Court interprets release signed by uninsured motorcyle operator

Mark Sindler was injured while operating a motorcycle he owned but had not insured.  He collected damages from Farmers Insurance, which provided liability insurance on the at-fault car driver, but insisted on language in the release that preserved his right to collect PIP benefits (wages, replacement domestic service expenses and medical).  After paying these benefits for more than a decade, Farmers notified Sindler it would no longer pay PIP benfits because Sindler was operating his own, uninsured bike at the time of the injury.  He sued to enforce his right to PIP benefits and Farmers sued to collect from him the medical it had paid.

The Court refused to consider the correspondence between the attorneys for Sindler and Farmers, and concluded that on the face of the Release executed by Sindler, he had not given up PIP benefits, but Farmers had not agreed to pay them. Since both attorneys were in the dark regarding a legislative change requiring that motorcyclists purchase insurance, and Farmers had only agreed to pay PIP benefits in accordance with the law, the Court held that Farmers was free 15 years later, to stop payment.

On the other hand, the Court noted that Farmers' right to recover payments that it was not legally obligated to make is an equitable right that depends, in part, on whether the recipient of the payments has acted in reliance on the "voluntary" payments.  Considering all of the factual circumstances, including Sindler's settlement of the liability claim for less than policy limits and his purchase of medical treatment in reliance upon an expectation that Farmers would pay the related expenses, the Court concluded that Farmers did not have the equitable right to demand repayment.