Employers Insurance Company of Wausau v. Harleysville Preferred Insurance Company et al
Filing
103
OPINION AND ORDER....Wausaus motion for summary judgment is denied. Neither Travelers nor Harleysville has a duty to defend the Underlying Action. Wausaus claim for a declaration concerning the priority of coverage among the parties is dismissed as moot. Travelers motion for summary judgment is granted insofar as there is no coverage under the Travelers Policy for the claims in the Underlying Action, and thus Travelers has no duty to defend the Underlying Action. For that reason, Harleysville s cross-claim against Travelers is dismissed. Harleysvilles motion for summary judgment is granted insofar as there is no coverage under the Harleysville Policy for the claims in the Underlying Action, and thus Harleysville has no duty to defend Hellman, the MTA, or the TBTA. Harleysvilles counterclaim against Wausau seeking a declaration that Wausau has a duty to defend the Underlying Action is dismissed as moot. (Signed by Judge Denise L. Cote on 2/29/2016) (gr)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
-------------------------------------- X
:
EMPLOYERS INSURANCE COMPANY OF WAUSAU, :
:
Plaintiff,
:
:
-v:
:
HARLEYSVILLE PREFERRED INSURANCE
:
COMPANY, THE TRAVELERS INDEMNITY
:
COMPANY, and THE ELECTRICAL EMPLOYERS :
SELF INSURANCE SAFETY PLAN,
:
:
Defendants.
:
-------------------------------------- X
15cv4175 (DLC)
OPINION AND ORDER
APPEARANCES:
For the plaintiff:
Janet Jakyung Lee
Marshall Todd Potashner
Jaffe & Asher LLP
600 Third Avenue, 9th Floor
New York, NY 10016
For defendant Harleysville Preferred Insurance Company:
Brooks Howard Leonard
Lance Jon Kalik
Riker Danzig Scherer Hyland & Perretti LLP
Headquarters Plaza
One Speedwell Avenue
Morristown, NJ 07962
For defendants The Travelers Indemnity Company and Travelers
Property Casualty Company of America:
Alan C. Eagle
Joanne Mary Engeldrum
Rivkin Radler, LLP
926 Rexcorp Plaza
Uniondale, NY 11556
DENISE COTE, District Judge:
This case arises from the tragic death of Nicholas Cavataio
(“Cavataio”) on August 5, 2014.
Cavataio was working at a
construction site when a large battery fell on him as it was
being unloaded from a truck.
Cavataio’s estate filed a lawsuit
in New York state court (the “Underlying Action”).
This case
concerns three insurance companies, Employers Insurance Company
of Wausau (“Wausau”), Travelers Indemnity Company (“Travelers”),
and Harleysville Preferred Insurance Company (“Harleysville”),
who dispute who among them must defend and indemnify various
defendants in that state court action.
The motions currently
before the Court concern the insurers’ duty to defend.
For the
reasons that follow, neither Travelers nor Harleysville has a
duty to defend the Underlying Action.
Background
The following facts are undisputed, unless otherwise noted.
I.
The Incident of August 5, 2014
On August 5, 2014, Cavataio was working for Hellman
Electric Corporation (“Hellman”) on a construction project,
known as TN Task 26, to install am integrated security system at
the Throgs Neck Bridge in Bronx, New York.
The project was
pursuant to a contract between Hellman and the Triborough Bridge
and Tunnel Authority (“TBTA”), an affiliate agency of the
Metropolitan Transportation Authority (“MTA”).
On that day, Hellman received a delivery of two large
2
batteries, one weighing 760 pounds, and the other weighing 2760
pounds, from Monarch Electric Company (“Monarch”).
The
batteries were manufactured by the Eaton Corporation (“Eaton”).
The delivery was made in a truck (the “Truck”) rented from
Miller Auto Leasing Corporation (“Miller”).
The Truck was
registered and principally garaged in New Jersey.
When the
batteries were delivered, Monarch employee Timothy Delaney
(“Delaney”) and Hellman employee Carl Wrynn (“Wrynn”) unloaded
the batteries from the Truck.
Wrynn and Delaney used a
hydraulic pallet jack to move the batteries.
According to
Delaney, a pallet jack is “a mobile device with wheels and has a
lever on top and two large, horizontal prongs extending from the
bottom.”
The prongs may be placed into large wooden pallets in
order to hydraulically lift the pallet and its contents.
As Wrynn and Delaney unloaded the second of the large
batteries, the battery fell off the truck and struck Cavataio in
the head, killing him.
Immediately prior to the battery
falling, Delaney had moved the pallet jack and battery onto the
lift gate of the Truck, and had lowered the battery to be flush
with the floor of the truck and lift gate, but had not moved the
lift gate.
Hellman prepared a report on the incident, which
stated:
Nick Cavataio was in the parking lot area assisting
3
Carl Wrynn (Hellman Employee) and truck driver from
Monarch Electrical Supply (Tim [Delaney]). They
unloaded crate #1 at 765 pounds with no problem.
While unloading crate #2 at 2,735 pounds Tim from
Monarch turned the pallet jack around on the 3,000
pound lift gate. All of a sudden the crate tipped
over so fast that Carl Wrynn and Tim [Delaney] jumped
down from the truck and noticed Nick Cavataio
underneath by the side of the 2,735 pound crate. Nick
[Cavataio] was bleeding excessively and died on
impact. Carl Wrynn called General Foreman, Joseph
Sergi who immediately called 911 (ambulance); Nick
Cavataio was pronounced deceased on site.
Officers of the New York City Police Department interviewed
Wrynn and Delaney and prepared a police report which stated:
On August 5, 2014, at approximately 0745 hours witness
[redacted] M/W/43 and witness [redacted] M/W/46 were
making a delivery of a battery cabinet weighing 2760
pounds at 4260 Throgsneck Expressway at the TBTA
facility. Witness #1 was inside the delivery truck
using a pump jack to move the skid containing the
battery cabinet towards the truck lift with the
assistance of witness #2. As witness #1 and #2 moved
the pallet to the truck lift the skid began to slide
forward off the pump jack. Witnesses were unable to
hold the battery cabinet due to the amount of the
weight. Battery Cabinet fell off the lift and struck
the victim Nicolas Cavataio on the head causing his
demise. Victim was pronounced [dead] at 0800 h[ou]rs
by EMS.
II.
The Underlying Action
On November 17, 2014, Cavataio’s widow, Rosanne Cavataio
(“Ms. Cavataio”), on behalf of both Cavataio’s estate and
herself, filed a lawsuit against the MTA, Eaton, Miller,
Monarch, and the TBTA, in the New York Supreme Court, Bronx
4
County. 1
The complaint alleges that the defendants negligently
and/or recklessly caused Cavataio’s death, and includes claims
for (1) conscious pain and suffering, (2) wrongful death, (3)
violation of New York Labor Law § 240, (4) violation of New York
Labor Law § 241, (5) violation of Rule 23 of the Industrial Code
of the State of New York, (6) violation of New York Labor Law §
200, and (7) loss of consortium.
In her bill of particulars,
Ms. Cavataio identifies several alternative theories of
liability: (1) defendants’ failure to use the proper pallet jack
to move the battery, (2) defendants’ failure to properly unload
the battery from the Truck, (3) defendants’ failure to use a
loading dock to unload the battery, and (4) defendants’ failure
to park the Truck in a safe location during unloading of the
batteries.
On January 15, 2015, the MTA and TBTA filed a third-
party complaint against Hellman for indemnification and/or
contribution in connection with any damages awarded to Ms.
Cavataio in the Underlying Action, and for breach of contract
because Hellman failed to obtain insurance as required by its
contract with the MTA and TBTA.
Wausau is currently defending Hellman, the MTA, and the
Ms. Cavataio could not assert claims directly against Hellman
because of N.Y. Workers' Comp. Law § 11, which provides that
workers’ compensation is the exclusive remedy to an employee,
his spouse, or other personal representatives for injuries to an
employee.
1
5
TBTA in the Underlying Action, subject to a reservation of
rights.
Wausau contends that Travelers and Harleysville also
have a duty to defend Hellman, the MTA, and the TBTA in the
Underling Action.
III. The Insurance Policies
There are three insurance policies at issue in this case.
Wausau issued a general commercial liability policy to Hellman
(the “Wausau Policy”), and is currently defending Hellman, the
MTA, and the TBTA in the Underlying Action.
Harleysville issued
a business auto policy to Hellman (the “Harleysville Policy”).
Travelers issued a commercial auto policy to Monarch (the
“Travelers Policy”).
Travelers and Harleysville have disclaimed
coverage for the claims in the Underlying Action.
A. The Wausau Policy
The Wausau Policy provided coverage for one year beginning
on June 27, 2014, which encompassed the August 2014 accident
date.
The limit on coverage under the Wausau Policy is
$2,000,000 per occurrence and $4,000,000 in aggregate.
B. The Travelers Policy
Travelers issued the Travelers Policy to Consolidated
Electrical Distributors, Inc. (“CED”).
CED has subsidiaries in
numerous states, one of which is Monarch.
By endorsement dated
November 11, 2013, Monarch was added as an additional named
6
insured under the Travelers Policy.
The Travelers Policy contains the following provisions
defining who is considered an “insured”:
1. Who Is An Insured
The following are “insureds”:
a. You 2 for any covered “auto” 3.
b. Anyone else while using with your permission a
covered “auto” you own, hire or borrow except:
* * *
(4) Anyone other than your “employees”, partners (if
you are a partnership), members (if you are a limited
liability company), or a lessee or borrower or any of
their “employees”, while moving property to or from a
covered “auto”.
* * *
c. Anyone liable for the conduct of an “insured”
described above but only to the extent of that
liability.
With respect to autos “principally garaged in New Jersey,” these
provisions are modified by an endorsement titled “New Jersey
Changes,” which provides:
A. Changes In Who Is An Insured
Paragraph 1.b.(4) of Who Is An Insured in the Business
Auto, Motor Carrier and Truckers Coverage forms is
replaced by the following:
“You” is defined by the Travelers Policy as “the Named
Insured,” which includes Monarch.
2
A “covered auto” is defined by the Travelers Policy as “any
auto.”
3
7
(4) Anyone other than your “employees”, partners (if
you are a partnership), members (if you are a limited
liability company), or a lessee or borrower or any of
their “employees”, while moving property to or from a
covered “auto”.
However, this paragraph does not apply for coverage up
to the minimum financial responsibility limits
specified in N.J.S.A. 39:6B-1.
The Travelers Policy states that Travelers will pay all
sums an insured “must pay as damages because of ‘bodily injury’
or ‘property damage’ . . . caused by an ‘accident’ and resulting
from the ownership, maintenance or use of a covered ‘auto.’”
The coverage limit under the Travelers Policy is $3,000,000 per
accident.
The Travelers Policy further provides that Travelers
has the “duty to defend any ‘insured’ against a ‘suit’ asking
for such damages,” but that Travelers has no duty to defend
suits related to injuries for which the Travelers Policy does
not provide coverage.
The Travelers Policy contains two exclusions which
Travelers contends are relevant to the Underlying Action.
The
first is the Employee Indemnification and Employer’s Liability
exclusion (the "Travelers Policy Employer's Liability
Exclusion"), which provides:
This insurance does not apply to any of the following:
“Bodily injury” to
* * *
8
a. An “employee” of the "insured" arising out of and
in the course of:
(1) Employment by the “insured”; or
(2) Performing the duties related to the “insured’s”
business;
b. The spouse, child, parent, brother or sister of
that “employee” as a consequence of Paragraph a.
above.
This exclusion applies:
(1) Whether the “insured” may be liable as an employer
or in any other capacity; and
(2) To any obligation to share damages with or repay
someone else who must pay damages because of the
injury.
The second exclusion is titled Movement of Property by
Mechanical Device (the “Travelers Policy Mechanical Device
Exclusion”), and provides:
This insurance does not apply to any of the following:
* * *
“Bodily injury” or “property damage” resulting from
the movement of property by a mechanical device (other
than a hand truck) unless the device is attached to
the covered “auto”.
C. The Harleysville Policy
Harleysville issued the Harleysville Policy to Hellman.
The Harleysville Policy had a coverage period from June 27, 2014
until June 27, 2015.
The Harleysville Policy has a policy limit
of $1,000,000.
The Harleysville Policy states that Harleysville “will pay
9
all sums an ‘insured’ must pay as damages because of ‘bodily
injury’ or ‘property damage’ to which this policy applies,
caused by an ‘accident’ and resulting from the ownership,
maintenance or use of a covered ‘auto.’” 4
It also states that
Harleysville has a “duty to defend any ‘insured’ against a
‘suit’ asking for such damages,” but not for any damages “to
which this insurance does not apply.”
The Harleysville Policy
defines who is an insured as:
You for any covered “auto”.
***
c. Anyone liable for the conduct of an "insured"
described above but only to the extent of that
liability.
The Harleysville Policy contains two exclusions which
Harleysville contends are relevant to the Underlying Action.
The first is the Employee Indemnification and Employer’s
Liability exclusion (the “Harleysville Policy Employer Liability
Exclusion”), which provides:
This insurance does not apply to any of the following:
‘Bodily injury’ to:
* * *
a. An “employee” of the “insured” arising out of and
in the course of:
(1) Employment by the “insured”; or
4
A covered “auto” is defined as “any auto.”
10
(2) Performing the duties related to the conduct of
the “insured's” business[.]
The second exclusion is the Movement of Property by
Mechanical Device exclusion (“Harleysville Policy Mechanical
Device Exclusion”), which provides:
This insurance does not apply to any of the following:
* * *
“Bodily injury” or “property damage” resulting from
the movement of property by a mechanical device (other
than a hand truck) unless the device is attached to
the covered “auto”.
IV.
Procedural Background
Wausau requested that both Travelers and Harleysville
provide coverage to Hellman, the MTA, and the TBA for the
Underlying Action.
disclaimed coverage.
Both Travelers and Harleysville have
On June 1, 2015, Wausau filed the instant
diversity action, seeking a declaratory judgment that Travelers
and Harleysville are required to defend and indemnify Hellman,
the MTA, and the TBTA in the Underlying Action.
Wausau also
seeks a money judgment against Travelers and Harleysville in an
amount equal to what it has spent and will spend defending
Hellman, the MTA, and the TBTA in the Underling Action.
Harleysville filed its answer on July 13, and asserted a
counterclaim against Wausau seeking a declaration that
Harleysville had no duty to defend Hellman, the MTA, or the TBTA
11
in the Underlying Action, or in the alternative, that the
coverage under the Harleysville Policy is in excess to that
provided by the Wausau Policy, and that Harleysville is entitled
to contribution and/or indemnification from Wausau.
Harleysville also asserted a cross-claim against Travelers
seeking a declaration that the Harleysville Policy is in excess
to the Travelers Policy and that Harleysville is entitled to
contribution and/or indemnification from Travelers.
Travelers filed its answer on July 17, and also sought a
declaration that it has no duty to defend or indemnify Hellman,
the MTA, or the TBTA in the Underling Action.
In the
alternative, if coverage is found under the Travelers Policy,
Travelers seeks a determination of the relative share of the
parties’ coverage.
On October 16, Wausau filed a motion for summary judgment
on its duty to defend claims.
On November 11, Travelers and
Harleysville both filed cross motions for summary judgment.
The
three motions were fully submitted on December 4.
Discussion
Summary judgment may not be granted unless all of the
submissions taken together “show[] that there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”
Fed. R. Civ. P. 56(a).
12
“Summary
judgment is appropriate where the record taken as a whole could
not lead a rational trier of fact to find for the non-moving
party.”
Smith v. Cty. of Suffolk, 776 F.3d 114, 121 (2d Cir.
2015) (citation omitted).
The moving party bears the burden of
demonstrating the absence of a material factual question, and in
making this determination, the court must view all facts in the
light most favorable to the non-moving party.
Eastman Kodak Co.
v. Image Tech. Servs.,Inc., 504 U.S. 451, 456 (1992); Gemmink v.
Jay Peak Inc., 807 F.3d. 46, 48 (2d Cir. 2015).
“[W]here the
evidentiary matter in support of the motion does not establish
the absence of a genuine issue, summary judgment must be denied
even if no opposing evidentiary matter is presented.”
Sec. Ins.
Co. of Hartford v. Old Dominion Freight Line Inc., 391 F.3d 77,
83 (2d Cir. 2004) (citation omitted).
Once the moving party has asserted facts showing that the
non-movant’s claims or affirmative defenses cannot be sustained,
“the party opposing summary judgment may not merely rest on the
allegations or denials of his pleading; rather his response, by
affidavits or otherwise as provided in the Rule, must set forth
specific facts demonstrating that there is a genuine issue for
trial.”
Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009)
(citation omitted); see Celotex Corp. v. Catrett, 477 U.S. 317,
322–23 (1986).
“[C]onclusory statements, conjecture, and
13
inadmissible evidence are insufficient to defeat summary
judgment,” Ridinger v. Dow Jones & Co. Inc., 651 F.3d 309, 317
(2d Cir. 2011) (citation omitted), as is “mere speculation or
conjecture as to the true nature of the facts.” Hicks v. Baines,
593 F.3d 159, 166 (2d Cir. 2010) (citation omitted).
Only
disputes over material facts -- “facts that might affect the
outcome of the suit under the governing law” -- will properly
preclude the entry of summary judgment.
Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986).
Under New York law, an insurer has a duty to defend a suit
“whenever the allegations of the complaint suggest a reasonable
possibility of coverage.”
Euchner-USA, Inc. v. Hartford Cas.
Ins. Co., 754 F.3d 136, 141 (2d Cir. 2014) (citation omitted).
The duty to defend is broader than the duty to indemnify, and
thus an insurer may be required to defend a suit and yet have no
duty to indemnify once the litigation has run its course.
at 140.
Id.
“If, liberally construed, the claim is within the
embrace of the policy, the insurer must come forward to defend
its insured no matter how groundless, false or baseless the suit
may be,” and “[a]ny doubt as to whether the allegations state a
claim within the coverage of the policy must be resolved in
favor of the insured and against the carrier.”
(citation omitted).
14
Id. at 141
Similarly, under Texas law, “courts strictly apply the
‘eight-corners rule,’ which looks only to the four corners of
the most recent complaint in the underlying action as well as
the four corners of the insurance policy.”
City of Coll.
Station, Tex. v. Star Ins. Co., 735 F.3d 332, 336 (5th Cir.
2013).
If the underlying complaint pleads facts sufficient to
create the potential of covered liability, the insurer has a
duty to defend the entire case, but “if the insurer can show
that all of the alleged liability falls outside of the scope of
coverage or within the scope of an exclusion, the insurer has no
duty to defend.”
Id. at 336-37.
In assessing the duty to
defend, the Court must construe the complaint liberally,
construe exclusions narrowly, and resolve any ambiguity in favor
of the insured.
I.
Id. at 337.
Coverage Under the Travelers Policy
A. Choice of Law
Wausau and Travelers dispute which law governs the
Travelers Policy.
Wausau argues that New Jersey law applies
because Monarch has its principal place of business in New
Jersey and because the Truck was garaged in New Jersey.
Travelers argues that Texas law applies because the Travelers
Policy was originally issued to Monarch’s parent, CED, and CED
has its principal place of business in Texas.
15
There is a
conflict between New Jersey and Texas law because New Jersey law
would invalidate certain exclusions in the Travelers Policy that
are enforceable under Texas law.
“Where jurisdiction is predicated on diversity of
citizenship, a federal court must apply the choice-of-law rules
of the forum state.”
Thea v. Kleinhandler, 807 F.3d 492, 497
(2d Cir. 2015); see also Klaxon Co. v. Stentor Elec. Mfg. Co.,
313 U.S. 487, 496 (1941).
New York recognizes the “center of
gravity” or “grouping of contacts” approach to choice of law in
contract disputes, which applies the law of the state with the
closest relationship to the transaction and the parties.
In re
Liquidation of Midland Ins. Co., 16 N.Y.3d 536, 543 (2011).
“In
the context of liability insurance contracts, the jurisdiction
with the most ‘significant relationship to the transaction and
the parties’ will generally be the jurisdiction ‘which the
parties understood was to be the principal location of the
insured risk.’”
Id. at 544 (citation omitted).
When an
insurance policy covers risks spread across multiple states,
however, the principal place of business of the insured serves
as a proxy for the principal location of the insured risk.
Certain Underwriters at Lloyd's, London v. Foster Wheeler Corp.,
822 N.Y.S.2d 30, 35 (1st Dep’t 2006).
Here, the insured that
negotiated and purchased the Travelers Policy was CED, which has
16
its principal place of business in Texas, and thus Texas law
applies to the Travelers Policy.
Wausau’s arguments to the contrary are without merit.
First, Wausau argues that Monarch, not CED, is the relevant
insured, and was added to the Travelers Policy as a separate
insured by endorsement dated November 1, 2013.
fails.
This argument
Foster Wheeler focused on the intent of the parties who
entered into the insurance contract.
Here it is CED and
Travelers who purchased and entered into the Travelers Policy,
and Monarch was only added by endorsement as an additional
insured.
In addition, the court in Foster Wheeler reasoned that
the choice of law analysis should promote “certainty,
predictability and uniformity of result” and “ease in the
determination and application of the law to be applied.”
34 (citation omitted).
Id. at
Wausau’s reasoning would result in the
application of dozens of states’ law to a single policy, a
result disfavored by New York law.
See Maryland Cas. Co. v.
Cont'l Cas. Co., 332 F.3d 145, 154 (2d Cir. 2003) (noting “[t]he
dearth of New York cases applying the laws of more than one
state to an insurance policy”).
Second, Wausau argues that the factors used to determine
the principal place of the risk weigh in favor of application of
New Jersey law: (1) Monarch’s domicile is New Jersey, (2) the
17
Truck was principally garaged in New Jersey, and (3) the
Travelers Policy itself contains an endorsement specific to New
Jersey.
These factors, however, are not controlling when the
risk covered by an insurance contract spans multiple states.
Foster Wheeler, 822 N.Y.S.2d at 33.
Moreover, the inclusion of
numerous state-specific endorsements to the Travelers Policy
suggests the contracting parties intended that a single state’s
law would apply, and that only certain provisions would vary by
state accordingly to the respective endorsements.
Third, Wausau argues that Foster Wheeler does not apply
because Monarch was added as an insured under the Travelers
Policy to insure against a specific risk, relying on Ill. Nat.
Ins. Co. v. Zurich Am. Ins. Co., 969 N.Y.S.2d 11, 12 (2013).
That case is distinguishable because there the additional named
insured was added to insure a specific construction project to
be performed by a subcontractor.
Id.
Here, Monarch was added
along with numerous other subsidiaries of CED and coverage was
not limited to a specific project.
B. Who Is an Insured Under the Travelers Policy?
Hellman is an insured under the Travelers Policy.
This
determination requires examination of both the Travelers Policy
and its New Jersey Endorsement.
The Travelers Policy provides that, in addition to Monarch,
18
an “insured” includes anyone who uses a covered auto with
Monarch’s permission except “[a]nyone other than [Monarch’s]
‘employees’ . . . or a lessee or borrower or any of their
‘employees’, while moving property to or from a covered ‘auto.’”
It is undisputed that Hellman is not an employee of Monarch and
that Cavataio’s injuries occurred while a battery was being
moved out of the Truck. 5
Consequently, Hellman would not qualify
as an insured under the language of the Travelers Policy.
But, this conclusion is altered by an endorsement titled
“New Jersey Changes.”
The endorsement modifies the Travelers
Policy’s definition of “Who Is An Insured” such that it does not
apply “for coverage up to the minimum financial responsibility
limits specified in N.J.S.A. 39:6B-1” (the “Omnibus Statute”).
The Omnibus Statute provides:
Every owner or registered owner of a motor vehicle
registered or principally garaged in this State shall
maintain motor vehicle liability insurance coverage
. . . insuring against loss resulting from liability
imposed by law for bodily injury, death and property
damage sustained by any person arising out of the
ownership, maintenance, operation or use of a motor
vehicle wherein such coverage shall be at least in:
(1) an amount or limit of $15,000.00, exclusive of
Wausau argues that the injury did not occur while property was
being moved “from” an auto since the battery was being moved
“from the cargo hold of the truck to the lift gate of the
truck,” and that movement of the battery was “wholly within and
on the Truck.” This argument does not create a genuine dispute
since it is undisputed that the battery was moved from the truck
bed to remove it from the Truck altogether.
5
19
interest and costs, on account of injury to, or death
of, one person, in any one accident.
N.J. Stat. Ann. § 39:6B-1.
The Supreme Court of New Jersey has
held that “that the obligation to provide coverage in a loading
and unloading accident arises from statute and therefore cannot
be limited by contract.”
147, 152-53 (2007).
Potenzone v. Annin Flag Co., 191 N.J.
Accordingly, if the Omnibus Statute
applies, the endorsement modifies the definition of insured but
only up to the minimum coverage required by the statute.
The Omnibus Statute applies to the claims in the Underlying
Action.
The statute “requires that owners of motor vehicles
registered or principally garaged in New Jersey maintain
liability insurance for certain mandatory minimum amounts.”
Citizens United Reciprocal Exch. v. Perez, 223 N.J. 143, 152-53
(2015).
Here, the owner of the Truck is Miller, not Monarch.
Monarch, however, assumed the contractual responsibility to
obtain insurance coverage for operation of the Truck.
The
leasing agreement between Monarch and Miller provides:
CUSTOMER SHALL AT HIS EXPENSE: (1) OBTAIN A POLICY OF
BODILY INJURY AND PROPERTY DAMAGE LIABILITY & PHYSICAL
DAMAGE INSURANCE WHICH SHALL EXTEND COVERAGE TO MILLER
AND MILLER’S ASSIGNEE AS AN ADDITIONAL INSURED AND
LOSS PAYEE ENTITLED TO ALL THE TERMS AND BENEFITS OF
THE POLICY. . . .
The agreement further states that the insurance obtained by
Monarch to satisfy this requirement is the Travelers Policy.
20
Monarch’s insurer, Travelers, was therefore required to provide
the minimum coverage required by New Jersey Law.
See Carolina
Cas. Ins. Co. v. Travelers Prop. Cas. Co., 90 F. Supp. 3d 304,
315 (D.N.J. 2014) (holding that the statutory minimum applies
when the party seeking coverage is not the owner of the vehicle
but assumed the contractual responsibility to provide
insurance). 6
Having concluded that Omnibus Statute applies, the last
issue is whether the claims against Hellman involve an injury
“arising out of the ownership, maintenance, operation or use of
a motor vehicle.”
N.J. Stat. Ann. § 39:6B-1.
There is no
genuine dispute that Cavataio was killed by a falling battery
while Hellman and Monarch employees were in the process of
unloading the battery from the Truck.
Under New Jersey law,
loading and unloading a vehicle is considered “use” of a motor
vehicle.
Pisaneschi v. Turner Const. Co., 345 N.J. Super. 336,
343 (App. Div. 2001).
Accordingly, Hellman is an insured under
the Travelers Policy but only up to the minimum coverage
In Carolina, a company called Ho-Ro was a named insured under a
policy issued by Carolina Casualty Insurance Company (“CCIC”).
Ho-Ro leased a vehicle and used it to load materials at a
construction site for a contractor called Gardner Bishop. A HoRo employee was injured when an object fell from the truck and
crushed his foot. Travelers prevailed in arguing that the
Omnibus Statute required coverage under the CCIC policy for
Gardiner Bishop, even though it neither owned nor had leased the
truck.
6
21
required by the Omnibus Statute.
Wausau next contends that the MTA and TBTA are insureds
under the Travelers Policy because an insured includes “[a]nyone
liable for the conduct of an ‘insured’ . . . but only to the
extent of that liability.”
The MTA and TBTA are being sued in
the Underlying Action under a theory of vicarious liability for
the negligence of the other defendants, who are insured under
the Travelers Policy.
Travelers does not dispute that the MTA
and TBTA qualify as insureds under the Travelers Policy.
C. Mechanical Device Exclusion
The Travelers Policy Mechanical Device Exclusion provides
that coverage does not extend to bodily injury “resulting from
the movement of property by a mechanical device (other than a
hand truck) unless the device is attached to the covered
‘auto.’”
Under Texas law, the term “resulting from” in the
insurance context requires only that a result arose out of or
flowed from a cause, and does not require a showing of proximate
causation.
Lancer Ins. Co. v. Garcia Holiday Tours, 345 S.W.3d
50, 55 (Tex. 2011) (holding that “result from” and “arise out
of” have the same meaning); Utica Nat. Ins. Co. of Texas v. Am.
Indem. Co., 141 S.W.3d 198, 203 (Tex. 2004) (holding that term
“arise out of” equates to but-for rather than proximate
causation).
22
It is undisputed that Cavataio was injured while a battery
was being moved by a pallet jack, a hydraulically-powered
mechanical device. 7
It is also undisputed that the pallet jack
was not attached to the Truck.
Cavataio’s injuries therefore
resulted from the movement of property by a mechanical device,
and fall under the unambiguous language of the Travelers Policy
Mechanical Device Exclusion.
Wausau raises two arguments for why the exclusion does not
apply.
Neither has merit.
First, Wausau argues that the
exclusion does not apply because some of the claims in the
Underlying Action do not allege that the injury was a result of
the movement of the battery.
This argument is unavailing
because all of the claims in the Underlying Action allege that
Cavataio was killed by the battery while it was being moved from
the Truck, and it is undisputed that the battery was being moved
The parties dispute whether a pallet jack is a type of “hand
truck,” the use of which is an exception to the Travelers Policy
Mechanical Device Exclusion. There is no genuine dispute,
however, that a hydraulically-powered device capable of moving a
battery weighing over a ton is not a hand truck. A hand truck
is defined as “a two-wheeled cart for moving heavy objects
consisting of a vertical framework at the top and a metal blade
at the bottom that is inserted beneath a load, the entire
assembly being tilted backwards until balanced for easy pushing
or pulling.” The American Heritage Dictionary of the English
Language (4th ed. 2000). A pallet jack is not a hand truck
under any reasonable interpretation of that term, and thus,
there is no genuine dispute that the battery was being moved by
a mechanical device.
7
23
by a pallet jack at that time.
While the theory of recovery
differs among the claims, the alleged injury is that Cavataio
was killed by the falling battery, which was being moved by the
pallet jack.
Second, in a letter dated February 17, 2016, Wausau
contends that Cavataio’s injuries were caused by “a failure of
the lift gate to maintain level and hold the weight of the
battery unit and pallet,” rather than due to failure of the
pallet jack.
In support of this argument, Wausau relies on the
deposition testimony of Delaney, who testified that, immediately
prior to the battery falling, he had moved the battery, pallet,
and pallet jack onto the lift gate, and lowered the battery to
be flush with the lift gate and truck.
At that moment, the
battery was sitting on a pallet, the pallet was sitting on the
pallet jack, and the pallet jack was sitting on the lift gate,
which was attached to the end of the Truck.
Importantly,
Delaney’s unrefuted testimony is that the lift gate was not
moving when the battery fell.
Accordingly, from the time
Delaney and Wrynn began moving the battery until the time it
fell on Cavataio, the only device used to move the battery was
the pallet jack; the lift gate remained stationary.
Delaney
further testified that at the time the battery fell on Cavataio,
the lift gate remained flush with the bed of the truck.
24
For
these reasons, there is no genuine dispute that the battery fell
while being moved by a mechanical device.
Accordingly, the Travelers Policy Mechanical Device
exclusion applies to all the claims in the Underlying Action.
Because all of the alleged liability falls within the scope of
this exclusion, Travelers has no duty to defend the Underlying
Action.
D. Employer’s Liability Exclusion
The Travelers Employer’s Liability Exclusion provides that
coverage does not extend to bodily injuries to “[a]n ‘employee’
of the ‘insured’ arising out of and in the course of (1)
[e]mployment by the ‘insured’; or (2) [p]erforming the duties
related to the ‘insured's’ business.”
The parties do not
dispute that this exclusion is inapplicable to the MTA and TBTA,
but dispute whether it applies to Hellman.
Having already
determined that all the claims in the Underlying Action fall
within the scope of the Travelers Policy Mechanical Device
Exclusion and that Travelers has no duty to defend the
Underlying Action, this issue is moot.
25
II.
Coverage Under the Harleysville Policy 8
A. Who Is an Insured Under the Harleysville Policy?
Hellman is a named insured under the Harleysville Policy.
The MTA and TBTA are additional insureds because the
Harleysville Policy provides that an insured includes “[a]nyone
liable for the conduct of an "insured . . . but only to the
extent of that liability.”
The claims against the MTA and TBTA
include claims that those parties are vicariously liable for the
death of Cavataio.
Specifically, the complaint in the
Underlying Action includes claims under N.Y. Labor Law §§ 240
and 241, which impose vicarious liability on the owners of
premises for the negligence of others.
See Robinson v. City of
New York, 779 N.Y.S.2d 757, 760 (Sup. Ct. 2004) (noting that
violations of § 240 impose vicarious liability on owners);
Torres v. City of New York, 7 N.Y.S.3d 539, 542 (2d Dep’t 2015)
(noting that § 241 “imposes a nondelegable duty on owners,
contractors, and their agents to provide a safe workplace to
workers.”).
Because the MTA and TBTA’s liability under these
statutes could be predicated on Hellman’s conduct, the MTA and
TBTA qualify as insureds to the extent of Hellman’s liability.
Harleysville argument to the contrary is unpersuasive.
The parties agree that the Harleysville Policy is governed by
New York law.
8
26
Harleysville argues that Ms. Cavataio did not bring any claims
against Hellman in the Underlying Action and that the complaint
in the Underlying Action alleges that Cavataio’s death was
caused solely by the named defendants.
For those reasons,
Harleysville contends that the MTA and TBTA are not alleged to
be liable for the conduct of Hellman.
This argument fails
because (1) Ms. Cavataio could not bring claims directly against
Hellman because of N.Y. Workers' Comp. Law § 11, which provides
that workers’ compensation is “exclusive and in place of any
other liability whatsoever,” and (2) the complaint in the
Underlying Action does allege that Cavataio’s death occurred at
Hellman’s worksite, and it is undisputed that a Hellman
employee, Wrynn, was involved in unloading the battery that
killed Cavataio.
There is a reasonable possibility that the MTA
and TBTA will be held liable for the conduct of Hellman, and
that is all that is required at this juncture.
GMM Realty, LLC
v. St. Paul Fire & Marine Ins. Co., 11 N.Y.S.3d 661, 662 (2d
Dep’t 2015) (“[A]n insurer's duty to defend . . . arises
whenever the allegations in the complaint in the underlying
action, construed liberally, suggest a reasonable possibility of
coverage.”).
B. Mechanical Device Exclusion
The Harleysville Policy contains an exclusion for bodily
27
injury “resulting from the movement of property by a mechanical
device.”
The language of this exclusion is identical to the one
in the Travelers Policy.
As already discussed in connection
with the Travelers Policy Mechanical Device Exclusion, Cavataio
was killed while a battery was being moved by a pallet jack, and
that pallet jack was not attached to the Truck.
Because all the
claims in the Underlying Action are predicated on Cavataio’s
death, all claims fall under the plain language of the
Harleysville Policy Mechanical Device Exclusion.
Wausau makes three arguments as to why the Harleysville
Policy Mechanical Device Exclusion does not apply.
has merit.
None of them
First, it argues that the complaint in the
Underlying Action does not mention a pallet jack, and that
Harleysville may not rely on extrinsic evidence to defeat
coverage.
This argument fails because (1) Ms. Cavataio alleges
in her bill of particulars in the Underlying Action that the
battery was being moved by a pallet jack, and (2) it is
undisputed that the battery that crushed Cavataio was being
moved by means of a pallet jack when it fell.
Second, Wausau argues that the exclusion does not apply
because the pallet jack is a type of hand truck, the use of
which is an exception to the Harleysville Policy Mechanical
Device Exclusion.
As discussed above in connection with the
28
Travelers Policy Mechanical Device Exclusion, a pallet jack is
not a hand truck under any reasonable interpretation of the
term.
The case relied upon by Wausau does not alter that
conclusion.
See Manigault v. W.H. Beaumont & Son, 237 N.Y.S.
370 (3d Dep’t 1929) (concerning a dolly, not a pallet jack).
Accordingly, there is no genuine dispute that the battery fell
while being moved by a mechanical device.
Third, Wausau argues that the exclusion does not apply
because Ms. Cavataio has raised several different theories of
liability in the Underlying Action, some of which are unrelated
to the pallet jack.
This argument is unavailing for the reasons
discussed in connection with the Travelers Policy.
Although Ms.
Cavataio has alleged different theories of liability in the
Underlying Action, the claims all arise from the allegation that
Cavataio was killed while the battery was being moved by a
pallet jack.
See U.S. Fire Ins. Co. v. New York Marine & Gen.
Ins. Co., 706 N.Y.S.2d 377, 380 (2000) (holding that the
possibility of alternative theories of recovery did not alter
the operative act giving rise to the accident itself).
Accordingly, the Harleysville Policy Mechanical Device Exclusion
applies to exclude coverage for Hellman, the MTA, and the TBTA
under the Harleysville Policy.
29
C. Employer’s Liability Exclusion
The Harleysville Policy contains an exclusion for bodily
injury to “[a]n ‘employee’ of the ‘insured’ arising out of and
in the course of . . . [e]mployment by the ‘insured.’”
Wausau
and Harleysville dispute whether coverage is excluded under this
provision.
Having determined that coverage is excluded under
the Harleysville Policy Mechanical Device Exclusion, this issue
is moot.
III. Priority of Coverage Among the Policies
Wausau seeks a declaration that the Travelers Policy and
Harleysville Policy are primary with respect to the claims in
the Underlying Action, and that the Wausau Policy is excess.
Having determined that neither Travelers nor Harleysville has a
duty to defend the Underlying Action, this issue is moot.
Similarly, Travelers’ and Harleysville’s requests for a
determination of the relative share of the parties’ coverage are
moot.
Conclusion
Wausau’s motion for summary judgment is denied.
Neither
Travelers nor Harleysville has a duty to defend the Underlying
Action.
Wausau’s claim for a declaration concerning the
priority of coverage among the parties is dismissed as moot.
Travelers’ motion for summary judgment is granted insofar
30
as there is no coverage under the Travelers Policy for the
claims in the Underlying Action, and thus Travelers has no duty
to defend the Underlying Action.
For that reason,
Harleysville’s cross-claim against Travelers is dismissed.
Harleysville’s motion for summary judgment is granted
insofar as there is no coverage under the Harleysville Policy
for the claims in the Underlying Action, and thus Harleysville
has no duty to defend Hellman, the MTA, or the TBTA.
Harleysville’s counterclaim against Wausau seeking a declaration
that Wausau has a duty to defend the Underlying Action is
dismissed as moot.
Dated:
New York, New York
February 29, 2016
__________________________________
DENISE COTE
United States District Judge
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