2009 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

11-12-2009

Interstate Aerials, LLC v. Great Amer Ins Co NY

Precedential or Non-Precedential: Non-Precedential

Docket No. 08-4901

Follow this and additional works at: http://digitalcommons.law.villanova.edu/thirdcircuit_2009

This decision is brought to you for free and open access by the Opinions of the United States Court of Appeals for the Third Circuit at Villanova

University School of Law Digital Repository. It has been accepted for inclusion in 2009 Decisions by an authorized administrator of Villanova

University School of Law Digital Repository. For more information, please contact Benjamin.Carlson@law.villanova.edu.

Recommended Citation

"Interstate Aerials, LLC v. Great Amer Ins Co NY" (2009). 2009 Decisions. Paper 268.

http://digitalcommons.law.villanova.edu/thirdcircuit_2009/268
NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

 

No. 08-4901

 

INTERSTATE AERIALS, LLC, 

Appellant

v.

GREAT AMERICAN INSURANCE

COMPANY OF NEW YORK; AL HORGAN

GENERAL CONTRACTOR, INC.; ERIE

INSURANCE GROUP; FICTITIOUS

INSURANCE COMPANIES 1-10

 

On Appeal from the United States District Court

for the District of New Jersey

(D.C. Civil No. 1-07-cv-03846)

Magistrate Judge: Hon. Ann M. Donio

 

Submitted Pursuant to Third Circuit LAR 34.1(a)

November 6, 2009

BEFORE: SCIRICA, Chief Judge, JORDAN and COWEN, Circuit Judges

(Filed: November 12, 2009 )

 

OPINION

 

COWEN, Circuit Judge
 The estate of the deceased employee filed a wrongful death action in the 1

Pennsylvania Court of Common Pleas, which is not before this Court.

2

Interstate Aerials, LLC (“Interstate Aerials”) appeals from the judgment of the

United States District Court for the District of New Jersey entered on November 26,

2008, denying Interstate Aerials’ motion for summary judgment and granting summary

judgment in favor of Great American Insurance Company of New York, et al. (“Great

American”). We will affirm.

I.

Interstate Aerials rents and leases construction equipment, including mechanical

aerial lifts, to contractors engaged in construction projects. Interstate Aerials delivered an

aerial lift to Al Horgan General Contractor, Inc. (“Al Horgan”) at one of its construction

sites. The lift collapsed, killing an employee of one of Al Horgan’s subcontractors. This

appeal involves a dispute between Interstate Aerial and its insurer, Great American.1

At the time of this incident, Interstate Aerials had a property insurance policy with

Great American for “Commercial Inland Marine” coverage. The terms of coverage for

leased property are set forth in an endorsement to the policy entitled, “LEASED

PROPERTY - CONTINGENT INTEREST FORM,” which is also identified as Form F

930. The first page of the endorsement describes the type of property covered by the

endorsement as “[p]ersonal property consisting principally of EQUIPMENT USUAL TO

AREIAL [sic] LIFT.” (App. 78.) Additionally, there is a subsection on the first page of
3

the endorsement entitled, “LIMITS OF LIABILITY.” This subsection limits coverage to

$200,000 for “[p]roperty leased to others . . . in the custody of any one lessee not

specified below.” (Id.) The second page of the endorsement reiterates that the property

subject to this limitation is: 

. . . personal property of the Insured, as described in the

Schedule, which is: (a) leased or rented to others; and (b)

intended for lease or rent to others. 

(App. 79.) 

Notably, the second page of the endorsement also contains a provision entitled,

“CONTINGENT COVERAGE,” which indicates that:

When property is in the custody of lessee(s), this insurance

applies only if the Insured has obtained: (1) A signed

lease/rental agreement which requires the lessee to: (a) be

fully responsible for all loss or damages; (b) provide

insurance, no less broad as respects perils than that provided

by this policy, covering the property to be leased; and (2)

Evidence of such physical damage insurance, which names

the Insured (lessor) as loss payee, when the value of property

leased to any one customer exceeds $50,000. 

Insurance under this policy shall not apply until the Insured

has exhausted all reasonable efforts to collect the amount of

loss or damage from the lessee and its insurer. 

(Id.) 

Great American relied on this contingent coverage provision to deny Interstate

Aerials claim, asserting that Interstate Aerials failed to (i) procure a signed lease

agreement with Al Horgan for the lift in question, and (ii) procure a certificate of
4

insurance on which Interstate Aerials was named as an additional insured or loss payee. 

Interstate Aerials commenced the instant action seeking a declaration that the

contingent coverage provision was unenforceable. Upon conclusion of discovery, the

parties cross-moved for summary judgment. Great American asserted that it was entitled

to judgment due to Interstate Aerials’ failure to comply with the terms of coverage as set

forth in the endorsement. Interstate Aerials conceded that it failed to comply with both

provisions; however, Interstate Aerials contended that the endorsement was

unenforceable as a matter of law. In support of this contention, Interstate Aerials asserted

that the endorsement was ambiguous and buried at the end of the insurance policy, and

therefore, its enforcement would run contrary to any policyholder’s reasonable

expectation of coverage. 

The District Court granted Great American’s motion and denied Interstate Aerials’

cross-motion. The District Court held that (i) the terms of the policy and endorsement

were unambiguous, (ii) the endorsement required Interstate Aerials to comply with the

contingent coverage provision, and (iii) Interstate Aerials failed to do so, thereby resulting

in no coverage under the policy for the incident claimed. On appeal, Interstate Aerials

contends that the District Court committed reversible error by denying its motion and

granting Great American’s motion. According to Interstate Aerials, it had a reasonable

expectation of coverage as (i) the terms of the endorsement were ambiguous, and (ii) the

endorsement was buried in the insurance policy. As noted above, Interstate Aerials
5

conceded that it failed to comply with the two requirements of the contingent coverage

provision. Accordingly, the sole issue before this Court is whether the contingent

coverage provision contained in the endorsement is enforceable under New Jersey law.

II.

The District Court exercised jurisdiction over this action pursuant to 28 U.S.C. §

1332. We have jurisdiction over this appeal pursuant to 28 U.S.C. § 1291. “The standard

of review applicable to the District Court’s order granting summary judgment is plenary.” 

Kautz v. Met-Pro Corp., 412 F.3d 465, 466 (3d Cir. 2005). We must apply the same test

employed by the District Court under Rule 56(c) of the Federal Rules of Civil Procedure. 

Id. 

III.

Under New Jersey law, “the words of an insurance policy are to be given their

plain, ordinary meaning.” Zacarias v. Allstate Ins. Co., 168 N.J. 590, 775 A.2d 1262,

1264 (2001). “In the absence of any ambiguity, courts should not write for the insured a

better policy of insurance than the one purchased.” Id. (quoting Gibson v. Calleghan, 158

N.J. 662, 690, 730 A.2d 1278 (1999)). In evaluating insurance policies for ambiguity,

courts should “interpret[] the policy as a whole, by giving a reasonable meaning to its

form and case.” Royal Ins. Co. v. KSI Trading Corp., 563 F.3d 68, 74 (3d Cir. 2009)

(internal quotation marks omitted) (quoting Arrow Indus. Carriers, Inc. v. Continental

Ins. Co., 232 N.J. Super. 324, 556 A.2d 1310, 1314 (1989)). An insurance policy is
6

ambiguous when “the phrasing of the policy is so confusing that the average policyholder

cannot make out the boundaries of coverage.” Weedo v. Stone-E Brick, Inc., 81 N.J. 233,

405 A.2d 788, 795 (1979). 

It is well-settled that insurance policies are “contracts of adhesion and as such, are

subject to special rules of interpretation.” Zacarias, 168 N.J. at 595, 775 A.2d at 1264. 

“When there is ambiguity in an insurance contract, courts interpret the contract to

comport with the reasonable expectations of the insured, even if a close reading of the

written text reveals a contrary meaning.” Id. To avoid “subjecting insureds ‘to technical

encumbrances or to hidden pitfalls . . . policies should be construed liberally in their favor

to the end that coverage is afforded to the full extent that any fair interpretation will

allow.’” Royal Ins. Co., 563 F.3d at 74 (quoting Meier v. New Jersey Life Ins. Co., 101

N.J. 597, 503 A.2d 862, 870 (1986)). “[C]ourts will depart from the literal text and

interpret [an insurance contract] in accordance with the insured’s understanding, even

when that understanding contradicts the insured’s intent, if the text appears overly

technical or contains hidden pitfalls, cannot be understood without employing subtle or

legalistic distinctions, is obscured by fine print, or requires strenuous study to

comprehend . . . .” Zacarias, 168 N.J. at 601, 775 A.2d at 1268 (internal citations

omitted).

The District Court properly ruled that the endorsement and its contingent coverage

provision were unambiguous and enforceable. The parties do not dispute that the
7

endorsement was part of the insurance policy. Nor do they dispute that this endorsement

set forth the terms for coverage of leased property, such as the aerial lift at issue in this

action, and that the endorsement indicates in plain language that liability for “[p]roperty

leased to others” is limited to $200,000. The “CONTINGENT COVERAGE” provision

sets forth two conditions precedent to coverage, neither one of which contains technical

language or legalese that might confuse the average policyholder. These provisions state

in plain language that leased property will be excluded from coverage if Interstate Aerials

fails to sign a written lease agreement with the lessee or if the lessee fails to procure

physical damage coverage naming Interstate Aerials as the payee. 

Interstate Aerials contends that despite this plain language, the contingent

coverage provision is unenforceable as it is buried at the end of the insurance policy and

is not located on the front page of the endorsement. These contentions lack merit. The

policy expressly incorporates all endorsements. The front page of the endorsement

informs the policyholder that it is a three-page document. A mere periphery scan of the

endorsement indicates that the first page is “(Page 1 or 3) >” as this information is

squarely located on the bottom of the page, on the center of the line, set apart from the

text of the endorsement. This disclosure negates any assertion that Great American

attempted to bury the contingent coverage provision or confuse Interstate Aerials as to the

nature of its coverage. Moreover, the headings of the provisions on the second page,

including the contingent coverage provision, were written in a large, capitalized font. 
8

Additionally, Interstate Aerials contends that the endorsement operates as the

functional equivalent of a declaration and because all terms of a declaration must appear

on its front page, the endorsement is unenforceable. This contention, too, lacks merit. 

First, even if this Court treated the endorsement as a declaration, the contingent coverage

provision would be enforceable. It is not the law in New Jersey that insurers must include

all exclusions from coverage on the first page of a declaration form or otherwise the

exclusions are unenforceable. See Zacarias, 168 N.J. 603 (explaining that “an insurance

contract is not per se ambiguous because its declaration sheet, definition section, and

exclusion provisions are separately presented”). Second, a review of the insurance policy

supports the District Court’s conclusion that the endorsement was not a declaration. The

policy contains a declaration sheet entitled “BUSINESSPRO POLICY COMMON

DECLARATIONS.” (App. 33.) The declaration sheet informs the policyholder that

endorsement CIM F930 “changes the policy.” The declaration sheet instructs the

policyholder to “[p]lease read [Form F930] carefully.” The declaration sheet identifies

Form F930 as an endorsement, and not a declaration. Additionally, the declaration sheet

instructs the policyholder to review Form F930 carefully for changes to coverage. 

Finally, contrary to Interstate Aerials’ contention, it is inconsequential that the

policy contains another form that is labeled as a declaration sheet. This form does not

create confusion. The second form, entitled “BUSINESS INLAND MARINE

COVERAGE PART DECLARATIONS PAGE,” indicates that all endorsements listed on
9

form CM 88 01 are incorporated as part of the policy. Form CM 88 01 lists endorsement

Form F930 as one of the endorsements contained in the policy. Thus, like the declaration

sheet discussed above, this form, too, directs the policy holder to Form F930 in plain and

simple language.

VI.

We affirm the District Court’s grant of Great American’s motion for summary

judgment.