The opinion of the court was delivered by: Martini, U.S.D.J.
Presently before the Court are cross-motions for summary judgment by Plaintiff Connecticut Indemnity Company ("Connecticut Indemnity") and Defendants Miguel Carela ("Carela") and Pinnacle Freight Lines, Inc. ("Pinnacle"). The parties seek a declaration regarding coverage under a "non-trucking" automobile liability insurance policy issued by Connecticut Indemnity. There was no oral argument. Fed. R. Civ. P. 78. For the following reasons, Connecticut Indemnity's motion for summary judgment is DENIED and Carela and Pinnacle's motion for summary judgment is GRANTED. *fn1
This declaratory judgment action stems from a motor vehicle accident that occurred on January 31, 2000, on I-87 near the town of New Baltimore, New York. The accident involved a 1995 Freightliner tractor-truck (the "Truck") owned by Carela and leased to Pinnacle, a federally certified motor carrier. While driving the Truck on I-87, Carela struck a car owned and driven by Defendant Sanchez Reddicks. Defendants James A. Barrett Jr. ("Barrett Jr.") and Stephen Gordon ("Gordon") were passengers in the car. At the time of the accident, the Truck was leased to Pinnacle and was hauling a commercial freight trailer in Pinnacle's business.
Carela, Reddicks, Barrett Jr., and Gordon are residents of New York. Pinnacle is registered with the Federal Motor Carrier Administration with a business address in New York. Carela registered the Truck in New York, but garaged it at Pinnacle's yard in New Jersey. At the time of the accident, the Truck was marked "Lease to PFL." "PINNACLF [sic] FREIGHT LINES," "S. KEARNY, NJ."
Two insurance policies covered the Truck. The first policy was a "trucking" policy. This covered the Truck when used for business's purposes. Pinnacle obtained this insurance from Legion Insurance Company ("Legion"). The second policy was a "non-trucking" policy. This covered the Truck when used for non-business purposes. Carela obtained this insurance from Connecticut Indemnity.
It is Connecticut Indemnity's non-trucking policy that is at issue in this case. The policy contained the following exclusion (the "Non-Trucking Exclusion"):
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."
(Jaeger Cert. Exh. C.) The certificate of insurance also required Carela to be permanently leased to a federally certified motor carrier, such as Pinnacle. In this regard, the certificate of insurance specified:
THIS CERTIFICATE OF INSURANCE IS ISSUED BASED ON A WARRANTY BY THE CONTRACTOR THAT HE/SHE IS PERMANENTLY LEASED TO THE GOVERNMENTALLY REGULATED MOTOR CARRIER NAMED ON THIS CERTIFICATE. ALL COVERAGE EXPIRES WHEN THE PERMANENT LEASE HAS BEEN BROKEN, CANCELLED, OR TERMINATED BY EITHER THE CONTRACTOR OR MOTOR CARRIER.
(Jaeger Cert. Exh. B.) The certificate of insurance listed Pinnacle as the governmentally regulated motor carrier. By all accounts, the purpose of this requirement was to ensure the availability of trucking insurance, since federally regulated motor carriers are required to carry such insurance. See 49 U.S.C. § 13906(a)(1); 49 C.F.R. § 387.7(a).
On July 25, 2003, Gordon and Clover M. Barrett, as guardian ad litem for Barrett Jr., filed a personal injury action against Pinnacle and Carela in the Supreme Court of New York, Kings County. Legion assumed the defense obligations of Carela and Pinnacle and settled the case for its $1,000,000.00 policy limit. The Commonwealth Court of Pennsylvania, though, declared Legion insolvent before it ever issued the settlement draft. Because Legion was declared insolvent, the New Jersey Property-Liability Guaranty Association ("PLIGA") assumed the obligations of Legion in this State pursuant to the New Jersey Property Liability Insurance Guaranty Association Act, N.J.S.A. 12:30A-1 to 12:30A-20 (the "Act").
Under the Act, Barrett Jr. and Gordon must exhaust their rights under any other insurance policy before recovering from PLIGA. See N.J.S.A. 17:30A-12b. Expecting that Barrett Jr. and Gordon would look to its non-trucking policy for coverage, Connecticut Indemnity filed the instant declaratory judgment action seeking a determination that it does not owe coverage for the accident. Specifically, Connecticut Indemnity argues that the Non-Trucking Exclusion applies and, therefore, precludes coverage. Furthermore, Connecticut Indemnity argues that it canceled the policy prior to the accident for non-payment of premiums. Carela and Pinnacle filed cross-claims against Connecticut Indemnity seeking a declaration that it owes coverage. This matter is fully briefed and presently before the Court.
Summary judgment is appropriate if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. See Fed. R. Civ. P. 56. Rule 56(e) requires that when a motion for summary judgment is made, the nonmoving party must set forth specific facts showing that there is a genuine issue for trial. See id.; see Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986). The mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment. Only disputes over facts that might affect the outcome of the lawsuit under governing law will preclude the entry of summary judgment. See Anderson, 477 U.S. at 247-48. If the evidence is such that a reasonable fact-finder could find in favor of the nonmoving party, summary judgment should not be granted. See id.; see also Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
The parties first dispute which law applies to this matter. Connecticut Indemnity argues that New Jersey law governs, while Carela and Pinnacle argue that New York law governs. "Before a choice of law question arises, however, there must actually be a conflict between the potentially applicable bodies of law. Where there is no difference between the laws of the forum state and those of the foreign jurisdiction, there is a 'false conflict' and the court need not decide the choice of law issue." Lucker Mfg. v. Home Ins. Co., 23 F.3d 808, 813 (3d Cir. 1994) (citations omitted); see also Zavala . Wal-Mart Stores, Inc., 393 F. Supp. 2d 295, 333 (D.N.J. 2005).
New Jersey and New York law conflict in two important ways that are relevant to this matter. First, the states differ in how they assess the validity of business-use exclusions, such as the Non-Trucking Exclusion. Under New Jersey law, "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." Connecticut Indemnity v. Podeszwa, 392 N.J. Super. 480, 482 (N.J. Super. Ct. App. Div. 2007). Under New York law, however, the business-use exclusion is only valid if it "expressly provide[s] that it is only operative if the lessee [of the truck] has business use liability coverage in effect for the accident in question...." Royal Indem. Co. v. Providence Wash. Ins., 92 N.Y.2d 653, 658 (1998).
Second, New Jersey and New York differ on what constitutes a valid notice of cancellation of an automobile insurance policy. Under New York law, every cancellation notice must include "a statement that proof of financial security is required to be maintained continuously throughout the registration period," along with a "notice ... indicating the punitive effects of failure to maintain continuous proof of financial security...." Veh. & Traf. L. § 313(a). Failure to include this statement deems the notice invalid. Barile v. Kavanaugh, 67 N.Y.2d 392, 399 (1986); Material Damage Adjustment Corp. v. King, 1 A.D.3d 439, 440 (N.Y. App. Div. 2003). New Jersey has no such requirement.See N.J.S.A. §§ 29C-1 to 29C-13.
Because a conflict of laws exists, this Court, sitting in diversity, must apply New Jersey's choice of law rules. Klaxton v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941); McFarland v. Miller, 14 F.3d 912, 917 (3d Cir. 1994). "Under New Jersey's choice of law rules ... the law of the place of contracting applies unless some other state has a 'dominant significant relationship' to the transaction." NL Indus. v. Commercial Union Ins. Co., 65 F.3d 314, 316 (3d Cir. 1995). Therefore, the Court's first task is to determine the place of contracting for the Connecticut Indemnity policy.
The evidence presented by the parties regarding the place of contracting is sparse. From what the Court knows, Carela obtained the non-trucking policy through an insurance broker located in New Jersey called "Cover Me Insurance." The Court does not know, however, where Carela applied for the insurance, or where negotiations for the policy occurred. Such facts are relevant to determining the place of contracting. See id.("If a company from another state uses an insurance broker to negotiate and purchase its insurance policies, then the place of contracting is the place where the broker negotiated the policies." (citing Diamond Shamrock Chems. Co. v. Aetna Cas. & Sur. Co., 609 A.2d 440, 465 (N.J. App. Div. 1992))); Polar Int'l Brokerage Corp. v. Investors Ins. Co. of Am., 967 F. Supp. 135, 141 (D.N.J. 1997) (holding that place of contracting is where insurance agent negotiated the policies); Nat'l Starch & Chem. Corp. v. Great Am. Ins. Cos., 743 F. Supp. 318, 325 (D.N.J. 1990) (examining where the last act occurred to give the contract binding effect).
Regardless, this does not change the Court's analysis. Even if the Court were to assume that the place of contracting occurred in New Jersey, as Connecticut Indemnity contends, the Court must still determine under New Jersey's choice of law rules whether another state (namely, New York) has a "dominant and significant relationship" to this matter. As shown below, the Court finds that it does.
To determine whether New York has a "dominant and significant relationship," New Jersey courts consider the Restatement (Second) of Conflict of Laws §§ 6, 188, and 193 (1988). See Pfizer, Inc. v. Emplrs Ins., 712 A.2d 634, 637-38 (N.J. 1998); Gilbert Spruance Co. v. Pa Mfrs. Ass'n Ins. Co., 629 A.2d 885, 888 (N.J. 1993); State Farm Mut. Auto. Ins. Co. v. Estate of Simmons, 417 A.2d 488, 491-93 (N.J. 1980). The Restatement lists various factors and contacts for courts to consider in determining whether the law of a state other than the place of contracting has the requisite dominant significant relationship. They are:
(a) the needs of the interstate and international systems; (b) the relevant policies of the forum; (c) the relevant policies of other interested states and the relative interests of those states in the determination of the particular issue; (d) the protection of justified expectations; (e) the basic policies underlying the particular field of law; (f) certainty, predictability and uniformity of result; and (g) ease in the determination and application of the law to be applied.
Restatement (Second) of Conflict of Laws § 6(2). Section 188 also lists several "contacts," according to the relative importance, to be considered in this analysis. Gilbert Spruance, 629 A.2d at 888. They are: (1) the place of contracting; (2) the place of negotiation of the contract; (3) the place of performance; (4) the location of the subject matter of the contract; and (5) the domicil, residence, nationality, place of incorporation and place of business of the parties. Restatement (Second) of Conflict of Laws § 188(2).
In addition, § 193 of the Restatement explains that, in the context of casualty insurance contracts, the application of the contacts above and the concerns of § 6 should focus on determining which state "the parties understood to be the principal location of the insured risk during the term of the policy unless with respect to the particular issue, some other state has a more significant relationship ... to the transaction and the parties...." ...