Potomac Insurance v. Pennsylvania Manufacturers' Ass'n
215 N.J. 409
| N.J. | 2013Background
- Aristone, as general contractor for the DeMasi School, was insured over time by multiple carriers including PMA, OneBeacon, Newark/Royal, and Selective, for defense costs and indemnity against Evesham's claims.
- Evesham sued Aristone for property damage related to roof and leakage; Aristone’s insurers defended and paid varying portions of defense costs; PMA initially denied coverage for defense costs.
- Aristone and PMA settled a separate declaratory judgment dispute; PMA contributed to Aristone’s settlement with Evesham, and Aristone released PMA from claims arising from the Evesham dispute.
- OneBeacon and Selective paid defense costs; PMA and Royal declined to pay defense costs; OneBeacon pursued a direct contribution claim against PMA for a portion of defense costs paid by OneBeacon and Selective.
- The trial court allocated defense costs using Owens-Illinois principles and held that OneBeacon could pursue a contribution claim against PMA despite Aristone’s release, a ruling affirmed on appeal.
- The release between Aristone and PMA did not bar OneBeacon’s contribution claim because OneBeacon was not a signatory to the release and there was no meeting of the minds that OneBeacon had waived its rights.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether OneBeacon may sue PMA for a share of defense costs. | OneBeacon argues a direct contribution right exists under continuous trigger. | PMA contends no direct contribution right exists, or is barred by the release and by alternative allocation rules. | Yes; OneBeacon may pursue a contribution claim against PMA. |
| Whether Aristone–PMA release extinguished OneBeacon’s claim. | OneBeacon was not a party to the release and had no meeting of the minds with PMA on waiver. | PMA argues the release extinguishes related claims including defense-cost claims. | Release did not extinguish OneBeacon’s contribution claim. |
| What allocation method applies to defense costs among insurers of a common insured. | Owens-Illinois/Carter-Wallace continuous-trigger framework supports a pro rata allocation across carriers. | California Fireman’s Fund approach (horizontal) may apply; but New Jersey adheres to vertical pro rata allocation. | Continues to apply Owens-Illinois/Carter-Wallace framework; OneBeacon’s claim proper under New Jersey allocation principles. |
Key Cases Cited
- Owens-Illinois, Inc. v. United Insurance Co., 138 N.J. 437 (1994) (continuous-trigger allocation and insurer contribution framework)
- Carter-Wallace, Inc. v. Admiral Insurance Co., 154 N.J. 312 (1998) (vertical loss allocation among primary and excess carriers)
- Fireman’s Fund Insurance Co. v. Maryland Casualty Co., 65 Cal.App.4th 1279 (Cal. Ct. App. 1998) (California rule permitting direct contribution between co-insurers)
- Childs v. New Jersey Manufacturers Insurance Co., 108 N.J. 506 (1987) (doubts about insurer contribution rights in uninsured motorist setting)
- Willingboro Mall, Ltd. v. 240/242 Franklin Ave. L.L.C., 215 N.J. 242 (2013) (policy promoting efficient dispute resolution and resource use)