RAY GRANT v. PRUDENTIAL PROPERTY & CASUALTY INSURANCE COMPANY

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0617-04T50617-04T5

RAY GRANT,

Plaintiff-Appellant,

v.

PRUDENTIAL PROPERTY &

CASUALTY INSURANCE COMPANY,

Defendant-Respondent.

_______________________________

 

Submitted March 13, 2006 - Decided May 5, 2006

Before Judges Holston, Jr. and Gilroy.

On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-611-04.

Randy P. Catalano, attorney for appellant.

Mortenson and Pomeroy, attorneys for respondent (Daniel J. Pomeroy and Karen E. Heller, on the brief).

PER CURIAM

This is a declaratory judgment action. Plaintiff, Ray Grant, appeals from the order of the Law Division, entered on August 27, 2004, denying his motion for summary judgment and granting the cross-motion for summary judgment of defendant, Prudential Property & Casualty Insurance Company (Prudential). We affirm.

We briefly state the procedural history and undisputed facts. Plaintiff was involved in an automobile accident on May 2, 2002, while a passenger in a motor vehicle, owned and operated by Justina M. Manning, and insured by Prudential. Manning's policy provided both third-party liability coverage, and first-party uninsured motorist coverage (UM) and underinsured motorist coverage (UIM) in the amounts of $100,000 per person and $300,000 per accident. The accident occurred when Manning's vehicle collided with a vehicle owned and operated by tortfeasor, Jennifer Thompson. The tortfeasor's vehicle was insured by Allstate Insurance Company, with third-party liability insurance limits of $15,000 per person and $30,000 per accident. At the time of the accident, plaintiff was the owner of a motor vehicle that was insured under the laws of the State of Pennsylvania by Safe Auto Insurance Company (Safe). The Safe policy provided UIM coverage in the amounts of $15,000 per person and $30,000 per accident. On May 30, 2003, plaintiff noticed Prudential of a potential UIM claim. On July 29, 2003, plaintiff settled his personal injury claim with the tortfeasor for $15,000, the full amount of Allstate's liability policy. Plaintiff made a demand for UIM coverage under the Prudential policy, and Prudential denied the claim, stating that the policy contained a step-down provision for occupants of the vehicle, other than the named insured, reducing the limits of UIM coverage to $15,000 per person and $30,000 per accident, the same as the tortfeasor's policy; and therefore, the tortfeasor's vehicle was not underinsured.

The step-down provision is contained in that section of the policy entitled "PART 3 - UNINSURED AND UNDERINSURED MOTORISTS COVERAGE" "OUR OBLIGATIONS" which provides in pertinent part:

If you have paid for this coverage, we will pay up to our limit of our liability shown on the Declarations and as described below for Uninsured Motorist Coverage and Underinsured Motorist Coverage for bodily injury and property damage that an insured is legally entitled to recover for an accident caused by an uninsured motor vehicle or underinsured motor vehicle as described below.

A Resident Relative who is a named insured on a Basic Automobile Policy is not eligible to recover Uninsured or Underinsured Motorists benefits under this policy. Additional insureds as described in this part are also covered, but only up to a limit of $15,000 per person/$30,000 per occurrence for bodily injury regardless of the amount of coverage shown on the Declarations.

An insured is defined in PART 3 as:

Coverage is provided under this PART for:

1. an Insured which is defined in this policy part as:

you [the insured] or any resident relative who is not a named Insured under a Basic Automobile Policy.

2. an Additional Insured which is defined in this policy part as:

any other person occupying your covered automobile. The limits of coverage under this part for additional insureds are $15,000 per person, $30,000 per accident for bodily injury regardless of the amount of coverage shown on the Declarations.

3. any other person who is entitled to collect damages for bodily injury to an insured or additional insured.

On January 30, 2004, plaintiff filed his complaint seeking a declaration that Prudential "owes $100,000 in primary UIM coverage to the plaintiff for the May 5, 2002, accident," and asserting that the step-down provision in the Prudential policy, limiting the UIM coverage available to plaintiff to $15,000, should not be enforced. After Prudential filed its answer, plaintiff moved for summary judgment contending that the step-down provision, reducing UIM coverage limits for persons who are neither the named insured nor a resident relative, should not be given effect; and that Prudential should be required to provide UIM coverage in the amount of $100,000, the limit stated on the declarations page. Prudential opposed the motion, and filed a cross-motion seeking enforcement of the step-down provision and dismissal of plaintiff's complaint. On August 27, 2004, Judge Kassel granted Prudential's motion dismissing plaintiff's complaint, denied plaintiff's motion, and entered a confirmatory order that date.

On appeal, plaintiff argues that because the declarations page of the policy indicates that the policy provided UM/UIM coverage in the amounts of $100,000 per person and $300,000 per accident, the UIM step-down provision conflicts with the stated declarations by barring a non-resident occupant from receiving UIM coverage above $15,000, regardless of whether the claimant has other available coverage. Plaintiff contends that because the declarations page fails to reference the step-down provision contained elsewhere in the policy, we should declare the provision unenforceable because it was not brought to the immediate attention of the insured on the declarations page. Plaintiff asserts that "[w]here one portion of the policy states that 'each person' receives $100,000 in UIM coverage, and another states that only $15,000 [to] 'each person' is provided, an ambiguity exists," and therefore, the step-down provision should not be enforced. Lastly, plaintiff argues that the provision reducing the limits of UIM coverage is in contravention of N.J.S.A. 17:28-1.1b and asks that the policy be reformed by deleting the step-down provision. We disagree.

A trial court will grant summary judgment to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). "An issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion, together with all legitimate inferences therefrom favoring the non-moving party, would require submission of the issue to the trier of fact." R. 4:46-2(c).

On appeal, "the propriety of the trial court's order is a legal, not a factual, question." Pressler, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2006). "We employ the same standard that governs trial courts in reviewing summary judgment orders." Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998).

Whether an injured claimant is entitled to UIM benefits is determined by statute, N.J.S.A. 17:28-1.1(e), the terms and provisions of the insurance policy, and case law. A "tortfeasor is 'underinsured' only when all the liability coverage insuring his or her purportedly underinsured vehicle is less than the UIM benefits 'held' by the UIM claimant." French v. N.J. Sch. Bd. Ass'n Ins. Group, 149 N.J. 478, 483 (1997). If this threshold analysis is met there must be a determination concerning whether the claimant's damages exceed the amount received from the settling tortfeasor. Ibid.

"UIM coverage . . . is 'personal' to the insured. Coverage is linked to the injured person, not the covered vehicle." Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 403 (1995). "UIM coverage provides 'as much coverage as the insured is willing to purchase, for his or her protection[,] subject only to the owner's policy liability limits for personal injury and property damages to others.'" Ibid. (quoting Prudential Prop. & Cas. Ins. Co. v. Traveler's Ins. Co., 264 N.J. Super. 251, 259-60 (App. Div. 1993)). Because it is linked to the injured party, "[o]ur case law recognizes the legitimacy of step-down provisions 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). Accordingly, where a passenger seeks to recover damages under the UIM provision of the car owner's insurance policy in which the passenger was injured, an "insurer[] [is] free to modify the insurance policy language to limit the UIM coverage of [the] passenger[] and others who are named insureds under other insurance policies." Id. at 412-13 (citing Magnifico v. Rutgers Cas. Ins. Co., 153 N.J. 406, 418 (1998)). It is against these principles that we consider plaintiff's arguments.

Disputes involving insurance contracts are resolved by looking to the language of the policy. Riccio v. Prudential Prop. & Cas. Ins. Co., 108 N.J. 493, 499 (1987). As contracts of adhesion, insurance policies are subject to special rules of interpretation. Araya v. Farm Family Cas. Ins. Co., 353 N.J. Super. 203, 206 (App. Div.) certif. denied, 175 N.J. 77 (2002). Insurance policies should be construed liberally and in favor of the insured's reasonable expectations of coverage. Gibson v. Callaghan, 158 N.J. 662, 671 (1999). Notwithstanding, words of an insurance policy should be given their ordinary meaning. Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). "In the absence of any ambiguity, courts 'should not write for the insured a better policy of insurance than the one purchased.'" Gibson, supra, 158 N.J. at 670 (quoting Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990)). If the expressed language of the policy is clear and unambiguous, the "'court is bound to enforce the policy as it is written.'" Royal Ins. Co. v. Rutgers Cas. Ins. Co., 271 N.J. Super. 409, 416 (App. Div. 1994) (quoting Flynn v. Hartford Fire Ins. Co., 146 N.J. Super. 484, 488 (App. Div.), certif. denied, 75 N.J. 5 (1977)). "These principles have been applied to enforce step-down provisions in insurance policies, provided the provisions are expressed in clear and unambiguous language." Morrison v. Am. Int'l Ins. Co. of Am., 381 N.J. Super. 532, 538 (App. Div. 2005).

We have reviewed the language of the step-down provision in the Prudential policy, and conclude that it is clear and unambiguous and should be enforced. Plaintiff was not the named insured, nor a resident relative of the named insured, and held the status of an "additional insured" under the terms of the policy. Pursuant to the terms of the step-down provision, plaintiff was only entitled to $15,000 UIM benefits. Because these limits were identical to the liability limits contained in the tortfeasor's policy, plaintiff is not entitled to pursue a claim for UIM benefits under the Prudential policy. Pinto, supra, 183 N.J. at 412; Magnifico, supra, 153 N.J. at 418.

Plaintiff's reliance upon this court's prior decision in Skeete v. Dorvius, 368 N.J. Super. 311 (App. Div. 2004), aff'd, 184 N.J. 5 (2005), and the concurring opinion of Justice Albin in the Court's decision is misplaced. In Skeete, plaintiff, a passenger in a vehicle owned and operated by Queenie Thomas, was injured when the vehicle was involved in an automobile accident with a vehicle operated by Chaisner Dorvius. Id. at 313. At the time of the accident, Skeete did not own his own motor vehicle, was not a named insured on any other insurance policy, nor did he reside with Thomas. Id. at 314. Accordingly, Skeete held the status of an additional insured under Thomas's policy issued by Prudential. Skeete instituted a personal injury action against Dorvius, recovered a verdict, and settled with Dorvius's liability insurance carrier for the full amount of its liability coverage, $25,000. Id. at 313. The amount, however, was not sufficient to cover Skeete's injuries, and Skeete made a demand for UIM coverage under the Prudential policy. Prudential denied the claim, asserting that the claim was barred pursuant to the same step-down provision in the present matter that was contained in an endorsement to the Prudential policy, which had been mailed to the insured during the term of the policy, along with several hundred other pages relating to the policy. Id. at 314-17.

Determining that the declarations page contained in the packages mailed to the insured by Prudential stated that the UIM coverage remained at $100,000 per person and $300,000 per accident, as was stated on the declarations page of the original policy, this court held "that unless specific changes in the limits of coverage are noted on the declarations page [mailed with the amended policy], the carrier's notice of changes in coverage is inadequate" as "the policyholder would reasonably expect that the coverage shown on the declarations page remained the same as the previous year." Id. at 319-20.

In affirming this court's decision, the Supreme Court held that the change in the step-down provision contained in the endorsement was not enforceable because "the notice of the addition of the step-down was insufficient because of its presentation as part of an essentially undifferentiated passel of two hundred documents. It is the placement of the notice[,] and not its specificity[,] that is the issue." Skeete, supra, 184 N.J. at 9. Contrary to plaintiff's argument, the Court did not adopt Justice Albin's concurring opinion that unless a step-down provision is noted on the declarations page that it should be deemed unenforceable because it would not be in accord with "the reasonable expectations of coverage raised by the declaration page, notwithstanding the contradictory language in the policy." Id. at 12. Rather, the Court held "[w]e are not prepared to say that every single policy change must be reflected on the declarations sheet. That simply may not be practical in every situation." Id. at 9. See Morrison, supra, 381 N.J. Super. at 541-44 (holding that a step-down provision, contained in an endorsement to an automobile insurance policy, was enforceable, notwithstanding that the declarations page omitted any reference to the provision).

Plaintiff argues next that a step-down provision is only enforceable under Pinto where the claimant is not the named insured under the policy, was insured as a family member or as a named insured under another policy, and the other policy had lower limits than the policy containing the step-down provision. Plaintiff asserts that the step-down provision contained in Prudential's policy should not be enforced because it contains an absolute limitation for all non-resident occupants for UIM coverage over the stated amount of $15,000 per person and $30,000 per accident. Plaintiff contends that a step-down provision is only enforceable where it provides for a step-down to a lower limit of insurance available to the claimant under another policy. We disagree.

Plaintiff construes Pinto too narrowly. We are unaware of any legal restraint prohibiting an insurer from including a step-down provision in an automobile insurance policy that provides for a specific lower limit of insurance for those holding the status as an "additional insured." See Royal Ins. Co., supra, 271 N.J. Super. at 419, where this court in construing a UIM step-down provision held that "[i]t is fundamental that in the absence of a statutory prohibition to the contrary, an insurance company has a right to impose whatever conditions it desires prior to assuming its obligations." We also reject plaintiff's argument because plaintiff was a named insured under his Safe insurance policy which contained the same UIM limits set forth in the step-down provision in the Prudential policy. Accordingly, if the step-down provision provided for a step down to a lower amount of UIM coverage under another insurance policy covering plaintiff, the result would be the same.

Lastly, plaintiff argues that the step-down provision, reducing limits of UIM coverage for additional insureds occupying the covered vehicle at the time of the accident, contravenes N.J.S.A. 17:28-1.1b. That statute requires insurers to offer policyholders an opportunity to purchase UIM coverage up to the limits that the policyholders have chosen for liability coverage. The statute only requires that UIM coverage with limits matching the liability limits under the policy be offered to the "named insured." Contrary to plaintiff's contention, the statute is devoid of any provision requiring that the insurer offer similar UIM coverage to protect every potential insured who could fit under the umbrella of the policy. We conclude that there is no contravention between the language of the step-down provision and N.J.S.A. 17:28-1.1b.

Accordingly, we affirm.

 

On or about November 1, 2003, Prudential Financial, Inc., divested itself of all interest in Prudential Property & Casualty Insurance Company of New Jersey by sale to Palisades Safety and Insurance Association, a member of the Palisades Group, which continued to provide insurance coverage under the policy previously issued by Prudential through High Point Safety and Insurance Management Corporation (High Point) formed by the Palisades Group after purchasing the assets of Prudential. Because the Notice of Appeal was filed in the name of Prudential, we shall continue to refer to the insurer as Prudential throughout this opinion.

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A-0617-04T5

May 5, 2006