STATE NATIONAL INSURANCE COMPANY v. THE COUNTY OF CAMDEN

Filing 439

OPINION. Signed by Judge Noel L. Hillman on 6/14/2012. (dmr)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
STATE NATIONAL INSURANCE
COMPANY,
Plaintiff,
v.
THE COUNTY OF CAMDEN,
Defendants.
THE COUNTY OF CAMDEN,
Counterclaimant and
Third-Party Plaintiff,
v.
STATE NATIONAL INSURANCE
COMPANY,
Counterclaim-Defendant
and
NICHOLAS M. ANDERSON,
Third-Party Defendant,
and
SCIBAL ASSOCIATES, INC.,
Third-Party Defendant and
Third-Party Counterclaimant.
THE INSURANCE COMPANY OF THE
STATE OF PENNSYLVANIA,
Intervening Plaintiff,
v.
THE COUNTY OF CAMDEN and SCIBAL
ASSOCIATES,
Defendants.
APPEARANCES:
ROBERT J. MORROW
HUNTON & WILLIAMS LLP
200 PARK AVENUE
NEW YORK, NY 10166
WALTER J. ANDREWS
MICHAEL S. LEVINE
HUNTON & WILLIAMS LLP

CIV. NO. 08-5128(NLH)(AMD)

OPINION

1751 PINNACLE DRIVE
SUITE 1700
MCLEAN, VA 22102
On behalf of State National Insurance Company
WILLIAM M. TAMBUSSI
JOSEPH T. CARNEY
WILLIAM F. COOK
BROWN & CONNERY, LLP
360 HADDON AVENUE
P.O. BOX 539
WESTMONT, NJ 08108
On behalf of the County of Camden
MARK D. SHERIDAN
PATTON BOGGS LLP
ONE RIVERFRONT PLAZA
NEWARK, NJ 07102
On behalf of The Insurance Company of the State of
Pennsylvania
ALAN J. BARATZ
WEINER LESNIAK
629 PARSIPPANY ROAD
POST OFFICE BOX 438
PARSIPPANY , NJ 07054-0438
On behalf of Scibal Associates, Inc.
HILLMAN, District Judge
This matter concerns the determination of which entity is
liable to pay for a multi-million dollar state court jury verdict
in favor of a plaintiff who sued the County of Camden, New Jersey
for injuries he sustained when he drove off the road and into a
guardrail owned and maintained by the County.

Presently before the

Court is the motion of Scibal Associates, Inc. for summary judgment
in its favor on the claims against it lodged by the Insurance
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Company of the State of Pennsylvania.1

For the reasons expressed

below, Scibal’s motion will be granted.
BACKGROUND
Because numerous Opinions have been issued in this case, and
those decisions detail the underlying facts and legal issues, the
Court will not restate them again here, other than to briefly list
the relevant pending claims, which all primarily hinge on the issue
of “notice” of the state court lawsuit filed against the County:

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Also pending is the motion of State National to strike
certain statements in ICSOP’s brief in opposition to Scibal’s
motion for summary judgment. State National argues that ICSOP’s
description of the State National policy as a “primary” policy
instead of an “excess” policy must be stricken from the record
because the Court has already found that State National acted as
an “excess” insurer to the County. The Court does not agree.
At a hearing to address the County’s motion for emergent
relief to compel State National to defend the County at state
court post-trial motions, the Court found in that context the
“likelihood that [the State National policy] is not a primary
policy, but an excess policy.” (Docket No. 61 at 34, Feb. 13,
2009.) In making that finding, the Court, however, did not issue
a final decision of law as to the nature of the State National
policy. Indeed, in the Court’s December 10, 2009 Opinion, the
Court noted, “State National classifies itself as an excess
insurer to the County. (See Compl. ¶ 20.) The County classifies
State National as a primary insurer. (See Answer ¶ 20; Opp Br.
at 20.) This is an unresolved issue.” (Docket No. 194 at 10
n.5.)
ICSOP’s classification of the State National policy as
“primary” in its brief in opposition to Scibal’s motion for
summary judgment is not relevant to the resolution of Scibal’s
motion, and ICSOP’s view of State National’s policy does not make
it the law of the case. In its briefs, ICSOP may express its
point of view on an issue, even if it is ultimately unavailing.
The Court does not find its characterization of the State
National policy to be “immaterial, impertinent [and] scandalous
matter,” See Fed. R. Civ. P. 12(f), and the Court will therefore
not strike it. An appropriate Order will be entered.
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(1) State National Insurance Company’s (“State National”)
declaratory judgment action against the County of Camden, seeking a
declaration that it does not owe coverage to the County for the
state court Anderson lawsuit under an excess liability insurance
contract; (2) an intervening third-party complaint against State
National, the County, and Scibal, filed by the Insurance Company of
the State of Pennsylvania (“ICSOP”), which also provided an
insurance policy to the County, seeking, among other things, a
declaration that it does not owe insurance coverage to the County;
(3) the County’s counterclaim against State National demanding,
among other things, coverage under the insurance policy, and the
County’s third-party complaint against Scibal for breach of its
duties as the County’s claims administrator pursuant to their
Professional Services Agreement (“PSA”); and (4) Scibal’s
counterclaim against the County.
The current motion for summary judgment filed by Scibal seeks
to resolve ICSOP’s claim against it.

ICSOP contends that it does

not owe coverage to the County under the ICSOP policy because the
County failed to provide it with timely notice of the Anderson
lawsuit as required by the policy terms.

In the event, however,

that ICSOP is found to have coverage obligations to the County
under the policy, ICSOP seeks a declaration that it should be
indemnified by, and receive total contribution from, Scibal,
because Scibal failed to notify ICSOP about the lawsuit as required

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by the PSA contract between Scibal and the County.

Scibal has

moved for judgment as a matter of law in its favor, arguing that
ICSOP’s claim against it fails because Scibal has no contractual
relationship with ICSOP, and it otherwise has no duty to ICSOP to
cause it to be liable for contribution or indemnification.

ICSOP

counters that Scibal’s motion is premature because, in denying
ICSOP’s motion for summary judgment in December 2009, the Court
found that discovery was necessary to determine what agency
relationships may have existed, what duties were created as a
result, and who may be responsible for any obligations breached,
and that the County’s claim against ICSOP should be resolved first
before ICSOP’s claim against Scibal is decided.

DISCUSSION
A.

Jurisdiction

This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds $75,000.
B.

Summary Judgment Standard

Summary judgment is appropriate where the Court is satisfied
that the materials in the record, including depositions, documents,
electronically stored information, affidavits or declarations,
stipulations, admissions, or interrogatory answers, demonstrate
that there is no genuine issue as to any material fact and that the
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moving party is entitled to a judgment as a matter of law.

Celotex

Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed. R. Civ. P. 56(a).
An issue is “genuine” if it is supported by evidence such that
a reasonable jury could return a verdict in the nonmoving party’s
favor.

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A fact is “material” if, under the governing substantive law, a
dispute about the fact might affect the outcome of the suit.

Id.

In considering a motion for summary judgment, a district court may
not make credibility determinations or engage in any weighing of
the evidence; instead, the non-moving party's evidence “is to be
believed and all justifiable inferences are to be drawn in his
favor.”

Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d

Cir. 2004)(quoting Anderson, 477 U.S. at 255).
Initially, the moving party has the burden of demonstrating
the absence of a genuine issue of material fact.
Catrett, 477 U.S. 317, 323 (1986).

Celotex Corp. v.

Once the moving party has met

this burden, the nonmoving party must identify, by affidavits or
otherwise, specific facts showing that there is a genuine issue for
trial.

Id.

Thus, to withstand a properly supported motion for

summary judgment, the nonmoving party must identify specific facts
and affirmative evidence that contradict those offered by the
moving party.

Anderson, 477 U.S. at 256-57.

A party opposing

summary judgment must do more than just rest upon mere allegations,
general denials, or vague statements.

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Saldana v. Kmart Corp., 260

F.3d 228, 232 (3d Cir. 2001).
C.

Analysis

As set forth in prior Opinions in this matter, the basic
premise of the case is this:

State National and ICSOP disclaim

coverage to the County under their insurance policies because they
claim the County did not properly notify them about the Anderson
lawsuit.

The County disputes the insurance companies’ positions

about the lack of proper notice, and it demands coverage.

The

County also separately claims that Scibal breached their PSA by
failing to properly notify State National and ICSOP about the
Anderson lawsuit.
It is Scibal’s PSA with the County, and the County’s breach of
contract claim against Scibal, that gives rise to ICSOP’s claim
against Scibal.

ICSOP claims that if it is required to provide

coverage to the County under their insurance policy, Scibal must
ultimately pay that bill because of Scibal’s failure to fulfill its
obligations to the County under the PSA.

Scibal counters that the

County did not inform Scibal about the existence of the ICSOP
policy until after the Anderson verdict, and that it therefore
cannot be held liable for any notice failure and breach of the PSA.
Scibal also contends that it has no duty--sounding in contract or
tort--with ICSOP that would make it liable to ICSOP.
The Court finds that for the same reasons expressed in the
Court’s prior Opinions dismissing Scibal’s claims against

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Meadowbrook (Docket No. 174, October 13, 2009) and Commerce (Docket
No. 382, December 17, 2010), ICSOP’s claim against Scibal fails as
a matter of law.
Under their PSA, Scibal had certain contractual obligations to
the County regarding the reporting of lawsuits filed against the
County to the County’s insurers.

Earlier in this case, Scibal

attempted to maintain claims against other entities (Meadowbrook,
which is State National’s claims administrator, and Commerce, which
is the broker that procured for the County the insurance policy
from ICSOP) on a derivative basis for their conduct should it be
found that Scibal breached the PSA (Scibal claimed that Meadowbrook
negligently failed to exercise the proper degree of care in
administering the State National policy after Scibal notified it of
the Anderson accident in June 2005, and Scibal claimed that
Commerce promised to the County that it would inform Scibal that it
procured the ICSOP policy, but that Commerce failed to do so).
Scibal could not maintain its claims against these entities,
however, because they had no duty to Scibal to perform in a certain
way--they did not have any contracts with Scibal, and they did not
have any joint liability sounding in tort.

(See Docket No. 174 at

11-14, citing N.J.S.A. 2A:53A-2, -3; Longport Ocean Plaza
Condominium, Inc. v. Robert Cato & Associates, Inc., 2002 WL
2013925, *2 (E.D. Pa. 2002) (analyzing New Jersey law and stating
that “[g]iven the rather straightforward language of the statute,

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it is not surprising that courts dismiss contribution claims when
the party against whom the claim is asserted may not, as a matter
of law, be held liable as a joint tortfeasor. . . .

As the term

‘joint tortfeasors’ and the language of the statute indicate, both
the party against whom a claim for contribution is asserted as well
as the party asserting the claim must be tortfeasors”); Adler's
Quality Bakery, Inc. v. Gaseteria, Inc., 159 A.2d 97, 108 (N.J.
1960) (“‘A person who, without personal fault, has become subject
to tort liability for the unauthorized and wrongful conduct of
another, is entitled to indemnity from the other for expenditures
properly made in the discharge of such liability.’”); Docket No.
382 at 10-11, 13, citing Siddons v. Cook, 887 A.2d 689, 696 (N.J.
Super. Ct. App. Div. 2005) (explaining that a negligence claim
requires a plaintiff to establish a duty owed to plaintiff by
defendant, a breach of that duty, and an injury caused by
defendant’s breach); Cherry Hill Manor Associates v. Faugno, 861
A.2d 123, 128 (N.J. 2004) (explaining that it “is well settled that
the true test for joint tortfeasor contribution is joint liability
and not joint, common or concurrent negligence”); Adler's Quality
Bakery, Inc. v. Gaseteria, Inc., 159 A.2d 97, 110 (N.J. 1960)
(explaining that the right of indemnity “is a right which enures to
a person who, without active fault on his own part, has been
compelled, by reason of some legal obligation, to pay damages
occasioned by the initial negligence of another, and for which he

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himself is only secondarily liable”)).
The same holds true for ICSOP’s derivative claim against
Scibal.

First, Scibal was not contractually obligated to ICSOP to

conduct itself in any particular way with ICSOP.

Second, there are

no claims by the County against Scibal or ICSOP for the same
negligence that would cause them to potentially be joint
tortfeasors.

Third, there are no claims that would cause ICSOP to

become responsible for Scibal’s wrongdoings that would require
Scibal to indemnify ICSOP.

Even if it is found that the County did

not breach the ICSOP policy, there is no legal basis to hold Scibal
responsible for paying what ICSOP owes to the County under that
policy.
ICSOP argues that the resolution of Scibal’s motion now is
premature because the Court has previously intimated that there
might be a special relationship between ICSOP and Scibal, and
discovery is necessary to sort out all the duties and relationships
between the parties.

It also argues that a finding in Scibal’s

favor on this motion will effectively resolve ICSOP’s claim against
the County in ICSOP’s favor, contrary to the interest of the
County, which is not involved in the briefing of Scibal’s motion.
Neither of these arguments constrains the Court from issuing a
decision on Scibal’s motion.

Relatively early in this case, in

December 2009, the Court noted,
Despite evidence already in the record concerning the
County’s failure to notify ICSOP directly of the Anderson
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claim, and the apparent prejudice ICSOP suffered as a
result, the obligations and duties of primary and excess
insurers (or first-level excess and second-level excess
insurers) show that there may be more to this case than
the County’s failure to comply with the duty under the
excess insurance policy to notify ICSOP of the Anderson
lawsuit. Moreover, the record is incomplete with regard
to Scibal’s communications with representatives of the
relevant carriers and the relationship between these
entities. This discovery is important before any final
determinations may be made about what agency
relationships may have existed; what duties were created
as a result; and who may be responsible for any
obligations breached.
(Docket No. 194 at 12-13.)
Since that time, the case has progressed, Opinions have been
issued, and discovery has been conducted.

No evidence has been

presented here, however, to show that ICSOP and Scibal have any
sort of relationship to cause Scibal to be liable for claims
between ICSOP and the other parties to the case.

Just because the

Court declined to grant summary judgment over two years ago for one
reason does not preclude the Court from granting summary judgment
now for another reason.
Additionally, the dismissal of ICSOP’s claim against Scibal
does not resolve ICSOP’s claim against the County or the County’s
claim against Scibal.

Whether it is found that the County breached

the ICSOP policy and ICSOP does not have to provide coverage to the
County, or that the County did not breach the ICSOP policy and
ICSOP must provide coverage to the County, the County may still
maintain its claim against Scibal that Scibal breached the PSA.
To the extent that the County claims that Scibal had a special
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relationship with ICSOP that would prove proper notice of the
Anderson lawsuit to ICSOP,2 the County may present evidence of such
a relationship and explain how that evidence supports its position
relative to the ICSOP and Scibal claims.

The Court will consider

such evidence in that context at that time.

However, when

addressing the instant summary judgment motion filed by Scibal
solely on ICSOP’s claim against it, no evidence has been produced
to suggest the viability of ICSOP’s claim against Scibal.
Consequently, summary judgment must be entered in Scibal’s
favor on ICSOP’s claim against it.

An appropriate Order will be

entered.

Date: June 14, 2012

s/ Noel L. Hillman

At Camden, New Jersey

NOEL L. HILLMAN, U.S.D.J.

2

The County filed a letter with the Court regarding Scibal’s
motion for summary judgment, and stated that it takes no position
on Scibal’s motion, other than to disagree with the factual
representations and arguments asserted in the motions as they
relate to the County. (See Docket No. 425.)
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