(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for
the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please
note that, in the interests of brevity, portions of any opinion may not have been summarized).
Argued January 20, 1999 -- Decided April 21, 1999
O'HERN, J., writing for a unanimous Court.
In May 1992, twenty-one-year-old Margaret Samuel was returning from college to the home of her
aunt and uncle on Long Beach Island. The vehicle she was driving was owned and insured by her father, and
Samuel was an insured under the policy. Samuel stopped at a tavern on Long Beach Island. She apparently
overindulged in alcoholic beverages and permitted a friend or acquaintance to drive her from the tavern.
Samuel was involved in a serious one-car accident when the vehicle struck a telephone pole. When
police arrived at the scene, they found no one in the driver's seat. Samuel was in the back seat with her
seatbelt fastened and with serious and disabling injuries. She was unable to recall the name of the person
who was driving the car, even after hypnosis. No witnesses to either the accident or the possible identity of
the driver ever came forward. A manager at a local 7-Eleven convenience store said he saw someone fitting
Samuel's description with two males approximately fifteen minutes before the accident.
Due to the extent of Samuel's injuries, she sought compensation for her pain and suffering and
permanent loss of bodily function from her insurer. A question arose as to whether she would pursue
uninsured motorist benefits or liability coverage under her father's insurance policy, which had been issued
by the Market Transition Facility (MTF). Samuel filed a complaint in the Law Division seeking damages
allegedly caused by the driver's negligence. She used a fictitious John Doe designation for the defendant
because the identity of the driver was unknown. The trial court allowed substituted service of the John Doe
complaint on MTF. On an interlocutory appeal, the Appellate Division required service by publication.
MTF filed a declaratory judgment action claiming that it was not obliged to indemnify or defend the
fictitious defendant. It also asserted it was not required to provide uninsured (UM)/underinsured (UIM)
benefits because the vehicle was insured. The parties settled Samuel's PIP claim.
The trial court granted MTF's motion for summary judgment. Concerning UM/UIM coverage, the
trial court concluded that the language of the policy excluded from the definition of "uninsured vehicle" any
vehicle owned or furnished by the insured. The court also found that Samuel was precluded from recovering
in a direct claim under the liability provisions of the policy because she could not recover judgment from the
driver. It noted that the fictitious pleading rule prohibited a judgment being entered against a person
designated by a fictitious name. Rule 4:26-4.
On appeal, the Appellate Division agreed that Ms. Samuel was not entitled to UM/UIM coverage.
Samuel v. John Doe,
309 N.J. Super. 406 (1998). It held, however, that if there were a permissive operator
of the vehicle, the John Doe defendant, although unidentified, would be considered a "person" entitled to
coverage under the bodily injury provisions of the policy. To ensure that Samuel's case did not "fall through
the cracks," the majority ruled that the fictitious defendant rule should be relaxed under Rule 1:1-2. The
court stated, however, that although Samuel need not prove the driver's identity, she has the burden of
proving the existence of the driver.
One member of the Appellate Division dissented in part. He saw no need to relax Rule 4:26-4.
Instead, he would allow Samuel to file a counterclaim in the declaratory judgment action, in which she would
have to prove she was injured by the negligence of an authorized driver of the car and that reasonable efforts
were made to locate the driver. In the liability and injury action, the dissenting judge would allow the jury to
consider Samuel's comparative negligence.
MTF filed an appeal as of right.
HELD: Samuel should be covered under the comprehensive statutory scheme for automobile insurance.
The remand proceedings should be in two phases. In the first, Samuel has the burden of establishing that
there was a driver other than herself operating the vehicle with her permission. If Samuel meets that
burden, there should be a second proceeding in respect of injury and damages.
1. MTF's appeal is limited to the procedural issues raised by the dissent. There should be a way out of the
procedural quandary to determine if there was in fact an unidentified permissive driver whose negligence
caused Samuel's injuries. Although there are problems for MTF in defending an unknown driver, they are
manageable. To protect the interests of the insurance company in these unusual circumstances, however,
there should be a two-step proceeding. (pp. 8-11)
2. In the first proceeding, Samuel must establish that there was another person operating the automobile
with her permission at the time of the accident. Rigorous discovery should be conducted to identify that
person. If Samuel can establish that an unidentified person operated the vehicle, then she should be
permitted to proceed against MTF as the real party in interest. Technically, a judgment is not required to
make such a claim. Once it is established that there was a "covered person" who was operating the car, the
insurer is contractually required to provide indemnity for that person's fault. MTF is bound to negotiate in
good faith with Samuel. (pp. 11-12)
3. If a settlement cannot be reached, Samuel may sue MTF directly. A liability insurance policy creates
rights not only for the policy holder but also for those to whom reparations will be made. The pleadings in
the John Doe case may be amended to name MTF as the real party in interest. If MTF would prefer to
avoid prejudicial reference to the existence of insurance, it can consent to the John Doe pleadings remaining
in their present form. (pp. 12-14)
The judgment of the Appellate Division is MODIFIED and AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, GARIBALDI, STEIN and
COLEMAN join in JUSTICE O'HERN's opinion.
SUPREME COURT OF NEW JERSEY
A-
216 September Term 1997
MARGARET SAMUEL,
Plaintiff-Respondent,
v.
JOHN DOE, said name John Doe
being fictitious,
Defendant.
MARKET TRANSITION FACILITY OF
NEW JERSEY,
Plaintiff-Appellant,
v.
MARGARET SAMUEL,
Defendant-Respondent,
and
JOHN DOE, said name being
fictitious,
Defendant.
Argued January 20, 1999 -- Decided April 21, 1999
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
309 N.J. Super. 406 (1998).
Joseph F. Trinity argued the cause for
appellant (Gebhardt & Kiefer, attorneys;
Robert G. Engelhart, on the brief).
Kelley L. Johnson argued the cause for
respondent (Pellettieri, Rabstein and Altman,
attorneys; Edward Slaughter, Jr., of
counsel).
The opinion of the Court was delivered by
O'HERN, J.
This appeal presents a conundrum -- a riddle without an
apparent solution -- in part because of the case's procedural
posture. In May 1992, twenty-one-year-old plaintiff Margaret
Samuel was returning to the home of her aunt and uncle on Long
Beach Island from her college in West Virginia. After the long
drive home from West Virginia, she stopped at the Ketch, a tavern
on the south end of Long Beach Island. She there met old friends
and made new acquaintances. Samuel appears to have overindulged
and in the enjoyment of the homecoming to have made an ill-advised choice of a designated driver. All that is known for
certain thereafter is that she was involved in a serious one-car
automobile accident. When police arrived at the scene of the
accident, they found that her car had run into a telephone pole.
There was no one in the driver's seat. Samuel was in the back
seat with her seatbelt fastened. She was bleeding and appeared
dazed. Her injuries were serious and disabling. Because of her
condition, Samuel could not later recall the name of her
companion who was driving the car, even after hypnosis. The
Ketch tavern appears to have been the antithesis of Cheers, the
tavern of legend. The Ketch is a place where no one knows your
name. No witnesses to either the accident or of the identify of
the driver have ever come forward. Although no one saw Samuel
leave the Ketch, a manager at a local 7-Eleven convenience store
said that he saw someone fitting Samuel's description with two
males approximately fifteen minutes before the accident.
The automobile insurance policy on Samuel's car provided
personal injury protection benefits (PIP) to cover Samuel's
medical expenses and income continuation benefits; liability
coverage for her bodily injuries; and uninsured
motorist/underinsured motorist coverage. Due to the extent of
her injuries, she sought compensation for her pain and suffering
and permanent loss of bodily function.
Meanwhile, MTF filed a declaratory judgment action that it was not obliged to indemnify or defend the fictitious defendant; cover Samuel under the policy's liability coverage; or provide Samuel uninsured (UM)/underinsured (UIM) benefits under the policy. According to MTF, Samuel was not entitled to UM coverage because the vehicle was insured. MTF also asserted that it could not be required to defend or indemnify plaintiff under the liability policy unless the driver were identified. The liability and UM issues were consolidated, and the John Doe personal injury action was stayed until the declaratory judgment action was resolved. The parties settled the PIP claim.
The trial court granted MTF's motion for summary judgment, ruling that Margaret Samuel was not covered under either the UM/UIM or liability provisions of the policy. Concerning liability and UM/UIM coverage, the trial court concluded that
[Samuel] has no direct claim against MTF under the liability provisions of its policy issued to her father. He is not a party to this action. He has not been shown to be legally responsible for her motor vehicle accident in any way and its resulting damage . . . to her. The plaintiff has also not shown entitlement to UM and UIM endorsement coverage, since the language of the policy which is standard statutory text excludes from its definition of uninsured motor vehicles any vehicle owned by or furnished for the regular use of you -- that is the insured -- or any family member. Here, the motor vehicle in question was owned by the insured, William Samuel. It was provided for the regular use of his daughter. It is, therefore, excluded from the definition of uninsured motor vehicle.
The court also found that Samuel was precluded from recovering
under the bodily injury provisions of the liability policy
because she had not first recovered judgment from the driver, and
that such recovery would be impossible under the fictitious
pleading rule if the driver remained unidentifiable.
On appeal, the Appellate Division agreed with the trial
court that Ms. Samuel was not entitled to coverage under the UM
provisions of the policy.See footnote 1 Although the unknown operator may be
thought of as an uninsured phantom or hit-and-run operator, he
was not operating an unknown vehicle. The vehicle was insured.
The Appellate Division held, however, that if there were a
permissive operator of Mr. Samuel's vehicle, the John Doe
defendant, although unidentified, would be considered a "person"
entitled to coverage under the bodily injury provisions of the
father's automobile insurance policy.See footnote 2 The issue that divided
the panel was a procedural question -- how a judgment could be
entered against a fictitious defendant.
Although Rule 4:26-4 allows actions to be brought against
fictitious defendants, it states that, “[n]o final judgment shall
be entered against a person designated by a fictitious name.”
Under the language of the rule, Samuel could not proceed to
judgment against Doe if his name remained unknown. To ensure
that Samuel's case did not “fall through the cracks,” thereby
leaving her without coverage,
309 N.J. Super. 406, 410 (1998),
the majority ruled that the fictitious defendant rule should be
relaxed because justice so required under Rule 1:1-2. The court
stated, however, that although plaintiff “does not have to prove
[the driver's] identity, she still has the burden of proving the
existence of the driver. . . .” Id. at 411.
One member of the Appellate Division dissented in part. He
saw no need to relax Rule 4:26-4. Id. at 412 (Shebell, J.,
dissenting). He would allow plaintiff to file a counterclaim in
the declaratory judgment action. Id. at 413. He left the order
of the procedures to the discretion of the trial court. Id. at
414. In the declaratory judgment action, plaintiff would be
required to demonstrate that she was injured due to the
negligence of an authorized driver of the car, and that
reasonable efforts were made to locate the driver. Ibid. In the
liability and injury action, he would have allowed a jury to
consider plaintiff's comparative negligence. Ibid. MTF appealed
as of right under Rule 2:2-1(a)(2).
Taking the case as we find it -- a case that is predicated upon there being coverage for an unidentified driver under the bodily injury provisions of the policy -- the question is how to determine if there was in fact such an unidentified permissive driver of the car and whether that person's negligence caused plaintiff's injuries. There should be a way out of the procedural muddle. The New Jersey Legislature has created a “comprehensive statutory system, which is designed to have 'financially responsible persons available to meet the claims of persons wrongfully injured in automobile accidents.'” Ross v. Transport of New Jersey, 114 N.J. 132, 135 (1989) (quoting Selected Risks Ins. Co. v. Zullo, 48 N.J. 362, 371 (1966)). We have described this comprehensive statutory scheme as providing an “adequate safety net for individuals hurt in such cases. . . .” Id. at 146. Putting aside for the moment the consideration of Samuel's own negligence, we are certain that the Legislature would intend that Samuel land somewhere in that safety net.
There are basically only two possible factual scenarios concerning the existence of an unidentified driver. Either the plaintiff was herself the driver of the car, in which event she would not be entitled to coverage, or she gave permission to a companion at the Ketch tavern to drive her car.See footnote 3
The Appellate Division concluded that if Samuel establishes that she was injured by the negligence of another driver who had her permission to use the car, “the carrier is in no different position than if it knew the driver's name.” 309 N.J. Super. at 412. That is a bit of an overstatement. It is much easier to defend a case when you have had interviews and taken statements from your insured. Still, it is not unusual for an insurance company to have to defend a claim without an insured. Most jurisdictions provide for service of process upon an insurance company when an insured motorist cannot be located. Couch on Ins. § 124:19 (3d ed. 1998); see, e.g., Dobkin v. Chapman, 236 N.E.2d 451 (N.Y. Ct. App. 1968) (holding that service under those circumstances comports with due process); see also Perry v. Brown, 272 N.J. Super. 572, 577 (Law Div. 1993) (stating that “[w]here it is shown that defendant absconded after the accident,” insurance carrier may be served) (citations omitted). We thus agree that although there are problems for MTF in defending the case, the problems are manageable. However, because of the important interests of the insurance company implicated by such unusual circumstances as are present, we believe that there should be a two-step proceeding.
The first proceeding will determine whether the plaintiff can establish that there was another person who was operating the automobile with her permission at the time of the accident. Every effort should be made to identify that person, including rigorous discovery from persons who may have been present at the tavern or the scene of the accident on that evening. If plaintiff can establish that an authorized person was operating the vehicle but cannot successfully identify the person, then plaintiff should be permitted to proceed with her claim for liability and damages against the insurance company as the real party in interest. Technically, a judgment is not required to make such a claim. Once it is established that there was a “covered person” who was operating the car, the insurance company is contractually required to provide indemnity for that person's fault. Law and regulatory policy bind an insurance company to negotiate in good faith with Samuel. N.J.S.A. 17:29B-4(9)(f); N.J.A.C. 11:3-10.3. “A decision not to settle must be a thoroughly honest, intelligent and objective one.” Bowers v. Camden Fire Ins. Ass'n, 51 N.J. 62, 71 (1968).
If a settlement cannot be reached, Samuel may sue MTF directly. A liability insurance policy creates rights not only for the policy holder but as well for those to whom reparations will be made. Policy holders sometimes assign their indemnification rights to the injured parties when insurance companies do not negotiate in good faith. Wang v. Allstate Ins. Co., 125 N.J. 2 (1991); Battista v. Western House Ins. Co., 227 N.J. Super. 135 (Law Div. 1988), aff'd in part, rev'd in part, 240 N.J. Super. 330 (App. Div.), cert. denied, 127 N.J. 553 (1991). If there is coverage, the pleadings in the John Doe case may be amended to name MTF as the real party in interest.See footnote 4 In that direct action, plaintiff's comparative negligence can be considered. See Lee v. Kiku Restaurant, 127 N.J. 170 (1992). If plaintiff is more than fifty percent negligent, she cannot recover.
If it is preferable to avoid prejudicial reference to the existence of insurance, then with MTF's consent, the John Doe pleadings may remain in the present form, see Krohn v. New Jersey Full Ins. Underwriters Ass'n, 316 N.J. Super. 477, 481 (App. Div. 1998) (explaining that reference to existence of insurance may unfairly influence jury verdict), or the declaratory judgment action may be the vehicle for determining liability and damages.
As modified, the judgment of the Appellate Division is affirmed.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, POLLOCK, GARIBALDI, STEIN, and COLEMAN join in JUSTICE O'HERN's opinion.
NO. A-216 SEPTEMBER TERM 1997
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
MARGARET SAMUEL,
Plaintiff-Respondent,
v.
JOHN DOE, etc.,
Defendant.
MARKET TRANSITION FACILITY OF
NEW JERSEY,
Plaintiff-Appellant,
v.
MARGARET SAMUEL,
Defendant-Respondent,
and
JOHN DOE, etc.,
Defendant.
DECIDED April 21, 1999
Chief Justice Poritz PRESIDING
OPINION BY Justice O'Hern
CONCURRING OPINION BY
DISSENTING OPINION BY
Footnote: 1UM coverage is optional first-party coverage insuring the
policy holder and others against the possibility of injury or
property damage caused by the negligent operation of an uninsured
motor vehicle. Pursuant to N.J.S.A. 17:28-1.1b, insurance
companies must offer such coverage.
N.J.S.A. 17:28-1.1e(2) defines uninsured vehicle as:
(a) a motor vehicle with respect to the ownership,
operation, maintenance, or use of which there is no
bodily injury liability insurance . . . ;
(b) a motor vehicle with respect to the ownership,
operation, maintenance, or use of which there is bodily
injury liability insurance in existence but the
liability insurer denies coverage or is unable to make
payment with respect to the legal liability of its
insured . . .;
(c) a hit and run motor vehicle as described in section
18 . . . .
“Uninsured motor vehicle” shall not include . . . a motor
vehicle owned by or furnished for the regular use of the named
insured or any resident of the same household . . . . (emphasis
added).
Footnote: 2The liability portion provides coverage for “'bodily
injury' or 'property damage' for which any insured becomes
legally responsible because of an auto accident,” and defines an
“insured” as “[a]ny person using your 'covered auto.'” It
excludes “[a]ny person using a vehicle without a reasonable
belief that person is entitled to do so.”
Similarly, the UM portion states that MTF will “pay damages
which an 'insured' is legally entitled to recover form the owner
or operator of an 'uninsured motor vehicle' because of 'bodily
injury': . . . .” The UM portion also defines “insured” as
“[y]ou or any 'family member [or] . . . [a]ny other person
'occupying' your covered auto. . . .” It excludes from coverage
“any vehicle . . . [o]wned by or furnished or available for the
regular use of you or any 'family member' [in addition to]
'bodily injury' sustained by any person: . . . [w]hile
'occupying,' or when struck by any motor vehicle owned by you or
any 'family member' which is not insured for this coverage under
this policy. . .”
Footnote: 3Of course, there is another possibility, that plaintiff
actually knows the name of the driver. If she is concealing the
name to shield that person from liability, civil or criminal, she
will be barred from any recovery and will be herself subject to
sanctions. Resolution of that issue is better suited for the
trial court.
Footnote: 4We note that in the analogous situation of a hit-and-run
driver operating an insured car, suit would be brought not
against a “John Doe,” but directly against the Director of the
Division of Motor Vehicles as custodian of the Uninsured Motorist
Fund. N.J.S.A. 39:6-78; see also High v. Southwestern Ins. Co.,
520 P.2d 662, 666 (Okla. 1974) (holding where John Doe hit-and-run driver was tortfeasor, that injured party was permitted to
sue defendant under UM clause, even though damages and owner and
driver of damaging vehicle were not identifiable).