On appeal from Superior Court of New Jersey, Law Division, Middlesex County, L-4571-98.
Before Judges Skillman, Lefelt and Winkelstein.
The opinion of the court was delivered by: Winkelstein, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 10, 2002
In this declaratory judgment action, the court is asked to decide the respective obligations of two automobile insurance carriers to each other and their insureds. Selective Insurance Company (Selective) insured the personal vehicle of Barbara Quartier, an employee of Coldwell Banker; CNA Insurance Company (CNA) provided automobile coverage for Coldwell Banker and its employees. The CNA policy included an "other insurance" clause which provided that CNA's coverage would be excess to other available insurance.
Quartier was involved in an accident while driving her personal vehicle in the course of her employment. The injured third party sued Quartier and Coldwell Banker. Selective settled the third party claim on behalf of Quartier, within its policy limits, without first notifying CNA or Coldwell Banker. The Law Division concluded that by doing so Selective acted in bad faith. The motion judge premised her decision on a finding that Selective's coverage was primary and CNA's coverage was excess. On appeal, Selective argues that each insurance company provided primary coverage, and the "other insurance" clause in CNA's policy did not render its coverage excess to Selective's. We agree. Under the terms of the respective policies, both Selective and CNA had a primary obligation to defend. As a consequence, Selective owed no duty to CNA. Accordingly, we reverse.
I This action arises from a two-vehicle automobile accident that occurred on September 18, 1997. Quartier, a realtor for Coldwell Banker, was driving her own car while showing houses to Felicia Peluso. Peluso was a passenger in the car when it collided with a vehicle driven by Linda Mikson.
At the time of the accident, Quartier's vehicle was insured under her personal automobile insurance policy issued by Selective. Quartier had agreed to obtain this coverage as a condition of her employment. The policy had a liability limit of $300,000; Quartier was the named insured while Coldwell Banker was named as an additional insured. The policy contained the following relevant provisions:
A. We will pay damages for "bodily injury" or "property damage" for which any "insured" becomes legally responsible because of an auto accident
B. "Insured" as used in this part means:
1. You . . . for the ownership, maintenance or uses of any auto . . . . * * * 3. For "your covered auto," any person or organization but only with respect to legal responsibility for acts or omissions of [you] . . . .
If there is other applicable liability insurance we will pay only our share of the loss. Our share is the proportion that our limit of liability bears to the total of all applicable limits. However, any insurance we provide for a vehicle you do not own shall be excess of any other collectible insurance.
CNA provided business automobile insurance to National Realty Trust, Coldwell Banker's parent corporation. Under the terms of this policy, CNA afforded coverage to Coldwell Banker employees as additional insureds. The policy had a liability limit of $1,000,000. The CNA policy states:
SECTION II ) LIABILITY COVERAGE A. COVERAGE We will pay all sums an "insured" legally must pay as damages because of "bodily injury" . . . to which this insurance applies, caused by an "accident" and resulting from the ownership . . . or use of a covered "auto."
A covered auto is defined as "ANY 'AUTO.'"
. . . Any employee of yours is an "insured" while using a covered "auto" you don't own, hire or borrow in your ...