On certification to the Superior Court, Appellate Division, whose opinion is reported at 287 N.J. Super. 117 (1996).
The opinion of the Court was delivered by Garibaldi, J. Justices Handler, Stein and Coleman join in Justice GARIBALDI's opinion. Justice O'hern filed a separate Dissenting opinion, in which Chief Justice Poritz and Justice Pollock join. O'hern, J., Dissenting. The Chief Justice and Justice Pollock join in Dissenting opinion.
The opinion of the court was delivered by: Garibaldi
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
Joseph Kennedy v. Jefferson Smurfit Company and Container Corp. of America et al. (A-39/40-96)
Argued October 21, 1996 -- Decided February 5, 1997
GARIBALDI, J., writing for a majority of the Court.
This appeal presents a narrow legal issue regarding an insurer's obligation to provide coverage to an additional insured in a "loading and unloading" case under an omnibus automobile insurance claim. The specific question presented is whether the selection of a defective pallet is part of the loading process, and thus arises out of the "use of a motor vehicle."
Joseph Kennedy was the owner of a tractor that was leased to North Operating Company (North). Pursuant to their agreement, North insured Kennedy's vehicle with New Jersey Manufacturers Insurance Company (NJM). North entered into a cargo-shipping agreement with Jefferson Smurfit Company (Jefferson). On February 21, 1991, North dispatched Kennedy to Jefferson's facility to pick up a loaded trailer (owned by North) filled with cardboard, which he was to deliver to Ultra Packaging Corporation (Ultra). The cardboard was on wood pallets in bundles weighing hundreds of pounds. After arriving at Ultra, Kennedy waited in the trailer and observed the unloading procedure. Suddenly, a pallet collapsed and the cardboard fell on Kennedy, injuring him. According to Kennedy, the pallet was rotted.
Kennedy filed suit against Jefferson, alleging that his injuries were caused by its defective pallet. Jefferson filed an Answer and Third Party Complaint against North, the owner of the trailer, and others. Jefferson, a self-insured company, then filed a declaratory judgment action against NJM, North's insurance carrier, seeking coverage under the "use" provision of its "Trucker's Policy," and Fireman's Fund, North's comprehensive general liability carrier. Jefferson conceded its own negligence and settled Kennedy's personal injury claim for $750,000. Thereafter, the Third-Party Complaint was consolidated with the declaratory judgment action, and both NJM and North filed motions for summary judgment. Jefferson opposed the motions and cross-moved for summary judgment. The trial court denied NJM's motion for summary judgment, but granted Jefferson's cross-motion against NJM in the amount of $750,000. The court also granted North's motion for summary judgment, thereby preventing Jefferson from seeking indemnification from North.
On appeal, the Appellate Division affirmed, concluding that NJM's policy covered Jefferson for Kennedy's injury because it was causally connected with the complete operation of loading and unloading North's truck. However, the Appellate Division remanded the case for a determination of the reasonableness and good faith of Jefferson's $750,000 settlement with Kennedy, because there had been no showing that the settlement fairly reflected the seriousness of the injuries suffered. Because of the Appellate Division's determination that the automobile policy covered Jefferson for Kennedy's injury, it declared moot Jefferson's appeal of the trial court's judgment that North owed Jefferson no indemnification under the trucking agreement.
NJM filed a petition for certification to review the decision that its automobile insurance policy provided coverage to Jefferson for Kennedy's injuries. Contingent on a grant of NJM's petition, Jefferson filed a cross-petition to appeal the issue of North's obligation to indemnify Jefferson.
The Supreme Court granted both petitions.
HELD: Because the selection of the defective pallet was necessary and preliminary to the process of loading North's trailer, Jefferson is an additional insured under the NJM policy and Jefferson's claim that North must indemnify it is moot.
1. That the concept of "use of a vehicle" includes the acts of loading and unloading the vehicle is well settled. (p. 6)
2. In order for an accident to be covered by the "loading and unloading" clause in an automobile insurance policy, the injury must have occurred during the process of loading and unloading the vehicle and must be causally connected with that act. (pp. 6-7)
3. Under the "complete operation" doctrine, all that is required to establish coverage is that the act or omission that resulted in the injury was necessary to carry out the loading or unloading. (pp. 7-8)
4. Although the injury occurred during the unloading process, the negligent act of selecting the pallet occurred before the physical loading of the goods. Therefore, the determination of coverage must depend on whether selecting the pallet was an integral part of the loading activity, and thus covered under the "use" provision of the policy. (pp. 9-10)
5. This case is not analogous to those cases denying coverage where the injury occurred as a result of negligent upkeep of, or defects on, the premises. (pp. 10-12)
6. Maintaining the broad scope of statutorily mandated automobile insurance coverage fosters, rather than offends, public policy. (pp.12-13)
7. To deny Jefferson coverage would be to change the interpretation relied on in this State by insurance companies in setting their rates. (p. 14)
Judgment of the Appellate Division is AFFIRMED. The case is REMANDED for a determination of the reasonableness and good faith of Kennedy's settlement with Jefferson.
Justice O'HERN filed a separate Dissenting opinion in which CHIEF JUSTICE PORITZ and JUSTICE POLLOCK join. The Dissent concluded that the accident in which Kennedy was injured was not causally connected with the loading and unloading, but merely occurred during it, and that the person charged with the negligent act should not be considered to have been using the vehicle so as to be covered by the vehicle's liability policy as an additional insured.
JUSTICES HANDLER, STEIN and COLEMAN join in JUSTICE GARIBALDI's opinion. JUSTICE O'HERN filed a separate Dissenting opinion, in which CHIEF ...