Superior Court of New Jersey,
Appellate Division.
Kathleen STRUNK, Plaintiff,
v.
M & A TRUCKING and Edson L. Silva, Defendants.
Safety Insurance Company, Plaintiff–Appellant,
v.
Progressive Insurance Company, Defendant–Respondent,
and
Murilo Martins d/b/a M & A Trucking, Kathleen C. Strunk and Edson L. Silva, Defendants.
Kathleen Strunk, Plaintiff,
v.
M & A Trucking and Edson L. Silva, Defendants.
Safety Insurance Company, Plaintiff–Respondent,
v.
Progressive Insurance Company, Defendant–Appellant,
and
Murilo Martins d/b/a M & A Trucking, Kathleen C. Strunk and Edson L. Silva, Defendants.
Telephonically Argued March 26, 2014.
Decided June 19, 2014.
On appeal from the Superior Court of New Jersey, Law Division, Union County, Docket Nos. L–2578–10 and L–1082–11.
Michael F. Nerone (Pion, Johnston, Nerone, Girman, Clements & Smith, P.C.) of the Pennsylvania bar, admitted pro hac vice, and Matthew T. Pisano argued the cause for appellant (A–2344–12/respondent (A–3195–12) Safety Insurance Company (Pisano Law Firm and Mr. Nerone, attorneys; Mr. Pisano, on the briefs).
Daniel J. Pomeroy argued the cause for respondent (A–2344–12)/appellant (A–3195–12) Progressive Insurance Company (Pomeroy, Heller & Ley, LLC, attorneys; Mr. Pomeroy and Karen E. Heller, on the brief).
Before Judges ALVAREZ, OSTRER and CARROLL.
PER CURIAM.
*1 Plaintiff Safety Insurance Company filed a declaratory judgment action seeking to compel defendant Progressive Insurance Company to extend primary liability coverage, pursuant to a Massachusetts non-trucking liability or “bobtail” insurance FN1 policy issued to defendant Edson L. Silva. Kathleen Strunk, a bicyclist, was injured in an April 18, 2009 accident with Silva’s tractor-truck or tractor. Safety defended Silva in the underlying litigation initiated by Strunk, ultimately settling the claim subject to a reservation of rights regarding coverage. In the declaratory judgment action, Safety unsuccessfully moved for summary judgment; Progressive cross-moved and prevailed. The Law Division judge denied Progressive’s application for counsel fees. We affirm.
FN1. “Bobtail” insurance covers a tractor trailer when the vehicle is not being used for commercial purposes.
Safety’s policy provides coverage to Silva when he is operating his tractor in the business of the named insured, M & A Trucking. Safety’s principal point on appeal is that summary judgment was erroneously granted to Progressive because it is not liable to pay claims under its commercial policy when Silva was not “[a]cting [i]n the [b]usiness of M & A Trucking.” Building on that premise, Safety then argues that the trial court’s enforcement of the Progressive insurance “[e]xclusion of [c]ompulsory [m]inimum [l]imits [wa]s [c]ontrary to [p]ublic [p]olicy,” reiterating that Progressive’s bobtail coverage should be primary for compensation paid on account of Strunk’s losses.
Progressive appeals the denial of counsel fees, contending that, under Rule 4:42–9(a)(6), it was the prevailing insurer, or “successful claimant,” thereby entitling it to reimbursement. Progressive further contends that the law on these issues was clear, the outcome “predictable,” and the affidavit that Safety submitted in support of summary judgment by Murilo Martins, the former owner of M & A, a misrepresentation of the contractual relationship between M & A and Silva.
Throughout 2009, Silva drove exclusively for M & A, five or six days per week. He frequently drove from Massachusetts, where M & A was headquartered and he resided, to New Jersey and New York. On April 17, 2009, a Friday, Silva delivered a load on behalf of M & A trucking to New Jersey.
The following day, April 18, Silva discovered that one of his tractor’s tires was leaking air. He had remained in New Jersey because he was scheduled to transport a load for M & A to Massachusetts that Monday, April 20.FN2 Silva disconnected the flatbed trailer and drove to a tire repair shop in Elizabeth. After the repairs were made, Silva headed back to the truck stop where he had left the flatbed trailer; the accident occurred on the way there. On April 20, 2009, Silva picked up the scheduled shipment for M & A in New Jersey and returned to Massachusetts.
FN2. In Silva’s deposition, he stated that, at the time he delivered the load to New Jersey, he had a second load to pick up in New Jersey to deliver in Massachusetts on behalf of M & A. He did not recall the date on which he picked up the second load, but the record contains a warehouse receipt and bill of lading dated April 20, 2009, which, presumably, correspond to Silva’s second load.
Safety issued its business automotive liability policy to Martins and M & A effective March 1, 2009, to March 1, 2010. The commercial policy covered vehicles leased, hired, rented or borrowed by M & A.
*2 Silva and M & A entered into their written agreement on February 15, 2009. It gave M & A “exclusive possession, control, and use of” Silva’s truck-tractor. In accord with “interstate [c]ommerce [c]ommission regulations,” the agreement remained in effect for a period of thirty days, at which point it continued on a “trip-by-trip basis until cancelled by either party.”
In the contract, Silva agreed not to “seek, request, or accept advances from any [carrier] other than M & A,” unless authorized by M & A. He also agreed to secure bobtail insurance having a minimum coverage of $100,000 per person and $300,000 per occurrence. Silva further agreed to maintain “the equipment in the state of repair required by applicable regulations.”
Progressive provided bobtail insurance coverage to Silva from February 9, 2009, to February 9, 2010. The type of coverage was designated as “Non– Trucking Liability To Others.” Part I—“[Liability to Others]”—provided $1,000,000 combined coverage for damages, including bodily injury, “for which an [insured] becomes legally responsible because of an [accident] arising out of the ownership, maintenance or use of an [insured auto].”
Progressive’s policy also provided “[Compulsory Bodily Injury To Others Coverage]” in Massachusetts, stating that Progressive “w[ould] pay all sums an [insured] legally must pay as damages because of [bodily injury] caused by an [insured auto] in Massachusetts [accidents].” The policy included the following exclusion:
Coverage under this Part I, including [our] duty to defend, does not apply to an [insured auto] or any attached [trailer] while used:
1. To carry property in any business, or while such property is being loaded or unloaded from the [insured auto] or an attached [trailer]; or
2. In the business of anyone to whom the [auto] or any attached [trailer] is leased or rented.
Additionally, the policy did not extend coverage to:
i. [Bodily injury] to guest occupants of an [insured auto].
ii. [Accidents] outside of Massachusetts or in places in Massachusetts where the public has no right of access.
iii. [Bodily injury] to any employee of the [insured] if entitled to Massachusetts workers’ compensation benefits.
In support of its application for summary judgment, Safety submitted an affidavit by Martins in which he defined a “trip” as “begin[ning] when the driver picks up a load pursuant to a dispatch and physically has possession of the load.” He stated that a “trip end[ed] when the delivery of the load is made at the destination pursuant to the dispatch.” Additionally, according to Martins, Silva was “free to solicit loads from other entities, to go to other locations or to return to his home” after delivering a load. Martins claimed to exercise no control over Silva once a delivery was complete and that Silva, having delivered his load on April 17, had not been assigned another trip until he was dispatched on April 20. He opined that Silva was not operating “in the business” of M & A at the time of the accident and that any maintenance that Silva obtained for his tractor was “performed solely for the benefit” of Silva, not for M & A, because there were “other available operators” if Silva’s truck became disabled.
*3 Silva disputed those representations in his deposition. It was his recollection that he remained in New Jersey because he knew on April 17, the day he arrived, that he would be returning to Massachusetts with a load for M & A picked up in New Jersey that Monday.
Counsel for Safety argued before the Law Division judge, as he does on appeal, that the Martins affidavit set forth the true nature of the lease arrangement with Silva, that it was a “trip” lease. He reiterated Martins’ claim that Silva was uncertain that he would be getting another load to return to Massachusetts on April 20 until that day. Counsel also argued that Silva could obtain another delivery for another carrier between his M & A deliveries without violating his agreement with M & A and that repairs made to the truck were therefore Silva’s personal business, not called for by the agreement.
The Law Division judge concluded to the contrary. He determined that Silva was operating the truck in the business of M & A at the time of the accident, requiring Safety to extend coverage. The judge found that Silva was operating the vehicle on M & A’s business when he drove the truck to be repaired because he was awaiting his next delivery and required by his contract to maintain the truck in good working order. Furthermore, he characterized Silva’s lease with M & A as exclusive, opining that Silva was not permitted to “seek, request or accept advances from any [carrier] other than [M & A Trucking, u]nless otherwise authorized by M & A Trucking.” Since Silva’s ability to negotiate other trips came subject to the “condition precedent” that he obtain permission from M & A, it was effectively an exclusive arrangement. The judge also reasoned that whether Silva had a return load at that moment was irrelevant—he was still midway on a delivery, as he was waiting to pick up a load in New Jersey before returning to Massachusetts.
Therefore, relying upon Planet Insurance Co. v. Anglo American Insurance Co., 312 N.J.Super. 233 (App.Div.1998), the trial judge granted Progressive’s motion for summary judgment and denied Safety’s. The judge denied Safety’s request that Progressive be held liable for the first $20,000 of coverage because the bobtail policy clearly excluded accidents occurring outside of Massachusetts.
After the judge rendered his decision, counsel for Progressive sought an award of counsel fees pursuant to Rule 4:42–9(a)(6). The judge denied the application on February 1, 2013, stating that Safety’s claims, although “not exactly ‘novel,’ “ were arguably made in “good faith.”
I.
The interpretation of an insurance contract, including any exclusions, raises a question of law. Nat’l Union Fire Ins. Co. v. Transp. Ins. Co., 336 N.J.Super. 437, 443 (App.Div.2001). We therefore decide such issues de novo, independently of the trial court’s conclusions. Polarome Int’l, Inc. v. Greenwich Ins. Co., 404 N.J.Super. 241, 260 (App.Div.2008), certif. denied, 199 N.J. 133 (2009).
*4 Our review of motions for summary judgment requires us to consider whether there is a “genuine issue as to any material fact challenged and [whether] the moving party is entitled to a judgment or order as a matter of law.” R. 4:46–2(c). We determine whether a rational fact finder could resolve the alleged disputed issue in favor of the non-moving party, drawing all inferences in favor of that party. Murray v. Plainfield Rescue Squad, 210 N.J. 581, 584 (2012); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
II.
In support of its contention that Silva was not engaged in the business of M & A at the time of the accident, Safety cites to a number of cases outside this jurisdiction. Reliance on precedent from other jurisdictions is unnecessary here because Planet Insurance Co. is dispositive.
Contrary to Martins’ affidavit, Silva recalled remaining in New Jersey because he had already been assigned a return load. That he was physically present in this state over the weekend corroborates his recollection, as otherwise he would have presumably returned to Massachusetts. The plain language of the agreement leads us to conclude that Silva’s relationship with M & A was exclusive. And, it is equally clear from that contract that he was obliged to maintain his vehicle in good repair. His sole reason for being in New Jersey was that he had delivered a load in this State on behalf of M & A and planned to return to Massachusetts with another.
We also note that interstate trucking companies, such as M & A, are controlled by a comprehensive federal regulatory scheme. See Planet Ins. Co., supra, 312 N.J.Super. at 238; Interstate Commerce Commission Termination Act, Pub.L. No. 104–88, 109 Stat. 803 (codified as amended in scattered sections of 49 U.S .C.A.). These regulations require trucking companies and drivers to enter into written leases mandating carriers to take “exclusive possession” of trucks during the pendency of leases. See David N. Nissenberg, 1 Law of Commercial Trucking § 7.16 (3d ed.2003); see also 49 C.F.R. §§ 376.11 to .12 (2014). The relevant regulations place “full responsibility for the control of the leased vehicles, equipment, and drivers on the carrier-lessee and is an obligation which may not be contracted away or delegated to another party.” 1 Law of Commercial Trucking, supra, § 7.16. “This has the effect of making the owner-lessor and his driver or other employees the statutory employees of the carrier-lessee during the term of the lease.” Ibid. Although currently many trucking companies enter into a “trip lease” arranged by brokers, that really does not affect our analysis in this case as the relationship between M & A and Silva does not fall into that category. See 1 Law of Commercial Trucking, supra, § 7.16.
Generally, when interpreting insurance policy exclusions in an interstate trucking case, state law governs. See Planet Ins. Co., supra, 312 N.J.Super. at 238. In Planet Insurance Co., as here, the insurer attempted to characterize the driver’s activity as personal, as opposed to business, in order to avoid liability. Supra, 312 N.J.Super. at 237. “After picking up the tractor, on the way home, [the driver] stopped at the cleaners to pick up his clothing.” Ibid. “The accident occurred after he left the cleaners and resumed his trip home. It [wa]s th[at] personal deviation, on the way home from having the tractor repaired, that fuel[ed] the debate over which policy provide [d] coverage.” Ibid. As in this case, the lease required the owner of the truck to maintain it in good repair. Id. at 239. The obligation to keep the truck in good working order, as in this case, inured to the benefit of the trucking company. Ibid.
*5 If anything, the driver in Planet Insurance Co. was less engaged in business than was Silva. Silva had the same duty to repair as the owner in Planet Insurance Co., but Silva remained in New Jersey, solely on the business of M & A, while waiting to return to Massachusetts, on Monday, April 20. By repairing the vehicle, he was fulfilling his agreement with M & A. And as a matter of policy, it behooves us to enforce the obligations of the owners/operators of trucks used for the transport of goods over our roadways to maintain their business vehicles in good working order for the public’s safety.
In any event, the court in Planet Insurance Co. imposed the obligation to extend coverage on the carrier providing commercial coverage and not the carrier who supplied the bobtail policy; this because the truck was being used in business, in furtherance of the interest of the lessee even though the driver completed a personal errand on the way back from the repair shop. Id. at 239–41. The essential nature of the business here also advanced M & A’s interest, not any personal interest of Silva.
We are not suggesting that the judge made credibility determinations in interpreting the contract, inappropriate in a summary judgment application. Martins’ affidavit out-and-out refuted Silva’s assertion that he had a pending return load in New Jersey. But it is not plausible that Silva would remain in New Jersey absent some business reason for doing so since he was based out of Massachusetts. Keeping his vehicle in good repair was clearly an obligation under the contract. In other words, Martins’ contention on this score did not give rise to a “legitimate inference[ ]” that Silva was in New Jersey in a personal capacity. See R. 4:46–2(c) (emphasis added). Additionally, Martins’ other statements, such as that it was entirely up to Silva to determine if repairs were necessary, and that M & A exercised no control over him once the delivery was completed on April 17, were merely his after-the-fact interpretations of the contract language.
Therefore, the court’s reliance on the plain language in the contract and Silva’s deposition testimony neither required him to make a credibility finding nor presented a genuine issue of material fact. See Perez v. Professionally Green, LLC, 215 N.J. 388, 405 (2013); R. 4:46–2(c). Silva’s understanding of the agreement is confirmed by the document.
Safety argues that if the agreement in Planet Insurance Co. is compared with this agreement, M & A’s contract was a trip agreement with a resulting legal distinction. Even if this were a trip agreement, similar obligations applied, including the requirement that Silva maintain his vehicle in good and safe repair for M & A’s benefit.
In sum, Safety’s commercial policy must provide the primary coverage for the New Jersey occurrence that resulted in Strunk’s lawsuit. Safety’s policy is primary for accidents occurring when Silva was engaged in business on behalf of M & A.
III.
*6 Turning to Safety’s argument that Progressive must pay the first $20,000 as compulsory minimum coverage under the policy, Progressive’s policy was explicitly limited to accidents occurring in Massachusetts. The $20,000 minimum coverage is required by Massachusetts law; it simply does not apply to occurrences outside that State. Accordingly, we agree with the Law Division judge that Safety’s position on this issue also lacks merit.
Safety also contends that Progressive’s policy must provide minimum mandatory coverage as required by New Jersey insurance law. This too lacks merit, and, additionally, was not argued before the trial court. In any event, the issue is moot because Silva was engaged in business activities of M & A and, therefore, the Safety policy applies to this included occurrence.
Finally, Safety argues that Progressive’s business use exclusion violates New Jersey public policy. This issue was already addressed in Connecticut Indemnity Co. v. Podeszwa, 392 N.J.Super. 480, 481–82 (App.Div.2007).
IV.
As to Progressive’s request for counsel fees, Rule 4:42–9(a)(6) authorizes an award “[i]n an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.” The rule is intended “to discourage groundless disclaimers and to provide more equitably to an insured the benefits of the insurance contract without the necessity of obtaining a judicial determination that the insured, in fact, is entitled to such protection.” Sears Mortg. Corp. v. Rose, 134 N.J. 326, 356 (1993) (internal quotation marks omitted). The award of counsel fees, however, is not mandatory, “but rather the trial judge has broad discretion as to when, where, and under what circumstances counsel fees may be proper and the amount to be awarded.” Wright ex rel. Iafelice v. Arpino, 319 N.J.Super. 581, 590 (App.Div.1999); see also N. J. Mfrs. Ins. Co. v. Consol. Mut. Ins. Co., 124 N.J.Super. 598, 600 (Law Div.1973) (stating that the rule grants discretion to award costs “where the assured may have acted in bad faith and contributed substantially to the necessity for the litigation by reason of misrepresentations”). We determine only whether the trial court abused its discretion in deciding a fee award. Packard–Bamberger & Co. v. Collier, 167 N.J. 427, 444 (2001).
Here, the trial court did not abuse its discretion in refusing to award counsel fees. This is not a case where the insurer improperly refused to defend and indemnify an insured. See Moper Transp., Inc. v. Norbet Trucking Corp., 399 N.J.Super. 146, 151, 157 (App.Div.), certif. denied, 196 N.J. 462 (2008). Instead, Safety defended M & A and later brought the declaratory action.
Safety presented a good faith, albeit flawed, argument in support of its contention that Progressive’s policy applied to the accident. “This is a matter between two insurers debating the interpretation of liability coverage clauses, not one where the insurer has refused to provide coverage.” Messec v. USF & G Ins. Co., 369 N.J.Super. 61, 64 (App.Div.), certif. denied, 181 N.J. 287 (2004). As a result, “fees should not be awarded when an insurer loses a dispute with another insurer,” particularly where the trial court determined the issues were “worthy of consideration.” Ibid .
*7 Affirmed.
