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Arma v. CVS Pharmacy

January 22, 2004

JOHN M. ARMA AND LISA ARMA, PLAINTIFFS,
v.
CVS PHARMACY, INC. DEFENDANT, AND CVS NEW YORK, INC. THIRD-PARTY PLAINTIFF,
v.
CARDINAL FREIGHT CARRIERS, INC., AND PROTECTIVE INSURANCE COMPANY THIRD-PARTY DEFENDANTS.



The opinion of the court was delivered by: Honorable Joseph E. Irenas

ORDER DENYING THIRD-PARTY DEFENDANT'S MOTION FOR SUMMARY JUDGMENT AND GRANTING THIRD-PARTY PLAINTIFF'S MOTION FOR SUMMARY JUDGMENT

This matter having appeared before the Court upon Third-Party Defendant's Motion for Summary Judgment and Third-Party Plaintiff's Cross-Motion for Summary Judgment, both made pursuant to Fed. R. Civ. P. 56, the Court having reviewed the submissions of the parties, and it appearing that:

1. The present motions arise from a personal injury action brought by the Plaintiff, John Arma ("Plaintiff") against CVS Pharmacy, Inc. ("CVS"), based on incidents ocurring March 2, 2000 and April 16, 2000. *fn1 On both occasions, Plaintiff claims that he was injured by falling CVS merchandise while unloading his tractor-trailer at two CVS locations. Plaintiff alleges that CVS negligently loaded the merchandise, causing his injuries.

2. Plaintiff drives a tractor-trailer for Cardinal Freight Carriers ("Cardinal"). CVS employs Cardinal to transport goods from its distribution centers to various retail outlets in New Jersey and neighboring states. Protective Insurance Company ("Protective") supplies Cardinal with motor vehicle liability insurance, including the dates of Plaintiff's injuries. The insurance policy specifies that Cardinal shall be self-insured for the first $100,000.00 of liability, and Protective shall be liable for claims above that amount.

3. On December 31, 2003, this Court ruled that, pursuant to N.J.S.A. 39:6B-1(a) *fn2 , the insurance policy includes CVS as an additional insured with respect to Plaintiff's claims. The Court deemed the insurance policy to include the statutory minimum coverage of $15,000.00, payable by Protective, before the self-retention amount of $100,000.00 goes into effect.

4. The remaining question between CVS and Cardinal is whether CVS or Cardinal should be responsible for payment of any Plaintiff's judgment up to the $100,000.00 self-retention, if Plaintiff should prevail on his claim. CVS filed a Third-Party Complaint for Declaratory Judgment on this issue against Cardinal, alleging that under New Jersey law, Cardinal must indemnify CVS to the extent that Protective's policy provides for Cardinal's self-retention, if Plaintiff recovers damages.

5. The CVS Third-Party Complaint is the subject of the motions before the Court. Cardinal moves for summary judgment on CVS's Third- Party Complaint for Declaratory Judgment on two grounds: (1) the Transportation Agreement *fn3 in effect between CVS and Cardinal precludes indemnification or contribution for accidents arising out of CVS's negligence; and (2) indemnification or contribution is expressly prohibited under New Jersey's Workers' Compensation law. CVS filed a cross-motion, seeking summary judgment in their favor on the same two issues, arguing that N.J.S.A. 39:6B-1(a) both supercedes the Transportation Agreement and is not preempted by New Jersey Workers' Compensation law.

6. The Court's original jurisdiction to hear the present case is based on 28 U.S.C. * 1332. This Court will deny Cardinal's motion for summary judgment and grant CVS's motion for summary judgment.

7. New Jersey's Compulsory Motor Vehicle Insurance Law, specifically N.J.S.A. 39:6B-1(a), governs the present matter. N.J.S.A. 39:6B-1(a) requires Cardinal to provide insurance coverage for loss arising in connection with its vehicles, if: (1) the vehicles are registered or principally garaged in New Jersey; and (2) the injury sustained arises out of the vehicle's "use".

8. First, Cardinal owned the tractor that Plaintiff drove to haul merchandise from CVS's distribution center to its various retail outlets. *fn4 It is undisputed that the tractors were principally garaged in New Jersey, satisfying N.J.S.A. 39:6B-1(a) (Thd. Pty. Pl's. Ex. B at 3-4).

9. Secondly, Plaintiff's act of unloading CVS merchandise qualifies as a "use" of a vehicle for the purposes of N.J.S.A. 39:6B- 1(a). One "who is in the process of unloading cargo from the vehicle is, for purposes of omnibus coverage, a user of the vehicle." Motor Club of America Ins. Co. v. Phillips, 330 A.2d 360 (N.J. 1974); see also Pisanechi v. Turner Construction Co., 785 A.2d 50, 55 (N.J. Super. 2001); Parkway Iron and Metal Co. v. New Jersey Mffrs. Ins. Co., 629 A.2d 1352, 1354 (N.J. Super. 1993); Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., Inc., 575 A.2d 416, 419 (N.J. Super. 1990); Bellafronte v. General Motors Corp., 376 A.2d 1294, 1297 (N.J. Super. 1977). *fn5

10. Here, Plaintiff alleges that CVS was negligent in its loading of the vehicles, thus causing his injury when unloading the merchandise (Pl's Comp., * * 14-15, 26-29). Loading and unloading of a vehicle are considered "use" under N.J.S.A. 39:6B-1(a). Cardinal's status as a self-insured for the first $100,000.00 of liability found against it does not remove it from the statutory requirements of N.J.S.A. 39:6B- 1(a). In deciding "whether a self-insurer's coverage obligations [extend to] an additional insured during a `loading and unloading' case," the Ryder/P.I.E. court held that there is, "no distinction between the two forms of insurance coverage - self-insurance and a liability policy - based on N.J.S.A. 39:6B-1." 575 A.2d at 413. Therefore, there is essentially no difference between Protective's responsibility for Plaintiff's claims under N.J.S.A. 39:6B-1 and Cardinal's responsibility. As a self-insured, Cardinal must supply Plaintiff with the same coverage under N.J.S.A. 39:6B-1 that an ordinary liability policy would provide. Id.

11. Turning to the specific issues that Cardinal raises in its motion, Cardinal first argues that the Transportation Agreement precludes any indemnification for accidents arising out of CVS's negligence. The indemnity provision in the Transportation Agreement essentially provides that Cardinal is only required to indemnify CVS against the negligent acts or omissions of Cardinal employees. CVS contends that N.J.S.A. 39:6B-1(a) supercedes the Transportation Agreement and requires that Cardinal provide insurance for users of its vehicles. The Court agrees.

12. The statutory insurance coverage provided by N.J.S.A. 39:6B- 1(a), to which Cardinal is subject, cannot be contracted away: Bellafronte makes clear the broad scope of coverage that an insurer must provide for accidents arising during loading and unloading. Because of statutorily-imposed omnibus requirements, any ...


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