SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1102-17T3

LORI-ANNE MICHEL and

ERICH H. MICHEL,

Plaintiffs-Appellants,

v.

NEW JERSEY MANUFACTURERS

INSURANCE COMPANY,

Defendant-Respondent.

_________________________________

Argued October 30, 2018 – Decided 

Before Judges Rothstadt and Natali.

On appeal from Superior Court of New Jersey, Law 

Division, Passaic County, Docket No. L-1879-17.

John J. Scura, III argued the cause for appellant (Scura, 

Wigfield, Heyer, Stevens & Cammarota, LLP, 

attorneys; John J. Scura, III, of counsel and on the 

briefs; Timothy J. Foley, on the briefs).

Daniel J. Pomeroy argued the cause for appellant 

(Pomeroy Heller & Ley, LLC, attorneys; Daniel J. 

Pomeroy and Karen E. Heller, on the brief).

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

November 15, 2018
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PER CURIAM

Plaintiffs Lori-Anne Michel and Erich Michel appeal from a September 

25, 2017 Law Division order dismissing their complaint under Rule 4:6-2(e),

against defendant New Jersey Manufacturers Insurance Company (NJM). The 

court determined that the step-down provision in Erich's1 NJM automobile 

insurance policy's uninsured/underinsured (UM/UIM) coverage governed,

thereby limiting Lori-Anne's coverage to the amount specified in her personal 

automobile insurance policy with United Services Automobile Association 

(USAA). Plaintiffs also appeal from a separate order issued the same day 

denying their motion to amend. We affirm.

Lori-Anne was injured while walking in a crosswalk when she was struck 

by a car operated by Rosa Ludena. At the time of the accident, Rosa Ludena 

was a named insured under a basic policy that did not provide bodily injury 

liability coverage. Lori-Anne, however, was the named insured under the USAA 

policy that provided $25,000 in UIM coverage. After Lori-Anne tendered her 

claim to USAA, it offered her the full $25,000 policy limit. 

 

1 We refer to plaintiffs by their first names to avoid any confusion created by 

their common last name.
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Lori-Ann then pursued underinsured motorist coverage under the NJM 

policy that identified only Erich as the named insured. In accordance with 

Longworth v. Van Houten, 223 N.J. Super. 174 (App. Div. 1988), Lori-Anne 

notified NJM of the USAA offer and NJM advised that it had no objection to 

Lori-Ann accepting the offer.

The NJM policy describes "you" and "your" to "refer to the named insured 

shown in the Declarations" and the named insured's "spouse . . . if a resident of 

the same household . . . ." The NJM UIM endorsement defines insured as "[y]ou 

or any family member." A family member is described to include "a person 

related to you by . . . marriage . . . who is a resident of your household . . . ." 

The endorsement further provides that NJM will pay "compensatory 

damages which an insured is legally entitled to recover from the owner or 

operator of an . . . underinsured motor vehicle because of . . . [b]odily injury 

sustained by an insured and caused by an accident . . . " and that its "maximum 

limit of liability for all damages resulting from any one accident" for 

underinsured motorist coverage is $300,000. However, the endorsement 

contains a step-down provision, identified in bold lettering as "LIMIT OF 

LIABILITY," which provides:

1. If:
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 a. An insured is not the named insured, but is a family 

member under this policy; 

 b. That insured is a named insured under one or more 

other policies providing similar coverage; and 

 c. All such other policies have a limit of liability for 

similar coverage which is less than the limit of 

liability for this this coverage; 

then [NJM's] maximum limit of liability for that 

insured, for all damages resulting from any one 

accident, shall not exceed the highest applicable limit 

of liability under any insurance providing coverage to 

that insured as a named insured.

By letter dated October 27, 2016, NJM denied plaintiffs' claim. NJM 

determined the step-down language applied because Lori-Anne was an "insured" 

"family member" under the NJM policy and a named insured under the USAA 

policy, which provided coverage similar to the NJM policy. In June 2017, LoriAnne and Erich commenced an action against NJM seeking UIM benefits. In 

count one of the complaint, plaintiffs alleged NJM breached its contract,

claiming Lori-Anne was entitled to the entire $300,000 policy limit because she 

was a "named insured" under the NJM policy. Count two sought damages for 

Erich's loss of consortium and count three claimed NJM breached the implied 

covenant of good faith and fair dealing when handling Lori-Anne's claim. 
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Instead of answering the complaint, NJM filed a motion to dismiss under

Rule 4:6-2(e). NJM argued that the express language of its policy reduced LoriAnne's coverage. Plaintiffs opposed the motion and maintained that Lori-Anne 

was not subject to the step-down provision because she identified as a named 

insured under the NJM policy and despite being married to Erich was not his

family member. They also cross-moved to amend the complaint "to add 

additional facts based on NJM's continued breach of its contractual obligations, 

bad faith and breach of its duty of good faith and fair dealing" and to clarify 

Erich's loss of consortium claim. 

After hearing oral arguments, the court granted NJM's motion, dismissed 

the complaint, and denied plaintiffs' cross-motion. The court concluded that the 

"clear and concise terms of the NJM policy" established that "Lori-Anne Michel 

is an insured, not a named insured, under the UIM provision of th[e] policy, and 

thus the 'step[-]down' limitations" applied to limit her recovery to the $25,000 

limit of her USAA policy. Further, the court concluded that Erich's per quod

claim was derivative of Lori-Anne's claim and was subject to the same liability 

limit. Finally, the court found "no basis to permit an amendment" of the 

complaint. 
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On appeal, plaintiffs argue the trial court incorrectly interpreted the NJM 

policy contrary to their reasonable expectations. Specifically, plaintiffs again 

maintain that Lori-Anne was a named insured under the NJM policy and was not 

a family member. On this point, plaintiffs argue that because the NJM policy 

defines "you and your" to include Erich as the named insured and Lori-Anne as 

the resident spouse both should be considered named insureds and not subject 

to the step-down clause.

Separately, plaintiffs note that the step-down provision applies only to an 

insured who is not the named insured but who is a family member. Because 

family member is defined to include a resident of "your" household related to 

"you" by marriage, plaintiffs allege the step-down provision is inapplicable to 

Lori-Anne because she is not a family member as she cannot be related to 

herself. 

Having considered these arguments in light of the record and applicable 

legal principles, we conclude that Lori-Anne is not a named insured under the 

NJM policy but is an insured family member and therefore subject to the stepdown provision in the NJM policy. 

A trial court’s decision to dismiss a complaint pursuant to Rule 4:6-2(e) 

is subject to de novo review. Scheidt v. DRS Techs., Inc., 424 N.J. Super. 188, 
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193 (App. Div. 2012) (citing Donato v. Moldow, 374 N.J. Super. 475, 483 (App. 

Div. 2005)). On appeal, the test is whether the non-moving party has alleged 

facts sufficient to "suggest" a cause of action. Craig v. Suburban Cablevision, 

Inc., 140 N.J. 623, 626 (1995) (quoting Velantzas v. Colgate-Palmolive Co., 109 

N.J. 189, 192 (1988)). "Plaintiffs are entitled to every reasonable inference in 

their favor," ibid., but "conclusory allegations are insufficient" to survive a 

motion to dismiss for failure to state a claim upon which relief can be granted. 

Scheidt, 424 N.J. Super. at 193 (citing Printing Mart-Morristown v. Sharp Elec. 

Corp., 116 N.J. 739, 768 (1989)).

Our analysis is guided by well-established principles concerning 

interpretation of insurance contracts. As a general rule, "[a]n insurance policy

is a contract that will be enforced as written when its terms are clear [and] in 

order that the expectations of the parties will be fulfilled." Flomerfelt v. 

Cardiello, 202 N.J. 432, 441 (2010). When an ambiguity does exist, the 

ambiguity is resolved against the insurer and in favor of coverage. Kopp v. 

Newark Ins. Co., 204 N.J. Super. 415, 420 (App. Div. 1985). However, "not 

every 'far-fetched interpretation of a policy will be sufficient to create an 

ambiguity requiring coverage' . . . ." Mem'l Props., LLC v. Zurich Am. Ins. Co., 

210 N.J. 512, 528 (2012) (quoting Cobra Prods., Inc. v. Fed. Ins. Co., 317 N.J. 
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Super. 392, 400-01 (App. Div. 1998)). "A genuine ambiguity exists when the 

'phrasing of the policy is so confusing that the average policyholder cannot make 

out the boundaries of coverage.'" Simonetti v. Selective Ins. Co., 372 N.J. 

Super. 421, 428-29 (App. Div. 2004) (quoting Lee v. Gen. Accident Ins. Co., 

337 N.J. Super. 509, 513 (App. Div. 2001)). 

Guided by these principles, we are not persuaded by plaintiffs' argument 

that Lori-Anne is a named insured under the NJM policy. Rather, she is an 

insured family member covered for UIM benefits up to the limits of her USAA 

policy. "[T]he term 'named insured' is self-defining." Botti v. CNA Ins. Co., 

361 N.J. Super. 217, 226 (App. Div. 2003). It "refers only to the names so 

appearing in the declaration." Ibid. (citation omitted). Here, the only name 

appearing on the declaration page is Erich Michel. 

By contrast, the term "insured" is defined by the endorsement as "[y]ou or 

any family member." "You" and "your" refers to the "named insured shown in 

the Declarations; and . . . [t]he spouse . . . if a resident of the same household." 

Plaintiffs' argument that NJM's "deliberate lumping of the named insured and 

their spouse as 'you and your' creates the reasonable expectation" that they are 

to be treated as one for purposes of the contract is misplaced. The NJM policy 

clearly characterized Erich and Lori-Anne differently for UIM purposes. Erich 
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is indisputably the named insured "shown on the Declarations" (consistent with 

Botti) and Lori-Anne is separately described as an insured as she is Erich's 

spouse and a "resident of the same household." 

We similarly reject Lori-Anne's claim that she is not a "family member" 

as she is "related to" Erich by marriage who is a resident of her household. There 

is nothing in the NJM policy to suggest that an insured is limited to a single 

designation. Lori-Anne can be correctly characterized as "you" and also 

someone who is a "family member" as she is unquestionably related to Erich, 

the named insured, by marriage, who also resides in her household.

We also reject plaintiffs' reasonable expectation of coverage argument 

because the NJM policy is not "so confusing that the average policyholder 

cannot make out the boundaries of coverage." See Simonetti, 372 N.J. Super. at 

428-29 (quoting Lee, 337 N.J. Super. at 513). Plaintiffs' reasonable expectation

with respect to who is a "named insured" is informed by the declarations page

on the NJM policy, which identifies only Erich, and by the fact that Lori-Anne 

purchased a separate policy with USAA, which listed only her as the named 

insured. With respect to plaintiffs' claim that Lori-Anne is not a family member, 

we conclude an average husband or wife policyholder would expect to be 
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included within the family member term when it is defined to include a person 

related to "you by . . . marriage." 

Finally, as noted, plaintiffs also appeal from the dismissal of count three

of the complaint, Erich's per quod claim and the denial of their motion to amend. 

Because plaintiffs failed to brief these issues, we consider the arguments waived. 

See Seeward v. Integrity, Inc., 357 N.J. Super. 474, 479 n.3 (App. Div. 2003). 

To the extent not addressed, plaintiffs' remaining arguments lack 

sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.