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Carpenter Technology Corp. v. Admiral Insurance Co.6/17/2002
t was not a New Jersey resident under the Act, we noted that "an overly broad definition of 'resident' might place New Jersey at a disadvantage compared to other states" by allowing other states to escape responsibility for covered claims. Id. at 594 (emphasis added). We emphasized that " lthough the scope of relief under the Act is to be construed liberally to effect its purposes [citation omitted], clearly one concern of the Legislature is 'to conserve limited Association resources to better assure their availability to serve core purposes.'" Id. at 590 (quoting Ciani, supra, 242 N.J. Super. at 169) (emphasis added). We now consider caselaw relevant to our analysis of Section 12a.
C.
UMC/Stamford, Inc. v. Allianz Underwriters Insurance Co., 276 N.J. Super. 52 (Law Div. 1994), addressed whether an excess insurer was entitled to a credit for the amount actually paid by the primary insurer or for the limits of the primary insurers' policies. There, the plaintiff sought coverage for environmental pollution claims under primary and excess insurance policies. After the plaintiff settled with the primary insurers, a non-settling insurer moved for disclosure of the settlement agreement. Id. at 56. In holding that the non-settling insurer could not compel disclosure of the settlement terms, the court reasoned: n excess carrier is entitled to a credit, not from the primary carrier's settlement, but from the amount allocable to the primary under its policies. In other words, the excess carrier is entitled to a credit for the full amount of the primary carrier's coverage before it is required to pay any cleanup expense. [Id. at 69 (emphasis added).]
The Third Circuit cited UMC with approval in Chemical Leaman Tank Lines, Inc. v. Aetna Casualty & Surety Company, 177 F.3d 210 (3d Cir. 1999). In that case, the plaintiffs instituted an action against the defendant insurance company seeking a declaratory judgment requiring that the defendant indemnify the plaintiffs for environmental cleanup costs. Id. at 214. Specifically, the plaintiffs contended that because they had settled with their primary liability carriers for less than their policy limits, the excess liability insurer should not have been granted a credit equal to the amount of the relevant policy limits. Id. at 226. Accordingly, the plaintiffs argued that the excess liability carrier was entitled to a credit for only the amount of settlement between the plaintiffs and the primary carrier. Id. at 226-27. In holding that the excess liability carrier was entitled to a credit equal to the full amount of the policy limits, the court endorsed UMC's reasoning:
he UMC approach tracks 'a widely followed corollary to the doctrine that a settlement with a primary insurer exhausts the primary coverage.' Under this approach, the insured forfeits any right to coverage of any dollar difference between the settlement amount and the primary insurer's policy limits. The excess insurer cannot be made liable for any part of this difference because the excess insurer never agreed to pay for losses below a specified floor . . . . This rule prevents the insured from securing a double recovery. [Id. at 227.] See also Koppers Co. v. Aetna Cas. & Sur. Co., 98 F.3d 1440 (3d Cir. 1996) (stating that settlement between insured and primary insurer will automatically permit excess insurer to credit equal to primary insurer's policy limit) (citing Barry R. Ostrager & Thomas R. Newman, Handbook on Insurance Coverage Disputes ยง 13.04, at 575-77 (7th ed. 1994)).
But see McMahon v. Caravan Refrigerated Cargo, 594 A.2d 349 (Pa. Sup. Ct.), alloc. denied, 600 A.2d 538 (1991) (holding that the plaintiff-claimant was not required to obta
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