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Royal Ins. Co. v. Rutgers Cas. Ins. Co.3/22/1994
Defendant Rutgers Casualty Insurance Company (Rutgers) appeals and plaintiff Royal Insurance Company (Royal) cross-appeals from a summary judgment of the Law Division that (1) declared that Rutgers and Royal shall equally pay an underinsured motorist arbitration award and post-judgment interest to defendant Sherri L. Davidson (Ms. Davidson) and (2) ordered Rutgers to reimburse Royal for fifty percent of all costs incurred by Royal in the arbitration proceedings, including the arbitrators' fees and Royal's attorneys' fees. The pivotal issue raised by this appeal is whether the Rutgers insurance policy or the Royal insurance policy provided Ms. Davidson with her primary underinsured motorist coverage or whether both policies provided concurrent coverage and, if so, what amount each policy must contribute toward payment of the award.
The facts giving rise to this appeal are undisputed. Ms. Davidson was injured as a result of an automobile accident involving Ms. Sandra Mimms. Ms. Davidson was operating an automobile owned by her employer, Arrow Pontiac, a Division of Auerbach Chevrolet Corporation. The Arrow Pontiac automobile was insured under a garage policy issued by Royal to Auerbach Chevrolet Corporation which contained underinsured motorist coverage with limits of $500,000 per accident. Ms. Davidson, as part of her compensation package, was permitted to drive the automobile for both personal and business use, but was required to contribute $25 per month towards the cost of the insurance covering that vehicle.
Ms. Mimms was operating an automobile which was insured by a policy with a personal injury liability limit of $25,000. Ms. Davidson made a claim against Ms. Mimms to recover damages for the personal injuries she sustained as a result of the accident. Ms. Mimms' insurance company paid Ms. Davidson the entire $25,000 policy limit in satisfaction of her claim against Ms. Mimms.
At the time of the accident, Ms. Davidson's husband, Carl L. Davidson, owned a GMC truck which he had purchased jointly with Ms. Davidson. He also owned a Chevette passenger automobile.
Both the GMC truck and the Chevette were covered by a Rutgers personal automobile policy which named "Carl L. & Sherri L. Davidson" as insureds and contained underinsured motorist coverage with limits of $300,000 per accident.
After Ms. Davidson settled with Ms. Mimms, she filed an arbitration claim against Rutgers and Royal, seeking to recover the amount of her uncompensated loss under the underinsured motorist provisions of the respective policies. Both Rutgers and Royal refused to pay Ms. Davidson, each contending that its policy provided only excess underinsured motorist coverage, not primary coverage. Prior to the scheduled arbitration hearing, Rutgers informed Ms. Davidson and Royal that it did not intend to participate in the arbitration. Ms. Davidson thereupon instituted an action in the Law Division seeking a court order to compel Rutgers to participate in the arbitration proceedings or, alternatively, to appoint an arbitrator to represent Rutgers at those proceedings. The Law Division did not order Rutgers to appear, but ordered that the arbitrator for Royal also act as the arbitrator for Rutgers.
The arbitration proceeded without the participation of a representative for Rutgers. At the Conclusion of the proceedings, the panel of arbitrators awarded Ms. Davidson damages in the total sum of $82,500 for the personal injuries she sustained in the accident. Since Ms. Davidson had received $25,000 from Ms. Mimms' insurance company, her net underinsured motorist award was $57,50
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