United States District Court,N.D. Indiana,Hammond Division.

Martin H. KING, Jr., and Freeda Posey King, Plaintiffs,

v.

FIERRO TRUCKING, INC., and Tobias Ledezma, Defendants.

 

March 26, 2008.

 

 

OPINION AND ORDER

 

JOSEPH S. VAN BOKKELEN, District Judge.

This matter is before the Court on the Motion of Defendant Fierro Trucking, Inc, for summary judgment on Counts II and III of Plaintiffs’ First Amended Complaint (DE 38) and its motion for oral argument on the summary judgment motion (DE 40). The motion for oral argument is DENIED.For the reasons set forth below, the motion for partial summary judgment is GRANTED.

 

A. Background

 

On September 20, 2004, Plaintiff Martin King and Defendant Tobias Ledezma were both driving tractor trailers in the right hand east bound lane of Interstate 80/94 in a construction zone near the city of Gary in Lake County, Indiana. Plaintiff Martin King’s truck was in front of the truck driven by Defendant Ledezma. Plaintiff Freeda King was a passenger in the truck driven by her husband. The front end of Defendant Ledezma’s truck struck the rear of the Kings’ trailer.

 

On June 5, 2006, Plaintiffs filed this action against Fierro Trucking, Inc., and Ledezma. Plaintiffs’ First Amended Complaint, filed on March 6, 2007, is in three counts. Count I is based on negligence on the part of Defendant Ledezma and the doctrine of respondeat superior against Defendant Fierro Trucking. Count II alleges negligent entrustment, supervision, and hiring on the part of Fierro Trucking; Count III claims wilful and wanton entrustment, supervision, and hiring. Federal jurisdiction is based on diversity of citizenship: Plaintiffs are citizens of Tennessee; Defendant Fierro was incorporated and had its principal place of business in Illinois; Defendant Ledezma is a resident of Illinois, but appears to be a citizen of Mexico without permanent resident alien status in the United States.See Ledezma Deposition at 10 and 12. Plaintiffs have alleged that the amount in controversy exceeds $75,000, the jurisdictional minimum amount under 28 U.S.C. § 1332.

 

Title 28 U.S.C. § 1332(a) confers on federal districts courts jurisdiction of civil actions between citizens of a State and citizens of a foreign state as well as actions between citizens of different States.

 

B. Summary Judgment Standard

 

A motion for summary judgment must be granted “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”Fed.R.Civ.P. 56(c).Rule 56(c) further requires the entry of summary judgment, after adequate time for discovery, against a party “who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.”Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

 

A party seeking summary judgment bears the initial responsibility of informing a court of the basis for its motion and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323. If the moving party supports its motion for summary judgment with affidavits or other materials, the burden of showing that an issue of material fact exists thereby shifts to the non-moving party. Kaszuk v. Bakery & Confectionery Union & Indus. Int’l Pension Fund, 791 F.2d 548, 558 (7th Cir.1986).“Whether a fact is material depends on the substantive law underlying a particular claim and “only disputes over facts that might the outcome of the suit under governing law will properly preclude the entry of summary judgment.’ “ Walter v. Fiorenzo, 840 F.2d 427, 434 (7th Cir.1988), quoting Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

 

Rule 56(e) specifies that once a properly supported motion for summary judgment is made, “the adverse party’s response, by affidavits or as otherwise provided in this rule, must set forth specific facts to establish that there is a genuine issue for trial.”Fed.R.Civ.P. 56(e).

 

In viewing the facts presented on a motion for summary judgment, a court must construe all facts in a light most favorable to the non-moving party and draw all legitimate inferences and resolve all doubts in favor of that party.NLFC, Inc. v. Devcom Mid-Am., Inc., 45 F.3d 231, 234 (7th Cir.1995). A court’s role is not to evaluate the weight of the evidence, to judge the credibility of witnesses, or to determine the truth of the matter, but instead to determine whether there is a genuine issue of triable fact. Anderson v. Liberty Lobby, 477 U.S. 242, 249-50 (1986).

 

C. Facts

 

Jose Fierro, as president and owner of Defendant Fierro Trucking, Inc., hired Defendant Ledezma as a truck driver for his company.Fierro Trucking consisted of Jose Fierro and two drivers. Jose Fierro had five months’ truck driving experience at Midwest Fence Company and five months’ experience driving a truck for his brother’s company when he started Fierro Trucking.

 

I n its Statement of Material Facts, Defendant Fierro Trucking cites to the depositions of Jose Fierro and Defendant Ledezma. However, the Court is unable to locate their depositions among the exhibits filed with Fierro Trucking’s Motion. Plaintiffs have filed excerpts from both depositions; however, the pages cited by Defendant Fierro Trucking are not included in many instances, so that the Court is unable to verify Fierro’s citations. Nonetheless, to the extent that Plaintiffs have not designated evidence showing that matters set forth in Fierro Trucking’s Statement of Material Facts are disputed, the Court will accept them as true.

 

Fierro Trucking did not have written rules and procedures or require a written application from its drivers. Jose Fierro did not contact references or perform a background check on Defendant Ledezma before he hired Ledezma. Jose Fierro did not periodically check the status of his drivers’ licenses. The company had no written policy for drug testing of employees generally or following an accident. Defendant Ledezma took a drug test before beginning work for Fierro Trucking, but does not recall any other drug testing during his employment there. The Company did not require him to take a drug test following the accident on September 20, 2004. No vehicle maintenance records were kept for the truck involved in the accident. The Company did not give its drivers copies of the Federal Motor Carrier Safety Rules and Regulations, or any other written manuals or directives.

 

Before Defendant Ledezma started working for Defendant Fierro Trucking, Ledezma gave Jose Fierro written proof of the Illinois Department of Transportation’s inspection of his tractor trailer, a copy of his commercial driver’s license, and his medical card. Jose Fierro questioned Ledezma about his driving record and his medical status as part of the application process. Defendant Ledezma’s on the job training with Fierro Trucking consisted of two weeks of driving with Jose Fierro during which Jose Fierro confirmed that Ledezma was skilled and reliable. Jose Fierro held weekly safety meetings, usually on Fridays, which Defendant Ledezma attended, in which he discussed matters such as vehicle and equipment maintenance and rules of the road.

 

Before his employment with Defendant Fierro Trucking, Defendant Ledezma drove a truck for Midwest Fence for four to five months. Ledezma had worked for Defendant Fierro Trucking for almost a year when the September 20, 2004, collision occurred. The only known blemishes on Defendant Ledezma’s driving record before the collision were two tickets for logbook violations. Ledezma had not consumed any alcoholic beverages, drugs, tranquilizers, sedatives, sleeping pills, medicines, narcotics, or other pills in the 24 hours before the collision. The morning of September 20, he had started work at around 5:00 or 6:00 am after a full night’s sleep. Before starting out that day Ledezma performed a pre-trip inspection of his vehicle, consisting of a check of the brakes, lights, tires and mirrors on both the tractor and the trailer, which revealed no problems.

 

Defendant Ledezma worked for no other employer during the time he worked for Defendant Fierro Trucking. He was paid for a completed load and not by mileage or weight. Defendant Fierro Trucking received a percentage of each load.

 

It is not clear to the Court who owned the truck Defendant Ledezma drove. As Plaintiffs point out in their Designation of Material Facts, Defendants admitted in both their Answer and Amended Answer that Defendant Fierro Trucking owned the vehicle. Nonetheless, Defendant Fierro Trucking claims that Defendant Ledezma owned the truck and leased it to Fierro Trucking, but that no written lease exists. Fierro Trucking paid no rent for the vehicle. The ICC number on the tractor trailer and the DOT number were in the name of “Fierro.” (Pls.’ Statement of Material Facts, ¶ 15.) It is not clear whether “Fierro” refers to the trucking company or the individual.

 

According to Defendant Ledezma, immediately before the collision he looked over to the right shoulder. As his gaze returned to the traffic ahead, the front end of his tractor trailer struck the rear of Plaintiffs’ trailer. According to Plaintiff Martin King, a tractor trailer driver is supposed to maintain a distance of fifty feet from the vehicle in front of him.

 

D. Analysis

 

1. Summary of Arguments

 

Defendant Fierro Trucking argues that the foregoing facts are insufficient to state claims of negligent or wilful and wanton entrustment, supervision, and hiring under Indiana law. Fierro Trucking maintains that Plaintiffs do not make out a case for negligent entrustment in light of the fact that Fierro Trucking had no right to control the vehicle because the Defendant Ledezma owned the truck involved in the accident and Ledezma was an independent contractor. Defendant Fierro Trucking argues further that Plaintiffs have not shown that Fierro Trucking entrusted the vehicle to Ledezma with knowledge that he was incompetent to drive. Regarding Plaintiffs’ allegations of negligent hiring and supervision, Defendant Fierro Trucking asserts that Indiana law assigns liability for the negligent hiring of an independent contractor only in specific circumstances not present in this case.

 

Plaintiffs maintain that Fierro Trucking’s failure to comply with a number of statutory and regulatory provisions constitutes negligent entrustment, hiring, and supervision per se, and that jury questions are presented as to whether the violations were a proximate cause of the collision and whether Defendant Ledezma was a Fierro Trucking employee rather than an independent contractor. Fierro Trucking counters that summary judgment is appropriate because Plaintiffs have failed to raise a genuine issue of material fact as to whether the claimed statutory and regulatory violations were the proximate cause of the Plaintiffs’ injuries.

 

The Court’s resolution of other issues makes determination of Ledezma’s status as a common law employee or and independent contractor vis-a-vis Fierro Trucking unnecessary.

 

2. Violation of Statutory or Regulatory Duty to Establish Fierro’s Independent Liability

 

Defendant Fierro Trucking concedes that it is vicariously liable without fault under Count I of the Complaint if Defendant Ledezma is determined to be liable, on the basis of its oral lease of Ledezma’s truck from him, FMCS regulations, and the fact that its placards were on the vehicle.

 

Under Indiana law, an unexcused violation of a statutory duty is negligence per se. Inland Steel v. Pequignot, 608 N.E.2d 1378, 1383 (Ind.App., 1993). However, negligence per se does not mean that there is liability per se. The violation of a statutory duty is not actionable negligence unless it is also a proximate cause of the plaintiff’s injury such that the injury “would not have occurred if the requirements of the statute had been observed.”Ray v. Goldsmith, 400 N.E.2d 176, 179 (Ind.App.1980). Thus, assuming that Defendant Fierro Trucking violated statutory and regulatory duties without excuse, the trucking company is still entitled to summary judgement if there is no genuine issue of material fact that the violations were a proximate cause of Plaintiffs’ damages. See Munsell v. Hambright, 776 N.E.2d 1272, 1279 (Ind.App.2002). A party’s act or omission is the proximate cause of an injury if the injury is the natural and probable consequence of the act or omission and should have been reasonably foreseen and anticipated in light of the circumstances. Id. at 1280.

 

The Federal Motor Carrier Safety Regulations (“FMCSR”) have been incorporated by reference into the Indiana Code at I.C. 8-2.1-24-18(a).

 

Plaintiffs’ brief is by no means clear as to the identity of the specific statutory and regulatory violations they maintain proximately caused the September 20 collision. In their brief, at page 7, Plaintiffs state: “Fierro Trucking, Inc., failed to comply with even the most basic fundamental statutory requirements of the FMCSR when it hired driver Ledezma. (Plaintiffs’ Statement of Material Facts # 7 [no written rules and procedures, no written application], 8 [failed to contact references or perform a background check, or ask previous employers about Ledezma’s job performance, or make periodic checks into the status of employees’ CDL licenses], 9 [no written policy for drug testing; Ledezma took a drug test before beginning work for Fierro Trucking, but does not recall other tests], 10 [no written policy for employees involved in a crash], 14 [no written lease of the truck owned by Ledezma; no rent paid for the vehicle], 17 [no drug test required of Ledezma after the September 20, 2004 collision], 18 [Ledezma was a resident alien with an expired work permit who speaks and writes very little English], 19 [Ledezma received his CDL license in Chicago in May, 2003. He was not asked to show proof of a valid work visa when he obtained his CDL], 20 [before driving for Fierro, Ledezma had driven a truck for Midewest Fence for four to five months. Ledezma worked at Fierro Trucking for almost a year before the September 20, 2004 collision] ).” Plaintiffs for the most part have not identified which, if any, regulations Defendant Fierro Trucking violated by each of the specified acts and omissions they complain of.

 

It is clear that Plaintiffs charge Defendant Fierrro Trucking with failing to require Defendant Ledezma to complete a written application form containing the information required by 49 C.F.R. § 391.21: the company’s name and address; the applicant’s name, address, date of birth, and social security number; his residence during the three years preceding the application; the issuing State, number, and expiration date of the applicant’s commercial motor vehicle drivers license; the nature and extent of the applicant’s experience in the operation of motor vehicles, including the types of equipment the applicant has operated; a list of all motor vehicle accidents in which the applicant was involved during the preceding three years; a list of all the applicant’s convictions for violations of motor vehicle laws during the previous three years; information on any license or permit denial, revocation, or suspension; a list of the applicant’s employers during the preceding three years, including employment dates and the reason for leaving that employer. Significantly, however, Plaintiffs do not draw the Court’s attention to any evidence in the record that a written application would have afforded evidence of Ledezma’s inability to safely operate his truck.

 

The Plaintiffs also claim, though not so clearly, that Defendant Fierro Trucking did not conduct all the investigations and inquiries required by 49 C.F.R. § 391.23 before hiring Defendant Ledezma.Plaintiffs also refer to the fact that 49 C.F.R. § 391.11(a) prohibits a motor carrier from permitting a person to drive a commercial motor vehicle unless that person is qualified to drive the vehicle under the standards of § 391.11(b) but Plaintiffs do not show that Ledezma failed to meet any of the requirements of that section, with the exception of mentioning Ledezma’s limited ability to speak and write English.

 

Title 49 C.F.R. § 391.23 requires motor carriers to review their drivers’ driving record and safety performance history and to make inquiries to previous employers concerning previous accidents as well as alcohol and substance testing violations and to verify employment.

 

Title 49 C.F.R. § 391.11(b)(2) requires the driver of a commercial motor vehicle to be able to speak and read English well enough to allow him to converse with the general public, to understand highway traffic signs and signals, to respond to official inquiries and to make reports and keep records. Other qualifications of § 391.11 include being at least 21 years old; possessing the ability “by reason of experience, training, or both [to] safely operate the type of commercial motor vehicle he/she drives;” being physically qualified as defined elsewhere in the regulations; holding a currently valid commercial motor vehicle operator’s licence; having furnished his employer with the list of violations or the certificate required by § 391.15; not being disqualified under the rules in § 391.15; having been issued a certificate of driver’s road test in accordance with § 391.3 1, or having presented an operator’s license or a certificate of road test which the motor carrier accepts as equivalent to a road test.

 

Defendant Fierro Trucking concedes that no written application form was furnished to or completed by Defendant Ledezma and that its pre-employment investigation did not include contacting previous employers. However, Plaintiffs fail to point to any evidence in the record which would suggest that a written application from Defendant Ledezma or a more thorough pre-employment investigation would have disclosed information calling into question Defendant Ledezma’s ability to safely operate a tractor trailer or contributed to the collision in any other way.

 

Assuming that Defendant Ledezma’s English is deficient by the standards of 49 C.F.R. § 391.11, once again, the Court has not been made aware of any evidence or reasonable inferences which would suggest his lack of proficiency in English in any way caused or contributed to the collision. If the Plaintiffs could demonstrate the existence of some evidence from which to infer that a formal written application or inquiries to previous employers would have revealed information impugning Defendant Ledezma’s driving ability, or that Defendant Ledezma’s lack of fluency in English somehow contributed to the collision, a jury question would be presented.

 

For example, in Indian Trucking v. Harber, 752 N.E.2d 168 (Ind.App.2001), cited by Defendant Fierro Trucking for the proposition that violation of FMCS regulations is negligence per se, there was evidence that the defendant truck driver did not feel qualified to adjust the brakes on his truck, that the brakes were “at the outer limits of adjustment” and that faulty brake adjustment contributed to the accident. Id. at 173.

 

In the absence of evidence tending to establish a connection between Defendant Fierro’s faulty pre-employment screening procedures or Defendant Ledezma’s lack of English and Plaintiffs’ injury, no genuine issue is presented for trial with respect to Defendant Fierro Trucking’s negligent or wilful and wanton entrustment, supervision and hiring. Accordingly, Defendant Fierro Trucking’s motion for summary judgment as to Count II of Plaintiffs’ First Amended Complaint is granted.

 

3. Wilful and Wanton Misconduct

 

It is unclear whether Count III of Plaintiffs’ First Amended Complaint rests on any foundation other than statutory and regulatory violations. However, Plaintiffs do refer to the fact that Jose Fierro hired Defendant Ledezma with perhaps five months’ truck driving experience to drive a truck that when fully loaded weighed 68,000 to 69,000 pounds and that Jose Fierro himself had a similar lack of experience as a truck driver when he hired Ledezma and conducted his road test. The Plaintiffs do not maintain that these circumstances constitute any sort of statutory or regulatory violation.

 

Wilful and wanton misconduct consists of the conscious and intentional performance of a wrongful act or the omission of a duty with reckless indifference to the consequences, under circumstances which show that the alleged miscreant has knowledge of existing conditions and that injury would probably result. Brown v. Saucerman, 145 N.E.2d 898, 899 (Ind.1958). In light of this standard, the Court finds, as a matter of law, that Defendant Fierro Trucking’s alleged dereliction in hiring a driver with five months’ experience to drive a big truck, without knowledge of or the existence of any other circumstances which would suggest that Ledezma was not a competent driver, does not constitute wilful and wanton misconduct. Accordingly, Count III of Plaintiffs’ Complaint is dismissed.

 

D. Conclusion.

 

For the foregoing reasons, Defendant Fierro Trucking’s Motion for Partial Summary Judgment is GRANTED.Counts II and III of Plaintiffs’ Complaint are hereby DISMISSED.Defendant Fierro Trucking’s motion for oral argument is DENIED.

 

SO ORDERED.

Superior Court of New Jersey,Appellate Division.

MOPER TRANSPORTATION, INC., Manuel Flores and Great American Assurance Company, Plaintiffs-Respondents

v.

NORBET TRUCKING CORP. and The Insurance Company of the State of Pennsylvania, XYZ Corp. (said name being fictitious and unknown), Defendants-Appellants.

Argued Oct. 1, 2007.

Decided March 27, 2008.

 

STERN, P.J.A.D.

Defendants, Norbet Trucking Corporation and the Insurance Company of the State of Pennsylvania (ICSOP), appeal from a final judgment based on an order of October 4, 2006, and orders of June 20, 2006, entered in favor of plaintiffs, Great American Assurance Company, Moper Transportation Inc. and Manuel Flores, declaring that ICSOP must provide coverage in the case of Colon v. Moper, and requiring reimbursement to Great American by ICSOP for counsel fees and costs in that matter and this declaratory judgment action. The court had ruled by order of June 20, 2006, that Flores, Moper’s sole shareholder and president, was using “the subject-matter tractor to return home after leaving Norbet Trucking’s facility after completing his dispatch duties … in the course and scope of the commercial business of Norbet Trucking as that term is defined in the respective policies and applicable case law,” that “the non-trucking [or business use] exclusion contained in the Great American non-trucking liability policy is applicable”  so that Great American did not provide coverage for Flores’ accident with David Colon in January 2004, and that ICSOP “must provide primary coverage” for injuries and damages resulting from the accident.

 

As pointed out by defendants, the exclusion in the Great American policy “is referred to interchangeably as the ‘non-trucking use’ and ‘business use’ exclusion.”

 

Moper had entered into a Transportation Service Agreement (TSA) with Norbet, and ICSOP issued a commercial trucker’s liability policy to Norbet while Great American issued a “non-trucking liability” policy to Moper. Due to the weather, Flores missed his normal ride home from work, and was driving the tractor from its New Jersey garage to his New York home when the accident occurred on the West Shore Expressway on Staten Island, New York.

 

Defendants argue New York law should apply, Great American’s “business use exclusion” is invalid thereunder, and, in any event, the tractor was not being used for business purposes. Thus, defendants assert that Great American provides coverage. They further contend that Great American, as an insurer, cannot collect counsel fees under Rule 4:42-9(a)(6) even if we affirm the judgment as to coverage, but that if a carrier can so collect, ICSOP is entitled to its fees and costs if we reverse the coverage determination. We affirm the judgment.

 

I.

 

As already stated, this declaratory judgment stems from a motor vehicle accident that occurred on January 27, 2004, on the West Shore Expressway in Staten Island when vehicles driven by Flores and David Colon were involved in an accident. The vehicle driven by Flores was a 1998 Kenilworth tractor (“the tractor”) registered in New Jersey. Colon was a resident of New York. He was driving a car registered in New York and owned by Kate Agugliaro, a resident of New York. Flores was also a resident of New York.

 

The tractor driven by Flores was owned by Moper, a New Jersey corporation which has its principal place of business in Jersey City. Flores is the sole shareholder of Moper. Moper owned only one tractor and Flores was the sole driver.

 

It is undisputed that Norbet’s principal place of business is South Plainfield and Moper is in Jersey City.

 

Prior to the date of the accident Moper leased the tractor to Norbet pursuant to the TSA dated December 1, 2003. Pursuant to their agreement, Moper performed “transportation services” for Norbet as a “contractor” while using its tractor. Norbet is a New Jersey trucking company that transports goods in interstate commerce.

 

In accordance with federal regulations, Norbet, “as a freight forwarder and/or common carrier” was required to obtain “public liability, property damage, and cargo insurance.” The TSA requires Moper to provide “non-trucking liability, and/or bobtail and deadhead insurance coverage”  in an amount no less than $1,000,000, and furnish a certificate of such insurance to Norbet. The TSA states that “[t]he parties to this Agreement agree that the Agreement, and any and all disputes or interpretations arising under it, shall be governed by the laws of the state of New Jersey except to the extent pre-empted by applicable federal law.”

 

“A bobtail is the popular term for a tractor (cab) without an attached trailer. Since a trucker who is ‘bobtailing’ is generally not using the vehicle for trucking purposes, non-trucking-use insurance is often called bobtail insurance.” Royal Indem. Co. v. Providence Wash. Ins. Co., 92 N.Y.2d 653, 684 N.Y.S.2d 470, 707 N.E.2d 425, 426 n. 1 (1998).

 

The carriers are not parties to the TSA agreement and plaintiffs do not argue that this provision by itself requires that New Jersey law must be utilized to govern the coverage dispute before us.

 

Pursuant to the TSA, Norbet obtained Trucking Liability Insurance from ICSOP running from December 15, 2003 to December 15, 2004. Moper purchased a “Non-Trucking Liability” policy from Great American for the period from November 19, 2003 to November 19, 2004. The Great American policy contained an exclusion for any “trucking or business use.”

 

The policy provides for “liability for non-trucking use.” The exclusions include “liability arising out of any accident which occurs while the covered auto is being used in the business of anyone to whom the covered auto is leased, rented or loaned….” An “auto means any land motor vehicle, trailer or semi-trailer designed for travel on public roads….”

 

Sometime between 1:00 and 2:00 a.m. on the day of the accident, Flores arrived at the Norbet Terminal where he turned his “tractor on” and attached the “flatbed” assigned by Norbet’s dispatcher to his tractor. Cargo was loaded, and Flores proceeded to make several interstate deliveries. He returned to the Norbet Terminal around 8:00 p.m.

 

Normally Flores would have received a ride home from a co-worker, but his co-worker was unable to give him a ride on that day because he had left due to the heavy snowfall. As a result, Flores drove the tractor home instead. On the way home, at approximately 10:15 p.m., he was traveling on the West Shore Expressway when he saw the Colon car, a Toyota, “sliding” and “spinning or going around.” According to Flores, the car driven by Colon slid backwards into his rear axle, causing the accident. Flores testified that no damage was caused to his trailer, but he observed damage to the bumper and trunk of Colon’s car.

 

Colon filed suit against Flores, Moper and Norbet in the Supreme Court of New York. Great American initially declined to defend or indemnify, and disclaimed any responsibility to defend Moper and Flores under its non-trucking liability policy “because of the trucking use of the vehicle at the time of the loss.” Specifically, Great American concluded that the accident occurred while Flores was “under dispatch for Norbet Trucking Corporation,” and therefore the accident arose out of a “trucking use” not covered by the policy. Great American took the position that because Flores was operating the tractor within the scope of Norbet’s business, ICSOP was “obligated to provide defense and indemnification to [Moper and Flores].” ICSOP also declined to defend Flores and Moper because Flores “was not working for [its] insured at the time of [the] accident.” ICSOP took the position that Great American was required to defend Moper and Flores under the “non-trucking policy” issued to Moper.

 

Great American ultimately undertook the defense of Moper and Flores in Colon’s New York action. In this declaratory action Moper, Flores and Great American sought coverage and counsel fees for both defending the Colon action and the declaratory judgment action. Defendants, including ICSOP, assert that the Great American policy provides coverage because New York’s “deemer” statute requires that its policy “must be reformed to conform to New York law,” and that because “ ‘the non-trucking use’ or ‘business use’ exclusion in the policy is invalid, [when reformed to conform to New York law] … coverage under the policy extends to Flores, Moper and Norbet as to the Colon loss.”

 

II.

 

The Law Division determined that, because New Jersey had more “significant connections and interest than New York … New Jersey law should apply.” The trial court considered the following factors in making its finding:

 

One. Both lessor/operator (Moper Transportation/Flores) and lessee/motor carrier (Norbet Trucking) are incorporated in and have their principal place of business in New Jersey.

 

Two. The nontrucking policy with its business exclusion provision issued by Great American to lessor/operator Moper/Flores was written in New Jersey in compliance with New Jersey statutory, regulatory, and other legal requirements.

 

Three. Likewise, the trucking policy issued by [ICSOP] was written in New Jersey in compliance with New Jersey’s statutory, regulatory, and other legal requirements.

 

Four. At the time of the accident on January 27th, 2004, both policies were in effect.

 

Five. New Jersey has a significant interest in the enforcement of its insurance laws and in the interpretation of New Jersey insurance policies in accordance with New Jersey law.

 

Six. New York’s only interest in this matter derives from the fact that the injured party, Colon, is a New York resident and the accident occurred in New York. New York’s only interest, therefore, is insuring, if possible, that the quantum of insurance coverage available to Colon would be comparable to the coverage required if the policy had been written under New York law.

 

….

 

Seven. It cannot be argued that New York can legitimately claim that New Jersey’s coverage requirements must be the same as New York’s coverage requirements. Indeed, ICSOP [ ] does not so argue. However, ICSOP is contending that New York has a significant interest in the particular language and/or phraseology used in New Jersey policies.

 

ICSOP is contending that the nontrucking policy issued by Great American should be deemed void as against public policy simply because it failed to contain particular language and/or phraseology which New York requires in policies written in New York. This Court rejects [ICSOP’s] contention. No legal authority has been offered to support it and it does not square with practical realties.

 

The judge further concluded that Flores was “returning home” from Norbet’s terminal “after a day of delivering cargo for Norbet,”“that the use was occasioned by a snow emergency” and that Norbet did not object to such use. Accordingly, the judge concluded that “the tractor was being used in furtherance of Norbet’s trucking business interest,” and its carrier was obligated to cover the accident.

 

As summarily noted above, ICSOP  argues that “pursuant to relevant New York statutes governing mandatory insurance on motor vehicles by insureds doing business in New York,” the trial court erred in failing to apply New York law, which ICSOP maintains would have required Great American to provide coverage to Flores and Moper “by reason of New York deemer statute.” It argues that “traditional standards of choice of law do not apply” because, as a carrier, “Great American had agreed to be bound by New York financial responsibility laws when it undertook to do business in New York.” ICSOP further contends that, as a result of the “deemer statute,” that Great American policy must be “reformed” to void the “trucking” or “business use” exclusion with respect to the Colon accident. ICSOP independently contends that, even if the “deemer statute is not dispositive of the choice of law issue,”“New York has the most significant contacts with the issues” in this case, and therefore the business use exclusion under Great American’s policy covering the tractor is unenforceable.

 

Norbet is also an appellant, but we refer to ICSOP because it is the carrier.

 

Plaintiffs argue that New Jersey has a far greater interest in this case than New York, noting among other things that Moper and Norbet are both New Jersey corporations, the lease agreement was signed in New Jersey, and both insurance policies were written in New Jersey. According to plaintiffs the only connection this case has to New York is the fact that the accident occurred there and Colon is a resident of New York. Plaintiffs also argue that “[u]nder the choice of law doctrines of both New Jersey and New York, it is well settled that the law of the state where the insurance contract was formed is the law which governs an action involving the rights and duties to parties of that insurance contract.” Great American asserts that ICSOP’s interest in having New York law applied to this case lies in the fact that New York law does not honor business use exclusions like the one contained in Great American’s insurance policy with Moper. Plaintiffs further contend that the public policy of New York, and its “deemer” statute, will not be offended by applying New Jersey law, as Colon would be compensated under the ICSOP policy if it is found that Flores negligently operated his tractor, thereby causing the accident.

 

III.

 

Choice-of-law determinations are made in accordance with the law of the forum state. New Jersey now applies a “governmental interest” test in a case like this, Fu v. Fu, 160 N.J. 108, 118, 733 A.2d 1133 (1999), and the “first prong” of that analysis requires a determination that an actual conflict exists between the laws of New York and New Jersey, and is to be decided “on an issue-by-issue basis,” Rowe v. Hoffman-LaRoche Inc., 189 N.J. 615, 621, 917 A.2d 767 (2007); Fu, supra, 160 N.J. at 117-18, 733 A.2d 1133.

 

Because both states have “deemer” statutes, and the issue of coverage may turn on resolution of the factual dispute as to whether the accident occurred during a “trucking” or “non-trucking” event, we invited the parties to file supplementary briefs addressing both New York and New Jersey law and whether there is an “actual conflict” as to the meaning of “business use,” and how any “factual dispute as to whether the Colon-Flores accident on Staten Island occurred incident to Norbet’s trucking business” is to be resolved. Stated differently, we are concerned if “an actual conflict” results only if the accident occurred during use in Norbet’s business but not otherwise.

 

See N.J.S.A. 17:28-1.4; N.Y. Ins. Law § 5107 (McKinney 2007); see also Craig & Pomeroy, New Jersey Auto Insurance Law (Gann 2008), § 3.1-3.5.

 

The parties seem to agree that there is no conflict in terms of what constitutes a “business” or “non-business” purpose and how that fact is to be determined. Moreover, in the original briefs, the parties seem to premise their arguments of an actual conflict on defendants’ assertion that “the Great American business use exclusion is invalid under New York Law.” See, e.g., Royal Indem. Co., supra, 92 N.Y.2d 653, 684 N.Y.S.2d 470, 707 N.E.2d 425;see also Connecticut Indem. Co. v. Podeszwa, 392 N.J.Super. 480, 496-97, 921 A.2d 458 (App.Div.2007). Plaintiffs do not seem to dispute the conflict or that a different result would occur under New York and New Jersey law if the tractor was being used for a business purpose. They merely seem to reject defendants’ contention that no conflicts of law analysis is necessary because of New York’s “deemer” statute:

 

The defendants attempt to confuse the issue by arguing that New York’s McKinney’s Insurance Law § 5107 is analogous to New Jersey’s Deemer Statute, and therefore traditional standards for choice of law do not apply. The defendants argue that these deemer statutes have the effect of eliminating choice of law issues, in that they effectively “reform” out of state policies to conform to the state’s mandatory insurance requirements. However, the defendants point to no case or statute that so holds. In fact, it is clear that this is not the case. In New Jersey, case law has held that the stated legislative purpose of the so-called Deemer Statutes is to provide insurance (PIP coverage) for any New Jersey resident who is not required to maintain such coverage and “who is not otherwise eligible for such benefits.” Government Employees Ins. Co. v. Allstate Insurance Co., 358 N.J.Super. 555, 561, 818 A.2d 474 (App.Div.2003). Therefore it is clear that the Deemer Statutes apply to those instances where there is no available insurance coverage to an aggrieved party. Here, there is clearly ample insurance coverage available to Mr. Flores and Moper Transportation; the issue is not lack of coverage, but rather which policy shall provide coverage. The defendants’ attempt to utilize the Deemer Statute to, in effect, invalidate prior choice of law reasoning is baseless and such an argument should be given no credence here.

 

Moreover, New Jersey appears to permit the “business-use” exclusion used by Great American “so long as the truck is covered by an additional policy providing coverage for business use.” Connecticut Indemn. Co., supra, 392 N.J.Super. at 482, 921 A.2d 458.

 

Accordingly, because the record supports the trial court’s opinion that a business use was involved, see Planet Ins. Co. v. Anglo American Ins. Co., 312 N.J.Super. 233, 240-41, 711 A.2d 899 (App.Div.1998)-an issue we must decide under New Jersey law in the absence of an actual conflict relating to the determination of that issue-, we proceed to consider the issue presented on the basis of an actual conflict with respect to the validity or enforceability of the “non-trucking” or “business use” exclusion in the Great American policy. As to that subject, there is an actual conflict. We add, however, that we are cited to no authority suggesting that a choice-of-law analysis becomes irrelevant merely because the state in which the accident occurs has a “deemer” statute that would apply because the accident occurred in that state. Craig and Pomeroy suggest that the New Jersey “deemer” statute would trump any choice-of-law analysis with respect to coverage under a policy issued out-of-state on an out-state vehicle involved in an accident and litigation here. Craig & Pomeroy, New Jersey Automobile Insurance Law (Gann 2008), § 3.1-3.2. It may well be that New York law is similar, which would point to its governmental interest under a choice-of-law analysis and application of that principle if New York law applies.

 

IV.

 

“The second prong of the governmental-interest analysis requires the Court to determine which state has the most significant relationship to the occurrence and the parties,”Fu, supra, 160 N.J. at 119, 733 A.2d 1133,“or most significant connections with the issues raised or the parties and the transaction[,]”Lonza, Inc. v. The Hartford Acc. and Indem. Co., 359 N.J.Super. 333, 342, 820 A.2d 53 (App.Div.2003) (citing Veazey v. Doremus, 103 N.J. 244, 247-49, 510 A.2d 1187 (1986)); see also Rowe, supra, 189 N.J. at 621, 917 A.2d 767.

 

It is not disputed that both Moper and Norbet are New Jersey corporations with their principal places of business in New Jersey. It is also undisputed that the TSA was “formed and executed in New Jersey,” and the TSA specifically requires that any issue arising under it be decided under New Jersey law. In addition, the tractor driven by Flores during the accident was registered in New Jersey, and both policies were issued here to New Jersey entities.

 

However, the accident occurred in New York, and the injured plaintiff lived there, sustained his losses there, was treated there, and sought his recovery there. The other driver in the accident, Flores, also lived in New York, and he would be subject to enforcement there of any judgment against him not covered by insurance. Moreover, New York’s statutory law and public policy preclude enforcement of business use exclusions in “bobtail” or “non-trucking” policies. See Royal Indemn. Co., supra, 707 N.E.2d at 428 (finding that a business use exclusion in a non-trucking policy is “void as against public policy” and reading the policy “as if the exclusion did not exist”).

 

New York might well have the paramount interest in assuring that Colon is compensated for any losses he suffered, and, therefore, with respect to coverage. As stated in Fu:

 

In personal injury cases, “the place where the injury occurred is a contact that, as to most issues, plays an important role in the selection of the state of the applicable law.” When both conduct and injury occur in a single jurisdiction, with only “rare exceptions, the local law of the state where conduct and injury occurred will be applied” to determine an actor’s liability. That is so because “a state has an obvious interest in regulating the conduct of persons within its territory and in providing redress for injuries that occurred there.”

 

[Fu, supra, 160 N.J. at 125-26, 733 A.2d 1133 (citations omitted).]

 

Fu dealt with a suit by the passenger of a car rented in New Jersey against the rental agency following “an automobile accident in New York involving only New Jersey residents.” Fu, supra, 160 N.J. at 113, 733 A.2d 1133. The Court held that New York’s vicarious law applied.

 

However, we conclude that our choice-of-law principles point to the law of New Jersey in this declaratory judgment action where the issue is which carrier provides coverage. The New York resident has settled the personal injury action and has been fully compensated. In any event, this is not a personal injury action in which he is a party. As a result, as between the carriers in this action dealing with loss allocation under policies issued to New Jersey insureds under a contract expressly governed by New Jersey law, we do not believe New York has the greater governmental interest. See, e.g., Fu, supra, 160 N.J. 108, 733 A.2d 1133;Erny v. Merola, 171 N.J. 86, 792 A.2d 1208 (2002); Dolan v. Sea Transfer Corp., 398 N.J.Super. 313, 942 A.2d 29 (App.Div.2008); Restatement of the Law (Second), Conflict of Laws 2d § 188.

 

Accordingly, we affirm the judgment of the Law Division and uphold the award of fees for the declaratory judgment against defendant ICSOP because it did not embody a first party claim, ICSOP declined to defend the Colon action against Great American’s insureds, and there is no dispute about the quantum of fees if sustainable under Rule 4:42-9(a)(6).0 This was not a direct action by an insured against its carrier but a declaratory judgment premised on ICSOP’s failure to defend a liability action commenced by a third party. See Tooker v. Hartford Accident & Indem. Co., 136 N.J.Super. 572, 347 A.2d 371 (App.Div.1975), certif. denied,70 N.J. 137, 358 A.2d 184 (1976) (“the rule applies to all successful claimants, including an excess or secondary carrier which successfully prosecutes a coverage action against the primary carrier when the latter has wrongfully refused to defend its assured”); see, generally, Shore Orthopaedic Group, LLC v. Equitable Life Assur. Soc’y of the United States, 397 N.J.Super. 614, 938 A.2d 962 (App.Div.2008).

 

0. ICSOP “concedes … that [it] was obligated to reimburse Great American for the costs of defense in the Colon action” if we affirm the judgment on coverage. However, it contends the Rule does not apply “to an insurance company which prevails after commencing a declaratory judgment action against its insured and establishes that coverage does not extend.” However, the declaratory judgment action obtained coverage for Moper and Flores in circumstances involving a disclaimer by ICSOP and Great American’s assertion that its exclusion was valid. Accordingly, we find no abuse of discretion in the award of counsel fees. See Messec v. USF & G Ins. Co., 369 N.J.Super. 61, 64, 848 A.2d 36 (App.Div.), certif. denied,181 N.J. 287, 854 A.2d 921 (2004).

 

V.

 

The judgment is affirmed.