SUPERIOR COURT OF NEW JERSEY 

 APPELLATE DIVISION 

 DOCKET NO. A-2643-21 

SYLVIA MELANIA TEJADA 

DE TAPIA, 

 Plaintiff, 

v.

74 INDUSTRIES, INC., 

 Defendant-Appellant, 

and 

VELCRO USA, INC., CARLISLE 

FINISHING, LLC, COATS 

AMERICAN, INC., a/k/a 

COATS NORTH AMERICA, 

CHAMPLAIN PLASTICS, INC., 

BETHEL INDUSTRIES, INC., 

AMERICAN & EFIRD, LLC, 

BRITTANY DYEING & 

PRINTING CORP., SINAI 

CUTTING, EXACTA CUTTING, 

NEWBURY CUTTING, BII CORP., 

a/k/a B2 CORP., CHST OF NJ, 

LLC, 

Defendants, 

NOT FOR PUBLICATION WITHOUT THE 

APPROVAL OF THE APPELLATE DIVISION 

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the 

internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
2 A-2643-21

and 

74 INDUSTRIES, INC., 

 Defendant/Third-Party 

 Plaintiff-Appellant, 

v.

NEW JERSEY MANUFACTURERS 

INSURANCE COMPANY, 

 Third-Party Defendant- 

 Respondent. 

______________________________

Argued October 12, 2023 – Decided July 12, 2024 

Before Judges Vernoia and Walcott-Henderson. 

On appeal from the Superior Court of New Jersey, 

Law Division, Bergen County, Docket No. L-5288-18.

Thomas J. Monroe argued the cause for appellant 

(Certilman Balin Adler & Hyman, LLP, attorneys; 

Thomas J. Monroe, on the brief).

Richard J. Williams, Jr., argued the cause for 

respondent (McElroy, Deutsch, Mulvaney & 

Carpenter, LLP, attorneys; Richard J. Williams, Jr., of 

counsel and on the brief). 

 

PER CURIAM 

Slyvia Melania Tejada de Tapia was injured at work and filed a workers' 

compensation claim against her employer, 74 Industries, Inc. (74 Industries), 
3 A-2643-21

which was settled pursuant to an order approving settlement with dismissal 

under N.J.S.A. 34:15-20 (the Section 20 Settlement). The Section 20 Settlement 

resulted in the dismissal of plaintiff's workers' compensation claims with 

prejudice. 

New Jersey Manufacturers Insurance Company's (NJM) had issued a 

standard workers' compensation and employers liability insurance policy (the 

Policy) to 74 Industries and recommended settlement of plaintiff's workers' 

compensation claim.1 Prior to the settlement, however, plaintiff had also filed a 

complaint in the Law Division alleging intentional torts against 74 Industries, 

and 74 Industries filed a third-party complaint against NJM seeking coverage 

under the Policy for plaintiff's claims of intentional wrong asserted against 74 

Industries. NJM denied coverage citing policy exclusions for intentional torts 

and moved to dismiss 74 Industries's third-party complaint. The Law Division 

1

 The Policy contains two mutually exclusive parts. Part One of the Policy 

provides coverage for 74 Industries's statutory obligations under the Workers' 

Compensation Act, N.J.S.A. 34:15-1 to -147 (WCA), to pay benefits to an 

employee injured during the course of their employment. Part Two of the Policy 

provides coverage for claims "where recovery is permitted by law" and excludes 

coverage and/or defense for civil suits brough against 74 Industries, including 

an intentional wrong. 
4 A-2643-21

judge granted NJM's motion to dismiss 74 Industries's third-party complaint for 

failure to state a claim. We affirm. 

I.

Plaintiff suffered an injury after she was bitten or stung by an insect during 

the course of her employment as a sewing machine operator with 74 Industries. 

According to plaintiff, insects routinely infested the packages of fabric and 

materials that employees handled and frequently bit and stung employees. 

Plaintiff was hospitalized for treatment related to the infection she suffered as a 

result of the insect bite. The infection caused her right leg to swell and form 

green open sores. 

Plaintiff filed a workers' compensation claim against 74 Industries seeking 

medical and temporary disability benefits related to her injuries. 74 Industries 

denied plaintiff's workers' compensation claim and sought coverage from NJM 

under the Policy. 

NJM defended 74 Industries in workers' compensation court and 

eventually recommended 74 Industries settle plaintiff's case for a lump sum 

payment of $25,000 by way of an order approving settlement with dismissal, 

with prejudice, under Section 20, N.J.S.A. 34:15-20, of the WCA. 
5 A-2643-21

In its settlement letter, NJM advised 74 Industries that "[t]he proposed 

settlement for $25,000 takes into account estimate[d] permanency value, the 

exposure to temporary total disability benefits[,] . . . the exposure to liability for 

medical expenses, and the cost and fees that would be incurred under an [o]rder 

[a]pproving [s]ettlement, but which would shift to the petitioner for a [S]ection 

20 resolution." NJM further wrote, "the proposed Section 20 settlement 

provides the benefit of certainty and a final closure." 

Approximately one month later, the parties appeared in workers' 

compensation court where plaintiff accepted the Section 20 settlement on the 

record before a judge of workers' compensation. At that hearing, the workers' 

compensation judge explained to plaintiff that in return for the $25,000 lump 

sum payment, NJM and 74 Industries would "receive[] the benefit of what we 

call a dismissal of your claim petition with prejudice." The judge further 

explained that with respect to her claim petition, plaintiff was barred from 

"seek[ing] anything further including money, including medical treatment, 

including payment of any medical bills[.]" In response to a query from the 

judge, plaintiff confirmed she understood and accepted the settlement. At no 

time during the hearing or prior to the court's acceptance of the settlement did 

the worker's compensation judge or plaintiff refer to or acknowledge plaintiff's 
6 A-2643-21

pending Law Division action or address whether or to what extent plaintiff's 

acceptance of the settlement affected her right, if any, to pursue any intentionalwrong claims against 74 Industries. 2

 

The judge entered an order approving the Section 20 settlement, stating in 

relevant part: 

This is a lump sum settlement between the parties in the 

amount of $25,000 pursuant to N.J.S.A. 34:15-20 

which has the effect of a dismiss[al] with prejudice, 

being final as to all rights and benefits of the petitioner 

and is a complete and absolute surrender and release of 

all rights arising out of this/these claim petition(s). The 

payment hereunder shall be recognized as a payment of 

workers' compensation benefits for insurance rating

purposes only. 

Prior to the entry of the Section 20 settlement, however, plaintiff had filed 

an action in the Law Division alleging her injuries were caused by 74 Industries's 

intentional misconduct under the principles explained by the Court in Laidlow 

2

 In addition, the summary judgment record includes a certification from 

plaintiff stating that her understanding of the settlement of the worker's 

compensation action was that in exchange for her receipt of the $25,000 lump 

sum payment, she would give up "all the claims [she had] made against 74 

Industries in the [Workers' Compensation] Action, and only the claims [she had] 

made in the [Workers' Compensation] action[.]" Plaintiff further certified that 

"at no time did [the judge of workers' compensation] ever tell [her] that [she] 

could not prosecute an intentional wrong claim against 74 Industries . . . if [she] 

entered into the Section 20 settlement[.]" 
7 A-2643-21

v. Hariton Mach. Co., 170 N.J. 602, 14 (2002). The "intentional wrong" 

exception to the surrender of common-law remedies under the Worker's 

Compensation Act is governed by N.J.S.A. 34:15-8—also known as the 

exclusive remedy provision of the Act. See Millison v. E. I. Du Pont de 

Nemours & Co., 101 N.J. 161, 169, 179 (1985) (holding "the Compensation Act 

should serve as a worker's sole and exclusive remedy under circumstances such 

as those alleged."). More particularly, N.J.S.A. 34:15-8 provides that the WCA 

is the exclusive remedy for claims made against an employer by an employee 

for injuries or death while working for the employer, "except for intentional 

wrong." 

In Laidlow, our Supreme Court clarified that "an intentional wrong is not 

limited to actions taken with a subjective desire to harm, but also includes 

instances where an employer knows that the consequences of those acts are 

substantially certain to result in such harm." 170 N.J. at 613. Consequently, an 

employee seeking to prove his employer committed an intentional wrong must 

demonstrate either (1) that the employer had a subjective desire to injure, or (2) 

that "based on all the facts and circumstances of the case . . . the employer knew 

an injury was substantially certain to result." Id. at 614. 
8 A-2643-21

Plaintiff had filed a series of amended complaints, each of which included 

the same four counts against 74 Industries. Plaintiff filed an amended complaint 

on September 19, 2019, a second-amended complaint on November 14, 2019, a 

third-amended complaint on March 30, 2020, and a fourth-amended complaint 

on February 1, 2021. In each of her complaints, plaintiff asserted four counts 

against 74 Industries, alleging intentional wrongs that plaintiff claimed are 

within the exception to the workers' compensation bar under N.J.S.A. 34:15-8. 

In count one, titled "Intentional Wrong against 74 Industries," alleged 74 

Industries breached its duty to plaintiff to keep the "premises free from known 

defects, dangers, and dangerous and hazardous conditions not typically 

associated with [p]laintiff's job responsibilities" by ignoring her complaints and 

those of its other employees, and by failing or refusing to undertake any action 

to correct, prevent, or alleviate the injuries. In count two, titled "Conduct 

Substantially Certain to Cause Injury Against 74 Industries," plaintiff alleged 

74 Industries was "substantially and virtually certain that its failure to remedy 

the persistent and continuing dangerous and hazardous condition created by 

large flying insects" embedded in fabrics handled by its employees in the 

workplace caused injuries. 
9 A-2643-21

In count three, titled "Intentional Wrong against 74 Industries," plaintiff 

alleged 74 Industries "was aware that its refusal to allow an injured employee to 

seek prompt medical treatment after sustaining an injury at work would cause 

injury to such an employee or exacerbate or aggravate the injury sustained at 

work." In count four, titled "Conduct Substantially Certain to Cause Injury 

against 74 Industries," plaintiff alleged 74 Industries was substantially and 

virtually certain that directing plaintiff "to choose between continuing her 

employment with 74 Industries or seeking prompt medical treatment after 

sustaining an injury at work" would cause injury. 

Defendant tendered plaintiff's third-amended complaint—with the same 

four counts presented in the fourth-amended complaint—to NJM for defense and 

indemnification under the Policy. In a letter dated November 18, 2020 to 74 

Industries, NJM denied coverage under Part Two of the Policy for claims in the 

third-amended complaint citing various "terms, conditions and exclusions of the 

NJM policy" which served "as the basis for NJM's disclaimer." 74 Industries 

moved to amend its answer and add a counterclaim and third-party complaint 

against NJM seeking a declaratory judgment that NJM was required to fully 

defend, indemnify, and reimburse it pursuant to the Policy, which provided 

coverage for the period from January 1, 2016, to January 1, 2017. NJM then 
10 A-2643-21

moved to dismiss 74 Industries's third-party complaint against it for failure to 

state a cause of action. 

The motion court granted NJM's motion to dismiss 74 Industries's thirdparty complaint for failure to state a claim pursuant to Rule 4:6-2(e). In its

written opinion, the court analyzed the WCA's exclusive remedy provision and 

the Supreme Court caselaw defining the narrow exception to the provision for 

injuries caused by intentional wrongs by the employer. The court found 

plaintiff's fourth amended complaint had pleaded causes of action for intentional 

wrongs, and that "Part Two of the Policy clearly and unambiguously excludes 

intentional wrongs from insurance coverage." 

The court further found that plaintiff's allegations fell squarely within the

Policy's C5 exclusion for "intentional wrongs" and rejected 74 Industries's 

contention the Policy was ambiguous because the C7 exclusion and C7 

endorsement provided coverage for "bodily injuries" under Part Two of the 

Policy. The court stated that "[w]hile plaintiff assert[s] that she was threatened 

with adverse employment action if she left the jobsite for medical treatment, 

. . . none of her counts allege employment discrimination or retaliation . . . ." 

and concluded the alleged threat involved an intentional wrong. The court 
11 A-2643-21

further reasoned that there is no duty to defend when an action is not covered by 

a policy. 

It is the court's dismissal of 74 Industries's coverage claims that is the 

subject of this appeal as plaintiff's Law Division causes of action against 74 

Industries have been settled. This case is therefore not about plaintiff's damages 

for the intentional wrongs alleged in her complaint, but rather it requires that we 

consider whether NJM had a duty under the Policy to indemnify and defend 74 

Industries in the Law Division action for the intentional wrongs alleged by 

plaintiff in her complaints. 

II. 

"We review a grant of a motion to dismiss a complaint for failure to state 

a cause of action de novo, applying the same standard under Rule 4:6-2(e) that 

governed the motion court." Wreden v. Twp. of Lafayette, 436 N.J. Super. 117, 

124 (App. Div. 2014). That standard is whether the pleadings even "suggest[]" 

a basis for the requested relief. Printing Mart-Morristown v. Sharp Elecs. Corp., 

116 N.J. 739, 746 (1989) (citation omitted). As a reviewing court, we assess 

only the "legal sufficiency" of the claim based on "the facts alleged on the face 

of the complaint." Green v. Morgan Props., 215 N.J. 431, 451 (2013) (quoting 

Printing Mart-Morristown, 116 N.J. at 746). Consequently, "[a]t this 
12 A-2643-21

preliminary stage of the litigation [we are] not concerned with the ability of [a 

party] to prove the allegation contained in the complaint," Printing MartMorristown, 116 N.J. at 746, rather a court must accept the facts as pled are true 

and accord them "all legitimate inferences," Banco Popular N. Am. v. Gandi, 

184 N.J. 161, 166, 183 (2005). 

The workers' compensation system is "an historic 'trade-off' whereby 

employees relinquish their right to pursue common-law remedies in exchange 

for prompt and automatic entitlement to benefits for work-related injuries." 

Laidlow, 170 N.J. at 605 (citing Millison, 101 N.J. at 174); see also N.J.S.A. 

34:15-7 to -8. "That system, however, is not without exception. When a 

worker's injuries have been caused by an employer's 'intentional wrong,' that 

'intentional wrong' voids the 'trade-off' and the employee may seek both workers' 

compensation benefits and common-law remedies." Charles Beseler Co. v. 

O'Gorman & Young, Inc., 188 N.J. 542, 546 (2006) (citing N.J.S.A. 34:15–8). 

"The interpretation of an insurance policy, like any contract, is a question 

of law, which we review de novo." Sosa v. Mass. Bay Ins. Co., 458 N.J. Super. 

639, 646 (App. Div. 2019) (citing Selective Ins. Co. of Am. v. Hudson E. Pain 

Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605 (2012)). "In 

attempting to discern the meaning of a provision in an insurance contract, the 
13 A-2643-21

plain language is ordinarily the most direct route." Chubb Custom Ins. Co. v. 

Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008) (citing Zacarias v. Allstate 

Ins. Co., 168 N.J. 590, 595 (2001)). 

"We are guided by general principles: 'coverage provisions are to be read 

broadly, exclusions are to be read narrowly, potential ambiguities must be 

resolved in favor of the insured, and the policy is to be read in a manner that 

fulfills the insured's reasonable expectations.'" Sosa, 458 N.J. Super. at 646 

(quoting Selective Ins. Co., 210 N.J. at 605). By contrast, "[i]f the plain 

language of the policy is unambiguous, we will 'not engage in a strained 

construction to support the imposition of liability or write a better policy for the 

insured than the one purchased.'" Ibid. (quoting Chubb Custom Ins. Co., 195 

N.J. at 238). 

"[C]ourts will enforce exclusionary clauses if [they are] 'specific, plain, 

clear, prominent, and not contrary to public policy,' notwithstanding that 

exclusions generally 'must be narrowly construed,' and the insurer bears the 

burden to demonstrate they apply." Abboud v. Nat'l Union Fire Ins. Co. of 

Pittsburgh, 450 N.J. Super. 400, 407 (App. Div. 2017) (quoting Flomerfelt v. 

Cardiello, 202 N.J. 432, 441-42 (2010)). 
14 A-2643-21

III. 

74 Industries's arguments essentially fall under three theories: that NJM 

had a duty to defend that was triggered by NJM's representation of 74 Industries 

in the underlying workers' compensation case, including recommending that 

NJM settle plaintiff's petition via a Section 20 settlement; that NJM had a duty 

to defend because a fair reading of two exclusions—the C5 and C7 exclusions—

and their accompanying endorsements are ambiguous and requires NJM to 

sustain coverage, see Charles Beseler Co., 380 N.J. Super. at 202 ("[w]hen an 

insurance policy's language fairly supports two meanings, one that favors the 

insurer, and the other that favors the insured, the policy should be construed to 

sustain coverage") (quoting President v. Jenkins, 180 N.J. 550, 563(2004)); and 

that, as a matter of public policy, NJM had a duty to indemnify them. 

First, we reject 74 Industries's argument that NJM had a duty to defend it 

in the Law Division action because the Section 20 settlement in workers' 

compensation court was intended to resolve "all of plaintiff's claims against 74 

Industries." 74 Industries further argues that by virtue of NJM's 

recommendation and representation of 74 Industries in the workers' 
15 A-2643-21

compensation case, NJM was duty bound to continue to represent it in the Law 

Division and provide coverage for plaintiff's claims. 

"Section 20 is a settlement mechanism available to the employee, the 

employee[']s dependents, and the employer to avoid a hearing on contested 

issues and to provide the parties with the security of a certain outcome." Univ. 

of Mass. Mem'l Med. Ctr., Inc. v. Christodoulou, 360 N.J. Super. 313, 347-48 

(App. Div. 2003), rev'd on other grounds, 180 N.J. 334, 349 (2004). A Section 

20 settlement is "designed to achieve a complete settlement of all issues for all 

of the parties concerned." Id. at 320. As such, a plaintiff's acceptance of a 

Section 20 settlement bars a subsequent lawsuit against the paying employer as 

it would be unfair to hold the employer liable for both common law damages 

and workers' compensation liability. See Hawksby v. DePietro, 165 N.J. 58, 66-

67 (2000) (holding that a Section 20 settlement barred a subsequent medical 

malpractice claim against plaintiff's treating physician and co-employee because 

it would be unfair to hold the employer liable for both common law damages 

and workers' compensation liability).

Prior to the Section 20 settlement, plaintiff had filed her fourth-amended 

complaint in the Law Division alleging her intentional wrong claims. The 

workers' compensation settlement record is silent as to plaintiff's then-pending 
16 A-2643-21

intentional-wrong suit in the Law Division. In fact, there is no mention of the 

then-pending Law Division action before the workers' compensation court judge 

by any party or by the judge at the settlement hearing. 

Rather, during the Section 20 settlement hearing, the workers' 

compensation judge solely addressed the impact of the Section 20 settlement, 

stating that "in return for making this payment to you . . . 74 Industries and . . . 

NJM received the benefit of what we call a dismissal of your claim petition with 

prejudice." The judge went on to explain "that means this case is over, finished 

and done with forever." (Emphasis added). In response, plaintiff said, "I 

understand." 

However, in the Section 20 settlement, plaintiff consented only to a 

release of all claims "arising out" of the claim petition filed in workers' 

compensation court, which by definition under N.J.S.A. 34:15-8 cannot and did

not include claims for intentional wrongs such as the causes of action plaintiff 

had filed against 74 Industries in the Law Division. Accordingly, there is 

nothing in the record to support defendant's argument that the Section 20 

settlement also resolved plaintiff's Law Division claims. Thus, 74 Industries's 

argument that NJM had a duty to defend and indemnify it on the pending Law 

Division claims based on the Section 20 settlement is unavailing. 
17 A-2643-21

74 Industries next argues the Policy is ambiguous, specifically as to the 

C5 and C7 exclusions—and corresponding endorsements—and that this 

ambiguity requires that NJM provide a defense and indemnity in the Law 

Division action. 74 Industries also argues the language in C5 is ambiguous and 

must further be read in conjunction with the "bodily injury" language in the 

endorsement to the C7 exclusion. 

The C5 exclusion states: "This insurance does not cover: '[b]odily injury 

intentionally caused or aggravated by you.'" The endorsement provides: 

With respect to [the] C5 [exclusion], this insurance 

does not cover any and all intentional wrongs within the 

exception allowed by N.J.S.A 34:15-8 including but not 

limited to bodily injury caused or aggravated by an

intentional wrong committed by you or your 

employees, or bodily injury resulting from an act or 

omission by you or your employees, which is 

substantially certain to result in injury. 

[emphasis added.] 

In Charles Beseler Co., we reviewed a version of this exclusion and 

endorsement without the "substantially certain" language and considered 

whether the exclusion covered all "intentional wrongs" contemplated in N.J.S.A. 

34:15-8. 380 N.J. Super. 193 (App. Div. 2005). Previously in Laidlow, the 

Court had explained that "an intentional wrong is not limited to actions taken 

with a subjective desire to harm, but also includes instances where an employer 
18 A-2643-21

knows that the consequences of those acts are substantially certain to result in 

such harm." 170 N.J. at 613. The Court reasoned: 

[I]n order for an employer's act to lose the cloak of 

immunity of N.J.S.A. 34:15-8, two conditions must be 

satisfied: (1) the employer must know that his actions 

are substantially certain to result in injury or death to 

the employee, and (2) the resulting injury and the 

circumstances of its infliction on the worker must be (a) 

more than a fact of life of industrial employment and 

(b) plainly beyond anything the Legislature intended 

the Workers' Compensation Act to immunize. 

[Id. at 617.] 

Relying on Laidlow, we held that the C5 exclusion without the 

"substantially certain" language was ambiguous because it excluded from 

coverage "only injuries that result from a subjective intent to injure." Charles 

Beseler Co., 380 N.J. Super. at 202. We also found that the C5 exclusion failed 

to exclude from coverage the subset of intentional wrong claims based on 

"wrongful employer conduct that allegedly was substantially certain to have 

caused injury." Ibid. We determined that such claims categorically fall under 

the "substantially certain" prong of the intentional-wrong exception recognized 

by Laidlow. Id. at 202-03. 

The Supreme Court adopted our determination that an "'intentional 

wrong,' qualifying for exception to the surrender of common-law remedies under 
19 A-2643-21

N.J.S.A. 34:15–8, was broader than the [C5] exclusion from employer-liability 

coverage for injuries 'intentionally caused' by the employer." Id. at 547 (citing 

Charles Beseler Co., 380 N.J. Super. at 202). And, the Court further concluded 

that: 

bodily injuries, which are "intentionally caused" by the 

employer and are subject to the [C5] exclusion, 

encompassed only "intentional injuries." So 

interpreted, the exclusion was held not to apply to [the 

employee]'s claim, which involved "an unintended 

injury caused by an intentional wrong." The panel 

refused to read into the [C5] exclusion any additional 

words that would extend the exclusion to a claim of

wrongful employer conduct that allegedly was 

substantially certain to have caused injury, which 

would satisfy the Laidlow standard for permitting a 

common-law action. 

[Charles Beseler Co., 188 N.J. at 547. (internal citations 

omitted).] 

 In affirming our decision in Charles Beseler Co., the Court stated "the 

policy language does not unambiguously exclude injuries falling under the 

'substantially certain' prong of the intentional-wrong exception recognized by 

Laidlow." Ibid. It further stated: 

[a]n insured could reasonably conclude that the 

"intentionally caused or aggravated by" language is

narrower than the statutory "intentional wrong" 

exception under the workers' compensation scheme. 

Based on that eminently reasonable reading of the 

precise language of the exclusion, an insured such as 
20 A-2643-21

Beseler would not expect that it would be bare of 

coverage against the allegations in [employee]'s 

common-law action. 

[Ibid.; accord New Jersey Mfrs. Ins. Co. v. Delta 

Plastics Corp., 380 N.J. Super. 532 (App. Div. 2005), 

aff'd, 188 N.J. 582 (2006).] 

The C5 endorsement in Part Two of the Policy at issue here includes the 

"substantially certain" language such that it resolves the ambiguity as to the 

"substantially certain" prong of the intentional wrong standard we considered in 

Laidlow and the Court addressed in Charles Beseler Co. 74 Industries 

acknowledges that it "is not aware of any case law challenging the validity of 

the current [C5] exclusion[.]" In any event, the plain and unambiguous language 

in the C5 endorsement clearly covers plaintiff's intentional tort claims under 

N.J.S.A. 34:15-8—both those that "result from a subjective intent to injure" and 

those that are "substantially certain to have caused injury." Charles Beseler Co., 

188 N.J. at 547. Thus, we reject 74 Industries's claim the C5 exclusion is 

ambiguous, and we therefore conclude the Policy excludes from coverage 

plaintiffs' intentional tort claims. 

74 Industries next argues that a separate endorsement to the C7 exclusion 

provides coverage, because the C7 endorsement states NJM "will defend any 

claim . . . where bodily injury is alleged." This argument is equally unavailing 
21 A-2643-21

for the following reasons. First, the C7 exclusion expressly provides there is no 

coverage for: 

Damages arising out of coercion, criticism, demotion, 

evaluation, reassignment, discipline, defamation, 

harassment, humiliation, discrimination against or 

termination of any employee, or any personnel 

practices, policies, acts or omissions; 

The separate C7 endorsement provides: 

With respect to Exclusion C7, we will defend any 

claim, proceeding or suit for damages where bodily 

injury is alleged. We have the right to investigate and 

settle. We will not defend or continue to defend after 

the applicable limits of insurance have been paid. Such 

policy limits include any legal costs assessed against 

you on behalf of your employee(s). 

 Here, 74 Industries relies on a broad reading of the endorsement provision, 

"we will defend any claim . . . where bodily injury is alleged" but, in doing so, 

ignores that the endorsement is limited to only claims that are otherwise 

excluded from coverage under the C7 exclusion. It therefore incorrectly argues 

that the bodily injury allegations in plaintiff's complaint trigger a coverage 

obligation for any and all bodily injury claims simply because the C7 

endorsement references "bodily injury." 

The plain language of the C7 exclusion excludes coverage for allegations 

of "coercion, discipline, harassment, termination of any employee, or any 
22 A-2643-21

personnel practices, policies, acts or omissions," which the Supreme Court in 

Schmidt v. Smith defined as "a class of discomforts that one typically would not 

associate with bodily injury[.]" 155 N.J. 44, 52 (1998) (reviewing a 

substantially similar version of the C7 exclusion that did not include the term 

"coercion"). The Court determined that "[t]he exclusion is valid as long as the 

liability arising from those discomforts is not related to bodily injury," and that 

had that plaintiff alleged "emotional injuries accompanied by physical 

manifestations," the carrier's attempt to avoid indemnification would violate 

"the public policy underlying the workers' compensation scheme" and would be 

void. Ibid. (first citing Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 179 

(1992), then citing Variety Farms, Inc. v. New Jersey Mfrs. Ins. Co., 172 N.J. 

Super. 10, 22 (App. Div. 1980)).

Although the C7 endorsement provides that NJM "will defend any claim, 

proceeding or suit for damages where bodily injury is alleged," the endorsement 

cannot be read separate and apart from the language in the exclusion provision. 

See New Jersey Transit Corp. v. Certain Underwriters at Lloyd's London, 461 

N.J. Super. 440, 454 (App. Div. 2019), aff'd, 245 N.J. 104 (2021) ("We must 

read the contract as a whole 'in a fair and common sense manner.' The court 

must 'give effect to the whole policy, not just one part of it[.]'") (quoting Cypress 
23 A-2643-21

Point Condominium Ass'n, Inc. v. Adria Towers, L.L.C., 226 N.J. 403, 415-16 

(2016)). In fact, the endorsement is limited to the circumstances set forth in the 

C7 exclusion: the endorsement expressly states it applies "[w]ith respect to 

Exclusion C7." And, there is no language in the endorsement suggesting the 

exception it provides for bodily injuries applies to any other policy provision. 

Again, based on the plain language, the endorsement provides only that C7 

exclusion will not be used to deny coverage for bodily injuries, such as "the 

emotional injuries accompanied by physical manifestations" explicitly noted by 

the Schmidt Court, 155 N.J. at 52, it does not create new coverage for all bodily 

injuries outside C7 the circumstances referenced in the exclusion. 

Here, the court rejected 74 Industries's argument that the C7 exclusion and 

endorsement compelled indemnification because it found plaintiff's allegations 

did not fall within those provisions, stating "[w]hile plaintiff asserts that she was 

threatened with adverse employment action if she left the jobsite for medical 

treatment," none of her counts alleged employment discrimination or retaliation 

to come under C7. 

We agree with the court's conclusion. It is true that plaintiff did not plead 

any counts falling within the C7 exclusion for "[d]amages arising out of 

coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, 
24 A-2643-21

harassment, humiliation, discrimination against or termination of any employee, 

or any personnel practices, policies,3 acts or omissions[.]" However, as the 

motion court acknowledged, "plaintiff assert[s] that she was threatened with 

adverse employment action if she left the jobsite for medical treatment," which 

based on a fair reading of the complaint suggests a cause of action for coercion.4 

Furthermore, in count three, plaintiff alleged 74 Industries "was aware that its 

refusal to allow an injured employee to seek prompt medical treatment after 

sustaining an injury at work would cause injury to such an employee or 

exacerbate or aggravate the injury sustained at work." 

Regardless, defendant's claim it is entitled to coverage under the C7 

exclusion fails because plaintiff's causes of action are founded on intentional 

wrongs and they are excluded from coverage under the C5 exclusion. Indeed, 

as the Court recognized in Schmidt, the employer there was entitled to coverage 

for bodily injury claims claimed by the plaintiff-employee falling within the C7 

3

 Although C7 covers personnel policies and practices, 74 Industries did not 

and does not claim any such personnel policies or practices are at issue here. 

4

 In her "Allegations Common To Each Count," plaintiff alleges she 

"immediately reported the injury and showed the injury to her supervisor who 

told [p]laintiff to stay on the factory line until she was unable [to] work any 

longer because if the supervisor told their manager, the manager would fire 

[p]laintiff." 
25 A-2643-21

endorsement but only because the plaintiff had not alleged that the employer had 

caused the alleged injuries intentionally such that the C5 exclusion applied. 155 

N.J. at 50-51. As such, the Court in Schmidt recognized that there is no coverage 

for any claimed actions that fall within the C7 bodily injury endorsement, under 

C7, where, as here, the actions allegedly resulting in the bodily injuries 

constitute intentional wrongs excluded from coverage by the C5 exclusion. See 

ibid. 

We are further persuaded that as the language in the C5 exclusion is clear 

and unequivocal, plaintiff's claims of intentional wrong conduct on the part of 

her employer, as defined in Laidlow, are not covered under NJM's Policy. 74 

Industries's argument that the C7 endorsement must control—to require NJM to 

indemnify it—without taking into account the C5 exclusion which excludes

coverage for bodily injuries intentionally caused or substantially certain to be 

caused by the insured, ignores general contract principles. See New Jersey 

Transit Corp., 461 N.J. Super. at 454 ("The court must 'give effect to the whole 

policy, not just one part of it[.]'"). 74 Industries's approach runs contrary to 

Schmidt, which recognized that the any claimed actions that fall within the 

coverage for bodily injury under C7, as reinforced by the later C7 endorsement, 

does not cover acts—like those alleged against 74 Industries—that are 
26 A-2643-21

intentional because they are subject to the C5 exclusion. See Schmidt, 155 N.J. 

at 50-51. 

Lastly, we reject 74 Industries's argument that public policy supports 

coverage for intentional wrongs, as we have consistently held that exclusions 

for intentional wrongs contained in insurance policies are legally valid. See 

Allstate Ins. Co. v. Malec, 104 N.J. 1, 119 (1986) (quoting Ambassador Ins. Co. 

v. Montes, 76 N.J. 477, 482 (1978)). We therefore find no basis to support 74 

Industries's argument that public policy favors coverage for plaintiff's 

intentional wrongs filed in Law Division. See Schmidt, 155 N.J. at 50-52 

(reviewing both the C5 and C7 exclusions and explaining these insurance 

contracts provide coverage for "bodily injuries falling both inside and outside 

of the workers' compensation structure" and "[t]o the extent Exclusion C7 would 

otherwise operate to deny coverage" for emotional injuries accompanied by 

physical manifestations vicariously caused by the employer, "the exclusion

violates the public policy underlying the workers' compensation scheme and is 

therefore void."). 

We therefore discern no basis to conclude NJM had a duty to defend or 

indemnify 74 Industries against plaintiff's intentional wrong claims made in the 
27 A-2643-21

Law Division fourth-amended complaint by virtue of NJM's settlement 

recommendation in the workers' compensation court or on any other basis. 

Affirmed.