Case Name: CHRISTINE THOMSEN, PLAINTIFF, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., AND COASTAL SUPPORT SERVICES, INC., DEFENDANTS; ALICE BROWN, AS ADMINISTRATOR AD PROSEQUENDUM FOR THE HEIRS-AT-LAW OF ALICE F. WATTS, DECEASED, AND AS ADMINISTRATOR OF THE ESTATE OF ALICE F. WATTS, DECEASED, PLAINTIFFS, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, IRENE MCMICHAEL, R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC CO., BELL ATLANTIC-NEW JERSEY, INC., DEFENDANTS, AND BELL ATLANTIC-NJ, INC., THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS; LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF-RESPONDENT, v. JANICE D. MERCER, CARING INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, AND IRENE MCMICHAEL, DEFENDANTS, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY AND RELIANCE INSURANCE COMPANY, THIRD PARTY DEFENDANTS, v. NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANT-APPELLANT; JANICE MERCER-CHARLES AND DEXTER CHARLES, HER HUSBAND, PLAINTIFFS, v. CHRISTINE D. THOMSEN, DEFENDANT, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS; LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF, v. R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC COMPANY, BELL ATLANTIC-NJ, INC., WEST JERSEY HEALTH SYSTEMS PARAMEDICS UNIT, GALLOWAY TOWNSHIP VOLUNTEER AMBULANCE SQUAD WEST DIVISION, EGG HARBOR CITY RESCUE SQUAD, WILLIAM B. KESSLER MEMORIAL HOSPITAL, EUGENE M. MLYNARCZYK, M.D., LISA RASOM, RN, L. DEFRANCISCO, RN, DEFENDANTS, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANTS
Court: New Jersey Superior Court, Appellate Division
Jurisdiction: New Jersey
Decision Date: 2005-04-28
Citations: 377 N.J. Super. 267
Docket Number: 
Parties: CHRISTINE THOMSEN, PLAINTIFF, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., AND COASTAL SUPPORT SERVICES, INC., DEFENDANTS. ALICE BROWN, AS ADMINISTRATOR AD PROSEQUENDUM FOR THE HEIRS-AT-LAW OF ALICE F. WATTS, DECEASED, AND AS ADMINISTRATOR OF THE ESTATE OF ALICE F. WATTS, DECEASED, PLAINTIFFS, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, IRENE MCMICHAEL, R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC CO., BELL ATLANTIC-NEW JERSEY, INC., DEFENDANTS, AND BELL ATLANTIC-NJ, INC., THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS. LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF-RESPONDENT, v. JANICE D. MERCER, CARING INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, AND IRENE MCMICHAEL, DEFENDANTS, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY AND RELIANCE INSURANCE COMPANY, THIRD PARTY DEFENDANTS, v. NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANT-APPELLANT. JANICE MERCER-CHARLES AND DEXTER CHARLES, HER HUSBAND, PLAINTIFFS, v. CHRISTINE D. THOMSEN, DEFENDANT, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS. LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF, v. R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC COMPANY, BELL ATLANTIC-NJ, INC., WEST JERSEY HEALTH SYSTEMS PARAMEDICS UNIT, GALLOWAY TOWNSHIP VOLUNTEER AMBULANCE SQUAD WEST DIVISION, EGG HARBOR CITY RESCUE SQUAD, WILLIAM B. KESSLER MEMORIAL HOSPITAL, EUGENE M. MLYNARCZYK, M.D., LISA RASOM, RN, L. DEFRANCISCO, RN, DEFENDANTS, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANTS.
Judges: 
Reporter: New Jersey Superior Court Reports
Volume: 377
Pages: 267–286

Head Matter:
872 A.2d 800
CHRISTINE THOMSEN, PLAINTIFF, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., AND COASTAL SUPPORT SERVICES, INC., DEFENDANTS. ALICE BROWN, AS ADMINISTRATOR AD PROSEQUENDUM FOR THE HEIRS-AT-LAW OF ALICE F. WATTS, DECEASED, AND AS ADMINISTRATOR OF THE ESTATE OF ALICE F. WATTS, DECEASED, PLAINTIFFS, v. JANICE D. MERCER-CHARLES, CARING, INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, INC., CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, IRENE MCMICHAEL, R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC CO., BELL ATLANTIC-NEW JERSEY, INC., DEFENDANTS, AND BELL ATLANTIC-NJ, INC., THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS. LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF-RESPONDENT, v. JANICE D. MERCER, CARING INC., CARING HOUSE PROJECTS, INC., CARING MEDICAL DAY SERVICES, CARING FELLOWSHIP CENTER, INC., COASTAL SUPPORT SERVICES, INC., CHRISTINE D. THOMSEN, AND IRENE MCMICHAEL, DEFENDANTS, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY AND RELIANCE INSURANCE COMPANY, THIRD PARTY DEFENDANTS, v. NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANT-APPELLANT. JANICE MERCER-CHARLES AND DEXTER CHARLES, HER HUSBAND, PLAINTIFFS, v. CHRISTINE D. THOMSEN, DEFENDANT, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY, AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION, THIRD PARTY DEFENDANTS. LARRY SPELL, BY HIS GUARDIAN AD LITEM, PATRICIA LYNCH, PLAINTIFF, v. R.C. MAXWELL CO., ATLANTIC CITY ELECTRIC COMPANY, BELL ATLANTIC-NJ, INC., WEST JERSEY HEALTH SYSTEMS PARAMEDICS UNIT, GALLOWAY TOWNSHIP VOLUNTEER AMBULANCE SQUAD WEST DIVISION, EGG HARBOR CITY RESCUE SQUAD, WILLIAM B. KESSLER MEMORIAL HOSPITAL, EUGENE M. MLYNARCZYK, M.D., LISA RASOM, RN, L. DEFRANCISCO, RN, DEFENDANTS, v. BELL ATLANTIC-NJ, THIRD PARTY PLAINTIFF, v. COUNTY OF ATLANTIC, THIRD PARTY DEFENDANT, AND IRENE MCMICHAEL, THIRD PARTY PLAINTIFF, v. PHILADELPHIA INDEMNITIES INSURANCE COMPANY, RELIANCE INSURANCE COMPANY AND NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTEE ASSOCIATION, THIRD PARTY DEFENDANTS.
Superior Court of New Jersey-Appellate Division
Argued September 13, 2004
Decided April 28, 2005.
Before Judges A.A. RODRÍGUEZ, WEISSBARD and HOENS.
Mark M. Tallmadge, argued the cause for appellant New Jersey Property — Liability Insurance Guaranty Association (Bressler, Amery & Ross, attorneys; Mr. Tallmadge, on the brief).
Mark S. Levy, argued the cause for respondent Larry Spell (Levy, Angstreich, Finney, Baldante, Rubenstein & Coren, attorneys; Melissa T. Herskowitz and Mr. Levy, on the brief).

Opinion:
The opinion of the court is delivered by:
RODRÍGUEZ, A.A., P.J.A.D.
This appeal was brought by the New Jersey Property-Liability Insurance Guaranty Association (the Association) concerning interpretation of the exhaustion and setoff provision (N.J.S.A. 17:30A-12b) of the New Jersey Property-Liability Insurance Guaranty Act (the Act). The specific issue presented is whether the Act's setoff provision operates to reduce the amount payable on a covered claim by the amount of coverage available from a solvent insurer, even when the claim far exceeds the coverage limits of the solvent insurer's policy. The setoff provision provides in pertinent part:
[a]ny person having a claim against an insurer, whether or not the insurer is a member insurer, under any provision in an insurance policy other than a policy of an insolvent insurer which is also a covered claim, shall be required to exhaust first his right under that other policy. An amount payable on a covered claim . shall be reduced by the amount of recovery under any such insurance policy.
[NJ.S.A. 17:30A-12bJ
We hold that the Association is entitled to a setoff of the full amount paid by a solvent insurer. In other words, when there is coverage by two policies and the exhaustion of the solvent insurer's policy does not completely recompense the claimant's damages, the Association is still entitled to the setoff. Thus, the Association's obligation is extinguished if the setoff equals or exceeds the $300,000 statutory cap for covered claims.
I
The facts are undisputed. On September 5, 1996, Larry Spell, then thirty-eight years old, was a passenger in a 1994 Dodge para-transit van owned by Caring, Inc. and leased to Caring Medical Day Services, Inc. (collectively "Caring") and operated by Janice Mercer-Charles, an employee of Caring. There was a collision between the van and a vehicle operated by Christine Thomsen. As a result of the impact, the van crashed into a telephone pole. Spell suffered a fractured neck and was rendered a quadriplegic. Alice F. Watts, another passenger in the van, died as a result of the accident. Lawsuits were filed by Spell, the Estate óf Watts, Thomsen and Mercer-Charles against various parties.
At the time of the accident, Caring was insured pursuant to a business automobile policy issued by Philadelphia Insurance Company (PIC). The PIC policy provided liability coverage in the amount of $1 million for any one accident. Caring was also insured pursuant to a commercial insurance policy issued by Reliance Insurance Company (Reliance). The Reliance policy provided liability coverage in the amount of $1 million for any one accident.
Spell offered to settle his claims against Mercer-Charles and Caring for $2 million. The offer was eventually accepted by Caring's insurers, PIC and Reliance. A consent order was entered permitting PIC and Reliance to deposit their respective policy limits into court, pending an allocation hearing. PIC deposited its $1 million. However, before Reliance deposited its limit, it was declared insolvent and ordered into liquidation by a Pennsylvania court. As a result, the Association moved successfully to intervene in the litigation and assumed responsibility for claims against Reliance's insured.
The Association moved for a declaration that its $300,000 per claim statutory obligation must be reduced by any amount received from PIC, the solvent insurer. Spell opposed this motion. For purposes of the motion, the parties agreed that Spell's damages exceeded $2 million. In a written opinion, the judge denied the Association's motion, ruling that it is not entitled to any setoff. The judge interpreted the language of the setoff provision to mean that the setoff only applies to insurance proceeds payable as a direct result of insolvency.
II
The Association appeals contending that pursuant to the setoff provision, its obligation to pay statutory benefits to Spell is reduced to zero. We agree.
We begin our analysis by restating certain core principles of the Act's legislative scheme. First, the Association is not an insurer. It is a private, non-profit, unincorporated legal entity. N.J.S.A. 17:30A-6; Am. Employers' Ins. Co. v. Elf Atochem N. Am., Inc., 157 N.J. 580, 586-87, 725 A.2d 1093, 1096-97 (1999). It depends upon revenue received through statutory assessments levied upon its members, who are insurers writing defined types of direct insurance. Johnson v. Braddy, 376 N.J.Super. 215, 218, 869 A.2d 964 (App.Div.2005); Harrow Stores, Inc. v. Hanover Ins. Co., 315 N.J.Super. 547, 719 A.2d 196 (App.Div.1998). Those assessments are ultimately recouped through policy surcharges imposed upon policyholders, who hold policies embraced within the scope of the Act. N.J.S.A. 17:30A-8a(3); N.J.A.C. 11:1-6.3. The statutory mandate requires the Association to administer and pay "covered claims" that are asserted against insolvent insurers and their policyholders. The Association's purpose is "to provide a mechanism for the payment of covered claims under certain insurance policies, to avoid excessive delay in payment, [and] to avoid financial loss to claimants or policyholders because of the insolvency of an insurer ." N.J.S.A. 17:30A-2a. The Act is to be construed liberally to effect its purposes. Carpenter Tech. Corp. v. Admiral Ins. Co., 172 N.J. 504, 516-17, 800 A.2d 54, 61-62 (2002) (citing Am. Employers' Ins. Co., supra, 157 N.J. at 590, 725 A.2d at 1098-99 and N.J. Guar. Ass'n. on Behalf of the Midland Ins. Co. v. Ciani, 242 N.J.Super. 164, 169, 576 A.2d 300, 303 (App.Div.1990)). The Legislature sought "to conserve limited Association resources to better assure their availability to serve core purposes." Ibid.
Second, the Legislature created the Association to provide "a measure of relief for policyholders and claimants in the case of insurer insolvency." Ciani, supra, 242 N.J.Super. at 169, 576 A.2d at 303 (emphasis added). It did not intend to "substitute the Association for the defunct insurer so as to prevent all loss to affected parties." Ibid, (emphasis added); see also Carpenter Tech. Corp., supra, 172 N.J. at 515, 800 A.2d at 60-61; Am. Employers' Ins. Co., supra, 157 N.J. at 590, 725 A.2d at 1098-99. In short, the Association is a limited safety net. It was not designed to put a claimant in the same position as if there had been no insolvency.
Third, the Association does not pay an injured party's entire loss. Instead, it pays only those losses qualifying as "covered claims" pursuant to the terms of the Act. See Carpenter Tech. Corp., supra, 172 N.J. at 508-09, 800 A.2d at 56-57. A "covered claim" is defined as an unpaid claim within the purview of a policy issued by an insurer, which became insolvent after January 1, 1974 and: (1) the claimant or insured is a resident of New Jersey at the time of the insured event; or (2) the property from which the claim arises is permanently located in New Jersey. N.J.S.A. 17:30A-5d. Moreover, '"covered claim' shall not include any amount due any . insurer . as subrogation recoveries or otherwise." Ibid.; Carpenter Tech. Corp., supra, 172 N.J. at 516, 800 A.2d at 61; Primus v. Alfred Sanzari Enter., 372 N.J.Super. 392, 402, 859 A.2d 452, 458 (App.Div.2004). There is a $300,000 statutory ceiling or cap on a covered claim set by N.J.S.A. 17:30A-8a(l). This ceiling applies regardless of whether or not a claimant's policy exceeds that amount. Ibid.
Fourth, where a claim is covered by numerous policies, some issued by solvent insurers and some by insolvent insurers, the Act expressly sets a priority for coverage. N.J.S.A. 17:30A-12b sets the priority of claims between the Association and solvent insurers. Jendrzejewski v. Allstate Ins. Co., 341 N.J.Super. 460, 463, 775 A.2d 583, 584 (App.Div.2001). The purpose of the setoff provision "was to conserve the assets of the [Association's fund] by shielding it from liability for the obligations of insolvent insurers where there is other insurance covering the same claim that is covered by the insolvent insurer's policy." Id. at 464, 775 A.2d at 585. A claimant must first exhaust the solvent insurer's policy limits. N.J.S.A. 17:30A-12b. The covered claim is thus reduced by the amount recovered from a solvent insurer. Ibid. This statutory priority and setoff trumps traditional principles of priority of coverage, such as primary, excess and co-equal. This is so because the Legislature has created a remedy, albeit a limited one, in a situation where claimants previously had little recourse against an insolvent insurer.
Summarizing, based on the language and the intent of the Act, it is clear that the Association was designed to spread the loss incurred by a claimant due to insolvency. It insures that such a claimant receives damages from some source, including the Association, up to a cap or ceiling of $300,000. If the claimant receives from a solvent insurer an amount equal to or greater than $300,000, the Association's obligation to provide statutory benefits is exhausted. Thus, the Association's funds are preserved in order to provide a measure of relief to other potential claimants.
Ill
Applying those principles here, we conclude that Spell must first exhaust the coverage afforded by the PIC policy. He may then seek recovery from the Association, subject to the $300,000 cap and a setoff in the amount recovered from PIC. See Harrow Stores, Inc., supra, 315 N.J.Super. at 554-55, 719 A.2d at 200-01; Sayre v. Ins. Co. of N. Am., 305 N.J.Super. 209, 215, 701 A.2d 1311, 1314 (App.Div.1997). Thus, here the Association's obligation to Spell is exhausted or reduced to zero by virtue of the setoff provision.
We reject the argument advanced by Spell and accepted by the judge that the setoff provision applies only to insurance proceeds payable as a direct result of the insolvency of a insurer. Other than uninsured motorist coverage, we cannot identify any type of coverage payable directly as a result of the insolvency of a insurer. Moreover, the setoff provision applies in situations where there is "overlapping coverage of a solvent and insolvent insurer during the same period of time." Sayre, supra, 805 N.J.Super. at 214, 701 A.2d at 1314.
We also reject the argument that the setoff should be reduced from the total amount of the claimant's losses, not from the $300,000 "covered claim" ceiling. The express and unambiguous language of the Act mandates that the setoff be deducted from a "covered claim." By definition, a "covered claim" is the amount that the Association is potentially obligated to pay, not the full extent of the damages suffered by the claimant. See Carpenter Tech. Corp., supra, 172 N.J. at 526, 800 A.2d at 67 (holding that a setoff for amounts recoverable from a foreign state's insurance guaranty association should be deducted from any amount recoverable from the Association).
The Law Division judge relied on several cases from other states to support his decision. However, these eases are distinguishable. In Ariz. Prop. & Cas. Ins. Guar. Fund v. Herder, 156 Ariz. 203, 751 P.2d 519 (1988), a passenger was injured when the automobile in which he was traveling was hit by an uninsured motorist. The parties stipulated that the passenger's damages exceeded $30,000. Id. at 520. The passenger was covered by two uninsured motorists (UM) policies, his own and that of his host driver. Ibid. Both policies had $15,000 per person limits. Ibid. The passenger recovered UM benefits in the amount of $15,000 from the host driver's insurance. Ibid. However, his own insurer had become insolvent. Ibid. The passenger sought recovery from APCIGF, Arizona's equivalent of the Association. APCIGF refused payment, arguing that pursuant to A.R.S. § 20-673C (2005), it was required to pay the $15,000 limits of the policy issued by the insolvent insurer, and this was reduced by the amount recovered from the host driver's insurer. Id. at 521. The Supreme Court of Arizona held that the passenger could recover the additional $15,000 from APCIGF. Id. at 524.
Herder dealt with a different situation than the one presented here. The Arizona statute deems a policy issued by an insolvent insurer to be "excess coverage." A.R.S. § 20-673C (2005). New Jersey does not employ such a provision. Thus, in New Jersey, an insolvent insurer's policy is not deemed excess coverage. Rather, the Association's benefits are to be reached only after all solvent insurers' policies are exhausted. This is significantly different than creating a level of excess coverage where none had existed.
The judge also relied on Wash. Ins. Guar. Ass'n v. McKinstry Co., 56 Wash.App. 545, 784 P.2d 190 (1990). The case is factually distinguishable. There, an insured was sued on a negligence claim exceeding $1 million. Id. at 191. The insured's primary insurance carrier tendered its policy limit of $500,000. Ibid. However, the excess carrier became insolvent. Ibid. WIGA, Washington's equivalent of the Association, refused to pay the remaining $500,000, arguing that the amount payable should be reduced by the amount of any recovery under the primary insurer's policy. Ibid. The Court of Appeals of Washington held that WIGA could not offset payments by a primary insurer when it is standing in the shoes of an insolvent excess insurer. Id. at 194. Therefore, McKinstry Co. is distinguishable because it dealt with different types of insurers: primary and excess.
Finally, the judge relied on CD Inv. Co. et al. v. Cal. Ins. Guar. Ass'n, 84 Cal.App.4th. 1410, 101 Cal.Rptr.2d 806 (2000). That holding is distinguishable because it concerned policies issued to cover five successive periods. Id. at 1417, 101 Cal.Rptr.2d 806. There, the insureds became insolvent. Ibid. Their obligations were assumed by CIGA, California's equivalent to the Association. Ibid. CIGA denied the claims, arguing that the solvent insurers had already paid $1.5 million, which exceeded CIGA's statutory cap of $500,000. Ibid. The California Court of Appeals held: (1) the statutory cap applies separately to each covered claim; and (2) each policy issued for a specific period of time gives rise to a separate covered claim. Id. at 1429, 101 Cal.Rptr.2d 806. Thus, the CD case is distinguishable because we are not dealing with coverage for separate or successive periods, but with two policies covering the same loss.
Accordingly, the order denying the Association's motion is reversed. The matter is remanded to the Law Division, Atlantic County, for the entry of a judgment declaring that the Association's obligation to pay Spell's covered claim has been eliminated by PIC's payment.
Reversed and remanded.
N.J.S.A. 17:30A-1 to-20.
N.J.S.A. 17:30A-12a sets priorities for claims against the Association and similar entities in other states.
APCIGF's statutoiy cap is $100,000. A.R.S. § 20-667B (2005).
WIGA's statutory cap is $300,000. RCWA 48.32.0601(a) (2005).