Magnifico v. Rutgers Cas. Ins. Co.

• Decision Date: 12 May 1998
• Citation: 153 N.J. 406,710 A.2d 412
• Parties: Kathleen MAGNIFICO and Carl Magnifico, Plaintiffs-Appellants and Cross-Respondents, v. RUTGERS CASUALTY INSURANCE COMPANY, Computer Science Corporation d/b/a CSC Insurance Company as servicing carrier for New Jersey Full Underwriters Insurance Association and The Joint Underwriters Association, Defendants-Respondents and Cross-Appellants.
• Court: New Jersey Supreme Court

Page 406

153 N.J. 406

710 A.2d 412

Kathleen MAGNIFICO and Carl Magnifico, Plaintiffs-Appellants and Cross-Respondents, v. RUTGERS CASUALTY INSURANCE COMPANY, Computer Science Corporation d/b/a CSC Insurance Company as servicing carrier for New Jersey Full Underwriters Insurance Association and The Joint Underwriters Association, Defendants-Respondents and Cross-Appellants.

Supreme Court of New Jersey.

Argued Jan. 6, 1998.

Decided May 12, 1998.

Roy H. Mossi, Elmwood Park, for plaintiffs-appellants and cross-respondents (Marcus & Levy, attorneys).

Robert J. Maloof, Hackensack, for defendants-respondents and cross-appellants CSC Insurance Company as servicing carrier for New Jersey Full Underwriters Insurance Association and The Joint Underwriters Association (Hein, Smith, Berezin, Maloof, Davidson & Jacobs, attorneys; Mr. Maloof and Carla H. Madnick, on the briefs).

Susan L. Moreinis, Collingswood, for defendant-respondent and cross-appellant Rutgers Casualty Insurance Company.

The opinion of the Court was delivered by

STEIN, J.

This appeal, together with New Jersey Manufacturers Insurance Co. v. Breen, 153 N.J. 424, 710 A.2d 421 (1998), and Grant v. Amica Mutual Insurance Co., 153 N.J. 433, 710 A.2d 426 (1998), also decided today, requires that we resolve issues of underinsured motorist (UIM) coverage under multiple insurance policies that were anticipated by our decision in French v. New Jersey School Board Ass'n Insurance Group, 149 N.J. 478, 694 A.2d 1008 (1997). Our acknowledgment in French, id. at 481, 694 A.2d 1008, that UIM insurance has been characterized as both a "sleeping giant," Green v. Selective Ins. Co. of Am., 144 N.J. 344, 349, 676 A.2d 1074 (1996), and a "legal iceberg," Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law § 26.1 at 355 (1998), provides a context for the issues to be addressed. Our objective is to reduce the complexity of UIM coverage issues to manageable proportions by clarifying and simplifying the applicable legal principles. In the process, we trust that over time the reasonable expectations of both the insurers that write that coverage and the insureds that purchase it generally can be fulfilled.

Kathleen Magnifico sought UIM coverage after being injured in an automobile accident while she was a passenger in a friend's car. The host's insurance policy had a UIM limit of $250,000. Magnifico's personal policy provided $100,000 of UIM coverage. Both UIM limits exceeded the liability limit carried by the tortfeasor. Magnifico seeks access to the sum of those two UIM policies. In an unpublished opinion, the Appellate Division held that the host policy provided primary UIM coverage and Magnifico's personal policy provided excess coverage, but that Magnifico's recovery of UIM benefits could not exceed the limit of coverage in her own policy, reduced by the amount of her recovery from the tortfeasor.

I

On October 19, 1990, Magnifico suffered serious spinal injuries in a car accident. Magnifico and her husband Carl were passengers in a car owned and driven by Grace DeNichilo. As DeNichilo made a left turn at a Weehawken intersection controlled by a traffic officer, Frank Cameron drove through the intersection, against the traffic officer's signal, and hit DeNichilo's car. Cameron was driving a car owned by Beverly Manning.

At the time of the accident, CSC Insurance Company (CSC), as servicing carrier for the New Jersey Full Underwriters Association and the Joint Underwriters Association, insured DeNichilo's car. That policy provided UIM coverage with a limit of $250,000. Magnifico's automobile policy was with Rutgers Casualty Insurance Company (Rutgers). The Rutgers policy provided UIM coverage with a limit of $100,000. Manning's State Farm Policy had a liability limit of $25,000.

Magnifico settled with Manning for the $25,000 limit of Manning's liability policy. Magnifico then sought UIM benefits from both CSC and Rutgers.

Rutgers responded that its coverage, according to the "other insurance" provision in Magnifico's policy, would be excess to that of CSC. The Rutgers "other insurance" clause states:

If there is other applicable similar insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide with respect to a vehicle you do not own shall be excess over any other collectible insurance.

DeNichilo's policy with CSC contained a nearly identical "other insurance" provision. CSC contended that the two carriers should therefore divide the payment of any arbitration award on a pro rata basis.

In August 1994, Magnifico filed a declaratory judgment action to determine the obligations of each insurer. Rutgers cross-claimed and counterclaimed for a declaration that its UIM coverage was excess. In April 1995, Magnifico moved for summary judgment declaring CSC to be the primary insurer and the Rutgers policy to be excess. Rutgers cross-moved for summary judgment. It agreed that the CSC policy was primary, but argued that the anti-stacking provision of N.J.S.A. 17:28-1.1c prevented Magnifico from collecting anything beyond the $250,000 available under the CSC policy.

Prior to oral argument on the summary judgment motions, and prior to this Court's decision in Aubrey v. Harleysville Insurance Cos., 140 N.J. 397, 658 A.2d 1246 (1995), CSC stipulated that its policy was primary with respect to Magnifico's UIM claims. At oral argument the trial court acknowledged that stipulation and also denied Rutgers' cross-motion for summary judgment on its anti-stacking argument. Inadvertently, the Law Division judge never signed an order memorializing his rulings.

After this Court issued its decision in Aubrey Rutgers moved for reconsideration, asking the court to consider the effect of Aubrey and urging the court to revisit the anti-stacking question. Rutgers argued that, based on Aubrey, Magnifico was entitled to UIM recovery only up to the $100,000 UIM limit established by her personal policy. Further, Rutgers contended that Magnifico could recover the $100,000 only from CSC because Aubrey did not disturb the "other insurance" provisions that made CSC primary in Magnifico's case. Therefore, Rutgers argued, Magnifico could collect nothing under the Rutgers policy because the $100,000 limit she chose was less than the $250,000 cap on the CSC policy.

CSC also moved for reconsideration based on an alternative interpretation of Aubrey. CSC agreed with Rutgers' position that Magnifico should be limited to the $100,000 limit she chose, but it also read Aubrey to mean that Magnifico could collect only from Rutgers because that was the insurer she chose.

The trial court reiterated its rejection of Rutgers' anti-stacking argument, and rejected CSC's position that Aubrey restricted Magnifico to collecting from Rutgers. The court agreed with Rutgers that Magnifico was entitled only to $75,000 in UIM benefits (the $100,000 limit she chose, less the $25,000 she received from Manning's insurer). Because Magnifico was not entitled to more than the $250,000 limit on the CSC policy, the court also agreed that the Rutgers excess policy was not exposed.

On appeal, Magnifico argued that CSC should be bound to its stipulation that it was the primary carrier, and that the trial court incorrectly interpreted Aubrey and unduly limited her access to UIM coverage. CSC cross-appealed, arguing that the trial court incorrectly held CSC liable to Magnifico as the primary carrier. Rutgers conditionally cross-appealed on the anti-stacking issue: if the Appellate Division were to hold that Magnifico could collect more than $100,000, Rutgers sought reversal of the ruling that it was to provide excess coverage.

The Appellate Division rejected Magnifico's attempt to hold CSC to its stipulation, finding that CSC stipulated only that its coverage was primary, not that the full $250,000 of UIM benefits would be available to Magnifico. The panel agreed with Rutgers' position that Aubrey prevented Magnifico from collecting anything more than the $100,000 UIM limit that she selected, reduced by the amount of her recovery from the tortfeasor. Rejecting CSC's contention, the panel held that Magnifico's recovery of UIM benefits would be from CSC rather than Rutgers, reasoning that our decision in Aubrey did not affect the rule that policy language should determine questions of priority between two applicable policies.

We granted Magnifico's petition for certification as well as the cross-petitions of CSC and Rutgers. 149 N.J. 407, 408, 694 A.2d 193 (1997).

II

Magnifico's petition and the cross-petitions assert essentially the same positions advanced by the parties in the Appellate Division. The principal legal issues before us are the total amount of UIM coverage to which Magnifico is entitled, whether the anti-stacking provision of N.J.S.A. 17:28-1.1c limits that available coverage, and the respective liability of CSC and Rutgers for payment of Magnifico's UIM benefits. Relevant but distinctly collateral to those issues is Magnifico's contention that CSC is estopped from challenging its stipulation before the Law Division that its policy provides primary UIM coverage to Magnifico. Magnifico's other collateral argument is that the Law Division's May 25, 1995 rulings that the CSC policy was primary and that both the CSC and Rutgers policies must contribute to the payment of her UIM benefits were "final" rulings not subject to reconsideration or modification.

In view of our ultimate disposition affirming the Appellate Division's determination that the CSC policy is primary and the Rutgers policy excess, infra at 416-17, 710 A.2d at 417, we are satisfied that Magnifico's estoppel argument is moot and we decline to address it.

We are unpersuaded by Magnifico's contention that the Law Division's ruling on May 25, 1995, that Magnifico was entitled to UIM benefits from both...