IN RE HARCO NATIONAL RELATOR INSURANCE COMPANY

NO. 2-09-351-CV

 

Court of Appeals of Texas, Fort Worth.

DELIVERED: June 24, 2010

 

ORIGINAL PROCEEDING

 

PANEL: LIVINGSTON, C.J.; MCCOY and MEIER, JJ.

 

MEMORANDUM OPINION

 

See Tex.R.App. P. 47.4.

BOB MCCOY JUSTICE

 

Relator, Harco National Insurance Company, seeks a writ of mandamus against Respondent, the Honorable Jeff Walker, Judge of the 96th District Court of Tarrant County. For the reasons that follow, we conditionally grant relief.

 

Factual Background

 

On October 3, 2007, Real Party in Interest Debra Fisher brought suit against Harco and several other defendants for fraud and fraudulent inducement arising out of the nondisclosure of insurance coverage in a prior negligence case between Fisher and Southwest International Trucks, Inc. and its employee/driver Clifford George Steece, Sr. In her suit, Fisher asserted that the defendants fraudulently induced her to enter into a settlement agreement settling all her claims for damage in the prior suit. On May 5, 2008, Fisher served Harco with a notice of intention to take oral deposition of the corporate representative of Harco, which included a document request seeking the production of:

 

[a]ny writings, letter, memorandums, emails, or other documents whether manually created or electronically created, in your possession, from any source, including but not limited to, Southwest International Trucks, Inc., Charles Shriver, II, Hermes Sargent Bates, L.L.P., Harco National Insurance Company, Southern County Mutual Insurance Company, and Republic Lloyds, Inc., relating to the claim of Debra Fisher for injuries and damages against Southwest International Trucks, Inc., or other insurers to include documents whether generated by you or received by you, from any source, including electronic or email communications that refer, mentions, states, or otherwise alleges to insurance coverage of Southwest International Trucks, Inc., resulting from an automobile accident, whether the source be primary, secondary, umbrella or any other insurance coverage.

 

On May 12, 2008, Harco filed a motion to quash the deposition notice, and the deposition was automatically stayed. On May 27, 2008, Fisher rescheduled the deposition and again included the document request. On June 2, 2008, Harco filed a motion for protective order, contending that the document requests were overly broad and that they sought to invade the attorney-client and attorney work product privileges. The trial court conducted an evidentiary hearing on the motion for protective order on October 2, 2008. At the conclusion of the evidentiary hearing, Harco submitted the documents listed on its privilege log to the trial court for an in camera inspection.

 

On March 11, 2009, the trial court sent the parties correspondence, stating that Harco’s documents generally fell within the attorney-client and work product privileges; however, it had determined that a large number of the documents fell within exceptions found within Rule 503(d)(1), (3), and (5) of the rules of evidence. See Tex.R. Evid. 503(d)(1), (3), (5). On March 25, 2009, Harco’s counsel sent correspondence to the trial court asking the court to refrain from producing the documents to Fisher until Harco had an opportunity to consider its options. On April 27, 2009, Harco’s counsel received correspondence from Fisher’s counsel forwarding a proposed order to the trial court. On May 1, 2009, Harco’s counsel sent Fisher’s counsel correspondence objecting to the proposed order. On September 2, 2009, Harco’s counsel received a copy of correspondence from Fisher’s counsel submitting a proposed order to the trial court. On that same day, Harco’s counsel sent correspondence to the trial court objecting to the form of the proposed order and asking the trial court to refrain from signing the order or producing the documents until the matter could be heard by the trial court.

 

On September 10, 2009, the trial court signed and entered an order in which it found that all of the documents that had been presented by Harco were discoverable except those specifically enumerated in the order. Upon receipt of the trial court’s order on September 14, 2009, Harco sent correspondence to the trial court asking the court to refrain from producing the documents to allow Harco the opportunity to preserve the court’s record and protect its rights by filing a petition for writ of mandamus. On September 17, 2009, the trial court released documents to the parties.

 

On September 25, 2009, the trial court sent the parties correspondence stating that two additional documents (Harco 00264 and Harco 00442) were also discoverable and providing copies of those two documents to Fisher’s counsel. Harco then filed this mandamus proceeding.

 

Standard of Review

 

Mandamus will issue to correct a discovery order if the order constitutes a clear abuse of discretion and there is no adequate remedy by appeal. In re Colonial Pipeline Co., 968 S.W.2d 938, 941 (Tex.1998) (orig.proceeding); Walker v. Packer, 827 S.W.2d 833, 839 (Tex.1992) (orig.proceeding). When determining whether the trial court abused its discretion, we are mindful that the purpose of discovery is to seek the truth so that disputes may be decided by what the facts reveal, not by what facts are concealed. Colonial Pipeline, 968 S.W.2d at 941. The rules governing discovery do not require as a prerequisite to discovery that the information sought be admissible evidence; it is enough that the information appears reasonably calculated to lead to the discovery of admissible evidence. See Tex.R. Civ. P. 192.3(a). But this broad grant is limited by the legitimate interests of the opposing party to avoid overly broad requests, harassment, or disclosure of privileged information. In re Am. Optical Corp., 988 S.W.2d 711, 713 (Tex.1998) (orig.proceeding).

 

Appellate courts will not intervene to control incidental trial court rulings when an adequate remedy by appeal exists. In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 136 (Tex.2004) (orig.proceeding); Walker, 827 S.W.2d at 840. A party will not have an adequate remedy by appeal (1) when the appellate court would not be able to cure the trial court’s discovery error, (2) when the party’s ability to present a viable claim or defense at trial is vitiated or severely compromised by the trial court’s discovery error, or (3) when the trial court disallows discovery and the missing discovery cannot be made a part of the appellate record or the trial court, after proper request, refuses to make it part of the record. In re Ford Motor Co., 988 S.W.2d 714, 721 (Tex.1998) (orig.proceeding); Walker, 827 S.W.2d at 843. Appellate courts must consider whether the benefits of mandamus review outweigh the detriments when determining whether appeal is an adequate remedy. In re BP Prods. N. Am., Inc., 244 S.W.3d 840, 845 (Tex.2008) (orig.proceeding). If a trial court erroneously orders privileged matters to be disclosed, there is no adequate remedy at law, and mandamus is the proper remedy. See Dillard Dep’t Stores, Inc. v. Hall, 909 S.W.2d 491, 492 (Tex.1995); Walker, 827 S.W.2d at 843.

 

Privileges

 

Harco asserts that the trial court clearly abused its discretion by finding that its documents were discoverable pursuant to the exceptions to the attorney-client and work product privileges enumerated within Texas Rules of Evidence Rule 503(d)(1), (3), and (5). See Tex.R. Evid. 503(d)(1), (3), (5). Fisher, on the other hand, contends that the trial court did not abuse its discretion by determining the documents were discoverable or by producing the documents to her.

 

To establish a privilege, a party must plead the particular privilege, produce evidence to support the privilege through affidavits or testimony, and produce the documents themselves if the trial court determines an in camera review is necessary. See Tex.R. Civ. P. 193.3(a); Peeples v. Hon. Fourth Supreme Judicial Dist., 701 S.W.2d 635, 637 (Tex.1985) (orig.proceeding). Once the party resisting discovery establishes a prima facie case that the documents are privileged, the burden shifts to the discovering party to refute the privilege claim. See Marathon Oil Co. v. Moye, 893 S.W.2d 585, 591 (Tex.App.-Dallas 1994, orig. proceeding).

 

A. Attorney-Client Privilege

 

The attorney-client privilege protects from disclosure confidential communications between client and counsel made for the purpose of facilitating the rendition of legal services. See Tex.R. Evid. 503(b); Huie v. DeShazo, 922 S.W.2d 920, 922 (Tex.1996); Arkla, Inc. v. Harris, 846 S.W.2d 623, 629 (Tex.App.-Houston [14th Dist.] 1993, orig. proceeding). This privilege attaches to the complete communication between attorney and client, including legal advice and facts therein. Marathon Oil Co., 893 S.W.2d at 589. The subject matter of the information communicated is irrelevant when determining whether the privilege applies. Id.

 

The attorney-client privilege applies only to communications intended to be confidential between the attorney and the client and made for the purpose of facilitating the rendition of legal services for the client. See Tex.R. Evid. 503(b); Arkla, Inc., 846 S.W.2d at 629. A communication is “confidential” if it is not intended to be disclosed to third persons other than those persons to whom disclosure is made “in furtherance of the rendition of professional legal services to the client or those reasonably necessary for the transmission of the communication.” Tex.R. Evid. 503(a)(5). If a matter for which a privilege has been asserted has been disclosed to a third party, the party asserting the privilege has the burden to prove that no waiver occurred. Arkla, Inc., 846 S.W.2d at 630.

 

B. Work product privilege

 

Rule 192.5 defines work product as:

 

(1) material prepared or mental impressions developed in anticipation of litigation or for trial by or for a party or a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents; or

 

(2) a communication made in anticipation of litigation or for trial between a party and the party’s representatives or among a party’s representatives, including the party’s attorneys, consultants, sureties, indemnitors, insurers, employees, or agents.

 

Tex.R. Civ. P. 192.5(a).

 

Rule 192.5 encompasses different levels of protection for two types of work product. First, core work product is defined as “the work product of an attorney or an attorney’s representative that contains the attorney’s or the attorney’s representative’s mental impressions, opinions, conclusions, or legal theories,” and it is not discoverable. See Tex.R. Civ. P. 192.5(b)(1). Second, any other work product is discoverable only upon a showing that the party seeking discovery has substantial need of the materials in the preparation of the party’s case and that the party is unable, without undue hardship, to obtain the substantial equivalent of the material by other means. Tex.R. Civ. P. 192.5(b)(2).

 

Rule 192.5(b)(2) precludes discovery of an attorney’s work product. Id. The work product exemption protects the attorney’s mental processes, conclusions, and legal theories from discovery by another party, thereby providing a privileged area where the attorney can analyze and prepare the case. Marathon Oil Co., 893 S.W.2d at 589. The work product exemption extends both to documents actually created by the attorney and memoranda, reports, notes, or summaries of interviews prepared by other individuals for the attorney’s use. Id.

 

C. Discussion

 

Fisher contends that Harco failed to present sufficient prima facie proof of privilege; therefore, the burden never shifted to her to prove an exception to the work product or attorney-client privileges. However, at the evidentiary hearing on Harco’s motion for a protective order, Harco offered affidavits by Charles Shriver, II and Craig Kennedy along with other exhibits in support of its assertion of privilege. The prima facie standard requires only the minimum quantum of evidence necessary to support a rational inference that the allegation of facts are true. See In re E.I. DuPont de Nemours & Co., 136 S.W.3d 218, 225 (Tex.2004) (orig.proceeding); Humphreys v. Caldwell, 888 S.W.2d 469, 470 (Tex.1994) (orig.proceeding); In re Maher, 143 S.W.3d 907, 913 (Tex.App.-Fort Worth 2004, orig. proceeding).

 

Additionally, a review of the documents themselves may constitute sufficient evidence to make a prima facie showing of attorney-client or work product privilege. See E.I. DuPont, 136 S.W.3d at 223; Humphreys, 888 S.W.2d at 470. We have reviewed the documents and have determined that Harco 00066 and Harco 00548-00551, correspondence between Harco and its reinsurer American Re-Insurance Co., do not fall within any of the discovery privileges asserted by Harco. Accordingly, the trial court did not abuse its discretion by ordering the production of Harco 00066 and Harco 00548, and any relief requested as to these documents is denied.

 

But, it is evident from our review of Harco 00024, Harco 00057, Harco 00058-00065, Harco 00069-00081, Harco 00083, Harco 00096-00097, Harco 00098-00099, Harco 00143, Harco 00197-00200, Harco 00264, Harco 00442, Harco 00451-00454, Harco 00457-00480, Harco 00522-00531, Harco 00549-00551, Harco 00576-00577, Harco 00639, Harco 00657, and Harco 00664-00673 that these documents, which are primarily comprised of memoranda, claims and damages summaries, and case evaluations, meet all the requirements of the attorney-client or attorney work product privileges. See Tex.R. Evid. 503(b); Arkla, Inc., 846 S.W.2d at 629; see also Nat’l Tank Co. v. Brotherton, 851 S.W.2d 193, 200 (Tex.1993) (orig.proceeding); Nat’l Union Fire Ins. Co. v. Valdez, 863 S.W.2d 458, 460 (Tex.1993) (orig.proceeding); Coats v. Ruiz, 198 S.W.3d 863, 875-76 (Tex.App.-Dallas 2006, no pet.). It is irrelevant that many of these documents were prepared in connection with the suit between Southwest International and Fisher rather than the underlying suit, since the work product privilege is of continuing duration. See Owens-Corning Fiberglas Corp. v. Caldwell, 818 S.W.2d 749, 751-52 (Tex.1991) (orig.proceeding).

 

Once a party demonstrates the privilege applies, the burden then shifts to the party seeking production to prove that an exception exists. See In re AEP Tex. Cent. Co, 128 S.W.3d 687, 692 (Tex.App.-San Antonio 2003, orig. proceeding); In re Monsanto, 998 S.W.2d 917, 933-34 (Tex.App.-Waco 1999, orig. proceeding); Marathon Oil, 893 S.W.2d at 589-90; Cigna Corp. v. Spears, 838 S.W.2d 561, 569 (Tex.App.-San Antonio 1992, orig. proceeding); Freeman v. Bianchi, 820 S.W.2d 853, 861 (Tex.App.-Houston [1st Dist.] 1991, orig. proceeding). Accordingly, because the documents listed above are privileged, Fisher was required to prove the existence of an exception to the privilege. See In re AEP Tex. Cent. Co, 128 S.W.3d at 692; In re Monsanto, 998 S.W.2d at 933-34; Marathon Oil, 893 S.W.2d at 589-90; Cigna Corp., 838 S.W.2d at 569; Freeman, 820 S.W.2d at 861.

 

503(d) Exceptions

 

Fisher argues that, even if Harco met its burden of proof regarding the asserted privileges, the documents fall within the crime-fraud or breach of duty exceptions and, therefore, the documents are discoverable. See Tex.R. Evid. 503(d)(1), (3) (explaining crime fraud and breach of duty exceptions).

 

A. Crime-Fraud Exception

 

Fisher first contends that the documents fall within the crime-fraud exception. See id.

 

Texas Rule of Evidence 503(d)(1) provides that material otherwise protected by the attorney-client privilege is discoverable if the services of the lawyer were sought or obtained to enable or aid anyone to commit or plan to commit what the client knew or reasonably should have known to be a crime or fraud. See id.; see also Granada Corp. v. First Court of Appeals, 844 S.W.2d 223, 227 (Tex.1992) (orig.proceeding). The crime-fraud exception applies only if (1) the party asserting it establishes a prima facie case of contemplated fraud and (2) there is a relationship between the document for which the privilege is challenged and the prima facie proof offered. See Granada, 844 S.W.2d at 227; Warrantech Corp. v. Computer Adapters Servs., Inc., 134 S.W.3d 516, 527 (Tex.App.-Fort Worth 2004, no pet.).

 

The prima facie requirement is met when the proponent offers evidence establishing the elements of fraud and that the fraud was ongoing, or about to be committed at the time the document was prepared. See In re AEP Texas Central Co., 128 S.W.3d at 692; Cigna Corp., 838 S.W.2d at 569. Mere allegations of fraud are not sufficient. In re AEP Texas Central Co., 128 S.W.3d at 692; Cigna Corp., 838 S.W.2d at 569; In re Monsanto Co., 998 S.W.2d at 933-34. Similarly, the fact that the plaintiff’s cause of action involves fraudulent conduct is also insufficient. Cigna Corp., 838 S.W.2d at 569. The fraud alleged to have occurred must have happened at or during the time the document was prepared, and the document must have been created as part of perpetrating the fraud. Id. The trial court must make findings both that the prima facie case has been established and that a nexus exists between the document at issue and the alleged fraud. See Granada Corp., 844 S.W.2d at 227; Freeman, 820 S.W.2d at 861-62. The nexus must be established for each privileged document. See Freeman, 820 S.W.2d at 861.

 

Fisher contends that she established a prima facie case of fraud because the evidence clearly establishes that adjuster David Leary attempted to fraudulently conceal the existence of the $10,000,000 umbrella policy. Specifically, Fisher argues that the evidence establishes that Leary did not disclose the existence of the umbrella policy to Charles Shriver, the attorney Harco retained to represent Southwest International Trucking in the suit brought by Fisher. Fisher notes that although Southwest International supplemented its disclosure responses five times, the disclosure responses never disclosed the existence of the umbrella policy, and Leary never corrected Southwest International’s responses to the disclosure requests. Fisher also states that Leary had an opportunity but nonetheless failed to disclose the umbrella policy during mediation when she demanded $900,000, which was clearly in excess of the $500,000 primary limits.

 

Fisher claims that, to the extent that any of the documents at issue here relate to Leary’s valuation of the underlying case or the basis of his valuation, the documents were part of the ongoing fraudulent concealment. However, neither the mere allegation of fraud, nor the fact that a party’s cause of action includes fraudulent conduct is sufficient to establish a prima facie case of contemplated fraud. See Cigna Corp., 838 S.W.2d at 569; In re Monsanto Co., 998 S.W.2d at 933-34. Fisher’s “evidence” demonstrating that Harco’s adjuster failed to advise Shriver of the existence of the umbrella policy is primarily Fisher’s own allegations of fraud against Harco, which serve as the basis of her lawsuit. Such a demonstration will not serve as a basis for the application of the crime-fraud exception. See Cigna Corp., 838 S.W.2d at 569. Further, even if we were to take Fisher’s evidence into consideration, it does not show that Shriver’s services were sought to aid Leary in committing or planning to commit a crime. See Granada Corp., 844 S.W.2d at 227. In fact, Fisher herself stated that Leary had never informed Shriver of the umbrella policy.

 

The crime-fraud exception requires the discovering party to establish a connection between the particular documents sought and the fraud alleged. See Granada Corp., 844 S.W.2d at 227; Freeman, 820 S.W.2d at 861-62. Moreover, the fraud alleged to have occurred must have occurred at or during the time the document was prepared and in order to perpetuate the fraud. See Coats, 198 S.W.3d at 876; Cigna Corp., 838 S.W.2d at 569. As Fisher has not established a prima facie case that the crime-fraud exception applies to the documents protected by the attorney-client privilege, we conclude that the trial court abused its discretion by ordering Harco to produce them on the basis of this exception.

 

B. Breach of Duty Exception

 

Fisher generally contends that any documents Harco, through Leary, had the opportunity to disclose to attorney Shriver about the existence of the umbrella policy would fall within the breach of duty exception. Texas Rule of Evidence 503(d)(3) provides that a communication, otherwise protected by the attorney-client privilege, is discoverable if the communication is relevant to an issue of breach of duty by a lawyer to the client or by a client to the lawyer. See Tex.R. Evid. 503(d)(3); Brown v. Green, 302 S.W.3d 1, 9 (Tex.App.-Houston [14th Dist.] 2009, no pet.); Vinson & Elkins v. Mornan, 946 S.W.2d 381, 394 (Tex.App.-Houston [14th Dist.] 1997, writ dism’d). Nothing in the record before us indicates that Fisher was ever represented by any of Southwest International’s or Harco’s attorneys. Thus, we agree with Relator that the breach of duty exception found in rule 503(d)(3) does not apply in this case. Accordingly, the trial court abused its discretion by ordering Harco to produce the documents pursuant to this exception.

 

C. Joint Defense Exception

 

Fisher does not argue, and the record does not indicate, that Harco’s documents were discoverable pursuant to the joint defense exception. See Tex.R. Evid. 503(d)(5) (“As to a communication relevant to a matter of common interest between or among two or more clients if the communication was made by any of them to a lawyer retained or consulted in common, when offered in an action between or among any of the clients.”). Thus, we conclude that this exception does not apply. See Marathon Oil Co., 893 S.W.2d at 592. Accordingly, to the extent the trial court ordered Harco to produce the documents pursuant to this exception, the trial court abused its discretion.

 

Conclusion

 

Because the documents do not fall within any of the exceptions, we hold that the trial court clearly abused its discretion by ordering the production of the following documents protected by the attorney-client or work product privileges: Harco 00024, Harco 00057, Harco 00058-00065, Harco 00069-00081, Harco 00083, Harco 00096-00097, Harco 00098-00099, Harco 00143, Harco 00197-00200, Harco 00264, Harco 00442, Harco 00451-00454, Harco 00457-00480, Harco 00522-00531, Harco 00549-00551, Harco 00576-00577, Harco 00639, 00657, and Harco 00664-00673. We conditionally grant mandamus relief as to the documents listed above. The writ will issue only if the trial court fails to (1) vacate its September 10, 2009 order and its September 25, 2009 letter ruling as to the documents listed above, (2) order the return of all originals and copies of the privileged documents provided to Debra Fisher by the trial court, and (3) issue such orders as necessary to prevent the use and dissemination of the privileged documents and information contained therein. We have reviewed the remaining documents, Harco 00066 and Harco 00548-00551, and have determined that they do not fall within any of the discovery privileges asserted by Harco. Accordingly, the trial court did not abuse its discretion by ordering the production of Harco 00066 and Harco 00548-00551. As to these documents, this court’s October 9, 2009 stay is hereby lifted and any relief requested is denied.

 

JOHN BAKER AND LULA BAKER, his wife, Plaintiffs-Respondents,

v.

J.J. DELUCA COMPANY, INC., NORTH WALES MILLWORK, INC., LEEDO CABINETRY, Defendants-Respondents,

and

CELADON TRUCKING, Defendant-Appellant,

and

J.J. DELUCA COMPANY, INC., Defendant/Third-Party

Plaintiff-Respondent,

v.

NORTH WALES MILLWORK, INC., Defendant/Third-Party

Defendant/Fourth-Party

Plaintiff-Respondent,

v.

LEEDO CABINETRY, Fourth-Party Defendant-

Respondent,

and

CELADON TRUCKING, Fourth-Party Defendant-

Appellant.

DOCKET NO. A-4922-08T2

 

Superior Court of New Jersey, Appellate Division.

 

Argued February 1, 2010 – Decided

 

Before Judges Lisa and Coburn.

 

On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-1393-06.

John A. Miller, Jr., argued the cause for appellant (Christie, Pabarue, Mortensen, and Young, P.C., attorneys; Mr. Miller and Richard E. Green, on the briefs).

 

Stephen L. Petrillo argued the cause for respondent J.J. Deluca Company, Inc. (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Mr. Petrillo, of counsel and on the briefs; Kenneth P. Skibinski and Robert A. Diehl, on the briefs).

 

John S. Fetten argued the cause for respondent North Wales Millwork, Inc. (Montgomery, Chapin & Fetten, P.C., attorneys; Mr. Fetten and Charone S. Frankel, on the briefs).

 

James S. Rehberger argued the cause for respondent Leedo Manufacturing Co., Inc. (Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, attorneys; Mr. Rehberger, of counsel and on the briefs; Kim M. Connor, on the briefs).

 

PER CURIAM

 

By leave granted, Celadon Trucking Services, Inc. (Celadon) appeals from the March 17, 2009 order granting the summary judgment motions of defendants J.J. Deluca Company, Inc. (Deluca), North Wales Millwork, Inc. (North Wales) and Leedo Manufacturing Co., Inc. (Leedo), determining that Celadon is required to provide coverage to defendants. Celadon also appeals from the corresponding amended order of March 26, 2009 to the same effect. The orders also denied Celadon’s cross-motion for partial summary judgment, which sought a declaration that Celadon was not required to provide coverage to defendants. Celadon argues that the trial court erred in holding that New Jersey’s insurance statutes apply to it. It argues that, because it is an interstate carrier, federal laws and regulations prescribe its exclusive financial responsibility requirements, and that those laws and regulations do not extend its coverage obligations to non-insureds such as defendants. We reject these arguments and affirm.

 

Plaintiff, John Baker, was a workman at a construction project in West Orange. On December 4, 2004, while at the job site, plaintiff was helping to unload construction materials from a tractor trailer owned by Celadon. Plaintiff claims he was injured when he was struck by a backsplash that fell off the truck.

 

Deluca was the general contractor for the construction project. Deluca had ordered certain construction materials (e.g. bathroom cabinets, vanities, and backsplashes) from North Wales, which, in turn, subcontracted the manufacturing of those items to Leedo. Leedo manufactured the contracted items at its Texas facility and then retained Celadon’s services to transport the items from Texas to the West Orange job site.

 

Celadon is a New Jersey corporation. It owns approximately 2500 trucks and 8000 trailers throughout the United States and Canada. All of its tractors and trailers, including the one plaintiff was unloading, are registered in Indiana. The driver of the truck in the underlying action in this case was “brought in” by Celadon Trucking Services of Indiana, Inc., an Indiana corporation. The driver was then “leased” to Celadon, and was for all purposes an employee of Celadon with respect to the incident in which plaintiff claims he was injured.

 

Celadon is self-insured in compliance with regulations of the United States Department of Transportation (USDOT). It does not have a certificate of self-insurance in any particular state. Celadon is self-insured for $2.5 million and has an excess insurance policy with Protective Insurance Company with a limit of $7.5 million per occurrence.

 

On February 17, 2006, plaintiff sued Deluca, which in turn filed a third-party complaint against North Wales, which then filed a fourth-party complaint against Leedo and Celadon.

 

On August 25, 2008, Deluca filed a motion to compel coverage from Celadon. Leedo and North Wales then filed similar motions. Celadon filed a cross-motion for partial summary judgment, seeking a determination that it was not responsible for coverage to those co-defendants. At the conclusion of oral argument on February 6, 2009, Judge McCormack granted defendants’ motions and denied Celadon’s, as memorialized by an order of March 17, 2009. The judge then issued a written opinion on March 26, 2009, with a corresponding amended order that was substantively the same as the March 17, 2009 order.

 

In his written opinion, Judge McCormack explained his rejection of Celadon’s contention that it is not subject to New Jersey’s motor vehicle statutes as follows:

 

N.J.S. 39:6A-3 establishes compulsory automobile insurance coverage. In furtherance of this omnibus coverage, every owner of a motor vehicle registered or garaged in New Jersey must maintain coverage for losses arising from, inter alia, “the use” of a motor vehicle. A person who is in the process of unloading cargo from a motor vehicle is, for purposes of the omnibus coverage, “a user” of the vehicle, Bellafronte v. General Motors, 151 N.J.Super. 377, 382-383 (App.Div.1977). Thus, under New Jersey law, it is clear that the plaintiff, at the time of this incident, was using the Celadon vehicle and Celadon would be required to provide coverage for such use.

 

The issue before this Court is whether Celadon avoids this requirement by virtue of the fact that it self-insured under the FMCSA [Federal Motor Carrier Safety Act].

 

Celadon argues that, since it is self-insured under the FMCSA, it is subject only to the rules and regulations of the [United States] Department of Transportation (DOT) as established by the FMCSA and not the State of New Jersey’s insurance law.

 

It is significant to note that the rules and regulations relied upon by Celadon deal primarily with registration, coverage limits and qualifications for self-insurance. The sole reference to scope of coverage is found in 49 C.F.R. 387.301, which indicates that an interstate carrier must have coverage, or qualifications as a self-insurer, in amounts to pay a judgment for injuries or death “resulting from the negligent operation, maintenance or use” of the subject vehicle. Neither federal regulation nor case law defines “use” as referred to in 49 C.F.R. 387.301.

 

This Court is satisfied that the case law is clear that, as long as the FMCSA does not explicitly preempt State provisions, states are free to enact laws that supplement or complement a federal statutory scheme. What a state cannot do is to enact a law that would conflict with the federal regulations. In California v. Zook, 336 U.S. 725 (1949), the United States Supreme Court held that “absent Congressional action, the familiar test is that of uniformity versus locality; if a case falls within an area in commerce thought to demand a uniform national rule, State action is struck down. If the activity of one is of predominantly local interest, State action is sustained.” Id. at 726. Neither counsel nor this Court could find any authority for the proposition that the FMCSA preempts or usurps a state’s rights to regulate insurance.

 

Celadon further argues that, since it is self-insured under FMCSA and not under New Jersey law (N.J.S. 39:6-52), it is not subject to the requirements of N.J.S. 17:28-1.4, the Deemer statute. Celadon maintains that said statute is only applicable to carriers and not self-insurers.

 

It is well founded that an entity that is self-insured under New Jersey laws has obligations “co-extensive with the obligations of those possessing liability policies”, Ryder/P.I.E. Nationwide Insurance v. Harbor Bay Corp., 119 N.J. 402, 410 (1990). Again, Celadon points to its being self-insured under FMCSA. This Court finds this distinction immaterial. In Liberty Mutual Insurance v. Thomson, 385 N.J.Super. 240 (App.Div.2006), the Court found an out of state self-insured auto rental company subject to the Deemer statute, holding that said defendant “is subject to mandatory insurance coverage for its rental vehicles while driven in New Jersey, just as if it was an insurance carrier.” Id. at 246.

 

We agree with Judge McCormack’s analysis, which we supplement with the following discussion.

 

Celadon acknowledges that N.J.S.A. 39:6A-3 and N.J.S.A. 39:6B-1 establish mandatory liability insurance coverage requirements in New Jersey. It argues, however, that these statutes are not applicable to it because, by their terms, the statutes apply only to motor vehicles “registered or principally garaged” in New Jersey. The Celadon trailer involved in this incident was registered in Indiana, and it was not principally garaged in New Jersey.

 

Celadon further argues that the judge erred in concluding that New Jersey’s deemer statute, N.J.S.A. 17:28-1.4, applies to it. In general, the deemer statute requires “[a]ny insurer authorized to transact or transacting automobile or motor vehicle insurance business in this State” to provide coverage at least equivalent to coverages required in New Jersey for accidents occurring in New Jersey. N.J.S.A. 17:28-1.4. Celadon argues that the deemer statute does not apply because Celadon is not authorized to transact nor is it transacting motor vehicle insurance business in New Jersey.

 

Celadon does not have a certificate of self-insurance issued by New Jersey, and there is no indication that it was “authorized” to transact insurance business in New Jersey. However, for purposes of the deemer statute, Celadon’s conduct in sending its self-insured truck into New Jersey, where plaintiff was allegedly injured while unloading it, is tantamount to transacting insurance business in New Jersey.

 

In Liberty Mutual Insurance Co. v. Thomson, 385 N.J.Super. 240, 242 (App.Div.), certif. denied, 188 N.J. 219 (2006), we considered the applicability of the deemer statute in a situation where Liberty Mutual’s insured was injured when his car was struck in New Jersey by the driver of a Hertz rental vehicle. The driver of the Hertz vehicle was an Australia resident, the car was registered in New York, it was rented by Hertz to the Australian driver in North Carolina, and the car was to be returned to New York. Ibid. Hertz was self-insured. Id. at 243. We held that whether Hertz was self-insured or purchased a separate policy, it was “required to provide the mandatory coverage set forth in our No-Fault Law while its cars are on New Jersey highways.” Id. at 244. We noted that the deemer statute provides that any insurer who issues a policy on an out-of-state vehicle, and who does business in New Jersey, is deemed to have contracted to provide New Jersey mandated coverage to any insured vehicle while on a New Jersey highway. Id. at 244-45. We concluded as follows:

 

In sum, Hertz self-insured the rental vehicle driven by Thomson, as it was permitted to do. If an insurance carrier doing business in New Jersey issues a motor vehicle policy covering a car registered in New York, the carrier is deemed to have agreed to provide the minimum required coverage under New Jersey law, including PIP. N.J.S.A. 17:28-1.4. As a self-insured, considered to have issued an insurance policy to itself, see White v. Howard, supra, 240 N.J.Super. at 431, 573 A.2d 513, Hertz is subject to mandatory insurance coverage for its rental vehicles while driven in New Jersey, just as if it was an insurance carrier.

 

[Id. at 245 (emphasis added).]

 

Our analysis in Liberty Mutual leads to the conclusion that Celadon is subject to the deemer statute. Although its truck was not registered in New Jersey, Celadon is a self-insurer which drove into New Jersey to conduct business at a New Jersey construction site. An accident then occurred arising out of the unloading of the vehicle, which, under New Jersey law, constitutes “use” of the vehicle within the meaning of New Jersey’s mandatory insurance statutes. Ryder/P.I.E. Nationwide, Inc. v. Harbor Bay Corp., 119 N.J. 402, 407-09 (1990); Bellafronte v. Gen. Motors Corp., 151 N.J.Super. 377, 382-83 (App.Div.), certif. denied, 75 N.J. 533 (1977). Thus, plaintiff’s alleged accident is one for which he can seek recompense from the motor vehicle insurer of the motor vehicle he was “using.”

 

This is not a case in which an out-of-state insurance company issued a policy to an out-of-state resident with no reason to foresee the vehicle entering New Jersey. Celadon willingly sent its self-insured vehicle into New Jersey to do business. Thus, Celadon is the functional equivalent, for deemer statute purposes, of an “insurer … transacting … motor vehicle insurance business in this State” within the terms of N.J.S.A. 17:28-1.4. Celadon should not be permitted to take advantage of its self-insurance opportunities, but then escape the requirements of New Jersey law even though it wrote the policy on a vehicle which it then purposely sent into New Jersey to conduct business.

 

We find unpersuasive Celadon’s argument that its lack of a New Jersey self-insurance certificate distinguishes it from cases holding that self-insurers are held to the same requirements as insurance companies under the deemer statute. A motor vehicle owner’s failure or ineligibility to obtain such a certificate should not serve to shield it from its obligations under the deemer statute to the public in New Jersey.

 

Celadon further argues that as an interstate carrier it is insured in accordance with the rules of the USDOT, and as such, it is subject only to USDOT’s financial responsibility requirements. According to Celadon, USDOT regulations do not require it to provide coverage to the co-defendants. We do not agree.

 

Celadon relies upon two sections of the FMCSA and two corresponding USDOT regulations in support of its argument that it is required by the federal law and regulations only to provide self-insurance in an amount sufficient to pay for any final judgment against the interstate carrier. While it is true that the statutes and regulations cited by Celadon contain such language, they also contain other language pertaining to the authority of the states in which the interstate carrier operates. We set forth the relevant portions of the two statutory sections upon which Celadon relies, namely 49 U.S.C.A. § 31139, and 49 U.S.C.A. § 13906:

 

49 U.S.C.A. § 31139. Minimum financial responsibility for transporting property

 

….

 

(b) General requirement and minimum amount.

 

(1) The Secretary of Transportation shall prescribe regulations to require minimum levels of financial responsibility sufficient to satisfy liability amounts established by the Secretary covering public liability, property damage, and environmental restoration for the transportation of property by motor carrier or motor private carrier (as such terms are defined in section 13102 of this title [49 U.S.C.A. § 13102] ) in the United States between a place in a State and-

 

(A) a place in another State;

 

….

 

(2) The level of financial responsibility established under paragraph (1) of this subsection shall be at least $ 750,000.

 

(c) Filing of evidence of financial responsibility. The Secretary may require a motor private carrier (as defined in section 13102 [49 U.S.C.A. § 13102] ) to file with the Secretary the evidence of financial responsibility specified in subsection (b) in an amount not less than the greater of the minimum amount required by this section or the amount required for such motor private carrier to transport property under the laws of the State or States in which the motor private carrier is operating; except that the amount of the financial responsibility must be sufficient to pay not more than the amount of the financial responsibility for each final judgment against the motor private carrier for bodily injury to, or death of, an individual resulting from negligent operation, maintenance, or use of the motor vehicle, or for loss or damage to property, or both.

 

[49 U.S.C.A. § 31139 (emphasis added).]

 

49 U.S.C.A. § 13906. Security of motor carriers, motor private carriers, brokers, and freight forwarders

 

(a) Motor carrier requirements.

 

(1) Liability insurance requirement. The Secretary may register a motor carrier under section 13902 [49 U.S.C.A. § 13902] only if the registrant files with the Secretary a bond, insurance policy, or other type of security approved by the Secretary, in an amount not less than such amount as the Secretary prescribes pursuant to, or as is required by, sections 31138 and 31139 [49 U.S.C.A. §§ 31138 and 31139], and the laws of the State or States in which the registrant is operating, to the extent applicable. The security must be sufficient to pay, not more than the amount of the security, for each final judgment against the registrant for bodily injury to, or death of, an individual resulting from the negligent operation, maintenance, or use of motor vehicles, or for loss or damage to property (except property referred to in paragraph (3) of this subsection), or both. A registration remains in effect only as long as the registrant continues to satisfy the security requirements of this paragraph.

 

[49 U.S.C.A. § 13906 (emphasis added).]

 

As illustrated by the terms of these provisions, the federal legislation contemplates the applicability of insurance regulation of the carrier’s vehicles by the states in which it operates. The provisions also require coverage for “use.” That term is undefined in the federal statutes and regulations. There is no basis upon which to conclude that New Jersey’s jurisprudence, which holds that loading and unloading of a vehicle constitutes use, thus mandating insurance coverage, was intended by Congress to be precluded under the federal scheme. We therefore conclude, as did Judge McCormack, that the FMCSA has not preempted state insurance regulation in this context.

 

Finally, we note that Celadon’s excess policy with Protective Insurance Company provides a further basis to support our conclusion that Celadon is required to provide insurance to the co-defendants under the deemer statute. Protective Insurance Company is authorized to transact business in New Jersey, and its $7.5 million excess policy covering Celadon includes New Jersey endorsements. Certainly, its coverage, whether explicitly stated or not, is deemed to comply with New Jersey insurance statutes under the deemer statute. Yet, its obligation to indemnify a claimant does not begin until Celadon’s $2.5 million self-insured retention is exhausted. It stands to reason that the self-insured must have the same obligations as that of its excess carrier.

 

Affirmed.