HANOVER INSURANCE COMPANY v. MI-JACK PRODUCTS, INC.

Filing 66

OPINION re 58 MOTION to Dismiss Third Party Complaint filed by H&M International Transportation inc.. Signed by Chief Judge Jose L. Linares on 10/1/2018. (dam, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

HANOVER INSURANCE as subrogee and
assignee oINORfOLK SOUTHERN and
NORFOLK SOUTHERN RAILWAY
COMPANY,

Civil Action No.: 17-8299 (ILL)

OPINION

Plaintiff,
V.

MI-JACK PRODUCTS, INC. d/b/a Technical
Services International,
Defendant,
MI-JACK PRODUCTS, INC. d/b/a Technical
Services International,
Third-Party Plaintiff,
V.

H&M INTERNATIONAL
TRANSPORTATION INC., et al.,
Third-Party Defendants.

LINARES, Chief District Judge.

This matter comes before the Court by way of a motion by Third Party Defendant H&M
International Transportation, Inc. (“H&M”) to dismiss the Third-Party Complaint of Third-Party
Plaintiff Mi-Jack Products (“Mi-Jack”) pursuant to Federal Rule of Civil Procedure 12(b)(6).
(ECF No. 58). Mi-Jack has submitted opposition, (ECF No. 62), and H&M has submitted a reply
thereto, (ECF No. 65). The Court has read the parties’ submissions and considers this matter
without oral argument in accordance with Federal Rule of Civil Procedure 78. For the reasons set

forth below, the Court denies H&M’s motion to dismiss.
1.

BACKGROUND’

This is a subrogation action arising out of an accident at a railway yard involving a lift
truck operator and third-party defendant, Jorge L. Gomez. (TPC

¶

2). Gornez died when an

intermodal container that he was offloading fell onto the lift truck that he was operating, killing
Gornez and damaging the lift truck. (TPC ¶ 2). Hoist Lifirctck manufactured the lift truck involved
in the accident. (TPC

¶

14). The lift truck was purchased by Norfolk Southern. (Compi.

¶

11).

Mi-Jack, doing business as Technical Services International, and Norfolk Southern entered into an
Equipment Maintenance Agreement under which Mi-Jack agreed to perform maintenance,
inspection, and repair services on the lift truck. (Compl.

JJ

12—17).

At the time of the accident, H&M and Norfolk Southern had entered into an Operating
Agreement wherein H&M performed intermodal transportation services at Croxton Railway Yard,
the site of the accident. (Compi.

¶

18—19). Pursuant to the Operating Agreement, H&M “agreed

to maintain all risk property insurance at replacement costs value on any of Norfolk’s[sic]
Southern’s Intermodal Lift Machines that H&M used.” (Compi.
insurance policy from Hanover Insurance. (Comp!.
this insurance policy. (Compi.

¶ 23).

¶

21). H&M purchased the

The lift truck at issue was covered by

¶ 22—23).

After the accident, Norfolk Southern filed an insurance claim with Hanover Insurance for
the damage to the lift truck. (Cornpl.
Southern. (Compl.

¶ 34).

¶

33). Hanover Insurance paid out $408,100 to Norfolk

Norfolk Southern then assigned Hanover all of its “claims, rights and

The facts stated herein are taken as alleged in Mi-Jack’s Third-Party Complaint, (ECF No. 7 at 9—21 (“TPC”)), and
Plaintiffs Complaint, (ECF No. 1 (“Compl.”)). For purposes of this motion to dismiss, these allegations are
accepted by the Court as true. See Phillips v. Cty. ofAlleghenv, 515 F.3d 224, 228 (3d Cir. 2008) (“The District
Court, in deciding a motion [to dismiss under Rule] 12(b)(6), was required to accept as true all factual allegations in
the complaint and draw all inferences from the facts alleged in the light most favorable to [the plaintiff].”).

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demands against third-persons” related to the damage to the lift truck. (Compi.

¶ 35).

Hanover

Insurance filed this subrogation action against Mi-Jack to recover the money it paid out to Norfolk
Southern. (See generally Compi.). Mi-Jack then filed a Third-Party Complaint against H&M and
others asserting claims for contribution and indemnification. (See generally TPC). Mi-Jack’s
claims against H&M assert that if H&M’s negligence caused damage to the lift truck, H&M would
be contributorily liable for the monetary payments Mi-Jack would have to pay out if it is found
liable for damages. (TPC at 13—14). H&M

now argues

that New

Jersey’s “anti-subrogation

nile” bars Hanover Insurance from asserting a “right of subrogation against its own insured under
the subrogating insurer’s policy,” and thus, Mi-Jack’s TPC fails to state a claim against H&M.
(ECF No. 5$-I at 5).
II.

LEGAL STANDARD

To withstand a motion to dismiss for failure to state a claim, a “complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Ati. Corp. v. Twonthlv, 550 U.S. 544,
570 (2007)). “A claim has facial plausibility when the plaintiff pleads factual content that allows
the court to draw the reasonabLe inference that the defendant is liable for the misconduct alleged.”
Id. at 67$ (citing Twombly, 550 U.S. at 556). “The plausibility standard is not akin to a ‘probability
requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.”
Id. (quoting Twombly, 550 U.S. at 556).
To determine the sufficiency of a complaint under Twomb[v and Iqbal in the Third Circuit,
the Court must take three steps. “First, it must ‘tak[e] note of the elements [the] plaintiff must
plead to state a claim.’ Second, it should identify allegations that, ‘because they are no more than
conclusions, are not entitled to the assumption of truth.’ Finally, ‘[w]hen there are well-pleaded

factual allegations, a court should assume their veracity and then detenuine whether they plausibly
give rise to an entitlement for relief.” Connelly v. Lane Constr. Coip., $09 F.3d 780, 787 (3d Cir.
2016) (quoting Iqbat, 556 U.S. at 675, 679) (citations omitted). “In deciding a Rule 12(b)(6)
motion, a court must consider only the complaint, exhibits attached to the complaint, matters of
public record, as well as undisputedly authentic documents if the complainant’s claims are based
upon these documents.” Mayer v. Belicliick, 605 f.3d 223, 230 (3d Cir. 2010).
III.

ANALYSIS

New Jersey’s anti-subrogation rule “prevents an insurer from asserting a right of
subrogation against its own insured if the defendant is either the inscired, a co-insured, or an
additional insured under the subrogating insurer’s policy.” Gttidcone Mitt. Ins. Co. v. Corn/to, No.
L-69 1-06, 2007 WL 3 170127, at *5 (N.J. Super. Ct. App. Div. Oct. 31. 2007) (quoting 22 [fotmes’

Applerncrn on Insurance

§

141 .2( B )(2) (2d ed. 2003); see also Am.

Fire

and (‘as. C’o.

i’.

Mc,terial

ifandtingSttpply. Inc., No. 06-i545, 2007 WL 1296200, at *2 (D.N.J. Apr. 27, 2007) ([S]ince an

insurance company cannot subrogate against its own insureds, it would he futile to permit their
joinder.”). Mi-Jack agrees with the application of New Jersey’s anti-subrogation rule as a “general
proposition of law,” but argues that the rule does not apply here because Norfolk Southern was
paid out under the insurance policy rather than H&M. (ECF No. 62 at 11).
It is true that the right of subrogation does
of the insured’s claim.” Ani. Reliance Ins. Co.

1’.

not occur

“until the insurer has made payment

K IIoi’nctntan at Mahwah JJ/ Inc.. 337 N.J. Super.

67, 72 (App. Div. 2001). However, “the courts have consistently held that where an insurance

company has paid a loss to one insured under its policy it cannot as suhrogee recover the amount
so paid from a co-insured under said policy even though the latter’s negligence may have caused
said loss.” St. PattI Fire & Marine Ins. Co. v. Murray Plttrnbing & itecttim Coip.. 135 Cal. Rptr.

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I 2t), 126 (Cal. CL App. 1976) (collecting cases). “To allow subrogation under such circumstances
would permit an insurer, in effect, to pass the incidence of the loss, either partially or totally, from
itself to its own insured and thus avoid the coverage which its insured purchased.” Id. H&M is
thus correct that the anti-subrogation rule would require this Court to dismiss Mi-Jack’s TPC.

Hanover Insurance would be subject to any affirmative defenses that Mi-Jack would assert against
H&M if it were the plaintiff, and the addition of H&M as a third-party defendant would only
impact Hanover Insurance’s right to recover from Mi—Jack as the contributory negligence of H&M
would be asserted against Hanover Insurance. See USAA Cas. Ins. Co. v. i1vletro Edison Co.. No.
12-1178, 2013 WL 2403309. at *2 (M.D. Pa. May 31, 2013).
The question though, is whether H&M, by virtue of its contractual obligation to pay for the
insurance policy, is an “insured,” “co—insured,’’ or “additional insured’’ under that policy. As the
Court must make all inferences in favor of the non-moving party, it is not able to ascertain that
l—1&M falls into one of those three categories. Hanover Insurance’s Complaint mentions the policy
by number and states that “Hanover insured the Lift Truck owned by Norfolk Southern through its
insurance policy issued to H&M.” (Coinpl.

¶ 23).

Mi—Jack’s TPC makes no mention of the policy,

nor does H&M in its Answer to the TPC, (ECF No. 34). Furthermore, the policy has not been
attached to any pleading or motion filed in this case, and as Mi—Jack mentions, Hanover has
brought this action solely as the subrogee of Norfolk Southern.

Thus, even the though the

Complaint alleges that the policy was issued to H&M, that allegation, without more, is not enough
for the Court to determine that H&M is an insured under the policy. Accordingly, the Court cannot
determine that the application of the anti—subrogation rule to H&M such that Mi—Jack’s TPC fails
to state a claim would he proper at this juncture.

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____________________

IV.

CONCLUSION

For the aforementioned reasons, H&M’s Motion to Dismiss, (ECF No. 58), is hereby
denied. An appropriate Order accompanies this Opinion.

DATED:

f ffl2O 18
LINARE
JOS
Ch f Judge, United States District Court

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