NJ Supreme Court Holds that Passenger in Own Uninsured Vehicle Cannot Pursue Personal Injury Lawsuit

On June 1, 2011, the NJ Supreme Court held that N.J.S.A. 39:6A-4.5(a) bars a person who was injured while a passenger in her own uninsured automobile from pursuing a  personal injury action to recover economic and noneconomic damages for those injuries. 

On August 24, 2006, the plaintiff, Denise Perrelli and Geovanni Valverde were driving south on the Garden State Parkway in Perrelli’s uninsured vehicle.  When they left the plaintiff’s home, Perrelli was driving the vehicle but after stopping at a rest area, Valverde took over the driving.  Upon leaving the rest area, the plaintiff’s vehicle was involved in an accident with a car driven by Paul Pastorelle.  As a result of the accident, Valverde was killed and Perrelli sustained serious physical and psychological injuries.

Two years before the accident, the plaintiff had purchased a 1992 Oldsmobile Cutlass and insured it through New Jersey Manufacturers (NJM).  When the plaintiff was first insured by NJM, she lived in Paramus where she received her premium notices.  Thereafter she moved twice.  She could not recall whether she received any premium notices at her last address, but believed her insurance was in effect on the day of the accident.  Perrelli’s coverage remained in effect until August 4, 2006 when NJM canceled her policy for nonpayment of premium.

On August 22, 2008, the plaintiff filed her complaint alleging her injuries were caused by the defendant’s negligence.  The defendant filed an answer and subsequently moved for summary judgment asserting that N.J.S.A. 39:6A-4.5(a) barred the action.  The trial court denied the defendant’s motion and the Appellate Division denied defendant’s motion for leave to appeal.  The Supreme Court granted defendant’s motion for leave to appeal.

N.J.S.A. 39:6A-4.5(a) states, “any person who, at the time of an automobile accident resulting in injuries to that person, is required but fails to maintain medical expense benefits coverage…(mandated by N.J.S.A. 39:6A-4 or N.J.S.A. 39:6A-3.1) shall have no cause of action for recovery of economic or non-economic loss sustained as a result of an accident while operating an uninsured automobile.”

The issue presented to the court was whether the phrase “while operating” required the plaintiff herself to have actually been driving her uninsured automobile at the time of the accident.  The defendant asserted that it was irrelevant whether the plaintiff was physically driving the car.  “The same legislative purpose of deterring the operation of uninsured motor vehicles, and precluding injured persons who caused the operation of an uninsured motor vehicle and did not contribute to the insurance pool from collecting it, apply equally whether the person seeking recovery for their injury is the driver of his or her own uninsured vehicle or a passenger in it.  Each involves an equal attempt to drain from the insurance pool without contributing to it, and each involves an equal violation of the law.”

The plaintiff argued that the statute, by its “clear and unambiguous meaning”, precludes recovery but only if the plaintiff was physically “operating the vehicle.”  The plaintiff’s noted that the statute had been amended on three occasions and the Legislature never added language to the effect of one who “operates or causes to be operated” an uninsured vehicle.  Lastly, the plaintiff argued that the Statute makes clear the uninsured person must be “culpably” or “knowingly” uninsured and in this case because the plaintiff believed she was insured, she could not be culpably uninsured.

The Supreme Court noted that in interpreting the Statute, if the language is clear on its face, courts should enforce the statute according to its terms.  However, where a literal interpretation would create a manifestly absurd result, the spirit of the law should control.  The Court noted that “to reduce the costs of automobile insurance, to protect victims of automobile accidents and reduce public expenditures when accidents are caused by judgment-proof tortfeasors, New Jersey requires all owners of motor vehicles registered or principally garaged in (the State)…to maintain minimum amounts of…insurance coverage for bodily injury, death and property damage caused by their vehicles.” N.J.S.A. 39:6A-4.5, adopted in 1985, was designed to further the costs and judicial objectives of the No Fault Act.  The Legislature wanted to ensure that an injured, uninsured driver did not draw on the pool of accident victim insurance funds to which he (or she) did not contribute.  The Court found that there was no doubt that the Legislature wanted to assure that all automobiles were covered by compulsory insurance by precluding those who do not have the required coverage from recovering from others merely by having someone else drive their vehicle.

The Court then held “that the preclusion of recovery contained in N.J.S.A. 39:6A-4.5(a) applies to the owner of an uninsured vehicle whether injured as a driver or passenger.”

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