JILL S. GIRARD WILLEY, Plaintiff,
DD TRANSPORT; EUGENE GREENE; JOHN DIDOMENICIS; AMERICAN TRANS FREIGHT HOLDING, LLC; ATF TRUCKING, LLC; ATF TRUCKING, INC.; AMERICA'S PEO, INC.; NEW START SHIPPING SERVICE; INTERPOOL, INC.; HAMBURG SÜD NORTH AMERICA, INC.; HAMBURG SUDAMERIKANISCHE DAMPFSCHIFFAHRTS-GESELLSCHAFT EGGERT AND AMSINCK; TRAC LEASE, INC.; INTER STAR NORTH AMERICA; SHANGHAI/HYUNDAI; COLUMBUS LINE, INC.; SHOALHAVEN STARCHES PTY, LTD; MANILDRA MILLILNG CORP.; J. CROTHERS; T. TAYLOR; J. CARRIGAN; J. BURNARD; R. SCARRA; W. KEOOH; R. CASPER; C. KIEFER; R. RICHARDSON; GREENWICH TERMINALS, LLC; ZURICH AMERICAN INSURANCE GROUP; FALCON TRUST COMMERCIAL RISK SPECILISTS; AMF INSURANCE SERVICES, INC.; CAPACITY COVERAGE COMPANY OF NEW JERSEY, INC. AND AMGRO, INC., Defendants. FEDERAL INSURANCE COMPANY, a subrogee of QUICK COURIER SERVICES, INC., Plaintiff,
DD TRANSPORT; JOHN DIDOMENICIS; EUGENE GREENE; NEW START SHIPPING SERVICE; INTERPOOL, INC.; INTER STAR NORTH AMERICA; SHANGHAI/HYNDAI; COLUMBUS LINE, INC.; HAMBURG SÜD NORTH AMERICA, INC.; HAMBURG SUDAMERIKANISCHE DAMPFSCHIFFAHRTS-GESELLSCHAFT EGGERT AND AMSINCK; TRAC LEASE, INC.; SHOALHAVEN STARCHES PTY, LTD; MANILDRA MILLING CORP.; J. CROTHERS; T. TAYLOR; J. CARRIGAN; J. BURNARD; R. SCARRA; W. KEOOH; R. CASPER; C. KIEFER; R. RICHARDSON; GREENWICH TERMINALS, LLC; AMERICAN TRANS FREIGHT HOLDING, LLC; ATF TRUCKING, INC.; ATF TRUCKING, LLC; AMERICA'S PEO, INC.; ZURICH AMERICAN INSURANCE GROUP; FALCON TRUST COMMERCIAL RISK SPECIALISTS; AMF INSURANCE SERVICES, INC.; CAPACITY COVERAGE COMPANY OF NEW JERSEY, INC. and AMGRO, INC., Defendants. EUGENE GREENE, Plaintiff,
THE ESTATE OF BRUCE WILLEY, deceased; O'CONNOR TRUCK LEASING, INC.; and QUICK COURIER, Defendants. HAMBURG SÜD NORTH AMERICA, INC.; HAMBURG SÜD S.A.; INTERPOOL, INC.; and TRAC LEASE, INC.; Third-Party Plaintiffs-Respondents,
ZURICH AMERICAN INSURANCE GROUP; AMF INSURANCE SERVICES, INC.; CAPACITY COVERAGE COMPANY OF NEW JERSEY, INC.; FALCON TRUST COMMERCIAL RISK SPECIALISTS, INC.; and FALCON TRUST GROUP, INC., Third-Party Defendants-Appellants.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 19, 2013
On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-2494-04.
James P. Lisovich argued the cause for appellant Zurich American Insurance Group (Coughlin Duffy LLP; Mr. Lisovicz, of counsel and on the brief; Timothy P. Smith and Joseph C. Amoroso, on the brief).
Stacey Alison Fols argued the cause for respondents Hamburg Sud North America, Inc., Hamburg Sud, S.A., Interpool, Inc. and Trac Lease, Inc. (Montgomery, McCracken, Walker & Rhoads, LLP, attorneys; Ms. Fols, on the brief).
Before Judges Lihotz, Kennedy and Mantineo.
In this appeal, we are asked to review a Law Division grant of summary judgment on insurance coverage in the context of the intermodal transportation industry. The case arises from a tragic motor vehicle accident which occurred on March 17, 2003.
On that date, Eugene Greene, was driving a tractor trailer northbound on the New Jersey Turnpike. Greene was an employee of New Start Shipping Service (New Start), an entity that had leased the tractor. At that time, the tractor was connected to a chassis that was leased and controlled by defendant Hamburg Süd North America (HSNA). Hamburg Süd S.A. (Hamburg) owned the intermodal container that was attached to the chassis.
As Greene was driving northbound, a tire on the chassis blew out and, after pulling briefly into a rest area, Greene once again began driving northbound, when another chassis tire blew out. At this point, Greene was driving the tractor trailer in the right lane at a very slow speed.
George Willey was also driving a tractor trailer northbound on the New Jersey Turnpike. His vehicle came upon Greene's from the rear and crashed into the back of the trailer. Willey's tractor sustained extremely heavy contact damage across its entire front. Willey was partially ejected from the cab and died at the scene from his injuries.
Willey's wife thereafter filed a complaint against New Start, and later amended it to assert claims against HSNA, Hamburg and other entities. HSNA and Hamburg filed a third-party complaint against Zurich American Insurance Group (Zurich), among others, seeking a defense and indemnification. HSNA and Hamburg asserted that New Start was contractually obligated to obtain insurance coverage listing them as additional insureds "for any accidents occurring while New Start had possession of [their] chassis and container." They further asserted that New Start had, in fact, obtained such a policy of insurance from Zurich for the period March 20, 2002, to March 20, 2003. In its answer, Zurich denied coverage and asserted that its insurance policy had been properly cancelled prior to the accident.
HSNA and Hamburg thereafter moved for summary judgment against Zurich, and contended they did not receive notice of any cancellation of the insurance policy pursuant to the terms of Zurich's "Lessor-Additional Insured and Loss Payee" endorsement, which stated, "If we cancel the policy, we will mail notice to the lessor. . . ." Zurich cross-moved for summary judgment, contending that New Start received timely notice of the policy cancellation, and that Zurich had no duty to independently notify HSNA or Hamburg. The motion judge disagreed and granted summary judgment for HSNA and Hamburg on the issue of notice.
On June 6, 2008, the motion judge granted summary judgment to HSNA and Hamburg dismissing the first-party claims against them. HSNA and Hamburg later moved for fees and costs incurred in the litigation and the motion judge referred the issue to a Special Master. On January 6, 2011, the Special Master awarded $321, 998.75 in fees and $40, 914.24 in costs. The motion judge affirmed the Special Master's ruling on June 30, 2011.
This appeal followed.
New Start and HSNA are signatories to the Uniform Intermodal Interchange and Facilities Access Agreement ("UIIA"). The UIIA "is a standard interchange contract developed to promote intermodal productivity and operating efficiencies through the development of uniform industry processes and procedures governing the interchange of intermodal equipment between ocean carriers, railroads, equipment leasing companies and intermodal trucking companies." UIIA, http://www.uiia.org (last visited July 18, 2013).
Under the UIIA, the motor carrier agrees to fully indemnify the equipment provider "against any and all claims, suits, loss, damage or liability for bodily injury, death and/or property damage . . . arising out of or related to the motor carrier's: use or maintenance of the equipment during an interchange period . . . ." Further, the motor carrier agrees to provide "[a] commercial automobile liability policy with a combined single limit of $1, 000, 000 or greater, insuring all Equipment involved in Interchange . . .; said insurance policy shall name the Equipment Provider as an additional insured." The motor carrier must also "have in effect, and attached to its commercial automobile liability policy, a Truckers Uniform Intermodal Interchange Endorsement (UIIE-1)[.]" Evidence of the coverage required by the UIIA must be provided to the Intermodal Association of North America ("IANA") by the insurance company and the IANA must receive thirty days advance notice of any cancellation of coverage.
Here, on March 12, 2003, the Packer Avenue Marine Terminal in Philadelphia interchanged HSNA's chassis to New Start. New Start picked up Hamburg's container on March 14, 2003, at the CSX Rail Terminal in Philadelphia. On March 17, 2003, Greene was dispatched to drive the tractor, chassis and container to Woburn, Massachusetts.
Zurich, as noted earlier, had issued a commercial liability insurance policy to New Start covering the period from March 20, 2002 to March 20, 2003. On May 10, 2002, New Start's broker, AMF Insurance Services, Inc., faxed a "Certificate of Liability Insurance" to "UIIA" which confirmed New Start's insurance under the policy. Under "Description of Operations . . . Special Provisions" the certificate stated: "ALL OPERATIONS OF THE INSURED. ALL COVERAGES ARE IN EFFECT AS LISTED ABOVE. ALL COMPANIES ON ATTACHED LIST ARE ADD'L INSUREDS ON AUTO GENERAL LIABILITY & TRAILER INTERCHANGE. ADDITIONAL INSURED: HSAC LOGISTICS - 465 SOUTH ST - MORRISTOWN N.J. 07960 ALSO ADDITIONAL INSURED ON AUTO GENERAL LIABILITY TRAILER." HSAC Logistics is HSNA's authorized agent in matters pertaining to the UIIA.
The policy did not include a UIIE-1 endorsement. It did, however, have a "Truckers Coverage Form" that provided coverage to owners or providers of trailers in New Start's possession under an equipment interchange agreement. The form named as an insured "[t]he owner or anyone else from whom you hire or borrow a covered 'auto' that is a 'trailer' while the 'trailer' is connected to another covered 'auto' that is a power unit." It further stated that Zurich had the duty to defend any such insured against a suit seeking damages for bodily injury or property damage. Section III of the form specifically addressed trailer interchange coverage and again set forth Zurich's duty to defend insureds against liability claims.
A "Lessor - Additional Insured and Loss Payee Endorsement" attached to the policy included New Start in its schedule, and "Additional Insured (Lessor) AS REQUIRED BY CONTRACT/AGREEMENT." It also stated that "[i]f we cancel the policy, we will mail notice to the lessor in accordance with the Cancellation Common Policy Condition[.]"
After making an initial payment for the policy, New Start entered into a finance agreement with AMGRO, Inc., under which AMGRO would pay the balance of the premium and New Start would repay AMGRO with interest through nine monthly payments. AMGRO was appointed as New Start's attorney-in-fact with authority to cancel the insurance policy if New Start failed to make the scheduled payments.
New Start failed to make its November 21, 2002 payment and on December 17, 2002, AMGRO sent a notice of cancellation to New Start, AMF, and Zurich, the effective date of which was December 31, 2002. On January 7, 2003, Zurich submitted a certificate of cancellation to the Federal Motor Carrier Safety Administration, with an effective date of February 6, 2003. It did not send a notice of cancellation to HSNA or its agents, or to the IANA.
Zurich maintains that HSNA and Hamburg are not covered by its policy because that policy was cancelled prior to the March 17, 2003, accident. Further, it argues that they were not entitled to notification of the cancellation because the policy only required that notice be given to "lessors" and not "additional insureds." Zurich contends that the court erroneously changed the terms of the policy and in doing so, improperly relied on non-policy agreements and unfounded expectations of the parties.
HSNA and Hamburg contend that the endorsement's use of the phrase "Additional Insured (Lessor)" signifies that when the word "lessor" is used in the policy it is interchangeable with "additional insured." They further argue that the UIIA is relevant to the interpretation of the policy because the endorsement specifically incorporates it into the policy by use of the phrase "as required by contract[.]" Finally, they add that, at best, the endorsement is ambiguous and should be read to favor coverage.
In granting summary judgment in favor of HSNA and Hamburg, the motion judge opined, in pertinent part:
IANA, an industry association, has attempted to streamline the course of business by creating an inclusive contract agreement. New Start was a member of IANA, and, therefore, they contractually agreed to provide the requisite insurance under UIIA. Zurich insured New Start in the context of this entire industry. They undertook to provide Hamburg notice of cancellation of the insurance policy issued to New Start based on Hamburg's status under the policy as an additional insured. The schedule of the additional insured endorsement provides that an additional insured includes those that are required by contract. They had to know there were additional insureds not just Hamburg. They didn't notify any.
I've taken into account the flow of commerce and the effect on commerce. If every one of these transactions was reduced to writing a lease and supplied the volume, even with computers the volume would be immense, and I believe that Zurich was well aware ...