Injured Passenger Involved In Auto Accident Not Entitled To Underinsured Motorist Coverage Under Owner’s Business Insurance Policy

Plaintiff, Maria Lopez Menjivar, and her friend and plaintiff’s boyfriend, had just returned from visiting a casino in Pennsylvania.  Plaintiff’s friend had driven her minivan and parked it on the side street in Plainfield, near where the plaintiff and her boyfriend lived.  While plaintiff was a back seat passenger of the vehicle, the defendant Neltson Wilfredo rear ended the vehicle and, as a result, plaintiff suffered personal injuries.  The issue in Menjivar v. Ramirez, 2021 N.J. Super. Unpub. LEXIS 3145 (App. Div. Dec. 22, 2021) was whether plaintiff was entitled to underinsured motorist (UIM) benefits under her friend’s business auto policy.

The defendant Wilfredo was driving a vehicle owned by Gloria Ramirez.  Ms. Ramirez had a basic automobile insurance policy that did not include bodily injury liability coverage.  The friend’s minivan was owned by a limited liability company J&Y Drywall (J&Y) which had an automobile insurance policy issued by State Farm.  Neither plaintiff, nor her friend were employees of J&Y.  The record does not explain what a relationship, if any, plaintiff’s friend had to J&Y.  It was undisputed, however, that at the time of the accident, the vehicle was not being used for business purposes related to J&Y.

Plaintiff sued Wilfredo who was operating the vehicle that struck them and Ramirez, the owner of the vehicle.  Neither responded to the complaint and both had their claims administratively dismissed for lack of prosecution.

Thereafter, plaintiff amended her complaint to add State Farm as a defendant, claiming that she was entitled to uninsured motorist coverage under the State Farm policy.  State Farm filed a motion for summary judgment to dismiss the case.  It argued that the plaintiff’s actual claim was for UIM coverage because the Ramirez car had a basic insurance policy and, therefore, under the law, a vehicle with a basic policy was not considered to be “uninsured.”  Further, State Farm contended that its policy did not provide UIM coverage to plaintiff because the policy limited UIM benefits to J&Y, the named insured, resident relatives, and “anyone who may seek indemnity due to injury to a named insured or a resident relative.”

At the trial court level, the judge heard the arguments on the summary judgment motion, found no ambiguity in State Farm’s policy and agreed that the State Farm policy did not provide UIM coverage to the plaintiff under the circumstances.  Thus, it granted summary judgment to State Farm.

Plaintiff appealed that ruling to the Appellate Division.  She argued that the State Farm policy was ambiguous and should be construed against State Farm.  Additionally, the New Jersey Association for Justice (“Association”) filed a brief to appear as amicus curiae.  It argued that the Legislature did not intend to leave someone like plaintiff without coverage.  It further argued that the basic policy on Ramirez’s vehicle should be treated as providing no coverage and hence, plaintiff should be able to recover under State Farm’s uninsured motorist coverage.

The Appellate Division rejected the arguments made by plaintiff and the Association.  It found that the State Farm policy was clear and unambiguous and did not provide UIM coverage to plaintiff.  Further, it found that the argument made by the New Jersey Association for Justice was inconsistent with the plain language of the statute.

The Court considered the State Farm policy language and found that UIM coverage was limited to an “insured,” “resident relatives,” and any person entitled to recover damages due to injury to the named insured or a resident relative.  The Appellate Division pointed out that the named insured on the policy was J&Y and that plaintiff was not a named insured, nor was she an employee of J&Y.  Thus, the Court found under the clear language of the State Farm policy, she was not entitled to UIM coverage.

Plaintiff argued that the policy was ambiguous because it discussed uninsured and underinsured motorist coverage in the same section.  The Appellate Division commented that “[w]hile State Farm’s policy is not a model of clarity, there is no ambiguity concerning the limitations on the UIM coverage.”  The Court further pointed out that uninsured coverage and underinsured motorist coverage were discussed in separate sections within the policy.  Moreover, the policy clarified that its definition of an “uninsured motor vehicle” did not include an “underinsured motor vehicle.”

The Appellate Division noted that the Ramirez automobile insurance policy was a basic policy which did exclude bodily injury liability coverage.  Further, the Court pointed out that the Legislature has stated that an automobile covered by a “basic” insurance policy is not considered to be an “uninsured motor vehicle.”  N.J.S.A. 17:28-1.1(2)(d).  Therefore, the Appellate Division found no ambiguity in State Farm’s policy concerning the distinction between uninsured coverage and UIM coverage.

Further, the Court considered the plaintiff’s argument that the term “resident relative” created an ambiguity concerning plaintiff.  The Appellate Division noted that where the named insured is a corporation, the corporation has no “resident relatives.”  The Court found that this definition did not render the coverage “illusory” because the governing statute did state that an individual employed by an insured corporation is deemed to be provided with a maximum UIM coverage available under the policy.  Thus, the Appellate Division found that State Farm’s coverage would extend to some individuals, but not to plaintiff.

Last, the Appellate Division rejected the Association’s argument that a car insured by a basic policy lacking bodily injury liability insurance should be considered an uninsured vehicle for coverage purposes.  The Court found this argument to be inconsistent with the plain language of the relevant statutory provisions.  The Legislature gave insurers options to have various types of coverage under a basic automobile insurance policy.  The statute made personal injury liability coverage optional.  Further, the statute specifically states that a vehicle covered by a basic policy is not considered an uninsured vehicle.

Thus, the Appellate Division rejected the Association’s argument that it should construe plaintiff’s claim as a claim for uninsured motorist coverage.  The Court noted that this argument must be made to the Legislature and declined to create an exception that was foreclosed by the plain language of the statute. 

Tags: insurance, underinsured motorist coverage