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Modern Technologies Group, Inc. v. Twin City Fire Insurance Co.

September 30, 2010

MODERN TECHNOLOGIES GROUP, INC. AND ERIC ALPERT, PLAINTIFFS,
v.
TWIN CITY FIRE INSURANCE CO., DEFENDANTS.



The opinion of the court was delivered by: Hon. Joseph H. Rodriguez, United States District Judge

OPINION

Hon. Joseph H. Rodriguez

Presently before the Court are two separate motions of the parties for summary judgment pursuant to Fed.R.Civ.P. 56. Defendant Twin City Fire Insurance Company ("Twin City") moves for summary judgment [14] as to all of the claims, while Plaintiffs Modern Technologies Group, Inc. ("MTG") and Eric Aplert ("Alpert") move for partial summary judgment [17] on the issue of coverage. Oral argument on the motions was heard on September 21, 2010. For the reasons expressed on the record of that day, and for those that follow, Defendant's motion for summary judgment is granted.

I. Procedural History

MTG and Alpert are insureds under a policy of a professional liability insurance policy (the "policy") issued by Twin City. Plaintiffs manufacture and distribute after-market automobile parts for limousines. Plaintiffs were sued by a former business associate, RNC Systems Inc. ("RNC"), in two separate actions, commonly alleging, inter alia, breach of contract and other commercial torts. Declaration of Sarah Katz ("Katz Decl.") Exs. E and F. The first action, entitled RNC Systems, Inc. v. Lumenythe International Corp., Peter Costigan, MTG and Alpert, was filed on December 21, 2007 in the Superior Court of the State of California, County of Orange. Id., Ex. F. The second action, entitled RNC Systems, Inc. v. Modern Technologies Group and Eric Alpert, was filed on February 26, 2008 in the United States District Court for the District of New Jersey, Camden Vicinage. Id., Ex. E.

Plaintiffs sought coverage under the policy with respect to these two liability actions brought against them in California and New Jersey. Twin City denied coverage solely on the ground of late notice. Plaintiffs initiated the present action seeking a declaration of coverage in the Superior Court of New Jersey, Burlington County against Twin City and Commerce Insurance Services. Defendants removed the matter to this Court on July 10, 2009. Then, Plaintiff filed an Amended Complaint, naming only Twin City as a defendant. Now, both parties move for summary judgment.

II. Background

For the most part, the facts are not in dispute. Instead, the parties disagree over the proper interpretation of the operative insurance policy. During the course of the business relationship between the parties, the original policy was renewed twice to cover a range of time between March 15, 2006 through June 15, 2009. The initial policy covered the time period from March 15, 2006 through June 15, 2007 ("2006-2007 policy" or "Expired Policy"). This policy was renewed and governed the time between June 15, 2007 through June 15, 2008 ("2007-2008 policy" or "Renewal Policy"). The 2007-2008 policy was again renewed for another year, covering the time between June 15, 2008 through June 15, 2009 ("2008-2009 policy" or "Second Renewal Policy"). The parties agree that the 2007-2008 policy governs this action.

Twin City claims that the operative policy is a "claims made" policy that requires strict enforcement of the notice provision of the policy. Here, the claims in California and New Jersey arose during the 2007-2008 policy; this policy expired on June 15, 2008. Twin City contends that because MTG did not report the claims to it until almost 90 days after the applicable policy expired, coverage is not available. But Plaintiff states that it made an attempt to report the claim in August 2008 when Alpert contacted the broker. Ex. A, Alpert Dep. 13:22-14:12. Alpert also telephoned Twin City in September 2008 to report the claims. Id., 14:19-14:25, 35:4-38:4.

Twin City acknowledges in a letter that it received notice of the claims on September 8, 2008. Ex. G, Tortora Dep. According to Twin City, the window to file a claim under the 2007-2008 policy closed on August 15, 2008. The parties agree that the filing of the California claim triggers the notice provision of the policy and that Plaintiffs did not report the claim to Twin City until after that policy expired in September 2008.*fn1

As a result, Twin City argues that its denial of coverage was justified pursuant to Zuckerman v. National Union Fire Insurance Co., 495 A.2d 395, 100 N.J. 304 (1985), which held that the notice provision of a "claims made" policy should be strictly enforced.

Plaintiffs reject Defendant's characterization of the policy as "claims made" and, as a result, argue that Zuckerman is inapplicable. Rather, Plaintiffs argue that because the policy does not provide "claims made" coverage, Twin City must demonstrate that it was actually prejudiced by the late notice to avoid extending coverage for the claims. Plaintiffs liken the applicable policy to the policies at issue in Cooper v. Government Employees Ins. Co., 237 A.2d 870, 51 N.J. 86 (1968) and Resolution Trust Corp. v, Moskowitz, 868 F.Supp. 634 (D.N.J. 1994), which required a demonstration of "appreciable prejudice" where coverage was denied due to untimely notice. Plaintiffs contend that Twin City cannot demonstrate prejudice and, therefore, seek a declaration of coverage for the California and New Jersey claims.

III. Summary Judgment Standard

"Summary judgment is proper if there is no genuine issue of material fact and if, viewing the facts in the light most favorable to the non-moving party, the moving party is entitled to judgment as a matter of law." Pearson v. Component Tech. Corp., 247 F.3d 471, 482 n.1 (3d Cir. 2001) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986)); accord Fed. R. Civ. P. 56 (c). Thus, this Court will enter summary judgment only when "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that ...


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