Gorton v. Reliance Ins. Co.

• Decision Date: 18 September 1978
• Citation: 391 A.2d 1219,77 N.J. 563
• Parties: Jean GORTON, Mari Ferry, and Bernard Levenberg, as Administrator ad Prosequendum of the Estate of Judy Levenberg, Deceased, Plaintiffs-Respondents, v. RELIANCE INSURANCE COMPANY, Utica Mutual Insurance Company, and Government Employees Insurance Company, Defendants-Appellants. EMPIRE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Philip J. DEMPSEY, Defendant-Respondent, and John P. Gilmore, Defendant.
• Court: New Jersey Supreme Court

Page 563

77 N.J. 563

391 A.2d 1219

Jean GORTON, Mari Ferry, and Bernard Levenberg, as Administrator ad Prosequendum of the Estate of Judy Levenberg, Deceased, Plaintiffs-Respondents, v. RELIANCE INSURANCE COMPANY, Utica Mutual Insurance Company, and Government Employees Insurance Company,

Defendants-Appellants.

EMPIRE MUTUAL INSURANCE COMPANY, Plaintiff-Appellant, v. Philip J. DEMPSEY, Defendant-Respondent, and John P. Gilmore, Defendant.

Supreme Court of New Jersey.

Argued Jan. 19, 1977.

Decided Sept. 18, 1978.

Anthony C. Stuart, Newark, for defendant-appellant Government Emp. Ins. Co. (Hansen, Pantages, Sellar & Zavesky, Newark, attorneys; Louis J. Pantages and Anthony C. Stuart, Newark, of counsel and on the brief).

Thomas B. Mannion, New Brunswick, for defendant-appellant Reliance Ins. Co. (Lynch, Mannion, Lutz & Lewandowski, New Brunswick, attorneys; Thomas B. Mannion, on the brief).

William E. Grant, Bloomfield, for plaintiff-appellant Empire Mut. Ins. Co. (Edward A. Harmon, Bloomfield, attorney; Norman Zeiner, Red Bank, on the brief).

Leonard Finkelstein, Old Bridge, for plaintiffs-respondents Gorton, Ferry and Levenberg (Heilbrunn, Finkelstein, Heilbrunn, Garruto & Galex, Old Bridge, attorneys; Martin W. Yazgier, Old Bridge, on the brief).

David P. Loughran, Toms River, for defendant-respondent Philip J. Dempsey (Sutton, Ward, Sutton, Hein & O'Malley, Toms River, attorneys; Lowell A. Berg, Toms River, on the brief).

PER CURIAM.

These two cases, argued here together but not formally consolidated, pose a common question of availability of uninsured motorist (UM) coverage. They arise out of a two-vehicular collision of July 16, 1971 in Holmdel, New Jersey. Plaintiffs Gorton and Ferry and plaintiff Levenberg's decedent, Judy Levenberg (along with another, unidentified person not here involved), were passengers in an automobile owned and operated by one Richard Chamos. Dempsey, defendant in the companion case, was operating a vehicle owned by defendant Gilmore when it was struck by the Chamos car. As a result of the accident Gorton, Ferry and Dempsey all sustained personal injuries, and Judy Levenberg, Chamos, and the fourth passenger in the Chamos vehicle were killed.

In the ensuing action for personal injuries and wrongful death the parties agreed that Chamos alone was at fault and responsible for the collision. His liability insurance carrier, which provided bodily injury liability coverage in the then statutory minimum amounts of $10,000 for each person and $20,000 per accident, ¹ offered its policy limits in settlement of all claims against Chamos, who was otherwise judgment-proof. Of the total of $20,000 available, Gorton settled for $4285.71, Ferry for $2042.85, Levenberg for $2673.44, Dempsey for $1000, and the balance went to the fifth claimant. It is alleged, and we assume for purposed of this litigation, that these amounts would not adequately compensate the various claimants before us for their injuries and damages.

Prior to executing releases reflecting this settlement plaintiffs Gorton, Ferry and Levenberg made a demand for arbitration, seeking recovery under the UM endorsements of their own insurance policies covering them at the time of the accident. ² Gorton claimed UM coverage under a Government Employees policy, Ferry under a Utica Mutual policy, and Levenberg under a Reliance policy. After instituting arbitration proceedings (and presumably because the carriers resisted arbitration, although the record does not set this forth specifically) these plaintiffs filed a declaratory judgment suit against their insurance companies, alleging that the liability insurance on the Chamos vehicle was "so inadequate as to render (that) vehicle uninsured within the meaning of their respective policies" and seeking a judgment to that effect. They asked as well that the judgment declare each of them entitled to the difference between what they would receive under the terms of the settlement with Chamos' liability insurer and the amounts available under their respective UM endorsements ($10,000 in each instance). The carriers filed answers denying that the Chamos vehicle was uninsured, either within the meaning of the policies or of the financial responsibility law.

Thereafter the parties brought cross-motions for summary judgment. The trial court granted the carriers' motions holding that the Chamos vehicle was not uninsured, either within the specific language of the respective policies under which UM protection was sought or within the meaning of N.J.S.A. 39:6-46, governing the requirements for liability policies under the Motor Vehicle Security-Responsibility Law. The Appellate Division reversed, Gorton v. Reliance Insurance Co., 137 N.J.Super. 558, 350 A.2d 77 (1975), holding that

since the minimum statutory limit for bodily injury or death of $10,000 per person was not available to each plaintiff (from the Chamos liability policy), the Chamos automobile was actually uninsured as to the difference between the amount of insurance coverage available and the minimum statutory limit of $10,000. Each plaintiff is entitled to recover under his UM endorsement the full amount of his damages up to a total of $10,000, less the amount already received by way of settlement with Chamos' insurance company. (137 N.J.Super. at 566, 350 A.2d at 81.)

On defendants' petition we certified the cause to review this holding. 70 N.J. 273, 359 A.2d 485 (1976).

In the companion case defendant Dempsey, who, it will be recalled, settled his personal injury claim against Chamos for $1000, sought to recover under the UM provisions of the insurance policy issued by Empire Mutual Insurance Company covering the Gilmore vehicle which he, Dempsey, was driving at the time of the accident. Dempsey filed a petition in arbitration against Empire Mutual, and the carrier responded by bringing this declaratory judgment action to enjoin arbitration. The trial court found for defendant, concluding that the Chamos vehicle was uninsured for the difference between Dempsey's settlement with Chamos in the amount of $1,000 and the limit of UM coverage, $10,000. ³ While Empire Mutual's appeal from this determination was pending in the Appellate Division, we certified the cause on the Court's own motion. 70 N.J. 527, 361 A.2d 541 (1976).

We look first to the UM endorsements in the policies before us ⁴ to determine whether UM coverage is afforded to these claimants under the language of those endorsements. The significant provisions are as follows:

The company will pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured highway vehicle because of bodily injury or property damage, caused by accident and arising out of the ownership, maintenance or use of such uninsured highway vehicle; provided, for the purposes of this coverage, determination as to whether the insured or such representative is legally entitled to recover such damages, and if so the amount thereof, shall be made by agreement between the insured or such representative and the company or, if they fail to agree, by arbitration.

No judgment against any person or organization alleged to be legally responsible for the bodily injury or property damage shall be conclusive, as between the insured and the company, of the issues of liability of such person or organization or of the amount of damages to which the insured is legally entitled unless such judgment is entered pursuant to an action prosecuted by the insured with the written consent of the company.

"uninsured highway vehicle" means:

(a) A highway vehicle with respect to the ownership, maintenance or use of which there is, in at least the amounts specified by the financial responsibility law of the state in which the insured highway vehicle is principally garaged (here, New Jersey), no bodily injury and property damage liability bond or insurance policy applicable at the time of the accident with respect to any person or organization legally responsible for the use of such vehicle, or with respect to which there is a bodily injury and property damage liability bond or insurance policy applicable at the time of the accident but the company writing the same denies coverage thereunder or is or becomes insolvent * * *. (Emphasis added.)

Our examination of the foregoing need be little more than cursory, for it is readily apparent that the Chamos automobile was not an "uninsured highway vehicle" within the meaning of the UM endorsement, inasmuch as at the time of the accident it was covered for bodily injury and property damage liability by an insurance policy "in at least the amounts specified by the financial responsibility law" of the State of New Jersey. Indeed, all of the claimants concede that the Chamos vehicle does not qualify as "uninsured" under the terms of this policy provision, and that on the face of the UM endorsements coverage is not available to them.

The thrust of the injured claimants' argument, then, is not that the language of the UM endorsement provides coverage in the situation at hand, but rather that as a result of the endorsement's definition of "uninsured highway vehicle" the endorsement itself fails to provide the coverage mandated by law, N.J.S.A. 17:28-1.1. That statutory provision at the time of the accident in this case, L.1968, C. 385, § 2, provided:

No automobile liability policy * * * of insurance * * * shall be delivered or issued for delivery in this State * * * unless coverage is offered in connection therewith, in limits for bodily injury or death set forth in section 9 of chapter 174 of the laws of 1952 (C.39:6-69), * * * for payment of all or part of the sums which the insured or his legal representative shall be legally entitled to recover as damages from the operator or owner of an uninsured automobile, or hit and run automobile as defined in section 18 of said chapter 174 (C.39:6...