JANENE RUSSO and GARY RUSSO, Plaintiffs–Respondents, v. CHUBB INSURANCE COMPANY OF NEW JERSEY, Defendant/Third–Party
Plaintiff–Respondent, v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY, Defendant/Third–Party Defendant–Appellant.
In this insurance coverage dispute, New Jersey Manufacturers Insurance Company (NJM) appeals from summary judgment orders of the Law Division requiring that it provide under-insured motorist (UIM) coverage for a vehicle that it claims it did not insure. We reverse.
Plaintiff Janene Russo was injured in a motor vehicle accident on June 3, 2006. She was driving a 2005 Land Rover that was leased by a business entity associated with her employer, GSR Architectural, Inc. (GSR).1 Russo sought insurance coverage from NJM, which had issued a business motor vehicle policy to GSR. NJM denied her claims, stating that the Land Rover was not covered by its policy.
Russo then filed claims for personal injury protection (PIP) and UIM coverage from a personal auto insurance policy with Chubb Insurance Company of New Jersey. Chubb paid PIP benefits, and in June 2008, consented to Russo's settlement of her personal injury claim against the driver of the car that had struck her vehicle. See Longworth v. Van Houten, 223 N.J.Super. 174 (App.Div.1988). However, Chubb later denied Russo's claim for UIM coverage on the ground that NJM was the primary carrier for the business vehicles of GSR.
The Russos filed suit against Chubb to compel coverage. Chubb, in turn, brought a third-party complaint against NJM, and the Russos then amended their complaint to name NJM as a direct defendant in their lawsuit.
Following discovery, the trial court heard cross-motions for summary judgment and held that NJM was the primary carrier for UIM coverage and Chubb was required to provide excess coverage above the limits of the NJM policy. NJM appeals from that decision.
The facts regarding the NJM policy are essentially undisputed. NJM issued a business motor vehicle insurance policy to GSR with one million dollars of UIM coverage. The policy was in effect from August 2005 to August 2006, that is, at the time of Russo's accident. Initially, the policy covered only a 1995 Ford pick-up truck, as shown on the initial declarations page of the policy dated July 19, 2005, and also an endorsement and revised declarations page dated November 28, 2005.
The Land Rover was leased to a business entity named Rure Associates, Inc., with which Gary Russo was associated. In 2005, it was insured under an NJM policy issued to an entity named Urban Enterprises, Inc. However, that NJM policy was cancelled for failure to pay premiums by written notification from NJM dated September 13, 2005. Consequently, it appears that the Land Rover had no insurance coverage during the latter months of 2005.
On December 29, 2005, Janene Russo called NJM and requested that the Land Rover be added to the GSR policy. NJM issued a letter that same day indicating it would “continue coverage” on the 2005 Land Rover, but that this coverage would “terminate in 30 days unless [NJM] receive[d]” documentation proving the Land Rover was leased by GSR and registered to GSR in New Jersey. By a revised endorsement and declarations page dated January 17, 2006, NJM added the Land Rover to the GSR policy, effective December 30, 2005.
Plaintiffs received the December 29, 2005 letter from NJM. In response to requests for admissions in this litigation pursuant to Rule 4:22–1, plaintiffs admitted they were “advised ․ that all coverage for the 2005 Land Rover would terminate in 30 days unless NJM received the required documentation.” NJM did not receive the requested documents showing that the Land Rover was leased to GSR and registered in New Jersey. Near the end of the thirty-day period, NJM faxed the same December 29, 2005 letter to GSR's office on January 27 and 31, 2006, and on February 1, 2006. Each fax contained a handwritten “Final Request” at the top of the letter. No one provided a lease of the Land Rover in GSR's name during the thirty-day period and at any time before Russo's accident.
NJM deleted the Land Rover from the GSR policy on February 3, 2006, revising the declarations page effective January 31, 2006. As a result, the February 3, 2006 endorsement and declaration page mailed to GSR again listed only the 1995 Ford pick-up as a covered vehicle, and it credited $1911 to GSR as a return premium. In the next several months, NJM sent GSR several endorsements adding other vehicles to the policy, but none of the revised declaration pages listed the Land Rover as a covered vehicle.
In April 2006, with proper written notice as required by the terms of the GSR policy, NJM cancelled the GSR policy effective April 4, 2006, for nonpayment of premiums. Subsequently, NJM reinstated the policy effective April 21, 2006. The May 1, 2006 endorsement and declarations page reinstating the policy listed five vehicles — two Fords, a Chevrolet, a Dodge, and a Volkswagen. It did not list the Land Rover as a covered vehicle.
As previously stated, on June 3, 2006, Janene Russo was involved in an accident while driving the Land Rover. NJM's June 13, 2006 letter denying her claim for coverage stated that the Land Rover had been “deleted” from the policy “effective January 31, 2006.” After NJM's denial of coverage, GSR executed documents on June 24, 2006, transferring the Land Rover lease from Rure Associates to GSR. NJM received the transfer documents and added the Land Rover as a covered vehicle under the GSR policy effective on July 8, 2006.
Russo's claim for PIP and UIM coverage from Chubb was under a personal auto policy Chubb had issued to Gary Russo in September 2005 for a 2000 Ferrari. The Chubb policy had a UIM limit of $500,000.
In granting summary judgment against NJM and in favor of Chubb, the trial court stated in a written opinion that NJM did not effectively cancel its policy with respect to the Land Rover. Citing both the terms of the NJM policy and New Jersey statutes and regulations, the court concluded that NJM was required to provide a written notice of cancellation in order to remove the Land Rover from the GSR policy. It reasoned that “[r]emoving an insured vehicle is a cancellation of a policy as to that vehicle.” We disagree with that conclusion.
In reviewing a grant of summary judgment, we apply the same standard under Rule 4:46–2(c) and Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445–46 (2007). Furthermore, we exercise plenary review because the issues on appeal pertain to interpretation of an insurance contract on the basis of undisputed facts. See Simonetti v. Selective Ins. Co., 372 N.J.Super. 421, 428 (App.Div.2004). We construe insurance policies liberally in favor of the insured so “that coverage is afforded ‘to the full extent that any fair interpretation will allow.’ ” Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990) (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961)). However, if there is no ambiguity in the insurance policy, we interpret it consistent with its plain meaning. Ibid.; accord Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010).
Paragraph A.7.b. of NJM's policy pertains to “Cancellation of Policies In Effect For 60 Days or More.” It requires written notice at least thirty days before the effective date of the cancellation if NJM “cancel[s] this policy.” In contrast, Paragraph B of the Common Policy Conditions, which is entitled “CHANGES,” provides:
This policy contains all the agreements between you and us concerning the insurance afforded. The first Named Insured shown in the Declarations is authorized to make changes in the terms of this policy with our consent. This policy's terms can be amended or waived only by endorsement issued by us.
Here, NJM did not cancel the policy on February 3, 2006, when it removed the Land Rover from the list of covered vehicles. It changed a term of the policy by issuing an endorsement and a revised declaration page. That change neither violated the terms of the policy nor any other legal requirement applicable to the policy.
As stated by the Law Division in Delcampo v. N.J. Auto. Full Ins. Underwriting Ass'n, 266 N.J.Super. 687, 700–01 (Law Div.1993):
[T]he term “coverage” is narrower in scope than the term “policy” and connotes a distinct part of an insurance policy providing the policyholder with insurance as to a defined risk or risks coming within its terms; whereas, the term “policy” refers to the entire insurance contract, the terms of which may furnish insurance or “coverage” for many distinct or different types of risks.
The GSR policy distinguishes between the terms “policy” and “coverage.” The “Common Policy Conditions” refer to “All Coverage Parts included in this policy․” On the other hand, the term “this policy” in the singular is repeatedly used in all parts of the policy to refer to the whole policy and all its coverages. The cancellation provision of paragraph A.7.b. applies to cancellation of “this policy,” meaning the whole policy.
As reflected in the factual circumstances of this case, an insured may change coverage on different vehicles that it adds to or removes from coverage throughout the term of the policy. Such changes are brought about by means of policy endorsements and revised declaration pages. Each revision of the policy to insure or delete a different vehicle does not require thirty- days written notice and formal cancellation of the policy as to that vehicle.
In addition to the terms of the policy, the trial court cited N.J.S.A. 17:29C–7 and –8 and N.J.A.C. 11:3–8.10 and –8.11 as statutory and regulatory provisions requiring that NJM send a written notice of cancellation. The statutes also refer to cancellation or non-renewal of “a policy,” and the regulations merely implement the statutes. Even if the statutes and regulations required thirty-days written notice of the cancellation of coverage of a vehicle, they apply to personal automobile policies, not to a commercial or business policy as in this case. N.J.S.A. 17:29C–6(A); N.J.A.C. 11:3–8.1.
NJM covered the Land Rover provisionally for one month, from December 30, 2005, to January 30, 2006. It tried repeatedly to obtain documentation establishing that the Land Rover was either owned or leased by GSR and registered in New Jersey. Because plaintiffs and GSR failed to provide the necessary documentation, NJM had no obligation to continue coverage of that vehicle. It was not required to provide written notice thirty days in advance to effect a change of “coverage” with respect to the vehicles insured by the policy.
Additionally, even if we had determined that the February 3, 2006 endorsement and revised declaration page did not effectively delete the Land Rover from coverage, the GSR policy was formally and legally cancelled in April 2006. When it was reinstated about two weeks later, the Land Rover was not listed as one of the covered vehicles. NJM did not collect any premiums to insure the Land Rover after the time it was removed from the policy on January 31, 2006.
In sum, the Land Rover was not a covered vehicle under the NJM policy when Janene Russo suffered injuries in an accident on June 3, 2006.
We reverse the order for summary judgment and direct that the complaint and third-party complaint against NJM be dismissed. Our disposition renders moot the other arguments and points raised on appeal. We remand to the Law Division for further proceedings in conformity with our decision with respect to plaintiffs' complaint against Chubb.
Reversed and remanded. We do not retain jurisdiction.
1. FN1. Janene Russo did office work for her husband Gary Russo's window sales and installation business. GSR was her corporate employer, and other corporate entities associated with Gary Russo also operated out of the same location.