super. 41, 44 (App. Div.), certif. denied, 188 N.J. 357 (2006). We reviewed the reasons for that at length in Aftab, in an extended discussion of risk retention groups, state guaranty associations, the Product Liability Risk Retention Act of 1981 (PLRRA), 15 U.S.C.A. §§ 3901 to 3906, and the New Jersey Risk Retention Act (NJRR Act), N.J.S.A. 17:47A-1 to -12. We need not re-plow that ground here. It suffices to say that Translico, as a registered risk retention group, does not qualify as an insolvent insurer under the PLIGA act and its policies do not give rise to PLIGA coverage. See Id. at 51-54. Accordingly, because Blatz's claim against Translico's insured for pedestrian PIP coverage is not a claim for which PLIGA bore any responsibility, PLIGA was not unjustly enriched by 21st Century's erroneous payment to Blatz.
21st Century argued in its brief to this court that such a result is inconsistent with settled UCJF law because PLIGA would have provided coverage had the truck that struck Blatz been insured by a commercial carrier and not a risk retention group.
While 21st Century is correct that PLIGA would have been responsible to pay Blatz's pedestrian PIP benefits under that scenario, the fact is immaterial. After the entry of summary judgment in this case, we decided American International Insurance Co. v. 4M Interprise, Inc., in which we rejected the claim that New Jersey discriminates against risk retention groups by barring their participation in PLIGA's program for payment of pedestrian-PIP benefits. 431 N.J. Super. at 526. We accepted that "the different treatment of commercial insurers and risk retention groups is a function of PLIGA's authority to assess commercial insurers who are members of PLIGA to cover its obligations — authority PLIGA does not have over risk retention groups whose membership in PLIGA is barred by federal law." Id. at 524. 4M thus establishes that PLIGA has no authority pursuant to N.J.S.A. 17:47A-9 to pay pedestrian PIP benefits owed under policies written by risk retention groups regardless of the solvency of such groups. Id. at 527.
We noted in 4M that the Director of the Division of Insurance has determined that PLIGA is responsible for pedestrian-PIP claims under policies issued pursuant to N.J.S.A. 17:28-1.3 by commercial insurers who are members of PLIGA because those members are assessed for the claims. 4M, supra, at 517 n.1. Although decided after this case was briefed, 4M was litigated by the same firms appearing in this matter. Accordingly, counsel are well acquainted with the facts and rationale for that holding.
In conformity with the Federal Liability Risk Retention Act of 1986 (LRRA), 15 U.S.C.S. §§ 3901 to 3906, and its predecessor the PLRRA, N.J.S.A. 17:47A-9 makes a risk retention group ineligible to "become a member of, contribute to, or derive any benefit from, [PLIGA]."
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21st Century's argument that it is 21st Century and not the insolvent Translico that would benefit by PLIGA's payment of this claim, and that N.J.S.A. 17:47A-9 is thus no barrier to its recovery, is without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). It is undisputed that it was Translico's obligation to pay PIP pedestrian benefits to Blatz. 21st Century discharged Translico's obligation by 21st Century's erroneous payment of those benefits to Blatz. Any payment by PLIGA to 21st Century would thus necessarily be on behalf of Translico and thereby prohibited by state and federal law.
Because 21st Century's claim against PLIGA for equitable reimbursement is substantively barred by well-settled UCJF law as well as the PLIGA Act, we need not address its contention that the Law Division erred in additionally deeming the claim time-barred.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION