Caviglia v. Royal Tours of America

• Citation: 842 A.2d 125,178 N.J. 460
• Parties: Jorge O. CAVIGLIA and Mabel Brun Caviglia, Plaintiffs-Respondents, v. ROYAL TOURS OF AMERICA and Hector Mundo, Defendants-Appellants, and ABC Corporation, XYZ Company, John Doe Nos. 1-3 (fictitious names for individuals or business entities incorporated in or authorized to do business In the State of New Jersey), Defendants.
• Decision Date: 19 February 2004
• Court: United States State Supreme Court (New Jersey)

842 A.2d 125

178 N.J. 460

Jorge O. CAVIGLIA and Mabel Brun Caviglia, Plaintiffs-Respondents, v. ROYAL TOURS OF AMERICA and Hector Mundo, Defendants-Appellants, and ABC Corporation, XYZ Company, John Doe Nos. 1-3 (fictitious names for individuals or business entities incorporated in or authorized to do business In the State of New Jersey), Defendants.

Supreme Court of New Jersey.

Argued October 21, 2003.

Decided February 19, 2004.

Floyd G. Cottrell, Newark, argued the cause for appellants (Newman Fitch Altheim Myers, attorneys; Kalliopi P. Kousis, on the brief).

Norberto H. Yaconoi, Paterson, and Kenneth C. Marano argued the cause for respondents (Mr. Yacono, attorney).

Susan Stryker, Trenton, argued the cause for amici curiae Insurance Council of New Jersey, Alliance of American Insurers, American Insurance Association and National Association of Independent Insurers (Sterns & Weinroth, attorneys; Ms. Stryker and Mitchell A. Livingston, on the brief).

Raymond R. Chance, III, Deputy Attorney General, argued the cause for amicus curiae State of New Jersey (Peter C. Harvey, Attorney General of New Jersey, attorney; Patrick DeAlmeida, Deputy Attorney General, of counsel; Prince F. Kessie, Deputy Attorney General, on the brief).

Gerald H. Baker, Hoboken, submitted a brief on behalf of amicus curiae The Association of Trial Lawyers of America-New Jersey (Baker, Garber, Duffy & Pedersen, attorneys). Justice ALBIN delivered the opinion of the Court.

Plaintiff Jorge O. Caviglia owned and operated an uninsured motor vehicle at the time he suffered injuries in an automobile accident. Although faultless in the accident, plaintiff was exposed to a mandatory fine of between $300 and $1,000, a period of community service, and a one-year license forfeiture because of his failure to carry automobile liability insurance. N.J.S.A. 39:6B-2. Because his vehicle was uninsured, plaintiff also was barred from suing the tortfeasor for recovery of his economic injuries. N.J.S.A. 39:6A-4.5a; Monroe v. City of Paterson, 318 N.J.Super. 505, 510, 723 A.2d 1266 (App.Div. 1999). Plaintiff does not dispute the power of the State to impose quasi-criminal penalties or to deny the recovery of economic damages as a consequence of his driving an uninsured vehicle. Plaintiff only challenges the constitutionality of that part of N.J.S.A. 39:6A-4.5a that precludes him from suing the tortfeasor for noneconomic damages, such as pain and suffering. He claims that the statutory bar violates federal and state constitutional guarantees of equal protection and due process. We are satisfied that the Legislature did not exceed its constitutional authority in enacting N.J.S.A. 39:6A-4.5a.

I.

On October 13, 1997, plaintiff was driving his Ford Tempo in North Bergen, with his wife, Mabel Brun, in the passenger's seat, when a bus operated by defendant Hector Mundo and owned by defendant Royal Tours of America, Inc. crossed over into plaintiff's lane of traffic, causing a collision. Plaintiff suffered serious injuries to his head, neck, back, and jaw as a result of the accident. Mabel also sustained personal injuries. On October 8, 1999, plaintiff and his wife filed suit for personal injury and property damage against defendants. Mabel settled her claims. In answers to interrogatories, plaintiff asserted that his injuries from the accident have prevented him from performing normal daily activities and have caused him severe pain and suffering.

Before the accident, for reasons not disclosed in the record, plaintiff's automobile insurance policy had been cancelled. Because of plaintiff's uninsured status at the time of the accident, defendants moved for summary judgment arguing that N.J.S.A. 39:6A-4.5a barred plaintiff's suit. That statute denies a "cause of action for recovery of economic or noneconomic loss" to the driver of an uninsured vehicle who is injured in an automobile accident. Ibid.

The trial court granted defendants' motion for summary judgment, but on reconsideration reversed itself and reinstated plaintiff's claim. The court concluded that N.J.S.A. 39:6A-4.5a's bar of a right to recover noneconomic damages by an uninsured, injured plaintiff violated the equal protection and due process guarantees of the Federal and State Constitutions. The Appellate Division affirmed, finding that the statute's absolute bar of a cause of action for noneconomic damages to uninsured drivers seriously injured in automobile accidents did not bear "a real and substantial relationship" to the Legislature's no-fault objectives and arbitrarily discriminated against that class of drivers. Caviglia v. Royal Tours of Am., 355 N.J.Super. 1, 9, 809 A.2d 146 (2002).

We granted defendants' motion for leave to appeal. 175 N.J. 544, 816 A.2d 1046 (2003). We now reverse.

II.

In resolving the constitutional challenge to N.J.S.A. 39:6A-4.5a, we begin with a short primer in New Jersey's automobile liability insurance laws. All owners of motor vehicles registered or principally garaged in New Jersey are required to maintain minimum amounts of standard, basic, or special liability insurance coverage for bodily injury, death, and property damage caused by their vehicles. N.J.S.A. 39:6B-1. That statute is intended to ensure that automobile accident victims are not left without the means to recover financially for their injuries from a judgment-proof tortfeasor. State v. McCourt, 131 N.J.Super. 283, 286, 329 A.2d 577 (App.Div.1974). Every policy also must provide a package of "personal injury protection [PIP] benefits" that guarantees, without regard to fault, medical expense benefits to the named insured and his family household members in the event they suffer bodily injury in an automobile accident. N.J.S.A. 39:6A-4.¹ This system of first-party self-insurance through PIP benefits was enacted pursuant to the New Jersey Automobile Reparation Reform Act (the No Fault Act) and is commonly referred to as no-fault insurance. L. 1972, c. 70; N.J.S.A. 39:6A-1 to -35; see also Fu v. Fu, 160 N.J. 108, 121, 733 A.2d 1133 (1999)

(describing transition from fault-based system to system of first-party coverage).

The No Fault Act was intended to serve as the exclusive remedy for payment of out-of-pocket medical expenses arising from an automobile accident. Roig v. Kelsey, 135 N.J. 500, 503, 512, 641 A.2d 248 (1994). Moreover, the act contained restrictions on the right to sue. For example, an injured driver with a standard liability policy was barred from suing the tortfeasor for the very PIP benefits reimbursable through his own insurance carrier. Sotomayor v. Vasquez, 109 N.J. 258, 261-62, 536 A.2d 746 (1988). The act also precluded an injured, insured motorist or passenger from suing an insured tortfeasor for economic or noneconomic damages (pain and suffering) unless the injury was of a permanent nature or the medical costs of treatment of the injury were valued at $200 or greater. Oswin v. Shaw, 129 N.J. 290, 295-96, 609 A.2d 415 (1992) (citing L. 1972, c. 70, § 8). The restriction on the right to sue in those instances was deemed the trade-off for lower premiums and prompt payment of medical expenses. Roig, supra, 135 N.J. at 511-12,641 A.2d 248.

A common thread throughout the evolution of the no-fault scheme has been the periodic inclusion of additional conditions on the right to sue in automobile accident cases. The No Fault Act was enacted in response to a long and widely held belief that the traditional court-oriented "fault" system had failed badly in providing prompt compensation for accident victims, whose medical bills and other accident-related costs remained unpaid for years while their lawsuits lumbered through an overburdened court system. Roig, supra, 135 N.J. at 502-03, 641 A.2d 248; Gambino v. Royal Globe Ins. Cos., 86 N.J. 100, 106-07, 429 A.2d 1039 (1981). The Legislature had four objectives in reforming the automobile accident tort system: (1) providing benefits promptly and efficiently to all accident injury victims (the reparation objective); (2) reducing or stabilizing the cost of automobile insurance (the cost objective); (3) making insurance coverage readily available for automobile owners (the availability objective); and (4) streamlining judicial procedures involved in third-party claims (the judicial objective). Gambino, supra, 86 N.J. at 105-06, 429 A.2d 1039 (citing Automobile Insurance Study Commission, Reparation Reform for New Jersey Motorists at 7 (December 1971)).

Although the No Fault Act may have been successful in meeting its first goal of providing speedy recovery of medical costs, lost wages, and other such expenses² without making the victim await the outcome of protracted litigation, the act fell short of its other objectives. Oswin, supra, 129 N.J. at 296, 609 A.2d 415; Rybeck v. Rybeck, 141 N.J.Super. 481, 492, 358 A.2d 828 (Law Div.1976), appeal dismissed, 150 N.J.Super. 151, 375 A.2d 269 (App.Div.), certif. denied, 75 N.J. 30, 379 A.2d 261 (1977). The act failed to curb increasing insurance costs and to relieve congestion of court calendars. Rybeck, supra, 141 N.J.Super. at 492, 358 A.2d 828.

In the decades that followed the birth of No Fault, the Legislature grappled with the intractable problem of the spiraling cost of automobile insurance. See Oswin, supra, 129 N.J. at 296,

609 A.2d 415 (describing Legislature's attempts to solve problem of rising insurance rates). In 1984, the Legislature comprehensively amended the No Fault Act by passage of the New Jersey Automobile Insurance Freedom of Choice and Cost Containment Act (the Cost Containment Act) for the purpose of making automobile insurance more affordable and available to more members of the public. L. 1983, c. 362; Oswin, supra, 129 N.J. at 295-96, 609 A.2d 415. The Cost Containment Act gave motorists the option of reducing insurance premiums by increasing deductibles and reducing benefits.³

Oswin, supra, 129 N.J. at 296,

609 A.2d 415. The new legislation also enlarged...