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Schipani v. McLeod

December 1, 2006


The opinion of the court was delivered by: Gold, S., U.S.M.J.



The facts of this case are recited in prior court orders, familiarity with which is assumed. In brief, plaintiffs Frank and Olga Schipani bring this action seeking to recover damages for injuries they suffered as a result of a motor vehicle accident in New Jersey. The Schipanis were passengers in a vehicle being driven by defendant Brian Ruzalski (the "Ruzalski vehicle"). Ruzalski's vehicle was struck from behind by a tractor trailer owned by defendant D.P. Gallimore & Sons and being driven by defendant William McLeod (the "Gallimore vehicle"). The Gallimore vehicle, in turn, had been struck in the rear by a second tractor trailer owned by R. Byrd Trucking Co. and being driven by Rudolph Byrd. See Memorandum and Order dated October 15, 2001, at 2, Docket Entry 27.

Plaintiffs settled with defendants R. Byrd Trucking Co. and Rudolph Byrd (the "Byrd defendants") early in the litigation for $35,000. Plaintiffs have not pursued their claims against defendants Ruzalski and McLeod, and those claims are hereby dismissed with prejudice.*fn1 This leaves D.P. Gallimore & Sons ("Gallimore") as the only remaining defendant.

By Memorandum and Order dated March 31, 2004, Senior United States District Judge Sterling Johnson, Jr., who was at that time presiding over this case, granted plaintiffs' motion for summary judgment on liability against defendant Gallimore. Docket Entry 90. In the course of his ruling, Judge Johnson held that, "[a]s the accident occurred in New Jersey, the New York no-fault law and its 'serious injury' threshold for personal injury claims do not apply in this case." Id. at 7.

The case has since been assigned to me for all purposes, and the parties have stipulated to have all issues, including the assessment of damages, decided by the court on papers they have previously submitted.*fn2 Because Gallimore has already been found liable, the only question remaining is the amount of damages to be awarded. There are, however, two issues that must be resolved before calculating damages: (1) whether plaintiffs are required to meet New Jersey's No-Fault Law threshold to recover damages and (2) the effect of plaintiffs' settlement with the Byrd defendants upon the assessment of damages against Gallimore.


1. Application of New Jersey's No-Fault Law

Like New York, New Jersey has a statute which permits individuals injured in automobile accidents to recover for non-economic loss only if their injuries are of a specified type or degree.

See N.J. STAT. ANN. § 39:6A-8 (West 2006); Whitaker v. DeVilla, 687 A.2d 738, 740 (1997). New Jersey law refers to this limitation on recovery as a "Verbal Threshold." Id.

I conclude that plaintiffs are not subject to the limits on recovery imposed by the "Verbal Threshold" for two independent reasons: 1) New Jersey's so-called "Deemer Statute," which applies the Verbal Threshold under certain circumstances to individuals injured while passengers in automobiles registered in other states, is not applicable here; and 2) the Verbal Threshold statute applies only to automobile accidents, and plaintiffs were injured in a collision with a commercial tractor-trailer.

First, New Jersey's Verbal Threshold does not apply to individuals injured in New Jersey unless they are named insureds on the relevant insurance policies. As noted earlier, an individual injured in an accident in a New Jersey-insured automobile is subject to a significant injury threshold before recovering for non-economic loss. N.J. STAT. ANN. § 39:6A-8(a) (West 2006).*fn3 An individual injured in an automobile insured in another state is generally also subject to the threshold of the New Jersey No-Fault Law. This result occurs pursuant to a New Jersey law referred to as the "Deemer Statute" N.J. STAT. ANN. § 17:28-1.4 (West 2006). See also Whitaker, 687 A.2d at 747 (noting that the statute "impos[es] the verbal threshold on non-resident insureds injured in this state and insured by companies authorized to do business here"); Taylor v. Rorke, 652 A.2d 207, 208 (N.J. Super. Ct. App. Div. 1995). Pursuant to the Deemer Statute, if a driver is insured in another state, by an insurer authorized to issue motor vehicle insurance in New Jersey, and that driver is involved in an accident in New Jersey, New Jersey law "deems" the out-of-state driver's insurance policy to provide the coverage required by New Jersey law. The Deemer Statute further provides that "any named insured, and any immediate family member" of the named insured on the policy, is subject to the Verbal Threshold.*fn4 N.J. STAT. ANN. § 17:28-1.4. See also Taylor, 652 A.2d at 208 ("deeming" a North Carolina insured driver subject to New Jersey's Verbal Threshold); Whitaker (holding that a driver insured in Pennsylvania and his wife were subject to New Jersey's Verbal Threshold, even though plaintiffs paid a higher premium to obtain a full tort option in their home state).

The Deemer Statute does not control here, however, because it is limited by its terms to named insureds and their immediate family members. See Whitaker, 687 A.2d at 746. Plaintiffs, who were passengers in the Ruzalski vehicle, apparently were not covered under their own automobile insurance policy and were not named insureds on Ruzalski's policy or members of Ruzalski's immediate family.*fn5 Cf. Rojas v. DePaolo, 813 A.2d 1288 (N.J. Super. Ct. 2002) (deciding that an out-of-state uninsured driver is not required to meet the New Jersey threshold). Defendant's argument that the Deemer Statute applies because plaintiffs received benefits under Ruzalski's insurance policy is incorrect. Def. Mem. pp. 7-8; Def. Reply p. 2. The Deemer Statute applies only to persons who are "named insureds" or family members of named insureds on a policy. Plaintiffs are not named insureds on the Ruzalski policy, even though they were eligible for and received benefits under Ruzalski's policy. See N.J. STAT. ANN. § 39:6A-2 (defining named insureds as individuals specifically identified in a policy and even excluding spouses in certain circumstances). Thus, I conclude that the Deemer Statute is not a proper basis for applying the Verbal Threshold to plaintiffs in this case.

Second, as plaintiffs correctly point out, the Verbal Threshold applies only to accidents involving automobiles, and defendant's vehicle was a commercial tractor-trailer. See Pl. Mem. p. 3. The statute provides that "[e]very owner, registrant, operator or occupant of an automobile . . . is hereby exempted from tort liability for non-economic loss" that does not meet the threshold. N.J. STAT. ANN. § 39:6A-8(a) (West 2006) (emphasis added). New Jerseys defines an automobile as "a private passenger automobile of a private passenger or station wagon type. . . ." or van, pick-up truck or panel truck not used for commercial purposes other than farming. N.J. STAT. ANN. § 39:6A-2 (West 2006). The New Jersey Appellate Division has stated that "[m]otorcycles, commercial trucks, taxicabs, chauffeured rentals, and buses are excluded from the No-Fault Law." Wagner v. Transamerica Insur. Co., 400 A.2d 497, 500 (N.J. Super. Ct. App. Div. 1979) (emphasis added) (referencing N.J. STAT. ANN. § 39:6A-2). See also Lymon v. Cape Transit Corp., 775 A.2d 41, 42 (N.J. Super. Ct. App. Div. 2001) (holding that a commercial bus does not fall within the definition of an automobile as defined by New Jersey law and that an automobile driver struck in the rear by a bus was not required to meet the Verbal Threshold to recover damages for non-economic loss) (citing N.J. STAT. ANN. ยง 39:6A-2); Simon v. Motor Vehicle Accident Indemnification ...

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