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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.