Before Judges Conley and Coburn.
The opinion of the court was delivered by: Conley, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued February 22, 2000 - Decided March 8, 2000
On appeal from Superior Court of New Jersey, Law Division, Bergen County.
This insurance appeal arises from an automobile accident that occurred on a construction site on Route 80. It is not brought by the insured, Universal Steel Erectors (Universal), a subcontractor on the site and the owner of the vehicle which was involved in the accident. Neither is it brought by the party in the ensuing personal injury litigation that had sought coverage under Universal's comprehensive general liability insurance, Conduit and Foundation Corporation (Conduit). Conduit was the contractor on the site responsible for maintaining the safety of the construction traffic lane. Rather, it is an appeal by Universal's comprehensive general liability (CGL) carrier, Hartford Casualty Insurance Company (Hartford), from a summary judgment in favor of Universal's business automobile carrier, Providence Washington Insurance Company (Providence) based upon a determination that Hartford's policy provides coverage for Universal's liability. We reverse.
Universal's employee was fatally injured in the accident. His estate sued Conduit for its negligence in supervising the traffic lane. Conduit, in turn, filed a third-party complaint against Universal. That complaint sought contractual indemnification alleging Universal's negligent entrustment and/or use of its vehicle. *fn1 It is this claim that triggered Universal's potential liability, and thus that of its insurers.
Hartford's CGL policy contained an automobile exclusion. And so, Hartford undertook Universal's defense on the third-party indemnification claim but with a reservation of rights. Conduit, then, filed a declaratory judgment action alleging that it was an additional insured on Hartford's CGL policy and that Hartford was estopped from denying coverage to it as such. *fn2
Universal had a business automobile policy with Providence which covered the vehicle involved in the accident. Hartford filed an answer in Conduit's declaratory judgment action and a third-party complaint against Providence alleging that, whereas the automobile exclusion in the Hartford policy precluded coverage, Providence's automobile policy expressly provided coverage for the personal injuries arising from the accident. *fn3 Hartford also alleged, alternatively, that if its policy was applicable, it was only as an excess policy pursuant to the "other insurance" provisions of the Hartford and Providence policies. *fn4 We assume Providence filed an answer to this third-party complaint, although the record provided to us does not contain it.
In any event, all of the underlying issues, both as to the personal injury suit and Conduit's third-party complaint against Universal for contractual indemnification, were settled for $981,000. We are told by Hartford, and it is not disputed by Providence, that Conduit's separate declaratory judgment action against Hartford for coverage as an additional insured on Universal's CGL policy was part of the settlement. The only remaining issue was whether Hartford or Providence would bear ultimate liability for the $475,000 Hartford contributed on Universal's behalf. In cross-motions for summary judgment, the motion judge determined that Hartford's CGL policy should pay. We disagree.
Before we address Hartford's contention that the motion judge erred in concluding that its policy and not that of Providence was applicable, we set forth the parameters of the dispute between Hartford and Providence as presented to us by virtue of the procedural posture of this case. First, and perhaps foremost, any claims Conduit may have had as a direct insured on Hartford's policy have been settled and are not before us. Second, the basis for Universal's liability, and thus that of Hartford and Universal on Conduit's contractual indemnification third-party claim, has been conceded. That is to say, as we understand it, in settling all of the issues involved in the proceedings below, both insurers have agreed that Universal's indemnification agreement with Conduit was an "insured contract" as defined by both policies and that Universal is liable, to some extent, for the personal injuries sustained in the automobile accident pursuant to that agreement. Finally, as posited below, there is no dispute that Universal's contribution to the settlement of the underlying personal injury suit, through Hartford, will be paid (indeed has been paid), and that that amount has been agreed to by both carriers.
As we have said, then, this is an insurance coverage dispute. It is not a dispute over the scope of the indemnification agreement between Conduit and Universal or whether that agreement is an "insured contract" for the purposes of insurance coverage under either policy. Nonetheless, the motion judge's decision focused upon the indemnification provision in Universal's subcontract with Conduit and whether "the Court should look to the nature and quality of the allegations asserted against the indemnitee [Conduit] or those asserted against the insured indemnitor [Universal]." The judge determined that the inquiry should focus on Conduit and, further, concluded that the accident was caused substantially by the negligence of Conduit in its supervision of the work site. *fn5 As we understand the judge's rationale, then, he concluded that Universal had agreed to indemnify Conduit for Conduit's negligence and that the cause of the accident was Conduit's negligence "in the maintenance of the construction road, or the lack thereof." He said "looking at . . . the acts of the indemnitee, it's clear to the Court that this was not an automobile accident or anything that could be extended to include actions . . . that an automobile insurance carrier would have to respond to." Rather, he thought, "[t]his clearly . . . was something that took place by way of the actions of Conduit in the maintenance of the construction road, or the lack thereof, and that therefore this would clearly be covered by Hartford's general contractor's liability policy."
We suppose, where there is a business automobile policy and a CGL policy for that business and something untoward happens on the insured's work site triggering liability on the part of the insured, the natural inclination may well be to view that as a matter of CGL coverage, particularly where the liability may be premised upon assumption of another's workplace negligence. In that scenario, the fact that a vehicle is the instrument of the underlying harm might be considered either incidental or not relevant. That we think was the general thrust of the judge's consideration of the insurance dispute here.
The difficulty with this rationale under the circumstances as presented to us is several-fold. First, it assumes, without reference to the terms of the Providence policy, that there is no coverage under that policy. This seems not to be so here. See n.3, supra. Moreover, as we understand the settlement below, both carriers have agreed that the only issue that remains is which of the two will be responsible. That assumes that if we determine Hartford's policy does not apply because of its auto exclusion, Providence will provide the coverage. *fn6
Second, the motion judge's rationale fails to recognize that the involvement of the use of the motor vehicle here was not incidental, either to the injuries that were sustained, or to the cause of action, whether it be as to Conduit's third-party complaint against Universal or the plaintiff's complaint against Conduit. As to the former, Conduit's claim for indemnification was based upon an allegation that Universal's vehicle was driven negligently. As to the latter, while the claim is that Conduit was negligent in its maintenance and ...