JEFFREY D. LIGHT, et al. v. UNITED STATES LIABILITY INSURANCE GROUP

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5025-04T25025-04T2

JEFFREY D. LIGHT, ESQUIRE, as

Administrator ad Prosequendum

of the ESTATE OF EVELYN SILBIGER,

Deceased,

Plaintiff-Respondent,

v.

UNITED STATES LIABILITY INSURANCE

GROUP, a/k/a MT. VERNON FIRE

INSURANCE COMPANY,

Defendant-Appellant,

and

HIGHLAND INSURANCE GROUP, a/k/a

STATE CAPITAL INSURANCE COMPANY,

Defendant.

___________________________________________

 

Submitted December 14, 2005 - Decided July 24, 2006

Before Judges Wefing, Wecker and Graves.

On appeal from the Superior Court of New

Jersey, Law Division, Atlantic County,

L-102-04.

Stephen E. Gertler, attorneys for appellant

(Mark S. Hochman, on the brief).

Westmoreland, Vesper & Quattrone, attorneys

for respondent (Kathleen F. Beers, on the

brief).

PER CURIAM

Defendant United States Liability Insurance Group, a/k/a Mt. Vernon Fire Insurance Company (Mt. Vernon), appeals from a summary judgment declaring that an excess automobile liability policy it issued to Esther Shapiro provides coverage for a suit brought on behalf of the Estate of Evelyn Silbiger, the named insured's mother. We reverse.

The underlying facts, while tragic, are uncomplicated. Joseph Silbiger, Esther Shapiro's brother, was a permissive driver of Shapiro's car when this accident occurred. Their parents, Abraham and Esther Silbiger, who were residents of Shapiro's household at the time, were passengers. Abraham Silbiger was seriously injured in the accident; Mrs. Silbiger died two weeks later as a result of her injuries. Plaintiff, representing the Estate, brought a wrongful death and survival action against Joseph Silbiger.

Shapiro, who was employed by the David Shapiro Insurance Agency, was the named insured on three policies, each of which potentially provided liability coverage for claims arising out of an accident involving her owned vehicle. Shapiro's basic automobile policy was issued by Liberty Mutual Insurance Company. That policy provided liability coverage in the face amount of $250,000 for any one claimant and $500,000 total for any one accident. Liberty paid its policy limit of $250,000 on plaintiff's wrongful death and survival claims and reached a settlement with Abraham Silbiger for $80,000 for his injuries. Shapiro also was the named insured under an "umbrella policy" issued by State Capital Insurance Company through Highlands Insurance Group. That policy provided additional liability coverage of one million dollars, including claims alleging automobile negligence. It also included this express exclusion: "Personal injury or property damage to you, your relatives who live with you, anyone under 21 who is in your care or in the care of your relatives who live with you or anyone listed as a named insured in the basic policy." No payment has been made on account of that policy, and it is not in issue on this appeal.

Finally, Esther was the named insured under an automobile Excess Liability Policy issued by Mt. Vernon. Mt. Vernon denied coverage on the ground that its policy excluded liability coverage for damages to "an insured," as defined by the underlying Liberty policy, and that as a resident family member of Esther, Evelyn was "an insured" under the Liberty policy.

The Mt. Vernon policy includes the following relevant provisions. First, the introductory language on the first page of the policy states:

IN THIS POLICY THE WORDS YOU AND YOUR REFER TO THE NAMED INSURED SHOWN IN THE DECLARATIONS. WE, US, AND OUR REFER TO THE STOCK INSURANCE COMPANY SHOWN IN THE DECLARATIONS. OTHER WORDS AND PHRASES THAT APPEAR IN BOLD PRINT HAVE SPECIAL MEANINGS. THEY ARE DEFINED IN THE DEFINITIONS SECTION OF THIS POLICY OR IF NOT SO DEFINED THEY ARE DEFINED IN THE UNDERLYING INSURANCE. IN RETURN FOR THE PAYMENT OF THE PREMIUM, IN RELIANCE UPON THE STATEMENTS IN THE DECLARATIONS MADE A PART HEREOF AND SUBJECT TO ALL OF THE TERMS OF THIS POLICY, WE AGREE WITH YOU AS FOLLOWS:

I. Insuring Agreements

We will pay those sums that the insured must legally pay as damages because of bodily injury, property damage, personal injury, or advertising injury, caused by an occurrence that takes place in the coverage territory, which occurs during the Policy Period of this policy in excess of the sums payable as damages in the underlying insurance.

[Emphasis added.]

The policy also includes Part IV, "Exclusions," listing thirteen separate exclusions. Mt. Vernon relies on its Exclusion 10: "This policy does not apply to: . . . . Bodily injury, property damage, personal injury or advertising injury to or suffered by any insured." Finally, the Mt. Vernon policy's Part V "Definitions" section provides: "Insured means any person or organization qualifying as an Insured in the underlying insurance." (Emphasis added.)

After both Highlands and Mt. Vernon declined coverage, plaintiff brought this declaratory judgment suit. The Law Division judge granted plaintiff's motion for summary judgment, holding that Mt. Vernon's claimed exclusion did not apply to the claim on behalf of the Estate. The judge reasoned that the Mt. Vernon policy was ambiguous because the Liberty policy included three separate definitions of an "insured" in three different sections of the Liberty policy. The judge then found that the reasonable expectations of the named insured were for Mt. Vernon's excess coverage to apply. We disagree.

Mt. Vernon's Exclusion 10 is unambiguous. It clearly excludes excess auto liability coverage on a claim for bodily injury that has been suffered by any "insured," as defined by the "underlying insurance" the Liberty policy. Shapiro's application for the Mt. Vernon policy listed her "Liberty Mutual" policy as her "underlying insurance," setting forth that policy's 250,000/500,000 "Underlying Limits of Liability." The Mt. Vernon policy states that it does not cover liability to an "insured," as defined by the underlying automobile liability policy, in this case, the Liberty policy.

We have carefully examined the Liberty policy to determine whether the existence of three separate definitions of "insured" in that policy creates any ambiguity. The introductory "Definitions" section of the policy does not include any definition of an "insured." In Part A - Liability Coverage, this definition of "insured" appears:

B. "Insured" as used in this Part means:

1. You or any "family member" for the ownership, maintenance or use of any auto or "trailer."

"Family member" is defined in the introductory Definitions section as follows:

F. "Family member" means a person related to you by blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.

[emphasis added.]

The Mt. Vernon policy is an excess liability policy, and the incorporated definition of "an insured" logically would be the definition contained in the Liability Coverage section of the Liberty policy. Shapiro's mother, who was a resident of her household, was a "family member" and therefore "an insured" under the Liberty definition, which supplied the Mt. Vernon definition as well.

Two other Parts of the Liberty policy include their own definitions of "an insured." Evelyn Silbiger would meet both of those definitions as well, and neither would lead to a different result. The definition of "an insured" in each of those Parts includes "a family member" of the named insured, and a "family member" under the general policy definition means a relative who is a resident of the named insured's household. Thus Evelyn Silberger was "an insured" under all three definitions in the Liberty policy, and there is no ambiguity to be found in the express incorporation of Liberty's definition into the Mt. Vernon policy.

We have previously upheld a similar exclusion in an umbrella policy. Weitz v. Allstate Ins. Co., 273 N.J. Super. 548 (App. Div. 1994). In Weitz, a wife sued her husband for injuries she suffered in a motor vehicle accident as a result of her husband's negligent operation of the vehicle. The plaintiff wife sought a declaratory judgment, ordering her husband's excess liability insurance carrier (Allstate) to cover her husband under his umbrella policy for damages awarded for her injuries in excess of his primary automobile policy limit. The plain language of the policy excluded liability coverage for injury to "an insured," and the policy defined "insured" to include "relatives living in [the insured's] household." Ibid.

We noted the significant distinction between a primary automobile liability policy, which is subject to extensive regulation and compelled by statute to provide liability coverage without such an exception, and an excess policy, which is not. Id. at 550. On that basis, we rejected the plaintiff's contention that because her husband's primary auto policy must include coverage for claims brought by members of his household, he would reasonably expect that his excess policy also would provide such coverage. Id. at 551. The Legislature does not require automobile owners to purchase excess insurance policies or umbrella policies, and therefore does not dictate the coverage to be provided by such policies. See id. The scope of coverage in an excess or umbrella contract of insurance is defined by the contract terms: the policy's plain language. Ibid.

Irrespective of seemingly harsh results, we have upheld liability coverage exclusions for injury or death to family members residing in the same household as the named insured when the exclusions were unambiguous and not contrary to any controlling law. See Zacarias v. Allstate Ins. Co., 168 N.J. 590, 593, 600-05 (2001) (there being no legislative mandate requiring liability insurance for boat owners, the named insured's resident spouse may be excluded from the boat owner's liability coverage); Doto v. Russo, 140 N.J. 544, 552-556 (1995) (umbrella insurance policies, unlike mandatory auto policies, need not provide uninsured motorist coverage, and a clearly worded exclusion is enforceable); Horesh v. State Farm Fire & Cas Co., 265 N.J. Super. 32, 37 (App. Div. 1993) (homeowner's insurance policy may exclude coverage for liability to an insured or an insured's household members).

The Mt. Vernon excess auto liability policy is by definition contingent upon the named insured's underlying auto policy, as it explicitly states. The named insured is alerted to that relationship by virtue of the application for the excess policy, which requires the proposed named insured to represent that she has an underlying policy and to identify that policy and its limits. On that basis, the cross-reference in the excess policy to the definition of "insured" in the underlying policy is neither hidden nor ambiguous. Because there is no ambiguity in the policy language, there is no reason to consider the reasonable expectations of the policyholder.

Our conclusion is based upon a plain reading of the contractual terms. We recognize the gap in coverage that those terms, and the resulting exclusion, create. Resident family members are likely to be frequent passengers in a policyholder's car, and in an accident where the driver is partly or wholly at fault, an excess (or umbrella) policy such as the Mt. Vernon policy will provide no liability coverage for such family members' claims. We do not know whether excess liability (or umbrella) coverage without such a gap in coverage is available from other carriers. But this is the policy Shapiro bought, and we can find no legal basis for modifying it.

 
Reversed.

Incorrectly named "Highland Insurance Group" in plaintiffs' Amended Declaratory Judgment Complaint. State Capital apparently was liquidated in North Carolina, where it was incorporated, and Highlands was put in receivership in Texas in November 2003. Upon the insolvency of State Capital, this suit was forwarded to the New Jersey Property-Liability Insurance Guaranty Association, which declined to handle it on the ground that it was not a "covered claim." The Law Division subsequently stayed proceedings against Highlands and State Capital.

Part B - "Medical Payments Coverage" of the Liberty policy provides this definition:

B. "Insured" as used in this Part means:

1. You or any "family member:"

a. while "occupying;" or

b. as a pedestrian when struck by:

a motor vehicle designed for use

mainly on public roads or a trailer

of any type.

2. Any other person while "occupying"

"your covered auto."

Part C - "Uninsured Motorists Coverage" of the Liberty policy provides this definition:

B. "Insured" as used in this Part means:

1. You or any "family member."

2. Any other person "occupying" "your

covered auto."

3. Any person for damages that person is

entitled to recover because of "bodily

injury" to which this coverage applies

sustained by a person described in 1.

or 2. above.

(continued)

(continued)

11

A-5025-04T2

July 24, 2006