Kathleen Stolarz and her husband were involved in a two-car auto accidentcaused by a bus on Route 6 in Woodbury, New York. This happened on February 18, 1989. A source found out that the vehicle that they were using was a company car rented by her employer Blue Cross/ Blue Shield. Blue Cross/ Blue Shield is a New Jersey company, and the car is registered in New Jersey. The car was insured by New Jersey Manufacturers Insurance Company. The policy given to Blue Cross/ Blue Shield was set to be consistent with the New Jersey law. Mr. and Mrs. Stolarz often garaged the vehicle at their home in Monroe, New York, which is just a few miles from the New Jersey border.
The insurance company of the other vehicle paid Mrs. Stolarz $20,000, which is the liability limit of the insured’s policy. This was disputed by Allstate Insurance Company, from whom the Stolarz’s got their personal car’s insurance from. They based their dispute from the underinsurance coverage of that policy. Mr. and Mrs. Stolarz demanded for arbitration. A source said, Allstate Insurance Company answered by filing for a special proceeding with the Supreme Court. New Jersey Manufacturers Insurance Company also disputed the amount that is payable and joined the proceeding to get a decision as to the obligations of the parties. Allstate Insurance Company settled with Mr. and Mrs. Stolarz and was not part of the appeal anymore.
New Jersey Manufacturers Insurance Company argued that in the insurance policy’s terms and the New Jersey law, they were entitled to offset the $20,000 which was given by the other driver to Mr. and Mrs. Stolarz from the $35,000 limit that was in the policy. Mr. and Mrs. Stolarz, said by a rep, countered this with the New York law offset clauses are void, and they should get the full amount. The court determined that with the conflict between the New Jersey law and New York law in this case, New York law should be the one to be followed with these injuries.