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Schoffer Enterprises v. Delos Insurance Co.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


April 8, 2010

SCHOFFER ENTERPRISES, PLAINTIFF-APPELLANT,
v.
DELOS INSURANCE COMPANY F/K/A SIRIUS AMERICAN INSURANCE COMPANY, DEFENDANT-RESPONDENT.

On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-195-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued December 8, 2009

Before Judges Lihotz and Ashrafi.

In this insurance coverage dispute, plaintiff Schoffer Enterprises (Schoffer) appeals a Law Division order entered following cross-motions for summary judgment denying its motion and granting that of defendant Delos Insurance Company f/k/a Sirius American Insurance Company (Delos). At issue is whether injuries suffered by a third-party occurred while loading and unloading a truck and, therefore, are covered under the omnibus vehicle use clause in an insurance policy issued by Delos. In dismissing Schoffer's complaint, the trial judge concluded the injury resulted from the negligent maintenance of property owned by Schoffer and was thus covered under its premises liability policy.

Schoffer raises these issues on appeal:

POINT I

NEW JERSEY SUBSCRIBES TO THE COMPLETE OPERATION DOCTRINE AND ALL THAT IS REQUIRED TO ESTABLISH COVERAGE IS THAT THE ACT OR OMISSION WHICH RESULTED IN THE INJURY WAS NECESSARY TO CARRY OUT THE LOADING OR UNL[O]ADING OPERATION.

POINT II

ALTHOUGH THE ACCIDENT OCCURRED "ON THE PREMISES" OWNED BY SCHOFFER, THE LOADING AND UNLOADING COVERAGE AFFORDED BY DELOS TRUMPS THE PREMISES LIABILITY ISSUE.

We affirm.

The facts are undisputed. On January 9, 2004, Thomas S. Blankenship was employed as a journeyman sheet metal worker with United Heating and Sheet Metal (UHSM). Blankenship and UHSM's owner, David Appolonia, were moving heating, ventilation and air-conditioning components stored on the premises of Schoffer's tenant, Mechanical Supply Company (Mechanical), onto a truck. Mechanical allowed UHSM to store the components on its parking lot when a strong storm prevented their intended installation.

Blankenship was responsible for retrieving boxes of parts, which had been stacked on pallets. Using a pallet jack, he transported each pallet loaded with boxes to UHSM's truck. He then handed each box to Appolonia, who was inside the truck bed. Once emptied, he placed the pallet in a stack along the side of Mechanical's building and retrieved another loaded pallet. After discarding an empty pallet, Blankenship was walking the pallet jack away from the truck when his right foot stepped on a four-foot wide, eight-foot long "hump" in the concrete parking lot. As a result, he lost his balance and fell on the right knee. Though able to complete work that day, Blankenship complained of severe pain in his knee, which required several surgical procedures over the next two years.

Blankenship's personal injury action against Schoffer and Mechanical was settled for $800,000. On January 11, 2008, Schoffer*fn1 filed its complaint in this matter against Appolonia and UHSM, claiming Blankenship's injuries occurred while he was "loading a vehicle owned by (UHSM) and (Appolonia)." Schoffer asserted primary insurance coverage for the accident rested with the carrier insuring UHSM's truck, later determined to be Delos. Schoffer amended its complaint on April 7, 2008, to add Delos and dismiss UHSM and Appolonia. Both parties then cross-moved for summary judgment.

Delos opposed Schoffer's efforts to obtain reimbursement under the "loading and unloading" endorsement of its motor vehicle policy, suggesting it was neither notified to participate nor advised of the negotiations leading to the consent judgment with Blankenship. Likewise, Delos alleged it was not bound by the judgment because it had no opportunity to defend against the underlying claims of liability. Delos also claimed Schoffer lacked standing as the judgment amount was satisfied by Schoffer's general liability carrier, Franklin Mutual Insurance Company; therefore, Schoffer was no longer the real party in interest. Finally, Delos disclaimed liability by asserting Blankenship's injury resulted from a dangerous condition on Schoffer's premises, thereby contesting the substantive contention that Blankenship's accident occurred during the "loading and unloading" process.

In granting summary judgment, the trial court declined to address most of the asserted procedural infirmities, stating only that, since Delos was not part of the negotiations resulting in the settlement with Blankenship, "Schoffer cannot bind Delos by its terms." Nevertheless, the principal basis for the court's determination was the attenuated connection between the cause of Blankenship's injuries and the loading of UHSM's truck. The trial court determined Blankenship's injuries "did not occur while he was using any part of the truck, was in proximity to the truck, or was using any device or instrument related to the loading or unloading of the truck." Rather, the fall resulted from the "negligent maintenance" of the parking lot, which "predated Blankenship's entry upon the premises." Thus, liability under Delos's policy was not triggered.

When reviewing a grant of summary judgment, we employ the same standards used by the motion judge. Atlantic Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006). We first determine whether the moving party has demonstrated there were no genuine disputes as to material facts. R. 4:46-2. We then decide "whether the motion judge's application of the law was correct," giving no deference to the motion judge's conclusions on issues of law. Atlantic Mut. Ins., supra, 387 N.J. Super. at 230-31 (citing Manalapan Realty, L.P. v. Tp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Prudential Prop. and Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998)).

On appeal, Schoffer argues the trial court was mistaken in its analysis of whether Blankenship's injury occurred during use of a vehicle, thereby triggering coverage pursuant to the terms of the motor vehicle liability policy. Schoffer maintains the "complete operation" doctrine applies, asserting "all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading." Drew Chem. Corp. v. American Fore Loyalty Group, 90 N.J. Super. 582, 589 (App. Div. 1966) (quotation omitted). On the other hand, Delos reiterates the trial court's factual determination that Blankenship's injuries were not caused by "any integral part of the overall loading/unloading process" and cites Forsythe v. Teledyne Turner Tube, 209 N.J. Super. 608, 612 (App. Div. 1986), and Wakefern Food Corp. v. General Accident Group, 188 N.J. Super. 77, 84 (App. Div. 1983), in support of its arguments.

"[T]he concept of 'use of a vehicle' includes the acts of loading and unloading the vehicle[.]" Kennedy v. Jefferson Smurfit Co., 147 N.J. 394, 398 (1997). In Kennedy, the Court noted "Maryland Casualty [Co. v. N.J. Mfrs. (Casualty) Insurance Co., 48 N.J. Super. 314 (App. Div.), aff'd, 28 N.J. 17 (1958),] first provided a framework for determining coverage for loading and unloading activities." Id. at 399. "[F]or an accident to be covered by the 'loading and unloading clause' in an automobile-insurance policy, the injury 'must have occurred during the process of loading or unloading the vehicle and be causally connected with the act.'" Ibid. (quoting Maryland Cas., supra, 48 N.J. Super. at 320).

The Kennedy Court next noted that in Drew, this court "extended the concept of causation in loading and unloading cases" to include the more expansive "complete operation" doctrine. Kennedy, supra, 147 N.J. at 399. "In 'complete operation' jurisdictions 'all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading.'" Id. at 399-400 (quoting Drew, supra, 90 N.J. Super. at 589). Accordingly, in New Jersey, "the distinction between preparations for loading and the act of unloading is obliterated." Id. at 400 (citing Drew, supra, 90 N.J. Super. at 587).

In this matter, Blankenship was working with his employer to unload a truck. However, for Delos's vehicle policy to be implicated, the acts of negligence causing Blankenship's injury must themselves be part of the loading and unloading process. Cenno v. W. Va. Paper and Pulp Co., 109 N.J. Super. 41, 45 (App. Div.), certif. denied, 56 N.J. 99 (1970). To satisfy this standard, Schoffer must show "that the act which resulted in the injury was necessary to carry out the loading or unloading." Kennedy, supra, 147 N.J. at 401 (citing Drew, supra, 90 N.J. Super. at 589).

The motion judge determined Blankenship's injury was independent of the loading process. The fall occurred while he traversed Schoffer's parking lot. Thus,

[t]he premises-liability cases deny coverage under the automobile policy for accidents occurring during loading and unloading activities because the accident arose not from the loading or unloading activities, but from the negligent acts of the owner of the premises where the accident occurred, prior to the loading or unloading of the vehicle. [Kennedy, supra, 147 N.J. at 401-02.]

The Supreme Court has recently reaffirmed this distinction. In Penn Nat'l Ins. Co. v. Costa, 198 N.J. 229, 232 (2009), the Court again stated coverage under an automobile policy is allowed for negligence arising from a vehicle's use; but not applicable when injury, which may occur during the unloading process, is nonetheless attributable to other causes. As "[c]overage under an automobile insurance policy is afforded to protect 'against loss resulting from liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of a motor vehicle[,]'" id. at 232 (quoting N.J.S.A. 39:6B-1(a)), Blankenship's injuries "must bear a substantial, and not an incidental, nexus" to the loading of the truck. Id. at 241. We concur with the motion judge's determination that the uneven hump in Schoffer's inadequately maintained parking lot caused Blankenship to lose his balance, fall and injure his knee. Therefore, there was no substantial nexus between the injuries suffered and the use of a motor vehicle. Ibid.

It would be inappropriate to extend coverage under Delos's automobile liability policy in this circumstance, as the negligence is squarely attributable to the property's condition, not the loading and unloading operation. We note the Penn National Court's approval of Wakefern's conclusion that "'[w]hen an accident... is occasioned by negligent maintenance of the premises and the only connection to that event is the fact that the motor vehicle [is] present..., no realistic social or public policy is served by straining to shift coverage.'" Id. at 235 (quoting Wakefern, supra, 188 N.J. Super. at 87).

We have considered Schoffer's remaining arguments and determined they lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.


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