On May 28, 2019, a New Jersey appeals court upheld the trial court’s decision to deny American European Insurance Co.’s motion to invoke an exclusion in their insured’s policy that barred coverage “for any claim, demand or suit based on assault and battery,” in<em> <a href="https://www.wcmlaw.com/wp-content/uploads/2019/05/CMS-Investment-Ventures-Inc.-et-al.-v.-American-European-Insurance-Co.-et-al.-case-number-A-2056-17T3.pdf">CMS Investment Ventures Inc. et al. v. American European Insurance Co. et al.</a></em>
The claim arose out of incident involving a tenant who was sexually assaulted by an intruder who broke into her apartment through a window. Before this incident, the tenant had contacted the Landlord, CMS Investment Ventures, and informed them that a window in her ground floor apartment was broken and did not lock properly. The landlord never responded to her complaint and shortly thereafter the incident occurred.
The tenant asserted a premises liability claim against the landlord whom notified their insurance company, American European Insurance Co (“AEIC”). After a 20 month investigation, AEIC denied coverage to CMS based on the assault and battery exclusion within the policy. In turn, CMS launched the instant action to challenge the denial. The trial judge found in part that “the phrase ‘based on assault and battery’ was ambiguous and capable of a limitless meaning.”
AEIC appealed that decision and the appellate panel affirmed the trial court’s ruling stating, “AEIC was estopped from denying coverage, because it waited 20 months to inform CMS of its coverage decision… AEIC was entitled to a reasonable amount of time to investigate the claim, however, AEIC’s adjuster closed the file without rendering a coverage decision or informing the insured.” Thanks to Jon Avolio for his contribution to this post. Please email <a href="mailto:BGibbons@wcmlaw.com">Brian Gibbons</a> with any questions.