STATE OF NEW JERSEY VS. FRANKLIN MARINHO(001-20-13, BERGEN COUNTY AND STATEWIDE) ( 2017 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0689-13T3
CATLIN INSURANCE COMPANY,
INC.,
Plaintiff-Respondent,
v.
FLIGHT LIGHT INC., AND
TRAFFIC SAFETY CORPORATION,
Defendants-Appellants,
and
COUNTY OF MIDDLESEX, BOROUGH
OF METUCHEN, KRISHNA M.
VASIREDDY, ANILA K. VASIREDDY,
MANJU RAWAT, KUNDAN S. RAWAT,
FAI-GON ELECTRIC, INC., ASKCA
INC., AND CARR & DUFF, INC.,
Defendants.
————————————————————————————————————————
Argued May 14, 2014 – Decided July 15, 2014
Before Judges Sapp-Peterson and Hoffman.
On appeal from Superior Court of New Jersey,
Law Division, Middlesex County, Docket No.
L-4608-12.
Kenneth W. Thomas argued the cause for
appellants (Lanza & Lanza, LLP, attorneys;
Mr. Thomas, on the brief).
Timothy G. Hourican argued the cause for
respondents (Brown Gavalas & Fromm, LLP,
attorneys; Robert J. Brown, of counsel and
on the brief; Patrick R. O'Mea, on the
brief).
PER CURIAM
In this declaratory judgment action, defendants Flight
Light, Inc. (Flight Light) and Traffic Safety Corporation
(Traffic Safety)1 appeal from Law Division orders granting
summary judgment to plaintiff Catlin Insurance Company, Inc.
(Catlin), and denying reconsideration. In granting summary
judgment, the judge determined the insurance policies issued by
Catlin did not require it to defend or indemnify defendants in
an underlying personal injury action. For the reasons that
follow, we affirm.
I.
This matter arises from an accident that occurred on
December 7, 2009, when an automobile struck and injured a
pedestrian as he crossed a public roadway in the Borough of
Metuchen (Metuchen). The pedestrian filed a complaint seeking
damages against various defendants, including Metuchen,
asserting his injuries were caused, in part, by a malfunctioning
1 We refer to Flight Light and Traffic Safety collectively as
defendants but refer to them separately when discussing the
parties to the insurance contract. Additionally, Traffic Safety
is a wholly owned subsidiary of Flight Light.
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in-pavement crosswalk warning system (System)2 located at the
intersection where the accident occurred. The complaint alleged
the System had failed to operate properly prior to the accident,
and was not repaired, thus creating a dangerous roadway
condition when the System failed to alert motorists to
pedestrians crossing the roadway. On March 19, 2012, Metuchen
filed a third-party complaint against Traffic Safety as the
manufacturer, seller and/or distributor of the allegedly
defective System, seeking contribution, common law
indemnification, and contractual indemnification for the claims
brought by the pedestrian in the underlying action.
Upon receipt of Metuchen's third-party complaint,
defendants notified Catlin and demanded coverage and
indemnification for the claim. Catlin had issued two insurance
policies to Flight Light for the policy period beginning on
August 21, 2009 and ending on August 21, 2010: an "Aviation
Products Liability Policy" (Aviation Products Policy), and a
"Commercial General Liability Aviation Insurance Policy (CGL
Aviation Policy). The policies were issued through Catlin's
agent, W. Brown & Associates Insurance Services.
On April 23, 2012, Catlin issued a reservation of rights
letter to Flight Light advising that the claims asserted against
2 The System consists of flashing lights embedded in a crosswalk
and pedestrian activation control stanchions.
3 A-0689-13T3
Flight Light in the underlying lawsuit may not be covered under
the Aviation Products Policy as its "investigation and the
allegations in the complaint and third-party complaint indicate
that this particular application did not involve aircraft,
airports, heliports, or aviation." Nevertheless, Catlin advised
that it would "provide a defense to defendants, . . . reserving
all of its rights to seek a determination of coverage under all
of the provisions in the policy contract."
On July 3, 2012, Catlin filed a declaratory judgment action
seeking a determination that defendants are not entitled to
insurance coverage under either of the two policies issued to
Flight Light for the third-party claims asserted in the
underlying action. Defendants filed an answer and counterclaim
seeking a declaration of coverage for the underlying action.
The Aviation Products Policy, which only names Flight Light
as an insured, includes "any partner, executive officer,
employee, director or stockholder thereof, while acting within
the scope of his duty as such" within the definition of insured;
notably, this definition does not include separate companies or
affiliates of the named insured. The contractual language
states the policy only covers claims arising from the handling
or use of Flight Light's aircraft products, items used in
connection with an aircraft.
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This specific policy insures bodily injury arising out of a
"Products Hazard," which is defined as the "handling or use of
(other than by an Insured) or the existence of any condition in
an aircraft when such aircraft product . . . is not in the
possession of the Insured, and . . . is away from the premises
owned, rented or controlled by the Insured." "Aircraft
Products" are defined as:
aircraft (including missiles or spacecraft
and any ground support or control equipment
used therewith), or any article furnished by
the Insured and installed in aircraft or
used in connection with aircraft or for
spare parts for aircraft or tooling used for
the manufacture thereof, including ground
handling tools and equipment and also means
training aids, instructions, manuals,
blueprints, engineering or other data,
and/or any article in respect of which
engineering or other advice and/or services
and/or labor have been given or supplied by
the Insured relating to any aircraft or
aircraft article.
The Aviation Products Policy also includes a merger clause,
stating the written terms of the policy contain the parties'
entire agreement: "By acceptance of this policy the Insured
agrees that the statements in the Declarations are his
agreements and representations, that this policy is issued in
reliance upon the truth of such representations and that this
policy embodies all agreements existing directly between himself
and the Company relating to this insurance."
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The CGL Aviation Insurance Policy provides coverage only
for bodily injury resulting from the insured's "aviation
operations," which are operations relating to the insured's
aviation activities. Specifically, this policy states Catlin
"will pay those sums that the Insured becomes legally obligated
to pay as damages because of bodily injury . . . to which this
insurance applies resulting from your aviation operations."
Aviation operations are defined as "all operations arising from
the ownership, maintenance or use of locations for aviation
activities including that portion of the roads or other accesses
that adjoin these locations. Aviation operations include all
operations necessary or incidental to aviation activities."
The CGL Aviation Policy also contains a merger clause
stating the policy contains the parties' entire agreement:
This policy contains all the agreements
between you and us concerning the insurance
afforded. The first Named Insured shown in
the Declarations is authorized to make
changes in the terms of this policy with our
consent. This policy's terms can be amended
or waived only by endorsement issued by the
Aviation Managers and made a party of this
policy.
On April 17, 2013, Kyle Owens, the principal of Flight
Light and Traffic Safety testified during a video deposition
that Flight Light manufactures and distributes airport lighting
and Traffic Safety manufactures and distributes traffic safety
lighting. Owens further testified neither Flight Light nor
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Traffic Safety manufactured the crosswalk system involved in the
underlying litigation; Traffic Safety manufactured the
controller and an entity other than Traffic Safety manufactured
the fixtures used in the street. Additionally, he noted the
lighting fixtures used in the crosswalk lighting system sold by
Traffic Safety are the same ones used by Flight Light for
airports.
In Flight Light's commercial insurance application dated
June 30, 2009, Flight Light was the only listed applicant,
although Traffic Safety was listed as a subsidiary that uses
Flight Light's employees. Traffic Safety was further identified
as a company in which Flight Light had controlling stock, which
provides "products for crosswalks at universities and other
commercial buildings."
After limited discovery, Catlin moved for summary judgment.
Following oral argument, Judge Joseph L. Rea granted the motion,
rejecting defendants' argument that Catlin's policies provided
coverage for the underlying claim. The judge found "no
ambiguity at all" in the language of either policy and otherwise
found no basis for coverage.
Judge Rea noted the Aviation Products Policy expressly
states coverage applies only to aircraft products and found the
plain language to require Catlin to insure only claims caused by
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an occurrence "arising out of the product's hazard." The court
continued:
What's a product hazard? It means the
handling or use other than by the insured or
the existence of any condition is an
aircraft product when such aircraft product
is not in the possession of insured or is
away from premises owned, rented or
controlled by the insured.
Then we get into what's an aircraft
product. . . . [I]t tells you . . . [we
are] going to cover this product under a
certain type of occurrence. It has to be
. . . an occurrence related to an aircraft
product, that's clear on the face of it.
The court noted the aircraft product "has to be used in
connection with [an] aircraft in order to qualify as an aircraft
product" under the plain language of the policy.
Noting both policies apply to aviation operations, Judge
Rea concluded the underlying action did not involve aviation
operations because aviation operations are "operations necessary
or incidental to aviation activities . . . [like] runways, not
crosswalks." Accordingly, Judge Rea granted plaintiff's motion,
finding Catlin "not obligated to defend or indemnify defendants
. . . with respect to any of the claims asserted in the
(underlying) action." Defendants filed a motion for
reconsideration, which the court denied. This appeal followed.
II.
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In an appeal from the grant of summary judgment, we review
the decision de novo, Heyert v. Taddese, 431 N.J. Super. 388,
411 (App. Div. 2013), and utilize "'the same standard [of
review] that governs the trial court.'" Mem'l Props., LLC v.
Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012) (alteration in
original) (quoting Henry v. N.J. Dep't of Human Servs., 204 N.J.
320, 330 (2010)). Thus, the evidence must be viewed "in the
light most favorable to the non-moving party" and must be
analyzed to determine "whether the moving party was entitled to
judgment as a matter of law." Ibid. (citing Brill v. Guardian
Life Ins. Co. of Am., 142 N.J. 520, 523 (1995)).
Further, contract interpretation is "ordinarily a legal
question for the court and may be decided on summary judgment
unless there is uncertainty, ambiguity or the need for parol
evidence in aid of interpretation. . . ." Celanese Ltd. v.
Essex Cnty. Improvement Auth., 404 N.J. Super. 514, 528 (App.
Div. 2009) (citation and internal quotation marks omitted).
Accordingly, the court interprets the terms of a contract, as a
matter of law, "unless the meaning is both unclear and dependent
on conflicting testimony." Ibid. (citation and internal
quotation marks omitted).
Contracts are read as a whole "'in a fair and common sense
manner.'" Porreca v. City of Millville, 419 N.J. Super. 212,
233 (App. Div. 2011) (quoting Hardy ex. rel. Dowdell v. Abdul-
9 A-0689-13T3
Matin, 198 N.J. 95, 103 (2009)). As such, "[a] contract should
not be interpreted to render one of its terms meaningless."
Ibid. (citation and internal quotation marks omitted). The
interpretation of contract terms is "decided by the court as a
matter of law unless the meaning is both unclear and dependent
on conflicting testimony." Bosshard v. Hackensack Univ. Med.
Ctr., 345 N.J. Super. 78, 92 (App. Div. 2001).
Insurance contracts are considered "contracts of adhesion,
[and] such policies are subject to special rules of
interpretation." Longobardi v. Chubb Ins. Co., 121 N.J. 530,
537 (1990) (citing Meier v. New Jersey Life Ins. Co., 101 N.J.
597, 611 (1986). We will often construe insurance policies
liberally in favor of the insured so "that coverage is afforded
'to the full extent that any fair interpretation will allow.'"
Ibid. (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J.
475, 482 (1961)). Nevertheless, "[a]n insurance policy is a
contract that will be enforced as written when its terms are
clear in order that the expectations of the parties will be
fulfilled." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010);
see also Zurich, supra, 210 N.J. at 525 (holding that generally,
an insurance policy should be interpreted in accordance with the
plain and ordinary meaning of its terms). Therefore, a court
must first decide if an ambiguity exists.
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Ambiguity in a contract exists "'if the terms of the
contract are susceptible to at least two reasonable alternative
interpretations. . . . To determine the meaning of the terms of
an agreement by the objective manifestations of the parties'
intent, the terms of the contract must be given their 'plain and
ordinary meaning.'" Nester v. O'Donnell, 301 N.J. Super. 198,
210 (App. Div. 1997) (alteration in original) (quoting Kaufman
v. Provident Life and Cas. Ins. Co., 828 F. Supp. 275, 283
(D.N.J. l992), aff'd, 993 F.2d 877 (3d Cir. 1993)). Therefore,
in "interpreting a contract, a court must try to ascertain the
intention of the parties as revealed by the language used, the
situation of the parties, the attendant circumstances, and the
objects the parties were striving to attain." Celanese Ltd.,
supra, 404 N.J. Super. at 528. Indeed, the court should examine
the document as a whole but, importantly, the "'court should not
torture the language of [a contract] to create ambiguity.'"
Nester, supra, 301 N.J. Super. at 210 (alteration in original)
(quoting Stiefel v. Bayly, Martin & Fay, Inc., 242 N.J. Super.
643, 651 (App. Div. 1990)).
It is only where a contract's language is ambiguous that a
court may rely upon extrinsic or parol evidence to determine the
intent of the parties; where the language of the contract is
clear, extrinsic evidence may not be considered. Chubb Custom
Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008)
11 A-0689-13T3
("If the language is clear, that is the end of the inquiry.");
see also Schor v. FMS Financial Corp., 357 N.J. Super. 185, 191
(App. Div. 2002) (holding if language in the contract is "not
free from doubt as to its meaning, the party is permitted to
introduce proof of extrinsic circumstances bearing on the
alleged proper interpretation of the language used"). Further,
the parol evidence rule "operates to prohibit the introduction
of oral promises to alter or vary an integrated written
instrument." Filmlife, Inc. v. Mal "Z" Ena, Inc., 251 N.J.
Super. 570, 573 (App. Div. 1991).
This tenant is especially true when the agreement itself
contains an integration clause. Harker v. McKissock, 12 N.J.
310, 321-22 (1953) ("The essence of voluntary integration is the
intentional reduction of the act to a single memorial; and where
such is the case the law deems the writing to be the sole and
indisputable repository of the intention of the parties.").
However, "when considering ambiguities and construing a policy,
courts cannot 'write for the insured a better policy of
insurance than the one purchased.'" Flomerfelt, supra, 202 N.J.
at 441 (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co.,
116 N.J. 517, 529 (1989)); see also Progressive Cas. Ins. Co. v.
Hurley, 166 N.J. 260, 273 (2001) (finding "absence of an
ambiguity in the language of an insurance policy, a court should
not engage in a strained construction to support the imposition
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of liability"). Finally, "the insured has the burden 'to bring
the claim within the basic terms of the policy.'" S.T. Hudson
Eng'rs, Inc. v. Pa. Nat'l Mut. Cas. Co., 388 N.J. Super. 592,
603 (App. Div. 2006) (quoting Reliance Ins. Co. v. Armstrong
World Indus., Inc., 292 N.J. Super. 365, 377 (App. Div. 1996)),
certif. denied, 189 N.J. 647 (2007).
III.
Defendants argue they are entitled to coverage under
Catlin's insurance policies, claiming they are ambiguous on
their face. We disagree.
Because insurance policies should be enforced as written
where contract terms are clear and unambiguous, and because we
discern no room for interpretation, we conclude Judge Rea
correctly interpreted the language of the Aviation Products
Policy as only covering aircraft-related products, and not the
crosswalk lighting system at issue here. See Kampf v. Franklin
Life Ins. Co., 33 N.J. 36, 43 (1960); B.D. v. Div. of Med.
Assistance & Health Servs., 397 N.J. Super. 384, 391 (App. Div.
2007); see also Great Atl. & Pac. Tea Co., Inc. v. Checchio, 335
N.J. Super. 495, 502 (App. Div. 2000) (Construction of a written
contract normally presents a legal question, but where there is
"uncertainty, ambiguity or the need for parol evidence in aid of
interpretation, then the doubtful provision should be left to
the jury.").
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The Aviation Products Policy provides Flight Light with
coverage for bodily injury caused by a "product hazard" in its
"aircraft products." Based upon the definitions provided in the
insurance policy, this plainly means plaintiff will defend and
indemnify Flight Light for any claims of bodily injury arising
from the handling or use of Flight Light's "aircraft products."
Aircraft products are "any article(s) furnished by the Insured
and installed in aircraft or used in connection with
aircraft . . . ." Therefore, according to the plain language of
the policy, Catlin insured Flight Light for injuries arising
from aircraft products installed on an aircraft or used in
connection with an aircraft.
Here, the complaint in the underlying action described the
System as a "pedestrian crossway lighting system consisting in
part of flashing lights embedded in the subject crosswalks and
pedestrian activation control stanchions." The System cannot be
considered an "aircraft product" within the meaning of the
Aviation Products Policy because it is completely unrelated to
an aircraft. Instead, the product at issue was used in a
crosswalk on a borough street rather than in connection with an
aircraft or aircraft application.
Therefore, inasmuch as the product giving rise to the
claims in the underlying action is not an "aircraft product,"
the claims arising from this product are not covered by the
14 A-0689-13T3
Aviation Products Policy. Accepting defendants' interpretation
of the policy would rewrite the policy to afford more coverage
than originally intended. See Flomerfelt, supra, 202 N.J. at
441.
We next consider defendants' assertion the CGL Aviation
Policy is also ambiguous. While defendants have failed to
articulate why we should find coverage under the CGL Aviation
Policy, it is clear the terms of the CGL Aviation Policy are
unambiguous and do not provide coverage for the underlying
claim. According to the plain language of the
Coverages/Insuring Agreement section of the CGL Aviation Policy,
Catlin will provide coverage for "bodily injury or property to
which this insurance applies resulting from [Flight Light's]
aviation operations[,]" which is defined as "all operations
necessary or incidental to aviation activities," including "all
operations arising from the ownership, maintenance, or use of
locations for aviation activities . . . ." Thus, the policy
clearly requires some connection between the underlying claim
and "aviation." The record contains no evidence of such a
connection.
Here, the claims in the underlying action involve personal
injuries sustained in an automobile accident at a downtown
suburban crosswalk. As such, there is no reasonable connection
between the claims in the underlying action and "aviation
15 A-0689-13T3
operations" as defined in the policy that could trigger
coverage. Therefore, based upon the unambiguous language of the
CGL Aviation policy, it is clear the claims against defendants
in the underlying action are not covered by the CGL Aviation
Policy.
Finally, we reject defendants' claim that Judge Rea erred
by failing to consider probative, extrinsic evidence. We note
the "distinction between the use of evidence of extrinsic
circumstances to illuminate the meaning of a written contract,
which is proper, and the forbidden use of parol evidence to vary
or contradict the acknowledged terms of an integrated contract."
YA Global Inv., L.P. v. Cliff, 419 N.J. Super. 1, 12 (App. Div.
2011) (quoting Garden State Plaza Corp. v. S. S. Kresge Co., 78
N.J. Super. 485, 497 (App. Div. 1963)). Defendants' proffered
parol evidence, including the deposition testimony of its
principal and a certification of its insurance agent, was not
presented to illuminate the meaning of Catlin's insurance
policies but rather to vary and contradict the plain language of
the policies. Finally, where a contract includes a merger
clause, as both policies here, such a clause is meant to reflect
the full intention of the parties. See Harker, supra, 12 N.J.
at 321-22. Therefore, we conclude Judge Rea correctly
interpreted the plain language of the policy in granting
Catlin's motion for summary judgment.
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Affirmed.
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