GAP, INC., Plaintiff–Appellant,

v.

TRAVELERS INSURANCE COMPANY, Defendant–Respondent.

 

DOCKET NO. A–0593–11T3

 

Superior Court of New Jersey, Appellate Division.

 

Argued January 30, 2013—Decided

 

Before Judges Axelrad, Nugent and Haas.

 

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L–3659–09.

Michael J. Frank argued the cause for appellant (Psak & Associates, L.L.C., attorneys; Mr. Frank, on the brief).

 

Frank E. Borowsky, Jr., argued the cause for respondent (Borowsky & Borowsky, L.L.C., attorneys; Erin M. McDevitt–Frantz and Mr. Borowsky, on the brief).

 

PER CURIAM

This insurance coverage case returns to us after remand proceedings directed by our prior order. See Gap, Inc. v. Travelers Ins. Co., No. A–0295–10 (App.Div. May 2, 2011). On remand, Judge Bernadette N. DeCastro found that defendant Travelers Insurance Company was not required to provide liability insurance coverage to plaintiff Gap, Inc. in an underlying negligence action. Plaintiff appeals, claiming the judge erred in failing to find it was covered under the terms of the insurance policy. After reviewing the record in light of the contentions advanced on appeal, we affirm substantially for the reasons set forth by Judge DeCastro in her written opinions.

 

I.

The material facts of this matter are not in dispute. Plaintiff contracted with Apex Xpress, Inc. (Apex), a trucking company, to make deliveries to plaintiff’s stores. The contract provided that “[a]ll deliveries are inside deliveries. Based on time of delivery, delivery will be made to the stockroom or the selling floor.”

 

On February 22, 2007, two Apex employees, Jose Otero and Raphael Agosto, made a delivery to one of plaintiff’s New York City stores. Otero was the driver that day and, upon arrival at the store, he went inside to advise plaintiff’s employees that a shipment had arrived. Otero and Agosto used the truck’s hydraulic loading gate as a “jack to bring the boxes down from the truck” onto the sidewalk outside the store. Apex had supplied Otero with “dollies” to use to place the boxes on so that they could be transported into the store from the sidewalk.

 

However, the store’s employees provided Otero with a metal “baker’s rack” to use to wheel the boxes from the sidewalk to the store because the employees were concerned the dollies could scratch the floors of the store. The baker’s rack had four wheels and one tray at the top and two trays closer to the bottom. The rack was approximately five-feet high. There were two or three “missing shelves,” which left about a three-foot gap between the top tray and the next tray down.

 

Plaintiff’s employees had vertically stretched three elastic “bungee cords” from the top tray to the next tray down. The cords were held to the trays with open fastening hooks. Plaintiff’s general manager explained that the store’s employees used the racks to take out trash and had placed the cords on the rack to help secure the trash bags. Otero testified at his deposition that the cords had “absolutely nothing” to do with his job and he never used them on any other deliveries. While Otero was loading boxes onto the rack, one of the bungee cords dislodged and struck him in the eye. Otero testified he did not know whether the bungee cord came loose or if it broke. Agosto witnessed the accident and stated that Otero “was trying to squeeze a small box on a space that he thought it would fit. It was kind of tight, and that’s when it occurred.”

 

Otero was taken to the emergency room for treatment. His vision was permanently impaired by the bungee cord. Otero filed a negligence suit against plaintiff and three bungee cord designers, manufacturers or distributors. Plaintiff settled Otero’s claim against it for $950,000.

 

Plaintiff then filed a declaratory judgment complaint against defendant in which it sought to require defendant to provide it with indemnification under an insurance policy defendant had issued to Apex for the truck Otero and Agosto had used to make the delivery.

 

The commercial automobile liability policy between defendant and Apex provided the following coverage:

 

[Defendant] will pay all sums an “insured” legally must pay as damages because of “bodily injury” or “property damage” to which this insurance applies, caused by an “accident” and resulting from the ownership, maintenance or use of a covered “auto”.

 

In pertinent part, the policy identified the following as “insureds”:

1. Who Is An Insured

 

The following are “insured”:

 

a. You [Apex] for any covered “auto”.

 

b. Anyone else while using with your permission a covered “auto” you own, hire or borrow except:

 

….

 

(4) Anyone other than your “employees”, partners (if you are a partnership), members (if you are a limited liability company), a lessee or borrower of a covered “auto” or any of their “employees”, while moving property to or from a covered “auto”.

 

The policy also contained a contractual liability exclusion, which provided as follows:

 

This insurance does not apply to any of the following:

 

….

 

Liability assumed under any contract or agreement. But this exclusion does not apply to liability for damages:

 

a. Assumed in a contract or agreement that is an “insured contract” provided the “bodily injury” or “property damage” occurs subsequent to the execution of the contract or agreement; or

 

b. That the “insured” would have in the absence of the contract or agreement.

 

The term “insured contract” was defined as:

That part of any other contract or agreement pertaining to your business … under which you assume the tort liability of another to pay for “bodily injury” or “property damage” to a third party or organization. Tort liability means a liability that would be imposed by law in the absence of any contract or agreement.

 

The agreement between plaintiff and Apex required Apex to obtain commercial general liability insurance and name plaintiff as an additional insured. Plaintiff asserts that Apex failed to secure this coverage.

 

II.

The parties filed cross-motions for summary judgment. On August 27, 2010, Judge DeCastro denied plaintiff’s motion and granted defendant’s cross-motion in a written opinion. The judge found the insurance policy provided that defendant was required to indemnify plaintiff only if the bodily injury sustained by Otero were caused by an accident resulting from plaintiff’s “ownership, maintenance or use of a covered ‘auto’.” The judge ruled that “[i]n order to determine whether an injury arises out [of] the maintenance, operation or use of a motor vehicle, there must be a substantial nexus between the injury suffered and the asserted negligent maintenance, operation or use of the covered vehicle by the party seeking coverage.”

 

After reviewing the undisputed facts of this case, the judge found there was no substantial nexus between Otero’s injury and any alleged maintenance, operation or use of the Apex truck by plaintiff. In rejecting plaintiff’s claim that it was entitled to coverage because the truck was being unloaded and the items were being brought into its store, the judge explained:

 

In the present action, Mr. Otero was injured when a bungee cord on a rack provided by [plaintiff] became dislo[d]ged and struck him in the eye. This is not an injury that would h[a]ve been in the contemplation of the parties to the contract or a natural and reasonable consequence of the use of the [truck. Plaintiff] failed to provide a safe workplace and permitted an unreasonably dangerous condition on the premises which injured [Otero] and did not arise out of the negligent use of the Apex vehicle. Therefore plaintiff … is not entitled to coverage under the loading and unloading doctrine.

 

The judge continued:

Additionally, [plaintiff] did not own, operate or maintain the Apex truck. [Plaintiff] had nothing to do with the loading or unloading process. The agreement between Apex and [plaintiff] specifically states that Apex is responsible for unloading all merchandise and only Mr. Otero and Mr. Agosto were involved in loading and unloading the merchandise from the truck. Therefore, [plaintiff] does not have a valid claim for insurance coverage against defendant … under the subject policy[.]

 

Plaintiff filed a notice of appeal. Just before oral argument, defendant issued an amended policy to Apex, which included an “Additional Insured” endorsement, which modified the “Who Is An Insured” provision of the original policy as follows:

 

Paragraph c. of the WHO IS AN INSURED provision includes the person or organization noted below, but only for his, her or its liability because of acts or omissions of an “Insured” under paragraphs a. or b. of that provision.

 

As “the person or organization noted below,” the endorsement lists:

OWNERS, MANAGERS AND LESSERS OF PREMISES, WHERE THE NAMED INSURED IS PERFORMING MOVING OPERATIONS AND EVIDENCED BY A CERTIFICATE OF [INSURANCE] ISSUED PRIOR TO LOSS.

 

The endorsement stated it was retroactive to August 15, 2006.

 

Following oral argument, we granted plaintiff’s request to supplement the record with the amendment and we remanded the matter to the trial court to “conduct whatever proceedings it deems appropriate.” We did not retain jurisdiction.

 

On remand, plaintiff filed a motion for reconsideration in which it asserted the new endorsement required defendant to provide it with insurance coverage. Judge DeCastro denied plaintiff’s motion in a written opinion. The judge found the endorsement did “not change the court’s initial assessment as to whether the necessary substantial nexus exists between the use, maintenance or operation of the insured vehicle and [Otero’s] injury.”

 

Assuming plaintiff was an “insured” under the endorsement, the judge found it would only be entitled to coverage for any liability it incurred “because of acts or omissions of an ‘Insured.’ ” Because the “Insured” (Apex) had not committed any “acts or omissions” leading to Otero’s injury, which was due to plaintiff’s provision of unsafe bungee cords on the baker’s rack and had nothing to do with the truck, and because plaintiff was only covered by the endorsement if Apex had been negligent, the judge found plaintiff was not entitled to be indemnified for the settlement it entered with Otero.

 

Plaintiff filed a motion for reconsideration of the judge’s July 8, 2011 order. Judge DeCastro denied the motion in a written opinion on August 19, 2011. This appeal followed.

 

III.

When a party appeals a trial court’s grant of summary judgment, we review de novo whether summary judgment was proper. Simonetti v. Selective Ins. Co., 372 N.J.Super. 421, 427 (App.Div.2004). Accordingly, we must first decide whether there was a genuine issue of fact, and then, if there was not, whether the trial court’s ruling on the law was correct. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J.Super. 162, 167 (App.Div.), certif. denied, 154 N.J. 608 (1998). In performing our appellate function, we consider “whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.” Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995); see also R. 4:46–2(c).

 

Plaintiff argues the judge erred in finding it was not entitled to coverage because the truck was being unloaded and merchandise was being brought into its store at the time Otero was injured. We disagree.

 

N.J.S.A. 39:6B–1 requires insurers of registered vehicles in New Jersey to provide coverage for losses “resulting from liability imposed by law for bodily injury, death and property damage sustained by any person arising out of the ownership, maintenance, operation or use of a motor vehicle.” See Craggan v. Ikea USA, 332 N.J.Super. 53, 64 (App.Div.2000). “Implicit within that requirement is the obligation to provide omnibus liability coverage to all persons who ‘use’ the named insured’s vehicle by participating in its loading or unloading.” Pisaneschi v. Turner Const. Co., 345 N.J.Super. 336, 343 (App.Div.2001) (citing Kennedy v. Jefferson Smurfit Co., 147 N.J. 394, 398–99 (1997)).

 

The Supreme Court has held that the mandatory “use” provision must be construed broadly “in order to effectuate the overriding legislative policy of assuring financial protection for the innocent victims of motor vehicle accidents.” Kennedy, supra, 147 N.J. at 403–04 (quoting Bellafronte v. General Motors Corp., 151 N.J.Super. 377, 382 (App.Div.), certif. denied, 75 N.J. 533 (1977)). It is not, however, “intended to insure all defendants against all claims arising from any accident in any way incident to loading/unloading irrespective of causation, that is, irrespective of the defendant’s actual involvement with the insured vehicle itself.” Pisaneschi, supra, 345 N.J.Super. at 343.

 

In determining coverage for loading and unloading activities, New Jersey follows the more “ ‘modern and enlightened’ ‘complete operation’ ” approach. FN1 See Kennedy, supra, 147 N.J. at 399. In complete operation jurisdictions, “all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading.” Id. at 399–400 (quoting Drew Chem. Corp. v. Am. Fore Loyalty Group, 90 N.J.Super. 582, 589 (App.Div.1966)). Accordingly, when inquiring whether a particular act can be considered part of the loading or unloading operation, courts must look to

 

FN1. The alternative minority approach is the “coming to rest doctrine,” under which “coverage exists only from the time the goods are removed or lifted from the truck to the moment the removed goods come to rest.” Kennedy, supra, 147 N.J. at 399.

 

whether the acts of negligence charged to defendants were a part of the overall loading or unloading operation so that, in the commission of the negligent acts charged, defendants can be said to have been using the vehicle and thereby became additional insureds under the policy. In other words, did the negligent act which caused the injury or is alleged to have caused it constitute a part of the loading and unloading process?

 

[ Kennedy, supra, 147 N.J. at 400 (quoting Cenno v. W. Va. Paper and Pulp Co., 109 N.J.Super. 41, 45 (App.Div.), certif. denied, 56 N.J. 99 (1970)).]

 

Put another way, the “critical issue” is whether the alleged act or omission constituted an “integral part” of the loading or unloading of the insured’s vehicle. Kennedy, supra, 147 N.J. at 401. Because the focus of the “complete operation” doctrine is on the overall loading and unloading process, “the distinction between preparations for loading and the act of loading is obliterated.” Pisaneschi, supra, 345 N.J.Super. at 345 (quoting Kennedy, supra, 147 N.J. at 400).

 

Applying these principles to the facts of this case, we find no basis to disturb Judge DeCastro’s conclusion that plaintiff’s action in providing Otero with a baker’s rack with defective bungee cords was not an “integral” part of the unloading of the Apex truck. The rack was certainly not necessary in the unloading process. Otero had dollies to use to transport the boxes from the sidewalk into plaintiff’s store. Similarly, Otero did not ask that bungee cords be attached to the rack. He did not choose or attach the cords to the rack and he did not make use of them for any purpose.

 

Plaintiff argues the cords could have been used to help “to hold the boxes onto the rack” in the same manner that its employees used them to keep trash from falling off the racks when they were used for that purpose. However, coverage is not mandated when the alleged negligent act, here plaintiff’s provision of defective bungee cords, is simply “useful” or “helpful” to the unloading process. Rather, the relevant inquiry is whether the cords were “necessary” or an “integral part” of the unloading process. Kennedy, supra, 147 N.J. at 401. That was not the case here. Although Otero acknowledged the cords “did tend to create a barrier to keep boxes from falling,” he testified the cords had “absolutely nothing” to do with his job and that he “never” used them during other deliveries.

 

Contrary to plaintiff’s contention, this case is not analogous to the facts presented in Kennedy. There, the plaintiff was injured when a rotted wooden pallet collapsed and the bundles of cardboard it held fell on top of him. Id. at 396. The Court held that the cardboard manufacturer’s negligent selection and use of a rotted wooden pallet to facilitate the loading of bales of cardboard onto the vehicle transporting the cardboard from the factory was a “use” of the vehicle and therefore a covered act for purposes of the insurance policy. Id. at 401. Central to the Court’s holding, however, was a recognition that “pallets are a common technique used to facilitate the movement of goods. Indeed, the pallet was selected in preparation for the loading and shipping of the cardboard.” Ibid.

 

Here, however, Otero testified the bungee cords were not a “common technique” for unloading merchandise at plaintiff’s stores. Further, the bungee cords were not “selected in preparation” for unloading plaintiff’s merchandise. They were attached by plaintiff’s employees to hold trash bags in place and just happened to be left on the baker’s rack when it was turned over to Otero.

 

This case is therefore more analogous to Cenno, supra, 109 N.J.Super. at 41. In Cenno, the underlying plaintiff was injured while unloading a large bale of cardboard boxes that were held together by metal bands. Id. at 44. When the plaintiff pulled on the band securing the bale, the band came apart, causing him to lose his balance and fall out of the truck to the ground. Ibid. The plaintiff brought suit against the manufacturer of the metal bands and the company that had baled the cardboard boxes. In concluding that neither qualified as additional insureds under the trucking company’s insurance policy, we stated that “the negligent acts charged to [the manufacturer] and [the baler] antedated delivery of the goods to the insured trucker and cannot reasonably be said to be causally connected with the loading and unloading in any way.” Id. at 47.

 

The Supreme Court in Kennedy quoted Cenno approvingly, despite its holding that the selection of the rotted wooden pallet in that case was an “integral part” of the loading and unloading process. In harmonizing its holding in Cenno, the Court stated:

 

It is unclear whether the cardboard was baled with metal bands solely to facilitate its shipment or whether that was a requirement of West Virginia’s customer. If there had been a factual basis for concluding that the baling was done solely to enable shipment of the goods, the Cenno court would have found [the baler] to be an additional insured.

 

[ Kennedy, supra, 147 N.J. at 405 (emphasis added).]

 

Here, the bungee cords plaintiff’s employees attached to the baker’s rack were not used “solely to facilitate” the unloading process. Rather, the bungee cords were attached to the rack prior to Otero’s arrival at the store. Plaintiff’s employees placed them on the rack, not for Otero’s use, but rather for their own convenience when they used the rack to remove trash from the store. Under these circumstances, Judge DeCastro properly concluded that plaintiff’s negligent act of improperly attaching unsafe bungee cords to the baker’s rack it gave to Otero was not a “use” of the Apex truck for the purpose of triggering coverage under the automobile liability insurance policy defendant provided to Apex.

 

Plaintiff’s remaining arguments lack merit. It asserts it is entitled to coverage under the retroactive endorsement of the policy defendant issued in 2011. However, the endorsement merely provided coverage for plaintiff for any liability it incurred as a result of Apex’s negligent acts. Here, Apex was not negligent in any fashion. Otero was injured due to plaintiff’s negligence in improperly placing unsafe bungee cords on the baker’s rack. Thus, the retroactive endorsement did not extend coverage to plaintiff under the facts of this case.

 

Plaintiff also argues that, under its contract with Apex to deliver merchandise to its stores, Apex was required to “indemnify and hold [it] harmless from any liability, loss, cost, damage, or expense, including attorney’s fees, which [plaintiff] may suffer as a result of any claims that arise out of or result from the rendering of services by” Apex. Plaintiff alleges Apex never obtained this coverage.

 

Even if this were the case, however, Apex’s failure to obtain this coverage would not make defendant liable to plaintiff for this deficiency. See Jeffrey M. Brown Assocs., Inc. v. Interstate Fire & Cas. Co., 414 N.J.Super. 160, 172 (App.Div.) (“An insurer’s duties are defined by what it contracted to do, not by what the insured contracted to do.”) (quoting 2 Allan D. Windt, Insurance Claims & Disputes: Interpretation of Important Policy Provisions § 11.30 at 11–469 (5th ed.2007), certif. denied, 204 N.J. 41 (2010)). Therefore, this argument lacks merit.

 

Moreover, through the retroactive endorsement, plaintiff was named as an additional insured as required by Apex’s contract with plaintiff for any claims resulting from Apex’s conduct. Again, however, plaintiff is not entitled to indemnification from defendant under this endorsement because Apex’s conduct did not cause Otero’s injury. Plaintiff’s own negligent acts are simply not covered by the endorsement under the circumstances of this case.

 

Plaintiff filed a motion after the case was remanded to the trial court in which it sought to reopen discovery concerning the endorsement. On June 10, 2011, Judge Peter F. Bariso, Jr. denied this motion, finding plaintiff had presented no exceptional circumstances warranting such relief. Plaintiff now challenges this ruling and argues it should have been permitted to learn more about the circumstances under which the retroactive endorsement was issued. Our scope of review of a decision concerning an extension of the discovery period is limited to determining whether the judge abused his or her discretion or misapplied the law. Huszar v. Greate Bay Hotel & Casino, 375 N.J.Super. 463, 471–72 (App.Div.2005), remanded on other grounds, 185 N.J. 290 (2005).

 

Rule 4:24–1(c) only permits an extension of discovery when “exceptional circumstances” are present. The party seeking the extension must “describe the discovery to be completed [and] set forth proposed dates for completion [.]” Ibid. The moving party must also “demonstrate with some degree of particularity the likelihood that further discovery will supply the missing elements of the cause of action.” Auster v. Kinoian, 153 N.J.Super. 52, 56 (App.Div.1977).

 

Plaintiff failed to meet these requirements. It did not state whether it would be seeking to take depositions, propound interrogatories, or employ any other specific discovery tool. It did not provide proposed dates for the completion of discovery. The language of the endorsement under review was clear. Under these circumstances, we are persuaded the judge did not mistakenly exercise his discretion in denying plaintiff’s request for additional discovery.

 

Finally, plaintiff’s argument that it was entitled to counsel fees lacks merit. Rule 4:42–9(a)(6) permits the award of counsel fees “[i]n an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.” Plaintiff was not a successful claimant and its motion for summary judgment in its favor was properly denied by Judge DeCastro.

 

Affirmed.