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First Mercury Insurance Company v. Cholish Salvage, Inc.

Superior Court of New Jersey, Appellate Division

November 12, 2013

FIRST MERCURY INSURANCE COMPANY, Plaintiff-Appellant,
v.
CHOLISH SALVAGE, INC./TRI STATE RECYCLING, INC. and HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY, Defendants-Respondents, and CHOLISH SALVAGE, INC./TRI STATE RECYCLING INC., Third-Party Plaintiff-Respondent,
v.
TRUE & ASSOCIATES, Third-Party Defendant. PORCHTOWN RECYCLERS, INC., Plaintiff-Respondent,
v.
HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY, N.J. TURNPIKE AUTHORITY AND GARDEN STATE PARKWAY, CHOLISH SALVAGE, INC., GREEN ACRES AUTO RECYCLING CENTER, INC., Defendants-Respondents. STAR INSURANCE COMPANY, Plaintiff/Intervenor-Appellant,
v.
HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY, FIRST MERCURY INSURANCE COMPANY, AND NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Defendants-Respondents.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued October 21, 2013

On appeal from the Superior Court of New Jersey, Law Division, Ocean County, Docket Nos. L-3086-11 and L-1370-11.

Kristin V. Gallagher argued the cause for appellant First Mercury Insurance Company (Carroll, McNulty & Kull, LLC, attorneys; Ms. Gallagher and Jorge L. Amieva, of counsel and on the brief).

Robert J. Morrow argued the cause for appellant Star Insurance Company (Maloof, Lebowitz, Connahan & Oleske, PA, attorneys; Mr. Morrow, on the brief).

Lance J. Kalik argued the cause for respondent Harleysville Insurance Company of New Jersey (Riker, Danzig, Scherer, Hyland & Perretti, LLP, attorneys; Mr. Kalik, of counsel and on the brief; Christian A. Cavallo, on the brief).

Kevin F. Colquhoun argued the cause for respondent Cholish Salvage, Inc./Tri State Recycling, Inc. (Colquhoun & Colquhoun, P.A., attorneys; Mr. Colquhoun, on the brief).

Before Judges Parrillo, Kennedy, and Guadagno.

PER CURIAM

Plaintiff First Mercury Insurance Company appeals from portions of orders entered on April 27, 2012, denying its motion for summary judgment and granting summary judgment to defendant Harleysville Insurance Company. First Mercury also appeals from an order entered on June 26, 2012, awarding counsel fees and costs to defendant Cholish Salvage, Inc., and an order entered on September 28, 2012, denying reconsideration.

Intervening plaintiff Star Insurance Company also appeals from the April 27, 2012 order denying its motion for summary judgment and from the September 28, 2012 order denying reconsideration. We have consolidated these appeals for the purpose of this opinion and affirm all orders.

I.

Cholish is engaged in the business of salvage and recycling, and purchases used cars from junkyards to be resold as scrap metal. Before transporting the cars, Cholish often brings one of its portable car-crushing machines to the junkyards to compress the cars.

The portable car crusher in question is owned by Cholish and was manufactured by Overbuilt, Inc. It is comprised of a flat base with two sidewalls, a back wall, and is equipped with hydraulic crushing plates powered by a diesel engine. The car crusher is not independently mobile. It is fitted with eight wheels and can only be moved by being towed by another vehicle.

The car crusher is registered with the State of New Jersey and bears a license plate number and vehicle identification number. Prior to purchasing this machine, Cholish had received citations for transporting other car crushers on public roads without a license plate. The owner of Cholish, Leonard Cholish sought guidance from the New Jersey Division of Motor Vehicles[1] (DMV), and received a letter dated October 12, 1988, from the DMV stating:

The 1987 Mac Car Crusher does not receive a title or registration as per a phone conversation and inquiry made to Patty in Trenton. The statement of origin acts as a title to this Car Crusher[, ] which is considered as industrial equipment and not a vehicle.

Copies of the letter were placed in all of Cholish's trucks and car crushers. According to Leonard Cholish, the letter was often successful in preventing the police from issuing a citation or when contesting a citation in court. However, because some of Cholish's drivers continued to receive citations, Cholish opted to register the car crushers with the DMV, as it was less costly than to contest the citations.

On June 1, 2008, Cholish transported the car crusher to a junkyard in Bayville, where it was used to compress several cars. A Cholish employee noticed that a hydraulic plate was not functioning properly and arrangements were made to transport the crusher to Cam Co. Hydraulics ("Camco") for inspection. A Camco employee requested that "a couple [of] cars" be left inside the car crusher so that operation of the plates could be observed. After Cholish completed work at the junk yard, Leonard Cholish asked Tony Copeland, a truck driver employed by Porchtown Recyclers, Inc., to transport the car crusher to Camco. Before Copeland left, two small cars were placed inside the machine.

On June 4, 2008, before leaving the junkyard, Copeland failed to lower the hydraulic crushing plate completely. Using a Porchtown truck, Copeland towed the car crusher onto the southbound lane of the Garden State Parkway. When Copeland attempted to pass under the Lacey Road overpass in Lacey Township, the top arm of the car crusher struck the bottom of the overpass, causing the machine to become wedged underneath the overpass. The height of the car crusher with the two cars inside was approximately seventeen feet; the bottom of the overpass was fifteen feet above the roadway.

The overpass was extensively damaged and debris from the collision struck a nearby vehicle. Approximately eighty gallons of hydraulic fluid spilled onto the roadway, requiring environmental cleanup by a hazardous materials unit. The cleanup took several hours and involved eight tow trucks and other heavy equipment.

Copeland was issued two summonses for violating N.J.A.C. 19:9-1.9(b)(2) (operating an oversized vehicle on the Garden State Parkway) and N.J.A.C. 19:9-1.12(d) (discharging debris onto the roadway, which caused damage to property).

On April 19, 2010, the New Jersey Turnpike Authority ("NJTA") and Garden State Parkway filed a complaint against Cholish and other defendants seeking damages for the cost of repairs to the Lacey Road overpass. The NJTA filed an amended complaint that sought $5.6 million in damages. The First Mercury Policy

First Mercury issued a commercial general liability policy to Cholish with limits of $1, 000, 000 for each occurrence and $2, 000, 000 general aggregate. The policy provides coverage as follows:

We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.

The First Mercury policy contains the following relevant exclusion:

This insurance does not apply to:
. . . .
g. Aircraft, Auto or Watercraft
"Bodily injury" or "property damage" arising out of the ownership, maintenance, use or entrustment to others of any aircraft, "auto" or watercraft owned or operated by or rented or loaned to any insured. Use includes operation and ...

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