Campbell v. Lion Ins. Co.

Page 498

311 N.J.Super. 498

710 A.2d 576

Gary CAMPBELL and Barbara Campbell, Plaintiffs-Respondents, v. LION INSURANCE COMPANY, Defendant-Appellant, and Michael Tepedino and Michael Tepedino Insurance Agency,

Defendants-Respondents,

Joanne Livolsi, Defendant.

Joanne LIVOLSI, Third-Party Plaintiff, v. MARKET TRANSITION FACILITY OF NEW JERSEY, Third-Party Defendant.

Superior Court of New Jersey Appellate Division.

Argued May 6, 1998.

Decided May 20, 1998.

Mark E. Utke, Westmont, for defendant-appellant (Margolis Edelstein, attorneys; Robert M. Kaplan, of counsel; Mr. Utke, on the brief).

Kyle T. Kievit, Northfield, for plaintiffs-respondents Gary Campbell and Barbara Campbell.

Amanda W. Figland, Westmont, for defendants-respondents Michael Tepedino and Michael Tepedino Insurance Agency (White and Williams, attorneys; Ms. Figland, of counsel and on the brief).

Before Judges SHEBELL, A.A. RODRIGUEZ and COBURN.

The opinion of the court was delivered by

COBURN, J.A.D.

This is a declaratory judgment action involving the parties' rights under an automobile insurance policy. ¹ Plaintiffs, Gary and Barbara Campbell, assert a right to arbitrate claims for uninsured motorist or underinsured motorist benefits against their carrier, defendant Lion Insurance Company ("Lion"). The only defense raised at trial by Lion was an exclusion of coverage expressed by the policy in the following terms:

A. We do not provide coverage under this endorsement [for uninsured or underinsured motorist coverage] for "property damage" or "bodily injury" sustained by any person:

* * *

3. When "your covered auto" is being used to carry persons or property for a fee. This exclusion does not apply to a share-the-expense car pool.

[ (Emphasis added).]

At the conclusion of a bench trial, the Law Division judge ruled in favor of plaintiffs. The judgment provided, "Lion Insurance Company shall provide Uninsured/Underinsured Motorist Coverage to the plaintiff and shall select an arbitrator according to the terms of the policy...." ² Defendant Lion appeals. We reverse.

I.

On May 22, 1992, plaintiff Gary Campbell was involved in a motor vehicle accident in Egg Harbor Township as a result of which he sustained numerous injuries and incurred medical expenses allegedly in excess of $10,000. He was driving his own van when it was struck by an automobile owned and operated by defendant Joanne Livolsi. Her insurance policy had been issued on behalf of Market Transition Facility of New Jersey ("MTF"), which initially denied coverage on the ground that the policy had been canceled for non-payment of premiums. During the pendency of this matter, which also involved the Campbells' negligence action against Livolsi and Livolsi's declaratory judgment action seeking coverage from MTF, Gary and his wife, Barbara, settled their claims with MTF for one-half of the policy limits.

At the time of the accident, the Campbells were the beneficiaries of an automobile insurance policy issued by Lion. The policy listed two vehicles, a 1980 station wagon, driven primarily by Barbara, and the 1985 van, for which Gary was listed as the primary driver. There were no seats in the rear of the van and its outer sides bore the inscription, "Auto Shopper." The policy contained the above quoted exclusion which formed the basis of Lion's denial of coverage on the Campbells' claims for uninsured or underinsured motorist insurance.

These are the facts relating to the exclusion. Despite Gary's representation to Lion that the van was used for pleasure, it was in fact being used, at least in part, for commercial purposes and, indeed, it had commercial license plates. Gary bought the van in 1990 from Showcase Publications, Inc., ("Showcase") for the purpose of delivering its weekly advertising newspaper called "Auto Shopper." Initially, he made deliveries one day a week in Atlantic County. Over time other routes were added in Cape May and Cumberland counties, with the result that he would be making deliveries on three days each week. Gary was still making deliveries of "Auto Shopper" for Showcase at the time of the accident. There is no evidence regarding the manner in which he was compensated for this work by Showcase.

On January 27, 1992, Gary entered into a "Contract Hauler Agreement" with South Jersey Publishing Company which publishes a newspaper known as "The Press of Atlantic City." The agreement, cancelable by either party on ten-days notice, provides for the delivery of newspapers seven days a week to specific "retail outlets" and "Home Delivery Carriers" in the "Pleasantville/Absecon/Smithville Distribution areas." The newspapers had to be picked up by 2:00 a.m. and delivered no later than 6:00 a.m. The agreement designates Gary as "Hauler" and includes the following statements:

2. Delivery Fee. In exchange for the delivery services described in this Agreement, Hauler will be paid a delivery fee in the amount of $500.00 per week ("the Delivery Fee"). The Delivery Fee will be paid by The Press to the Hauler on Friday of the week after the week in which delivery services were rendered, subject to any deductions or setoffs described below. * * * When the Monday thru Saturday Edition is in more than one bundled section, Hauler will receive $25.00 per extra section.

3. Deductions From Delivery Fee.

(a) If the Hauler's delivery vehicle breaks down or is otherwise disabled while providing the delivery services required under this Agreement, The Press will, if reasonably possible, send a vehicle to pick up and complete delivery of the newspapers not yet delivered by Hauler. In any such case, The Press will deduct from the Delivery Fees next payable to Hauler an amount equal to The Press's costs in completing such delivery, including a charge equal to $0.40 per mile driven, plus all actual labor (man-hour) charges.

* * *

(c) If any newspapers are damaged in any manner or by any cause after Hauler receives them for delivery, The Press will deduct from the Delivery Fee otherwise payable to the Hauler the full retail (newsstand) price of the newspapers so damaged.

* * *

7. Independent Contractor. Hauler warrants, and the parties agree, that Hauler is an independent contractor, free to provide delivery or other services to any other party or person whatsoever, both during the term of this Agreement and after its expiration. Nothing contained herein shall be construed to imply an employment relationship between Hauler and The Press. Hauler acknowledges, understands and agrees that, based on Hauler's representations, The Press will not deduct or withhold from the Delivery Fee payable to hauler hereunder any amounts of state or Federal income taxes, unemployment and disability, FICA or other deductions or impositions whatsoever. Hauler is solely responsible for payment or deposit of any and all such amounts.

Although Gary indicated that he also used the van for pleasure and for transporting his children, and even though he testified that he did not consider himself to be "in business," it is apparent that he was earning over $25,000 a year from the use of the vehicle for his newspaper hauling contracts. The accident occurred while Gary was performing his contractual undertakings.

II.

The first question presented by this case is the meaning of the insurance policy's exclusion of uninsured and underinsured motorist coverage when the vehicle is being used "to carry ... property for a fee." In Mazzilli v. Accident & Cas. Ins. Co. of Winterthur, 35 N.J. 1, 170 A.2d 800 (1961), the Court summarized the applicable rules of construction governing interpretation of an insurance policy:

Solution of a problem of construction of an insurance policy must be approached with a well settled doctrine in mind. If the controlling language will support two meanings, one favorable to the insurer, and the other favorable to the insured, the interpretation sustaining coverage must be applied. Courts are bound to protect the insured to the full extent that any fair interpretation will allow. Kievit v. Loyal Protective Life Ins. Co., etc., 34 N.J. 475, 170 A.2d 22 (1961). Moreover, in evaluating the insurer's claim as to the meaning of the language under study, courts necessarily consider whether alternative or more precise language, if used, would have put the matter beyond reasonable question; also whether judicial decisions appear in the reports attributing a more comprehensive significance to it than that contended for by the insurer. Mahon v. American Cas. Co. of Reading, Pennsylvania, 65 N.J.Super. 148, 167 A.2d 191 (App.Div.1961). Insurance contracts are unipartite in character. They are prepared by the company's experts, men learned in the law of insurance who serve its interest in exercising their draftsmanship art. The result of their effort is given to the insured in printed form upon the payment of his premium. The circumstances long ago fathered the principle that doubts as to the existence of coverage must be resolved in favor of the insured. Barker v. Iowa Mut. Ins. Co., 241 N.C. 397, 85 S.E.2d 305 (Sup.Ct.1955).

These general rules of construction have spawned a number of subsidiary ones of equally universal recognition. For example, where the policy provision under examination relates to the inclusion of persons other than the named insured within the protection afforded, a broad and liberal view is taken of the coverage extended. But, if the clause in question is one of exclusion or exception, designed to limit the protection, a strict interpretation is applied. Cal-Farm Ins. Co. v. Boisseranc, 151 Cal.App.2d 775, 312 P.2d 401, 405 (Cal.App.1957).

[Id. at 7-8, 170 A.2d 800.]

The "carrying property for a fee" exclusion has not yet been construed by the courts of this state. ³ However, it has received attention elsewhere in cases which provide useful guidance.

The most recent opinion appears to be United States Fidelity & Guar. Co. v. Lightning Rod Mut. Ins. Co., 80 Ohio St.3d 584...