Schaser v. State Farm Ins. Co.

• Decision Date: 19 February 1992
• Parties: Robin L. SCHASER, Plaintiff, v. STATE FARM INSURANCE COMPANY, the Harleysville Insurance Companies, and New Jersey Manufacturers Insurance Company, Defendants. National Union Fire Insurance Company, Intervening Defendant.
• Court: New Jersey Superior Court

Page 169

255 N.J.Super. 169

604 A.2d 687

Robin L. SCHASER, Plaintiff, v. STATE FARM INSURANCE COMPANY, the Harleysville Insurance Companies, and New Jersey Manufacturers Insurance Company, Defendants National Union Fire Insurance Company, Intervening Defendant.

Superior Court of New Jersey, Law Division Cumberland County.

Decided Feb. 19, 1992.

Eisenstat, Gabage & Berman, for plaintiff (Charles W. gabage).

Horn, Kaplan, Goldberg, Gorny & Daniels, for defendant, State Farm Ins. Co. (L. Patricia Sampoli).

Cooper, Perskie, April, Niedelman, Wagenheim & Levenson, for defendant, The Harleysville Ins. Co. (Susan Petro).

Yampell, Nicodemo & Caruthers, for defendant New Jersey Mfrs. Ins. Co. (Donald Caruthers, III).

Slimm, Dash & Goldberg, for defendant-intervenor, Nat. Union Fire Ins. Co. (Kenneth J. Sylvester).

KLEINER, J.S.C.

In a suit for a declaratory judgment, plaintiff, Robin L. Schaser, has filed a motion for summary judgment requiring this court to construe N.J.S.A. 17:28-1.1(c) as it pertains to the computation and award of multiple uninsured motorist coverages. The court must also analyze the effect upon the ultimate award of N.J.S.A. 34:15-40 as it pertains to liens of workers' compensation insurance carriers against uninsured motorist coverage benefits payable to an injured employee. Although the issues raised do not appear to be factual oddities, nevertheless, the precise facts have not as yet been addressed in any reported New Jersey judicial decision.

On November 7, 1986, plaintiff was a passenger in an insured motor vehicle owned and operated by Thomas L. Lucas which was insured by defendant, Harleysville Insurance Company, (hereafter Harleysville). The Harleysville policy provided single limit uninsured motorist coverage of $100,000. Lucas' vehicle was involved in a collision with a vehicle owned and operated by David L. Tucker which was uninsured.

Plaintiff and her host driver, Lucas, were co-employees of J.C. Erlich, and were engaged in the course of their employment when the accident occurred. Erlich was insured for workers' compensation by defendant, National Union Fire Insurance Company, (hereafter National Union.) ¹

Plaintiff was also the named insured on her personal automobile liability insurance policy issued by defendant, State Farm Insurance Company (hereafter State Farm) which provided $15,000.00 uninsured motorist coverage.

Additionally, plaintiff was a resident of her father's household. Plaintiff's father, John Schaser, was the named insured on an automobile liability insurance policy issued by defendant, New Jersey Manufacturers Insurance Company, (hereafter N.J.M.), which provided a $35,000.00 single limit uninsured motorist endorsement. As a resident relative, plaintiff is entitled to uninsured motorist insurance coverage provided by N.J.M.

Plaintiff and her host driver, Lucas, were both severely injured in this collision. Plaintiff, who was barred from asserting any claim against Lucas, N.J.S.A. 34:15-8, did assert the following claims: (a) workers' compensation claim against her employer, insured by National Union; (b) negligence claim against the uninsured motorist, Tucker; ² (c) claims for uninsured motorist coverage against Harleysville (Lucas' insurer), State Farm (plaintiff's personal automobile insurer) and N.J.M. (plaintiff's father's insurer).

Lucas, also asserted a claim for uninsured motorist coverage under his own Harleysville policy. That policy required all automobile uninsured motorist claims to be arbitrated.

Recognizing that the Harleysville policy afforded single limit coverage of $100,000. and that both plaintiff and Lucas were severely injured, their respective counsel agreed to submit the claims to arbitration and agreed to divide the single limit insurance coverage pro rata, based upon the amount of each award in proportion to the total of both awards.

The arbitrators awarded plaintiff $400,000. and awarded Lucas $910,000. Thus, by agreement, plaintiff was entitled to receive 400/1310ths or .30534 percent of the $100,000. coverage or $30,534. and Lucas was entitled to receive 910/1310ths or $69,466.

N.J.S.A. 17:28-1.1(c) provides:

"... c. Uninsured and underinsured motorist coverage provided for in this section shall not be increased by stacking the limits of coverage of multiple motor vehicles covered under the same policy of insurance nor shall these coverages be increased by stacking the limits or coverage of multiple policies available to the insured. If the insured had uninsured motorist coverage available under more than one policy, any recovery shall not exceed the higher of the applicable limits of the respective coverages and the recovery shall be prorated between the applicable coverages as the limits of each coverage bear to the total of the limits ..."

All parties contend correctly that an insured cannot collect a sum greater than, "the higher of the applicable limits of the respective coverages" or, in this case, $100,000. However, the parties cannot agree as to the respective contribution of each insurance carrier. Plaintiff contends she is entitled, pursuant to N.J.S.A. 17:28-1.1(c) to $30,534. from Harleysville, $15,000. from State Farm and $35,000. from N.J.M. or uninsured benefits totalling $80,534. This contention which is disputed necessitated this declaratory judgment proceeding.

Defendant, National Union, has filed a separate cross-motion for summary judgment in which it argues that pursuant to N.J.S.A. 34:15-40 et seq. any sum awarded plaintiff for uninsured motorist coverage is subject to its lien, less deductions up to 33 1/2 percent of the award, representing attorney's fees, and up to $200.00 representing reimbursable litigation expenses of its employee (Schaser) in pursuing a successful third party claim against the tortfeasor Tucker.

I. UNINSURED MOTORIST COVERAGE

Plaintiff contends she should recover $80,534. computed as follows: $30,534. payable by Harleysville ($100,000. single limit policy divisible between plaintiff and Lucas pursuant to arbitration), $15,000. payable by State Farm and $35,000. payable by N.J.M State Farm, however, stresses that the language of N.J.S.A. 17:28-1.1(c) that:

"... and the recovery shall be pro rated between the applicable coverages as the limits of each coverage bear to the total of the limits."

is ignored by plaintiff's contention.

It contends that the statute not only imposes a limitation on the recovery total of $100,000. but urges that the court must total the available coverages as the first step in determining the amount of the plaintiff's award. In this case, the coverages total $150,000. On a pro rata basis, State Farm contends that its policy of $15,000. is 10 percent of the total available coverage and thus, State Farm should contribute 10 percent of the maximum award limitation of $100,000. or $10,000.

N.J.M. concurs in the argument of State Farm. It contends that its coverage of $35,000. is equivalent to 23.3 percent of the total available coverage of $150,000. and therefore, it suggests that it must contribute 23 percent of $100,000. to the plaintiff's combined award, or $23,000. ³

Harleysville has taken no position as to the method of interpreting N.J.S.A. 17:28-1.1(c) contending that its contribution pursuant to either alternative will be $30,534.36.

Plaintiff's analysis will result in an award of $80,534.36, while defendants' analysis would result in an award of $63,534.36.

The only reported decisions dealing with this section of the applicable statute are Cuevas v. Allstate Ins. Co., 234 N.J.Super. 461, 560 A.2d 1317 (Law Div.1986) and Rox v. Allstate Ins. Co., 250 N.J.Super. 536, 595 A.2d 563 (Law Div.1991).

In Cuevas, the court was called upon to determine the distribution of uninsured motorist coverage among five claimants: Cuevas, C. Soto, L. Soto, Feliciano and Perez. Both policies involved were issued by Allstate Insurance Company and both policies provided coverage of $15,000. per person and $35,000. per accident. All five individuals were eligible claimants under one policy but only Cuevas was entitled to recover under the second policy which insured his uncle. ⁴

Arbitration resulted in the following awards: Cuevas, $12,000.; C. Soto, $10,500.; L. Soto, $5,000.; Feliciano, $3,000.; Perez, $10,000. The awards totalled $40,500.

The court concluded that N.J.S.A. 17:28-1.1(c) limited each claimant to a maximum recover of $15,000. The Cuevas court was not required to deal with the pro rata policy provisions of that statute as no arbitration award exceeded applicable policy coverage limits. ⁵

The Cuevas court did analyze the applicable statute 234 N.J.Super. at page 464, 560 A.2d 1317,

N.J.S.A. 17:28-1.1(c) specifically prohibits the concept of stacking of limits of multiple coverages available to an insured for the purpose of increasing limits of coverage. It further clarifies the situation, where an insured has multiple U.M. coverages available with different limits, by restricting recovery to the highest coverage limits and requiring that such recovery be pro rated between the applicable coverage as the limits of each coverage bear to the total of the limits.

The plain meaning of the statute is to prevent the increasing of coverage limits by "stacking" thereby restricting an insured's recovery to the limits of the policy with the highest U.M. limits, and providing for a means of allocation with other available U.M. policies. [Emphasis added].

In Rox v. Allstate Ins. Co., supra, the court, after construing a self-insured municipality's responsibility for uninsured motorist coverage held, 250 N.J.Super. at 543, 595 A.2d 563,

Co-defendant City is responsible for a concurrent and pro rata share of any reward [sic ] rendered in favor of the plaintiffs up to the total of $15,000. each, with its pro rata share being the percentage which is applicable coverage of $15,000. bears to the total of all applicable coverages available to...