MANUEL SANCHEZ VS. NEW JERSEY TURNPIKE AUTHORITY (L-8597-12, MIDDLESEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court."
Although it is posted on the internet, this opinion is binding only on the
parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1969-15T3
MANUEL SANCHEZ and
YOLANDA SANCHEZ,
Plaintiffs-Appellants/
Cross-Respondents,
v.
NEW JERSEY TURNPIKE
AUTHORITY, PORFIRIO I.
RAMON and MARIA E. RAMON,
Defendants-Respondents,
and
NEW JERSEY MANUFACTURERS
INSURANCE,
Defendant-Respondent/
Cross-Appellant.
______________________________
Argued October 17, 2017 – Decided November 16, 2017
Before Judges Reisner and Hoffman.
On appeal from the Superior Court of New
Jersey, Law Division, Middlesex County, Docket
No. L-8597-12.
Thomas De Seno argued the cause for
appellants/cross-respondents.
Gage Andretta argued the cause for respondent
New Jersey Turnpike Authority (Chiesa
Shahinian & Giantomasi, PC, attorneys; Bruce
Ettman, on the brief).
John A. Camassa argued the cause for
respondent/cross-appellant New Jersey
Manufacturers Insurance Company (Camassa Law
Firm, PC, attorneys; Mr. Camassa, of counsel;
Christopher M. Brady, on the briefs).
PER CURIAM
Plaintiffs Manuel and Yolanda Sanchez appeal from an order
dated December 4, 2015, denying their motion for reconsideration
of a September 24, 2015 order, which in effect determined that New
Jersey Manufacturers Insurance Company (NJM) did not owe
plaintiffs underinsured motorist (UIM) coverage for an automobile
accident. NJM filed a protective cross-appeal from an October 23,
2015 order denying its motion for a new trial on damages, claiming
errors in the jury instructions.
On plaintiffs' appeal, we vacate the September 24, 2015 and
December 4, 2015 orders, and we remand the matter to the trial
court for a plenary hearing to decide material factual disputes
concerning the coverage issue. NJM failed to perfect the cross-
appeal by providing us with all of the pertinent trial transcripts.
Without the entire trial record, including the testimony of the
damages experts, we cannot determine whether any alleged charging
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errors had a clear capacity to produce an unjust result. See R.
2:10-2. Accordingly, we dismiss the cross-appeal.
I
In 2011, Manuel Sanchez,1 a State Trooper, was injured in an
auto accident while he was on duty, driving a vehicle owned and
insured by the New Jersey Turnpike Authority (the Authority). The
other driver, Porfirio Ramon, had a $15,000 auto insurance policy.
After settling with Ramon for the $15,000 policy limit, plaintiffs
sought UIM coverage from the Authority and from Manuel's personal
auto insurance policy issue by NJM. There was no dispute that the
NJM policy provided $300,000 in UIM coverage. A dispute arose as
to whether the Authority provided $15,000 or $2 million in UIM
coverage.
The dispute was based on the following unusual set of facts.
The Authority was self-insured, but had procured an excess policy
from Chartis Claims, Inc.2 for amounts over $2 million.
Endorsement No. 23 of that policy, which was titled
1
Manuel's wife Yolanda sought per quod damages. We refer to Mr.
and Mrs. Sanchez collectively as plaintiffs. For clarity, and
intending no disrespect, we refer to them individually by their
first names.
2
The Chartis policy indicates that coverage was being provided by
"National Union Fire Insurance Company of Pittsburgh, Pa."
However, the parties have referred to the insurer as "Chartis" and
we will do so as well.
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"Uninsured/Underinsured Motorists Coverage Endorsement," could be
construed to mean that Chartis was providing UIM coverage for
occupants of the Authority's vehicles on an excess basis, and that
the Authority was self-insured for $2 million in UIM coverage.
The endorsement included the following sentence:
"Uninsured/Underinsured Motorists Retained Limit $2,000,000
INSURING AGREEMENT." The Authority's position was that the Chartis
policy only covered third-party claims, not UIM claims. The
Authority contended that Endorsement No. 23, including the
retained limit language concerning UIM coverage, was insurance
company boilerplate, which was not applicable to the type of
coverage the Authority had purchased from Chartis and should not
have been included in the policy.
While the UIM litigation was pending, plaintiffs filed a
motion to amend the complaint to add Chartis as a defendant. The
assigned motion judge (the first judge) did not decide whether the
Chartis policy in fact provided UIM coverage or what amount of UIM
coverage the Authority provided. Rather, he reasoned that, even
if the Chartis policy included UIM coverage, plaintiffs failed to
demonstrate that their damages exceeded $2 million, so as to
trigger any "umbrella coverage" the Chartis policy provided.
Accordingly, the judge denied the motion because the amendment
would have been "futile."
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It appears from the record that the language in the Chartis
endorsement had created issues in other auto accident cases
involving the Authority, concerning the level of the Authority's
underlying UIM coverage. At his deposition, the Authority's deputy
executive director, John O'Hern, testified that the Authority's
self-insured retention limit for UIM coverage was $15,000, but he
testified that there was no written documentation setting that
coverage limit. O'Hern testified to his understanding that UIM
coverage of $15,000 per individual and $30,000 per accident was
statutorily required. O'Hern also testified to his understanding
that the Authority never had UIM excess coverage from Chartis and
Endorsement No. 23 was "a mistake." He noted that section O of
the exclusions section of the basic Chartis policy stated that the
policy did not apply to the insured's UIM obligation.
O'Hern acknowledged evidence that in two prior cases
involving injured State Troopers, the Authority had settled UIM
claims for considerably more than $15,000. He testified that in
both of those cases, the Authority's initial litigation position
had been that its UIM limits were $15,000/30,000. The minutes of
the Commission meeting concerning one of the settlements indicate
that the plaintiff in that case claimed that he suffered a
traumatic brain injury. However, at his deposition, O'Hern also
recalled a more recent case in which the Authority had litigated
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its obligation to provide UIM coverage and had obtained a Law
Division decision holding that its UIM coverage was limited to
$15,000. According to O'Hern, that decision arose from a court
hearing in which he testified.
On February 15, 2012, the Authority's acting director of law
authored a memo indicating that the Authority's limit had always
been $15,000, but that the Chartis policy language had created an
issue on that point. He recommended that the Authority's Board
of Commissioners raise the UIM self-insured limit to $250,000 to
adequately protect the Authority's employees. He also recommended
asking Chartis to delete the controversial language from its
policy. On February 28, 2012, the Commissioners approved that
recommendation, voting to change the Authority's UIM self-insured
retention limit to $250,000 and authorizing the executive director
to ask Chartis to remove Endorsement No. 23 from its policy.3
According to O'Hern, the Authority's current umbrella policy does
not contain a provision for UIM coverage.
Despite knowing that there was an issue over the Authority's
self-insured limit, plaintiffs settled with the Authority for
$67,000. The settlement agreement recited that it was without
prejudice to the Authority's position that at the time of the
3
The memo and the Commission minutes refer to Endorsement No.
"24" but we conclude this is a typographic error.
6 A-1969-15T3
accident, it only provided $15,000 in UIM coverage, regardless of
the terms of any existing excess policy. Plaintiffs then proceeded
to trial against NJM, before a second judge.
Shortly before the trial, NJM filed a motion asking the trial
court to declare that the Authority's UIM coverage was $2 million,
and that NJM's policy was excess to the coverage provided by the
Authority. Instead of deciding the coverage issue, the second
judge declined to entertain the motion and proceeded with the
trial. The jury returned a verdict of $250,000 in damages for
Manuel and $50,000 in per quod damages for Yolanda. After the
trial, the second judge determined that the Authority's UIM self-
insured retention limit was $2 million and that, pursuant to the
language of the NJM policy, NJM's coverage was excess to that
provided by the Authority. In effect, that determination vitiated
the $300,000 jury verdict against NJM.
II
On this appeal, plaintiffs contend that the language in the
Chartis policy was incorrect, and that the language of an excess
policy cannot legally determine the insured public entity's
underlying coverage limit. The Authority supports plaintiffs'
position. The Authority argues, in the alternative, that it had
no obligation to provide any UIM coverage and did not include such
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coverage in its self-insured retention, or that its UIM obligation
was limited to $15,000.
Ordinarily, the interpretation of an insurance policy is a
contract question that presents solely a legal issue. See Powell
v. Alemaz, Inc., 335 N.J. Super. 33, 37 (App. Div. 2000). However,
in this case, where the Authority was self-insured, the issue is
not so simple. After reviewing the record, we conclude that there
is a material factual issue concerning the Authority's UIM coverage
at the time of the 2011 accident. The Chartis policy only provides
coverage that is excess to underlying existing coverage. It
neither provides primary coverage nor creates any underlying
coverage. See Arico v. Twp. of Brick, 281 N.J. Super. 471, 475
(App. Div.), certif. denied, 142 N.J. 515 (1995). Language in the
Chartis policy concerning the Authority's amount of underlying UIM
coverage might constitute some evidence of that coverage. However,
the Chartis policy language cannot not create such underlying
coverage if it does not otherwise exist.
There are factual issues concerning how the contested
language came to appear in the Chartis policy; whether the
Authority negotiated or paid for any UIM or UM coverage from
Chartis; or whether Endorsement No. 23, or at least the included
language about the retention amount, was simply boilerplate that
Chartis included in error. We understand the first judge's
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reasoning in denying plaintiff's motion to add Chartis as a party,
however, Chartis may have records or employees that can shed light
on the coverage issue. If Chartis will not voluntarily produce
its information on remand, it may be added as a party for discovery
purposes only.
The record also presents factual issues concerning the
Authority's policies and its past conduct with respect to providing
UIM coverage to persons driving the Authority's vehicles. It is
difficult to comprehend how a public agency such as the Authority
could have no contemporaneous records defining its self-insured
UIM coverage. Because there is no statutory requirement for UIM
coverage, it is also unclear whether or how the Authority could
provide $2 million in UIM coverage, without a public vote of its
Commissioners authorizing that coverage.4 See N.J.S.A. 17:28-1.1
(requiring auto insurance policies to include UM, but not UIM,
coverage); Downey v. City of Elizabeth, 273 N.J. Super. 335, 338-
39 (App. Div. 1994) (self-insured public entity need not provide
UIM coverage). It is further unclear why the Authority settled
UIM claims for amounts so far in excess of what it claimed was its
4
NJM's appendix contains the minutes of a July 27, 2010 Commission
vote authorizing the renewal of the Chartis umbrella policy, but
the resolution only refers generally to auto liability excess
coverage and makes no mention of authorizing any underlying UIM
coverage.
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self-insured limit of $15,000. The parties should have the
opportunity to present and cross-examine witnesses on the factual
issues and the trial court should have the opportunity to gauge
their credibility.
In response to our questions at oral argument, the Authority's
counsel conceded that an evidentiary hearing was required, while
counsel for NJM and plaintiffs insisted that their respective
positions should prevail without a hearing. In fairness to the
second judge, we acknowledge that none of the parties specifically
asked for a hearing in the trial court. However, in view of the
amount of money at stake here, and the disputed factual and
credibility issues, we conclude that a plenary hearing is
required.5
Accordingly, we vacate the September 24, 2015 and December
4, 2015 orders, and we remand for further proceedings consistent
with this opinion. We do not retain jurisdiction.
Dismissed in part, vacated in part and remanded.
5
In light of our disposition of the appeal, we do not address the
parties' additional arguments.
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