On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket Nos. L-7065-04 and L-1392-05.
The opinion of the court was delivered by: Baxter, J.S.C. (temporarily assigned).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff, Winkelstein and Baxter.
This appeal requires us to determine whether public policy considerations prevent an insurer of a tractor-truck from excluding from liability coverage all losses sustained by third parties in an accident with the truck while it is being used for business purposes. We conclude that so long as the truck is covered by an additional policy providing coverage for business use, such exclusionary language violates neither the requirements of N.J.S.A. 39:6B-1, nor the public policy of the State. We affirm the grant of summary judgment to Connecticut Indemnity Company.
This matter involves a coverage dispute between plaintiff Connecticut Indemnity Company (Connecticut) and third-party defendant Rutgers Casualty Insurance Company (Rutgers). Rutgers provided liability insurance coverage to Richard and Anne Podeszwa, who were involved in an accident on December 14, 2000 when their vehicle was struck by the tractor-truck owned by Euclides Anico. At the time of the accident, the truck was leased to Allway Corporation and was being driven by Allway's employee Nelson Perez. In accordance with the provisions of the lease requiring the lessee to purchase and maintain liability insurance, Allway purchased a policy of insurance from Security Indemnity Insurance Company (Security). That policy provided Allway with coverage for all liability claims arising while the truck was being used in the business of Allway.
Nine months after the accident, Security was declared insolvent, and the New Jersey Property-Liability Insurance Guaranty Association (PLIGA) assumed responsibility for the defense and any indemnification of Allway, pursuant to the terms of the New Jersey Property Liability Insurance Guaranty Association Act (the Act). N.J.S.A. 17:30A-1 to -20. Pursuant to the terms of the Act, PLIGA required the Podeszwas to exhaust their rights under any other available insurance policies, including filing an uninsured motorist claim (UM) under the UM endorsement of the policy issued to them by Rutgers. N.J.S.A. 17:30A-12.
Connecticut had issued to Anico, the truck's owner, a "non-trucking policy," commonly known as a "bobtail policy." Such policies indemnify commercial truckers from liability when they are "bobtailing," i.e. using the truck without the trailer attached or using the truck for purposes other than commercial or business use. Connecticut's policy provided $1,000,000 of combined single limit liability coverage to all permissive users of the truck, such as Perez. The policy contained the following exclusions:
This insurance policy does not apply to:
1. A covered "auto" while used to carry property in any business.
2. A covered "auto" while used in the business of anyone to whom the "auto" is rented, if the rental agreement requires the lessee to carry primary insurance for liability arising out of the lessee's use of the "auto."
The policy specified, however, that the exclusion for business use of the truck would not apply unless a valid business-use policy is in effect. The policy states: the above exclusions apply only if there is other liability insurance which is valid and collectible, applicable to the covered "auto", which provides the minimum kinds of coverage required by law and which meets the minimum limits specified by the compulsory or financial responsibility law of the jurisdiction where the covered "auto" is being used or the minimum limits specified by any law governing motor carriers of passengers or property, whichever is applicable.
The trial court entered a preliminary order, which no party challenges, specifying that at the time the truck struck the Podeszwa's vehicle, Perez was using the truck in Allway's business, and thus, the accident occurred while the truck was being used for a "trucking or business" purpose. Connecticut, relying on the exclusion in its policy, refused to pay any damages to the Podeszwas, asserting that its policy only covered the truck when it was being used for "non-trucking" purposes, which was not the case at the time the accident occurred.
Accordingly, on September 28, 2004, Connecticut filed a declaratory judgment action against the Podeszwas, Perez, Anico, Allway, Security and PLIGA seeking a declaration that it had no responsibility for payment of any bodily injury or property damage claims arising out of the accident between Perez and the Podeszwas. After the Podeszwas filed a third-party action against their UM carrier Rutgers, the two complaints were consolidated by the Law Division for disposition. In its answer, Rutgers, in addition to denying all allegations against it, raised the affirmative defense of estoppel, claiming that because Connecticut had paid on a property damage claim asserted by the Podeszwas, it should now be estopped from denying coverage on their bodily injury claims. Rutgers also asserted that Connecticut's denial of coverage violated the provisions of N.J.S.A. 39:6B-1 (Omnibus Clause),*fn1 as well as the public policy of this State. Rutgers alleges that insurance policies seeking to exclude coverage for certain types of use violate public policy and are void.
The Podeszwas, Rutgers and Connecticut all filed motions for summary judgment, which were heard by the trial court on May 27, 2005. Judge Waugh, relying on our opinion in Planet Insurance Company v. Anglo American Insurance Company, Ltd., 312 N.J. Super. 233 (App. Div. 1998), ruled in favor of Connecticut. He held that "under these circumstances, the coverage of the non-trucking or bobtail policy is not available. . . . I am satisfied that I am bound by Planet Insurance and . . . the Connecticut Indemnity policy . . . does not afford coverage in this situation." The judge signed an order specifying that the exclusionary language of the Connecticut policy issued to defendant Anico was valid and not in violation of public policy, that Connecticut had no obligation to provide liability coverage to Anico or his permissive user Perez for injuries sustained by the Podeszwas in the December 14, 2000 accident, and that Rutgers was obligated to provide UM coverage to the Podeszwas and to submit to UM arbitration. Rutgers appealed.
We pause briefly to review the federal statutory and regulatory framework governing interstate commercial trucking in order to provide context for our decision. Federal law defines a "motor carrier" as a "person providing commercial motor vehicle transportation for compensation." 49 U.S.C.A. § 13102(14). Pursuant to 49 U.S.C.A. § 31144(a), the Secretary of Transportation is required to promulgate regulations governing the responsibilities of motor carriers engaged in interstate commerce. The Secretary, in turn, delegated the rule-making responsibility to the Federal Motor Carrier Safety Administration (FMCSA), which then promulgated the Federal Motor Carrier Safety Regulations (FMCSR). 49 C.F.R. §§ 350.101 to 399.211. The regulations require that a registered motor carrier such as Allway must provide liability insurance or other proof of "financial responsibility," such as a surety bond, sufficient to pay a final judgment against a driver resulting from the driver's negligence. 49 U.S.C.A. § 13906(a)(1). Here, there is no dispute that the lease between the ...