Allstate Ins. Co. v. Malec

• Decision Date: 22 September 1986
• Citation: 104 N.J. 1,514 A.2d 832
• Parties: , 55 USLW 2197 ALLSTATE INSURANCE COMPANY, Plaintiff-Appellant, v. John F. MALEC, Defendant-Respondent, and Leah Wilcox, Defendant.
• Court: New Jersey Supreme Court

Page 1

104 N.J. 1

514 A.2d 832, 55 USLW 2197

ALLSTATE INSURANCE COMPANY, Plaintiff-Appellant, v. John F. MALEC, Defendant-Respondent and Leah Wilcox, Defendant.

Supreme Court of New Jersey.

Argued Sept. 23, 1985.

Decided Sept. 22, 1986.

Francis X. Ryan, for appellant (Green and Lundgren, attys.)

P. Joseph Boyce, for respondent.

Bruce I. Goldstein, submitted a brief on behalf of amici curiae, Alliance of American Insurers, American Ins Ass'n, and Nat. Ass'n of Independent Insurers (Saiber, Schlesinger, Satz & Goldstein, attys.).

The opinion of the Court was delivered by

CLIFFORD, J.

Plaintiff, Allstate Insurance Company (Allstate), seeks a declaratory judgment that its standard automobile liability insurance policy did not afford coverage to its insured, defendant Leah Wilcox, for liability to defendant John F. Malec arising out of an automobile collision of October 17, 1981. Allstate relies on a specific provision in the policy that excludes liability coverage for intentional acts of the insured.

The trial court granted summary judgment for Malec. The Appellate Division, in an unreported opinion, affirmed, holding as a matter of both statutory construction and public policy that an automobile liability insurer cannot exclude coverage for liability caused by the intentional act of its insured. We granted certification, 99 N.J. 217, 491 A.2d 711 (1984), to review that holding. We reverse.

I

Allstate issued to Alicia Stewart, mother of defendant Wilcox, a policy of automobile liability insurance that was in effect on October 17, 1981. For purposes of this appeal Allstate concedes that on that date Wilcox was driving her mother's vehicle under circumstances that qualify Wilcox as an "insured" under the policy.

The Appellate Division's recitation of the incident that gives rise to the underlying claim of Malec against Wilcox is taken substantially from Malec's answers to interrogatories in the instant case and reads as follows:

On October 17, 1981, Wilcox drove the Stewart vehicle without permission.[ ¹ Mrs. Stewart reported the incident to the Winslow Township Police Department. Defendant Malec, a member of the Gloucester Township Police Department, assumed chase of Wilcox upon her entering Gloucester Township. Pursuit speed at this time was in the area of 65 miles per hour. As they approached the Garwood Plaza in Erial, Mr. Malec attempted to pass Leah Wilcox's vehicle and was struck in the right side of his police unit by Ms. Wilcox's vehicle, forcing him into oncoming traffic. The pursuit continued north on Erial-New Brooklyn Road until coming into the area of Little Gloucester and Erial-New Brooklyn Road, which is controlled by a traffic light. Mr. Malec again attempted to stop Ms. Wilcox's vehicle by passing it and again was struck in the right side of the police unit by her vehicle, forcing him again off the lane into oncoming traffic. Leah Wilcox's vehicle at this point bounced off of the police unit and struck the rear of a green pickup truck stopped for the traffic light. After striking the truck, Ms. Wilcox's vehicle backed up and made a right turn around the truck and onto Little Gloucester Road. The pursuit continued onto Little Gloucester Road towards Blackwood-Clementon Road. When Ms. Wilcox's vehicle reached the first side driveway to the K-Mart Stores located on Little Gloucester Road, it turned in and at this point Mr. Malec was able to pull to the right of her vehicle and get ahead of it enough to attempt to stop it. At this point Ms. Wilcox's vehicle ran into the left side of the police unit and stopped. The Winslow police unit pulled to the left side of Ms. Wilcox's vehicle and Patrolman Leahy placed Ms. Wilcox under arrest, charging her with driving while unlicensed and with aggravated assault on a police officer. The outcome of those charges is unknown since they were apparently disposed of in Juvenile Court.

At the time of the occurrence Malec had automobile coverage on his own vehicle with Insurance Company of North America, whose policy included the statutorily-required uninsured motorist (UM) provision. See N.J.S.A. 17:28-1.1. In addition, the police vehicle that Malec was operating was self-insured by his employer, Gloucester Township, which also extended workers' compensation coverage.

Malec asserted claims for bodily injury arising out of the accident. Allstate denied coverage for the claims on the basis of a standard provision in its policy that "[t]his [liability insurance] policy does not apply * * * to bodily injury or property damages caused intentionally by or at the direction of the insured." It is the carrier's contention that Wilcox acted intentionally in ramming Malec's car, and therefore the policy's exclusion for intentional acts applies. To resolve the liability coverage issue Allstate instituted this declaratory judgment action. See, e.g., Rova Farms Resort v. Investors Ins. Co., 65 N.J. 474, 509-10, 323 A.2d 495 (1974) (concurring opinion), and cases cited therein. Malec, who was joined as a defendant because of his "interest in the outcome of the litigation" (plaintiff's Complaint para. 6), filed an Answer, but defendant Wilcox did not respond.

Thereafter Allstate moved and Malec cross-moved for summary judgment. The trial court, in a letter opinion, determined that the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -20 (No-Fault Act), which requires both liability and personal injury protection (PIP) coverage, contains only one section that sets forth permissible exclusions from coverage, and those permissible exclusions apply only to PIP coverage. See N.J.S.A. 39:6A-7. Therefore, reasoned the trial court, the legislature must not have intended to permit exclusions from liability coverage, so Allstate was "not relieved of its [statutory] obligation to provide liability insurance coverage to defendant Wilcox on the basis of its contention that injury to Malec was the [result of] the intentional act of Wilcox." The trial court therefore denied summary judgment for Allstate and granted summary judgment to Malec.

The Appellate Division affirmed. As did the trial court, the court below interpreted the statutory scheme in respect of automobile liability insurance as not permitting a coverage exception for intentional acts. It further concluded that allowing Allstate's exclusion would violate the policy of construing automobile insurance legislation liberally in favor of broad protection for accident victims.

II

We approach our decision with an abiding awareness of some basic principles: (1) Whenever an insurance policy and a governing statute are in conflict, the statute controls, and the policy is automatically amended by operation of law to conform to the statutory standard. E.g., Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 373, 225 A.2d 570 (1966). (2) Legislation involving automobile insurance must be construed with "liberality in effecting the broadest protection of auto accident victims consistent with the language of the pertinent statute." Motor Club of Am. Ins. Co. v. Phillips, 66 N.J. 277, 293, 330 A.2d 360 (1984). (3) Statutorily mandated coverage cannot be countered by policy provisions that are contrary to the statutory mandates or public policy. American Home Assurance Co. v. Hartford Ins. Co., 190 N.J.Super. 477, 485-86, 464 A.2d 1128 (App.Div.1983). (4) Policy provisions that exclude coverage for liability resulting from intentional wrongful acts are "common," are "accepted as valid limitations," and are consistent with public policy. See Ruvolo v. American Casualty Co., 39 N.J. 490, 496, 189 A.2d 204 (1963).

In resisting Allstate's appeal Malec adopts the analysis pursued by the courts below, which is to read the No-Fault Act as requiring coverage for liability arising from intentional injuries. The Appellate Division achieved that result by noting that the Act permits the exclusion of PIP benefits when a person's conduct contributes to his injury or death in certain specified ways. In particular, the Appellate Division focused on N.J.S.A. 39:6A-7, which provides in pertinent part:

Insurers may exclude a person from benefits under section 4 and section 10 where such person's conduct contributed to his personal injuries or death occurred in any of the following ways:

(1) while committing a high misdemeanor or felony or seeking to avoid lawful apprehension or arrest by a police officer; or

(2) while acting with specific intent of causing injury or damage to himself or others.

The court below then looked to N.J.S.A. 39:6A-4, which requires that every automobile liability insurance policy "shall provide personal injury protection coverage * * * for the payment of benefits without regard to negligence, liability or fault of any kind * * *." It emphasized the declaration in Pennsylvania Nat'l Mut. Casualty Ins. Co. v. Estate of Miller, 185 N.J.Super. 183, 447 A.2d 1344 (App.Div.1982), that the statute's failure to exclude intentional acts and its express inclusion of the language "negligence, liability or fault of any kind" demonstrates an intent on the part of the legislature "not to limit the operation of the statute to occurrences resulting from unintentional conduct or to conduct which, although intentional, lacks a design to produce the result which occurs." Id. at 186-87, 447 A.2d 1344. The Appellate Division agreed as well with the Pennsylvania National court that N.J.S.A. 39:6A-7 and -4 should be read in pari materia, and that when read that way those statutes demonstrate that the legislature intended "not to exclude the results of intentionally inflicted injury except where the conduct of the injured person was implicated." Id. at 187, 447 A.2d 1344.

From all of the foregoing the court below concluded that "the relevant statutes [including N.J.S.A. 17:28-1.1, dealing with mandated coverage for automobile liability policies] do not exclude liability coverage for intentional acts." It buttressed...