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Reszler v. Travelers Property Casualty Insurance

April 3, 2007

ROBERT C. RESZLER, PLAINTIFF,
v.
TRAVELERS PROPERTY CASUALTY INSURANCE, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Hughes, U.S.M.J.

MEMORANDUM OPINION

This matter is before the Court upon the Motion of Plaintiff Robert C. Reszler ("Plaintiff") to Amend the Complaint. Defendant Travelers Indemnity Company ("Travelers") opposes the motion. In July 2003, Plaintiff was struck head on by a vehicle owned by Amber Beech Farm, Inc. and driven by Holly M. Binder. Amber Beech Farm's State Farm Insurance policy covered the accident and tendered $100,000, the full value of the policy. Travelers, through its insurance brokers Genzler & Smith Associates and Kennel Pak, Inc., provided an excess liability insurance policy to Amber Beech Farm. Plaintiff filed an action for declaratory judgment asserting that the Travelers policy covered the cost of the injuries he suffered in excess of the State Farm policy. On February 8, 2006, Travelers removed the action to this Court based on diversity. On October 23, 2006, Travelers was granted summary judgment when the Court held that Travelers' excess policy did not provide coverage for Plaintiff's underlying claim because the State Farm policy was not listed on the Declarations as required by the Travelers policy.

Plaintiff now moves to assert a claim against Travelers on an errors and omissions theory of liability which in essence would hold Travelers liable to Plaintiff for assuming management of the excess policy and then failing to meet its obligations to properly insure Amber Beech. The Court reviewed the written submissions of the parties and conducted oral argument on April 2, 2007. For the reasons that follow, Plaintiff's Motion to Amend the Complaint is granted.

I. BACKGROUND AND PROCEDURAL HISTORY

This case involves a motor vehicle accident that took place on July 3, 2003 in Hamilton Township, New Jersey. (Slaughter Cert. at ¶ 3). Defendant Holly Binder ("Ms. Binder"), driving a vehicle owned by Amber Beech Farms, crossed over the center-line divider into opposing lanes of traffic and struck Plaintiff head on. Id. As a result, on July 29, 2004, Plaintiff filed a Complaint against Holly M. Binder, Amber Beech Farm, Inc., and several fictitiously pled parties in the Superior Court of New Jersey, Mercer County, alleging that Ms. Binder acted negligently in the operation of the vehicle and that Amber Beech was liable as her employer. (Id. at ¶ 4; Travelers' Opp. Br. at 1).

Prior to the accident, State Farm Mutual Insurance Company had issued an automobile liability policy to Amber Beech Farms, Inc., an entity incorporated and located in Pennsylvania. (Travelers' Opp. Br. at 1). The policy covered the 2000 Ford Ranger pickup truck that was involved in the accident and had liability limits of $100,000.00. Id. Plaintiff asserted that the liability limits of the State Farm policy were insufficient to compensate him for the injuries he suffered in the accident. Id. at 2. As the matter progressed, Plaintiff discovered that Amber Beech Farm had a Commercial Excess Liability Insurance Policy. (Slaughter Cert. at ¶ 5). The excess policy had been issued to Amber Beech through Defendant Kennel Pak, Inc. (Travelers' Opp. Br. at 2). Plaintiff filed a declaratory action on September 8, 2005, in the Superior Court of New Jersey, seeking a Court Order declaring that coverage from the excess policy was applicable to this matter. (Slaughter Cert. at ¶ 6). The declaratory action was then removed to this Court by Travelers, a Connecticut corporation, based on diversity of citizenship. Id.

Travelers filed a Motion for Summary Judgment arguing that the underlying motor vehicle policy was not listed in the schedule to the policy as required for coverage, and therefore, Travelers was not required to provide excess coverage pursuant to the policy. Id. at ¶ 7. While the summary judgment motion was pending, Plaintiff filed a Motion to Amend his Complaint on September 18, 2006 to add Kennel Pak, Inc. and Genzler & Smith Associates, Inc. as defendants, asserting an errors and omissions theory of liability. (See Dkt. no. 06-586, entry no. 20). Kennel Pak and Genzler & Smith Associates, Inc. are Pennsylvania corporations. (Travelers' Opp. Br. at 2). Kennel Pak, a subsidiary of Genzler & Smith Associates, was the insurance broker of the Travelers general liability and excess insurance policies issued to Amber Beech. Id. The Court granted Plaintiff's Motion to Amend on October 16, 2006, and Plaintiff filed an Amended Complaint on October 18, 2006. (See Dkt. no. 06-586, entry no. 23 and 24).

Travelers Motion for Summary Judgment was granted on October 23, 2006, dismissing Plaintiff's claim for declaratory judgment. (See Dkt. no. 06-586, entry no. 28). Subsequently, Kennel Pak, Inc. and Genzler & Smith Associates, Inc. filed an Answer to Plaintiff's Complaint and a Cross-Claim against all Defendants seeking contribution and indemnification on November 30, 2006. (See Dkt. no. 06-586, entry no. 31).

Plaintiff filed the present Motion to Amend the complaint on February 1, 2007. (See Dkt. no. 06-586, entry no. 37). Travelers filed a Brief in opposition to Plaintiff's motion on February 23, 2007. (See Dkt. no. 06-586, entry no. 39). In his motion, Plaintiff seeks to amend the complaint to add Travelers as a party defendant in this matter in an errors and omissions theory of liability.

(Slaughter Cert. at ¶ 2). Plaintiff asserts that Initial Disclosures by Defendants Kennel Pak, Inc. and Genzler & Smith Associates, Inc. reveal that Travelers had assumed service obligations with respect to the excess policy. Id. at ¶ 10. Travelers argues in opposition that the claim Plaintiff proposes to add against Travelers would be futile under Pennsylvania law and therefore, could not withstand a motion to dismiss. (Travelers' Opp. Br. at 3). Plaintiff argues in reply that New Jersey law applies and allows the proposed amendment. (Pl.'s Reply Ltr. Br. at 2).

II. DISCUSSION

Plaintiff seeks leave to amend the complaint to add Travelers as a party defendant in this

matter in an errors and omissions theory of liability. (Slaughter Cert. at ¶ 2). Plaintiff asserts that on December 21, 2006, his counsel was served with Initial Disclosures by Defendants Kennel Pak, Inc. and Genzler & Smith Associates, Inc. which included documents that imply that Travelers took over policy service from Genzler and Smith Associates and Kennel Pak. Id. at ¶ 17. Plaintiff argues that "it is inferable" that Travelers had assumed service obligations with respect to the policy in question and failed to meet its obligations to Plaintiff. (Travelers' Opp. Br. at 3).

Travelers argues in opposition that the claim Plaintiff proposes to add against Travelers could not withstand a motion to dismiss and therefore would be futile. Id. Travelers contends that any claims regarding the provision of coverage advice to Amber Beech must be governed by Pennsylvania law because (1) Kennel Pak, Inc., Genzler & Smith Associates, Inc., and Amber Beech are all Pennsylvania citizens, (2) the Travelers policy was issued in Pennsylvania, and (3) the State Farm auto policy that covered the vehicle driven by Ms. Binder was issued in Pennsylvania and covered a vehicle registered in Pennsylvania. Id. at 5. Travelers argues that "Plaintiff's proposed claim against Travelers is not cognizable under Pennsylvania law." Id.

Plaintiff argues in reply that New Jersey conflict of law standards should be applied since this case and the underlying case were brought in New Jersey under New Jersey law. (Pl.'s Reply Ltr. Br. at 2). Specifically, Plaintiff argues that New Jersey applies the "government interest" test which requires application of the law in the state with the greatest interest in the issues raised, the parties, or the transaction. Id. at 3. Plaintiff further argues that "unlike in Pennsylvania, in New Jersey a person injured by the negligence of an operator of a motor vehicle has the right to initiate a lawsuit against an insurance carrier . . . which has alleged committed an 'errors and omissions' offence that has inured to the detriment of the injured person even though he/she is not named in the insurance contract." Id. at 5. Plaintiff contends that New Jersey has a greater interest in this litigation than Pennsylvania because of New Jersey's strong policy in favor of assuring that its citizens who have been injured in motor vehicle accidents as the result of the negligence of another receive just and adequate compensation for their damages. Id. at 5.

A. Federal Rule of Civil Procedure 15(a)

Federal Rule of Civil Procedure 15 provides that leave to amend a Complaint "shall be freely given when justice so requires." FED. R. CIV. P. 15(a). The decision whether to grant or deny a motion for leave to amend "rests within the sound discretion of the district court." Rolo v. City Investing Co. Liquidating Trust, 155 F.3d 644, 654 (3d Cir. 1998). See Foman v. Davis, 371 U.S. 178, 182 (1962). The Court can deny a motion to amend if (1) there has been undue delay, bad faith, or dilatory motive, (2) if the amendment would be futile, or (3) if there would be prejudice to the other party. Hill v. City of Scranton, 411 F.3d 118, 134 (3d Cir. 2005); Jablonski v. Pan Am. World Airways, Inc., 863 ...


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