United States District Court,

S.D. New York.

AMERICAN HOME ASSURANCE COMPANY a/s/o STANLEY DOOR SYSTEMS, Plaintiff,

v.

M/V HANJIN MARSEILLES, her engines, boilers, tackles, etc., Vanavana Shipping,

Senator Lines & Expeditors International of Washington, Inc., Defendants.

June 1, 2004.

REPORT AND RECOMMENDATION

PECK, Chief Magistrate J.

Presently before the Court is defendant Senator Lines’ motion to dismiss on the basis of a forum selection clause in the Bill of Lading between Senator Lines and Expeditors International. (Dkt. Nos. 12 & 13.)

For the reasons discussed below, Senator Lines’ motion to dismiss should be GRANTED as against co-defendant Expeditors and as against plaintiff American Home Assurance (“AHA”), the subrogated cargo underwriter of Stanley Door Systems.

FACTS

The facts are not in dispute.

On or before November 21, 2002, Stanley delivered to defendant Expeditors a shipment of 260 boxes of goods. (Dkt. No. 15: McDermott Decl. ¶ 4.) Expeditors and Stanley were parties to bill of lading number 6430071357, which does not contain a forum selection clause. (McDermott Decl. ¶ 5 & Ex. 1: Bill of Lading 6430071357.) Expeditors subcontracted with defendant Senator Lines to carry the shipment; Expeditors and Senator Lines were parties to bill of lading number SENUPUSD05802105, which contains a forum selection clause stating: “Any disputes arising under and in connection with this Sea Waybill shall be governed by German Law and determined by the courts of Bremen.” (McDermott Decl. ¶ 5 & Ex. 2: Bill of Lading number SENUPUSD05802105.) AHA alleges that during shipment some of Stanley’s goods were lost at sea through the fault of defendants, causing damages of $58,768.60. (Dkt. No. 1: Compl. ¶ 9 & Sched. A.) AHA brought suit in this Court against, inter alia, Senator Lines and Expeditors. (Compl.) Expeditors’ answer asserted a cross-claim against Senator Lines for indemnity and/or contribution. (Dkt. No. 8: Expeditors Answer ¶ ¶ 23-24.)

Senator Lines’ Motion to Dismiss

On January 22, 2004, Senator Lines filed a motion to dismiss AHA’s complaint and defendant Expeditors’ cross-claim on the basis of a Bremen, Germany forum selection clause contained in the bill of lading between Expeditors and Senator Lines. (Dkt. Nos. 12 & 13.) Senator Lines argues that: (1) foreign forum selection clauses are presumptively enforceable (Dkt. No. 13: Senator Lines Br. at 2); (2) courts routinely enforce German forum clauses in bills of lading (id. at 4); and (3) Expeditors’ cross-claim is subject to the forum selection clause, even for a tort claim, because they are a party to the waybill (id. at 5). AHA opposed the motion (Dkt. Nos. 15 & 16), and Expeditors joined in AHA’s opposition to the motion to dismiss via a letter to Judge Daniels. (Dkt. No. 17: Senator Lines Reply Br., Att. Expeditors 2/13/04 Letter.)

ANALYSIS

I.

PRINCIPLES GOVERNING THE VALIDITY OF FORUM SELECTION CLAUSES UNDER FEDERAL LAW

A. Forum Selection Clauses Generally Are Upheld, Including in Contracts Governed by COGSA

The Supreme Court has repeatedly upheld the validity of forum selection clauses between contracting parties. E.g., Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 589-95, 111 S.Ct. 1522, 1525-28 (1991); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 14, 105 S.Ct. 2174, 2182 n. 14 (1985); M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 8-18, 92 S.Ct. 1907, 1912-17 (1972). [FN1] In Bremen, the Supreme Court held that forum selection clauses “are prima facie valid and should be enforced unless enforcement is shown by the resisting party to be ‘unreasonable’ under the circumstances.” M/S Bremen v. Zapata Off-Shore Co., 407 U.S. at 10, 92 S.Ct. at 1913. “[A]bsent some compelling and countervailing reason it should be honored by the parties and enforced by the courts.” Id. at 12, 92 S.Ct. at 1914.

FN1. See also, e.g., Ainsley Skin Care of New York, Inc. v. Elizabeth Grady Face First, Inc., 97 Civ. 6716, 1997 WL 742526 at *2 (S.D.N.Y. Dec. 2, 1997) (Peck, M.J.).

In Carnival Cruise Lines, the Supreme Court “refine[d]” its Bremen analysis and extended the validity of forum selection clauses to include those not the subject of negotiation and included in a form contract between a business and a consumer, so long as the parties had notice of the clause. Carnival Cruise Lines, Inc. v. Shute, 499 U.S. at 593, 111 S.Ct. at 1527. The Supreme Court explained that there are valid business reasons for including a reasonable forum selection clause in a form contract that is not the subject of negotiation. Id. at 593-94, 111 S.Ct. at 1527. The Supreme Court emphasized that “forum-selection clauses contained in form … contracts are subject to judicial scrutiny for fundamental fairness….” Id. at 595, 111 S.Ct. at 1528. The Supreme Court noted, however, that the forum state chosen was not a ” ‘remote alien forum” ‘ but one where one of the parties was located. Id. at 594, 111 S.Ct. at 1528. Therefore, “because respondents do not claim lack of notice of the forum clause, … they have not satisfied the ‘heavy burden of proof,’ … required to set aside the clause on the grounds of inconvenience.” Id. at 595, 111 S.Ct. at 1528; see also, e.g., New Moon Shipping Co. v. Man B & W Diesel AG, 121 F.3d 24, 32 (2d Cir.1997) (In order to escape a forum selection clause, a party must show ” ‘that trial in the contractual forum will be so gravely difficult and inconvenient that he will for all practical purposes be deprived of his day in court.” ‘); Ainsley Skin Care of New York, Inc. v. Elizabeth Grady Face First, Inc., 1997 WL 742526 at *2; National School Reporting Servs., Inc. v. National Schools of Cal., Ltd., 924 F.Supp. 21, 24 (S.D.N.Y.1996) (“Forum selection clauses are regularly enforced…. The Second Circuit has consistently held that, in cases brought under diversity jurisdiction, a forum selection clause shall be upheld, unless it can be shown that ‘enforcement would be unreasonable and unjust or that the clause was obtained through fraud or over reaching.” ‘); Bison Pulp & Paper Ltd. v. M/V Pergamos, 89 Civ. 1392, 1995 WL 880775 at *7-14 & n. 12 (S.D.N.Y. Nov. 29, 1995); Elite Parfums, Ltd. v. Rivera, 872 F.Supp. 1269, 1271-72 (S.D.N.Y.1995) (“The Second Circuit has a ‘strong policy’ of enforcing forum selection agreements.”); Orix Credit Alliance, Inc. v. Bell Realty, Inc., 93 Civ. 4949, 1994 WL 86394 at *2 (S.D.N.Y. Mar. 16, 1994) (“In diversity cases, [forum selection clauses] must be enforced unless it is clear ‘that enforcement would be unreasonable and unjust, or that the clause was obtained through fraud or overreaching.” ‘); Falconwood Fin. Corp. v. Griffin, 838 F.Supp. 836, 838-41 (S.D.N.Y.1993) (“Settled law permits parties to a contract to select in advance the forum for litigation of disputes that arise under the contract.”).

The Carriage of Goods by Sea Act(“COGSA”), 46 U.S.C. § § 1300-15, applies to bills of lading for shipments to or from a U.S. port in foreign trade. Like other contracts, mandatory forum selection clauses in maritime contracts governed by COGSA are upheld between the parties by federal courts. In Vimar Seguros Y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528, 115 S.Ct. 2322 (1995), the Supreme Court held that foreign arbitration clauses in bills of lading were not invalid under COGSA. Since Sky Reefer, courts have consistently held that forum selection clauses (including foreign arbitration clauses) in bills of lading are valid under COGSA. See, e.g., Kukje Hwajae Ins. Co. v. M/V Hyundai Liberty, 294 F.3d 1171, 1175 (9th Cir.2002), pet. for cert. filed, No. 02-81, 71 USLW 3400 (Nov. 22, 2002); Fireman’s Fund Ins. Co. v. M.V. DSR Atlantic, 131 F.3d 1336, 1339 (9th Cir.1997), cert. denied, 525 U.S. 921, 119 S.Ct. 275 (1998); Mitsui & Co. (U.S.A.), Inc. v. Mira M/V, 111 F.3d 33, 36 (5th Cir.1997); Glyphics Media, Inc. v. M.V. Conti Singapore, 02 Civ. 4398, 2003 WL 1484145 at *4-6 (S.D.N.Y. Mar. 21, 2003); Far Eastern Antique Arts v. M/V Cho Yang Success, 01 Civ. 8375, 2002 WL 1313308 at *2 (S.D.N.Y. June 14, 2002); Central National-Gottesman, Inc. v. M.V. Gertrude Oldendorff, 204 F.Supp.2d 675, 679 (S.D.N.Y.2002); Commercial Union Ins. Co. v. M.V. Bremen Express, 16 F.Supp.2d 403, 407 (S.D.N.Y.1998), aff’d, No. 99-9070, 208 F.3d 202 (table) (2d Cir. Mar. 21, 2000); Farrell Lines, Inc. v. Columbus Cello-Poly Corp., 32 F.Supp.2d 118, 125-28 (S.D.N.Y.1997), aff’d, 161 F.3d 115 (2d Cir.1998); International Marine Underwriters CU v. M/V Kasif Kalkavan, 989 F.Supp. 498, 499-500 (S.D.N.Y.1998).

B. Privity of Contract Principles and Forum Selection Clauses

Privity of contract usually is needed to bind an entity to a forum selection clause. In Sparks Tune-Up Ctrs., Inc. v. Strong, No. 92 C 5902, 1994 WL 188211 at *5 (N.D.Ill. May 12, 1994), the defendants disputed the plaintiff’s attempt to bind them to a forum selections clause which they neither bargained for nor agreed upon. “The thrust of the plaintiffs’ argument is that privity of contract is not necessary to bind an individual or an entity to a forum selection clause contained in an agreement. Rather, according to the plaintiffs, a non-party to a contract should be ‘subject to’ the contract’s forum selection clause when the conduct of the non-party is ‘closely related’ to the contractual relationship in which the forum selection clause is controlling.” Id., 1994 WL 188211 at *4. The court rejected this argument, finding that the cases that plaintiff cited in support of this assertion were distinguishable because the parties seeking to avoid the forum selection clause were parties to the contract. Id., 1994 WL 188211 at *5; see also, e.g., American Specialty Sys., Inc. v. Chicago Metallic Corp., No. 01 C 4609, 2002 WL 406965 at *5 (N.D.Ill. Mar. 15, 2002) (“CMC argues that the plaintiff should be bound to the forum selection clause contained in CMC’s General Conditions of Sale…. The problem with this argument is that the plaintiff was not a party to any contract with CMC and did not agree to the forum selection clause in CMC’s General Conditions of Sale…. ‘A third party … cannot have his rights altered, compromised or redefined by the provisions of a contract he has not accepted.’… Therefore, CMC’s forum selection clause cannot be applied against the plaintiff .”); City of Peru v. Bouvier Hydropwer, Inc., No. 00 C 1179, 2001 WL 59036 at *1 (N.D.Ill. Jan. 19, 2001) (“Here, the City was not a party to the contract and thus did not agree to litigate disputes arising out of it in Pennsylvania. Defendants can point to no case in which a non-party to a contract was compelled to litigate its claim in a jurisdiction identified in a forum selection clause, which he did not agree to or bargain for. I decline to enforce the forum selection clause against the City.”).

C. Mandatory Forum Selection Clauses Are Enforceable

Case law makes a distinction between forum selection clauses that are considered permissive rather than mandatory. ” ‘A mandatory forum selection clause grants exclusive jurisdiction to a selected forum.’ … In contrast, a permissive forum selection clause indicates the contracting parties’ consent to resolve their dispute in a given forum, but does not require the dispute to be resolve in that forum.” Fireman’s Fund McMgee Marine v. M/V Caroline, 02 Civ. 6188, 2004 WL 287663 at *3 (S.D.N.Y. Feb. 11, 2004); see also, e.g., Baosteel America, Inc. v. M/V Ocean Lord, 257 F.Supp.2d 687, 689 (S.D.N.Y.2003). “Court[s] have … drawn a distinction between mandatory forum selection clauses and permissive provisions, which are accorded less weight. A forum selection clause that is ‘permissive in its language (“may be brought”) … [leaves] open the possibility that an action could be brought in any forum where jurisdiction can be obtained.” ‘ Foothill Capital Corp. v. Kidan, 03 Civ. 3976, 2004 WL 434412 at *2 (S.D.N.Y. Mar. 8, 2004) (quoting Blanco v. Banco Indus. de Venezuela, S.A., 997 F.2d 974, 979 (2d Cir.1993)). However, “[m]andatory and exclusive forum selection clauses ‘are presumptively valid and must be enforced unless they are unreasonable or constitute the product of fraud or Overreaching.” ‘ Fireman’s Fund McMgee Marine v. M/V Caroline, 2004 WL 287663 at *3 (citing Asoma Corp. v. M/V Southgate, 98 Civ. 7407, 1999 WL 1115190 at *1 (S.D.N.Y.Dec.7, 1999) (Haight, D.J.)); Jockey Int’l. Inc. v. M/V Leyerkusen Express, 217 F.Supp.2d 447, 451 (S.D.N.Y.2002) (Haight, D.J.).

Forum selection clauses that contain the term “shall” generally are held to be mandatory clauses that must be enforced. See, e .g., AVC Nederland B.V. v. Atrium Inv. P’ship, 740 F.2d 148, 155 (2d Cir.1984); Baosteel America, Inc. v. M/V Ocean Lord, 257 F.Supp.2d at 689-90 ( & cases cited theein); Valley Nat’l Bank v. Greenwich Ins. Co., 254 F.Supp.2d 448, 455 (S.D.N.Y.2003); Thyssen, Inc. v. M/V Alpha Jupiter, 96 Civ. 8734, 1997 WL 882595 at *7 (S.D.N.Y. Aug. 15, 1997); Bison Pulp & Paper Ltd. v. M/V Perganos, 89 Civ. 1392, 1995 WL 880775 at *11 (S.D.N.Y. Nov. 29, 1995). On the other hand, forum selection clauses that contain terms such as “have the right”, “may” or “come within” are usually permissive. Baosteel America, Inc. v. M/V Ocean Lord, 257 F.Supp.2d at 690.

II. THE FORUM SELECTION CLAUSE IN SENATOR LINES’ BILL OF LADING IS MANDATORY AND REASONABLE AND SHOULD BE ENFORCED AGAINST EXPEDITORS AND AHA

Plaintiff AHA concedes that forum selection clauses, including in contracts covered by COGSA, generally are enforced. (Dkt. No. 16: AHA Br. at 3: “Plaintiff does not dispute the authority cited by [Senator Lines’] counsel in support of the motion that U.S. Courts do enforce mandatory forum selection clauses for Germany and other countries.”) AHA argues, however, that the forum selection clause in Senator Lines’ bill of lading is permissive, not mandatory. (AHA Br. at 3.) AHA primarily relies on the decision in Hartford Fire Ins. Co. v. Novorango U.S.A. Inc., 156 F.Supp.2d 372 (S.D.N.Y.2001), which held the Senator Lines’ forum selection clause–” ‘Any dispute arising under or in connection with this Bill of Lading shall be governed by German Law and determined by the Courts of Bremen,” ‘ id. at 373-74–to be permissive, not mandatory. Id. at 375. The court in Hartford felt that “the use of the word ‘shall’ only confers jurisdiction in the courts of Bremen, Germany without excluding jurisdiction elsewhere or employing mandatory venue language.” Id.

This Court respectfully disagrees with the Hartford court’s conclusion. First, the cases generally hold that use of the word “shall,” even without more, makes the forum selection clause mandatory, not simply permissive. (See cases cited at page 8 above.) Second, the Senator Lines’ forum selection clause at issue in this case contains additional language that makes clear its mandatory nature. The clause in full has two paragraphs, not just one, and reads as follows:

JURISDICTION AND LAW CLAUSE

a) Any dispute arising under and in connection with this Sea Waybill shall be governed by German Law and determined by the Courts of Bremen.

b) With regard to contracts of carriage concluded in France, or entered into with a French port, the court where the carrier has his principle place of business be also competent in case of “APPEAL ON GUARANTEE” or “PLURALITE DE DEFENDEURS” or “CONNEXITE” the parties to this Sea Waybill expressly deregating from article 100 to 107, 323, 331 to 333, 336 and 337 FRENCH NOUVEAU CODE DE PROCEDURE CIVILE.

(Dkt. No. 15: McDermott Decl. Ex. 2: Senator Bill of Lading SENUPUSDO5802105.) [FN2]

FN2. There is no mention of this second paragraph of the Senator Lines’ bill of lading in the Hartford decision. This Court cannot determine if it was absent from the Senator Lines’ bill of lading at issue in Hartford or rather whether the parties failed to call it to the Hartford court’s attention.

Contracts must be read in their entirety. See, e.g., Jamie Sec. Co. v. The Ltd., Inc., 880 F.2d 1572, 1576 (2d Cir.1989) (“The contract must be examined in its entirety to ensure a valid interpretation.”). “By examining the entire contract, we safeguard against adopting an interpretation that would render any individual provision superfluous.” Sayers v. Rochester Tel. Corp. Supp. Mgmt. Pension Plan, 7 F.3d 1091, 1095 (2d Cir.1993).

If the first paragraph of the forum selection clause were permissive, the France carve-out to the forum selection clause in the second paragraph would be superfluous. This further shows that the first paragraph of the forum selection clause is mandatory. The Court finds the forum selection clause to be mandatory.

None of the parties here addressed an issue that appeared as dicta in Hartford, 150 F.Supp.2d at 376, and that applies to the facts of this case: whether a party that was not a signatory to the bill of lading, like Stanley, can be bound to its terms. As explained by Judge Haight in Jockey Int’l. Inc. v. M/V Leverkusen Express, 217 F.Supp.2d 447 (S.D.N.Y.2002), a non-vessel Operating Common Carier (“NVOCC”), as agent for the cargo owner, binds the owner to the bill of lading signed by the NVOCC:

Courts, including the Second Circuit, have held that provisions of a bill of lading issued to an intermediary like Fritz also bind the consignee on whose behalf the intermediary acted in arranging the shipment. In Stolt Tank Containers, Inc. v. Evergreen Marine Corporation, 962 F.2d 276, 279-80 (2d Cir.1992), the court of appeals held that the owner of damaged containers was subject to the liability limitations contained in a bill of lading issued by the carrier to an intermediary without reference to the owner. The court rejected the owner’s argument that it could not be bound by a contract to which it was not a party, concluding that “where a party is aware that another is shipping its packages aboard a vessel and has at least constructive notice that liability limitations might apply, that party is bound by the liability limitations agreed to by the shipper.” Id. at 280. While the Second Circuit has not addressed the binding nature of forum selection clauses in particular, Stolt’s reasoning would appear to apply to the other provisions of such a contract. Applying similar reasoning the Ninth Circuit has recently held that a forum selection clause in a bill of lading issued to an NVOCC binds the cargo owner. See Kukje Hwajae Ins. Co., Ltd., 294 F.3d at 1177. As the Ninth Circuit explained, “because an NVOCC is considered, in general, to act as an agent for the cargo’s owner when it contracts for carriage on a vessel, and because in this case [the NVOCC] was acting as [the cargo owner’s] agent when it accepted the [shipper’s] bill of lading, [the cargo owner’s subrogated insurer] is bound by that bill.” Id. See also Indemnity Insurance Co. of North America v. Schneider Freight USA, Inc., No. CV 00-08032, 2001 WL 1356247, *4-*5 (C.D.Cal. June 15, 2001) (NVOCC bound owner to forum selection clause in bill of lading).

Jockey Int’l Inc. v. M/V Leverkusen Express, 217 F.Supp.2d at 457; accord, Kukje Hwajae Ins. Co. v. M/V Hyundai Liberty, 294 F.3d 1171, 1177 (9th Cir.2002). The mandatory forum selection clause in the bill of lading between Senator Lines and Expeditors as AHA’s agent therefore is binding upon AHA.

Finally, AHA also argues that if the Court finds that the forum selection clause is mandatory, it nevertheless is not enforceable because it is unreasonable in that it deprives AHA of a remedy. (Dkt. No. 16: AHA Br. at 4-6.) AHA asserts that “in light of the fact that under German maritime law sole title to sue under the Senator Line’s sea waybill is with its contractual partner, Expeditors International of Washington, Inc., plaintiff would be barred from bringing suit against Senator Lines. Thus, Senator Lines’ forum selection clause is unreasonable as it denies plaintiff of its remedy to recover against Senator lines.” (AHA Br. at 6.) Senator Lines has agreed to stipulate that if AHA brings suit against Senator Lines in Bremen, “Senator Lines would waive any defense that plaintiff lacks privity to sue Senator Lines under the waybill.” (Dkt. No. 17: Senator Reply Br. at 7.) Accordingly, dismissal of this action would not deprive AHA of a remedy in Bremen, Germany on the basis of contractual privity.

CONCLUSION & SCHEDULING

For the reasons stated above, Senator Lines’ motion to dismiss should be GRANTED as to both Expeditors and AHA. The only claim that remains before this Court is AHA’s claim against Expeditors. Plaintiff AHA shall inform the Court in writing by June 11, 2004 whether it wishes to proceed in this Court just against Expeditors, or whether it will pursue all of its claims, against Senator Lines and Expeditors, in Germany.

FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R.Civ.P. 6. Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with courtesy copies delivered to the chambers of the Honorable George B. Daniels, 40 Centre Street, Room 410, and to my chambers, 500 Pearl Street, Room 1370. Any requests for an extension of time for filing objections must be directed to Judge Daniels. Failure to file objections will result in a waiver of those objections for purposes of appeal. Thomas v. Arn, 474 U.S. 140, 106 S.Ct. 466 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir.1993), cert. denied, 513 U.S. 822, 115 S.Ct. 86 (1994); Roldan v. Racette, 984 F.2d 85, 89 (2d Cir.1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir.), cert. denied, 506 U.S. 1038, 113 S.Ct. 825 (1992); Small v. Secretary of Health & Human Servs., 892 F.2d 15, 16 (2d Cir.1989); Wesolek v. Canadair Ltd., 838 F.2d 55, 57-59 (2d Cir.1988); McCarthy v. Manson, 714 F.2d 234, 237-38 (2d Cir.1983); 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72, 6(a), 6(e).

END OF DOCUMENT

Superior Court of Delaware.

REESE

v.

WHEELER, et al.

Submitted March 10, 2004.

Decided June 10, 2004.

Dear Counsel:

STOKES, J.

This is my decision on Third-Party Defendant State Farm Mutual Automobile Insurance Company’s (“State Farm”) Motion for Summary Judgment and Third-Party Defendant Commercial Union Insurance Company’s (“Commercial Union”) request to join in the Motion. State Farm’s Motion is granted, and Commercial Union’s request for Summary Judgment through joinder in the Motion is denied for the reasons set forth herein.

STATEMENT OF THE CASE

On April 4, 1997, Wayne Reese (“Reese”), a truck driver for N.M. Corbin, Inc. was injured when a Yard Dog roll-off jockey truck (“Yard Dog”) driven by Roy Wheeler (“Wheeler”) ran into him on the loading docks of the Draper-King Cole (“Draper”) plant in Milton, Delaware. Plaintiffs Wayne and Ramona Reese brought suit against Wheeler, Kaye Trucking & Leasing Company (“Kaye Trucking”), Draper Canning Company and Draper-King Cole, Inc. in April, 1999. Default judgment was obtained against Wheeler and Kaye Trucking on April 7 and March 3 of 2000, respectively. Commercial Union, N.M. Corbin, Inc.’s insurer, and State Farm, Reese’s insurer, were joined as Third-Party Defendants on Draper’s motion for indemnification and contribution pursuant to their uninsured and underinsured motorist (“UM/UIM”) coverage. In a previous opinion, summary judgment was found on behalf of the plaintiffs on the basis that Reese was an insured pursuant to Commercial Union’s UM/UIM policy under the designation “any family member” and that he was also an insured under the policy as a “user” of the covered vehicle pursuant to Virginia law. Reese v. Wheeler, Del.Super. Ct., C.A. No. 99C-04- 002, Stokes, J. (November 4, 2003).

In this instance, Third-Party Defendant, State Farm has brought its own motion for Summary Judgment. State Farm claims that pursuant to its policy, the Yard Dog does not qualify as an “uninsured motor vehicle” because it was equipment used only on the Draper property and on no public roads and it was not registered or licensed with the Delaware Department of Motor Vehicles. Commercial Union desires to join in the motion, incorporating State Farm’s arguments about the Yard Dog as to the language of its own policy.

State Farm also claims that the Yard Dogis not uninsured, however, this issue was previously decided in the November 4th decision, Reese v. Wheeler, Del.Super. Ct., C.A. No. 99C-04-002. Although the Yard Dog was the property of Draper, Wheeler was driving it without Draper’s permission when it struck Reese. Wheeler is a driver for Kay Trucking & Leasing Company, which has since gone out of business. St. Paul Fire & Marine Insurance Company (“St.Paul”), the insurer for Wheeler and Kaye Trucking has refused to cover this incident. In a letter, dated December 23, 2002, Northbrook Property and Casualty Insurance Company denied coverage on behalf of St. Paul. Plaintiff’s Answering Brief, App. 1. Wheeler and Kaye Trucking are uninsured as to this matter and thus, so is the Yard Dog which Wheeler was driving without Draper’s permission. See Va.Code § 38.2-2206 (definition of “uninsured motor vehicle” (ii)). See also State Farm’s Uninsured Motorists Insurance, Third-Party Def. State Farm’s Mot. for Summary Judgment (“State Farm’s Mot.”), App. B at 5-6 (definition of “uninsured motor vehicle” (a)(ii)).

The single issue in this case is whether the Yard Dog qualifies as a “motor vehicle” under the language of State Farm’s UM/UIM policy and whether Commercial Union can profit from this effort.

DISCUSSION

A. Standard of Review

This Court will grant summary judgment only when no material issues of fact exist, and the moving party bears the burden of establishing the nonexistence of material issues of fact. Moore v. Sizemore, 405 A.2d 679, 680 (Del.1979). Once the moving party meets its burden, the burden shifts to the nonmoving party to establish the existence of material issues of fact. Id. at 681. The court views the evidence in a light most favorable to the nonmoving party. Id. at 680.

Where the moving party produces an affidavit or other evidence sufficient under Superior Court Civil Rule 56 in support of its motion and the burden shifts, the nonmoving party may not rest on its own pleadings, but must provide evidence showing a genuine issue of material fact for trial. Super. Ct. Civ. R. 56(e); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). If material issues of fact exist or if the Court determines that it does not have sufficient facts to enable it to apply the law to the facts before it, then summary judgment is not appropriate. Ebersole v. Lowengrub, 180 A.2d 467, 470 (Del.1962).

B. Choice of Law

Delaware applies the “most significant relationship” test for choice of law issues in a contract case. Oliver B. Cannon & Son, Inc. v. Dorr-Oliver, Inc., 394 A.2d 1160, 1166 (Del.1978). An action to ascertain the scope of uninsured motorist benefits in a policy is an action in contract, not in tort. Allstate Ins. Co. v. Spinelli, 443 A.2d 1286, 1287 (Del.1981). The relevant test is the “most significant relationship” test as laid out in the Restatement (Second) of Conflict of Laws § 188 (1971). [FN1] Oliver B. Cannon & Son, Inc., 394 A.2d at 1166 (Del.1978). See also Travelers Indemnity Co. v. Lake, 594 A.2d 38 (Del.1991). The Court’s interpretation of an insurance policy is a matter of law. Nat’l Union Fire Ins. Co. v. Fisher, 692 A.2d 892 (Del.1997); Universal Underwriters Ins. Co. v. The Travelers Ins. Co., 669 A .2d 45, 47 (Del.1995). This case involves a Virginia policy issued to a Virginia resident, Reese’s wife. [FN2] Reese also lives in Virginia. The only connection this issue has to Delaware is that the accident occurred in Delaware. [FN3] The Court will apply Virginia law in the interpretation of State Farm’s policy. [FN4]

FN1. (2) In the absence of an effective choice of law by the parties (see § 187), the contacts to be taken into account in applying the principles of § 6 to determine the law applicable to an issue include: (a) the place of contracting,

(b) the place of negotiation of the contract,

(c) the place of performance,

(d) the location of the subject matter of the contract, and

(e) the domicil, residence, nationality, place of incorporation and place of business of the parties.

These contacts are to be evaluated according to their relative importance with respect to the particular issue.

(3) If the place of negotiating the contract and the place of performance are in the same state, the local law of this state will usually be applied, except as otherwise provided in § § 189-199 and 203.

FN2. The Named Insured on the State Farm Policy is actually Remonia Shores, who resides at 2025 W. Grace St., Richmond, Virginia. Neither side has disputed that Reese is an insured under the policy. He resides at the same address and is married to Ramona G. Reese. Presumably she is the same woman named on the policy and they were married and residents of the same household at the time of the accident. See State Farm’s Mot., App. B at 2 (State Farm Policy, Persons Insured).

FN3. The Defendant Roy Wheeler is an Indiana resident, and the Defendants Draper Company and Draper-King Cole, Inc. are Delaware Corporations. Kaye Trucking, Inc. is an Ohio Corporation. The location of these defendants is inapposite to the issue of whether Reese is covered under State Farm or Commercial Union’s UM/UIM policies, and it is not considered for the purposes of resolving the conflict of law issue.

FN4. The Court previously ruled on this choice of law issue regarding Commercial Union in its November 4, 2003 decision, Reese v. Wheeler, Del.Super. Ct., C.A. No. 99C-04-002. The Court will also apply Virginia Law to the interpretation of Commercial Union’s policy.

C. State Farm’s Policy

State Farm’s UM/UIM policy provides:

Persons Insured

Each of the following is an insured under this insurance to the extent set forth below:

(a) the named insured and, while residents of the same household, the spouse of the named insured and relatives, wards or foster children of either;

(b) any other person while occupying an insured motor vehicle; and

(c) any person, with respect to damage he is entitled to recover because of bodily injury to which this insurance applies sustained by an insured under (a) or (b) above.

State Farm’s Mot.App. B at 2.

Reese is an insured as the spouse, residing in the same household, of the named insured. See, supra, n. 2. State Farm’s UM/UIM policy provides coverage pursuant to Va.Code § 38.2-2206 for bodily injury or property damages sustained by the insured “caused by accident and arising out of the ownership, maintenance or use of such uninsured motor vehicle.” State Farm’s Mot.App. B at 1. The UM/UIM policy further defines “motor vehicle” to mean:

a land motor vehicle or trailer other than

(a) a farm type tractor or other equipment designed for use principally off public roads, while not upon public roads,

(b) a vehicle operated on rails or crawler-treads, or

(c) a vehicle while located for use as a residence or premises.

Id. at 5.

Despite the fact that § 38.2-2206 covers “uninsured motor vehicles” without mentioning or specifically permitting exclusions, insurers in Virginia are allowed to exclude “certain risks from coverage.” State Farm Mut. Automobile Ins. Co. v. Gandy, 383 S.E.2d 717, 719 (Va.Supr.1989) (interpreting medical payments coverage in motor vehicle insurance policy). “Reasonable exclusions not in conflict with statute in an insurance contract will be enforced, but it is incumbent upon the insurer to employ exclusionary language that is clear and unambiguous.” Id.

It is clear from State Farm’s policy that the Yard Dog is not excluded as a “farm type tractor,” [FN5] a “vehicle operated on rails or crawler treads,” or “a vehicle while located for use as a residence or premises.” The single remaining question is whether the Yard Dog qualifies as “other equipment designed for use principally off public roads, while not upon public roads.” None of the parties dispute that the Yard Dog was a vehicle designed not to be used on public roads and that Reese was injured when it was being used “not upon a public road.” See Pl.’s Response to Mot. of State Farm Ins. for Summary Judgment (“Plaintiff’s Response”) at 2.

FN5. Va.Code § 46.2-100 defines a “farm tractor” as:

every motor vehicle designed and used as a farm, agricultural, or horticultural implement for drawing plows, mowing machines, and other farm, agricultural, or horticultural machinery and implements including self-propelled mowers designed and used for mowing lawns.

A Yard Dog is not a farm tractor and would also not be a farm-type tractor. It is not used for farm, agricultural or horticultural purposes, but, rather, is used to move truck trailers around, in this case at a canning plant. If it is to be an excluded motor vehicle it must be excluded as equipment and not as a farm-type tractor. See State Farm Mut. Automobile Ins. Co. v. Gandy, 383 S.E.2d 717 (Va.Supr.1989) (finding under a policy with similar language that a forklift was not a “motor vehicle” because it was “equipment designed for use principally off public roads”).

The State Farm policy does not define the term “equipment.” Since an insurance policy is a contract, Virginia law requires that words in the policy are “given their ordinary and customary meaning when they are susceptible of [sic] such construction.” Hill v. State Farm Mut. Automobile Ins. Co., 375 S.E.2d 727, 729 (Va.Supr.1989). Webster’s Third New Int’l Dict. (1968) defines “equipment” to mean “the implements (as machinery or tools) used in an operation or activity.” However, it goes on to distinguish the word from other, similar words such as “apparatus” and “machinery” by saying “equipment [usually] covers everything, except personnel needed for efficient operation or service….” Id. A yard dog roll-off jockey truck is a vehicle used to move trailers around a loading dock. One website of trucker’s jargon defines a “jockey truck” as:

A tractor made especially for use within the confines of large yards. They have short wheel bases, fifth wheels that hydraulically raise and lower and deck plates that are accessed directly from the door. These are yard trucks and are not equipped to drive legally on public roads.

Available at, http://www.surfnetinc.com/fredh/jargon.htm

In addition, an OSHA website states:

A fifth wheel is a unique power unit designed primarily for moving and spotting trailers in truck, rail, and marine terminals. Other names for a fifth wheel are: yard hustler; jockey truck; yard goat; and UTR (utility tractor). Most fifth wheels are not designed or equipped for public highway or street use.

62 FR 40142 (1997), Preambles to Final Rules: Longshoring and Marine Terminals § 5–V. Other Issues, n. 9, available at, http:// www.osha.gov/pls/osha web/owadisp.show_document?p_id=977 & p_ table=PREAMBLES.

The term equipment is broad enough to include any motor vehicle that is used as part of an operation or service. See, e.g., Va.Code § 46.2-700 (mobile equipment defined as “any self-propelled vehicle manufactured for a specific purpose … which is used on a job site and whose movement on any highway is incidental to the purpose for which it was defined and manufactured.”) Defendant Draper describes the Yard Dog as “a truck cab designed to move trailers around an unloading and docking facility,” manufactured by Ford in the 1970’s. Def. Draper’s Response to Mot. of State Farm Ins. for Summary Judgment (“Def.’s Response”) at 2. Thus, a yard dog roll-off jockey truck would be equipment, according to the ordinary meaning of the word. It is an implement used as part of the process of moving around the trailers and loading and unloading them at loading docks. Similarly, the Virginia Supreme Court has interpreted a forklift as being ” ‘equipment designed for use principally off public roads.” ‘ State Farm Mut. Automobile Ins. Co. v. Gandy, 383 S.E.2d 717 (Va.Supr.1989). While the Court was concerned with the purposes for which a forklift is used and how one works, it also noted that the forklift was not registered with the Department of Motor Vehicles, ” ‘was not licensed with a vehicle tag,’ and ‘was used only in the private yard of the company which owned it.” ‘ Id . at 718.

In this case, the State Farm exclusion of equipment is limited to that equipment which is used principally off public roads and which is not being used upon public roads. The Yard Dog was neither designed to be used on public roads, nor was it used on public roads. See Def.’s Response, at 8. It was not registered with the Delaware Department of Motor Vehicles, [FN6] nor was it licensed. In addition, Reese was injured while the vehicle was being used on Draper’s property and not on a public road. The parties do not dispute these facts. The Court concludes that the Yard Dog is excluded from the UM/UIM portion of the State Farm Policy under the designation, “other equipment designed for use principally off public roads, while not upon public roads.”

FN6. 21 Del. C. § 2101 provides that no person shall drive or move any vehicle on any highway unless that vehicle is registered and has registration plates. 21 Del. C. § 2118 provides that all motor vehicles required to be registered in Delaware must also be insured.

Defendant Draper argues that the terms of State Farm’s policy are ambiguous because a Yard Dog was not specifically excluded from coverage. Draper follows the reasoning in Hill v. State Farm Mut. Automobile Ins. Co., 375 S.E.2d 727 (Va.Supr.1989). In that case, the Virginia Supreme Court decided that since there was doubt as to whether a moped was included in the exclusions of the Uninsured Motorists Policy, the language was ambiguous. Therefore, the language was interpreted in favor of coverage and the moped was considered a “motor vehicle” pursuant to the definition in the policy. Hill was decided before Gandy, 383 S.E.2d 717, however, a case in which the Virginia Supreme Court found the same language not to be ambiguous concerning whether a forklift was excluded under the definition of “motor vehicle” for medical benefits coverage. Notwithstanding that Gandy addressed different coverage, both cases considered the same language of the definition of “motor vehicle” as is present in this case.

After consideration, the Court finds that a Yard Dog is more like the forklift in Gandy than the moped in Hill. A moped is a vehicle used to get from one place to another and, at the time of Hill, it was separately defined in Va.Code § 46.1-1 (repealed in 1989). This section also provided, that when driven on a highway, a moped would be considered a “vehicle” for the purposes of traffic regulations. See Hill, 375 S.E.2d at 728. On the other hand, a Yard Dog, like a forklift, is not a vehicle whose purpose is to transport a person from place to place. Certainly, its purpose was to aid in the process of unloading goods at a loading dock. In other words, although it is unclear whether a moped would qualify as equipment, after the Gandy decision, the Yard Dog is equipment under the ordinary and customary meaning of the word.

D. Commercial Union’s Position

Commercial Union has also requested summary judgment based on the idea that the Yard Dog is excluded from its UM/UIM coverage, and it has incorporated State Farm’s arguments as its own. Commercial Union’s UM/UIM policy provides coverage to an insured for damages resulting in bodily injury sustained from an accident with an uninsured motor vehicle. Third-Party Def. Commercial Union’s Joinder in Mot. (“Commercial Union’s Joinder”) App. 1 at 8. The policy defines “uninsured motor vehicle” to be a land motor vehicle or trailer. Id. This definition contains no exceptions as State Farm’s UM/UIM policy does.

In comparison, the Medical Benefits and Liability sections contain a definition of “motor vehicle” and “auto,” respectively, that include exceptions; however, these sections are separate and distinct from the UM/UIM section. For example, the Medical Benefits section provides coverage for medical expenses incurred as the result of an accident with a motor vehicle used as a motor vehicle, whereas the UM/UIM section provides coverage for damages incurred as a result of bodily injury from an accident with an uninsured motor vehicle. Each section provides for a different range of coverage and thus it is expected that each will have its own definition of which motor vehicles are contemplated for the purposes of that section. The Liability section defines the word “auto” to mean “a land motor vehicle, trailer or semitrailer designed for travel on public roads but does not include mobile equipment.” Notice of Joinder, App. 1 at 16. “Mobile equipment” includes any of the following type of land vehicles:

1. Specialized equipment such as: Bulldozers; Power shovels, Rollers, graders or scrapers; Farm machinery, Cranes; Street sweepers or other cleaners; Diggers; Forklifts, Pumps, Generators; Air Compressors, Drills; Other similar equipment.

2. Vehicles designed for use principally off public roads.

3. Vehicles maintained solely to provide mobility for such specialized equipment when permanently attached.

4. Vehicles not required to be licensed.

5. Autos maintained for use solely on your premises or that part of roads or other accesses that adjoin your premises.

Id.

The Medical Expense Benefits section of the policy defines “motor vehicle” to mean:

a self-propelled land motor vehicle or trailer other than:

a. A farm type tractor or other self-propelled equipment designed for use principally off public roads while not upon public roads;

b. A vehicle operated on rails or crawler-treads; or

c. A vehicle located for use as a residence or premises.

Id. at 6.

While a Yard Dog may have been considered equipment under the definitions included in either of the Liability or Medical Benefits sections, again the UM/UIM section contains no similar exclusion. Furthermore, Va.Code § 46.2- 100, provides:

“Motor vehicle” means every vehicle as defined in this section that is self-propelled or designed for self-propulsion except as otherwise provided in this title. Any structure designed, used, or maintained primarily to be loaded on or affixed to a motor vehicle to provide a mobile dwelling, sleeping place, office, or commercial space shall be considered a part of a motor vehicle. For the purposes of this title, any device herein defined as a bicycle, electric personal assistive mobility device, electric-assisted bicycle, or moped shall be deemed not to be a motor vehicle.

Nothing in this definition mandates the exclusion of a vehicle like a Yard Dog from Commercial Union’s UM/UIM policy as an “uninsured motor vehicle.” “Because insurance carriers select the language of the policies they write, any doubt concerning the meaning of the policy language is resolved against the insurer.” Hill, 375 S.E.2d at 730. As a result, according to the language of Commercial Union’s UM/UIM policy, the Yard Dog qualifies as an “uninsured motor vehicle.”

Moreover, Commercial Union did not make this argument in its previous summary judgment motion, which was decided by the Court on November 4, 2003. The point has been waived. Commercial Union cannot piggyback this claim through joinder with State Farm’s Motion. Litigants are not entitled to multiple bites of the apple.

CONCLUSION

Considering the foregoing, Third-Party Defendant State Farm’s Motion for Summary Judgment is granted. The Yard Dog is an excluded motor vehicle for the purposes of State Farm’s UM/UIM policy, pursuant to the language of the policy. Commercial Union’s request for joinder in the Summary Judgment as to this issue is denied.

IT IS SO ORDERED.

END OF DOCUMENT