Unsatisfied Claim & Judgment Fund Bd. v. New Jersey Mfrs. Ins. Co.

• Decision Date: 23 November 1994
• Parties: UNSATISFIED CLAIM & JUDGMENT FUND BOARD and Commissioner of Insurance on Behalf of the Unsatisfied Claim & Judgment Fund Board, Plaintiffs-Appellants, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent.
• Court: New Jersey Supreme Court

Page 185

138 N.J. 185

649 A.2d 1243

UNSATISFIED CLAIM & JUDGMENT FUND BOARD and Commissioner of Insurance on Behalf of the Unsatisfied Claim &amp Judgment Fund Board, Plaintiffs-Appellants, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant-Respondent.

Supreme Court of New Jersey.

Argued Oct. 11, 1994.

Decided Nov. 23, 1994.

Ralph J. Padovano, Montvale, for appellants (Beattie Padovano, attorneys; Antimo A. Del Vecchio, on the briefs).

Brian J. Steller, Roseland, for respondent (Connell, Foley & Geiser, attorneys; Kathleen M. Cehelsky, on the letter brief).

The opinion of the court was delivered by

CLIFFORD, J.

The Unsatisfied Claim and Judgment Fund (UCJF or Fund) paid personal-injury-protection (PIP) benefits to passengers in an uninsured automobile that collided with a vehicle insured by defendant, New Jersey Manufacturers Insurance Company (NJM). Thereafter the Fund asserted a subrogation or reimbursement claim against NJM, seeking to recover its PIP payments. The Law Division entered summary judgment for the defendant insurer, and the Appellate Division affirmed, 270 N.J.Super. 311, 637 A.2d 191 (1994). We granted the Fund's petition for certification, 136 N.J. 295, 642 A.2d 1004 (1994), and now affirm.

I

On January 7, 1989, Maya Upia and Pura Ventura were passengers in the uninsured vehicle owned and operated by Jose Fernandez when it collided with the automobile of John Zane, insured by defendant, NJM. The accident occurred when Zane, travelling south on Paulison Avenue, Clifton, attempted to make a left-hand turn onto Clifton Avenue and struck Fernandez's northbound automobile.

Upia and Ventura instituted suit against Fernandez, Zane, and the State of New Jersey, Department of Insurance, UCJF, for bodily injuries that they had sustained in the collision. Neither passenger had any insurance available from which to make a claim for PIP benefits or any uninsured-motorist coverage. The Fund agreed to pay Upia's and Ventura's PIP-benefits claims of $1,424 and $3,487.60 respectively, in exchange for the dismissal of the complaint against the Fund and a release of the Fund from PIP-benefits liability, thus preserving any rights of the passengers to proceed against the alleged tortfeasors, Fernandez and Zane.

The Fund then filed this suit against Zane's insurer, NJM, to recover the amount of PIP benefits the Fund had paid to the passengers. On the parties' motions for summary judgment, the Law Division denied the Fund's motion, granted NJM's cross- and dismissed the complaint. The trial court concluded that the Fund had no right either of subrogation or of reimbursement for PIP payments against a third-party tortfeasor, and that the Fund's remedy was against the uninsured owner of the host vehicle, Fernandez.

In the Appellate Division the Fund argued, as it does here, that the combined effect of N.J.S.A. 39:6-86.6 (section 86.6 of the Fund Law), N.J.S.A. 39:6A-9.1 (section 9.1 of the No-Fault Law), and dicta in Wilson v. Unsatisfied Claim & Judgment Fund Board, 109 N.J. 271, 536 A.2d 752 (1988), support the conclusion that the Fund has such a right of subrogation or reimbursement. Because the Appellate Division found that neither the statutes nor Wilson authorizes that remedy, it affirmed the trial court's order for summary judgment in favor of defendant. 270 N.J.Super. at 314, 637 A.2d 191.

II

In view of Justice Garibaldi's comprehensive discussion of the New Jersey Automobile Reparation Reform Act, N.J.S.A. 39:6A-1 to -35 (No-Fault Law), last term for a unanimous Court in Roig v. Kelsey, 135 N.J. 500, 502-11, 641 A.2d 248 (1994), we do not rework that well-ploughed ground. We focus instead on the 1988 version of the statutory provisions, effective January 1, 1989, six days before the accident giving rise to this case. Under the 1988 amendments the "verbal threshold" applied to all insureds unless they elected otherwise, thereby foreclosing those insureds from recovery in tort for noneconomic damages except in nine specified circumstances. N.J.S.A. 39:6A-8. See generally Cynthia M. Craig & Daniel J. Pomeroy, New Jersey Auto Insurance Law § 4:3-5 (discussing 1988 amendments), § 15:3-2 (reviewing rules applying threshold to plaintiffs). Significantly, the "verbal threshold" bound even PIP claimants who had no insurance, such as pedestrians or passengers. Id. at § 4:3-5. Therefore, the PIP claimants in this case, the passengers in Fernandez's car who were not required to maintain PIP coverage, were bound by the "verbal threshold" and thus could not sue in tort for their injuries. See id. at § 15:3-2a(7).

The UCJF Law, on the other hand, is quite different from the No-Fault Law, both in purpose and effect. Originally enacted in 1952, that Law established the Fund "to provide a measure of relief to persons who sustain losses or injury inflicted by financially-irresponsible or unidentified operators of motor vehicles, where such persons would otherwise be remediless." Douglas v. Harris, 35 N.J. 270, 279, 173 A.2d 1 (1961). "The legislature created the Fund 'to provide the kind of protection a liability insurance policy would provide.' " Esdaile v. Hartsfield, 245 N.J.Super. 591, 595, 586 A.2d 334 (App.Div.1991) (quoting 25 New Jersey Practice, Motor Vehicle Law and Practice § 1151, at 3 (2d ed. 1987)), rev'd on other grounds, 126 N.J. 426, 599 A.2d 1254 (1992). However, the statute does not reflect a goal of making every claimant completely whole or compensating all accident victims; rather, it seeks to offer some measure of relief to those who come within the class intended to be protected, to prevent a claimant from being forced to absorb the entire economic loss caused by the accident. Ibid.

With the arrival of the No-Fault Law the Legislature built into the Fund Law provisions covering PIP benefits. The sections of the Fund Law concerning the eligibility requirements and procedures for collecting PIP benefits from the Fund are N.J.S.A. 39:6-86.1 to -86.6. In virtually all respects, the PIP provisions in the Fund Law track those in the No-Fault Law. See Craig & Pomeroy, supra, at § 31:3-5; compare N.J.S.A. 39:6-86.1 (listing available PIP benefits) with N.J.S.A. 39:6A-4 (listing available PIP benefits).

III

The Fund relies on section 86.6, "Recovery of benefits paid by Fund," to argue that it may recoup the paid PIP benefits from NJM, "the insurer." That section provides:

The commissioner shall be entitled to recover on behalf of the [UCJF] for all payments made by it pursuant to sections 7 and 10 of this act, regardless of fault, from any person who owned or operated the automobile involved in the accident and whose failure to have the required insurance coverage in effect at the time of the accident resulted in the payment of [PIP] benefits. If the identity of the owner and operator is not ascertained until after [PIP] benefits have been paid[,] then the commissioner shall be entitled to recover for such payments, regardless of fault, from the operator if he was driving without the owner's permission or from the operator and the owner if he was driving with the owner's permission or, in either case, from the insurer if there is an insurance policy providing [PIP] benefits that was in effect at the time of the accident with respect to such automobile.

The commissioner is authorized to bring an action, which shall be a summary proceeding, in the Superior Court to reduce the right provided by this section to judgment.

[Footnote omitted, emphases added.]

The statute is clear. Section 86.6 grants the Fund two sources for recovery of PIP benefits that it has paid. The first is from an uninsured motorist--the owner or operator who should have had insurance with PIP coverage and did not, thus resulting in the Fund's paying out PIP benefits. The second is from hit-and-run accidents--the owner or operator whose identity was learned only after the Fund had paid the PIP benefits. See Sanders v. Hunter, 253 N.J.Super. 666, 671-72, 602 A.2d 809 (Law Div.1991); Craig & Pomeroy, supra, at § 30:3-4c; Mario A. Iavicoli, No Fault and Comparative Negligence In New Jersey § 76 (1973); see also Wilson v. Unsatisfied Claim & Judgment Fund Bd., 213 N.J.Super. 594, 602, 517 A.2d 1236 (Law Div.1985) (noting that under section 86.6 Fund may recover PIP payments it has advanced), aff'd, 213 N.J.Super. 520, 517 A.2d 1197 (App.Div.1986), aff'd, 109 N.J. 271, 536 A.2d 752 (1988). Section 86.6's reference to "the insurer" at the end of the first paragraph refers to the insurer covering either the owner or operator of the automobile in the hit-and-run accident that the Fund had presumed to be uninsured. That provision ensures that if an insurance policy for the hit-and-run vehicle's owner or operator was in effect at the time of the accident, the Fund may recover the paid PIP benefits from the tortfeasor's insurer under that policy.

In this case, the third-party tortfeasor, Zane, was neither uninsured nor unknown at the time of the accident, and the insurer, NJM, was not an insurer of a hit-and-run motorist. Therefore, contrary to the Fund's arguments, section 86.6 fails to provide the Fund with a source of recovery.

The Fund also relies on section 9.1 of the No-Fault Law, claiming that it authorizes the Fund to recover the paid PIP benefits from NJM. Section 9.1 begins:

An insurer, health maintenance organization or governmental agency paying * * * [PIP] benefits * * *, as a result of an accident occurring within this State, shall, within two years of the filing of the claim, have the right to recover the amount of payments from any tortfeasor who was not, at the time of the accident, required to maintain [PIP] * * * coverage, other than for pedestrians, under the laws of this State, * * * or although required did not maintain [PIP] * * * coverage at the time of the accident.

It continues:

In the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an...