*NOT FOR PUBLICATION* 

 

UNITED STATES DISTRICT COURT 

DISTRICT OF NEW JERSEY 

__________________________________________

:

TRAVELERS PROPERTY CASUALTY :

COMPANY OF AMERICA, :

Plaintiff :

: Civil Action No.: 10-6320 (FLW)

v. : 

: OPINION 

CONTINENTAL INSURANCE COMPANY :

OF NEW JERSEY, :

:

Defendant. :

__________________________________________:

WOLFSON, United States District Judge: 

In this action, two insurance companies, Plaintiff Travelers Property 

Casualty Co. of Am. (“Plaintiff” or “Travelers”) and Defendant Encompass Ins. 

Co. of New Jersey f/k/a Continental Ins. Co. of New Jersey (“Defendant” or 

“Encompass”), dispute which insurance policy provides primary coverage for an 

automobile accident. The underlying incident occurred when a real estate 

agent, who was employed by Weichert Company (“Weichert”) at the time of the 

accident and acting within the scope of his employment, negligently caused an

automobile accident while showing properties to a third-party client; the thirdparty sued for personal injuries and recovered a judgment against Weichert and 

the agent. The real estate agent, driving his own personal vehicle, was insured 

by Encompass, and Weichert was insured under a commercial automobile policy 

issued by Travelers. The main point of contention in this case is whether 

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Weichert was an insured under the Encompass policy, and if so, what type of 

duties Encompass owed Weichert as a result of that relationship. In the instant 

matter, both parties move for summary judgment. For the reasons set forth 

herein, Encompass’ motion for summary judgment is GRANTED; and 

Travelers’ cross-motion is DENIED. 

BACKGROUND 

The Court only recounts the following undisputed facts necessary for the 

resolution of these motions for summary judgment. 

I. The Underlying Lawsuit 

The underlying state lawsuit that is the subject of this insurance dispute 

arose from a motor vehicle accident that occurred on November 25, 2003 in 

Randolph, New Jersey. Pl. Facts, ¶ 3; Def. Facts, ¶ 1-3. The plaintiff in that 

case, Michele Cooper, was a passenger in a car operated by Robert Jenkins,

whose negligent operation resulted in a car accident that caused Cooper to 

sustain a number of injuries. Pl. Facts, ¶ 3, 6, 8; Def. Facts, ¶ 1. At the time of 

the accident, Jenkins, a real estate agent of Weichert, was showing homes to 

Cooper, a prospective client. Pl. Facts, ¶ 5; Def. Facts, ¶ 1, 3.1 Importantly, 

Jenkins was acting in his capacity as a Weichert real estate agent at the time 

of the accident. Pl. Facts, ¶ 5; Def. Facts, ¶ 1, 3. In November 2005, Cooper 

1 The issue whether Jenkins was a Weichert employee or an independent 

contractor at the time of the accident was resolved by the state court in the 

underlying lawsuit; the court found that Jenkins was an employee of Weichert 

and that Weichert was vicariously liable for Jenkins’ actions. Def. Facts, ¶ 50. 

As such, that issue is not disputed here.

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and her husband, suing per quod, filed a lawsuit against both Jenkins and 

Weichert, seeking to recover for the injuries she sustained. Pl. Facts, ¶ 21; Def. 

Facts, ¶ 3. 

II. The Insurance Policies 

Jenkins was operating his personal vehicle insured by Encompass 

pursuant to his wife’s automobile policy (the “Encompass Policy”), under which 

Jenkins was named as an insured driver. Pl. Facts, ¶ 9, 18; Def. Fas, ¶ 4. The 

Encompass Policy had a $250,000 per person limit for bodily injuries; that is, 

Encompass would pay, on behalf of the policy holder, damages for which the 

policy holder or any covered person are legally liable, up to the $250,000 policy 

limit. Pl. Facts, ¶ 19. Covered persons are identified as: 

(1) You [the policy holder] or any family member for the 

ownership, maintenance or use of any covered motor vehicle. 

(2) Any other person occupying or using any covered motor 

vehicle with permission from [the policy holder] or a family 

member. 

(3) With respect to a covered motor vehicle that [the policy holder] 

own[s] or that is shown on the Coverage Summary, any person 

or organization legally responsible but only for acts or 

omissions of any person included in [(1)] above. 

(4) With respect to a covered motor vehicle, other than one 

described in [(3)] above, any person or organization legally 

responsible but only for acts or omissions of any person 

included in [(1)] above. This provision applies only if the 

person or organization does not own or hire the motor vehicle.

Id. The Policy contained an “other insurance clause,” which provides that where 

there is other insurance applicable to a loss, Encompass will pay “only [its] 

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share of the loss,” which equals the proportion that its limit of liability bears to 

the total of all applicable limits. Pl. Facts, ¶ 19; Def. Facts, ¶ 6. 

Weichert was insured under a commercial automobile insurance policy 

issued by Travelers, which was effective at the time of the accident (the 

“Travelers Policy”). Pl. Facts, ¶ 20; Def. Facts, ¶ 7. The Travelers Policy 

covered Weichert up to $1,000,000 for liability as a result of negligence arising 

out of the use of “any auto.” Pl. Facts ¶ 20; Def. Facts ¶ 8-9. In that connection, 

the Travelers Policy contained a “Business Auto Coverage Extension Form” 

which provided that: “An employee of yours [Weichert] is an ‘insured’ while 

using a covered ‘auto’ you don’t own, hire or borrow in your business or personal 

affairs.” Def. Facts, ¶ 10. In addition, the Policy also contained a provision 

addressing other insurance policies, which stated: “[f]or any covered auto you 

[Weichert] don’t own, the insurance provided by this policy is excess over any 

other collectible insurance.” Pl. Facts, ¶ 20. The parties do not dispute that 

Weichert did not own the vehicle involved in the accident. Id.

III. The State Court Tort Action

On December 5, 2005, Travelers received a copy of the underlying 

complaint, the same day that it was served upon Weichert. Pl. Facts, ¶24; Def. 

Facts, ¶ 11. Upon receipt, the matter was assigned to a claim representative at 

Travelers, who made the determination that Weichert “wouldn’t be liable,” and 

that “the Travelers polic[y] would become excess over the [Encompass Policy’s] 

coverage.” Pl. Facts, ¶ 26-27; Def. Facts, ¶ 14, 17. Significantly, this 

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determination was based on Travelers’ position that Jenkins was an 

independent contractor rather than a Weichert employee, and the belief that 

the Encompass Policy “followed the car.” Pl. Facts, ¶ 26-28; Def. Facts, ¶ 14, 

17-20. Accordingly, on December 13, 2005, Travelers wrote to Encompass to 

tender the defense of Weichert, asserting that Weichert qualified as an insured 

party pursuant to the Encompass Policy. Pl. Facts, ¶ 27-29; Def. Facts, ¶ 11-

12. In that letter, Travelers notified Encompass that in the event that 

Encompass did not assume the defense of Weichert, that Travelers would fulfill 

its obligation to defend Weichert, but would subsequently seek re-imbursement 

from Encompass for all attorneys’ fees and costs incurred it the defense. Pl. 

Facts, ¶ 29-30; Def. Facts, ¶ 15. Subsequently, Encompass declined the tender 

of Weichert’s defense, and Travelers accordingly referred the matter to outside 

legal counsel. Pl. Facts, ¶ 31, 37; Def. Facts, ¶ 15-16.

After retaining legal counsel, Travelers maintained the position that 

Jenkins was not a Weichert employee, and therefore, Weichert was not liable 

for Cooper’s injuries. Pl. Facts, ¶ 46, 49, 53-55; Def. Facts, ¶ 17-19. Moreover, 

according to Encompass, in evaluating Travelers’ potential obligations in 

connection with the Coopers’ lawsuit, Travelers’ defense counsel did not value

the case over $250,000, and thus, had no concern that the underlying verdict 

might exceed the Encompass Policy’s $250,000 coverage limit. Def. Facts, ¶ 37. 

Defense counsel for Encompass also independently evaluated the case on 

various occasions in advance of trial, and predicted the potential verdict value

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to be “200,000 to $300,000, if not higher.” Pl. Facts, ¶ 103; Def. Facts, ¶ 31. 

Thus, he believed that a $175,000 settlement offer would be appropriate. Pl. 

Facts, ¶ 83; Def. Facts, ¶ 31. 

IV. Settlement Negotiations and Verdict

Based on the evaluations of Encompass’ assigned claim adjuster and 

defense counsel, Encompass believed a settlement range between $125,000 to 

$150,000 was reasonable. Def. Facts, ¶ 32. Subsequently, in accordance with 

company policy, Encompass’ evaluation coordinator independently reviewed 

the claim, and placed an “evaluation amount” on the claim, proscribing a low 

value of $148,750 and a high value of $175,000. Def. Facts, ¶ 34-36. 

Approximately two months before the parties advanced to trial, Cooper’s

counsel sent a letter to Encompass demanding that the insurance company pay 

the $250,000 Encompass Policy limit, under the condition that the settlement 

would not preclude Cooper from pursing claims against Weichert under a 

respondeat superior/agency theory. Def. Facts, ¶ 43. As noted earlier, the state 

court found that Jenkins was an employee of Weichert. Indeed, until the eve of 

trial, the Coopers’ settlement demand was $1 million to settle the whole case. 

Def. Facts, ¶ 41. After a full trial, the jury found in favor of the Coopers in the 

amount of $1,250,000. While both Travelers and Encompass were “shocked” by 

the amount, they, nevertheless, agreed to a settlement with the Coopers in the 

amount of $1.25 million plus pre-judgment interest. Def. Facts, ¶¶ 54, 57. In 

that regard, Encompass paid the Coopers its policy limit of $250,000, and 

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Travelers paid its $1,000,000 policy limit, plus certain interest. Id. According 

to Encompass, in entering into this settlement, Travelers’ only reservation of 

rights was to pursue its remedies against Encompass with respect to the issue 

of costs of defense, which was based on Travelers’ position that Weichert was 

an insured under the Encompass Policy, and therefore, Encompass had a duty 

to defend and indemnify. Def. Facts, ¶ 59. 

V. The Instant Suit 

Travelers brought the instant suit to recover the full payment that it 

made to the Coopers under the settlement, $1,000,000, as well as the attorneys’ 

fees and costs expended in the state court action. Travelers claims that 

Encompass provided primary coverage to Weichert for the underlying lawsuit, 

and therefore, Encompass’ failure to settle the underlying claims prior to the

trial constituted a breach of its duty of good faith and fair dealing. In the 

instant matter, both parties move for summary judgment on all claims. The 

threshold question, here, is whether Weichert, as the employer of Jenkins, was 

an insured under the Encompass Policy. 

DISCUSSION 

I. Standard of Review 

Courts will enter summary judgment only when "the pleadings, 

depositions, answers to interrogatories, and admissions on file, together with 

the affidavits, if any, show that there is no genuine issue as to any material fact 

and that the moving party is entitled to a judgment as a matter of law." Fed. R. 

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Civ. P. 56(a). An issue is "genuine" if supported by evidence such that a 

reasonable jury could return a verdict in the non-moving party's favor. See

Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251-52 (1985). A fact is "material" 

if, under the governing substantive law, a dispute about the fact might affect 

the outcome of the suit. See Id. at 252. In determining whether a genuine issue 

of material fact exists, the court must view the facts and all reasonable 

inferences drawn from those facts "in the light most favorable to the [nonmoving] party." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 

587 (1986).

A party moving for summary judgment "bears the initial responsibility 

of informing the district court of the basis for its motion." Celotex v. Catrett, 

477 U.S. 317, 323 (1986). The nonmoving party then carries the burden to 

"designate 'specific facts showing that there is a genuine issue for trial.'" Id. at 

324. Moreover, the non-moving party may not rest upon the mere allegations or 

denials of its pleading. Id. at 324; Maidenbaum v. Bally's Park Place, Inc., 870 

F. Supp. 1254, 1258 (D.N.J. 1994). The non-moving party must "do more than 

simply show that there is some metaphysical doubt as to the material facts." 

Matsushita, 475 U.S. at 586. A mere "scintilla of evidence . . . will be 

insufficient." Anderson, 477 U.S. at 252.

Moreover, under New Jersey law, interpretation of insurance policy 

provisions is essentially a question of law and suitable for resolution on a 

motion for summary judgment. 

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II. The Encompass and Traveler Policies 

In its cross-motion for summary judgment, Travelers spent most of its 

brief raising purported issues of fact relating to Encompass’ conduct in the 

underlying lawsuit. In that connection, Travelers insists that Encompass was 

acting in bad faith for failing to settle the state court action, which ultimately

resulted in a substantial verdict in favor of the plaintiffs in the state case. 

However, before the Court can assess the record as to those disputed facts, I 

must first resolve a seminal legal issue: the status of Weichert vis-à-vis the 

Encompass Policy at the time of the underlying incident. 

To that point, Travelers, citing the “other insurance” clause, contends

that coverage under the Travelers Policy was afforded only on an excess basis 

because Encompass covers the same loss. Thus, Travelers argues that Weichert 

was an insured under the Encompass Policy, the primary insurer. On the other

hand, Encompass maintains that irrespective of the “other insurance” clause, 

the Travelers Policy was not a “true” excess policy because it is not a policy 

issued as excess to another primary policy; rather, Encompass claims that 

Encompass and Travelers were “co-primary” insurers, each of whom had a 

primary duty to defend and indemnify its respective insured. Encompass relies 

primarily on the New Jersey Appellate Division’s decision in CNA Ins. Co. v. 

Selective Ins. Co., 354 N.J. Super. 369 (App. Div. 2002) (“CNA”). My analysis 

will begin with that case since CNA dealt with facts and insurance policies 

substantially similar to this case.

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 At the outset, I note that an insurance policy is a contract to pay a sum 

of money upon the happening of a particular event. See Warnig v. Atl. County 

Special Servs., 363 N.J. Super. 563, 572 (App. Div. 2003). In particular, primary 

insurance “attaches immediately upon the happening of the occurrence that 

gives rise to liability.” CNA, 354 N.J. Super at 378. In that regard, there are 

situations where there are two or more insurance policies that cover the same 

loss, and in those circumstances, which insurance policy is the primary 

sometimes becomes the subject of lawsuits. Indeed, the CNA decision dealt with 

two primary insurance policies in the context of competing “other insurance” 

clauses. 

In CNA, a real estate employee of Coldwell Banker was involved in an 

auto accident while driving her personal car and was acting in the scope of 

employment. CNA, 354 N.J. at 373. The injured third-party sued both the 

employee and Coldwell Banker on a respondeat superior theory. The employee 

was covered by a Selective auto insurance policy, and Coldwell Banker was 

insured by CNA Insurance, which commercial automobile policy covered the 

same loss. Id. at 373. The CNA policy, like the Travelers Policy here, contained 

an “other insurance” clause, which provided that “[f]or any covered “auto” you 

[Coldwell Banker] don’t own, the insurance provided by this Coverage Form is 

excess any other collectible insurance . . . .” Id. Further, identical to the 

Encompass Policy here, the Selective Policy contained an “other insurance” 

clause that provided that in the event there “is other applicable liability 

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insurance, [Selective] will pay only [its] share of the loss.” Id. Notwithstanding 

the competing “other insurance” clauses, CNA demanded that Selective defend 

and indemnify Coldwell Banker in connection with the accident; Selective 

declined.2 Id. at 374. 

On appeal, the threshold question was whether the relationship between 

CNA and Selective was that of “co-primary insurers”; that is, each insurance 

company would have its own primary and independent obligation to defend its 

insured. Id. at 377-78. Selective reasoned that “there is a widely accepted 

difference between a ‘true’ excess insurance policy and a primary insurance 

policy whose indemnity obligation is made secondary by . . . ‘other insurance’ 

clauses.” Id. at 378. CNA, however, insisted that by virtue of the “other 

insurance” provision in its policy, its obligations were excess to those of 

Selective. Id. at 378-79.

The appellate court discussed at length the difference between a primary 

insurance policy containing an excess “other insurance” clause and a “true” 

excess policy. The latter requires the existence of a primary policy as a 

condition of coverage. Id. at 379. As the court explained: “To have a true 

primary-excess relationship, the same insured must purchase underlying 

coverage for the same risk.” Id. at 383; W9/PHC Real Estate LP v. Farm Family 

Cas. Ins. Co., 407 N.J. Super. 177, 198 (App. Div. 2009). Customarily, “a true 

2 While not pertinent to my legal analysis, CNA brought suit against Selective 

for settling the underlying tort action in bad faith. 

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excess policy includes a requirement for underlying primary insurance in a 

specific sum, and lists the underlying primary insurance.” Id. at 380; see

Cosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 28 N.J. 554 (1959) (holding 

that there can be no excess insurance in the absence of a primary insurance). 

The purpose, then, of a true excess policy is to protect the insured “in the event 

of a catastrophic loss in which liability exceeds the available primary coverage.” 

Id. at 379 (quoting 15 Couch on Insurance § 220:32 (3d ed. 1999)).3 

On the other hand, a primary policy with an “excess other insurance” 

clause is “a device which allows the ‘primary insurer [to] attempt . . . to limit or 

eliminate its liability where another primary policy covers the risk.” Id. at 380 

(citing 15 Couch on Insurance § 220:32 (3d ed. 1999)). Such a provision “makes 

a primary insurer secondarily liable when other available coverage exists.” Id. 

3 The Appellate Division’s conclusions are supported by out-of-state cases as 

well. For example, as the CNA court noted, both the Supreme Courts of 

Wisconsin and Arizona have drawn the distinction between a “true excess” and 

a primary insurer in the context of “other insurance” provisions. A “true excess” 

policy exists when that policy is written under circumstances where rates were 

ascertained after giving due consideration to known existing and underlying 

basic or primary policies. See Lay v. Bunderson, 320 N.W.2d 175, 179 (Wis. 

1982); St. Paul Fire & Marine Ins. Co. v. Gilmore, 812 P.2d 977, 981 (Ariz. 

1991). According to Lay and Gilmore, without those considerations at the time 

of underwriting, a primary insurance policy containing an excess “other 

insurance” clause does not change its primary status when another policy 

covers the same loss. See Fireman's Fund Ins. Co. v. CNA Ins. Co., 177 Vt. 215, 

235 (2004) (same); Frankenmuth Mutual Insurance Co. v. Continental 

Insurance Co., 537 N.W.2d 879, 881 n.4 (Mich. 1995) (“True excess coverage 

occurs where a single insured has two policies covering the same loss, but one 

policy is written with the expectation that the primary will conduct all of the 

investigation, negotiation and defense of claims until its limits are 

exhausted.”)(internal quotations and citations omitted).

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But, the clause cannot transform an otherwise primary policy into an excess 

one. Id. 

Applying the foregoing distinctions, the court held that CNA's 

contractual obligation to Coldwell Banker remained primary, not excess. This 

was so, as the court observed, because Coldwell Banker did not purchase 

primary coverage and then purchase additional excess coverage. Thus, CNA’s 

obligation to pay would begin at “dollar-one,” despite the inclusion of an “other 

insurance” clause. Id. at 382. Indeed, CNA’s policy did not give it the right to 

afford coverage only upon the exhaustion of some other primary coverage. 

Rather, “that right [was] afforded [to] CNA by virtue of the existence of the 

Selective policy.” Id. In that regard, the court made clear that when both 

carriers are primary, “each carrier owes a contractual duty to its own insured 

to faithfully fulfill its obligations. Each undertakes to represent its insured and 

negotiate settlements.” Id. at 384. 

Relying on the reasoning of CNA, a court in this district, more recently,

found that an “other insurance” clause, worded substantially similar to the one 

in the Travelers Policy, cannot transform a primary insurance policy into an 

excess policy. High Point Safety & Ins. Co. v. Am. Mfrs. Mut. Ins. Co., No. 05-

5759, 2006 U.S. Dist. LEXIS 70847, at * 10 (D.N.J. Sep. 29, 2006). In that case, 

an employee of Healthfair Vitamin Centers (“HVC”) was driving his personal 

vehicle, with his supervisor as a passenger, to view a competitor’s store. HVC 

was insured under an American Manufacturers Mutual (“AMM”) policy, and 

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the driver was personally insured under a High Point policy. See Id. at *2-3. 

Nearly identical to the policies at issue here, AMM’s policy stated that AMM 

would pay losses only “in excess of the amount due from that other insurance,” 

and High Point’s policy “shall pay a proportionate share of the loss” when other 

insurance overlapped in coverage. Id. 

High Point brought suit against AMM, arguing that, as a co-primary 

insurer, AMM must contribute a pro rata share of the cost to defend and 

indemnify the employee in the underlying suit. Id. at *3-4. AMM countered 

that it had no duty to defend or indemnify the employee because of the excess 

“other insurance” clause in its policy. Rejecting that argument, the district 

court relied on the reasoning espoused in CNA and found that “High Point’s 

fortuitous coverage of [the employee-driver] cannot serve to discharge the 

responsibility of AMM to insure HVC.” Id. at *10. In doing so, the court further 

explained that the excess “other insurance” clause in the AMM policy did not 

transform its obligation to defend HVC on a primary basis. Id. 

The same holds true in this case. The strikingly similar facts and legal 

conclusions in both High Point and CNA are compelling.4 Here, just like in 

4 I note that another Appellate Division decision, W9/PHC Real Estate LP, 

supra, not discussed in detail by either party, explained the difference between 

a “true excess” and primary insurance. In that case, Crabtree, a landscaping 

company, was hired by plaintiff W9/PHC, a property management service, to 

remove snow from its property. Under that service contract, Crabtree was 

required to name W9/PHC as an additional insured on Crabtree’s insurance 

policy issued by Farm Family Casualty Insurance Co. More importantly, the 

contract also contained an indemnity provision providing that Crabtree would 

indemnify W9/PHC against any “loss, costs, claims, damages” or suits asserted 

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CNA and High Point, the “other insurance” clause in the Encompass Policy 

provides coverage only on a proportional basis and the Travelers’ Policy 

contains an excess “other insurance” clause. Indeed, both courts in CNA and 

Highpoint found the distinction did not serve to change the co-primary 

relationship of the two insurance companies. Likewise, here, the different 

“other insurance” clauses do not change Travelers’ obligations to Weichert 

under its policy. Rather, there is nothing in the record to indicate that the cost 

of Travelers’ premium was contingent upon Encompass’ policy, or that 

Travelers considered the “exhaustion of the [Encompass’] coverage [] a factor

when it calculated the automobile insurance premium.” CNA, 354 N.J. Super

against W9/PHC. Id. at 407 N.J. Super at 185. The plaintiff was insured under 

its own general commercial liability policy through Zurich. Both policies

contained “other insurance” clauses. However, notably, the Zurich policy states 

that

This insurance is excess over: 

Any other primary insurance available to you covering liability for 

damages arising out of the premises or operations for which you have 

been added as an additional insured by attachment of an endorsement. 

When this insurance is excess, we will have no duty . . . to defend. 

Id. at 187. When the court was called upon to decide which policy was primary, 

based on language of that provision and the service contract, the court held that 

the Zurich policy was excess over Crabtree’s policy. 

Significantly, the excess “other insurance” clause in the Travelers Policy

here does not contain the same language as the above-recited clause in W9/PHC 

Real Estate; that is, the Travelers Policy makes no mention of any additional 

insured. And, more importantly, the relationship of the parties in W9/PHC Real 

Estate is decidedly different than the one here, because the obligations of the 

parties, i.e., indemnification, in that case were governed by a service contract 

which is not present in this case. Therefore, I do not find W9/PHC Real Estate

helpful or apposite to resolving the issues in this case.

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at 383. Instead, Weichert purchased the Travelers Policy as its primary 

insurance, and it did not purchase any excess coverage from Travelers or any 

other insurance companies. Thus, Travelers’ obligation to pay would start at 

“dollar-one.” Travelers’ contract with Weichert “does not give it the right to 

afford coverage only upon the exhaustion of [another] primary coverage.” CNA, 

354 N.J. Super. at 382. In that respect, Travelers’ excess “other insurance” 

clause was nothing more than its attempt “to limit or eliminate its liability 

where another primary policy covers the risk.” CNA, 354 N.J. Super. at 380. 

I am also not persuaded that Jenkins, who was insured by Encompass

for the personal vehicle he drove, and simply, because he was an employee of 

Weichart, renders Travelers an excess carrier. As the Appellate Division aptly 

noted: “To have a true primary-excess relationship, the same insured must 

purchase underlying coverage for the same risk.” Id. at 383. Weichart neither 

had, nor was required by Travelers to have, an underlying policy covering the 

same risk. Without such excess coverage, Travelers was contractually charged 

with all of its obligations to its insured, i.e., Weichert, on a primary basis, 

including the obligation to negotiate a settlement in the underlying state tort 

action.

Notwithstanding the case law, Travelers insists that its coverage should 

be on an excess basis. To begin, Travelers, inexplicably, states in a footnote,

that “[t]here is no dispute that the Encompass policy is primary to the Travelers 

policy . . . .” Travelers’ Cross-Motion at p. 6, n.2. Travelers goes on to state that 

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Encompass’ expert does not refute this fact in his report furnished for this 

litigation.5 However, this legal issue is clearly disputed by Encompass on these 

motions and the case law, as I have explained, supra, supports Encompass’ 

position.

Next, Travelers cites to the dissenting opinion in the case Commercial 

Union Ins. Co. v. Chubb Gp. of Ins. Cos., 194 N.J. Super 69 (App. Div. 1984), for 

the proposition that “where one liability policy covers an employee for his own 

negligence and another covers his employer for the same negligence, the 

employee’s policy must be exhausted before the employer’s carrier may be called 

upon to pay.” Id. at 82 (Brody, Judge, dissenting). While Commercial Union

was reversed by the New Jersey Supreme Court for the reasons expressed by 

the dissenting judge, that case did not deal with interpretations of “other 

insurance” clauses. Rather, wholly distinguishable from this case, Commercial 

Union involved respective obligations of a primary insurer and an excess

insurer; plainly, that case did not involve two primary insurance policies with 

competing provisions regarding “other insurance.”

Finally, Travelers disputes the relevance of CNA. While recognizing that 

the facts in CNA are similar to the facts here, Travelers, nevertheless, grasping 

at straws, distinguishes CNA on the basis that there was no reference to a

subrogation claim in that case. Travelers goes on to argue that its 

5 I note that Travelers’ terse responses to Encompass’ position regarding the 

two competing “other insurance” clauses in both policies are only addressed in 

two footnotes. See Travelers’ Cross-Motion at p. 6, n.2; p. 9 n.3. 

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reimbursement claim is premised on its subrogation rights against Encompass 

through Weichert, and that the general rule is that a carrier with excess 

coverage is subrogated to the rights against the primary carrier. However, 

Travelers’ argument in this regard presumes that the Encompass Policy 

provides primary coverage and that the Travelers Policy covers the loss on an 

excess basis. But, I have already found that both insurance policies are coprimary, and therefore, the issue of suborgation, as advanced by Travelers, has 

no relevance in light of that finding. Furthermore, Travelers attempts to 

factually distinguish CNA by explaining that Selective recognized its coverage 

obligation to Coldwell Banker. Travelers grossly mischaracterizes the facts of 

CNA. Nothing in the CNA decision would lead this Court to find that Selective 

conceded that it had a duty to defend Coldwell Banker in the underlying tort 

action. Quite the contrary, CNA's counsel accused Selective of acting in bad 

faith by obtaining a settlement and release in favor of only the employee up to 

her personal policy limits without obtaining a full release for Coldwell Banker 

and CNA; CNA sued Selective on that basis. Likewise, Travelers contends, here,

that Encompass failed to settle the underlying lawsuit in good faith violating

its duty to defend Weichert. I find that Travelers’ arguments in this context 

are specious. 

I conclude by observing that Traveler spent the majority of its papers 

accusing Encompass of failing to abide by its duty to defend Weichert in good 

faith. Those arguments presume that Weichert is an insured under the 

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Encompass Policy by virtue of the excess “other insurance” clause in the 

Travelers Policy. As I have outlined above, this is not so. Therefore, all other 

arguments Travelers has made in that connection fail as a matter of law. 

Simply put, because both Encompass and Travelers had independently duties

to defend their respective insureds, i.e., Jenkins and Weichert, Encompass owed 

no duty to Weichert. Accordingly, Encompass’s motion for summary judgment 

is GRANTED and Travelers’ cross-motion is DENIED. Judgment will be 

entered in favor of Encompass. 

DATED: August 19, 2014 /s/ Freda L. Wolfson 

Freda L. Wolfson

U.S. District Judge

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