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Hartford Accident and Indemnity Co. v. Ambassador Insurance Co.

Decided: October 26, 1978.

HARTFORD ACCIDENT AND INDEMNITY COMPANY, PLAINTIFF-APPELLANT,
v.
THE AMBASSADOR INSURANCE COMPANY, DEFENDANT-RESPONDENT



On appeal from Superior Court, Law Division, Monmouth County.

Matthews, Kole and Milmed. The opinion of the court was delivered by Kole, J.A.D.

Kole

As a result of a fall by Israel Varela, an infant, on property owned by Juarez, which occurred on August 9, 1971, an action for damages was instituted by Varela and his parents against Juarez. A third-party complaint was then filed by Juarez against the manager of the property, Jacko Real Estate Company (Jacko). The Varelas later dismissed their original suit and brought a new action naming both Juarez and Jacko as direct defendants.

Jacko's insurer under a liability policy, Hartford Accident and Indemnity Company (Hartford), assumed its defense and filed an answer on Jacko's behalf. The liability insurer for Juarez, The Ambassador Insurance Company (Ambassador), took over their defense and filed an answer. Cross-claims for contribution and indemnification were filed by both defendants.

The Varela matter was tried on liability only. During trial Hartford's attorneys, having recently discovered that Jacko, as real estate manager, was an additional insured under the Ambassador policy, demanded, unsuccessfully, that Ambassador's attorneys also take over Jacko's defense. As indicated below, a formal similar demand was made after trial.

The jury returned a verdict which found that both defendants were negligent and that their negligence was a proximate cause of the infant Varela's injury. However, the jury determined that under the management agreement between Jacko and Juarez, Jacko was solely responsible. Thereafter, the case was settled by way of a "friendly" judgment between Jacko -- i.e. , Hartford -- and the Varelas for $7,500.

Hartford then instituted the present action against Ambassador to recover one-half of the settlement amount, plus the expense of the Varela case defense, pursuant to the "other insurance" clauses of each insurance policy, which are identical.

In a letter opinion the trial judge determined that Hartford had failed to state a cause of action and entered judgment in favor of Ambassador. Hartford appeals.

The facts in this case are undisputed. Defendant Ambassador issued a liability policy to Juarez, effective September 4, 1970 through September 4, 1971. The policy contained both an "additional insured" clause and an "other insurance" clause.

When the first Varela suit against Juarez only was instituted, an investigation was commenced by the York Claims Service on behalf of Ambassador. Their initial report informed Ambassador that Jacko was the manager of the Juarez property. Ambassador's claims manager admitted that at the time he received this letter he was aware of the policy provision for additional insureds which stated:

II. PERSONS INSURED

Each of the following is an insured under this insurance to the extent set ...


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