POLIZZI v. LIBERTY MUTUAL FIRE INSURANCE COMPANY

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

GISELLE POLIZZI, Civil Action No.: 14-02768

Plaintiff,

OPINION

v.

LIBERTY MUTUAL FIRE INSURANCE

COMPANY,

Defendant.

CECCHI, District Judge.

This matter comes before the Court upon the cross-motions of Liberty Mutual Fire Insurance

Company (“Liberty Mutual Fire”) and Liberty Mutual Mid-Atlantic Insurance Company (“Liberty

Mutual Mid-Atlantic”) (collectively “Defendants”),1 and Giselle Polizzi (“Plaintiff”) for summary

judgment pursuant to Federal Rule of Civil Procedure 56. ECF Nos. 55, 57. The Court has considered

the submissions made in support of and in opposition to the instant motions. See ECF Nos. 55-1, 57-

1, 58, 60. The motion is decided without oral argument pursuant to Federal Rule of Civil Procedure

78.2 For the reasons set forth below, Defendants’ motion for summary judgment is GRANTED and

Plaintiff’s motion for summary judgment isDENIED.

I. BACKGROUND

This casearises from a car accident and the resulting dispute about the proper interpretation of

1LibertyMutual Mid-Atlantic is sued herein as Liberty Mutual Fire (collectively “Liberty Mutual”).

SeeECF No. 55-2 at 1(“Def. SMF”).

2 The Court considers any new arguments not presented by the parties to be waived. See Brenner v.

Local 514, United Bhd. of Carpenters & Joiners of Am., 927 F.2d 1283, 1298 (3d Cir. 1991) (“It is

well established that failure to raise an issue in the district court constitutes a waiver of the argument.”).

an insurance policy.3

On March 10, 2010, Liberty Mutual Mid-Atlantic issued Personal Automobile Policy4 No.

AOU-238-288162-40 0 7 (“Mid-Atlantic Policy”), to Wilma Negron and Jose Negron-Rivera (the

“Negrons”), both of whom were “named insureds.” ECF No. 55-2 ¶ 1 (“Def. SMF”). The policy

period was from March 10, 2010 to March 10, 2011. Id. Plaintiff was listed as a driver on the

declaration page of theMid-Atlantic Policy,but wasnot a “named insured.” Id.¶¶ 8,10,15. A 2006

BMW X3owned by the Negronswas a listed vehicle covered by the Mid-Atlantic Policy. Id. ¶ 11.

The declaration page in the Mid-Atlantic policy established bodily injury recovery limits for

insureds of $250,000 per person for accidents with uninsured (or underinsured) motorists “(“UIM”).

Id. ¶ 13. However, the Mid-Atlantic Policy also contains an endorsement titled “UNINSURED

MOTORIST COVERAGE –NEW JERSEY”(“Endorsement”). Id. ¶ 12. This Endorsement contains

a provision (i.e., “Step-down Clause”) which decreased the ordinary $250,000 UIM limit to $15,000

if the insured is neither a “named insured” nor a “family member” as defined by the Mid-Atlantic

Policy. Id. ¶ 13. The Mid-Atlantic Policy defines “family member” as “a person related to you by

blood, marriage or adoption who is a resident of your household. This includes a ward or foster child.”

Id. ¶ 16 (emphasis added). Thus, if an insured gets into an accident withan uninsured (or underinsured)

tortfeasor, and they are neither a defined “family member” nor a “named insured,”their $250,000 per

person UIMlimit drops to $15,000 per personby operation of the Step-down Clause. Id. ¶ 14.

Plaintiff alleges that on November 15, 2010, she was struck and injured by an underinsured

vehicle while driving her parents’ 2006 BMW X3. Id. ¶ 2. On March 14, 2013, Plaintiff alleges that

3Unless otherwise indicated, the following facts are not in dispute and are drawn from the parties’

Local Rule 56.1 statements. The Court notes that if a fact is in dispute, it will be represented by

citations to both parties’ Local Rule 56.1 statements.

4There was another Personal Automobile Policy issued by Liberty Mutual Fire that Plaintiff was a

“named insured”on(“Polizzi Policy”),which is not the focus of this immediate dispute. Def. SMF ¶

18.

she learned that the tortfeasor in the accident had bodily injury insurance limits ofonly$100,000 with

State Farm Insurance.5 Id. ¶ 3. It is undisputed that the tortfeasor was an underinsured motorist. See

id. Plaintiff subsequently notified Liberty Mutual that she was making a UIM benefits claim against

the Mid-Atlantic Policy. Id. At the time of the accident, Plaintiff was not living in her parent’s home

at 16 Cindy Lane, Emerson, New Jersey (id. ¶ 9), but rather, she was residing at 143 Caesar Street,

Cliffside Park, New Jersey. ECF No. 57-2 ¶ 17 (“Pl. Resp.”). Additionally, in her moving brief,

Plaintiff notes that “[a]fter the accident on November 15, 2010, plaintiff resided with her parents.”

ECF No. 57-1 at 2; see also ECF No. 55-6, Ex. C, Polizzi Dep. Tr. at 10:3-19 (admitting that she did

not live with the Negrons on the date of the accident).6

The main dispute at issue in this case concerns the applicability of the Endorsementto the Mid-

Atlantic Policy. Plaintiff argues that the Endorsement conflicts with the declarations found in the Mid-

Atlantic Policy, where Plaintiff is listed as a driver. Pl. Resp. ¶ 14. Thus, she avers that she had a

reasonable expectation to the coverage, and is thereby entitled to the $250,000 UIM limit, not the

$15,000 UIM limit. Id. ¶¶ 14-15.

II. PROCEDURAL HISTORY

The complaint in this action was filed in the Superior Court of New Jersey, Bergen County, on

March 27, 2014. ECF No. 1-1. Plaintiff sought a declaratory judgment stating that Defendants shall

provide the UIM benefits under the Mid-Atlantic Policy, compel Defendants to participate in UIM

5The underlying action between Plaintiff and the tortfeasor from the accident was settled for

$75,000, but there was allegedly an understanding that it was for the full $100,000 available under

the tortfeasor’s policy “when the risk of trial and the cost of bringing five experts to Court to testify

on behalf of plaintiffs were taken into consideration.” ECF No. 57-1 at 5. Plaintiff alleges that

Liberty Mutual Firetook no action to intercede in that action prior to thesettlement. Def.SMF ¶ 4.

6Plaintiff’s main arguments are focused on whether the Endorsement, and consequently the Step-

down Clause, are applicableto her Mid-Atlantic Policy. SeeECF No. 57-1. Nowhere does Plaintiff

expressly argue that should the Endorsement apply, she would be considered a “family member,” and

thus be entitled to the $250,000 UIMlimit as statedin the Mid-Atlantic Policy.

arbitration, or in the alternative, conform the Polizzi Policy to provide Personal Injury Protection

(“PIP”) benefits, increase the PIP limits on the Polizzi Policy, reimburse Empire Blue Cross Blue

Shield for medical expenses, provide UIM benefits under the Polizzi Policy, and compel Defendants

to participate in UIM arbitration. Id. at 3-4. The case was subsequently removed by Defendants on

April 30, 2014. ECF No. 1. Defendants moved to dismiss the complaint in its entirety on June 13,

2014.7 ECF No. 6. By order and opinion datedMarch 30, 2016, this Court dismissed Plaintiff’s claim

for relief seeking UIM benefits under the Polizzi Policy without prejudice. ECF No. 12. Plaintiff filed

an amended complaint (ECF No. 13) on April 19, 2016, and Defendants filed their answer (ECF No.

18) on June 8, 2016. On April 18, 2018, an arbitration award was entered in favor of Plaintiff, and

Defendants subsequently requested a trial de novo contending thatthe decision to award Plaintiff UIM

coverage under the Mid-Atlantic Policy“has no basis in either law or equity.” ECF No. 48 at 2. These

cross-motions for summary judgment were filed by Defendants on September 28, 2018 (ECF No 55),

andbyPlaintiff on October 29, 2018(ECF No. 57), specifically addressing this final issue.

III. LEGAL STANDARD

Summary judgment is appropriate if the “depositions, documents, electronically stored

information, affidavits or declarations, stipulations . . . admissions, interrogatory answers, or other

materials” demonstrate that there is no genuine issue as to any material fact, and, construing all facts

and inferences in a light most favorable to the non-moving party, “the moving party is entitled to a

judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); see alsoPollock v.

Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir. 1986); Fed. R. Civ. P. 56(c).

The moving party has the initial burden of proving the absence of a genuine issue of material

fact. See Celotex, 477 U.S. at 323. Once the moving party meets this burden, the non-moving party

7The motion to dismiss was administratively terminated on January 22, 2015 after this Court ordered

the parties to mediation(ECF No. 10), but itwas subsequently reinstated on May 11, 2015 after

mediation proved unsuccessful.

has the burden of identifying specific facts to show that, to the contrary, a genuine issue of material

fact exists for trial. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87

(1986). In order to meet its burden, the nonmoving party must “go beyond the pleadings and by [its]

own affidavits, or by the ‘depositions, answers to interrogatories, and admissions on file,’ designate

‘specific facts showing that there is a genuine issue for trial.’” Celotex, 477 U.S. at 324; see also Lujan

v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990) (stating that “[t]he object of [Rule 56(e)] is not to

replace conclusory allegations of the complaint ... with conclusory allegations of an affidavit”);

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986); Big Apple BMW, Inc. v. BMW of N. Am.,

Inc., 974 F.2d 1358, 1363 (3d Cir. 1992) (“To raise a genuine issue of material fact. . .[the opponent

must]exceed[]the ‘mere scintilla’ threshold.”).

An issue is “genuine” if it is supported by evidence such that a reasonable jury could return a

verdict in the nonmoving party’s favor. Anderson, 477 U.S. at248. A fact is “material” if, under the

governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In

considering a motion for summary judgment, a district court may not make credibility determinations

or engage in any weighing of the evidence; instead, the non-moving party’s evidence “is to be believed

and all justifiable inferences are to be drawn in his favor.” Marino v. Indus. Crating Co., 358 F.3d

241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255).

“The standard by which the court decides a summary judgment motion does not change when

the parties file cross-motions.” Clevenger v. First Option Health Plan of N.J., 208 F. Supp. 2d 463,

468 (D.N.J. 2002). “When ruling on cross-motions for summary judgment, the court must consider

the motions independently . . . and view the evidence on each motion in the light most favorable to the

party opposing the motion.” Id.at 468–69 (citations omitted). “That one of the cross-motions is denied

does not imply that the other must be granted.” Ill. Nat'l Ins. v. Wyndham Worldwide Operations, Inc.,

85 F. Supp. 3d 785, 794 (D.N.J. 2015).

IV. DISCUSSION

Both motions hinge on the same legal question: are the terms of the Endorsement applicable to

the Mid-Atlantic Policy? If the answer is yes, Defendants’ motion will be successful; if no, Plaintiff’s

will be successful. For the purposes of this motion, since Plaintiff admitted she did not reside at her

parents’ home until after the accident, she is not a “family member” as defined by the Endorsement.

See Def. SMF ¶ 14. Thus, the only way she will be entitled to the $250,000 UIM limit is if the

Endorsement is inapplicable to the Mid-Atlantic Policy.

Defendants argue that Plaintiff is not entitled to any UIM coverage under the Mid-Atlantic

Policy because the Step-down Clause contained in the Endorsement applies, which thereby reduces

her available UIM limit from $250,000 to $15,000. ECF No. 55-1 at 1. That $15,000 must then be

reduced by the “tortfeasor’s full available policy limit,” leaving nothing to be recovered. Id. at 6.

Plaintiff contends that she is entitled to UIM coverage under the Mid-Atlantic Policy. ECF No. 57-1

at 1. She argues that the Step-down Clause is inapplicable here because it was in the Endorsement, it

conflicts with other UIM provisions in the body of the Mid-Atlantic Policy, and it was not referenced

on the declaration page. Id. As a result of these infirmities, she avers that the Defendants’attempt to

change the body of the Mid-Atlantic Policy with the Endorsement (and Step-down Clause) must fail

because it created ambiguity in the policy and lacked the adequate notice needed to defeat Plaintiff’s

reasonable expectation that she was entitled to UIM coverage pursuant to the declaration page of the

Mid-Atlantic Policy. Id.

A. Applicability of the Endorsement containing the Step-down Clause

It is well settled law in New Jersey that insurance policies are contracts of adhesion and are

“therefore scrutinized with particularity.” Morrison v. Am. Int’lIns. Co. of Am., 381 N.J. Super. 532,

537 (App. Div. 2005) (citing Zacarias v. Allstate Ins. Co., 168 N.J. 590, 594-95 (2001)). When

conducting this analysis, courts will “giv[e] effect to the ‘reasonable expectations’ of the insured for

the purpose of rendering a ‘fair interpretation’ of the boundaries of insurance coverage,” resolving

ambiguities against the insurer. Id. (quoting DiOrio v. New Jersey Mfrs. Ins. Co., 79 N.J. 257, 269

(1979)). The reasonable expectations of an insured party will be assessed “from the perspective of the

average policyholder.” Id. (internal citations omitted). “If the policy language is clear, the policy

should be interpreted as written [as] it is not the function of the courts to rewrite the policy to make a

better policy of insurance than the one purchased.” Id. at 538 (internal citations and quotation marks

omitted). If a section of a policy potentially creates ambiguity, courts should not only focus on the

language of that one section, see Werner Indus., Inc.v. First State Ins. Co., 112 N.J. 30, 37 (1988), but

rather, attempt to read “the offending section” in the context“of the entire policy in order to determine

whether harmony can be found between the alleged ambiguous language and the remainder of the

policy,” Morrison, 381 N.J. Super. at 541 (citing Zacarias, 168 N.J. at 603). If harmony cannot be

found, ambiguity exists,and courts should do the following:

[I]n enforcing an insurance policy, courts will depart from the literal text and interpret

it in accordance with the insured’s understanding [reasonable expectations], even when

that understanding contradicts the insurer’s intent, if the text appears overly technical

or contains hidden pitfalls, cannot be understood without employing subtle or legalistic

distinctions, is obscured by fine print, or requires strenuous study to comprehend.

Zacarias, 168 N.J. at 601(internal citations omitted).

Plaintiff analogizes her case to Lehrhoff v. Aetna Cas. & Sur. Co., 271 N.J. Super. 340 (App.

Div. 1994), where the court held that that the “reasonable expectations of coverage raised by the

declaration page cannot be contradicted by the policy’s boilerplate unless the declaration page itself

clearly so warns the insured.” Id.at 347. Plaintiff also cites to Skeete v. Dorvius, 368 N.J. Super. 311

(App. Div. 2004), aff’d, 184 N.J. 5 (2005). See ECF No. 57-1 at 7-9. There, in holding that an

insurance company’s changes to a policy without proper notification violated a policyholder’s

reasonable expectations, the Appellate Division expressly stated that “[w]e hold that unless specific

changes in the limits of coverage are noted on the declaration page, the carrier’s notice of changes in

coverage is inadequate.” Id.at 319. Plaintiff contends that together, Lehrhoffand Skeeteestablishthat

since she was listed on the declaration page as a driver, she reasonably expected to have the same

protections and coverage as the “named insureds” (i.e., her parents), and the Endorsement—which

contains the Step-down Clause that is apparently in conflict with the declaration page—cannot defeat

those reasonable expectations, especially when the declaration page contains no notice that the

Endorsement alters its UIM provisions. SeeECF No. 57-1 at 10-11.

The court in Morrison pointed out that the New Jersey Supreme Court limited the holding of

Lehrhoff in its Zacarias decision: “Lehrhoff, however, does not establish a bright line rule that the

declaration page controls where important additional terms of the policy are not included on the

declarationpage but are reflected elsewhere.” Morrison, 381 N.J. Super. at 539 (citing Zacarias, 168

N.J. at 603). In Zacarias, the New Jersey Supreme Court acknowledged that the declaration page is

the one page that is most likely to be read, and therefore, insurers should “explore ways to incorporate

as much information as may be reasonably included in the declarations sheet.” Zacarias, 168 N.J. at

603-04. However, the court stated that “an insurance contract is not per se ambiguous because its

declarations sheet, definition section, and exclusion provisions[i.e., Step-down Clause]are separately

presented.” Id. at 603. The court recognized the usefulness of cross-referencing within policies, and

that without thattool, policies would increase in length and “run the risk of making insurance policies

more difficult for the average insured to understand.” Id. Thus, when confronted with a declaration

page and endorsement containing potentially contrary provisions, courts should resist a quick finding

ofambiguity, and instead venture to read the two sectionsin harmony,if possible. See id.

Here, the Court finds that the terms of the Mid-Atlantic Policy are clear and unambiguous,

thereby rendering the reasonable expectations doctrine inapplicable. Defendants argue that the

provisions in Morrison that the court found to be unambiguous and therefore “immune from

application of the [reasonable expectations] doctrine are either identical to or substantially identical to

the relevant provisions of the [Mid-Atlantic Policy]” here.8 ECF No. 58 at 9. ThisCourt agrees. The

Mid-Atlantic Policy’s cover page warns the policyholderin bolded printto “[p]lease read your policy

and each endorsement carefully.” ECF No. 55-5, Ex. B, Mid-Atlantic Policy at 6 (emphasis added).

The policy specifically references the Endorsement by its title on the declaration page (unlike in

Morrison, where the court did not identify if it was referenced on the declaration page). Id. at 5. Lastly,

the Endorsement explicitly states in capital letters that “THIS ENDORSEMENT CHANGES THE

POLICY. PLEASE READ IT CAREFULLY.” Id. at 51. Viewed as a whole, harmony can be found

between the body of the Mid-Atlantic Policy and the Endorsement. See Zacarias, 168 N.J. at 603. As

outlined above, the Mid-Atlantic Policy warns the policyholder to read the endorsements because they

change the terms of the policy—as endorsements do. Had Plaintiff done so, she would have understood

that the Endorsement reduces the UIM limits available to her. An average policyholder would have

been alerted to the Endorsement and is thus responsible for the contents within. See Morrison, 381

N.J. Super. at 542 (stating that “[w]hen an insured purchases an original policy of insurance he may be

expected to read it and the law may fairly impose upon him such restrictions, conditions and limitations

as the average insured would ascertain from such reading”) (internal citations omitted). Therefore, the

terms of the Mid-Atlantic Policy are unambiguous, and thus, Plaintiff could not have reasonably

expected to be entitled to the UIM limits found on the declaration page because those limits were

changed by the Endorsement. See id. at 538 (“[I]f the policy language is clear, the policy should be

8Defendants list the following similarities: 1) the UIM limitsof the Mid-Atlantic Policy are stated on

the declaration page; 2) the Endorsement is only four pages long; 3) the Endorsement is titled

“UNINSURED MOTORIST COVERAGE –NEW JERSEY”; 4) just above the title of the

Endorsement, the following words appear in all caps (unlike the policy in Morrison, which was not

in all caps), “THIS ENDORSEMENT CHANGES THE POLICY. PLEASE READ IT

CAREFULLY”; 5) the Endorsement contains a Step-down Clause which lowers the UIM limit to the

statutory minimum for individuals who were neither “named insureds”nor “family members” (in

Morrison, the step-down clause merely cited to the statute, while here, the statutory limits were

explicitly listed); 6) the Step-down Clause is found on page two of the Endorsement; and 7) the term

“family member” is defined the same way in both policies. ECF No. 58 at 9-10.

interpreted as written.”) (internal citations omitted). The fact that the Step-down Clause was not

specifically referenced on the declaration page is not fatal to Defendants’ argument and Plaintiff cites

to no authority that requires this;nor is it problematicthat the Endorsement was not incorporated into

the body of the Mid-Atlantic Policy.

The cases Plaintiff cites for support—Lehrhoff and Skeete—are both distinguishable from the

instant dispute. In Lehrhoff, the court found that the plaintiff had a reasonable expectation to UIM

coverage because the endorsement that contained the step-down clause did not indicate that the term

“family member” was a defined term (as the Mid-Atlantic Policy does), thus creating ambiguity in the

policy:

“[F]amily member” for purposes of identifying a person entitled to [UIM] coverage

does not mean, as one might think, any family member, or indeed, as one might also

think, any immediate family member or even any immediate family member listed on

the declaration page. It means none of these because some pages away from Part C

there is a general definitions section to which Part C does not refer by cross-reference

or otherwise which limits the meaning of “family member” for purposes of Part C

coverage.

See Lehrhoff, 271 N.J. Super. at 345. This failure to properly cross-reference to the definitionssection

was critical to the court’s finding that the policy was ambiguous. See id. at 349. The Lehrhoff court

also stated that at the time the policy was issued, the plaintiff was a “resident member of the insured’s

household,” and therefore, the premium for the entire policy was calculated on that basis. Id. at 349.

Here, Plaintiff concedes that she was not living at the insured’s household until after the accident. See

ECF No. 57-1 at 2;see alsoECF No. 55-6, Ex. C, Polizzi Dep. Tr. at 10:3-19. Thus, the same rationale

is not applicable here; Plaintiff was not a “family member” as defined by the Mid-Atlantic Policy at

any time before her accident (and especially not at the time the policy was originally issued). The

Negrons’ premium for the Mid-Atlantic Policy was not calculated based on Plaintiff being a “family

member.” This is contrary to the plaintiff in Lehrhoff, who was a “family member” at the time that the

policy was issued, but subsequently moved out of the residence and then got into an accident. Id. at

342-43.

Skeeteis also distinguishable. InSkeete, the insurance company amended the policy when the

policyholder renewed it, not when it was initially issued, as was the case here. See Skeete, 368 N.J.

Super. at 314 (noting that the policyholder received renewals at six-month intervals). Additionally,

the insurance company sent the policyholder almost 200 pages of material within a two-week window.

Id. at 314-15. The changes to the UIM provision were buried in just a few paragraphs in those 200

pages, and there was no mention of the change on the declaration page:

[T]he manner in which Prudential notified [the policyholder] of the change in UM/UIM

coverage—inundating her with almost 200 pages of documents in a two-week period,

burying the change in a few unremarkable paragraphs, and failing to note the change

on the declaration page—was inadequate for the average policyholder to determine that

the UM/UIM coverage was amended and how the amendment would affect the

policyholder.

Id. at 317. The Skeetecourt did not believe it was proper to require the policyholder to “wade through

almost 200 pages of material she received in 1999, compare[] the policy page by page with the previous

policy and cross-reference[]” multiple definitions. Id. at 319-20. Here, the Mid-Atlantic Policy

contained the Endorsement when it was originally issued. See ECF No. 55-5, Ex. B, Mid-Atlantic

Policy at 51. The policy itself is only roughly 50 pages long, compared to the 200 pages the

policyholder in Skeetereceived in a two-week window. Seeid. Lastly, the Endorsement was listed by

its title on the declaration page. Seeid. at 5. Skeeteprovides no support to Plaintiff’s case.

Defendants’ have presented sufficient evidence to demonstrate that the terms of the

Endorsement should apply to the Mid-Atlantic Policy. Therefore, the Court cannot find, as a matter

of law, that Plaintiff is entitled to the $250,000 UIM limit. The Court, then, denies Plaintiff’s motion

for summary judgment. Accordingly, since the Endorsement and Step-Down Clause are applicable to

the Mid-Atlantic Policy, Plaintiff is only entitled to a UIM limit of $15,000 because she is neither a

defined “named insured” nor a “family member.” That $15,000 is further reduced by the tortfeasor’s

available policy limit of $100,000, see Winner v. Revill, 382 N.J. Super. 399, 404 (App. Div. 2006)

(citing N.J.STAT.ANN.§ 17:28-1.1),thereby leavingno UIM coverage available to Plaintiff under the

Mid-Atlantic Policy. The Court, accordingly, grants Defendants’ motion for summary judgment.

V. CONCLUSION

For the reasons above, Defendants’ motion for summary judgment is GRANTED and

Plaintiff's motion for summary judgment is DENIED. An appropriate order accompanies this opinion.

DATED: January 26, 2021 CA. Co

CLAIRE C. CECCHI, U.S.D.J.

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