Title: Caviglia v. Royal Tours of America

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized). On October 13, 1997, plaintiff, an uninsured driver, suffered serious injuries as a result of an automobile accident with a tour bus operated by defendant Hector Mundo and owned by defendant Royal Tours of America, Inc.. His wife, Mabel Brun, a passenger, also suffered injuries. Plaintiff and Mabel sued for personal injury and property damage. Mabel settled her claims. Defendants moved for summary judgment, arguing that because plaintiff was uninsured, N.J.S.A. 39:6A-5a barred him from suing for economic and noneconomic loss. At first the trial court granted defendants motion, but on reconsideration reversed itself and reinstated plaintiff s claim. The trial court concluded that N.J.S.A. 39:6A-4.5a violated the equal protection and due process guarantees of the Federal and State Constitutions. The Appellate Division affirmed. The Supreme Court granted defendants motion for leave to appeal. HELD: We uphold N.J.S.A. 39:6A-4.5a on due process grounds because the statute does not implicate a fundamental right and it is rationally related to, and suitably furthers, a legitimate state interest. We also find that N.J.S.A. 39:6A-4.5a does not violate the equal protection rights of uninsured drivers under the Federal or State Constitutions. 1. Under New Jersey s No Fault Act, N.J.S.A. 39:6A-1 to 35, All owners of motor vehicles registered or principally garaged in New Jersey are required to maintain minimum amounts of standard, basic, or special liability insurance coverage for bodily injury, death, and property damage caused by their vehicles. In addition, every policy must provide a package of personal injury protection (PIP) benefits. The No Fault Act was intended to serve as the exclusive remedy for payment of out-of-pocket medical expenses arising from an automobile accident. The Act contained restrictions on the right to sue and was intended to: (1) provide benefits promptly and efficiently to all accident injury victims; (2) reduce or stabilize the cost of automobile insurance; (3) make insurance coverage readily available for automobile owners; and (4) streamline judicial procedures involved in third-party claims. In 1984, the Legislature enacted the Cost Containment Act in an attempt to control the spiraling cost of automobile insurance. That Act provided for the option of reduced premiums with higher deductibles and reduced benefits, and enlarged the class of people to be excluded from PIP coverage entirely. In 1985, the Legislature enacted N.J.S.A. 39:6A-4.5, which imposes restrictions on the right of an uninsured driver to sue for noneconomic damages. In 1988, N.J.S.A. 39:6A-4.5 was amended and the new verbal threshold was introduced, requiring a more exacting standard of proving death or a severe bodily injury, and applied to all insured motorists seeking recovery for noneconomic losses who did not select an alternative option. In 1997, the Legislature comprehensively amended N.J.S.A. 39:6A-4.5 to bar three classes of people from suing for personal injuries in automobile accident cases, including persons who operate automobiles without insurance, N.J.S.A. 39:6A-4.5a, the provision under review here. N.J.S.A. 39:6A-4.5a advances a policy of cost containment by ensuring that an injured, uninsured driver does not draw on the pool of accident-victim insurance funds to which he did not contribute. The legislation thus gives the uninsured driver a very powerful incentive to comply with the compulsory insurance laws: obtain automobile liability insurance coverage or lose the right to maintain a suit for both economic and noneconomic injuries. (Pp. 5-13) 2. The Fourteenth Amendment to the United States Constitution guarantees that no state may deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws. U.S. Const. amend. XIV, 1. If a statute is founded on some conceivable rational basis to promote a public purpose, it will survive constitutional scrutiny. In finding that N.J.S.A. 39:6A-4.5a violated federal and state constitutional guarantees of substantive due process, the Appellate Division held that the absolute bar to recovery of noneconomic damages was arbitrary and irrational. Section 4.5a did nothing more than subject the right to sue for noneconomic damages in an automobile accident case to the condition that the injured motorist secure liability insurance. Preconditions on the filing of lawsuits are a common feature of our laws. An uninsured driver forfeits the right to sue by failing to comply with a necessary precondition to filing suit: maintaining insurance coverage. An uninsured motorist does not have a fundamental right to operate an automobile without liability insurance. The Legislature may act to give motorists incentives to purchase insurance so that a greater pool of insurance proceeds will be available for all accident victims. Alternatively, it may bar the claims of those who fail to contribute to the system by obtaining insurance. We cannot say that this is an irrational approach towards stabilizing or decreasing insurance costs for those who comply with our insurance laws. We therefore uphold N.J.S.A. 39:6A-4.5a on due process grounds because the statute does not implicate a fundamental right and it is rationally related to, and suitably furthers, a legitimate state interest. (Pp. 13-22) 3. Uninsured drivers do not belong to a class entitled to heightened protections under our Federal or State Constitutions. Uninsured drivers are not similarly situated to insured drivers because uninsured drivers are in violation of the law, and their counterparts are not. Subjecting uninsured drivers to disparate legislative treatment is justified by the public need in having all drivers conform with the No Fault Act. N.J.S.A. 39:6A-4.5a, therefore, does not violate the equal protection rights of uninsured drivers under the Federal or State Constitutions. (Pp. 23-27) The judgment of the Appellate Division is REVERSED and the matter is REMANDED for proceedings consistent with this opinion. CHIEF JUSTICE PORITZ and JUSTICES LONG, VERNIERO, LAVECCHIA, ZAZZALI and WALLACE join in Justice ALBIN s opinion. JORGE O. CAVIGLIA and MABEL BRUN CAVIGLIA, Plaintiffs-Respondents, v. ROYAL TOURS OF AMERICA and HECTOR MUNDO, Defendants-Appellants, and ABC CORPORATION, XYZ COMPANY, JOHN DOE NOS. 1-3 (fictitious names for individuals or business entities incorporated in or authorized to do business In the State of New Jersey), Defendants. Argued October 21, 2003 Decided February 19, 2004 On appeal from the Superior Court, Appellate Division, whose opinion is reported at 355 N.J. Super. 1 (2002). Floyd G. Cottrell argued the cause for appellants (Newman Fitch Altheim Myers, attorneys; Kalliopi P. Kousis, on the brief). Norberto H. Yacono and Kenneth C. Marano argued the cause for respondents (Mr. Yacono, attorney). Susan Stryker argued the cause for amici curiae Insurance Council of New Jersey, Alliance of American Insurers, American Insurance Association and National Association of Independent Insurers (Sterns & Weinroth, attorneys; Ms. Stryker and Mitchell A. Livingston, on the brief). Raymond R. Chance, III, Deputy Attorney General, argued the cause for amicus curiae State of New Jersey (Peter C. Harvey, Attorney General of New Jersey, attorney; Patrick DeAlmeida, Deputy Attorney General, of counsel; Prince F. Kessie, Deputy Attorney General, on the brief). Gerald H. Baker submitted a brief on behalf of amicus curiae The Association of Trial Lawyers of America-New Jersey (Baker, Garber, Duffy & Pedersen, attorneys). Justice ALBIN delivered the opinion of the Court. Plaintiff Jorge O. Caviglia owned and operated an uninsured motor vehicle at the time he suffered injuries in an automobile accident. Although faultless in the accident, plaintiff was exposed to a mandatory fine of between $300 and $1,000, a period of community service, and a one-year license forfeiture because of his failure to carry automobile liability insurance. N.J.S.A. 39:6B-2. Because his vehicle was uninsured, plaintiff also was barred from suing the tortfeasor for recovery of his economic injuries. N.J.S.A. 39:6A-4.5a; Monroe v. City of Paterson, 318 N.J. Super. 505, 510 (App. Div. 1999). Plaintiff does not dispute the power of the State to impose quasi-criminal penalties or to deny the recovery of economic damages as a consequence of his driving an uninsured vehicle. Plaintiff only challenges the constitutionality of that part of N.J.S.A. 39:6A-4.5a that precludes him from suing the tortfeasor for noneconomic damages, such as pain and suffering. He claims that the statutory bar violates federal and state constitutional guarantees of equal protection and due process. We are satisfied that the Legislature did not exceed its constitutional authority in enacting N.J.S.A. 39:6A-4.5a. a. For the purpose of filing an action for recovery of noneconomic loss, as defined in [N.J.S.A. 39:6A-2], be subject to the tort option specified in [N.J.S.A. 39:6A-8b]; b. In the event of a recovery for noneconomic loss pursuant to an arbitration award, judicial judgment or voluntary settlement, be subject to the setoff option as set forth in [N.J.S.A. 39:6A-4.3c], except that the amount of the setoff shall be payable to the New Jersey Automobile Insurance Risk Exchange established pursuant to [N.J.S.A. 39:6A-21]. [L. 1985, c. 520, 14 (current version at N.J.S.A. 39:6A-4.5) (emphasis added).] The statute did not restrict entirely an injured, uninsured motorist from suing for noneconomic damages, but conditioned that right on his meeting the $1,500 medical-expense threshold. L. 1985, c. 520, 14. At that time, the $1,500 medical-expense threshold was the highest monetary threshold option available to insureds in exchange for lower premiums. L. 1985, c. 520, 15. The uninsured driver, thus, had to satisfy the most onerous monetary threshold before he was entitled to pursue a suit for noneconomic injuries. In 1988, the Legislature amended N.J.S.A. 39:6A-4.5 by deleting subsection b and by subjecting uninsured motorists seeking noneconomic damages to N.J.S.A. 39:6A-8a s new verbal threshold as a condition to filing suit. L. 1988, c. 119, 4, 6. The verbal threshold required a more exacting standard of proving death or a severe bodily injury See footnote 4 and applied to all insured motorists seeking recovery for noneconomic losses who did not select an alternative option. That alternative option did not require the insured to meet a monetary threshold or prove bodily injury, but instead gave him a right to unrestricted recovery for noneconomic damages in exchange for higher premiums. L. 1988, c. 119, 4, 6-7; Oswin, supra, 129 N.J. at 297; Jacques v. Kinsey, 347 N.J. Super. 112, 126 (Law Div. 2001). Requiring the uninsured motorist to meet the verbal threshold as a prerequisite to pursuing a lawsuit for personal injuries was an important barrier designed to keep insurance costs down. Jacques, supra, 347 N.J. Super. at 125-26. In 1997, the Legislature comprehensively amended N.J.S.A. 39:6A-4.5 to bar three classes of people from suing for personal injuries in automobile accident cases: (a) persons who operate automobiles without insurance; (b) persons who drive while under the influence of alcohol or drugs; and (c) persons who act with the intent to injure others while driving. The statute provides: a. Any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage mandated by [N.J.S.A. 39:6A-4 ] shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of an accident while operating an uninsured automobile. b. Any person who is convicted of, or pleads guilty to, operating a motor vehicle in violation of [N.J.S.A. 39:4-50, -50.4a], or a similar statute from any other jurisdiction, in connection with an accident, shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of the accident. c. Any person acting with specific intent of causing injury to himself or others in the operation or use of an automobile shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of an accident arising from such conduct. [L. 1997, c. 151, 13 (current version at N.J.S.A. 39:6A-4.5) (emphasis added). See footnote 5] Only subsection (a) of the amended statute forms the basis of the appeal in this case. N.J.S.A. 39:6A-4.5a advances a policy of cost containment by ensuring that an injured, uninsured driver does not draw on the pool of accident-victim insurance funds to which he did not contribute. See Rojas v. DePaolo, 357 N.J. Super. 115, 119 (Law Div. 2002) (noting section 4.5 s evident purpose of reducing or stabilizing insurance prices). The legislation thus gives the uninsured driver a very powerful incentive to comply with the compulsory insurance laws: obtain automobile liability insurance coverage or lose the right to maintain a suit for both economic and noneconomic injuries. [Id. at 492-93 .] Legislatures are empowered to pass laws to meet the pressing social needs of the times, even if those laws seem to others ill-advised or later prove to be failures. Legislatures are entitled to experiment and explore means through which to advance public policy, provided there is a reasonable basis to support the legislation. Williamson v. Lee Optical of Okla. Inc., 348 U.S. 483, 487-88, 75 S. Ct. 461, 464, 99 L. Ed. 563, 572 (1955) ( [T]he law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction, and that it might be thought that the particular legislative measure was a rational way to correct it. ); Day-Brite Lighting, Inc. v. Missouri, 342 U.S. 421, 423, 72 S. Ct. 405, 407, 96 L. Ed. 469, 472 (1952). Thus, we decline to second-guess the Legislature s common-sense reasoning that section 4.5a has the potential to produce greater compliance with compulsory insurance laws and, in turn, reduce litigation, and result in savings to insurance carriers and ultimately the consuming public. A legislative enactment is presumed to be constitutional and the burden is on those challenging the legislation to show that it lacks a rational basis. Board of Educ. of Piscataway Tp. v. Caffiero, 86 N.J. 308, 318 (1981), appeal dismissed, 454 U.S. 1025, 102 S. Ct. 560, 70 L. Ed 2d 470 (1981). We customarily grant great deference to the Legislature in its decisions governing the necessity and reasonableness of economic and social legislation. Edgewater Inv. Assocs. v. Borough of Edgewater, 103 N.J. 227, 235 (1986). In this case, the Appellate Division shifted the burden to the State to justify the constitutionality of the statute. The State, however, was not obligated to present statistical evidence to prove the soundness of the legislation. In the absence of a sufficient showing that the Legislature lacked factual support for its judgment, this Court will assume that the statute is based on some rational basis within the knowledge and experience of the Legislature. Burton v. Sills, 53 N.J. 86, 95 (1968), appeal dismissed, 394 U.S. 812, 89 S. Ct. 1486 (Mem), 22 L. Ed. 2d 748 (1969) (citation omitted). Nevertheless, the arithmetic of this State s automobile liability insurance scheme is not difficult to compute. When fewer motorists purchase automobile insurance and more uninsured motorists receive payment on their claims for personal injuries, those who obey our compulsory insurance laws pay higher premiums. The Legislature may do more than ponder powerlessly such an inequitable equation. The Legislature may act to give motorists incentives to purchase insurance so that a greater pool of insurance proceeds will be available for all accident victims. Alternatively, it may bar the claims of those who fail to contribute to the system by obtaining insurance. We cannot say that this is an irrational approach towards stabilizing or decreasing insurance costs for those who comply with our insurance laws. We need not address whether the abrogation of an entire cause of action would violate plaintiff s substantive due process rights because here we find that the Legislature did not do so. Rather, it placed a reasonable condition on the exercise of the right to sue for personal injuries in an automobile accident case. Placing such a condition bears a real and substantial relationship to the Legislature s no-fault goals. We uphold N.J.S.A. 39:6A-4.5a on due process grounds because the statute does not implicate a fundamental right and it is rationally related to, and suitably furthers, a legitimate state interest. NO. A-72 SEPTEMBER TERM 2002 ON APPEAL FROM Appellate Division, Superior Court JORGE O. CAVIGLIA and MABEL BRUN CAVIGLIA, Plaintiff-Appellant, v. ROYAL TOURS OF AMERICA and HECTOR MUNDO, Defendants-Appellants. DECIDED February 19, 2004 Chief Justice Poritz PRESIDING OPINION BY Justice Albin CONCURRING OPINION BY DISSENTING OPINION BY [ N.J.S.A. 39:6A-8a.]