NICOLE PIERIDES v. GEICO INSURANCE COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-2783-08T12783-08T1

NICOLE PIERIDES (A MINOR) and

GEORGE and IRENE PIERIDES AS

HER PARENTS/LEGAL GUARDIANS and

INDIVIDUALLY,

Plaintiffs-Respondents,

v.

GEICO INSURANCE COMPANY,

Defendant-Appellant.

________________________________________________________________

 

Argued October 1, 2009 - Decided

Before Judges Fisher, Sapp-Peterson and Espinosa.

On appeal from Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-3995-08.

Patricia L. Dee argued the cause for appellant (Capehart & Scatchard, P.A., attorneys; Robert A. Hicken, of counsel; Ms. Dee, on the brief).

David K. Chazen argued the cause for respondent (Chazen & Chazen, LLC, attorneys; Mr. Chazen, on the brief).

PER CURIAM

Defendant GEICO (Government Employees Insurance Company) appeals from an order that granted summary judgment to plaintiffs and denied its motion for summary judgment. The order resulted in the reformation of a New York automobile insurance policy issued to plaintiffs, who are New Jersey residents, to increase the amount of coverage provided to $250,000 in personal injury protection (PIP) benefits and $300,000 in uninsured motorist (UM) coverage. We reverse.

Plaintiffs George and Irene Pierides first purchased an automobile insurance policy from GEICO in 1996, when they were residents of New York. At his deposition, George described his request for coverage as follows:

Basically, I just asked for the best coverage because I'm purchasing a new vehicle, so I wanted full coverage, the best policy I could buy and that was handed to me and I said okay.

It wasn't explained to me as far as numbers and stuff like that. I just says I need full coverage.

He explained his understanding of the term "full coverage:"

God forbid the car get a total loss you are covered. If I get hurt in an accident it will cover me. That's my interpretation of full coverage.

The uninsured/underinsured (UM/UIM) limits on the New York policy he purchased were $25,000 per person, $50,000 per accident. The basic PIP coverage of $50,000 was the mandatory minimum coverage required under New York law. See N.Y. Ins. Law 5103(d); N.Y. Comp. Codes R. & Regs. tit. 11, 60-1.1 (LEXIS through Mar. 26, 2010 amendments). When asked how the coverage limits were selected, George stated,

I have no idea. I don't know how it was there, but I didn't even know those numbers were there. I never requested them. That's what was handed to me when I asked for full coverage and I never questioned it.

When he received the first policy, he only looked at it to confirm that his name, address and the vehicle identification number were correct. From the time that the first policy was purchased in 1996, plaintiffs never asked for any changes to the coverage limits provided by the policy.

In January 2007, plaintiffs moved to Midland Park, New Jersey. At that time, there was only one automobile in the household, a 2005 Jeep that had been leased from a Chrysler dealership in Brooklyn. The Jeep was titled and registered in New York and insured by a GEICO policy issued in New York. The bills for the policy were sent to George's auto repair shop and gas station in Staten Island, New York. Although the automobile was principally garaged and used in New Jersey, plaintiffs never registered the automobile in New Jersey.

In July 2007, when the insurance policy was subject to renewal, Irene telephoned GEICO. In her deposition testimony, Irene stated that she wanted to notify them that she now resided and worked in New Jersey and that her policy was based in New York. She asked if she could continue leaving it in New York so that they could be billed through her husband's business. She testified that GEICO's response was that she could do so.

The policy log maintained by GEICO differs from Irene's account of this telephone call. The log notes read:

MSPH ADV THAT SHE HAD MOVED INTO NJ ADV TO SURRENDER PLATES TO NYS BEFORE XCELLING POLICY MSPH ADV ASKEDTHERE WOULD BE ANY DIFFERENCE AV THAT THERE NAY B/C OF COVG DIFFERENCES MSPH ASKED IF IT WAS OK TOKEEP NYS INS ON VEH WHILE IN NJ ADV THAT WE WOULD NEED TO HAVE A NJ POLICY WHEN THE VEH IS BEING KEPT MOSTLY IN THIS STATE MSPH ADV THAT SHE MAINTAINS OWNERSHIP OF NY ADDRESS THAT IS CURRENTLY THE RATED LOCATION NYS LAW ENFORCE FEE DMV FINES EFT AND EFF DATES

We interpret the log notes as follows: Irene advised that she had moved to New Jersey. She was told to surrender the Jeep's license plates to New York State before canceling the policy. She asked if there would be any difference between New York and New Jersey policies and was told that there might be because of coverage differences. Irene asked if it was okay to keep a New York policy on the vehicle while it was kept in New Jersey. In response, she was told that a New Jersey policy was needed when the vehicle is kept mostly in that state. She then advised that she maintains ownership of the New York address that is the rated location for the policy. There is then references to New York State law, the enforcement of "fee DMV fines" and the effective termination and effective dates that are not explained in the record.

There was no evidence that George or Irene ever requested a New Jersey policy or a specific dollar amount of coverage.

GEICO issued a New York policy in July 2007 (the policy) that lists plaintiffs' New Jersey residence as the address for the insured and lists Staten Island, New York as the rated location for the policy. A New York insurance card was issued for the policy to plaintiffs' address in Midland Park, New Jersey. The policy provides $300,000 in bodily injury liability coverage, basic PIP coverage of $50,000 and supplementary uninsured/underinsured (UM/UIM) motorist coverage of $25,000 per person, $50,000 per accident. As previously noted, the PIP coverage was the mandatory minimum under New York law.

PIP coverage in New Jersey is governed by N.J.S.A. 39:6A-4.3, which requires the insurer to provide the following option:

e. Medical expense benefits in amounts of $150,000, $75,000, $50,000 or $15,000 per accident; except that medical expense benefits shall be paid in an amount not to exceed $250,000 for all medically necessary treatment of permanent or significant [injuries]. . . .

If none of the aforesaid medical expense benefits options is affirmatively chosen in writing, the policy shall provide $250,000 medical expense benefits coverage.

On August 22, 2007, an unidentified hit and run vehicle struck plaintiffs' daughter, fifteen-year old Nicole Pierides, in Midland Park, New Jersey. Nicole suffered serious injuries and was hospitalized for two months. Her medical expenses exceeded $300,000.

Plaintiffs filed a demand for arbitration with the National Arbitration Forum to compel GEICO to pay medical expenses in the amount of $299,564.71 under the PIP provision of the policy. A second demand for arbitration was made under the UM provision of the policy. Thereafter, plaintiffs filed an order to show cause against GEICO regarding its failure to appoint an arbitrator. After GEICO argued that coverage issues were not arbitrable but had to be determined by the court, the trial court entered an order permitting plaintiffs to file a first amended complaint for declaratory relief. In this complaint, plaintiffs alleged

On or about March 27, 2008 the plaintiffs demanded that the policy limits of [the policy] be conformed in accordance with New Jersey law and that the amount of Personal Injury Protection (PIP) benefits be increased from $50,000.00 to $250,000.00 and the amount of Uninsured Motorist (UM) benefits be increased from $25,000.00 to $300,000.00.

Plaintiffs asked the court to decide this coverage issue by changing the policy limits accordingly. After discovery was complete, plaintiffs moved for summary judgment and GEICO filed a cross-motion for summary judgment, arguing that the New York policy should be enforced as written.

It is undisputed that, because plaintiffs' vehicle was not involved in the accident, the "Deemer Statute," N.J.S.A. 17:28-1.4, does not apply to provide the coverage that would be available under N.J.S.A. 39:6A-4.3. The New York policy provided $50,000 in PIP benefits, which was eventually paid to a medical provider on behalf of plaintiffs.

The trial court granted summary judgment to plaintiffs and denied defendant's motion for summary judgment. The court viewed a conflict of laws question as the first issue to be addressed and determined that New Jersey law applied to the controversy. The court opined that GEICO had a duty to advise plaintiffs that they needed a New Jersey insurance policy and should have written a New Jersey insurance policy for them after they moved to New Jersey. The court also found that GEICO had an obligation to provide plaintiffs with a Buyer's Guide pursuant to N.J.S.A. 39:6A-23; that GEICO violated that statute and N.J.S.A. 17:28-1.9 in failing to do so and therefore deprived plaintiffs of an opportunity to select appropriate coverage. The court stated that the plaintiffs "did what they were supposed to do" and that, pursuant to New Jersey's public policy, the New York policy should be reformed to a New Jersey policy. The court observed that if the policy was reformed to the minimum coverage required by statute, plaintiffs would be entitled to $250,000 in PIP coverage for the emergency care provided to Nicole based upon her injuries. See N.J.S.A. 39:6A-4.3(e). The court ordered that the policy be reformed to provide plaintiffs with $250,000 in PIP coverage and $300,000 in UM coverage. No authority was cited to explain the basis for increasing the UM coverage.

GEICO raises the following issues on appeal:

POINT I

THE TRIAL COURT IMPROPERLY DENIED DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AS A MATTER OF LAW.

POINT II

NEW JERSEY CONFLICTS OF LAWS DEMANDS APPLICATION OF NEW YORK LAW IN INTERPRETING A NEW YORK INSURANCE POLICY.

POINT III

SINCE THE PIERIDES VEHICLE WAS NOT INVOLVED IN THE ACCIDENT, THE 'DEEMER' STATUTES OF THE STATES OF NEW JERSEY AND NEW YORK DO NOT APPLY AND THE GEICO POLICY SHOULD NOT BE REFORMED.

A. NEW JERSEY'S DEEMER STATUTE, N.J.S.A. 17:28-1.4, ONLY ALLOWS REFORMATION OF A POLICY WHEN THE INSURED VEHICLE IS USED.

B. NEW YORK'S EQUIVALENT TO THE DEEMER STATUTE, N.Y. INS. LAW SEC. 5103 ALSO REQUIRES USE OR OPERATION OF THE INSURED VEHICLE AT THE TIME OF THE ACCIDENT AND THUS DOES NOT AFFORD PLAINTIFF RELIEF FOR INCREASED PIP BENEFITS.

C. THE ARBITRARY MODIFICATION OF THE NEW YORK POLICY HEREIN CIRCUMVENTS BOTH NEW JERSEY AND NEW YORK PUBLIC POLICY AND WILL ULTIMATELY RESULT IN HIGHER INSURANCE PREMIUMS STATE WIDE.

POINT IV

NEW JERSEY INSURER'S OBLIGATION TO FORWARD A BUYER'S GUIDE TO ITS INSUREDS DOES NOT APPLY SINCE GEICO'S POLICY WAS ISSUED FROM NEW YORK AND, THUS, PLAINTIFFS' UM LIMITS SHOULD NOT BE ARBITRARILY INCREASED.

After carefully reviewing the record, we conclude that the trial court erred in granting summary judgment to plaintiffs and denying summary judgment to defendant.

When reviewing a grant of summary judgment, we employ the same standards used by the trial court, which grants summary judgment if the record shows 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). Burnett v. Gloucester County Bd. of Chosen Freeholders, 409 N.J. Super. 219, 228 (App. Div. 2009); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated that there are no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31, (App. Div.), certif. denied, 189 N.J. 104 (2006). In so doing, we view the evidence in a light most favorable to the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). We review issues of law de novo and accord no deference to the motion judge's conclusions on issues of law. Zabilowicz v. Kelsey, 200 N.J. 507, 512-13 (2009).

I

We turn first to the grant of summary judgment to plaintiffs. The trial court granted summary judgment and ordered the reformation of the insurance contract here based in part upon the following conclusions: that GEICO violated New Jersey statutory requirements and regulations by failing to send plaintiffs a Buyer's Guide and that GEICO breached a duty to advise plaintiffs that they needed a New Jersey insurance policy. We disagree with the court's legal conclusion that GEICO had an obligation to send a Buyer's Guide to plaintiffs and also conclude that a genuine issue of fact existed as to whether GEICO violated any duty to advise plaintiffs to obtain a New Jersey policy. Therefore, we conclude that summary judgment was improvidently granted.

We begin by reviewing the general principles underlying the remedy ordered. Reformation corrects the written policy to accurately state the policy terms upon which the parties agreed. Both New York and New Jersey view reformation as constituting a "recognition that the scrivener has failed to express accurately what the parties themselves intended" and is a "correction of that failure." Aarvig v. Aarvig, 248 N.J. Super. 181, 186 (Ch. Div. 1991). See Chimart Assocs. v. Paul, 489 N.E.2d 231, 234 (N.Y. 1986); Resort Sports Network Inc. v. PH Ventures III, LLC, 886 N.Y.S.2d 5, 7-8 (App. Div. 2009). The traditional grounds justifying reformation of an instrument are either mutual mistake or unilateral mistake by one party and fraud or unconscionable conduct by the other. E.g., in New Jersey, St. Pius X House of Retreats, Salvatorian Fathers v. Diocese of Camden, 88 N.J. 571, 577 (1982); Dugan Constr. Co. v. N.J. Turnpike Authority, 398 N.J. Super. 229, 243 (App. Div.), certif. denied, 196 N.J. 346 (2008); e.g., in New York, Barclay Arms, Inc. v Barclay Arms, Assoc., 540 N.E.2d 707, 709 (N.Y. 1989); Chimart, supra, 489 N.E.2d at 234; Greater N.Y. Mut. Ins. Co. v. U.S. Underwriters Ins. Co., 827 N.Y.S.2d 147 (App. Div. 2007). For a court to grant reformation, there must be clear and convincing proof that the contract as reformed is what the contracting parties understood and meant it to be. E.g., in New Jersey, St. Pius X House of Retreats, supra, 88 N.J. at 580-581); Pivnick v. Beck, 326 N.J. Super. 474, 483 (App. Div. 1999), aff'd, 165 N.J. 670 (2000); e.g., in New York, Chimart, supra, 489 N.E.2d at 234; ABA Consulting, LLC v. Liffey Van Lines, Inc., 889 N.Y.S.2d 540, 542 (App. Div. 2009). The party seeking reformation, usually the insured, has the burden to prove the actual agreement. 2 Holmes' Appleman on Insurance 8.3 (2d ed. 1998). Reformation will not be granted based upon a mistake resulting from "the complaining party's own negligence." Millhurst Milling & Drying Co. v. Automobile Ins. Co., 31 N.J. Super. 424, 434 (App. Div. 1954). See, e.g., Melohn v. Commercial Ins. Co. of Newark, N.J., 330 N.Y.S.2d 157 (App. Div. 1972), aff'd, 31 N.Y.2d 971 (1973).

In granting summary judgment and ordering reformation, the trial court concluded that when plaintiffs moved to New Jersey, GEICO had an obligation to send them a Buyer's Guide pursuant to N.J.S.A. 39:6A-23 and that GEICO's failure to do so violated New Jersey law and warranted reformation of the New York contract. It is evident, however, that the obligation to provide a Buyer's Guide is limited to the issuance of New Jersey policies.

The term "insurer" as used in the subchapter of the New Jersey Administrative Code governing the Buyer's Guide is defined in pertinent part as any corporation issuing a contract of private passenger automobile insurance. N.J.A.C. 11:3-15.3. Such contracts of insurance are, by definition, New Jersey policies, either standard policies issued in accordance with N.J.S.A. 39:6A-3, which include the personal injury protection coverage described in N.J.S.A. 39:6A-4 or basic policies providing direct insurance on an automobile as defined in N.J.S.A. 39:6A-2, issued in accordance with N.J.S.A. 39:6A-3.1 and N.J.A.C. 11:3-3. There is no support in any of these statutes and regulations for the imposition of a duty to provide a Buyer's Guide to an insured purchasing a policy issued in another state. Therefore, we disagree with the trial court's legal conclusion that such a duty existed.

Moreover, a failure to provide the Buyer's Guide merely operates to deprive the insurer of the immunity provided by N.J.S.A. 17:28-1.9(a) to claims regarding an insurer's duty to inform. The statute does not create additional remedies for the insured when a Buyer's Guide is not provided. While reformation is available as a remedy for an insurer's failure to comply with notice requirements, see Craig and Pomeroy, New Jersey Auto Insurance Law 29:2 (2010), plaintiffs still bear the obligation of proving their entitlement to that remedy. Therefore, as a matter of law, GEICO's failure to send a Buyer's Guide does not equate with proof that reformation is appropriate.

The trial court also concluded that GEICO "should have advised the plaintiffs that they needed a New Jersey insurance policy and should have written a New Jersey insurance policy." Assuming for the purposes of argument that GEICO had such a duty, it was inappropriate to conclude that GEICO breached that duty within the context of this summary judgment motion. In opposing plaintiff's motion for summary judgment, GEICO was entitled to all legitimate inferences from the evidence in the record. Brill, supra, 142 N.J. at 540. The policy log maintained by GEICO in the ordinary course of business stated that Irene "asked if it was ok to keep" New York insurance on the vehicle while it was in New Jersey and was advised that GEICO would need to have a New Jersey policy when the vehicle is being kept mostly in that state. This evidence was sufficient to create a genuine issue of fact as to whether GEICO breached any duty it might have to advise plaintiffs that they had to obtain a New Jersey policy. No authority has been cited to support the proposition that GEICO had an independent duty to issue a New Jersey policy to plaintiffs when they explicitly requested a New York policy and maintained ownership of the location where the policy was rated. Therefore, this alleged breach of duty did not provide a basis for summary judgment.

II

In its motion for summary judgment, GEICO sought to have the insurance contract, and in particular, its policy limits, enforced as written pursuant to the law of New York. In denying summary judgment, the trial court ruled that New Jersey law should apply and reformed the contract to increase its policy limits. We conclude that the trial court erred in its choice of law analysis and that, even applying New Jersey law, plaintiffs were not entitled to reformation of the insurance contract. Therefore, summary judgment was improvidently denied to GEICO.

A

We first consider the choice of law issue. As a general rule, the law of the place of the contract will govern the determination of the rights and liabilities of the parties under an automobile liability insurance contract, unless "the dominant and significant relationship of another state to the parties and the underlying issue" dictates otherwise. State Farm Mut. Auto. Ins. Co. v. Estate of Simmons, 84 N.J. 28, 37 (1980) (quoting Restatement (Second) of Conflict of Laws 193 (1971)). See also General Metalcraft, Inc. v. Liberty Mut. Ins. Co., 796 F. Supp. 794, 796-97 (D.N.J. 1992) ("[T]his rule will generally comport with the reasonable expectations of the parties concerning the principal situs of the insured risk during the term of the policy and will furnish needed certainty and consistency in the selection of the applicable law."); Polarome Mfg. Co. v. Commerce & Indus. Ins. Co., 310 N.J. Super. 168, 173 (App. Div.), certif. denied, 155 N.J. 590 (1998). Especially in insurance law, courts must focus on the parties' "justified expectations and their needs for predictability of result." Pfizer, Inc. v. Employers Ins. of Wausau, 154 N.J. 187, 199 (1998). Such expectations and predictability are framed by the fact that auto insurance policies are written to satisfy particular states' requirements for autos registered and garaged there. Rutgers Cas. Ins. Co. v. State Farm Mut. Ins. Co., 234 N.J. Super. 202, 205 (App. Div. 1989).

Plaintiffs maintained the registration of the insured vehicle in New York, even after they moved to New Jersey. In addition, at their request, New York was the rated location for the policy and therefore, the presumptive situs of the insured risk. Accordingly, a policy was issued that satisfied the requirements of New York's insurance laws.

The trial court determined that, pursuant to conflict of laws principles, New Jersey law should apply to this dispute and that, as a result, New Jersey public policy required the increase of the coverage afforded in the policy. Although we agree that New Jersey law applies, we conclude that the trial court erred in its analysis of the conflict of laws issue and in its application.

Choice of law is a matter of law which we review de novo. North Jersey Neurosurgical Assocs. v. Clarendon Nat'l Ins. Co., 401 N.J. Super. 186, 191-92 (App. Div. 2008). As the forum state, New Jersey's choice of law principles apply. Rowe v. Hoffman-La Roche, Inc., 189 N.J. 615, 621 (2007); Erny v. Estate of Merola, 171 N.J. 86, 94 (2002); Moper Transp., Inc. v. Norbet Trucking Corp., 399 N.J. Super. 146, 153 (App. Div.), certif. denied, 196 N.J. 463 (2008). New Jersey employs a governmental-interest analysis, in which "the determinative law is that of the state with the greatest interest in governing the particular issue." Veazey v. Doremus, 103 N.J. 244, 247-48 (1986). The analysis calls for a two-step process. Because a decision on choice of law is necessary "'only . . . when the laws of the involved states differ on the point in issue[,]'" Pfizer, supra, 154 N.J. at 199; Fantis Foods v. N. River Ins. Co., 332 N.J. Super. 250, 252 (App. Div.), certif. denied, 165 N.J. 677 (2000); the first step is to determine whether there is an actual conflict between the laws of the interested states, a determination made on an issue-by-issue basis. Gantes v. Kason Corp., 145 N.J. 478, 484 (1996); Veazey, supra, 103 N.J. at 248. If there is no actual conflict, the forum state applies its own law to resolve the disputed issues. Rowe, supra, 189 N.J. at 621-22; Smith v. Alza Corp., 400 N.J. Super. 529, 543 (App. Div. 2008). If there is an actual conflict, the next step in the governmental-interests analysis is to determine "the state with the greatest interest in governing the particular issue." Veazey, supra, 103 N.J. at 248. To do this, the court must "identify the governmental policies underlying the law of each state and how these policies are affected by each state's contacts to the litigation and to the parties." Ibid.; Smith, supra, 400 N.J. Super. at 543.

The trial court did not address the first step of this analysis. The court did not identify whether there was an actual conflict between the laws of New York and New Jersey or even identify what conflict it was considering. Instead, the court began its analysis with the second step, concluding that New Jersey had the greatest interest in the outcome. The court proceeded to order reformation of the insurance contract to provide the PIP benefits that would have been available in a policy issued in New Jersey as well as an increase in UM benefits, purportedly on the basis of New Jersey public policy. This analysis cannot be justified by a choice of law decision because no actual conflict exists between the insurance laws of New York and New Jersey.

An actual conflict exists regarding an insurance contract when there is a conflict in the way each state interprets the policy, see 4 Holmes' Appleman on Insurance 21.1 (2d ed. 1998), or when it would violate the public policy of the forum state to apply the law of the jurisdiction where the contract was formed, see 15 Corbin on Contracts 79.7 (rev. ed 2003). Since it is not argued that there is a conflict in how the insurance contract would be interpreted under the laws of New York and New Jersey, we focus on whether the enforcement of the contract as written would violate the public policy of New Jersey.

State policies that are not "truly inconsistent or mutually repugnant" do not present an actual conflict and, therefore, there is no need for a choice of law determination. Simmons, supra, 84 N.J. at 41 n.1. See also Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 493 (1961). "[N]ot all differences in the laws of two states demonstrate inconsistent public policies or interests. Unless such differences are fundamental, foreign law need not be considered offensive or repugnant to local public policy." Simmons, supra, 84 N.J. at 41 (citation omitted).

In determining whether a "fundamental difference" exists, our courts have distinguished between cases in which the laws of states differ on the existence of coverage and those cases in which the difference lies in the extent of coverage. For example, in Simmons, both New Jersey and Alabama mandated liability coverage to persons driving a vehicle with the permission of the named insured, although Alabama law was "considerably more restrictive and narrow." Our Supreme Court did not find an actual conflict:

While each state differs as to the duration and character of that permission or consent, the public policy of each state nevertheless seeks to achieve the same fundamental goals and objectives.

The distinctions between these states as to the extent of coverage do not in the context of this case demand the full and literal application of the insurance laws of New Jersey to determine the obligations of the parties in order to vindicate the public policy of this State.

[Id. at 42.]

In contrast, there is an actual conflict when the existence of coverage is affected by the application of the substantive law of different states to the same contract. E.g., North Jersey Neurosurgical, supra, 401 N.J. Super. at 192 (conflict exists where New Jersey law provides that an automobile insurance policy shall be the primary source of PIP "no-fault" benefits for a resident relative of the insured who is not a named insured on another policy while New York law provides that a claimant shall seek "no-fault" benefits from the insurance policy of the host vehicle); Walsh v. Mattera, 379 N.J. Super. 548 (App. Div. 2005) (although New York and New Jersey had same statute of limitations, conflict existed because under New York law, UIM claim accrues when primary benefits are exhausted and, under New Jersey law, UIM claim accrues at time of accident); Lonza, Inc. v. The Hartford Acc. & Indem. Co., 359 N.J. Super. 333, 345 (App. Div. 2003) (conflict exists between law of Rhode Island and New Jersey regarding coverage trigger and allocation of damages in environmental coverage action); Polarome, supra, 310 N.J. Super. at 170 (conflict existed on late notice of claims to insurer because New York law required timely notice and New Jersey law requires the insurer to show prejudice despite late notice).

Both New Jersey and New York have statutes requiring owners of automobiles registered or principally garaged in their states to maintain mandatory liability coverage, including PIP benefits. See N.J.S.A. 17:28-1.4; N.Y. Ins. Law 5103. The disparity in the amounts of mandatory minimum PIP benefits coverage required in each state relates to the extent of available coverage and not its existence. This difference does not render the underlying policies "truly inconsistent or repugnant" to each other. See Simmons, supra, 84 N.J. at 41 n.1. Therefore, we reject the trial court's implicit premise that the difference in the amounts of mandatory minimum coverage presented an actual conflict of laws that warranted the importation of New Jersey's mandatory minimum coverage into the New York policy.

There is also no actual conflict between the laws of New York and New Jersey regarding reformation of the insurance contract. Both New Jersey and New York adopt the traditional rationale and grounds for reformation as well as the burden and quantum of proof required of the party seeking this equitable remedy. Applying this doctrine to an insurance contract, both New York and New Jersey have acknowledged the availability of the remedy in situations where the negligence of the insurer's agent has caused a policy to contain inadequate coverage. See Weinisch v. Sawyer, 123 N.J. 333, 336 (1991); Sobotor v. Prudential Prop. & Cas. Ins. Co., 200 N.J. Super. 333, 337-41 (App. Div. 1984); Cappelleti v. Unigard Ins. Co., 636 N.Y.S.2d 958, 960 (App. Div. 1995). Because the remedy is not generally available when the error is due to the complaining party's negligence, both states also recognize a duty on the part of the insured as a factor in the availability of this equitable remedy. See e.g., in New Jersey, Dancy v. Popp, 114 N.J. 570, 572 (1989); Millbrook Tax Fund, Inc. v. P.L. Henry & Assocs., 344 N.J. Super. 49, 53 (App. Div. 2001); Martinez v. John Hancock Mut. Life Ins. Co., 145 N.J. Super. 301, 310 (App. Div. 1976), certif. denied, 74 N.J. 253 (1977). See e.g. in New York, Greater N.Y. Mut., supra, 827 N.Y.S.2d 147; In re Union Indem. Ins. Co. of N.Y., 557 N.Y.S.2d 51 (App. Div. 1990); German Flats v. Aetna Cas. & Sur. Co., 572 N.Y.S.2d 819, 820-21 (App. Div. 1991); Northeastern Shares Corp. v. International Ins. Co. of N.Y., 269 N.Y.S. 351 (App. Div.), aff'd, 265 N.Y. 574 (1934). As we observed in Martinez, supra, "Consideration of the extent of an insured's duty to read an insurance policy is germane to the two theories upon which an insurer's liability can be expanded beyond" what is provided for in the policy itself: equitable estoppel of the insurer to deny coverage and reformation of the policy. 145 N.J. Super. at 312. See also Countryside Oil Co. v. Travelers Ins. Co., 928 F. Supp. 474, 481 (D.N.J. 1995); Dancy, supra, 114 N.J. at 572. See e.g., in New York, Designcraft Jewel Indus., Inc. v. Rampart Brokerage Corp., 406 N.Y.S.2d 97 (App. Div. 1978); Byron v. Liberty Mut. Ins. Co., 405 N.Y.S.2d 113 (App. Div. 1978).

Since there is no fundamental difference in the law of New York and New Jersey regarding the reformation of insurance contracts, there is no actual conflict and we apply the law of New Jersey to this issue. Rowe, supra, 189 N.J. at 621-22; Smith, supra, 400 N.J. Super. at 543.

B

As noted, reformation is justified based upon either mutual mistake or unilateral mistake by one party and fraud or unconscionable conduct by the other. Since this is not a case of mutual mistake, reformation must be justified here based upon inequitable conduct by GEICO, giving due consideration to the duties of both the insurer and the insured. In considering defendant's motion for summary judgment, we draw all legitimate inferences in favor of the plaintiffs. Brill, supra, 142 N.J. at 540.

Since reformation will not be granted based upon a mistake resulting from "the complaining party's own negligence," Millhurst, supra, 31 N.J. Super. at 434, our inquiry focuses on whether the plaintiffs' conduct precludes this remedy. An examination of the record reveals that the trial court erred in denying summary judgment to GEICO as the remedy of reformation was not available to plaintiffs. Contrary to the trial court's findings, plaintiffs did not do "what they were supposed to do," and cannot be absolved of responsibility for the alleged error in the insurance contract. Their admitted negligence in failing to review the coverage identified on the declarations sheet was germane to whether reformation was available to them. In addition, plaintiffs failed to comply with New Jersey's statutes regarding registration and insurance. Finally, reformation would not serve the public policy of New Jersey because to grant that remedy here would permit plaintiffs to recover from New Jersey's system of no-fault insurance despite their failure to contribute to that fund.

(1)

Plaintiffs had an obligation to act as conscientious policyholders. In cases like this, where inequitable conduct by the insurer is alleged, the insured is bound "to make such examination as would be reasonable for the average person under the particular circumstances[.]" Dancy, supra, 114 N.J. at 572 (quoting Harr v. Allstate Ins. Co., 54 N.J. 287, 309-10 (1969)). Our Supreme Court has recognized that "the one page most likely to be read and understood by the insured is the declarations sheet." Pizzullo v. N.J. Mfrs., Ins. Co., 196 N.J. 251, 272 (2008); Zacarias v. Allstate, 168 N.J. 590, 602 (2001). Because it is "the one page of the policy tailored to the particular insured and not merely boilerplate," the declarations sheet is recognized as a basis for defining the insured's expectation of coverage. Lehrhoff v. Aetna Cas. and Sur. Co., 271 N.J. Super. 340, 346-48 (App. Div. 1994). Therefore, at a minimum, the insured must act as "a conscientious policyholder," and, upon receipt, examine "the declaration page to assure himself that the coverages and their amounts . . . accord with his understandings of what he is purchasing." Lehrhoff, supra, 271 N.J. Super. at 346-47.

The information that appears on the declarations page is, therefore, critical to the evaluation of reformation requests. Martinez, supra, 145 N.J. Super. at 310. See Pizzullo, supra, 196 N.J. at 273 (failure to identify a relevant exclusion on the declarations page may contribute to the creation of an ambiguity in an otherwise clear policy of insurance); compare Heake v. Atl. Cas. Ins. Co., 15 N.J. 475, 481 (1954) (reformation was appropriate where agent's misrepresentation of facts to insurer resulted in issuance of policy with exclusion of coverage to applicant, a fact not revealed on the declarations page of the policy and not discovered by the insured until after the loss) with Martinez, supra, 145 N.J. Super. at 312-313 (reformation not appropriate where agent's fraud had no effect on the scope of coverage and insured could have discovered the scope of coverage by reviewing the declarations page).

The declarations sheet of the policy here identified the "Basic Personal Injury Protection" as Option B, providing $50,000 in coverage. In addition, the policy here included a "New York No-Fault Benefits Declaration Page" that clearly identified the policy as a New York policy and stated that it was "a breakdown of your No-Fault (PIP) coverages to show how much No-Fault coverage you have and the premium." The No-Fault Declarations Page states that the policy provided "mandatory personal injury protection" of $50,000 with "aggregate no-fault benefits available" of $50,000. The contents of the declarations pages formed the basis for defining the insured's expectation of PIP coverage. See Pizzullo, supra, 196 N.J. at 272; Lehrhoff, supra, 271 N.J. Super. at 346-48.

This was not a case in which any alleged impropriety on the part of GEICO misled plaintiffs as to the amount of PIP coverage provided by the policy. The amount of coverage was clearly set forth on the declarations page as well as on the "New York No-Fault Benefits Declaration Page." Therefore, if plaintiffs had acted as "a conscientious policyholder," they would have been aware of the limits of PIP coverage. By his own admission, George never checked the amounts of coverage provided by the policies he purchased over the years. This failure constituted negligence on plaintiffs' part and is germane to a consideration of whether reformation is appropriate. See Martinez, supra, 145 N.J. Super. at 312; Millhurst, supra, 31 N.J. Super. at 434.

(2)

Plaintiffs also had certain statutory obligations which they failed to fulfill. Under New Jersey's system of no-fault automobile insurance, the owners of motor vehicles registered or principally garaged in New Jersey must purchase standard, basic, or special insurance coverage for their automobiles pursuant to N.J.S.A. 39:6B-1, which provides PIP benefits pursuant to N.J.S.A. 39:6A-4, -3.1(a), -3.3(b)(1). See Zabilowicz, supra 200 N.J. 507; Caviglia v. Royal Tours of Am., 178 N.J. 460, 466 (2004). It is clear that these obligations apply to plaintiffs as the physical location where an automobile is primarily kept is the pivotal factor in determining where it is "principally garaged." Chalef v. Ryerson, 277 N.J. Super. 22, 26-28 (App. Div. 1994). Their failure to comply with these obligations rendered them subject to sanctions, which include fines, imprisonment and loss of driving privileges. N.J.S.A. 39:6B-2. Plaintiffs cannot shift their responsibility for complying with these statutes to their insurer.

(3)

There is an additional consideration that militates against plaintiffs' recovery from the New Jersey no-fault system of insurance. Although they maintained coverage in amounts that satisfied New Jersey's minimum coverage requirements, it remains significant that their premiums were paid on a New York policy.

The PIP benefits available pursuant to N.J.S.A. 39:6A-4.3(e) are part of a comprehensive legislative enactment in 1998, Automobile Insurance Cost Reduction Act (AICRA), N.J.S.A. 39:6A-1.1 to -35, that "respond[ed] to the need to control the spiraling costs to both consumers and insurance companies" with "a multi-pronged approach aimed at achieving the goals of containing costs, rooting out fraud within the system, and ensuring a fair rate of return for insurers." DiProspero v. Penn, 183 N.J. 477, 488 (2005). See also N.J.S.A. 39:6A-1.1(b); Dyszel v. Marks, 6 F.3d 116, 124 (3d Cir. 1993).

A principal means of advancing the policy of cost containment is to insure that a party does not draw on the pool of accident-victim insurance funds to which he did not contribute. See, e.g., Caviglia, supra, 178 N.J. at 471 (upholding constitutionality of N.J.S.A. 39:6A-4.5(a), which denies a cause of action for recovery of economic or noneconomic loss to a driver of an uninsured vehicle who is injured in an automobile accident). Similarly, in upholding the constitutionality of the "Deemer statute," N.J.S.A. 17:28-1.4, the Third Circuit noted the nexus between contributing to the cost of New Jersey's no-fault system and the right to recovery. Dyszel, supra, 6 F.3d at 127. Our Supreme Court agreed:

Because non-resident insureds do not contribute to the costs incurred by New Jersey insurers in defending full tort option claims, the Legislature obviously recognized that allowing non-residents the benefit of the full tort option for damages incurred in New Jersey accidents inevitably would increase the liability exposure of New Jersey insurers and generate pressure for increased premiums.

[Whitaker v. DeVilla, 147 N.J. 341, 357 (1997).]

The link between a party's right to recover from no-fault funds and contribution to New Jersey's no-fault insurance system was highlighted in Baduini v. Serina, 375 N.J. Super. 478 (App. Div. 2005). The plaintiff was a New Jersey resident who owned and operated a vehicle in New Jersey but also had a vehicle in Pennsylvania that was insured through a Pennsylvania policy. The plaintiff had an accident in New Jersey while using the vehicle insured in Pennsylvania. Although plaintiff contributed to New Jersey's insurance scheme through the premiums on his New Jersey vehicle, we held the Deemer statute applicable to the plaintiff's claims and required him to meet the verbal threshold, noting that the Pennsylvania premiums paid on the vehicle in the accident did not contribute to the costs of New Jersey insurers. Id. at 483-484.

Here, too, plaintiffs did not contribute to the costs of New Jersey insurers as part of our no-fault insurance system. Therefore, reformation of the policy to include the higher PIP coverage available in New Jersey would entail allowing them to recover from an insurance fund to which they did not contribute in contravention of New Jersey's policy of cost containment.

In summary, we conclude that summary judgment was improvidently granted to plaintiffs because GEICO had no obligation to provide them with a Buyer's Guide and a genuine issue of fact existed as to the alleged breach of a duty to advise plaintiffs regarding New Jersey insurance law. In addition, we conclude that summary judgment was inappropriately denied to defendant because plaintiffs asked to maintain a New York policy; any alleged mistake as to the coverage provided could have been obviated by an inspection of the declarations pages of the policy; and, further, because reformation of the policy would be inconsistent with New Jersey's public policy to contain insurance costs. We further note that, even if reformation were appropriate here, no legal basis has been advanced for the increase in coverage for UM limits beyond that of minimum coverage. See Rutgers Cas. Ins. Co. v. LaCroix, 390 N.J. Super. 277, 288 n.3 (App. Div. 2007), aff'd, 194 N.J. 515 (2008).

 
Reversed and remanded for entry of judgment consistent with this opinion.

Because testimony from both plaintiffs is cited, they are referred to by their first names for clarity.

GEICO is listed as a licensed insurance carrier on the website of the State of New Jersey Department of Banking & Insurance. http://www.state.nj.us/dobi/data/inscomp.htm.

The policy period was for six months, from 7-11-07 to 1-11-08. The record does not reveal whether the preceding policy was also for six months. If so, that policy would have been renewed at or about the time that plaintiffs moved to New Jersey. No evidence has been presented as to any communications between the insured and GEICO regarding the change of address at that time.

The citations in the record have been corrected to reflect the applicable statutes.

For examples of actual conflicts in cases that do not involve the interpretation of an insurance contract, see P.V. ex rel. T.V. v. Camp Jaycee, 197 N.J. 132, 143 (2008) (conflict exists where charitable immunity from most tort liability existed in New Jersey and did not in Pennsylvania); Rowe, supra, 189 N.J. at 622 (conflict exists between Michigan law that creates conclusive presumption that a drug is not defective if approved by FDA and New Jersey law that creates rebuttable presumption that a drug warning is adequate if approved by FDA); Gantes, supra, 145 N.J. at 484-85 (conflict exists where states apply different statutes of limitations).

However, as previously noted, GEICO's failure to send plaintiffs a Buyer's Guide cannot be considered as evidence of inequitable conduct.

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A-2783-08T1

April 19, 2010