Fernandez v. Nationwide Mut. Ins.
| Citation | 402 N.J. Super. 166,952 A.2d 1156 |
| Decision Date | 12 August 2008 |
| Docket Number | No. A-4849-06T1,A-4849-06T1 |
| Parties | Sebastian FERNANDEZ, Plaintiff-Respondent, v. NATIONWIDE MUTUAL FIRE INSURANCE COMPANY, Defendant-Appellant, and Proformance Insurance Company, Defendant. |
| Court | Superior Court of New Jersey |
Christine M. Mercado, argued the cause for appellant (Richard D. Millet & Associates, LLC, attorneys, Somerville; Ms. Mercado and Richard D. Millet, of counsel and on the brief).
Anthony V. D'Elia, Secaucus, argued the cause for respondent (Chasan Leyner & Lamparello, attorneys; Mr. D'Elia, on the brief).
Before Judges PARRILLO, GILROY and BAXTER.
The opinion of the court was delivered by
GILROY, J.A.D.
This is a declaratory judgment action. Plaintiff Sebastian Fernandez filed a complaint seeking to resolve a dispute between himself and defendant Nationwide Mutual Fire Insurance Company his personal injury protection (PIP) carrier, regarding the priority of their claims to the insurance proceeds of the third-party tortfeasors. Nationwide appeals from the April 13, 2007 order of the Law Division, which granted plaintiff's motion for summary judgment; denied its cross-motion for summary judgment; and directed the Clerk of the Court to pay plaintiff monies that had previously been deposited with the court by defendant Proformance Insurance Company, the tortfeasors' liability insurance carrier.
The issue presented on appeal is whether a PIP carrier's right to reimbursement for paid PIP benefits, pursuant to N.J.S.A. 39:6A-9.1, has priority over an insured's right to be made whole where the tortfeasor's insurance does not fully cover the insured's personal injury damages. The trial judge, believing a conflict exists between the appellate decisions in Knox v. Lincoln Gen. Ins. Co.,1 and IFA Ins. Co. v. Waitt,2 concerning whether a PIP carrier or its injured insured should have preference to the proceeds of a third-party tortfeasor's insurance policy, decided that IFA controlled and resolved the issue in favor of plaintiff. The judge concluded that a PIP carrier's statutory right to reimbursement "is triggered, only in the event that there are excess funds available."
We conclude that Knox and IFA are not in conflict, but rather address different issues under the PIP reimbursement statute, N.J.S.A. 39:6A-9.1. We determine that the issue presented is controlled by Knox and hold: that where a PIP carrier has paid benefits to its insured, it is entitled to reimbursement of those benefits from the insurance proceeds of a third-party tortfeasor, pursuant to N.J.S.A. 39:6A-9.1, even if the limits of the tortfeasor's insurance policy are insufficient to make the insured whole. Accordingly, we reverse.
On February 2, 2004, plaintiff was the owner and operator of an automobile insured by Nationwide when he was involved in an accident with a commercial vehicle owned by Go Pro Waste Services, Inc., and operated by Peter Garofalo (collectively, the tortfeasors). The tortfeasors' vehicle was insured by Proformance for personal injury liability coverage in the amount of $1,000,000. As a result of the accident, plaintiff suffered serious injuries and incurred medical expenses totaling $591,269.62. Nationwide paid plaintiff its PIP coverage limit of $250,000. On April 20, 2004, plaintiff filed a personal injury action against the tortfeasors. On July 14, 2004, Nationwide filed for inter-company arbitration against Proformance to recover the PIP benefits paid to plaintiff, together with interest, pursuant to N.J.S.A. 39:6A-9.1.
On September 20, 2005, Nationwide received an arbitration award against Proformance in the amount of $250,891.56. On November 3, 2005, plaintiff received a non-binding arbitration award against the tortfeasors in the amount of $1,841,269.62, which included excess medical expenses of $341,269.62. On February 23, 2006, plaintiff settled with the tortfeasors for $1,000,000, with Proformance paying plaintiff $749,108.44 and depositing the remaining $250,891.56, the amount awarded to Nationwide, into court, pending resolution of plaintiff's claim to those funds.
On May 30, 2006, plaintiff filed a declaratory judgment action against Nationwide and Proformance, seeking a declaration that "his claim to [the $250,891.56] takes priority over the Defendant Nationwide's arbitration award." On September 8, 2006, an order was entered granting leave to Proformance to deposit the amount of the arbitration award into court. Plaintiff and Nationwide cross-moved for summary judgment. Proformance did not assert a position on the motions. On April 13, 2007, the trial judge entered an order supported by an oral decision, granting plaintiff's motion and denying Nationwide's motion. In granting plaintiff summary judgment, the judge determined that plaintiff was entitled to be made whole for his injuries by receiving the full amount of Proformance's liability insurance proceeds before Nationwide was entitled to receive reimbursement.
On appeal, Nationwide argues that, as plaintiff's PIP carrier, it has a primary right of reimbursement over that of plaintiff, pursuant to N.J.S.A. 39:6A-9.1, even where the amount of the tortfeasors' insurance is insufficient to fully satisfy plaintiff's personal injury claims. Plaintiff counters that the PIP subrogation statute does not give Nationwide's claim priority over his claim; rather, it merely permits a PIP carrier to recoup the amount of paid PIP benefits directly from a tortfeasor's carrier when the tortfeasor did not maintain PIP coverage. Plaintiff contends that the facts of the present matter are more aligned with those in IFA, rather than Knox, and that we should affirm the decision of the trial court.
A trial court will grant summary judgment to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523, 666 A.2d 146 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).
On appeal, "the propriety of the trial court's order is a legal, not a factual, question." Pressler, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2008). "We employ the same standard that governs trial courts in reviewing summary judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J.Super. 162, 167, 704 A.2d 597 (App.Div), certif. denied, 154 N.J. 608, 713 A.2d 499 (1998).
This appeal requires us to address an issue raised in Selective Ins. Co. v. Nat'l Cont'l Ins. Co., 385 N.J.Super. 62, 71, 895 A.2d 1218 (App.Div.), certif. denied, 188 N.J. 218, 902 A.2d 1235 (2006), where the court stated that "there is an inherent conflict between injured victims who are required to obtain PIP coverage and their first-part[y] insurer's right to subrogate against a tortfeasor's liability carrier." Although the court acknowledged that there is a "philosophical" dispute between an injured insured and his or her PIP carrier when the amount of the tortfeasor's insurance coverage is not sufficient to satisfy the claims of both, the court was not required to resolve the issue under the facts of the case. Ibid.
We begin our analysis by stating the PIP reimbursement statute:
An insurer, health maintenance organization or governmental agency paying benefits pursuant to subsection a., b. or d. of section 13 of P.L. 1983, c. 362 (C.39:6A-4.3), personal injury protection benefits in accordance with section 4 or section 10 of P.L. 1972, c. 70 (C. 39:6A-4 or 39:6A-100), medical expense benefits pursuant to section 4 of P.L. 1998, c. 21 (C.39:6A-3.1) or benefits pursuant to section 45 of P.L. 2003, c. 89 (C.39:6A-3.3), as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain personal injury protection or medical expense benefits coverage, other than for pedestrians, under the laws of this State, including personal injury protection coverage required to be provided in accordance with section 18 of P.L. 1985, c. 520 (C.17:28-1.4), or although required did not maintain personal injury protection or medical expense benefits coverage at the time of the accident. In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer, health maintenance organization or governmental agency is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.
[N.J.S.A. 39:6A-9.1.]
Plaintiff contends that because the tortfeasors' liability insurance policy will be exhausted before his and Nationwide's claims are fully satisfied, that pursuant to IFA, he is entitled to be made whole before Nationwide receives PIP reimbursement. We disagree.
In IFA, the insured was paid more than $30,000 in PIP benefits by his PIP carrier. IFA, supra, 270 N.J.Super. at 622, 637 A.2d 941. The tortfeasor operated a commercial motor vehicle insured with a $75,000 single-limit liability policy. After the insured filed a personal injury complaint, the tortfeasor's carrier deposited its entire amount of coverage into court in the underlying liability action. Ibid. After the money was deposited, the...
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