Matter of Allstate Insurance Co. (Stolarz-NJM)

Katheen Stolarz and her husband (plaintiffs) were injured in a car accident in New York. The Stolarzes and the other driver lived in New York, but the Stolarzes’ car was leased by Stolarz’s New Jersey employer, was registered in New Jersey, and was insured by New Jersey Manufacturers Insurance Company (NJM) (defendant) under a policy that was negotiated and made in New Jersey and written to conform to New Jersey law. The policy contained a single $35,000 limit for a claim relating to another driver’s uninsurance or underinsurance (single-limit policy) and entitled NJM to an offset for money received from others regarding such a loss. Stolarz was not a party to the policy and did not pay the policy premiums but was listed as an additional insured. After receiving $20,000 from the other driver’s insurer, the Stolarzes sought additional compensation from New York-based Allstate Insurance Company (Allstate) (defendant), which insured the Stolarzes’ personal cars. NJM joined in the proceedings, seeking declaratory relief. NJM argued that it was entitled to offset any obligation to the Stolarzes by the $20,000 the Stolarzes received from the other driver’s insurer. The Stolarzes responded that New York law governed and that the offset provision was unenforceable under New York law for public-policy reasons. NJM countered that New Jersey law governed and that the offset provision was valid under New Jersey law. The supreme court applied New York law and invalidated the offset provision. The appellate division affirmed. NJM appealed.