New Jersey Supreme Court Looks Outside Pleadings in NJ to Deny Duty to Defend
In Norman Int’l, Inc. v. Admiral Ins. Co., No. 086155, 2022 WL 3220868 (N.J. Aug. 10, 2022), the New Jersey Supreme Court ruled on the application of a county-specific exclusionary clause in an Admiral Insurance Company (“Admiral”) policy issued to Richfield Window Coverings, LLC (“Richfield”)—Richfield sells window coverings, blinds, etc., and also provides retailers with cutting machines to cut its products. The Admiral policy issued to Richfield excluded liability for “bodily injury” that was “in any way connected with” operations/activities in select New York counties, including Nassau County.
Instantly, a Home Depot employee in Nassau County, NY, was injured while using Richfield’s cutting machine—a machine which was also maintained by Richfield. The employee filed suit against Richfield in Nassau County. Richfield next sought coverage under its policy with Admiral but Admiral invoked the county-specific exclusionary clause. Richfield sought a declaration in the Superior Court that Admiral was obligated to defend Richfield because the terms “operations” and “activities” in the county-specific exclusionary clause were ambiguous. This argument was rejected and Admirals motion for summary judgment was granted. The Appellate Division, however, reversed and found there was no causal relationship between Richfield’s activities involving the cutting machine and the causes of action raised in the complaint.
More importantly though, the Appellate Division noted that the trial court improperly considered facts from discovery to arrive at its decision. On this issue, the New Jersey Supreme Court stated, in no uncertain terms, that courts in fact can consider “those facts beyond the complaint necessary to determine the duty to defend issue.” Another noteworthy aspect of the opinion was its stance on the meaning of the language “in any way connected with.” On this, the Court stated “in any way connected with” does not require a showing of causation—it was enough that Richfield provided the machine to Home Depot. Consequently, the Appellate Division’s holding was reversed.Thanks to Richard Dunne for his contribution to this article. Should you have any questions, contact Matthew Care.