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United States Fidelity & Guaranty Co. v. Industrial Indemnity Co.

Decided: May 12, 1993.

UNITED STATES FIDELITY & GUARANTY CO., PLAINTIFF-RESPONDENT,
v.
INDUSTRIAL INDEMNITY COMPANY AND CRUM & FORSTER COMMERCIAL INSURANCE COMPANY, DEFENDANTS-APPELLANTS



On appeal from Superior Court of New Jersey, Law Division, Essex County.

Petrella, Long and D'Annunzio. The opinion of the court was delivered by D'Annunzio, J.A.D.

D'annunzio

On August 25, 1985, Sandra Hartley (Hartley) was involved in an automobile accident. At the time of the accident, she was operating a vehicle owned by her employer, Apple Computer, Inc., and insured by Industrial Indemnity Company and Crum and Forster Commercial Insurance Company (hereinafter jointly referred to as Indemnity), defendants in the present action. On or about November 12, 1985, Hartley filed a complaint seeking personal injury protection (PIP) benefits from Indemnity as well as from United States Fidelity & Guaranty Co. (hereinafter USF & G), plaintiff in the present action, the insurer of the vehicle owned by her father.

By order dated May 22, 1987, the court, having found that Hartley resided in her father's household, granted judgment to Hartley against USF & G and Indemnity, finding both companies liable for payment of PIP benefits in connection with Hartley's automobile accident. The court further ordered that the PIP benefits were to be paid primarily by USF & G. The order also required USF & G to pay interest and attorney's fees. The court denied without prejudice Indemnity's motion to hold USF & G solely liable to Hartley for PIP benefits, leaving the insurers to whatever actions they may have against each other in law or in equity for contribution.

USF & G and Hartley reached a settlement whereby USF & G agreed to pay Hartley's medical bills of $34,027.50 and attorney's fees of $19,081.25, while reserving its right to appeal the judgment. We affirmed in an unpublished opinion. Hartley v. United States Fidelity & Guaranty Co., No. A-3666-87 (App.Div. Sept. 27, 1989). The Supreme Court denied USF & G's petition for

certification. Hartley v. United States Fidelity & Guaranty Co., 122 N.J. 172, 584 A.2d 236 (1990).

While awaiting the outcome of its petition for certification, USF & G, seeking contribution from Indemnity, filed a demand for arbitration with the American Arbitration Association, which Indemnity resisted. Thereafter, on April 23, 1991, USF & G filed a complaint in the Superior Court, Law Division, seeking to compel Indemnity to participate in the arbitration process pursuant to N.J.S.A. 39:6A-11 (hereinafter § 11) which provides:

If two or more insurers are liable to pay benefits under sections 4 and 10 of this act*fn1 for the same bodily injury, or death, of any one person, the maximum amount payable shall be as specified in sections 4 and 10 if additional first party coverage applies*fn2 and any insurer paying the benefits shall be entitled to recover from each of the other insurers, only by inter-company arbitration or inter-company agreement, an equitable pro-rata share of the benefits paid. (Footnotes added.)

Indemnity contended that USF & G's coverage was "primary" under N.J.S.A. 39:6A-4.2 (hereinafter § 4.2), and, therefore, Indemnity had no responsibility to pay to USF & G a pro rata share of the PIP benefits under § 11. Section 4.2 provides:

Except as provided in subsection d. of section 13 of P.L.1983, c. 362 (C. 39:6A-4.3), the personal injury protection coverage of the named insured shall be the primary coverage for the named insured and any resident relative in the named insured's household who is not a named insured under an automobile insurance policy of his own. No person shall recover personal injury protection benefits under more than one automobile insurance policy for injuries sustained in any one accident.

Indemnity and USF & G moved for summary judgment. The motion Judge heard oral argument on the matter on April 3, 1992 and announced that he was denying USF & G's motion to compel arbitration. ...


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