On appeal from District Court, Essex County.
Pressler, Brody and Cohen. The opinion of the court was delivered by Pressler, P.J.A.D.
Defendants Township of West Orange (Township) and its employee William Cecere appeal from an order dismissing their claim for the provision of a defense and indemnification by codefendant West Orange Board of Education (Board). The issue before us involves the right of an excess insurer to reimbursement of its legal expenses where it has defended its insured even though the recovery sought against the insured was within the coverage of the primary insurer.
The underlying litigation arose out of an accident which took place when a school bus owned by the Board struck a parked vehicle owned by plaintiff John Rooney. It is not disputed that at the time of the accident the bus had been lent by the Board
to the Township for Township business. The driver of the bus, Cecere, who had parked it on a hill, was standing outside the bus, presumably awaiting his passengers. The empty bus began to roll down the hill and struck several cars, one of which was plaintiff's. Plaintiff instituted this action in July 1982 against Cecere, the Township, and the Board, seeking to recover $3,000 for his property damage.
Cecere and the Township were provided with a defense by the Township's liability carrier. Their answer included several cross-claims against the Board, none of which raised the issue here presented. The matter proceeded unexceptionally for about a year. In July 1983 plaintiff moved for summary judgment against all defendants. The Township responded by a cross-motion against the Board seeking an order requiring the Board to assume its defense. The certification of the Township's attorney, filed in support of this request for relief, stated simply that the Board was a self-insurer obligated to provide omnibus coverage and hence that it, the Township, was the Board's insured, entitled to both a defense and indemnification.
In response to plaintiff's motion, the Board conceded that it was not opposing plaintiff's motion for summary judgment in respect of the liability issue, but was only contesting damages since the car had been stolen after it was struck by the bus and the Board believed that some portion of the damage might have been caused by the thief. In response to the Township's cross-motion, the Board admitted that the Township and its employee were its insureds under the omnibus coverage it was obliged to afford as a self-insurer. It also admitted that its coverage was primary. It resisted the motion solely on the ground that the Township's own insurer was also obliged to defend as indeed it was doing. The Board, moreover, stipulated that if there were a judgment against the Township or Cecere or both, it would be obliged to contribute equally with the Township's carrier to the payment thereof. There is thus no question that as of this point in the litigation, the Board, as self-insurer, had assumed that the Township's coverage was
also primary, and there is nothing in this record to suggest that as of that time it had any reason to believe otherwise. If it had been correct in this understanding, its legal position would have been correct as well since each primary insurer is obliged to afford a defense and both must contribute to the satisfaction of the insured's indemnification rights. See Child's v. New Jersey Manufacturers Insurance Company, 199 N.J. Super. 441 (App.Div.1985). In any event, the Township's motion for a defense and indemnification was denied after it appeared at oral argument that none of the parties could represent to the court the terms of the applicable provisions of the Township's policy.
In November 1983, the Township again moved for a summary judgment requiring the Board to indemnify and defend it. This time it supported the motion with a certification asserting, for the first time, that its insurance afforded only excess coverage on this risk. The Township was apparently correct in this belated discovery since its policy provides that the coverage would be excess only in respect of non-owned automobiles. The Township's contention, therefore, was that since the risk exposure was unequivocally within the Board's primary coverage, it, the Township, did not have a contractual right to either a defense or indemnity from its own insurer. The trial judge, however, denied the Township's renewed motion on the theory that some fact might emerge at trial which would demonstrate that Cecere had committed a willful tort not covered by the Board's omnibus obligation and hence that the Township's coverage might be sole and primary. Several months later, in February 1984, the Board settled plaintiff's claim for $700, and the action was dismissed as to all parties.
At the outset it is clear that the trial judge's hypothesis of the existence of a possible state of facts which might relieve the Board of its coverage obligations in respect of the Township's employee was a speculation hardly constituting the genuine dispute of material fact which will defeat a summary judgment motion. R. 4:46-2. After all, the ...