On appeal from the Superior Court of New Jersey, Law Division, Bergen County, L-629-99.
Before Judges Eichen, Collester and Lintner.
The opinion of the court was delivered by: Lintner, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
After exiting a school bus operated by defendant University Bus Company (University Bus), Raymond Rosario, a minor, was struck by a motor vehicle operated by defendant Thomas Mariani. A complaint on behalf of Rosario by his parents, both as Guardian ad Litem and individually, was filed against Mariani, his employer Mariani Electric (Mariani), University Bus, bus driver David Haywood, the Borough of Ramsey (the Borough) and Rodrick J. Mullin, an employee of the Borough. The Ramsey Board of Education (the Board) was joined as a third-party defendant and in turn filed an answer and fourth-party complaint naming American Guarantee and Liability Insurance Company (American Guarantee) and seeking coverage and defense costs as an "additional insured" under a liability policy issued by American Guarantee to University Bus. The Board also sought indemnification and defense costs from University Bus, alleging that University Bus had breached its contract with the Board requiring University Bus to obtain insurance coverage designating the Board as the "named insured." *fn1 A fourth amended complaint was eventually filed by plaintiff, adding the Board as a defendant. *fn2 It alleged specifically that the Board breached its obligation in that it failed to provide certain information to the bus company that would have enabled their drivers to operate the necessary signals on said buses to assure safe crossing by the infant plaintiff, and were further negligent in that they could have prevented the creation of any danger to the plaintiff by locating his bus stop in a manner which would avoid having to cross the roadway wherein the accident occurred.
On July 16, 2001, American Guarantee moved for summary judgment seeking to dismiss the Board's claim that it provide coverage and a defense for the Board. The Board countered by filing a cross-motion to require American Guarantee to provide a defense and coverage. On November 16, 2001, following oral argument on the motions, the judge denied American Guarantee's motion and granted summary judgment in favor of the Board. An order memorializing the judgment requiring American Guarantee to defend and indemnify the Board as an "additional insured" was filed on November 21, 2001. On January 18, 2002, we granted American Guarantee's motion for leave to appeal. R. 2:2-4.
We hold that, although American Guarantee's policy does not cover claims against the Board for independent negligence unconnected with the actual operation of the bus, its language expresses a clear intent to cover claims resulting from the Board's negligent conduct implicating the actual operation of the bus or its driver. We also hold that the allegations asserted in plaintiffs' fourth amended complaint trigger American Guarantee's duty to defend the Board. Accordingly, we reverse the order insofar as it requires American Guarantee to provide the Board with indemnity coverage for the Board's independent acts of negligence not arising out of the operations performed by, or on behalf of, University Bus or its driver and remand for further proceedings. Unaffected by our decision is any pending breach of contract claims for failure to acquire insurance coverage for the Board as the "named insured" pursuant to the provisions of the Pupil Transportation Contract.
The underlying accident occurred on September 8, 1998 after Haywood stopped the school bus to permit Ramon Rosario to exit and cross at a designated crosswalk on South Central Avenue in Ramsey. Rosario exited and walked to the rear of the bus and was struck by Mariani's vehicle as he crossed South Central Avenue.
The Pupil Transportation Contract required University Bus to provide the following insurance for the benefit of the Board:
5. The transportation contractor agrees to furnish automobile public liability insurance covering the operator of every vehicle transporting pupils and drivers thereof in the amount specified in the bid specifications. . . . The aforesaid insurance shall cover the local board as a named insured. .
6. The transportation contractor will defend and indemnify the local board and any agent, officer, or employee thereof and save it harmless from and against any and all claims, actions, damages, liability and expense in connection with loss of life, personal injury and/or damage to property arising from or out of actions of the transportation contractor occasioned wholly or in part by any act or omission to act of the transportation contractor, its agent, its subcontractor, or its employees. (Emphasis added.)
A Commercial Automobile Insurance policy was acquired from American Guarantee. The Common Policy Declaration page lists Scholastic Bus Company as the "Named Insured." *fn3 A Manuscript Endorsement (the endorsement), making up the second page of the declaration, described the following coverage under the heading "BLANKET ADDITIONAL INSURED":
Additional insured shall include any entity where shown on a certificate of insurance or to whom the named insured is obligated by a written "insured contract" or agreement to provide insurance: however, this coverage shall only apply with respect to liability arising out of operations performed by or on behalf of the named insured. Further, this coverage shall not apply to damages arising out of the negligence of the additional insured unless such coverage is required in an "insured contract" with the additional insured and unless the "insured" shall become legally liable to pay for such damages through the enforcement of that contract. (Emphasis added.)
The Certificate of Insurance issued to the Board listed "Scholastic Bus Co. &/OR University Bus Co. &/OR Student's Bus Co." as "insured" and provided that the Board "is included as an additional insured, but ...