MANUEL SANCHEZ VS. NEW JERSEY TURNPIKE AUTHORITY (L-8597-12, MIDDLESEX COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-1969-15T3

MANUEL SANCHEZ and
YOLANDA SANCHEZ,

Plaintiffs-Appellants/
Cross-Respondents,

v.

NEW JERSEY TURNPIKE
AUTHORITY, PORFIRIO I.
RAMON and MARIA E. RAMON,

Defendants-Respondents,

and

NEW JERSEY MANUFACTURERS
INSURANCE,

Defendant-Respondent/
Cross-Appellant.
______________________________

Argued October 17, 2017 – Decided November 16, 2017

Before Judges Reisner and Hoffman.

On appeal from the Superior Court of New
Jersey, Law Division, Middlesex County, Docket
No. L-8597-12.

Thomas De Seno argued the cause for
appellants/cross-respondents.
 Gage Andretta argued the cause for respondent
New Jersey Turnpike Authority (Chiesa
Shahinian & Giantomasi, PC, attorneys; Bruce
Ettman, on the brief).

John A. Camassa argued the cause for
respondent/cross-appellant New Jersey
Manufacturers Insurance Company (Camassa Law
Firm, PC, attorneys; Mr. Camassa, of counsel;
Christopher M. Brady, on the briefs).

PER CURIAM

Plaintiffs Manuel and Yolanda Sanchez appeal from an order

dated December 4, 2015, denying their motion for reconsideration

of a September 24, 2015 order, which in effect determined that New

Jersey Manufacturers Insurance Company (NJM) did not owe

plaintiffs underinsured motorist (UIM) coverage for an automobile

accident. NJM filed a protective cross-appeal from an October 23,

2015 order denying its motion for a new trial on damages, claiming

errors in the jury instructions.

On plaintiffs' appeal, we vacate the September 24, 2015 and

December 4, 2015 orders, and we remand the matter to the trial

court for a plenary hearing to decide material factual disputes

concerning the coverage issue. NJM failed to perfect the cross-

appeal by providing us with all of the pertinent trial transcripts.

Without the entire trial record, including the testimony of the

damages experts, we cannot determine whether any alleged charging

2 A-1969-15T3
errors had a clear capacity to produce an unjust result. See R.

2:10-2. Accordingly, we dismiss the cross-appeal.

I

In 2011, Manuel Sanchez,1 a State Trooper, was injured in an

auto accident while he was on duty, driving a vehicle owned and

insured by the New Jersey Turnpike Authority (the Authority). The

other driver, Porfirio Ramon, had a $15,000 auto insurance policy.

After settling with Ramon for the $15,000 policy limit, plaintiffs

sought UIM coverage from the Authority and from Manuel's personal

auto insurance policy issue by NJM. There was no dispute that the

NJM policy provided $300,000 in UIM coverage. A dispute arose as

to whether the Authority provided $15,000 or $2 million in UIM

coverage.

The dispute was based on the following unusual set of facts.

The Authority was self-insured, but had procured an excess policy

from Chartis Claims, Inc.2 for amounts over $2 million.

Endorsement No. 23 of that policy, which was titled

1
Manuel's wife Yolanda sought per quod damages. We refer to Mr.
and Mrs. Sanchez collectively as plaintiffs. For clarity, and
intending no disrespect, we refer to them individually by their
first names.
2
The Chartis policy indicates that coverage was being provided by
"National Union Fire Insurance Company of Pittsburgh, Pa."
However, the parties have referred to the insurer as "Chartis" and
we will do so as well.

3 A-1969-15T3
"Uninsured/Underinsured Motorists Coverage Endorsement," could be

construed to mean that Chartis was providing UIM coverage for

occupants of the Authority's vehicles on an excess basis, and that

the Authority was self-insured for $2 million in UIM coverage.

The endorsement included the following sentence:

"Uninsured/Underinsured Motorists Retained Limit $2,000,000

INSURING AGREEMENT." The Authority's position was that the Chartis

policy only covered third-party claims, not UIM claims. The

Authority contended that Endorsement No. 23, including the

retained limit language concerning UIM coverage, was insurance

company boilerplate, which was not applicable to the type of

coverage the Authority had purchased from Chartis and should not

have been included in the policy.

While the UIM litigation was pending, plaintiffs filed a

motion to amend the complaint to add Chartis as a defendant. The

assigned motion judge (the first judge) did not decide whether the

Chartis policy in fact provided UIM coverage or what amount of UIM

coverage the Authority provided. Rather, he reasoned that, even

if the Chartis policy included UIM coverage, plaintiffs failed to

demonstrate that their damages exceeded $2 million, so as to

trigger any "umbrella coverage" the Chartis policy provided.

Accordingly, the judge denied the motion because the amendment

would have been "futile."

4 A-1969-15T3
 It appears from the record that the language in the Chartis

endorsement had created issues in other auto accident cases

involving the Authority, concerning the level of the Authority's

underlying UIM coverage. At his deposition, the Authority's deputy

executive director, John O'Hern, testified that the Authority's

self-insured retention limit for UIM coverage was $15,000, but he

testified that there was no written documentation setting that

coverage limit. O'Hern testified to his understanding that UIM

coverage of $15,000 per individual and $30,000 per accident was

statutorily required. O'Hern also testified to his understanding

that the Authority never had UIM excess coverage from Chartis and

Endorsement No. 23 was "a mistake." He noted that section O of

the exclusions section of the basic Chartis policy stated that the

policy did not apply to the insured's UIM obligation.

O'Hern acknowledged evidence that in two prior cases

involving injured State Troopers, the Authority had settled UIM

claims for considerably more than $15,000. He testified that in

both of those cases, the Authority's initial litigation position

had been that its UIM limits were $15,000/30,000. The minutes of

the Commission meeting concerning one of the settlements indicate

that the plaintiff in that case claimed that he suffered a

traumatic brain injury. However, at his deposition, O'Hern also

recalled a more recent case in which the Authority had litigated

5 A-1969-15T3
its obligation to provide UIM coverage and had obtained a Law

Division decision holding that its UIM coverage was limited to

$15,000. According to O'Hern, that decision arose from a court

hearing in which he testified.

On February 15, 2012, the Authority's acting director of law

authored a memo indicating that the Authority's limit had always

been $15,000, but that the Chartis policy language had created an

issue on that point. He recommended that the Authority's Board

of Commissioners raise the UIM self-insured limit to $250,000 to

adequately protect the Authority's employees. He also recommended

asking Chartis to delete the controversial language from its

policy. On February 28, 2012, the Commissioners approved that

recommendation, voting to change the Authority's UIM self-insured

retention limit to $250,000 and authorizing the executive director

to ask Chartis to remove Endorsement No. 23 from its policy.3

According to O'Hern, the Authority's current umbrella policy does

not contain a provision for UIM coverage.

Despite knowing that there was an issue over the Authority's

self-insured limit, plaintiffs settled with the Authority for

$67,000. The settlement agreement recited that it was without

prejudice to the Authority's position that at the time of the

3
The memo and the Commission minutes refer to Endorsement No.
"24" but we conclude this is a typographic error.

6 A-1969-15T3
accident, it only provided $15,000 in UIM coverage, regardless of

the terms of any existing excess policy. Plaintiffs then proceeded

to trial against NJM, before a second judge.

Shortly before the trial, NJM filed a motion asking the trial

court to declare that the Authority's UIM coverage was $2 million,

and that NJM's policy was excess to the coverage provided by the

Authority. Instead of deciding the coverage issue, the second

judge declined to entertain the motion and proceeded with the

trial. The jury returned a verdict of $250,000 in damages for

Manuel and $50,000 in per quod damages for Yolanda. After the

trial, the second judge determined that the Authority's UIM self-

insured retention limit was $2 million and that, pursuant to the

language of the NJM policy, NJM's coverage was excess to that

provided by the Authority. In effect, that determination vitiated

the $300,000 jury verdict against NJM.

II

On this appeal, plaintiffs contend that the language in the

Chartis policy was incorrect, and that the language of an excess

policy cannot legally determine the insured public entity's

underlying coverage limit. The Authority supports plaintiffs'

position. The Authority argues, in the alternative, that it had

no obligation to provide any UIM coverage and did not include such

7 A-1969-15T3
coverage in its self-insured retention, or that its UIM obligation

was limited to $15,000.

Ordinarily, the interpretation of an insurance policy is a

contract question that presents solely a legal issue. See Powell

v. Alemaz, Inc., 335 N.J. Super. 33, 37 (App. Div. 2000). However,

in this case, where the Authority was self-insured, the issue is

not so simple. After reviewing the record, we conclude that there

is a material factual issue concerning the Authority's UIM coverage

at the time of the 2011 accident. The Chartis policy only provides

coverage that is excess to underlying existing coverage. It

neither provides primary coverage nor creates any underlying

coverage. See Arico v. Twp. of Brick, 281 N.J. Super. 471, 475

(App. Div.), certif. denied, 142 N.J. 515 (1995). Language in the

Chartis policy concerning the Authority's amount of underlying UIM

coverage might constitute some evidence of that coverage. However,

the Chartis policy language cannot not create such underlying

coverage if it does not otherwise exist.

There are factual issues concerning how the contested

language came to appear in the Chartis policy; whether the

Authority negotiated or paid for any UIM or UM coverage from

Chartis; or whether Endorsement No. 23, or at least the included

language about the retention amount, was simply boilerplate that

Chartis included in error. We understand the first judge's

8 A-1969-15T3
reasoning in denying plaintiff's motion to add Chartis as a party,

however, Chartis may have records or employees that can shed light

on the coverage issue. If Chartis will not voluntarily produce

its information on remand, it may be added as a party for discovery

purposes only.

The record also presents factual issues concerning the

Authority's policies and its past conduct with respect to providing

UIM coverage to persons driving the Authority's vehicles. It is

difficult to comprehend how a public agency such as the Authority

could have no contemporaneous records defining its self-insured

UIM coverage. Because there is no statutory requirement for UIM

coverage, it is also unclear whether or how the Authority could

provide $2 million in UIM coverage, without a public vote of its

Commissioners authorizing that coverage.4 See N.J.S.A. 17:28-1.1

(requiring auto insurance policies to include UM, but not UIM,

coverage); Downey v. City of Elizabeth, 273 N.J. Super. 335, 338-

39 (App. Div. 1994) (self-insured public entity need not provide

UIM coverage). It is further unclear why the Authority settled

UIM claims for amounts so far in excess of what it claimed was its

4
NJM's appendix contains the minutes of a July 27, 2010 Commission
vote authorizing the renewal of the Chartis umbrella policy, but
the resolution only refers generally to auto liability excess
coverage and makes no mention of authorizing any underlying UIM
coverage.

9 A-1969-15T3
self-insured limit of $15,000. The parties should have the

opportunity to present and cross-examine witnesses on the factual

issues and the trial court should have the opportunity to gauge

their credibility.

In response to our questions at oral argument, the Authority's

counsel conceded that an evidentiary hearing was required, while

counsel for NJM and plaintiffs insisted that their respective

positions should prevail without a hearing. In fairness to the

second judge, we acknowledge that none of the parties specifically

asked for a hearing in the trial court. However, in view of the

amount of money at stake here, and the disputed factual and

credibility issues, we conclude that a plenary hearing is

required.5

Accordingly, we vacate the September 24, 2015 and December

4, 2015 orders, and we remand for further proceedings consistent

with this opinion. We do not retain jurisdiction.

Dismissed in part, vacated in part and remanded.

5
In light of our disposition of the appeal, we do not address the
parties' additional arguments.

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