Court Opinion

ID: 2651975
Source: CourtListenerOpinion
Date Created: 2014-02-03 15:30:30.241894+00
Date Added: 2024-06-11T12:36:00.160687
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. 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 Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

  Nowell James and Maryann James v. New Jersey Manufacturers Insurance Company (A-26-12) (071344)

Argued October 7, 2013 -- Decided February 3, 2014

LaVECCHIA, J., writing for a unanimous Court.

         In this appeal, the Court considers the retroactivity of N.J.S.A. 17:28-1.1(f), which prohibits the use of
step-down provisions in an employer’s commercial motor vehicle liability policy to provide less uninsured or
underinsured motorist coverage (UM/UIM coverage) for employees than that which is provided to the “named
insureds” on the policy.

         On July 5, 2007, plaintiff Nowell James was driving a vehicle owned by his employer, Metric Plumbing
and Heating, Inc. (Metric), and was significantly injured when another car struck the Metric vehicle. James settled
with the owners of the other car for $100,000, the policy limit of their insurance. The Metric vehicle was insured
under a policy issued on March 18, 2007, by defendant New Jersey Manufacturers Insurance Company (NJM). The
policy included a $500,000 limit for UM/UIM coverage. Since the $100,000 James received in the settlement did
not defray his medical costs, he sought UIM coverage at the $500,000 limit as an “insured” person under Metric’s
policy. However, the NJM policy contained a step-down provision capping the recovery of UIM benefits for
unnamed insureds at the limit contained in James’s own personal policy, or a policy by which he was covered as a
family member. Since James was covered under his wife’s policy, which had a UIM limit of $50,000, his maximum
UIM recovery under the NJM policy was capped at $50,000. Because James had already received an amount in
excess of $50,000 from his settlement, NJM denied his UIM claim.

         On July 9, 2009, James filed suit against NJM, seeking UIM benefits under the policy issued to Metric.
James partially relied upon N.J.S.A. 17:28-1.1(f), which provides that policies naming a corporate or business entity
as the named insured, “shall be deemed to provide the maximum [UM/UIM] coverage available under the policy to
an [employee] regardless of whether the [employee] is an additional named insured under that policy” or is covered
under any other policy providing UI/UIM coverage. N.J.S.A. 17:28-1.1(f) was enacted into law, and made
immediately effective, on September 10, 2007, five months after NJM issued its policy to Metric, and two months
after James’s motor vehicle accident.

          NJM moved for summary judgment, arguing that N.J.S.A. 17:28-1.1(f) does not apply retroactively and
that the policy’s step-down provision remained applicable. The trial court granted summary judgment to NJM,
finding that N.J.S.A. 17:28-1.1(f) did not retroactively bar the application of step-down provisions in employer
motor vehicle liability policies in existence at the time of the law’s enactment. James appealed, and the Appellate
Division reversed in an unpublished opinion. The panel concluded that N.J.S.A. 17:28-1.1(f) reformed the NJM
policy that was in existence when the amendment took effect, reasoning that the step-down provision was rendered
unenforceable regardless of when during the life of the policy an accident involving an employee actually occurred.
The Court granted NJM’s petition for certification. 212 N.J. 460 (2012).

HELD: As of its effective date of September 10, 2007, N.J.S.A. 17:28-1.1(f) applied to and prospectively reformed,
for employees, a corporation’s or business entity’s motor vehicle liability policy containing UM/UIM step-down
provisions, including policies that were in force at that time. No exceptions to the rule favoring prospective
application of new legislation pertain to N.J.S.A. 17:28-1.1(f) . Because James’s accident preceded N.J.S.A. 17:28-
1.1(f)’s effective date, his claims are governed by the provisions of the NJM policy that were in existence as of the
date of his accident.

1. The Court’s decision in Pinto v. New Jersey Manufacturers Insurance Co., 183 N.J. 405 (2005), upheld the
validity of a step-down provision in an employer’s motor vehicle liability policy with respect to UM/UIM benefits
provided to an employee. On September 10, 2007, about two years after Pinto was decided, N.J.S.A. 17:28-1.1(f)

                                                           1
was enacted, reversing the effect of Pinto by prohibiting step-down provisions which limit UM/UIM coverage for
employees in employer business motor vehicle insurance policies. In pertinent part, it provides that policies issued
to corporate or business entities shall not provide less UM/UIM covered for an employee than the coverage provided
to the named insured. Where a corporate or business entity is the named insured, the policy “shall be deemed to
provide the maximum [UM/UIM] coverage available under the policy to an [employee] regardless of whether the
[employee] is an additional named insured under that policy” or is covered under any other policy providing
UI/UIM coverage. N.J.S.A. 17:28-1.1(f) took effect immediately upon enactment. (pp. 10-13)

2. In accordance with notions of fairness and due process, statutes should generally be given prospective
application. In determining whether a statute could be applied retroactively, a court must first ask whether the
Legislature intended to provide for retroactive application and then ask whether such application will result in
manifest injustice or unconstitutional interference with vested rights. Three circumstances justify giving a statute
retroactive effect: (1) when there is express or implicit legislative intent that it apply retroactively; (2) when it is
curative, merely clarifying the legislative intent of a previous act without altering it in any substantial way; and (3)
when warranted by the parties’ expectations. Once it is determined that a statute is subject to retroactive application,
an inquiry must be made as to the potential for manifest injustice to the adversely-affected party. (pp. 13-17)

3. The plain language of N.J.S.A. 17:28-1.1(f) is the Court’s starting point in its retroactivity analysis. The clear
language of the amendment’s two operative sentences shows that step-down provisions are not entirely prohibited.
N.J.S.A. 17:28-1.1(f) directs how employees must be treated in the presence of such provisions, but does not render
them ultra vires in other settings, such as when a non-employee user of a corporate vehicle is injured by an
uninsured or underinsured motorist. The statutory language is similarly explicit in identifying its effective date of
September 10, 2007. Nothing in the plain language of the statute indicates an intended retroactive effect. When
considered in conjunction with the operative sentences of the legislation, the natural and most straightforward
application of the immediate effective date means that N.J.S.A. 17:28-1.1(f) reformed policies as of that date. Thus,
only employees seeking coverage for accidents occurring after the effective date would be covered under reformed
policies. This conclusion does not result in manifest injustice to insurers because they have no contractual
expectation that the insurance regulatory scheme will remain unalterably fixed. (pp. 17-23)

4. The Court disagrees with the Appellate Division’s conclusion in Hand v. Philadelphia Insurance Co., 408 N.J.
Super. 124 (App. Div), certif. denied, 200 N.J. 506 (2009), in which it determined that the language of N.J.S.A.
17:28-1.1(f) evinced an implicit legislative intent to retroactively reform all commercial liability policies by
eliminating step-down provisions in existence on the effective date of the new legislation and providing an
immediate remedy for any claims pending as of that date. The Court reiterates that the plain language of N.J.S.A.
17:28-1.1(f) does not eliminate step-down provisions, instead simply thwarting implementation of such provisions
for a certain class of insureds. As of the amendment’s effective date, it began blocking the application of step-down
provisions to those insureds and altered contract terms to provide a remedy. (pp. 23-25)

5. The Court has previously held that UM/UIM claims specifically arise at the time of the accident. As of the date
of James’s accident, Metric’s policy with NJM had not yet been affected by N.J.S.A. 17:28-1.1(f), and the plain
language of that amendment evinces no legislative intent for retroactive application. Additionally, the curative
exception to the general rule favoring prospective application of statutes is inapplicable because N.J.S.A. 17:28-
1.1(f) neither cured a judicial misinterpretation of the law nor clarified or expanded a preexisting statutory
provision. Finally, since N.J.S.A. 17:28-1.1(f) was neither adopted nor effective at the time Metric’s policy was
issued or when James’s accident occurred, NJM had a reasonable basis to believe its step-down provision was
enforceable. Although employee UM/UIM claims involving accidents that occurred on or after the effective date of
N.J.S.A. 17:28-1.1(f) are governed by that new law, James’s UM/UIM claim is governed by the provisions of the
NJM policy that were lawfully in existences as of the date of his accident. The Appellate Division erred in
retroactively applying N.J.S.A. 17:28-1.1(f) to James’s claim and reversing the trial court’s award of summary
judgment to NJM. (pp. 25-32)

         The judgment of the Appellate Division is REVERSED.

        CHIEF JUSTICE RABNER, JUSTICES ALBIN and PATTERSON, and JUDGE CUFF
(temporarily assigned) join in JUSTICE LaVECCHIA’s opinion. JUDGE RODRÍGUEZ (temporarily
assigned) did not participate.

                                                           2
                                      SUPREME COURT OF NEW JERSEY
                                        A-26 September Term 2012
                                                 071344

NOWELL JAMES and MARYANN
JAMES, his wife,

    Plaintiffs-Respondents,

         v.

NEW JERSEY MANUFACTURERS
INSURANCE COMPANY,

    Defendant-Appellant.

         Argued October 7, 2013 – Decided February 3, 2014

         On certification to the Superior Court,
         Appellate Division.

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

         Alexander J. Rinaldi argued the cause for
         respondents (Salny Redbord and Rinaldi,
         attorneys).

    JUSTICE LaVECCHIA delivered the opinion of the Court.

    In Pinto v. New Jersey Manufacturers Insurance Co., 183
N.J. 405, 407 (2005), this Court enforced a commercial motor

vehicle liability policy’s “step-down” provision, which had the

effect of capping uninsured or underinsured motorist coverage

(UM/UIM coverage) provided through an employer’s commercial

policy to employees and other qualifying “insureds” at the

                                1
limits available to such individuals through their personal

automobile insurance coverage.     The Pinto holding relied on

prior recognition of the legitimacy of such contractual capping

provisions, id. at 412 (citing Magnifico v. Rutgers Cas. Ins.

Co., 153 N.J. 406, 418 (1998)), when construing the policy

language before the Court.

    Two years later, a new statute was enacted that prohibits,

in motor vehicle liability policies issued to corporate or

business entities, the use of step-down provisions to provide

less UM/UIM coverage for employees than that which is provided

to the “named insureds” on the policy; and further, if the

policy lists only the business entity as the “named insured”

then employees are “deemed” eligible for maximum available

coverage.    L. 2007, c. 163, codified at N.J.S.A. 17:28-1.1(f).

The new legislation, which was signed into law on September 10,

2007, specified that it was effective immediately.     L. 2007, c.

163, § 2.

    This appeal involves the application of the new legislation

to a policy that was in effect at the time that the legislation

became effective.    The policy contained a step-down provision

that but for the new legislation would govern the limits of

UM/UIM coverage for the injured employee involved in this

matter.     Specifically, we are called on to address whether the

step-down provision is enforceable for a UIM claim by the

                                   2
employee concerning an accident that occurred prior to the

adoption of N.J.S.A. 17:28-1.1(f).    Thus, we must consider the

retroactivity of the statute.

    The law favors prospective application of a new statute.

To conclude otherwise requires a finding that one of the

recognized exceptions to that rule applies.    We conclude that

there is no evidence that the Legislature explicitly or

implicitly directed retroactive application and no other

exception pertains here.    The legislation, by its very terms,

reformed commercial motor vehicle liability policies as of the

date it became effective.   While that brought about the

amendment of existing policies from that date forward for the

life of that policy and for any new or renewal policies that

were issued subsequent to the new law’s effective date, the new

law did not retroactively alter otherwise lawful policy terms

applicable to claims that arose before the legislation took

effect.   A UM/UIM claim under an occurrence-based motor vehicle

liability policy is governed by the policy terms in effect on

the date of the occurrence, here the accident.    The timing of

the instant accident preceded the effective date when N.J.S.A.

17:28-1.1(f) reformed the employer’s motor vehicle liability

policy.

    Applying established rules of statutory construction and

the retroactivity of new legislation, we hold that N.J.S.A.

                                  3
17:28-1.1(f) does not retroactively apply to an accident that

preceded the new legislation’s effective date.

                                  I.

                                  A.

    On July 5, 2007, plaintiff Nowell James was injured in an

automobile accident while driving a vehicle owned by his

employer, Metric Plumbing and Heating, Inc. (Metric).     James’s

car was struck by another vehicle, operated by Ria T. Demeo and

owned by Jon J. Demeo.     James suffered serious injuries as a

result of the collision.    He subsequently settled with the

Demeos for $100,000, the policy limit of their insurance.       This

appeal focuses on his UIM claim under his employer’s commercial

motor vehicle liability policy.

    James was operating a vehicle that Metric insured under a

policy issued by New Jersey Manufacturers Insurance Company

(Defendant or NJM).    The NJM policy was issued on March 18,

2007, and included a $500,000 limit for uninsured/underinsured

(UM/UIM) coverage.    Because the $100,000 received from the

Demeos was insufficient to defray the costs of James’s injuries,

James sought UIM coverage at the $500,000 limit as an “insured”

person under Metric’s policy with NJM.     However, as was the case

in Pinto, the policy issued by NJM contained a step-down

provision limiting the recovery of UIM benefits for certain

categories of insureds.    For individuals who were not “named

                                  4
insureds” on the policy, which James was not, eligibility for

UIM benefits was capped at the limit contained in the insured’s

own personal policy, or a policy by which the insured was

covered as a family member.    The specific policy language states

as follows:

         Limit of Insurance

         1. Regardless of the number of covered autos,
            insureds, premiums paid, claims made or
            vehicles involved in the accident, the
            LIMIT   OF    INSURANCE   shown   in   the
            Declarations Supplement I for [UM/UIM]
            Coverage is the most we will pay for all
            damages resulting from any one accident
            with an uninsured motor vehicle or an
            underinsured motor vehicle.

              a. However, subject to our maximum Limit
                 of Insurance for this coverage, if:
                 (1) An insured is not the individual
                 named   insured    under    this   policy;
                 (2) That insured is an individual named
                 insured   under   one    or   more   other
                 policies providing similar coverage;
                 and
                 (3) All such other policies have a
                 limit of insurance for similar coverage
                 which is less than the Limit of
                 Insurance for this coverage; then the
                 most we will pay for all damages
                 resulting from any one accident with
                 [a UM/UIM] motor vehicle shall not
                 exceed the highest applicable limit of
                 insurance under any coverage form or
                 policy   providing    coverage   to   that
                 insured as an individual named insured.

              b. However, subject to our maximum Limit
                 of Insurance for this coverage, if:
                 (1) An insured is not the individual
                 named insured under this policy or any
                 other policy;

                                  5
              (2) That insured is insured as a family
              member under one or more other policies
              providing    similar     coverage;  and
              (3) All such other policies have a
              limit of insurance for similar coverage
              which is less than the Limit of
              Insurance for this coverage;
              then the most we will pay for all
              damages resulting from any one accident
              with [a UM/UIM] motor vehicle shall not
              exceed the highest applicable limit of
              insurance under any coverage form or
              policy   providing   coverage   to that
              insured as a family member.

    James was insured under his wife’s personal automobile

policy, which had a UIM limit of $50,000.    Thus, under Metric’s

NJM policy, with its applicable step-down provision, James’s

maximum UIM recovery under the NJM policy was capped at $50,000.

Accordingly, NJM denied James’s UIM claim because James already

had received an amount in excess of $50,000 from his settlement

with the Demeos.

                               B.

    On July 9, 2009, James filed this action against NJM

seeking UIM benefits under the NJM motor vehicle liability

policy issued to his employer to compensate him for injuries

sustained in the July 5, 2007, accident.    In support of his

claim, James primarily relied upon N.J.S.A. 17:28-1.1(f), which

provides in pertinent part as follows:

         Notwithstanding  the   provisions  of   this
         section or any other law to the contrary, a
         motor vehicle liability policy or renewal of
         such policy of insurance, . . . issued in

                                6
         this State to a corporate or business entity
         . . . , shall not provide less uninsured or
         underinsured    motorist    coverage   for   an
         individual employed by the corporate or
         business entity than the coverage provided
         to the named insured under the policy. A
         policy that names a corporate or business
         entity as a named insured shall be deemed to
         provide     the     maximum     uninsured    or
         underinsured    motorist   coverage   available
         under the policy to an individual employed
         by   the   corporate    or   business   entity,
         regardless of whether the individual is an
         additional named insured under that policy
         or is a named insured or is covered under
         any other policy providing uninsured or
         underinsured motorist coverage.

         [N.J.S.A. 17:28-1.1(f).]

N.J.S.A. 17:28-1.1(f) was enacted into law, and made immediately

effective, on September 10, 2007 -- five months after NJM issued

its policy to Metric, and two months after the motor vehicle

accident for which James seeks UIM compensation.   Thus, James’s

claim is premised on the amendment to N.J.S.A. 17:28-1.1 that

was adopted during the effective period of NJM’s policy with

Metric, but after the accident injuring James.

    NJM filed a motion for summary judgment arguing that

N.J.S.A. 17:28-1.1(f) does not apply retroactively to the facts

of James’s claim and that the policy’s step-down provision was

applicable to the claim.   In response, James argued that the

Legislature intended to reform all motor vehicle liability

policies issued to corporate or business entities that were in

existence on September 10, 2007, when N.J.S.A. 17:28-1.1(f)

                                7
became effective.   Therefore, James maintained that the step-

down clause in NJM’s policy, issued to Metric and in effect on

September 10, 2007, had been abrogated by law on that date and

for the entirety of the policy’s life.

    The trial court determined that the step-down provision

included in Metric’s policy was implicated on these facts

because:   (1) James was covered as an insured under his wife’s

policy, which contained a UIM coverage limit of $50,000; and (2)

James had received in excess of that amount from his settlement

with the Demeos.    Accordingly, under the terms of the NJM step-

down provision, NJM was required to pay “no more” than the

$50,000 coverage limit contained in James’s wife’s policy.

    Rejecting James’s claim that N.J.S.A. 17:28-1.1(f)

retroactively barred application to employees of step-down

provisions in employer motor vehicle liability policies in

existence at the time of the law’s enactment, the court granted

summary judgment to NJM.    The court explained that because the

step-down provision was valid at the time the policy was issued

by NJM to Metric, it would be unfair to increase NJM’s potential

liability by retroactively reforming the policy in light of the

subsequent passage of N.J.S.A. 17:28-1.1(f).    The court

explained that NJM permissibly “relied on the law which

permitted step down provisions” when negotiating its motor

vehicle liability policy with Metric and that James “d[id] not

                                  8
have the same reasonable expectations” because N.J.S.A. 17:28-

1.1(f) was not adopted until after Metric had already entered

into its insurance contract with NJM.

    James appealed and the Appellate Division reversed in an

unpublished opinion.   The panel reviewed two prior Appellate

Division decisions that had considered the retroactive effect to

be given to N.J.S.A. 17:28-1.1(f):   Olkusz v. Brown, 401 N.J.

Super. 496 (App. Div. 2008) (finding no legislative intent for

retroactive application of new law), and Hand v. Philadelphia

Insurance Co., 408 N.J. Super. 124 (App. Div.) (finding implicit

support for retroactivity but finding manifest injustice in

retroactive application under facts presented), certif. denied,

200 N.J. 506 (2009).   The panel noted that although those

decisions had reached differing conclusions as to the

Legislature’s intent concerning the retroactive implementation

of the statute, neither had provided relief from an otherwise

valid step-down provision for accidents that had long preceded

the new law’s effective date of September 10, 2007.     The panel

in the instant matter, confronting an accident that had occurred

during the life of a policy in effect at the time that N.J.S.A.

17:28-1.1(f) became law, but before the statute’s September 10,

2007, effective date, concluded that the amendatory provision

reformed the NJM policy that was in existence when the amendment

took effect.   The panel reasoned that the step-down provision in

                                 9
NJM’s policy with Metric “was eliminated” and, further, that

NJM’s step-down provision was unenforceable irrespective of when

during the life of that policy an accident involving an employee

of Metric actually occurred.   The panel also rejected the

argument that its application of the amendatory legislation was

“manifestly unjust or otherwise impair[ed] defendant’s

contractual rights.”

    We granted NJM’s petition for certification to consider

whether the amendatory legislation applies retroactively to an

accident that preceded the effective date of the legislation

and, if so, whether reforming a motor vehicle liability policy

in such a setting would be manifestly unjust.   James v. N.J.

Mfrs. Ins. Co., 212 N.J. 460 (2012).

                                II.

                                A.

    As previously stated, this Court’s decision in Pinto,

supra, issued on June 6, 2005, upheld the validity of and

enforced a step-down provision in respect of UM/UIM benefits

provided to an employee of a corporate entity through the

employer’s motor vehicle liability policy. 183 N.J. at 407-10.

The Pinto holding was premised on this Court’s prior recognition

of the legitimacy of such contractual capping provisions.    Id.

at 412 (citing Magnifico v. Rutgers Cas. Ins. Co., 153 N.J. 406,

418 (1998)).   And, in its construction of the language of the

                                10
insurance policy involved, the decision rested on common law

principles of contract interpretation.   Id. at 412-13.

    A little more than two years after Pinto was decided, the

Legislature passed Senate Bill No. 1666, which the Governor

signed into law on September 10, 2007, as chapter 163 of the

Laws of 2007.   The new legislation amended N.J.S.A. 17:28-1.1 to

include the following additional subsection:

         f. Notwithstanding the provisions of this
         section or any other law to the contrary, a
         motor vehicle liability policy or renewal of
         such policy of insurance, insuring against
         loss resulting from liability imposed by law
         for bodily injury or death, sustained by any
         person   arising    out   of   the   ownership,
         maintenance or use of a motor vehicle,
         issued in this State to a corporate or
         business entity with respect to any motor
         vehicle registered or principally garaged in
         this State, shall not provide less uninsured
         or underinsured motorist coverage for an
         individual employed by the corporate or
         business entity than the coverage provided
         to the named insured under the policy.        A
         policy that names a corporate or business
         entity as a named insured shall be deemed to
         provide     the     maximum     uninsured    or
         underinsured    motorist   coverage   available
         under the policy to an individual employed
         by   the   corporate    or   business   entity,
         regardless of whether the individual is an
         additional named insured under that policy
         or is a named insured or is covered under
         any other policy providing uninsured or
         underinsured motorist coverage.

    The Statement accompanying S-1666 described the purpose of

the legislation.

                                11
     This bill prohibits the use of step-
down provisions in motor vehicle liability
policies issued to corporate or business
entities to lower uninsured or underinsured
motorist coverage for employees to the
limits   of   coverage   available   to  the
employees under their personal policies.

     This bill is in response to the New
Jersey Supreme Court’s decision in [Pinto].
In Pinto, the court held that as to a motor
vehicle   liability   policy    that   names   a
corporate or business entity as a named
insured, step-down provisions which limit
uninsured or underinsured motorist coverage
for employees of that entity that are not
individuals named on the policy are valid
and enforceable.    Thus, the court’s ruling,
which upholds earlier case law on the
subject, allows an employee’s coverage under
an   employer’s    business     motor    vehicle
insurance policy to be limited to the lower
limits   of   uninsured    or    under   insured
motorist    coverage     contained     in    the
employee’s     individual      motor     vehicle
liability policy, even in situations in
which the employee is injured in a covered
vehicle in a work-related accident, if the
employer’s       policy       so       provides.

      This bill reverses the effect of the
Pinto    decision by prohibiting step-down
provisions in these policies.    Further, the
bill expressly provides that a policy that
names a corporate or business entity as a
named insured shall be deemed to provide the
maximum uninsured or underinsured motorist
coverage available under the policy to any
individual employed by the corporate or
business entity, regardless of whether the
individual is an additional named insured
under that policy, or is a named insured or
is covered under any other policy providing
uninsured or underinsured motorist coverage.

                      12
In respect of the new law’s effective date, S-1666 provided that

“[t]his act shall take effect immediately.”       See L. 2007, c.

163, § 2.

    The question presented here is whether the amendment to

N.J.S.A. 17:28-1.1 was intended to apply to an accident that

preceded its effective date, but which occurred during the life

of a policy that was in force at the time of the statute’s

enactment.   Our analysis is informed by rules of statutory

construction that govern the retroactive application of

legislation.

                                  B.

    It is well established that “statutes generally should be

given prospective application.”    In re D.C., 146 N.J. 31, 50

(1996).   Settled rules of statutory construction favor

prospective rather than retroactive application of new

legislation.   See Cruz v. Cent. Jersey Landscaping, Inc., 195
N.J. 33, 45 (2008); Nobrega v. Edison Glen Assocs., 167 N.J.
520, 536 (2001); see also Gibbons v. Gibbons, 86 N.J. 515, 522

(1981) (“It is a fundamental principle of jurisprudence that

retroactive application of new laws involves a high risk of

being unfair.” (quoting 2 Sutherland, Statutory Construction,

§ 41.02 at 247 (4th ed. 1973))).       The preference for prospective

application of new legislation “is based on our long-held

notions of fairness and due process.”       Cruz, supra, 195 N.J. at

                                  13
45; accord Landgraf v. USI Film Prods., 511 U.S. 244, 266, 114
S. Ct. 1483, 1497, 128 L. Ed. 2d 229, 253 (1994) (stating that

“[t]he Due Process Clause . . . protects the interests in fair

notice and repose that may be compromised by retroactive

legislation”).

    There is a two-part test for determining “‘whether a

statute could be applied retroactively.’”   D.C., supra, 146 N.J.

at 50 (quoting Phillips v. Curiale, 128 N.J. 608, 617 (1992)).

          The   first   part  questions   whether the
          Legislature intended to give the statute
          retroactive application.    The second part
          involves whether retroactive application of
          that statute will result in either an
          unconstitutional interference with vested
          rights or a manifest injustice.

          [Ibid. (internal    citations   and   quotation
          marks omitted).]

    Consistent application of that test results in three

circumstances that will justify giving a statute retroactive

effect:   (1) when the Legislature expresses its intent that the

law apply retroactively, either expressly or implicitly; (2)

when an amendment is curative; or (3) when the expectations of

the parties so warrant.   See Cruz, supra, 195 N.J. at 46; D.C.,

supra, 146 N.J. at 50; Twiss v. State, 124 N.J. 461, 467 (1991);

Gibbons, supra, 86 N.J. at 522-23.

    The Legislature may demonstrate its intent to apply a

statute retroactively either by stating so “in the language of

                                14
the statute or in the pertinent legislative history . . . or

[such intent may be] implied.”   Gibbons, supra, 86 N.J. at 522

(citation omitted); see also Oberhand v. Dir., Div. of Taxation,

193 N.J. 558, 571 (2008) (noting legislative intent that statute

be given retroactive application may be express or implied).

Implied retroactivity may be found from the statute’s operation

when retroactive application is necessary to fulfill legislative

intent.   See Gibbons, supra, 86 N.J. at 522 (noting that implied

retroactivity may be found where “necessary to make the statute

workable or to give it the most sensible interpretation”);

Twiss, supra, 124 N.J. at 467 (same).   When the Legislature

addresses whether a statute should apply retroactively to the

law’s enactment, that expression of legislative intent should be

given effect absent a compelling reason not to do so.   See

Nobrega, supra, 167 N.J. at 537.

    A statutory provision also may be afforded retroactive

application if it is “curative,” that is, designed to “remedy a

perceived imperfection in or misapplication of a statute.”

Schiavo v. John F. Kennedy Hosp., 258 N.J. Super. 380, 386 (App.

Div. 1992), aff’d, 131 N.J. 400 (1993); see Cruz, supra, 195

N.J. at 46.   “Generally, curative acts are made necessary by

inadvertence or error in the original enactment of a statute or

in its administration.”   2 Sutherland, Statutory Construction,

§ 41.11 at 417 (5th ed. 1991).   We have explained that an

                                 15
amendment is curative if it does “not alter the act in any

substantial way, but merely clarifie[s] the legislative intent

behind the [previous] act.”   2nd Roc-Jersey Assocs. v. Town of

Morristown, 158 N.J. 581, 605 (1999); accord Schiavo, supra, 258

N.J. Super. at 386 (stating similarly that “the new statute

[must be] intended simply to explain and to clarify the existing

law rather than to change the meaning of the original law”

(internal citations and quotation marks omitted)).

    Finally, we have acknowledged that, absent a clearly

expressed intent by the Legislature to have a statute apply only

prospectively, “such considerations as the expectations of the

parties may warrant retroactive application of a statute.”

Gibbons, supra, 86 N.J. at 523.

    Once it has been determined that a statute is subject to

retroactive application, a separate inquiry requires examination

for manifest injustice to the party adversely affected by

retroactive application of the changed law.   See ibid.   Thus,

notwithstanding a readily gleaned legislative intent to

retroactively apply new legislation, or the determination that a

statute is clearly curative, the impact on the affected party

must be considered.   See D.C., supra, 146 N.J. at 58 (stating

that affected party’s reliance on prior law and “the unfairness

of changing that law” are important factors in retroactivity

analysis); Innes v. Innes, 117 N.J. 496, 511 (1990) (stating

                                  16
that manifest injustice inquiry focuses on “whether the parties

relied on prior law to their detriment, such that retroactive

application would cause a ‘deleterious and irrevocable’ result”

(quoting Gibbons, supra, 86 N.J. at 523-24)).

                              III.

    In analyzing the retroactivity question before us, we first

must examine the change in law that the new statute directs.

The plain language of N.J.S.A. 17:28-1.1(f), enacted in response

to the Pinto holding, is our starting point in discerning and

implementing the legislative intent underlying this new statute,

including the issue of retroactive effect.   See Norfolk S. Ry.

Co. v. Intermodal Props., LLC, 215 N.J. 142, 166 (2013).

    The opening operative language of the legislation is

detailed and precise in directing the effect that the new

legislation is to have:

         Notwithstanding   the  provisions   of   this
         section or any other law to the contrary, a
         motor vehicle liability policy or renewal of
         such policy of insurance, insuring against
         loss resulting from liability imposed by law
         for bodily injury or death, sustained by any
         person   arising   out  of   the   ownership,
         maintenance or use of a motor vehicle,
         issued in this State to a corporate or
         business entity with respect to any motor
         vehicle registered or principally garaged in
         this State, shall not provide less uninsured
         or underinsured motorist coverage for an
         individual employed by the corporate or
         business entity than the coverage provided
         to the named insured under the policy.

                               17
         [N.J.S.A. 17:28-1.1(f) (emphasis added).]

That straightforward language prohibits providing an employee

with less coverage than the named insured on a corporate or

business entity’s commercial automobile liability policy.    The

plain language of the second sentence of the amendment further

directs what should happen if the corporate or business entity’s

commercial automobile liability policy has not identified any

named insured -- other than the business entity itself -- which

was the same situation as existed in Pinto.    That second

sentence of N.J.S.A. 17:28-1.1(f) states as follows:

         A policy that names a corporate or business
         entity as a named insured shall be deemed to
         provide the maximum uninsured or under
         insured motorist coverage available under
         the policy to an individual employed by the
         corporate or business entity, regardless of
         whether the individual is an additional
         named insured under that policy or is a
         named insured or is covered under any other
         policy providing uninsured or under insured
         motorist coverage.

Giving that plain and direct language its normal meaning, it is

apparent that neither of the two operative sentences comprising

this legislative provision prohibits step-down provisions in

commercial motor vehicle liability policies for uninsured or

underinsured motorist coverage.

    Stated simply, step-down provisions are not ultra vires as

a result of the statute’s plain language.     The Court’s role in

undertaking statutory interpretation is to give “words their

                                  18
ordinary meaning and significance.”        Perez v. Professionally

Green, LLC, 215 N.J. 388, 399 (2013) (quoting DiProspero v.

Penn, 183 N.J. 477, 492 (2005)).        A court may not “rewrite a

plainly-written enactment of the Legislature []or presume that

the Legislature intended something other than that expressed by

way of the plain language” of the statute.        Ibid. (alteration in

original) (internal citation and quotation marks omitted).           The

text of the instant statute does not “prohibit” use of step-down

provisions, notwithstanding that generalized description in the

sponsor’s statement.     Rather, the two operative sentences of the

new law direct how employees must be treated in the presence of

such provisions.   If the words are clear and unambiguous,

extrinsic aids may not be used to create ambiguity.        See State

v. Shelley, 205 N.J. 320, 323 (2011).       It is the text of the

statute that controls.     Ibid.

    The precise way in which the operative language of N.J.S.A.

17:28-1.1(f) is worded demonstrates that the amendment does not

render step-down provisions ultra vires in other settings in

which an “insured” under a motor vehicle liability policy issued

to a corporate or business entity might remain subject to a

step-down limit on coverage under a commercial policy.        Examples

of such other settings in which a step-down would operate

permissibly include a family member of an employee riding in a

corporately registered car, or a non-employee permissive user of

                                   19
the vehicle, who was injured by an uninsured or underinsured

motorist.    As was pointed out correctly in argument by NJM

before this Court, such examples would meet the criteria of an

innocent “insured” eligible for coverage under a typical

liability policy of automobile insurance and, specific to the

case at hand, under the policy in issue in this matter.     NJM

persuasively argues that one would expect that the Legislature

was aware that an “insured” subject to a commercial policy’s

step-down provision for UM/UIM applies more broadly than simply

to the employees of the business entity and, further, that the

Legislature, by not outright prohibiting all use of step-down

provisions in commercial motor vehicle liability policies,

recognized sound policy reasons for permitting such

contractually limiting provisions to be negotiated in the

setting of commercial liability insurance.

    That said, although the Legislature did not proscribe the

use of step-down provisions in corporate or business motor

vehicle liability policies, the language of the two operative

sentences clearly altered how policies containing such

provisions would be permitted to operate in respect of

employees.   Again, we follow the well-recognized principle that

a statute’s language must be given its ordinary meaning.

N.E.R.I. Corp. v. N.J. Highway Auth., 147 N.J. 223, 236 (1996).

The straightforward text of N.J.S.A. 17:28-1.1(f) is not

                                 20
ambiguous as to how it alters commercial policies of automobile

insurance.   We thus give those words their normally ascribed

meaning:   The level of UM/UIM coverage for a “named insured” in

a policy shall be the same level that is provided to employees

of the corporation or business entity by operation of law, as

directed through the first sentence of the new legislation.     If

the corporation or the business entity is the only named

insured, then employees of that entity must receive under the

commercial policy the maximum available amount of UM/UIM

coverage by operation of law, as directed through the second

sentence of the new legislation.

       The language of the statute is also explicit in identifying

the effective date of the amendment.   Pursuant to section 2 of

the bill that, when enacted, became N.J.S.A. 17:28-1.1(f), the

amendment was to take effect immediately.     See L. 2007, c. 163,

§ 2.    Because the bill was signed into law on September 10,

2007, the new law took effect immediately on September 10, 2007.

As the Olkusz panel aptly noted, had the Legislature intended an

earlier date for the law to take effect, that intention could

have been made plain in the very section directing when the law

would become effective.    Olkusz, supra, 401 N.J. Super. at 502.

However, the Legislature did not do so.     Neither the law nor the

bill sponsor’s statement expresses that the law was to have

operative effect before its stated effective date.    Id. at 503.

                                 21
In short, the plain language of the statute simply does not

specify an intended retroactive effect of the statute on

commercial motor vehicle liability policies prior to the law’s

effective date.   Ibid.   We are therefore in accord with the view

generally accepted in the Appellate Division that the

Legislature provided no express direction that the new

legislation be given a retroactive application.     See ibid.;

Hand, supra, 408 N.J. Super. at 138.

    That does not mean that the Legislature did not explicitly

intend for N.J.S.A. 17:28-1.1(f) to impact policies in existence

on the amendment’s effective date.     To the contrary, we have no

doubt from the language of the new law that the Legislature

intended immediately to affect motor vehicle liability policies

of corporations or business entities in force as of the date

that the new law took effect.   The natural and most

straightforward application of the immediate effective date in

tandem with the directory nature of the operative sentences of

the legislation leads us to conclude that the new legislation

reformed policies as of the law’s effective date by stating what

level of UM/UIM coverage must be provided to employees through

the commercial automobile policy held by their corporate or

business employer.   Indeed, the “shall be deemed” language of

the second sentence pointedly specified that employees would

receive the maximum available level of UM/UIM coverage when only

                                 22
the business was identified as the “named insured” under the

policy, plainly evidencing the Legislature’s intent to

immediately alter a policy in existence when the statute took

effect.   In combination, we conclude that those explicit and

detailed statutory terms clearly demonstrate that employees

seeking coverage for accidents occurring after the legislation

took effect would be covered under reformed policies, as

directed by law pursuant to the legislation.

    To the extent that such an interpretation interferes with

policies negotiated before the amendment’s passage but in

existence on September 10, 2007, we find explicit legislative

intent that the legislation should have that impact.     Insurers

cannot cry foul for the legislative determination to implement a

mid-policy alteration for accidents occurring after the

effective date for, as we recently stated, “[i]n a highly

regulated industry, such as insurance, businesses have no

‘contractual expectation’ that a naturally fluid regulatory

scheme, ‘subject to change at any time,’ will remain in an

unalterably fixed state.”   Farmers Mut. Fire Ins. Co. v. N.J.

Prop. Liab. Ins. Guar. Ass’n, 215 N.J. 522, 547 (2013) (citation

omitted).

                              IV.

    In the facts of this appeal, we are asked whether Metric’s

policy with NJM, in existence when the new law came into effect,

                                23
should be regarded as changed prior to the date of the

amendment’s enactment so as to include the date on which James’s

accident occurred.   To reach such a conclusion, there must be an

implicit intent by the Legislature for such retroactive

application of the new law’s textual directives or some other

exception to the rule of prospective application of a new law

because no explicit direction for retroactive application was

forthcoming from the legislation or its history.   We turn first

to an examination for any implicit intent to have the law

applied as James argues.

                                A.

    James and the panel below relied for support on the

analysis in Hand, supra, in which the Appellate Division

concluded that the language of N.J.S.A. 17:28-1.1(f) evinced an

implicit legislative intent to retroactively reform all

commercial liability policies containing a step-down provision

in existence on the effective date of the new legislation and to

provide an immediate remedy for all who had a claim pending as

of that date. 408 N.J. Super. at 141.   The Hand panel reasoned

that a solely prospective application to policies issued after

the date of the law’s enactment would render much of N.J.S.A.

17:28-1.1(f) superfluous.   Id. at 139-41.   Thus, the panel

continued, the Legislature must have intended for N.J.S.A.

17:28-1.1(f) to eliminate step-down provisions and to bar their

                                24
enforcement in all policies for claims pending as of the

effective date of the legislation.     Id. at 141 (concluding that

Legislature intended to provide remedy to plaintiff

notwithstanding that accident occurred two years prior to

amendment’s enactment, and claim was filed prior to amendment on

policy whose term apparently had expired before legislation took

effect).   While it is correct that a retroactive intent may be

implied from a statute’s operation, we glean no such implicit

intent in this amendatory legislation.

    First, as noted, a plain language construction of the

operative terms of the new legislation reveals that it does not

proscribe step-down provisions.    It simply thwarts

implementation of such provisions for a certain class of

insureds who otherwise might be subject to them, namely

employees of a corporate or business entity whose policy

contains such a provision.    The legislation does not prevent a

step-down provision from operating for other persons subject to

its terms.   Thus, when the amendment became effective it

immediately began blocking the provision’s application to

employees and altered or filled in contract terms to provide a

remedy.    In other words, on its effective date N.J.S.A. 17:28-

1.1(f) reformed the contract by operation of law.      The timing of

the reformation of the contract is critical.

                                  25
    Like many motor vehicle insurance policies, the policy in

this case was an “occurrence policy,” whose benefits are

triggered on the date of the occurrence, generally the accident.

See Zuckerman v. Nat’l Union Fire Ins. Co., 100 N.J. 304, 312

(1985) (discussing “occurrence” policies in context of

automobile insurance).   We previously have held that UM/UIM

claims specifically “arise at the time of the accident.”     Green

v. Selective Ins. Co. of Am., 144 N.J. 344, 353 (1996).    Under

this system, an insured’s right to UM/UIM coverage and the

benefits to be accorded arises at the time of the occurrence.

Thus, for accidents like the one that unfortunately occurred in

James’s case, the date of the accident controls the occurrence

date and the legal obligations under the contract.   At the time

of James’s accident, the contract had not yet been affected by

the amendatory provision, even though that corporate entity’s

commercial motor vehicle liability policy was affected by the

legislative amendment later during the contract’s policy period.

    As stated previously, N.J.S.A. 17:28-1.1(f) amended

policies when the law took effect, immediately reforming

existing policies of insurance prospectively from that date in

accordance with its precise and direct terms as to how

commercial motor vehicle liability policies must treat employees

under any step-down provision impacting UM/UIM coverage.     Thus,

an accident to an employee occurring after the effective date of

                                26
the amendment but before the expiration of the policy period

would be treated differently by operation of law than would be

an accident that preceded that law’s effective date.

    Our construction gives plain and direct meaning to the

straightforward language of the new law.   See DiProspero, supra,

183 N.J. at 492.   It gives immediate effect to the law’s

reference to policies, which we understand the Legislature to

have meant existing policies as of the time of the law’s

immediate implementation.   Further, our interpretation of the

plain meaning of the law’s effective date provision and how that

applies to the operative provisions of the legislation does not

render superfluous any of the law’s references to the “renewal”

of policies.   See McCann v. Clerk of Jersey City, 167 N.J. 311,

321 (2001) (“It is a cardinal rule of statutory construction

that full effect should be given, if possible, to every word of

a statute.” (internal quotation marks omitted)).   The amendatory

legislation has continuing effect on any renewal policy for

existing customers, as well as for any subsequently issued

policy of insurance to a new commercial insured, that contains a

step-down provision governing UM/UIM benefits that must be

applied in accordance with the public policy that the

Legislature has decreed for business entities insuring corporate

vehicles registered or garaged in New Jersey.

                                27
    In sum, we see no explicit or implicit legislative intent

to apply the law in the “retroactive” way in which James seeks.

While the amendment applies to the corporate policy issued by

NJM to Metric, it amends the policy as of the date the amendment

took effect, September 10, 2007, and not before.

                                 B.

    We perceive no other basis of support for the retroactive

application sought by James.

    The curative exception to the general rule favoring the

prospective application of statutes is not applicable here.

N.J.S.A. 17:28-1.1(f) did not cure a judicial misinterpretation

of the law.    See 2nd Roc-Jersey Assocs., supra, 158 N.J. at 605.

Prior case law had recognized the use of step-down provisions,

see, e.g., Magnifico v. Rutgers Cas. Ins. Co., 153 N.J. 406, 418

(1998), and Pinto merely interpreted and enforced contractual

language consistent with that common law.     Pinto, supra, 183

N.J. at 407.    The new law disallows the “enforceability of a

contractual clause, which [this Court] in Pinto . . . found to

be an issue of ‘insurance contract interpretation.’”        Olkusz,

supra, 401 N.J. Super. at 503.     Based on public policy

considerations, the amendment now prohibits the application of

step-down provisions in business entities’ motor vehicle

insurance policies to limit the recovery of UM/UIM benefits by

employees.     It does not “clarify or expand upon a preexisting

                                  28
statutory provision.”    Ibid.   It is not curative under any

definition of the term.    See 2nd Roc-Jersey Assocs., supra, 158

N.J. at 605.

    There also is no basis for concluding that the expectations

of the parties justify retroactive application of N.J.S.A.

17:28-1.1(f).    The insurance policy was issued on March 18,

2007, and the accident occurred on July 5, 2007.     At neither

point was N.J.S.A. 17:28-1.1(f) adopted or effective.     The

controlling law held that this type of step-down clause was

enforceable.    See Pinto, supra, 183 N.J. at 412.   Accordingly,

at the time of the issuance of the contract and of the accident,

NJM had a reasonable basis to believe that the provision was

enforceable.

    The expectation of retroactive application should be

strongly apparent to the parties in order to override the lack

of any explicit or implicit expression of intent for retroactive

application.    No case for such expectation has been made out

here.   To the extent that James points to the existence of a

pending bill in the Legislature at the time of his accident, the

argument fails to establish an expectation that is recognizable

as requiring a retroactive application of the new law to his

case.   The possibility that a bill might become law is an

expectation built on uncertainty until it happens.     Moreover,

the bill that James points to never indicated in its language or

                                  29
its accompanying statements that it would provide retroactive

relief.   Therefore, we do not find that the “expectations of the

parties” exception to the general rule favoring the prospective

application of new legislation is present here.

    We thus conclude that the amendment is not curative and

that the expectations of the parties do not warrant the

retroactive application of N.J.S.A. 17:28-1.1(f) to UM/UIM

claims arising from accidents that occurred before its effective

date, September 10, 2007.

                                C.

    To summarize, with respect to the question of retroactivity

of new legislation that is before us, N.J.S.A. 17:28-1.1(f) by

its very language had an immediately reformative effect on

commercial motor vehicle liability policies in existence on the

date of its enactment, like the one whose policy life included

the date of James’s accident.    The new law reformed policies

when it became effective; however, an employee’s claim made on a

motor vehicle liability policy must be judged based on the law

governing the policy at the time of the occurrence:    the

accident.   Thus, employee UM/UIM claims involving accidents that

occurred on or after the effective date of N.J.S.A. 17:28-1.1(f)

are governed by that new law.    Cf. Sexton v. Boyz Farms, Inc.,

780 F. Supp. 2d 361, 366 (D.N.J. 2011) (concluding that N.J.S.A.

17:28-1.1(f) reformed policies extant on September 10, 2007,

                                 30
such that claims arising after September 10, 2007, would no

longer be subject to step-down provisions).

     We hold that, when it became effective, the new law applied

to and prospectively reformed, for employees, a corporation’s or

business entity’s motor vehicle liability policy containing

UM/UIM step-down provisions, including policies that were in

force as of the law’s effective date, September 10, 2007.     Our

holding enforces the effective date plainly directed by the

Legislature and all operative language of the new provision.

The holding also incorporates our conclusion that none of the

exceptions to the general rule favoring prospective application

of new legislation pertain to N.J.S.A. 17:28-1.1(f).

     James’s UM/UIM claim is governed by the provisions of the

NJM policy that were lawfully in existence as of the date of his

accident, which preceded the effective date of the new law.    We

therefore conclude that the Appellate Division erred in

retroactively applying N.J.S.A. 17:28-1.1(f) to James’s claim

and reversing the trial court’s award of summary judgment to NJM

on that basis.1

1
  This matter is before the Court on NJM’s petition for
certification. We therefore reject James’s contention before
this Court that, despite the non-applicability of N.J.S.A.
17:28-1.1(f), summary judgment was not appropriate because, he
claims, there was an issue of material fact as to whether James
was a “named insured” under Metric’s policy. We note that it
was undisputed that the only “named insured” in the policy was
Metric and that James was an “insured” under the policy.
                               31
                              V.

    The judgment of the Appellate Division is reversed.

     CHIEF JUSTICE RABNER, JUSTICES ALBIN and PATTERSON, and
JUDGE CUFF (temporarily assigned) join in JUSTICE LaVECCHIA’s
opinion. JUDGE RODRÍGUEZ (temporarily assigned) did not
participate.

Although James argues that there is a genuine dispute over
whether he should be regarded as the equivalent of a named
insured, that argument was rejected in Pinto, supra, which
addressed essentially identical policy language and concluded
that a policy is unambiguous where it names the corporate entity
as the only “named insured” and includes employees as
“insureds.” 183 N.J. at 417.
                               32
               SUPREME COURT OF NEW JERSEY

NO.   A-26                                       SEPTEMBER TERM 2012

ON CERTIFICATION TO             Appellate Division, Superior Court

NOWELL JAMES and MARYANN
JAMES, his wife,

      Plaintiffs-Respondents,

              v.

NEW JERSEY MANUFACTURERS
INSURANCE COMPANY,

      Defendant-Appellant.

DECIDED            February 3, 2014
               Chief Justice Rabner                                  PRESIDING
OPINION BY          Justice LaVecchia
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY

CHECKLIST                             REVERSE
CHIEF JUSTICE RABNER                         X
JUSTICE LaVECCHIA                            X
JUSTICE ALBIN                                X
JUSTICE PATTERSON                            X
JUDGE RODRÍGUEZ (t/a)             -----------------------       ---------------------
JUDGE CUFF (t/a)                             X
TOTALS                                       5

                                                            1