1999 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

5-13-1999

Robeson Ind Corp v. Hartford Accident

Precedential or Non-Precedential:

Docket 98-5168

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Recommended Citation

"Robeson Ind Corp v. Hartford Accident" (1999). 1999 Decisions. Paper 121.

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Filed May 13, 1999 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

No. 98-5168 

ROBESON INDUSTRIES CORP., 

 Appellant, 

v. 

HARTFORD ACCIDENT & INDEMNITY COMPANY; 

ZURICH INSURANCE COMPANY; CONTINENTAL 

INSURANCE COMPANY 

No. 98-5285 

IN RE: ROBESON INDUSTRIES CORP., 

 Debtor, 

ROBESON INDUSTRIES CORP. 

v. 

HARTFORD ACCIDENT & INDEMNITY COMPANY; 

ZURICH INSURANCE COMPANY; CONTINENTAL 

INSURANCE COMPANY 

On Appeal from the United States District Court 

for the District of New Jersey 

District Judge: Honorable Garrett E. Brown 

(Civ. Nos. 97-5185, 98-1500) 

Argued February 17, 1999 

BEFORE: GREENBERG, ROTH, and 

LOURIE,* Circuit Judges 

_________________________________________________________________ 

*Honorable Alan D. Lourie, Circuit Judge of the United States Court of 

Appeals for the Federal Circuit, sitting by designation. 
(Filed: May 13, 1999) 

 Eugene R. Anderson (argued) 

 Michael R. Magaril 

 Steven J. Pudell 

 Anderson Kill & Olick, P.C. 

 One Gateway Center, Suite 901 

 Newark, NJ 07102 

 Attorneys for Appellants 

 Lon A. Berk (argued) 

 Sandra Tvarian 

 Wiley Rein & Fielding 

 1776 K Street, NW 

 Washington, DC 20006 

 Gerald A. Hughes 

 Hughes & Hendrix 

 850 Bear Tavern Road, Suite 304 

 West Trenton, NJ 08628 

 Attorneys for Appellee 

 Zurich Insurance Company 

 James W. Greene (argued) 

 Thompson, O'Donnell, Markham, 

 Norton & Hannon 

 805 15th Street, NW, Suite 705 

 Washington, DC 20005 

 Paul J. Russoniello 

 Flaster, Greenberg, Wallenstein, 

 Roderick, Spirgel, Zuckerman, 

 Skinner & Kirchner 

 1810 Chapel Avenue West 

 Third Floor 

 Cherry Hill, NJ 08102 

 Attorneys for Appellees 

 Continental Casualty Company and 

 American Casualty Company of 

 Reading 

 2 
OPINION OF THE COURT 

LOURIE, Circuit Judge. 

Robeson Industries Corp. appeals from the decision of 

the United States District Court for the District of New 

Jersey affirming the bankruptcy court's grant of summary 

judgment that Robeson was not entitled to coverage under 

its insurance policies and could not prevail in its tort 

claims against the insurers. Robeson also appeals from the 

decision of the district court denying jurisdiction to review 

the bankruptcy court's imposition of sanctions under 

Bankruptcy Rule 9011. See Robeson Indus. Corp. v. Zurich 

Ins. Co., Civ. No. 97-5158(GEB) (D.N.J. Feb. 20, 1998) 

(summary judgment); (D.N.J. June 2, 1998) (sanctions). We 

affirm. 

BACKGROUND 

This appeal arises out of an adversary proceeding 

commenced by debtor Robeson in the United States 

Bankruptcy Court for the District of New Jersey. In that 

proceeding, Robeson contended that Hartford Accident and 

Indemnity Co., Zurich Insurance Co., and Continental 

Insurance Co. (the "Insurers") had a duty to defend and 

indemnify it against claims arising from the discharge of 

certain contaminants at its manufacturing facility in 

Castile, New York, including a claim brought by the New 

York State Department of Environmental Conservation in 

1990.1 Robeson had purchased various commercial general 

liability insurance policies from the Insurers that provided 

coverage from 1976 to 1983. The policies were negotiated in 

New York and were issued to Robeson at its headquarters 

in Mineola, New York. Although the policies were 

apparently not identical as to the property covered, see 

Robeson Indus. Corp. v. Zurich Ins. Co., Bankr. No. 93- 

_________________________________________________________________ 

1. In addition, a private claim was later filed after the commencement of 

the bankruptcy proceeding by an adjacent landowner. See Robeson 

Indus. Corp. v. Zurich Ins. Co., Bankr. No. 93-33265(KCF), at 3 (Bankr. 

D.N.J. Jan. 24, 1997) (memorandum opinion). 

 3 
33265(KCF), at 4 (Bankr. D.N.J. Jan. 24, 1997) 

(memorandum opinion), they all pertained generally to 

Robeson's New York property, including the Castile facility. 

None of the policies contained a choice-of-law provision. 

The policies contained two provisions relevant to the 

present controversy. The first provision obligated Robeson 

to give prompt notice to the Insurers of any occurrence or 

third-party claim covered by the policies (the "late notice" 

provision).2 The parties do not dispute that the states of 

New York and New Jersey differ in their interpretation of 

the "late notice" provision. Under New York law, an

insured's breach of the timely notice provision relieves the 

insurer of its duty to defend or indemnify, even absent a 

showing of prejudice to the insured. See Unigard Sec. Ins. 

Co. v. North River Ins. Co., 594 N.E.2d 571, 573 (N.Y. 1992). 

In contrast, under New Jersey law, an insurer mustfirst 

establish prejudice before untimely notice relieves the 

insurer of its duties under the policy. See Cooper v. 

Government Employees Ins. Co., 237 A.2d 870, 874 (N.J. 

1968). 

The second policy provision generally excludes coverage 

for environmental contamination, except for contamination 

that was "sudden and accidental" (the "pollution exclusion" 

exception). Although Robeson argued to the bankruptcy 

court that no conflict of law existed between New York and 

New Jersey on the interpretation of the "pollution 

exclusion" exception, the court disagreed, noting that New 

_________________________________________________________________ 

2. What we refer to as the "late notice" provision is actually two 

separate 

provisions in the policies that cover different circumstances, both of 

which were implicated in this case. The first provision states: "If a 

claim 

is made or suit is brought against insured, the insured shall immediately 

forward to the company every demand, notice, summons or other 

process received by him or his representative." See Robeson Indus. Corp. 

v. Zurich Ins. Co., Bankr. No. 93-33265(KCF), at 3 (Bankr. D.N.J. Aug. 

27, 1997) (memorandum opinion) (emphasis added). The second 

provision states: "In the event of an occurrence, written notice 

containing 

particulars sufficient to identify the insured and also reasonably 

obtainable information with respect to the time, place and circumstances 

thereof, and the names and addresses of available witnesses, shall be 

given by or for the insured to the company, or any of its authorized 

agents as soon as practicable." Id. (emphasis added). 

 4 
Jersey interprets the "sudden and accidental" language to 

cover gradual discharges, see Morton Int'l, Inc. v. General 

Accident Ins. Co., 629 A.2d 831, 870-75 (N.J. 1993), 

whereas New York interprets this language as covering only 

abrupt discharges, see Powers Chemco, Inc. v. Federal Ins. 

Co., 548 N.E.2d 1301, 1302 (N.Y. 1989). See also Pfizer, 

Inc. v. Employers Ins. of Wausau, 712 A.2d 634, 640-41, 

643-44 (N.J. 1998) (summarizing the differences between 

New York's and New Jersey's interpretations of the"late 

notice" provision and the "pollution exclusion" exception). 

The interpretations to be given to the "late notice" 

provision and the "pollution exclusion" exception are 

outcome-determinative in this case. Robeson did not timely 

notify the Insurers of their potential liability under the 

policies until December 1992, two-and-a-half years after 

the State of New York filed its claim against Robeson and 

several years after the contamination began. Moreover, 

Robeson's contamination was gradual, ostensibly occurring 

over several years. Robeson thus contended in the 

Bankruptcy court that New Jersey law applied to the

interpretation of the policies. Robeson's main argument in 

support of its contention was that it had moved its

headquarters to South Plainfield, New Jersey in April 1991.3 

Robeson further argued, in an attempt to show its close ties 

to New Jersey, that it had been using warehousing facilities 

in New Jersey for approximately the last twenty years, paid 

New Jersey taxes thereon, and had continually maintained 

management personnel and sales representatives in New 

Jersey. 

The bankruptcy court, applying New Jersey choice-of-law 

rules, found Robeson's argument in favor of the application 

of New Jersey law unpersuasive, and held on summary

judgment that New York law applied to the interpretation of 

the policy exclusions. See Robeson Indus. Corp. v. Zurich 

Ins. Co., Bankr. No. 93-33265(KCF), at 17 (Bankr. D.N.J. 

Jan. 24, 1997). The court later granted summary judgment 

of non-coverage to the Insurers. See id. at 2-8 (Bankr. 

_________________________________________________________________ 

3. At some time prior to its filing of the instant suit, Robeson moved its 

headquarters again from New Jersey to California. See Robeson's Brief, 

at 8 n.9. 

 5 
D.N.J. Aug. 27, 1997). The court also clarified that its 

choice-of-law ruling also applied to Robeson's tort claims 

against the Insurers--claims stemming largely from the 

Insurers' alleged bad faith with respect to the denial of 

coverage. Finding such claims to be unsustainable under 

New York law, the court granted summary judgment to the 

Insurers on the tort claims as well. See id. at 8-12. The 

district court summarily affirmed the bankruptcy court's 

summary judgment rulings on appeal. See Robeson Indus. 

Corp. v. Zurich Ins. Co., Civ. No. 97-5158(GEB) (D.N.J. Feb. 

20, 1998). 

In its summary judgment opinion, the bankruptcy court 

invited the Insurers to move for sanctions under 

Bankruptcy Rule 90114 because of Robeson's dogged 

insistence that New Jersey law or policy should apply even 

in the face of the court's earlier choice-of-law ruling and 

New York law directly on point. The Insurers accepted this 

invitation, and, not surprisingly, the bankruptcy court 

granted the resulting motion,5 awarding the Insurers their 

_________________________________________________________________ 

4. Bankruptcy Rule 9011 is similar to Rule 11 of the Federal Rules of 

Civil Procedure. It states in relevant part: 

 (b) Representations to the court--By presenting to the court 

 (whether by signing, filing, submitting, or later advocating) a 

 petition, pleading, written motion, or other paper, an attorney or 

 unrepresented party is certifying that to the best of the person's 

 knowledge, information, and belief, formed after an inquiry 

 reasonable under the circumstances--(1) it is not being presented 

 for any improper purpose, such as to harass or to cause 

 unnecessary delay or needless increase in the cost of litigation; 

(2) 

 the claims, defenses, and other legal contentions therein are 

 warranted by existing law or by a nonfrivolous argument for the 

 extension, modification, or reversal of existing law or the 

 establishment of new law[.] 

Subsection (c) provides for the imposition of sanctions for the breach of 

a party's Rule 9011 obligations. 

5. The bankruptcy court stated: "This court determined on January 27, 

1997 that under New Jersey choice of law rules . . . New York law 

applied. From January 27, 1997 to August 27, 1997, the plaintiff in an 

overly zealous manner created expense to the defendants on related 

issues without presenting [a] consistent theory or a good faith argument 

for reversing existing [law]. [Robeson's] briefs were duplicative, 

circulative, voluminous, self-righteous and full of[citations to] selfserving publication[s] which it authored." See Robeson Indus. Corp. v. 

Zurich Ins. Co., Bankr. No. 93-33256(KCF), at 2 (Bankr. D.N.J. Feb. 11, 

1998) (memorandum opinion). 
 6 
litigation expenses for the time period between the court's 

choice-of-law ruling and its grant of summary judgment. 

Robeson appealed the imposition of sanctions to the

district court, but the court dismissed the appeal on the 

ground that it had not been filed within the ten-day time 

limit prescribed by Bankruptcy Rule 8002(a). The district 

court noted that the bankruptcy court signed its sanctions 

order on February 11, 1998, that the order was entered on 

the clerk's docket on February 23, 1998, and that the tenday period began to run on this latter date. Because 

Robeson's notice of appeal was filed on March 6, the 

district court continued, it was one day late and therefore 

the court lacked jurisdiction. See Robeson Indus. Corp. v. 

Zurich Ins. Co., Civ. No. 97-5158(GEB) (D.N.J. Jun. 1, 1998) 

(hearing transcript). Ruling in the alternative, the district 

court affirmed the decision of the bankruptcy court to 

impose sanctions on the merits. See id. 

Robeson appealed the summary judgment rulings and 

the sanctions order to this court. We have jurisdiction 

pursuant to 28 U.S.C. S 1291 (1994). 

DISCUSSION 

A. Standards of Review 

Summary judgment is appropriate when there are no 

genuine issues of material fact and the moving party is 

entitled to judgment as a matter of law. See Fed. R. Civ. P. 

56(c). This court reviews a district court's grant of summary 

judgment de novo, reapplying the summary judgment 

standard. See General Ceramics, Inc. v. Firemen's Fund Ins. 

Cos., 66 F.3d 647, 651 (3rd Cir. 1995). Choice-of-law is a 

question of law which this court reviews de novo . See id. 

Whether an appeal from the bankruptcy court to the 

district court is timely is also a question of law which this 

court reviews de novo. See Shareholders v. Sound Radio, 

Inc., 109 F.3d 873, 879 (3rd. Cir. 1997). Because we sit in 

diversity in the present case, we are bound to follow the 

substantive law of the forum, see Clark v. Modern Group, 

Ltd., 9 F.3d 321, 326 (3rd Cir. 1994), including the forum's 

choice-of-law rules, see Klaxon v. Stentor Elec. Mfg. Co., 313 

U.S. 487, 496 (1941). 

 7 
B. Choice-of-Law 

The Supreme Court of New Jersey has in several cases 

set forth New Jersey's choice-of-law rules for the 

interpretation of casualty insurance contracts. See, e.g., 

Pfizer, Inc. v. Employers Ins. of Wausau, 712 A.2d 634 (N.J. 

1998); HM Holdings, Inc. v. Aetna Cas. & Sur. Co., 712 A.2d 

645 (N.J. 1998) (decided concurrently with Pfizer); Unisys 

Corp. v. Insurance Co. of N. Am., 712 A.2d 649 (N.J. 1998) 

(decided concurrently with Pfizer); The Gilbert Spruance Co. 

v. Pennsylvania Mfrs.' Ass'n Ins. Co., 629 A.2d 885 (N.J. 

1993). See also General Ceramics, supra. These cases make 

clear that New Jersey follows S 193 of the Restatement 

(Second) of Conflict of Laws.6 Pfizer, "applying the 

principles" laid down in the Court's earlier opinion in 

Spruance, sets forth the operative portions of that

provision: 

 Spruance set forth a specific choice-of-law framework 

 for interpreting casualty-insurance contracts. Under 

 this framework, a court looks first to Restatement 

 section 193, which provides that the place that"the 

 parties understood . . . to be the principal location of 

 the insured risk governs unless some other state has a 

 more significant relationship under the principles 

 stated in S 6 to the transaction and the parties." 

Pfizer, 712 A.2d at 638 (citation deleted). Thus, under S 193 

of the Restatement, New Jersey generally interprets

casualty-insurance policies in accordance with the law of 

the state in which the insured risk is principally located, 

unless some other state has a more significant relationship 

to the transaction and the parties as illuminated by the 

_________________________________________________________________ 

6. The validity of a contract of fire, surety or casualty insurance and 

 the rights created thereby are determined by the local law of the 

 state which the parties understood was to be the principal location 

 of the insured risk during the term of the policy, unless with 

respect 

 to the particular issue, some other state has a more significant 

 relationship under the principles stated in S 6 to the transaction 

and 

 the parties, in which event the local law of the other state will 

be 

 applied. 

Restatement (Second) of Conflicts of Law S 193 (1969). 

 8 
consideration of factors listed in S 6.7 The Court has 

referred to the approach under S 193 as "site-specific." See 

Pfizer, 712 A.2d at 637. 

However, not every application of S 193 necessitates 

review of the S 6 factors. Indeed, rote application of the S 6 

factors would swallow the "site-specific" rule that S 193 

prescribes. The Supreme Court of New Jersey has 

recognized as much: 

 When the policy covers risks located primarily in a 

 single state, the choice-of-law issue can be

 straightforward. For example, there is no choice-of-law 

 issue where the policyholder is located in one state, the 

 environmental liability arises out of the same state, 

 and the policies are issued by a state-based insurer for 

 that one site. An easy example is that of a [commercial 

 general liability] policy covering a solid waste treatment 

 plant creating a risk in a single state. At the other end 

 of the spectrum are cases where a single insured seeks 

 coverage under [commercial general liability] policies 

 for certain environmental and toxic tort liabilities, 

 including . . . [multiple] sites located in . . . different 

 states. When such an insured operation or activity is 

 predictably multistate, the significance of the principal 

 location of the insured risk diminishes; in such a case, 

 section 193 directs that the governing law is that of the 

_________________________________________________________________ 

7. [T]he factors relevant to the choice of the applicable rule of law 

 include (a) the needs of the interstate and international system, 

(b) 

 the relevant policies of the forum, (c) the relevant policies of 

other 

 affected states and the relevant interests of those states in the 

 determination of the particular issue, (d) the protection of 

justified 

 expectations, (e) the basic policies underlying the particular 

field of 

 law, (f) certainty, predictability, and uniformity of result, and 

(g) ease 

 in the determination and application of the law to be applied. 

Restatement (Second) of Conflict of Laws S 6 (1969). 

The Supreme Court of New Jersey, following Ceramics, collapsed these 

factors into four "categories" for purposes of application: (1) the 

competing interests of the relevant states, (2) the national interests of 

commerce among several states, (3) the interests of the parties in 

realizing justified expectations and achieving predictable results, and 

(4) 

the interests of judicial administration. See Pfizer, 712 A.2d at 639-40. 
 9 
 state with the dominant significant relationship 

 according to the principles set forth in Restatement 

 section 6 as applied to the particular issue involved. 

Pfizer, 712 A.2d at 638 (citations and quotations omitted). 

Therefore, a court need only consider the application of the 

S 6 factors when the "insured operation or activity is 

predictably multistate," that is, when the policy covers sites 

in many states, or when the insured risk is transient. See 

id. at 639 (noting that the insured risk was"to some degree 

transient," and therefore "to choose the applicable law that 

governs the disputed issues, Spruance requires that we 

turn to the S 6 analysis."). The comments to S 193 confirm 

this interpretation: 

 The location of the insured risk will be given greater 

 weight than any other single contact in determining the 

 state of the applicable law provided that the risk can be 

 located, at least principally, in a single state. Situations 

 where this cannot be done, and where the location of 

 the risk has less significance, include (1) where the 

 insured object will be more or less constantly on the 

 move from state to state during the terms of the policy 

 and (2) where the policy covers a group of risks that 

 are scattered throughout two or more states.

Restatement (Second) of Conflict of Laws S 193 cmt. b 

(1969). 

Robeson's principal argument is that HM Holdings , a case 

decided concurrently with Pfizer, mandates that New Jersey 

law applies in this case, at least with respect to the 

interpretation of the "late notice" provision. Robeson asserts 

that that case is "remarkably similar" to the facts presented 

here. We disagree. Like Pfizer, Unisys, Spruance, and 

General Ceramics, HM Holdings involved a "predictably 

multistate" insured operation, which consequently 

necessitated a S 6 inquiry on its particular facts.

Specifically, HM Holdings involved coverage under a

commercial general liability policy of nine waste sites 

located within seven different states. See HM Holdings, 712 

A.2d at 211-12. The Court concluded under S 6 that the law 

of the waste sites would apply to the interpretation of the 

"pollution exclusion" exception, and that either the law of 

 10 
New Jersey or the law of the waste sites applied to the "late 

notice" provision, with New Jersey law taking precedence if 

the law of the waste sites was similar to New York's, the 

state in which the parties were headquartered. See id. at 

648-49. 

In contrast, Robeson's insured activities were not 

"predictably multistate," and they thus fit within the 

general site-specific rule of S 193. The policies involved 

covered only Robeson's New York property, and only New 

York was implicated by Robeson's contamination. Compare 

Spruance, 629 A.2d at 885 (involving the hauling of waste 

from Pennsylvania to New Jersey). These facts alone are 

dispositive under S 193 because the parties at the time of 

contracting clearly understood New York (more specifically, 

Robeson's plant in Castile) to be the principal location of 

the insured risk. In fact, the facts of this case, viz., "a 

commercial general liability policy covering a . . . plant 

creating a risk in a single state," were described by the 

Supreme Court of New Jersey as an "easy example" that 

presents "no choice-of-law issue" and no need for a complex 

balancing of factors under S 6. See Pfizer, 712 A.2d at 638; 

cf. Spruance, 629 A.2d at 891 ("When the waste producing 

facility and the waste site are located in the same state, 

their common location makes the application of section 193 

straightforward.").8 

Robeson's argument concerning the movement of its 

headquarters to New Jersey does not alter the result to 

which S 193 directs us. First, the site-specific rule 

prescribed by that section is unaffected by the location of 

the contracting parties' headquarters; the focus is the 

_________________________________________________________________ 

8. The bankruptcy court was also aware that "[t]he instant case 

represents the hypothetical `straightforward' case suggested by the court 

in [Spruance] because the insured risk was not transient and was not 

scattered through several states." See Robeson Indus. Corp. v. Zurich Ins. 

Co., Bankr. No. 93-33265(KCF), at 10 (Bankr. D.N.J. Jan. 24, 1997) 

(memorandum opinion). Despite the bankruptcy court's recognition of 

this fact, and its proper conclusion based thereon that New York law 

should apply to the interpretation of the policies, the court went on to 

balance the various states' interests under S 6. While we consider this 

extra step unnecessary under S 193, we believe that it helped to 

underscore the bankruptcy court's conclusion. 

 11 
parties' understanding of the location of the insured risk.9 

Second, S 193 prescribes that it is the parties' 

understanding of the principal location of the insured risk 

"during the term of the policy" that matters. Thus, the 

movement of Robeson's headquarters to New Jersey seven 

years after the expiration of the last of the policies at issue 

cannot have affected the parties' understanding at the time 

of contracting that New York was the principal location of 

the insured risk. Robeson's other contacts with New Jersey 

likewise do not affect the analysis under S 193. 

We conclude that the district court correctly affirmed the 

bankruptcy court's application of New Jersey choice-of-law 

rules and correctly affirmed the application of New York law 

to the interpretation of the policies. Because Robeson does 

not dispute that it is not entitled to coverage under the 

laws of New York, the district court's affirmance of the 

bankruptcy court's grant of summary judgment to the

Insurers is also affirmed. 

C. The Tort Claims 

Robeson argues that the bankruptcy court improperly

applied New York law to its tort claims. Robeson asserts 

that its tort claims are independent of its claim for coverage 

under the policy, and that New Jersey choice-of-law rules 

mandate that New Jersey law should apply to those claims. 

Robeson supports this assertion by noting that its various 

tort claims,10 which it summarizes generally as the

_________________________________________________________________ 

9. We do not mean to suggest that the location of a party's headquarters 

is irrelevant in a "multistate activity" case--i.e., when a weighing of 

the 

S 6 factors is warranted under S 193, see, e.g., Pfizer, 712 A.2d at 641 

(assessing the relevance of New York law in a multistate site case 

because New York was the principal place of business of the insured and 

was the location in which the contracts were negotiated), but this is not 

such a case. 

10. The relevant tort claims are styled in Robeson's complaint as "breach 

of covenant of good faith and fair dealing,""failure to warn," and "breach 

of fiduciary duty." See Robeson's Complaint at 15, 17, 22. Review of 

these claims reveals, as Robeson admits, that the claims are premised 

upon the Insurers' alleged bad faith in the handling of Robeson's claims. 

Thus, we will refer to Robeson's various tort claims as a single claim for 

bad faith. 

 12 
Insurers' "bad-faith claims handling and investigation of 

Robeson's claims in connection with the Castile facility," 

Robeson's Opening Brief at 18, all took place after Robeson 

had moved its headquarters to New Jersey and therefore 

that the state of New York has no relevant interest in the 

controversy. Robeson argues further that New Jersey law 

allows for the imposition of tort liability against an insurer 

for bad faith even when the insured was not entitled to 

coverage under the policy, and cites several cases from 

various state supreme courts in support of this contention. 

The Insurers respond that the same state's law--New York's 

--should apply to both Robeson's coverage and bad faith 

claims because the bad faith claims merely arise out of 

alleged unsatisfactory performance by the Insurers under 

the policy. Accordingly, the Insurers contend that New York 

law applies to the propriety of the bad faith claims, and 

that such claims are unsustainable thereunder. 

We do not necessarily agree with the bankruptcy court's 

conclusion that the same state's law necessarily applies to 

the coverage and bad faith claims. The appellate courts of 

New Jersey have explained that 

 conflict of laws principles do not require that all legal 

 issues presented by a single case be decided under the 

 law of a single state. Instead the choice of law decisions 

 can and should be made on an issue-by-issue basis, 

 and thus the law of different states can apply to 

 different issues in the same case. 

O'Connor v. Busch Gardens, 605 A.2d 773, 774 (N.J. Super. 

Ct. App. Div. 1992) (citing Johnson Matthey, Inc. v. 

Pennsylvania Mfrs.' Ass'n Ins. Co., 593 A.2d 367, 375 (N.J. 

Super. Ct. App. Div. 1991)). Therefore, a separate analysis 

to determine which state's law applies to Robeson's bad 

faith claim would normally be appropriate. 

However, application of New Jersey's conflict-of-law rules 

is unnecessary here because neither New Jersey nor New 

York would sustain Robeson's tort claims. In New York 

University v. Continental Insurance Co., 662 N.E.2d 763 

(N.Y. 1995), the Court of Appeals of New York dismissed a 

claim analogous to Robeson's, namely, that the insurer had 

negligently and recklessly failed to adequately investigate 

 13 
the insured's claim and denied payment. See New York 

Univ., 662 N.E.2d at 769-70. The Court of Appeals began 

its analysis by noting that insurance policies, like other 

contracts, contain an implied duty of good faith and fair 

dealing. See id. at 769. In order to sustain an action for tort 

liability against an insurer, as opposed to an action for 

breach of contract, the insured's complaint must assert a 

basis for tort liability that goes beyond the breach of the 

insurer's contractual duties. See id. at 770 (noting that the 

insured's complaint must state a "tort independent of the 

contract"). The Court of Appeals concluded that 

 Plaintiff's claim amounts to nothing more than a claim 

 based on the alleged breach of the implied covenant of 

 good faith and fair dealing, and the use of familiar tort 

 language does not change the cause of action to a tort 

 claim in the absence of an underlying tort duty 

 sufficient to support a claim for punitive damages. 

 The cause of action is duplicative of the . . . cause of 

 action for breach of contract and should have been 

 dismissed. 

Id. (citations omitted). Because Robeson's tort claims in 

essence allege no more than that the Insurers engaged in 

bad faith in their performance of their duties under the 

policy, New York law mandates their dismissal. 

Robeson's bad faith claim does not fare any better under 

New Jersey law. In Pickett v. Lloyd's, 621 A.2d 445 (N.J. 

1993), the New Jersey Supreme Court concluded that 

"there is a sufficient basis in law to find that an insurance 

company owes a duty of good faith to its insured in

processing a first-party11 claim," a conclusion which rested 

largely on the understanding that contracts generally 

contain an implied duty of good faith and fair dealing. See 

Pickett, 621 A.2d at 540. After extensive analysis of the 

authorities, the Court concluded that the cause of action 

for bad faith is "best understood as one that sounds in 

_________________________________________________________________ 

11. Both New York University and Pickett involve first-party claims. 

However, we see no reason why the rationales of these cases should not 

likewise apply in the third-party context, i.e., when the policy covers 

damage to a third party's property. 

 14 
contract," id. at 452, and that contract damages were the 

appropriate remedy for breach, see id. at 454. The Court 

continued that whether bad faith exists depends on 

whether the insured's claim was "fairly debatable." Id. at 

453. In other words, the insured must "show the absence 

of a reasonable basis for denying benefits of the policy and 

the defendant's knowledge or reckless disregard of the lack 

of a reasonable basis for denying the claim." Id. In defining 

the scope of what claims are "fairly debatable," the Court 

noted the following: 

 Perhaps the [fairly debatable] rule is easiest to 

 understand in the context of the denial of benefits on 

 the basis of non-coverage . . . . Under the "fairly 

 debatable" standard, a claimant who could not have 

 established as a matter of law a right to summary 

 judgment on the substantive claim would not be 

 entitled to assert a claim for an insurer's bad faith 

 refusal to pay the claim. 

Id. at 453-54 (citations omitted). 

Here, Robeson did not establish a right to summary 

judgment that there was coverage. In fact, summary 

judgment was decided in favor of the Insurers , a ruling 

which we have affirmed as correct. Accordingly, the

Insurers did not act in "bad faith" as a matter of New 

Jersey law. 

Because the application of the laws of New York or New 

Jersey to Robeson's tort claims would lead to the same 

conclusion--i.e., dismissal--there is no need for us to 

embark upon a choice-of-law analysis with respect thereto. 

Instead, we agree with the bankruptcy court and the

district court that these claims were not sustainable in 

either jurisdiction, and we affirm the grant of summary 

judgment in favor of the Insurers. 

D. Sanctions 

Robeson's final argument is that its appeal of the 

bankruptcy court's sanctions order to the district court was 

not untimely under Bankruptcy Rule 8002(a). In support of 

its argument, Robeson contends that the ten-day time 

period of Rule 8002(a) did not begin to run until the district 

 15 
court had finally disposed of Robeson's earlier appeal on 

the merits of coverage and tort liability on February 24, 

1998.12 As Robeson's appeal of the sanctions order was filed 

on March 6, 1998, within 10 days of February 24th, 

Robeson contends that its appeal was timely filed. 

We disagree. Rule 8002(a) states that "[t]he notice of 

appeal shall be filed with the clerk within 10 days of the 

date of the entry of the judgment, order, or decree appealed 

from." This court has noted that "[t]his deadline is strictly 

construed. The failure to file a timely notice of appeal 

creates a jurisdictional defect barring appellate review." 

Shareholders v. Sound Radio, Inc., 109 F.3d 873, 879 (3rd 

Cir. 1997) (citations omitted). The rule clearly defines the 

act that starts the running of the appeal period--viz., entry 

of the order in the bankruptcy court. The rule makes no 

exception for the circumstance that a party has taken an 

appeal to the district court on the merits of the case or on 

a separate issue presented in the same controversy.

Furthermore, we perceive no reason that such an exception 

is warranted, and in any event it would not be consistent 

with the "strict construction" that we are required to afford 

to the rule. Accordingly, we agree with the district court 

that Robeson's appeal of the sanctions order was not timely 

and that the district court therefore lacked jurisdiction to 

review that order. Given our affirmance on jurisdictional 

grounds, we express no opinion on the district court's 

conclusion that the sanctions order was otherwise 

affirmable on its merits. 

_________________________________________________________________ 

12. Appellee Zurich appears to have misunderstood Robeson's argument, 

for it discusses the relevance of the fact that the district court had 

stayed its sanctions order pending resolution of Robeson's earlier appeal 

on the merits of coverage and tort liability. However, Robeson clearly 

articulates its argument in its opening brief: "The relevant issue before 

this Court is whether an appeal of sanction may proceed in the absence 

of a final adjudication of an action, not whether a court's entry of a 

stay 

of its own sanctions order tolls the time to file a notice of appeal from 

the Order." Robeson's Opening Brief, at 43 (emphasis in original). Given 

the clarity of Robeson's argument, there is no reason for us to consider 

the relevance of the district court's stay. 

 16 
CONCLUSION 

The district court did not err in (1) affirming the

bankruptcy court's conclusion that New York law applied to 

the interpretation of the insurance policies at issue and 

that Robeson was not entitled to coverage thereunder, (2) 

affirming the bankruptcy court's conclusion that Robeson's 

tort claims were unsustainable, or (3) dismissing Robeson's 

appeal on the issue of sanctions for lack of jurisdiction. 

Accordingly, the judgment of the district court is 

AFFIRMED. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

 17