Sotomayor v. Vasquez

• Decision Date: 26 January 1988
• Citation: 109 N.J. 258,536 A.2d 746
• Parties: Louis SOTOMAYOR, Plaintiff-Respondent, and Christian Carvajal, by his Guardian Ad Litem, Cecilia Flores, and Cecilia Flores, individually, Plaintiffs, v. Fernando VASQUEZ, Jose Marin, Julio Freijo, and the Chubb Group of Insurance Companies, jointly, severally, and/or in the alternative, Defendants, and Unsatisfied Claim and Judgment Fund Board, Defendant-Respondent, and The Aetna Casualty and Surety Company, Defendant-Appellant.
• Court: New Jersey Supreme Court

Page 258

109 N.J. 258

536 A.2d 746

Louis SOTOMAYOR, Plaintiff-Respondent and Christian Carvajal, by his Guardian Ad Litem, Cecilia Flores, and Cecilia Flores, individually, Plaintiffs, v. Fernando VASQUEZ, Jose Marin, Julio Freijo, and the Chubb Group of Insurance Companies, jointly, severally and/or in the alternative, Defendants and Unsatisfied Claim and Judgment Fund Board, Defendant-Respondent and The Aetna Casualty and Surety Company, Defendant-Appellant.

Supreme Court of New Jersey.

Argued Sept. 15, 1987.

Decided Jan. 26, 1988.

Victor C. Harwood, III, Hackensack, for defendant-appellant (Harwood Lloyd, attorneys).

Mark I. Feiner, West New York, for plaintiff-respondent Louis Sotomayor (Greenberg, Feiner, Wallerstein & Benisch, attorneys).

Frank P. Addas, Jersey City, for defendant-respondent Unsatisfied Claim and Judgment Fund Bd. (James & Addas, attorneys).

The opinion of the Court was delivered by

O'HERN, J.

This is a PIP case. PIP is an acronym for personal injury protection benefits, a form of compulsory auto insurance required by the New Jersey Automobile Reparation Reform Act, L. 1972, c. 70 ("No-Fault" Law), N.J.S.A. 39:6A-4. This case concerns the scope of the coverage afforded under a standard New Jersey automobile policy. We do not intend this opinion, or Wilson v. Unsatisfied Claim & Judgment Fund Bd., 109 N.J. 271, 536 A.2d 752 (1988), also decided today, to be a treatise on PIP law. We must of necessity refer to various issues that are peripheral to the central issues that we shall decide. We refer to such secondary issues only as background to the matters before us and we shall use terms of convenience, not of art, such as "family" in lieu of "household," to simplify statutory references.

I

At the outset, we note also that our "No-Fault" Law is premised on certain underlying assumptions: namely, that most automobile accidents involve private passenger cars, and that most households will own a car. Thus, compulsory automobile insurance providing basic PIP benefits for the occupants of each car and the members of each car owner's family is designed to provide quick and easy reimbursement for the basic personal costs most people incur when they are involved in an automobile accident. Usually, the benefits payable under PIP law are the familiar common-law special damages for "bodily injury," such as medical expenses and lost income. PIP's strategic goal is to counter, by early payment of bills without regard to a driver's fault, the increasing spiral of automobile negligence cases that were thought to have been a major cause of rising auto insurance premiums in New Jersey, as well as much of the congestion in the court system.

Expressed symbolically, the basic scheme of PIP is that each car in personal use should take care of its passengers and that each family car should take care of that family. The relevant language of the statute creating those two tiers is as follows:

Every automobile liability insurance policy [providing liability insurance] * * * shall provide personal injury protection coverage (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 sustained bodily injury as a result of an accident while

(a) occupying, entering into, alighting from or using an automobile,

(2) TO OTHER PERSONS sustaining bodily injury while

(a) occupying, entering into, alighting from or using the automobile of the named insured, with the permission of the named insured * * *. [ N.J.S.A. 39:6A-4 (emphasis added).] ¹

We can see how this system functions by examining a typical two-car accident involving two families out for a Sunday drive with two respective parents, A and B, driving their respective family cars. We realize that this discussion may appear overly simplistic to those familiar with PIP, but we believe that these examples may be helpful to the reader. Assume that each car carries a parent, child, and two unrelated passengers, and that following the accident, all eight occupants are taken to the hospital, where they all incur medical expenses. In the anticipated situation of two insured cars, each of the occupants of Car A would be covered for all necessary medical treatment by Car A's PIP insurance company. Similarly, Car B's occupants would be covered by Car B's PIP carrier. ²

But what if Car B were uninsured? Assume for example that, through a technicality, Car B's PIP coverage had lapsed, but that B had another car at home. The PIP carrier for B's other family car would then provide coverage for B and B's child. B's passengers, call them P1 and P2, could also look to their own family car policies for coverage if they had cars.

But what if P1 and P2 or their families owned no cars? The Unsatisfied Claim and Judgment Fund, N.J.S.A. 39:6-61 to 6-91, provides limited backup indemnity for the victim of an accident caused by an uninsured motorist. Established under N.J.S.A. 39:6-86.1 and administered by the Unsatisfied Claim and Judgment Fund Board, this counterpart backup fund provides PIP benefits to the eligible victim of an accident involving an uninsured car. We shall discuss the provisions of that law in detail in Wilson v. Unsatisfied Claim and Judgment Fund Bd., supra, also decided today.

This case presents one additional wrinkle to the examples that we have provided. To continue the discussion, assume that P1 and B exchange places and P1 is driving B's car, which is uninsured for PIP. Assume further that P1 has an insured family car. Of course, P1 has his bills paid by his family car policy, but can P2, who has no family car PIP coverage, recover from P1's PIP carrier?

That is the basic issue in this case, which is made more complex by the fact that Car B is owned by a New Yorker and is registered in New York. We hold that P1's PIP carrier is not required by N.J.S.A. 39:6A-4 to afford PIP coverage to P2, the other passenger in B's uninsured car.

II

The facts of this case are as follows: On March 29, 1981, plaintiff Sotomayor was involved in a two-car accident in New Jersey while riding as a passenger in an uninsured New York vehicle that was driven by Fernando Vasquez, Aetna's insured. (Vasquez owned a car registered in New Jersey. He had recently moved to Virginia but that fact plays no part in the resolution of these issues.) The other automobile involved in the accident was a New Jersey-insured car. As a result of the accident, plaintiff suffered serious injuries. The liability aspects of the accident were settled by agreement between the insurance carriers of the respective drivers. Each carrier paid its policy limits on the bodily injury claim. Plaintiff then brought this action seeking PIP benefits from Aetna under the Vasquez policy, or, alternatively, PIP benefits from the UCJF. Aetna denied coverage, contending that, as the car was not owned by Vasquez, the accident did not involve an "automobile of the named insured" within the meaning of N.J.S.A. 39:6A-4. The trial court, however, granted Sotomayor's motion for summary judgment against Aetna, entered a judgment for $77,000 against the carrier, and granted the Unsatisfied Claim and Judgment Fund Board's motion for summary judgment. This amount represented Sotomayor's medical expenses.

Aetna appealed the Law Division's order finding PIP coverage. Plaintiff Sotomayor filed a protective cross-appeal from the dismissal of his PIP claim against the Fund in the event his PIP judgment against Aetna was reversed. On appeal, the Appellate Division affirmed, reasoning that "[t]here is nothing in [ N.J.S.A. 39:6A-4] to suggest the automobile must be owned by the insured. To engrave a condition of ownership on the statute would restrict the coverage, narrow the protection afforded and defeat the ordinary expectations of the policyholder." Sotomayor v. Vasquez, 213 N.J.Super. 414, 418, 517 A.2d 507 (1986). For procedural reasons, ³ this Court granted Aetna's request for review on January 28, 1987, treating it as a motion for leave to appeal. 107 N.J. 88, 526 A.2d 165 (1987). Plaintiff's cross-petition for certification against the defendant Unsatisfied Claim and Judgment Fund Board was never acted upon because the Court elected to consider this matter as a motion for leave to appeal.

III

A.

Preliminarily, we shall address three supplementary arguments that the parties advanced in addition to their central arguments on the scope of statutory PIP coverage.

Plaintiff argues that the PIP coverage endorsement merely modifies rather than supplements the medical payments coverage provision of the Aetna policy issued to Vasquez. Under that coverage (to be discussed in Part V hereof, infra at 269-270), defined medical expenses are payable to any "person who sustains bodily injury * * * while occupying a non-owned automobile" operated or occupied, with the owner's permission, by the named insured or by a relative. Therefore, Sotomayor argues that since the vehicle involved in the accident was a "non-owned" automobile, he should qualify for the medical payment coverage. PIP, however, is an entirely new and different form of coverage. The addition of a PIP endorsement cannot be read to convert the prior limited medical payment coverage for a broader class of beneficiaries to an unlimited coverage for that same class.

The Fund argues that the literal language of the PIP endorsement is controlling, and that Aetna, rather than the Fund, should be liable. Since the endorsement defines "eligible injured person" to include an occupant of the "insured automobile," and since Aetna insured the automobile (at least for liability coverage), Sotomayor should be covered by the Aetna policy. But, as the Fund recognizes, the same endorsement defined "insured automobile" as "an automobile with respect to which the named insured is required to maintain liability insurance coverage under the New Jersey...