Rosenberg v. Universal Underwriters Ins. Co.

• Decision Date: 29 August 1986
• Citation: Rosenberg v. Universal Underwriters Ins. Co., 525 A.2d 349, 217 N.J.Super. 249 (N.J. Super. 1986)
• Parties: Richard ROSENBERG, Administrator of the Estate of Scott Rosenberg, Plaintiff, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Defendant.
• Court: New Jersey Superior Court

Page 249

217 N.J.Super. 249

525 A.2d 349

Richard ROSENBERG, Administrator of the Estate of Scott Rosenberg, Plaintiff, v. UNIVERSAL UNDERWRITERS INSURANCE COMPANY, Defendant.

Superior Court of New Jersey, Law Division Gloucester County.

Decided Aug. 29, 1986.

Harris Y. Cotton, Woodbury, for plaintiff.

Stanley H. Needell, Trenton, for defendant (Needell & Needell, attorneys).

CIVIL ACTION OPINION

HOLSTON, J.S.C.

This is an action for recovery of Personal Injury Protection, hereinafter "P.I.P.", benefits under N.J.S.A. 39:6A-10.

Richard Rosenberg is the president and sole shareholder of Varsity Autos, Inc. The Corporation operated a wholesale automobile business and had a fleet of cars. These cars were insured by defendant, Universal Insurance Co., hereinafter "Universal", through an agent, Rosenberg & Sinderbrand, hereinafter "R & S", under a garage insurance policy. R & S had been writing insurance for Rosenberg for approximately eight years. Rosenberg, his wife, Marilyn, and his two sons, Kenneth and Scott, did not own cars in their own name, having always used company cars. Scott was an employee of the Corporation.

The policy in question had been in effect since 1981 under an assigned risk plan and included basic P.I.P. coverage required under N.J.S.A. 39:6A-4.

That statute required P.I.P. benefits be made available to the insured, any relative of the named insured or any person with the insured's permission who occupies, uses, enters or alights from the insured's automobile or, while a pedestrian, in an accident caused by the insured automobile or as a result of being struck by an object propelled by or from the insured automobile.

In November 1981, based on Rosenberg's intent to provide insurance protection for his family, R & S advised Universal that Marilyn and Kenneth were to be added as drivers and that P.I.P. "Option 5", under N.J.S.A. 39:6A-10 should be added to the policy. Universal acknowledged this coverage effective November 3, 1981 and renewed the policy as amended in May 1982.

On January 7, 1983, Scott, while in Florida, was struck by an automobile and died from the injuries sustained. A claim for benefits was made by Richard Rosenberg under the policy with Universal. That claim has been refused on the grounds that Scott was not insured under that policy.

The following facts are stipulated:

(1) The benefits under the policy are to be interpreted under N.J.S.A. 39:6A-10, prior to its amendment in 1982, making additional benefits available to the "named insured" described in N.J.S.A. 39:6A-4.

(2) If the Court determines that plaintiff is entitled to benefits under the policy, defendant will pay the following damages:

a. Lost wages                   $42,600.00
                b. Essential services           $14,600.00
                c. Death benefits               $10,000.00
                d. Funeral expenses             $ 1,000.00
                e.  Medical bills                $ 2,558.90
                f. Such interest and attorney's fees as
                   the Court may allow
                

Defendant relies primarily on Giambri v. Government Employees Ins. Co., 170 N.J.Super 140, 405 A.2d 872 (Law Div.1979), aff'd., 174 N.J.Super 162, 415 A.2d 1202 (App.Div.1980) (per curiam). Salvatore Giambri was an employee of his family's closely-held corporation. He was injured when an uninsured motorcycle on which he was riding collided with an automobile. The corporation's insurance carrier denied coverage. The Court held that to allow coverage would "ignore the corporate entity ... by treating the corporation's automobile policy as a family policy". (Id. at 142, 405 A.2d 872.) The Court further stated:

The court, therefore, holds that under the facts of this case, an automobile liability insurance policy issued to a family-held corporation as the named insured does not provide coverage to members of the family "as members of the family of the named insured" under N.J.S.A. 39:6A-4. Had plaintiff sustained his injuries while operating or riding as a passenger in one of the four company automobiles, or had plaintiff been struck as a pedestrian by one of the four company automobiles, he would have been entitled to coverage regardless of his status as a family member. Defendant was, therefore, providing effective coverage to the corporation under the personal injury protection provisions of the policy. [at 143, 405 A.2d 872.]

Universal contends, therefore, that since it, too, provided a policy covering a corporation under N.J.S.A. 39:6A-4, only a corporate policy existed, not a family household one. However at trial, Universal produced only one witness from its company, an employee in the underwriting department, who was unable to state the company's position as to who is covered under Option 5 on a corporate garage policy of liability.

Giambri dealt with the interpretation of mandatory P.I.P. coverage as applied to a corporate insurance policy but did not consider the effect of optional coverage under N.J.S.A. 39:6A-10. The distinction between these sections was addressed in Clendaniel v. N.J.Mfrs. Ins. Co., 96 N.J. 361, 476 A.2d 263 (1984), which interpreted "Option 5" to conform to the present language of the statute. The Court said:

Our interpretation that the availability of Section 10 optional coverage is for more than the named insured but for fewer than all the persons covered in Section 4 conforms with the general rules of statutory construction. N.J.S.A. 39:6A-10 speaks of "named insured covered under section 4." If the statute required the availability of optional benefits for the named insured only, then the phrase "covered under section 4" would be meaningless. On the other hand, if the statute required the availability of optional benefits for all persons covered under section 4, then the phrase "named insured" would be superfluous because named insureds are covered under section 4 ... [at 367, 476 A.2d 263.]

... We cannot discern any valid policy reason why the Legislature would require insurers to make available for purchase additional coverage for the policyholder and his or her spouse without giving the named insured the right to obtain added protection for his resident relatives.

Section 4 benefits are mandatory. Section 10 benefits, however, are optional. To obtain additional coverage under Section 10, the insured must pay an additional premium ... we cannot discern any valid reason why the named insured would want to pay extra premium to provide additional benefits for a guest passenger or an unknown pedestrian ... [at 368, 476 A.2d 263.]

... We conclude that the Legislature intended that N.J.S.A. 39:6A-10, prior to its 1981 amendment, required an insurer to offer to the named insured the option of purchasing additional Section 10 P.I.P. benefits only for the named insured and resident relatives residing in the named insured's household. [at 370, 476 A.2d 263.]

Since this option was requested by Rosenberg and since he was paying an additional premium, to hold that under Giambri only the corporation was insured, would mean that Rosenberg was paying an additional premium for family insurance coverage under which no one was covered. This was certainly not the intent of the Legislature. Its effect could not be explained by the insurance company.

This Court holds that where a general garage policy for liability covering a closely-held corporation includes Option 5 under N.J.S.A. 39:6A-10, coverage is afforded to the corporation owner, his spouse and resident members of the household. This conclusion is not inconsistent with Giambri, which would still limit coverage under N.J.S.A. 39:6A-4 to the Corporation. This distinction is consistent with Clendaniel, supra.

As this Court has determined that insurance coverage is available to the insured and resident members of his household, this Court must now determine whether Scott Rosenberg was a resident member of the household at the time of the accident. Scott had lived with his parents for his entire life, except for a short period of time when he lived with his girlfriend around the corner from his parents. Four days before the accident, Scott packed a small backpack and hitchhiked to Georgia with his girlfriend, leaving behind several personal items including a stereo and camera. After spending only one night in Georgia at a trailer belonging to a friend of his girlfriend's, he continued on alone to Florida to visit his cousin, a psychologist. It was there that Scott died. Additionally, Scott indicated to the plaintiff, Richard Rosenberg, when he left for Georgia, that he would be away approximately 10 days or 2 weeks. Rosenberg had telephone conversations with Scott at his cousin's residence in Florida with no indication from Scott that he had intended to change his residence from New Jersey to Georgia or Florida. There was, for example, no request by Scott to his father to ship his clothes and belonging to Georgia or Florida.

Scott was on probation for prior drug-related offenses. There was conflicting testimony between Scott's girlfriend and his probation officer as to whether Scott was drug-free before leaving for a few weeks to try to get off drugs. His probation officer testified that Scott was drug-free when he left. However, the autopsy report revealed that there were fresh needle marks on Scott's arm, indicating he probably was still on drugs. Scott's girlfriend's testimony, therefore, appears credible.

Prior to his leaving for Georgia, Scott notified his probation department of his intention to move to Georgia and completed an Application for Supervision as Probationer, pursuant to the Interstate Compact for Supervision of Probationers applying for permission to be supervised for probation in Georgia, indicating he would make his residence in Woodbine, Georgia. He further signed an Agreement waiving extradiction and an Agreement to Return. The application and agreement were signed January 3, 1983 and judicial approval was granted January 7, 1983, one day prior to his death in Florida of January 8, 1983....