Appeal from the United States District Court for the District of New Jersey. (D.C. No. 84-0097).
Seitz and Higginbotham, Circuit Judges, and Giles, District Judge.*fn*
The plaintiffs, Dome Petroleum Limited and Dome Energy Limited ("Dome"), appeal from an order granting summary judgment dismissing their claims against the defendants, Employers Mutual Liability Insurance Company of Wisconsin ("Employers"), the First Jersey National Bank ("First Jersey") and certain of its employees. Jurisdiction in the district court was founded upon diversity of citizenship, and this court has appellate jurisdiction over final orders pursuant 28 U.S.C. § 1291 (1982).
This dispute arose out of a tender offer that Dome made for several million shares of Conoco, Inc., in May of 1981. Pursuant to this offer, Dome appointed First Jersey as the depository agent for receiving those shares tendered. As a depository agent, First Jersey was required to determine whether the tenders were timely received. On May 26, 1981, First Jersey erroneously rejected tenders of some 720,000 shares as untimely.
As a result of this error and of First Jersey's actions to prevent the loss from falling upon the timely tendering shareholders, First Jersey suffered a loss of approximately $3.5 million. The facts of this loss are set out more fully in our prior opinion. First Jersey National Bank v. Dome Petroleum Limited, 723 F.2d 335, 337-38 (3d Cir. 1983).
First Jersey sought to recover its loss from Dome under an indemnification clause in the depository agreement between Dome and First Jersey. In our prior opinion, we held that Dome was obligated to indemnify First Jersey even though the error may have been due to the negligence of First Jersey's employees. 723 F.2d at 340-42. We left open, however, the question of whether Dome may be subrogated to First Jersey's claim against its insurance carrier, Employers, which was not a party to that action.
Dome then began this action against Employers, certain employees of First Jersey, and First Jersey. First, it asserted, as First Jersey's subrogee, a claim under First Jersey's errors and omissions policy with Employers which it contended covered this loss. Second, it asserted, as First Jersey's subrogee, a claim in negligence against the First Jersey employees allegedly responsible for the loss. These employees are named insureds under First Jersey's policy with Employers. Third, it asserted a direct action in its own right against the First Jersey employees. Fourth, it asserted a claim against First Jersey for interference with Dome's rights to subrogation.
The district court, upon motion for summary judgment by the defendants, dismissed all four claims. It held that subrogation was not available to Dome, that Dome had no cause of action against the employees, and that since Dome had no right of subrogation in this case, First Jersey had not interfered with it. Dome then appealed the dismissal of the first three claims, but does not raise, on this appeal, any issue relating to the dismissal of the fourth claim against First Jersey.
On a review of a summary judgment, we do as the district court was required to do: we determine whether the record as it stands reveals any disputed issue of material fact, assume the resolution of any such issue in favor of the non-movant and determine whether the movant is then entitled to judgment as a matter of law. First Jersey National Bank v. Dome Petroleum Limited, 723 F.2d at 338. Neither party disputes the application of New Jersey law to this diversity action.
Under New Jersey law, subrogation is an equitable device by which the subrogee, having paid for a loss to the subrogor, steps into the shoes of the subrogor to assert any claim it had against a third party who in good conscience ought to pay for the loss. Standard Accident Insurance Co. v. Pellecchia, 15 N.J. 162, 104 A.2d 288 (1954). Dome asserts that having paid for the loss, it is subrogated to First Jersey's claim against its insurer.
The district court held that Dome could not assert a claim against Employers as First Jersey's subrogee. It determined, relying upon Pasker v. Harleysville Mutual Insurance Co., 192 N.J. Super. 133, 469 A.2d 41 (App. Div. 1983), that subrogation was available only against a ...