clauses were given literal effect, i.e., neither policy would cover the loss. Id. at 559. Therefore, the court held that, where two insurers both provide that they shall be "excess insurance," the two provisions cancel each other out under the doctrine of mutual repugnance. Id. at 562. Thus, the court concluded that, in such a case, the general coverage of each policy applies, and the loss is apportioned according to the express provisions of both policies. Id.
Subsequently, many years later, the New Jersey Superior Court, Appellate Division, addressed the same issue when one insurance company, who paid an insured for the entire loss on a building damaged by fire, sued another for contribution and indemnification. Pasker, 192 N.J. Super. at 135-36. Both insurance policies contained similar "other insurance" clauses. Id. at 135. The appellate court recognized that the Guiding Principles of Overlapping Insurance were adopted by the insurance industry after the New Jersey Supreme Court's decision in Cosmopolitan. Id. at 139. The Pasker court noted that these Guiding Principles made it possible to delineate between a general and specific insurer. Id. at 139-40. The court reasoned that, because both insurance companies were signatories to the Guiding Principles, there was no reason why they should not be referenced to resolve the dispute. Id. at 139-40. In conclusion, the Pasker court explicitly distinguished its case from Cosmopolitan "because the parties [were] signatories to the Guiding Principles . . . ." Id. at 140-41.
Shortly thereafter, the United States Court of Appeals for the Third Circuit employed the Guiding Principles in a dispute between two insurance companies over coverage for the collapse of a masonry building. Commercial Union Ins. Co. v. Bituminous Cas. Corp., 851 F.2d 98, 100, 102 (3d Cir. 1988). Both insurance policies contained "other insurance" clauses "purporting to offer coverage only in excess of other available insurance." Id. at 102. The Third Circuit recognized Cosmopolitan as good law and also acknowledged the appellate court's decision in Pasker to employ the Guiding Principles when the parties are signatories to them. Id. The Commercial Union Court, therefore, projected that the New Jersey Supreme Court would follow Pasker and apply the Guiding Principles to apportion such losses. Id.1
The dispute between the parties, in the case sub judice, is the expanse of the Third Circuit's interpretation of the appellate court's decision in Pasker. Plaintiff and defendant General Star argue that the Third Circuit employed a broad reading of Pasker, and predicted that the New Jersey Supreme Court would apply the Guiding Principles regardless of whether the parties were signatories to them. In contrast, defendant Generali contends that the Third Circuit merely predicted that the New Jersey Supreme Court would follow the Pasker court's decision to narrowly apply the Guiding Principles only when both parties were signatories. This Court agrees with the latter.
The Court finds that the doctrine of mutual repugnance is still the law of New Jersey, except where the two disputing insurance companies are signatories to the Guiding Principles. The Court's decision is guided by a number of factors. First, neither Pasker nor Commercial Union are in conflict with the New Jersey Supreme Court's decision in Cosmopolitan.
In fact, both courts acknowledged the rule of law set forth in Cosmopolitan. To hold that the Guiding Principles apply even when the insurance companies are not signatories to those standards would render Cosmopolitan null and void.
This does not appear to be the intent of either the appellate division or the Third Circuit. Second, New Jersey courts, subsequent to these decisions, continue to acknowledge Cosmopolitan and the doctrine of mutual repugnance. See, e.g., Harrison v. Ford Motor Credit Co., 280 N.J. Super. 414, 417, 655 A.2d 931 (App. Div. 1994); Rogers v. Snappy Car Rental, Inc., 272 N.J. Super. 346, 353, 639 A.2d 1154 (Law Div. 1993). See also Dome Petroleum Ltd. v. Employers Mut. Liab. Ins. Co. of Wis., 635 F. Supp. 1397, 1399 (D.N.J. 1986).
In the present matter, both insurance policies contain substantially similar "other insurance" clauses, which attempt to provide only excess coverage.
Furthermore, both policies intended to insure the same risk, regardless of how the property was described.
See Cosmopolitan, 28 N.J. at 560-61 (holding that "where the intent is clear, the fact that one of the insurers stated its intent more specifically than the other is not significant"). Moreover, both parties are not signatories to the Guiding Principles. Accordingly, the rule of law pronounced by the New Jersey Supreme Court, in Cosmopolitan, is determinative, and the "other insurance" clauses are mutually repugnant and a pro rata apportioning of the losses is appropriate.
Pursuant to the Court's ruling, defendant Generali, therefore, has fulfilled its obligation to plaintiff under the insurance policy.
Hence, plaintiff's motion for summary judgment against defendant Generali must be denied. Similarly, defendant General Star's motion for summary judgment against defendant Generali must be denied. Because defendant Generali is not required to pay any amount above and beyond its pro rata share of plaintiff's loss, defendant Generali's cross-motion for summary judgment against plaintiff must be granted.
For the foregoing reasons, plaintiff's motion is DENIED, defendant Generali's motion is GRANTED, and defendant General Star's motion is DENIED.
An appropriate Order accompanies this Letter Opinion.
NICHOLAS H. POLITAN
This matter having come before the Court on various motions of the parties, and the Court having heard oral argument on June 9, 1997, and having considered the matter including the submissions of the parties, and for the reasons appearing more particularly in the Letter Opinion of this Court in the above-captioned matter, and good cause having been shown,
IT IS on this 20th day of June, 1997, hereby
ORDERED that plaintiff ALI, Inc.'s motion for summary judgment against defendant Generali is DENIED, and it is further
ORDERED that defendant General Star Indemnity Company's motion for summary judgment against defendant Generali is DENIED, and it is further
ORDERED that defendant Generali's motion for summary judgment against plaintiff is GRANTED.
NICHOLAS H. POLITAN