United States District Court,

N.D. Illinois, Eastern Division.

NORTHLAND INSURANCE COMPANY, Plaintiff,

v.

Dorlan CRANE, Lincoln General Insurance Company, Nancy Hoffman and Mark

Hoffman, individually and as parent and next friend of Karen Hoffman, a minor,

Defendants.

April 7, 2005.

MEMORANDUM OPINION AND ORDER

 

MAROVICH, J.

I. Background

Unless otherwise noted, the following facts are undisputed by plaintiff Northland and defendants the Hoffmans. (As the Court noted above, Crane and Lincoln General were not served with the motion for summary judgment or the second amended complaint on which it is based.)

Plaintiff Northland Insurance is a Minnesota corporation with its principal place of business in St. Paul, Minnesota. Defendant Crane is a citizen of Illinois. The Hoffmans are citizens of Illinois.

At some point, Northland Insurance issued to Crane an insurance policy (the “Crane policy”) that was effective April 14, 2002 to April 14, 2003. The Crane policy covered bodily injury or property damage “caused by an ‘accident’ and resulting from the ownership, maintenance or use of a covered ‘auto’.” The Crane policy excludes certain auto uses, such as “to carry property in any business” and use “in the business of anyone to whom the ‘auto’ is rented.”

The Hoffmans have a lawsuit (the “Hoffman litigation”) pending against Crane (among others) in the Circuit Court of Cook County. In the Hoffman litigation, the Hoffmans allege that on June 21, 2002, Crane was operating his semi-tractor trailer on Interstate 80. The Hoffmans further allege that Nancy Hoffman and Karen Hoffman suffered injuries when the front of Crane’s vehicle came into contact with the back of a vehicle carrying Nancy and Karen Hoffman.

Absent from the record is any evidence that Crane ever demanded that Northland Insurance defend or indemnify him with respect to the Hoffman litigation. Nor is there any evidence in the record that would suggest Crane has ever indicated that he intends to make a claim under the Crane policy.

II. Summary judgment standard

2 Summary judgment should be granted when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(c). When making such a determination, the Court must construe the evidence and make all reasonable inferences in favor of the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Summary judgment is appropriate, however, when the non-moving party “fails to make a showing sufficient to establish the existence of an element essential to the 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, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986).

III. Discussion

Count I-Duty to Defend and Duty to Indemnify

In Count I, Northland Insurance seeks a declaration that it has no duty under the Crane policy either to defend or to indemnify Crane with respect to the Hoffman litigation. Before the Court considers the merits of the claim, it must satisfy itself that it has jurisdiction over the claim. Weaver v. Hollywood Casino-Aurora, Inc., 255 F.3d 379, 381 (7th Cir.2001).

The exercise of the Court’s judicial power under Article III of the Constitution “depends on the existence of a case or controversy.” United States National Bank of Oregon v. Independent Ins. Agents of Amer., Inc., 508 U.S. 439, 446, 113 S.Ct. 2173, 124 L.Ed.2d 402 (1993). Federal courts do not have the power to render advisory opinions. Id. These principles are no less true when a litigant seeks a declaratory judgment under the Declaratory Judgment Act. 28 U.S.C. § 2201 (“In a case of actual controversy within its jurisdiction … any court of the United States … may declare the rights and other legal relations of any interested party seeking such declaration …”) (emphasis added). Among other things required for a case or controversy, the plaintiff must have suffered an injury that is “actual or imminent, not ‘conjectural’ or ‘hypothetical.’ ” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560, 112 S.Ct. 2130, 119 L.Ed.2d 351 (1992). Northland Insurance bears the burden of establishing jurisdiction “with the manner and degree of evidence required at the successive stages of the litigation.” Lujan, 504 U.S. at 561.

Northland Insurance fails to put forth evidence sufficient to establish the existence of a case or controversy as to Count I. Until an insured either makes a demand for payment under an insurance policy or threatens to make such a demand, there is no case or controversy over which the insurance company can seek a declaration of its rights. Atlanta Int’l Ins. Co. v. Atchison, Topeka and Santa Fe Railway Co., 938 F.2d 81, 83-84 (7th Cir.1991). Here, Northland Insurance presents no evidence that Crane has ever demanded or threatened to demand coverage for the Hoffman litigation under the Crane policy. What Northland Insurance seeks is an advisory opinion, which this Court will not and cannot provide. Thus, the Court lacks jurisdiction over Count I.

3 The Court denies plaintiff’s motion for summary judgment with respect to Count I and dismisses Count I without prejudice.

Counts II and III-Reformation and Rescission

In Count II, Northland Insurance seeks reformation of the Crane policy, and in Count III, Northland Insurance seeks rescission of the Crane policy. The Court concludes that these claims, like Count I, are not ripe, and, accordingly, the Court lacks jurisdiction over these claims as well.

Northland Insurance has not put forth evidence of facts indicating the existence of a case or controversy with respect to Counts II and III. Northland Insurance’s injury is hypothetical. Northland Insurance’s brief makes clear that reformation and/or rescission may be appropriate in the future upon the occurrence of a particular event (namely the entry of a court order finding that Northland Insurance had a duty to defend or indemnify Crane with respect to the Hoffman litigation), which may or may not ever occur. Specifically, in its brief in support of its motion for summary judgment on Counts II and III, Northland Insurance states:

If this Court were to find that the Northland Non-trucking Use Policy actually provides coverage to the 1998 Transcraft trailer, then Northland would be entitled to reformation of the policy in order to accurately reflect the intentions of the parties.

If this Court finds that the absence of reference to the trailer in the non-trucking use endorsement is tantamount to full trucker’s insurance for the trailer, then a mistake was made when the policy was drafted.

In the event that this Court finds that the Hoffmans’ position has any support on the record, the Northland Policy must be rescinded because if Dorlan Crane intended to purchase full truckers’ coverage, he clearly misrepresented numerous material facts in his application.

(Northland Brief at 6, 7). These statements make clear that, as it stands, Northland Insurance has suffered no actual injury and none is imminent. Rather, Northland Insurance seeks rescission and reformation if and only if the Court, at some point in the future, concludes that Northland Insurance has a duty to indemnify or defend Crane with respect to the Hoffman litigation. The Court has not reached that conclusion. Nor can it reach that conclusion given that it lacks jurisdiction over Count I as well. The claims for rescission and reformation are not ripe. Accordingly, the Court has no jurisdiction over these claims.

Plaintiff’s motion for summary judgment as to Counts II and III is denied, and Counts II and III are dismissed without prejudice.

IV. Conclusion

For the reasons set forth above, the Court denies plaintiff’s motion for summary judgment and dismisses plaintiff’s claims without prejudice.

Supreme Court of New Jersey.

Patricia ROBINSON and David Robinson, Plaintiffs,

v.

Dominick N. COIA, Jr., John Doe I-III (a fictitious name designating the

operator of the motor vehicle) and John Doe IV-VI (a fictitious name

designating the operator of the motor vehicle); individually, jointly,

severally and/or in the alternative, Defendants,

and

Avis Rent a Car System, Inc., Defendant-Appellant,

v.

Richard Brown, Jr., Defendant and Third Party Plaintiff-Respondent,

v.

James J. O’Connell and Gloria A. Maisey, Third Party Defendants.

Argued Feb. 14, 2005.

Decided March 29, 2005.

PER CURIAM.

The judgment of the Appellate Division is reversed substantially for the reasons expressed in the thorough and persuasive dissenting opinion of Judge Wecker below. Robinson v. Coia, 369 N.J.Super. 336, 347-354 (App.Div.2004). We add only the following.

This appeal is about the respective obligations of an insurer on a personal policy of automobile insurance and a self-insured car rental company for injuries sustained by a third party in an accident involving a rented vehicle. Richard Brown, Jr., rented a car from Avis Rent A Car System, Inc. in Cherry Hill, New Jersey. He declined to purchase any additional coverage from Avis when it was offered as part of the rental agreement. At the time of the rental, Brown had a personal automobile insurance policy from Farmers Insurance Exchange, which contained an excess insurance clause that made its coverage excess to all other collectible coverage. Avis, on the other hand, self-insured those of its vehicles registered in Pennsylvania. Such was the car rented to Brown.

In Paragraph 18 of the rental agreement executed by Brown, he agreed that

[t]he coverage provided by [Avis] shall be excess of any applicable insurance available to me or any other driver, from any other source, whether primary, excess, secondary or contingent in any way. Otherwise, it is provided according to the terms, and subject to the conditions, of a standard automobile liability insurance policy, including all requirements as to notice and cooperation on my part, which are hereby made a part of this agreement.

Had Brown purchased additional insurance, then “the coverage provided by [Avis] according to paragraph 18 … shall be primary and the combined limits of liability protection shall be [$1,000,000 per person/$1,000,000 per accident]. Unfortunately, Brown was involved in a multi-car accident while driving the Avis rental car on the Atlantic City Expressway. That automobile accident, and the resultant personal injury action brought by third parties, provides the backdrop to this appeal.

As noted, the Pennsylvania-registered automobile involved in the accident was self-insured by Avis. Had Avis rented a car registered in New Jersey to Brown, however, the same result would pertain vis-a-vis the personal automobile insurance policy held by Brown. The policy of business automobile insurance coverage Avis purchased to cover its New Jersey registered vehicles required the renter’s personal automobile policy to be primary and the Avis policy to be treated as excess to the renter’s policy. Only when the renter purchased additional liability insurance on executing the rental agreement would the Avis policy be primary. Under either the self-insurance program or the purchased policy, Avis as the “named insured” maintains insurance covering liability to a person injured in an accident involving one of its vehicles thereby satisfying the requirements of N.J.S.A. 45:21-3.

FN1. The policy purchased by Avis contained an “Other Insurance” clause that provided:

a. With respect to anyone insured under this policy other than the named insured, … the insurance furnished under this policy is excess over any other valid and collectible insurance whether such other insurance is stated to be primary, contributing, secondary, excess, contingent or otherwise unless the other policy was issued by us or an affiliated company specifically to apply in excess of this policy.

b. With respect only to the named insured, … the following shall apply: for any covered auto you own this policy provides primary insurance.

Thus, the fact of self-insurance does not change the result in this dispute about coverage. We agree with the analysis of the dissenting judge below that a rental company may self-insure to fulfill the liability requirements of N.J.S.A. 45:21-3. Robinson, supra, 369 N.J.Super. at 347-49. See Agency Rent-A-Car, 268 N.J.Super. 319, 324-25 (App.Div.1993). Compliance with that obligation does not require that the rental company’s policy of insurance (or self-insurance) must be primary in respect of a renter’s liability to third parties. See Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554, 563 (1959). Moreover, the dissent concluded that in this instance, when Avis’s coverage by operation of contract and statute (memorialized in the rental agreement) and the renter’s “other insurance” clause were each, by their terms, “excess” to the other, the two should be treated as co-primary. Robinson, supra, 369 N.J.Super. at 353-54. We agree also with that approach.

FN2. We note that the amount in dispute is within the limits of liability contained in N.J.S.A. 45:21-3. We express no opinion, however, on whether a self-insuring rental company can limit its liability to the statutory minimums, absent excess coverage.

The judgment of the Appellate Division is reversed and the matter is remanded for further proceedings consistent with this opinion.

Chief Justice PORITZ and Justices LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE, and RIVERA-SOTO join in this opinion.

For reversal and remandment–Chief Justice PORITZ, Justice LONG, LaVECCHIA, ZAZZALI, ALBIN, WALLACE, RIVERA-SOTO–7.