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Boyson Inc. v. Archer & Greiner

February 23, 1998

BOYSON, INC., PLAINTIFF-RESPONDENT/ CROSS-APPELLANT,
v.
ARCHER & GREINER, P.C., A PROFESSIONAL CORPORATION OF THE STATE OF NEW JERSEY, DEFENDANT-APPELLANT/ CROSS-RESPONDENT, AND ITT HARTFORD INSURANCE GROUP, DEFENDANT-RESPONDENT.



Argued December 9, 1997 Before Judges Long, Stern and Kleiner. On appeal from the Superior Court of New Jersey, Law Division, Middlesex County.

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

[9]    We granted leave to appeal from the denial of defendant Archer & Greiner's motion for summary judgment in this legal malpractice case relating to its representation of Boyson, Inc. in the Eastern District of Pennsylvania. Boyson (now plaintiff in the malpractice action) cross-appeals from the motion Judge's application of New Jersey law in deciding the summary judgment motion. The parties agree that Boyson would have no cause of action if the products hazard exclusion of its comprehensive liability policy was enforceable, so that Archer & Greiner's failure to seek a defense and indemnification for Boyson from its carrier would not constitute malpractice. The parties also agree that the exclusion was enforceable in New Jersey, but not in Pennsylvania. We remand for reconsideration of Archer & Greiner's motion for summary judgment under Pennsylvania law including its choice-of-law principles.

I.

Archer & Greiner was retained by Boyson to represent it as a defendant in a products liability diversity action filed in the United States District Court for the Eastern District of Pennsylvania. Boyson was insured under a comprehensive general liability ("CGL") policy issued by co-defendant ITT Hartford Insurance Group ("Hartford"). Boyson manufactured parts for a conveyor system installed in a Pennsylvania plant from which Alois Mrazik suffered a work-related injury. Boyson was thereafter sued by Mrazik in the products liability action. The case was ultimately settled, and Boyson thereafter brought this action against Archer & Greiner and Hartford to recover its costs of defense and settlement of the Mrazik action.

Archer & Greiner moved for summary judgment asserting that there was no coverage in light of the "products hazard" exclusion of the CGL policy, and, therefore, the law firm was not negligent in failing to notify Hartford of the claim against Boyson. Archer & Greiner argued that New Jersey law governed resolution of the "conflict ... between the law of New Jersey and Pennsylvania relative to exclusions in comprehensive general liability policies ... and their applicability to negligent failure to warn claims." Hartford also moved for summary judgment based on the exclusion, as well as on Boyson's failure to provide it with timely notice, its settlement of the case and its failure to comply with the entire controversy doctrine. Boyson opposed both motions, contending that Pennsylvania law governed the question of coverage and that "Pennsylvania law holds that products hazard exclusions in general liability policies do not preclude coverage of negligent failure to warn claims."

The motion Judge granted Hartford's motion for summary judgment. He held that because Boyson's manufacturing facility was in this state and the insurance contract was made here, New Jersey law controlled the issue of coverage and, thus, the products hazard exclusion to the CGL policy applied. The Judge, however, denied Archer & Greiner's summary judgment motion because of an expert report that the firm "deviated from the acceptable practice of law." A motion for reconsideration was also denied.

On this appeal Archer & Greiner argues that:

(1) if New Jersey law applies to the Hartford policy [as the motion Judge concluded], then the products liability exclusion contained therein is valid: and (2) if this exclusion is valid, then Boyson cannot maintain its cause of action against Archer & Greiner, P.C. for malpractice as Archer & Greiner, P.C. could not have breached its duty to Boyson by failing to utilize a policy the provisions of which were inapplicable to plaintiff Mrazik's allegations of product liability [in the underlying tort action]. Therefore, if New Jersey law is the applicable choice of law for the Hartford policy, plaintiff Boyson's cause of action against Archer & Greiner, P.C. for malpractice must fail.

In essence, Archer & Greiner contends that it could not have committed malpractice for "allegedly not pursuing the Hartford policy in a timely fashion" *fn1 if there was no coverage as a matter of law.

II.

Boyson is in the business of manufacturing and selling conveyor systems and component parts. Its principal place of business is in East Brunswick, New Jersey.

The federal product liability action arose out of an accident which took place on June 28, 1989 on the premises of the Exide Corporation in Allentown, Pennsylvania. Mrazik, a Pennsylvania resident and an employee of Exide, allegedly "suffered personal injuries when one of the batteries which he was filling fell off the conveyor belt, causing an acid burn to his leg." His products liability action alleged, among other things, that Boyson "fail to design, manufacture and sell the conveyor and its parts with due care," "fail to incorporate on the conveyor proper and adequate safety devices for use in safety" and "fail to warn or adequately warn of the dangers attendant upon the use of the conveyor."

The component parts of the conveyor on which Mrazik was working had been sold to Exide by Boyson. Exide incorporated the component parts into its existing conveyor system.

Boyson took the position that it had no coverage in the Mrazik action. As already stated, Boyson had a comprehensive general liability policy with Hartford during the relevant period. An endorsement *fn2 specifically excluded "bodily injury or property damage included within the Contemplated ...


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