Viger v. Commercial Ins. Co. of Newark, N.J.
| Decision Date | 19 May 1983 |
| Docket Number | No. 82-3128,82-3128 |
| Parties | Sarah VIGER, et al. v. COMMERCIAL INSURANCE COMPANY OF NEWARK, NEW JERSEY, Appellant. |
| Court | U.S. Court of Appeals — Third Circuit |
Richard A. Kraemer, Philadelphia, Pa., Mark L. Milligan (argued), Christiansted, St. Croix, V.I., for appellant.
Jeffrey L. Resnick (argued), Derek Hodge, Christiansted, St. Croix, V.I., for appellees.
Before GIBBONS, SLOVITER and BECKER, Circuit Judges.
This case originated when plaintiffs filed four separate actions, thereafter consolidated, against St. Croix Fisherman's Cooperative, Inc. d/b/a The Fish Shop, a Virgin Islands corporation engaged in the retail sale of fish and fish products, seeking damages for injuries plaintiffs sustained after consumption of fish purchased at The Fish Plaintiffs then filed this suit against Commercial seeking the $97,500 awarded them in the consent judgment, court costs, and attorneys' fees. In its answer, Commercial disclaimed liability on the grounds, inter alia, that St. Croix Fisherman's had failed to give it proper notice of plaintiffs' claim and that the insurance policy did not provide coverage for the acts complained of. Plaintiffs moved for summary judgment, contending that Commercial was collaterally estopped by the consent decree from contesting St. Croix Fisherman's negligence and that coverage could be determined from the language of the policy. After a hearing, at which the only witness was Commercial's expert, Prof. C. Arthur Jaffe, the trial court granted plaintiffs' motion for summary judgment. Commercial appeals. We reverse on the ground that the injuries at issue were unambiguously excluded from coverage under the policy.
Shop. The fish was apparently contaminated with ciguatera poisoning. The complaints sought compensatory and punitive damages, alleging, inter alia, breach of warranty, negligence, and failure to warn. After a consent judgment was entered against St. Croix Fisherman's in the consolidated cases for an aggregate amount of $97,500, St. Croix Fisherman's assigned to plaintiffs its rights under an insurance contract with Commercial Insurance Company of Newark, New Jersey.
The central question is whether the insurance policy at issue covered the injuries in this case. As a preliminary matter, however, Commercial contends it was given inadequate notice of the claim by St. Croix Fisherman's. The trial court found that "[t]he insurance company was given notice of the complaints filed against the insured" and that there was "no question as to the timeliness or adequacy of this notice." Commercial argues that there was a disputed factual issue as to notice, precluding the grant of summary judgment.
In its answer to the complaint Commercial denied that notice had been given. However, Commercial failed to submit affidavits to contradict the affidavit of St. Croix Fisherman's general manager stating that notice had been given. Naked assertions in the pleadings are insufficient to withstand summary judgment. See Fed.R.Civ.P. 56(e); Ness v. Marshall, 660 F.2d 517, 519 (3d Cir.1981). The mere correspondence between Commercial and plaintiffs' counsel denying notice does not meet the showing required to create a genuine issue of material fact under Rule 56. Accordingly, Commercial's notice argument was properly rejected. 1
We turn to the question of coverage. The policy form listed twenty-six possible coverage parts, with a blank square next to each to be marked to designate the coverage. In this policy, only the square for Owners', Landlords' and Tenants' Liability Insurance was marked. Significantly, one of the other possible coverages was for Completed Operations and Products Liability Insurance, but that coverage was not purchased.
The policy provided that
The company will pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of
A. bodily injury or
B. property damage
to which this insurance applies, caused by an occurrence and arising out of the ownership, maintenance or use of the insured premises and all operations necessary or incidental thereto.
The annual premium for this policy was $40.00 and, as set forth in the policy, was based on the size of the premises, 600 square feet.
Commercial contends that the plaintiffs' claims are not covered by this policy because they were explicitly excluded under the language of exclusion "p", which provided that
This insurance does not apply:
....
(p) to bodily injury or property damage included within the completed operations hazard or the products hazard.
The terms "completed operations hazard" and "products hazard" were defined in the definitions section on the jacket of the policy as follows:
"completed operations hazard" includes bodily injury and property damage arising out of operations or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs after such operations have been completed or abandoned and occurs away from premises owned by or rented to the named insured....
"products hazard" includes bodily injury and property damage arising out of the named insured's products or reliance upon a representation or warranty made at any time with respect thereto, but only if the bodily injury or property damage occurs away from premises owned by or rented to the named insured and after physical possession of such products has been relinquished to others.
We need not consider the scope of the "completed operations hazard" exclusion, because we hold that the injuries in this case fall within the "products hazard" exclusion of the policy. The "bodily injur[ies]" sued for "[arose] out of [St. Croix Fisherman's] products", and those "bodily injur[ies] ... occur[red] away from premises owned by or rented to [St. Croix Fisherman's] and after physical possession [was] relinquished to others."
The trial court came to its conclusion that coverage was not excluded because it believed that exclusion "p" did not encompass a negligent failure to warn of the sort alleged by plaintiffs, and, alternatively, that the policy was at the least ambiguous, and ambiguities should be strictly construed against the insurance company.
In considering the failure to warn claim, the trial court failed to distinguish between plaintiffs' allegation of failure to warn as a basis for alleging liability against St. Croix Fisherman's and the separate question whether such liability is covered by the insurance policy. Thus, the trial court focused on St. Croix Fisherman's duty to warn plaintiffs and its alleged breach of that duty on the insured premises. Even if we assume arguendo that the breach of such a duty by St. Croix Fisherman's occurred on the insured premises, it does not advance analysis of the contractual obligation undertaken by Commercial. Under the language of the "products hazard" exclusion, the relevant inquiry is whether the bodily injury, not the tortious conduct, occurred on the insured premises. In this case, there is no dispute that plaintiffs left the premises after purchasing the fish, and that the preparation and consumption of the fish and plaintiffs' subsequent illness took place away from The Fish Shop. Therefore, plaintiffs' claim in this case arises out of an alleged "products hazard", as defined by the policy. See Fred Steinheider & Sons, Inc. v. Iowa Kemper Insurance Co., 204 Neb. 156, 281 N.W.2d 539 (1979). But cf. Fidelity & Casualty Co. v. Fratarcangelo, 201 Va. 672, 112 S.E.2d 892 (1960).
The Wisconsin Supreme Court in Jones v. Sears Roebuck & Co., 80 Wis.2d 321, 259 N.W.2d 70 (Wis.1977), faced with an insurance policy containing exclusions virtually identical to those here and a complaint containing a failure to warn claim, held, without any separate discussion of the failure to warn allegation, that because the injury occurred off the premises of the seller and after the seller had relinquished control of the product to the purchaser, coverage was clearly excluded by the terms of the policy.
Plaintiffs rely on ADA Resources, Inc. v. Don Chamblin & Associates, Inc., 361 So.2d 1339 (La.App.1978). Suit had been filed against the insured, a seller of equipment used in oil drilling, alleging negligence in delivering a cross-over joint other than the one ordered and in failing to discover such mistake, and also alleging that the product delivered was defective. The insurance company disclaimed its obligation to defend on the basis of the "products hazards" and "completed operations" exclusions, and the trial court entered summary judgment for the company. On appeal, the court held that these exclusions could not relieve the insurance company from defending the claim...
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