(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 March 29, 1999 -- Decided June 18, 1999
PER CURIAM
This appeal concerns liability coverage under an automobile insurance policy.
Twenty-nine-year-old Joseph Collins and his wife, Rhonda planned to attend a concert. The brakes
on their car were bad so they decided to go to Joseph's mother's house to borrow the car owned by Joseph's
step-father, James Spataro, and used by Joseph's mother, Doris. The car, a Toyota Camry, was insured by
Rutgers Casualty Insurance Company (Rutgers).
When the Collinses arrived, the Spataros were not home. Joseph found the keys to the Camry in his
mother's bedroom and gave them to Rhonda. Rhonda drove the Camry to the home of Joseph's cousin,
Paul Spataro. Joseph followed behind Rhonda in their car, even though his license had been revoked. Upon
arriving, the Collinses decided to leave their car with its bad brakes at Paul's house. After Rhonda gave
Joseph the keys to the Camry, Joseph drove the couple to Rhonda's brother's house. From there, they took
other means of transportation to the concert.
After the concert, Joseph drove the Camry home because Rhonda was too tired. During the ride
home, the Collinses were in a one-car accident in which Rhonda was killed.
The Estate of Rhonda Collins (the Estate) filed suit, claiming compensation for damages arising out
of the accident. Rutgers and the Estate each filed declaratory judgment actions, seeking a determination of
coverage available under the Rutgers policy. The three actions were consolidated.
One of the liability provisions of the Rutgers policy provided that Rutgers would pay damages for
bodily injury and property damage for which an insured becomes legally responsible for an accident. Under
the language of the policy, coverage flowed to the insured, a family member, or any person using the covered
automobile. A provision of the policy, A.8, excludes from liability coverage any person using a vehicle
without a reasonable belief that he or she is entitled to do so. The unrelated A.6 exclusion concerning those
engaged in an auto-related business, however, specifically excepts the insured or any family member from
being deprived of coverage.
At trial, the testimony differed concerning whether Rhonda or Joseph had permission to drive any of
the Spataros' vehicles. According to the trial court, the test was whether the person using the vehicle had a
reasonable belief that he was entitled to do so. The court concluded that Joseph had no reasonable belief
that he was entitled to use the car either on his own or by giving the car to his wife who later allowed him to
drive. Thus, the court entered judgment in favor of Rutgers.
On appeal, a divided panel of the Appellate Division reversed the judgment of the trial court and
remanded for further fact-finding in respect of whether Rhonda had a reasonable belief that she was entitled
to use the Camry and whether Joseph could be considered a family member. According to the majority of
the panel, if Rhonda had a reasonable belief that she had permission to use the Spataro car, Joseph would
be covered under the initial permission, assuming he is a family member. The panel also found that the A.8
exclusion for "any person" who did not have permission to drive the car was inapplicable to family members.
The dissenting member of the Appellate Division panel found that the trial court had already made
the determination that neither Joseph nor Rhonda had a reasonable belief that either was permitted to use
the car. The dissent also held that the A.8 exclusion applies to family members.
Rutgers appealed to the Supreme Court as of right based on the dissent in the Appellate Division.
HELD: A fair interpretation of the policy is that coverage for an initial permittee should be governed by the
"with permission" standard.
1. The "reasonable belief" standard should not govern Rhonda's entitlement to coverage. The fair
interpretation of the Sparatos' policy is that coverage for an initial permittee such as Rhonda should be
governed by the "with permission" standard given the breadth of this State's initial permission rule and given
that Rhonda's coverage under the policy was intended to comply with the statutory mandate. (pp. 6-8)
2. The trial court did not make a finding in regard to whether Rhonda had permission to use the Sparatos'
car. Once it is established that the first user had permission from the named insured, lack of permission,
whether express or implied, of the named insured for use by a later permittee is irrelevant to coverage. (pp.
8-9)
3. The dissenting member of the Appellate Division panel correctly concluded that the A.8 exclusion should
apply to a family member, although generally exclusions must be broadly interpreted to afford coverage to
family members. The proper test for measuring whether the belief was reasonable is the reaction of a
reasonable person of the person's age, personality, and social milieu, subject to such attendant influences on
the person's judgment and mind as credibly can be discerned from the proofs. (pp. 9-11)
4. The trial court's finding that Joseph could not have reasonably believed he had permission to operate the
Camry was based on substantial evidence in the record. Therefore, the Court need not reach the issue of
whether Joseph was a family member. The issue of whether Rhonda had initial permission to use the car
should be remanded to the trial court. If Rhonda had such permission, Joseph's reasonable belief becomes
irrelevant. However, if Rhonda did not have permission to use the car, Joseph, if he was a family member,
would not be covered because he could not have had a reasonable belief that he had permission from the
Sparatos to drive the car. (pp. 11-12)
Judgment of the Appellate Division is AFFIRMED IN PART AND REVERSED IN PART and the
matter is REMANDED to the Law Division to determine whether Rhonda Collins had express or implied
permission to drive the vehicle.
JUSTICES HANDLER and STEIN, concurring in part and dissenting in part, agree with the
majority's conclusion that coverage for an initial permittee should be governed by the "with permission"
standard. However, the Justices disagree that the A.8 exclusion applies to family members. They would
remand to determine whether Joseph Collins was a family member within the meaning of the policy.
CHIEF JUSTICE PORITZ and JUSTICES POLLOCK, O'HERN, GARIBALDI, and COLEMAN
join in this PER CURIAM opinion. JUSTICES HANDLER and STEIN have filed a separate opinion,
concurring in part and dissenting in part.
SUPREME COURT OF NEW JERSEY
A-51/
52 September Term 1998
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
JOSEPH E. COLLINS,
Defendant-Respondent.
EDWARD G. IOVINO, as Administrator
Ad Prosequendum of the Estate of
Rhonda Collins, Deceased,
Plaintiff-Respondent,
v.
RUTGERS CASUALTY INSURANCE COMPANY
and JAMES SPATARO,
Defendants-Appellants,
and
JOSEPH E. COLLINS,
Defendant-Respondent.
Argued March 29, 1999 -- Decided June 18, 1999
On appeal from the Superior Court, Appellate
Division, whose opinion is reported at 313
N.J. Super. 79 (1998).
Edward H. Lee argued the cause for appellant
James Spataro (Pitman, Pitman, Mindas and
Lee, attorneys).
Susan L. Moreinis argued the cause for
appellant Rutgers Casualty Insurance Company.
James M. Nardelli argued the cause for
respondent Edward G. Iovino (Parsons &
Nardelli, attorneys).
Alison L. Newman, on behalf of respondent
Joseph E. Collins, submitted a letter in lieu
of brief joining in the brief submitted by
respondent Edward G. Iovino (King, Kitrick,
Jackson & Troncone, attorneys).
PER CURIAM
This appeal concerns liability coverage under an automobile
insurance policy. The facts of the case are set forth in the
reported opinion of the Appellate Division,
313 N.J. Super. 79
(1998). We repeat only the facts necessary to our disposition.
Twenty-nine-year-old Joseph Collins had planned to attend a
concert with his wife, Rhonda. When they realized that their car
had bad brakes, the couple decided to go to the home of Joseph's
mother to borrow a car owned by Joseph's stepfather, James
Spataro, and used principally by Joseph's mother, Doris Spataro.
The car was insured by Rutgers Casualty Insurance Company
(Rutgers). When the Collinses arrived, the Spataros were not
home. Joseph, however, found the keys to the car, a Toyota
Camry, in the Spataros' bedroom and gave them to Rhonda. The
Collinses then departed from the Spataros' residence for the home
of Joseph's cousin, Paul Spataro. Rhonda drove the Spataros' car
while Joseph drove the car with bad brakes, even though his
license had been revoked. Upon arriving, they decided to leave
the car with the bad brakes at the cousin's house. After Rhonda
gave Joseph the keys to the Camry, Joseph drove the couple to the
house of Rhonda's brother, Vincent Iovino. They took other means
of transportation from the Iovino home to the concert. After the
concert, the Collinses decided that Joseph would drive the Camry
because Rhonda was too tired. During the ride home, the
Collinses were in a one-car accident in which Rhonda, who had
fallen asleep in the back seat, was killed.
The Estate of Rhonda Collins (the Estate) filed suit
claiming compensation for damages arising out of the accident.
Rutgers and the Estate each filed declaratory judgment actions
seeking a determination of coverage available under the Rutgers
policy. The three actions were consolidated.
The liability provision of the policy states in relevant
part:
A. We will pay damages for “bodily injury”
or “property damage” for which any “insured”
becomes legally responsible because of an
auto accident.
B. “Insured” as used in this Part means:
1. You or any “family member” for the ownership, maintenance or use of any auto . . . .
2. Any person using “your covered auto.”
A provision of the policy, A.8, excludes from liability coverage
any person “[u]sing a vehicle without a reasonable belief that
that person is entitled to do so.” The unrelated A.6 exclusion
of those engaged in an auto-related business, however,
specifically excepts the insured or any “family member” from
being deprived of coverage.
At trial, the testimony differed concerning whether Rhonda
or Joseph had permission to drive any of the Spataros' vehicles.
In its opinion, the trial court initially asserted that the
“principal issue to be determined herein is whether Joseph
Collins and/or Rhonda Collins his wife, had permission to drive
the Camry of Doris and James Spataro . . . [on the day of the
accident.]” Although the court framed the issue in terms of
permission, it stated that under the test set forth in St. Paul
Insurance Co. v. Rutgers Casualty Insurance Co.,
232 N.J. Super. 582 (App. Div. 1989), the “question is whether the person using
the vehicle, (here Joseph) has a 'reasonable belief['] that (he)
was entitled to do so.”
The trial court concluded that Joseph had “no reasonable
belief that he was entitled to use the vehicle either on his own
or by giving the car to his wife who later 'allowed' him to
drive.” Consequently, the court entered judgment in favor of
Rutgers.
A divided panel of the Appellate Division reversed the
judgment of the trial court and remanded for further fact-finding
concerning whether Rhonda had a reasonable belief that she was
entitled to use the Camry and whether Joseph could be considered
a family member. According to the majority, if Rhonda had a
reasonable belief that she had permission to use the car, Joseph
would be covered under that initial permission (assuming he were
a family member). The court also found that the A.8 exclusion
for “any person” who did not have permission to drive the car was
inapplicable to family members. The court explained that “a
reasonable expectation of an insured is that family members will
be protected when operating a covered family vehicle even in the
absence of permission, the family member's disobedience being a
family matter to be dealt with internally.” 313 N.J. Super. at
89. The dissent found that the trial court had already made the
factual determination that neither Joseph nor Rhonda had a
reasonable belief that either was permitted to use the car. The
dissent also held that the A.8 exclusion, which precludes
coverage for “any person” operating a vehicle without a
reasonable belief that he or she had the owner's permission, does
apply to family members. Rutgers appealed as of right. R. 2:2-1(a)(2).
We affirm in part and reverse in part the judgment of the
Appellate Division. We employ somewhat different reasoning.
We disagree that the “reasonable belief” standard should govern Rhonda's entitlement to coverage. As explained in State Farm Mutual Automobile Insurance Co. v. Zurich American Insurance Co., 62 N.J. 155, 169 (1973), the “reasonable belief” language in an insurance policy was originally designed to place an outer limit on those circumstances in which an automobile liability insurance policy provides coverage to an insured for nonowned vehicles. That language was intended to have a broader scope than “with permission” language.
Rhonda's entitlement to coverage arises from the omnibus clause of the policy required by N.J.S.A. 39:6B-1.See footnote 1 Although 39:6B-1 contains no limitation on coverage based on permitted use, the provision has been understood to have replaced N.J.S.A. 39:6-46, which was repealed by L. 1979, c. 169, § 5, and which contained “express and implied consent” language. Scott v. Salerno, 297 N.J. Super. 423, 445 (App. Div.), certif. denied, 149 N.J. 409 (1997); Parkway Iron & Metal Co. v. New Jersey Mfrs. Ins. Co., 266 N.J. Super. 386, 389 (App. Div. 1993), certif. denied, 135 N.J. 302 (1994). N.J.S.A. 39:6A-4 requires that an automobile liability insurance policy provide personal injury protection (PIP) for any person using the insured vehicle “with permission of the named insured.” Although the Spataros' policy is susceptible to a contrary interpretation, we believe that the fair interpretation of the policy is that coverage for an initial permittee such as Rhonda should be governed by the “with permission” standard given the breadth of New Jersey's initial-permission rule, see Matits v. National Mut. Ins. Co., 33 N.J. 488, 496-97 (1960), and given that Rhonda's coverage under the policy was intended to comply with the statutory mandate.
The trial court made no finding concerning whether Rhonda had permission to use the Spataros' vehicle. Thus, the initial question is whether Rhonda's use of the vehicle was “with permission,” either expressed or implied. Generally, implied permission is
“an inferential permission, in which a presumption is raised from a course of conduct or relationship between the parties in which there is mutual acquiescence or lack of objection signifying consent.”
[I]t is “actual permission circumstantially
proven”. . . . The essence of the concept is
that from all the surrounding circumstances a
fact-finder could reasonably conclude that
the use by the putative permittee was not
contrary to the intent or will of the alleged
permitter.
[Zurich, supra, 62 N.J. at 167-68 (citations
omitted).]
Once established that "the first user [Rhonda] in fact ha[d] permission from the named insured, lack of permission, whether express or implied, of such named insured for use by a later permittee is irrelevant to coverage, short of theft, or the like." Tooker v. Hartford Acc. and Indem. Co., 128 N.J. Super. 217, 221-22 (App. Div. 1974)(citing Odolecki v. Hartford Acc. & Indem. Co., 55 N.J. 542, 550 (1970)); Zurich, supra, 62 N.J. at 174), appeal after remand, 136 N.J. Super. 572 (1975), certif. denied, 70 N.J. 137 (1976). Thus, if the trial court were to conclude that Rhonda had initial permission to drive the Spataros' vehicle, coverage should be afforded by Rutgers. However,
before permission can be said to flow from the owner or named insured to the third-person-driver through the alleged initial permittee the latter must be found from the circumstances to have assumed charge or dominion over the car pursuant to the owner's permission and to have remained in that relationship to the vehicle while allowing the third person to drive it. If those facts are found, the driver is covered by the policy.
[Zurich, supra, 62 N.J. at 174-75.]
The second issue concerns whether the policy exclusion in section A.8 applies to family members, given the history of the "reasonable belief" clause. Id. at 169-72. We believe that the Appellate Division dissenter correctly concluded that the A.8 exclusion should apply to a “family member,” although generally exclusions must be broadly interpreted to afford coverage to family members. The proper test for measuring whether the belief was reasonable is “the reaction of a reasonable [person] of [Joseph's] age, personality and social milieu, subject to such attendant influences on his judgment and mind as may be credibly discerned from the proofs.” Id. at 171-72 (citing Bucak v. Edward F. Zusi Brass Foundry, 49 N.J. Super. 187, 211 (App. Div.), certif. denied, 27 N.J. 398 (1958)).
Justice Mountain described the concept thus:
[T]he policy describing coverage as to non-owned vehicles is broader than that of the omnibus clause. . . . [W]hether a driver reasonably believes he has permission to operate a particular automobile depends upon the driver's subjective state of mind, examined in light of his social milieu and affected, doubtless, by the mores of a peer group with whom he associates.
[Zurich, supra, 62 N.J. at 183 (Mountain,
J., concurring in part and dissenting in
part).]
We thus held in Ryan v. LCS, Inc.,
311 N.J. Super. 618 (App. Div.
1998), aff'd o.b.,
157 N.J. 251 (1999), that a family member of
the policy holder who operated a non-family car that he had
stolen could not have had a reasonable belief that he was
operating that car with the owner's permission.
Before exploring Joseph's reasonable belief, a threshold
question in this case is whether he was a family member.
Because of marital problems, Joseph had been living
intermittently with the Spataros before the accident. The policy
defines “family member” as a “person related to you by blood,
marriage or adoption who is a resident of your household. . . .”
The Appellate Division remanded that issue to the trial court.
Because we conclude that the trial court's finding that
Joseph could not have reasonably believed that he had permission
to operate the Spataro's car was based on substantial evidence in
the record, we do not reach the issue of whether Joseph was a
family member. Although the trial court did not articulate its
use of the broader “reasonable belief” standard for coverage
applicable to family members, we are satisfied it took into
account both the objective and subjective aspects of the test in
concluding that a person of Joseph's age and social setting
(whose license had been suspended for nine years) could not
reasonably have believed that the Spataros would have given him
permission to operate their car.
Because the trial court made no findings concerning whether
Rhonda had initial permission, express or implied, to use the
car, we agree that that issue should be remanded. Without
specifically naming the person to whom the trial court was
referring, the court concluded that "[t]his is not a case where
initial permission is granted, and then the borrower 'extends'
beyond the scope of permission," and that “[t]he only time
permission to drive a Spataro vehicle was asked, it was denied in
no uncertain terms.” The question is whether the use of the
Spataros' car by their daughter-in-law Rhonda, occasioned by the
defective brakes on the Collins' car, would have been “contrary
to the intent or will” of the Spataros. Zurich, supra, 62 N.J.
at 168.
In sum, if Rhonda had initial permission to use the car,
Joseph's reasonable belief becomes irrelevant; however, if
Rhonda did not have permission to use the car, Joseph, if he was
a family member, would not be covered because he could not have
had a reasonable belief that he had permission to drive the car.
Accordingly, the judgment of the Appellate Division is
affirmed in part and reversed in part. The matter is remanded
to the Law Division to determine whether Rhonda had express or
implied permission to drive the vehicle. We leave to the trial
court the determination of whether supplementation of the record
is necessary.
CHIEF JUSTICE PORITZ and JUSTICES POLLOCK, O'HERN, GARIBALDI
and COLEMAN join in this PER CURIAM opinion. JUSTICES HANDLER
and STEIN have filed a separate opinion, concurring in part and
dissenting in part.
SUPREME COURT OF NEW JERSEY
A-51/
52 September Term 1998
RUTGERS CASUALTY INSURANCE COMPANY,
Plaintiff-Appellant,
v.
JOSEPH E. COLLINS,
Defendant-Respondent.
EDWARD G. IOVINO, as Administrator
Ad Prosequendum of the Estate of
Rhonda Collins, Deceased,
Plaintiff-Respondent,
v.
RUTGERS CASUALTY INSURANCE COMPANY
and JAMES SPATARO,
Defendants-Appellants,
and
JOSEPH E. COLLINS,
Defendant-Respondent.
HANDLER and STEIN, J.J., concurring in part and dissenting
in part.
We would agree with Part I of the majority opinion but disagree that the A.8 exclusion applies to family members. We would remand to determine if Joseph Collins was a family member within the meaning of the policy.
NO. A-51/52 SEPTEMBER TERM 1998
ON APPEAL FROM Appellate Division, Superior Court
ON CERTIFICATION TO
RUTGERS CASUALTY INSURANCE
COMPANY,
Plaintiff-Appellant,
v.
JOSEPH E. COLLINS,
Defendant-Respondent.
EDWARD G. IOVINO, as Administrator
Ad Prosequendum of the Estate of
Rhonda Collins, Deceased,
Plaintiff-Respondent,
v.
RUTGERS CASUALTY INSURANCE
COMPANY and JAMES SPATARO,
Defendants-Appellants,
and
JOSEPH E. COLLINS,
Defendant-Respondent.
DECIDED June 18, 1999
Chief Justice Poritz PRESIDING
OPINION BY PER CURIAM
CONCURRING OPINION BY
CONCURRING/DISSENTING OPINION BY Justices Handler and Stein
Footnote: 1N.J.S.A. 39:6B-1(a) states:
Every owner or registered owner of a motor vehicle registered or principally garaged in the State shall maintain motor vehicle liability insurance coverage, under provisions approved by the Commissioner of Banking and Insurance, insuring against loss resulting from liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of a motor vehicle . . . .