1

SYLLABUS

(This syllabus is not part of the Court’s opinion. 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 

Court. In the interest of brevity, portions of an opinion may not have been summarized.)

Johnson & Johnson v. Director, Division of Taxation (A-51-19) (083612)

(NOTE: The Court did not write a plenary opinion in this case. The Court affirms

the judgment of the Appellate Division substantially for the reasons expressed in 

Judge Haas’s opinion, published at 461 N.J. Super. 148 (App. Div. 2019).)

Argued October 27, 2020 -- Decided December 7, 2020

PER CURIAM

The Court considers the Appellate Division’s determination that, in light of the 

Legislature’s 2011 amendment to N.J.S.A. 17:22-6.64, respondent Johnson & Johnson 

(J&J) was required to pay an insurance premium tax (IPT) based only upon its premium 

for risks localized in New Jersey rather than upon its total United States premium.

J&J is insured through Middlesex Assurance, which it wholly owns and which 

provides insurance exclusively to J&J. Middlesex is not a licensed or authorized 

insurance dealer in New Jersey. As a result, J&J’s IPT requirements are governed by the 

statutes regulating New Jersey’s “nonadmitted” or “unauthorized” insurance market.

The nonadmitted market is comprised of two main types of unauthorized 

insurance markets, which are separate and distinct from each other: the surplus lines 

market and the self-procured market. The principal difference is that surplus lines 

insurance is purchased through a surplus lines agent who bears responsibility for paying 

any insurance premium taxes, N.J.S.A. 17:22-6.59, while the insured is responsible for 

paying premium taxes on self-procured insurance, N.J.S.A. 17:22-6.64.

Prior to 2011, New Jersey collected IPT on both surplus lines and self-procured 

insurance that covered risks located in New Jersey. See N.J.S.A. 17:22-6.59 (2010) 

and -6.64 (2010). If the insurance covered risks located in other states as well, those 

other states could each assess IPTs based on the premium for the risk located there.

In 2011, Congress enacted the Nonadmitted and Reinsurance Reform Act 

(NRRA), 15 U.S.C. §§ 8201 to 8206. Most relevant here, the NRRA provides that, in 

cases where nonadmitted insurance covers multistate risks, “[n]o State other than the 

home State of an insured may require any premium tax payment for nonadmitted 

insurance.” 15 U.S.C. § 8201(a).
2

That new Home State Rule prompted the New Jersey Legislature to amend certain

state insurance laws. See L. 2011, c. 119. As relevant here, a sentence was added to both 

N.J.S.A. 17:22-6.59 and -6.64: “If a surplus lines policy covers risks or exposures in this 

State and other states, where this State is the home state, . . . the tax payable pursuant to 

this section shall be based on the total United States premium for the applicable policy.”

Although that sentence was added to N.J.S.A. 17:22-6.64, the rest of that statute

was left unchanged, including the statute’s requirements that every holder of selfprocured insurance report when it procures or continues coverage “upon a subject of 

insurance resident, located or to be performed within this State, other than insurance 

procured through a surplus lines agent pursuant to the surplus lines law of this State,” and 

pay a five-percent IPT for such coverage.

Here, it is undisputed that J&J’s insurance is self-procured. Prior to the 2011 

Amendments, J&J accordingly paid IPT based on its New Jersey-located risks. The 

question here is whether, in light of the 2011 Amendments, J&J is now also required to 

pay IPT to its home state of New Jersey on its nationwide coverage. In other words, did 

the 2011 Amendments extend an obligation to pay IPT based on the total United States 

premium solely to holders of surplus lines policies, or did they also impose that

obligation upon holders of self-procured policies, like J&J?

In the wake of the 2011 Amendments, J&J increased its IPT payments to reflect 

the amount due on its nationwide insurance premiums “as a precautionary measure.” J&J 

continued to make those voluntary payments until November 2015, when it filed a claim 

with the Department of Banking and Insurance (DOBI) and the Director of the Division 

of Taxation (Division) seeking a refund of IPT in the amount of nearly $56 million, plus 

interest. The Division denied J&J’s refund claim in August 2016.

J&J then filed a complaint in the Tax Court. See 30 N.J. Tax 479, 490-91 (Tax Ct. 

2018). The Tax Court found in favor of the Division and DOBI, concluding that the 2011

“amendments apply the Home State Rule to all nonadmitted insurance including selfprocured captive insurance.” Id. at 513. The court acknowledged that “the addition of a 

paragraph in the self-procurement statute relating to surplus lines policies is problematic, 

as is the failure to remove the original language allocating the IPT to the location of the 

risk.” Ibid. “Nonetheless,” the court reasoned, “the Legislature’s intent is clear and 

purposeful. By amending both N.J.S.A. 17:22-6.59 and -6.64, the Legislature kept 

consistent its equal treatment of nonadmitted insurers, and maximized its nonadmitted 

IPT revenue stream under the NRRA.” Ibid.

The Appellate Division reversed, finding that “J&J’s IPT obligation should have 

continued to be based solely upon the risks it insured that were located within New 

Jersey” because N.J.S.A. 17:22-6.64 provided -- both before and after the 2011 

Amendments -- “that IPT was to be calculated at the rate of ‘5% of the gross amount of 

such premium’ paid for insurance procured ‘upon a subject of insurance resident, located 

or to be performed within [New Jersey].’” 461 N.J. Super. 148, 151 (App. Div. 2019).
3

Stressing that the original plain language of N.J.S.A. 17:22-6.64 “clearly limited 

J&J’s tax liability to the risks it insured in New Jersey [and] was not changed in any way, 

shape, or form in the 2011 amendment to” that section, the Appellate Division explained 

that it was “bound to follow and apply” that language. Id. at 163. The appellate court 

was not persuaded that the sentence added to both N.J.S.A. 17:22-6.59 and -6.64 

extended the application of the Home State Rule to self-procured policies because that 

added sentence “is limited by its express terms to ‘surplus lines polic[ies] cover[ing] risks 

or exposures in this State and other states.’” Id. at 164 (quoting N.J.S.A. 17:22-6.64). 

The court reasoned that, because “J&J does not procure surplus lines coverage from 

Middlesex Assurance,” that added sentence “is simply inapplicable to J&J.” Ibid.

The Appellate Division ultimately declared itself “unable to conclude that the 

Legislature, by specifically stating that the Home State Rule only applied to surplus 

insurance coverage obtained through surplus line agents, likewise intended to extend it to 

the types of insurance coverage procured by J&J from Middlesex Assurance.” Ibid.

The Court granted certification. 241 N.J. 94 (2020).

HELD: The judgment of the Appellate Division is affirmed substantially for the reasons 

expressed in Judge Haas’s thoughtful opinion, which rests heavily on the plain language 

of N.J.S.A. 17:22-6.64. 461 N.J. Super. at 162-64. The Legislature, of course, may 

amend the statute if it chooses to do so.

AFFIRMED.

JUSTICE LaVECCHIA, dissenting, finds that the plain language argument 

advanced here asks the Court to put on blinders and ignore the effort the Legislature has 

made to achieve taxation of premiums on nationwide risks insured by entities for which 

New Jersey is the home state. Stressing the primacy of legislative intent in statutory 

construction, as well as the deference due the Division’s interpretation of tax statutes, the 

dissent explains that the only conceivable purpose for including the new clause in 

N.J.S.A. 17:22-6.64 was to impose nationwide premium taxation on home-state insureds 

with self-procured coverage. That purpose is further evidenced by the new provisions 

allowing the State to engage in compacts with other states for the collection of taxation 

under N.J.S.A. 17:22-6.64 as well as -6.59. Noting that the Legislature has at times 

referred to all nonadmitted insurance as surplus lines coverage, without distinguishing 

between surplus lines insurance and self-procured insurance, the dissent opines that 

reading the new clause in -6.64 to draw such a distinction renders the clause meaningless.

CHIEF JUSTICE RABNER and JUSTICES ALBIN, FERNANDEZ-VINA,

SOLOMON, and PIERRE-LOUIS join in this opinion. JUSTICE LaVECCHIA 

filed a dissent. JUSTICE PATTERSON did not participate.
1

SUPREME COURT OF NEW JERSEY

A-51 September Term 2019

083612

Johnson & Johnson,

Plaintiff-Respondent,

v.

Director, Division of Taxation, and Commissioner, 

Department of Banking and Insurance,

Defendants-Appellants.

On certification to the Superior Court, 

Appellate Division, whose opinion is reported at

461 N.J. Super. 148 (App. Div. 2019).

Argued

October 27, 2020

Decided

December 7, 2020

William B. Puskas, Jr., Deputy Attorney General, argued 

the cause for appellants (Gurbir S. Grewal, Attorney 

General, attorney; Melissa H. Raksa, Assistant Attorney 

General, of counsel, and William B. Puskas, Jr., on the 

brief).

Margaret C. Wilson argued the cause for respondent 

(Wilson Law Group, attorneys; Margaret C. Wilson, on 

the brief).

PER CURIAM
2

The judgment of the Appellate Division is affirmed substantially for the 

reasons expressed in Judge Haas’s thoughtful opinion, which rests heavily on 

the plain language of N.J.S.A. 17:22-6.64. Johnson & Johnson v. Dir., Div. of 

Tax’n, 461 N.J. Super. 148, 162-64 (App. Div. 2019). The Legislature, of 

course, may amend the statute if it chooses to do so.

CHIEF JUSTICE RABNER and JUSTICES ALBIN, FERNANDEZ-VINA,

SOLOMON, and PIERRE-LOUIS join in this opinion. JUSTICE LaVECCHIA 

filed a dissent. JUSTICE PATTERSON did not participate.
1

Johnson & Johnson,

Plaintiff-Respondent,

v.

Director, Division of Taxation, and Commissioner, 

Department of Banking and Insurance,

Defendants-Appellants.

JUSTICE LaVECCHIA, dissenting.

I cannot join in the majority’s affirmance of the Appellate Division’s

judgment in this matter. For the reasons expressed herein, I agree with the 

judgment of the Tax Court, which upheld the tax imposed on the corporate 

taxpayer in this matter. I write separately to add my reasons for believing that 

the Tax Court reached the correct outcome.

I.

This appeal requires the Court to review the State’s tax treatment of

certain premiums paid by Johnson & Johnson (J&J) for insurance policies 

following the Legislature’s 2011 amendments and additions to what is 

commonly known as the Surplus Lines Law. In those amendments, for reasons 

set forth herein, the Legislature made evident its intent to exercise its right to 
2

impose insurance premium taxation on the nationwide risks of an insured that 

has New Jersey as its home state, such as J&J. At stake in this interpretative 

question is whether the State must reimburse J&J the approximately $56 

million in insurance premium taxes it has already paid on its self-procured 

insurance. In my view, J&J is not entitled to that reimbursement.

A brief recitation of the factual and procedural setting of this matter 

provides sufficient context for my disagreement with the majority’s outcome

in this appeal.

J&J is an international corporation headquartered in New Brunswick, 

New Jersey. J&J maintains insurance purchased through Middlesex 

Assurance, a Bermuda corporation that was subsequently re-domiciled in 

Vermont. Middlesex Assurance is wholly owned and controlled by J&J, 

making Middlesex Assurance a single-parent captive insurance company. 

Middlesex Assurance is not a licensed or authorized insurance dealer in New 

Jersey.

The insurance at issue is regulated under the Surplus Lines Law, 

N.J.S.A. 17:22-6.40 to -6.65. New Jersey assesses a tax of five percent on all 

insurance premiums (insurance premium tax or IPT) from unauthorized foreign 

or alien insurers, sometimes referred to as nonadmitted insurers. N.J.S.A. 

17:22-6:59 and -6.64. Our law divides the nonadmitted insurance market into 
3

two categories: surplus lines insurance and self-procured insurance. The 

principal difference is that surplus lines insurance is purchased through a 

surplus lines agent who bears responsibility for paying any insurance premium 

taxes, while the insured is responsible for paying premium taxes on selfprocured insurance, which is obtained without an agent. Ibid.

Before 2011, federal law permitted states to assess taxes on premiums 

paid to nonadmitted insurers only to the extent that those premiums covered 

risks in-state. The federal Nonadmitted and Reinsurance Reform Act (NRRA) 

modified that scheme to both limit and expand state powers to tax insurance. 

Now, under the NRRA, nonadmitted insurance premiums may be taxed only 

by the “home state” of the insured entity. 15 U.S.C. §§ 8201(a), 8206(6)(A). 

But that home state may tax the whole of that insured entity’s nonadmitted 

premiums -- even if some or all of the insured risks are situated out-of-state. 

15 U.S.C. § 8201(a).1 

To make use of that newfound authority to tax, the New Jersey 

Legislature passed S. 2930 (2011) (the 2011 Amendments) for the express 

purpose of “bring[ing] the surplus lines law . . . into compliance with the 

1 State taxes imposed pursuant to the NRRA are sometimes referred to as 

relying on the “Home State Rule”; however, for simplicity’s sake, this dissent 

shall refer to an IPT assessed upon the whole of an in-state entity’s insurance 

premiums as “nationwide premium taxation” or a “nationwide IPT.” 
4

[NRRA].” Sponsors’ Statement to S. 2930 7 (L. 2011, c. 119). The 2011 

Amendments altered both N.J.S.A. 17:22-6.59, the section imposing taxation 

on surplus lines coverage, and N.J.S.A. 17:22-64, the section imposing a tax 

on all other nonadmitted insurance coverage. Both sections now include an 

identical clause regarding nationwide premium taxation:

If a surplus lines policy covers risks or exposures in this 

State and other states, where this State is the home state, 

as defined in section 7 of L. 1960, c. 32 ([N.J.S.A.]

17:22–6.41), the tax payable pursuant to this section 

shall be based on the total United States premium for 

the applicable policy.

[N.J.S.A. 17:22-6.59 and -6.64.]

J&J had historically paid the New Jersey Division of Taxation (the 

Division) within the Department of the Treasury IPT on the portion of its 

premiums allocable to risks in New Jersey. After the 2011 Amendments, J&J 

increased its IPT payments to reflect the amount due on its nationwide 

insurance premiums in what it describes “as a precautionary measure.” 

However, in 2015, J&J concluded that, notwithstanding the enactment of the 

2011 Amendments, it was required to pay IPT only on the portion of its 

insurance premiums attributable to New Jersey-based risks. It therefore filed a 

claim with the Division seeking the refund of its claimed IPT overpayment in 

the amount of $55,902,070.95 plus interest. 
5

J&J principally argued that the NRRA and the new statutory language 

quoted above, which was inserted into N.J.S.A. 17:22-6.59 and -6.64 via the 

2011 Amendments, changed only the tax treatment of surplus lines coverage. 

Because J&J did not purchase its insurance through a surplus lines agent, J&J

claimed that it held self-procured insurance, which it argued was unimpacted 

by the 2011 Amendments. 

The Department of Banking & Insurance, and specifically the 

Commissioner of that Department, is assigned supervisory and administrative 

responsibilities in the regulatory area that includes this taxing scheme. See 

generally N.J.S.A. 17:22-6.40 to -6.84.

2 The Department issued a letter

rejecting J&J’s asserted basis for claiming entitlement to a refund because, in 

its view, the 2011 Amendments extended to self-procured policies such as 

J&J’s. Thereafter, the Division denied the claim.

2

In particular, the Commissioner is empowered to set standards for financial 

integrity for nonadmitted surplus lines insurers eligible to have insurance 

placed through a licensed surplus lines agent and to publish lists of such 

eligible insurers, N.J.S.A. 17:22-6.45; to establish and operate “The Surplus 

Lines Examining Office,” id. at -6.48; to revoke the license of a surplus lines 

agent, id. at -6.61; to collect taxes levied upon premiums for other nonadmitted 

insurance, which tax is required to be paid by an insured and not through a 

surplus lines agent, id. at -6.64; to order production of records relating to 

nonadmitted insurance policies, id. at -6.65; to enter into interstate compacts 

allocating taxation authority over policies that cover multi-state risks, id.

at -6.69d; and to adopt rules and regulations governing nonadmitted insurance 

policies, id. at -6.69g.
6

J&J then filed this action with the Tax Court. The matter proceeded on 

the basis of cross motions for summary judgment.

In granting summary judgment for the Division and denying summary 

judgment to J&J, the Tax Court held that J&J was not entitled to the 

reimbursement requested. Johnson & Johnson v. Dir., Div. of Tax’n, 30 N.J. 

Tax 479, 513 (Tax 2018). Although the Tax Court did not rely on the 

Division’s argument that the term “surplus lines policy” in the newly added 

sentence inserted into N.J.S.A. 17:22-6.59 and -6.64 was definitionally meant 

to include both surplus lines coverage and self-procured coverage, the court 

nevertheless held that the 2011 Amendments evidenced an overall legislative 

intent to impose nationwide premium taxation on both surplus lines policies 

and self-procured coverage. Id. at 511. The Tax Court took into account the 

Legislature’s consistent pattern of treating the two types of policies equally. 

Id. at 511-12. That -- when combined with the perceived clear legislative 

intent to impose nationwide insurance premium taxation -- was determined to 

outweigh the reference to “surplus lines policies” in the newly inserted 

language in N.J.S.A. 17:22-6.64, taking into consideration the identical 

language in both statutes. Id. at 512-13.

J&J appealed, and the Appellate Division reversed and remanded the 

matter for a determination of the amount of refund due to J&J. Johnson & 
7

Johnson v. Dir., Div. of Tax’n, 461 N.J. Super. 148, 165 (App. Div. 2019). 

The court held that the plain language of the new insertion into N.J.S.A. 17:22-

6.64 is limited to surplus lines coverage, which does not include self-procured 

coverage. Id. at 163-64. The panel further relied on the principle that, even if 

it found some ambiguity in the legislative amendment, that ambiguity would 

have to be resolved in favor of the taxpayer, J&J. Id. at 165.

II.

In this matter of statutory interpretation involving a pure question of 

law, our Court’s review is de novo. Brill v. Guardian Life Ins. Co. of Am., 

142 N.J. 520, 539-40 (1995). The arguments take two starkly different views 

of legislative intent concerning the perplexing insertion of identical language 

into two provisions dealing with the taxation of insurance premiums paid by 

home-state insureds with respect to two categories of nonadmitted insurers in 

the wake of a change in federal law that prompted revision in the states’ taxing 

of such premiums.

The Division’s arguments can be summarized as a straightforward 

proposition: the Legislature’s historically parallel treatment of surplus lines 

coverage and self-procured coverage, combined with the Legislature’s clear 

intention that the 2011 Amendments impose nationwide IPT, should be read to 

outweigh the technical language of the statutes. The Division points to further 
8

evidence of legislative intent by noting the addition of a new section allowing 

the Commissioner of Banking and Insurance to enter into compacts with other 

states -- for administrative ease and efficiency in the collection of receipts 

from entities that implicate multi-state risks -- with respect to taxes to be 

collected under either N.J.S.A. 17:22-6.59 or -6.64. In addition, the Division 

highlights legislative history discussing the State’s loss of revenue from 

NRRA and expressing an intent to “maximize the tax revenue rightfully due 

and owing the State.” Sponsors’ Statement to S. 2930 8 (L. 2011, c. 119). In 

sum, the Division maintains that the new authority granted to the 

Commissioner plainly evidences the Legislature’s intention to allow collection 

through -6.64 of nationwide premium taxation on self-procured risks for homestate insureds.

J&J, in turn, roots its argument in the asserted plain language of the 

statute. J&J cites language within the Surplus Lines Law indicating that the 

act does not apply to “insurance coverages which are independently procured

as provided in [N.J.S.A. 17:22-6.64].” N.J.S.A. 17:22-6.40 (emphasis added). 

The text of -6.64 begins by clarifying that it extends to insurance “other than 

insurance procured through a surplus lines agent pursuant to the surplus lines 

law.” According to J&J, while both sections were created through the same 

enactment, the Surplus Lines Law clearly distinguishes self-procured insurance
9

-- which is not obtained through a surplus lines agent -- from surplus lines 

coverage. J&J asserts that the new language addressing “the total United 

States premium,” quoted in full above, can therefore impact only surplus lines 

coverage (i.e., not self-procured insurance), even though that language was 

inserted into N.J.S.A. 17:22-6.64, a provision that addresses only self-procured 

insurance.

III.

For me, the plain language argument asks the Court to put on blinders 

and ignore the effort the Legislature has made to achieve taxation of premiums 

on nationwide risks insured by entities for which New Jersey is the home state. 

I cannot accept the argument.

The “overriding goal” of statutory construction “must be to determine 

the Legislature’s intent.” Dep’t of Law & Pub. Safety v. Gonzalez, 142 N.J. 

618, 627 (1995). We have heretofore always recognized that “when a ‘literal 

interpretation of individual statutory terms or provisions’ would lead to results 

‘inconsistent with the overall purpose of the statute,’ that interpretation should 

be rejected.” Hubbard ex rel. Hubbard v. Reed, 168 N.J. 387, 392-93 (2001) 

(quoting Cornblatt v. Barow, 153 N.J. 218, 242 (1998)). Indeed, the 

Legislature has acknowledged that very principle in the statute to which we 

adhere when following its direction on statutory construction: N.J.S.A. 1:1-1 
10

provides that, when interpreting a law, courts should give words their plain 

meaning “unless inconsistent with the manifest intent of the legislature.” 

Through that language, the Legislature asks courts to opt for intended results,

not ones that are contrary to manifest intent.

Furthermore, the Court owes deference to the Division’s interpretations 

of tax statutes. The Division’s interpretation of a tax statute “is entitled to 

prevail, so long as it is not plainly unreasonable.” Metromedia, Inc. v. Dir., 

Div. of Tax’n, 97 N.J. 313, 327 (1984). Such deference is especially 

appropriate “when the case involves the construction of a new statute by its 

implementing agency.” Nat. Res. Def. Council, Inc. v. Train, 510 F.2d 692, 

706 (D.C. Cir. 1974). That principle is plainly applicable here, for the 

Department of Banking and Insurance has weighed in, and strongly, 

concerning the intent of the adjustment to the taxing of premiums paid by 

home-state insureds to nonadmitted insurers in the wake of the change in 

federal law.

The only conceivable purpose for including the new clause in N.J.S.A. 

17:22-6.64 was to impose nationwide premium taxation on home-state 

insureds with self-procured coverage. The NRRA was specifically passed with 

a future effective date to allow states to recalibrate their insurance taxation 

systems. Following the passage of the NRRA, at least forty-three states
11

undertook such reforms. Insurance Oversight: Policy Implications for U.S. 

Consumers, Businesses and Jobs: Hearing Before the H. Subcomm. on Ins., 

Housing, & Cmty. Opportunity, 112th Cong. 29 (2011) (statement of Letha 

Heaton on behalf of the National Association of Professional Surplus Lines 

Offices, Ltd.). Those reforms typically had the same, clear objective: to claim 

the newly available revenue (from nationwide taxation of nonadmitted 

insurance held by “at home” entities) to compensate for the revenue withdrawn 

(from taxation of nonadmitted insurance on in-state risks held by out-of-state 

entities). See, e.g., 78 Del. Laws c. 176 (2011) (“[P]rotecting the revenue of 

this State . . . may be accomplished by facilitating the payment and collection 

of premium tax on nonadmitted insurance . . . .”); Fiscal Note to S. 1096 (2011 

Pa. Laws 194, No. 28) (June 26, 2011) (noting that imposing nationwide 

taxation on home-state insureds would compensate for revenue loss caused by 

the NRRA).

In New Jersey’s instance, as noted above, the 2011 Amendments 

introduced the same clause into the sections dealing with surplus lines 

coverage and self-procured coverage: 

If a surplus lines policy covers risks or exposures in this 

State and other states, where this State is the home state, 

as defined in section 7 of L. 1960, c. 32 ([N.J.S.A.]

17:22-6.41), the tax payable pursuant to this section 

shall be based on the total United States premium for 

the applicable policy.
12

[N.J.S.A. 17:22-6.59 and -6.64 (emphasis added).]

Accepting J&J’s interpretation, that provision is not just effectively a 

nullity, it is a wholly meaningless addition to N.J.S.A. 17:22-6.64 because 

N.J.S.A. 17:22-6.59 already adopts a rule of nationwide premium taxation for 

surplus lines policies. We have said repeatedly that courts “must avoid an 

interpretation that renders words in a statute surplusage.” Shelton v. 

Restaurant.com, Inc., 214 N.J. 419, 440 (2013). The Court should “assume 

that the Legislature purposely included every word, and[] strive to give every 

word its logical effect.” Id. at 441.

The canon against surplusage weighs heavily in favor of reading 

N.J.S.A. 17:22-6.64 in the sensible manner that the Legislature clearly

intended, rather than rendering the Legislature’s enactment entirely 

ineffectual. And the legislative history of the Surplus Lines Law provides still 

more support for the Division’s position.

The history of legislative actions relating to the surplus lines section, 

N.J.S.A. 17:22-6:59, and the self-procured section, N.J.S.A. 17:22-6:64, 

demonstrates that the Legislature has used the term “surplus lines” as 

interchangeable with “nonadmitted insurance,” i.e., to encompass both surplus 

lines insurance and self-procured insurance. When the Legislature raised the 

tax on nonadmitted insurers from three percent to five percent, the legislative 
13

budget committee statement in the General Assembly explained that “[t]his 

bill, as amended, increases the premium receipts tax for surplus lines coverage 

from 3% to 5%.” Assem. Budget Comm. Statement to A. 1408 1 (June 22, 

2009). But the law increased the tax rates on both surplus lines policies and

self-procured policies. L. 2009, c. 75, §§ 4, 5. Similarly, the Office of 

Legislative Services estimated the revenue increase from the elevated tax on 

“Surplus lines carriers” as if the adjustments to N.J.S.A. 17:22-6:59 and -6.64 

impacted a singular tax. Legis. Fiscal Estimate for A. 1408 1 (June 22, 2009). 

Nowhere in the legislative history of the 2009 law does there appear a 

reference to self-procured insurance as being separate from surplus lines 

insurance. Additionally, L. 1996, c. 69, which provided a series of technical 

fixes to the Surplus Lines Law, is entitled “An act concerning surplus lines 

insurers,” despite its application to both N.J.S.A. 17:22-6:59 and -6.64. 

This case is a far cry from one where it can be said that a statute’s 

language plainly directs its outcome, in my view. Further evidence of the lack 

of a plain meaning to be attributed to the “surplus lines coverage” verbiage 

used in the two clauses added in 2011 -- and specifically those words where 

inserted into N.J.S.A. 17:22-6.64 -- can be gleaned from review of other 

relevant provisions of the Surplus Lines Law. 
14

It is important to consider here that “surplus lines coverage” is not a 

defined term in the Surplus Lines Law. See N.J.S.A. 17:22-6.41. However, 

the law does offer a definition of “surplus lines insurer” that is quite broad: 

“an unauthorized insurer in which an insurance coverage is placed or may be 

placed under this surplus lines law.” N.J.S.A. 17:22-6.41(b). That broad 

reference reaches all nonadmitted insurance, including self-procured insurance, 

because self-procured insurance is covered by N.J.S.A. 17:22-6.64, which was 

enacted as a part of the Surplus Lines Law. L. 1960, c. 32, § 30. 

The interpretation advanced by the Division -- that the undefined phrase 

“surplus lines coverage” in -6.59 incorporates a reference to both self-procured 

polices and policies procured through a surplus lines agent -- does not make 

the 2011 Amendments redundant as to -6.64. The amendatory language 

needed to be separately included in -6.64 because the tax imposed through that 

section is collected from the insured rather than through a surplus lines agent, 

as in -6.59. Inclusion of the amendatory language solely in N.J.S.A. 17:22-

6.59 would have been insufficient to impose an IPT on the premiums for selfprocured insurance. There had to be a second inclusion in -6.64 because there 

is no agent (as there is in -6.59) on whom to impose the duty to collect the tax. 

Placing the reference in both statutes was necessary to effectuate the tax’s 

collection. Thus, the Division’s interpretation does not render N.J.S.A. 17:22-
15

6.64’s levy of the IPT upon self-procured coverage to be without meaning or 

legal effect. 

On the other hand, the canon against surplusage does not work in an 

opposite direction to support J&J’s position. To be sure, N.J.S.A. 17:22-6.40 

states that the Surplus Lines Law -- which includes -6.64 -- does not apply 

to -6.64, but that statement is not as paradoxical as it appears. As Division’s 

counsel argued, there are regulatory provisions governing surplus lines agents’ 

procurement of surplus lines insurance that are not applicable to self-procured 

insurance from unaffiliated insurers. In -6.40, in contrast to -6.59, the term 

“surplus lines” is used not as a catch-all denoting all nonadmitted insurance, 

but rather to refer to a specific category of nonadmitted insurance.3

The NRRA defined its terms so as to clearly apply to “surplus lines or

independently procured insurance coverage.” See 15 U.S.C. § 8206(12)

(emphasis added). As the Division argues, the NRRA included the word “or,” 

emphasizing that “[i]f Congress wanted the NRRA to apply only to surplus 

lines transactions, it would have said so. It did not.” Sadly, this appeal would 

3

 This Court has contributed to a muddying of the two categories on occasion. 

See, e.g., R.R. Roofing & Bldg. Supply Co. v. Fin. Fire & Cas. Co., 85 N.J. 

384, 389 (1981) (defining “[s]urplus lines insurance [as] involv[ing] New 

Jersey risks which insurance companies authorized or admitted to do business 

in this State have refused to cover by reason of the nature of the risk”). 

Technically, that definition describes nonadmitted insurance as a whole, which 

encompasses both surplus lines coverage and self-procured insurance.
16

have been much more straightforward had the amendatory language used by 

the Legislature in the wake of the NRRA’s enactment been similarly clear in 

expression. Rather, it appears that the Legislature has allowed itself on several 

occasions in the past, and again in the 2011 Amendments, to be lulled into 

referring to all nonadmitted insurance as surplus lines coverage, without 

acknowledging the Surplus Lines Law’s original distinction between surplus 

lines insurance and self-procured insurance. Nevertheless, the legislative 

amendments enacted in 2011 to render New Jersey taxation in this area 

consistent with the rules of the NRRA convey to me an unmistakable intent to 

impose nationwide premium taxation on both forms of nonadmitted insurance.

Because the amendments’ structure, new compact provisions, and 

legislative history reveal the Legislature’s intent to capture this revenue, I find 

inapplicable the default rule provided in Fedders Financial Corp. v. Director, 

Division of Taxation, 96 N.J. 376, 385-86 (1984), which resolves ambiguity in 

a tax statute, after other efforts to discern legislative intent fail, in favor of the 

taxpayer. That rule applies when there is no evidence of legislative intent in 

the extrinsic aids available to instruct a court. I find evidence of the legislative 

intent unmistakable here for the reasons expressed. Therefore, I decline to 

ignore that intention and require the State to reimburse paid premiums that J&J 
17

has made in IPT for its nationwide insured risks covered by insurance it selfprocured through its wholly owned captive insurance company. 

For all those reasons, I respectfully dissent.