Dieng v. Enterprise Rent-A-Car

Opinions of the United
2003 Decisions States Court of Appeals
for the Third Circuit

6-6-2003

Dieng v. Entr Rent A Car
Precedential or Non-Precedential: Non-Precedential

Docket No. 01-3935

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
____________

Nos. 01-3935; 02-3663; 02-3902
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BINTOU K. DIENG, as the Intended Third Party Beneficiary of
the Policy of Insurance/Self-Insurance Issued to Enterprise
Rent-a-Car and individually; OUMOU DIENG, as the Intended
Third Party Beneficiary of a Policy of Insurance/Self
Insurance Issued to Enterprise Rent-a-Car and individually;
ESTATE OF SOUKAINA COLY, by and through Papa Diop
Administrator ad Prosequendum, as the Intended Third-Party
Beneficiary of a Policy of Insurance/Self-Insurance Issued
to Enterprise Rent-a-car and individually; ESTATE OF AWA
DIENG, by and through Ibrahima Sene, Administrator ad
Prosequendum, as the Intended Third-Party Beneficiary of a
Policy of Insurance/Self Insurance Issued to Enterprise
Rent-a-Car and individually; ESTATE OF ASSIETOU DIENG, by and
through Ibrahima Sene, Administrator ad Prosequendum, as the Intended
Third-Party Beneficiary of a Policy of Insurance/Self Insurance Issued to
Enterprise Rent-a-Car and individually
Appellants in No. 02-3902
v.

ENTERPRISE RENT-A-CAR; ELCO ADMINISTRATIVE SERVICES,
jointly, severally and/or in the alternative

Enterprise Rent-A-Car and Elco Administrative Services,
Appellants in Nos. 01-3935 & 02-3663

____________

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
(D.C. Civ. No. 00-cv-05764 )
District Judge: Honorable Jerome B. Simandle

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Argued April 23, 2003
Before: SCIRICA, Chief Judge,* AMBRO and W EIS, Circuit Judges.

(Filed: June 6, 2003)
____________

Christopher A. Jeffreys, Esquire (ARGUED)
Law Offices of Christopher A. Jeffreys, P.C.
Pro Hac Vice Counsel
425 Broad Hollow Road
Melville, New York 11747

Kent & McBride, P.C.
1040 Kings Highway North, Suite 403
Cherry Hill, New Jersey 08034

Attorneys for Defendants-Appellants/Cross-Appellees Enterprise Rent-A-Car, ELCO
Administrative Services

Mark S. Gertel, Esquire (ARGUED)
Gertel & Feld, P.C.
1040 North Kings Highway, Suite 725
Cherry Hill, New Jersey 08034

Attorneys for Plaintiffs-Appellees/Cross Appellants Bintou K. Dieng, et. al.

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OPINION

_________________________

* Judge Scirica began his term as Chief Judge on May 4, 2003.

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WEIS, Circuit Judge.

This case is a declaratory judgment action originally filed in the New Jersey

Superior Court and later removed to the United States District Court for the District of

New Jersey. The primary issue is the applicability of New Jersey’s “deemer statute,”

N.J.S.A. 17:28-1.4, a provision of that state’s automobile insurance legislation.

In general, the “deemer statute” requires companies authorized to transact

insurance business in New Jersey to provide in their policies personal injury protection

benefits such as medical bills and funeral expenses. The statute makes such coverage

available to accident victims injured within New Jersey, regardless of their domicile and

whether the insurance policy covering the accident was purchased outside the state.

The plaintiffs in this case were the driver and passengers of a car leased in

Virginia from the Enterprise Leasing Company, a Virginia corporation wholly owned by

Enterprise Rent-A-Car, a Delaware Corporation. To insure the vehicle, Rent-A-Car filed

a certificate of self-insurance with the New Jersey Department of Insurance in accordance

with that state’s requirements. Plaintiffs filed suit against Rent-A-Car as the vehicle’s

insurer to recover personal injury protection benefits.

The District Court, in a well-reasoned opinion, concluded that it had

personal jurisdiction over Rent-A-Car by virtue of its New Jersey registration, that New

Jersey rather than Virginia law should apply, and that under New Jersey law, self-

insurance is the equivalent of a policy of insurance. See Ryer/P.I.E. Nationwide, Inc. v.

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Harbor Bay Corp., Inc., 575 A.2d 416 (N.J. 1990). As a result, Rent-A-Car was required

to pay personal injury protection benefits to the plaintiffs, all of whom were non-residents

of New Jersey.

After careful review of the record, including the thorough briefs of counsel,

and having had the benefit of excellent oral argument, we conclude that the District Court

arrived at the correct result in determining eligibility for PIP benefits. The District

Court’s careful and comprehensive opinion analyzed the contested issues and, in our

view, accurately predicted what the New Jersey Supreme Court would hold in a similar

case.

We point out once again that the grant of a declaratory judgment in the

federal courts is discretionary, and must “yield to considerations of practicality and wise

judicial administration.” State Auto Ins. Cos. v. Summy, 234 F.3d 131, 134 (3d Cir.

2000) (citing Wilton v. Seven Falls Co., 515 U.S. 277, 288 (1995)). Particularly when the

issue is the novel interpretation of a state statute concerned with the terms of insurance

policies, disputes are better resolved in the first instance in the state system. Those courts

can issue a definitive ruling on the legal contentions, rather than render a prediction of

what the highest court of the state would decide.

A certification procedure to the state supreme court is an option in resolving

the issues here. However, we deem it inappropriate particularly in this case where the

defendant removed the declaratory judgment from the state court where it was originally

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filed, and chose to litigate the issue in the federal courts.

The District Court denied plaintiffs’ request for attorneys’ fees under New

Jersey Court Rule 4:49(a)(6), noting that the plaintiffs are first-party claimants seeking

direct benefits from the defendant. The Rule provides that: “[no] fee for legal services

shall be allowed in the taxed costs or otherwise, except . . . [i]n an action upon a liability

or an indemnity policy of insurance, in favor of a successful claimant.” On its face, the

Rule would prohibit the award of attorneys’ fees in cases such as the one before us.

The New Jersey Supreme Court has only obliquely addressed the issue. In

Darel v. Pennsylvania Mfg. Assoc. Ins. Co., 555 A.2d 570 (N.J. 1989), the Court

conceded that although the propriety of the award of fees in that PIP case had neither

been briefed nor argued, the “exercise of discretion” in awarding the fee “is sustainable.”

The Court did not discuss the Rule or even cite to it.

In Maros v. Transamerican Ins. Co., 388 A.2d 971, 974 (N.J. 1978), the

Court stated that “counsel fees are discretionary when actions on an insurance policy is

involved.” Again, the Court did not cite to the Rule, and it is clear that the expansive off-

hand comment is inconsistent with the text and the Court’s subsequent actions. See also

Enright v. Labou, 521 A.2d 1300 (N.J. App. Div. 1987) (observing that the Supreme

Court Committee on Counsel Fee Awards had recommended the Rule not be changed to

allow recovery in first-party claims against insurance companies. The Court did not

expand the Rule following that Committee report.).

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Cirelli v. Ohio Cas. Co., 371 A.2d 17, 19 (N.J. 1977) was the Court’s first

encounter with a PIP claim case. In approving an award of a fee, the Court cited the

Rule, but did not explain its application to that first-party action. Thus, a review of the

New Jersey Supreme Court opinions does not offer any clear exposition of its application

of the Rule in PIP cases.

However, despite the language of the Rule, the New Jersey Superior Court

Appellate Division, in a series of opinions, has permitted the discretionary award of fees

in PIP cases. See, e.g., Scullion v. State Farm Ins. Co., 785 A.2d 469 (N.J. App. Div.

2001); Helton v. Prudential Prop. & Cas. Co., 500 A.2d 717 (N.J. App. Div. 1985).

In Pressler, Rules Governing The Courts of the State of New Jersey, 1612

(2003 ed.), the author states:

“Since the stated intention of the Rule was to permit an
award of counsel fees only where an insurer refused to
indemnify or defend in respect to its insured’s third-party
liability to another, it should not be extended, beyond its
express terms, to permit a counsel fee . . . to an insured who
brings a direct suit against his insurer to enforce casualty or
other direct coverage including UM/UIM coverage.”

However, citing numerous cases, the commentary continues “[s]uch a fee is, however,

allowable in personal injury protection benefits actions where the insured counsel is

successful.” To support this exception to the Rule, Pressler cites to the Supreme Court

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opinions noted above, as well as numerous cases of the Appellate Division of New Jersey.

The defendant relies upon language in Eagle Fire Prot. Corp. v. First Indem.

of America Co., 678 A.2d 699 (N.J. 1996), in which the New Jersey Supreme Court

referred to the commentary, asserting that counsel fees should be awarded only in third-

party cases. Although counsel fees were there denied, that case involved a surety bond,

not a casualty insurance policy, and the Court did not discuss the PIP situation.

Consequently, Eagle Fire does not govern the defendant’s cause.

The argument that the Rule’s language excludes all first-party cases,

including PIP, is a strong one. In reality, however, it appears that the Appellate Division

has concluded that PIP is an exceptional situation beyond the scope of the Rule. The

New Jersey Supreme Court is apparently content to allow this reading to prevail, an

approach which we, as a result, are constrained to follow as well. In these circumstances,

we believe that, in its discretion, the District Court did have authority to allow counsel

fees. Accordingly, we will remand to the District Court so that it may exercise its

discretion. We intimate no view on whether counsel fees should be awarded or in any

amount.

The Judgment of the District Court will be affirmed on the ruling in favor

of the plaintiffs on eligibility for PIP benefits. The order denying counsel fees will be

reversed, and the matter will be remanded to the District Court for further consideration

consistent with this Opinion.

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______________________________

TO THE CLERK:

Please file the foregoing Opinion.

/s/ Joseph F. Weis, Jr.
United States Circuit Judge