Planet Ins. Co. v. Gunther

• Decision Date: 29 November 1993
• Parties: PLANET INSURANCE COMPANY and Retail Express, Inc., Plaintiffs, v. J. Eric GUNTHER, Joann Gunther, Charles Patterson, Theodore Moser, d/b/a T & M Trucking, Peter R. DiNapoli, Roy Howard and Lisa Howard, d/b/a The Beer Store, The New York State Thruway Authority, The State of New York, Aetna Casualty & Surety Company, Automobile Insurance Company of Hartford, Connecticut and The Insurance Company of the State of Pennsylvania, Defendants.
• Court: New York Supreme Court

Page 763

608 N.Y.S.2d 763

160 Misc.2d 67

PLANET INSURANCE COMPANY and Retail Express, Inc., Plaintiffs, v. J. Eric GUNTHER, Joann Gunther, Charles Patterson, Theodore Moser, d/b/a T & M Trucking, Peter R. DiNapoli, Roy Howard and Lisa Howard, d/b/a The Beer Store, The New York State Thruway Authority, The State of New York, Aetna Casualty & Surety Company, Automobile Insurance Company of Hartford Connecticut and The Insurance Company of the State of Pennsylvania, Defendants.

Supreme Court, Rockland County.

Nov. 29, 1993.

Steven M. Kaplan, Jones, Hirsch, Connors & Bull, New York City, for plaintiffs.

Charles E. Lynch, McCormack, Damiani, Lowe & Mellion, Bardonia, for defendants Gunther.

Robert D. Becker, Ginsberg, Becker and Weaver, New York City, for defendant Ins. Co. of Pa.

Joseph A. Maria, White Plains, for defendant DiNapoli.

Robert Abrams, Attorney-General, Kenneth L. Scheer, Asst. Atty. Gen., Poughkeepsie, for defendants State and New York State Thruway Authority.

Sharon A. Scanlan, J. Russel Clune, P.C., Harrison, for defendants Aetna & Auto Ins.

Levine, Glass & Miller, Monticello, for defendants Howard.

JOAN B. LEFKOWITZ, Justice.

FACTUAL AND PROCEDURAL BACKGROUND

Retail Express Inc., an interstate carrier licensed by the Interstate Commerce Commission, and which is incorporated in New Jersey, executed a lease, as lessee, with TM Trucking, as lessor, a company located in the State of Pennsylvania. The lease pertained to a Mack tractor trailer combination and driver, defendant Charles Patterson. The lease was for periods of 30 days, automatically renewable for like periods unless cancelled. The lease required the lessor to maintain property damage insurance for damage caused by its employees and for the lessee to maintain personal injury liability insurance. The lease was nonexclusive in that TM Trucking could use the tractor trailer when it was not needed by Retail Express Inc.

The lease was renewed on several occasions. During one renewal, on May 23, 1990, the tractor trailer was initially being operated by Mr. Patterson on behalf of Retail Express, with appropriate placards, to transport a beer cargo from Newark, New Jersey to Lake Kiamesha, New York. Once that was done the truck was allegedly used on behalf of defendant Moser d/b/a T & M Trucking to transport another cargo of beer from defendants Howard d/b/a The Beer Store in Lake Kiamesha to Freeport (Long Island), New York.

En route to Freeport the tractor trailer was involved in an accident on the Tappan Zee Bridge between Westchester and Rockland Counties. It apparently struck the rear end of an automobile (probably registered in Connecticut) owned and operated by defendant Peter DiNapoli in which defendant J. Eric Gunther a resident of Rockland County was a passenger. Also involved in the collision was an unattended, stationary truck owned by defendant, the New York State Thruway Authority. Apparently there was a fire as a result of the accident. The Thruway Authority truck and the leased tractor trailer and its cargo were destroyed.

As might be expected, several lawsuits emanated from this accident. Mr. Gunther and his wife have commenced an action for damages for personal injuries in the Supreme Court, Rockland County, Index No. 1313/91, against Messrs. Patterson, Theodore Moser and DiNapoli. That action is pending before myself. Mr. DiNapoli has sued Mr. Patterson and Theodore Moser for personal injury damages in the Supreme Court, Rockland County, Index No. 7668/92, which action is before Justice Bergerman. The Gunthers have also sued the New York State Thruway Authority and New York State for damages in the Court of Claims. The New York State Thruway has sued Mr. Patterson, Charles Moser and an entity called Greencap Trucking This is an action for declaratory judgment. Plaintiff Planet Insurance Company (hereafter referred to as "Planet") insured Retail Express Inc. by way of a Truckers Policy (No. 147144701) providing for $1,000,000 coverage for an accident. Under Planet's policy an "insured" includes any person operating the leased vehicle with the permission of Retail (Part IV, D, page 2). Planet disclaimed coverage approximately five months after receiving notice of the accident on the ground that the tractor trailer combination was not being used on behalf of its insured, Retail Express, at the time of the accident and, therefore, under the definition of "insured" in the policy (Part III, D. 1-5) neither the operator (Mr. Patterson) nor lessor-owner (Mr. Moser, T & M Trucking) was an insured under the policy. Planet also disclaimed coverage for the Howard cargo claim pursuant to an exclusion in the policy for property in the insured's care (if the cargo was in Retail Express' control) (Part III, C.6).

                Inc.  (as alleged owner of the trailer), for $35,256.91 property damages, in the Supreme Court, Albany County, Index No. 85/92.   Mr. Howard d/b/a The Beer Store sued Carl Moser d/b/a T & M Trucking, Ted Moser d/b/a TM Trucking, Mr. Patterson and Retail Express, Inc. for property damage (lost cargo), in the Supreme Court, Sullivan County.   On October 26, 1992 Mr. Howard obtained a default judgment in the sum of $28,728.43 against Messrs. Moser, Moser and Patterson.   The Thruway Authority has also commenced a separate action in the Supreme Court, Albany County, against Retail Express for property damage, Index No. 292/93, in the sum of $35,256.91
                

Defendant, the Insurance Company of the State of Pennsylvania (hereafter referred to as "ICSP") issued a $300,000 non-trucking use policy (No. TBA 7142461 RA) to TM Trucking (presumably the same T & M Trucking sued herein). Endorsement No. 11 to the policy provides a limitation on coverage to exclude coverage where the tractor "is being used to carry property in any business" (No. 11, B). The same endorsement provides "bobtail" coverage; that is coverage for the truck cab use only and excludes coverage when a trailer is attached to the truck (Hartford Ins. Co. v. Occidental Fire & Cas. Co., 908 F.2d 235, 236 n. 2 [7th Cir.1990]; Wenkosky v. Protective Ins. Co., 698 F.Supp. 1227, 1228 [M.D.Pa.1988]. "Apparently, the insurance afforded is for liability coverage while the tractor is being delivered or returned from the lessee and not attached to any trailer carrying cargo." Brun v. George W. Brown, Inc., 56 Misc.2d 577, 579, 289 N.Y.S.2d 722 (Supreme Ct.Kings County 1968). The definition of an insured in ICSP's policy includes the named insured and anyone else using the named insured's vehicles with exceptions not germane to this litigation.

ICSP's policy in its "other insurance" provision (Section IV, B.5) provides that it is primary as to equipment owned by the named insured. Planet's policy provision in point "Other Insurance" (Part VII, Section B, page 5) provides that it is primary only when the covered vehicle is being used exclusively on Retail's business. The ICSP policy in endorsement number 2 provides:

"We agree with YOU that if any of the provisions of the endorsement, 'Truckers Insurance for Non-Trucking Use' CA2309 (01 87) are held to be void or unenforceable under the law of any jurisdiction, for reasons of public policy, violation of statute, or otherwise, WE will not pay any sum in excess of the minimum amounts required by the Financial Responsibility Laws of such jurisdiction, and then only after all other valid and collectible insurance available to the insured, or which would be available to the insured in the absence of this policy, has been exhausted."

Defendants Aetna Casualty & Surety Company and Automobile Insurance Company of Hartford, Connecticut (hereinafter referred to collectively as "Aetna") issued automobile liability policies to Mr. DiNapoli and the Gunthers against which putative claims on uninsured coverage have been made.

(The Court held as to preliminary matters that Retail Express Inc. was not an "owner" within the meaning of section 388 of the Vehicle and Traffic Law and that the plaintiffs had standing to bring the action. The Court opined that it might be prudent to require both the lessor and lessee's insurers

to provide a defense in the underlying personal injury actions, citing Cordial Greens Country Club v. Aetna Cas. & Sur. Co., 41 N.Y.2d 996, 395 N.Y.S.2d 443, 363 N.E.2d 1178 (1977), but then addressed the heart of the legal argument presented regarding New York's public policy requiring motor vehicles to carry insurance.)

PUBLIC POLICY

Nonetheless, the parties have vigorously presented their legal arguments and need for resolution of the public policy questions, which, it appears, must be addressed if the cases are to be resolved by settlement. To that end and for purposes of completeness (and to avoid delay in the underlying actions if an appeal is taken from a claimed imperfect declaratory judgment) the Court shall reach the merits of the controversy presented.

Under New York State's Motor Vehicle Financial Security Act (Vehicle & Traffic Law § 310 et seq.) owners of motor vehicles registered in this State, including tractor trailers (section 311[ (2) ], must maintain proof of financial security or insurance (sections 311[3], [4][a], 312[1][a], [b] which covers permissive users (section 388[1], [4]; 11 NYCRR 60-1.1[c][1-3]. The purpose of the legislative scheme is to assure that one injured by reason of negligence of an owner or permitted operator may have recourse to a financially responsible defendant. Continental Auto Lease Corp. v. Campbell, 19 N.Y.2d 350, 352, 280 N.Y.S.2d 123, 227 N.E.2d 28; see McGowan v. Marcus, NYLJ 11/8/93 p. 35, col. 1 (Supreme Ct. Rockland County). Consequently, by way of illustration, the Court of Appeals has held that an insurer of a lessor may not escape responsibility where the lease excluded certain uses or users of the motor vehicle, by applying the fiction of constructive consent by the lessor to the use or user. MVAIC v. Continental Natl. Amer. Group, 35 N.Y.2d 260, 360...