2008 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit
5-23-2008 

# Old B r id ge T

wp B d E d v . Ge n S t a r Inde mnity P r e c e de n t i al or N on-P r e c e de n t i al : N on-P r e c e de n t i al D ocke t N o . 07-1261

F o l lo w thi s a nd a dd it ion al work s at : h tt p://d i g it alc ommon s .l a w . vi l l a no va . e du/thir dc ir c uit_2008

Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sity S choo l of L a

w Di g it al Re posit or y

. It h as be e n a c c e pt e d for inclusion in 2008 D e c i sion s b y a n author i z e d a dmini s tr at or of V i l l a no va U nive r sity S choo l of L a

w Di g it al Re posit or y

. F or mor e infor m at ion, p le as e c on t a ct Be n j a min . C a rl s on@l a

w . vi l l a no va . e du . Re c omme nde d C it at ion
" Old B r id g e T

wp Bd E d v

. Ge n S t a r Inde mnity " (2008). 2008 D e cisio n s . P ape r 1146. h tt p://d i g it alc ommon s .l a

w . vi l l a no va . e du/thir dc ir c uit_2008/1146

### NO T P RE CE DE NT I AL UN I TE D S TA TE S C OU RT OF AP PE AL S FO R T HE TH IRD C IRCU IT

___________ No. 07- 1261

__________ OL D B RI DG E T OW

NS HI P B OA RD OF ED UC AT I ON , Appe l l ant

v. GENE RA L S TA R IND EMNI TYCO MP AN Y

v. GENE RA L S TA R IND EMNI TYCO MP AN Y, Th i r d P arty Pl a i nt i ff
v. INSURANCE CORPORATI ON OF HANNOVER, Thi r d Party De fe ndant

OnAp pealfrom

the Unite d S tate s Dis tric t Court fo r the Distri ct

of New Jer se y ( D. C. Ci v. No. 05- c v- 05681) D istrict Ju d g e: H o n . G arrett E . B ro w n , Jr.

Subm itte d und er

Th ir d C ir cuit

LA R 3 4.1(a) on Mar c h 7, 2008

### 2 Befo re : FISHE R, GR EE NB ER G andRO TH , Cir cuit Judg es ( Opi ni on fi l e d: May

28, 2008)

O P I N IO N
RO TH , Cir cuitJu dg e: O l d B r i dge Tow ns hi p B oar d of Educat i on ( t he B oard ) a p p ea l s an or derof t he U
. S
. D istri ct C o u rtfo r the D istri ct o f N ew Jerse y , d en y ing the B o ard ’s m o ti o n fo r sum m ary j udg me n ta nd gr ant i ng s um m ar yj udgm enti n favorof G ener al St arI ndemni t yC om pany . T he i ssue on a pp eal i s w hetherG eneral S t ar i s obli gated t o ind em nifyt he B oard fo r at t orney s’ f e e s aw a rd e d in a law su it f iled a g a in st th e B o a rd
. F o r th e re a so n s s e t f o rth b e lo w , w e w ill
a f f irm th e o rd e r o f

th e D istric t C o u rt. I. B ackground an d P roce dural H i s t ory B e c a u se th e f

a c ts a re w e ll k n o w n to th e p a rties , w e w ill d isc u ss th e m o n lyb rie f ly her e. F ro m Ju ly1 , 2 0 0 2 , u n til Ju ly1 , 2 0 0 3 , the B o a rd h e ld a S c h o o l B o a rd L e g a l L iab ili ty P o licyiss u e d b yG e n e ra l S tar . P u rsu a n t to th a t p o licy , G e n e ra l S tar p ro v id e d th e B o a rd w ith i ns ur ance cover age f

orcer t ai n l egal cl ai m s . T he pol i cypr ovi ded, “The C om pany[G ener al S tar ] w ill p a yo n b e h a lf

o f th e IN S U R E D a ll s u m s w h ich th e IN S U R E D sh a ll b e c o m e leg a lly ob l i gated t o p ayas dam ages t o w hich t his i nsurance ap pli es, a s a re su l tof C L A IM S fi rs t
m ad e ag ains t the I N SU R E D
. . . byr eas on of W R O N G FU L A C T ( S) byt heT he p oli cydefined “W rongf ul A ct s” as “[a] nyact ual oral l eged err ors, m i sst at e m e n ts, 1 m i slead ing st at ement s , act s orom i s s i ons , negl ectorbr eac h of dut y , i ndi vi dual l yor col l ect i vel y , i ncl udi ng actual oral l eged Ci vi l R i ght s vi ol at i ons . . . . ” 

### 3 E D U C A T IO N A L E N T IT Y
. . .. ” U n d e r th e a g r e e m e n t, G e n e ra l S tar h a d th e “ d u tyto 1 defe nd any sui tagainstt he IN S U R E D seeki ng dam ages t o w hich t his i nsurance ap pli es, arisi n g fro m W R O N G F U L A C T (S ) e v en if an y o f the all eg ati o n s o f the C L A IM o r su itare g ro u n d l e s s , f

a l s e , o rf r a u d u l e n t . ” I n a d d i t i o n , a p r o v i s i o n , e n t i t l e d “ S u p p le m e n ta l P a ym e n ts ,” obl i gat ed G ener al St ar t o pay“cour tcos t s i ncur r ed i n anys ui tt o w hi ch t hi s i ns ur ance appl i es
a n d w h ic h th e C o m p a n yis d e f e n d in g h e re u n d e r.” T he pol i cyi ncl uded a numberof exc l us i ons . I n par t i cul ar , t he pol ic ypr ovi ded t hat G ener al St ar“s hal l not m ake a nypaym entnordefe nd anys ui ti n connec t i on w i t h any C L A I M S m a d e a g a i n s t t h e I N S U R E D
. . . [ f ] o r a n y d a m a g e a r i s i n g f r o m b o d i l y i n

j u r y,
s i cknes s , emot i onal di s t r es s , m ent al angui s h .
. . hum i l i at i on and di s par agement. . . [w ] het her
o rn o tb a s e d u p o n , a r i s i n g o u t o f o r r e l a t e d t o a n y c i v i l r i g h t s o r o t h e r v i o l a t i o n o f s t a t u t o r y,
con st i t uti on al or co m m on l aw ” or “[f]or back w ages or sal ary , em ploym ent benefit s,
over t i m e, futu re w ag es o r sa l ar yors i m i l arC L A I M S .
. . . ” The pol i cyal s o excl uded “a ny
c o sts , fe e s in c lu d in g a tto rn e y ’s f e e s, o r e x p e n s e s w h ich th e IN S U R E D sh a ll b e leg a lly
o b lig a te d to p a ya s a re s u lt o f a n y a d v e rs e ju d g m e n t f o r in ju n c tiv e o r d e c la ra to ry re lie f . . ..” In Ju n e 2 0 0 2 , Je a n n e C o o k , a su b stitu te t e a c h e r e m p lo ye d b y th e B o a rd , f iled su it agai ns tt he B oar d ( as w el l as ot herdefe ndant s ) i n t he Superior C our tof N ew J er s eyunder th e N e w Je rse yL a w A g a in st D isc rim in a tio n . C o o k a lleg e d th a t th e B o a rd h a d e n g a g e d in

### 4

dis abil i t ydis cri m i nati on , fa i l ed to provide r easona ble accom m od at i on for her di sabi l i t i es, creat ed a h ost i l e w ork en vi r onm ent, ret al i at ed ag ai nst her for enga ging i n p rot ect ed acti vit i es, and comm it ted i nt ent i onal i nfl i ct i on of emot i onal di s t r es s . C ook al l eged thats he had
s uffe r ed “e m ot i onal di s t r e s s , h u mi l i a t i o n , e mba rr a s s me n t , b o d i l yi n j u ryc o u p l e d wi t h phy s i cal
m ani fes t at i on of emot i onal di s t r es s , l os s of i ncome and ot her s ever e fi nanci al l os s es . ” S he soug ht com pen sat oryand pu nit i ve d am ages, as w el l as back pay , front pay , at t orney s’ fees, in te re s t, a n d c o s ts . G ener al St ar engage d couns el and pr ovi ded a defe ns e on behal f of t he B oar d, s ubj ect t o a “Rese r vat i on of R i ght s ” and N on- W ai ver A gr eement . T he R es er vat i on of R i ght s l et t er
s t at ed t hatG ener al St arw as r es er vi ng i t s r i ght s under t he pol i cy , cl ai m i ng t hat“[t ] her e i s no
cover age f

oranydamage s t hatm aybe aw ar ded as excl uded byexcl us i on ( 2) , w hi ch i nvol ve[s ] bodyi nj ur yand/ oremot i onal di s t r es s orm ent al angui s h. A ddi t i onal l y , t her e i s no
cover age fo r a n y damages t hatm i ghtbe aw ar ded as excl uded byexcl us i on ( 12) , [w hi ch
e x c lu d e s ] b a c k p a y , f

u tu re p a y , o r e m p lo y e e b e n e f its .” A ju ry f o u n d th a t th e B o a rd a n d o th e r d e f e n d a n ts h a d f

a iled to p ro v id e C o o k w ith
r eas onabl e ac comm odat i on, di s cr i m i nat ed agai n s therbas ed on herhandi cap, r et al i at ed agai ns ther , and fa i l ed t o engage i n t he i nt er act i ve pr oces s . T he j ur y det er m i ned t hatC ook
w as notent i t l ed t o economi c dam ages but aw ar ded her $250, 000 for “emot i onal di s t r es s and sufferi ng . ” T he S up eri or C ou rtof N ew Jer seyaw arded C oo k att orney s’ fees and cost s.I ti s undi s put ed t hatt he pol i cydoes n o tcovert he $250, 000 i n emot i onal damages 2 aw ar ded t o C ook. 

### 5 T he B oar d t hen fi l ed a compl ai nt i n t he Super i or C our tagai ns tG ener al St ars eeki ng i ndemni fi cat i on fort he aw ar d of at t or ney s ’ fee s and cos t s . B ot h t he B oar d and G ener al St ar 2 fi l e d a mot i on fo rs umm a r yj udgm ent. T he a c t i on w a s s ub s e qu e nt l yr e move d t o t he U
. S. D i s t r i c tC o u r tf

o rt h e D i s t r i c to f

N e w J e r s e y. T h e D istri ct C o u rtg ran ted G en era l Star’s m o ti o n an d d en ied th e B o ard ’s m o ti o n . In
s o doi ng, t he D i s t r i ctC our tr eas on ed t hat , byvi r t ue of the exc l us i ons forcl ai m s forback
w ag es o r em o ti o n al distr ess, t h e p o lic y ag ree m en t did n o t pro v ide c o v era g e f o r C o o k ’s cl ai m s. B ecause t he poli cy agreem ent provided t hat G eneral S t ar w ou l d p ay“cou rtcost s in any s ui t t o w hi ch t his i ns ur ance appl i es ” (e m phas i s added) , t he D i s t r i ctC our tconcl uded t hat G e n e ra l S tar d id n o t h a v e to p a yc o sts in c o n n e c tio n w ith C o o k ’s s u it. T he B oar d t i m el yappea l ed. II . A n a ly sis T he D i str ict C our thad j ur i s di ct i on pur s uantt o 28 U
. S. C
. § 1332. W e have j ur i s di ct i on under28 U
. S. C
. § 1291. W e e x e rc ise p len a ry re v iew o f th e D istric t C o u rt’s o rd e r g ra n tin g su m m a ryju d g m e n t. N e w p o rt A ss o c s. D e v . C o . v. T h e T ra v e lers In d e m . C o . o

f Illi n o is , 1 6 2 F
. 3 d 7 8 9 , 7 9 1 (3d C ir
. 1 9 9 8 )
. S u m m a r y j u d g m e n tw i l l b e a f f i r m e d o n l y i f

“ t h e r e i s n o g e n u i n e i s s u e a s t o a n y

### 6

m at er i al fac tand .
. . t he m ovi ng par t y i s ent i t l ed t o j udgm entas a mat t erof l aw . ” F ED . R. C IV . P. 5 6 (c ). We a l s o e x e r c i s e p l e n a r yr e v i e w o f t h e Di s t r i c tCo u r t ’ s i n t e rp r e t a t i o n o f s t a t e l a w. Che mi c a lLe a man Ta n k Li n e s , I n c . v . Ae tn a Cas
. & S u r . C o. , 8 9 F .3 d 9 7 6 , 9 8 3 (3d C ir
. 19 96 ). In t his case, N ew Jer seyl aw app l i es. U nderN ew J er s eyl aw , an i ns ur ance pol i cyi s i nt erpr et ed “ac cor di ng t o i t s pl ai n and
or di nar ym eani ng. ” V

oor hees v. P r ef

er r ed Mut . I

ns . C o. , 6 0 7 A
. 2 d 1 2 5 5 , 1 2 6 0 (N
. J. 1 9 9 2 ). H ow ever , beca us e i ns ur ance cont r act s ar e contr act s of adhe s i on, N ew J er s eyl aw r equi r es t hatcour t s “as s um e a pa r t i cul ar l yvi gi l ant r ol e i n ens ur i ng t hei rconfor m i t yt o publ i c pol i cy and pr i nci pl es of fa i r nes s . ” G i bs on v. C al l aghan , 730 A
. 2d 1279, 1282 ( N
. J
. 1999) ( i nt er nal q u o tatio n o m itt e d ). A s s u c h , “w h e n th e re is a m b ig u ity in a n in su ra n c e c o n tra c t, co u rts [ m u st] i nt erpr ett hatcont r act t o comport w i t h t he re as onabl e expect at i ons of t he i ns ur ed. ” Zacar i as
v. A l l s t at e I ns . C o. , 7 7 5 A .2 d 1 2 6 2 1 6 8 N .J. 5 9 0 , 5 9 4 (N .J. 2 0 0 1 ). In a d d iti o n , ex c lu sio n s in an i ns ur ance pol i cym us tbe narr ow l ycons t r ued, and t he i ns ur er bear s t he bur den of br i ngi ng th e c a s e w ith in a p o lic ye x c lu s io n . A m er i can Mo torist s I ns . C o. v. L- C

-A Sal es C o. , 713 A .2 d 1 0 0 7 , 1 0 1 3 (N .J. 1 9 9 8 ). N o n e th e les s, in th e a b se n c e o f a n ya m b ig u ity , a c o u rt “ sh o u ld notw r i t e fort he i ns ur ed a be t t er pol i cy of i ns ur ance t han t he one pur chas ed. ” V oor hees , 607 A
. 2d at1260. Th e p o l i c ya t i s s u e i n t h i s c a s e u n a mb i g u o u s l yr e q u i r e s Ge n e r a l S t a rt o p a y“ a l l s u ms
w hich [t he B oard] s hall beco m e l egall yob l i gated t o p ayas dam ages t o w hi ch this i ns ur anceT he B oar d ar gues t hatt he D i s t r i ctC our tim p rop er l ypl ace d t he bur den of pr ovi ng t hat 3 the ex clus ion s d id no t ap p ly o n the B o ard
. H o w ev er, the ex clus ion s clea rl yap p lyto C o o k ’s c a se . T h e p lain lan g u a g e o f th e p o licysa ti s f

ie s G e n e ra l S tar ’s b u rd e n w ith re sp e c t to s how i ng t hatt he exc l us i ons appl yher e. 

### 7 appl i es . . .” a s w e ll as “ c o u rt c o sts in c u rre d in a n ysu it t o w hich this i nsuran ce ap pli es . . .” (e m p h a sis a d d e d ). T h u s, th e B o a rd is o n ly e n tit led to p a y m e n t f o r C o o k ’s a tto rn e y s’ f

e e s if h e r s u it w a s o n e “ to w h ic h th is in s u ra n c e a p p lie s .” I n hercl ai m s against th e B oar d, C ook cl ai m ed t hats he had s uffe r ed “e m ot i onal di s t r es s , hum i l i at i on, embar r as s m ent , bodi l y i nj ur ycoupl ed w i t h phy s i cal m ani fes t at i on of emot i onal di s t r es s , l os s of i ncome and ot hers ever e fi nanci al l os s es . ” H avi ng pr evai l ed on
c e rt a in o f

h e r c la im s , s h e w a s a w a rd e d o n ly em o tio n a l d a m a g e s . T he exc l us i ons t o t he pol i cycl ear l ys t at e t hatG ener al St ar“s hal l notm ake any p ay m en t . . . in con n ec ti o n w ith an yC L A IM S
. . . [f ]or a n yd am ag e a ri sing fro m b o d il yinjury

. . . emot i onal di s t r es s , m ent al angui s h
. . . hum i l i at i on and di s par agement. . . ” or“[f ] orback
w ag es o r salary , em p loy m en t b en ef it s, o v erti m e, f

u ture w ag es o r sa lary o r si m il ar C L A IM S

. . . ” ( e mph a s i s a d d e d )
. W h i l e we a r e mi n d f u l t h a t we mus t c o n s t r u e e x c l u s i ons t o an i ns ur ance pol i cynar r ow l y , C ook’ s cl ai m s fal l s quar el y w i t hi n t he t ypes of cl ai m s excl uded b yth e p o licya t issu e in th is c a se . B yits ter m s, th e p o licyp ro v id e s th a t G e n e ra l S tar w ill 3 notm ake any paym enti n connec t i on w i t h s uch cl ai m s . I ndemni fi cat i on of at t or ney s ’ fee s
w ou l d co nst i t ute a pay m ent. C oo k’s s uiti s not one t o w hich t he insur ance a pp l i es; i ti s

### 8

s pe c i f i c a l l ye x c l u d e d f

r o m c o v e r a g e . As s u c h , Gen e r a l St a ri s n o to b l i g a t e d t o p a yfor C o o k ’s a tto rn e y s ’ f

e e s u n d e r t h e p o lic y . I I I . C oncl usi on F o r t h e re a s o n s s e t f

o rt h a b o v e , w e w ill a f

f ir m th e ju d g m e n t o f

th e D is tr ic t C o u rt .