Court Opinion

ID: 9697249
Source: CourtListenerOpinion
Date Created: 2023-08-25 19:09:26.890646+00
Date Added: 2024-06-11T18:20:30.101082
License: Public Domain

STEIN, J.,
dissenting.
The Court holds that the statute requiring fifteen days notice to an insured prior to the cancellation of an automobile insurance policy for non-payment of the premium and requiring that the reason for cancellation accompany the notice, N.J.S.A. 17:29C-8, permits the notice to be given before the default in payment has taken place. In my view, that holding cannot be reconciled with the plain language of N.J.SA 17:29C-8 and the related statute, N.J.S.A 17:29C-7(A) (listing grounds on which effective notice of cancellation may be based), nor with the obvious legislative intent underlying those two provisions. I would affirm the holding of the Appellate Division in Munoz v. New Jersey Automobile Full Insurance Underwriting Ass’n (JUA) and Napolitano v. Allstate Insurance Co. I would modify the Appellate Division’s order in Zimmerman v. JUA to provide for a new trial on remand to permit the insurer to produce evidence of its premium due date.
N.J.SA 17:29C-7(A) provides that a notice of cancellation “shall be effective only if it is based on one ... of the following reasons”: (a) non-payment of the policy premium, or (b) revocation or suspension of the insured’s driver’s license, vehicle registration, or the license of an operator of the insured vehicle. Under the ordinary meaning of that statutory language, a notice of cancellation cannot be “based on” non-payment or loss of a driver’s license until one of those two events has occurred. Until either the insured defaults on the obligation to pay the premium when due or suffers the loss of driving privileges, the factual basis for the cancellation does not exist and a notice of cancellation will not be effective under the terms of the statute.
Moreover, an effective notice of cancellation based on nonpayment of premium must give the reason for the cancellation. N.J.SA 17:29C-8. The notice cannot reasonably (or accurately) *393give non-payment as the reason for cancellation until non-payment has occurred. Indeed, a premature notice of cancellation for nonpayment would not serve its intended function of informing an insured that his or her coverage was in danger of lapsing when the insured had no intention of defaulting, but, because of a bounced check or some other unexpected, post-notice event, fails to pay on time. Moreover, according to N.J.S.A 17:29C-6(F), non-payment of the premium occurs when the insured fails to discharge his obligation to pay the premium “when due.” Obviously, a notice of cancellation based on non-payment that is sent before the payment is due cannot be effective under the plain terms of the statute.
The Court holds, however, that the statute permits a notice of cancellation to be sent before the grounds for the cancellation have arisen. The Court’s reasoning suggests that an effective cancellation notice may be “based on” the mere possibility that in the future the premium would not be paid or that a driver’s license would be revoked or suspended. I do not believe that result can be reconciled with the plain meaning of the statute.
N.J.SA 17:29C-8 requires that a notice of cancellation for nonpayment must be sent fifteen days before the effective date of the cancellation. Therefore, because an effective notice of cancellation cannot be sent until the event on which the cancellation is based has occurred, the effective cancellation date for non-payment cannot be sooner than fifteen days from non-payment, which, by definition, cannot occur until the premium due date and the insured’s failure to pay. Thus, the fifteen-day grace period has been written into the statute by the Legislature in plain terms and no judicial construction is required to give it effect.
Only one conceivable purpose exists for the Legislature to have enacted that provision: to provide defaulting policyholders with a short grace period in which to make payment and preserve their coverage. See Christian v. Ormsby, 267 N.J.Super. 237, 266, 631 A.2d 158 (Law Div. 1992). That purpose is consistent with the fundamental public policy in favor of universal automobile insurance. See Lindstrom v. Hanover Ins. Co., 138 N.J. 242, 247-48, *394649 A.2d 1272 (1994).. The Court, by permitting an effective notice of cancellation for non-payment of the premium to be sent before the premium is due, renders that grace period a nullity, because sending a premature notice will permit the insurer to cancel the policy immediately if payment is not received on the due date. See, e.g., Christian, supra, 267 N.J.Super. at 265, 631 A.2d 158.
No inquiry into the legislative intent is necessary because the ■statute is clear on its face. If there were any ambiguity, public policy and the obvious intent of the Legislature would mandate that the statute be construed to allow defaulting policyholders a brief opportunity to prevent a lapse in coverage. The Court concedes that such a construction would not inconvenience insurers beyond requiring them to set the premium due date fifteen days in advance of the date the policy would lapse if the premium were not paid. Ante at 390, 678 A.2d at 1057. The Court’s reading of the statute, in addition to contradicting its plain meaning, thwarts both the public policy in favor of preserving coverage and the unmistakable legislative intent in enacting the statute.
Accordingly, I would affirm the Appellate Division in both Munoz and Napolitano. In Zimmerman v. JUA, the Appellate Division held that the only evidence indicated that December 22, 1990, constituted the premium due date, rendering ineffective the notice of cancellation of December 5. The insurer argued, however, that the rules of the JUA, which were appended to the policy application, were part of the policy and provided for premium due dates of 60,120, and 180 days from the date of the inception of the policy on September 24,1990. Obviously the JUA rules constitute evidence of an earlier premium due date than either December 22 or December 5 and would support a finding that the notice of cancellation properly was sent after the insured defaulted. The Appellate Division reversed and remanded in Zimmerman for further proceedings consistent with its ruling that the notice of cancellation was premature. I would also remand, requiring a new trial to determine whether there was an earlier premium due *395date in the policy that preceded the date of the notice of cancellation.
For reversal — Justices HANDLER, POLLOCK, O’HERN, GARIBALDI and COLEMAN — 5 in Nos. A-115 and A-117.
For affirmance — Justice STEIN — 1 in Nos. A-115 and A-117.
For reversal and remandment — Justices HANDLER, POLLOCK, O’HERN, GARIBALDI and COLEMAN — 5 in No. A-116.
For modification and remandment — Justice STEIN — 1 in No. A-116.