JEANNE FINNEGAN VS. INDUCTOTHERM CORPORATION VS. GREENTREE FOOD MANAGEMENT INC. VS. FRED DUNHOUR (L-2886-12, CAMDEN COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court."

Although it is posted on the internet, this opinion is binding only on the

parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4267-15T1

JEANNE FINNEGAN,

Plaintiff,

v.

INDUCTOTHERM CORP.,

Defendant/Third-Party

Plaintiff-Appellant,

v.

GREENTREE FOOD MANAGEMENT,

INC.,

Third-Party Defendant-

Respondent/Fourth Party

Plaintiff,

v.

FRED DUNHOUR and THE DUNHOUR

AGENCY,

Fourth-Party Defendants/

Respondents.

_______________________________________________

Argued May 9, 2017 – Decided August 22, 2017

Before Judges Messano, Espinosa and Grall.

On appeal from the Superior Court of New

Jersey, Law Division, Camden County, Docket

No. L-2886-12.

Robert P. Avolio argued the cause for

appellant Inductotherm Corporation (Avolio &

Hanlon, PC, attorneys; Mr. Avolio and

Catherine M. Brennan, on the briefs).

John P. O'Toole argued the cause for

respondents Greentree Food Management, Inc.,

Fred Dunhour, and The Duhhour Agency (Wilson,

Elser, Moskowitz, Edelman & Dicker, LLP,

attorneys; Mr. O'Toole, on the brief).

PER CURIAM

Plaintiff Jeanne Finnegan, an employee of Greentree Food

Management, Inc. (Greentree), suffered injuries following a slip

and fall at work. Greentree provided cafeteria services to the

employees of Inductotherm Corp. (Inductotherm), in a cafeteria in

Inductotherm's building, pursuant to a written agreement (the

Agreement).

The Agreement lacked any express indemnification provisions

but provided in pertinent part: "Greentree will: Carry

Comprehensive General Liability Insurance to the limits mutually

agreed upon to cover its own operation. Greentree will have

Inductotherm Corp. listed as an additional insured on their General

Liability Policy and shall present at inception and annually

thereafter satisfactory evidence thereof." (Emphasis added). The

Agreement also required every Greentree employee to sign an

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"agreement" on Greentree's letterhead recognizing his or her "sole

and exclusive remedy w[ould] be under the workmen's (sic)

compensation provided by . . . Greentree."

On the date of plaintiff's fall Greentree maintained a

commercial general liability policy (the CGL policy) with

Harleysville Insurance Company. It is undisputed that Greentree

never added Inductotherm to the policy as an additional insured.

Harleysville refused Inductotherm's tender of its defense,

writing, "Inductotherm is not listed [as] an additional insured

on the [CGL] policy nor does Inductotherm qualify as an insured

under the policy."

Plaintiff filed a negligence complaint against Inductotherm,

which, in turn, filed an answer and third-party complaint against

Greentree, alleging breach of the Agreement, breach of the covenant

of good faith and fair dealing and negligence. Greentree answered

and filed a fourth-party complaint against its insurance broker,

Fred Dunhour, and his company, The Dunhour Agency (collectively,

Dunhour). Inductotherm amended its third-party complaint to

include cross-claims against Dunhour for indemnification, as well

as negligence and breach of contract.

Inductotherm and Greentree moved for summary judgment; the

motion judge granted Greentree's motion and dismissed the third-

party complaint. We granted Inductotherm's motion for leave to

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appeal, summarily reversed and reinstated the third-party

complaint.1 At some point undisclosed by the record, Inductotherm

settled with Finnegan.

A second Law Division judge then granted Greentree's motion

to dismiss Inductotherm's negligence claim.2 The parties'

subsequent cross-motions for summary judgment were denied.

1

The panel's order provided in pertinent part:

The third-party complaint is reinstated and

the matter is remanded to the trial court for

further proceedings on the respective

liability for negligence of third-party

defendant or third-party plaintiff and breach

of contract. The questions of liability for

creating the dangerous condition causing

plaintiff's accident and any resultant

injuries [are] disputed. Further, the breach

of contract claims are dependent on a

determination of said liability, obviating

summary judgment.

The parties and the trial judge understandably were confused

by the order's contemplation of a trial on Greentree's and

Inductotherm's "respective liability for negligence." Absent an

express indemnity provision, "[b]y virtue of the exclusive remedy

provisions of the Workers' Compensation Act . . . an employer is

immune from suit by an employee, and may not be sued for

contribution by a third-party tortfeasor." Kane v. Hartz Mountain

Indus., Inc., 278 N.J. Super. 129, 145 (App. Div. 1994) (citing

Ramos v. Browning Ferris Indus. of S. Jersey, Inc., 103 N.J. 177,

184 (1986)), aff'd o.b., 143 N.J. 141 (1996).

2

Inductotherm has not appealed that decision. As a result, we

consider the points raised on appeal only in the context of

Inductotherm's breach of contract and breach of the implied

covenant of good faith claims.

4 A-4267-15T1

On April 25, 2016, the parties appeared for trial. After an

off-the-record conference in chambers, the judge held oral

argument on the record to consider legal arguments raised by

Inductotherm and Greentree. Relying on Pennsville Shopping Center

Corp. v. American Motorist Insurance Co., 315 N.J. Super. 519

(App. Div. 1998), certif. denied, 157 N.J. 647 (1999), the judge

reasoned that even if Inductotherm had been added as an additional

insured on Greentree's CGL policy, there nonetheless would be no

coverage for plaintiff's claim because "the additional insured

status has to be taken [to be] coextensive with . . . Greentree's

liability." He determined that Greentree could not be liable for

plaintiff's injuries because of the workers' compensation bar,

N.J.S.A. 34:15-8, and pursuant to Ramos, supra, Inductotherm could

not seek contribution from Greentree. The judge granted summary

judgment and dismissed Inductotherm's claims against Greentree and

Dunhour. This appeal followed.

Inductotherm argues it was reversible error for the judge,

without formal notice or motion, to grant summary judgment on the

day of trial after earlier denying the parties' cross-motions

seeking the same relief. We do not necessarily condone the

procedure employed by the judge. See, e.g., Klier v. Sordoni

Skanska Constr. Co., 337 N.J. Super. 76, 84 (App. Div. 2001)

("[P]laintiff came to court prepared to pick a jury, but rather

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was required to defend a motion, brought by the court sua sponte,

to dismiss his complaint."). However, because we are reversing

on other grounds, and because the record fails to reveal that

Inductotherm ever objected to the judge's consideration of what

was a purely legal issue, Inductotherm's argument in this regard

warrants no further discussion.3

Inductotherm also argues the judge misconstrued Pennsville

and Ramos and erred as a matter of law by applying those cases to

its breach of contract claim. Inductotherm contends the CGL policy

would have provided it with coverage for plaintiff's claim had

Greentree and Dunhour properly added Inductotherm as an additional

insured. It urges us to reverse and enter summary judgment as to

liability on its breach of contract claim.

We agree with Inductotherm that the judge misconstrued

Pennsville, which has little application to these facts. We

reverse and remand for further proceedings consistent with this

opinion.

3

Inductotherm never sought reconsideration in the trial court.

On appeal, and without seeking permission to supplement the record,

its counsel included a certification in Inductotherm's appendix.

Generously read, the certification explains counsel's surprise

that the judge, instead of picking a jury, entertained legal

argument and dismissed the complaint. Notably, the certification

does not state that counsel ever objected to the judge's course.

6 A-4267-15T1

"The interpretation of a contract is subject to de novo review

by an appellate court." Kieffer v. Best Buy, 205 N.J. 213, 222

(2011) (citations omitted). "Accordingly, we pay no special

deference to the trial court's interpretation and look at the

contract with fresh eyes." Id. at 223.

We interpret contractual terms by considering "their plain

and ordinary meaning." Ibid. (quoting M.J. Paquet, Inc. v. N.J.

Dep't of Transp., 171 N.J. 378, 396 (2002)). "The judicial task

is simply interpretative; it is not to rewrite a contract for the

parties better than or different from the one they wrote for

themselves." Ibid. However, "[i]f the terms of the contract are

susceptible to at least two reasonable alternative

interpretations, an ambiguity exists." Chubb Custom Ins. Co. v.

Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008) (citing Nester

v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997)).

It is undisputed that the Agreement required Greentree to add

Inductotherm as an additional insured on its CGL policy. Its

failure to do so was a breach of the agreement. See, e.g.,

Antenucci v. Mr. Nick's Mens Sportswear, 212 N.J. Super. 124, 131

(App. Div. 1986) ("[T]he lessee contracted to provide liability

insurance coverage for the landlord. Because of its breach of

that covenant it was liable for the losses sustained by the

landlord flowing from that breach.").

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As already noted, the judge accepted Greentree's argument

that our decision in Pennsville compelled dismissal of

Inductotherm's complaint. There, we concluded a shopping center

tenant's insurance policy did not provide coverage to the landlord-

owner for injuries suffered by a patron who fell in the parking

lot. Pennsville, supra, 315 N.J. Super. at 523. The lease

obligated the tenant to indemnify the landlord for injuries

occurring on the demised premises and to name the landlord as an

additional insured on the tenant's liability policy. Id. at 521.

The lease, however, obligated the landlord to maintain the common

areas of the shopping center and to indemnify the tenant against

any claim that resulted from the landlord's failure to do so. Id.

at 521-22.

We held, "[u]nder the terms of the lease . . . , tenant bore

responsibility only for damages incurred on the demised premises.

Its undertaking to name landlord as an additional insured must be

taken to be coextensive with the scope of tenant's own liability."

Id. at 523. Importantly, we also held, "the question whether a

party is insured at all may be a separate matter susceptible of

resolution by reference to any relevant matter such as an

underlying contract, here the lease agreement, which clarifies the

intendments of the parties in apportioning responsibility and

providing for insurance coverage." Ibid.

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Here, however, there was no indemnification provision in the

Agreement, much less cross-indemnification commitments between

Greentree and Inductotherm that limited each party's

responsibilities for conditions on the premises, as did the lease

in Pennsville. Additionally, the panel in Pennsville never

discussed the particular terms of the additional insured

endorsement of the tenant's policy.

We have since cautioned against over reading Pennsville's

holding, recognizing

the court in Pennsville relied upon the lease

in concluding that the additional insured

endorsement in the tenant's policy only

provided coverage to the landlord for any

claim arising out of an accident occurring on

the demised premises. Although the court did

not quote the additional insured endorsement

in the tenant's policy, the language of that

endorsement was presumably ambiguous.

Therefore, the court resorted to the terms of

the lease to resolve the ambiguity, which is

an appropriate use of extrinsic evidence in

construing an insurance policy.

[Jeffrey M. Brown Assocs., Inc. v. Interstate

Fire & Cas. Co., 414 N.J. Super. 160, 171 (App.

Div.) (emphasis added), certif. denied, 204

N.J. 41 (2010).]

As Judge Skillman noted,

[a]n insurance policy is a contract between

the insurer and the insured. Thus, the extent

of coverage . . . is controlled by the relevant

policy terms, not by the terms of the

underlying trade contract that required the

named insured to purchase coverage.

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[Id. at 171-72 (quoting Bovis Lend Lease LMB,

Inc. v. Great Am. Ins. Co., 855 N.Y.S.2d 459,

464 (N.Y. App. Div. 2008)).]

The only remaining issue is whether Inductotherm suffered

damages as a proximate result of Greentree's breach. In Robinson

v. Janay, we held, "[t]he damages which may be recovered for breach

of an agreement to furnish an insurance policy is the loss

sustained by reason of the breach, 'the amount that would have

been due under the policy provided it had been obtained.'"

105 N.J. Super. 585, 591 (App. Div.) (quoting 43 Am. Jur. 2d,

Insurance, § 174, p. 231), certif. denied, 54 N.J. 508 (1969).

Therefore, we must determine whether the CGL policy would

have provided Inductotherm with a defense and indemnification

against plaintiff's suit. The principles we apply to contracts

generally apply in equal force to insurance contracts. "In

attempting to discern the meaning of a provision in an insurance

contract, the plain language is ordinarily the most direct route."

Chubb, supra, 195 N.J. at 238 (citing Zacarias v. Allstate Ins.

Co., 168 N.J. 590, 594-95 (2001)). "If the language is clear,

that is the end of the inquiry." Ibid. (citing Zacarias, supra,

168 N.J. at 594-95). "[I]n the absence of an ambiguity, a court

should not 'engage in a strained construction to support the

imposition of liability' or write a better policy for the insured

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than the one purchased." Ibid. (quoting Progressive Cas. Ins. Co.

v. Hurley, 166 N.J. 260, 272-73 (2001)).

The CGL policy provided coverage to the "Named Insured" listed

on the declarations page, and "any other person or organization

qualifying as a Named Insured under this policy." The declarations

page listed Greentree alone as the insured.

The CGL policy provided coverage for all bodily injury claims

"that the insured becomes legally obligated to pay." It included

an exclusion, however, for "'bodily injury' to . . . (1) [a]n

'employee' of the insured arising out of and in the course of: (a)

[e]mployment by the insured; or (b) [p]erforming duties related

to the conduct of the insured's business." The "Separation Of

Insureds" section of the policy provided, "this insurance applies:

a. [a]s if each Named insured were the only Named Insured; and b.

[s]eparately to each insured against whom claim is made or 'suit'

is brought."

Had Inductotherm been an additional insured under the CGL

policy, the exclusion would not have applied because plaintiff was

not an employee of Inductotherm. This result is consistent with

the reasoning of two of our reported cases that construed similar

contractual provisions, Erdo v. Torcon Construction Co., 275 N.J.

Super. 117, 121-23 (App. Div. 1994), and Maryland Casualty Co. v.

New Jersey Manufacturers Casualty Insurance Co., 48 N.J. Super.

11 A-4267-15T1

314, 323-26 (App. Div.), aff'd, 28 N.J. 17 (1958), both of which

were comprehensively summarized by the Third Circuit in

ArcelorMittal Plate, LLC v. Joule Technical Services, Inc., 558

F. App'x. 205, 209 (3d. Cir. 2014) ("Two New Jersey appellate

courts, having considered the issue in considerable depth, have

concluded that an employee exclusion does not bar coverage for

claims against one insured by a different insured's employees.").

We need not expound further. The CGL policy presumably would have

provided Inductotherm with a defense.

We hesitate to reach that conclusion as a matter of law given

the record before us. Because the CGL policy did not include

Inductotherm as an additional insured, we cannot say whether any

additional insured endorsement would have included limitations or

exclusions to the general insuring provisions of the policy. For

example, the CGL policy in the record includes an endorsement

naming the lessor of Greentree's "[p]remises," "Maplewood

Apartment & Jager Management," as an additional insured. That

endorsement added the lessor as "an insured . . . but only with

respect to liability arising out of the ownership, maintenance or

use of that part of the premises leased to [Greentree]."

Dunhour was deposed, but his testimony provides no

information in this regard. The record fails to reveal any

discovery taken from Harleysville's representative that might shed

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light on the precise terms of any additional insured endorsement,

or whether Inductotherm's addition to the CGL policy as an

additional insured would have been without any limitation of

coverage.

In short, we reverse the order under review, reinstate

Inductotherm's third-party complaint and remand the matter for

further proceedings. Although Inductotherm urges us to reverse

and enter summary judgment in its favor, Inductotherm must

establish that if it had been added as an additional insured on

the CGL policy, the policy would have provided a defense and

potentially indemnification. We hasten to add that if, after

adding Inductotherm as an additional insured, the CGL policy

contained no other coverage limitations or exclusions,

Inductotherm is entitled to summary judgment as to its claims that

Greentree breached the Agreement, and Inductotherm would have

received a defense to, and indemnification for, plaintiff's

claims. Erdo, supra, 275 N.J. Super. at 121-23; Maryland Cas.,

supra, 48 N.J. Super. at 323-26. However, Inductotherm did not

submit any proof of the damages it claimed were the proximate

consequences of the breach, nor did the parties or the trial court

address the issue. That shall also be a subject of the remand

proceedings.

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Finally, at the Law Division hearing, Inductotherm agreed

that because the judge granted summary judgment to Greentree, its

claims against Dunhour were properly dismissed. We reinstate

those claims.

Reversed and remanded for further proceedings consistent with

this opinion. We do not retain jurisdiction.

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