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No Coverage for Personal Injury Under Loading and Unloading Coverage in Auto Policy When Accident had no Substantial Nexus with Use of Truck

By on November 6, 2020 in Coverage with 0 Comments

Craig Crumley, an employee of Thomas Lindstrom Steel ­& Company (“Lindstrom”), a subcontractor of Plaintiff D’Andrea Construction Company (“D’Angelo”), was injured on a job site while assisting in the retrieval of two old welding machines in helping other employees in the loading and unloading of the new welders. The issue in D’Andrea Construction Co. v. Old Republic General Insurance Corp., 2020 N.J. Super. Unpub. Lexis 2088 (App. Div. Nov. 4, 2020) was whether there was coverage for this accident under the policy of D’Andrea’s and Lindstrom’s auto insurance carrier, Everest National Insurance Company (“Everest”).

Crumley was injured during an accident after another Lindstrom employee (Bianco) arrived at the job site with two welding machines, one new welder on the truck’s flatbed and another attached to a hitch on the back of the truck. Bianco was delivering 2 new welding machines and retrieving 2 old machines to Lindstrom and needed help loading and unloading the welders.

The first welder was swapped out without incident. However, Bianco then tried to drive the truck to the location of the other old welder but the ground was too rough and there was insufficient room for the truck. Crumley then asked a D’Andrea employee, Monitzer, to assist with the removal of the welder using a backhoe. Crumley held a chain to prevent the welder from swinging but while Monitzer and Crumley were moving toward the Lindstrom truck, the backhoe struck Crumley’s foot and leg, causing him injuries.

The lawsuit filed by Crumley was settled for $5.8 million dollars. Thereafter, D’Andrea and its general liability insurers sued D’Andrea’s and Lindstrom’s auto insurers, seeking reimbursement for the monies contributed for Crumley’s settlement. All but Everest settled with the plaintiffs.

At the trial court level, the Plaintiffs and Everest filed cross motions for summary judgment. The trial court judge denied the Plaintiffs’ Motion for Summary Judgment, finding that D’Andrea was not insured under the Everest policy and, further, Everest was not given timely notice of the claim.

Upon appeal, the Plaintiffs argued that the trial court judge mistakenly found that Crumley was not using an Everest insured vehicle when the accident occurred and also there was error in the court’s ruling that their claims were barred due to their late notice to Everest. Plaintiffs argued that Crumley should be afforded additional insured status under the Everest policy “because he was using the Lindstrom truck to load and unload the welders.” Their argument was that Crumley’s injuries happened during an essential part of the task and, thus, the completed operations doctrine applies because the task required loading and unloading the welders.

The Appellate Division noted that the courts have “long recognized” that the obligation to provide coverage in a loading and unloading accident arises from statute. Further, the Appellate Division stated that because “New Jersey courts looked to the complete operation of loading and unloading, all that is required to establish coverage is that the act or omission which resulted in the injury was necessary to carry out the loading or unloading.”

Therefore, the critical issue is whether the defendant’s alleged acts or omissions were an “integral part of the unloading activity, and thus covered under the use provision.” The Appellate Division noted that the pivotal question was whether there was a substantial nexus that existed between Crumley’s injury and the use of the Lindstrom truck.

The Court noted that the trial court judge conducted a comprehensive survey and analysis of cases examining “loading and unloading” and found that the condition of the work site was the reason the backhoe struck Crumley. He observed that it was D’Andrea’s decision to dangle a 700 pound welder from a backhoe while crossing an area of uneven terrain between 150 and 500 feet, in order to get the welder to a location on property under D’Andrea’s control, from which it could be loaded onto the Lindstrom trailer. Thus, the Appellate Division agreed that the trial court judge properly concluded that there was no substantial nexus between the “loading and unloading” of the Lindstrom truck and this accident.

Further, the Appellate Division rejected the Plaintiffs’ argument that the trial court made a mistake in holding their claims were time barred due to untimely notice because the statute of limitations for this contractual claim had not run. The Court agreed that Everest was prejudiced by delaying notification. Everest was not named as a defendant until seven years after the accident, almost four years after the settlement, and three years after Plaintiffs filed this most recent declaratory judgment action.            

Accordingly, the Court affirmed the trial court’s opinion, finding that Everest was not responsible for the costs of defense and indemnification of the settlement for this personal injury claim.

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Betsy G. Ramos

About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 25 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020 and 2021, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

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