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Watson v. Agway Ins. Co.

June 20, 1996


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

Approved for Publication June 20, 1996.

Before Judges Keefe, Wefing and A.a. Rodriguez. *fn1 The opinion of the court was delivered by Keefe, J.A.D.

The opinion of the court was delivered by: Keefe

The opinion of the court was delivered by


In this declaratory judgment action, defendant Agway Insurance Co. (Agway), appeals from the entry of summary judgment in favor of plaintiff Peter S. Watson holding that there was underinsured motorist (UIM) coverage available under Agway's business automobile and excess policies for the benefit of plaintiff's decedent Kathleen Watson. We affirm.

On July 5, 1994, plaintiff Peter Watson's wife, Kathleen, was fatally injured in an automobile accident. The accident was caused when a vehicle driven by Francis Montgomery failed to stop for a stop sign and flashing red light and collided with Kathleen's vehicle. Colonial Penn Insurance Company was the liability insurer of the Montgomery automobile. It tendered its single limit liability coverage of $100,000 in settlement of the case against its insured.

At the time of the accident, Kathleen was driving a leased vehicle which was a temporary substitute for her personal automobile that was being repaired. Her personal automobile was insured by defendant First Trenton Indemnity Co. (First Trenton). Defendant Agway was the insurer under a business automobile policy and an excess insurance policy in which "Peter Watson, David Watson T/A Watson Farms" were the named insureds. Plaintiff notified First Trenton and Agway of his intention to make UIM claims against them, and his intentions to settle with Colonial Penn. Neither Agway nor First Trenton objected to plaintiff's acceptance of the settlement. Agway denied UIM coverage for damages resulting from Kathleen's death under its auto and excess policies.

Plaintiff instituted this declaratory judgment action against Agway and First Trenton, seeking a determination that both First Trenton and Agway provided $500,000 in primary UIM coverage, and that Agway provided an additional $1,000,000 in excess UIM coverage. Plaintiff moved for summary judgment seeking the relief sought in his complaint as well as counsel fees. First Trenton cross-moved, essentially taking the same position as plaintiff in respect of the Agway policies, but also seeking a declaration that First Trenton's policy was excess to Agway's. Agway cross-moved seeking a determination that neither of its policies provided UIM coverage for Kathleen's accident.

Agway argued that there was no coverage because the named insured in the Agway policies is a partnership, and, as such, the wife of an individual partner cannot receive third party UIM benefits under the terms of either policy. The Law Division Judge, Lee B. Laskin, rejected that argument. He ruled that the Agway policies provided UIM coverage for Kathleen; that the Agway and First Trenton policies were co-primary and afforded $200,000 in UIM coverage under each policy; and that Agway's excess policy provided an additional $1,000,000 of coverage. Plaintiff's application for attorney fees was denied.

Agway appeals from that decision and plaintiff cross-appeals from the denial of counsel fees. First Trenton joins in plaintiff's contention that the Agway policies afford UIM coverage in these circumstances. Neither insurer challenges the trial court's determination of co-primary coverage in the event we hold that there is coverage under the Agway policies. Agway concedes on appeal that if we find UIM coverage under the auto policy, there is also coverage under the excess policy, inasmuch as the arguments made under the auto policy are the same as those advanced under the excess policy. Therefore, we shall focus our analysis on the terms of the auto policy.

The declarations page of the Agway policy describes the coverage as "COMMERCIAL AUTO COVERAGE PART/ BUSINESS AUTO DECLARATIONS." The "Named Insured" is identified as "Peter Watson, David Watson T/A Watson Farms." Underneath the designation of the named insured, the policy has the following words contained on one line: "Form of Business:[] Individual [x] Partnership [] Corporation []Other ." As indicated, the box next to the word "Partnership" was marked with an "x." The policy provided for liability coverage of $500,000 with uninsured (UM) and UIM coverage in the same amount.

The UIM endorsement affords coverage to an "insured" who is entitled to recover compensatory damages from the owner or driver of an "underinsured motor vehicle." It is conceded for the purpose of this litigation that the Montgomery vehicle ...

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