JOSEPH J. TOLOTTI v. UNITED SERVICES AUTOMOBILE ASSOCIATION

NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
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                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-4102-18T4

JOSEPH J. TOLOTTI,

          Plaintiff-Respondent,

v.

UNITED SERVICES
AUTOMOBILE ASSOCIATION,
an insurance agency authorized
to do business in the state of
New Jersey,

     Defendant-Appellant.
______________________________

                   Argued February 6, 2020 – Decided February 21, 2020

                   Before Judges Alvarez and Nugent.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Cumberland County, Docket No. L-0607-17.

                   Mario John Delano argued the cause for appellant
                   (Campbell, Foley, Delano & Adams, LLC, attorneys;
                   Mario J. Delano, on the briefs).

                   Vincent J. Pancari argued the cause for respondent
                   (Capizola, Pancari, Lapham & Fralinger, PA, attorneys;
                   Vincent J. Pancari, on the brief).
PER CURIAM

      This is a declaratory judgment action concerning insurance coverage.

Defendant, United Services Automobile Association (USAA), insured plaintiff

Joseph Tolotti's pick-up truck under a New Jersey Standard Auto Policy (the

Policy). Tolotti also owned a golf cart, which was not identified on the Policy

as a covered vehicle. When a third party alleged he suffered injuries proximately

caused by Tolotti's negligent operation of the golf cart, Tolotti sought a defense

and indemnification from USAA. USAA denied coverage. Tolotti filed this

declaratory judgment action. The trial court found in his favor, declared the

USAA Standard Auto Policy provided coverage, and awarded Tolotti counsel

fees and costs. USAA appeals. Because the Policy's plain language excludes

coverage, we reverse.

      The facts are undisputed. USAA insured Tolotti's pick-up truck under the

Policy, which was in effect on March 17, 2016—the day, according to the

complaint later filed against Tolotti, his negligent operation of the golf cart

caused the personal injury plaintiff to be thrown from the golf cart and injured.

The golf cart is not identified as a covered vehicle in the USAA policy, nor has

Tolotti ever asked USAA to add it to the policy as a covered vehicle.




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      The Policy includes a "Declarations Page" that identifies Tolotti as the

named insured and his pick-up as the covered vehicle. Another page includes

the "Agreement" and "Definitions." The definition of "miscellaneous vehicle"

includes "a motorcycle, moped or similar type vehicle; motor home; golf cart,

snowmobile; all-terrain vehicle; or dune buggy."

      Following the definitions, the policy is divided into "Parts," which provide

coverages, such as Personal Injury Protection Coverage and Medical Payments

Coverage. The part relevant to this dispute is "Part A – Liability Coverage."

      The "Liability Coverage" part defines a "covered person." Next is the

"Insuring Agreement," which declares:

            We will pay compensatory damages for [Bodily Injury]
            or [Property Damage] for which any covered person
            becomes legally liable because of an auto accident. We
            will settle or defend, as we consider appropriate, any
            claim or suit asking for these damages. Our duty to
            settle or defend ends when our limit of liability for these
            coverages has been paid or tendered.

            We have no duty to defend any suit or settle any claim
            for [Bodily Injury] or [Property Damage] not covered
            under this policy.

      Following other provisions not relevant to this appeal, the Policy's

Liability Part contains "Exclusions." The parties' central dispute turns on the




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interpretation of the exclusions in subsections "B(1)" and "B(2)."         These

subsections state:

            B.   We do not provide Liability Coverage for the
            ownership, maintenance, or use of:
                 1.    Any vehicle, other than your covered auto,
                       unless that vehicles is:

                          ....

                          c.      A miscellaneous vehicle having at
                                  least four wheels[.]

                          ....

                     2.   Any vehicle, other than your covered auto,
                          that is owned by you, or furnished or
                          available for your regular use.

      In his declaratory judgment action, Tolotti argued the juxtaposition of

exclusions B(1) and B(2), the first providing coverage under the exception to

the exclusion, and the second excluding coverage, creates an ambiguity. This

ambiguity, he argued, is required by settled and longstanding legal principles

concerning interpretation of insurance contracts to be interpreted against USAA

and in favor of coverage.

      USAA disagreed.          It argued that exclusion B(1), its exception, and

exclusion B(2) are all clear. USAA disagreed that an ambiguity could arise from

two clauses, each clear. To interpret two clear clauses in that way, it continued,


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would violate a fundamental underpinning of insurance and a prevailing

principle of insurance law: insurance companies do not insure, and insureds are

not entitled to coverage for, a risk for which no premium has been paid.

       The trial court denied USAA's motions for summary judgment and

reconsideration. When the case came on for trial, the court determined that its

previous orders were dispositive of the legal issues in the lawsuit, there being

no genuinely disputed material facts. The court entered an order requiring

USAA to defend and indemnify Tolotti.

       Having prevailed on his first-party coverage claim against USAA, Tolotti

applied to the court for fees and costs, which the court granted. This appeal

ensued. The parties present essentially the same arguments they made in the

trial court.

       Our review of the trial court's orders is de novo because the interpretation

of an insurance policy presents a question of law. Selective Ins. Co. of Am. v.

Hudson E. Pain Mgmt. Osteopathic Med. & Physical Therapy,  210 N.J. 597, 605

(2012). "A trial court's interpretation of the law and the legal consequences that

flow from established facts are not entitled to any special deference."

Manalapan Realty, L.P. v. Twp. Comm.,  140 N.J. 366, 378 (1995).




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                                         5
      We begin with some basic tenets.           "The fundamental principle of

insurance law is to fulfill the objectively reasonable expectations of the parties."

Werner Indus., Inc. v. First State Ins. Co.,  112 N.J. 30, 35 (1988). Generally,

when interpreting an insurance policy, we give its words their plain, ordinary

meaning. Kimber Petroleum Corp. v. Travelers Indem. Co.,  298 N.J. Super.
 286, 300 (App. Div. 1997). Courts should not "engage in a strained construction

to support the imposition of liability." Progressive Cas. Ins. Co. v. Hurley,  166 N.J. 260, 273 (2001).

      If a policy's language is clear, the policy should be enforced as written to

fulfill the reasonable expectations of the parties.     Passaic Valley Sewerage

Comm'rs v. St. Paul Fire & Marine Ins. Co.,  206 N.J. 596, 608 (2011). Courts

must "'avoid writing a better insurance policy than the one purchased.'" Villa v.

Short,  195 N.J. 15, 23 (2008) (quoting President v. Jenkins,  180 N.J. 550, 562

(2004)).

      On the other hand, if a policy's terms are ambiguous "they are construed

against the insurer and in favor of the insured, in order to give effect to the

insured's reasonable expectations." Flomerfelt v. Cardiello,  202 N.J. 432, 441

(2010) (citing Doto v. Russo,  140 N.J. 544, 556 (1995)). Generally, if an

insurance policy's terms are susceptible to at least two reasonable alternative


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interpretations, an ambiguity exists. Nester v. O'Donnell,  301 N.J. Super. 198,

210 (App. Div. 1997).

      Here, neither party contends that either exclusion B(1) or exclusion B(2)

is ambiguous. Rather, plaintiff contends the juxtaposition of the clauses creates

the ambiguity. Plaintiff argues: "Reading the plain language of each results in

one wherein coverage is afforded and the other wherein coverage is not. . . .

How is an insured supposed to figure out coverage when he or she reads the

provisions indicated?" He adds: "More so, the first provision sets forth a

scenario whereby coverage is afforded. The second one takes it away."

      Plaintiff's argument overlooks two settled principles of insurance law.

First, "only genuine ambiguities engage to the so-called 'doctrine of

ambiguity[.]'" Weedo v. Stone-E-Brick, Inc.,  81 N.J. 233, 246 (1979) (quoting

DiOrio v. N.J. Mfrs. Ins. Co.,  79 N.J. 257, 269 (1979)). As the Supreme Court

noted in Weedo, "[w]e conceive a genuine ambiguity to arise where the phrasing

of the policy is so confusing that the average policyholder cannot make out the

boundaries of coverage.     In that instance, application of the test of the

objectively reasonable expectation of the insured often will result in benefits

never intended from the insurer's point of view."  81 N.J. at 247. Here, no such

ambiguity exists.


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      Next, the argument that an exclusion and its exception, read in conjunction

with another exclusion, creates a reasonable expectation of coverage, overlooks

another basic principle:

            [E]ach exclusion is meant to be read with the insuring
            agreement, independently of every other exclusion.
            The exclusions should be read seriatim, not
            cumulatively. If any one exclusion applies there should
            be no coverage, regardless of inferences that might be
            argued on the basis of exceptions or qualifications
            contained in other exclusions. There is no instance in
            which an exclusion can properly be regarded as
            inconsistent with another exclusion, since they bear no
            relationship with one another.

            [Id. at 248 (citations omitted).]

      Exclusion B(2) is unambiguous. Read independently of every other

exclusion, ibid., it excludes coverage for owned vehicles, other than a covered

auto identified on the Policy's declaration page; that is, it excludes coverage for

the golf cart. The trial court's judgment and order awarding fees and costs are

thus reversed.

        Reversed.




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