Appellate Division Sides with Insurer in Denying Coverage in Sex Abuse Case
The New Jersey Appellate Division recently affirmed a grant of summary judgment to High Point Insurance Company in High Point Insurance Company v. J.M., et al., ___ N.J.Super. ___, (App.Div. 2008), Docket No. A-0829-06T50829-06T5 (March 12, 2008) declaring that it was not obligated to defend or indemnify a pair of insureds under a homeowner’s policy in a personal injury lawsuit stemming out of sexual abuse.
As a result of events that occurred between August 1999 and April 2000 involving two minors, Sheryl Van Dyke (“Sheryl”) pled guilty to one count of second degree sexual assault and one count of endangering the welfare of minors. In a subsequent personal injury action brought by guardians of the involved minors, Sheryl faced allegations of sexual molestation and emotional injury. In addition, the complaint alleged that George Van Dyke (“George”), Sheryl’s husband, knew or should have known of Sheryl’s behavior and did nothing to prevent it. The Van Dykes were insured pursuant to a homeowner’s policy issued by High Point. High Point defended George subject to a reservation of rights, but declined to defend Sheryl. The case eventually settled.
Subsequently, a coverage action was commenced to determine whether the settlement was covered. The trial Court found Sheryl’s actions to be intentional based on an objective approach thus precluding coverage pursuant to an expected/intended exclusion within the policy. The trial court also denied coverage to George on public policy grounds, asserting that liability coverage should not be provided to spouses of sexual molesters, especially if he knew or should have know about his wife’s sexual proclivities.
George argued on appeal that the trial court should have applied a subjective test to determine an insured’s intent to injure. He further argued that if such a test was applied, summary judgment would have been denied because High Point could not demonstrate that he had any intent to injure. Quoting the New Jersey Supreme Court in Voorhees v. Preferred Mutual Ins. Co., 128 N.J. 165, 184 (1992), the Court stated “[w]hen the actions are particularly reprehensible, the intent to injure can be presumed from the act without an inquiry into the actor’s subjective intent to injure.” Furthermore, the Court reasserted its public policy stance stated in J.C. v. N.B., 335 N.J.Super. 503, 509-10 (App.Div. 2000) that allowing coverage for a spouse in a sexual molestation case would provide that spouse “with an undue incentive to value the stability and privacy of the marriage over the well-being of the child-victim.” Therefore, the Court found that public policy warranted application of an objective approach and as such George’s behavior cannot be labeled an ‘accident’ consistent with the policy’s definition of ‘occurrence’. The award of summary judgment relative to George was thus affirmed.
Also on appeal, Sheryl argued that High Point had a duty to defend and indemnify her based on her lack of subjective intent to cause any harm. Sheryl cited her assertion of a duress defense as support for her argument. The Court found this reasoning unpersuasive, stating that the elements of the crimes for which Sheryl pled guilty to reflect culpability for injury to the minors involved. As a result, the Court found that it did not matter which test (subjective or objective) the Court used to evaluate coverage and affirmed the award of summary judgment relative to Sheryl.
Tags: insurance, sexual abuse
This entry was posted on Thursday, April 24th, 2008 at 10:27 am and is filed under Analysis. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
April 24th, 2008 at 5:24 pm
I will wait to see how the substance of this ruling is addressed at the Supreme Court level (in this or a subsequent case) before expressing confidence that this holding will be the law. Reasons include (a) whether a “subjective” or “objective” standard of intent is applied, the record on the husband’s intent is difficult to square with the burden typically required for a finding of noncoverage under these provisions — the real facts are not reported, but the opinion gives no suggestion of any evidence of actual knowledge or culpability on his part; (b) the Supreme Court may have a different opinion on whether an innocent homeowner would “reasonably expect” coverage for allegations of negligence notwithstanding that the direct cause of harm was unquestionably criminal behavior by others within the home, even if the perpetrator was the insured’s spouse not entitled to coverage under the circumstances; and (c) the Supreme Court may have a different opinion on whether the availability of coverage for the innocent spouse would incentivize or disincentivize that person from reporting sexual misconduct by a spouse when discovered. Maybe we’ll find out. Do you know if certification is being sought?
May 13th, 2008 at 6:53 pm
NJ Court Rules Part II govern appeals to the New Jersey Supreme Court from a final judgment of the Appellate Division. In this case there appears no basis for further appellate review as of right, and thus review by the Supreme Court would require the Supreme Court to review it on certification under Rule 2:12. Under Rule 2:12-3 a party seeking certification must file a petition for certification within 20 days from the entry of the Appellate Division ruling. A petition for certification is granted on the affirmative vote of 3 or more of the justices of the Supreme Court (New Jersey’s Supreme Court has 7 justices). R. 2:12-10. The applicable standard is that “[c]ertification will be granted only if the appeal presents a question of general public importance which has not been but should be settled by the Supreme Court or is similar to a question presented on another appeal to the Supreme Court; if the decision under review is in conflict with any other decision of the same or a higher court or calls for an exercise of the Supreme Court’s supervision and in other matters if the interest of justice requires….” R. 2:12-4. As you note, there would appear to be some conflict in New Jersey’s appellate case law regarding the applicability of homeowners insurance to torts involving sexual misconduct.