Scott v. Salerno

• Citation: 297 N.J.Super. 437,688 A.2d 614
• Parties: Denise Rae Bishop SCOTT and Wayne Scott, Plaintiffs, v. Anthony T. SALERNO and GNOC, Corp., t/a Bally's Grand Hotel & Casino, Defendants/Third-Party Plaintiffs-Respondents, Pauline N. MARCHESE, Defendant, v. RUTGERS CASUALTY INSURANCE COMPANY, Third-Party Defendant-Appellant.
• Decision Date: 11 February 1997
• Court: New Jersey Superior Court – Appellate Division

Page 437

297 N.J.Super. 437

688 A.2d 614

Denise Rae Bishop SCOTT and Wayne Scott, Plaintiffs, v. Anthony T. SALERNO and GNOC, Corp., t/a Bally's Grand Hotel

& Casino, Defendants/Third-Party Plaintiffs-Respondents, Pauline N. MARCHESE, Defendant, v. RUTGERS CASUALTY INSURANCE COMPANY, Third-Party Defendant-Appellant.

Superior Court of New Jersey Appellate Division.

Argued Jan. 22, 1997.

Decided Feb. 11, 1997.

Susan L. Moreinis, Collingswood, for appellant Rutgers Casualty Insurance Company

Alan J. Cohen, Atlantic City, for respondents GNOC, CORP., t/a Bally's Grand Hotel & Casino and Anthony Salerno, Newark (Sills, Cummis, Zuckerman, Radin, Tischman, Epstein & Gross, attorneys; Mr. Cohen, of counsel; Mr. Cohen and N. Lynne Hughes, on the brief).

Before Judges MICHELS and KLEINER.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Third-party defendant Rutgers Casualty Insurance Company (Rutgers) appeals (1) from a summary judgment of the Law Division that directed it to indemnify and hold harmless defendant and third-party plaintiffs Anthony Salerno (Salerno) and GNOC, Corp., t/a Bally's Grand Hotel & Casino (Bally's) for expenses incurred by reason of its failure to defend Salerno and Bally's in connection with a personal injury negligence action brought against them by plaintiffs Denise Rae Bishop Scott and Wayne Scott and (2) from a post-judgment order that awarded Salerno and Bally's attorney's fees of $6,820.73.

The facts giving rise to this appeal are essentially undisputed. On June 14, 1993, Salerno, while operating an automobile owned by defendant Pauline N. Marchese (Marchese), was involved in an accident with an automobile owned and operated by plaintiff Denise Rae Bishop Scott (Scott) in Atlantic City, New Jersey. At the time of the accident, Salerno was valet parking automobiles for Bally's. The Marchese automobile was covered by a Personal Auto Policy issued by Rutgers, which, in pertinent part, provided:

PART A--LIABILITY COVERAGE

INSURING AGREEMENT

A. We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident. Damages include pre-judgment interest awarded against the "insured". We will settle or defend, as we consider appropriate, any claim or suit asking for these damages. In addition to our limit of liability, we will pay all defense costs we incur. Our duty to settle or defend ends when our limit of liability for this coverage has been exhausted. We have no duty to defend any suit or settle any claim for "bodily injury" or "property damage" not covered under this policy.

B. "Insured" as used in this Part means:

....

2. Any person using "your covered auto".

3. For "your covered auto", any person or organization but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part.

....

EXCLUSIONS

A. We do not provide Liability Coverage for any person:

....

6. While employed or otherwise engaged in the "business" of:

a. selling; d. storing; or

b. repairing; e. parking;

c. servicing;

vehicles designed for use mainly on public highways. This includes road testing and delivery. This exclusion (A.6.) does not apply to the ownership, maintenance or use of "your covered auto" by:

a. you;

b. any "family member"; or

c. any partner, agent or employee of you or any "family member".

Following the accident, Scott and Wayne Scott instituted this action against Marchese, Salerno, and Bally's seeking damages for the personal injuries Scott sustained as a result of the accident. By letter dated December 3, 1993, Bally's notified Rutgers of the accident, that the automobile was insured by Rutgers, and that the automobile was being operated by one of its valet drivers. Bally's thereupon demanded that Rutgers commence an investigation, provide coverage, and defend and indemnify it and the valet driver in connection with the Scotts' action. Thereafter, Rutgers advised Bally's that it would not enter an appearance on its behalf since Bally's was not operating the automobile and was not covered under the omnibus provisions of the Rutgers policy. However, Rutgers advised Bally's that it would provide a defense for Salerno under a reservation of rights. On February 3, 1994, under a reservation of rights, Rutgers filed an answer to the Scotts' complaint on behalf of Marchese and Salerno. On the same day, Bally's filed an answer and a third-party complaint against Rutgers on its own behalf and also on behalf of Salerno. In the third-party complaint, Salerno and Bally's sought a declaratory judgment that the Rutgers' Personal Auto Policy issued to Marchese provide coverage to them. They also sought counsel fees and costs.

During the course of pretrial depositions, Salerno testified that he was employed by Kinney Systems, Inc. (Kinney). As a result, the trial court granted plaintiff leave to file an amended complaint to name Kinney as a defendant. However, any issue as to whether Salerno was employed by Kinney or by Bally's was never resolved because Bally's and Salerno had already moved for summary judgment on the third-party complaint for coverage. They contended that the exclusionary language in Exclusion A.6. of the Rutgers' Personal Auto Policy was violative of our public policy, and, therefore, the exclusion was void and unenforceable. The trial court agreed and held that the Rutgers' Personal Auto Policy provided coverage to Salerno and Bally's for the Scott-Marchese automobile accident, and ordered Rutgers to defend and indemnify them for expenses incurred in defending the Scotts' action up to the limit of the policy. In granting summary judgment, the trial court reasoned:

Salerno and Bally's, as Salerno's employer, are covered under the Rutgers policy Part A Section B Number 2 and 3 which describes the "insured" as "any person using your 'covered auto' " and "for 'your covered auto', any person or organization, but only with respect to legal responsibility for acts or omissions of a person for whom coverage is afforded under this Part." According to the terms, Bally's and Salerno are covered under the policy. The only way Rutgers can attempt to avoid coverage is under the exclusions. The only exclusions they might claim to have any relevance are # 5, which is for the operation of a vehicle while it was being used as a public or livery conveyance. In this case, this vehicle was clearly not being used as a public or livery conveyance. Or # 6, while employed or otherwise engaged in the business of parking cars, would be the second exception. Under American Home Assurance Co. v. Hartford Insurance Co., 190 N.J.Super. 477 , the court held that "when a customer's liability insurance policy covers any person using his automobile with his permission and within the scope thereof, a provision excluding coverage if the automobile is used by a person engaged in the automobile business is invalid." See 190 N.J.Super. at 486 . Even though N.J.S.A. 39:6-46 was repealed, N.J.S.A. 39:6-48 is still in effect, and this indicates that insurance must be provided in accordance with the coverage defined in Sections 24 and 25 of the Act, which was N.J.S.A. 39:6-46. The court finds that the coverage must be provided under the policy. The court finds that Rutgers is responsible for providing coverage to Bally's and to Salerno. Salerno was certainly using the vehicle with the permission of the owner. The court does not find that the vehicle being used was a public or livery conveyance, and the "parking" exclusion is invalid.

The trial court also held that since Rutgers owed the defense, it was responsible for the counsel fees and costs incurred by Bally's and Salerno in defending this action. Bally's filed an application for counsel fees and costs supported by an affidavit of services. Rutgers objected to the award of counsel fees, contending that it had been paying for the defense of Salerno from the commencement of the action and, therefore, should not be compelled to also reimburse Bally's for any counsel fees and costs Bally's incurred in defending Salerno. Rutgers also argued that the affidavit of services set forth only the bulk amount of the services and costs and did not comply with R. 4:42-9(b). The trial court reviewed in camera the file that was submitted by Bally's and Salerno in support of their application for counsel fees and costs and awarded them $6,820.73. Thereafter, the Scotts' claims against Salerno were settled for $40,000 and this appeal followed.

I.

Rutgers contends that summary judgment should be reversed because its policy expressly excluded liability coverage for any person while employed or otherwise engaged in the business of parking or storing vehicles. Rutgers argues that because " N.J.S.A. 39:6-46 was expressly repealed and the language relied upon by the lower court was not specifically reenacted[,] L.1979, c. 169 sect. 5, eff. 8/9/89[,]" by its "replacement" statute N.J.S.A. 39:6B-1 et seq., "there is no statutory or other bar to enforcing Exclusion 6 precisely as it reads; i.e., to exclude coverage for those driving the insured vehicle while in the 'business' of parking or storing the vehicle." We disagree and affirm.

Our function in construing a policy of insurance, as with any other contract, is to search broadly for the probable intent of the parties in an effort to find a reasonable meaning in keeping with the expressed general purposes thereof. See Fidelity Union Trust Co. v. Robert, 36 N.J. 561, 567, 178 A.2d 185 (1962); American Home Assur. Co. v. Hartford Ins. Co., 190 N.J.Super. 477, 484, 464 A.2d 1128 (App.Div.1983); Tooker v. Hartford Accident & Indem. Co., 128 N.J.Super. 217, 222-23, 319 A.2d 743 (App.Div.1974); Insurance Co. of Pa. v. Palmieri, 81 N.J.Super. 170, 179, 195 A.2d 205 (App.Div.1963), certif. denied, 41 N.J. 389, 197 A.2d 15 (1964). In this pursuit, a broad and liberal view should be taken where the...