Verriest v. INA Underwriters Ins. Co.

• Decision Date: 23 August 1995
• Parties: Robert VERRIEST, Plaintiff-Appellant, v. INA UNDERWRITERS INSURANCE COMPANY, Defendant-Respondent, and James Curley Pierce and Throckmorton Texaco Corp., Defendants. Mary C. PRICE, General Administratrix, Administratrix ad Prosequendum of the Estate of Sherry Ann Price, deceased, and individually, and John A. Price, Plaintiffs-Appellants, v. INA UNDERWRITERS INSURANCE COMPANY, Defendant-Respondent, and James Curley Pierce, Throckmorton Texaco Corp., Throckmorton's (Throckmorton) Texaco, Inc., and James H. Pierce, Defendants.
• Court: New Jersey Supreme Court

Page 401

142 N.J. 401

662 A.2d 967

Robert VERRIEST, Plaintiff-Appellant, v. INA UNDERWRITERS INSURANCE COMPANY, Defendant-Respondent, and James Curley Pierce and Throckmorton Texaco Corp., Defendants.

Mary C. PRICE, General Administratrix, Administratrix ad

Prosequendum of the Estate of Sherry Ann Price,

deceased, and individually, and John A.

Price, Plaintiffs-Appellants, v. INA UNDERWRITERS INSURANCE COMPANY, Defendant-Respondent, and James Curley Pierce, Throckmorton Texaco Corp.,

Throckmorton's (Throckmorton) Texaco, Inc., and

James H. Pierce, Defendants.

Supreme Court of New Jersey.

Argued May 1, 1995.

Decided Aug. 23, 1995.

Patricia J. Cooney, Chatham, for appellant Robert Verriest (O'Connor & Rathican, attorneys; Gerald B. O'Connor, of counsel and on the joint brief).

Barbara L. Birdsall, Neptune, for appellants Mary C. Price, etc., et al. (Stout & O'Hagan, attorneys; William S. O'Hagan, Jr., of counsel).

Robert Gregory Leonard, Morristown, for respondent (Leonard & Butler, Morristown, attorneys; John R. Scott, Belleville, on the letter brief).

PER CURIAM.

On November 18, 1984, James Curley Pierce (Curley) was involved in an automobile accident that killed one person and seriously injured another. This appeal addresses whether a business-automobile policy issued by INA Underwriters Insurance Company (INA) covers Curley for liability arising out of that accident. The Law Division found that the policy afforded coverage. In an unreported opinion, the Appellate Division reversed. We granted certification. 139 N.J. 288, 654 A.2d 469 (1994).

I

The facts in this matter are essentially undisputed. Approximately two-and-one-half weeks prior to the accident, Charles Janulewicz brought his 1974 Cadillac to Throckmorton Texaco Corp. (Throckmorton), a sole proprietorship owned by James H. Pierce (James H.), in search of an interested buyer. Although Throckmorton was in the business of "detailing," which consists of washing, polishing, and waxing cars, Janulewicz assumed that James H. was an automobile dealer because he frequently had seen cars "sitting around the lot with no plates." Curley, James H.'s cousin who had moved to New Jersey approximately three weeks earlier and was working at Throckmorton, expressed interest in the car but lacked the money to buy it. James H., however, purchased the car for Curley, apparently for $150, and Curley was to repay James H. After receiving the money, Janulewicz removed the license plates from the car, signed and dated the Certificate of Ownership, leaving the name of the buyer blank, and gave the certificate and keys to James H. James H. immediately turned over the Certificate of Ownership and keys to Curley. The car, however, remained on the Throckmorton lot because, according to James H., Curley lacked the money "to pay [him] for the car" and "to get the car registered." During the two-and-one-half weeks that the Cadillac remained on the Throckmorton lot prior to the accident, Curley performed repair work on the vehicle, which James H. observed.

Shortly after purchasing the car, James H. contacted his insurance agent and arranged a meeting at which Curley was to have insured the car. That meeting was to have taken place the day after the accident. Apparently, Curley also was to have registered the car on that day.

Four days prior to the accident, James H. drove to Florida to attend a funeral, leaving Curley in charge of the business. In fact, Curley lived in a utility room in the Throckmorton premises during James H.'s absence. The day before the accident, while James H. was still away, Curley went into a locked drawer in James H.'s office, removed two automobile-dealer plates registered to D'Amico Lincoln Mercury (D'Amico), and put them on the Cadillac. Both James H. and Curley agreed that Curley had received no authorization to use those plates. Curley then took the Cadillac and went out drinking with a couple of friends "all night." Early the next morning, while Curley was driving the Cadillac, he crossed the center line of a roadway and collided head on with a vehicle driven by Sherry Ann Price. Price died as a result of the injuries she had sustained in the accident. Robert Verriest, a passenger in Price's vehicle, sustained severe injuries.

At the time of the accident, Throckmorton and James H. were insured under a business-automobile policy issued by INA, which had a $300,000 per occurrence liability limit. (Although the policy listed Throckmorton as the named insured, James H. was also a named insured under the policy because Throckmorton was a sole proprietorship, not a corporation.)

Verriest and Price's parents brought suit against Curley, Throckmorton, James H., and D'Amico, alleging negligence. INA provided a defense for James H. and Throckmorton, but did not defend Curley. Curley failed to answer the complaints, and the trial court entered a default judgment against him. D'Amico appeared in the action through separate counsel and was eventually awarded summary judgment. A jury trial resulted in a verdict in favor of defendants. In answers to specific interrogatories, the jury found that Curley had not been acting in the scope of his employment at Throckmorton at the time of the accident and that neither James H. nor Throckmorton had been negligent in employing Curley. During that trial, however, plaintiffs proved their damages against Curley, and the jury returned a verdict against Curley for $422,500 in the Verriest suit and $75,000 in the Price suit. Because Curley was judgment proof, he assigned his rights against INA to plaintiffs.

Plaintiffs then brought this suit against INA to determine coverage. The Law Division initially granted INA's motion for summary judgment, reasoning that plaintiffs' claims were barred by the entire-controversy doctrine. In an unreported opinion, the Appellate Division reversed and remanded, finding "nothing in R. 4:27-1B [predecessor to Rule 4:30A] [that] requires a personal injury claimant to join or combine a coverage suit with a common-law negligence case."

The parties then cross-moved for summary judgment on the issue of coverage under the INA policy. Under that policy, INA agreed to pay "all sums the insured legally must pay as damages because of bodily injury ... to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." (Emphases added). The policy defined a covered auto as "ANY AUTO," and defined an insured as either the named insured (Throckmorton or James H.) or "[a]nyone else ... using with your [the named insured's] permission a covered auto you [the named insured] own, hire or borrow."

The Law Division granted summary judgment in favor of plaintiffs, finding that Curley was entitled to coverage under the policy because the Cadillac had been a covered auto and Curley's use of that vehicle had been permissive. In an unreported opinion, the Appellate Division reversed, noting that the trial court had improperly failed to focus on the question of ownership. Examining the policy, the Appellate Division reasoned that "[b]ecause Curley was not a named insured he was not an 'insured' entitled to coverage unless he was using a covered auto owned, hired or borrowed by the named insured with the named insured's 'permission.' "

The court initially found that James H. had not been the "true" owner of the Cadillac, essentially because James H. had bought the car for Curley and "[t]here [was] no indication that he exerted any control over the vehicle after giving Janulewicz the money." Although the court noted that "under the terms of the policy * * * Curley's permissive use of the vehicle is relevant only if James H. was the owner of the car," it nevertheless reached the issue of permissive use. Somewhat inconsistently with its observation that James H. had not exerted any control over the vehicle, the Appellate Division concluded that there was "no proof in this case that James H. gave actual permission to Curley to operate the vehicle on a public highway." Finding that such permission could not be implied based on the circumstances, the court held that the policy did not afford coverage.

II

Under the terms of the policy, Curley is covered for liability arising out of the accident if he "us[ed] with [James H.'s] permission a covered auto [James H.] own[ed]." We first address whether James H. owned the Cadillac.

A

INA initially argues that because Janulewicz left the name of the buyer blank on the Certificate of Ownership, he did not effectively transfer title to the Cadillac and therefore plaintiffs must turn to Janulewicz and his insurance carrier for coverage. INA points to Eggerding v. Bicknell, 20 N.J. 106, 118 A.2d 820 (1955), in which an automobile dealership provided a defendant, Albert Bicknell, with a Certificate of Ownership for a used Chrysler after receiving the full purchase price, but failed to insert the date of the transaction or the name of the buyer as required by the Motor Vehicle Certificate of Ownership Law, (Certificate of Ownership Law), N.J.S.A. 39:10-1 to -37, and the regulations promulgated by the Director of the Division of Motor Vehicles thereunder. Before the paperwork had been completed, Bicknell struck and injured the plaintiff while operating the Chrysler. After the plaintiff had been awarded a $15,000 judgment against Bicknell, Bicknell brought an action seeking coverage against the automobile-dealer's insurance carrier. The Court found coverage, reasoning that the dealer's failure to follow the statutory requirements for transferring title, which require strict compliance, prevented the transfer of ownership of the car. Eggerding, supra, 20 N.J. at 112, 118 A.2d 820; see also Velkers v. Glens Falls Ins. Co., 93 N.J.Super. 501, 226 A.2d 448 (Ch.Div.) (holding that person who traded in car to dealer, but provided incomplete Certificate of Ownership, remained owner of vehicle and therefore his...