CAROLINA CASUALTY INSURANCE COMPANY v. LIBERTY MUTUAL FIRE INSURANCE COMPANY
Filing
78
OPINION. Signed by Judge William J. Martini on 10/17/22. (gh, )
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UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAROLINA CASUALTY INSURANCE
COMPANY,
Plaintiff,
v.
Civ. No. 2:18-cv-04813 (WJM)
OPINION
LIBERTY MUTUAL FIRE INSURANCE
COMPANY,
Defendant.
WILLIAM J. MARTINI, U.S.D.J.
This is a declaratory judgment action between insurers. Carolina Casualty Insurance
Company (“CCIC” or “Plaintiff”) seeks reimbursement from Liberty Mutual Fire Insurance
Company (“Liberty” or “Defendant”) for a settlement reached between CCIC and its insured,
Allegheny Plant Services (“APS”), following a judgment in excess of CCIC’s policy limits.
Liberty has moved for summary judgment and CCIC has cross moved for summary judgment.
ECF Nos. 64, 66. Having reviewed the parties’ submissions, the Court decides the motions
without oral argument. See Fed. R. Civ. P. 78(b); L. Civ. R. 78.1(b). For the reasons set forth
below, CCIC’s motion is DENIED and Liberty’s motion is GRANTED.
I.
FACTUAL BACKGROUND
On January 18, 2007, APS employee Robert Whitmore was hauling goods in a tractortrailer on behalf of Rand-Whitney Container Newtown LLC (“Rand-Whitney”) in Maywood,
New Jersey. Plaintiff’s Statement of Material Facts (“Pl.’s SMF”) ¶¶ 4, 6; Pl.’s Ex. E.1
Pursuant to a 2003 agreement between APS and Rand-Whitney (the “Transportation
Agreement”), the tractor-trailer that Whitmore was operating was leased by Rand-Whitney
from Ryder Truck Rental, Inc. (“Ryder”). Defendant’s Statement of Material Facts (“Def.’s
SMF”) ¶ 8; Def.’s Ex. C at 2, ¶ 11. While driving the tractor-trailer (the “Ryder Vehicle”)
east on Essex Street, Whitmore attempted to turn left at an intersection and onto the entrance
ramp for Route 17. Pl.’s Ex. E.
1
Defendant attempts to dispute the fact that Whitmore was hauling goods on Rand-Whitney’s behalf at the time of the
accident, see Defendant’s Response to Pl.’s SMF ¶ 6, but admits to this very fact in its own Statement of Material facts,
see Defendant’s Statement of Material Facts ¶ 4. As such, the Court will accept this fact as undisputed.
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John Kozlik, a Yellow Corporation2 truck driver in the course of his employment,
waved Whitmore into the intersection. Def.’s SMF ¶ 5. Upon making the left turn, Whitmore
collided into an automobile traveling westbound on Essex Street (the “Accident”). Pl.’s Ex.
E. The automobile was occupied by the operator, Robert J. Curley (“Curley”), and his
passenger, Louis Capurso (“Capurso”). Def.’s SMF ¶ 4.
A. Relevant Insurance Policies
At the time of the Accident, APS was insured by CICC under a commercial
transportation insurance policy (“CCIC Policy”). Pl.’s SMF ¶ 1. The CCIC Policy provided
commercial automobile liability coverage in the amount of $1,000,000 per occurrence. Id.
Likewise, Rand-Whitney was insured by Liberty under a business auto policy at the time of
the Accident (“Liberty Policy”). Pl.’s SMF ¶ 2. On October 29, 2007, Rand-Whitney
provided a telephone report of the Accident to Liberty. Pl.’s Ex. T. Liberty’s record of the
telephone report lists the claimant as Robert Curley. Id.
B. Previous Lawsuits
1. The Capurso Action
On or about December 19, 2008, Capurso commenced a lawsuit (the “Capurso
Action”) in the Superior Court of New Jersey asserting negligence claims against Whitmore,
APS, Rand-Whitney, Robert Curley, and fictitious parties. Pl.’s Ex. M; Pl.’s SMF ¶ 22.
Prior to the commencement of the lawsuit, the record reflects that Capurso’s attorney
also contacted Ryder about the Accident in February 2007, but Ryder replied that Capurso
would need to pursue his claim with Liberty directly since Rand-Whitney elected to provide
their own liability insurance. Pl.’s Ex. G. Liberty was ultimately contacted but told CICC in
December 2007 that they were “closing [their] file because the claim should be handled by
Carolina Casualty per [their] insured” and that “Claimant’s attorney was directed to Liberty
incorrectly by Ryder.” Pl.’s Ex. N. In addition to sending the paperwork they received for
Capurso’s claim to CICC, they also let CCIC know that they had “been told that [Curley had]
a bodily claim too.” Pl.’s Ex. N.
Accordingly, after the Capurso Action was filed, Liberty sent a tender letter to CICC,
who in turn accepted the tender in March 2009 and confirmed that CICC would defend RandWhitney, Whitmore, and APS. Pl.’s Exs. O, V. Specifically, CCIC noted that they “instructed
defense council [sic] to answer [on Rand-Whitney’s] behalf and handle their defense in this
matter” and that an answer on Rand-Whitney’s behalf had already been filed. Pl.’s Ex. O.
Ultimately, CCIC settled the Capurso Action and secured a release for Rand-Whitney and the
other defendants. Def.’s SMF ¶ 12. After paying to settle the Capurso Action and pay Curley
2
The parties agree that the record refers to Kozlik’s employer by several names, including Yellow Corporation, Yellow
Transportation, and Yellow Freight. Def.’s SMF ¶ 5. The name of Kozlik’s employer is not material to this litigation.
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for property damage to his automobile, the CICC Policy was reduced to a balance of
$894,681.82. Def.’s Ex. N ¶ 5. On or around April 7, 2009, Liberty closed its file for the
Capurso Action for a second time. Def.’s Resp. to Pl.’s SMF ¶ 39.
2. The Curley Action
On or about September 29, 2008, Curley commenced a personal injury lawsuit (the
“Curley Action”) against APS, Whitmore, and Kozlik in the Superior Court of New Jersey.
Pl.’s SMF ¶ 25; Def.’s Ex. L. Neither Rand-Whitney nor Kozlik’s employer were named as
defendants. Def.’s SMF ¶¶ 13, 34. CCIC retained counsel to represent APS in the Curley
Action. Pl.’s SMF ¶ 26. The case proceeded to trial and on October 4, 2012, the jury awarded
a verdict of $1,400,000.00 ($1,567,844.00 with interest) to Curley. Pl.’s SMF ¶ 28. 85% of
the liability was apportioned to APS and Whitmore and the remaining 15% of liability was
apportioned to Kozlik. Def.’s SMF ¶ 15; Def.’s Ex. L.
On January 7, 2013, the superior court entered a final judgment on the verdict against
Whitmore in the amount of $894,681.82, against APS in the amount of $1,224,000.00 plus
interest, and against Kozlik in the amount of $216,000.00 plus interest. Def.’s Ex. L. CCIC
subsequently paid the remainder of the CCIC Policy—$894,682.82—towards the judgment.
Pl.’s SMF ¶ 31; Def.’s Ex. L. On April 16, 2013, the court entered an Amended Order of
Judgment stating that because APS was found to be greater than 60% responsible for the
Accident, APS was liable for the full amount of the verdict, including interest and costs, under
N.J.S.A. 2A:15-5.3. Pl.’s SMF ¶ 32; Def.’s Ex. L.3 Following CCIC’s payment of the
remainder of its policy, the balance remaining on the judgment totaled $673,162.21 (“Excess
Judgment”). Pl.’s SMF ¶ 42. APS paid the Excess Judgment. Def.’s SMF ¶ 22, Def.’s Ex.
F at 32, ¶ 224.
3. The APS Action
On November 8, 2013, APS filed a lawsuit against CCIC (the “APS Action”) in the
U.S. District Court for the Western District of Pennsylvania regarding CCIC’s management
of the Curley Action and resulting Excess Judgment. Def.’s SMF ¶ 19; Def.’s Ex. F. The
case, which was ultimately transferred to this District, asserted claims of breach of fiduciary
duty, breach of contract, and bad faith in violation of 42 Pa. § C.S. 8371. Def.’s SMF ¶ 19;
Def.’s Ex. F at L0457-L0463. Neither Rand-Whitney nor Liberty were named as a defendant.
Id. at L0424.
On or about March 29, 2017, while the APS Action was ongoing, CCIC contacted
Liberty for a copy of the Liberty Policy to examine whether excess coverage from Liberty
would be available “for the benefit of [APS] and [Whitmore].” Def.’s Ex. H at L0005. CCIC
informed Liberty of the Excess Judgment from the Curley Action and the pending APS
3
Because Kozlik’s employer was not named in the suit and Kozlik failed to notify them, it was held post-trial that
Kozlik’s employer had no duty to indemnify him. Def.’s Ex. H at L0158.
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Action. Id. On August 9, 2017, Liberty disclaimed coverage, though they stated that “[e]ven
if any coverage would have been available to APS or Whitmore assuming timely notice, then,
. . . the coverage would be excess.” Def.’s Ex. I at L0550. In response to Liberty’s disclaimer
of coverage, CCIC’s counsel asked Liberty on September 20, 2017 to re-evaluate their
coverage position and invited them to a global mediation in the APS Action on September 25,
2017. Def.’s Ex. J at L0559. Liberty replied to CICC the same day, reiterating its prior
coverage position and declining to attend the mediation. Def.’s Ex. J at L0653. In its letter,
Liberty noted that “Allegheny Plant Services, Inc. ha[s] never requested coverage in the
Curley matter from Liberty Mutual.” Id. Consequently, APS’s counsel emailed Liberty on
September 22, 2017 to ask for Liberty’s “participat[ion] in [the September 25th] mediation in
order to facilitate a settlement and [t]o extinguish [Liberty’s] risk of future litigation and
costs.” Def.’s Ex. K at L0140. APS’s counsel continued that “[s]hould Liberty Mutual opt
not to participate and the parties fail to reach a settlement on Monday, it is likely that Liberty
Mutual will be pulled into this litigation in the not too distant future.” Id. APS’s counsel then
stated that he had “only recently learned of Liberty Mutual’s involvement in the underlying
claim/lawsuit” and that in the event the case was not settled on September 25th, he expected
to seek leave to amend the complaint “to account for these important facts,” where “Liberty
Mutual could find itself as an additional defendant” in the APS Action. Id. Liberty again
declined to participate in the September 25, 2017 settlement and “st[ood] by [their] coverage
position.” Id. at L0139. On October 23, 2017, CICC settled the APS Action by reimbursing
APS in full for its payment of the Excess Judgment. Def.’s SMF ¶¶ 22, 29.
II.
PROCEDURAL HISTORY
CCIC filed the present action against Liberty on March 29, 2018, seeking a declaratory
judgment as to whether Liberty is an excess provider that is responsible for the Excess
Judgment. See Compl. ¶ 1, ECF No. 1. Specifically, the complaint seeks: (1) a declaration
that Liberty must provide a copy of the Liberty Policy and claims file from the Accident; (2)
a declaration that Liberty must provide coverage as an excess carrier in the Curley Action; (3)
an award to CCIC of the Excess Judgment plus all interest, costs, and disbursements; and (4)
an award to CCIC of further relief the Court deems just and proper. See Compl. at 5. Liberty
answered the complaint on June 1, 2018. See Answer, ECF No. 7. After having an
opportunity to develop the record through discovery, the parties each moved for summary
judgment on February 15, 2022. See generally Defendant’s Brief in Support of Motion for
Summary Judgment (“Def.’s Br.”), ECF No. 64; Plaintiff’s Brief in Support of Motion for
Summary Judgment (“Pl.’s Br.”), ECF No. 66.
III.
LEGAL STANDARD
Federal Rule of Civil Procedure 56(a) provides that summary judgment is proper when
“the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” In deciding a motion for summary judgment, the
Court construes all facts and inferences in the light most favorable to the non-moving party.
Boyle v. Cnty. of Allegheny Pa., 139 F.3d 386, 393 (3d Cir. 1998). The moving party bears
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the initial burden of showing the basis for its motion and identifying those portions of the
record which it believes demonstrate the absence of a genuine issue of material fact—that is,
the “absence of evidence to support the nonmoving party’s case.” Celotex Corp. v. Catrett,
477 U.S. 317, 323, 325 (1986). Once the moving party meets this burden, the burden shifts
to the non-moving party to “come forward with specific facts showing that there is a genuine
issue for trial and do more than simply show that there is some metaphysical doubt as to the
material facts.” United States v. Donovan, 661 F.3d 174, 185 (3d Cir. 2011) (internal
quotation marks omitted) (quoting Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475
U.S. 574, 586-87 (1986)). The non-moving party must present actual evidence that creates a
genuine issue for trial—reliance on unsupported assertions, speculation, or conclusory
allegations is insufficient to defeat a motion for summary judgment. Solomon v. Soc’y of
Auto. Engineers, 41 F. App’x 585, 586 (3d Cir. 2002) (citing Celotex, 477 U.S. at 324); see
also Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871, 888 (1990) (non-moving party may not
successfully oppose summary judgment motion by simply replacing “conclusory allegations
of the complaint or answer with conclusory allegations of an affidavit”). Furthermore, “the
mere existence of some alleged factual dispute between the parties will not defeat an otherwise
properly supported motion for summary judgment; the requirement is that there be no genuine
issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). “A
fact is ‘material’ . . . if its existence or nonexistence might impact the outcome of the suit
under the applicable substantive law.” Santini v. Fuentes, 795 F.3d 410, 416 (3d Cir. 2015)
(citing Anderson, 477 U.S. at 248 (1986)). “A dispute over a material fact is ‘genuine’ if ‘a
reasonable jury could return a verdict for the nonmoving party.’” Id. (quoting Anderson, 477
U.S. at 248). Where the parties have filed cross-motions for summary judgment, the summary
judgment standard does not change. In re Cooper, 542 F. Supp. 2d 382, 385 (D.N.J. 2008)
(citing Appelmans v. City of Phila., 826 F.2d 214, 216 (3d Cir. 1987)). The court must
consider each motion independently and view the evidence on each motion in the light most
favorable to the party opposing the motion. See Boardwalk Regency Corp. v. Unite Here Loc.
54, No. CIV.08-0016, 2009 WL 540675, at *4 (D.N.J. Mar. 3, 2009) (first citing Williams v.
Philadelphia House Auth., 834 F. Supp. 794, 797 (E.D. Pa. 1993), aff’d, 27 F.3d 560 (3d Cir.
1994); and then citing Matsushita, 475 U.S. at 587).
IV.
DISCUSSION
Liberty argues that it is entitled to summary judgment because (1) APS and Whitmore
do not qualify as “insureds” under the Liberty policy; (2) APS, Whitmore, and CICC had no
expectation of coverage from Liberty and failed to timely comply with the notice provisions
of the Liberty Policy; (3) CCIC conceded that it breached its duties to APS through its
settlement of the APS Action and thus has no legal or equitable basis to shift its liability to
Liberty; (4) the Transportation Agreement required APS to assume all risks relating to the
negligent performance of hauling services and does not support any equitable subrogation or
contribution claim by CICC against Liberty; and (5) CICC should be judicially estopped from
asserting that APS and Whitmore are “insureds” under the Liberty Policy. See generally
Def.’s Br. at 4-20.
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CCIC in turn argues that it is entitled to summary judgment because (1) APS and
Whitmore are “insureds” under the Liberty Policy; (2) Liberty’s disclaimer of coverage over
the Excess Judgment was improper because CCIC timely complied with the notice provisions
of the Liberty Policy; and (3) CCIC upheld its obligations as a primary insurer and handled
the Curley Action reasonably and in good faith. See generally Pl.’s Br. at 13-39.
The Court need only address the parties’ arguments concerning whether APS and
Whitmore qualify as “insureds” under the Liberty Policy to conclude that Liberty is entitled
to summary judgment on all of CCIC’s claims.
A. “Who Is An Insured” Under the Liberty Policy
The Liberty Policy states that Liberty “will pay all sums an ‘insured’ legally must pay
as damages because of ‘bodily injury’ or ‘property damage’ to which this insurance applies,
caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered
‘auto.’” Pl.’s Ex. B at 89. The parties dispute whether APS qualifies as an “insured” under
the Liberty Policy. 4 If APS is not an “insured,” then it is not entitled to coverage under the
Liberty Policy.
The Liberty Policy states, in part, that the following are “insureds”:
a. You for any covered “auto”.
b. Anyone else while using with your permission a covered
“auto” you own, hire or borrow . . . [.]
Pl.’s Ex. B at 89. “You” and “Your” refer to Rand-Whitney Group LLC, the named
insured. Pl.’s Ex. B at 88. “Auto” is defined in relevant part as a “land motor vehicle, ‘trailer’
or semitrailer designed for travel on public roads[,]” Pl.’s Ex. B at 97, and under the Liberty
Policy at issue here, “[a]ny ‘[a]uto’” is considered a covered auto. Pl.’s Ex. B at 3, 88. Thus,
4
Both parties primarily cite to and rely on New Jersey law for the interpretation of the Liberty Policy in their briefs but
acknowledge in footnotes that Massachusetts law may be applicable in the alternative. See Def.’s Br. 8-9 n.1; Pl.’s Br.
13-14 n.3. CCIC is an Iowa corporation with a principal place of business in Iowa, while Liberty is a Wisconsin
corporation with a principal place of business in Massachusetts. Pl.’s Corp. Disclosure, ECF No. 2; Def.’s Corp.
Disclosure, ECF No. 8. “As a federal district court sitting in diversity, this Court must apply the choice of law rules of
New Jersey, the forum state, to determine the applicable substantive law.” Edelman v. Croonquist, No. CIVA 09-1938,
2010 WL 1816180, at *2 (D.N.J. May 4, 2010) (citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496-97 (1941)).
“The first step in any choice-of-law inquiry under New Jersey law requires the court to determine whether there is an
actual conflict between the laws of the potential forums.” Aliments Krispy Kernels, Inc. v. Nichols Farms, 851 F.3d 283,
289 (3d Cir. 2017) (citation omitted). If there is no actual conflict, the inquiry is over and the court will apply New Jersey
law. Id. (citation omitted). “If there is an actual conflict, then the court must determine which forum has the most
significant relationship with the parties and the contract.” Id. (citation and internal quotation marks omitted). Here,
neither party has asserted, and the Court has not found, any Massachusetts law in conflict with New Jersey law. As such,
the Court will apply New Jersey law. See MacKay v. Avison, 196 A.2d 691, 695 (N.J. App. Div. 1964) (presuming that
the parties were content to have New Jersey law apply where plaintiff did not raise any statutory or decisional law of
Connecticut).
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for APS to qualify as an “insured” in regards to the Curley Action, APS must have been using
the Ryder Vehicle with Rand-Whitney’s permission, and the Ryder Vehicle must have been
“own[ed], hire[d], or borrow[ed]” by Rand-Whitney. The parties dispute whether the Ryder
Vehicle was “hired” or “borrowed” under the Liberty Policy.
“Whether an insurance policy provides coverage to an insured is a question of law to
be decided by the Court.” Spiniello Companies v. Hartford Fire Ins. Co., No. CIV A
07CV2689, 2008 WL 5046831, at *2 (D.N.J. Nov. 21, 2008) (citing Atlantic Mut. Ins. Co. v.
Palisades Safety & Ins. Ass’n, 837 A.2d 1096 (N.J. Super Ct. App. Div. 2003)). The burden
of establishing that coverage exists under an insurance policy rests with the party seeking
coverage. New Jersey Manufacturers Ins. Grp. v. Narrangassett Bay Ins. Co., No. CV 1701112, 2018 WL 6427868, at *6 (D.N.J. Dec. 7, 2018) (citing Hartford Accident & Indem.
Co. v. Aetna Life & Cas. Ins. Co., 483 A.2d 402, 408 (N.J. 1984)). “In interpreting insurance
contracts, ‘the words of an insurance policy should be given their ordinary meaning, and in
the absence of an ambiguity, a court should not engage in a strained construction to support
the imposition of liability.’” Nat’l Interstate Ins. Co. v. Champion Truck Lines, Inc., No.
CIV.A. 11-5097, 2013 WL 1192395, at *3 (D.N.J. Mar. 21, 2013) (quoting Longobardi v.
Chubb Ins. Co., 582 A.2d 1257, 1260 (N.J. 1990)). “The court’s responsibility is to give
effect to the whole policy, not just one part of it.” Cypress Point Condo. Ass’n, Inc. v. Adria
Towers, L.L.C., 143 A.3d 273, 280 (N.J. 2016) (citation and internal quotation marks omitted).
Further, the court “must endeavor to give effect to all terms in a contract and the construction
which gives a reasonable meaning to all its provisions will be preferred to one which leaves
a portion of the writing useless or inexplicable.” Zurich Am. Ins. Co. v. Keating Bldg. Corp.,
513 F. Supp. 2d 55, 64 (D.N.J. 2007) (internal quotation marks omitted) (quoting Linan-Faye
Constr. Co. v. Housing Auth., 995 F. Supp. 520, 524 (D.N.J. 1998) (quoting Prather v. Am.
Motorists Ins. Co., 67 A.2d 135 (N.J. 1949))).
“An insurance policy is not ambiguous merely because two conflicting interpretations
of it are suggested by the litigants.” Oxford Realty Grp. Cedar v. Travelers Excess & Surplus
Lines Co., 160 A.3d 1263, 1270 (N.J. 2017) (citations and internal quotation marks omitted).
“Nor does the separate presentation of an insurance policy’s declarations sheet, definition
section, and exclusion section necessarily give rise to an ambiguity.” Id. However, “[i]f the
terms of the contract are susceptible to at least two reasonable alternative interpretations, an
ambiguity exists.” Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 948 A.2d 1285, 1289
(N.J. 2008). When “an ambiguity exists, the court will resort to tools and rules of construction
beyond the corners of the policy.” Oxford Realty Grp., 160 A.3d at 1270 (citation and internal
quotation marks omitted). “[C]ourts frequently look to how other courts have interpreted the
same or similar language in standardized contracts to determine what the parties intended,
especially where rules in aid of interpretation fail to offer a clear result.” Chubb Custom Ins.
Co., 948 A.2d at 1289.
CCIC asserts that because insurance policies are contracts of adhesion, the Court
should construe the Liberty Policy in the insured’s favor, and where ambiguities exist, the
Court’s interpretation of the policy should take the insured’s reasonable expectations into
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account. Pl.’s Br. at 18-19. While New Jersey courts do ordinarily construe insurance
contract ambiguities in favor of the insured, sophisticated commercial insureds—such as the
relevant insureds in this case—do not receive this benefit. Oxford Realty Grp., 160 A.3d at
1270 (“Sophisticated commercial insureds . . . do not receive the benefit of having contractual
ambiguities construed against the insurer.”). Further, the doctrine of reasonable expectations,
where “the insured’s reasonable expectations are brought to bear on misleading terms and
conditions of insurance contracts and genuine ambiguities are resolved against the insurer,”
is “less applicable to commercial contracts.” Id. at 1271 (citations and internal quotation
marks omitted). Because the putative insureds in this case, APS and Whitmore, are a carrier
company and its employee, the Court declines to apply the doctrines asserted by CCIC in its
interpretation of the Liberty Policy.
B. Plain Meaning of “Hire” and “Borrow”
The parties assert, and an examination of the policy as a whole reveals, two reasonable
interpretations for the terms “hire” and “borrow” in the applicable “Who Is An Insured”
section, thus rendering the terms ambiguous. See Chubb Custom Ins. Co., 948 A.2d at 1289.
“Hire” and “borrow” are not explicitly defined in the Liberty Policy’s “Definitions”
section, “Who Is An Insured” section, or other sections. However, the “Covered Autos”
section, which immediately precedes the “Who Is An Insured” section, provides some context.
See Pl.’s Ex. B at 88. The “Covered Autos” section defines the categories of automobiles that
can be covered under plans offered by Liberty Mutual, though these definitions relate to
whether an auto is a “covered ‘auto’” under the “Who Is An Insured” section, and not to
whether the entity using the covered auto constitutes an “insured.” But see Ins. Co. of State
of Pennsylvania v. Cont’l Nat. Indem. Co., 7 F. App’x 503, 509 (6th Cir. 2001) (assuming
that the definition of “hired auto” in the covered autos section of a policy also defined the
term “hire” in the section of the policy that defined insureds). Rand-Whitney’s plan covers
“Any ‘Auto,’” but the “Covered Autos” section provides definitions for other categories of
vehicles such as “Owned ‘Autos,’” “Owned Private Passenger ‘Autos,’” “Hired ‘Autos,’” and
“Nonowned ‘Autos.’” Pl.’s Ex. B at 88.
In the “Covered Autos” section, “Nonowned ‘Autos’” is defined in part as “[o]nly
those ‘autos’ you do not own, lease, hire, rent or borrow.” Pl.’s Ex. B at 88 (emphasis added).
Citing to Zurich American Ins. Co. v. Keating Bldg. Corp., 513 F. Supp. 2d 55, 63 (D.N.J.
2007), Liberty argues that under “well-settled rules of policy construction,” a separate
meaning must be ascribed to “lease,” “hire,” and “borrow.” Def.’s Br. 5. Under this
construction, a leased vehicle cannot also be hired or borrowed. CCIC responds by pointing
out that “Hired ‘Autos’” is similarly defined in the “Covered Autos” section as “[o]nly those
‘autos’ you lease, hire, rent, or borrow.” Pl.’s Ex. B at 88 (emphasis added); Plaintiff’s
Opposition Brief (“Pl.’s Opp. Br.”) at 6, ECF No. 74. Because Rand-Whitney leased the truck
from Ryder, CCIC asserts that the Ryder Vehicle should constitute a “hire[d]” auto for the
purposes of the “Who Is An Insured” section. Pl.’s Opp. Br. 6. CCIC also argues, seemingly
in the alternative, that these competing definitions for “Nonowned” and “Hired ‘Autos,’”
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along with the omission of the word “lease” under the “Who is an Insured” section of the
Liberty Policy, create an ambiguity as to whether a leased vehicle is a “hired” vehicle for the
purpose of whether APS and Whitmore are “Insureds” under the Liberty Policy. Pl.’s Opp.
Br. 6.
Reading the insurance policy as a whole, the definition of “Hired ‘Autos’” in the
“Covered Autos” section informs the definition of “hire” in the “Who Is An Insured” section.
However, because “Hired ‘Autos’” and “Nonowned ‘Autos’” use “lease, hire, rent [and]
borrow” in their definitions, “lease” and “hire” must each have their own meaning. The Court
holds that these competing definitions of “hire” and “borrow,” as used in the relevant “Who
Is An Insured” section, are ambiguous.
C. Control Analysis
Finding that the definitions of “hire” and “borrow” are ambiguous, the Court looks to
“how other courts have interpreted the same or similar language in standardized contracts to
determine what the parties intended[.]” Chubb Custom Ins. Co., 948 A.2d at 1289. Several
courts have examined the meaning of the term “hired auto” in the hauling context. “The key
inquiry regarding whether an automobile will fall within the hired automobiles provision of
the policy is whether the insured exercised dominion, control or the right to direct the use of
the vehicle.” Nat’l Interstate Ins. Co. v. Champion Truck Lines, Inc., No. CIV.A. 11-5097
JBS, 2013 WL 1192395, at *3 (D.N.J. Mar. 21, 2013) (internal quotation marks omitted)
(quoting Selective Way Ins. v. Travelers Prop. Cas. Co. of Am., 724 F. Supp. 2d 520, 526
(E.D. Pa. 2010)). When evaluating the degree of control exercised by the insured, courts
primarily consider “the degree of control exerted over the vehicle, driver, and route,” Nat’l
Interstate Ins. Co., 2013 WL 1192395, at *3 (internal quotation marks omitted) (quoting
Selective Way Ins., 724 F. Supp. 2d at 527), and “note that minimal levels of control do not
render an auto ‘hired.’” Selective Way Ins., 724 F. Supp. 2d at 527.
Liberty argues that Rand-Whitney “exercised no control over the truck” because it
delegated responsibility to APS for the selection and supervision of drivers, the setting of
routes, the maintenance of the Ryder Vehicle, and the employment of Whitmore. Def.’s Br.
at 5. CCIC responds that Rand-Whitney did exercise control over the Ryder Vehicle by
providing the vehicle for APS to use and by directing APS’s tender of freight, designating the
point of origin and destination for each shipment, and stipulating the points of stop-offs for
partial unloading. Pl.’s Opp. Br. 7-8. CICC asserts in the alternative that there is a genuine
issue of material fact as to Rand-Whitney’s control of the vehicle. Pl.’s Opp. Br. 8.
Courts have taken a fact-specific approach when considering whether an entity
possesses sufficient control over an auto to be said to have “hire[d]” it. See U.S. Fid. & Guar.
Co. v. Heritage Mut. Ins. Co., 230 F.3d 331, 333-34 (7th Cir. 2000) (“Although we are not
the first court to determine the scope of a hired-automobile clause, the fact specific nature of
the inquiry makes prior cases of limited help[.]”). After an examination of the Transportation
Agreement between APS and Rand-Whitney, the Court finds that Rand-Whitney did not
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possess a level of control over the Ryder Vehicle sufficient to have “hire[d]” it under the
Liberty Policy.
1. Vehicle
When analyzing control over the vehicle, courts have considered the provision and
maintenance of the relevant vehicle as indicia of control. See Nat’l Interstate Ins. Co., 2013
WL 1192395, at *4 (noting that an entity did not hire an auto and its driver partly because it
“did not provide or maintain [the driver’s] equipment”); see also, e.g., U.S. Fid. & Guar. Co.,
230 F.3d at 333 (noting in its hired vehicle analysis that an entity “provided the maintenance
and the fuel for the trucks”). According to the Transportation Agreement, Rand-Whitney was
responsible for “provid[ing] and keep[ing] available” vehicles for APS’s use in tendering
Rand-Whitney’s freight. Pl.’s Ex. I at RW0013. Rand-Whitney also provided credit for the
average cost per gallon of fuel for the period that APS provided transportation services for its
commodities, though it did not provide the fuel directly. Pl.’s Ex. I at RW0021. Further,
these vehicles, including the Ryder Vehicle, were to be domiciled at Rand-Whitney’s facility
in Newtown, Connecticut. Pl.’s Ex. I at RW0013; see also Def.’s Ex. O. However, APS, at
its own expense, was responsible for all maintenance and repairs to the vehicles that were not
already provided to Rand-Whitney by Ryder. Pl.’s Ex. I at RW0013. Notably too, APS was
permitted to use the vehicles to perform backhauls, or carriage services for third parties other
than Rand-Whitney on return trips, for its own benefit and at its own expense. Pl.’s Ex. I at
RW0014. APS also provided trailers to Rand-Whitney for the provision of the carriage
services. Pl.’s Ex. I at RW0014.
2. Driver
Courts have also considered in their control analysis whether an entity employed, paid,
provided benefits for, or otherwise managed the driver of the auto. See Nat’l Interstate Ins.
Co., 2013 WL 1192395, at *4 (noting that an entity did not hire an auto and its driver partly
because it did not choose the driver to perform the job and did not pay him); see also U.S.
Fid. & Guar. Co., 230 F.3d at 335 (considering that an entity “paid the drivers for the amount
of material they hauled and paid their benefits” in its control analysis); Chicago Ins. Co. v.
Farm Bureau Mut. Ins. Co. of Arkansas, 929 F.2d 372, 374 (8th Cir. 1991) (noting that the
driver “remained an employee of [the entity whose insurer sought contribution]” and that the
same entity was “maintaining his workers’ compensation insurance”). Under the
Transportation Agreement, APS was responsible at its sole cost and expense for providing a
full-time supervisor on Rand-Whitney’s premises and at least eight full-time drivers for its
performance of services. Pl.’s Ex. I at RW0014. The agreement specifies that these personnel
were to be employees of APS and that APS was to have “exclusive control and direction”
over them. Pl.’s Ex. I at RW0014, RW0016. APS was responsible for their “selection,
training, supervision[,] and management,” and paid all their “wages, taxes, benefits[,] and
costs.” Pl.’s Ex. I at RW0014. Further, APS was to ensure that the personnel were “competent
and properly licensed for the performance of their duties” under the Transportation
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Agreement. Id. APS was also responsible for providing drivers with clean uniforms that met
the specification of Rand-Whitney. Id.
3. Route
Control over the route is another factor commonly evaluated by courts when
performing a control analysis in the hauling context. See Nat’l Interstate Ins. Co., 2013 WL
1192395, at *4 (“[T]here is no indication in the record that [the entity whose insurer sought
primary coverage] instructed [the driver] as to the specific route he was supposed to take or
how to operate his vehicle.”); see also U.S. Fid. & Guar. Co., 230 F.3d at 335 (“[The entity]
did not dictate the routes the drivers must use nor did it maintain exclusive control over
them.”); Earth Tech, Inc. v. U.S. Fire Ins. Co., 407 F. Supp. 2d 763, 773 (E.D. Va. 2006)
(“[T]he record demonstrates that [entity] did not exercise any control over the vehicle beyond
specifying the type of vehicle and the locations of the pick-up and delivery of the material.”).
Attendant to this, Courts have also considered whether an entity procures the licenses,
permits, taxes, and insurance for the vehicle performing the hauling. See Chicago Ins. Co.,
929 F.2d 372 at 374 (considering that an entity was issued hauling permits and carried
insurance on the trucks in its control analysis); Earth Tech, Inc., 407 F. Supp. 2d at 773
(considering that an entity paid for transportation and waste taxes in its control analysis).
Here, Rand-Whitney “designate[d] the point of origin and destination for each shipment and
. . . stipulate[d] the point or points where stop-offs, if any, [were] made for partial unloading.”
Pl.’s Ex. I at RW0013. APS then used this information to set the routes to be taken, Def.’s
Ex. E at 171-172, ¶ 12, though this responsibility is not delineated in the Transportation
Agreement.5 Further, APS was required to, at its own cost and expense, “procure and
maintain all licenses and permits and pay all taxes, including receipts taxes, associated with
the transportation services performed under [the Transportation Agreement.]” Pl.’s Ex. I at
RW0016. APS was also required to procure and maintain insurance throughout the term of
the Transportation Agreement. Id.
While Rand-Whitney possessed a degree of control over the Ryder Vehicle by
providing and domiciling the truck, crediting the cost of fuel to APS for transport on its behalf,
and designating the points of origin, destination, and stop-offs, courts have found that similar
levels of control are not sufficient to have “hire[d]” the auto. See Chicago Ins. Co., 929 F.2d
at 374 (8th Cir. 1991) (holding that an entity had only “limited supervisory powers” where it
could: (1) require trucks to have hauling permits; (2) take a fee on weight tickets; (3) tell
drivers what they were transporting and where to pick it up; (4) resolve disputes between
drivers; and (5) remove unsatisfactory drivers); Earth Tech, Inc., 407 F. Supp. 2d at 773
(“Because Capitol was interested only in the results of transportation from point A to point B,
5
CCIC attempts to dispute this fact by citing to language in the Transportation Agreement. Pl.’s Resp. to Def.’s SMF at
¶ 9; see Fed. R. Civ. P. 56(c)(1) (“A party asserting that a fact . . . is genuinely disputed must support the assertion by . .
. citing to particular parts of materials in the record . . . or . . . showing that the materials cited do not establish the
absence . . . of a genuine dispute, or that an adverse party cannot produce admissible evidence to support the fact.”).
However, the Transportation Agreement does not directly discuss which entity set the routes taken by the drivers
between these points—it discusses only the points of origin, destination, and stop-offs for the carrier. As such, it does
not put this fact in dispute.
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and did not otherwise exercise any control over the transportation of the vehicle, the vehicle
was not a ‘hired auto,’ and therefore it was not covered by Capitol’s insurance policy with
U.S. Fire.”); Selective Way Ins., 724 F. Supp. 2d at 529 (holding that the ability to exert control
over where and when to load and unload cargo, provide a bill of lading to the driver, and
require drivers to follow the same procedures as its own employees was only an indication of
“minimal control . . . insufficient to render the truck a ‘hired auto’”). As such, while RandWhitney possessed limited control over the vehicles under the Transportation Agreement,
particularly since it provided and domiciled the vehicles, such control is “insufficient to render
[the Ryder Vehicle] a ‘hired auto.’” Selective Way Ins., 724 F. Supp. 2d at 529. APS, by
contrast, is the entity that maintained and repaired the vehicles used for hauling services under
the Transportation Agreement, provided trailers, and determined when the vehicle would be
used for backhaul operations. APS also hired, trained, managed, evaluated, and licensed the
drivers and supervisors provided under the Transportation Agreement, set the routes, acquired
insurance for the vehicle, paid all applicable taxes, and procured all licenses and permits
necessary for performing the hauling services.
D. “Borrowed” Analysis
The analysis of whether a car is “borrowed” is similar to the control analysis for hired
autos. In Atlantic Mutual Insurance Co. v. Palisades Safety & Insurance Association, 837
A.2d 1096, 1099 (N.J. App. Div. 2003), the Appellate Division of the New Jersey Superior
Court considered a nearly identical “Who Is An Insured” section to determine whether an
employer was “borrowing” an auto owned by its employee’s wife while the employee ran an
errand for his supervisor. The Atlantic Mutual court relied on a definition of “borrower” that
required the entity to have “dominion or control” over the vehicle and held that “the ‘user’ of
the vehicle must also have the simultaneous authority to move the vehicle[.]” Id. There, the
court considered factors similar to those considered in the “hired auto” analysis discussed
supra, such as whether the employer paid the driver and considered his driving to be in
furtherance “company business,” to hold that the employer’s insurer provided liability
coverage to the driver. Id. at 1099-1100. As such, applying the same control analysis as
above relating to whether Rand-Whitney “hired” the Ryder Vehicle, the Court finds that
Rand-Whitney also did not exercise “dominion or control” over the Ryder Vehicle at a level
requisite to have “borrowed” the truck under the Liberty Policy.
V.
CONCLUSION
Because Rand-Whitney cannot be said to have “hire[d]” or “borrow[ed]” the Ryder
Truck under the “Who Is An Insured” section of the Liberty Policy, APS and Whitmore are
not Liberty’s “insureds” and thus cannot seek coverage from Liberty for the Accident.
For the reasons set forth above, CCIC’s motion is DENIED and Liberty’s motion is
GRANTED.
An appropriate Order shall follow.
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/s/ William J. Martini
WILLIAM J. MARTINI, U.S.D.J.
Date: October 17, 2022
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