SUSANA FERRER v. STATE FARM INSURANCE COMPANIES

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

SUSANA FERRER, individually

and as Administratrix of the

Estate of NATHAN H. FERRER,

SHIRLEY FERRER, an infant by her

guardian ad litem, SUSANA FERRER

AND SHARON FERRER, an infant by

her guardian ad litem, SUSANA

FERRER,

Plaintiffs-Appellants,

v.

STATE FARM INSURANCE COMPANIES and

STATE FARM INDEMNITY COMPANY,

Defendants-Respondents.

____________________________________________________

May 2, 2014

Argued February 25, 2014 Decided

Before Judges Messano and Hayden.

On appeal from the Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-3373-11.

Salvador H. Sclafani argued the cause for appellants.

Thomas W. Matthews argued the cause for respondents (Soriano, Henkel, Biehl & Matthews, attorneys; Mr. Matthews, on the brief).

PER CURIAM

Plaintiff Susana Ferrer1 appeals from the February 19, 2013 Law Division order dismissing the declaratory action against defendants State Farm Insurance Companies and State Farm Indemnity Company (State Farm), which she brought as administratrix of the estate of her husband, Nathan Ferrer, on behalf of herself and the couple's two minor daughters (collectively plaintiffs). For the reasons that follow, we affirm.

The record reveals that on March 1, 2010, Nathan was killed in an accident while a passenger in a vehicle driven by Abraham Zavala and owned by Diane Zavala. Their vehicle was struck by a vehicle owned by Julia Lee Williams, but occupied by Charmaine Marquel Brown and Calvin Raines, who were fleeing from the police.

At some point, plaintiffs settled with the Zavalas' insurance company for the policy limits of $15,000, and Williams' insurance company for $25,000. Plaintiffs also filed suit against Brown and Raines, and received a $2,048,235.70 default damage award against Brown.2

Plaintiffs did not have automobile insurance. However, they sought coverage from State Farm under the uninsured/underinsured motorist (UM/UIM) provision of Nathan's mother, Sophia Castaneda's policy. Castaneda had car insurance through State Farm since 1995. According to Castaneda, in 2002, Nathan began to have coverage under her State Farm policy.

Specifically, on July 5, 2002, Castaneda's vehicle was involved in an accident while Nathan was driving, which was reported to State Farm. Beginning that year, the policy renewal documents Castaneda received from State Farm included Nathan's name next to Castaneda's in the "driver(s) in household" section on every auto-renewal page. Nathan's name never appeared on the declarations page.

Castaneda did not sign anything to add Nathan to her policy and never spoke with an agent about adding him. Indeed, since 2002, neither Castaneda nor Nathan signed any documents relating to the State Farm coverage. Nathan did not live with his mother in 2002 or thereafter, but he frequently utilized Castaneda's two vehicles.

State Farm denied coverage for the March 1, 2010 accident contending Nathan was not an insured under the terms of Castaneda's policy and he did not live with Castaneda, the covered insured. On July 19, 2011, plaintiffs filed a complaint against State Farm seeking declaratory judgment that Nathan was covered under Castaneda's policy and thus entitled to UM/UIM coverage and personal injury protection (PIP) benefits.

After a two-day bench trial, Judge Philip H. Mizzone, Jr., dismissed plaintiffs' complaint with prejudice on February 19, 2013. The judge found that, based on the clear and unambiguous terms of Castaneda's State Farm policy, Nathan did not qualify to receive benefits because his name did not appear on the declarations page and he did not reside with his mother. The judge further determined that the listing of Nathan's name on the auto-renewal pages did not confer benefits as the pages clearly stated that the contents thereof did not expand coverage. The judge concluded that no reasonable policy holder who had reviewed the policy documents would have expected coverage for Nathan. This appeal followed.

On appeal, plaintiffs argue that the trial judge erred in dismissing their complaint because they should have been afforded coverage based on the auto-renewal pages, which extended coverage to Nathan, or, alternatively, gave him the reasonable expectation of coverage. Plaintiffs contend that Castaneda's policy was ambiguous, and such ambiguity must be resolved in their favor. Further, plaintiffs assert that the declarations page the judge relied on was issued for the policy period of October 11, 2008, through April 11, 2009, meaning it was not in effect at the time of the accident. Based on our review of the applicable legal principles, we disagree.

We begin with a review of the principles governing insurance contract interpretation. "An insurance policy is a contract that will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). An insurance policy should be interpreted in accordance with its terms' plain and ordinary meaning. Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012) (citing Flomerfelt, supra, 202 N.J. at 441).
Any ambiguities must be "resolved in favor of the insured." Ibid. Even so, simply because different wording could possibly make a provision more clear, does not render the language chosen ambiguous. Villa v. Short, 195 N.J. 15, 26 (2008) (citing Argent v. Brady, 386 N.J. Super. 343, 352 (App. Div. 2006)). "[T]he test for determining if an ambiguity exists is whether 'the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage.'" Nunn v. Franklin Mut. Ins. Co., 274 N.J. Super. 543, 548 (App. Div. 1994) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)).

"[W]hen considering ambiguities and construing a policy, courts cannot 'write for the insured a better policy of insurance than the one purchased.'" Flomerfelt, supra, 202 N.J. at 441 (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)). Moreover, the courts must not read one provision such that another provision is rendered meaningless. Homesite Ins. Co. v. Hindman, 413 N.J. Super. 41, 47 (App. Div. 2010).

In general, "the insured has the burden 'to bring the claim within the basic terms of the policy.'" S.T. Hudson Eng'rs, Inc. v. Pa. Nat'l Mut. Cas. Co., 388 N.J. Super. 592, 603 (App. Div. 2006) (quoting Reliance Ins. Co. v. Armstrong World Indus., Inc., 292 N.J. Super. 365, 377 (App. Div. 1996)), certif. denied, 189 N.J. 647 (2007). If the policy language "supports two reasonable meanings, one favorable to the insurer and one favorable to the insured, the interpretation supporting coverage will be applied." Ibid.

Furthermore, "'[g]enerally speaking, courts construe insurance policies consistent with the objectively reasonable expectations of the insured.'" Universal Underwriters Ins. Co., Recreational Prods. Ins. Div. v. N.J. Mfrs. Ins. Co., 299 N.J. Super. 307, 318 (App. Div.) (quoting Aubrey v. Harleysville Ins. Cos., 140 N.J. 397, 404 (1995)), certif. denied, 151 N.J. 73 (1997); see also Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992). "[I]n enforcing an insurance policy, courts will depart from the literal text and interpret it in accordance with the insured's understanding, even when that understanding contradicts the insurer's intent, if the text appears overly technical or contains hidden pitfalls . . . ." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 601 (2001).

We have previously highlighted the importance of the declarations page of an insurance policy. "A personal automobile insurance policy is a bulky document, arcane and abstruse in the extreme to the uninitiated, unversed and, therefore, typical policyholder." Lehrhoff v. Aetna Cas. & Sur. Co., 271 N.J. Super. 340, 346 (App. Div. 1994). "[A] conscientious policyholder, upon receiving the policy, would likely examine the declaration page to assure himself" of the accuracy of the information thereon. Id. at 346-47. Thus, "it is the declaration page, the one page of the policy tailored to the particular insured and not merely boilerplate, which must be deemed to define coverage and the insured's expectation of coverage." Id. at 347. Reasonable expectations based on the declarations page cannot be contradicted by boilerplate policy provisions unless the page warns the insured. Ibid.

The standard of review from the court's findings in a bench trial is limited. We owe "'deference to those findings of the trial judge which are substantially influenced by [the judge's] opportunity to hear and see the witnesses and to have the "feel" of the case, which a reviewing court cannot enjoy.'" State v. Locurto, 157 N.J. 463, 471 (1999) (quoting State v. Johnson, 42 N.J. 146, 161 (1964)). Thus, we shall "'not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice[.]'" Seidman v. Clifton Sav. Bank, S.L.A., 205 N.J. 150, 169 (2011) (quoting In re Trust Created by Agreement Dated December 20, 1961, ex rel. Johnson, 194 N.J. 276, 284 (2008)).

However, "[t]he interpretation of an insurance contract is a question of law for the court to determine[.]" Adron, Inc. v. Home Ins. Co., 292 N.J. Super. 463, 473 (App. Div. 1996) (citing Weedo v. Stone-E-Brick, Inc., 155 N.J. Super. 474, 479 (App. Div. 1977), rev'd on other grounds, 81 N.J. 233 (1979)). Additionally, whether an insured's expectations are objectively reasonable is a question of law to be determined by the court. Bromfeld v. Harleysville Ins. Cos., 298 N.J. Super. 62, 79 (App. Div. 1997). Such purely legal questions are entitled to no deference. 30 River Court E. Urban Renewal Co. v. Capograsso, 383 N.J. Super. 470, 476 (App. Div. 2006).

Here, Castaneda's policy states as follows:

When the bodily injury[3] or property damage arises out of the ownership, operation, maintenance or use of an underinsured motor vehicle, insured means:

a. you;

b. resident relatives who are neither listed as a named insured on any other personal automobile policy nor a husband, wife, or partner in a civil union considered valid under New Jersey law of such a named insured; and

c. any person entitled to recover damages because of bodily injury to an insured under a. or b. above.

Castaneda's policy defines "you" as "the named insured or named insureds shown on the Declarations Page," including the spouse of the insured if that person lives with the insured. Castaneda's policy defines "resident relative" as "a person other than you, who resides primarily with the first person shown as a named insured on the Declarations page and who is . . . related to the named insured[.]" For the underinsured coverage, "[t]he bodily injury must be sustained by an insured."

Castaneda's policy defines an "eligible injured person" for PIP benefits as "the named insured or any relative of the named insured, if the named insured or relative sustains bodily injury[.]" "Named Insured means the person . . . named as the insured on the Declarations Page," and his or her spouse if they reside together. "Relative . . . means a person related to the named insured by blood, marriage, or civil union . . . who is a resident of the same household as the named insured."

Simply put, in order for Nathan to be eligible for UIM or PIP benefits, he had to be named as the insured on the declarations page, or he had to live with his mother. It is undisputed that Nathan did not live with his mother, and his name did not appear on the declarations page. Under the plain language of Castaneda's policy, Nathan was not eligible for UIM or PIP benefits. See Mem'l Props., LLC, supra, 210 N.J. at 525.

The language of Castaneda's policy is clear and unambiguous regarding eligibility for UIM and PIP benefits. Even though a car insurance manual can be difficult to navigate, the terms controlling these benefits are certainly not so confusing that the average policyholder could not determine who would be entitled to coverage. See Nunn, supra, 274 N.J. Super. at 548. The provisions at issue do not use overly technical language or contain hidden pitfalls. See Zacarias, supra, 168 N.J. at 601. And, the policy comports with the judicial and statutory mandates for these types of policies. See N.J.S.A. 39:6A-3.1(a) (stating that PIP benefits extend to named insured and family members residing with named insured); Barnett v. Prudential Prop. & Cas. Ins. Co., 304 N.J. Super. 573, 585 (App. Div. 1997) (stating that claimant must qualify as an insured to receive UIM benefits), certif. denied, 154 N.J. 610 (1998).

Moreover, it was not objectively reasonable for plaintiffs to expect coverage under Castaneda's policy. See Universal Underwriters, supra, 299 N.J. Super. at 318. The policy was purchased and paid for by Castaneda. Nathan never resided with her while she was insured under this policy. When Nathan's name was added as driver in the household in 2002, there is no evidence that the cost of Castaneda's policy increased. Castaneda never asked for Nathan to be added to her policy. The declaration page of Castaneda's policy does not list Nathan anywhere.

Additionally, the auto-renewal pages do not list Nathan as an insured, but only as a driver in the household. And the auto-renewal pages specifically state:

Your premium may be influenced by the drivers listed below and other individuals permitted to operate your vehicle. This list does not extend or expand coverage beyond that contained in this automobile policy. The drivers listed below are the drivers reported to us that own or regularly operate any vehicle in your household.

Thus, the declarations page, which controls, clearly only lists Castaneda, and the auto-renewal pages provide the requisite warning. See Lehrhoff, supra, 271 N.J. Super. at 347. While Castaneda testified that she believed Nathan was covered, her belief was not reasonable. See Botti v. CNA Ins. Co., 361 N.J. Super. 217, 225 (App. Div. 2003) (stating that "an insured is chargeable with knowledge of the contents of a policy").

We reject plaintiffs' assertion that the expired date on the declarations page changes its effectiveness. The State Farm manual specifically states that Castaneda's policy consists of the booklet, any endorsements, and "the most recently issued Declarations Page[.]" The declarations page in the record was the most recently issued, thereby making it the controlling document despite that it was issued for an earlier policy period.

We recognize that plaintiffs suffered an immense tragedy, which is undoubtedly compounded by their inability to obtain insurance coverage here. However, Nathan was simply not covered under his mother's insurance. The courts cannot now write Nathan into Castaneda's policy. See Flomerfelt, supra, 202 N.J. at 441.

Plaintiffs' remaining arguments are without merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 The Ferrers' first names will be used to avoid confusion, meaning no disrespect.

2 Apparently, Brown and Raines pled guilty to crimes connected to the accident.

3 In Castaneda's policy, "[d]efined words and phrases are printed in boldface italics."