SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2401-18T2

MELVIN REID and MARYLYNN

REID, Husband and Wife,

Plaintiffs-Respondents,

v.

NEW JERSEY MANUFACTURERS

INSURANCE COMPANY,

Defendant-Appellant.

_________________________________

Argued November 4, 2019 – Decided 

Before Judges Sabatino, Geiger and Natali.

On appeal from the Superior Court of New Jersey, Law 

Division, Monmouth County, Docket No. L-0610-18.

Stephen J. Foley, Jr., argued the cause for appellant 

(Campbell, Foley, Delano & Adams, LLC, attorneys; 

Mario John Delano and Stephen J. Foley, Jr., on the 

briefs).

Daniel M. Santarsiero argued the cause for respondents 

(Law Offices of Jonathan F. Marshall, attorneys; Daniel 

M. Santarsiero, on the briefs).

NOT FOR PUBLICATION WITHOUT THE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.

February 27, 2020
2

A-2401-18T2

PER CURIAM 

Defendant New Jersey Manufacturers Insurance Company (NJM) appeals 

from an August 31, 2018 order granting partial summary judgment to plaintiffs 

Melvin and Marylynn Reid. After considering the record against the relevant 

legal principles and applicable standard of review, we reverse.

I.

Jonathan Radcliffebivins was operating a motor vehicle when he collided with 

a car operated by Marc Reid in which his father, Melvin, was a passenger. The 

vehicle Radcliffebivins was operating was insured by the Government Employees 

Insurance Company (GEICO) with $20,000 in liability limits. The vehicle that Marc 

was driving was owned by his then wife Maria A. Menio-Reid and was insured by

defendant NJM which provided, among other coverages, $300,000 in underinsured

motorist1(UIM) insurance.

2

 Melvin did not reside with Marc or his wife and was 

1

 A tortfeasor is an underinsured motorist when possessing "'less' coverage 'at 

the time of the accident' than the person seeking UIM benefits. The comparison 

of policy limits required by N.J.S.A. 17:28-1.1(e) is determined by the 'actual 

tortfeasor's policy limits and not by the settlement amounts paid to the injured 

party.'" Harmon v. N.J. Auto. Full Ins. Underwriting Ass'n, 268 N.J. Super. 434, 

438 (App. Div. 1993) (quoting Gold v. Aetna Life & Cas. Ins. Co., 233 N.J. 

Super. 271, 277 (App. Div. 1989)).

2

 The parties have not included the declarations sheet to the NJM policy in the 

record, nor a complete copy of the NJM policy. They do not dispute, however, 
3

A-2401-18T2

not a named insured on the NJM policy. Melvin was insured by an Allstate 

Insurance Company (Allstate) policy that contained $100,000 in per person UIM 

limits. 

In November 2014, plaintiffs filed a complaint in the Law Division against 

Radcliffebivins for injuries sustained by Melvin in the accident. Plaintiffs also 

notified Allstate and NJM shortly thereafter of the action and advised those insurers 

that they sought UIM benefits. Plaintiffs further advised Allstate and NJM of the 

companies' attendant rights to intervene in the proceedings. Allstate so exercised 

that right but NJM did not participate in the plaintiffs' personal injury action and 

advised plaintiffs that its exposure was limited based on section A.2 of the Limits of 

Liability section of the NJM policy. 

Section A.2 provides coverage for both uninsured motorist (UM) and UIM 

incidents subject to applicable coverage limits and conditioned on the following:

Limit of Liability

A. The limit of liability shown in the declarations for 

this coverage is our maximum limit of liability for all 

damages resulting from any one accident. However, 

subject to our maximum limit of liability for this 

coverage:

that the policy included $300,000 in UIM benefits. Further, no party has 

challenged the insured status of plaintiff Melvin Reid. We assume from their 

arguments, however, that he was neither a named insured nor family member.
4

A-2401-18T2

2. If an insured is not a named insured or family

member under this policy, then [NJM's] maximum limit 

of liability for that insured, for all damages resulting 

from any one accident, shall not exceed the minimum

limits required by New Jersey law for liability coverage

set forth in N.J.S.A. 39:6A-3.

[(Emphasis supplied).]

N.J.S.A. 39:6A-3 provides that the minimum coverage limit for "injury to, or 

death of, one person, in any one accident" is $15,000.3 

Radcliffebivins offered to settle with plaintiffs for the $20,000 liability limit 

in the GEICO policy. In accordance with Longworth v. Van Houten, 223 N.J. Super. 

174 (App. Div. 1988), plaintiffs notified Allstate and NJM of the settlement offer

and sought their consent to settle. Allstate authorized the settlement, but NJM again 

indicated that because Radcliffebivins' liability limits exceeded the UIM limits under 

the step-down clause, plaintiffs were precluded from recovery against NJM. 

A jury returned a verdict for plaintiffs against Allstate, finding that the 

collision caused $1,250,000 in damages to Melvin and $50,000 in per quod damages 

to Marylynn. As a result of the jury's verdict, Allstate disbursed the remaining 

$80,000 of available UIM coverage under its policy. 

3

 N.J.S.A. 39:6A-3 further prescribes a minimum coverage limit for "injury to, 

or death of, more than one person, in any one accident" of $30,000, N.J.S.A. 

39:6A-3(b), and $5000 for "damage to property in any one accident." N.J.S.A. 

39:6A-3(c).
5

A-2401-18T2

Shortly thereafter, plaintiffs filed a two-count complaint against NJM, 

alleging that it: 1) was bound by the February 8, 2018 verdict, and 2) wrongfully 

denied insurance benefits to plaintiffs in violation of its duty of good faith and fair 

dealing. With respect to count one, plaintiffs sought the $300,000 in UIM benefits 

under the NJM policy. 

The parties cross-moved for summary judgment on count one. Plaintiffs 

argued that NJM should not be permitted to "re-litigate the jury award" against 

Allstate because "it is undisputed that [NJM] was on notice of the underlying 

litigation," yet chose not to intervene. Further, plaintiffs contended that NJM was 

bound by our unpublished decision in Granata v. Rasizer, No. A-1855-14T2 (App. 

Div. May 19, 2016), certif. denied, 227 N.J. 358 (2016),

4

 as it was a party to that 

litigation.

In Granata, the plaintiff was injured in an automobile accident while driving 

her mother's car. Granata, slip op. at 1. The vehicle was insured by NJM, and 

the plaintiff was not a named insured on the policy. Ibid. Plaintiff filed a claim 

4

 Generally, "no unpublished opinion shall be cited by any court," Rule 1:36-3, 

except where, as here, the unpublished decision is submitted for the limited 

purposes of "the application of preclusionary legal principles or case history . . 

. ." Pressler and Verniero, Current N.J. Court Rules, cmt. 2 on R. 1:36-3 (2020); 

see also Animal Prot. League of N.J. v. N.J. Dep't of Envtl. Prot., 423 N.J. Super. 

549, 556 n.2 (App. Div. 2011).
6

A-2401-18T2

with NJM for UIM benefits "pursuant to [the plaintiff's mother's] belief that 

NJM provided her with up to $300,000 in UIM benefits." Ibid. 

NJM denied the claim because the prior year, the policy had been amended 

to include a step-down provision5that limited the available UM/UIM coverage 

for non-resident relatives to $15,000. Ibid. NJM alleged that plaintiff's mother 

had been made aware of the step-down clause in a "summary of important 

changes" sent to her prior to the policy renewal that stated her UM/UIM 

coverage "had been reduced 'to the lowest level allowed by New Jersey law.'" 

Id. at 1, 4. Plaintiff's mother testified at her deposition that she did not read the 

summary, but that when she contacted NJM, she was told her coverage had not 

changed. Id. at 2. The trial court granted summary judgment to NJM. Ibid.

We reversed and concluded that the UIM step-down provision in that case 

was ambiguous because neither the summary, the declaration sheet, nor the 

policy itself "indicate[d] the amount of available coverage for a non-resident 

relative," as the policy contained only a reference to N.J.S.A. 39:6A-3. Id. at 4. 

We rejected NJM's argument that a policyholder should conduct research or 

consult with a lawyer to determine the minimum liability limits and stated: 

The need to consult a lawyer suggests, on its face, the 

impermissible ambiguity that we and our Supreme 

5

 The step-down clause in Granata is identical to section A.2.
7

A-2401-18T2

Court have consistently proscribed. Even if a 

policyholder had gone to a library and found N.J.S.A. 

39:6A-3, that section would not provide the requisite 

clarity for a lay policyholder, as it does not mention UM 

or UIM coverage specifically, and gives three different 

numbers for different types of coverage. 

[Ibid.]

Instead, relying on Zacarias v. Allstate Ins. Co., 168 N.J. 590 (2011), we

reasoned that:

[i]n enforcing an insurance policy, courts will depart 

from the literal test and interpret it in accordance with 

the insured's understanding, even when that 

understanding contradicts the insurer's intent, if the text 

appears overly technical or contains hidden pitfalls, 

cannot be understood without employing subtle or 

legalistic distinctions, is obscured by fine print, or 

requires strenuous study to comprehend.

[Ibid. (quoting Zacarias, 168 N.J. at 601) (citations 

omitted).]

We also noted that NJM renews coverage regularly and could "easily add a 

number . . . to plaintiff's contract." Ibid. As such, we determined that "[t]he 

mere citation of a statute is not enough to inform the average policy holder of 

what those limits are," ibid., and "the minimum liability coverage limit of 

$15,000 should have been specifically included in the policy to allow . . . the 

policy holder[] to 'digest the changes' of the policy." Ibid. (quoting Skeete v. 

Dorvius, 184 N.J. 5, 9 (2005)).
8

A-2401-18T2

As it does before us, NJM maintained in the trial court that section A.2

was clear and unambiguous and distinguished Granata by noting that the Granata

court addressed a situation involving improperly communicated changes in 

coverage as opposed to the present circumstance where the insured "is getting 

exactly what he negotiated, exactly what he paid for when he took the insurance 

in the first place." 

In an August 31, 2018 oral decision, the court granted plaintiffs' motion, 

denied NJM's cross-motion, and entered a conforming order granting judgment 

to plaintiffs for $200,000.6In its oral decision, the court concluded that NJM 

was bound by the Granata decision as it was a party to that litigation. The court 

reasoned that Granata was "sufficiently similar to the present case" because 

neither policy's UIM provision contained "an explicit dollar value, and instead 

[consisted of] a reference to a statute which is not known to the average insured." 

The court deemed it irrelevant "[w]hether the alleged ambiguity was always 

present . . . or introduced during coverage."

Finally, the court noted that even if it did not consider Granata, it would 

nevertheless have found the step-down clause "ambiguous and . . . properly 

6 The judgment was comprised of the difference between the $300,000 UIM 

policy limit covering Menio-Reid's vehicle, and the $100,000 disbursed by 

GEICO and Allstate.
9

A-2401-18T2

interpreted against the insurer." The court explained that "a step[-]down 

provision that . . . [cites] a statute, rather than an easily digestible dollar amount, 

is confusing" and, as such, refused to "enforce a provision that is so . . . 

confusing that the average policyholder cannot make out the boundaries of 

coverage . . . ."

NJM moved for reconsideration or to amend the order pursuant to Rule 1:7-4

(b), requesting that the court consider another section of its policy "which would 

afford . . . plaintiff[s] coverage," but would provide less than $300,000 in UIM 

benefits. In response, plaintiffs filed a cross-motion to enforce litigant's rights 

pursuant to Rule 1:10-3, asserting that NJM had neither relied upon, nor mentioned,

any other provision of the policy other than section A.2, and had failed to supply

answers to an information subpoena. The court issued an October 17, 2018 order 

granting plaintiffs' cross-motion and denying NJM's motion.

Plaintiffs moved to certify the partial summary judgment order as final, 

pursuant to Rules 4:42-2 and 4:59, which the court granted on January 18, 2019. 

This appeal followed.

NJM advances two arguments on appeal. First, it contends the court 

incorrectly concluded that NJM was bound by our unpublished decision in Granata

simply because it was a party to that case. Second, NJM maintains the court 
10 A-2401-18T2

mistakenly determined that that NJM's step-down clause was vague and 

unenforceable. 

II.

Our review of a ruling on summary judgment is de novo, applying the 

same legal standard as the trial court. Townsend v. Pierre, 221 N.J. 36, 59 

(2015). "Summary judgment must be granted if 'the pleadings, depositions, 

answers to interrogatories and admissions on file, together with the affidavits, if 

any, show there is no genuine issue as to any material fact challenged and that 

the moving party is entitled to a judgment . . . as a matter of law.'" Town of 

Kearny v. Brandt, 214 N.J. 76, 91 (2013) (quoting R. 4:46-2(c)). We accord no 

special deference to the trial judge's conclusions on issues of law. Nicholas v. 

Mynster, 213 N.J. 463, 478 (2013).

Initially, we conclude that NJM was not collaterally estopped from relying 

on the step-down provision contained in section A.2 of its policy based on our 

decision in Granata. Collateral estoppel "bars relitigation of issues previously 

litigated and determined adversely to the party against whom the doctrine is 

asserted . . . . When used to bar a defendant from asserting a defense previously 

litigated and lost against a different plaintiff[,] it is referred to as offensive 

collateral estoppel." Kortenhaus v. Eli Lilly & Co., 228 N.J. Super. 162 (App. 
11 A-2401-18T2

Div. 1988). For a court to determine that a party is collaterally estopped from 

litigating an issue, five elements must be met: 

(1) the issue to be precluded is identical to the issue 

decided in the prior proceeding; (2) the issue was 

actually litigated in the prior proceeding; (3) the court 

in the prior proceeding issued a final judgment on the 

merits; (4) the determination of the issue was essential 

to the prior judgment; and (5) the party against whom 

the doctrine is asserted was a party to or in privity with 

a party to the earlier proceeding.

[Allen v. V & A Bros., Inc., 208 N.J. 114, 137 

(2011) (quoting Olivieri v. Y.M.F. Carpet, Inc., 186 

N.J. 511, 521 (2006)).]

Under the first prong, the prior action must have involved substantially 

similar or identical issues. L.T. v. F.M., 438 N.J. Super. 76, 86 (App. Div. 2014) 

(quoting Olivieri, 186 N.J. at 521). Some courts have required the issues to be 

"precisely the same." In re Liquidation of Integrity Ins. Co./Celotex Asbestos 

Trust, 214 N.J. 51, 68 (2013) (quoting In re McWhorter, 887 F.2d 1564, 1567 

(11th Cir. 1989)). 

Further, an "issue is actually litigated" if the issue "is properly raised, by 

the pleadings or otherwise, and is submitted for determination, and is 

determined." Allesandra v. Gross, 187 N.J. Super. 96, 105-06 (App. Div. 1982) 

(quoting Restatement (Second) of Judgments § 27, cmt. d (Am. Law. Inst. 

1980)). Moreover, "'final judgment' includes any prior adjudication of an issue in 
12 A-2401-18T2

another action that is determined to be sufficiently firm to be accorded conclusive 

effect." Restatement (Second) of Judgments § 13. "Simply put, for collateralestoppel purposes, 'the question to be decided is whether a party has had his day 

in court on an issue.'" State v. K.P.S., 221 N.J. 266, 278 (2015) (quoting 

McAndrew v. Mularchuk, 38 N.J. 156, 161 (1962)). 

Plaintiffs urge that NJM, having had a robust opportunity to defend 

section A.2 against ambiguity challenges in Granata, should be precluded from 

relitigating that issue. Indeed, the ambiguity issue appears to have been 

"identical,"

7

"actually litigated" to finality, see Allen, 208 N.J. at 137 (quoting 

Olivieri, 186 N.J. at 521); Restatement (Second) of Judgments § 27 cmt. d, 

decided on the merits, and the Granata court's finding of an impermissible 

7

 We have assumed, for purposes of this opinion, that plaintiffs satisfied each 

prong of the five-part test set forth in Olivieri as our determination that offensive 

collateral estoppel should not be applied rests on the fundamental unfairness in 

doing so. With that said, we would be remiss if we did not point out the factual 

differences between this case and Granata. As noted, the Granata court 

concluded an ambiguity existed in the NJM policy not solely because NJM cited

to N.J.S.A. 39:6A-3 in section A.2 but also by NJM's failure to fairly convey a 

change in the policy. NJM also allegedly affirmatively advised the policy holder 

that "there was no change in her coverage." Granata, slip op. at 2, 4. 

Conversely, here, the same UIM limits have existed since the parties entered 

into the operative insurance agreement, and the record does not indicate NJM 

made any misrepresentation regarding the scope of UIM coverage.
13 A-2401-18T2

ambiguity in the policy was seemingly "essential to the judgment." Finally, it 

is undisputed that NJM was a party to Granata.

We conclude, however, that it would be improper to advance such a rigid, 

mechanical application of collateral estoppel here as to do so would ignore 

fundamental fairness principles that undergird the doctrine. Indeed, as the 

Supreme Court noted in Allen, "even if all five elements coalesce, it 'will not be 

applied when it is unfair to do so.'" Allen, 208 N.J. at 138 (quoting Olivieri, 

186 N.J. at 521-22). In exercising discretion when applying the preclusive effect 

of a prior judgment or ruling, courts must "weigh economy against fairness." 

Barker v. Brinegar, 346 N.J. Super. 558, 566 (App. Div. 2002). And, where a 

party seeks collateral estoppel based on an interpretation of law, a "court is not 

precluded from readdressing the issue so that inequitable administration of the 

law may be avoided." State v. Santomauro, 261 N.J. Super. 339, 343 (App. Div. 

1993) (citing City of Plainfield v. Pub. Serv. Elec. & Gas Co., 82 N.J. 245, 258-

59 (1980)).

The Supreme Court has identified "a variety of fairness factors" favoring 

its application, including "conservation of judicial resources; avoidance of 

repetitious litigation; and prevention of waste, harassment, uncertainty and 

inconsistency." Olivieri, 186 N.J. at 523 (quoting Pace v. Kuchinsky, 347 N.J. 
14 A-2401-18T2

Super. 202, 216 (App. Div. 2002)). Factors disfavoring the application of 

collateral estoppel include circumstances where:

[t]he party against whom [collateral estoppel] is sought 

could not have obtained review of the prior judgment; 

the quality or extent of the procedures in the two actions 

is different; it was not foreseeable at the time of the 

prior action that the issue would arise in subsequent 

litigation; and the precluded party did not have an 

adequate opportunity to obtain a full and fair 

adjudication in the prior action.

[Ibid. (quoting Pace, 347 N.J. at 216).]

In addition to the factors noted in Olivieri, courts also look to the 

Restatement (Second) of Judgments § 29, which enumerates additional fairness 

considerations. Allen, 208 N.J. at 138. These include whether: 1) "[t]he 

determination relied on as preclusive was itself inconsistent with another 

determination of the same issue," Restatement (Second) of Judgments § 29; 2) 

"[t]he issue is one of law and treating it as conclusively determined would 

inappropriately foreclose opportunity for obtaining reconsideration of the legal 

rule upon which it was based," ibid.; and 3) "the court in the second action can 

conclude, without an evidentiary hearing, that the first determination was 

erroneous," id., Reporter's Note, cmt. j. Further, applying offensive collateral 

estoppel in the face of inconsistent determinations, see Restatement (Second) of 

Judgments § 29(4); Kortenhaus, 228 N.J. Super. at 169, is inappropriate when 
15 A-2401-18T2

those contrary decisions undermine the "underlying confidence" in the 

correctness of the prior determination and therefore "do[] not require that it be 

given effect against the party in litigation against another adversary." 

Restatement (Second) of Judgments § 29, cmt. f. 

We have previously enforced "step-down provisions in insurance policies, 

provided the provisions are expressed in clear and unambiguous 

language." Morrison v. Am. Int'l Ins. Co. of Am., 381 N.J. Super. 532, 538 

(App. Div. 2005). In Morrison, we upheld a step-down clause which limited 

recovery for bodily injury to non-resident relatives to "the minimum limit 

required by N.J.S.A. 17:28-1.1." Id. at 535. The plaintiff in that case, like 

plaintiffs here, argued that the policy provision was ambiguous in part because 

it "refer[red] to a statute rather than to a specific monetary amount." Id. at 538. 

In affirming summary judgment for the insurance company, we noted that the 

policy language did not create an ambiguity because "it simply and clearly states 

that the insurer's liability as to any insured who is not a named insured or 

resident family member is the minimum amount contained in the specifically 

identified statute." Id. at 541. Further, in Aubrey v. Harleysville Ins. Cos., 140 

N.J. 397 (1995), the Supreme Court found that a step-down clause limiting 

liability coverage to the "amount by which the compulsory or financial-
16 A-2401-18T2

responsibility law limits exceed the limit of [the customer's liability] insurance"

was valid. Id. at 401, 408.

In its merits brief, NJM also cites two unpublished cases, inconsistent with 

Granata, which enforced automobile insurance policy provisions that referenced 

statutes in place of a specific monetary amount. In American Int'l Ins. Co. v. 

Bailey, No. A-4681-04 (App. Div. Apr. 12, 2006), we enforced an insurance 

policy provision limiting liability for bodily injury to non-family members to 

"the minimum limit required by N.J.S.A. 17:28-1.1." And, in Cox v. Tomasso, 

No. A-0106-17 (App. Div. Nov. 1, 2018),8 we upheld an NJM policy provision 

which excluded coverage while the policyholder occupied "any vehicle insured 

by another motor vehicle policy in which [the policyholder] or a family member 

[were] a named insured," but still required NJM to provide "UM/UIM coverage 

for minimum limits required by New Jersey law for liability as set forth in 

N.J.S.A. 39:6A-3." 

These decisions, as well as those in Morrison and Aubrey, directly conflict 

with Granata to the extent that it concluded that reference to a statutory 

provision in an insurance policy instead of a monetary amount creates a per se 

8

 As noted in footnote 4, we cite to unpublished cases for the limited purpose 

of "the application of preclusionary legal principles." Pressler and Verniero,

cmt. 2 on R. 1:36-3.
17 A-2401-18T2

ambiguity. See also Cohen v. Allstate Ins. Co., 231 N.J. Super 97, 100 (App. 

Div. 1989) (enforcing a policy provision allowing either party to demand a trial 

where the arbitration award exceeds "the minimum limit for liability specified 

by the financial responsibility law of New Jersey"); D'Antonio v. State Farm 

Mut. Auto. Ins. Co., 262 N.J. Super. 247, 249-50 (App. Div. 1993) (same);

Agency Rent-a-Car v. Indem. Ins. Co., 268 N.J. Super. 319, 323-25 (App. Div.

1993) (upholding a policy provision where the lessor would indemnify 

authorized operators for "liability and property damage up to the minimum 

dollar amounts required . . . by the applicable motor vehicle financial 

responsibility laws of the [s]tate"); Pribble v. State Farm Mut. Auto. Ins. Co., 

933 P.2d 1108, 1110 (Wyo. 1997) (concluding that an automobile liability 

insurance policy that provided no coverage for any bodily injury to "any insured 

or any member of an insured's household to the extent the limits of liability of 

this policy exceed the limits of liability required by law" was "not ambiguous 

simply because one must refer to the laws of Wyoming for a complete 

understanding of the extent of that exclusion"). 

Not only do the aforementioned decisions reach different results than 

Granata, we are convinced they do so because the proposition advanced by 
18 A-2401-18T2

plaintiffs – that section A.2 is ambiguous merely because it references N.J.S.A. 

39:6A-3 – is an incorrect statement of New Jersey law.

Our courts give "special scrutiny" to insurance contracts because of the 

"stark imbalance between insurance companies and insureds in their respective 

understanding of the terms and conditions of insurance policies." Zacarias, 168 

N.J. at 594 (citing Gibson v. Callaghan, 158 N.J. 662, 669 (1999)). Generally, 

the words of an insurance policy are given their "plain, ordinary meaning." Id.

at 595. In the absence of ambiguity, "courts should not write for the insured a 

better policy of insurance than the one purchased." Ibid. (quoting Gibson, 158 

N.J. at 670).

Insurance policies, however, are "contracts of adhesion and as such, are 

subject to special rules of interpretation." Ibid. (citing Longobardi v. Chubb Ins. 

Co., 121 N.J. 530, 537 (1990); Meier v. N.J. Life Ins. Co., 101 N.J. 597, 611-12

(1986)). When there is ambiguity in an insurance contract, courts interpret the 

contract to comport with the reasonable expectations of the insured, even if a 

close reading of the written text reveals a contrary meaning. Ibid. "A policy 

provision in an insurance contract is considered ambiguous 'where the phrasing 

of the policy is so confusing that the average policyholder cannot make out the 

boundaries of coverage.'" Id. at 598 (quoting Weedo v. Stone-E-Brick, Inc., 81 
19 A-2401-18T2

N.J. 247 (1979)). Further, an ambiguity will be found to exist "in an insurance 

contract '[w]hen an insurance policy's language fairly supports two meanings, 

one that favors the insurer, and the other that favors the insured . . . .'" Cassilli 

v. Soussou, 408 N.J. Super. 147, 154 (App. Div. 2009) (quoting President v. 

Jenkins, 180 N.J. 550, 563 (2004)). 

Courts will, therefore, "depart from the literal text and interpret it in 

accordance with the insured's understanding, even when that understanding 

contradicts the insurer's intent, if the text . . . cannot be understood without 

employing subtle or legalistic determinations." Zacarias, 168 N.J. at 601. "The 

objectively reasonable expectations of applicants and intended beneficiaries 

regarding the terms of insurance contracts will be honored even though 

painstaking study of the policy provisions would have negated those 

expectations." Id. at 594-95 (quoting Sparks v. St. Paul Ins. Co., 100 N.J. 325, 

338-39 (1985)).

In Zacarias, cited in Granata and relied upon by plaintiffs, the Court 

determined that an intra-family exclusion was unambiguous and enforceable. 

Id. at 601. In denying a claim under the plaintiff's boatowner's insurance policy 

for injury to his wife, Allstate cited a declarations sheet included with the 

plaintiff's policy which cross-referenced a provision within the policy itself. Id.
20 A-2401-18T2

at 593. The referenced policy provision stated that Allstate would not cover 

"bodily injury to an insured person," defined as "you and, if a resident of your 

household . . . any relative . . . ." Ibid. In seeking a declaratory judgment to 

void the intra-family exclusion, the plaintiff argued that the terms of the policy 

were ambiguous because the declarations sheet did not "expressly list the intrafamily exclusion." Id. at 594, 602. 

The Zacarias Court rejected the plaintiff's argument and found that the 

policy's language was "direct and ordinary," it contained "[l]arge and bold type,"

the "provisions [were] clearly spaced," and it "explicitly disclaims coverage for 

injuries to insureds." Id. at 601-02. As such, the Court determined, no 

"entangled and professional interpretation" was required to understand the 

policy. Id. at 602.

Likewise, neither Eherenstorfer v. Div. of Pub. Welfare, Dep't of Hum. 

Servs., 196 N.J. Super. 405 (App. Div. 1984), nor Badiali v. N.J. Mfrs. Ins. Grp., 

220 N.J. 544 (2015), also relied upon by plaintiffs, support the application of 

collateral estoppel under the circumstances presented. In Eherenstorfer, the 

court determined that a prior unpublished decision of our court that voided 

certain state regulations regarding eligibility for public assistance bound the 

Bergen County Welfare Board despite its unpublished status, because it "was a 
21 A-2401-18T2

party in that case and the regulations . . . involved [t]herein were directly in 

issue." Id. at 411. The Eherenstorfer court further held that "[a] party does not 

have the right to avoid a legal determination made by this court merely because 

a decision is unpublished." Id. at 412. In Badiali, the Supreme Court held that 

under the unique facts presented, it was not improper for NJM to use an 

unpublished decision "not for its legal value, but rather to prove that NJM acted 

in good faith in conducting its business as an insurance claims handler." Badiali, 

220 N.J. at 560.

We agree that an opinion's unpublished status does not act as a bar to 

application of collateral estoppel principles in both the general context of 

Eherenstorfer and for the limited purpose set forth in Badiali. As we discuss at 

pages eleven to twenty, supra, however, application of that doctrine here would 

be unfair and inequitable. Unlike the invalid regulations in Eherenstorfer, we

conclude that section A.2 of the NJM policy is not ambiguous, and the 

circumstances in Badiali are absent.

III.

As noted, plaintiffs argue that section A.2 is ambiguous and unenforceable 

not because it conflicts with any word, sentence or provision in the NJM policy 

but instead because NJM incorporated the $15,000/$30,000 limits by 
22 A-2401-18T2

referencing a statute rather than specifically listing those limits. Accepting that 

under the circumstances plaintiffs would likely have had no occasion to even 

have seen the NJM policy as it was issued to Maria A. Menio-Reid, we conclude

that NJM's clear reference to N.J.S.A. 39:6A-3 in the step-down clause, without 

additional indicia that the policy language "fairly supports two meanings,"

Cassilli, 408 N.J. Super. at 154, did not create an ambiguity such that "the 

average policyholder cannot make out the boundaries of coverage." Zacarias, 

168 N.J. at 598. Like Zacarias, the language in the step-down clause is "direct 

and ordinary," and contains bold type. Further, like Morrison, the step-down 

clause was listed under a heading indicating that there would be a "limit of 

liability," such that an "average insured would have read the provision." See

Morrison, 381 N.J. Super. at 543 (citing Bauman v. Royal Indem. Co., 36 N.J. 

12, 25 (1961)). 

We also note that under New Jersey law, "[a] word or phrase is not 

automatically rendered ambiguous simply because the policy fails to define 

it." Priest v. Roncone, 370 N.J. Super. 537, 544 (App. Div. 2004). "[I]n the 

absence of a specific definition in an insurance policy, the words must be 

interpreted in accordance with their ordinary, plain and usual meaning." Boddy 

v. Cigna Prop. & Cas. Cos., 334 N.J. Super. 649, 656 (App. Div. 2000) (quoting 
23 A-2401-18T2

Daus v. Marble, 270 N.J. Super. 241, 251 (App. Div. 1994)). 

Here, the relevant provisions of N.J.S.A. 39:6A-3 unambiguously set forth 

the specific monetary limits of coverage. See, e.g., Sanders v. Or. Pac. States 

Ins. Co., 840 P.2d 87, 90 (Or. 1992) (enforcing an insurance policy that 

incorporated by reference a statute because the statutory language was clear). 

And, while we acknowledge that an insured would be required to locate the 

statute and read it, "[o]ur courts have held fast to the general rule that an insured 

is chargeable with knowledge of the contents of an insurance policy in the 

absence of fraud or inequitable conduct on the part of the carrier." Edwards v. 

Prudential Prop. & Cas. Co., 357 N.J. Super. 196, 204 (App. Div. 2003); see

also Morrison, 381 N.J. Super. at 542.9 We therefore conclude that an average 

policy holder should be able to understand the plain language of the policy and 

N.J.S.A. 39:6A-3 "without employing subtle or legalistic determinations," 

Zacarias, 168 N.J. at 601, as it clearly provides that the minimum coverage limit 

for "injury to, or death of, one person, in any one accident" is $15,000. 

9

 Were we to accept that it would have been better practice for NJM to specify 

the monetary limits in section A.2, as the Zacarias court stated, even a policy 

that is "far from perfect" may still "pass muster." Zacarias, 168 N.J. at 604. As 

we have discussed, the NJM policy "is sufficiently clear when reviewed under 

the rules of construction traditionally employed" in construing similar policies

that the failure to list the $15,000/30,000 limits does not warrant the relief 

requested by plaintiffs. Ibid.; see also Morrison, 381 N.J. Super. at 538. 
24 A-2401-18T2

Finally, we disagree that plaintiffs' interpretation of section A.2 comports 

with the "objectively reasonable expectations" of (any) insured. Id. at 595 

(quoting Sparks, 100 N.J. at 338-39). Indeed, such an interpretation would

effectively delete section A.2 from the policy thereby permitting plaintiffs to 

access, unconstrained by the actual policy language, $300,000 in UIM benefits 

for which no one ever bargained and to which no reasonable insured could have 

objectively expected to receive. 

Accordingly, we conclude it would be unfair and inequitable to apply 

offensive collateral estoppel against NJM. Nothing in our opinion should be 

construed to prevent the re-litigation of matters conclusively resolved amongst 

parties where it would be appropriate to do so. Further, we find no support in 

New Jersey law for the proposition that a policy is vague and ambiguous merely 

because it references a statute, nor do we conclude that an insured would have a

reasonable expectation to receive $300,000 in UIM benefits under the 

circumstances presented. 

Reversed.