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Carolina Casualty Insurance Co. v. Travelers Property Casualty Company

United States District Court, D. New Jersey

February 25, 2015

TRAVELERS PROPERTY CASUALTY COMPANY, counter-claimant, third party Plaintiff, Cross-claimant, cross-defendant; ILLINOIS NATIONAL INSURANCE COMPANY, counter-claimant, cross-defendant; LEXINGTON INSURANCE COMPANY, counter-claimant, cross-defendant; OLD REPUBLIC INSURANCE COMPANY, cross-defendant, Defendants,
PENSKE TRUCK LEASING CO., L.P. GARDNER, MASSON, BISHOP & COMPANY, counter-claimant, cross-claimant, cross-defendant; GARDNER M. BISHOP, INC., counter-claimant, cross-claimant, cross-defendant; MARK ALBANESE, counter-claimant, cross-defendant; JOSEPH PUCCIO, counter-claimant, cross-defendant; JOHN KANARD, cross-defendant, Third Party Defendants.


KEVIN McNULTY, District Judge.

This action arose from an accident in which John Kanard, a tractor-trailer driver, was severely injured as a result of the acts of Gardner, Masson, Bishop & Company ("Gardner Bishop"), a general contracting company. Kanard sued Gardner Bishop and ultimately obtained a $5 million dollar settlement. The settlement was paid for by Gardner Bishop's primary liability insurer, Travelers Property Casualty Company ("Travelers"), and excess carrier, Illinois National Insurance Company ("Illinois National"). Thereafter, Carolina Casualty Insurance Corporation ("CCIC") - another potentially liable insurer - brought this action seeking a declaratory judgment that it did not owe coverage to Gardner Bishop in relation to the accident. Travelers, Illinois National, and CCIC each moved for summary judgment on the coverage question.[1] In my opinion dated October 22, 2014 (the "Opinion") (Dkt. No. 106), I held that CCIC did owe coverage and was required to reimburse Illinois National for a portion of the $5 million settlement. My Opinion and Order asked the parties to submit letters addressing any other issue that remained to be decided in order to put the Court in a position to enter final judgment.

Now before the Court are the letters submitted by Travelers (Dkt. Nos. 110, 113) and Illinois National (Dkt. No. 109). Also before the Court is a motion for reconsideration filed by CCIC (Dkt. No. 112), [2] as well as what amounts to a letter brief opposing the submissions of Travelers and Illinois National (Dkt. No. 111). In their letters, Travelers and Illinois National request an award of attorney fees and costs. Illinois National additionally requests prejudgment interest on the amount owed by CCIC. CCIC, in its letter, proffers several reasons why the awards sought by Traveler and Illinois National should be denied in whole or in part. For the reasons set forth below, the relief requested by Travelers and Illinois National is granted and CCIC's motion for reconsideration is denied.


I first address CCIC's motion for reconsideration.[3] CCIC does not challenge the manner in which the Court apportioned liability for the $5 million settlement among the various insurers. Instead, CCIC contends that the Opinion failed to consider certain language in the Travelers policy that is relevant to the allocation of defense costs.

A. The Summary Judgment Opinion

The details of the Opinion are well known to the parties. I briefly summarize a few aspects that are relevant to CCIC's motion for reconsideration.

In the Opinion, I found that CCIC owed coverage to Gardner Bishop as a "user" of the tractor-trailer. I then found that CCIC was obligated to pay $1, 000, 000 - the limit of its policy - to reimburse Illinois National for the costs of the settlement award. All told, I apportioned liability for the settlement award as follows:

To decide each insurer's percentage of liability, I initially set aside the excess coverage and determined the amount owed by each primary insurer. Because there are three insurers at the primary coverage level, I had to consider each policy's "other insurance" clause to determine how the coverage should be allocated among them. Thus I reviewed the Travelers policy's Other Insurance clause, which provided that Travelers' coverage would be "excess over[] [a]ny of the other insurance... [i]f the loss arises out of the maintenance or use of... autos[.]'" (Dkt. No. 89-19, at 31) The loss in this case arose from the "use" of an "auto" as defined. I found, however, that the Travelers policy was a primary-level policy and not a "true" excess policy, because it was not conditioned on the existence of a primary policy. ( See Dkt. No. 106, at 30) In effect, it was "excess" only in the specialized sense of setting priorities among the policies at the primary level. ( See id. at 27-32)

Because the amount of the settlement far exceeded the limits of the three primary policies, it was unnecessary to determine the priority of payment among the primary carriers. All of their limits would be exhausted regardless. That holding applied only to payment of the settlement, however. As to the allocation of defense costs, an issue that was explicitly reserved, I requested additional submissions from the parties.

B. CCIC's Motion for Reconsideration

1. The alleged error

CCIC asserts that the Court's earlier Opinion ignored definitional language in the Travelers policy's Commercial General Liability Coverage Form. CCIC acknowledges that the Opinion's allocation of settlement costs is unaffected. But by not considering this definitional language, CCIC argues, the Court's prior Opinion impliedly, and mistakenly, would render CCIC liable for Travelers' defense costs.

As noted in my prior Opinion, the Other Insurance clause of the Travelers policy deems it to be excess[4] where liability arises from the "use" of an "auto, " which includes the "loading and unloading" of cargo from a truck ( See Dkt. No. 89-19, at 24). CCIC contends, however, that the same policy states elsewhere that "loading and unloading' does not include the movement of property by means of a mechanical device" (Id. at 33-34). The loading and unloading that gave rise to the accident at the heart of this case involved a mechanical device. Therefore, CCIC argues, Gardner Bishop never "use[d]" the tractor-trailer, and the Travelers policy is not "excess" within the meaning of its Other Insurance clause. That designation matters, says CCIC, because as a primary insurer Travelers would be obligated to contribute to the costs of defense pro rata. By contrast, if the policy is deemed excess, then Travelers would have "no duty to defend" its insured (although it did so), and CCIC would be liable to reimburse Travelers for its defense costs. (Dkt. No. 89-19, at 31)

CCIC requests that the Court amend its earlier Opinion to reflect this additional definitional language in the Travelers policy. ( See Dkt. No. 112-1, at 6) Alternatively, CCIC asks the Court to clarify that the Opinion applies only to the allocation of settlement costs, not defense costs. ( See id. at 4)

2. Discussion

CCIC's motion will be denied for two reasons: (a) Considered as a motion for reconsideration, it is faulty because CCIC never fairly brought its current arguments to the Court's attention. More fundamentally, however, the relief requested would not affect the prior Opinion and Order. CCIC's arguments do not alter this Court's allocation of coverage, the subject of the earlier Opinion. They relate only to the allocation of defense costs, an issue explicitly reserved by the Court and made subject to further proceedings. (b) At any rate, CCIC is wrong on the merits. The policy provision on which it relies was removed from the ...

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