Maimone v. Liberty Mut. Ins. Co.

• Decision Date: 24 June 1997
• Parties: Raymond MAIMONE, Plaintiff-Respondent, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant/Third-Party Plaintiff-Respondent, v. IFA INSURANCE COMPANY, Third-Party Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 299

302 N.J.Super. 299

695 A.2d 341

Raymond MAIMONE, Plaintiff-Respondent, v. LIBERTY MUTUAL INSURANCE COMPANY, Defendant/Third-Party Plaintiff-Respondent, v. IFA INSURANCE COMPANY, Third-Party Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Argued May 27, 1997.

Decided June 24, 1997.

Paul T. Fader, Roseland, for appellant (Connell, Foley & Geiser, LLP, attorneys; Richard D. Catenacci, of counsel; Mr. Fader, on the brief).

Brian R. Martinotti, Montvale, for respondent Raymond Maimone (Beattie Padovano, attorneys; Mr. Martinotti, on the brief).

Walter F. Skrod, Paramus, for respondent Liberty Mutual Insurance Company.

Before PETRELLA and KIMMELMAN, JJ.

The opinion of the court was delivered by

KIMMELMAN, J.A.D.

This appeal involves a dispute between two insurance carriers as to which of the two is responsible as the primary carrier and which is responsible as the excess carrier with respect to underinsured motorist (UIM) benefits for injuries suffered by plaintiff.

While driving a non-owned vehicle (host vehicle) with the consent of the owner, plaintiff was involved in a collision and sustained personal injuries. The tortfeasor had minimal coverage and, pursuant to Longworth ¹ approval, plaintiff settled his claim against the tortfeasor for the maximum amount available. The owner of the host vehicle was insured by defendant/third-party plaintiff Liberty Mutual Insurance Company (Liberty Mutual) with UIM coverage of $100,000. Third-party defendant IFA Insurance Company (IFA) insured plaintiff's personal vehicle with UIM coverage of $250,000 per person/$500,000 per accident.

Plaintiff filed an action against Liberty Mutual seeking to declare it the carrier primarily responsible for UIM benefits and to compel UIM arbitration. Liberty Mutual answered and filed a third-party complaint against IFA. Liberty Mutual then moved for summary judgment relying upon Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 658 A.2d 1246 (1995), for the proposition that IFA, as plaintiff's personal carrier, was responsible to pay his UIM benefits. IFA cross-moved for summary judgment contending that the "Other Insurance" provision of its policy renders Liberty Mutual's UIM coverage primary and IFA's UIM coverage excess. The trial judge granted Liberty Mutual's motion holding that IFA was the primary UIM carrier.

IFA appeals contending that American Reliance Ins. Co. v. The American Cas. Co. of Reading, 294 N.J.Super. 238, 683 A.2d 205 (App.Div.1996), and Royal Ins. Co. v. Rutgers Cas. Ins. Co., 271 N.J.Super. 409, 638 A.2d 924 (App.Div.1994), provide for the enforceability of "Other Insurance" clauses in insurance contracts. We reverse and hold that Liberty Mutual is primarily liable.

At the outset we note, as counsel have pointed out, that there are conflicting decisions rendered by different panels of this court with respect to the same or similar issues as here presented.

In Frankel v. Motor Club of America Ins. Co., 298 N.J.Super. 250, 689 A.2d 728 (App.Div.1996), the injured plaintiff was a passenger in the insured vehicle rather than the driver of a host vehicle as here. In Frankel, the injured plaintiff's personal insurer was Motor Club and her policy carried UIM coverage of $50,000. The vehicle in which she was a passenger was covered by a $100,000 UIM coverage policy issued by Harleysville Insurance Company. Primary coverage was denied by each. The Law Division ruled that the injured plaintiff was entitled to resort only to the Motor Club UIM coverage which she had purchased for herself. Motor Club appealed contending that the "Other Insurance" provision of its policy mandated that Harleysville be deemed the carrier primarily responsible for UIM coverage for plaintiff and placed reliance upon our pre-Aubrey decision in Royal Insurance Co. v. Rutgers Casualty Insurance Co., 271 N.J.Super. 409, 638 A.2d 924 (App.Div.1994).

In Royal, the injured claimants' personal insurance policy with Royal contained an "Other Insurance" provision as follows:

For any covered auto you own this policy provides primary insurance. For any covered auto you don't own, the insurance provided by this policy is excess over any other collectible insurance.

[Id. at 415, 638 A.2d 924.]

Judge Michels, writing for the court in Royal, upheld the effect of the "Other Insurance" clause contained in the injured claimant's personal injury policy holding that the UIM coverage pertaining to the non-owned vehicle in which she was driving was primary. Judge Michels wrote:

[W]e recognize that underinsured motorist coverage has been characterized by some courts as being "personal to an insured", apparently because this type of insurance is acquired solely at the option of the insured and "provid[es] 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." However, this characterization of underinsured motorist coverage cannot overcome the clear and unambiguous language of a policy and render the policy's "excess" clause void and unenforceable. It is fundamental that in the absence of a statutory prohibition to the contrary, an insurance company has a right to impose whatever conditions it desires prior to assuming its obligations, including providing whether its policy shall be primary to or excess over other collective insurance ....

[Id. at 419, 638 A.2d 924 (citations omitted) (emphasis added).]

Notwithstanding our holding in Royal, the Frankel panel suggested that Royal "was overruled sub silentio by Aubrey [ ]" and upheld the trial court's determination that the injured plaintiff must resort to her personal insurance policy for UIM benefits. Frankel, supra, 298 N.J.Super. at 254, 689 A.2d 728. Nevertheless, the panel did recognize without comment our holding in American Reliance Insurance Co. v. The American Casualty Company of Reading, 294 N.J.Super. 238, 683 A.2d 205 (App.Div.1996). Frankel is not controlling on the issue here presented.

In American Reliance, the injured claimant was driving a van owned by her employer at the time of the accident. A dispute arose as to which insurance carrier, claimant's personal carrier or her employer's carrier, was responsible for UIM benefits after claimant had settled for the total available liability afforded by the tortfeasor's policy. Claimant's personal policy contained an "Other Insurance" clause. The trial judge ignored the "Other Insurance" clause and, relying upon Aubrey, determined that the UIM coverage of claimant's personal policy applied. On appeal, we emphasized that the contractual terms of the insurance policies must be observed and noted that the critical terms of the respective policies there involved were identical to the terms construed in Royal. We saw no reason in Aubrey requiring us to reach a different holding than that reached in Royal and therefore reversed the trial court concluding that the "Other Insurance" clause in claimant's policy rendered the policy issued to the employer responsible for UIM coverage.

Subsequent to our decisions in Frankel and American Reliance, we decided Koniecpolski v. Worldwide Ins. Group, 299 N.J.Super. 275, 690 A.2d 1088 (App.Div.1997). There, at the time of the accident, the injured claimant was driving his ex-wife's vehicle which was covered by insurance. The ex-wife's policy had UIM coverage of $50,000 per person/$100,000 per accident and did not contain the claimant's name as an additional insured or as a resident spouse. The claimant had his own insurance policy with UIM coverage of $250,000 per person/$500,000 per accident. The claimant's policy had an "Other Insurance" clause substantially identical to the "Other Insurance" clause contained in the IFA policy insuring plaintiff in this appeal. As in this appeal, a dispute arose between the two carriers as to which was obligated to provide the claimant with UIM coverage.

The panel of this court considering Koniecpolski relied upon...