New Jersey Mfrs. Ins. Co. v. Hardy

• Decision Date: 27 January 2004
• Citation: 840 A.2d 231,178 N.J. 327
• Parties: NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Plaintiff-Respondent, v. Bernie J. HARDY, Kason Cheeks and Haveron Total Health, P.A., Defendants-Appellants.
• Court: New Jersey Supreme Court

840 A.2d 231

178 N.J. 327

NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Plaintiff-Respondent, v. Bernie J. HARDY, Kason Cheeks and Haveron Total Health, P.A., Defendants-Appellants.

Supreme Court of New Jersey.

Argued October 20, 2003.

Decided January 27, 2004.

Douglass D. Burgess argued the cause for appellants (Cary & Icaza, Newark, attorneys; Robert R. Cary, on the brief).

Robert F. Cox, Cranford, argued the cause for respondent (McCreedy and Cox, attorneys).

Justice LaVECCHIA delivered the opinion of the Court.

This appeal is from an insurance-coverage declaratory judgment action. We must address whether an individual is entitled to claim Personal Injury Protection (PIP) coverage pursuant to N.J.S.A. 39:6A-1 to -35 (No Fault Act) under a personal automobile insurance policy when the precipitating accident occurred during work and involved the employer's motor vehicle. The defendant-claimant, Kayson Cheeks, was serving as a police officer in the City of Newark when he was injured while on patrol in a police cruiser. A divided Appellate Division panel determined that a specially equipped police car is not a "private passenger automobile" within the meaning of the No Fault Act's definition of "automobile" and held, therefore, that Cheeks was not entitled to PIP coverage. N.J. Mfrs. Ins. Co. v. Hardy, 357 N.J.Super. 19, 21-24, 813 A.2d 1230 (2003). This appeal is before us as of right as a result of the dissent by Judge Lisa. R. 2:2-1(a)(2). We reverse.

I.

Plaintiff New Jersey Manufacturers Insurance Co. (NJM) sold a Standard Personal Auto Policy (Policy) to defendant Bernie J. Hardy, Cheeks's father. On February 10, 2001, while on patrol in a police cruiser, Cheeks's vehicle was struck from the rear by another vehicle and he sustained bodily injuries. At the time of the accident, Cheeks lived with his father, and was insured under the Policy as a resident relative.

Defendant Haveron Total Health, P.A., treated Cheeks for his injuries. He submitted a claim for workers' compensation benefits and also sought PIP coverage under the Policy. NJM denied the claim on the basis that Cheeks's accident did not occur while he was a passenger in a "private passenger automobile." NJM also asserted that Cheeks's workers' compensation provider was responsible for this work-related automobile accident, not NJM as his PIP carrier. Haveron accepted assignment of Cheeks's claim and promptly sought arbitration under the Policy. NJM filed this declaratory judgment action in response.

Following the parties' submission of cross-motions for summary judgment, the motion court granted judgment to defendants. The court held that Cheeks was entitled to PIP coverage because, consistent with the definition found in N.J.S.A. 39:6A-2a, the police car was "a private vehicle" that "was not being used as a public or livery conveyance for passengers or [being] rent[ed] to others with a driver." In a subsequently issued written opinion, the court expanded on its oral decision, citing Simon v. CNA Insurance Co., 225 N.J.Super. 606, 543 A.2d 110 (App.Div.), certif. denied, 113 N.J. 350, 550 A.2d 461 (1988), to support its holding that a vehicle owned by a governmental entity can be "private" for purposes of entitlement to PIP benefits under the No Fault Act. The court also stated that the availability of workers' compensation does not preclude PIP coverage.

A divided Appellate Division panel reversed. Hardy, supra, 357 N.J.Super. 19, 813 A.2d 1230. The majority found no controlling case law on the question whether a police car is a "private passenger automobile," and held that it was not, because police cars are modified for "the hazards they routinely encounter." Id. at 23, 813 A.2d 1230. Noting that Cheeks may seek his costs through workers' compensation, the majority added that Cheeks should not be permitted "to transfer the cost of his work-related injuries to [NJM and,] thus, entirely circumvent[ ] the statutory forum [of workers' compensation] available to him." Id. at 23-24, 813 A.2d 1230.

The dissent, on the other hand, construed the No Fault Act as excluding from PIP coverage only automobiles used for public livery or rented with a driver, and observed that police cars met neither of those statutory exceptions. Id. at 25, 813 A.2d 1230 (Lisa, J.A.D., dissenting). Judge Lisa cited examples of cases that had allowed PIP coverage for accidents involving government-owned automobiles or automobiles used for business purposes when those vehicles did not fall within the specifically excluded use categories of N.J.S.A. 39:6A-2a. Id. at 24-25, 813 A.2d 1230. He found that a "vehicle modification" exception was not supported by the language of the statute or in logic and disagreed with the majority's contention that Cheeks was circumventing the workers' compensation system, noting that NJM may seek contribution from Cheeks's workers' compensation provider. Id. at 28-30, 813 A.2d 1230.

II.

The present dispute concerning construction of the term "automobile" arises in the context of our statutory and regulatory system of mandatory automobile insurance. In New Jersey, every owner or registered owner of an automobile registered or principally garaged in New Jersey must maintain either a standard or basic automobile liability insurance policy with certain minimum limits of coverage insuring against bodily injury, death, or property damage sustained by any person "arising out of the ownership, maintenance, use or operation of an automobile." N.J.S.A. 39:6A-3, -3.1, and -4; N.J.S.A. 39:6B-1. A standard insurance policy also must provide PIP coverage for persons sustaining bodily injury as a result of an automobile accident or caused by an automobile. N.J.S.A. 39:6A-1.¹ In addition to liability and PIP coverage, standard automobile liability insurance policies must provide optional uninsured motorist (UM) and underinsured motorist (UIM) coverage. N.J.S.A. 17:28-1.1. Those coverage requirements—liability, PIP, and optional UM and UIM—are triggered by the place where the automobile is registered or principally garaged rather than by the identity of the policyholder. N.J.S.A. 17:28-1.1; N.J.S.A. 39:6A-3; N.J.S.A. 39:6B-1a; see also Ross v. Transport of N.J., 114 N.J. 132, 139, 553 A.2d 12 (1989)

.

PIP coverage is no-fault insurance in that it reimburses persons injured in automobile accidents without regard to fault for, among other things, medical expenses incurred and wage loss sustained as a result of such accidents. N.J.S.A. 39:6A-1.1; see Palisades Safety & Ins. v. Bastien, 175 N.J. 144, 147-48, 814 A.2d 619 (2003). The No Fault Act requires that automobile liability policies include PIP

for the payment of benefits without regard to negligence, liability or fault of any kind, [1] to the named insured and members of his family residing in his household who sustain bodily injury as a result of an accident while occupying, entering into, alighting from or using an automobile, or as a pedestrian, caused by an automobile or by an object propelled by or from an automobile, [2] to other persons sustaining bodily injury while occupying, entering into, alighting from or using the automobile of the named insured, with permission of the named insured, and [3] to pedestrians sustaining bodily injury caused by the named insured's automobile or struck by an automobile or struck by an object propelled by or from that automobile.

[N.J.S.A. 39:6A-4.]

The coverage thus applies to three categories of injured persons: (1) a named insured and resident relatives of that named insured injured in an accident involving any automobile; (2) other persons sustaining injuries in incidents involving an automobile of a named insured, who are permissive occupants or users of a named insured's automobile; and (3) pedestrians injured by an automobile of a named insured. Ibid. Stated differently, PIP coverage (a) follows a named insured and additional insureds, and (b) follows the automobile of a named insured. Ibid.

As we have noted on past occasions, and as the statute itself requires, the No Fault Act is given liberal construction in favor of its intended remedial purpose of effecting broad protection for accident victims. See, e.g., Palisades, supra, 175 N.J. at 148,

814 A.2d 619; Amiano v. Ohio Cas. Ins. Co., 85 N.J. 85, 90, 424 A.2d 1179 (1981); N.J.S.A. 39:6A-16. Medical expenses must be paid "for reasonable, necessary, and appropriate treatment ... in an amount not to exceed $250,000 per person per accident...." N.J.S.A. 39:6A-4a. Although an insurance company must pay all such PIP medical expense benefits, the Unsatisfied Claim and Judgment Fund (UCJF) is available to reimburse an insurer for any amount paid in excess of $75,000. Ibid. Importantly, in addition to payment of medical expenses, an insurer must provide additional PIP coverage as follows:

1. Income continuation benefits of $100 per week up to a limit of $5,200, pursuant to N.J.S.A. 39:6A-4b;

2. Essential services benefits for reimbursement of services the insured person did provide but can no longer, because of an injury sustained in the automobile incident (e.g., grocery shopping, cleaning) up to a limit of $12 per day and $4,348 in the aggregate, pursuant to N.J.S.A. 39:6A-4c;

3. Death benefits, up to the limits of N.J.S.A. 39:6A-4b, to be paid to the decedent's spouse or children or estate if the deceased was an income producer, pursuant to N.J.S.A. 39:6A-4d; and

4. Funeral expense benefits up to $1,000, pursuant to N.J.S.A. 39:6A-4e.

III.

The No Fault Act defines "automobile" as:

[1] a private passenger automobile of a private passenger or station wagon type that is owned or hired and is neither used as a public or livery conveyance for passengers nor rented to others with a driver; and [2] a motor vehicle with a pickup body, a delivery sedan, a van, or a panel truck or a camper type vehicle used for recreational purposes owned by an individual or by husband and wife who are residents of

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