ROBERT and ANTONIA FLAHERTY v. HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-3796-07T23796-07T2

ROBERT and ANTONIA FLAHERTY,

Plaintiffs-Respondents,

v.

HARLEYSVILLE INSURANCE COMPANY

OF NEW JERSEY,

Defendant-Appellant,

and

DALTON INSURANCE AGENCY INC.,

Defendant-Respondent,

v.

J.S. BRADDOCK AGENCY,

Third-party Defendant-

Respondent.

______________________________________

 

Argued May 19, 2009 - Decided

Before Judges Winkelstein, Fuentes and Chambers.

On appeal from Superior Court of New Jersey,

Law Division, Camden County, Docket No.

L-13-06.

Lance J. Kalik argued the cause for appellant

(Riker Danzig Scherer Hyland & Perretti, attorneys;

Mr. Kalik, of counsel and on the brief; Elizabeth D. Brennan, on the brief).

Anthony Granato argued the cause for respondents

Robert and Antonia Flaherty (Jarve Kaplan Granato,

attorneys; Michael A. Kaplan and Mr. Granato,

on the brief).

Christopher P. Leise argued the cause for respondent J.S. Braddock Agency (White and Williams, attorneys; Mr. Leise, of counsel and on the brief; Nicole L. Strauss-Russo, on the brief).

Michael S. Mikulski, II, argued the cause for respondent Dalton Insurance Agency (Connor, Weber & Oberlies, attorneys;, Mr. Milulski, of counsel and on the brief; Amelia M. Lolli, on the brief).

PER CURIAM

Defendant Harleysville Insurance Company appeals from the order of the Law Division directing it to submit to arbitration plaintiffs Robert and Antonia Flaherty's underinsured motorist (UIM) claim. By so doing, the trial court held that the step- down provision in Harleysville's policy was rendered unenforceable by N.J.S.A. 17:28-1.1(f). In reaching this result, the court concluded that the Legislature intended for N.J.S.A. 17:28-1.1(f) to apply retroactively to any UIM claim filed at the time the statute took effect. We reverse.

We summarize the following facts from the record developed before the trial court. On February 8, 2000, Robert Flaherty suffered bodily injuries as a result of a motor vehicle accident he had with Maureen Quinn, the underlying tortfeasor. Quinn's automobile insurance policy was issued by the United States Automobile Association (USAA), and had a coverage limit of $300,000. At the time of the accident, Robert Flaherty resided with his wife Antonia. Mrs. Flaherty was a named insured in a policy issued by Eagle Insurance Company, which had a UIM coverage limit of $50,000 per person, and $100,000 per accident. Because plaintiffs lived together at the time of the accident, they were considered members of the same household.

At the time of the accident, Mr. Flaherty was employed as an investigator by the law firm of Tomar, Simonofff, Adourian, O'Brien, Kaplan, Jacoby, & Grazziano (the Firm). The car he was driving at the time of the accident was insured under a policy issued to the Firm by Harleysville, and had a UM/UIM benefit limit of $1,000,000.

The Harleysville policy contained a step-down clause, limiting the amount of UIM coverage provided to the Firm's employees to the lower UIM coverage available through the employee's personal auto policy, if any, provided that the personal policy's UIM coverage is lower than the coverage available through the Harleysville policy. The actual step-down clause in the Harleysville policy reads as follows:

D. 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 Schedule or Declarations for Uninsured Motorists Coverage and Underinsured Motorists 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 an "uninsured motor vehicle" or an "underinsured 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;

(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 an "uninsured motor vehicle" or an "underinsured 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".

After plaintiffs settled their claims against the underlying tortfeasor for $285,000, they notified Harleysville of their intention to file a UIM claim under the $1,000,000 coverage available to Mr. Flaherty through the Firm's policy. Harleysville responded by invoking the step-down clause, and notifying plaintiffs that their claim was limited to the $50,000 UIM coverage available under Mrs. Flaherty's personal policy with Eagle Insurance. This law suit ensued.

After engaging in motion practice, the issue came before the trial court by way of summary judgment. In an oral decision on November 2, 2007, the court held that the step-down clause in the Harleysville policy was not enforceable pursuant to N.J.S.A. 17:28-1.1(f). The Legislature expressly adopted to overrule the Supreme Court's decision in Pinto v. New Jersey Manufacturers Insurance Co., 183 N.J. 405 (2005), upholding the enforceability of step-down clauses.

Against this backdrop, Harleysville now appeals the trial court's decision. We reverse for reasons expressed in Olkusz v.

Brown, 401 N.J. Super. 496 (App. Div. 2008), holding that N.J.S.A. 17:28-1.1(f) is to be applied prospectively only.

Reversed.

Dalton Insurance Agency, LLC was improperly pleaded as Dalton Insurance Agency, Inc.

(continued)

(continued)

6

A-3796-07T2

June 11, 2009