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Arma v. CVS Pharmacy


January 22, 2004


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


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 contractual attempt to exclude coverage for an additional insured will be held invalid.

Ryder/P.I.E., 575 A.2d at 408; see also Bellafronte, 376 A.2d at 1297. Cardinal's argument that the Transportation Agreement invalidates N.J.S.A. 39:6B-1(a) simply contradicts the New Jersey courts' view on this issue. Accordingly, this Court finds that N.J.S.A. 39:6B-1(a) supercedes the Transportation Agreement between CVS and Cardinal. As Cardinal is statutorily required to provide insurance to users of its vehicles, it is responsible for Plaintiff's claims.

13. Cardinal also argues that New Jersey's Workers' Compensation Act expressly precludes indemnification of CVS for Plaintiff's claims. Cardinal paid Plaintiff workers' compensation wage and medical benefits after both accidents, and it argues that Plaintiff's recovery is limited to these benefits. This Court disagrees with the notion that Plaintiff's workers' compensation recovery erases Cardinal's statutory responsibility under N.J.S.A. 39:6B-1(a).

14. The New Jersey Workers' Compensation Act contains no express language, as Cardinal suggests, preventing an injured employee from receiving both workers' compensation benefits and insurance recovery. In fact, reading such a limitation into N.J.S.A. 39:6B-1(a) would invalidate the specific language that the legislature chose. The precise wording of N.J.S.A. 39:6B-1(a) does not exempt any class of persons from the statute, but rather requires coverage for "any person" injured in connection with a motor vehicle. The tort bar in the Workers' Compensation Act, N.J.S.A. 34:15-8, will protect an employer from tort liability to its employees, not statutory liability as a provider of insurance.

15. The Bellafronte court considered the issue of the New Jersey Workers' Compensation Act as a defense to N.J.S.A. 39:6B-1(a). The court held, "not only does N.J.S.A. 39:6B-1(a) not purport. . .to exempt from coverage victims covered by the Workers' Compensation Act, but it affirmatively requires coverage for any person sustaining injury in a motor vehicle accident." Id. at 1298.

16. Cardinal cannot contract away its insurance responsibilities under N.J.S.A. 39:6B-1(a) or exclude from its coverage injured persons who have already received workers' compensation benefits. Cardinal is not released from its statutory responsibilities; it must provide compensation for Plaintiff as he was injured using a Cardinal vehicle.

And for good cause shown,

IT IS on this 22nd day of January, 2004,

ORDERED THAT Third-Party Defendant's Motion for Summary Judgment is DENIED and Third-Party Plaintiff's Motion for Summary Judgment is GRANTED.

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