Clendaniel v. New Jersey Manufacturers Ins. Co.

• Decision Date: 18 June 1984
• Citation: 476 A.2d 263,96 N.J. 361
• Parties: Kurt CLENDANIEL, Plaintiff-Respondent, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 361

96 N.J. 361

476 A.2d 263

Kurt CLENDANIEL, Plaintiff-Respondent, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Feb. 6, 1984.

Decided June 18, 1984.

John Aleli, Pleasantville, for defendant-appellant (Steedle, Megargee, Youngblood, Franklin & Corcoran, Pleasantville, attorneys).

Gerald J. Neski, Bridgeton, for plaintiff-respondent (Adler, Neski & Garofola, Bridgeton, attorneys).

The opinion of the Court was delivered by

GARIBALDI, J.

This appeal concerns the interpretation of N.J.S.A. 39:6A-10 (Section 10) of the New Jersey Automobile Reparation Reform Act (prior to its amendment in January 1982, by L.1981, c. 533, § 1) (Act). Specifically, the issue here is whether N.J.S.A. 39:6A-10 required the insurer to make available to the named insured additional personal injury protection (PIP) benefits for persons other than the named insured. We hold that the insurer was required to make available additional Section 10 PIP benefits not only to the named insured but also to resident relatives in the household of the named insured. This interpretation of N.J.S.A. 39:6A-10, prior to its 1981 Amendment, conforms with the present language of the statute.

I

While a passenger in a car taken without the owner's permission, Kurt Clendaniel (Kurt) was seriously injured in an automobile accident. At the time of the accident, he resided with his parents. Kurt's father, Donald Clendaniel, had an automobile insurance policy issued by New Jersey Manufacturers Insurance Company (NJM) through the New Jersey Assigned Risk Plan. The policy was placed with NJM by Camden A. Trimble for Mr. Clendaniel. The policy, by way of endorsement, provided additional Section 10 PIP benefits only to the named insured, Mr. Clendaniel, and to his wife. Kurt was not listed as an insured for additional Section 10 PIP benefits.

Under Mr. Clendaniel's policy, NJM paid Kurt basic PIP medical expenses pursuant to N.J.S.A. 39:6A-4, but disputed Kurt's claim for income continuation benefits due to Kurt's lack of employment. NJM also disputed Kurt's claim for additional Section 10 PIP benefits.

Thereafter, Kurt sued NJM seeking the income continuation benefits and the additional Section 10 PIP benefits. Kurt argued that he was entitled to the Section 10 benefits on one of two alternate grounds. First, he contended that he was insured based on the representation that Trimble allegedly made to Mr. Clendaniel that the entire household would be entitled to the Section 10 benefits. Alternatively, he contended that he was entitled to the benefits because NJM failed to fulfill its statutory duty to make additional PIP coverage for him available to his father, the named insured.

The trial court granted partial summary judgment in favor of NJM, dismissing Kurt's claim for additional Section 10 PIP benefits. The trial court held that Trimble was not an agent of NJM, thereby implying that any alleged representations by Trimble were irrelevant. The court then ruled that NJM had no duty pursuant to N.J.S.A. 39:6A-10 to make available additional PIP benefits for Kurt. Thus Kurt was not entitled to Section 10 benefits because the policy in question designated only the named insured, Donald Clendaniel, and his spouse, if resident of the same household, as persons insured for additional Section 10 PIP benefits.

The Appellate Division granted Kurt's motion to appeal, reversed the judgment of the trial court, and remanded the case for further proceedings. 184 N.J.Super. 331, 446 A.2d 180. The Appellate Division held that N.J.S.A. 39:6A-10 required an insurer to make available to the named insured as an option additional PIP benefits for all classes of persons covered under N.J.S.A. 39:6A-4 including resident relatives, guest passengers, and pedestrians.

We granted NJM's motion for leave to appeal the interlocutory order of the Appellate Division and summarily remanded the matter to the Appellate Division to reconsider in light of the 1981 amendment to Section 10. 91 N.J. 285, 450 A.2d 592. After its reconsideration, the Appellate Division again held that prior to the enactment of the amendment, N.J.S.A. 39:6A-10 required an insurer to make available additional PIP benefits for all classes of persons covered under N.J.S.A. 39:6A-4. 190 N.J.Super. 286, 463 A.2d 369. Accordingly, the Appellate Division reversed the trial court's judgment and remanded the case to the trial court.

We granted NJM leave to appeal. 95 N.J. 201, 470 A.2d 422.

II

N.J.S.A. 39:6A-10 mandates that insurers must provide named insureds with the option of purchasing additional PIP benefits above those required of all motorists under N.J.S.A 39:6A-4. The statement accompanying the original bill in the Legislature states, "The insured may purchase additional coverage if desired." See Statement accompanying A667 (1972). For cases stating this proposition, see Allstate Ins. Co. v. Skolny, 86 N.J. 112, 114 n. 1, 429 A.2d 1045 (1981); Muschette v. The Gateway Ins. Co., 76 N.J. 560, 564, 388 A.2d 964 (1978); Garden State Fire & Casualty Co. v. Commercial Union Ins. Co., 176 N.J.Super. 301, 307, 422 A.2d 1327 (App.Div.1980).

The issue here is whether the Legislature intended that the insurer must offer the named insured the option of obtaining additional Section 10 PIP benefits for persons other than the named insured and, if so, for whom the Legislature intended that such additional coverage must be made available.

The problem arises because the first line of N.J.S.A. 39:6A-10 is ambiguous in view of other sections of the Act. Prior to amendment in 1981, N.J.S.A. 39:6A-10 required insurers to

make available to the named insured covered under section 4, suitable additional first-party coverage for income continuation benefits, essential services benefits, survivor benefits and funeral expense benefits. * * * Income continuation in excess of that provided for in section 4 must be provided as an option by insurers to persons for disabilities * * *. [Emphasis added.]

N.J.S.A. 39:6A-2 g provides that " '[n]amed insured' means the person or persons identified as the insured in the policy and, if an individual, his or her spouse." N.J.S.A. 39:6A-4 provides for payment of basic benefits:

to the named insured and members of his family residing in his household who sustained bodily injury as a result of an accident involving an automobile, to other persons sustaining bodily injury while occupying the automobile of the named insured or while using such automobile with the permission of the named insured and to pedestrians, sustaining bodily injury caused by the named insured's automobile or struck by an object propelled by or from such automobile. [Emphasis added.]

While Section 10 is not a model of precision, we find that the scant legislative history from the original Commission Report through the current amended Section 10 indicates that the Legislature's intent always was to extend Section 10 benefits only to the named insured and his or her resident relatives. It clearly intended to limit the additional Section 10 benefits to a class narrower than that set forth in N.J.S.A. 39:6A-4.

In its December 1971 report to the Governor, the Automobile Insurance Study Commission, appointed to study the concept of no-fault insurance, recommended that:

as a supplement to [mandatory PIP coverage], insurers shall make available to the named insured and members of his household, at the latters' option of rejection, suitable additional (excess) first-party benefits for loss of income including, in the event of death, a dependent survivor's benefit. [Reparation Reform for New Jersey Motorists xvii (emphasis added).]

The most compelling argument for our position is found in the legislative statements accompanying the recently-enacted amendment to N.J.S.A. 39:6A-10. The Legislature, recognizing that Section 10 was confusing, sought to clarify it by enacting L.1981, c. 533, § 1. The amended N.J.S.A. 39:6A-10 reads as follows:

Insurers shall make available to the named insured covered under Section 4, and, at his option, to resident relatives in the household of the named insured, suitable additional first-party coverage * * *. * * * Income continuation in excess of that provided for in Section 4 must be provided as an option by insurers ¹ for disabilities * * *. [Footnote added.]

According to the statement of the Senate Labor, Industry and Professions Committee, this change was

intended to eliminate an inconsistency between sections 4 and 10 of the New Jersey no-fault law. Section 4 provides for basic personal injury protection benefits, including income continuation benefits, essential service benefits, and funeral expense benefits. Section 10 provides for higher benefits in these categories which may be purchased as an option. While section 4 benefits are applicable to the named insured and the members of his family, the statutory language of section 10 is unclear with respect to the applicability of the section 10 benefits to members of the household as well as the named insured. This legislation makes the additional benefits available to both named insureds and members of their families residing in their household. [Senate Labor, Industry and Professions Committee, Statement to Assembly, No. 1853, June 25, 1981.]

This is consistent with Assembly Banking and Insurance Committee, Statement to Assembly, No. 1853, September 29, 1980, which provides:

This legislation eliminates an inconsistency between sections 4 and 10 of P.L.1972, c. 70 (the "New Jersey Automobile Reparation Reform Act"). Section 4 provides that all basic benefits under Personal Injury Protection coverage are payable to "the named insured and members of his family residing in his household." Section 10 benefits, however, which are optional benefits, are made available to the "named insured," without reference to members of his family. This bill corrects this oversight, making...