Allstate Ins. Co. v. Alvarado

• Decision Date: 11 February 1988
• Citation: 549 A.2d 905,227 N.J.Super. 152
• Parties: ALLSTATE INSURANCE COMPANY Plaintiff, v. Arthur ALVARADO and City of Newark Defendants.
• Court: New Jersey Superior Court

Page 152

227 N.J.Super. 152

549 A.2d 905

ALLSTATE INSURANCE COMPANY Plaintiff, v. Arthur ALVARADO and City of Newark Defendants.

Superior Court of New Jersey, Law Division Essex County.

Decided Feb. 11, 1988.

Thomas A. Wester, for plaintiff (McDermott, McGee and Ruprecht, Millburn, attorneys).

Ronald Washington, Asst. Corp. Counsel, for defendants (Glenn A. Grant, Corp. Counsel, Newark, for City of Newark).

WALLS, J.S.C.

As a self insurer, Newark is legally mandated to provide uninsured motorist coverage to its employees such as here to the policeman who, while driving a municipally-owned automobile, sustained personal injuries because of the collision with his vehicle by one driven by an uninsured motorist. Christy v. Newark, 102 N.J. 598, 510 A.2d 22 (1986).

At the time of the collision, May 29, 1983, the employed policeman was also covered and protected by his own privately obtained, uninsured motorist insurance coverage provided by Allstate Insurance Company, the plaintiff herein. By this motion, plaintiff seeks resolution in its favor of the following questions:

Should the Christy, the judicially prescribed, uninsured motorist, coverage of the municipality be deemed primary in satisfaction of any liability prior to that of the protection bought and paid for by the employee from a private carrier?

Additionally, now that Newark is deemed the provider of uninsured motorist coverage, must it submit controversies arising from such coverage to arbitration?

The following discussion compels the conclusion that those questions be answered adversely to the interests of the moving party.

Allstate demands that Newark furnish primary coverage of its uninsured motorist benefits to the injured employee Alvarado for one reason, i.e., Allstate's policy with Alvarado says so:

"If there is another applicable similar insurance, we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you do not own shall be excess over any other collectible insurance."

Obviously, such a contractual understanding between this carrier and its insured is not binding upon Newark, a nonparty to the agreement of insurance. Without more, Newark may be affected by, but cannot be directly obligated to such terms.

On the other hand, Newark argues that Allstate should pay its benefits first and contends that earlier decisions of our appellate courts countenance such an approach. Montedoro v. Asbury Park, 174 N.J.Super. 305, 416 A.2d 433 (App.Div.1980); State Farm Mutual Auto Liab. v. Kiser, 168 N.J.Super 230, 402 A.2d 952 (App.Div.1979); Walkowitz v. Royal Globe Insurance Company, 149 N.J.Super. 442, 374 A.2d 40 (App.Div.1977); Transport of New Jersey v. Watler, 161 N.J.Super. 453, 391 A.2d 1240 (App.Div.1978); Mortimer v. Peterkin, 170 N.J.Super. 598, 407 A.2d 1235 (App.Div.1979).

From these, Newark, in its brief, seems to conclude that there is a judicial predilection to favor the interests of a municipality vis-a-vis those of the private sector.

Such conclusion is erroneous. The aforecited, distinguished writings serve individually as steps in the development of the legislative goal of New Jersey to provide necessary benefits to victims of accidents involving vehicles operated by uninsured drivers and collectively, as "the springboard for resolution of the essential issue ..." of Christy v. Newark, 102 N.J. 598, 510 A.2d 22 (1986). Transport of New Jersey v. Watler, 161 N.J.Super. 453, 391 A.2d 1240 (1978) aff'd as modified, 79 N.J. 400, 400 A.2d 61 (1979). That issue was, as we know, whether Newark, which had established an insurance fund pursuant to N.J.S.A. 40A:10-6, was required to furnish uninsured motorist coverage. And we know the answer of Christy.

Still, Newark contends that the cases decided before Christy and NJSA 59:1-1 et seq., specifically 59:9-2(e) of the Tort Claims Act, require a deduction in any amount due from a public entity which is compensated by a third party. The insurance carrier should exhaust the limits of its coverage before the municipality pays, Newark argues.

Generally, too rigid a reliance upon the Tort Claims Act is not sanctioned by our highest court which, in Christy, agreed with the refusal of the Appellate Division to characterize a claim for uninsured motorist benefits as "one in which a claim for tort has been asserted against the City. The claim is one arising out of a contract--here, a statutory contract founded in NJSA 40A:10-6 ..." Christy v. Newark, 102 N.J. 598 at 610, 510 A.2d 22. It is "in effect, a contractual substitute for a tort action against an uninsured motorist." Midland Insurance Co. v. Colatrella, 102 N.J. 612 at 617, 510 A.2d 30.

In his review of NJSA 34:15-40, Justice Pollack, writing for the majority in Colatrella, determined that "the Legislature has expressed its intent that a compensation lien should be attached to the recovery from a third party tort feasor. Thus, we remain persuaded that when a negligent motorist, including one who is uninsured or unidentified injures a motorist, a compensation lien should attach to the uninsured motorist proceeds recovered by the injured employee." The Justice then defined the rationale "... [w]e base our decision on the belief that the primary concern of the Legislature here as in other work related injuries caused by third party tort feasors, is to integrate the source of recovery (emphasis supplied)." Id. at 618, 510 A.2d 30.

Perhaps, something less than rigid reliance upon Tort Claims Section 59:9-2 may be allowed. As has been earlier indicated, Allstate asserts that its "excess coverage" clause requires that Newark pay its uninsured motorist benefits first to the injured Alvarado. Newark resists this suggestion and relies on NJSA 59:9-2(e):

"If a claimant receives or is entitled to receive benefits for the injuries allegedly incurred from a policy or policies of insurance or any other source other than a joint tort feasor, such benefits shall be disclosed to the court and the amount thereof which duplicates any benefit contained in the award shall be deducted from any award against a public entity or public employee recovered by such claimant; provided, however, that nothing in this provision shall be construed to limit the rights of a beneficiary under a life insurance policy. No...