GUERLINE FELIX VS. BRIAN v. RICHARDS BRIAN v. RICHARDS VS. GUERLINE FELIX VS. GEICO INDEMNITY COMPANY (L-5330-14 AND L-0455-15, ESSEX COUNTY AND STATEWIDE) ( 2018 )

NOT FOR PUBLICATION WITHOUT THE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-5093-16T4
GUERLINE FELIX,
Plaintiff,
v.
BRIAN V. RICHARDS,
Defendant.
________________________________
BRIAN V. RICHARDS and KASSANDRIA
RICHARDS, His Wife Per Quod,
Plaintiffs,
v.
GUERLINE FELIX, MID-ATLANTIC
INSURANCE COMPANY OF NEW JERSEY,
Defendants,
and
AAA MID-ATLANTIC INSURANCE
COMPANY,
Third-Party Plaintiff-
Respondent,
v.
GEICO INDEMNITY COMPANY,
Third-Party Defendant-
Appellant.
________________________________
Argued July 16, 2018 – Decided August 1, 2018
Before Judges Whipple and Suter.
On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket Nos.
L-5330-14 and L-0455-15.
Eric G. Siegel argued the cause for appellant
(McElroy, Deutsch, Mulvaney & Carpenter, LLP,
attorneys; Richard J. Williams, Jr., of
counsel and on the brief; Eric G. Siegel, on
the brief).
Sanford D. Kaplan argued the cause for
respondent (Muscio, Kaplan & Helfrich, LLC,
attorneys; Sanford D. Kaplan, on the brief).
PER CURIAM
The issue in this appeal is whether N.J.S.A. 17:28-1.4, the
Deemer statute, applies to an automobile insurance policy written
by GEICO Indemnity Company (GEICO) in Florida for a Florida
resident who had an accident in New Jersey. The Florida policy
did not include any bodily injury liability (BI) coverage. New
Jersey now permits its residents the option under N.J.S.A. 39:6A-
3.1, to purchase an automobile insurance policy with no BI coverage
or in an amount less than the minimum required of $15,000 per
person per accident or $30,000 for more than one person per
accident ($15,000/$30,000). GEICO contends the Deemer statute
should no longer require the out-of-state policy to include BI
2 A-5093-16T4
coverage when New Jersey residents can purchase a policy without
it.
GEICO appeals the June 10, 2016 order that granted summary
judgment to AAA-Mid-Atlantic Insurance Company of New Jersey
(AAA), requiring GEICO to provide $15,000/$30,000 in BI coverage
and to defend and indemnify its insured, Guerline Felix. GEICO
also appeals the October 14, 2016 order that granted attorney's
fees to AAA. We agree that the Deemer statute is applicable to
the Florida policy. We affirm both orders.
On September 21, 2013, Felix was involved in a motor vehicle
accident with Brian Richards in Newark, New Jersey. Felix and
Richards both alleged they sustained personal injuries from the
accident. Felix was a resident of Florida and purchased automobile
insurance from GEICO in that State. Her policy provided no
coverage for BI liability. It also provided that GEICO would not
provide BI coverage for a motor vehicle accident outside of her
State. Richards resided in New Jersey. His automobile insurance
policy was written by AAA. It included uninsured motorist coverage
(UM) and underinsured motorist (UIM) coverage.
3 A-5093-16T4
Felix sued Richards in the Superior Court, Essex County1 for
personal injury damages from the accident. Richards and his wife,
filing per quod, sued Felix and AAA for personal injuries in a
separate action.2
GEICO denied Felix a defense or indemnification under her
policy because the Florida policy did not provide BI coverage.
She retained personal counsel to represent her in the Richards
case. AAA, who was a defendant in Richards, filed a third-party
complaint against GEICO, claiming that it had no obligation to
provide UM or UIM coverage to Richards because, under the Deemer
statute, GEICO's policy was automatically deemed to include
$15,000/$30,000 in BI coverage. GEICO's answer opposed
application of the Deemer statute.
Both insurers filed motions for summary judgment in April
2016. AAA asked for a declaration that GEICO's policy was deemed
to include $15,000/$30,000 of BI coverage and to require GEICO to
defend and indemnify Felix. GEICO's summary judgment motion asked
to dismiss AAA's third-party complaint.
Following oral argument on June 10, 2016, the trial court
granted AAA's motion for summary judgment, ordering that GEICO's
1
Felix v. Richards, Docket Number ESX-L-5330-14.
2
Richards v. Felix, Docket Number ESX-L-0455-15.
4 A-5093-16T4
policy was to include the minimum BI coverage required in a
standard New Jersey automobile insurance policy. The court found
that the Deemer statute was "clear on its face" in requiring out-
of-state policies to include "a minimum $15,000 per person and
$30,000 per accident in bodily injury liability coverage." The
Deemer statute did "not create a carve out for basic New Jersey
policies as set forth in Section 3.1, as our Legislature did not
include express language reflecting such within the Deemer
statute." The court also rejected GEICO's argument that the Deemer
statute violated the Equal Protection Clause, relying on other
cases that addressed that issue.
Private counsel for Felix filed a motion to compel GEICO to
assign her counsel. That motion was granted and, although
counsel's application for an award of attorney's fees was denied
initially, on reconsideration, the court awarded $2835 in counsel
fees and $325 in costs. A stipulation of dismissal dismissed
claims between Felix and Richards but preserved GEICO's ability
to appeal the Deemer statute issue.
On appeal, GEICO contends the trial court's erroneous
interpretation of the Deemer statute created an irreconcilable
conflict between the basic policy and the Deemer statute. GEICO
argues that the Deemer statute, as amended by the Automobile
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Insurance Cost Reduction Act of 1998 (AICRA), L. 1998, c. 21,
should be interpreted to incorporate the basic policy and that by
doing so, the Florida policy should not have been deemed to include
$15,000/$30,000 in BI coverage. GEICO asserts the court's
interpretation of the Deemer statute violates the dormant Commerce
Clause and the Equal Protection Clause. Finally, GEICO disclaims
any obligation to defend or indemnify Felix or to pay for her
attorney's fees.
We review a court's grant of summary judgment de novo,
applying the same standard as the trial court. Conley v. Guerrero,
228 N.J. 339, 346 (2017). Summary judgment must be granted if
"the pleadings, depositions, answers to interrogatories and
admissions on file, together with the affidavits, if any, show
that there is no genuine issue as to any material fact challenged
and that the moving party is entitled to a judgment or order as a
matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016) (quoting R. 4:46-
2(c)).
The Deemer statute was "originally enacted in 1985 as part
of New Jersey's no fault automobile insurance plan." Cupido v.
Perez, 415 N.J. Super. 587, 592 (App. Div. 2010). Its purpose was
to "ensure that New Jersey residents injured by out-of-state
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vehicles have recourse to policies providing coverage at least as
broad as a New Jersey policy." Craig & Pomeroy, New Jersey Auto
Insurance Law, § 3:3, p. 64 (2018). New Jersey has "a legitimate
interest in its insurance scheme." Whitaker v. DeVilla, 147 N.J.
341, 351 (1997) (quoting Adams v. Keystone Ins. Co., 264 N.J.
Super. 367, 377 (App. Div. 1993)).
As enacted in 1985 and amended in 1988, the statute provided:
Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting insurance business in
this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the liability insurance
requirements of section 1 of P.L. 1972, c. 197
(C. 39:6B-1) or section 3 of P.L. 1972, c. 70
(C. 39:6A-3), the uninsured motorist insurance
requirements of subsection a. of section 2 of
P.L. 1968, c. 385 (C. 17:28-1.1), and personal
injury protection benefits coverage pursuant
to section 4 of P.L. 1972, c. 70 (C. 39:6A-4)
or of section 19 of P.L. 1983, c. 362 (C.
17:28-1.3), whenever the automobile or motor
vehicle insured under the policy is used or
operated in this State.
Any liability insurance policy subject to this
section shall be construed as providing the
coverage required herein, and any named
insured, and any immediate family member as
defined in section 14.1 of P.L. 1983, c. 362
(C. 39:6A-8.1), under that policy, shall be
7 A-5093-16T4
subject to the tort option specified in
subsection a. of section 8 of P.L. 1972, c.
70 (C. 39:6A-8).
[L. 1988, c. 119, § 1.]
The Court stated that
the [D]eemer statute guarantees that if the
insured's vehicle is operated in New Jersey[,]
the insurer will provide liability coverage
of not less than $15,000 on account of injury
to, or death of, one person in any one
accident, coverage of not less than $30,000
on account of injury to or death of more than
one person in any one accident, and coverage
of not less than $5000 for damage to property
in any one accident.
[Whitaker, 147 N.J. at 348 (citing N.J.S.A.
39:6B-1; N.J.S.A. 39:6A-3).]
"In addition, the [D]eemer statute guarantees the out-of-state
insured uninsured motorist coverage in the same limits as are
required for liability coverage" and personal injury protection
(PIP) up to $250,000. Ibid.The Deemer statute was amended by L. 1997, c. 436, § 1,
effective January 19, 1998, to address "affiliate" insurers and
added an entirely new sentence "requiring only PIP benefits
coverage and then only for New Jersey residents if 'the controlling
or affiliated insurer is not transacting automobile or motor
vehicle insurance business in New Jersey.'" Cooper Hosp. Univ.
8 A-5093-16T4
Med. Ctr. v. Prudential Ins. Co., 378 N.J. Super. 510, 516 (App.
Div. 2005) (citation omitted). As amended, the statute provided,
Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting insurance business in
this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the personal injury
protection benefits coverage pursuant to
section 4 of P.L. 1972, c. 70 (C.39:6A-4) or
section 19 of P.L. 1983, c. 362 (C.17:28-1.3)
for any New Jersey resident who is not
required to maintain personal injury
protection coverage pursuant to section 4 of
P.L. 1972, c. 70 (C.39:6A-4) and who is not
otherwise eligible for such benefits, whenever
the automobile or motor vehicle insured under
the policy is used or operated in this State.
In addition, any insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State,
which sells a policy providing automobile or
motor vehicle liability insurance coverage, or
any similar coverage, in any other state or
in any province of Canada, shall include in
each policy coverage to satisfy at least the
liability insurance requirements of section 1
of P.L. 1972, c. 197 (C.39:6B-1) or section 3
of P.L. 1972, c. 70 (C.39:6A-3), the uninsured
motorist insurance requirements of subsection
a. of section 2 of P.L. 1968, c. 385 (C.17:28-
1.1), and personal injury protection benefits
9 A-5093-16T4
coverage pursuant to section 4 of P.L. 1972,
c. 70 (C.39:6A-4) or of section 19 of P.L.
1983, c. 362 (C.17:28-1.3), whenever the
automobile or motor vehicle insured under the
policy is used or operated in this State.
[L. 1997, c. 436, § 1 (emphasis added).]
Relevant here, that amendment "left virtually intact [the
original portion of the Deemer statute]3 save for the addition of
the words 'automobile or motor vehicle,' which modif[ied] and,
therefore, limit[ed] the type of affiliated insurance businesses
with the broader obligation to provide New Jersey insurance benefit
coverages to both in-state and out-of-state residents in their
out-of-state policies." Cooper Hospital, 378 N.J. Super. at 516.
"The original portion of the statute, the second sentence . . .
requires that the controlling or affiliated insurer be authorized
to transact not any insurance business, but motor vehicle or
automobile insurance business in this State." Ibid. (quoting
Gov't Emps. Ins. Co. v. Allstate Ins. Co., 358 N.J. Super. 555,
564-65 (App. Div. 2003)). In Cooper Hospital, we rejected the
notion of any "across-the-board limitation" of the statute,
finding "no Legislative intent to modify the [D]eemer statute."
Id. at 519 (quoting Allstate Ins. Co., 358 N.J. Super. at 568).
3
The reference here is to the second sentence of N.J.S.A.
17:28-1.4 that begins, "In addition."
10 A-5093-16T4
In 1998, the Legislature enacted AICRA which largely became
effective in 1999. Craig & Pomeroy, § 4:3-8, p. 87. The
Legislature noted that because of the
high cost of automobile insurance in New
Jersey . . . many-lower income residents
. . . have been forced to drop or lapse their
coverage in violation of the State's mandatory
motor vehicle insurance laws, making it
necessary to provide a lower-cost option to
protect people by providing coverage to pay
their medical expenses if they are injured.
[N.J.S.A. 39:6A-1.1.]
AICRA provided for "the creation of two insurance coverage
options, a basic policy and a standard policy." Ibid. Under
N.J.S.A. 39:6A-3, a standard policy requires the owner of an
automobile that is "registered or principally garaged" in New
Jersey to maintain BI liability coverage in "an amount or limit
of $15,000, exclusive of interest and costs, on account of injury
to, or death of, one person, in any one accident; and (b) . . .
$30,000, exclusive of interest and costs, on account of injury to
or death of, more than one person, in any one accident."
The basic policy is an "alternative to the mandatory coverages
provided in sections 3 and 4 of P.L. 1972, c. 70 (C. 39:6A-3 and
39:6A-4)." N.J.S.A. 39:6A-3.1. Under N.J.S.A. 39:6A-3.1(c), an
owner of an automobile registered or principally garaged in New
Jersey can elect to purchase a basic policy that has no BI coverage
11 A-5093-16T4
minimum, but may include an optional $10,000 BI liability limit
for "injury to, or death of, one or more persons in any one
accident."
AICRA also amended the Deemer statute. As amended, the
statute provides:
Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer which sells a
policy providing automobile or motor vehicle
liability insurance coverage, or any similar
coverage, in any other state or in any
province in Canada, shall include in each
policy coverage to satisfy at least the
personal injury protection benefits coverage
pursuant to section 4 of P.L. 1972, c. 70
(C.39:6A-4) or section 19 of P.L. 1983, c. 362
(C.17:28-1.3) for any New Jersey resident who
is not required to maintain personal injury
protection coverage pursuant to section 4 of
P.L. 1972, c. 70 (C.39:6A-4) or section 4 of
P.L. 1998, c. 21 (C.39:6A-3.1) and who is not
otherwise eligible for such benefits, whenever
the automobile or motor vehicle insured under
the policy is used or operated in this State.
In addition, any insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State, or
controlling or controlled by, or under common
automobile or motor vehicle insurance business
in this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the liability insurance
requirements of subsection a. of section 1 of
P.L. 1972, c. 197 (C.39:6B-1) or section 3 of
12 A-5093-16T4
P.L. 1972, c. 70 (C.39-6A-3), the uninsured
motorist insurance requirements of subsection
a. of section 2 of P.L. 1968, c. 385 (C.17:28-
1.1), and personal injury protection benefits
coverage pursuant to section 4 of P.L. 1972,
c. 70 (C.39:6A-4) or of section 19 of P.L.
1983, c. 362 (C.17:28-1.3), whenever the
automobile or motor vehicle insured under the
policy is used or operated in this State.
[N.J.S.A. 17:28-1.4 (emphasis added).]
In the first sentence, that was added by L. 1998, c. 21, §
72, the Legislature inserted a reference to N.J.S.A. 39:6A-3.1.
In the second sentence, which is the original portion of the Deemer
statute, AICRA added the words "subsection a" proceeding the words
"section 1 of P.L. 1972, c. 197". The second sentence was not
amended to expressly refer to N.J.S.A. 39:6A-3.1.
We reject GEICO's argument that AICRA's creation of the basic
policy option, with no or limited BI coverage, modified the Deemer
statute to require no BI coverage for automobiles to which the
statute otherwise would apply. The Deemer statute makes one
reference to N.J.S.A. 39:6A-3.1 but that is in the first sentence
of the statute, that concerns affiliated entities amendment; the
reference is not in the second sentence of N.J.S.A. 17:28-1.4.
The second sentence only mentions N.J.S.A. 39:6A-3, which is the
statute that requires $15,000/$30,000 BI coverage. "[T]he meaning
of a statute must . . . be sought in the language in which the act
13 A-5093-16T4
is framed, and if that is plain, . . . the sole function of the
courts is to enforce it according to its terms." Sheeran v.
Nationwide Mut. Ins. Co., 80 N.J. 548, 556 (1978) (quoting
Caminetti v. United States, 242 U.S. 470, 485 (1917)). We have
no reason to conclude that the Legislature meant to eliminate the
$15,000/$30,000 BI coverage minimum just because it referred to
the basic policy in one part of the statute that addresses
affiliates where it did not include that reference in the second
sentence, the original portion of the statute.
AICRA amended the original portion of the Deemer statute to
add reference to "subsection a. of section 1 of P.L. 1972, c. 197
(C. 39:6B-1)." N.J.S.A. 17:28-1.4. Subsection "a" requires an
owner of a motor vehicle registered or garaged in New Jersey to
maintain BI coverage of at least $15,000. It makes no reference
to a basic policy. The basic policy is addressed in subsection
b, not a, of N.J.S.A. 39:6B-1. "[T]he meaning of a word or series
of words may be ascertained by reference to a neighboring set of
words or similar provisions in the same statutory scheme." Wells
Reit II-80 Park Plaza, LLC v. Dir., Div. of Taxation, 414 N.J.
Super. 453, 469 (App. Div. 2010) (citation omitted). We cannot
assume that the Legislature intended to incorporate the coverages
in the basic policy as the minimum to be applied under the Deemer
14 A-5093-16T4
statute when AICRA expressly amended the statute to add reference
to section "a" of N.J.S.A. 39:6B-1 that did not include the basic
policy. Had the Legislature intended AICRA to change the minimum
requirements for out-of-state policies affected by the Deemer
statute, it could simply have said so. "Legislative intent may
be determined by analyzing 'legislative history, committee
reports, and contemporaneous construction.'" Cooper Hospital, 378
N.J. Super. at 514 (quoting Burns v. Belafsky, 166 N.J. 466, 473
(2001)). GEICO points to nothing in AICRA's legislative history
for support that the Legislature intended to make the change in
the Deemer statute that it raises.
GEICO rests its argument on AICRA's amendment of N.J.S.A.
39:6A-3 to reflect that consumers now have the option to purchase
a basic policy. N.J.S.A. 39:6A-3 was amended to add the language
"[e]xcept as provided by section 4 of P.L. 1998, c. 21 (C 39:6A-
3.1)," to the beginning of the sentence that then required "every
owner or registered owner of an automobile registered or
principally garaged in this State [to] maintain automobile
liability insurance coverage . . . insuring against loss resulting
from liability imposed by law for bodily injury, death and property
damage" from an automobile accident of at least $15,000/$30,000.
But other than indicating that insurance consumers can purchase a
15 A-5093-16T4
basic policy without violating the standard BI liability coverage
minimums, we discern no intent by the Legislature that the Deemer
statute now should deem out-of-state automobile insurance policies
of drivers involved in accidents in New Jersey to have zero BI
liability coverage.4
N.J.S.A. 39:6A-3 was enacted as part of the New Jersey
Automobile Reparations Reform Act (No Fault Act), L. 1972, c. 70
and required, among many other reforms, that motorists maintain a
minimum amount of BI liability coverage. "One of the motivating
thrusts behind the 1972 reform package was the extraordinary
pressure on the Unsatisfied Claim and Judgment Fund [UCJF] by
reason of the claims of individuals injured by uninsured
motorists." Craig & Pomeroy, § 1:2-5, p. 12. The UCJF "provide[s]
a measure of relief to persons who sustain losses inflicted by
financially irresponsible or unknown owners or operators of motor
vehicles, where such person would otherwise be remediless."
Sanders v. Langemeier, 199 N.J. 366, 379 (2009) (quoting Jimenez
v. Baglieri, 152 N.J. 337, 342 (1998)). "[T]he reason for the
[Deemer] provision was to help reduce the demands on the [UCJF]."
4
GEICO argues that only policies without BI coverage are affected
by its interpretation of N.J.S.A. 17:28-1.4. If an out-of-state
policy has BI coverage of $5000, GEICO acknowledges that the
policy's BI limit should be converted to $15,000. It does not
explain its rationale for this argument.
16 A-5093-16T4
Craig & Pomeroy, § 1:2-7, p. 15. The effect of GEICO's argument
is to reform out-of-state policies to include no BI liability
coverage; this is contrary to the purpose of the Deemer statute
and may increase the financial pressure on the UCJF by reducing
to zero the amount of BI liability coverage by out-of-state drivers
who have accidents in New Jersey insured by a company doing
insurance business in New Jersey.
GEICO's argument may have broad ramifications for other
coverages that now are "deemed" to be part of an out-of-state
policy under the Deemer statute. For instance, the basic policy
reduced the required minimum amount of personal injury protection
insurance that can be purchased. GEICO's argument might extend
to PIP coverage. Should the Legislature have intended a change
in the Deemer statute, as argued by GEICO, it could have said so
expressly. Therefore, we agree with the trial judge that the
plain language of the Deemer statute requires GEICO's policy here
to be reformed to include BI coverage in the amount of
$15,000/$30,000.
For the first time on this appeal, GEICO challenges the
constitutionality of the Deemer statute under the dormant Commerce
Clause. We decline to address this constitutional issue because
17 A-5093-16T4
it was not raised in the trial court. State v. Robinson, 200 N.J.
1, 20-22 (2009); State v. Arthur, 184 N.J. 307, 327 (2005).
GEICO also argues that the Deemer statute as interpreted by
the trial court violates the Equal Protection Clause. The statute
has been upheld in the past against constitutional challenge under
the equal protection law. See Whitaker, 147 N.J. at 357-358;
Adams v. Keystone Ins. Co., 264 N.J. Super. 367, 377-78 (App. Div.
1993); Taylor-Segam v. Rajagopal, 275 N.J. Super. 286, 292 (App.
Div. 1994).
The Deemer statute applies to insurers who choose to write
policies of insurance in New Jersey or through their affiliates.
Insurance is a heavily regulated industry and imbued with strong
public interest. See In re "Plan for Orderly Withdrawal from
N.J." of Twin City Fire Ins. Co., 129 N.J. 389, 407 (1992).
Although a state cannot discriminate against non-resident
businesses in their regulation of commerce, Crespo v. Staph, 128
N.J. 351, 356 (1992), all insurers writing policies in New Jersey
are treated uniformly; it's the consumer who has the option to
purchase more affordable coverage.
GEICO appeals the trial court's award of attorney's fees and
costs to Felix's counsel, who she retained when GEICO denied her
18 A-5093-16T4
request for representation. The court's October 14, 2016 order
provided that it "overlooked/misapplied R. 4:42-9(c)."
We review this award of attorney's fees and costs under an
abuse of discretion standard. Garmeaux v. DNV Concepts, Inc., 448
N.J. Super. 148, 156-57 (App. Div. 2016). Here, there was no
abuse of discretion. The Rules permit an award of counsel fees
"[i]n an action upon a liability or indemnity policy of insurance,
in favor of a successful claimant." R. 4:42-9(a)(6). AAA
successfully sued GEICO to establish that GEICO's policy should
be deemed to include BI coverage. Therefore, it was entitled to
an award of fees under the Rule. Because GEICO has not challenged
the actual amount of the fees or costs awarded, we have no occasion
to review that issue.
Affirmed.
19 A-5093-16T4