                  IN THE COURT OF APPEALS OF TENNESSEE
                       WESTERN SECTION AT JACKSON


JOSEPH LEIBOVICH, EXECUTOR OF )
THE ESTATE OF EVELYN G. JORDAN)
AND JOHN JORDAN,                 )
                                 )
          Plaintiffs/Appellees,  ) Shelby Circuit No. 38197 T.D.
                                 )
VS.                              ) Appeal No. 02A01-9608-CV-00192
                                 )

THE KROGER COMPANY,
TOPVALCO, INC., MID-SOUTH
                                 )
                                 )
                                 )
                                                FILED
AUTOMATIC DOOR AND BESAM,        )
                                        August 19, 1997
INC.,                            )
                                 )
                                      Cecil Crowson, Jr.
          Defendants/Appellants. )     Appellate C ourt Clerk


           APPEAL FROM THE CIRCUIT COURT OF SHELBY COUNTY
                       AT MEMPHIS, TENNESSEE
                 THE HONORABLE D’ARMY BAILEY, JUDGE




JOHN R. CANNON, JR.
THE HARDISON LAW FIRM
Memphis, Tennessee
Attorney for Appellant



SAM L. CRAIN, JR.
STEPHEN D. CRAWLEY
SCOTT J. CROSBY
Memphis, Tennessee
Attorneys for Appellee




REVERSED AND REMANDED


                                                                ALAN E. HIGHERS, J.



CONCUR:

W. FRANK CRAWFORD, P.J., W.S.

DAVID R. FARMER, J.


     In this personal injury action, Joseph Leibovich (“Plaintiff”) filed suit as the executor
of the estate of Evelyn Jordan (“Jordan”) and her husband, John Jordan, for injuries Jordan

sustained as a result of being struck by automatic doors that closed upon her. Plaintiff

alleged that the negligence of the Defendants, The Kroger Company, Topvalco, Inc., Mid-

South Automatic Door (“Mid-South”), and Besam, Inc. (“Besam”), combined to cause

Jordan’s injury. Besam cross-claimed against Mid-South for breach of contract based

upon Mid-South’s failure to have Besam named as a co-insured on Mid-South’s policy of

liability insurance for the 1989-1990 year. Besam filed a motion for summary judgment on

its cross-claim against Mid-South. The trial court granted Besam’s motion for summary

judgment on its cross-claim against Mid-South and held that Mid-South breached its

distributorship agreement with Besam by failing to name Besam as a co-insured or

additional insured on Mid-South’s liability insurance policy which was in effect on the date

of Jordan’s accident. In granting Besam’s motion for summary judgment on its cross-claim

against Mid-South, the trial court ordered Mid-South to defend Besam in the underlying

action, ordered Mid-South to reimburse Besam for all attorneys’ fees and litigation costs

incurred by Besam in its defense of this case up to the date of the order, ordered Mid-

South to pay any judgment entered against Besam in favor of the Plaintiff to the same

extent that Besam would have been covered for the judgment under the liability insurance

policy in effect at the time of Plaintiff’s accident had Besam been named as a co-insured

or additional insured under the policy, unless Besam is adjudged solely liable for Plaintiff’s

alleged damages and injuries, and designated its order as a final judgment pursuant to

Tenn. R. Civ. P. 54.02. Mid-South appeals the judgment of the trial court arguing that the

trial court erred in granting Besam’s motion for summary judgment on its cross-claim

against Mid-South. For the reasons stated hereafter, we reverse the judgment of the trial

court and remand for a determination of whether Besam is directly and solely liable for the

claims asserted by the Plaintiff.



                                           FACTS

       Mid-South, a distributor of automatic doors, entered into a distributorship agreement

with Besam, a manufacturer of automatic doors, whereby Mid-South agreed to provide

Besam with liability insurance for all claims for which Besam was not directly and solely



                                              2
liable. Mid-South’s distributorship agreement with Besam provides in pertinent part as

follows:

       6.     [Mid-South’s] Sales, Service and Reporting Obligations

                      [Mid-South] shall, to the reasonable satisfaction
                      of [Besam]:

              G.   Obtain and maintain liability insurance naming
                   [Besam] as co-insured in such reasonable
                   amounts as may be agreed upon by the parties
                   and protecting [Besam] from any workman’s
                   compensation or other claim for which [Besam]
                   is not directly and solely liable hereunder.
                   *          *          *
       11.    General

              G.      The construction and performance of this
                      Agreement and the rights and remedies of the
                      parties hereto shall be governed by the law of
                      the State of New Jersey.



       Mid-South failed to have Besam named as a co-insured on Mid-South’s policy of

liability insurance for the 1989-1990 year.



       On July 26, 1990, Jordan sustained injuries at a Kroger store when an automatic

door closed on her.



                                              LAW

       The sole issue presented for review is as follows:

       Whether the trial court erred in granting Besam’s motion for summary judgment on

its cross-claim against Mid-South.



       The standards governing our review of a trial court’s action on a motion for summary

judgment are well settled.     Since our inquiry involves purely a question of law, no

presumption of correctness attaches to the trial court’s judgment, and our task is confined

to reviewing the record to determine whether the requirements of Rule 56 of the

Tennessee Rules of Civil Procedure have been met. Carvell v. Bottoms, 900 S.W.2d 23,

26 (Tenn. 1995); Cowden v. Sovran Bank/Central South, 816 S.W.2d 741, 744 (Tenn.

1991); Foley v. St. Thomas Hosp., 906 S.W.2d 448, 452 (Tenn. Ct. App. 1995); Brenner

                                               3
v. Textron Aerostructures, A Division of Textron, Inc., 874 S.W.2d 579, 582 (Tenn. Ct. App.

1993). Tennessee Rule of Civil Procedure 56.03 provides that summary judgment is

appropriate only where: (1) there is no genuine issue of material fact relevant to the claim

or defense contained in the motion, and (2) the moving party is entitled to a judgment as

a matter of law on the undisputed facts. Carvell, 900 S.W.2d at 26; Byrd v. Hall, 847

S.W.2d 208, 210 (Tenn. 1993); Anderson v. Standard Register Co., 857 S.W.2d 555, 559

(Tenn. 1993). The moving party has the burden of proving that the motion satisfies these

requirements. Downen v. Allstate Ins. Co., 811 S.W.2d 523, 524 (Tenn. 1991).



       While the summary judgment procedure is not a substitute for trial, it goes to the

merits of the complaint and should not be taken lightly. Byrd, 847 S.W.2d at 210; Jones

v. Home Indem. Ins. Co., 651 S.W.2d 213, 214 (Tenn. 1983); Fowler v. Happy Goodman

Family, 575 S.W.2d 496, 498 (Tenn. 1978); Foley, 906 S.W.2d at 452. It has been

repeatedly stated by the appellate courts of this state that the purpose of a summary

judgment proceeding is not the finding of facts, the resolution of disputed factual issues or

the determination of conflicting inferences reasonably to be drawn from the facts. Bellamy

v. Federal Express Corp., 749 S.W.2d 31, 33 (Tenn. 1988).           Rather, the purpose of

summary judgment is to resolve controlling issues of law. Id.



       In evaluating the propriety of a motion for summary judgment, we view the evidence

in the light most favorable to the nonmoving party and draw all reasonable inferences in

the nonmoving party’s favor. Byrd, 847 S.W.2d at 210-11. A motion for summary

judgment should be granted only when both the facts and the conclusions drawn from the

facts permit a reasonable person to reach but one conclusion. Id.



       Because the parties agreed in the distributorship agreement that New Jersey law

would apply in the construction and performance of the agreement and in assessing the

parties’ rights and remedies, we will apply New Jersey law to the facts of this case.



       One who enters into an agreement to obtain insurance and neglects to fulfill his



                                             4
obligation becomes himself an insurer and is liable as such.              DiPietro v. City of

Philadelphia, 496 A.2d 407, 409 (Pa. Super. Ct. 1985). As a general rule, the insurer is

obligated to defend an action whenever a complaint alleges a basis of liability within the

insured’s liability coverage. Burd v. Sussex Mut. Ins. Co., 267 A.2d 7, 9 (N.J. 1970). One

purpose of a liability insurance policy is to have the insurer defend suits involving claims

which the insurer would have to pay if the claimant prevailed in the action. Id. at 10. The

covenant to defend is thus identified with the covenant to pay. Id.



       The obligation to defend “groundless, false or fraudulent” claims does not mean that

the insurer is obligated to defend claims which are beyond the insured’s liability coverage.

Id. The obligation to defend means merely that an insurer cannot refuse to defend a suit

on the ground that the claim asserted against the insured cannot possibly succeed

because either in law or fact there is no basis for a plaintiff’s judgment. Id. In sum, an

insurer’s promise to pay claims within the scope of an insured’s liability insurance policy

encompasses the obligation to defend those claims. Id.



       If the circumstances are such that the scope of coverage and the correlative duty

to defend may not be resolved until factual matters surrounding the claim have been

determined at trial, the obligation to furnish a defense is transformed to one of

reimbursement to the insured. Cooper Lab. v. Int’l Surplus Lines, 802 F.2d 667, 675 (3rd

Cir. 1986); See also Burd, 267 A.2d at 9-10.



       In the present case, the trial court may find Besam to be directly and solely liable

for Plaintiff’s injuries. Thus, as Mid-South has argued, the possibility exists that Plaintiff’s

claim might not be covered by the insurance required by the parties’ distributorship

agreement. Therefore, because Mid-South’s obligation to defend claims which would have

been covered by the insurance required by the parties’ distributorship agreement does not

include an obligation to defend claims beyond the reach of insurance coverage required

by the parties’ agreement, the trial court’s grant of summary judgment in favor of Besam

on Besam’s cross-claim against Mid-South is premature. Mid-South’s corresponding



                                               5
obligation to defend and duty to pay the claims assessed against Besam does not arise

until after the trial court determines whether Besam is directly and solely liable for the

claims asserted by the Plaintiff. We, therefore, reverse the trial court’s order granting

summary judgment in favor of Besam on its cross-claim against Mid-South and remand for

a determination of whether Besam is directly and solely liable for the claims asserted by

the Plaintiff.



       The judgment of the trial court is hereby reversed and remanded for a determination

of whether Besam is directly and solely liable for the claims asserted by the Plaintiff. Costs

on appeal are taxed to Besam for which execution may issue if necessary.




                                                         HIGHERS, J.



CONCUR:




CRAWFORD, P.J., W.S.




FARMER, J.




                                              6
