This is an action for summary judgment arising out of a motor vehicle negligence action in which the two insurance companies involved disputed coverage and the payment of fees for the defense of said action.
It appears that on November 6, 1966 plaintiff George Toma was operating a 1964 Cadillac, owned by the defendant Peter Matera, in a westerly direction on Route 3 in the Township of East Rutherford, New Jersey, when he struck the rear of a 1966 Chevrolet owned and operated by defendant Pedro Pluda. Toma, a licensed used car salesman, had come into possession of the car on November 5, 1966, having been
given it by Matera for the purpose of showing it to a prospective purchaser at a social event that evening. Toma is insured by Continental National American Group (Continental), policy No. 215-64-13, whereas Matera has coverage with National Union Insurance Company (National Union), under policy No. ACF 980134.
There is a suit presently pending for personal injuries in the Superior Court, Docket L 42915-67, wherein Pedro Pluda is plaintiff and George Toma, individually and doing business as Parkway Auto Body, and Peter Matera are defendants. Continental undertook to defend said action after a refusal by National Union.
This action is concerned with two closely related issues: (1) Which insurance company will be designated the primary insurer and be responsible for coverage of the accident and for the defense of said suit? (2) If the excess insurer defends said action after the primary insurer declined to do so, is it entitled to a recovery of expenses and counsel fees?
The specific exclusion upon which National Union rests its defense reads as follows:
This policy does not apply under Part I:
(d) to any haulaway, tank, truck, tank trailer, or any automobile used therewith, owned, hired or held for sale by the named insured and not being delivered, demonstrated or tested ; or to any watercraft, while away from the premises or to any aircraft; [emphasis added]
This type of exclusion is intended to eliminate coverage of persons using automobiles in the automobile business for purposes other than delivery, demonstration or testing. Other automobile liability insurance policies have in the past contained various forms of exclusion clauses referring to garages, automobile repair shops and filling stations. For the most part, the provisions of such clauses have expressly eliminated persons engaged in those businesses from those added as insureds by the omnibus clause of the policy. LeFelt v. Nasarow , 71 N.J. Super. 538 (Law Div. 1962).
Under the New Jersey statutes an omnibus clause should have a broad interpretation, N.J.S.A. 39:6-46(a) ...