SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
A-4279-95T5
ROSE CALABRESE and FRANCES B.
PACE,
Plaintiffs-Respondents,
v.
SELECTIVE INSURANCE COMPANY OF
AMERICA,
Defendant-Appellant,
______________________________________
ROSEMARIE ROCCHIO and ANTHONY
ROCCHIO,
Plaintiffs-Respondents,
v.
SELECTIVE INSURANCE COMPANY OF
AMERICA,
Defendant-Appellant,
v.
LUCY PALDINO,
Third Party Defendant.
______________________________________
Argued January 23, 1997 - Decided February 10, 1997
Before Judges Shebell, Baime and Braithwaite.
On appeal from the Superior Court of New
Jersey, Law Division, Bergen County.
J. David Woods argued the cause for defendant- appellant, Selective Insurance Company Of America (Bashwiner And Woods, attorneys; Robert K. Walsh, on
the brief).
John R. Altieri argued the cause for plaintiffs- respondents, Rose Calabrese and Francis B. Pace.
Brian M. Murphy argued the cause for plaintiffs-
respondents, Rosemarie Rocchio and Anthony Rocchio.
The opinion of the court was delivered by
SHEBELL, P.J.A.D.
This appeal by defendant, Selective Insurance Company of
America (Selective), involves issues pertaining to claims for
underinsured motorists (UIM) coverage made by plaintiffs, three
injured "family members," under two policies of insurance
Selective issued. The accident in question occurred on December
4, 1993, in River Edge, when plaintiff, Rosemarie Rocchio, was
operating a motor vehicle owned by her daughter, Marianne
Rocchio. Three other members of Rosemarie's family, and
apparently her household, were passengers in the vehicle:
plaintiff, Rose Calabrese, her mother; plaintiff, Frances Pace,
Rosemarie's aunt; and Rosemarie's sister, Lucy Paldino.
The Rocchio vehicle was struck by the vehicle of Albert R.
Morris, which crossed into Rocchio's lane of travel and struck
the vehicle head-on. Morris carried liability insurance with
bodily injury coverage limits of $100,000 per person and $300,000
per accident. Lawsuits were instituted on behalf of the four
injured occupants of the Rocchio vehicle, resulting in payment by
Morris's insurance carrier of the entire $300,000 policy limits,
with each claimant settling for $75,000. Before entering into
the settlements, counsel for the injured parties notified
Selective by letters of their intent to settle and Selective did
not object. See Longworth v. Van Houten,
223 N.J. Super. 174
(App. Div. 1988).
The vehicle owned by Marianne Rocchio was covered by a
policy of insurance issued by Selective, policy number F1222843,
with a combined single limit (CSL) for uninsured/underinsured
motorists coverage of $300,000. Selective had issued automobile
policy, number F1222844, to Rosemarie Rocchio and her husband,
Anthony J. Rocchio, with the same CSL coverage for
uninsured/undersinsured motorists coverage of $300,000.
In January 1995, demands for arbitration were made by the
Rocchios, Calabrese and Pace. Thereafter, actions were
instituted by Verified Complaint and Order To Show Cause why
arbitrators should not be appointed to convene UIM proceedings.
In July 1995, the Law Division ordered Selective to participate
in arbitration as to the UIM coverage of the two policies.
Thereafter, Selective moved for reconsideration, which was
denied. We denied Selective's motion for leave to appeal.
An arbitration proceeding was held on October 17, 1995,
resulting in a decision that the damages suffered by Rosemarie
and Anthony Rocchio amounted to $345,000, that Calabrese suffered
$250,000 in damages and that Pace had $180,000 in damages. On
December 14, 1995, Selective put the parties on notice that it
demanded a de novo trial as to damages, based upon an alleged
endorsement to the policy. The insureds deny receiving the
endorsement or having any knowledge of it.
Selective moved to mold the arbitrator's award, maintaining
that no sums were payable under the UIM coverage on the grounds
that Morris had $300,000 in coverage for the accident, the same
as the Selective limits, and therefore, he was not underinsured
within the policy and statutory definitions. Plaintiffs cross-moved for an order confirming the arbitrator's award. On
February 27, 1996, the Law Division entered judgment in the
amount of $225,000 for the Rocchios, $175,000 in favor of
Calabrese, and $125,000 in favor of Pace. Selective appeals.
The threshold question in any UIM case is whether the
tortfeasor's vehicle is, in fact, underinsured. Cynthia M. Craig
& Daniel J. Pomeroy, New Jersey Auto Insurance Law, § 27:4-1
(Gann, 1997). Therefore, we first consider whether the
tortfeasor was underinsured at the time of the accident within
the meaning of N.J.S.A. 17:28-1.1e and the two Selective policies
of insurance. We conclude that the Morris vehicle was
underinsured thereby making each plaintiff eligible for UIM
benefits from Selective.
N.J.S.A. 17:28-1.1e(1) defines underinsured motorist
coverage as follows:
e. For the purposes of this section, (1)
"underinsured motorist coverage" means
insurance for damages because of bodily
injury and property damage resulting from an
accident arising out of the ownership,
maintenance or use of an underinsured motor
vehicle. A motor vehicle is underinsured
when the sum of the limits of liability under
all bodily injury and property damage
liability bonds and insurance policies
available to a person against whom recovery
is sought for bodily injury or property
damage is, at the time of the accident, less
than the applicable limits for underinsured
motorist coverage afforded under the motor
vehicle insurance policy held by the person
seeking that recovery. A motor vehicle shall
not be considered an underinsured motor
vehicle under this section unless the limits
of all bodily injury liability insurance or
bonds applicable at the time of the accident
have been exhausted by payment of settlements
or judgments. The limits of underinsured
motorist coverage available to an injured
person shall be reduced by the amount he has
recovered under all bodily injury liability
insurance or bonds[.]
"In effect, the statute states that the determination
whether a vehicle is underinsured requires ascertaining whether
the liability limits of the person `against whom recovery is
sought' are `less than' the amount of UIM coverage `held by the
person seeking that recovery.'" Aubrey v. Harleysville Ins.
Cos.,
140 N.J. 397, 403 (1995). Thus, the determination of
whether the Morris vehicle is underinsured requires a comparison
of the liability limits of his insurance with the UIM limits of
the "policy held by the person seeking that recovery." N.J.S.A.
17:28-1.1e(1).
In Tyler v. New Jersey Auto. Full Ins. Underwriting Ass'n,
228 N.J. Super. 463, 466 (App. Div. 1988), we explained this
comparison as follows:
The plain meaning of the statute is that
underinsured motorist benefits are available
if (and to the extent that) the tortfeasor's
liability limits are lower than the limits of
the underinsured motorist coverage contained
in the plaintiff's policy....
The statute produces the same result if
there is one injured claimant or many, or if
the amount of damages exceed the tortfeasor's
liability limits, or even if multiple claims
against one tortfeasor are, because of his
liability limits, settled for amounts which
are individually less than the underinsured
motorist coverage available from the
claimant's policy. A tortfeasor is not
underinsured relative to plaintiffs' damages,
or relative to the judgment or judgments
against him, but rather relative to the
limits of the underinsured motorist coverage
purchased by or for the person seeking
recovery.
[See also Harmon v. New Jersey Full Auto.
Ins. Underwriting Ass'n.,
268 N.J. Super. 434, 438-39 (App. Div. 1993).]
Here, the difference in the per person liability limits of
the tortfeasor's policy and the Selective policies have led the
parties to varying positions as to the application of this
rational. We have not previously considered a case where the
tortfeasor was covered under a split-limit coverage, here
$100,000 per person/$300,000 per accident, and the claimants were
insured under a policy containing single limits, here $300,000.
We considered the converse of this situation in Staub v. Hanover
Ins. Co.,
251 N.J. Super. 66, 67 (App. Div. 1991). There, the
tortfeasor carried a policy having a single limit of $100,000,
while one of four people injured by the tortfeasor had UIM
coverage of $100,000 per person, but $300,000 per accident.
We held in Staub that "where more than one person has been
injured by a tortfeasor, his vehicle is underinsured if the
tortfeasor's per accident limit is less than the claimant's UIM
per accident limit, even if the per person limit is the same in
both policies." Id. at 68. Our reasoning was:
In comparing the limits in two policies, we
must compare the same kind of coverage
provided in each. Because several people
were injured by the tortfeasor, plaintiff's
$300,000 per accident UIM limit must be
compared with the tortfeasor's $100,000 per
accident limit. The result of the comparison
is that the tortfeasor's vehicle is
underinsured. Had plaintiff alone been
injured, then only his $100,000 per person
limit would be compared with the tortfeasor's
$100,000 per person limit and the
tortfeasor's vehicle would not have been
underinsured....
The result is fair. As this case
demonstrates, the tortfeasor's liability
insurer would have incurred a greater risk
had its policy indemnified the tortfeasor for
up to $300,000 per accident instead of only
$100,000 per accident. We assume that the
added risk would have resulted in an added
premium. The tortfeasor saved that added
premium by carrying only $100,000 coverage
per accident. Plaintiff, on the other hand,
undoubtedly paid defendant a premium for the
additional $200,000 per accident UIM coverage
by which his per accident limit exceeds the
tortfeasor's $100,000 per accident limit.
Therefore, because more than one person was
injured in the accident it is fair to
consider plaintiff's UIM limit to be greater
than the tortfeasor's liability limit so that
plaintiff can receive the benefit of all the
coverage he bought.
[Id. at 68-69 (Emphasis added).]
We also stated that "facts, such as the number of people injured and the amount of their claims are generally not relevant," except however, "where the claimant, the tortfeasor or both have double limits, one `per person' and the other `per accident,' it becomes necessary to consider whether more than one person was injured by the tortfeasor in order to determine which of the
limits to use when making the comparison." Id. at 69.
Although the damages of each plaintiff exceeded the $100,000
per person limit of the tortfeasor's coverage, that does not
translate into a finding that the tortfeasor was underinsured.
"A tortfeasor is not underinsured relative to plaintiffs'
damages, or relative to the judgment or judgments against him,
but rather relative to the limits of the underinsured motorist
coverage purchased by or for the person seeking recovery."
Tyler, supra, 288 N.J. Super. at 466. Pursuant to N.J.A.C. 11:3-15.6, prospective purchasers of UIM coverage are advised:
When you buy uninsured motorist coverage
above the minimum limits required by law, you
are also provided coverage to protect you
from those motorists who are underinsured.
If you are in an accident caused by such a
motorist, underinsured motorist coverage will
pay damages up to the difference between your
underinsured motorist coverage limit and the
other driver's liability coverage limit.
"UIM recovery is controlled contractually by the amount of the UIM policy limits purchased and available to [the claimant], not fortuitously by the number of tortfeasors involved in the accident." Nikiper v. Motor Club of America Cos., 232 N.J. Super. 393, 398-99 (App. Div.), certif. den., 117 N.J. 139 (1989). See also 8C John A. Appleman & Jean Appleman, Insurance Law and Practice § 5071.45 ("Since the purpose of uninsured/underinsured coverage is to permit the insured to recover for damages against a negligent motorist as if the motorist had carried a policy of liability insurance, if his liability coverage was in fact equal to or greater than the UM
coverage carried by the insured, that suffices") (footnote
omitted); Craig & Pomeroy, supra, § 27:4 ("under no circumstances
can the UIM claimant ever recover more than the policy limits of
the UIM contract purchased by or on behalf of the UIM claimant,
again no matter how great the claimant's damages may be").
The principle of UIM coverage is not to make the injured
party whole, but to put that person in as good a position as if
the tortfeasor possessed an amount of liability insurance equal
to the UIM coverage of an "insured" under the policy in question.
Bauter v. Hanover Ins. Co.,
247 N.J. Super. 94, 96 (App. Div.),
certif. den.
126 N.J. 335 (1991). Thus, if the tortfeasor had
the same type and amount of liability insurance that was provided
by Selective's UIM, that is, $300,000 CSL, it could not be argued
that the tortfeasor was underinsured despite the inability to
collect more than $75,000 from the tortfeasor.
We conclude that because the $300,000 per person aspect of
the UIM coverage obtained from Selective is greater than the
liability coverage of Morris which was limited to only $100,000
per person, the tortfeasor was underinsured. We reject the
argument that because Morris possessed coverage of $300,000 per
accident, the amount made available for all claims arising out of
the accident, this upper dollar amount of his coverage should be
considered equivalent to the UIM CSL coverage of $300,000
provided per accident by Selective, thereby resulting in a
finding that Morris's vehicle was not underinsured. Whether
there is one claimant or many, and therefore, without regard to
the overall limit of liability per accident, the coverage
available to a person making a claim under the UIM provision must
be compared to the per person limit of the policy covering the
tortfeasor. See Tyler, supra, 228 N.J. Super. at 466.
We consider our holding in this regard to be in accordance
with the intent of N.J.S.A. 17:28-1.1e(1), which mandates only
that we look to "the limits of liability ... available to a
person against whom recovery is sought" and determine whether the
limits are "less than the applicable limits for underinsured
motorist coverage afforded under the motor vehicle insurance
policy held by the person seeking that recovery." Further, the
policy clearly was purchased and the additional premium paid
based upon a reasonable expectation of receiving a per person
limit of $300,000 as protection against an underinsured
tortfeasor, such as one who might have only a $100,000 limit for
each person making a claim. As we noted in Staub, a "fair
result" requires that the insured "receive the benefit of all the
coverage he bought." Staub, supra, 251 N.J. Super. at 69.
There are two Selective policies which the plaintiffs look to for coverage on their UIM claims. Policy number F1222844 was issued to Marianne Rocchio and covers the vehicle, which she owned, in which the plaintiffs were riding. Policy number F1222843 was issued to the plaintiffs, Rosemarie Rocchio and her
husband, Anthony, and covered their personal automobile which was
not involved in the collision. Both policies bind Selective to
pay compensatory damages "which an insured is legally entitled to
recover from the owner or operator of an "underinsured vehicle"
because of bodily injury sustained by an insured and caused by an
accident." "Insured" includes the named insured or any "family
member," or any other person "occupying" the named insured's
covered auto.
Based on this inclusive language of the insuring agreement,
it is clear that the bodily injury claim of Rosemarie Rocchio and
her husband's per quod claim are covered by their personal
automobile policy's UIM coverage. While Mrs. Rocchio was, of
course, occupying the vehicle of Marianne, and appears to be
covered by the language of that policy, we question whether
recovery under that policy is permitted under the holding of our
Supreme Court in Aubrey, supra, 140 N.J. at 403-05. At the very
least, Aubrey compels the conclusion that Rosemary and Anthony
Rocchio's policy must be viewed as the primary coverage. Id. at
403; cf. Royal Ins. Co. v. Rutgers Cas. Ins. Co.,
271 N.J. Super. 409 (App. Div. 1994).
Rose Calabrese, Rosemarie's mother, and Frances Pace,
Rosemarie's aunt, are covered under the Rocchio policy, because
they are family members of the Rocchios. They are also covered
under Marianne's policy because of their occupancy of the
vehicle. We do not perceive that the holding in Aubrey militates
against our holding that Marianne's policy covers Calabrese and
Pace. Unlike the situation in Aubrey, the Rocchios' policy
limits for UIM are the same as the limits of coverage on
Marianne's vehicle for UIM purposes. In addition, Calabrese and
Pace, unlike the claimant in Aubrey, did not purchase or hold the
insurance coverage made available to them under the "family
member" coverage of the Rocchio policy. See Market Trans. v.
Parisi-Lusardi,
293 N.J. Super. 471 (App. Div. 1996) (injured
driver of automobile of another could assert a claim for UIM
coverage purchased by a family member, where the injured
individual did not own an automobile and did not have her own UIM
coverage). As to Calabrese and Pace, the "other insurance"
clause of the Rocchio policy renders it excess coverage and we,
therefore, hold the policy covering Marianne's vehicle to be the
primary UIM coverage for these two occupants of her vehicle.
Royal Ins. Co., supra, 271 N.J. Super. at 420.
We next consider the question of credits to be made
available to Selective under N.J.S.A. 17:28-1.1e. "Under the
explicit and unambiguous language of this statute, the insureds'
underinsured motorist coverage is to be reduced by the amount
that he or she has recovered under all bodily injury insurance or
bonds. This statute compels accumulation of all liability
insurance recovery against the insured's own UIM policy limits of
recovery." Prudential Insurance v. Johnson,
238 N.J. Super. 1, 5
(App. Div. 1989) (Emphasis added).
The arbitration award to the Rocchios was $345,000. The
maximum coverage they contracted for with Selective, however, is
$300,000. Selective is, therefore, entitled to a credit of
$75,000 against the $300,000 coverage because of the payment
Rocchios received from the tortfeasor. The Rocchios are entitled
to payment of $225,000 under their policy with Selective.
Rose Calabrese was awarded $250,000 in arbitration. She may
look to the $300,000 coverage in Marianne's policy, subject to
the deduction of the $75,000 Calabrese received from the
tortfeasor. She is, therefore, entitled to payment of $175,000.
Frances Pace received an award in arbitration of $180,000.
She also may look to the policy covering Marianne's vehicle,
which has a remaining balance of coverage of $125,000. Pace's
award is subject to the deduction of $75,000 that she received
from the tortfeasor. Her award is, therefore, $105,000.
As neither policy has been exhausted, we need not consider
the issues raised pertaining to estoppel under Barrett v. New
Jersey Mfrs. Ins. Co.,
295 N.J. Super. 613 (App. Div. 1996), or
the stacking of coverage in contravention of N.J.S.A. 17:28-1.1c.
Lastly, we consider Selective's assertion that despite the
arbitration of plaintiffs' claims, it has the contractual right
to a trial de novo, apparently in the Law Division, because of
1991 endorsements to the policies. We have been shown no other
comparable language in the original policy dealing with
arbitration procedures, nor have we been advised of any statutory
provision or court rule that would permit a party to seek a trial
de novo after arbitration.
The Law Division judge summarized the issue as follows:
As for the issue of trial de novo, the
defendant asserts that there are endorsements
in the policy which would allow for a trial
de novo if the arbitration awards were not
satisfactory. According to affidavits
submitted by plaintiffs, the UM/UIM
endorsements were never received. Defendant,
on the other hand, has submitted the
certification of James Coleman which states
that it is the practice and custom of
Selective Insurance to send endorsements to
the insured. The Court, however, finds this
certification insufficient to establish the
mailing and receipt of the policy and
endorsement. See Bruce v. James P. MacLean
Firm,
238 N.J. Super. 408 (App. Div. 1989)
and SSI Medical Services v. State,
284 N.J.
Super. 184 (App. Div. 1995) [, aff'd
146 N.J. 614 (1996)]. Therefore, the court finds the
proof of mailing of the endorsements
insufficient and the motion for trial de novo
is denied and the arbitration is binding.
"Proof of mailing can be established by evidence of habit or
routine practice." SSI Medical Services, supra, 284 N.J. Super.
at 191 (citing Biunno, N.J. Rules of Evidence, Comment 1 on
N.J.R.E. 406(a) (1994)). "[T]he fact of mailing may be
established `by evidence of a custom with respect to the mailing
of letters, coupled with the testimony of the person whose duty
it is to perform or carry out the custom.'" Id. (citations
omitted). Likewise, testimony as to office policy by employees
actually charged with the responsibility of mass mailing of
notices has been found adequate to prove mailing. Bruce v. James
P. MacLean Firm,
238 N.J. Super. 501, 507 (Law Div.) aff'd o.b.,
238 N.J. Super. 408 (App. Div. 1989).
Once mailing has been established, a presumption arises as
to receipt: "Proper mailing gives rise to a presumption, namely
that `mail matter correctly addressed, stamped and mailed was
received by the party to whom it was addressed, which presumption
is rebuttable and may be overcome by evidence that the notice was
never in fact received.'" SSI Medical Services, supra, 284 N.J.
Super. at 192 (quoting Szczesny v. Vasquez,
71 N.J. Super. 347,
354 (App. Div. 1962)).
Here, the insureds have steadfastly maintained that they
never received the endorsement. Selective responded by filing an
affidavit of its underwriting administrator for Selective, who
set forth the following in a certification:
2. Selective Insurance Company issued a
renewal of Personal Automobile Policy No.
F122843 to Marianne Rocchio and a renewal of
Personal Automobile Policy No. F1222844 to
Anthony and Rosemarie Rocchio. Each of these
personal automobile policies contained
endorsement SI04800891.
3. It is Selective's custom and
practice when a policy incepts to send to its
insureds copies of the entire policy
manuscript with endorsements.
4. When an existing policy is renewed,
it is Selective's custom and practice to send
the insured a Declaration Sheet, Buyer's
Guide and Coverage Selection Form, as well as
all endorsements which change the existing
coverage.
5. Endorsement SI04800891 was a
coverage form used by Selective after August
of 1991. At the time of the issuance of the
personal automobile policies in question, it
was Selective's practice and custom to send
this Endorsement to the insured as described
above.
6. Because both Policy No. F122843 and
F122844 were renewal policies effective
November 4, 1993 to May 4, 1994 and because
endorsement SI04800891 had been used since
August of 1991, a separate copy of the
Endorsement was not sent with the renewal
documents.
Selective's affidavit is general and unclear. It does not
raise a presumption of proper mailing or receipt. The affidavit
was not offered by an agent charged with the task of mailing the
notices. The title of underwriting administrator does not,
without more, establish that individual as someone with personal
knowledge of the mailing policies. Paragraph 6 of the affidavit
concedes that an endorsement was not sent with the renewal
documents to the claimants, implying that the insureds already
received it because it was Selective's custom to send
endorsements when changing existing coverage. It states that
"endorsements which change the existing coverage" are sent when a
policy is renewed, and the endorsement pertaining to de novo
trials has been used since August of 1991. The policy of Anthony
and Rosemarie Rocchio, effective Nov 4, 1990, was in effect
before the endorsement came to be used in August 1991.
Therefore, it is likely that they would only have become aware of
the endorsement if it was included with the renewal documents.
There is, however, no direct evidence of its being forwarded to
them. We, therefore, affirm on this issue for the reasons
expressed by the Law Division judge.
The judgment of the Law Division dated February 27, 1996, is
affirmed.