Court Opinion

ID: 3199480
Source: CourtListenerOpinion
Date Created: 2016-05-02 14:05:52.551227+00
Date Added: 2024-06-11T14:50:22.456341
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                   APPROVAL OF THE APPELLATE DIVISION

                                      SUPERIOR COURT OF NEW JERSEY
                                      APPELLATE DIVISION
                                      DOCKET NO. A-2337-14T1

VANESSA RIVERA,
                                         APPROVED FOR PUBLICATION
      Plaintiff-Appellant,
                                               May 2, 2016
v.
                                           APPELLATE DIVISION

ELMER F. McCRAY, III,

      Defendant,

and

NEW JERSEY RE-INSURANCE COMPANY,

     Defendant-Respondent.
___________________________________

          Argued April 6, 2016 – Decided May 2, 2016

          Before Judges Ostrer, Haas1 and Manahan.

          On appeal from the Superior Court of New
          Jersey,   Law  Division, Atlantic County,
          Docket No. L-2796-13.

          Melville D. Lide argued the cause              for
          appellant (Radano & Lide, attorneys;           Mr.
          Lide, on the brief).

          Daniel J. Pomeroy argued the cause for
          respondent (Pomeroy, Heller & Ley, LLC,
          attorneys; Mr. Pomeroy and Karen E. Heller,
          on the brief).

1
  Judge Haas did not participate in oral argument.           He joins the
opinion with consent of counsel. R. 2:13-2(b).
       The opinion of the court was delivered by

OSTRER, J.A.D.

       This    appeal    requires    us        to   interpret       an     underinsured

motorist       (UIM)    coverage    step-down         provision     in        a    personal

automobile insurance policy, issued by defendant New Jersey Re-

Insurance      Company    (NJM)2.     The      issue    presented        is       whether    a

"special policy," see N.J.S.A. 39:6A-3.3, which provides no UIM

coverage at all, provides "similar coverage" so as to trigger

the step-down provision and reduce UIM coverage to zero.                               Based

on the plain language of the NJM policy and well-established

principles of insurance contract interpretation, we conclude it

does    not.       We    therefore    reverse         the   trial        court's       order

dismissing      plaintiff's    claim      to    UIM    coverage      under         the    NJM

policy.

                                          I.

       The underlying facts are undisputed.                     On July 5, 2011,

defendant Elmer F. McCray rear-ended plaintiff Vanessa Rivera

while she operated a vehicle owned by her mother, Janet Torres-

White, who was insured by NJM.                  Rivera was separately insured

under a special policy issued by National Continental Insurance

Company.

2
  The policy form is used by the New Jersey Manufacturers
Insurance Group, of which NJ Re-Insurance Co. is a part.

                                          2                                         A-2337-14T1
    Rivera       alleged     she   sustained         significant       and    permanent

personal injuries.          Rivera settled her negligence claim against

McCray for his policy's liability limit of $15,000.                      Rivera then

sought    recourse     to   $85,000   of       the    $100,000    of    UIM    coverage

available under her mother's policy.                       Rivera's special policy

provided no UIM coverage whatsoever.

    NJM denied Rivera's claim based on a step-down provision.

The provision applies to an insured who is not a named insured

under    the    NJM   policy,   but   is       a   named    insured    under   another

policy "providing similar coverage" that is less than the NJM

policy's UIM liability limit.                  The provision states that the

maximum liability limit for such an insured shall step down to

the liability limit "under any insurance providing coverage to

that insured as a named insured."                  The provision states:

    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:

         1. If:

               a. An insured is not the named insured, but
                  is a family member, under this policy;
               b. That insured is a named insured under one
                  or more other policies providing similar
                  coverage; and

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            c. All such other policies have a limit of
               liability for similar coverage which is
               less than the limit of liability for this
               coverage;

                 then our maximum limit of liability for
                 that insured, for all damages resulting
                 from any one accident, shall not exceed
                 the highest applicable limit of liability
                 under any insurance providing coverage to
                 that insured as a named insured.

                 [(Emphasis added).]

      Rivera filed an amended complaint against NJM seeking a

declaratory judgment that she had recourse to UIM benefits under

the   NJM   policy.      NJM     denied       coverage    and    interposed       other

defenses.     The parties then cross-moved for summary judgment on

the step-down issue, asserting opposing interpretations of what

constituted      "similar      coverage."         NJM    also     argued,    in    the

alternative, that Rivera did not have recourse to the $85,000 of

UIM coverage because she was not a "family member" as defined in

the NJM policy, as she resided elsewhere.

      The   trial      court    concluded        that    Rivera      had    "similar

coverage" that triggered the step-down provision, which in turn

left her with zero UIM benefits because she had no benefits

under her own special policy.             The court considered it illogical

that the step-down provision would reduce the coverage of a

person who had even a modicum of UIM coverage, but not the

coverage    of     a   person    who      had    no     UIM     coverage    at     all.

                                          4                                 A-2337-14T1
Accordingly,    the    court    denied      Rivera's   motion   for   partial

summary judgment and granted NJM's motion for summary judgment

dismissal.     The court did not reach the issue of plaintiff's

residency.

                                      II.

     We     exercise   de      novo   review     of    the   trial    court's

interpretation of an insurance policy on a motion for summary

judgment.    Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins.

Co. of Pittsburgh, 224 N.J. 189, 199 (2016).              We are also bound

by   well-established          principles       of     insurance      contract

interpretation, which the Supreme Court recently summarized:

            "In attempting to discern the meaning of a
            provision in an insurance contract, the
            plain language is ordinarily the most direct
            route." Chubb Custom Ins. Co. v. Prudential
            Ins. Co. of Am., 195 N.J. 231, 238, 948 A.2d
            1285 (2008).   If the plain language of the
            policy is unambiguous, we will "not 'engage
            in a strained construction to support the
            imposition of liability' or write a better
            policy   for  the   insured  than  the   one
            purchased." Ibid. (quoting Progressive Cas.
            Ins. Co. v. Hurley, 166 N.J. 260, 273, 765
            A.2d 195 (2001)).

                 When the provision at issue is subject
            to more than one reasonable interpretation,
            it is ambiguous, and the "court may look to
            extrinsic    evidence    as   an     aid  to
            interpretation." Ibid. Only where there is
            a genuine ambiguity, that is, "where the
            phrasing of the policy is so confusing that
            the average policyholder cannot make out the
            boundaries    of   coverage,"    should  the
            reviewing court read the policy in favor of

                                       5                              A-2337-14T1
           the insured.    Progressive Cas. Ins. Co.,
           supra, 166 N.J. at 274, 765 A.2d 195
           (quoting Weedo v. Stone-E-Brick, Inc., 81
           N.J. 233, 247, 405 A.2d 788 (1979)). "When
           construing   an   ambiguous  clause   in  an
           insurance policy, courts should consider
           whether clearer draftsmanship by the insurer
           'would have put the matter beyond reasonable
           question.'"   Ibid. (quoting Doto v. Russo,
           140 N.J. 544, 547, 659 A.2d 1371 (1995)).

           [Templo Fuente De Vida, supra, 224 N.J. at
           200.]

    Our     courts   have   enforced   UIM   step-down    provisions    if

"expressed in clear and unambiguous language."           Morrison v. Am.

Int'l Ins. Co. of Am., 381 N.J. Super. 532, 538 (App. Div.

2005).     Step-down provisions are legitimate "even though they

may result in differential treatment of similar plaintiffs based

on the existence of other available insurance."            Pinto v. N.J.

Mfrs. Ins. Co., 183 N.J. 405, 412 (2005), superseded in part by

N.J.S.A.    17:28-1.1(f)    (prohibiting     step-down    provisions     in

certain business auto insurance policies).          In particular, "a

step-down clause in an insurance policy can restrict the amount

of UIM coverage available to an individual who is not named in

that policy to the limit of UIM coverage that the individual may

recover under his or her own insurance policy."          Id. at 413.

    It is undisputed that Rivera is an "insured" under the NJM

policy because she was operating her mother's vehicle at the

time of the accident.       NJM contends she is not entitled to UIM

                                   6                             A-2337-14T1
benefits under its policy, because she may recover zero UIM

benefits under her own policy.                 However, the language of the NJM

policy does not achieve that result.

       The step-down            provision at issue applies if all of the

following three conditions are met: (1) the "insured is not the

named insured, but is a family member, under this policy"; (2)

"[t]hat      insured       is   a   named    insured   under    one   or     more   other

policies providing similar coverage"; and (3) "[a]ll such other

policies have a limit of liability for similar coverage which is

less than the limit of liability for this coverage . . . ."                            As

for the first condition, Rivera is not the named insured under

the NJM policy, but we assume, for the purposes of our analysis,

that   she    is     a    family    member.       We   note    that   NJM    separately

challenges that status.

       The    second        and      third     conditions      establish       separate

requirements.            The second describes the nature of the insured's

other policy.            The insured making the claim under the NJM policy

must be a named insured under the other policy, and that other

policy must "provid[e] similar coverage."                      The third condition

compares the limits of liability of the two policies: the other

policy must "have a limit of liability for similar coverage

which is less than the limit of liability for this coverage."

If   the     other       policy's    "similar     coverage"     is    less    than    the

                                              7                                 A-2337-14T1
coverage provided under the NJM policy, "then [NJM's] maximum

limit of liability for that insured . . . shall not exceed the

highest     applicable    limit       of    liability         under     any    insurance

providing coverage to that insured as a named insured."

    We     conclude     that   the     special         policy    does     not      provide

"similar     coverage"     because          it    provides       no     UIM        coverage

whatsoever.     The special policy, authorized by N.J.S.A. 39:6B-

1(c), and described in N.J.S.A. 39:6A-3.3, is available only to

certain    Medicaid    recipients          of    limited      income.         By    law,    a

special policy "shall not provide . . . underinsured motorist

coverage."     N.J.S.A. 39:6A-3.3(c).                 The policy, sold to Rivera

for $360 a year, provides only limited first-party benefits for

emergency    medical     expenses,         and   a    death     benefit.           N.J.S.A.

39:6A-3.3(b).      It    was    designed         to    provide    a     mechanism        for

drivers of severely limited economic means to comply with the

compulsory     insurance       law,        instead      of      driving       uninsured.

N.J.S.A. 39:6A-3.3(a).

    Although     the     NJM   policy       does      not    define     "coverage"         or

"similar coverage," the term "coverage" is used in reference to

distinct categories of risk.               See Delcampo v. Ins. Underwriting

Ass'n, 266 N.J. Super. 687, 700 (Law Div. 1993) ("[T]he term

'coverage' . . . connotes a distinct part of an insurance policy

providing . . . insurance as to a definite risk or risks coming

                                            8                                      A-2337-14T1
within its terms. . . .")             The policy refers to "liability

coverage," "personal injury protection coverage," "coverage for

damage to your auto," and "uninsured motorist coverage."                    Thus,

in the context of the step-down provision, we construe "similar

coverage"    to   mean   "coverage    similar    to    UIM   coverage."          See

Prather v. American Motorists Ins. Co., 2 N.J. 496, 502 (1949)

(an   insurance    contract    must   be   "read      and    considered     as    a

whole.")

      NJM conflates the second and third conditions.                   It argues

the   step-down   provision    applies     because     Rivera   "has     her   own

policy . . . on which she is the named insured that provides a

limit of liability 'for similar coverage' that is less than the

NJM UM/UIM limits of liability."            We recognize that the third

condition is susceptible to two interpretations, one of which

favors NJM's position.         Construing "similar coverage" to mean

"coverage similar to UIM coverage," one may contend that Rivera

has a policy with a zero "limit of liability for [UIM coverage]

which is less than the limit of liability" in the NJM policy.

Alternatively, one may contend Rivera has no limit of liability

for UIM coverage because she has no UIM coverage at all.

      However, we need not resolve the ambiguity in the third

condition,    inasmuch    as   Rivera     does   not    satisfy    the     second

condition.    In describing the other policy, the second condition

                                      9                                  A-2337-14T1
requires that the other policy is "providing similar coverage."

The word "similar" allows for "some degree of difference."                          Pine

Grove Manor v. Dir. Div. of Taxation, 68 N.J. Super. 135, 142

(App. Div. 1961).          It is "generally interpreted to mean that one

thing has a resemblance in many respects, nearly corresponds, is

somewhat like, or has a general likeness to some other thing

. . . although in some cases 'similar' may mean 'identical' or

'exactly alike.'"          Fletcher v. Interstate Chem. Co., 94 N.J.L.

332,    334    (Sup.    Ct.      1920)    (holding     that    contract       to    sell

"similar" printing presses did not require them to be "exactly

alike"), aff'd o.b., 95 N.J.L. 543 (E. & A. 1921).

       Regardless of whether "similar" as used in the NJM policy

means "identical" or allows for "some degree of difference,"

Rivera's      policy    does     not     provide    "coverage       similar    to   UIM

coverage,"       because    it    does     not     provide    any    form     of    "UIM

coverage"     whatsoever.         Even     where    two   policies     provided      UIM

coverage, we have found the coverage not to be "similar" so as

to     trigger    a    step-down       provision     where    one     provided       gap

coverage, and the other provided excess coverage.                       Nat'l Union

Fire Ins. Co. of Pittsburgh, Pa. v. Jeffers, 381 N.J. Super. 13,

19-20 (App. Div. 2005) (comparing UIM coverage in New Jersey and

Pennsylvania policies).

                                           10                                 A-2337-14T1
       A contrary interpretation is not compelled by the fact that

Rivera would be entitled to greater coverage as an insured under

a special policy than if she had purchased a standard policy

with    UIM   coverage        at   any    limit       less    than       the    NJM    policy

provided.         The    result    here     is    a    consequence         of    NJM's      own

draftsmanship.          See Magnifico v. Rutgers Cas. Ins. Co., 153 N.J.

406,    418   (1998)       (noting       that    "insurers         can    modify       policy

language in an effort to address issues of UIM coverage and

liability").       If Rivera had been a licensed driver who did not

own an automobile at all, she could have gone without her own

insurance entirely.           See N.J.S.A. 39:6A-3 (compulsory insurance

law pertains to "owner or registered owner of an automobile

registered or principally garaged" in New Jersey).                                    Had she

driven her mother's vehicle under those circumstances, she would

have been unaffected by the step-down provision.

       We recognize that Rivera chose, presumably as a result of

her financial circumstances, to purchase the special policy, and

not to obtain UIM coverage at all.                    But Torres-White did select

UIM    coverage    —    not   only   for    herself,         but   for     other      persons

insured under her policy, such as family members driving her

vehicle.      Her reasonable expectations, based on the "similar

coverage" condition of the step-down provision, should not be

frustrated by denying her daughter benefits.                         See Nav-Its, Inc.

                                            11                                        A-2337-14T1
v. Selective Ins. Co., 183 N.J. 110, 118-19 (2005); French v.

N.J. School Bd. Ass'n Ins. Group, 149 N.J. 478, 487, 495 (1997).

    In sum, the step-down provision does not apply to Rivera

because     she    is   not    a   named    insured     under   another    policy

"providing        similar     coverage."      Consequently,      NJM   was      not

entitled to summary judgment dismissing Rivera's complaint.

                                      III.

    NJM argues that even if the step-down provision does not

apply, its liability is limited because Rivera does not qualify

as a "family member" under its policy.                The policy provides that

UIM coverage for a person who is neither a named insured nor a

family member "shall not exceed the minimum limits required by

New Jersey law for liability coverage set forth in                        N.J.S.A.

39:6A-3."     That limit would be $15,000 in this case.                   As that

limit is no greater than the limit of McCray's insurance, no UIM

benefits would be available to Rivera if she is not a family

member.     A "family member" must be related to, and resident in

the household of, the named insured.                  In challenging Rivera's

residency in Torres-White's household, NJM notes that Rivera's

own policy, as well as her amended complaint, indicate that she

resides at an address other than her mother's.

    Rivera contended that she was, in fact, a resident in her

mother's household.           She also argues that NJM is estopped from

                                       12                                 A-2337-14T1
challenging her residency, because NJM raised the issue for the

first time in support of its motion for summary judgment.      She

contends that she detrimentally relied on NJM's previous silence

in reaching her settlement with McCray.

    The trial court did not reach the residency issue, but

noted that a period of discovery would have been required.      We

agree.   Since we reverse the grant of summary judgment on the

step-down provision as it relates to what constitutes "similar

coverage," we remand so that the trial court may address the

residency issue after a period of discovery.   Rivera's estoppel

argument should be addressed initially by the trial court after

completion of discovery.

    Reversed and remanded.   We do not retain jurisdiction.

                               13                        A-2337-14T1