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Polarome Manufacturing Co. v. Commerce & Industry Insurance Co.

April 23, 1998

POLAROME MANUFACTURING COMPANY, INC., PLAINTIFF-APPELLANT,
v.
COMMERCE & INDUSTRY INSURANCE COMPANY, DEFENDANT/THIRD PARTY PLAINTIFF-RESPONDENT,
v.
HOME INSURANCE COMPANY, (IN REHABILITATION A/K/A/ RISK ENTERPRISES MANAGEMENT LIMITED ("REM"), THIRD PARTY DEFENDANT-RESPONDENT/CROSS-APPELLANT.



Argued January 27, 1998

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

Before Judges Pressler, Wallace and Carchman.

The opinion of the court was delivered by CARCHMAN, J.S.C., (temporarily assigned). This is an insurance coverage case the Disposition of which is dependent on whether New York or New Jersey law applies. If New York law applies, plaintiff's failure to provide timely notice to the insurer warrants a dismissal of plaintiff's declaratory judgment action seeking coverage. Applying the choice-of- law analysis mandated by the Supreme Court in State Farm Auto. Ins. Co. v. Estate of Simmons, 84 N.J. 28 (1980), and The Gilbert Spruance Co. v. Pennsylvania Manufacturers' Ass'n Ins. Co., 134 N.J. 96 (1993), we conclude that the State of New York has the dominant and significant relationship with this transaction and the parties, as well as being the situs of the execution of the contract. We, therefore, conclude that the motion Judge correctly determined that New York law applied, and we affirm the judgment below dismissing plaintiff's complaint.

Plaintiff Polarome Manufacturing Company, Inc. (Polarome) is a New York corporation that manufactures aromatic and flavoring chemicals and whose principal address is in Jersey City. Polarome entered into an agreement for the disposal of Polarome's steel drums with National Drum & Barrel Corporation (National Drum), a New York corporation principally operating in Brooklyn, New York. Under the arrangement, National Drum would leave a trailer at Polarome's Newark, New Jersey facility which would then be fully loaded by Polarome's employees with empty 55-gallon steel drums for pick-up and disposal by National. On March 31, 1992, Raymond Eckes, who at the time was a New York resident employed by National Drum, picked up a full trailer containing approximately 220 empty steel drums in Newark and brought the trailer back to National Drum's Brooklyn location. After those drums which could be re-used were unloaded, Eckes transported the remaining drums to Connecticut to be sold for salvage. While unloading those drums in Connecticut, one of the drums rolled out of the trailer and onto Eckes's foot causing severe injury.

At the time of the Eckes incident, Polarome maintained general liability coverage with a personal injury limit of $1,000,000 issued by Home Insurance Company (Home) *fn1 , a New Hampshire company licensed in all states. At that same time, National Drum's automobile insurance policy with Commerce and Industry Insurance Company (CIIC), a New York insurer licensed in all states, provided it with $1,000,000 worth of liability coverage. The CIIC policy issued to National Drum noted that the State of New York was its primary location of risk. That policy's notice provision provided, in part, that "[y]ou or someone on your behalf must promptly notify us or our agent of any accident or loss."

In March 1993, Eckes and his wife filed a complaint against Polarome and others in the Superior Court, Law Division, Hudson County. In May 1993, Polarome filed its answer and separate defenses with Home agreeing to provide a defense for Polarome.

On October 13, 1995, two and one-half years later, Polarome substituted attorneys. Thereafter, on January 3, 1996, counsel for Polarome contacted CIIC for the first time regarding the still pending Eckes case and demanded coverage for Polarome asserting that Polarome was an insured under the terms of National Drum's policy. CIIC denied coverage, and Polarome instituted this declaratory judgment action against CIIC seeking an adjudication of its coverage under the National Drum automobile insurance policy. CIIC answered and claimed that, because New York law applied to the coverage, it was not the primary insurer, and further disclaimed based on late notice. Additionally, CIIC joined Home as a third-party defendant.

Polarome and CIIC cross-moved for summary judgment on the declaratory judgment action. The motion Judge granted summary judgment in favor of CIIC, thereby relieving it from providing a defense or indemnification to Polarome in the underlying Eckes case. Polarome's motion was denied. This appeal followed. *fn2

Polarome raises a number of issues on appeal, however, we deem the choice-of-law issue and the failure of National Drum to give appropriate notice, under New York law, to CIIC to be dispositive of this appeal.

We start our analysis with State Farm Mut. Auto Ins. Co. v. Estate of Simmons, 84 N.J. 28 (1980), where our Supreme Court adopted the approach advanced in Restatement (Second) of Conflicts of Law §§ 6 and 188 (1971) for determining choice of law issues. The Court concluded that in a contract action, the law of the state which has the "most significant relationship" with the transaction would apply. Id. at 34- 35. In assessing what constitutes a "significant relationship" the Court alluded to seven general considerations implicated in the analysis:

1)the needs of the interstate and international system;

2) the relevant policies of the forum;

3) the relevant policies of other affected states and the relevant interests of those states in the ...


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