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Mann v. Interstate Fire & Casualty Co.

January 23, 1998


Before Judges Stern, Kleiner and Kimmelman.

The opinion of the court was delivered by: Kleiner, J.A.D.

[9]    Argued December 16, 1997

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

Upon leave to appeal, plaintiffs, Harold Raymond Mann and Regional Trucking Company, Inc. (Regional), appeal from the grant of summary judgment to defendant, Interstate Fire & Casualty Company (Interstate), in a declaratory judgment action seeking indemnification and a defense in a wrongful death action. We conclude that the motion Judge failed to properly consider the issues of dual agency and apparent authority and failed to recognize that defendant's potential liability to plaintiffs raised sufficient material issues of fact warranting submission of the issue to the trier of fact after a plenary hearing. We reverse.

On February 10, 1992, Guy Kisal, a Pennsylvania resident, was killed when he was struck by a tandem tractor/trailer owned by defendant Regional and operated by its employee, plaintiff Mann. On January 27, 1994, Dorothy Kisal, as administrator ad prosequendum and general administratrix of the Estate of Guy Kisal, instituted suit in the Superior Court, Law Division, Essex County against both Regional and Mann. Regional demanded that Interstate afford insurance coverage and pay on behalf of Regional and Mann all sums in excess of primary underlying coverage which they may become obligated to pay as damages to Kisal. Interstate denied coverage, thus prompting this declaratory judgment action.

Regional is engaged as an ICC certified carrier in the hauling of goods in interstate commerce. Prior to February 10, 1992, Regional was affiliated with two other ICC certified carriers, R.G. Truck Leasing and Reisch Trucking & Transportation. All three companies utilized the Sciarra Agency as their insurance broker.

From March 20, 1991, to March 20, 1992, Interstate afforded excess coverage to R.G. Truck Leasing under a policy issued in Pennsylvania providing liability coverage for accidents resulting in bodily injury in excess of $1 million and up to $4 million. Since Interstate was not then an admitted insurance company in Pennsylvania, it was required to comply with the Pennsylvania Surplus Lines Law, 40 Pa. Cons. Stat. 991.1615, which requires that any Interstate policy be issued through a certified Surplus Lines Agent. *fn1

Interstate's insurance policy with R.G. Leasing was procured by the Sciarra Agency through McConaghy Special Risk, Inc. (McConaghy), which had offices in Collingswood, New Jersey. McConaghy is identified on the declaration page of the Interstate policy issued to R.G. Truck Leasing as "Agent or Broker." It is undisputed in the record on appeal that Sciarra Agency was not an approved broker or surplus lines agent for Interstate. Thus, Sciarra Agency, in order to purchase an Interstate policy on behalf of one of its customers, was required to deal with a surplus lines broker or agent for Interstate. *fn2 It is undisputed that when R.G. Truck Leasing secured its Interstate excess policy, it contacted Sciarra Agency, who then contacted McConaghy, who then communicated with Interstate.

While the Interstate excess policy insuring R.G. Truck Leasing was in place prior to Kisal's death, R.G. Truck Leasing's operations were taken over by Regional. Regional contacted Sciarra Agency and requested that the Interstate policy be amended to reflect Regional as the named insured. In accord with prior practice, Sciarra Agency requested, both orally and by facsimile, McConaghy to either secure an appropriate amendment to the Interstate policy changing the name of the named insured or to provide it with a new application for excess insurance to be completed by Regional for transmission to Interstate.

As of the date of Kisal's death, McConaghy had not acted on Sciarra Agency's request. *fn3 Thus, when Regional demanded indemnification and a defense of Kisal's wrongful death complaint, Interstate denied coverage.

In the Law Division, Regional contended that McConaghy acted as a dual agent. It contended that McConaghy had a duty to act with the requisite degree of skill and knowledge to procure requested excess insurance coverage as the agent of Sciarra Agency, who was the agent of Regional. It also contended that McConaghy was acting as the agent of Interstate in processing applications for insurance and providing information to Interstate relating to prospective customer's risks. It contended that when McConaghy failed to communicate with Interstate after being first contacted by the Sciarra Agency, it breached its obligation to both Regional and Interstate and thus, to the extent that Regional would have been afforded coverage, Interstate was obligated to indemnify and defend it in Kisal's wrongful death claim. As noted, on cross-motions for summary judgment, the Law Division concluded that McConaghy was not the agent of Interstate for the purpose of transmitting Regional's request for excess coverage to Interstate and thus that Interstate was not vicariously liable for McConaghy's negligence.


An analysis of the factual contentions submitted by both parties in support of their respective motions and cross-motions for summary judgment turns on the special relationship between the parties and the roles and responsibilities of the several parties in securing an excess insurance policy for Regional.

In an effort to buttress its contentions, Regional provided the motion Judge with excerpts of deposition testimony. Justin Sciarra of Sciarra Agency testified that in order to obtain an Interstate policy for a putative insured, its customer, his agency was required to contact McConaghy to discuss the risk and to provide McConaghy with the customer's loss information, the nature of the business and extent of its business as reflected in its income, identification of the customer's primary insurance coverage, and the number of vehicles owned or operated by the customer. The requisite information then would be forwarded by McConaghy to Interstate. Once an application for excess insurance was evaluated, Interstate would quote a rate to McConaghy and McConaghy would transmit the rate ...

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