United States District Court,

D. New Jersey.

HARTFORD FIRE INSURANCE COMPANY, Plaintiff,

v.

CHATA COATING AND LAMINATING, INC., et al., Defendants

ANTHONY M. BRIDA, INC., Third-Party Plaintiff,

v.

SAMUEL P. MARTIN INSURANCE AGENCY, INC., Third-Party Defendant.

June 22, 2005.

OPINION

 

SIMANDLE, J.

This insurance related dispute is before the Court upon the cross-motions for summary judgment by Hartford Fire Insurance Co. (“Hartford”) and Anthony M. Brida, Inc. (“Brida”), as well as the motion for summary judgment by Brida against Samuel P. Martin Insurance Agency d/b/a the Martin Company (“Martin”). For the reasons expressed below, the Court will grant the motion by Hartford, and deny the motions by Brida.

I. BACKGROUND

This action arises out of a suit filed on April 26, 2002 in the United States District Court for the District of South Carolina by Chata Coating and Laminating, Co. (“Chata”) against Brida, as well as others, alleging that machinery belonging to Chata was damaged by water in the course of Brida’s authorized transportation of that machinery in December 2001 (“Underlying Action”). The complaint in the Underlying Action alleges that the damage was caused by Brida’s failure to tarp the machinery in the course of transportation and seeks damages, inter alia, for the loss of use of the allegedly damaged machinery, loss of profits, and loss of reputation and goodwill.

At all relevant times, Brida was a motor carrier authorized to transport goods for hire in interstate and intrastate commerce. On or about October 25, 1999, Hartford issued policy no. 13 UUM 1D8655 (the “Policy”) to Brida, effective October 25, 1999 through October 19, 2000. The Policy was procured through Martin, a licensed insurance agent, and provided coverage under Form MS 00 39 04 89 (the “Cargo Coverage Form”) for those sums that Brida becomes legally obligated to pay under a contract of carriage for direct physical loss to property being transported by Brida. [FN1]

FN1. A complete copy of the Policy was received by Brida no later than April 2000. The Hartford Policy was renewed on the same terms and conditions from October 25, 2000 to October 25, 2001, and then from October 25, 2001 through October 25, 2002. Shortly after the commencement of each policy period, Hartford would prepare a physical copy of the policy and forward it to Martin, which would then forward a complete copy to Brida.

Section “B” of the Cargo Coverage Form contains the following exclusions from coverage:

B. Exclusions

1. [Omitted Here]

2. We will not pay for “loss” caused by or resulting from any of the following.

a. Delay, loss of use, loss of market, or any other causes of consequential “loss”.

b. [Omitted Here]

c. [Omitted Here]

d. Poor or insufficient packaging or packing of the Covered Property; or poor packing of the Covered Property in or on the transporting vehicle.

e. Rust, corrosion, contamination, leakage, breakage, marring, scratching, wetness, dampness or exposure to light or darkness. But we will pay for such direct physical “loss” to Covered Property caused by any of the “specified causes of loss”, except as otherwise excluded.

f-j. [Omitted Here]

(Grady Aff. Ex. A.) “Specified causes of loss” as used in Exclusion B.2(e) is defined by the Policy to include, among other things, “water damage.” (Id., “General Definitions” C.21.) As used in the Policy, “[w]ater damage means the damage resulting from the accidental discharge or leakage of water or steam as the direct result of the breaking apart or cracking of any part of a system or appliance (other than a sump system including its related equipment and parts) containing water or steam.” (Id. at C.21(b).) Moreover, “[f]or property in transit, ‘Specified Causes of Loss’ also means … ‘Flood,” ‘ that term being defined as “[s]urface water, waves, tidal water, tidal waves, tsunamis, or overflow of any natural or man made body of water from its boundaries, all whether driven by wind or not….” (Id. at General Definitions C.12(a).)

On or about November 8, 1999, Martin forwarded to Hartford a request from one of Brida’s customers concerning the coverage provided under a Hartford policy identical to the one at issue here. Specifically, Great American Lines had asked Brida in writing whether the Hartford policy provided coverage for wetness, dampness or rust. This inquiry had been forwarded by Brida to the Martin Agency, which in turn forwarded the inquiry to Hartford. On November 8, 1999, Imelda Toland, Hartford’s underwriter assigned to the Brida account, notified Jacqueline McAllister of the Martin Agency by fax that no coverage for wetness, dampness or rust was provided by the Hartford Policy. On or about November 15, 1999, Ms. McAllister contacted Daniele Brida of Brida and advised her of Hartford’s position that no coverage was afforded for wetness, rust, or corrosion. On or about November 15, 1999, Ms. McAllister sent a fax to Ms. Brida confirming that conversation and forwarding Hartford’s reply that no coverage was provided for wetness, dampness or rust under the policy.

On or about December 26, 2001, Hartford was advised by Martin of a potential cargo claim against Brida by Chata. On or about March 19, 2002, Chata presented a formal written claim against Brida, which was forwarded to Hartford. The written claim, alleging that Brida failed to properly tarp or otherwise protect the printing press which had been tendered to Brida for transport, included claims for losses of $703,000 for repair and lost profits not less than $9,869,378. On or about April 18, 2002, Hartford advised Brida in writing that it was declining the claim on the grounds that the type of losses at issue were specifically excluded from the Policy. Chata filed its complaint in federal district court in South Carolina on April 26, 2002.

On or about June 7, 2002, Hartford filed a declaratory judgment action against Chata and Brida in the United States District Court for the District of South Carolina seeking a declaration that Hartford has no obligations to provide Brida with indemnity or a defense for Chata’s claims against Brida. That declaratory judgment action was transferred to this Court on February 20, 2003 and the Underlying Action has been stayed pending the resolution of this action. Brida has filed a counterclaim against Hartford for, among other things, negligence, as well as a third party complaint against Martin, also on a negligence theory.

II. SUMMARY JUDGMENT STANDARD OF REVIEW

Summary judgment is appropriate when the record “show[s] 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). A dispute is “genuine” if “the evidence is such that a reasonable jury could return a verdict for the non-moving party.” See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if it might affect the outcome of the suit under the applicable rule of law. Id.

In deciding whether there is a disputed issue of material fact, the court must view the evidence in favor of the non-moving party by extending any reasonable favorable inference to that party; “the nonmoving party’s evidence ‘is to be believed, and all justifiable inferences are to be drawn in his favor.” ‘ Hunt v. Cromartie, 526 U.S. 541, 552 (1999) (quoting Liberty Lobby, 477 U.S. at 255). The threshold inquiry is whether there are “any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party.” Liberty Lobby, 477 U.S. at 250. [FN2]

FN2. The moving party always bears the initial burden of showing that no genuine issue of material fact exists, regardless of which party ultimately has the burden of persuasion at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

The standard by which the court decides a summary judgment motion does not change when the parties file cross-motions. Weissman v. United States Postal Serv., 19 F.Supp.2d 254 (D.N.J.1998). When ruling on cross-motions for summary judgment, the court must consider the motions independently, Williams v. Philadelphia House Auth., 834 F.Supp. 794, 797 (E.D.Pa.1993), aff’d, 27 F.3d 560 (3d Cir.1994), and view the evidence on each motion in the light most favorable to the party opposing the motion. See Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).

III. DISCUSSION

Central to this controversy is the exclusionary provision contained at section B.2 of the Policy under the section entitled “Cargo Coverage–Carrier for Hire.” (Grady Aff. Ex. A.) Under New Jersey law