Universal Underwriters Ins. Co., Recreational Products Ins. Div. v. New Jersey Mfrs. Ins. Co.

• Decision Date: 03 April 1997
• Parties: UNIVERSAL UNDERWRITERS INSURANCE COMPANY, RECREATIONAL PRODUCTS INSURANCE DIVISION, Plaintiff-Appellant, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent, and David Marshall, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 307

299 N.J.Super. 307

690 A.2d 1104

UNIVERSAL UNDERWRITERS INSURANCE COMPANY, RECREATIONAL

PRODUCTS INSURANCE DIVISION, Plaintiff-Appellant, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent, and David Marshall, Defendant-Appellant.

Superior Court of New Jersey,

Appellate Division.

Submitted March 3, 1997.

Decided April 3, 1997.

Margolis Edelstein, Westmont, for appellant Universal Underwriters Insurance Company in A-4514-95 (Robert M. Kaplan, on the brief).

Randolph H. Wolf, Red Bank, for appellant David Marshall in A-4796-95 (Mr. Wolf, Red Bank, and Robert W. Ruggieri, Matawan, on the brief).

Mortenson and Pomeroy, Springfield, for respondent in A-4514-95 and A-4796-95 (Daniel J. Pomeroy, Springfield, and Karen E. Heller, Kearny, on the brief).

Before Judges PETRELLA, LANDAU and KIMMELMAN.

The opinion of the court was delivered by

PETRELLA, P.J.A.D.

Plaintiff Universal Underwriters Insurance Company, Recreational Products Insurance Division (Universal) and defendant David Marshall (Marshall) filed separate appeals ¹ from the grant of summary judgment to defendant New Jersey Manufacturers Insurance Company (NJM). The motion judge held that NJM was not required to participate under its automobile insurance policy in underinsured motorist (UIM) coverage arbitration for an injury to Marshall incurred during the operation of his motorcycle. The appeals are consolidated for the purpose of this opinion.

Universal sought declaratory judgment against NJM and Marshall, claiming he was insured by both companies and requesting that NJM participate on a pro rata basis in any potential award to Marshall under UIM coverage. On cross-motions for summary judgment, the judge concluded that "from the totality of all of the circumstances" there was no coverage under Marshall's personal automobile policy issued by NJM. On review of both Universal's and NJM's policies and in light of the appropriate legal principles, we disagree and reverse.

On August 3, 1994, Marshall was injured in an motor vehicle accident on West Canal Road in Franklin Township when Bartel Scheckinger crossed the road's center line and hit Marshall, who was riding his motorcycle. Scheckinger's automobile insurance carrier, Maryland Casualty Insurance Company (MCIC), settled with Marshall for its policy limit of $15,000. Marshall asserts that his medical expenses exceed that amount.

Marshall had a "Motorcycle Policy" with Universal insuring his 1993 Harley Davidson motorcycle, and providing liability and UIM coverage of $100,000 each and $300,000 per accident. ² Additionally, Marshall owned a 1987 Jeep and 1992 Plymouth automobile insured by NJM with a UIM limit of $500,000. The NJM policy expressly excludes any liability coverage "for the ownership, maintenance or use of: [a]ny motorized vehicle having fewer than four wheels."

I.

Our function in construing the provisions of an insurance contract is to give effect to the parties' intent as evidenced by the terms used by them. Sinopoli v. North River Ins., 244 N.J.Super. 245, 250-251, 581 A.2d 1368 (App.Div.1990), certif. denied, 127 N.J. 325, 604 A.2d 600 (1991); see also Jacobs v. Great Pacific Century Corp., 104 N.J. 580, 582, 518 A.2d 223 (1986); Atlantic Northern Airlines, Inc. v. Schwimmer, 12 N.J. 293, 301, 96 A.2d 652 (1953). An insurance policy that is clear and unambiguous should be enforced as written. Royal Ins. Co. v. Rutgers Cas. Ins. Co., 271 N.J.Super. 409, 416, 638 A.2d 924 (App.Div.1994).

Any ambiguity found in the policy should be construed against the insurer and "exclusionary clauses should be strictly construed." Sinopoli v. North River Ins., supra, 244 N.J.Super. at 250, 581 A.2d 1368; New York State Higher Educ. Services Corp. v. Lucianna, 284 N.J.Super. 603, 608, 666 A.2d 173 (App.Div.1995). "If the controlling language of an insurance policy supports two interpretations, one favorable to the insurer and the other favorable to the insured, courts are obligated to adopt the interpretation supporting coverage." Watson v. Agway Ins. Co., 291 N.J.Super. 417, 423, 677 A.2d 788 (App.Div.1996) (citing Salem v. Oliver, 248 N.J.Super. 265, 271, 590 A.2d 1194 (App.Div.1991), aff'd o.b., 128 N.J. 1, 4, 607 A.2d 138 (1992)).

Marshall is the named insured on the Declaration page of NJM's automobile policy. That page indicates that the policy provides him $500,000 in UIM coverage. It is undisputed that Marshall was injured in an automobile accident with an underinsured motorist. ³ NJM's underinsured motorist provision defines an underinsured motor vehicle as a "land motor vehicle or trailer of any type to which a liability ... policy applies at the time of the accident but its limit is less than the limit of liability for this coverage...." UIM coverage extends to:

compensatory damages which an Insured is legally entitled to recover from the owner or operator of an ... underinsured motor vehicle where such coverage is indicated as applicable in the Declarations because of:

1. Bodily Injury sustained by an Insured and caused by an accident....

* * * * * *

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the ... underinsured motor vehicle. We will pay damages under this coverage caused by an accident with an underinsured motor vehicle only after the limits of liability under any applicable liability bonds or policies have been exhausted....

NJM's policy by its terms provides UIM coverage for Marshall because the bodily injuries he sustained were caused by an accident with an underinsured motorist. ⁴

What is not so clear, is the effect of Marshall's purchase of UIM insurance with another carrier, Universal. The UIM provisions of Part C of Universal's policy, as amended by endorsement, ⁵ state:

We will pay damages which a covered person is legally entitled to recover from the owner or operator of an uninsured motor vehicle or underinsured motor vehicle where such coverage is indicated as applicable in the Schedule or Declarations because of:

1. Bodily Injury sustained by a covered person and caused by an accident; and

2. Property damage caused by an accident except under paragraph 2 of the definition of uninsured motor vehicle.

The owner's or operator's liability for these damages must arise out of the ownership, maintenance or use of the uninsured motor vehicle or underinsured motor vehicle. We will pay damages under this coverage caused by an accident with an underinsured motor vehicle only after the limits of liability under any applicable liability bonds or policies have been exhausted by payment of judgments or settlements.

To determine whether a policy provides primary, co-primary or excess coverage, the court must look to each policy's "Other Insurance" provisions. Royal Ins. Co. v. Rutgers Cas. Ins. Co., supra, 271 N.J.Super. at 415, 638 A.2d 924; American Reliance Ins. Co. v. American Cas. Co., 294 N.J.Super. 238, 240, 683 A.2d 205 (App.Div.1996). In Royal Ins., the plaintiff was injured in an automobile accident with an underinsured motorist in a vehicle owned and insured with Royal Insurance Company by her employer, and providing UIM coverage of $500,000. Plaintiff was permitted to drive the automobile as part of her work compensation, but was required to contribute $25 per month toward insurance. Additionally, plaintiff and her husband owned two other vehicles insured by Rutgers Casualty with $300,000 in UIM coverage. The Rutgers' "Other Insurance" provision specifically provided:

any insurance we provide with respect to a vehicle you do not own, or a vehicle owned by you or your family member which is not insured for this coverage under this policy, shall be excess over any other collectible insurance.

[Royal Ins. Co. v. Rutgers Cas. Ins. Co., supra, 271 N.J.Super. at 415, 638 A.2d 924].

We held that because plaintiff was injured in a car she did not own, under the express terms of the Rutgers policy, it only provided excess insurance to the Royal policy. Id. at 417, 638 A.2d 924.

Universal concedes UIM coverage under its policy, and that Marshall is underinsured. It contends, however, that NJM's policy provides concurrent coverage and should bear a pro rata share of the liability. Universal's argument has merit. NJM's "Other Insurance" provision provides:

If there is other applicable similar insurance under more than one policy or provision of coverage:

1. Any recovery for damages for property damage or bodily Injury sustained by an Insured may equal but not exceed the higher of the applicable limit for any one vehicle under this insurance or any other insurance.

2. Any insurance we provide with respect to a vehicle you do not own shall be excess over any other collectible insurance.

3. We will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. [emphasis added].

NJM's policy is distinguishable from the Rutgers policy because NJM's policy does not contain the exclusionary language "a vehicle owned by you ... which is not insured for this coverage under this policy, shall be excess over any other collectible insurance." Royal Ins. Co. v. Rutgers Cas. Ins. Co., supra, 271 N.J.Super. at 415, 638 A.2d 924 (emphasis added). NJM's policy provides excess insurance only for vehicles not owned by the insured. Because Marshall owned his motorcycle, paragraph three of NJM's "Other Insurance" provision applies and NJM must share in the loss on a pro rata basis.

In summary, since NJM's policy provides UIM coverage for injuries sustained by an insured in an accident with an underinsured motorist, regardless of whether the vehicle the insured is occupying is insured under its policy, and NJM by its policy terms agrees to share in the loss if other insurance is applicable, NJM must participate in the loss.

This result is consistent with our decision in Watson v. Agway Ins. Co., supra, 291 N.J.Super. 417, 677...