Donato v. Market Transition Facility of New Jersey

• Decision Date: 21 March 1997
• Citation: 690 A.2d 631,299 N.J.Super. 37
• Parties: Colleen DONATO, Plaintiff-Respondent, v. MARKET TRANSITION FACILITY OF NEW JERSEY, serviced by AMGRO, Inc., and Amgro, Inc., Defendants-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 37

299 N.J.Super. 37

690 A.2d 631

Colleen DONATO, Plaintiff-Respondent, v. MARKET TRANSITION FACILITY OF NEW JERSEY, serviced by AMGRO Inc., and Amgro, Inc., Defendants-Appellants.

Superior Court of New Jersey Appellate Division.

Argued March 12, 1997.

Decided March 21, 1997.

Patricia W. Holden, Westmont, for defendants-appellants (Martin, Gunn & Martin, attorneys; Ms. Holden and William J. Martin, on the brief).

John J. Palitto, Jr. , Wilmington, DE, for plaintiff-respondent.

Before Judges SHEBELL, PAUL G. LEVY and BRAITHWAITE.

The opinion of the court was delivered by

SHEBELL, P.J.A.D.

Defendant, Market Transition Facility of New Jersey ("MTF"), appeals from a summary judgment order requiring it to provide Underinsured (UIM) coverage to plaintiff, Colleen Donato, as well as the denial of its motion for summary judgment. We affirm.

On June 16, 1992, plaintiff was an occupant in a motor vehicle owned by her male domestic companion. She was injured when the vehicle of a tortfeasor struck the vehicle in which she was a passenger. It appears that at the time of the accident, although plaintiff was living with her companion, they were not married and she was not a named insured on his policy, which he had purchased from MTF. Plaintiff did not own a vehicle of her own, nor was she a named insured under any other insurance policy. The MTF policy had uninsured motorist coverage in the amount of $250,000 per person/$500,000 per accident. UIM coverage was included under the UM coverage. An "insured" for the purposes of the UIM coverage was defined as the insured himself or any family member or any other person occupying the covered auto.

The tortfeasor had coverage in the amount of $25,000 per person. The tortfeasor's insurance carrier offered to settle with plaintiff for the maximum amount of the policy. Plaintiff, pursuant to Longworth v. Van Houten, 223 N.J.Super. 174, 538 A.2d 414 (App.Div.1988), informed MTF of the settlement offer and requested that MTF indicate whether it intended to waive its subrogation rights. Also included in plaintiff's letter was the following:

Please be advised in consideration of the recent decision in Aubrey v. The Harleysville Insurance Companies, ¹ that Colleen Donato had no policy of insurance at the time of the accident, and her affidavit of no insurance is already in your files.

In reply, MTF waived its subrogation rights and requested that plaintiff choose an arbitrator so that "we can begin to move this case toward a resolution." Plaintiff accepted the $25,000 and both parties named arbitrators. The matter was given an arbitration date, however, arbitration was delayed due to MTF's request to have plaintiff examined by an independent doctor. MTF then advised plaintiff, in a letter dated November 6, 1995, that it was denying her claim based on Aubrey. As a result, plaintiff filed a Complaint in the Law Division for a declaratory judgment that she was covered under the MTF policy's UIM provision. MTF filed an Answer denying liability. Both parties moved for summary judgment, and after oral argument on March 29, 1996, the judge denied MTF's motion, granted plaintiff's motion and ordered arbitration. The judge then stayed his order pending appeal. With consent of the parties, the judge deemed his orders final pursuant to R. 4:42-1(b).

MTF's sole argument on appeal is that under Aubrey it was entitled to summary judgment since the insurance policy was not "personal" to plaintiff, and therefore, she should not be permitted recover under it. We reject this argument and express our hope that the result here will highlight the confusion, unfairness, and extensive litigation that has followed Aubrey. See Anthony J. Monaco, Underinsured Motorist Benefits Should Not Run with the Insured, 147 N.J.L.J. 1104 (March 10, 1997). We implore our Supreme Court to revisit the issue, which we believe to be of constitutional dimensions.

The plaintiff in Aubrey, supra, was involved in a car accident while operating a vehicle owned by Chris Koch Toyota ("Koch") with Koch's permission. 140 N.J. at 399, 658 A.2d 1246. She was under contract with Koch to purchase the vehicle, but was awaiting approval of financing in order to close the sale and transfer title. Ibid. Plaintiff had an automobile insurance policy with UIM limits of $15,000 and liability limits of $15,000 per person/$30,000 per accident. Id. at 399-400, 658 A.2d 1246. She sustained injuries as a result of an accident while driving the Koch vehicle and settled with the insurance companies of the tortfeasors for $15,000 and $25,000, the limits of both policies. Id. at 400, 658 A.2d 1246. Since she had recovered $40,000 under the tortfeasors' insurance policies, she was not "underinsured," as defined by N.J.S.A. 17:28-1.1e, with respect to her own policy. Ibid. Therefore, she attempted to recover under Koch's insurance policy, issued by the Harleysville Insurance Companies ("Harleysville"), which had $1,000,000 of liability and UIM coverage and extended this coverage to occupants of the vehicle. Id. at 400-01, 658 A.2d 1246.

Plaintiff filed a declaratory judgment action to establish UIM coverage under the Harleysville policy. Id. at 401, 658 A.2d 1246. Harleysville's cross-motion to dismiss was granted by the Law Division. Ibid. We reversed and held that plaintiff was entitled to UIM coverage. Id. at 402, 658 A.2d 1246. The Supreme Court reversed and concluded "that UIM coverage, which is limited to the amount contained in the insured's policy, is 'personal' to the insured." Id. at 403, 658 A.2d 1246. The Court reasoned as follows:

Coverage is linked to the injured person, not the covered vehicle. UIM coverage provides "as much coverage as the insured is willing to purchase, for his or her protection subject only to the owner's policy liability limits for personal injury and property damages to others."

[Id. at 403, 658 A.2d 1246 (citations omitted).]

The Court further reasoned that Aubrey's expectations, when she purchased her insurance, were such that she could not have reasonably anticipated "the possibility of receiving benefits under UIM endorsements issued in favor of Koch." Id. at 404, 658 A.2d 1246. We do not quarrel with the ultimate outcome in Aubrey, as we believe that both the "step-down" clause and the reasonable expectation of Koch, the purchaser of the policy, militate against coverage.

However, the Aubrey Court declared:

The right to recover UIM benefits depends on the UIM limits chosen by the insured. Recovery does not depend on the limits of other UIM policies, such as the mother's policy in Landi, or Koch's policy in the instant case.

[Id. at 405, 658 A.2d 1246.]

In Landi v. Gray, 228 N.J.Super. 619, 550 A.2d 768 (App.Div.1988), we allowed the injured plaintiff, who had purchased insurance for herself, but was not underinsured as to her own policy, to obtain coverage from the UIM provision in her mother's insurance policy because she was a family member. Id. at 623-24, 550 A.2d 768. Landi was injured in an accident when she borrowed her brother's car and allowed a friend, who was not insured, to operate the car. Id. at 620, 550 A.2d 768. The friend lost control of the car and hit a tree. Ibid. Plaintiff's brother's insurance policy had liability coverage of $15,000 per person/$30,000 per accident. Id. at 620-21, 550 A.2d 768. Plaintiff had purchased auto insurance with the same liability coverage as her brother's policy and UIM coverage of $15,000. Id. at 623, 550 A.2d 768. They both lived with their mother who had purchased auto insurance in the amount of $100,000 per person/$300,000 per accident with $100,000 UIM coverage. Id. at 621, 550 A.2d 768. Plaintiff sought to recover under her mother's UIM coverage, as she was not underinsured with respect to her brother's policy. Id. at 621-22, 624, 550 A.2d 768. We held that plaintiff was entitled to recover under her mother's policy, as that was "[t]he only policy under which plaintiff is afforded underinsured motorist coverage that covers this accident...." Id. at 624, 550 A.2d 768. The Aubrey court considered this result inappropriate, apparently because Landi's recovery was in excess of the limits of her own UIM coverage. Aubrey, supra, 140 N.J. at 405, 658 A.2d 1246.

In Aubrey, supra, the Supreme Court relied in part on its reasoning that UIM coverage is "personal" to the insured, and is "linked" to the injured person and not the "covered" vehicle. 140 N.J. at 403, 658 A.2d1246. The Court also supported its holding by reference to the reasonable expectations of the "insured," but it looked only to the reasonable expectations of the injured party (Aubrey) under that person's contract of insurance, even though no issue concerning interpretation of the injured party's policy was before the Court. Id. at 404, 658 A.2d 1246. Instead, in both Aubrey and Landi the issue was whether the purchaser reasonably expected that the injured plaintiff would be covered under the purchaser's insurance contract. That contract, being unambiguous, could not constitutionally be impaired absent substantial conflict with public policy, which in these circumstances just does not appear to exist.

Clear language providing UIM coverage to both family members and occupants of a covered vehicle is standard in most insurance policies where the insured has purchased UIM coverage. See New Jersey Manufacturers v. Breen, 297 N.J.Super. 503, 511-12, 688 A.2d 647 (App.Div.1997); Calabrese v. Selective Insurance Company of America, 297 N.J.Super. 423, 432-33, 688 A.2d 606 (App.Div.1997); Cook-Sauvageau v. PMA Group, 295 N.J.Super. 620, 622, 685 A.2d 978 (App.Div.1996); Market Transition Facility v. Parisi-Lusardi, 293 N.J.Super. 471, 475-76, 681 A.2d 660 (App.Div.1996); and Taylor v. National Union Fire Ins. Co., 289 N.J.Super. 593, 596-97, 674 A.2d 634 (App.Div.), certif. denied, 145 N.J. 376, 678 A.2d 716 (1996). Undoubtedly, this coverage has been contemplated by both the...