Amb Property, Lp v. Penn America
14 A.3d 65
N.J. Super. Ct. App. Div.2011Background
- AMB Property, LP owns a warehouse leased to Mystic Express, Inc., with Mystic required to maintain insurance naming AMB and Matrix Realty as additional insureds.
- Mystic obtained general liability insurance from Penn America via Suburban General Insurance Agency and Jimcor served as Penn America's managing general agent.
- Premium financing by Imperial financed Mystic's policy premiums; Mystic did not sign the finance agreement, but Suburban signed on Mystic's behalf.
- The premium finance agreement included a power of attorney authorizing Lender to cancel policies on default and to act for the insured to recover unearned premiums.
- Policy renewal in 2004-2005 carried an additional insured endorsement for AMB and Matrix Realty; Mystic defaulted on premium payments beginning December 2004.
- Imperial repeatedly canceled and reinstated the policy based on payments; Mystic ultimately defaulted in June 2005, triggering cancellation of the policy effective July 1, 2005.
- On July 17, 2005, Mystic’s warehouse roof collapsed, causing property damage and leading AMB to sue Penn America and related parties for defense/indemnification and alleged professional negligence.
- The trial court granted summary judgment to Jimcor and Penn America; AMB’s claims against Suburban and others were settled, leaving this appeal focused on the cancellation authority and related issues.
- AMB sought a declaratory judgment that Penn America owed defense/indemnification as an additional insured and pursued negligence claims against Jimcor; the appellate court affirmed dismissal of those claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Authority to cancel via power of attorney | Imperial lacked valid authority to cancel under the premium finance agreement. | IPFCA power of attorney authorized cancellation; apparent authority supported reliance by Jimcor. | Imperial had authority; IPFCA controls and apparent authority supported cancellation. |
| No-assignment clause waiver | Consent-to-assignment clause prevented Imperial from acting; no transfer rights. | Insurer may waive no-assignment clause; clause benefits insurer, not insured; waiver valid. | No-assignment clause waived; Imperial could cancel without assignment; clause not a barrier. |
| Jimcor's negligence | Jimcor failed to exercise reasonable care in canceling/reinstating and may be negligent. | Jimcor acted reasonably in obtaining required underwriting information and relied on authority; no professional negligence proven. | No genuine issue of material fact; Jimcor entitled to summary judgment. |
Key Cases Cited
- Carreon v. Hospitality Linen Services of New Jersey, 386 N.J. Super. 504 (App.Div. 2006) (premium finance authority to cancel under IPFCA supported by statute)
- Auger v. Gionti Agency, 218 N.J. Super. 360 (App.Div. 1987) (premium financing power of attorney cancels policy; supplements IPFCA authority)
- Mercer v. Weyerhaeuser Co., 324 N.J. Super. 290 (App.Div. 1999) (apparent authority doctrine; totality of circumstances test)
- N.J. Lawyers' Fund for Client Prot. v. Stewart Title Guar. Co., 203 N.J. 208 (2010) (set forth framework for apparent authority analysis)
- Iafelice ex rel. Wright v. Arpino, 319 N.J. Super. 581 (App.Div. 1999) (no-assignment waiver protection and insurer's broad rights)
- Kisselbach v. Cnty. of Camden, 271 N.J. Super. 558 (App.Div. 1994) (definition and evidentiary role of power of attorney)