On appeal from Superior Court, Law Division, Hudson County.
Fritz, Bischoff and Morgan. The opinion of the court was delivered by Morgan, J.A.D.
The primary issue in this appeal by Nationwide Insurance Company (Nationwide) is whether two exclusions in Nationwide's Comprehensive Automobile Liability Policy issued to Swift Lines Transfer Company (Swift Lines), the named insured therein, effectively exclude coverage, otherwise afforded, to one Luis Valdes, a defendant in the underlying personal injury liability suit. In the event coverage is found to exist, we must also consider the trial judge's refusal to permit Nationwide to prove that the personal injury claimant and the defendant against whom a default judgment was entered were coemployees as the basis of an attack, apparently collateral in nature, against that default judgment.
This intensely convoluted controversy had its genesis in an accident which occurred on March 24, 1971 on the premises of Swift Lines, Nationwide's named insured, in which plaintiff in the personal injury suit, Everardo DoCompo, received injuries allegedly as the result of Valdes' negligence. DoCompo's complaint, filed toward the end of the two-year period of limitations, on March 21, 1973, specifically described DoCompo as being an employee of Swift Lines, but nonetheless sought judgment against Swift Lines as the defendant derivatively responsible for the neglect of Valdes, also made a party defendant. The complaint alleged that DoCompo's presence on the Swift Lines premises on the date of the accident was "To assist the defendant, Luis Valdes, in the operation of a tractor-trailer." Both Swift Lines and Valdes, the two defendants in the personal injury action, were served. Nationwide, Swift Lines' insurer, apparently
notified of the accident soon after its occurrence, filed an answer on behalf of Swift Lines only, in which it denied DoCompo's allegation that he was Swift Lines' employee. It also denied DoCompo's allegation that he was on the Swift Lines' premises as Valdes' helper. No answer was filed on behalf of Valdes. It appears that although Valdes was served with DoCompo's complaint, he left New Jersey at some unidentified time thereafter and neither DoCompo nor Nationwide have been able to locate him.
It is undisputed that on the date of the DoCompo accident and for at least a month prior thereto, Valdes had leased to Swift Lines a tractor owned by him on an oral lease of no particular duration and had been engaged during that period in driving the leased tractor attached to a Swift Lines trailer hauling goods on Swift Lines' behalf in interstate commerce. During the month or so before the accident, Valdes had been so engaged on a six-day week basis on behalf of Swift Lines and when he needed a helper DoCompo would so act. It is not clear from this record precisely how the accident happened. For present purposes, however, it is sufficient to note that it occurred during the morning hours during the process of attaching Valdes' leased tractor to the Swift Lines trailer he was to be hauling that day. DoCompo was aiding him in this endeavor. Valdes was in the cab of the tractor and in driving control thereof. Somehow, and it is not clear how, and not really germane to this appeal, DoCompo fell, receiving the injuries for which he brought action. There seems to be dispute as to whether the accident occurred before or after the hookup between tractor and trailer occurred, and Nationwide contends on this appeal, as it contended in the trial court, that this fact is pivotal to the applicability of two exclusions in its policy, about which more later.
In any event, in December 1974, more than 20 months after initiation of the DoCompo suit,*fn1 Nationwide filed the [168 NJSuper Page 566] suit for declaratory relief, disposition of which, adverse to Nationwide, provides the basis for this appeal. In that complaint Nationwide alleged that a policy of insurance covering Swift Lines covered as well "tractor drivers while attached to a Swift Line trailer [sic]." Valdes was alleged to be the owner of a tractor "hired out to Swift Lines through Ross Trucking Company * * *." As to Everardo DoCompo, Nationwide alleged that he was Valdes' helper and "hired by someone other than Swift Lines." Quite obviously, by these affirmative allegations, Nationwide declined specifically to admit Swift Lines' employment of DoCompo and Valdes, a matter of considerable moment to Nationwide's worker's compensation defense of coemployment, based upon N.J.S.A. 34:15-8,*fn2 a matter hereinafter to be dealt with. Indeed, this approach was consistent with Nationwide's stance in its defense, on Swift Lines' behalf, of DoCompo's liability suit wherein it answered an interrogatory specifically denying that Valdes was its employee on the date of DoCompo's accident. As Nationwide continued in its interrogatory answer, "Luis Valdes was an employee of Ross Trucking, and Ross Trucking leased vehicles and drivers to Swift Lines. However, at the time of the event, approximately 7:30 A.M., Mr. Valdes was not on any business for Swift Lines. Since the normal work day started at 8:00 A.M." Hence, as of December 1974, when this declaratory
judgment complaint was filed, almost four years after the DoCompo accident and well over a year and a half after that accident was in suit, Nationwide was denying both DoCompo's and Valdes' employment by Swift Lines, a position consistent with that taken in its answer to DoCompo's complaint on Swift Lines' behalf.
Nationwide's declaratory complaint went on to acknowledge the derivative nature of Swift Lines' liability to DoCompo but asserted that a policy issued to Valdes by Cavalier Insurance Corporation (Cavalier), a party to the declaratory suit, and in force on the date of DoCompo's accident, provided Valdes with the necessary coverage. According to Nationwide's position as expressed in this complaint, the Cavalier policy covered "when the tractor is not connected to a trailer." Its final allegation was that because, as a matter of fact, the Valdes tractor was not connected to Swift Lines' trailer (at the time of the accident), "no coverage was owed" by Nationwide to Valdes. It bears emphasis that no other basis of noncoverage was alleged.
About a month after Nationwide filed its declaratory suit it made a motion for a stay of DoCompo's liability suit until disposition of the coverage issue raised by the declaratory suit. The motion was denied and almost immediately thereafter, or even on the same day,*fn3 DoCompo's application for a default against nonanswering defendant Valdes was granted. Shortly thereafter judgment by default was entered against Valdes in the aggregate amount of $60,000 in DoCompo's favor.*fn4 That judgment stands to this date. Neither Valdes nor Nationwide has even moved to have it vacated and its amount represents the magnitude of the dispute before us.
No judgment was ever entered against Swift Lines, a party which had, of course, made an appearance in the matter.
Trial on that claim, however, was never reached because in January 1977 Nationwide acknowledged the fact that Swift Lines was DoCompo's employer and that DoCompo's accident arose out of and in connection with that employment. Payment of worker's compensation to DoCompo was made by Nationwide, who covered Swift Lines for that kind of liability, and DoCompo promptly dismissed his action against Swift Lines.*fn5 Hence, there never was a judgment for DoCompo against Swift Lines and never could be. N.J.S.A. 34:15-8. Nationwide thereafter dismissed its suit for declaratory judgment against DoCompo, leaving unresolved only DoCompo's counterclaim seeking payment from Nationwide for its coverage of Valdes in connection with the default judgment against Valdes, and a cross-claim against Cavalier also seeking from that policy payment of the Valdes default judgment.
A brief trial was held with respect to the factual issues projected which, at that time, January 12, 1978, included the status of Valdes vis-a-vis Swift Lines and whether the tractor and trailer were attached at the time DoCompo sustained his injuries.
The trial court, in a letter opinion, reached the following conclusions: (1) the Cavalier policy insuring Valdes as its named insured provided no coverage for Valdes in the given circumstances; (2) Nationwide was precluded from litigating the question of Valdes' status as a Swift Lines' employee and as DoCompo's coemployee, as a statutory defense to Valdes' liability based upon N.J.S.A. 34:15-8, and (3) Nationwide's policy covered Valdes by virtue of Cox ...