Taxicab Passenger Not Entitled to Uninsured Motorist Benefits under the Taxicab’s Policy

MSZL&M Relies Upon Appellate Division Decision to Successfully Defend a New Jersey Insurance Company from Taxicab Passenger’s Claims for Uninsured Motorist Benefits

A vehicle owned by Andy Auto and operated by Danny Driver (“Driver 1”) was involved in a motor vehicle accident with a vehicle driven by Darius Driver (“Driver 2”).  At the time of the accident, Driver 1 was operating his motor vehicle as a taxicab through Taxi Company A and Plaintiff was a passenger inside of the taxicab.

Plaintiff initially filed a lawsuit against Taxi Company A, Driver 1 and Driver 2. Thereafter, during the discovery process, Plaintiff discovered that the vehicle driven by Driver 2 was not insured at the time of the accident. Thus, Plaintiff filed an Amended Complaint naming ABC Insurance Company (hereinafter “Insurance Company”), the company that had insured the vehicle owned by Andy Auto and driven by Driver 1, seeking UM benefits.

New Jersey Uninsured Motorist Coverage

Uninsured Motorist (“UM”) coverage in the State of New Jersey is governed by N.J.S.A. 17:28-1.1. This statute, in pertinent part, requires that all standard motor vehicle insurance policies provide uninsured motorist coverage for “the insured or his legal representative.”  This coverage is mandated for the purpose of protecting individuals who are involved in motor vehicle accidents involving vehicles that have no bodily injury liability insurance coverage.

The policy of insurance issued by Insurance Company to Andy Auto specifically named Andy Auto as the insured. The policy also included a Schedule of Named Drivers that did not include Driver 1. While the policy of insurance issued by Insurance Company to Andy Auto did contain UM/UIM coverage in the amount of $35,000.00, an Endorsement within the policy limited the persons entitled to such benefits. Specifically, the UM/UIM Endorsement pertaining to the policy specifically defined “insured” as follows:

       B.Who is an Insured
           Only the following are “insureds”:

1. You for any covered “auto”;
2. Anyone who has been specifically named in the Schedule of Named Drivers section of the application for this Policy at the time of the issuance of this Policy for a covered “auto”;
3. Anyone who has been added as a Named Driver in accordance with the procedure set forth in the Schedule of Named Drivers Endorsement of this Policy for any covered “auto.”

In spite of the limiting language contained in the policy issued by Insurance Company to Andy Auto, Plaintiff’s attorney remained adamant about pursuing Plaintiff’s UM claim against Insurance Company. Prior to MSZL&M’s assignment to represent Insurance Company, Plaintiff’s counsel even obtained a Default against Insurance Company based upon Insurance Company’s failure to Answer Plaintiff’s Amended Complaint. Even after MSZL&M’s assignment of the defense, Plaintiff’s counsel refused to voluntarily dismiss its claim against Insurance Company.

After Plaintiff refused to voluntarily dismiss her claim for UM benefits against Insurance Company, MSZL&M filed a Motion to (i) Set Aside Default and (ii) Dismiss Plaintiff’s Complaint, in Lieu of Filing an Answer, for Plaintiff’s Failure to State a Claim Upon Which Relief can be granted.

Jones v. Naser City Transp. Corp

In its Motion, MSZL&M relied on the Appellate Division case of Jones v. Naser City Transp. Corp., 388 N.J. Super. 513 (App. Div. 2006).   In Jones, a taxi passenger who was injured when the taxi was struck by an uninsured vehicle sued for UM benefits under the taxi’s insurance policy. However, the taxi’s policy limited UM coverage to the owner and anyone specifically named as a driver. In her attempt to override the limiting nature of the UM benefits extended through this policy, the plaintiff in Jones argued that the policy limitation violated statutory law and public policy.

Significantly, the Appellate Division rejected the plaintiff’s arguments and held that the provision in the taxi’s policy that limited UM coverage to the owner and anyone specifically named as a driver did not violate any law or public policy. As such, the court refused to extend UM coverage under the taxi’s automobile insurance policy to the plaintiff taxi passenger. The court noted that the plaintiff was entitled to relief through the Unsatisfied Claim and Judgment Fund.

In conjunction with its opinion, the Appellate Division noted as follows:

“The statutory rule governing UM coverage is stated in NJSA 17:28-1.1, which, in pertinent part, requires that all motor vehicle insurance policies provide uninsured motorists coverage for ‘the insured or his legal representative.’ Had the Legislature wanted UM coverage extended to all vehicular passengers, the most natural place for insertion of that requirement would have been in this statute.” Id. at 514-515.

Additionally, when Plaintiff attempted to rely upon the New Jersey Automobile Reparation Reform Act (“Act”) to assert that she should be granted UM benefits because she would be entitled to PIP coverage as a vehicle occupant under the Act, the court denied this argument by stating:

“We reject that argument in part because the Act specifically excludes private passenger automobiles ‘used as a public livery conveyance for passengers’, such as taxis, from the coverage it requires. We also reject it because the [quoted section of the Act relied upon by plaintiff with regard to vehicle occupants] does not change the definition of an ‘insured,’ but simply provides PIP coverage to certain categories of persons who do not fit ordinarily within the definition of an insured, such as a passenger. We also note that when the Legislature wanted, in a specific instance, to extend the PIP coverage required of all motor vehicles, as distinguished from automobiles, it was not reluctant to do so expressly…” Id. at 515.

After the submission of MSZL&M’s Motion to Dismiss, Plaintiff finally changed its position and agreed to execute a voluntary Stipulation of Dismissal With Prejudice to dismiss its claim for UM benefits against Insurance Company.