Under New Jersey law, if the Insured cannot recover under an insurance policy, the Insured's creditors cannot recover. Liberty Mut. Fire Ins. v. Kahlaid, Inc., 489 A.2d 1231, 1232 (N.J. Super. Ct. App. Div. 1985) (secured creditor had no right as a mere loss payee to recover under a casualty policy under which the Insured could not recover because it breached a policy provision). It thus follows from our holding that PEC could not recover under the LEU policies, that PEC's creditors could not recover either.
Raritan Bay, as "loss payee is not an insured but only a mere appointee of the insured[.]" Liberty Mut. Fire Ins. Co. v. Kahlaid, Inc., 489 A.2d 1231, 1232 (N.J. Super. Ct. App. Div. 1985) (citation and internal quotation marks omitted). Under New Jersey law, "[b]ecause of the personal nature of a contract of insurance, if an insurance policy is made expressly payable to a second mortgagee, the second mortgagee is entitled to the policy proceeds in preference to the holder of a first mortgage who is not listed as a loss payee under the policy."
Under a fidelity insurance policy the insurer is liable only in the event of a loss by the insured and "the right to recover . . . belongs solely to the insured absent some provision in the [Policy] to the contrary." Resolution Trust Corp. v. Moskowitz, 845 F. Supp. 247, 250 (D.N.J. 1994) (citing Anderson v. Employers Ins. of Wausau, 826 F.2d 777, 780 (8th Cir. 1987)), vacated in part, No. 93-2080, 1994 U.S. Dist. LEXIS 15259 (D.N.J. Aug. 31, 2004); see also Liberty Mutual Fire Ins. Co. v. Kahlaid, Inc., 489 A.2d 1231, 1232 (N.J. Super. Ct. App. Div. 1985) ("If the loss is not payable to the insured, it is not payable to the loss payee."). Thus, where "the policy expressly states that recovery under the policy is limited to the named insured, . . . third party claims against the insurance proceeds must be rejected."
The endorsements issued by Great American to Tri-State do not afford loss payees a direct right of action against Great American. Under New Jersey law, "[a] loss payee is not an insured but only a mere appointee [of the insured] who may not recover if the insured has breached any provision of the policy which would prevent recovery by him. If the loss is not payable to the insured, it is not payable to the loss payee." Liberty Mutual Fire Ins. Co. v. Kahlaid, Inc., 199 N.J.Super. 494, 497, 489 A.2d 1231 (App.Div. 1985); See also Rena, Inc. v. Brien, 310 N.J.Super. 304, 317, 708 A.2d 747 (App.Div. 1998). With respect to promissory estoppel, the loss payees must establish that:
Petition for certification denied. (See 199 N.J. Super. 494)
Both parties to this appeal argue the proximate cause issue in terms of whether Forked River would or could have had any status greater than a "loss payee" had Matlack complied with a request to "name" or "put" Forked River on the policy. As we said in Liberty Mutual Fire Ins. Co. v. Kahlaid, Inc., 199 N.J. Super. 494, 497, 489 A.2d 1231 (App.Div.), certif. denied, 101 N.J. 300, 501 A.2d 958 (1985) A loss payee is not an insured but only "a mere appointee [of the insured] who may not recover if the insured has breached any provision of the policy which would prevent recovery by him."
The more difficult question is the availability and effect of an arson defense where the insured is a corporation. Compare Miller Dobrin Furniture Co. v. Camden Fire Ins. Co., 55 N.J. Super. 205, 218-219, 150 A.2d 276 (Law Div. 1959) (holding that arson committed by a dominant, fifty-percent stockholder was attributable to the corporation) and Italian Fisherman v. Commercial Union Assurance Co., 215 N.J. Super. 278, 282, 521 A.2d 912 (App.Div.), certif. denied, 107 N.J. 152, 526 A.2d 211 (1987) (holding that arson committed by stockholder who was the principal managing agent precluded recovery by the corporation); Liberty Mutual Fire Ins. Co. v. Kahlaid, Inc., 199 N.J. Super. 494, 498, 489 A.2d 1231 (App.Div.), certif. denied, 101 N.J. 300, 501 A.2d 958 (1985) (holding that the insurer did not assume the risk of paying an innocent secured creditor if the insured's sole stockholder intentionally caused the loss) with Howell v. Ohio Casualty Ins. Co., 130 N.J. Super. 350, 354, 327 A.2d 240 (App.Div. 1973) (holding that where one spouse's arson destroyed the house which both spouses owned as tenants by the entireties, the innocent spouse was entitled to recover under their fire insurance policy for her share of the loss); Ambassador Ins. Co. v. Montes, 76 N.J. 477, 483, 486 n. 3, 388 A.2d 603 (1978) (stating in dictum that even if fire damage was intentionally caused by a dominant stockholder, the insurer would be liable to the insured corporation "provided that as a result the wrongdoer does not benefit"). See Annotation, Fire Insurance on Corporate Property as Affected by its Intentional Destruction by a Corporate Officer, Employee, or Stockholder, 37 A.L.R.3d 1385 (1971).