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American Home Assurance Co. v. Hermann''s Warehouse Corp.

Decided: February 24, 1987.

AMERICAN HOME ASSURANCE COMPANY, INC., PLAINTIFF-APPELLANT,
v.
HERMANN'S WAREHOUSE CORPORATION, DEFENDANT-RESPONDENT



On appeal from the Superior Court, Law Division, Middlesex County.

Morton I. Greenberg, R. S. Cohen and Gruccio. The opinion of the court was delivered by Morton I. Greenberg, P.J.A.D.

Greenberg

This matter comes on before this court on appeal by plaintiff American Home Assurance Company from an order of February 18, 1986 denying plaintiff's motion for summary judgment and granting defendant Hermann's Warehouse Corporation's cross-motion for summary judgment dismissing this action. Plaintiff, which had issued a liability insurance policy with a $2,000,000 limit of coverage to defendant to protect its warehouse business, settled a claim by a third party against defendant and brought this action to recover the deductible provided in the policy. The deductible was for $20,000 on all losses except for inventory shortages or unexplained disappearances in which cases it was for $40,000.

The basic facts are not in dispute. On August 4, 1980, All Freight Trucking Company contacted defendant to make arrangements for the delivery to defendant for storage of a number of cargo trailers containing Christmas ornaments for Kurt S. Adler, Inc. According to defendant, it advised All Freight that because of a full work schedule it could not unload and take possession of the trailers that day. Nevertheless, All Freight dropped off three trailers in defendant's yard and

requested it to unload them the next morning. While defendant permitted the trailers to be left in its yard, it did so without charge solely for the convenience of All Freight. Consequently, defendant did not unload the vehicles or formally acknowledge the receipt of their contents or issue a warehouse receipt for them. The following morning two of the three trailers were missing leading Adler to make a claim against defendant for $76,382.80 for lost merchandise.

Inasmuch as Adler's claim was not paid, it instituted an action against defendant for the loss. While we do not have the pleadings from that action, plaintiff asserts that Adler's possible recovery was $100,000, calculated as $76,382.80 damages with the balance as interest. Defendant does not deny that representation. As provided in the insurance policy, defendant turned the case over to plaintiff for defense. Thereafter, pursuant to a provision in the policy that reserved to it "the right to settle any claim, suit or other proceedings as it may deem expedient," plaintiff settled Adler's claim for $67,500 without defendant's consent.

Following the settlement, plaintiff requested defendant to reimburse it for the $20,000 deductible in accordance with a provision in the policy specifying that: "If the Company shall have paid such deductible amount, the Assured shall promptly reimburse the Company therefor." Defendant refused to reimburse plaintiff claiming that it could not have been liable to Adler, had not consented to the settlement, had urged Adler's claim be rejected and had requested a jury trial. Consequently, plaintiff instituted this action to recover the deductible. Evidently, plaintiff is in doubt as to whether the $20,000 or $40,000 figure is applicable as it seeks either amount alternatively.

After an answer was filed, the parties served cross-motions for summary judgment. The motion judge disposed of the case with the following opinion:

As to American Home Assurance Company versus Hermann's Warehouse Corporation, there are motions for summary judgment.

The plaintiff, American Home Assurance Company, settled the case and seeks recovery of the deductible. Defendant opposes the motion for summary judgment and seeks motion for summary judgment in its own behalf arguing that it did not participate in the settlement, did not approve the settlement and should not be required to pay the deductible.

I am satisfied from the arguments of counsel that the defendant's position is the sound one. In fact, it did not approve the settlement and should not be required to pay the deductible. I am going to grant summary judgment for the defendant. ...


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