By: Victoria M. Adeleke, Law Clerk
Edited by: Betsy G. Ramos, Esq.
Plaintiffs Bridgewater Donuts, LLC and Tamar, Inc. filed a lawsuit against defendant Geico Indemnity Co. seeking coverage under an automobile liability policy issued to Susan Mendelsohn-Hall. Mendelsohn-Hall alleged she suffered injuries when hot tea spilled on her at the Dunkin’ Donuts drive-through, leading to a lawsuit against Plaintiffs. Plaintiffs then sought coverage under Mendelsohn-Hall’s auto policy issued by Geico, invoking the “loading and unloading” doctrine. However, Geico denied coverage, prompting this legal dispute. The issue in Bridgewater Donuts, LLC v. Geico Indemnity Co., 2024 N.J. Super. Unpub. LEXIS 1505 (App. Div. July 9, 2024) was whether Plaintiffs qualified as additional insured under Mendelsohn-Hall’s auto policy under the loading and unloading doctrine.
Mendelsohn-Hall had a New Jersey Family Automobile Insurance policy that provided coverage for bodily injury sustained by a person arising out of the ownership, maintenance or use of the automobile. The policy defined the persons insured to include Mendelsohn-Hall and any other person using the auto with her permission.
On the day of the accident, Mendelsohn alleged she was scalded by hot tea as it was delivered to her at the drive thru window by plaintiffs’ employees and that her injuries were proximately caused by plaintiffs’ negligence.
Plaintiffs filed a complaint against Defendant Geico, seeking a declaratory judgment that they were additional insureds under Mendelsohn-Hall’s policy. Defendant moved for summary judgment, arguing plaintiffs had not been using Mendelsohn-Hall’s vehicle when she sustained her injuries and, therefore, were not additionally insured as users of the automobile. The trial court granted Geico’s motion for summary judgment and dismissed Plaintiffs’ complaint. The trial court determined that Plaintiffs did not qualify as additional insureds under Mendelsohn-Hall’s auto policy because her injuries were not directly attributable to the loading of the tea by plaintiffs into her vehicle.
The Appellate Division reversed. The appellate court first explained that N.J.S.A. 39:6A-3 requires that automobile owners have auto insurance that covers loss arising out of the ownership, maintenance, operation and use of an automobile. The Court then explained that unloading and loading had always been a verified use of the vehicle under the statute, and implicit in this requirement is the obligation to provide omnibus liability coverage to all persons who use the named insured vehicle by participating in its loading or unloading.
The Appellate Division relied on the N.J. Supreme Court case of Penn Nat’l Ins. Co. v. Costa, where the Court found that to determine whether an injury arises out of the use of a motor vehicle thereby triggering coverage, that there must be a substantial nexus between the injury suffered and the asserted negligent use of the motor vehicle. Use of a motor vehicle has been interpreted broadly to include the acts of loading and unloading the automobile.
The Appellate Division found that in Bridgewater Donuts, LLC, the record supported a finding of the requisite substantial nexus. The Appellate Division pointed to the undisputed fact that plaintiffs’ drive-up window was available to customers to purchase and pick up their items and load the items into their car. Plaintiffs’ employee loading the hot tea she had purchased into her vehicle was integral to the completion of the transaction between Mendelsohn-Hall and plaintiffs. Therefore, the Court determined her injuries bore a substantial and not incidental nexus to Plaintiffs’ alleged negligent use during the loading process under her automobile policy.
Thus, the Court reversed the trial court’s order granting summary judgment to defendant Geico and denying Plaintiffs’ motion for summary judgment and remanded the case back to the trial court for further proceedings.