Pizzullo v. New Jersey Mfrs. Ins. Co.

• Decision Date: 07 August 2008
• Docket Number: A-21 September Term 2007
• Citation: 196 N.J. 251,952 A.2d 1077
• Parties: Michael PIZZULLO and Dorothea Pizzullo, h/w, Plaintiffs-Appellants, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent.
• Court: New Jersey Supreme Court

952 A.2d 1077

196 N.J. 251

Michael PIZZULLO and Dorothea Pizzullo, h/w, Plaintiffs-Appellants, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent.

A-21 September Term 2007

Supreme Court of New Jersey.

Argued February 4, 2008.

Decided August 7, 2008.

Gerald R. Stockman, argued the cause for appellants (Kalavruzos, Mumola & Hartman, attorneys, Hamilton; Anthony J. Monaco, Freehold, on the brief).

Kevin M. Shanahan, Pennington, argued the cause for respondent.

Justice HOENS delivered the opinion of the Court.

In this matter, we are called upon to determine the scope that our Legislature intended to be afforded to the statute enacted in June 1993, which granted automobile insurers immunity from suit arising from an insured's election of coverage. See N.J.S.A. 17:28-1.9(a). The trial court, after first concluding that the statute did not provide the insurer with immunity, determined that the insurer was equitably estopped to decline coverage. The Appellate Division reversed, finding that the statute afforded the insurer immunity and rejecting the application of the estoppel doctrine as having been abrogated by the passage of the immunity statute itself.

Our analysis of the intent and meaning of the statute compels us to conclude that, notwithstanding its apparently broad wording this record presents us factual circumstances that place the insurer outside of the statute's protective scope. The factual record, which is truly unique, demonstrates that the insured requested certain coverage and that the insurer promised to provide it, but did not do so. The record further reflects that the insurer misrepresented the coverage to the insured and that the documents issued to the insured were inherently ambiguous. In these unusual circumstances, we conclude that the insurer was not entitled to claim the immunity afforded by the statute. We further conclude that because of the ambiguity in the documents, the insured's expectation of coverage was reasonable.

I.

The facts are not a matter of controversy. In 1987, plaintiff Michael Pizzullo ("Michael") telephoned his automobile insurance carrier, defendant New Jersey Manufacturers Insurance Company ("NJM"), to obtain coverage for his wife, plaintiff Dorothea Pizzullo ("Dorothea"). The couple was purchasing a new car for Dorothea and, as part of their plan to establish a separate identity for his wife's credit and financial transactions, Michael wanted to acquire insurance coverage for her that was as good as the coverage that he then had for himself. He telephoned defendant and discussed his request with Linda Middleton, a customer service representative. He specifically asked to purchase a separate policy in his wife's name so that he could accomplish his goal of ensuring that she had the same protections that his policy afforded him.

It is undisputed that Michael had a history of asking for high levels of coverage, often seeking the maximum available policy limits. It was in keeping with his usual practice, therefore, to make a request for a similarly high level of protection when seeking coverage for his wife's new vehicle. In response to his inquiry, Middleton told Michael that it was not NJM's practice to write separate policies for married couples, but that he could accomplish "the same exact coverage" for her simply by adding her new car to the existing policy. This advice was not only part of Middleton's regular response to such questions, but was also in compliance with her training. According to Michael's unrebutted testimony, he pressed Middleton, repeating his desire to establish credit for his wife and asking again for a separate policy. Defendant does not contest Michael's assertion that he was again assured that by adding Dorothea and her new vehicle to his existing policy, he would accomplish his goal of creating the same coverage for her as he had.

Defendant conceded that in 1987, when Michael made his request, it had a policy of discouraging the purchase of separate insurance policies by spouses, unless the couple was separated or divorced, and that it trained its customer service representatives to respond to any inquiries of this kind just as Middleton did when Michael asked about coverage for his wife. Because plaintiffs were a married couple who were not separated, Michael was not even told that it was possible for him to purchase the separate policy for his wife that he requested. Instead, he was assured that the single policy would cover each of them equally and to the same extent Michael was covered at the time.

Having been assured that by adding his wife to his existing policy he would be obtaining coverage for her that was equal to what he already had for himself, Michael acquiesced in Middleton's statement about the coverage. Defendant issued the policy in 1987 and sent the policy, along with a declarations page, a Buyer's Guide, and a Coverage Selection Form, to plaintiffs. Significantly, and in accordance with Michael's recollection, defendant charged separate premiums for his car and for his wife's car, the new total being approximately double the premium that he had been paying for the prior policy. The policy was renewed every year thereafter, and the same documents were sent each year. Each time, plaintiffs received a declarations page that showed $500,000 for liability coverage, per car, per accident; and $500,000 per car for Uninsured/Underinsured Motorist (UM/UIM) coverage. The declarations page did not contain an explicit notation that the UM/UIM coverage was provided on a per accident basis. The policy document itself, however, contained a separate UM/UIM provision, stating that the UM/UIM benefits were provided on a per accident basis.

In actuality, the assurance given by defendant through its customer service representative was not accurate. Rather than providing the same level of coverage for each of the spouses, the effect of adding Dorothea to Michael's existing policy was to bring both of them within one $500,000 per accident coverage limit for UM/UIM purposes. The result was that, despite their newly doubled premium, plaintiffs' UM/UIM coverage limit was, potentially, only half of that for each of them in the event that they were both injured in a single accident. Had defendant answered Michael's question correctly, and had Michael been permitted to purchase a separate policy for his wife as he requested, each would have been able to obtain the maximum UM/UIM benefits of $500,000 to cover injuries suffered in a common accident. In the alternative, had NJM explained that coverage would essentially be halved in the event of a common accident, plaintiffs could have applied for liability and UM/UIM coverage of $1,000,000, which in fact was the maximum NJM offered at that time.

At trial, defendant's corporate representative conceded that failing to make clear the UM/UIM consequences of having one policy rather than two could be seen to be "a disservice to the customer." As such, the inaccurate answer given in response to a question like Michael's about the coverage deprived the customer of information needed to be able to make an informed choice about whether to add a new car to the existing policy or to purchase a separate policy for each spouse.

In 1998, plaintiffs were both severely injured when they were involved in a single accident while using the same vehicle, and they collected all of the available insurance from sources other than the policy issued by defendant. Believing that they each had $500,000 UIM coverage, the maximum amount allowed by their policy, they each sought the full benefit of that UIM limit. Defendant denied that claim, asserting that the policy had a $500,000 per accident limit rather than a $500,000 per insured limit, with the result that this was the total amount that they could recover for their injuries.

II.

Plaintiffs filed their declaratory judgment action in the Law Division seeking a determination that each of them was entitled to UM/UIM benefits up to $500,000. Defendant argued that even though the advice given to the insureds by defendant's customer service representative was erroneous, and even though plaintiffs had relied on that inaccurate representation when they agreed to forgo the purchase of a separate policy for Dorothea, defendant was nonetheless immune from liability. In particular, defendant argued that it was entitled to the protection of the immunity statute absent a showing that its acts were willful, wanton or grossly negligent. See N.J.S.A. 17:28-1.9(a).

A.

Following a two-day bench trial, the trial court issued detailed findings of fact, followed by equally detailed conclusions of law. In particular, the court found that Michael had asked for a separate policy for his wife that would provide the same coverage that he had, that Middleton had told him that he could secure the same coverage for his wife by adding her to his policy, that he chose a joint policy based on this misrepresentation, and that the Pizzullos paid separate premium amounts for their coverage.

In addition, the trial court made findings relating to claimed ambiguities in the insurance materials defendant provided to plaintiffs. Specifically, the declarations page failed to include the words "Each Accident" in the column describing UIM coverage, the Buyer's Guide was unclear about the precise limit on UIM benefits, and the Coverage Selection Form did not contain any explicit indication that UIM benefits were afforded only on a per accident basis. At the same time, however, the trial court found that the language in the insurance policy and the Endorsement was clear about the fact that the total UM/UIM coverage available for all family members was $500,000 per accident.

Regardless of whether or not the documents themselves were ambiguous, the trial court concluded that defendant was not entitled to statutory immunity as against plaintiffs' claims because it had made...