[140 NJSuper Page 339] These two summary judgment motions raise novel questions concerning the relationships between excess and primary insurance carriers and the insurance agency securing such coverage.
Plaintiff Western World Insurance Company (Western) ($40/80,000 excess coverage) seeks indemnification from Allstate Insurance Company (Allstate) ($10/20,000 primary coverage) for $10,000 expended by it, without prejudice to its present legal position, in satisfaction of a personal injury claim successfully pursued by one Mildred Callahan. It is undisputed that the insured promptly reported the occurrence of the accident to the Richard Lewis Agency (Agency) which thereupon duly reported the incident in January 1972 separately to both Allstate and Western. Western thereupon set up an accident file but did nothing further.
Agency had negotiated coverage from Allstate for the 233 Taxi Corp. through the Assigned Risk Plan and secured excess coverage with Western under a group policy.
After suit was instituted Agency duly forwarded a copy of the summons and complaint to Allstate.*fn1 According to Agency it followed its customary procedure, although it has no record of it, and forwarded a copy of the suit papers to the excess carrier at the time they were sent to the primary carrier. Western now disputes this and asserts this is a fact issue requiring a denial of summary judgment.
On June 6, 1974 a negligence trial was held on the issue of liability only. Western did not participate in this proceeding. However, both Allstate and Western were obligated to their insured under their respective policy contracts.
Allstate apparently became aware of the excess coverage from its insured the day before the actual trial date and then notified Western. This notification was effective either immediately, or just after the June 6, 1974 trial, or at the latest, by letter dated July 3, 1974.
The damage issue was scheduled for trial on July 15, 1974, with plaintiff's attorney present, but the matter was "disposed of" for $20,000 -- each carrier contributing $10,000.
Western now complains that Allstate breached a duty to give notice of the suit. Allstate asserts that if it is liable, Agency is responsible for failure to advise it of the existence of Western as an excess carrier, and accordingly has joined Agency as a third-party defendant. Allstate and Agency now seek summary judgment as a matter of law as to the respective claims against them. Western has not asserted any claim against Agency.
Although, in seeking to avert summary judgment, plaintiff alleges some fact issues (including those mentioned above) asserted to be material, it would make no difference in law if there is no cause of action. Indeed, for reasons stated herein, those disputed facts are not material. Plaintiff wishes to impose a duty upon the primary insurer analogous to the duty a carrier owes to its insured. In support of this proposition it relies on Rova Farms Resort, Inc. v. Investors Co. of America , 65 N.J. 474, 498 (1974), which "permits a carrier to escape liability for excess unless its decision to go to trial is marred by dishonesty, bad faith or negligence." This reliance is misplaced. The "excess" amount which concerned our Supreme Court in Rova was absorbed by the insured and the loss was proximately caused by the carrier's refusal to settle within policy limits. More significantly, the ...