istockphoto.com

This story is reprinted with permission from the Insurance Coverage Law Center, the industry's only comprehensive digital resource designed for insurance coverage law professionals. Visit the website to subscribe.

A New Jersey driver has lost her appeal to the Appellate Division of a trial court's decision to dismiss her lawsuit against another driver after it voided her insurance policy and ruled that, as a consequence, she was "uninsured" and barred by New Jersey law from bringing her suit.

The Case

Following an automobile accident, Cherise C. Raymond sued Raymond L. Fernandez, the owner and driver of the car that allegedly struck Ms. Raymond's car, in a New Jersey state court.

Mr. Fernandez moved for summary judgment, contending that because the trial court had granted the motion by Ms. Raymond's insurer, Citizens United Reciprocal Exchange ("CURE"), to retroactively rescind her automobile insurance policy, New Jersey law (N.J.S.A. 39:6A-4.5(a)) barred her from bringing claims against him.

The trial court had granted CURE's motion to void the policy ab initio after finding that Ms. Raymond had made misrepresentations and omissions in her initial application and five subsequent renewal applications. Among other things, the trial court found, she had not listed her correct address and members of her household on each application.

The trial court granted Mr. Fernandez's motion.

Ms. Raymond appealed, arguing that she had not been "culpably uninsured" under N.J.S.A. 39:6A-4.5(a) because she had paid the policy's premiums and, therefore, was insured at the time of the accident.

New Jersey Law

N.J.S.A. 39:6A-4.5(a) provides:

Any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage . . . shall have no cause of action for recovery of economic or noneconomic loss sustained as a result of an accident while operating an uninsured automobile.

The Appellate Division's Decision

The Appellate Division affirmed.

In its decision, the appellate court explained that, under New Jersey law, all motor vehicle owners registered in New Jersey must maintain minimum amounts of insurance coverage for bodily injury, death, and property damage caused by their vehicles. The appellate court added that the law required that each policy must contain personal injury protection ("PIP") benefits.

Moreover, the appellate court continued, N.J.S.A. 39:6A-4.5(a) prohibited a New Jersey resident who failed to meet the statutory provisions mandating insurance coverage from suing.

The appellate court pointed out that Ms. Raymond did not dispute that she had knowingly listed an incorrect address – a UPS store in Bloomfield, New Jersey – on each insurance application and she did not counter CURE's determination that she resided with her boyfriend and his mother in Maplewood, New Jersey, at the time of the accident. Indeed, the appellate court observed, Ms. Raymond had not appealed from the order granting CURE's motion that voided her policy.

It then rejected Ms. Raymond's contention that because, in deciding CURE's motion, the trial judge had specifically determined she had not committed fraud that she should not be barred from recovery "for an accident that was clearly not her fault simply because CURE found a reason to void her policy."

The appellate court reasoned that N.J.S.A. 39:6A-4.5(a) did not impose a requirement that an uninsured motorist have a culpable state of mind, and did not exempt motorists who had a good faith belief that they had medical expense benefits coverage. Rather, the appellate court said, the term "culpably uninsured" simply identified individuals "who were deemed uninsured within the meaning of the statute."

The appellate court acknowledged that N.J.S.A. 39:6A-4.5(a) had been described as a "blunt tool" that might result in "harsh outcomes." It stated, however, that harsh consequences did not permit a departure from the express language in the statute because "[t]he statute's self-evident purpose" was "to give the maximum incentive to all motorists" to comply with New Jersey's compulsory no-fault insurance laws.

Accordingly, the appellate court concluded that the trial court had correctly determined that the vehicle Ms. Raymond was operating at the time of the accident was uninsured given that it had previously determined the policy was void from its inception. Therefore, its decision to dismiss her complaint "was proper."

The case is Raymond v. Fernandez, No. A-1933-18T1 (Appellate Division, Dec. 16, 2019). Attorneys involved include: Lee Law Firm, LLC, attorneys for appellant (Edward H. Lee, on the brief). Law Offices of Nancy L. Callegher, attorneys for respondent Angel L. Fernandez (Matthew Ian Cohen, on the brief).

Steven A. Meyerowitz, a Harvard Law School graduate, is the founder and president of Meyerowitz Communications Inc., a law firm marketing communications consulting company. Mr. Meyerowitz is the Director of the Insurance Coverage Law Center and editor-in-chief of journals on insurance law, banking law, bankruptcy law, energy law, government contracting law, and privacy and cybersecurity law, among other subjects. He may be contacted at [email protected].