Court: New Jersey Superior Court Appellate Division; May 20, 1998; New Jersey; State Appellate Court
The court's opinion, delivered by Judge Coburn, addresses a declaratory judgment action regarding the rights of plaintiffs Gary and Barbara Campbell under their automobile insurance policy with Lion Insurance Company. The Campbells seek to arbitrate claims for uninsured or underinsured motorist benefits, while Lion's sole defense is a policy exclusion stating no coverage applies when the insured vehicle is used for a fee, except for share-the-expense car pools. The Law Division ruled in favor of the Campbells, ordering Lion to provide coverage and appoint an arbitrator, but Lion has appealed.
The background involves an accident on May 22, 1992, where Gary Campbell, driving his own van, was injured when struck by Joanne Livolsi’s vehicle, which was insured by Market Transition Facility (MTF). MTF initially denied coverage due to cancellation for non-payment. The Campbells settled with MTF for half the policy limits. At the time of the accident, they were insured by Lion under a policy covering two vehicles, including the van, which Gary primarily used for deliveries of the newspaper "Auto Shopper," a commercial activity. Despite stating the van was for pleasure use, it was utilized for business and had commercial plates.
Gary had previously entered a "Contract Hauler Agreement" with South Jersey Publishing Company, which paid him $500 weekly for newspaper deliveries. The agreement required deliveries seven days a week, emphasizing the commercial nature of the van's use at the time of the accident. The policy exclusion cited by Lion is central to the appeal.
Hauler will receive $25.00 for each additional bundled section of the Monday through Saturday Edition. Deductions from the delivery fee may occur under certain circumstances: if Hauler's delivery vehicle breaks down, The Press may send a vehicle to complete the delivery, and the costs incurred will be deducted from Hauler's fees at a rate of $0.40 per mile driven and actual labor costs. Additionally, if any newspapers are damaged after being received by Hauler, The Press will deduct the full retail price of those newspapers from Hauler's delivery fee.
Hauler is characterized as an independent contractor, free to engage in work for others during and after the agreement period. The Press will not withhold any taxes or other deductions from Hauler’s fees, which makes Hauler solely responsible for any applicable taxes. Despite Hauler's claims of using the vehicle for personal purposes and not perceiving himself as 'in business', he earned over $25,000 annually from newspaper hauling.
The excerpt also addresses a legal question regarding the interpretation of an insurance policy's exclusion of uninsured and underinsured motorist coverage when the vehicle is being used for profit. Citing Mazzilli v. Accident, Cos. Ins. Co. and other cases, it emphasizes that insurance policies should be interpreted in favor of the insured when ambiguous. Courts consider whether alternative language could have clarified coverage and generally resolve doubts in favor of the insured, especially regarding exclusion clauses.
The 'carrying property for a fee' exclusion remains unaddressed by the state's courts but has been interpreted in other jurisdictions, notably in *United States Fidelity & Guar. Co. v. Lightning Rod Mut. Ins. Co.*, 80 Ohio St.3d 584 (1997). This case highlighted the ambiguity of the term 'fee' in relation to a salaried employee using a personal vehicle to deliver products. The court defined 'fee' as compensation for official services or specific acts, leading to two interpretations of the exclusion: one that excludes coverage for any vehicle use when the insured receives payment, and another that excludes coverage only when payment is specifically for the act of transport. Under the first interpretation, the employee’s delivery of pizza would be excluded due to hourly wages from Domino's. Conversely, under the second interpretation, since no specific fee was paid for the delivery, coverage would not be excluded. The policy explicitly excludes commercial vehicle uses such as taxicabs or moving vans when payment is involved. Ultimately, the court ruled in favor of coverage for the employee’s accident due to the ambiguous policy language, noting that intent to cover commercial use is irrelevant when terms are unclear. The discussion also referenced *BPM Pizza, Inc.*, which indicated that 'fee' could be strictly construed to mean payments for specific contracts of carriage, as illustrated by another employee, Gary Campbell, who was compensated with separate fees for delivering newspapers, thus reinforcing the exclusion in his case.
Plaintiffs sought uninsured (UM) and underinsured (UIM) motorist coverage from Lion. The trial court allowed plaintiffs to pursue either coverage but focused solely on UM coverage despite plaintiffs’ counsel asserting entitlement to both. The plaintiffs’ appeal emphasizes their right to UIM coverage, which they argue is undermined by a public policy violation concerning an exclusion in their policy. However, the claim for UM coverage is barred due to a prior settlement with Livolsi's insurer, making it unnecessary to evaluate the trial court's public policy ruling on UM coverage exclusions.
The distinction between UM and UIM coverage is critical: UM coverage is mandatory in all policies to protect injured parties, while UIM coverage must be offered but not necessarily accepted. Legislative intent varies for both types of coverage, reflecting the broader implications of UM benefits for all policyholders versus the individual nature of UIM benefits. The court affirms that an insurance company can set conditions on UIM coverage unless explicitly prohibited by law. Nonetheless, policies must align with the insured's reasonable expectations, and exclusions should be interpreted strictly against the insurer. Ultimately, if policy language clearly indicates a lack of coverage, the insured must acknowledge this. The court reversed the trial court's decision.
The action was appropriately filed in the Law Division, referencing Government Employees Ins. Co. v. Butler, which established that actions seeking declarations of rights under an insurance policy are essentially contract construction matters within the jurisdiction of law courts. Plaintiffs cannot simultaneously claim both uninsured and underinsured motorist coverage against the same tortfeasor, leading to confusion regarding the applicable coverage, which will be elaborated on later. Additionally, in CSC Ins. Servs. v. Graves, the court indicated that an exclusionary phrase meant to limit coverage was improperly construed in relation to personal injury protection benefits, as it attempted to impose exclusions not permitted by specific New Jersey statutes (N.J.S.A. 39:6A-2a and N.J.S.A. 39:6A-7). Consequently, this case does not influence the current issue. Various other cases are cited for further context, although one case is noted as a potential counterpoint.
