Court Opinion

ID: 4197108
Source: CourtListenerOpinion
Date Created: 2017-08-18 13:10:11.478156+00
Date Added: 2024-06-11T14:39:35.060975
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                            2                                      A-0689-13T3
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.

                                            4                                 A-0689-13T3
       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."

                                          5                                 A-0689-13T3
      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

                                            6                                     A-0689-13T3
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

                                             7                                A-0689-13T3
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.

                                          8                                 A-0689-13T3
       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.

                                      10                              A-0689-13T3
    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

                                               12                                   A-0689-13T3
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.").

                                        13                                A-0689-13T3
       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.

                                             16                                         A-0689-13T3
Affirmed.

            17   A-0689-13T3