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New Jersey Law Journal
AUBREY THISTLE CAN STILL PRICKLEJUSTICES MAY DECIDE CASE-BY-CASE WHETHER UIM LIMITATION STILL APPLIES Cheryl Winokur
The state Supreme Court gave plaintiffs' attorneys a red rose last June when it trimmed its ruling in Aubrey v. Harleysville Insurance Companies. But, as oral arguments in Aubrey's aftermath showed last Tuesday, every rose has its thorn. Aubrey, 140 N.J. 397 (1995), had limited recovery in underinsured-motorist cases to the injured party's policy limits, even though there might be other insurance available. But in French v. New Jersey School Board Association Insurance Group, 149 N.J. 478 (1997), the justices ruled that was too literal and harsh a result -- at least in the case before them. But the justices gave little indication at oral arguments in N.J. Manufacturers Insurance Co. v. Breen, A-58, and Grant v. Amica Mutual Insurance Co., A-91, whether they would provide sweeping relief for individuals whose claims were denied after Aubrey or whether they would rule on a case-by-case basis. They did, however, seem to suggest that in situations where a passenger who has insurance is injured in another insured's automobile, the host's policy should be considered primary if the contractual language permits. Moreover, they seemed certain that taking the sum of both policies violates the "anti-stacking" provision of N.J.S.A. 17:28-1.1c., which prohibits an insured who has UIM coverage under more than one policy from recovering more than the highest of the limits. Lawyers for the carriers tried to steer clear of Aubrey's prospective application, arguing that it was moot after French, in which the justices allowed an injured school bus driver to avail herself of the $1 million UIM limit of her employer's policy rather than the $25,000 limit of her own. The insurers' lawyers argued that coverage should be denied based on the facts of their cases. NJM's attorney, Brian Steller, told the justices that Ruth Breen should not be entitled to recover under the $500,000 UIM policy limits of her parents' commercial policy because her personal UIM coverage was $50,000. He argued that she was not a named insured under the business policy nor an employee of the corporation. Justice Daniel O'Hern asked Steller to consider the example of a mom- and-pop business, where the business-owned car is used for personal matters. If one of the owners' children uses the car, is he or she covered, "even though the child is not an employee?" he asked. "I appreciate the distinction," replied Steller, a partner at Roseland's Connell, Foley & Geiser. But "the facts of this case are very specific." Justice Gary Stein, though, indicated that based on plain language of the policy, Breen should be entitled to recover. The language "suggests that you can look to blood relationships not of the corporation, but of the named insureds," he observed. "What are we to do about that?" Steller replied that the policy was not ambiguous, likening the family coverage provision to PIP coverage which, although mentioned in the policy, is not available to an insured under every circumstance. Later in the arguments Stein asked Breen's attorney, Marc Saperstein, whether the prospective application of Aubrey was still relevant since French instructs that the plain language of the policy determines coverage. "Why isn't that a sufficient basis to sustain [Breen's] claims?" he asked. "What is it about the holding that you want to avoid?" Saperstein responded that he was concerned about other plaintiffs whose policies are not clear. "We need to level the playing field," said Saperstein, a partner at Teaneck's Davis, Saperstein & Salomon. Gerald Baker, arguing as amicus for the Association of Trial Lawyers of America-New Jersey, reiterated Saperstein's point. "If everyone is misinterpreting Aubrey, at least give us a break and apply it prospectively," said Baker, a partner at Hoboken's Baker, Pedersen & Robbins. In Grant, the carrier's attorney, Daniel Pomeroy, argued that Frank Grant, who was injured in October 1992, was not entitled to collect under his brother Michael's $100,000 UIM policy, even though the brothers lived together, because Michael's policy was not purchased by or for Frank, who had $25,000 in UIM coverage. Justice Stein, however, took exception to Pomeroy's suggestion that Frank Grant should be denied coverage because his brother never intended him to be covered. What if Michael Grant did not read his policy, Stein reasoned. "Where does that get you? You have a policy that covers family members." In response to Pomeroy's suggestion that Grant should be decided on the facts, Justice O'Hern wondered why the Court could not tell arbitrators: "Here's a claim for coverage. Decide if it's fair." "Questions of coverage simply don't belong in arbitration," said Pomeroy, a partner at Springfield's Mortenson & Pomeroy. Instead, courts should conduct plenary hearings "because it's a decision that's quick," he said. Justice James Coleman Jr., cut that discussion short, however, saying he was uncomfortable ruling on an issue that was not before the Court. "I don't like deciding issues that were not presented," he said. It might not be long, however, before the issue is considered -- at least in terms of uninsured motorist claims. On Jan. 8, lawyers for Daniel O'Connell, who was injured in a two-car accident in January 1994, asked the Court to decide whether an insured's efforts to ascertain the identity of an unknown driver is a question of coverage for the courts or a question of entitlement that should be decided by an arbitration panel. An appellate panel on Dec. 12 agreed with Union County Superior Court Judge Lawrence Weiss that it was a question for the courts. The petition for certification in O'Connell v. New Jersey Manufacturers Insurance Co., 4526497, is pending, according to Richard Pliskin, a spokesman for the Court. The third case before the justices concerning backlash from Aubrey and French was Magnifico v. Rutgers Casualty Insurance Co., A-61. Roy Mossi, who represents Kathleen Magnifico, a passenger in a vehicle owned by Grace DeNichilo, argued that his client should be entitled to $325,000 -- the sum of both parties' UIM benefits, minus the $25,000 limit of the tortfeasor's policy. Justice Stein, however, was not persuaded by Mossi's insistence that this was not stacking. Taking the argument to its logical conclusion, Stein said, would suggest that a household with five people who each have their own car could end up with $500,000 UIM coverage. "I don't believe that's what the [anti-stacking] statute permits or the industry understands," he said. Stein, however, was not convinced that Magnifico should be limited to the $100,000 limits of her personal policy with Rutgers Casualty Insurance Co. since the plain language of the host car's policy from CSC Insurance Co. seems to provide passengers with $250,000 UIM coverage. "If it does, why do we bind her to $100,000?" he asked Rutgers' attorney, Susan Moreinis. Moreinis responded that Magnifico would reasonably expect that she would be entitled only to her $100,000 policy limits because that is the amount she purchased. Justice Stewart Pollock, however, wanted to know "whose reasonable expectations" the Court should consider: Magnifico's or DeNichilo's. "I don't think she could have reasonable expectations simply by getting into someone else's car," responded Moreinis, a solo practitioner in Collingswood. Meanwhile, Justice Coleman suggested that carriers could have written policies precluding coverage for injured passengers and wondered why carriers should "get the benefit" of not having done so. He said he read French as allowing claimants covered under two policies to select the benefit of the maximum. |
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