On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-10269-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued September 30, 2009
Before Judges Fuentes and Simonelli.
Plaintiff Accident Fund Insurance Company appeals from the December 8, 2008 Law Division order granting summary judgment declaring that coverage existed under a workers' compensation policy for a work-related accident occurring in New Jersey on December 13, 2004. Plaintiff also appeals from the February 6, 2009 order awarding defendants counsel fees and costs pursuant to Rule 4:42-9(6), and other damages. We reverse.
The facts are derived from evidence submitted by the parties in support of, and in opposition to, the summary judgment motion, viewed in a light most favorable to plaintiff. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiff is an insurance company, which provides workers' compensation insurance in numerous states throughout the country. Defendant PML Holdings, Inc. (PML) is a Michigan limited liability corporation and a majority owner of several professional employer organizations (PEOs).*fn1 A PEO acts as an "outside human resources department[,]" it leases employees to its client companies, and is responsible for all of its client companies' payroll, taxes, and employee benefits.
Defendant is also responsible for obtaining workers' compensation insurance for its client companies, including defendant West Valley Restoration Co., Inc. (West), whose business is located in New Jersey. Defendant secured workers' compensation and employer's liability insurance policy WCV 5015744 from plaintiff, which covered thirteen states for the period November 17, 2003 to November 17, 2004, excluding New Jersey (the first policy). The policy provision, "Item 3. Coverage," states, in relevant part, as follows:
A. Workers Compensation Insurance: Part One of the policy applies to the Workers Compensation Law of the states listed here: AZ, AR, IL, ME, MI, MO, MT, NC, OK, RI, TN, TX, VA[.]
C. Other States Insurance: Part Three of the policy applies to the states, if any, listed here: All states other monopolistic states and states designated in Item 3.A. of the Information Page.
The policy provision, "Part Three-Other States Insurance[,]" states, in relevant part, as follows:
PART THREE - OTHER STATES INSURANCE
A. How This Insurance Applies
1. This other states insurance applies only if one or more states are shown in Item 3.C. of the Information Page.
2. If you begin work in any one of those states after the effective date of this policy and are not insured or are not self-insured for such work, all provisions of the policy will apply as though that state were listed in Item 3.A. of the Information Page.
3. We will reimburse you for the benefits required by the workers compensation law of that state if we are not permitted to pay the benefits directly to persons entitled to them.
4. If you have work on the effective date of this policy in any state not listed in Item 3.A. of the Information Page, coverage will not be afforded for that state unless we are notified within thirty days.
The policy also contains a merger clause, which states that "[t]he only agreements relating to this insurance are stated in this policy. The terms of this policy may not be changed or waived except by endorsement issued by us to be part of this policy."
New Jersey was not initially covered in the first policy. It was later added, as indicated in an amended declarations page showing the following change to Item 3:
A. Workers Compensation Insurance: Part One of the policy applies to the Workers Compensation Law of the states listed here: AL, AZ, AR, GA, IL, IN, KS, KY, ME, MI, MN, MS, MO, NV, NJ, NC, OK, RI, SC, SD, TN, TX, VA, WI.
Additionally, Policy Information Page Endorsement WC 89 06 00 B indicates that Item 3.C. was changed to specifically include New Jersey and two other states.
In the summer of 2004, as the expiration of the first policy drew near, plaintiff, defendant and defendant's broker began negotiating coverage for the 2004-2005 policy period. Plaintiff notified defendant and its broker that it no longer desired to be a national carrier and would only provide coverage in ten "core" states, which did not include New Jersey. After further negotiations, plaintiff added six more states, not including ...