NATIONAL MANUFACTURING CO., INC., v. CITZENS INSURANCE COMPANY OF AMERICA, et al
OPINION/ORDER denying 62 Motion for Summary Judgment. Signed by Judge Stanley R. Chesler on 4/15/15. (DD, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
NATIONAL MANUFACTURING CO.,
CITIZENS INSURANCE COMPANY OF
AMERICA, et al,
JANED ENTERPRISES, INC.,
Civil Action No. 13-0314 (SRC)
OPINION AND ORDER
CHESLER, District Judge
This matter comes before the Court upon the motion for partial summary judgment filed
by Plaintiff National Manufacturing Co. (“Plaintiff”). Defendant Hanover Insurance Group
(“Defendant”) opposes the motion. The Court has considered the arguments made by the parties
and proceeds to rule without oral argument. Because Plaintiff effectively asks this Court to issue
an advisory opinion, and for the other reasons set forth below, the Court will deny the motion.
This action involves a dispute over insurance coverage. Plaintiff is a company that
fabricates metal medical devices, including battery casings that are used in pacemakers. Janed
Enterprise, Inc. (“Janed”) is a company that manufactures and distributes chemical products,
including a passivation agent that it supplied to Plaintiff. Plaintiff alleges that some of the
passivation agent that Janed supplied to it was contaminated with too much chloride, which
ultimately caused Plaintiff’s customers to complain.
Plaintiff submitted a claim to Defendant, its insurance provider, to recover the value of
the allegedly defective products. Defendant denied Plaintiff’s claim.
Plaintiff initiated this action (“the Insurance Action”) against Defendant in January of
2013, alleging that by denying coverage, Defendant had breached its insurance contract and the
implied covenant of good faith and fair dealing. On March 19, 2013, Defendant filed a Third
Party Complaint against Janed, asserting and preserving its rights of subrogation and
indemnification, and alleging that Janed would be responsible for any damages owed to Plaintiff.
Separately, Plaintiff also sued Janed for allegedly supplying the defective products, and
the two have since reached a provisional settlement agreement (“the Provisional Settlement”).
In February of 2015, Plaintiff moved for partial summary judgment, primarily “seek[ing]
a ruling on the effect of the Provisional Settlement on the Insurance Action[.]” [Docket Entry
62, Document 10, at 6]. In support of that motion, Plaintiff argues that Defendant has no current
or future subrogation rights against Janed because Defendant failed to make any payments on
Plaintiff’s claim for coverage. Plaintiff urges that such a finding is warranted by the absolutewaiver rule -- a legal principle which holds that an insurance provider waives its rights to
subrogation if it fails to make payments under a policy.
Defendant opposes the motion. Among other points argued, Defendant emphasizes that
Plaintiff has improperly sought an advisory opinion from this Court. On the merits of Plaintiff’s
motion, Defendant contends that New Jersey has not adopted the absolute-waiver rule upon
which Plaintiff relies.
A. Legal Standard
Federal Rule of Civil Procedure 56(a) provides that a “court shall grant summary
judgment if the movant shows that there is no genuine issue as to any material fact and the
movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A factual dispute is
genuine if a reasonable jury could return a verdict for the non-movant, and it is material if, under
the substantive law, it would affect the outcome of the suit. Anderson v. Liberty Lobby, 477
U.S. 242, 248 (1986). In considering a motion for summary judgment, a district court “must
view the evidence ‘in the light most favorable to the opposing party.’” Tolan v. Cotton, 134 S.
Ct. 1861, 1866 (2014) (quoting Adickes v. S.H. Kress & Co., 398 U.S. 144, 157 (1970)). The
court may not make credibility determinations or engage in any weighing of the evidence.
Anderson, 477 U.S. at 255.
The showing required to establish that there is no genuine issue of material fact depends
on whether the moving party bears the burden of proof at trial. On claims for which the moving
party does not bear the burden of proof at trial, the movant must point out to the district court
“that there is an absence of evidence to support the nonmoving party’s case.” Celotex, 477 U.S.
at 325. In contrast, “[w]hen the moving party has the burden of proof at trial, that party must
show affirmatively the absence of a genuine issue of material fact: it must show that, on all the
essential elements of its case on which it bears the burden of proof at trial, no reasonable jury
could find for the non-moving party.” In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003)
(quoting United States v. Four Parcels of Real Property, 941 F.2d 1428, 1438 (11th Cir. 1991)).
Once the moving party has satisfied its initial burden, the party opposing the motion must
establish the existence of a genuine issue as to a material fact. Jersey Cent. Power & Light Co.
v. Lacey Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). “A nonmoving party has created a genuine
issue of material fact if it has provided sufficient evidence to allow a jury to find in its favor at
trial.” Gleason v. Norwest Mortg., Inc., 243 F.3d 130, 138 (3d Cir. 2001), overruled on other
grounds by Ray Haluch Gravel Co. v. Cent. Pension Fund of the Int’l Union of Operating Eng’rs
and Participating Emp’rs, 134 S. Ct. 773 (2014). However, the party opposing the motion for
summary judgment cannot rest on mere allegations; instead, it must present actual evidence that
creates a genuine issue as to a material fact for trial. Anderson, 477 U.S. at 248; see also Schoch
v. First Fid. Bancorporation, 912 F.2d 654, 657 (3d Cir. 1990) (holding that “unsupported
allegations in [a] memorandum and pleadings are insufficient to repel summary judgment”).
B. Factors Weighing Against Judgment
The Court declines to grant summary judgment in Plaintiff’s favor. The Court reaches
that decision in light of the rule against advisory opinions, the existence of material factual
disputes, and because Plaintiff asks this Court to weigh in on a novel issue of state law.
First, the United States Supreme Court has observed that “the oldest and most consistent
thread in the federal law of justiciability is that the federal courts will not give advisory
opinions.” Flast v. Cohen, 392 U.S. 83, 96 (1968). In order for a federal court to render
judgment, the issue before it
must be definite and concrete, touching the legal relations of parties
having adverse legal interests. It must be a real and substantial
controversy admitting of specific relief through a decree of a
conclusive character, as distinguished from an opinion advising
what the law would be upon a hypothetical state of facts.
[N. Carolina v. Rice, 404 U.S. 244, 246 (1971) (internal citation and
quotation marks omitted)].
Here, the instant motion improperly seeks an advisory opinion from this Court. Plaintiff
has in essence moved for a judgment setting forth what the parties’ rights would be if Plaintiff
and Janed indeed executed their provisional settlement. Specifically, Plaintiff appears to seek a
judgment holding: that Defendant has no current or future subrogation rights against Janed; that
Plaintiff may seek additional damages from Defendant as is necessary for Plaintiff to be made
whole; that the provisional settlement agreement regarding the allocation between insured and
uninsured portions of loss will be binding; and that the action shall proceed to determine whether
Defendant owes damages to Plaintiff for having denied it coverage. Rather than seeking
judgment on the legal claims that it has brought against Defendant in this action, Plaintiff asks
the Court for a green-light to move forward in its settlement with Janed, and for an assurance that
the agreement will lead to favorable circumstances for its signatories. See Docket Entry 62,
Document 10, Page 5 (Plaintiff asserts that it wants “summary judgment seeking to allow the
settlement with Janed . . . but preserving [its] claims against Defendants). That is not the role of
this Court. See Rice, 404 U.S. at 246.
Next, critically, Plaintiff’s motion appears to contravene Rule 56(a)’s requirement that
summary judgment be issued only if no disputes of material fact exist. Plaintiff has asked the
Court to endorse Plaintiff’s and Janed’s allocations of covered-versus-uncovered losses, which
implicates disputes between Plaintiff and Defendant, and which would require factual
development in order to be resolved.
Finally, rendering judgment at this time would be improper for an additional reason. To
advance its motion, Plaintiff relies primarily on an absolute-waiver rule that is recognized in
other jurisdictions, but which has not yet been authoritatively addressed in New Jersey. See
Nucci v. Am. Ins. Co., No. A-0147-13T1, 2014 WL 6977767, at *3 (N.J. App. Div. Dec. 11,
2014) (declining to decide whether to adopt the absolute-waiver rule, and observing that the
issue is “of first impression in New Jersey” which the state “has not addressed[.]”). Plaintiff
alternatively cites nonbinding authority from other jurisdictions, see Bunge Corp. v. London &
Overseas Insurance Co., 394 F.2d 496, 497 (2d Cir. 1968), or cases that are readily
distinguishable from the instant dispute, see Transportes Ferreos de Venezuela II CA v. NKK
Corp., No. 96-cv-4016, 1999 WL 33232347 (D.N.J. Mar. 5, 1999) (action involving insured
tortfeasor seeking defense and indemnification from its provider).
When possible, United States District Courts sitting in diversity should not wade into the
waters of creating new state law. See generally Erie R. Co. v. Tompkins, 304 U.S. 64, 78 (1938)
(“Congress has no power to declare substantive rules of common law applicable in a state . . . .
And no clause in the Constitution purports to confer such a power upon the federal courts.”);
Makariw v. Rinard, 336 F.2d 333, 334 (3d Cir. 1964) (holding that when federal court in
diversity addresses an issue of first impression in the state, the court must “consider such
approach to the problem as may be indicated by the [state] cases in the general field[.]”); see also
Neff v. Flagstar Bank, 520 F. App’x 323, 329 (6th Cir. 2013) (citing principle that “federal
courts sitting in diversity should avoid declaring a new rule of state law if the case can otherwise
be properly decided.”). This Court declines Plaintiff’s invitation to needlessly settle a question
of state law which New Jersey courts have not yet resolved.
For the reasons above, the Court will deny Plaintiff’s motion. Therefore,
IT IS on this 15th day of April, 2015,
ORDERED that Plaintiff’s motion for partial summary judgment [docket entry 62] be
and hereby is DENIED.
s/ Stanley R. Chesler
STANLEY R. CHESLER
United States District Judge
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