United States District Court, D. New Jersey
August 4, 2005.
BENJAMIN KAMINECKI, DAVID KAMINECKI, STACEY EDELMAN-KAMINECKI, and JOSHUA EDELMAN, Plaintiffs,
SCOTTSDALE INSURANCE COMPANY, Defendant.
The opinion of the court was delivered by: JEROME SIMANDLE, District Judge
This matter comes before the Court upon a motion by Plaintiffs
Benjamin Kaminecki, David Kaminecki, Stacey Edelman-Kaminecki,
and Joshua Edelman ("Kamineckis") to compel the advancement of
defense costs from their insurer, Defendant Scottsdale Insurance
Company. For the reasons discussed herein, the motion will be
denied without prejudice. I. BACKGROUND
A. Procedural History
The instant motion relates to the underlying case of Jackson
v. Kaminecki, No. 02 Civ. 2405 (D.N.J.). In the Jackson case,
Plaintiff Sean Jackson, an employee of the Strand
Corporation,*fn1 was injured while working within the scope
of his employment on August 16, 2000. (Pl. Br. at 1.) Jackson was
an attendant on an amusement park ride called "Chaire Ride"
(a/k/a "Monster Mash Haunted House Ride"), an adult roller
coaster, and fell between two moving cars, severing his leg. (Pl.
Br. at 1.)
On November 19, 2001, Jackson was approved to receive workers'
compensation benefits for the injuries he suffered as a Strand
employee. Jackson, slip op. at 6. Thereafter, on May 14, 2002
Jackson filed suit against the Kamineckis*fn2 and others in
this Court alleging, inter alia, claims of strict liability,
intentional misconduct and negligence. Id. The Kamineckis requested their insurer, Scottsdale Insurance
Co., to provide a defense*fn3 for them in the Jackson
case, but Scottsdale refused. (Pl. Br. at 2.) Scottsdale bases
its refusal to defend the Kamineckis on the grounds that the
insurance policy excludes coverage for "intentional wrong[s]" and
"bodily injury to an employee" which are precisely what Jackson
complains of in the underlying dispute. (See Def. Ex. B.)
Scottsdale further refuses to provide a defense for the
Kamineckis because the insurance company believes there to be
serious material misrepresentations on the Kaminecki's insurance
application. (See Def. Ex. D.) Plaintiff maintains that the
above exclusions are not relevant in the Jackson matter and the
Kamineckis are entitled to past and future defense costs incurred
in litigating the Jackson case. (Pl. Br. at 5-6.)
On March 31, 2004, the Kamineckis filed the pending lawsuit
against Scottsdale Insurance requesting a declaratory judgment as
to Scottdale's duty to defend the Kamineckis in the Jackson
case. [Docket Item 1.] On November 20, 2004, Plaintiffs filed the
instant motion to compel payment of future and previously
incurred defense costs "until such time as the declaratory
judgment action can be resolved on its merits." (Pl. Br. at 7.) II. DISCUSSION
A. Choice of Law
Defendant contends that New Jersey law should be applied to any
disputes arising out of the language of the insurance contract.
(Def. Br. at 6-7.) However, Plaintiff only presents Pennsylvania
law in support of his motion for advancement of defense costs.
(See Pl. Br. at Ex. D.)
As a federal court sitting in diversity, this Court is
obligated to apply the choice of law rules of the forum state
in this case, New Jersey. See Klaxon Co. v. Stentor Elec.
Mfg., 313 U.S. 487 (1941). More importantly, in cases involving
interpretation of liability insurance contracts "the law of the
place of the contract will govern the determination of the rights
and liabilities of the parties under the insurance policy."
State Farm Mutual Auto Insurance Co. v. Simmons' Estate,
84 N.J. 28, 37 (1980) (interpreting choice of laws in the context of
automobile liability contracts). In State Farm, the New Jersey
Supreme Court further held that:
[T]he law of the place of the contract ordinarily
governs the choice of law because this rule will
generally comport with the reasonable expectations of
the parties concerning the principal situs of the
insured risk during the term of the policy and will
furnish needed certainty and consistency in the
selection of the applicable law.
Id. Here, the Plaintiff Kamineckis are the executives of the Strand
Corp., with its principal place of business in Wildwood, New
Jersey. (Compl. at ¶ 3.) Furthermore, the insurance policy was
executed in New Jersey and specifically states: "This insurance
is issued pursuant to the N.J. Surplus Lines Law." (Def. Ex. A.)
Following the explicit language of the contract and the lex
the instant motion will be adjudged
according to New Jersey law.
B. Application of New Jersey Law
Plaintiffs have cited to no New Jersey precedent for their
motion, and New Jersey law is to the contrary. An insurer has a
duty to defend its insureds on any claims brought that are within
the scope of the insurance contract. The duty to defend is
"determined by whether the allegations set forth in the
complainant's pleadings fall within the purview of the policy
language," not based upon the merits of the claims. LCS Inc. v.
Lexington Insurance Co., 371 N.J. Super. 482, 490 (N.J.Super.
Ct. App. Div. 2004.); see Ohio Casualty Insurance Co. v.
Flanagin, 44 N.J. 504, 512 (1965). In cases where "multiple
alternative courses of action are set forth," such as the case
sub judice, "the duty to defend will continue until every
covered claim is eliminated." Id. This problem is resolved by
merely comparing the language of the Complaint to that of the insurance
contract to adjudge whether the allegations "give rise to a claim
which may constitute a risk covered by the policy." Ohio
Casualty, 44 N.J. at 514; see Danek v. Hommer,
28 N.J. Super. 68, 77 (N.J.Super.Ct. App. Div. 1953.)
In the event that an insured believes the insurer is obligated
to provide a defense and the insurer declines responsibility, the
insured has two likely options: (1) following the adjudication of
the claim against the insured, an action may be brought against
the insurance carrier for reimbursement of defense costs or (2)
as here, seek a declaration of the insurer's duty to defend
before the trial against the insured begins. Burd v. Sussex
Mutual Insurance Co., 56 N.J. 383, 391 (1970).
Here, Plaintiffs have elected to file suit against Scottsdale
Insurance to declare liability on the part of the insurer. (See
Compl. at ¶ 15.) Plaintiffs argue that Scottsdale Insurance
should advance the defense costs associated with the litigation
of Jackson prior to a final judgment in the pending declaratory
judgment action. (Pl. Br. at 7.) However, no such relief exists
under New Jersey law. The only remedy now available to the
Kamineckis is to wait until a final judgment has been made
declaring Scottsdale's liability in the underlying dispute;
thereafter, the Kamineckis can request a reimbursement of the
fees already incurred and future defense expenses. See Gerhardt v. Continental Insurance Co., 48 N.J. 291, 300 (1966).
If Plaintiffs believe there to be "no genuine issue as to any
material fact" and that they are "entitled to a judgment as a
matter of law," then the appropriate course of action would be to
file a motion for summary judgment pursuant to Fed.R.Civ.P.
56. Neither party regards the present motion as one for summary
Plaintiff proffers only one non-precedential case, Associated
Electric & Gas Insurance v. Rigas, 2004 WL 838140 (E.D. Pa.
2004), in support of the motion for advancement of defense costs.
(Pl. Br. Ex. D.) As in the present case, the insureds in Rigas
instituted a declaratory judgment action following an insurer's
refusal to defend them in various civil suits. Rigas, 2004 WL
838140 at *1. Although the insurance carrier was ordered to make
payments of defense costs to the insureds, that case is easily
distinguished from the case at hand. In the Rigas case, the
insureds appropriately moved for summary judgment to declare the
liability of the insurance carrier, whereas Plaintiffs here have
not filed such a motion. Id. Short of obtaining summary
judgment, even the Rigas case does not suggest a basis for
obtaining interim relief. CONCLUSION
For the above stated reasons, the Court will deny Plaintiff's
motion for advancement of defense costs without prejudice, and
entertain an appropriate motion for summary judgment if filed.
The accompanying Order will be entered.