(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).
JOSE R. MUNOZ V. NEW JERSEY AUTOMOBILE FULL INSURANCE UNDERWRITING
ASSOCIATION, ET AL. (A-115/116/117-95)
Argued February 27, 1996 -- Decided July 15, 1996
COLEMAN, J., writing for a majority of the Court.
The Munoz, Napolitano and Zimmerman matters were consolidated for purposes of appeal. The
issue common to all three cases is whether a notice of cancellation of automobile insurance coverage due to
the policyholder's failure to pay premiums must post-date the premium due date, thereby allowing the
policyholder a fifteen-day grace period before coverage expires.
Jose Munoz purchased a one-year policy from New Jersey Automobile Full Insurance Underwriting
Association (JUA) effective from May 18, 1990 to May 19, 1991. The total annual premium was $1,234.
Munoz paid $400 when he purchased the policy, leaving a balance of $834. He made no further payments.
On September 14, 1990, Munoz was mailed a cancellation notice informing him that his policy would expire
on October 3, 1990 if payment was not received by that date. No payment was received. On October 17,
1990, Munoz was involved in an automobile accident resulting in personal injuries and damage to his vehicle.
Munoz made a claim for insurance coverage, which was denied on the basis that his policy had been
cancelled.
James Zimmerman purchased a one-year policy from the JUA effective from September 24, 1990 to
September 24, 1991. The annual premium was $1,466, payable in installments. Zimmerman made the initial
payment of $445. According to the JUA manual of Rules and Rates, the next premium was due sixty days
from the effective date of the policy, November 23, 1990. Zimmerman contends that he was not aware of
that due date. The record reveals no notice concerning payment of an installment until December 5, 1990,
when Zimmerman was mailed a notice of cancellation that stated that the policy would expire on December
22, 1990, if payment was not received by that date. Zimmerman claims that he did not receive that notice.
He made no further payments. On March 26, 1991, Zimmerman was involved in an automobile accident and
sought personal injury benefits. The JUA denied the claim on the basis that the policy had been cancelled.
Patricia Napolitano was insured through Allstate Insurance Company (Allstate). In September 1991,
she received a notice from Allstate instructing her to renew her existing policy, which was due to expire
September 23, 1991. Napolitano promptly renewed and requested a change in the policy, which increased
her premium by $456.10. Payment of that premium was to be made in four equal installments over the six-month period of the policy. Two weeks after the effective date of the policy, Napolitano received two bills in
close succession; the first for approximately $230, and the second for $116.53. Napolitano was confused over
whether the $230 bill was an error or merely advisory. She paid only the $116.53 bill. She received a notice
of cancellation that instructed her to disregard the notice if payment had already been made. Believing that
she had made the appropriate premium payment, Napolitano disregarded the notice and made no additional
payments. On December 21, 1991, Napolitano was injured in an automobile accident. Her claim for
personal injury benefits was denied by Allstate on the basis that the policy had been cancelled.
Napolitano, Zimmerman and Munoz instituted proceedings in the Law Division to obtain coverage under their cancelled policies. In Munoz, the trial court concluded that the applicable statutory provisions, read together, require that the fifteen-day notice of cancellation for failure to pay premiums be issued after the date of default in payment in order to provide a window of opportunity for the insured to pay the
amount past due. Therefore, the court ordered reinstatement of the policy. The Appellate Division affirmed
the decision of the trial court.
In Zimmerman, the trial court rejected Zimmerman's claim that he had not received the December
2, 1990 cancellation notice based on its conclusion that the JUA had sufficiently demonstrated proper mailing
of that notice. On appeal, Zimmerman raised for the first time the issue of premature notice as plain error.
The Appellate Division, relying on Munoz and Christian v. Ormsby, reversed the decision of the trial court,
ruling that there was coverage notwithstanding proper mailing.
In Napolitano, the insured argued that cancellation was improper because the notice was
prematurely sent and because she reasonably relied on the language of the notice instructing her to disregard
same if payment had been made. The trial court directed a verdict in favor of Allstate, concluding that it
was not bound by Munoz and Christian. The trial court found it unlikely that the Legislature intended to
extend coverage beyond an insured's default in payment simply because the required cancellation notice was
mailed early. The Appellate Division reversed on the premature notice issue, citing the Munoz and Christian
decisions.
The Supreme Court granted certification to address the issue of premature notice of cancellation.
HELD: The plain language of the applicable statutory and regulatory provisions permits insurers to send
requisite notice of cancellation of insurance in advance of the premium due date.
1. Where a statute is clear and unambiguous, a court may not impose an interpretation other than the
statute's ordinary meaning. The relevant provisions concerning cancellation for non-payment of premiums do
not by their terms require that notice post-date the payment due date. In order for a notice of cancellation
for non-payment of premiums to be effective, it need only state the reasons for the cancellation and be
mailed or delivered at least fifteen days prior to the date of cancellation. Nothing in the statutes can be read
as precluding insurers from mailing notice in advance of the due date. Moreover, the applicable
administrative regulations addressing cancellation for non-payment do not require that notice post-date the
premium payment due date. (pp. 9-11)
2. The plain language of the statute and regulations requires only that notice of cancellation for non-payment of premium be mailed or delivered at least fifteen days, and not more than thirty days, in advance
of the effective date of cancellation, which must be no more than ten days prior to the last day for which
coverage has been paid by the prior premium. The notice may be mailed prior to default in payment, as
long as those conditions are met. (pp. 11-12)
3. When the plain meaning of a statute is clear and unambiguous, that meaning governs unless there is
specific legislative intent to the contrary. The language of the relevant statute conveys no other intent than
to ensure that each policyholder receive fifteen days of notice before his or her policy is cancelled and to
require the insurance company to identify the reason for cancellation. Nothing in the legislative history
suggests that the Legislature intended to provide a fifteen-day grace period. (pp. 12-16)
4. The problem of free insurance where a notice post-dates default can be minimized by proper scheduling
on the part of insurance companies. At oral argument, the Court was informed that the insurance industry is
taking corrective action to adopt procedures such as those urged here. Nonetheless, it is recommended that
the Commissioner of Insurance consider adopting regulations that would require all insurance companies to
do so. (pp. 16-18)
5. A notice of cancellation that does not comport with the appropriate timing and mailing requirements is deemed ineffective. Thus, Zimmerman may have an alternative basis for seeking reinstatement in light of his
assertion that the JUA terminated coverage more than ten days before the carry date in contravention of
applicable regulation. A remand is required for a determination of that issue. (pp. 18-20)
Judgment of the Appellate Division is REVERSED in all three cases. The Zimmerman case is
REMANDED to the Law Division for further proceedings in accordance with this opinion.
JUSTICE STEIN, dissenting, is of the view that no inquiry into the legislative intent is necessary
because the statute is clear on its face. The Court's reading of the statute, in addition to contradicting its
plain meaning, thwarts both the public policy in favor of preserving coverage and the unmistakable legislative
intent in enacting the statute.
JUSTICES HANDLER, POLLOCK, O'HERN and GARIBALDI join in JUSTICE COLEMAN's
opinion. JUSTICE STEIN filed a separate dissenting opinion. CHIEF JUSTICE WILENTZ did not
participate.
SUPREME COURT OF NEW JERSEY
A-115/116/
117 September Term 1995
JOSE R. MUNOZ,
Plaintiff-Respondent,
v. (A-115)
NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION,
Defendant-Appellant,
and
STANLEY AGENCY, INC., JOHN QUINN
and JOHN DOE, jointly severally and
in the alternative,
Defendants.
JAMES ZIMMERMAN,
Plaintiff-Respondent,
v. (A-116)
THE NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION
(N.J.A.F.I.U.A.),
Defendant-Appellant,
and
JOHN DOES 1-10 (fictitious names),
Defendants.
PATRICIA NAPOLITANO,
Plaintiff-Respondent,
v. (A-117)
ALLSTATE INSURANCE COMPANY,
Defendant-Appellant.
Argued February 27, 1996 -- Decided July 15, 1996
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
284 N.J. Super. 1 (1995) (Munoz v. New
Jersey Automobile Full Insurance Underwriting
Association).
On certification to the Superior Court,
Appellate Division. (Zimmerman v. The New
Jersey Automobile Full Insurance Underwriting
Association and Napolitano v. Allstate
Insurance Company).
Dennis F. Carey, III, argued the cause for
appellant New Jersey Automobile Full
Insurance Underwriting Association in Munoz
v. New Jersey Automobile Full Insurance
Underwriting Association (Dwyer, Connell &
Lisbona, attorneys).
Francis X. Ryan argued the cause for
appellants New Jersey Automobile Full
Insurance Underwriting Association,
(N.J.A.F.I.U.A.) and Allstate Insurance
Company (Green, Lundgren & Ryan, attorneys;
Mr. Ryan and Laurence T. Bennett, on the
briefs).
Lawrence A. Leven argued the cause for
respondent Jose R. Munoz (Leven & Rios,
attorneys).
Bruce D. Zeidman argued the cause for
respondent James Zimmerman (Cofsky & Zeidman,
attorneys).
James M. Nardelli argued the cause for
respondent Patricia Napolitano (Parsons
Cappiello & Nardelli, attorneys).
Bruce I. Goldstein submitted a brief on
behalf of amicus curiae, National Association
of Independent Insurers in Munoz v. New
Jersey Automobile Full Insurance Underwriting
Association and Napolitano v. Allstate
Insurance Company (Saiber Schlesinger Satz &
Goldstein, attorneys; Michael J. Geraghty, on
the brief).
The opinion of the Court was delivered by
COLEMAN, J.
The question common to these three appeals is whether a
notice of cancellation of automobile insurance coverage due to
the policyholder's failure to pay premiums must post-date the
premium due date, thereby allowing the policyholder a fifteen-day
grace period before coverage expires. Plaintiffs failed to make
payment and were consequently denied coverage by their respective
carriers for accidents occurring after the putative cancellation
dates.
The trial court found there was coverage for the accidents
in two of the three cases. The Appellate Division held that all
three plaintiffs were entitled to coverage under their policies.
It reasoned that a notice of cancellation for failure to pay
premiums is premature and hence invalid when it is issued before
the point in time at which the payments become delinquent.
We granted certification,
142 N.J. 573 (1995), and now
reverse. We hold that the plain language of the applicable
statute and regulations do not require that notice of
cancellation post-date the default in payment.
Plaintiff, Jose Munoz, purchased a one-year policy from defendant New Jersey Automobile Full Insurance Underwriting Association (JUA) effective from May 18, 1990, to May 19, 1991. The total annual premium was $1,234. Munoz paid $400 at the inception of the policy, leaving a balance of $834. He made no further payments. On September 14, 1990, Computer Sciences
Corporation, the policy servicer, mailed Munoz a cancellation
notice informing him that his policy would expire on October 3,
1990, if payment was not received by that date. No payment was
received. On October 17, 1990, Munoz was involved in an
automobile collision resulting in personal injuries and damage to
his vehicle. Munoz made a claim for coverage, which was denied
on grounds that his policy had been canceled.
Plaintiff, James Zimmerman, purchased a one-year policy from
the JUA effective from September 24, 1990, to September 24, 1991.
The annual premium was $1,466, payable in installments.
Zimmerman made the initial payment of $445. According to Rule
16(a) of the JUA manual of Rules and Rates, the next premium was
due sixty days from the effective date of the policy, November
23, 1990. Zimmerman contends that he was unaware of that due
date. The record reveals no notice regarding payment of an
installment until December 5, 1990, when Electronic Data Systems
Corporation, the policy servicer, mailed a notice of cancellation
stating that the policy would expire on December 22, 1990, if
payment was not received by that date. The perforated invoice
portion of the notice showed an "Invoice Date" of December 2,
1990, and a "Due Date" of December 22, 1990. Zimmerman claims he
did not receive that notice; he made no further payment. On
March 26, 1991, Zimmerman was involved in an automobile accident
and sought personal injury benefits. Defendant JUA denied the
claim, stating that the policy had been canceled.
The facts concerning the third plaintiff, Patricia
Napolitano, are more complicated. Napolitano was insured through
defendant Allstate Insurance Company (Allstate). In September
1991, she received a notice from Allstate instructing her to
renew her existing policy, which was due to expire September 23,
1991. Napolitano promptly renewed and requested a change in the
policy that increased her premium. The adjusted premium for the
new policy totalled $456.10 for coverage running from September
23, 1991, to March 23, 1992. Payment was to be made in four
equal installments over that six-month period.
According to Napolitano, two weeks after the effective date
of the policy she received two bills in close succession, the
first one for approximately $230 and the second in the amount of
$116.53. Because the combined total of the bills constituted
nearly the entire premium for the six months, Napolitano assumed
the $230 bill was either in error or merely advisory and
therefore paid only the $116.53 bill. That check was dated
October 15, 1991.
According to Allstate, it mailed Napolitano a renewal bill
on September 24, 1991, in the amount of $116.53. That amount
reflected the next six-month premium divided by four, $114.02,
plus a $2.50 installment payment plan fee. On October 3, 1991,
not having received payment, Allstate sent a cancellation notice
to Napolitano stating that her policy would be canceled October
22, 1991, if the $116.53 payment was not received by that date.
On October 7, 1991, Allstate mailed two bills: The first was a
bill for $230.55, reflecting both the first $116.53 payment,
which had not yet been received, and the next premium payment of
$114.02. The second bill was a reprint of the outstanding
September 24 bill. On October 20, 1991, Allstate received
Napolitano's October 15 payment of $116.53. On October 30, 1991,
Allstate mailed a notice of cancellation indicating that
Napolitano's policy would expire as of November 18, 1991, if
payment of $116.52 was not made by that time. That amount
reflected the $114.02 outstanding from the $230.55 invoice, after
subtracting the $116.53 payment received on October 20, plus a
second $2.50 installment payment fee. The notice instructed the
insured to disregard the notice if payment had already been made,
which Napolitano did, believing that her October 15 payment
satisfied the outstanding amount. Napolitano never contacted
Allstate or her insurance agent with respect to the notices.
Copies of the bills were not produced at trial, and the
parties are unable to provide the due dates of the premium
payments. A representative of Allstate indicated, however, that
the payments were probably due twenty-eight days from the date of
the bills. On December 21, 1991, Napolitano was injured in an
automobile accident and her subsequent claim for personal injury
benefits was denied by Allstate on grounds that the policy had
been canceled.
All three plaintiffs instituted proceedings in the Law
Division to obtain coverage under their canceled policies. In
the Munoz case, the trial court concluded, based on Christian v.
Ormsby,
267 N.J. Super. 237, 266-67 (Law Div. 1993), that the
applicable statutory provisions, read together, require that the
fifteen-day notice of cancellation for failure to pay premiums be
issued after the date of default in payment in order to provide a
window of opportunity for the insured to pay the amount past due.
Munoz v. Quinn,
284 N.J. Super. 61, 63 (Law Div. 1994). It
therefore ordered reinstatement of the policy. The Appellate
Division affirmed in a published opinion, holding that requiring
the notice of cancellation to post-date the premium due date
would not result in a windfall of fifteen days of free coverage
to the insured because the insurer is free to fix the premium due
date at fifteen days before coverage is due to expire. Munoz v.
New Jersey Auto. Full Ins. Ass'n,
284 N.J. Super. 1, 3 (App. Div.
1995).
In the Zimmerman case, the issue of premature notice was not
raised in the trial court. Zimmerman brought an action against
the JUA, asserting that he had not received the cancellation
notice of December 2, 1990. The trial court rejected Zimmerman's
claim, finding that the JUA had sufficiently demonstrated proper
mailing of the cancellation notice. On appeal, Zimmerman raised
the issue of premature notice as plain error. The Appellate
Division revered in an unpublished opinion, finding there was
coverage notwithstanding proper mailing. It relied on the prior
decisions in Munoz and Christian.
In the Napolitano case, plaintiff argued that cancellation
was improper because the notice was prematurely sent and because
she reasonably relied on the language of the notice instructing
her to disregard same if payment had been made. At the close of
plaintiff's evidence, the trial court directed a verdict in favor
of the insurer, concluding that it was not bound by the Law
Division opinions in Munoz and Christian. Munoz had not been
decided by the Appellate Division at that time. The trial court
found it unlikely that the Legislature intended to extend
coverage past an insured's default in payment simply because the
required cancellation notice was mailed early. The court
rejected plaintiff's reasonable expectations argument. In an
unpublished opinion, the Appellate Division reversed on the
premature notice issue, citing the Munoz and Christian decisions.
Plaintiff did not file a cross-petition for certification on the
issue of her reasonable expectations, and thus we need address
only the issue of premature notice.
In the present appeals, the insurance companies assert that the decisions of the Appellate Division contradict the plain meaning of the notice of cancellation statute. They argue that the statute nowhere states that a cancellation notice must post-date default in payment and that such a requirement obligates the insurance companies to provide a grace period not intended by the Legislature. The insureds rely on the Appellate Division decisions and the reasoning in Christian and assert that the
applicable statutes and regulations, read collectively, require
that a cancellation notice post-date the default in payment.
The issue with which we are presented is one of first
impression for this Court. Because its resolution requires us to
interpret legislation, we begin with a close examination of the
relevant statutory language. Chase Manhattan Bank v. Josephson,
135 N.J. 209, 225 (1994); Brenner v. Berkowitz,
134 N.J. 488, 504
(1993); Lammers v. Board of Educ.,
134 N.J. 264, 267 (1993).
Cancellation of automobile insurance is governed by N.J.S.A.
17:29C-6 to -13. Section 7 concerns grounds for cancellation and
provides:
(A) A notice of cancellation of a policy
shall be effective only if it is based on one
or more of the following reasons:
(a) Nonpayment of premium . . . .
[N.J.S.A. 17:29C-7.]
"Nonpayment of premium" is defined as "failure of the named
insured to discharge when due any of his [or her] obligations in
connection with the payment of premiums on a policy, or any
installment of such premium . . . ." N.J.S.A. 17:29C-6(F)
(emphasis added).
Section 8, the specific provision at issue in these appeals,
addresses the proper timing of notice of cancellation and
provides:
No notice of cancellation of a policy . . .
shall be effective unless mailed or delivered
by the insurer to the insured at least 20
days prior to the effective date of
cancellation; provided, however, that where
cancellation is for nonpayment of premium at
least 15 days' notice of cancellation
accompanied by the reason therefor shall be
given.
[N.J.S.A. 17:29C-8 (emphasis added).]
Plaintiffs urge us to read this section, in conjunction with the
definition of nonpayment and the statutory grounds for issuing
notice of cancellation, as requiring that a notice of
cancellation for nonpayment of premium be mailed after the
premium due date.
It is well settled that statutes should be interpreted in
accordance with their plain meaning. Fisch v. Bellshot,
135 N.J. 374, 383 (1994); Phillips v. Curiale,
128 N.J. 608, 617-18
(1992); State Dep't of Law & Pub. Safety v. Bigham,
119 N.J. 646,
651 (1990). Where a statute is clear and unambiguous, a court
may not impose an interpretation other than the statute's
ordinary meaning. Ocean Pines, Ltd. v. Borough of Point
Pleasant,
112 N.J. 1, 7 (1988); State v. Butler,
89 N.J. 220, 226
(1982); In re Jamesburg High School,
83 N.J. 540, 547 (1980).
It is apparent that the cited provisions concerning
cancellation for nonpayment of premium do not by their terms
require that notice post-date the payment due date. In order for
notice of cancellation for nonpayment of premium to be effective,
it need only state the reason for the cancellation and be mailed
or delivered at least fifteen days prior to the date of
cancellation. Although the definition provision indicates that
the nonpayment does not occur until the policyholder fails to pay
the premium "when due," N.J.S.A. 17:29C-6(F), nothing in the
statutes can be read as precluding insurers from mailing notice
in advance of that date.
Nor do the applicable administrative regulations concerning
cancellation for nonpayment of premium so provide. Section 11:3-7.6 of the automobile insurance regulations provides two
additional timing requirements with respect to mailing notice of
cancellation:
(b) The effective date of the cancellation
of a policy for nonpayment of premium shall
not be earlier than 10 days prior to the last
full day of which premium received by the
company prior to the date of preparation of
the cancellation notice, would pay for
coverage on a pro rata basis . . . .
. . . .
(d) No cancellation notice shall be
mailed prior to 30 days in advance of its
effective date.
[N.J.A.C. 11:3-7.6.]
Again, there is an absence of any requirement that the
cancellation notice post-date the default in payment.
This is not a situation in which the Court is called on to
interpret an ambiguous word or phrase. Cf. State v. Valentin,
105 N.J. 14, 19-20 (1987) (finding that word "volunteer," with
respect to offense of volunteering false information to police
officer, was subject to more than one interpretation); Lukas v.
State Dep't of Human Servs.,
103 N.J. 126, 131 (1986) (observing
that portion of State Facilities Education Act relating to
acquisition of teachers' rights could admit alternative
interpretations when read in isolation). There is simply no
provision, either in the statute or regulations, that on its face
imposes the requirement that notice post-date default. With
respect to timing, the plain language of the statute and
regulations requires only that notice of cancellation for
nonpayment of premium be mailed or delivered at least fifteen
days, and not more than thirty days, in advance of the effective
date of cancellation, which must be no more than ten days prior
to the last day for which coverage has been paid by the prior
premium. As such, the language admits the conclusion that notice
may be mailed prior to default in payment, as long as those
conditions are met.
Plaintiffs assert, however, that legislative intent supports the interpretation that notice must be mailed after default. While a court may not veer from the plain meaning of a statute that is clear and unambiguous, such meaning is to be given effect "absent any specific indication of legislative intent to the contrary." Town of Morristown v. Woman's Club, 124 N.J. 605, 610 (1991); accord Chase Manhattan Bank v. Josephson, supra, 135 N.J. at 225; Merin v. Maglaki, 126 N.J. 430, 434 (1992). Where the Legislature did not consider a specific situation, a court should determine the Legislature's probable intent as if it had addressed the issue. Amerada Hess Corp. v. Director, Div. of
Taxation,
107 N.J. 307, 318-19 (1987), aff'd,
490 U.S. 66,
109 S.
Ct. 1617,
104 L. Ed.2d 58 (1989); In re Mutual Benefit Life Ins.
Co.,
258 N.J. Super. 356, 375 (App. Div. 1992).
In Christian v. Ormsby, supra, 267 N.J. Super. at 266, the
only published decision on this issue prior to the Appellate
Division's consideration of the cases currently before us, the
Law Division determined that the statutory provisions, read
together, evince a legislative intent to "provide policyholders
with a fifteen-day grace period after default in the payment of a
premium under an automobile insurance policy before the insurer
can effectively cancel the policy." Ibid. In so finding, the
Law Division relied on the statutes themselves and cited no
legislative history supporting its conclusion.
We are unconvinced that the language of the statutes conveys
any intent other than the obvious: to ensure that each
policyholder receive fifteen days of notice before his or her
policy is canceled and to require the insurance company to
identify the reason for cancellation. No legislative committee
statement accompanied the enactment of the 1968 notice provision.
We observe, however, that the 1967 Senate Committee hearing on
motor vehicle insurance, which addressed a range of insurance
problems, suggests the Legislature's concern that insurance
companies were canceling policies capriciously and not providing
policyholders with sufficient time to find alternative coverage.
Public Hearing on Motor Vehicle Liability Insurance Before the
Senate Comm. on Banking and Insurance, 91-95 (Aug. 15, 1967); see
also Romanny v. Stanley Baldino Constr. Co.,
142 N.J. 576, 582
(1995) (indicating that minimum notice periods exist to prevent
lapses in coverage) (relying on Lopez v. New Jersey Auto. Full
Ins. Underwriting Ass'n,
239 N.J. Super. 13, 19-20 (App. Div.),
certif. denied,
122 N.J. 131 (1990)); Barbara Corp. v. Bob
Maneely Ins. Agency,
197 N.J. Super. 339, 344 (App. Div. 1984)
(same). Nothing in that hearing or in relevant press articles
from that period suggests that the Legislature intended to
provide the type of grace period urged by plaintiffs.
On the contrary, in 1980, the Legislature amended N.J.S.A.
17:29C-8 and -10 in response to this Court's decision in Weathers
v. Hartford Ins. Group,
77 N.J. 228 (1978), which concerned the
sufficiency of proof for demonstrating proper mailing of a notice
of cancellation. Id. at 232-33. The amendments set forth
particular proof of mailing requirements and changed the minimum
period of notice of cancellation for nonpayment of premium from
ten days to the current fifteen days. The amendment as
introduced also included language that would have amended
N.J.S.A. 17:29C-7 to include a five-day grace period similar to
that sought by plaintiffs. The amended section would have
provided:
(A) A notice of cancellation of a policy
shall be effective only if it is based on one
or more of the following reasons:
(a) Nonpayment of premium; provided that
a notice of cancellation for nonpayment of
premium shall not be effective if payment of
the amount due is received by the insurer
within 5 business days of the effective date
of such notice[.]
[Assembly Bill No. 1418 (Apr. 14, 1980)
(second reprint) (emphasis added).]
That language was deleted by the Assembly Committee prior to the
amendment's adoption.
Although the reason for the Legislature's failure to adopt
that provision is unknown, it is clear that the Legislature at
one point considered enacting a grace period but determined not
to do so. Thus, plaintiffs urge us to adopt an interpretation of
a statute that was expressly rejected by the Legislature. Cf.
Amerada Hess Corp. v. Director, Div. of Taxation, supra, 107 N.J.
at 312-13 (applying doctrine of probable intent to determine
whether statute preventing corporations from excluding certain
federal taxes from the state corporate tax base applied to a
particular tax not in existence at time of the statute's
enactment).
Moreover, any deviation from the plain meaning of a statute
is permitted only where there is "`specific'" legislative intent
requiring an alternative reading. Chase Manhattan Bank v.
Josephson, supra, 135 N.J. at 225 (quoting Town of Morristown v.
Woman's Club, supra, 124 N.J. at 610) (emphasis omitted); see
also N.J.S.A. 1:1-1 (declaring that statutes should be given
their generally accepted meaning "unless inconsistent with the
manifest intent of the legislature") (emphasis added). None of
the available indications of legislative intent suggests a
"specific" intent to create a grace period. Compare Township of
Holmdel v. Director, Div. of Taxation,
130 N.J. 522, 528-29
(1992) (Stein, J., concurring) (doubting that Legislature
intended or considered that statute requiring State to compensate
municipalities for loss of tax revenue formerly paid by local
insurance companies in the event that company leaves municipality
would require such payments where company relocates to different
state, but finding insufficient legislative history to overcome
plain meaning allowing that result) with Young v. Schering Corp.,
141 N.J. 16, 25 (1995) (using probable intent to overcome literal
meaning of Conscientious Employee Protection Act (CEPA) provision
that stated that institution of CEPA action waives all common law
rights where Court was "thoroughly convinced [that] the
Legislature did not intend to penalize former employees by
forcing them to choose between a CEPA claim and other legitimate
claims") (emphasis added).
We therefore reject the lower courts' reasoning in Munoz and
Christian. We discern no cognizable legislative intent to create
a grace period after the effective date of cancellation from
either the statute's history or the language itself. In the
absence of such intent, it is the plain meaning of the statute
that governs. We are persuaded that the language of the statute
does not provide for a grace period. It is not the role of a
court to supply what the Legislature has omitted, and we decline
to do so here. Witt v. Gloucester County Bd. of Chosen
Freeholders,
94 N.J. 422, 434 (1983) (citing Craster v. Board of
Comm'rs,
9 N.J. 225, 230 (1952)); Remedial Educ. & Diagnostic
Servs., Inc. v. Essex County Educ. Servs. Comm'n,
191 N.J. Super. 524, 528 (App. Div. 1983), certif. denied,
97 N.J. 601 (1984).
Defendants assert that requiring the notice of cancellation
to post-date the default in payment will effectively provide
delinquent policyholders with fifteen days of free insurance
following default. Plaintiffs insist that no windfall will
result as insurers are free to set the premium due date in
advance of the insured's "carry date," that is, the last full day
of coverage paid for under the previous premium payment.
Defendants resist this solution, arguing that the carry date
commonly fluctuates due to changes made in coverage during the
course of a policy and that they are constrained by N.J.A.C.
11:3-7.6(b), which prevents insurers from canceling a policy more
than ten days prior to the carry date.
We agree with plaintiffs and the Appellate Division that the
problem of free insurance where a notice post-dates default can
be minimized by proper scheduling on the part of insurance
companies. If a policyholder's initial premium payment, pro
rated on a per diem basis, provides coverage through May 30, for
instance, an insurer can choose to set the second premium due
date at May 15. In such a situation, the policyholder has
already paid for the fifteen days that comprise the statutory
notice period in the event that he or she defaults. If during
the course of the policy the insured's carry date moves forward
to May 15 due to a change in coverage, we see no reason why the
insurer cannot at that point adjust the premium due date to May 1
or require an additional premium payment at the time of the
change in coverage that will carry the policyholder to the same
date as under the previous policy. The proposed solution
remedies the free insurance problem. Indeed, we were informed at
oral argument that the insurance industry has taken corrective
action to adopt procedures such as those urged by plaintiffs. We
recommend nonetheless that the Commissioner of Insurance consider
adopting regulations that would require all insurance companies
to do so.
While this issue is of obvious significance to insurance
companies and to the plaintiffs, it contributes little to
plaintiffs' statutory argument. The relevant inquiry in these
matters is whether the Legislature intended to provide a grace
period in which defaulting policyholders can satisfy their
overdue payment obligations and avoid cancellation. The
interpretation advanced by plaintiffs allows an insured to
reinstate coverage without penalty after the date on which the
policy could properly be canceled for nonpayment of premium. As
noted before, nothing in the applicable statutory provisions
supports that result. Consequently, the insurers' ability to
avoid free coverage during that period does not inform our
resolution of these appeals.
In addition to the argument that notice of cancellation was prematurely sent, plaintiff Zimmerman asserts that in his case
the JUA terminated coverage more than ten days before the carry
date in contravention of applicable regulations. That argument
was not raised in the lower court proceedings.
As previously noted, N.J.A.C. 11:3-7.6(b) provides that the
effective date of cancellation of a policy for nonpayment of
premium may not be earlier than ten days prior to the last full
day of coverage under the last premium payment received.
Zimmerman contends that the premium installment he paid at the
inception of his policy, calculated on a per diem basis, would
have provided coverage through January 11, 1991. The notice of
cancellation provided by the JUA indicated an effective date of
December 22, 1990.
Where a notice of cancellation does not comport with the
appropriate timing and mailing requirements, it is deemed
ineffective. N.J.S.A. 17:29C-7, -8, -10; Lopez v. New Jersey
Auto. Full Ins. Underwriting Ass'n, supra, 239 N.J. Super. at 20;
see also Romanny v. Stanley Baldino Constr. Co., supra, 142 N.J.
at 584 (noting that "insurance companies must comply strictly
with all statutory and regulatory requirements relating to
cancellation"). Thus, Zimmerman may have an alternative basis
for seeking reinstatement despite our conclusion that the notice
was not premature for failure to post-date the default in
payment. A remand is required for a determination of that issue.
In sum, we hold that the plain language of the applicable
statutory and regulatory provisions permits insurers to send the
requisite notice of cancellation in advance of the premium due
date. There is no indication of contrary legislative intent that
persuades us otherwise. We therefore reverse the judgment of the
Appellate Division in all three cases. We remand the Zimmerman
case to the Law Division for further proceedings in accordance
with this opinion.
JUSTICES HANDLER, POLLOCK, O'HERN and GARIBALDI join in
JUSTICE COLEMAN's opinion. JUSTICE STEIN filed a separate
dissenting opinion. CHIEF JUSTICE WILENTZ did not participate.
SUPREME COURT OF NEW JERSEY
A-115/116/
117 September Term 1995
JOSE R. MUNOZ,
Plaintiff-Respondent,
v. (A-115)
NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION,
Defendant-Appellant,
and
STANLEY AGENCY, INC., JOHN QUINN
and JOHN DOE, jointly severally and
in the alternative,
Defendants.
JAMES ZIMMERMAN,
Plaintiff-Respondent,
v. (A-116)
THE NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION
(N.J.A.F.I.U.A.),
Defendant-Appellant,
and
JOHN DOES 1-10 (fictitious names),
Defendants.
PATRICIA NAPOLITANO,
Plaintiff-Respondent,
v. (A-117)
ALLSTATE INSURANCE COMPANY,
Defendant-Appellant.
STEIN, J., dissenting.
The Court holds that the statute requiring fifteen days
notice to an insured prior to the cancellation of an automobile
insurance policy for non-payment of the premium and requiring
that the reason for cancellation accompany the notice, N.J.S.A.
17:29C-8, permits the notice to be given before the default in
payment has taken place. In my view, that holding cannot be
reconciled with the plain language of N.J.S.A. 17:29C-8 and the
related statute, N.J.S.A. 17:29C-7(A) (listing grounds on which
effective notice of cancellation may be based), nor with the
obvious legislative intent underlying those two provisions. I
would affirm the holding of the Appellate Division in Munoz v.
New Jersey Automobile Full Insurance Underwriting Ass'n (JUA) and
Napolitano v. Allstate Insurance Co. I would modify the
Appellate Division's order in Zimmerman v. JUA to provide for a
new trial on remand to permit the insurer to produce evidence of
its premium due date.
N.J.S.A. 17:29C-7(A) provides that a notice of cancellation
"shall be effective only if it is based on one . . . of the
following reasons": (a) non-payment of the policy premium, or (b)
revocation or suspension of the insured's driver's license,
vehicle registration, or the license of an operator of the
insured vehicle. Under the ordinary meaning of that statutory
language, a notice of cancellation cannot be "based on" non-payment or loss of a driver's license until one of those two
events has occurred. Until either the insured defaults on the
obligation to pay the premium when due or suffers the loss of
driving privileges, the factual basis for the cancellation does
not exist and a notice of cancellation will not be effective
under the terms of the statute.
Moreover, an effective notice of cancellation based on non-payment of premium must give the reason for the cancellation.
N.J.S.A. 17:29C-8. The notice cannot reasonably (or accurately)
give non-payment as the reason for cancellation until non-payment
has occurred. Indeed, a premature notice of cancellation for
non-payment would not serve its intended function of informing an
insured that his or her coverage was in danger of lapsing when
the insured had no intention of defaulting, but, because of a
bounced check or some other unexpected, post-notice event, fails
to pay on time. Moreover, according to N.J.S.A. 17:29C-6(F),
non-payment of the premium occurs when the insured fails to
discharge his obligation to pay the premium "when due."
Obviously, a notice of cancellation based on non-payment that is
sent before the payment is due cannot be effective under the
plain terms of the statute.
The Court holds, however, that the statute permits a notice
of cancellation to be sent before the grounds for the
cancellation have arisen. The Court's reasoning suggests that an
effective cancellation notice may be "based on" the mere
possibility that in the future the premium would not be paid or
that a driver's license would be revoked or suspended. I do not
believe that result can be reconciled with the plain meaning of
the statute.
N.J.S.A. 17:29C-8 requires that a notice of cancellation for
non-payment must be sent fifteen days before the effective date
of the cancellation. Therefore, because an effective notice of
cancellation cannot be sent until the event on which the
cancellation is based has occurred, the effective cancellation
date for non-payment cannot be sooner than fifteen days from non-payment, which, by definition, cannot occur until the premium due
date and the insured's failure to pay. Thus, the fifteen-day
grace period has been written into the statute by the Legislature
in plain terms and no judicial construction is required to give
it effect.
Only one conceivable purpose exists for the Legislature to
have enacted that provision: to provide defaulting policyholders
with a short grace period in which to make payment and preserve
their coverage. See Christian v. Ormsby,
267 N.J. Super. 237,
266 (Law Div. 1992). That purpose is consistent with the
fundamental public policy in favor of universal automobile
insurance. See Lindstrom v. Hanover Ins. Co.,
138 N.J. 242, 247-48 (1994). The Court, by permitting an effective notice of
cancellation for non-payment of the premium to be sent before the
premium is due, renders that grace period a nullity, because
sending a premature notice will permit the insurer to cancel the
policy immediately if payment is not received on the due date.
See, e.g., Christian, supra, 267 N.J. Super. at 265.
No inquiry into the legislative intent is necessary because
the statute is clear on its face. If there were any ambiguity,
public policy and the obvious intent of the Legislature would
mandate that the statute be construed to allow defaulting
policyholders a brief opportunity to prevent a lapse in coverage.
The Court concedes that such a construction would not
inconvenience insurers beyond requiring them to set the premium
due date fifteen days in advance of the date the policy would
lapse if the premium were not paid. Ante at ___ (slip op. at
16). The Court's reading of the statute, in addition to
contradicting its plain meaning, thwarts both the public policy
in favor of preserving coverage and the unmistakable legislative
intent in enacting the statute.
Accordingly, I would affirm the Appellate Division in both
Munoz and Napolitano. In Zimmerman v. JUA, the Appellate
Division held that the only evidence indicated that December 22,
1990, constituted the premium due date, rendering ineffective the
notice of cancellation of December 5. The insurer argued,
however, that the rules of the JUA, which were appended to the
policy application, were part of the policy and provided for
premium due dates of 60, 120, and 180 days from the date of the
inception of the policy on September 24, 1990. Obviously the JUA
rules constitute evidence of an earlier premium due date than
either December 22 or December 5 and would support a finding that
the notice of cancellation properly was sent after the insured
defaulted. The Appellate Division reversed and remanded in
Zimmerman for further proceedings consistent with its ruling that the notice of cancellation was premature. I would also remand, requiring a new trial to determine whether there was an earlier premium due date in the policy that preceded the date of the notice of cancellation.
NO. A-115 SEPTEMBER TERM 1995
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
JOSE R. MUNOZ,
Plaintiff-Respondent,
v.
NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION,
Defendant-Appellant,
and
STANLEY AGENCY, INC., et al.,
Defendants.
DECIDED July 15, 1996
Justice Handler PRESIDING
OPINION BY Justice Coleman
CONCURRING OPINION BY
DISSENTING OPINION BY Justice Stein
NO. A-116 SEPTEMBER TERM 1995
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
JAMES ZIMMERMAN,
Plaintiff-Respondent,
v.
THE NEW JERSEY AUTOMOBILE FULL
INSURANCE UNDERWRITING ASSOCIATION
(N.J.A.F.I.U.A.),
Defendant-Appellant,
and
JOHN DOES 1-10 (fictitious names),
Defendants.
DECIDED July 15, 1996
Justice Handler PRESIDING
OPINION BY Justice Coleman
CONCURRING OPINION BY
DISSENTING OPINION BY Justice Stein
NO. A-117 SEPTEMBER TERM 1995
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
PATRICIA NAPOLITANO,
Plaintiff-Respondent,
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Appellant.
DECIDED July 15, 1996
Justice Handler PRESIDING
OPINION BY Justice Coleman
CONCURRING OPINION BY
DISSENTING OPINION BY Justice Stein