On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5163-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Winkelstein, Gilroy and Chambers.
In this automobile insurance coverage case, defendant Allstate Insurance Company appeals from two orders of January 19, 2007, that:
1) denied its motion for summary judgment; and 2) granted the cross-motion of defendant IFA Insurance Company, determining that Allstate's liability coverage was primary to that of defendants Elrac, Inc., d/b/a Enterprise Rent-A-Car, and its administrative claim services entity, Elco Administrative Services (collectively, Elrac) and IFA. We reverse, determining that Allstate does not owe liability coverage for the accident.
Plaintiff Maleewan Patimetha is the owner of a motor vehicle insured by Allstate. Defendant Penchit Pumchardengatna is the owner of a motor vehicle insured by IFA. Patimetha, Pumchardengatna, and plaintiff Premchit Hu are co-workers. On August 5, 2005, because she was apprehensive that her motor vehicle might break down on a business trip to North Carolina, Patimetha rented a motor vehicle from Elrac. Elrac self-insured the rental vehicle.
On August 6, 2003, Patimetha operated the rental motor vehicle, and Hu and Pumchardengatna were passengers. After driving for several hours, Patimetha became ill, and turned the operation of the motor vehicle over to Pumchardengatna. Pumchardengatna lost control of the motor vehicle, causing injuries to Patimetha and Hu.
On July 22, 2005, Patimetha and Hu filed a personal injury negligence complaint against Pumchardengatna. Because of an insurance coverage dispute among Allstate, IFA and Elrac, plaintiffs sought a declaratory judgment in the same complaint seeking a resolution of the coverage issue.*fn1
On December 5, 2006, Allstate filed a motion for summary judgment, seeking an order declaring that it did not owe coverage to Pumchardengatna because the rental motor vehicle was not an "insured auto" and Pumchardengatna was not an "insured person" under its policy. IFA opposed and cross-moved, seeking a determination that Allstate's coverage was primary, with IFA and Elrac owing excess coverage on a pro rata basis. On January 19, 2007, the trial court entered two orders, supported by an oral decision, denying Allstate's motion and granting IFA's cross-motion.
In deciding the motions, the court found that the rental vehicle was not a "substitute auto" under the Allstate policy because Patimetha's vehicle was not being repaired or serviced at the time of the accident as defined in the policy. Nevertheless, the court determined that Allstate owed liability coverage on a primary basis by applying the initial-permission rule*fn2 against the language of the Allstate policy. The court reasoned that the rental vehicle met the definition of a "non-owned auto" as defined in Allstate's policy, and therefore, not only was Allstate obligated to provide coverage to Patimetha as a permissive user, but also to any person to whom she gave permission to operate the vehicle.
After Allstate's motion for leave to appeal was denied, it settled Patimetha's claim for $50,000 and Hu's claim for $70,000. Allstate now appeals, seeking a reversal of the two January 19, 2007 orders, and a remand for entry of an order directing IFA and Elrac to reimburse it for the amounts paid in the settlements.
On appeal, Allstate argues that: 1) "the trial court erred as a matter of law by applying the initial[-]permission rule [to] find coverage that was not afforded by the terms of the Allstate policy"; and 2) "the trial court's ruling that the Allstate policy must provide primary coverage was erroneous as a matter of law."
A trial court will grant summary judgment to the moving party "if the pleadings, depositions, answers to interrogatories and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact challenged and that the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995). On appeal, "the propriety of the trial court's order is a legal, not a factual, question." Pressler, Current N.J. Court Rules, comment 3.2.1 on R. 2:10-2 (2009). "We employ the same standard that governs trial ...