Christy v. City of Newark

• Decision Date: 11 June 1986
• Citation: 102 N.J. 598,510 A.2d 22
• Parties: Michael CHRISTY, Plaintiff-Respondent, v. CITY OF NEWARK, Defendant-Appellant, and State Farm Insurance Company, Defendant.
• Court: New Jersey Supreme Court

Page 598

102 N.J. 598

510 A.2d 22

Michael CHRISTY, Plaintiff-Respondent, v. CITY OF NEWARK, Defendant-Appellant and State Farm Insurance Company, Defendant.

Supreme Court of New Jersey.

Argued Sept. 24, 1984.

Decided June 11, 1986.

Michael Dougherty, Asst. Corp. Counsel, Newark, for defendant-appellant (John J. Teare, Corp. Counsel, Newark, attorney).

Richard H. Wildstein, Passaic, for plaintiff-respondent Michael Christy (Goldstein, Ballen, O'Rourke & Wildstein, Passaic, attorneys).

Anthony J. Marinello, Bloomfield, for defendant State Farm Ins. Co. (Soriano, Henkel, Stein & Gaydos, Bloomfield, attorneys).

PER CURIAM.

Rather than obtain from an insurance company a liability insurance policy covering its motor vehicles, defendant City of Newark established an insurance fund under N.J.S.A. 40A:10-6. ¹ The Appellate Division determined that under that statutory funding arrangement, the City is obligated to furnish uninsured motorist benefits to plaintiff, a Newark police officer. We granted certification, 96 N.J. 262, 475 A.2d 567 (1984), to review that determination, and now affirm.

I

Plaintiff, Michael Christy, was injured when a "hit-and-run" vehicle struck a police car that he was operating in the course of his duties. Plaintiff was an insured within the meaning of the uninsured motorist (UM) endorsement of his own automobile insurance policy issued by defendant State Farm Insurance Company (State Farm). He was also entitled to, and eventually obtained, benefits pursuant to the Workers' Compensation Act, N.J.S.A. 34:15-1 to -127. In addition, plaintiff sought UM protection from the City under its insurance fund, created by the municipality under the authority of N.J.S.A. 40A:10-6. That enactment reads in full as follows:

The governing body of any local unit may establish an insurance fund for the following purposes:

a. To insure against any loss or damage however caused to any property, motor vehicles, equipment or apparatus owned by it, or owned by or under the control of any of its departments, boards, agencies or commissions;

b. To insure against liability resulting from the use or operation of motor vehicles, equipment or apparatus owned by or controlled by it, or owned by or under the control of any of its departments, boards, agencies or commissions;

c. To insure against liability for its negligence and that of its officers, employees and servants, whether or not compensated or part-time, who are authorized to perform any act or services, but not including an independent contractor within the limitations of the "New Jersey Tort Claims Act" ( N.J.S.A. 59:1-1 et seq.).

The governing body may appropriate the moneys necessary for the purposes of this section.

Our focus here is on subsection b., the provision for "insur[ance] against liability resulting from the use or operation of motor vehicles, equipment or apparatus" owned by the municipality.

Because the City rejected the claim for UM coverage, plaintiff made demand for arbitration. In a letter of November 17, 1981, the City declared its refusal to participate in arbitration proceedings because it was "not a party to any arbitration agreements." It further took the position that plaintiff's claim was "clearly barred by the provisions of the New Jersey Tort Claims Act," N.J.S.A. 59:1-1 to :12-3.

Despite the City's declared position, plaintiff's claims for UM benefits went to arbitration against both State Farm, plaintiff's own carrier, and Newark. As it had indicated it would, the City refused to participate in the arbitration proceedings, but it did nothing to protect its position in respect of the issue of arbitrability. See In re Grover, 80 N.J. 221, 230, 403 A.2d 448 (1979) (insurer could have instituted action for judicial decision on arbitrability issue and requested that arbitration be stayed, or could have objected to propriety of arbitration as to it and participated in arbitration proceedings on issues of plaintiff's damages and liability of "hit-and-run" driver). The arbitrator found liability on the part of the hit-and-run driver and fixed plaintiff's damages at $26,500. He specifically refused to decide which source of UM benefits, the City or State Farm, was primary and which was secondary, inasmuch as the question was "not within the jurisdiction of the Arbitrator to decide."

Plaintiff then started this suit in the Law Division, seeking to apportion between State Farm and the City the gross award resulting from arbitration, and to compel Newark to pay its share of UM benefits. As to the City, plaintiff's complaint alleged, without reference to any statutory provision or other source, that the City was "[a]t the time of the accident * * * a self-insurer of its vehicles," and was therefore "required to provide all benefits set forth in law including Uninsured Motorists Protection Benefits * * *." The City's answer set up separate defenses under the New Jersey Tort Claims Act, the Workers' Compensation Act, the Motor Vehicle Security-Responsibility Law ( N.J.S.A. 39:6-23 to -91), and, significantly for our purposes, N.J.S.A. 40A:10-6.

The City and plaintiff both moved for summary judgment. The trial court denied plaintiff's motion against Newark and granted the City's motion; the court entered judgment in favor of plaintiff against State Farm for $11,500, "subject to workers' compensation lien, if any." The court concluded that the City was under no obligation to provide UM coverage for its employees. It thus limited plaintiff's remedy to his workers' compensation claim and his UM coverage with State Farm.

On plaintiff's appeal to the Appellate Division he claimed that Newark was required to furnish UM protection under N.J.S.A. 39:6A-14, which requires "[e]very owner or registrant of an automobile registered or principally garaged in this State [to] maintain uninsured motorist coverage" as provided by N.J.S.A. 17:28-1.1. Plaintiff argued in addition that the City was "certainly a self-insured pursuant to N.J.S.A. 40A:10-6," the "insurance fund" provision. The City insisted in its Appellate Division brief that it is "not a self-insurer under N.J.S.A. 39:6-52 [part of the Motor Vehicle Security-Responsibility Law, N.J.S.A. 39:6-23 to -91], but rather provides insurance against liability for negligence pursuant to the authority granted in N.J.S.A. 40A:10-6, which * * * does not mandate uninsured motorist coverage under the facts of this case."

The Appellate Division reversed the summary judgment in favor of the City. It determined that N.J.S.A. 40A:10-6(b), which authorizes the creation of an insurance fund to insure against liability resulting from the use or operation of motor vehicles, equipment, or apparatus owned or controlled by the municipality, must be read to include UM protection within its purposes. The court below reached this conclusion by contrasting subsection b. with N.J.S.A. 40A:10-6(c), which has as its purpose the insuring of the municipality against liability for its negligence and that of its officers, employees or servants. The Appellate Division reasoned that because subsection b. imposes liability on the municipality arising out of the use or operation of its motor vehicles but makes no mention of negligence, that subsection must be deemed to include UM protection, for it would otherwise be superfluous in view of subsection c.'s provision for liability arising from negligence, there being no other source for the imposition of liability against the municipality. The court below observed in passing that a liberal construction of N.J.S.A. 40A:10-6 is warranted in order to afford UM protection not just to a police officer, as in this case, but as well to civilian passengers, who frequently are carried by police cars in emergency situations.

The Appellate Division then dealt with Newark's position under the Motor Vehicle Security-Responsibility Law, N.J.S.A. 39:6-23 to -91. One section of that Law, N.J.S.A. 39:6-52, provides that any person in whose name more than twenty-five motor vehicles are registered may qualify as a self-insurer by obtaining a certificate of self-insurance after satisfying the Director of the Division of Motor Vehicles of his ability to pay judgments. Another section, N.J.S.A. 39:6-54, declares that the Law "shall not apply with respect to any motor vehicle owned by * * * any political subdivision of this State or any municipality therein * * *." Although Newark acknowledged below that our courts have held that a certificate of self-insurance obtained pursuant to N.J.S.A. 39:6-52 is equivalent to a "policy" that incorporates the UM coverage mandated of all insurance policies by N.J.S.A. 17:28-1.1, see Transport of New Jersey v. Watler, 161 N.J.Super. 453, 391 A.2d 1240 (App.Div.1978), aff'd as modified, 79 N.J. 400, 400 A.2d 61 (1979); Mortimer v. Peterkin, 170 N.J.Super. 598, 407 A.2d 1235 (App.Div.1979), the City argued that it was exempt from the provisions of that law by virtue of N.J.S.A. 39:6-54. The Appellate Division rejected that contention because inasmuch as the statute under which Newark claimed to have become an insurer, N.J.S.A. 40A:10-6, is not part of the Motor Vehicle Security-Responsibility Law, the exemption did not attach.

The court below also refused to credit the municipality's claim that the New Jersey Tort Claims Act, N.J.S.A. 59:1-1 to :12-3, served to limit its liability, because the court considered plaintiff's claim to be for UM benefits rather than one in tort.

Finally, the Appellate Division viewed as without merit Newark's claim that its police car was not an "automobile" within the meaning of N.J.S.A. 39:6A-14, which requires "[e]very owner or registrant of an automobile registered or principally garaged in this State [to] maintain uninsured motorist coverage" as provided by N.J.S.A. 17:28-1.1. The City's argument was based on the definition of "automobile" found in N.J.S.A. 39:6A-2(a): "a private passenger automobile of a private...