GUERLINE FELIX VS. BRIAN v. RICHARDS BRIAN v. RICHARDS VS. GUERLINE FELIX VS. GEICO INDEMNITY COMPANY (L-5330-14 AND L-0455-15, ESSEX 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NOT FOR PUBLICATION WITHOUT THE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-5093-16T4

GUERLINE FELIX,

Plaintiff,

v.

BRIAN V. RICHARDS,

Defendant.
________________________________

BRIAN V. RICHARDS and KASSANDRIA
RICHARDS, His Wife Per Quod,

Plaintiffs,

v.

GUERLINE FELIX, MID-ATLANTIC
INSURANCE COMPANY OF NEW JERSEY,

Defendants,

and

AAA MID-ATLANTIC INSURANCE
COMPANY,

Third-Party Plaintiff-
Respondent,

v.

GEICO INDEMNITY COMPANY,

Third-Party Defendant-
 Appellant.
________________________________

Argued July 16, 2018 – Decided August 1, 2018

Before Judges Whipple and Suter.

On appeal from Superior Court of New Jersey,
Law Division, Essex County, Docket Nos.
L-5330-14 and L-0455-15.

Eric G. Siegel argued the cause for appellant
(McElroy, Deutsch, Mulvaney & Carpenter, LLP,
attorneys; Richard J. Williams, Jr., of
counsel and on the brief; Eric G. Siegel, on
the brief).

Sanford D. Kaplan argued the cause for
respondent (Muscio, Kaplan & Helfrich, LLC,
attorneys; Sanford D. Kaplan, on the brief).

PER CURIAM

The issue in this appeal is whether N.J.S.A. 17:28-1.4, the

Deemer statute, applies to an automobile insurance policy written

by GEICO Indemnity Company (GEICO) in Florida for a Florida

resident who had an accident in New Jersey. The Florida policy

did not include any bodily injury liability (BI) coverage. New

Jersey now permits its residents the option under N.J.S.A. 39:6A-

3.1, to purchase an automobile insurance policy with no BI coverage

or in an amount less than the minimum required of $15,000 per

person per accident or $30,000 for more than one person per

accident ($15,000/$30,000). GEICO contends the Deemer statute

should no longer require the out-of-state policy to include BI

2 A-5093-16T4
coverage when New Jersey residents can purchase a policy without

it.

GEICO appeals the June 10, 2016 order that granted summary

judgment to AAA-Mid-Atlantic Insurance Company of New Jersey

(AAA), requiring GEICO to provide $15,000/$30,000 in BI coverage

and to defend and indemnify its insured, Guerline Felix. GEICO

also appeals the October 14, 2016 order that granted attorney's

fees to AAA. We agree that the Deemer statute is applicable to

the Florida policy. We affirm both orders.

On September 21, 2013, Felix was involved in a motor vehicle

accident with Brian Richards in Newark, New Jersey. Felix and

Richards both alleged they sustained personal injuries from the

accident. Felix was a resident of Florida and purchased automobile

insurance from GEICO in that State. Her policy provided no

coverage for BI liability. It also provided that GEICO would not

provide BI coverage for a motor vehicle accident outside of her

State. Richards resided in New Jersey. His automobile insurance

policy was written by AAA. It included uninsured motorist coverage

(UM) and underinsured motorist (UIM) coverage.

3 A-5093-16T4
 Felix sued Richards in the Superior Court, Essex County1 for

personal injury damages from the accident. Richards and his wife,

filing per quod, sued Felix and AAA for personal injuries in a

separate action.2

GEICO denied Felix a defense or indemnification under her

policy because the Florida policy did not provide BI coverage.

She retained personal counsel to represent her in the Richards

case. AAA, who was a defendant in Richards, filed a third-party

complaint against GEICO, claiming that it had no obligation to

provide UM or UIM coverage to Richards because, under the Deemer

statute, GEICO's policy was automatically deemed to include

$15,000/$30,000 in BI coverage. GEICO's answer opposed

application of the Deemer statute.

Both insurers filed motions for summary judgment in April

2016. AAA asked for a declaration that GEICO's policy was deemed

to include $15,000/$30,000 of BI coverage and to require GEICO to

defend and indemnify Felix. GEICO's summary judgment motion asked

to dismiss AAA's third-party complaint.

Following oral argument on June 10, 2016, the trial court

granted AAA's motion for summary judgment, ordering that GEICO's

1
Felix v. Richards, Docket Number ESX-L-5330-14.
2
Richards v. Felix, Docket Number ESX-L-0455-15.

4 A-5093-16T4
policy was to include the minimum BI coverage required in a

standard New Jersey automobile insurance policy. The court found

that the Deemer statute was "clear on its face" in requiring out-

of-state policies to include "a minimum $15,000 per person and

$30,000 per accident in bodily injury liability coverage." The

Deemer statute did "not create a carve out for basic New Jersey

policies as set forth in Section 3.1, as our Legislature did not

include express language reflecting such within the Deemer

statute." The court also rejected GEICO's argument that the Deemer

statute violated the Equal Protection Clause, relying on other

cases that addressed that issue.

Private counsel for Felix filed a motion to compel GEICO to

assign her counsel. That motion was granted and, although

counsel's application for an award of attorney's fees was denied

initially, on reconsideration, the court awarded $2835 in counsel

fees and $325 in costs. A stipulation of dismissal dismissed

claims between Felix and Richards but preserved GEICO's ability

to appeal the Deemer statute issue.

On appeal, GEICO contends the trial court's erroneous

interpretation of the Deemer statute created an irreconcilable

conflict between the basic policy and the Deemer statute. GEICO

argues that the Deemer statute, as amended by the Automobile

5 A-5093-16T4
Insurance Cost Reduction Act of 1998 (AICRA), L. 1998, c. 21,

should be interpreted to incorporate the basic policy and that by

doing so, the Florida policy should not have been deemed to include

$15,000/$30,000 in BI coverage. GEICO asserts the court's

interpretation of the Deemer statute violates the dormant Commerce

Clause and the Equal Protection Clause. Finally, GEICO disclaims

any obligation to defend or indemnify Felix or to pay for her

attorney's fees.

We review a court's grant of summary judgment de novo,

applying the same standard as the trial court. Conley v. Guerrero,

228 N.J. 339, 346 (2017). Summary judgment must be granted if

"the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact challenged

and that the moving party is entitled to a judgment or order as a

matter of law." Templo Fuente De Vida Corp. v. Nat'l Union Fire

Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016) (quoting R. 4:46-

2(c)).

The Deemer statute was "originally enacted in 1985 as part

of New Jersey's no fault automobile insurance plan." Cupido v.

Perez, 415 N.J. Super. 587, 592 (App. Div. 2010). Its purpose was

to "ensure that New Jersey residents injured by out-of-state

6 A-5093-16T4
vehicles have recourse to policies providing coverage at least as

broad as a New Jersey policy." Craig & Pomeroy, New Jersey Auto

Insurance Law, § 3:3, p. 64 (2018). New Jersey has "a legitimate

interest in its insurance scheme." Whitaker v. DeVilla, 147 N.J.

341, 351 (1997) (quoting Adams v. Keystone Ins. Co., 264 N.J.

Super. 367, 377 (App. Div. 1993)).

As enacted in 1985 and amended in 1988, the statute provided:

Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting insurance business in
this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the liability insurance
requirements of section 1 of P.L. 1972, c. 197
(C. 39:6B-1) or section 3 of P.L. 1972, c. 70
(C. 39:6A-3), the uninsured motorist insurance
requirements of subsection a. of section 2 of
P.L. 1968, c. 385 (C. 17:28-1.1), and personal
injury protection benefits coverage pursuant
to section 4 of P.L. 1972, c. 70 (C. 39:6A-4)
or of section 19 of P.L. 1983, c. 362 (C.
17:28-1.3), whenever the automobile or motor
vehicle insured under the policy is used or
operated in this State.

Any liability insurance policy subject to this
section shall be construed as providing the
coverage required herein, and any named
insured, and any immediate family member as
defined in section 14.1 of P.L. 1983, c. 362
(C. 39:6A-8.1), under that policy, shall be

7 A-5093-16T4
 subject to the tort option specified in
subsection a. of section 8 of P.L. 1972, c.
70 (C. 39:6A-8).

[L. 1988, c. 119, § 1.]

The Court stated that

the [D]eemer statute guarantees that if the
insured's vehicle is operated in New Jersey[,]
the insurer will provide liability coverage
of not less than $15,000 on account of injury
to, or death of, one person in any one
accident, coverage of not less than $30,000
on account of injury to or death of more than
one person in any one accident, and coverage
of not less than $5000 for damage to property
in any one accident.

[Whitaker, 147 N.J. at 348 (citing N.J.S.A.
39:6B-1; N.J.S.A. 39:6A-3).]

"In addition, the [D]eemer statute guarantees the out-of-state

insured uninsured motorist coverage in the same limits as are

required for liability coverage" and personal injury protection

(PIP) up to $250,000. Ibid.

The Deemer statute was amended by L. 1997, c. 436, § 1,

effective January 19, 1998, to address "affiliate" insurers and

added an entirely new sentence "requiring only PIP benefits

coverage and then only for New Jersey residents if 'the controlling

or affiliated insurer is not transacting automobile or motor

vehicle insurance business in New Jersey.'" Cooper Hosp. Univ.

8 A-5093-16T4
Med. Ctr. v. Prudential Ins. Co., 378 N.J. Super. 510, 516 (App.

Div. 2005) (citation omitted). As amended, the statute provided,

Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting insurance business in
this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the personal injury
protection benefits coverage pursuant to
section 4 of P.L. 1972, c. 70 (C.39:6A-4) or
section 19 of P.L. 1983, c. 362 (C.17:28-1.3)
for any New Jersey resident who is not
required to maintain personal injury
protection coverage pursuant to section 4 of
P.L. 1972, c. 70 (C.39:6A-4) and who is not
otherwise eligible for such benefits, whenever
the automobile or motor vehicle insured under
the policy is used or operated in this State.
In addition, any insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State,
which sells a policy providing automobile or
motor vehicle liability insurance coverage, or
any similar coverage, in any other state or
in any province of Canada, shall include in
each policy coverage to satisfy at least the
liability insurance requirements of section 1
of P.L. 1972, c. 197 (C.39:6B-1) or section 3
of P.L. 1972, c. 70 (C.39:6A-3), the uninsured
motorist insurance requirements of subsection
a. of section 2 of P.L. 1968, c. 385 (C.17:28-
1.1), and personal injury protection benefits

9 A-5093-16T4
 coverage pursuant to section 4 of P.L. 1972,
c. 70 (C.39:6A-4) or of section 19 of P.L.
1983, c. 362 (C.17:28-1.3), whenever the
automobile or motor vehicle insured under the
policy is used or operated in this State.

[L. 1997, c. 436, § 1 (emphasis added).]

Relevant here, that amendment "left virtually intact [the

original portion of the Deemer statute]3 save for the addition of

the words 'automobile or motor vehicle,' which modif[ied] and,

therefore, limit[ed] the type of affiliated insurance businesses

with the broader obligation to provide New Jersey insurance benefit

coverages to both in-state and out-of-state residents in their

out-of-state policies." Cooper Hospital, 378 N.J. Super. at 516.

"The original portion of the statute, the second sentence . . .

requires that the controlling or affiliated insurer be authorized

to transact not any insurance business, but motor vehicle or

automobile insurance business in this State." Ibid. (quoting

Gov't Emps. Ins. Co. v. Allstate Ins. Co., 358 N.J. Super. 555,

564-65 (App. Div. 2003)). In Cooper Hospital, we rejected the

notion of any "across-the-board limitation" of the statute,

finding "no Legislative intent to modify the [D]eemer statute."

Id. at 519 (quoting Allstate Ins. Co., 358 N.J. Super. at 568).

3
The reference here is to the second sentence of N.J.S.A.
17:28-1.4 that begins, "In addition."

10 A-5093-16T4
 In 1998, the Legislature enacted AICRA which largely became

effective in 1999. Craig & Pomeroy, § 4:3-8, p. 87. The

Legislature noted that because of the

high cost of automobile insurance in New
Jersey . . . many-lower income residents
. . . have been forced to drop or lapse their
coverage in violation of the State's mandatory
motor vehicle insurance laws, making it
necessary to provide a lower-cost option to
protect people by providing coverage to pay
their medical expenses if they are injured.

[N.J.S.A. 39:6A-1.1.]

AICRA provided for "the creation of two insurance coverage

options, a basic policy and a standard policy." Ibid. Under

N.J.S.A. 39:6A-3, a standard policy requires the owner of an

automobile that is "registered or principally garaged" in New

Jersey to maintain BI liability coverage in "an amount or limit

of $15,000, exclusive of interest and costs, on account of injury

to, or death of, one person, in any one accident; and (b) . . .

$30,000, exclusive of interest and costs, on account of injury to

or death of, more than one person, in any one accident."

The basic policy is an "alternative to the mandatory coverages

provided in sections 3 and 4 of P.L. 1972, c. 70 (C. 39:6A-3 and

39:6A-4)." N.J.S.A. 39:6A-3.1. Under N.J.S.A. 39:6A-3.1(c), an

owner of an automobile registered or principally garaged in New

Jersey can elect to purchase a basic policy that has no BI coverage

11 A-5093-16T4
minimum, but may include an optional $10,000 BI liability limit

for "injury to, or death of, one or more persons in any one

accident."

AICRA also amended the Deemer statute. As amended, the

statute provides:

Any insurer authorized to transact or
transacting automobile or motor vehicle
insurance business in this State, or
controlling or controlled by, or under common
control by, or with, an insurer which sells a
policy providing automobile or motor vehicle
liability insurance coverage, or any similar
coverage, in any other state or in any
province in Canada, shall include in each
policy coverage to satisfy at least the
personal injury protection benefits coverage
pursuant to section 4 of P.L. 1972, c. 70
(C.39:6A-4) or section 19 of P.L. 1983, c. 362
(C.17:28-1.3) for any New Jersey resident who
is not required to maintain personal injury
protection coverage pursuant to section 4 of
P.L. 1972, c. 70 (C.39:6A-4) or section 4 of
P.L. 1998, c. 21 (C.39:6A-3.1) and who is not
otherwise eligible for such benefits, whenever
the automobile or motor vehicle insured under
the policy is used or operated in this State.
In addition, any insurer authorized to
transact or transacting automobile or motor
vehicle insurance business in this State, or
controlling or controlled by, or under common
automobile or motor vehicle insurance business
in this State, which sells a policy providing
automobile or motor vehicle liability
insurance coverage, or any similar coverage,
in any other state or in any province of
Canada, shall include in each policy coverage
to satisfy at least the liability insurance
requirements of subsection a. of section 1 of
P.L. 1972, c. 197 (C.39:6B-1) or section 3 of

12 A-5093-16T4
 P.L. 1972, c. 70 (C.39-6A-3), the uninsured
motorist insurance requirements of subsection
a. of section 2 of P.L. 1968, c. 385 (C.17:28-
1.1), and personal injury protection benefits
coverage pursuant to section 4 of P.L. 1972,
c. 70 (C.39:6A-4) or of section 19 of P.L.
1983, c. 362 (C.17:28-1.3), whenever the
automobile or motor vehicle insured under the
policy is used or operated in this State.

[N.J.S.A. 17:28-1.4 (emphasis added).]

In the first sentence, that was added by L. 1998, c. 21, §

72, the Legislature inserted a reference to N.J.S.A. 39:6A-3.1.

In the second sentence, which is the original portion of the Deemer

statute, AICRA added the words "subsection a" proceeding the words

"section 1 of P.L. 1972, c. 197". The second sentence was not

amended to expressly refer to N.J.S.A. 39:6A-3.1.

We reject GEICO's argument that AICRA's creation of the basic

policy option, with no or limited BI coverage, modified the Deemer

statute to require no BI coverage for automobiles to which the

statute otherwise would apply. The Deemer statute makes one

reference to N.J.S.A. 39:6A-3.1 but that is in the first sentence

of the statute, that concerns affiliated entities amendment; the

reference is not in the second sentence of N.J.S.A. 17:28-1.4.

The second sentence only mentions N.J.S.A. 39:6A-3, which is the

statute that requires $15,000/$30,000 BI coverage. "[T]he meaning

of a statute must . . . be sought in the language in which the act

13 A-5093-16T4
is framed, and if that is plain, . . . the sole function of the

courts is to enforce it according to its terms." Sheeran v.

Nationwide Mut. Ins. Co., 80 N.J. 548, 556 (1978) (quoting

Caminetti v. United States, 242 U.S. 470, 485 (1917)). We have

no reason to conclude that the Legislature meant to eliminate the

$15,000/$30,000 BI coverage minimum just because it referred to

the basic policy in one part of the statute that addresses

affiliates where it did not include that reference in the second

sentence, the original portion of the statute.

AICRA amended the original portion of the Deemer statute to

add reference to "subsection a. of section 1 of P.L. 1972, c. 197

(C. 39:6B-1)." N.J.S.A. 17:28-1.4. Subsection "a" requires an

owner of a motor vehicle registered or garaged in New Jersey to

maintain BI coverage of at least $15,000. It makes no reference

to a basic policy. The basic policy is addressed in subsection

b, not a, of N.J.S.A. 39:6B-1. "[T]he meaning of a word or series

of words may be ascertained by reference to a neighboring set of

words or similar provisions in the same statutory scheme." Wells

Reit II-80 Park Plaza, LLC v. Dir., Div. of Taxation, 414 N.J.

Super. 453, 469 (App. Div. 2010) (citation omitted). We cannot

assume that the Legislature intended to incorporate the coverages

in the basic policy as the minimum to be applied under the Deemer

14 A-5093-16T4
statute when AICRA expressly amended the statute to add reference

to section "a" of N.J.S.A. 39:6B-1 that did not include the basic

policy. Had the Legislature intended AICRA to change the minimum

requirements for out-of-state policies affected by the Deemer

statute, it could simply have said so. "Legislative intent may

be determined by analyzing 'legislative history, committee

reports, and contemporaneous construction.'" Cooper Hospital, 378

N.J. Super. at 514 (quoting Burns v. Belafsky, 166 N.J. 466, 473

(2001)). GEICO points to nothing in AICRA's legislative history

for support that the Legislature intended to make the change in

the Deemer statute that it raises.

GEICO rests its argument on AICRA's amendment of N.J.S.A.

39:6A-3 to reflect that consumers now have the option to purchase

a basic policy. N.J.S.A. 39:6A-3 was amended to add the language

"[e]xcept as provided by section 4 of P.L. 1998, c. 21 (C 39:6A-

3.1)," to the beginning of the sentence that then required "every

owner or registered owner of an automobile registered or

principally garaged in this State [to] maintain automobile

liability insurance coverage . . . insuring against loss resulting

from liability imposed by law for bodily injury, death and property

damage" from an automobile accident of at least $15,000/$30,000.

But other than indicating that insurance consumers can purchase a

15 A-5093-16T4
basic policy without violating the standard BI liability coverage

minimums, we discern no intent by the Legislature that the Deemer

statute now should deem out-of-state automobile insurance policies

of drivers involved in accidents in New Jersey to have zero BI

liability coverage.4

N.J.S.A. 39:6A-3 was enacted as part of the New Jersey

Automobile Reparations Reform Act (No Fault Act), L. 1972, c. 70

and required, among many other reforms, that motorists maintain a

minimum amount of BI liability coverage. "One of the motivating

thrusts behind the 1972 reform package was the extraordinary

pressure on the Unsatisfied Claim and Judgment Fund [UCJF] by

reason of the claims of individuals injured by uninsured

motorists." Craig & Pomeroy, § 1:2-5, p. 12. The UCJF "provide[s]

a measure of relief to persons who sustain losses inflicted by

financially irresponsible or unknown owners or operators of motor

vehicles, where such person would otherwise be remediless."

Sanders v. Langemeier, 199 N.J. 366, 379 (2009) (quoting Jimenez

v. Baglieri, 152 N.J. 337, 342 (1998)). "[T]he reason for the

[Deemer] provision was to help reduce the demands on the [UCJF]."

4
GEICO argues that only policies without BI coverage are affected
by its interpretation of N.J.S.A. 17:28-1.4. If an out-of-state
policy has BI coverage of $5000, GEICO acknowledges that the
policy's BI limit should be converted to $15,000. It does not
explain its rationale for this argument.

16 A-5093-16T4
Craig & Pomeroy, § 1:2-7, p. 15. The effect of GEICO's argument

is to reform out-of-state policies to include no BI liability

coverage; this is contrary to the purpose of the Deemer statute

and may increase the financial pressure on the UCJF by reducing

to zero the amount of BI liability coverage by out-of-state drivers

who have accidents in New Jersey insured by a company doing

insurance business in New Jersey.

GEICO's argument may have broad ramifications for other

coverages that now are "deemed" to be part of an out-of-state

policy under the Deemer statute. For instance, the basic policy

reduced the required minimum amount of personal injury protection

insurance that can be purchased. GEICO's argument might extend

to PIP coverage. Should the Legislature have intended a change

in the Deemer statute, as argued by GEICO, it could have said so

expressly. Therefore, we agree with the trial judge that the

plain language of the Deemer statute requires GEICO's policy here

to be reformed to include BI coverage in the amount of

$15,000/$30,000.

For the first time on this appeal, GEICO challenges the

constitutionality of the Deemer statute under the dormant Commerce

Clause. We decline to address this constitutional issue because

17 A-5093-16T4
it was not raised in the trial court. State v. Robinson, 200 N.J.

1, 20-22 (2009); State v. Arthur, 184 N.J. 307, 327 (2005).

GEICO also argues that the Deemer statute as interpreted by

the trial court violates the Equal Protection Clause. The statute

has been upheld in the past against constitutional challenge under

the equal protection law. See Whitaker, 147 N.J. at 357-358;

Adams v. Keystone Ins. Co., 264 N.J. Super. 367, 377-78 (App. Div.

1993); Taylor-Segam v. Rajagopal, 275 N.J. Super. 286, 292 (App.

Div. 1994).

The Deemer statute applies to insurers who choose to write

policies of insurance in New Jersey or through their affiliates.

Insurance is a heavily regulated industry and imbued with strong

public interest. See In re "Plan for Orderly Withdrawal from

N.J." of Twin City Fire Ins. Co., 129 N.J. 389, 407 (1992).

Although a state cannot discriminate against non-resident

businesses in their regulation of commerce, Crespo v. Staph, 128

N.J. 351, 356 (1992), all insurers writing policies in New Jersey

are treated uniformly; it's the consumer who has the option to

purchase more affordable coverage.

GEICO appeals the trial court's award of attorney's fees and

costs to Felix's counsel, who she retained when GEICO denied her

18 A-5093-16T4
request for representation. The court's October 14, 2016 order

provided that it "overlooked/misapplied R. 4:42-9(c)."

We review this award of attorney's fees and costs under an

abuse of discretion standard. Garmeaux v. DNV Concepts, Inc., 448

N.J. Super. 148, 156-57 (App. Div. 2016). Here, there was no

abuse of discretion. The Rules permit an award of counsel fees

"[i]n an action upon a liability or indemnity policy of insurance,

in favor of a successful claimant." R. 4:42-9(a)(6). AAA

successfully sued GEICO to establish that GEICO's policy should

be deemed to include BI coverage. Therefore, it was entitled to

an award of fees under the Rule. Because GEICO has not challenged

the actual amount of the fees or costs awarded, we have no occasion

to review that issue.

Affirmed.

19 A-5093-16T4