The opinion of the court was delivered by: Debevoise, Senior District Judge
This matter concerns an insurance coverage dispute arising out of an accident that occurred at a construction site while workers were unloading a truck. Plaintiffs, The Burlington Insurance Company ("Burlington"), a general liability insurer and Stonebridge, Inc. ("Stonebridge"), a construction company, instituted this suit against Defendant, Northland Insurance Company ("Northland"), an auto insurance provider. Plaintiffs seek: (1) a declaration that Northland owes primary coverage to Stonebridge in connection with Laise v. Stonebridge, Inc., Docket No. MID-L7986-07 (Middlesex County Superior Court) (the "Laise action"); (2) a declaration that Northland owes a defense and indemnification to Stonebridge for the same; and (3) reimbursement of defense costs incurred in defending and settling the Laise matter. Presently before the court are motions for summary judgment filed by both Plaintiffs and Defendant. For the reasons set forth below, Plaintiffs' motion is GRANTED. Defendant's motion is DENIED.
Plaintiff Stonebridge is a construction company, and Plaintiff Burlington is its general liability insurer. Defendant Northland is an auto insurance provider. This matter is an insurance coverage dispute arising out of an unloading accident that occurred at a construction site run by Stonebridge involving a truck insured by Northland.
The underlying facts concerning the accident are largely undisputed. On June 6, 2006, Bruce Laise, a truck driver and Pennsylvania resident, drove a tractor and flatbed trailer from a lot in Milton, Pennsylvania to a construction site in Paramus, New Jersey. (Def. SOF. ¶¶ 1-3). The truck was loaded with steel bar joists, which Laise was assigned to deliver to the site. Id. at ¶ 3. At the site, located at the Garden City Plaza, Stonebridge was performing work under a steel erection subcontract that it had entered with Weir Welding, Inc. ("Weir"). Id.
Upon arrival, a Stonebridge Foreman instructed Laise to park the truck so that it could be unloaded. Id. at ¶ 4. Laise parked the truck where directed, exited the vehicle and began to unstrap the load. Id. at ¶ 5. While Laise was unstrapping the cargo, an ironworker employed by Stonebridge climbed onto the trailer to put "choker slings" through the steel bar joists so that they could be lifted from the trailer bed. (Pl. Ex. 5, 16:24-25). The employee dropped a choker near Laise, who picked it up and handed it up to the employee. Id. at 23:8-16. As the employee bent to retrieve the choker, a wrench dropped out of the employee's tool belt and struck Laise in the head. (Def. SOF. ¶7).
The falling wrench broke Laise's nose and lacerated his face. Id. at ¶ 8. Because of his injuries, Laise was taken by ambulance to Valley Hospital where he was treated by Dr. Tuckman, a plastic surgeon. (Pl. Ex. 13). Due to ongoing problems, Laise later underwent a second surgery related to his injuries on January 25, 2007. (Pl. Ex. 16). Burlington was informed about the incident through a letter from ACE Insurance Company on behalf of its insured, Weir, which sought indemnification from Stonebridge and coverage as an additional insured under the Burlington policy. (Def. SOF. ¶ 10).
On September 18, 2007, Laise filed suit against Stonebridge, alleging that because of the negligence of its employee, he had suffered an open comminuted displaced nasal fracture, deviated nasal fracture, nasal laceration, nasoseptal deformity, hypertrophy of bilateral inferior turbinates, sinusitis, headaches and anosmia. (Pl. Exs. 7,8). Burlington was provided with a copy of the complaint by plaintiff's counsel under cover of letters dated September 25, 2007 and October 3, 2007. (Def. SOF. ¶ 11).
Burlington agreed to defend Stonebridge, and Stonebridge's defense was referred to the Law Offices of John C. Lane on October 30, 2007. (Pl. Ex. 24). While Burlington was aware of the role of the truck in the accident, it did not learn the identity of the truck's owner or insurer until September of 2008. (Pl. Ex. 18, 14:3-8). On October 1, 2008, Burlington's counsel sent a letter to Northland attaching the Laise complaint and Stonebridge answer. The letter also stated that:
Further investigation with the FMCA Motor Carrier website has identified Northland Insurance Company as Kepler Brothers' insurer at the time of the accident. The policy was identified as TF480923, with an effective policy date of September 15, 2005 through January 4, 2007. It is our position that the Northland Insurance policy likely provides primary insurance to this accident under the loading/unloading provisions of its liability insurance policy. We, therefore, demand that Northland Insurance Company immediately provide us with a copy of the policy and indemnify my client, Stonebridge, Inc. in this action. (Pl. Ex. 26).
A week later, on October 8, 2008, a Northland representative, Rick Kalustian, responded to Burlington's letter by email. He replied:
Northland has received your 10/1 claim letter regarding this lawsuit. While we have not yet had an opportunity to retrieve and analyze our insured's policy, I'm writing you at this early juncture to hopefully get a better understanding why you believe such a policy would provide a defense and indemnity to your client Stonebridge. (Pl. Ex. 28).
On January 30, 2009, Stonebridge counsel contacted Northland by telephone, again requesting a copy of the Northland insurance policy so that the "loading/unloading" provisions could be examined. (Pl. Ex. 27). The policy was eventually sent to Stonebridge on February 2, 2009. (Pl. Ex. 30).
On February 3, 2009, the Laise action was submitted to mandatory, non-binding arbitration pursuant to New Jersey Superior Court rules. The arbitration resulted in a finding of 100% liability upon Stonebridge with a damages award of $175,000. (Pl. Ex. 19). On February 18, 2009, Stonebridge counsel contacted Northland again and requested that they take over the defense and indemnification of the Laise case. (Pl. Ex. 27).
What happened next is disputed. The notes from Northland's employee indicate that a letter was sent to Burlington advising them that Northland had been unable to determine if it owed a defense or indemnification to Stonebridge and requesting "arb hearing docs/case docs including depo transcripts." Id. However Stonebridge counsel did not recall receiving any letter, and no copy of such a letter has been offered into evidence. Stonebridge counsel testified at deposition that he spoke to the Northland employee on the telephone and advised her of the results of the arbitration hearing. (Pl. Ex. 18, 62-63). He did not recall and indeed doubted that Northland had requested discovery information or that he had agreed to provide such information to Northland. Id.
On February 24, 2009, the Laise plaintiffs filed a notice of demand for a trial de novo. (Pl. Ex. 20). A month later on May 15, 2009 Burlington wrote again to Northland advising them of the upcoming trial date. The letter also stated:
As you should be aware, TBIC has tendered this matter to you on behalf of our insured given Stonebridge's entitlement to coverage under the above automobile liability policy issued to Kepler Brothers Inc. (Kepler). The only response we have received to date is that the matter is "under review." You have not requested any additional information from us. We again invite Northland Insurance (Northland) to participate in the defense and/or settlement negotiations in this matter. (Pl. Ex. 31).
Northland replied on May 18, 2009. While acknowledging receipt of Burlington's letter, Northland claimed to have "limited information regarding this loss" and further stated that it had been "unable to determine if [it] owe[d] a defense regarding [the] case." (Pl. Ex. 32). Northland also claimed to be waiting for "documents regarding the arbitration proceeding" and requested "all deposition transcripts related to this case." Id. On May 22, 2009, Burlington sent Northland the requested deposition transcripts. (Pl. Ex. 33). One week later, on May 29, 2009, Burlington and Stonebridge filed this action in New Jersey Superior Court.
On June 15, 2009, the day that trial was scheduled to begin, Burlington, on behalf of Stonebridge, settled the Laise action for $325,000. (Pl. Ex. 23). The order of dismissal included a comment that "[a]fter conferencing this matter, reviewing liability and damages issues, Judge Ciuffani recommended settlement at $325,000, which was ultimately agreed to between the parties." Id. Burlington subsequently paid the entire $325,000. (Pl. Ex. 39). In addition, the net defense costs and fees paid by Burlington on behalf of Stonebridge from the date of tender through the filing of a stipulation of dismissal totals $13,337.42. (Pl. Exs. 39, 40, 41).
This case was removed to federal court on diversity grounds on July 1, 2009 pursuant to
28 U.S.C. § 1332(a) and 28 U.S.C. § 1446(b). Plaintiffs claim that Northland owes primary coverage and defense costs relating to the Laise action. Plaintiffs seek a declaratory judgment and reimbursement for the expenses incurred by Burlington in defending and settling the Laise matter. Plaintiffs also seek costs incurred in prosecuting this action.
The Northland policy provides in pertinent part:
We 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".
The Northland 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 of a covered "auto" or any of their "employees", while moving property to or from a covered "auto".
The Northland policy also contains the following exclusions:
This insurance does not apply to any of the ...