Carolina Cas. Ins. Co. v. Travelers Prop. Cas. Co.

• Decision Date: 22 October 2014
• Docket Number: Civ. No. 09–4871 KMMCA.
• Citation: 90 F.Supp.3d 304
• Parties: CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff/Counter–Defendant, v. TRAVELERS PROPERTY CASUALTY COMPANY, counter-claimant, third party plaintiff, cross-claimant, cross-defendant, Illinois National Insurance Company, counter-claimant, cross-defendant; Lexington Insurance Company, counter-claimant, cross-defendant; Old Republic Insurance Company, cross-defendant, Defendants, v. Penske Truck Leasing Co., L.P. Gardner, Masson, Bishop & Company, counter-claimant, cross-claimant, cross-defendant; Gardner M. Bishop, Inc., counter-claimant, cross-claimant, cross-defendant; Mark Albanese, counter-claimant, cross-defendant; Joseph Puccio, counter-claimant, cross-defendant; John Kanard, cross-defendant, Third Party Defendants.
• Court: U.S. District Court — District of New Jersey

90 F.Supp.3d 304

CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff/Counter–Defendant

v.TRAVELERS PROPERTY CASUALTY COMPANY, counter-claimant, third party plaintiff, cross-claimant, cross-defendant, Illinois National Insurance Company, counter-claimant, cross-defendant;

Lexington Insurance Company, counter-claimant, cross-defendant;

Old Republic Insurance Company, cross-defendant, Defendantsv.Penske Truck Leasing Co., L.P. Gardner, Masson, Bishop & Company, counter-claimant, cross-claimant, cross-defendant;

Gardner M. Bishop, Inc., counter-claimant, cross-claimant, cross-defendant;

Mark Albanese, counter-claimant, cross-defendant;

Joseph Puccio, counter-claimant, cross-defendant;

John Kanard, cross-defendant, Third Party Defendants.

Civ. No. 09–4871 KMMCA.

United States District Court, D. New Jersey.

Signed Oct. 22, 2014.

Deborah M. Mulvey, Walter H. Swayze, III, Segal, McCambridge, Singer & Mahoney, Ltd., Jersey City, NJ, for Plaintiff.

Anthony J. Zarillo, Jr., Michael J. Rossignol, Bevan Mosca Guiditta & Zarillo, Basking Ridge, NJ, Gloria B. Cherry, Braff, Harris & Sukoneck, Livingston, NJ, Lawrence F. Citro, Biancamano & Di Stefano, PC, Edison, NJ, for Defendants.

OPINION

McNULTY, District Judge.

This is a declaratory judgment action among insurers. A tractor-trailer driver, severely injured in a loading accident, sued and obtained a $5 million settlement, which has been paid. This action seeks a declaratory judgment to settle the potentially responsible carriers' shares of the obligation to cover that $5 million award and the costs of defense. Before me now are four motions for summary judgment.

My ultimate allocation of the $5 million settlement is as follows:

Primary Coverage		Excess Coverage
	Travelers	$1,000,000	Illinois National	$1,492,500
	CCIC	$1,000,000	Lexington	$1,492,500
	Old Republic	$ 15,000
	Primary Total =	$2,015,000	Excess Total =	$2,985,000

I. FACTS

Gardner, Masson, Bishop & Company (“Gardner Bishop”) was a general contractor for a New Jersey Turnpike construction project. Ho–Ro Trucking (“Ho–Ro”) had a contract with Gardner Bishop to pick up concrete road barriers from a construction staging area and transport them to another location.

John Kanard was an employee of Ho–Ro Trucking. On September 28, 2007, Kanard drove a tractor¹ and attached flatbed trailer to the construction staging area. Ho–Ro owned the flatbed trailer. Ho–Ro leased the tractor from the owner, Penske Truck Leasing Co., L.P. (“Penske”) (Travelers' R. 56.1 Statement at ¶ ¶ 8–9).²

Kanard parked the tractor-trailer at the staging area. Gardner Bishop employees began loading the 8,000–pound barriers onto the trailer, using an excavator outfitted with a specially designed clamp. (Id. at ¶ 9). Kanard was working with loading straps along the side of the trailer. (Id. at ¶ 12). One of the barriers fell, crushing and severing Kanard's left foot. (Id. at ¶¶ 10–13).

On August 18, 2008, Kanard sued Gardner Bishop and various other defendants, alleging seven counts of negligence relating to the loading process. (Id. at ¶¶ 17–19). Gardner Bishop's liability insurer, Travelers Property Casually Company (“Travelers”), provided a full defense. That action settled for $5 million. (Id. at ¶ 30). Of that $5 million, Travelers paid $1 million (the limit of Travelers' policy). The remaining $4 million was paid by Illinois National Insurance Company (“Illinois National”), Gardner Bishop's excess liability insurer. (Illinois National's policy had a $10 million limit.) (See id. at ¶¶ 30– 31). Both Travelers and Illinois National reserved their rights to recover amounts for which other insurers might be liable.

And there were other potentially liable insurers. At the time of the accident, Ho–Ro and Penske had dual insurance policies on the vehicles that they owned. (Ho–Ro, remember, owned the trailer, and Penske the tractor.) Ho–Ro had a policy from Carolina Casualty Insurance Company (“CCIC”) and an excess policy from Lexington Insurance Company (“Lexington”). Penske had both a primary and an excess policy from Old Republic Insurance Company.

CCIC maintains that it does not owe any coverage, and it has not paid out on any claim. It says that to the extent it may have offered to participate in Gardner Bishop's defense, it did so under a reservation of rights. Lexington and Old Republic have not paid out either, although it is not clear that Gardner Bishop or Travelers ever demanded that they provide coverage or defense costs. [ECF No. 90–1, at 9–10]

A. The Insurance Policies

I now review pertinent terms of the various policies of insurance. I focus on their “other-insurance” provisions, which will affect the allocation of responsibility among the insurers found to owe coverage.

1. The CCIC Policy

CCIC issued a “Commercial Transportation Policy” to Ho–Ro as a named insured, with a policy limit of $1 million.³ (CCIC Policy, Cert. of Deborah Metzger Mulvey, Esq., Ex. H1 [ECF No. 89–17, at 2, 77] ). CCIC promised to “pay all sums an ‘insured’ legally must pay as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies, caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered auto.” CCIC also has “the right and duty to defend any ‘insured’ against a ‘suit’ asking for such damages ...” (Id. at Truckers Coverage Form p. 2 [ECF No. 89–17, at 19–20] ). The CCIC Policy's definitions of “Who Is An Insured” and what is an “auto” are discussed at section III.B.1, infra.

The CCIC policy addresses the possibility of separate ownership or coverage of a tractor and trailer. Its coverage

is primary for any covered ‘auto’ while hired or borrowed by you and used exclusively in your business as a ‘trucker’ and pursuant to operating rights granted to you by a public authority. This Coverage Form's Liability Coverage is excess over any other collectible insurance for any covered ‘auto’ while hired or borrowed from you by another ‘trucker.’ However, while a covered ‘auto’ which is a ‘trailer’ is connected to a power unit, this Coverage Form's liability Coverage is: (1) On the same basis, primary or excess, as for the power unit if the power unit is a covered ‘auto’. (2) Excess if the power unit is not a covered ‘auto’.

(Id. at Truckers Coverage Form p. 11 [ECF No. 89–17, at 28] ).

The CCIC other-insurance provision further provides for allocation among primary carriers and among excess carriers:

When this Coverage Form and any other Coverage Form or policy covers on the same basis, either excess or primary, we pay only our share. Our share is the proportion that the Limit of Insurance of our Coverage Form bears to the total of the limits of all the Coverage Forms and policies covering on the same basis.

(Id. ).

2. The Travelers Policy

Travelers issued a “Commercial Insurance” policy to Gardner Bishop, providing coverage for bodily injury with a limit of $1 million. (Travelers Policy, Coverage Part Declarations, and General Liability Coverage Form at pp. 5–10 Cert. of Deborah Metzger Mulvey, Esq., Ex. H3 [ECF No. 89–19, at 15, 25–30] ).

The Travelers policy's other-insurance provision states: “This insurance is primary except when b. below applies. If this insurance is primary, our obligations are not affected unless any of the other insurance is also primary. Then, we will share with all that other insurance by the method described in c. below.” [ECF No. 89–19, at 31]. I discuss first the exception to primary coverage in part b. and then the sharing method in part c.

The part b. exception to primary coverage contains one potentially applicable section:

This insurance is excess over: (1) Any of the other insurance, whether primary, excess, contingent or on any other basis ... (d) If the loss arises out of the maintenance or use of aircraft, ‘autos' or watercraft....⁴

[Id. ]

Where part b. deems coverage to be excess, part b. then sets the limit of that excess coverage:

[W]hen this insurance is excess over other insurance, we will pay only our share of the amount of the loss, if any, that exceeds the sum of: (1) The total amount that all such other insurance could pay for the loss in the absence of this insurance; and (2) The total of all deductible and self-insured amounts under all that other insurance.

[Id. ]

Part c. then sets forth the method of sharing if Travelers' coverage and some other insurer's coverage are both primary:

If all of the other insurance permit contribution by equal shares, we will follow this method also. Under this approach each insurer contributes equal amounts until it has paid its applicable limit of insurance or none of the loss remains, whichever comes first. If any of the other insurance does not permit contribution by equal shares, we will contribute by limits. Under this method, each insurer's share is based on the ratio of its applicable limit of insurance to the total applicable limits of insurance of all insurers.

(Id. ).

3. The Illinois National Policy

Illinois National issued a Commercial Excess Liability Policy to Gardner Bishop with a limit of $10 million per occurrence. (Policy Declarations, Cert. of Deborah Metzger Mulvey, Esq., Ex. H4 [ECF No. 89–20 at p. 2] ). That policy promised to “pay on behalf of the Insured those sums in excess of the Retained Limit that the Insured becomes legally obligated to pay as damages by reason of liability imposed by law because of Bodily Injury, Property Damage or Personal Injury and Advertising Injury to which this Insurance applies....” (Illinois National Policy at 1 [ECF No. 89–20 at p. 13] ). This policy is explicitly excess to the “Retained Limit,” i.e., the policy limits of any applicable underlying policies. Applicable policies are listed in an attached schedule, but the list is not intended to be exclusive; also included is any “applicable Other Insurance providing coverage to the Insured.” (Id. at 24 [ECF No. 89–20 at 36] ). The Illinois National policy itself has an “other insurance” provision, which provides that “[i]f other valid and collectible insurance applies to...