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Pep Boys v. Cigna Indem. Ins. Co. of North America

April 28, 1997


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

Approved for Publication April 28, 1997.

Before Judges D'Annunzio, Newman and Villanueva. The opinion of the court was delivered by D'annunzio, J.A.D.

The opinion of the court was delivered by: D'annunzio

The opinion of the court was delivered by


This is a dispute about liability insurance coverage. It arises out of the death of Richard Parks, Jr.

On May 25, 1990, the decedent, Richard Parks, Jr., his younger brother and another boy decided to purchase freon because the brother had heard that it could "get you high." At that time, decedent was seventeen years old, the brother was fifteen, and the third boy was fourteen.

The three boys proceeded to the Pep Boys store in Howell Township, New Jersey because the decedent's brother knew that it carried freon, which was used in automobile air conditioning systems. They pooled their money to buy as many cans of No. 12 freon as they could afford. The third boy purchased two cans of freon from the cashier, who did not question him about his age or the purpose of his purchase. The boy claimed that he did not see any signs restricting the sale of freon. Realizing that he had purchased the wrong kind of freon, he went back into the store to exchange the two cans. Patricia Stallworth, an assistant manager, directed him to where the freon was located and then completed the exchange for three other cans of freon. He explained to Stallworth that he needed freon without an oil additive. He again was not asked for any identification, although Stallworth had inferred that he was of age because he had been waited on before and looked older.

Despite a warning on the back of the can stating that inhalation could cause death, the Parks brothers, the boy who purchased the freon, and two other boys took turns inhaling or "huffing" the freon. Decedent then fell over and could not be resuscitated. The cause of death was "acute freon toxicity."

On October 9, 1991, Richard A. Parks, General Administrator and Administrator Ad Prosequendum of the Estate of Richard Parks, Jr., filed a wrongful death and survival complaint against The Pep Boys and its employees stemming from the death of Richard Parks, Jr. The complaint alleged causes of action for negligence for the sale of freon to a minor in violation of N.J.S.A. 2A:170-25.9 to 25.13, negligence in training the store's personnel, and reckless indifference by the store and its employees to the harm the freon could cause. Plaintiff did not assert any claims under the Product Liability Act for a manufacturing defect, a design defect or a warning defect, N.J.S.A. 2A:58C-2, and did not sue the manufacturer. See Parks v. Pep Boys, 282 N.J. Super. 1, 659 A.2d 471 (App. Div. 1995) (affirming in part and reversing in part, a summary judgment in favor of Pep Boys).

At the time of the sale, the manufacturer of the freon, Interdynamics, Inc., had a policy of liability insurance with Cigna Indemnity Insurance Company of North America and Cigna Property & Casualty Companies (Cigna). The policy included a vendor's endorsement covering "All Vendors of the Insured," which included Pep Boys, and "All Products of the Insured," which included the freon sold by Pep Boys to decedent's companion. David A. Wiley, Jr., Pep Boy's claims manager, submitted an affidavit to the trial court. The affidavit stated, in part:

2. In my capacity as claims manager, it has been my responsibility to insure that all vendors selling products to Pep Boys have insurance affording coverage to Pep Boys for injuries to third-parties arising out of the sale of the vendor's products.

3. In order for a vendor to sell products to Pep Boys, they are required to either include Pep Boys as an additional insured on the vendor's insurance policy or have a broad form vendor's endorsement included with the policy.

4. The above requirement was enacted due to a prevailing concern about the expense of defending cases which stem from selling the products of others.

5. As such, Pep Boys insists on a vendor's endorsement to protect against claims resulting from the sale of a vendor's product. Pep Boys has a reasonable expectation that all risks associated with selling the products of others will be shifted to the particular vendor.

Cigna denied Pep Boys' request for coverage of the Parks tort claim on the ground that decedent's death was caused by Pep Boys' negligence and, therefore, did not come within the endorsement.

Pep Boys filed this action seeking a declaratory judgment of coverage. While the declaratory judgment action was pending, Pep Boys settled the tort claim for $100,000. Pep Boys then sought reimbursement from Cigna of the settlement amount and the expense of defending the tort claim. The court granted summary judgment to Cigna and Pep Boys appeals.

The endorsement provides:

WHO IS AN INSURED (Section II) is amended to include as an insured any person or organization (referred to below as vendor) shown in the Schedule, but only with respect to "bodily injury" or "property damage" arising out of "your products" shown in the Schedule which are distributed or sold in the regular ...

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