United States District Court,

D. Nebraska.

Florence MUZI, Plaintiff,

v.

NORTH AMERICAN VAN LINES, INC., Custard Insurance Adjusters, Inc., Defendants.

No. 8:14CV267. | Signed March 18, 2015.

 

 

MEMORANDUM AND ORDER

JOSEPH F. BATAILLON, Senior District Judge.

*1 This matter is before the court on a motion to dismiss filed by defendants North American Van Lines, Inc. and Custard Insurance Adjusters, Inc., Filing No. 19.1 This is an action for damages to property in connection with the moving of household goods. The plaintiff asserts a claim under the Carmack Amendment to the Interstate Commerce Act (“ICA”), 49 U.S.C. § 14706, and a state-law tort claim for bad faith refusal to settle in connection with a policy of insurance, seeking attorney fees under Neb.Rev.Stat. § 44359.

 

The defendants move to dismiss the state-law claim for failure to state a claim under Fed.R.Civ.P. 12(b)(6). They contend that the state-law claim is preempted by the Carmack Amendment.

 

 

I. FACTS

In her amended complaint, the plaintiff alleges that she contracted with defendant North American Van Lines, Inc. (“North American”) to transport her personal property from Alabama to Nebraska and also alleges she procured insurance of her property from North American and defendant Custard Insurance Adjusters, Inc. (“Custard”) for an additional payment. She states that, pursuant to the Bill of Lading, the parties agreed the total value of the property being transported was $125,000.00. She alleges her property was damaged by water and mold. She also alleges that North American and Custard acted as insurers and entered into a contract with her wherein they agreed to insure the plaintiff’s property and provide her an additional payment in the event of its loss.

 

The Bill of Lading includes a binding estimate that indicates, under “other services” an “insurance surcharge.” Filing No. 21–2, at ECF p. 4 Index of Evid., Ex. 2, Lambert Decl., Ex. A, Bill of Lading. Under the heading “protection options,” in a box labelled “Warning,” a maximum value protection of $125,000.00 is shown and the option with a $250.00 deductible is circled. Id., Ex. A, Bill of Lading at 5. In addition, a page labelled “Customer Declaration of Value,” shows the plaintiff’s signature under both Option 1 for “Standard Full Value Protection” and Option 2 for “Waiver of Full Replacement Value Protection.” Id., at 22. The plaintiff’s initials, however, are shown under Option 1, next to “$250 deductible” and the total value to be provided by the customer under Option 1 is handwritten as $125,000. Initials are crossed out under Option 2. Also, the space labelled a monetary amount “to be provided by carrier” under Option 1 is not filled in.

 

 

II. LAW

Under the Federal Rules, a complaint must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Fed.R.Civ.P. 8(a)(2). The rules require a “ ‘showing,’ rather than a blanket assertion, of entitlement to relief .” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556 n. 3. (2007) (quoting Fed.R.Civ.P. 8(a)(2)). “Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the … claim is and the grounds upon which it rests.’ “ Erickson v. Pardus, 551 U.S. 89, 93 (2007) (quoting Twombly, 550 U.S. at 555). In order to survive a motion to dismiss under Fed.R.Civ.P. 12(b)(6), the plaintiff’s obligation to provide the grounds for his entitlement to relief necessitates that the complaint contain “more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555.

 

*2 The factual allegations of a complaint are assumed true and construed in favor of the plaintiff. Id. “On the assumption that all the allegations in the complaint are true (even if doubtful in fact),” the allegations in the complaint must “raise a right to relief above the speculative level.” Twombly, 550 U.S. at 555–56. In other words, the complaint must plead “enough facts to state a claim for relief that is plausible on its face.” Id. at 547. “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). Determining whether a complaint states a plausible claim for relief is “a context-specific task” that requires the court “to draw on its judicial experience and common sense.” Id. at 679.

 

A court considering a motion to dismiss may begin by identifying pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth. Id. Although legal conclusions “can provide the framework of a complaint, they must be supported by factual allegations.” Id. When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief. Id.

 

The Carmack Amendment to the ICA, 49 U.S.C. § 14706, regulates the liability of common carriers engaged in interstate commerce. In re Atlas Van Lines, Inc., 209 F.3d 1064, 1066 (8th Cir.2000); see Adams Express Co. v. Croninger, 226 U.S. 491, 503–05 (1913). The purpose of the Carmack Amendment is to establish a uniform federal guidelines designed in part to remove the uncertainty surrounding a carrier’s liability when damage occurs to a shipper’s interstate shipment. Distribuidora Mari Jose, S.A. de C.V. v. Transmaritime, Inc., 738 F.3d 703, 706 (5th Cir.2013). The Carmack Amendment preempts state law claims against interstate motor carriers and provides the exclusive cause of action for loss or damages to goods arising from interstate transportation. Moffit v. Bekins Van Lines Co., 6 F.3d 305, 307 (5th Cir.1993); Fulton v. Chicago, Rock Island & Pac. R.R., 481 F.2d 326, 332 (8th Cir.1973) (holding that where damages are sought against a motor carrier for failure to properly perform an interstate contract of carriage, the Carmack Amendment governs and preempts any state-law causes of action arising from or based on the carrier’s performance of the interstate contract of carriage).

 

When a plaintiff alleges “liability on a ground that is separate and distinct from the loss of, or the damage to, the goods,” however, the claim is not preempted. Gordon v. United Van Lines, Inc., 130 F.3d 282, 289 (7th Cir.1997) (noting that that “a number of situations” may exist “in which a carrier might remain liable to a shipper for certain kinds of separate and independently actionable harms that are distinct from the loss of, or the damage to, the goods”). Similarly, a claim that does not arise from the same conduct as the claims for delay, loss or damage to shipped property will not be not preempted. Smith v. United Parcel Serv., 296 F.3d 1244, 1248–49 (11th Cir.2002).2

 

*3 “With the enactment in 1906 of the Carmack Amendment, Congress superseded diverse state laws with a nationally uniform policy governing interstate carriers’ liability for property loss.” New York, N.H. & Hartford R.R. v. Nothnagle, 346 U.S. 128, 131 (1953). In substance, the Carmack Amendment provides that a carrier is strictly liable for the actual loss or injury to a shipper’s property. See Continental Grain Co. v. Frank Seitzinger Storage, Inc., 837 F.2d 836, 839 (8th Cir.1988).

 

The Carmack Amendment subjects motor carriers to absolute liability for “actual loss or injury to property” when transporting cargo in interstate commerce. 49 U.S.C. § 14706(a)(1). A carrier’s liability under the Carmack Amendment includes all reasonably foreseeable damages resulting from the breach of its contract of carriage, “including those resulting from nondelivery of the shipped goods as provided by the bill of lading.” Air Prods. & Chems., Inc. v. Illinois Cent. Gulf R.R. Co., 721 F.2d 483, 485 (5th Cir.1983); see National Hispanic Circus, Inc. v. Rex Trucking, Inc., 414 F.3d 546, 549 (5th Cir.2005) (noting that both general and special damages may be recovered under the Carmack Amendment); Paper Magic Group, Inc. v. J.B. Hunt Transp., Inc., 318 F.3d 458, 461–62 (3d Cir.2003) (finding loss in value due to delay a reasonably foreseeable component of general damages); Contempo Metal Furniture Co. v. East Texas Motor Freight Lines, Inc., 661 F.2d 761, 765 (9th Cir.1981) (stating that “[t]he Carmack Amendment has not altered the common law rule that special or consequential, damages, i.e., those that the carrier did not have reason to foresee as ordinary, natural consequences of a breach when the contract was made, are not usually recoverable in an action for breach of contract”). Accordingly, recovery of consequential damages under the Carmack Amendment is allowed when a plaintiff can show that the carrier had notice of the special circumstances from which such damages would flow. See, e.g., Contempo, 661 F.2d at 765 (allowing damages for delay); Hector Martinez & Co. v. Southern Pac. Transp. Co., 606 F.2d 106, 111 (5th Cir.1979) (allowing claim for damages resulting from delay); John Morrell & Co. v. Burlington N., Inc., 560 F.2d 277, 281 (7th Cir.1977) (stating that to recover special damages, a plaintiff must show that the defendant had notice of circumstances that might lead to such damages); Pillsbury Co. v. Illinois Cent. Gulf R.R., 687 F.2d 241, 245 (8th Cir.1982) (allowing recovery of demurrage charges when fumigation effort slowed the unloading of backed-up cars); Mach Mold Inc. v. Clover Assocs., Inc., 383 F.Supp.2d 1015, 1032 (N.D.Ill.2005) (stating that an injured party can recover damages for delay, non-speculative lost profits, and all reasonably foreseeable consequential damages). The foreseeability of consequential damages is a question of fact. See National Hispanic Circus, 414 F.3d at 550.

 

*4 A carrier can, however, limit its liability if it takes certain steps, including giving the shipper a reasonable opportunity to choose between two or more levels of liability, obtaining the shipper’s agreement as to the choice of liability, and issuing a receipt or bill of lading prior to moving the shipment. Emerson Elec. Supply Co. v. Estes Express Lines Corp., 451 F.3d 179, 188 (3d Cir.2006) (noting that amendments to the ICA did not alter the requirement that a carrier provide a shipper with a reasonable opportunity to choose between two or more levels of liability). To satisfy the two or more levels of liability requirement, a carrier must offer two or more shipping rates with corresponding levels of liability for one type of shipment. See Nothangle, 346 U.S. 128, 134, (1953) (“[O]nly by granting its customers a fair opportunity to choose between higher or lower liability by paying a correspondingly greater or lesser charge can a carrier lawfully limit recovery to an amount less than the actual loss sustained.”). “A reasonable opportunity to choose between different levels of coverage ‘means that the shipper had both reasonable notice of the liability limitation and the opportunity to obtain information necessary to making a deliberate and well-informed choice.’ “ Carmana Designs Ltd. v. North Am. Van Lines Inc., 943 F.2d 316, 320 (3d Cir.1991) (quoting Bio–Lab, Inc. v. Pony Express Courier Corp., 911 F.2d 1580, 1583 (11th Cir.1990).

 

Household goods carriers are governed by additional statutes and regulations. See 49 U.S.C. §§ 13704(a)(2) & 14104; Munitions Carriers Conference, Inc. v. United States, 147 F.3d 1027, 1029 (D .C.Cir.1998) (noting, post-deregulation, that carriers are no longer required to file tariffs for the transportation of most goods, but must still file tariffs for the transportation of household goods). Id. The Federal Motor Carrier Safety Administration (FMCSA) regulates interstate household moves under the authority of the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA–LU), which Congress passed in 2005. See Public Law 109–59, 119 Stat. 1144 (Aug. 10, 2005), codified at 49 U.S.C. §§ 13102–14104. With respect to household goods, the ICA provides:

(f) Limiting liability of household goods carriers to declared value.—

(1) In general.—A carrier or group of carriers subject to jurisdiction under subchapter I or III of chapter 135 may petition the Board to modify, eliminate, or establish rates for the transportation of household goods under which the liability of the carrier for that property is limited to a value established by written declaration of the shipper or by a written agreement.

(2) Full value protection obligation.—Unless the carrier receives a waiver in writing under paragraph (3), a carrier’s maximum liability for household goods that are lost, damaged, destroyed, or otherwise not delivered to the final destination is an amount equal to the replacement value of such goods, subject to a maximum amount equal to the declared value of the shipment and to rules issued by the Surface Transportation Board and applicable tariffs.

*5 (3) Application of rates.—The released rates established by the Board under paragraph (1) (commonly known as “released rates”) shall not apply to the transportation of household goods by a carrier unless the liability of the carrier for the full value of such household goods under paragraph (2) is waived, in writing, by the shipper.3

 

49 U.S.C.A. § 14706(f)(1)-(3). There are currently two generally applicable liability options for interstate household goods moves: the first reimburses the shipper for the replacement value of his or her goods, referred to as the full value option; and the second reimburses the shipper at a lower rate, currently 60 cents per pound, and is referred to as the released rate option. See Transportation of Household Goods in Interstate Commerce; Consumer Protection Regulations: Released Rates of Motor Carriers of Household Goods, 77 Fed.Reg. 25371–01, 25373 (April 30, 2012).

 

Carriers of household goods may offer to sell or obtain for a shipper separate liability insurance when the individual shipper releases the shipment for transportation at a value not exceeding 60 cents per pound ($1.32 per kilogram) per article. See 49 C.F.R. § 375.301; § 375.303(a). If the carrier sells, offers to sell, or procures liability insurance coverage for loss or damage to shipments, it must; (1) issue to the individual shipper a policy or other appropriate evidence of the insurance that the individual shipper purchased; (2) provide a copy of the policy or other appropriate evidence to the individual shipper at the time it sells or procures the insurance; (3) issue policies written in plain English; (4) clearly specify the nature and extent of coverage under the policy. Id., § 375.303(c)(1)-(4). If the carrier sells or procures insurance, the carrier’s failure to issue a policy, or other appropriate evidence of insurance purchased, to an individual shipper will subject the carrier to full liability for any claims to recover loss or damage attributed to the carrier. Id., § 375.303(c)(5). Separate liability insurance from a third-party insurance company “is not valuation coverage governed by Federal law, but optional insurance regulated under State law.” Transportation of Household Goods; Consumer Protection Regulations, 69 Fed.Reg. 10570–01, 105–79–80 (Mar. 5, 2004); see also William J. Augello and George Carl Pezold, Freight Claims in Plain English, Vol. I, § 8.8.20 (4th ed.2008) (confirming that an offer to purchase third-party insurance does not qualify as an alternative choice of rates under the Carmack Amendment); Nipponkoa Ins. Co. v. Atlas Van Lines, Inc., 687 F.3d 780, 782 (7th Cir.2012) (noting that, in the transportation trade, insurance and rates have not been treated as economic equivalents).

 

 

III. DISCUSSION

At this stage of the proceedings, the court is unable to determine whether the plaintiff purchased a separate policy of insurance. She alleges that she did. The Bill of Lading supports that allegation to some extent because it includes an “insurance surcharge.” The court is unable to determine the meaning or relevance of that notation in this context. Nothing in the record clarifies whether the imposition of an insurance surcharge incorporates either an additional rate or insurance or both. Further, it is not clear on the face of the complaint or in the Bill of Lading whether the carrier would have issued or procured the policy or whether a third-party insurer is involved. In addition, the Bill of Lading appears to be inconsistent with respect to the valuation and/or agreed level of liability. Under the circumstances, further development of the record is necessary to determine the issues that relate to Carmack Amendment preemption.

 

*6 Depending on the evidence, the plaintiff may be able to pursue a state law tort claim with respect to a separate contract of insurance that is governed under state law. Arguably, her bad faith claim is not based on the defendants’ conduct in transporting the household goods, but arises under obligations separate and apart from the loss or damage to the goods. Accordingly, the court finds the defendants’ motion to dismiss the state-law claim should be denied at this time, without prejudice to reassertion on further development of the record.

 

IT IS ORDERED:

 

1. The defendants’ motion to dismiss (Filing No. 19) is denied.

 

The plaintiff’s motion to strike the defendants’ index (Filing No. 22) is granted in part and denied in part, as set forth in this order.

 

 

 

Footnotes

 

1

 

Also pending is the plaintiff’s motion to strike the defendants’ index or evidence, Filing No. 22. In support of their motion to dismiss, the defendants have submitted copies of a brochure entitled “Your Rights and Responsibilities When You Move,” and the Bill of Lading, with authenticating declarations. Filing No. 21, Index of Evid., Ex. 1, Declaration of Tammy Angeloff; Ex. A, Brochure; Ex. 2, Declaration of Thomas Lambert (“Lambert Aff.”), Ex. A, Bill of Lading. The plaintiffs move to strike the exhibits, contending that the documents are outside the pleadings and cannot be considered for purposes of a Fed.R.Civ.P. 12(b)(6) motion.

“Though matters outside the pleading may not be considered in deciding a Rule 12 motion to dismiss, documents necessarily embraced by the complaint are not matters outside the pleading.” Gorog v. Best Buy Co., 760 F.3d 787, 791 (8th Cir.2014); Ashanti v. City of Golden Valley, 666 F.3d 1148, 1151 (8th Cir.2012). For example, “ ‘[T]he contracts upon which [a] claim rests … are evidently embraced by the pleadings.’ “ Id. (quoting Mattes v.. ABC Plastics, Inc., 323 F.3d 695, 697 n. 4 (8th Cir.2003)); see alsoStahl v. United States Dep’t of Agric., 327 F.3d 697, 700 (8th Cir.2003) (“In a case involving a contract, the court may examine the contract documents in deciding a motion to dismiss.”).

The court finds the plaintiff’s motion to strike is well taken with respect to the brochure, however, the bill of lading is referred to in the complaint and essentially forms the gravamen of the plaintiff’s Carmack Amendment claim. Importantly, the plaintiff does not challenge the accuracy or authenticity of the document. Accordingly, the court will consider the Bill of Lading in connection with the motion to dismiss. The brochure, on the other hand, is not embraced by the pleadings and the plaintiff’s motion to strike will be sustained with respect to that document.

 

2

 

See, e.g., UPS Supply Chain Solutions, Inc. v. Megatrux Transp., Inc., 750 F.3d 1282 (11th Cir.2014) (Carmack Amendment does not preempt carrier’s contract action against subcarrier for indemnity for attorney’s fees); Gale v. Ramar Moving Systems, Inc., No. 13–cv–487, 2013 WL 3776983, *2–*3 (D.Md.2013) (claims for damage to non-shipped goods and for damage to home during move were not preempted by Carmack Amendment); Dynamic Transit v. Trans Pac. Ventures, 291 P.3d 114, 117 (Nev.2012) (Carmack Amendment does not preempt claim for intentional conversion of goods); Mason and Dixon Intermodal, Inc. v. Lapmaster Int’l, LLC, 632 F.3d 1056, 1061 (9th Cir.2011) (Carmack Amendment did not preempt state laws governing partial settlement); Frey v. Bekins Van Lines, Inc., 748 F.Supp.2d 176, 181 (E.D.N.Y.2010) (Carmack Amendment does not preempt claim regarding bait and switch pricing allegations); Learning Links, Inc. v. United Parcel Serv. of America, Inc., No. 03–cv–7902, 2006 WL 785274, *4–*5 (S.D.N.Y.2006) (Carmack Amendment did not preempt claim related to overcharges for shipments); Buchanan v. Neighbors Van Lines, No. 10–cv–6206, 2011 WL 5005769, *6–*7 (C.D.Cal.2011) (Carmack Amendment does not preempt state law claims against a broker arising out of interstate transport of goods for fraud); McGinn v. JB Hunt Transport, Inc., No. 10cv610, 2012 WL 124401, *3 (E.D.Wis.2012) (Carmack Amendment does not preempt state law claims of person injured by falling cargo against shipper or carrier for improper loading and maintenance of load stability during transit); In re EVIC Class Action Litigation, No. MDL–1339, 2002 WL 1766554, *9–*10 (S.D.N.Y.2002) (Carmack Amendment was “inapposite” to claims against defendant United Parcel Service, where those claims were not for “loss or damage to shipped goods,” but for misuse of customers’ payments for shippers’ insurance); Sokhos v. Mayflower Transit, Inc., 691 F.Supp. 1578, 1581 (D.Mass.1988) (Carmack Amendment preempt only state law claims for lost to goods, but not state law claims of deceptive practices).

 

3

 

Under 49 U.S.C. § 14706(f)(3), the Board authorizes household goods carriers to set “released rates,” which are lower rates for transportation services when the shipper agrees to release the carrier from full liability for potential loss and damage to the shipper’s cargo. See Transportation of Household Goods in Interstate Commerce; Consumer Protection Regulations: Released Rates of Motor Carriers of Household Goods, 77 Fed.Reg. 25371–01 (April 30, 2012). In the regulations, the Federal Motor Carrier Safety Administration Transportation Board explains:

Unless otherwise agreed to, a moving company is liable for the cost to replace lost or damaged goods, up to a total value stated by the consumer. For instance, if the consumer stated that the shipment had a value of $200,000, and the entire shipment were destroyed, the moving company would be liable for a $200,000. However, if a consumer does not indicate a total value for the shipment, the Board’s decision would require the moving company to be liable for the greater of (1) $6,000 or (2) $6.00 per pound of the lost or destroyed item(s).

Released Rates of Motor Common Carriers of Household Goods, 76 Fed.Reg. 5431–01 (Jan. 31, 2011).

United States District Court,

D. New Jersey.

CAROLINA CASUALTY INSURANCE COMPANY, Plaintiff/Counter–Defendant,

v.

TRAVELERS PROPERTY CASUALTY COMPANY, counter-claimant, third party plaintiff, cross-claimant, cross-defendant; Illinois National Insurance Company, counter-claimant, cross-defendant; Lexington Insurance Company, counter-claimant, cross-defendant; Old Republic Insurance Company, cross-defendant, Defendants,

v.

Penske Truck Leasing Co., L.P. Gardner, Masson, Bishop & Company, counter-claimant, cross-claimant, cross-defendant; Gardner M. Bishop, Inc., counter-claimant, cross-claimant, cross-defendant; Mark Albanese, counter-claimant, cross-defendant; Joseph Puccio, counter-claimant, cross-defendant; John Kanard, cross-defendant, Third Party Defendants.

Civ. No. 09–4871 (KM)(MCA). | Signed Feb. 25, 2015.

Attorneys and Law Firms

Deborah M. Mulvey, Walter H. Swayze, III, Segal McCambridge Singer & Mahoney, Jersey City, NJ, for Plaintiff/Counter-Defendant.

Erin Marie McDevitt-Frantz, Borowsky & Borowsky LLC, Shrewsbury, NJ, Anthony J. Zarillo, Jr., Michael J. Rossignol, Bevan, Mosca, Giuditta & Zarillo, P.C., Basking Ridge, NJ, Gloria B. Cherry, Braff, Harris & Sukoneck, Livingston, NJ, Lawrence F. Citro, Biancamano & Di Stefano, PC, Edison, NJ, for Defendants.

Robert Harris Tell, Mountainside, NJ, for Third Party Defendants.

 

 

OPINION

McNULTY, District Judge.

*1 This action arose from an accident in which John Kanard, a tractor-trailer driver, was severely injured as a result of the acts of Gardner, Masson, Bishop & Company (“Gardner Bishop”), a general contracting company. Kanard sued Gardner Bishop and ultimately obtained a $5 million dollar settlement. The settlement was paid for by Gardner Bishop’s primary liability insurer, Travelers Property Casualty Company (“Travelers”), and excess carrier, Illinois National Insurance Company (“Illinois National”). Thereafter, Carolina Casualty Insurance Corporation (“CCIC”)—another potentially liable insurer—brought this action seeking a declaratory judgment that it did not owe coverage to Gardner Bishop in relation to the accident. Travelers, Illinois National, and CCIC each moved for summary judgment on the coverage question.1 In my opinion dated October 22, 2014 (the “Opinion”) (Dkt. No. 106), I held that CCIC did owe coverage and was required to reimburse Illinois National for a portion of the $5 million settlement. My Opinion and Order asked the parties to submit letters addressing any other issue that remained to be decided in order to put the Court in a position to enter final judgment.

 

Now before the Court are the letters submitted by Travelers (Dkt.Nos.110, 113) and Illinois National (Dkt. No. 109). Also before the Court is a motion for reconsideration filed by CCIC (Dkt. No. 112),2 as well as what amounts to a letter brief opposing the submissions of Travelers and Illinois National (Dkt. No. 111). In their letters, Travelers and Illinois National request an award of attorney fees and costs. Illinois National additionally requests prejudgment interest on the amount owed by CCIC. CCIC, in its letter, proffers several reasons why the awards sought by Traveler and Illinois National should be denied in whole or in part. For the reasons set forth below, the relief requested by Travelers and Illinois National is granted and CCIC’s motion for reconsideration is denied.

 

 

I. MOTION FOR RECONSIDERATION

I first address CCIC’s motion for reconsideration.3 CCIC does not challenge the manner in which the Court apportioned liability for the $5 million settlement among the various insurers. Instead, CCIC contends that the Opinion failed to consider certain language in the Travelers policy that is relevant to the allocation of defense costs.

 

 

A. The Summary Judgment Opinion

The details of the Opinion are well known to the parties. I briefly summarize a few aspects that are relevant to CCIC’s motion for reconsideration.

 

In the Opinion, I found that CCIC owed coverage to Gardner Bishop as a “user” of the tractor-trailer. I then found that CCIC was obligated to pay $1,000,000—the limit of its policy—to reimburse Illinois National for the costs of the settlement award. All told, I apportioned liability for the settlement award as follows:

 

 

 

 

Primary Coverage

 

 

Excess Coverage

 

 

Travelers

 

 

$1,000,000

 

 

Illinois National

 

 

$1,492,500

 

 

CCIC

 

 

$1,000,000

 

 

Lexington

 

 

$1,492,500

 

 

Old Republic

 

 

$15,000

 

 

 

 

Total Primary

 

 

$2,015,000

 

 

Total Excess

 

 

$2,985,000

 

 

 

 

 

*2 To decide each insurer’s percentage of liability, I initially set aside the excess coverage and determined the amount owed by each primary insurer. Because there are three insurers at the primary coverage level, I had to consider each policy’s “other insurance” clause to determine how the coverage should be allocated among them. Thus I reviewed the Travelers policy’s Other Insurance clause, which provided that Travelers’ coverage would be “excess over [ ][a]ny of the other insurance … [i]f the loss arises out of the maintenance or use of …’autos[.]’ “ (Dkt. No. 89–19, at 31) The loss in this case arose from the “use” of an “auto” as defined. I found, however, that the Travelers policy was a primary-level policy and not a “true” excess policy, because it was not conditioned on the existence of a primary policy. (See Dkt. No. 106, at 30) In effect, it was “excess” only in the specialized sense of setting priorities among the policies at the primary level. (See id. at 27–32)

 

Because the amount of the settlement far exceeded the limits of the three primary policies, it was unnecessary to determine the priority of payment among the primary carriers. All of their limits would be exhausted regardless. That holding applied only to payment of the settlement, however. As to the allocation of defense costs, an issue that was explicitly reserved, I requested additional submissions from the parties.

 

 

B. CCIC’s Motion for Reconsideration

1. The alleged error

CCIC asserts that the Court’s earlier Opinion ignored definitional language in the Travelers policy’s Commercial General Liability Coverage Form. CCIC acknowledges that the Opinion’s allocation of settlement costs is unaffected. But by not considering this definitional language, CCIC argues, the Court’s prior Opinion impliedly, and mistakenly, would render CCIC liable for Travelers’ defense costs.

 

As noted in my prior Opinion, the Other Insurance clause of the Travelers policy deems it to be excess4 where liability arises from the “use” of an “auto,” which includes the “loading and unloading” of cargo from a truck (See Dkt. No. 89–19, at 24). CCIC contends, however, that the same policy states elsewhere that “loading and unloading’ does not include the movement of property by means of a mechanical device” (Id. at 33–34). The loading and unloading that gave rise to the accident at the heart of this case involved a mechanical device. Therefore, CCIC argues, Gardner Bishop never “use[d]” the tractor-trailer, and the Travelers policy is not “excess” within the meaning of its Other Insurance clause. That designation matters, says CCIC, because as a primary insurer Travelers would be obligated to contribute to the costs of defense pro rata. By contrast, if the policy is deemed excess, then Travelers would have “no duty to defend” its insured (although it did so), and CCIC would be liable to reimburse Travelers for its defense costs. (Dkt. No. 89–19, at 31)

 

*3 CCIC requests that the Court amend its earlier Opinion to reflect this additional definitional language in the Travelers policy. (See Dkt. No. 112–1, at 6) Alternatively, CCIC asks the Court to clarify that the Opinion applies only to the allocation of settlement costs, not defense costs. (See id. at 4)

 

 

2. Discussion

CCIC’s motion will be denied for two reasons: (a) Considered as a motion for reconsideration, it is faulty because CCIC never fairly brought its current arguments to the Court’s attention. More fundamentally, however, the relief requested would not affect the prior Opinion and Order. CCIC’s arguments do not alter this Court’s allocation of coverage, the subject of the earlier Opinion. They relate only to the allocation of defense costs, an issue explicitly reserved by the Court and made subject to further proceedings. (b) At any rate, CCIC is wrong on the merits. The policy provision on which it relies was removed from the Travelers policy by endorsement. And even without the endorsement, the provision would be overridden by N.J.S.A. 39:6B–1, New Jersey’s omnibus motor vehicle insurance law.

 

 

a. Reconsideration

Viewed as a motion for reconsideration, CCIC’s application is plainly inadequate. See generally D.N.J. Loc. Civ. R. 7.1(i). Reconsideration is an “extraordinary remedy,” to be granted “sparingly.” NL Indus. Inc. v. Commercial Union Ins. Co., 935 F.Supp. 513, 516 (D.N.J.1996). Generally, reconsideration is granted in three scenarios: (1) when there has been an intervening change in the law; (2) when new evidence has become available; or (3) when necessary to correct a clear error of law or to prevent manifest injustice. See North River Ins. Co. v. CIGNA Reinsurance Co., 52 F.3d 1194, 1218 (3d Cir.1995); Carmichael v. Everson, 2004 WL 1587894, at *1 (D.N.J. May 21, 2004). Local Rule 7.1(i) requires such a motion to specifically identify “the matter or controlling decisions which the party believes the Judge or Magistrate Judge has overlooked.” Id.; see also Egloff v. New Jersey Air Nat’l Guard, 684 F.Supp. 1275, 1279 (D.N.J.1988). Evidence or arguments that were available at the time of the original decision will not support a motion for reconsideration. Damiano v. Sony Music Entertainment, Inc., 975 F.Supp. 623, 636 (D.N.J.1997); see also North River Ins. Co., 52 F.3d at 1218; Bapu Corp. v. Choice Hotels Int’l, Inc., 2010 WL 5418972, at *4 (D.N.J. Dec.23, 2010) (citing P. Schoenfeld Asset Mgmt. LLC v. Cendant Corp., 161 F.Supp.2d 349, 352 (D.N.J.2001)). Mere disagreement with a holding is properly expressed via an appeal, not a motion for reconsideration. See Morris v. Siemens Components, Inc., 938 F.Supp. 277, 278 (D.N.J.1996).

 

All provisions of the Travelers policy were available to all parties at the time of the summary judgment motions. CCIC has not identified any intervening change in the law or pointed to any evidence that was not previously available to the Court. Rather, CCIC attempts to use this motion to raise new arguments.

 

*4 CCIC’s summary judgment papers did not fairly present its current contention that the definition of “loading and unloading” requires that the Travelers policy be deemed primary.5 Rather, CCIC repeatedly took the position that the Travelers policy was excess under the terms of its Other Insurance clause. In support of its motion for summary judgment, CCIC stated:

 

Where the Other Insurance provisions of applicable policies all state that they each should operate in excess of any other valid insurance, they are deemed to be mutually repugnant and must be deemed to apply pro rata with one another.

The six policies at issue each contain Other Insurance clauses which state that any applicable insurance should apply excess of it. In fact, most of the said clauses are identical. Indeed, this is also the case with respect to the CCIC and Travelers’ policies.

Consequently, any coverage which Travelers asserts should be owed is owed pro rata with Travelers’ own coverage.

(Dkt. No. 89–1, at 20) (emphasis added) Likewise, in its opposition to Travelers’ motion for summary judgment, CCIC again stated:

[S]ince the Other Insurance provisions of … the Travelers and the Illinois National policies all state that they each should operate in excess of any other valid insurance, they are deemed to be mutually repugnant and must be deemed to apply pro rata with one another.

(Dkt. No. 95, at 14) (emphasis added) CCIC later, and without explanation, reversed this position in a reply brief and stated that the Travelers policy was primary, but it never connected that turnabout to the definitional language that it cites now.6 CCIC cannot fault the Court for failing to consider an argument it seems to have purposely bypassed, but anyway never made.7

More fundamentally, CCIC’s presentation of its motion as one to amend or alter the Court’s prior Order is puzzling. CCIC seems to fear that the Court’s prior interpretation of the Travelers policy will affect the allocation of defense costs. The defense costs issue, however, has not yet been decided. Not having been “considered,” it cannot be “reconsidered.”

 

The prior Opinion expressly states that the Court is reserving the issue of defense costs. (See Dkt. No. 106, at 33 (“The parties are directed to submit letters within 20 days outlining any issues that must be decided in order for the Court to enter a judgment that is final as to all claims and all parties. These may include fees and costs, as well as any remaining third-party claims, counterclaims, and cross-claims.”))8 As to allocation of the settlement, priorities among the primary-layer insurers did not matter. As the Opinion notes, the $5 million settlement exceeds the primary insurers’ combined policy limits. It does not matter who is first, second, or third; each will pay up to its policy limit. CCIC acknowledges that it is not quarreling with that aspect of the Opinion. (See Dkt. No. 112–1, at 7 n. 2)

 

*5 For purposes of allocation of defense costs, however, assume arguendo that prioritization does matter. Even so, there is nothing wrong with the reasoning of the Opinion, and it need not be amended. If prioritization matters for purposes of allocating defense costs, so be it; the Court will consider such arguments if and when they become consequential. But see Part II, infra.

 

 

b. The merits

Finally, even taken at face value, CCIC’s reconsideration motion must be denied on the merits.

 

First, the definitional language upon which CCIC relies was removed from the Travelers policy by endorsement. That endorsement, which modifies the terms of the Commercial General Liability Coverage Form, states: “The definition of loading or unloading’ in the Definitions Section does not apply.” (Dkt. No. 89–19, at 67) Thus the language on which CCIC relies—the language that the Court is alleged to have mistakenly ignored—is inoperative.

 

Second, even setting aside the endorsement, for the reasons expressed in the Opinion (see Dkt. No. 106, at 16–22), the New Jersey Omnibus Statute, N.J.S.A. 39:6B–1, would override the limitations contained in the policy’s definition of loading and unloading.

 

For the foregoing reasons, CCIC’s motion for reconsideration is denied.

 

 

II. REMAINING ISSUES

Travelers, Illinois National, and CCIC have submitted letters to the Court discussing the issues that must be decided in order to place the Court in a position to enter final judgment. As noted above, Travelers and Illinois National request an award of attorney fees and costs, and Illinois National separately requests an award of prejudgment interest. CCIC argues, at some length, that this relief must be denied.

 

 

A. Defense Costs

Travelers and Illinois National argue that CCIC is liable for their defense costs. They contend that, when CCIC improperly denied coverage, they incurred the costs of defending the claim against Gardner Bishop as well as this declaratory judgment action. CCIC, they say, is obligated under New Jersey law to pay the attorney fees and costs that they incurred. CCIC counters that Travelers’ and Illinois National’s conduct over the course of this litigation should bar them from recovering defense costs. Alternatively, CCIC argues that the amount sought by Travelers must be reduced.

 

Under New Jersey Court Rule (“NJCR”) 4:42–9(a)(6), a party may recover attorney fees “[i]n an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.” The rule seeks “to discourage groundless disclaimers and to provide more equitably to an insured the benefits of the insurance contract without the necessity of obtaining a judicial determination that the insured is, in fact, entitled to such protection.” Burlington Ins. Co. v. Northland Ins. Co., 766 F.Supp.2d 515, 532 (2011) (quoting Guaran tee Ins. Co. v. Saltman, 217 N.J.Super. 604, 610, 526 A.2d 731 (App.Div.1987)). In short, it attaches a potential cost to an insurer’s wrongful refusal to indemnify.

 

*6 The Rule as promulgated awarded defense costs only where an insurer refused to indemnify or defend its insured’s third-party liability to another. However, “New Jersey courts have also awarded attorney fees incurred by an insured in a declaratory judgment action to determine the existence of coverage of liability to third parties.” Guaran tee Ins. Co., 217 N.J.Super. at 612, 526 A.2d 731. All successful claimants—not just policy holders—may recover attorney fees. Eligible claimants “include excess or secondary carrier[s] which successfully prosecute a coverage action against the primary carrier when the latter has wrongfully refused to defend its insured.” Tooker v. Hartford Accident & Indem., Co., 136 N.J.Super. 572, 347 A.2d 371 (App.Div.1975)). Ultimately, however, the award of defense costs is “not mandatory in every action on an indemnity or liability policy” but rather is committed to the trial judge’s “broad discretion.” Enright v. Lubow, 215 N.J.Super. 306, 313, 521 A.2d 1300 (App.Div.1987).

 

I agree with Travelers and Illinois National that CCIC should pay their defense costs under NJCR 4:42–9(a)(6).9 CCIC brought this action seeking a declaratory judgment that it was not obligated to provide coverage to Gardner Bishop in connection with the injuries sustained by Kanard, a third party. This action is undoubtedly “an action upon a liability or indemnity policy of insurance.” Travelers and Illinois National—Gardner Bishop’s primary and excess insurers—have prevailed on the issue whether CCIC owed coverage to Gardner Bishop. Travelers and Illinois National thus qualify as “successful claimant[s]” within the meaning of NJCR 4:42–9(a)(6). Accordingly, they are entitled to recover from CCIC the fees and costs incurred to defend Gardner Bishop in the initial action brought by Kanard, as well as the fees and costs incurred to defeat this coverage action. See, e.g., Hurleysville Ins. Co. of New Jersey v. Dray–Con Transp., Inc., 2011 WL 798688, at *5 (N.J.Super.Ct.App.Div. Mar.9, 2011); Moper Transp. Inc. v. Norbet Trucking Corp., 399 N.J.Super. 146, 157–58, 943 A.2d 873 (App.Div.2008), certif. denied, 196 N.J. 463, 957 A.2d 1171 (2008); Tooker, 136 N.J.Super. at 576–77, 347 A.2d 371.

 

CCIC makes the opaque assertion that Travelers and Illinois National have failed to prove that they are entitled to recovery “under the applicable legal standard.” That aside, CCIC does not deny that NJCR 4:42–9(a)(6) authorizes the recoupment of defense costs here. Instead, CCIC argues that the Court should deny recovery because Travelers has “unclean hands” or has “waived its right of reimbursement” in the course of negotiations.

 

Under the doctrine of unclean hands, a court will withhold equitable relief “when the party seeking relief is guilty of fraud, unconscionable conduct, or bad faith directly related to the matter at issue that injures the other party and affects the balance of equities.” Paramount Aviation Corp. v. Agusta, 178 F.3d 132, 147 n. 12 (3d Cir.1999). The nexus between the offending conduct and the relief requested “must be close.” Highmark, Inc. v. UPMC Health Plan, Inc., 276 F.3d 160, 174 (3d Cir.2001).

 

*7 CCIC alleges that Travelers and Illinois National contrived a “ruse” to deliberately inflate their attorney fees and costs. (Dkt. No. 111, at 2) After CCIC initiated this declaratory judgment action, for example, Travelers and Illinois National impleaded and initially sought contribution from Old Republic, but later abandoned that claim. That about-face, says CCIC, was just one of several ploys to “prolong settlement discussions” and “delay [the] ultimate resolution of the underlying case.” (Dkt. No. 111, at 2)

 

I am skeptical of this “deliberate delay” or “refusal to settle” theory, which has little factual support. Travelers and Illinois National had little incentive to pour money into this declaratory judgment action unnecessarily. The best case scenario is that they (or their attorneys) would get the excess money back. And that scenario depended upon their ultimately prevailing, an uncertain proposition. Even assuming that CCIC’s theory makes economic sense, there is no evidence of the nefarious intent that it attributes to Travelers and Illinois National.

 

I find these allegations insufficient to bar recovery under the doctrine of unclean hands. There is no conduct so inequitable as to bar an otherwise appropriate recovery. Travelers and Illinois National had the right to assert their case against a potentially liable insurer like Old Republic. That they subsequently chose to release their claims (which turned out to be worth $15,000) is not blameworthy. Nor does it disentitle them to fees and costs under NJCR 4:42–9(a)(6). Even if dilatory, these acts are not “directly related” in the sense that they are inconsistent with the basic entitlement to costs. Paramount Aviation Corp., 178 F.3d at 147 n. 12.10

 

CCIC argues in the alternative that Travelers waived its right to recover defense costs. On October 5, 2006, shortly after Kanard was injured, Travelers notified CCIC of the claim against Gardner Bishop and demanded that CCIC defend and indemnify. In a letter dated December 10, 2007, CCIC declined. On December 9, 2008—nearly four months after Kanard filed suit against Gardner Bishop—Gardner Bishop’s counsel wrote and renewed Travelers’ prior demand. That December 9 letter stated: “If you [i.e., CCIC] decline to accept this tender unreservedly, I will continue to represent Gardner Bishop in this matter and will seek reimbursement of all attorneys’ fees and other costs associated with this matter.” (Dkt. No. 90–4, Ex. M) CCIC responded to that second tender by letter dated March 13, 2009, but rejected its terms; CCIC stated that it would defend Gardner Bishop, but only under “reservation” and on a “pro rata” basis. Gardner Bishop, believing with some foundation that CCIC had rejected its offer, did not respond. On September 23, 2009, CCIC instituted this declaratory judgment action. In its complaint, CCIC backed away from its offer to share defense costs pro rata and instead asserted that “Travelers is obligated to defend and indemnify Gardner Bishop with respect to any claims or suits” arising from the Kanard accident. (Dkt. No. 1, 148). CCIC now contends that Travelers, because it did not explicitly respond to the March 13, 2009 counteroffer, waived its right to recover its defense costs.11

 

*8 CCIC’s waiver argument is not well taken. In 2007, CCIC refused outright to indemnify or defend Gardner Bishop. It gave no sign of willingness to participate in Gardner Bishop’s defense, even after Kanard filed his lawsuit. Not until March 2009, when it responded to Gardner Bishop’s renewed demand, did CCIC offer anything at all. CCIC admits that this response, offering pro rata contribution, amounted to a “refusal of [Travelers’] contractual indemnification tender.” (Dkt. No. 111, 3) CCIC did not moot this dispute; it counteroffered less than it owed. As I concluded in my Opinion, the Travelers policy is excess among the primary-level policies according to its Other Insurance clause. That clause further states that when the Travelers policy is excess, Travelers “will have no duty … to defend the insured against any ‘suit’ if any other insurer has a duty to defend the insured against that ‘suit’.” (Dkt. No. 89–19) The Court has found that CCIC is such an “other insurer” and that it had a duty to defend Gardner Bishop. Therefore, Travelers was under no duty to defend Gardner Bishop in Kanard’s suit. From Travelers’ perspective, CCIC’s offer to pay for only part of Gardner Bishop’s defense was plainly insufficient. And shortly thereafter, CCIC filed this declaratory judgment action, in which it backtracked and disclaimed any obligation to indemnify or defend Gardner Bishop.

 

That course of conduct did not constitute a “waiver” of Travelers’ rights. Travelers was not obligated to accept CCIC’s March 2009 counteroffer; indeed, as I have found, Travelers’ position, not CCIC’s, was correct. NJCR 4:42–9(a)(6) was enacted “precisely to discourage this sort of behavior” by compelling insurance companies to honor their obligations without the necessity of judicial intervention. Burlington Ins. Co. v. Northland Ins. Co. ., 766 F.Supp.2d at 515, 532 (D.N.J.2011). CCIC’s counteroffer may have been in good faith, but under NJCR 4:42–9(a)(6), a successful claimant “need not show that an insurer acted in ‘bad faith’ to recover.” Id. Travelers did not waive its right to recovery under NJCR 4:42–9(a)(6).

 

CCIC asserts, as a last resort, that if it is found liable for Travelers’ defense costs, “the date from which expenditure … should be calculated is June 2012.” (Dkt. No. 111, at 2) The argument is confusingly expressed. June 2012, says CCIC, is “the date on which Travelers rejected [its] good faith tender of pro rata sharing, the date of mediation in the underlying matter.” (Id.) The sense seems to be that CCIC’s pro rata counteroffer remained alive until rejected in June 2012.12 CCIC made its pro rata counteroffer in March 2009. That offer, as stated above, did not discharge CCIC’s obligation. Moreover, it must be regarded as withdrawn as of September 2009, when CCIC sued for a declaratory judgment that it owed nothing. Accordingly, CCIC’s request to limit Travelers’ defense costs to those incurred after June 2012 is rejected.

 

*9 Travelers and Illinois National are entitled to reimbursement of their defense costs from CCIC. Within 14 days, they shall submit certifications of services sufficient to support their claims.

 

 

B. Prejudgment Interest

In the Opinion, the Court ruled that CCIC must pay $1 million dollars to Illinois National, representing the portion of the $5 million settlement for which CCIC is liable. Illinois National now requests an award of interest on that amount. CCIC opposes such an award on the same basis it challenged the award of defense costs—inequitable prolongation of the litigation. Those grounds are rejected for the reasons stated above.

 

Under New Jersey state law, the purpose of prejudgment interest is to “compensate the plaintiff for the loss of income that would have been earned on the judgment had it been paid earlier.” Thabault v. Chait, 541 F.3d 512, 533 (3d Cir.2008); Ruff v. Weintraub, 105 N.J. 233, 519 A.2d 1384, 1390 (1987). Illinois National argues that because it paid the settlement, including the portion owed by CCIC, on April 5, 2012, it should receive prejudgment interest from that day forward. I agree. By refusing to contribute the full amount owed under its policy, CCIC caused Illinois National to foot the bill in the interim. Illinois National is entitled to interest representing the time value of that money.

 

 

C. Correction of the Opinion and Order Regarding Lexington Insurance Company

In the Opinion and Order, the Court found that Lexington Insurance Company (“Lexington”) owed Illinois National $1,492,500. This amount was calculated by determining the amount of the settlement owed by the three eligible primary insurers, $2.015 million, and then splitting the balance of the settlement between the two eligible excess insurers—Illinois National and Lexington. Illinois National, however, released its claim for contribution against Lexington before the Court filed the Opinion and Order. (See Dkt. No. 109, at 8, 10) Accordingly, Illinois National requests that the Court amend the Opinion and Order to reflect its withdrawal of claims.

 

I will enter an order amending my prior order to reflect Illinois National’s withdrawal of claims against Lexington. The overall allocation of the settlement, however, needed to be calculated, and it remains unchanged. This amendment has no other effect than to adjust the status of Illinois National vis-à-vis Lexington. By virtue of dropping its claims, Illinois National cannot collect what Lexington would otherwise owe it. CCIC’s liability remains the same.

 

CCIC opposes this correction on the grounds that “the percentage of allocation decided by the Court should not be revisited except upon the filing of an appropriate Motion or Appeal.” (Dkt. No. 111, at 4) I reject that argument. I directed the parties to submit letter briefs addressing any issues not decided in the Opinion that “must be decided in for the Court to enter a judgment that it final as to all claims and all parties.” Illinois National’s request is within the scope of my instruction.

 

*10 An appropriate amendment to the Order will be entered.

 

 

III. CONCLUSION

For the reasons stated above, CCIC’s motion for reconsideration is DENIED. Travelers’ and Illinois National’s request for attorney fees and costs is GRANTED. Illinois National’s request for prejudgment interest and to amend the Opinion is GRANTED.

 

Within 14 days, Travelers and Illinois National will submit certifications documenting and calculating their defense costs. Illinois National will submit a calculation of prejudgment interest.

 

An appropriate order will be filed.

 

 

 

Footnotes

 

1

 

Motions for summary judgment were also filed by Penske Truck Leasing Co., L.P. (“Penske”) and Old Republic Insurance Company (“Old Republic”). Those parties are not directly involved in the matters decided in this opinion.

 

2

 

Penske and Old Republic submitted a letter to the Court stating that they take no position with respect to CCIC’s motion for reconsideration because it does not challenge the Court’s decision regarding their liability on the coverage question. (See Dkt. No. 117)

 

3

 

CCIC’s motion is titled “Brief of Plaintiff in Support of its Motion Pursuant to Fed.R.Civ.P. 59(e) and 60(b).” It also cites Local Rule 7.1(i), which governs motions for reconsideration. In this District, “[t]he fundamental distinction between Fed.R.Civ.P. 59(e) and L. Civ. R. 7.1(i) is that ‘the provisions of rule 59 are designed to address orders rendering a final judgment,’ whereas L. Civ. R. 7.1(i) is a mechanism for reconsideration of interlocutory orders.” A. Lite, N.J. Fed. Prac. L.R. 7.1, comment 6 (2015 ed.) (quoting Navarrete v. United States, 2013 WL 796274, at *2 (D.N.J. Mar.4, 2013)). For the reasons expressed herein, the relief sought by this motion would not really require any alteration to the Court’s earlier Opinion and Order. But as a request to amend or change an interlocutory order, it is best viewed as a motion for reconsideration under Rule 7.1(i), and I have titled it accordingly.

 

4

 

Excess, remember, in the specialized sense of prioritization among insurers at the primary level.

 

5

 

CCIC maintains that it cited the definitional language at oral argument, but that “time did not permit complete exposition and argument of the specific language, perhaps affecting the Court’s consideration of the issue.” (Dkt. No. 112–1, at 7–8).

 

6

 

In a reply brief submitted with leave of the Court, CCIC flatly asserted that “[t]here is no basis on which and no argument to apply [the Excess Insurance subsection of the Travelers policy’s Other Insurance clause], and therefore the Travelers policy operates on a primary basis.” (Dkt. No. 98, at 10) CCIC did not explain its position or even acknowledge that it had earlier argued that the Travelers policy should be deemed excess.

 

7

 

Indeed, in support of its Statement of Material Facts in Support of Plaintiff’s Motion for Summary Judgment, CCIC attached as “Exhibit I” the “[p]ertinent specific [excerpts] pertaining to the operation of ‘Other Insurance” in the Travelers policy. (Dkt. No. 89–2, 116) These excerpts, found at Dkt. No. 89–13, do not include the definition of “loading and unloading” on which CCIC relies.

 

8

 

That language is sufficiently clear. CCIC’s alternative demand for “clarification” is therefore denied.

 

9

 

Travelers also argues that it is entitled to defense costs under the terms of its policy. Since I have found that Travelers is entitled to an award of defense costs under NJCR 4:42–9(a)(6), I do not address that argument.

 

10

 

In an analogous context, New Jersey will permit recovery of attorney’s fees where an insurer has acted in bad faith, for example by breaching its fiduciary duty to settle claims. Badiali v. New Jersey Mfrs. Ins. Group, ––– N.J. ––––, ––– A.3d ––––, 2015 WL 668206 at *5 (N.J.Supr.Ct. Feb. 18, 2015) (citing Lieberman v. Employers Ins. of Wausau, 84 N.J. 325, 336, 419 A.2d 417 (1980)). But “mere failure to settle a debatable claim does not constitute bad faith…. Rather, to establish a first-party bad faith claim for denial of benefits in New Jersey, a plaintiff must show ‘that no debatable reasons existed for denial of the benefits.’ “ Id. (citing Pickett v. Lloyd’s, 131 N.J. 457, 473, 481, 621 A.2d 445 (1993)). Here, Travelers’ position was not just “debatable,” but (as it turned out) correct. Its failure to accept CCIC’s March 2009 counteroffer, discussed below, was not inequitable.

 

11

 

Any notion that Travelers, by its silence, accepted CCIC’s counteroffer of pro rata defense is contrary to New Jersey law. “New Jersey courts require ‘an unqualified acceptance’ to conclude the manifestation of mutual assent; and while acceptance may be implied through conduct, silence does not ordinarily manifest assent, particularly in cases where the parties’ relationship and circumstances justify the offeror’s expecting a reply.” Elliott & Frantz, Inc. v. Ingersoll–Rand Co., 457 F.3d 312, 323 (3d Cir.2006) (citing Weichert Co. Realtors v. Ryan, 128 N.J. 427, 608 A.2d 280 (1992)).

 

12

 

As Travelers points out, the mediation in Kanard’s action was conducted September 2011, and Kanard settled the underlying action for $5 million in January, not June, 2012. In the end, however, the confusion over these dates does not matter for the reasons expressed in the text, above.