PETER FONTANA VS. EXECUTIVE CARS (L-1359-11, ESSEX COUNTY AND STATEWIDE), A-3151-15T4

Royal Dispatch Services ("Royal") is the named insured on a Global Liberty commercial "NON‑OWNED AUTO ONLY" liability policy covering 234 franchisee vehicles listed on the declarations page; Cheung’s vehicle (#109) was listed.
Cheung was a Royal franchisee (independent contractor) who, while driving his own vehicle on a Royal dispatch, caused an accident that injured plaintiff Fontana; Cheung’s insurer paid its $100,000 limit.
Plaintiffs sued Cheung and Royal and sought a declaratory judgment that Global’s $1,000,000 policy provided excess coverage for Cheung’s negligence because his vehicle was a covered auto under the policy.
Trial court found Cheung’s vehicle was a covered auto and, relying on parties’ "reasonable expectations," held Global must defend and indemnify Cheung for his own negligence regardless of his employment status.
The Appellate Division affirmed that Cheung’s vehicle was a covered auto but reversed the ruling that Cheung was an insured under the policy; the court held the policy’s plain language excludes owner‑drivers like Cheung from the insured definition and remanded to determine whether Royal is vicariously liable for Cheung’s negligence.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether Cheung’s vehicle is a “covered auto” under Global’s policy	Vehicle is listed on declarations; therefore covered	Vehicle is listed (not disputed) but coverage type matters	Affirmed: Cheung’s vehicle is a covered auto
Whether Cheung (owner/driver) is an “insured” under the policy	Policy and parties’ expectations show coverage extends to drivers of listed autos	Policy’s insured definition and express owner exclusion preclude coverage for vehicle owners	Reversed: Cheung is not an insured; owner‑drivers excluded under plain policy language
Whether courts may apply reasonable expectations to create coverage despite unambiguous policy language	Parties reasonably expected contingent/excess coverage for franchisee negligence	Plain, unambiguous policy controls; reasonable‑expectation doctrine inapplicable absent ambiguity or exceptional circumstances	Court erred to rely on expectations; no ambiguity or exceptional circumstances shown
Whether Global must defend/indemnify Cheung absent a finding Royal is vicariously liable	Plaintiffs: yes, because declarations and practice showed intended contingent coverage	Global: only if Royal (the insured) is vicariously liable; policy covers Royal’s vicarious liability, not owners’ direct negligence	Remanded: coverage may exist only if Royal is vicariously liable; trial court must decide vicarious‑liability facts

Locurto v. Safeway Stores, 157 N.J. 463 (standard of appellate review for bench findings)
Weedo v. Stone‑E‑Brick, 81 N.J. 233 (insurance policy interpretation principles)
Oxford Realty Grp. Cedar v. Travelers Excess & Surplus Lines Co., 229 N.J. 196 (plain‑language rule for policy interpretation)
Pizzulo v. N.J. Mfrs. Ins. Co., 196 N.J. 251 (give policy terms their plain, ordinary meaning)
Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231 (end inquiry when policy unambiguous)
Zacarias v. Allstate Ins. Co., 168 N.J. 590 (reasonable expectations doctrine scope)
Abboud v. Nat'l Union Fire Ins. Co., 450 N.J. Super. 400 (when courts may invoke insureds’ reasonable expectations)
Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260 (policies as contracts of adhesion; liberal construction for insured)