YASSER M. ABDELKADER et al. v. ERIE INSURANCE GROUP

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1570-05T21570-05T2

YASSER M. ABDELKADER and

RANEEN ELBAKRY,

Plaintiffs-Appellants,

v.

ERIE INSURANCE GROUP,

Defendant-Respondent.

_________________________________________________

 

Argued August 29, 2006 - Decided September 29, 2006

Before Judges Payne and Gilroy.

On appeal from Superior Court of New

Jersey, Law Division, Somerset County,

L-226-04.

Kate L.Y. Monagle argued the cause for

appellants (Benbrook & Benbrook attorneys;

Ms. Monagle, on the brief).

Glenn A. Montgomery argued the cause for

respondent (Montgomery, Chapin & Fetten,

attorneys; Mr. Montgomery, of counsel and

on the brief; Gary Ahladianakis, on the brief).

PER CURIAM

Plaintiffs Yasser Abdelkader and Raneen Elbakry, suing per quod, appeal from an order by the trial court dismissing their insurance coverage action against defendant Erie Insurance Exchange (improperly impleaded as Erie Insurance Group) on the ground of lack of in personam jurisdiction. In the action, plaintiffs had sought underinsured motorist (UIM) benefits allegedly provided in a policy of automobile insurance issued by Erie following a collision occurring in New Jersey on August 16, 2000 between a motorcycle driven by Abdelkader and an underinsured tortfeasor's car.

In a prior unreported opinion in the matter, Abdelkader v. Erie Ins. Group, No. A-6482-03T2 (App. Div. June 16, 2005), we found that general jurisdiction could not be asserted over Erie, a company that is not authorized to transact business in the State of New Jersey that issued its automobile coverage to Abdelkader while he was a Pennsylvania resident. Slip op. at 4-5 (citing Lebel v. Everglades Marina, Inc., 115 N.J. 317, 322-23 (1989)). That holding is not challenged in the present appeal.

We found further that whether specific jurisdiction could be asserted depended upon whether a nexus existed between the sixty days of extended automobile coverage afforded to Abdelkader by Erie following his move to New Jersey on August 1, 2000 and the UIM benefits sought by him in his declaratory judgment action such that Erie could reasonably anticipate being haled into court in this State. Slip op. at 8-9. We remanded the matter for a determination of that issue.

The record before us on the first appeal demonstrated that Erie does not write motorcycle insurance, and that the policy issued by Erie to Abdelkader under which he sought UIM benefits identified as a covered vehicle only a 1997 Volkswagen GTI. The Erie policy provided Abdelkader with uninsured and underinsured motorist (UM/UIM) coverage with bodily injury limits of $250,000 per person and $500,000 per accident. However, the policy's UM/UIM endorsement specifically excluded coverage for "miscellaneous vehicles," a term defined as including motorcycles, "unless the miscellaneous vehicle is listed on the Declarations and a premium is shown for this coverage." No miscellaneous vehicle was identified on the declarations sheet of the policy, and no premium for coverage of such vehicle was noted as having been paid. Additionally, Erie's UM/UIM endorsement contained a "household" exclusion of coverage for

damages sustained by anyone we protect while occupying or being struck by a motor vehicle owned by you . . . but not insured for Uninsured or Underinsured Motorists Coverage under this policy.

Erie's policy defined a motor vehicle to include a motorcycle.

On remand, the motion judge found that Pennsylvania law permitted the exclusion found in Erie's policy, and that if Pennsylvania's law applied, no UIM coverage for plaintiff's injuries existed, whereas if New Jersey law applied, the exclusion would likely be declared contrary to statute and would be deemed ineffectual. However, the judge found it unnecessary to resolve the conflict of laws issue as it related to coverage, determining that: "A question of whether this court can exercise personal jurisdiction over Erie is a separate issue from whether if Erie had issued a New Jersey auto insurance policy, it could have . . . excluded the motorcycle accident from [UIM] coverage. The personal jurisdiction issue is a constitutional question that must be determined first." Because of Erie's lack of contacts with New Jersey, the judge again found no personal jurisdiction to exist, determining that neither the policy's territory of coverage provision nor Abdelkader's determination to move to New Jersey, which triggered the automatic sixty-day extension of existing Erie coverage, was sufficient to establish minimum contacts with this State or to render an assertion of jurisdiction reasonable in the circumstances.

In his appeal following remand, Abdelkader argues that Erie purposefully availed itself of the privilege of conducting business in New Jersey as the result of its territory of coverage provision and the existence of a forum-related accident, a second provision conforming Erie's coverage to the mandatory requirements of other states, and the provision extending its coverage for a sixty-day period after notice was sent of cancellation or nonrenewal based upon a change of residence to another state. With respect to the third basis, Abdelkader argues that Erie had specific notice, through its agent, of Abdelkader's move to New Jersey, and upon receipt of that information, did not seek to limit coverage during the sixty-day grace period afforded by its contract. "Erie's specific communication to Abdelkader that Erie would continue to provide insurance coverage was the purposeful, intentional conduct which gives rise to specific personal jurisdiction over Erie in this case."

In a final argument, Abdelkader asserts that any exclusion from UIM coverage of compensation for injuries sustained in the motorcycle accident would be invalid under both Pennsylvania and New Jersey law. He relies on Richmond v. Prudential Prop. and Cas. Ins. Co., 856 A.2d 1260 (Pa. Super. 2004) (en banc), appeal denied, 875 A.2d 1076 (2005) and Universal Underwriters Ins. Co. v. N.J. Mfrs. Ins. Co., 299 N.J. Super. 307 (App. Div. 1997) as support for this argument.

In our initial opinion, we recognized that in the context of specific jurisdiction, the minimum contacts inquiry necessary to determine whether jurisdiction exists "must focus on 'the relationship among the defendant, the forum, and the litigation.'" Slip op. at 5 (citing Lebel, supra, 115 N.J. at 323) (quoting Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579, 53 L. Ed. 2d 683, 698 (1977)). We reasoned that if Erie issued coverage in Pennsylvania that only covered Abdelkader's VW automobile and that could not be reasonably construed to provide UM/UIM coverage for the collision between Abdelkader's motorcycle and the tortfeasor's underinsured motor vehicle, then any relationship between Erie, New Jersey (the forum state), and Abdelkader's coverage litigation would be lacking and jurisdiction could not be found either as the result of the policy's territory of coverage provision or the mandatory extension of coverage that occurred following Erie's notice of cancellation or nonrenewal when Abdelkader moved to New Jersey. We further reasoned that in such circumstances, Erie could not reasonably anticipate being haled into New Jersey to defend a claim for UIM coverage that was specifically excluded from Erie's policy.

We find nothing in Abdelkader's renewed arguments that suggests to us that Erie, as the result of automobile coverage issued by it in Pennsylvania, could reasonably have anticipated defending a suit in New Jersey seeking UIM benefits for injuries sustained by Abdelkader in a motorcycle accident. This is so because Erie placed within the UIM endorsement of the policy issued to Abdelkader a specific household exclusion, applicable in the circumstances of this case, that has been found by Pennsylvania's courts to be valid. See Richmond, supra, 856 A.2d at 1270-71 (recognizing the validity of household exclusions in insurance policies in instances in which the insured, injured while in a vehicle for which the insured had obtained minimal or no UIM coverage, sought UIM benefits under the more generous coverage of policies covering different vehicles that were issued to the insured or other family members); see also Eichelman v. Nationwide Ins. Co., 711 A.2d 1006 (1998), Hart v. Nationwide Ins. Co., 663 A.2d 682 (1995). We have been directed to no New Jersey decision that discusses whether Erie's household exclusion, contained within an endorsement providing optional UIM coverage, would be found to be valid or invalid in New Jersey and to no precedent that would establish that New Jersey law would apply to this coverage case arising out of a mandatory extension of coverage initially written to protect a Pennsylvania risk, were a conflict between the laws of Pennsylvania and New Jersey to be found to exist. Both issues appear to be undecided under the laws of this State, and thus Erie could not be deemed to be on notice of applicable New Jersey law, contrary to the law of Pennsylvania, when the coverage extension occurred. Under these circumstances, we find no basis for concluding that Erie would anticipate that its involuntary extension of automobile coverage to Abdelkader for the sixty day period during which he established his residence in New Jersey would give rise to this coverage action arising from his motorcycle accident, so that specific personal jurisdiction could be asserted over it. The nexus between Erie's coverage and the benefits that Abdelkader now seeks is simply too tenuous in this case to serve as a foundation for such jurisdiction. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478-79, 105 S. Ct. 2174, 2185, 85 L. Ed. 2d 528, 545 (1985).

Jurisdiction over a defendant foreign company can exist only if the requisite minimum contacts with New Jersey are present, since it is "essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240, 2 L. Ed. 2d 1283, 1298 (1958); see also Asahi Metal Indus. Co. v. Super. Ct. of Cal., 480 U.S. 102, 112, 107 S. Ct. 1026, 1032, 94 L. Ed. 2d 92, 104 (1987) (requiring an action of the defendant purposefully directed toward the forum State). Such a showing provides protection to a defendant against being haled into court on the basis of random, fortuitous or attenuated contacts or as the result of the unilateral activity of another party and preserves the liberty interest that is protected by the Due Process Clause of the Constitution by providing "fair warning" that a particular activity may subject the defendant to the jurisdiction of the forum state. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291-92, 100 S. Ct. 559, 564, 62 L. Ed. 2d 490, 498 (1980); Burger King Corp., supra, 471 U.S. at 471-76, 105 S. Ct. at 2181-84, 85 L. Ed. 2d at 540-43 (1985). In this case, we find the requisite minimum contacts to be lacking.

The order dismissing plaintiffs' action is therefore affirmed.

 

That continuation of coverage is statutorily mandated by 40 Pa. C.S. 991.2006(2), which requires a sixty-day period before a notice of cancellation or nonrenewal can be deemed effective.

That provision states: "This policy applies to accidents or losses that happen during the policy period in the United States of America . . . . "

The provision, affording "extra protection when temporarily out of state" is as follows:

When the laws of a state where an auto we insure is temporarily being used require higher limits and/or more coverages than shown on the Declarations, your coverage(s) will comply with the minimum requirements of such laws. . . .

However, as Erie notes, UIM coverage is not mandated in New Jersey. See N.J.S.A. 17:28-1.1b.

The policy at issue in Universal, upon which Abdelkader relies, did not contain such an exclusion within its UIM coverage. We held in that case only that it is "improper to incorporate a policy's liability exclusions, which are vehicle oriented, into the underinsured motorist provisions because the two sections provide entirely separate and distinct types of coverage. 299 N.J. Super. at 322. We did not determine what exclusions could be specifically incorporated into optional UIM coverage.

(continued)

(continued)

10

A-1570-05T2

 

September 29, 2006