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Lising v. New Jersey Manufacturers Insurance Co.


August 26, 2010


On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Middlesex County, Docket No. L-7906-07.

Per curiam.


Argued February 8, 2010

Before Judges Rodríguez, Reisner and Yannotti.

The issue presented on this appeal stems from a declaratory judgment action involving an insurer's obligation to provide coverage to additional insureds in a "loading and unloading case" pursuant to the omnibus automobile-insurance provision. Specifically, whether the negligent loading of goods overseas prior to a shipping container being attached to the insured's vehicle arises out of the "use of the motor vehicle." We hold that it does and affirm the trial court's decision.

These are the facts relevant to this appeal. Earl Tito Lising, Jr. (decedent), an M&M International (M&M) employee, was killed on March 30, 2005, while unloading crates of steel tubing from a shipping container. It is undisputed that the container remained sealed until its delivery to M&M's place of business in Edison.

M&M, which is located in Edison, purchased steel tubing from Tesima, a South Korean company. Tesima purchased wooden crates from Daegu, a South Korean company, to ship the steel tubing. Tesima contracted with Korea Express International Company (KEIC), a South Korean company, to transmit the steel tubing overseas to the New Jersey Inter Rail terminal (NJIRT), located in Jersey City. KEIC contracted with Hanjin Shipping, a South Korean company, to provide a shipping container to Tesima at Daegu's place of business.

Prior to the container leaving Daegu's place of business, a Korean truck driver loaded the container with the crates. The container was sealed in the presence of a Tesima representative. Hanjin shipped the container on its vessel from Pusan, South Korea to Long Beach, California. KEIC hired Korea Express U.S., Inc. (Korea Express) as its freight forwarding agent to ship the container by rail to NJIRT. M&M hired Niban Express as its freight forwarding agent to clear the container through United States Customs and to hire Port of New York Express (PONYE), a trucking company, to transport the container from NJIRT to Edison. Following its arrival at NJIRT, the sealed Hanjin container was placed on a chassis by NJIRT personnel and released to PONYE for transportation to M&M. The container was attached to the PONYE vehicle at the time of the accident.

New Jersey Manufacturers (NJM) provided PONYE with a trucker insurance policy, which contained an omnibus provision providing coverage for "use" of the insured vehicles. Specifically, the NJM policy provides that it "will pay all sums an insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto." "Trailers" constitute covered autos under the policy. The policy defines "trailer" as including "semitrailer or dollie used to convert a semi-trailer into a trailer. But for Trailer Interchange coverage only, trailer also includes a container." The policy contains an "Intermodal Interchange Uniform Endorsement Form UIIE-1."

The policy defines "insured" as follows:


The following are insureds:

a. You for any covered auto.

b. Anyone else while using with your permission a covered auto you own, hire or borrow except:

(4) Anyone other than your employees, partners (if you are a partnership), members (if you are a limited liability company), a lessee or borrower or any of their employees, while moving property to or from a covered auto.

Plaintiff Elaine Lising, the Administratrix ad Prosequendum and Administratrix of decedent's estate, sued on behalf of the Estate and herself. The underlying wrongful death action joined as defendants all entities involved in the transporting of the container from South Korea to Edison. Plaintiff alleged that the crates were negligently stacked inside the container when it was loaded, and that this negligence constituted the proximate cause of decedent's death.

Daegu wrote to NJM claiming that it was an additional insured pursuant to PONYE's policy due to its involvement in the "loading" of the container. The other entities named in plaintiff's wrongful death complaint contended that they were also covered as additional insureds because plaintiff's claims arose out of the negligent "loading" of the insured vehicle in South Korea. NJM declined additional insured coverage.

Plaintiff then filed a declaratory judgment action asserting that Tesima, Daegu, KECI and Korea Express were additional insureds under the NJM policy issued to PONYE. Plaintiff's direct claim against NJM was dismissed for lack of standing. Thereafter, Tesima and Daegu filed the present declaratory action against NJM.*fn1

NJM moved for summary judgment, seeking a declaration that Tesima and Daegu were not additional insureds under the NJM policy. Tesima and Daegu cross-moved for summary judgment. Judge Phillip Lewis Paley denied NJM's summary judgment motion and entered summary judgment in favor of Daegu and Tesima. NJM filed this appeal.

New Jersey's compulsory motor vehicle insurance law requires insurers of registered vehicles to provide coverage for losses "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." N.J.S.A. 39:6B-1; see also N.J.S.A. 39:6A-3. We have interpreted "use" to impose an obligation to provide omnibus liability coverage to all persons who participate in the "loading and unloading" of the named insured's vehicle.

Bellafronte v. Gen. Motors Corp., 151 N.J. Super. 377, 381-83 (App. Div.), certif. denied, 75 N.J. 533 (1977). This broad construction of mandatory "use" coverage is necessary "to effectuate the overriding legislative policy of assuring financial protection for the innocent victims of motor vehicle accidents." Id. at 382.

This requirement, however, is not intended to be extended to insure all defendants against all claims arising from any accident that is related to loading or unloading regardless of causation. Pisaneschi v. Turner Constr. Co., 345 N.J. Super. 336, 343 (App. Div. 2001). Instead, the requirement is only "intended to protect the named insured and others who, in the pick-up or delivery process, are actually using the motor vehicle and its contents during the 'complete operation'" of the vehicle. Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., Inc., 119 N.J. 402, 409 (1990) (quoting Wakefern Food Corp. v. Gen. Accident Grp., 188 N.J. Super. 77, 86 (App. Div. 1983)).

Pursuant to New Jersey's "complete operation" doctrine, "loading and unloading" insurance "covers the entire process involved in the movement of goods, from the moment they are given into the [named] insured's possession until they are turned over at the place of destination to the party to whom delivery is made." Pisaneschi, supra, 345 N.J. Super. at 344-45 (alterations in original). Any accident occurring during and arising out of the process of loading or unloading the insured vehicle is covered. Cenno v. W.V. Paper & Pulp Co., 109 N.J. Super. 41, 46-47 (App. Div.), certif. denied, 56 N.J. 99 (1970). Further, the distinctions between unloading and delivery and between loading and preparatory acts are not considered. Id. at 47.

To determine whether a defendant's claim is covered by the omnibus provision, "[t]he pertinent inquiry is whether the acts of negligence charged to defendants were part of the overall loading or unloading operation so that, in the commission of the negligent acts charged, defendants can be said to have been using the vehicle and thereby became additional insureds under the policy." Kennedy v. Jefferson Smurfit Co., 147 N.J. 394, 400 (1997). Consequently, to qualify as additional insured, a defendant must demonstrate: (1) its alleged act or omission constituted an integral part of the loading or unloading of insured's vehicle, Kennedy, supra, 147 N.J. at 400-01; Cenno, supra, 109 N.J. Super. at 45; and (2) plaintiff's injuries occurred during the process of loading or unloading that vehicle and was causally connected with defendant's alleged negligent act, Kennedy, supra, 147 N.J. at 399; Md. Cas. Co. v. N.J. Mfrs. Cas. Ins. Co., 48 N.J. Super. 314, 320 (App. Div.), aff'd, 28 N.J. 17 (1958).

Here, Judge Paley based his decision on the fact that loading of the container was completed in South Korea. The judge noted that the container was insured under the NJM policy once it was attached to the insured vehicle. Tesima and Daegu therefore qualified as additional insureds because the loading of the container was an "integral part" of the "complete operation."

Applying the appropriate appellate standard of review, which is the same as in the motion court, see Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998), we affirm the grant of summary judgment in favor of Daegu and Tesima. We reject NJM's argument that the activities of Tesima and Daegu in placing the goods into the container did not constitute "loading" of the insured vehicle. NJM insured the container and chassis once it became attached to the insured PONYE vehicle. See Killeen Trucking, Inc. v. Great Am. Surplus Lines Ins., 211 N.J. Super. 712, 716-17 (App. Div. 1986). Once a container is coupled with a chassis, it constitutes a trailer and will be covered by motor vehicle insurance. Ibid. The policy here unambiguously afforded coverage for a trailer that was used by the insured.

Thus, the NJM policy covered the "complete operation" of the loading and unloading of the trailer when it was attached to the insured vehicle.

We also reject NJM's argument that the activities of Tesima and Daegu were too attenuated. The stacking of the wooden crates containing the metal tubing constituted an "integral part of the loading" of the insured vehicle. See Kennedy, supra, 147 N.J. at 401. The stacking of the crates was "necessary" to complete the process of loading. Id. at 399-400. Further, it was undisputed that decedent's injuries occurred during the process of unloading. Because the fatal injury was causally connected to the negligence of Tesima and Daegu in stacking the crates, coverage is afforded.

NJM further argues that the loading of goods into an intermodal shipping container for international transportation was an act unrelated to the loading of the insured's vehicle. NJM sets forth four reasons. First, NJM argues that if we find that the activities of Tesima and Daegu constituted the "use" of the insured's vehicle, then any contact with the goods by an employee of the shipping or rail companies would constitute "use" of the insured's vehicle. Second, the use of an intermodal shipping container was not causally related to the transportation by the insured's vehicle. Third, the contracts of Tesima and Daegu were limited to delivering the goods to NJIRT and the packing of the container therefore was not in preparation for delivery to the insured vehicle. Fourth, PONYE's responsibilities were limited to transporting a sealed container. We disagree.

NJM's first argument misconstrues when the policy covering the insured vehicle affords coverage for loading and unloading. As mentioned, the shipping container does not constitute an insured auto until it is connected to the insured's vehicle. See Killeen Trucking, supra, 211 N.J. Super. at 716-17. Consequently, if an accident happens prior to the shipping container attaching to the insured vehicle, the NJM policy will not afford coverage. Only after an accident occurs as a result of the unloading of the container, will the policy cover negligent acts in loading if such acts are causally related to the injury sustained. See Kennedy, supra, 147 N.J. at 399.

Next, whether or not Tesima and Daegu loaded the intermodal container with the contemplation that it would be eventually attached to the insured vehicle is irrelevant. The pertinent inquiry is whether the activities were integral to complete loading and unloading. See Kennedy, supra, 147 N.J. at 400-01. Third, it is unreasonable to argue that the stacking of the crates in the container was unrelated to the complete operation of the insured. This conduct was "necessary" to complete the loading and unloading of the container that was subsequently insured under the NJM policy.

Finally, case law reflects that the loading and unloading doctrine pertains to the movement of goods and/or cargo. See Kennedy, supra, 147 N.J. Super. at 396 (loading constituted placing cardboard into trailer); Cenno, supra, 109 N.J. Super. at 44 (unloading constituted removing bale from trailer). The doctrine is not limited to the loading and unloading of the container itself. Consequently, in attaching the container to the insured vehicle, the insured assumed responsibility for the complete operation, that is the loading and unloading of the goods packed in the container.

Further, as NJM points out, the case law involves traditional scenarios involving only one mode of transportation. See Kennedy, supra, at 396; Pisaneschi, supra, 345 N.J. Super. at 339-40. However, in this instance and in the context of international shipping, there will be multiple methods of transportation before the container carrying cargo will be attached to the insured vehicle. Requiring that the insured vehicle be "involved" with the container at the time it is loaded will narrow the coverage afforded by the omnibus statute and conflict with the legislative policy.

NJM also contends that "any use of a vehicle must be with permission of the named insured before additional insured coverage is triggered." NJM argues that this requirement is consistent with the New Jersey omnibus statute. We disagree.

The obligation to provide coverage for loading and unloading is created by statute and cannot be limited by contract. Ryder/P.I.E., supra, 119 N.J. at 407. The Supreme Court has recognized that "a policy exclusion may not override statutory mandate to provide insurance coverage and the attempt to do so in a loading and unloading accident is void." Potenzone v. Annin Flag Co., 191 N.J. 147, 155 (2007).

Thus, requiring a person involved in loading or unloading an insured vehicle to first obtain permission runs counter to the broad scope of coverage that an insurer must provide for accidents arising out of the loading and unloading of the insured vehicle. Bellafronte, supra, 151 N.J. Super. at 382. Such a requirement would be contractual. This contractual requirement therefore cannot override the broad coverage of the omnibus statute. Pontenzone, supra, 191 N.J. at 155.


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