SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-1614-19

OLVIN LEONEL RODRIGUEZORTIZ,

Plaintiff,

v.

INTERSTATE RACKING & 

SHELVING, II, INC., LIT/GREEK 

RT. 130, LLC, MEDICA, and 

TITAN RACK & SHELVING, 

LLC,

Defendants,

and

INTERSTATE RACKING &

SHELVING, II, INC.,

Plaintiff-Appellant,

v.

BERKSHIRE HATHAWAY,

INC., GUARD INSURANCE 

COMPANY, a/k/a AMGUARD 

INSURANCE COMPANY, 

and BERKSHIRE HATHAWAY 

NOT FOR PUBLICATION WITHOUT THE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.
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A-1614-19

GUARD, a/k/a BERKSHIRE 

HATHAWAY GUARD 

INSURANCE COMPANY,

Defendants-Respondents.

_____________________________

Argued January 27, 2021 – Decided September 3, 2021

Before Judges Ostrer, Accurso, and Enright.

On appeal from the Superior Court of New Jersey, Law 

Division, Ocean County, Docket Nos. L-1477-15 and

L-1563-18.

H. Alton Neff argued the cause for appellant.

Robert M. Wolf argued the cause for respondent 

AmGuard Insurance Company (Finazzo Cossolini 

O'Leary Meola & Hager, LLC, attorneys; Jeremiah 

O'Leary and Robert M. Wolf, on the brief).

PER CURIAM

Interstate Racking & Shelving, II, Inc. (Interstate) contends that its 

workers' compensation and employer's liability insurer, AmGuard Insurance 

Company (AmGuard), should have provided it a defense to a tort suit brought 

by an Interstate employee who was injured on the job. The employee was 

already receiving workers' compensation benefits. His lawsuit sought additional

damages based on common law claims that Interstate (and others) acted 

intentionally as well as negligently, recklessly and carelessly. Eventually, 
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A-1614-19

Interstate sued AmGuard for a defense. While Interstate's claim was pending, 

the court dismissed the employee's underlying suit — which Interstate defended 

with its own attorney — because he could not prove an intentional wrong to 

surmount the Workers' Compensation Act's exclusivity provision, N.J.S.A. 

34:15-8. Later, on cross-motions for summary judgment in the coverage action,

the trial court dismissed Interstate's complaint seeking defense costs and denied 

Interstate's motion for a declaration of coverage. The court held that exclusions

in the employer's liability part of Interstate's policy barred its claim. 

On appeal, Interstate challenges the trial court's interpretation of the 

policy. Interstate also argues that, to the extent the policy does bar recovery, it 

is void because it limits the scope of statutorily mandated coverage. Interpreting 

the employer's liability policy anew, we conclude it excludes coverage for 

Interstate's defense costs. However, AmGuard concedes that the workers' 

compensation portion of its policy afforded coverage of defense costs of 

negligence-based claims. Therefore, we reverse in part and remand for a 

determination whether, and to what extent, Interstate may recover costs 

associated with defending the negligence-based claims.
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I.

The facts are largely undisputed. Interstate employee Olvin RodriguezOrtiz fell off a warehouse racking system that he was dismantling and suffered 

serious injuries. He was not wearing a harness or other safety equipment. At 

the time, AmGuard insured Interstate under a Workers' Compensation and 

Employer's Liability Policy. Rodriguez-Ortiz filed a petition for workers' 

compensation benefits, on which AmGuard has paid in excess of $1 million. 

Almost a year after the accident, Rodriguez-Ortiz also sued Interstate in 

Superior Court, seeking compensatory and punitive damages arising out of the 

same injuries. Rodriguez-Ortiz also sued numerous mainly fictitiously-named

business entities and individuals who were somehow connected to the accident 

or the property and equipment involved. The prolix complaint, as later amended,

alleged: Interstate and others failed to warn Rodriguez-Ortiz, to provide him 

needed safety equipment, or to take other measures to assure his safety; they 

created or permitted a "known dangerous hazard . . . which presented an 

unreasonable risk of harm"; their "negligence, recklessness and carelessness" 

caused Rodriguez-Ortiz's fall; and they were "strictly liable in tort." RodriguezOrtiz also alleged that Interstate's conduct "was especially egregious, wanton 
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and/or intentional and amounted to conduct of a character so reprehensible as to 

warrant the award of punitive damages."

Interstate's attorney forwarded the summons and complaint to Interstate's 

commercial general liability insurer, Essex Insurance Company (Essex), and 

demanded a defense and indemnification up to the policy's limit, if necessary.

Separately, Interstate's owner sent a similar demand to Interstate's insurance 

producer, who evidently procured both the Essex and AmGuard policies. 

Shortly after Interstate filed its answer, Rodriguez-Ortiz's attorney delivered a 

copy of the complaint to AmGuard. Interstate's attorney also communicated 

with AmGuard about the suit. But the record includes no express written 

demand for a defense like the one sent to Essex. 

Three years into the employee's pending tort action, Interstate sued 

AmGuard for its defense costs, an assumption of the defense, and a declaratory 

judgment of coverage under the employer's liability portion of its policy. 

Interstate contended it was entitled to a defense from AmGuard because 

Rodriguez-Ortiz alleged that Interstate acted intentionally. The "verified" 

complaint stated that Interstate demanded a defense "by notification through its 
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A-1614-19

insurance agent."1In addition to its breach of contract claim, Interstate asserted

a breach of the covenant of good faith and fair dealing, a breach of the duty of 

care, fraud, wrongful denial of insurance coverage, and violation of the 

Consumer Fraud Act, N.J.S.A. 56:8-1 to -224. Interstate also sought attorney's 

fees and punitive damages. 

In its answer, AmGuard asserted that its policy excluded coverage of 

Rodriguez-Ortiz's intentional tort claim because it excluded claims for 

intentional wrongs and actions that the insured knows are "substantially certain" 

to cause death or injury; and the policy excluded a duty to defend uncovered 

claims. Interstate's coverage action was consolidated with Rodriguez-Ortiz's 

tort suit. 

After discovery in the tort suit, Interstate succeeded in having the 

complaint dismissed on summary judgment. The court, citing Millison v. E.I. 

du Pont de Nemours & Co., 101 N.J. 161 (1985) and Laidlow v. Hariton 

Machinery Co., 170 N.J. 602 (2002), held that Rodriguez-Ortiz could not satisfy 

1 We say "verified" in quotes because Interstate's president, Miguel Suarez 

Hernandez, certified only that the statements in the complaint were "true to the 

best of [his] knowledge and information," which is not a proper verification. 

See Jacobs v. Walt Disney World, Co., 309 N.J. Super. 443, 454 (App. Div. 

1998) (stating that factual assertions based merely upon information and belief 

are inadequate under Rule 1:6-6).
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the "intentional wrong" exception to the Workers' Compensation Act's 

exclusivity provision, N.J.S.A. 34:15-8.2 The court concluded that RodriguezOrtiz failed to prove that Interstate knew its actions were substantially certain 

to cause Rodriguez-Ortiz's injury, and failed to prove that Rodriguez-Ortiz's 

injury was more than what may "commonly arise within an industrial life." 

And, a few months later, on cross-motions for summary judgment in the 

coverage action, the court held that the AmGuard employer's liability policy 

excluded coverage for Interstate's defense costs. The court noted that the 

employer's liability policy excluded coverage for claims that the workers' 

compensation part of the policy covered. And the employer's liability policy 

also excluded coverage for intentional wrongs, including those that would 

satisfy the "substantially certain" test in Millison and Laidlow. Because the 

2 The Court in Laidlow, 170 N.J. at 617, summarized the test this way:

[U]nder Millison, in 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.
8

A-1614-19

policy denied a duty to defend uncovered claims, Interstate was not entitled to 

its defense costs. 

Interstate serves up a dozen points on appeal. Reduced to their essence, 

Interstate presents three main arguments: (1) AmGuard was required to defend 

because Rodriguez-Ortiz grounded claims in negligence, and the AmGuard 

employer's liability policy did not exclude negligence claims; (2) the exclusion 

of intentional wrongs, including actions substantially certain to cause injury, 

was void because it limited coverage Interstate was compelled to obtain; and (3)

AmGuard was estopped from denying coverage.

II.

As the record discloses no genuine issue of material fact, Interstate's 

appeal turns on purely legal issues that we review de novo: does the AmGuard 

policy exclude coverage; does the compulsory insurance law override its terms;

and was AmGuard estopped from denying coverage. See Abboud v. Nat'l Union 

Fire Ins. Co. of Pittsburgh, Pa., 450 N.J. Super. 400, 406 (App. Div. 2017) 

(stating that interpreting an insurance policy is a legal question that we review 

de novo); Pickett ex rel. Est. of Pickett v. Moore's Lounge, 464 N.J. Super. 549, 

555 (App. Div. 2020) (stating that resolution of insurance policy interpretation 
9

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issue will determine whether insurer was entitled to summary judgment where 

"the record discloses no genuine issue of material fact").

A.

Turning first to the AmGuard policy, 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 

v. Mass. Bay Ins. Co., 458 N.J. Super. 639, 646 (App. Div. 2019) (quoting 

Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med., 210 N.J. 

597, 605 (2012)). We apply the policy language's "plain, ordinary meaning." 

Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). We liberally construe 

the policy in the insured's favor "to the end that coverage is afforded 'to the full 

extent that any fair interpretation will allow.'" Progressive Cas. Ins. Co. v. 

Hurley, 166 N.J. 260, 273 (2001) (quoting Kievit v. Loyal Protective Life Ins. 

Co., 34 N.J. 475, 482 (1961)). "In determining whether there is ambiguity, we 

consider whether an average policyholder could reasonably understand the 

scope of coverage, and whether better drafting could put the issue beyond 

debate." Sosa, 458 N.J. Super. at 646. 
10 A-1614-19

We must examine the scope of the policy's coverage because "the duty to 

defend comes into being when the complaint states a claim constituting a risk 

insured against." Danek v. Hommer, 28 N.J. Super. 68, 77 (App. Div. 1953), 

aff'd o.b., 15 N.J. 573 (1954). The duty exists even if "the cause of action . . . 

cannot be maintained against the insured either in law or in fact — in other 

words, because the cause is groundless, false or fraudulent." Ibid.; see also

Abouzaid v. Mansard Gardens Assocs., 207 N.J. 67, 79 (2011). "The complaint 

should be laid alongside the policy and a determination made as to whether, if 

the allegations are sustained, the insurer will be required to pay the resulting 

judgment" with doubts resolved in the insured's favor. Abouzaid, 207 N.J. at 

79-80 (quoting Danek, 28 N.J. Super. at 77). 

In Danek, an injured employee's husband brought a per quod action 

against his wife's employer. Whether the Workers' Compensation Act excluded 

the claim was an open issue until the Supreme Court declared it was excluded 

in that very litigation. See Danek v. Hommer, 9 N.J. 56 (1952). In the 

subsequent suit over defense costs, the court held that the employer was entitled 

to recover because, when the husband filed his suit, Hommer had a plausible 

claim for coverage. Danek, 28 N.J. Super. at 80. The court held that the insurer 

could not "escape defending such an action because, as the Supreme Court later
11 A-1614-19

decided, there was no legal liability on the part of the employer to pay the 

claim." Id. at 78. 

To perform the exercise of laying Rodriguez-Ortiz's complaint alongside 

the policy, we must be mindful that the AmGuard policy actually combines two 

policies of insurance: workers' compensation in part one, and employer's 

liability in part two. The workers' compensation insurance "applies to bodily 

injury by accident or . . . by disease." AmGuard promises to "pay promptly 

when due the benefits required . . . by the workers compensation law." AmGuard 

also assumes "the right and duty to defend" at its expense "any claim, proceeding 

or suit against [Interstate] for benefits payable by this insurance," and disavows

any "duty to defend a claim, proceeding or suit that is not covered by [the 

workers' compensation] insurance." 

Like part one, the employer's liability insurance also "applies to bodily 

injury by accident or . . . disease." AmGuard promises to "pay all sums that 

[Interstate] legally must pay as damages because of bodily injury to your 

employees, provided the bodily injury is covered" by the employer's liability 

insurance. The policy then identifies four forms of damages that this promise 

"include[s]": (1) damages owed third parties who suffered a loss as a result of 

the employee's injury; (2) costs of care and loss of services; (3) damages for 
12 A-1614-19

consequential bodily injury to identified family members of the injured 

employee; and (4) damages for bodily injury the employee claims against 

Interstate in a non-employer capacity.3

Two exclusions warrant our scrutiny to determine if Interstate was entitled 

to a defense under the employer's liability policy. Under the heading "C. 

Exclusions," the policy excludes the duty to pay: "4. Any obligation imposed 

by a workers compensation, occupational disease, unemployment compensation, 

or disability benefits law, or any similar law" and "5. Bodily injury intentionally 

caused or aggravated by you."4 An endorsement amplifies the "intentional 

injury" exclusion, stating:

3

 We reject AmGuard's contention this is an exclusive list. Although "include" 

could mean "the thing which is stated is the only thing intended," it may also 

mean "the thing which is stated constitutes only one of the things intended," and 

the word "include" "[o]rdinarily . . . is a word of enlargement and not of 

limitation." See Cuna v. Bd. of Fire Comm'rs, 42 N.J. 292, 304 (1964). That is, 

"include" or "includes" "conveys the conclusion that there are other items 

includable, though not specifically enumerated." Zorba Contractors, Inc. v. 

Hous. Auth. of Newark, 282 N.J. Super. 430, 434 (App. Div. 1995). In any 

event, we would resolve any ambiguity on that score against the insurer. Sosa, 

458 N.J. Super. at 651. 

4 The policy also excludes: "2. Punitive or exemplary damages because of 

bodily injury to an employee employed in violation of law" and "3. Bodily injury 

to an employee while employed in violation of law with your actual knowledge 

or the actual knowledge of any of your executive officers." We reject 

AmGuard's argument that because Rodriguez-Ortiz, an immigrant, lacked 
13 A-1614-19

With respect to Exclusion C5, 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.

The duty to defend extends no farther than covered claims and suits. The 

policy states: "We have no duty to defend a claim, proceeding or suit that is not 

covered by this insurance. We have no duty to defend or continue defending 

after we have paid our applicable limit of liability under this insurance."

B.

We conclude that even if Rodriguez-Ortiz succeeded in his various claims 

of Interstate's negligence — whether denominated careless, reckless, or 

violations of duty of care — Interstate would not be entitled to indemnification 

under the employer's liability portion of its policy. That is so because 

Rodriguez-Ortiz's remedy for such claims rests exclusively within the workers' 

compensation system. 

authorization to work, AmGuard could avoid liability on the "violation of law" 

ground. See Fernandez-Lopez v. Jose Cervino, Inc., 288 N.J. Super. 14, 21

(App. Div. 1996) (stating that "[u]nless and until the Legislature expressly 

excludes undocumented aliens from workers' compensation benefits, the 

compassionate public policy which animates this social legislation favors 

inclusion of all injured workers not specifically excluded by the Legislature").
14 A-1614-19

It is undisputed that Rodriguez-Ortiz did not opt out of workers'

compensation. See N.J.S.A. 34:15-9; Peck v. Newark Morning Ledger Co., 344 

N.J. Super. 169, 176 (App. Div. 2001) ("There is a presumption that employers 

and employees accept the provisions of Article II of the [Workers' 

Compensation] Act . . . unless there is an express written election not to be 

bound by the article."). In return for the certainty of compensation within the 

Workers' Compensation system for workplace injury "without regard to the 

negligence of the employer," N.J.S.A. 34:15-7, the Act provides that an injured 

employee may not sue his or her employer when the employer's negligence is

responsible for the injury, see N.J.S.A. 34:15-8 (stating "[s]uch agreement shall 

be a surrender . . . of . . . rights to any other method, form or amount of 

compensation or determination thereof than as provided in this article"). As we 

noted in Estate of D'Avila v. Hugo Neu Schnitzer East, 442 N.J. Super. 80, 99 

(App. Div. 2015), "N.J.S.A. 34:15-8 directs that an employer may not be sued 

by an employee . . . for negligence that caused injury or death to the employee." 

In short, "workers' compensation is the exclusive remedy, absent proof of an 

intentional wrong." Ibid.

Thus, Rodriguez-Ortiz's negligence-based claims were, in the words of 

Exclusion C4, "obligation[s] imposed by a workers compensation . . . law." 
15 A-1614-19

Those claims — even if proved — fell outside the employer's liability coverage. 

And, because the employer's liability policy stated AmGuard had "no duty to 

defend a claim, proceeding or suit that is not covered by this insurance," the 

employer's liability policy imposed on AmGuard no "duty to defend" RodriguezOrtiz's negligence-based claims.

However, that does not end the matter of a defense of the negligencebased claims. AmGuard concedes that Interstate was entitled to a defense of 

those claims under the workers' compensation part of the policy. While its 

employer's liability policy "expressly excludes . . . claims compensable through 

workers' compensation" (e.g., the negligence claims in Rodriguez-Ortiz's

complaint), AmGuard acknowledges that "[c]overage and a defense for such 

claims is afforded in Part One of the Policy concerning claims cognizable within 

the workers' compensation framework." 

That is so because Rodriguez-Ortiz's negligence-based claims were for 

"bodily injury by accident," to which the workers' compensation insurance 

applied; and the policy imposed upon AmGuard a "duty to defend . . . any claim, 

proceeding or suit against [Interstate] for benefits payable by this [workers' 

compensation] insurance"; and its duty to defend only excluded "a claim, 

proceeding or suit that is not covered by this [workers' compensation] 
16 A-1614-19

insurance." In other words, AmGuard does not dispute that if an employee

brings a negligence-based claim in Superior Court — whether it is instead of, or 

in addition to, filing a petition in the Workers' Compensation Division — the 

workers' compensation policy covers the cost of defending and, presumably, 

securing the lawsuit's dismissal and transfer to the Workers' Compensation 

Division. See N.J.S.A. 34:15-49(a) ("The Division of Workers' Compensation 

shall have the exclusive original jurisdiction of all claims for workers' 

compensation benefits . . . .").

The workers' compensation coverage creates a duty to provide a defense 

to the negligence-based claims, notwithstanding that the policy excluded a duty 

to defend intentional-tort claims. "When multiple alternative causes of action 

are stated, the duty to defend will continue until every covered claim is 

eliminated." Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 174 (1992). 

However, an insurer is obligated "to pay only those defense costs reasonably 

associated with claims covered under the policy." SL Indus., Inc. v. Am. 

Motorists Ins. Co., 128 N.J. 188, 215 (1992).
17 A-1614-19

Therefore, we reverse in part and remand for the court to determine 

whether, and to what extent, Interstate may be entitled to reimbursement of its 

costs associated with defending Rodriguez-Ortiz's negligence-based claims.5

C.

We turn next to the employer's liability policy's exclusion of intentional 

wrongs, including acts "substantially certain to result in injury." Interstate does 

not seriously contest that the policy's plain language would defeat its claim for 

the costs of defending Rodriguez-Ortiz's claims of intentional tort. Rather, 

Interstate contends that enforcing the provision violates public policy. 

The employer's liability endorsement clearly intends to make the policy's 

exclusion co-extensive with bodily injury claims that satisfy the "intentional 

wrong" exception to the Workers' Compensation Act's exclusivity provision. 6 

5 We leave it to the trial court to determine the viability of other defenses 

AmGuard may have to a claim for these costs, such as AmGuard's affirmative 

defense that Interstate breached its obligation under part four of the policy to 

provide AmGuard prompt notice of Rodriguez-Ortiz's lawsuit, and to not 

voluntarily assume expenses except at its own cost. We acknowledge that 

AmGuard adverted to this provision in its brief before us, but it did so only in a 

footnote. For that reason, we are not obliged to decide it. Almog v. Isr. Travel 

Advisory Serv., Inc., 298 N.J. Super. 145, 155 (App. Div. 1997). 

6 The policy provision is an apparent response to our decisions in New Jersey 

Manufacturers Insurance Co. v. Delta Plastics Corp., 380 N.J. Super. 532, 539 

(App. Div. 2005), aff'd, 188 N.J. 582 (2006), and Charles Beseler Co. v. 
18 A-1614-19

The Court in Millison held that "the intentional wrongs of an employer . . . fall 

outside of the boundaries of the Compensation Act," although N.J.S.A. 34:15-8 

expressly refers only to intentional wrongs of co-employees. Millison, 101 N.J. 

at 185. And to establish the requisite intentional wrong to surmount the 

exclusivity bar, a plaintiff must show two things: first, the employer knew its 

"actions [were] substantially certain to result in injury or death to the employee,"

and second, "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." Laidlow, 170 N.J. at 617. 

With that as a backdrop, the policy endorsement excludes coverage of 

"any and all intentional wrongs within the exception allowed by N.J.S.A. 34:15-

8." The endorsement specifies that the exclusion "includ[es] but [is] 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." 

O'Gorman & Young, Inc., 380 N.J. Super. 193, 198 (App. Div. 2005), aff'd, 188 

N.J. 542 (2006), that exclusions of claims "intentionally caused or aggravated 

by [the insured]" did not encompass all intentional wrongs that lie outside the 

exclusivity provision.
19 A-1614-19

The exclusion clearly covers Rodriguez-Ortiz's intentional tort claims. 

And, "indulgently interpreted," see Green v. Morgan Props., 215 N.J. 431, 456 

(2013), the complaint also encompassed claims that Interstate engaged in acts 

"substantially certain to result in injury." Although the complaint did not 

include the "substantially certain" magic words, it alleged that Interstate created 

or permitted "a known dangerous hazard . . . which presented an unreasonable 

risk of harm." In discovery, Rodriguez-Ortiz's counsel attempted (but failed) to 

elicit evidence to satisfy the "substantially certain" requirement. 

Therefore, upon placing Rodriguez-Ortiz's complaint alongside the 

policy, we conclude that AmGuard had no duty to defend the complaint's 

intentional tort claims, because the employer's liability policy excludes from the 

duty to defend any claims that are not covered by the insurance.

Interstate contends that enforcing the exclusion violates public policy, 

because it restricts coverage that Interstate was mandated to obtain. But the 

compulsory insurance Interstate invokes assures employees' recoveries against 

their employers, not employers' recoveries against their insurers. Therefore, we 

are unconvinced that the employer's liability policy's duty-to-defend exclusion 

is void as against public policy.
20 A-1614-19

Soon after the Workers' Compensation Act was in place, there were calls 

to implement "a system of compulsory insurance" to assure that workers 

received compensation if their employers became insolvent, and to assure that 

employers could manage the risk of payouts to employees. The commission that 

recommended adoption of New Jersey's workers' compensation system and then 

monitored its implementation concluded "the law was gravely defective in that 

the injured person or his dependents had no assurance of payment in the event 

of the insolvency of the employer." Report of the Employers' Liability Comm'n

For the Year 1914 at 6 (1915). The commission stated:

As this serious defect can only be remedied by a system 

of compulsory insurance, we now recommend the 

passage of a compulsory insurance act, for the 

protection of the employer from financial disaster and 

the assurance to those persons entitled to compensation, 

of the payments provided by law. In recommending 

this, we have in mind the fact that it is quite as 

necessary for the protection of the employer as for the 

employee, as otherwise he may be forced out of 

business and into bankruptcy owing to his failure to 

voluntarily cover his liability by insurance.

[Ibid.]

The Legislature first passed a law requiring insurance to cover liability 

under the workers' compensation system, see L. 1917, c. 178, and then passed a 

law requiring that employers insure themselves against liability to employees 
21 A-1614-19

who are covered under section I of the Act, N.J.S.A. 34:15-1 to -6, see L. 1917, 

c. 262.7 Our modern law continues to require employers to make "sufficient 

provision for the complete payment of any obligation which he [or she] may 

incur to an injured employee, or his [or her] dependents under the provisions of 

said article 2 [the workers' compensation system]." N.J.S.A. 34:15-71

(emphasis added).

8

 They may do so by self-insuring if they have the financial 

capacity, N.J.S.A. 34:15-77, or by obtaining insurance, N.J.S.A. 34:15-78. 

Likewise, employers are required to "make sufficient provision for the complete 

payment of any obligation which [the employer] may incur to an injured 

employee or his [or her] administrators or next of kin under said article 1 of this 

chapter [N.J.S.A. 34:15-1 to -6, the tort system for those employees who opt out 

of workers' compensation]." N.J.S.A. 34:15-72 (emphasis added). Nothing 

requires employers to make "provision" for their defense costs. 

7 Section I has been called "the employers' liability section of the statute," which 

governs employees who opt out of the workers' compensation system, and which 

covers "liability [that] is made to depend not upon any implied contract for 

compensation, but upon the negligence of the employer, either at common law 

or resulting from the requirements of the act itself." Taylor v. Seabrook, 87 

N.J.L. 407, 408 (Sup. Ct. 1915).

8 Although current law collects workers' compensation system provisions under 

"article 2" and the non-elected common law system provisions under "article 1," 

the original workers' compensation statute placed them under "section 2" and 

"section 1" and old cases use that nomenclature. See L. 1911, c. 95, §§ 1, 2. 
22 A-1614-19

We recognize that the Supreme Court has broadly read these compulsory 

insurance provisions. In a case involving a claim for bodily injury arising out 

of acts of sexual harassment, the Court held that "N.J.S.A. 34:15-72 required 

[the employer] to obtain sufficient coverage for the payment of any obligation 

it might incur on account of bodily injuries to an employee." Schmidt v. Smith, 

155 N.J. 44, 51 (1998) (emphasis added). The Court held that the defendantemployer — which obtained a combined workers' compensation and employer's 

liability policy — contracted with its insurer "for the coverage of bodily injuries 

falling both inside and outside of the workers' compensation structure." Ibid.

In particular, "[t]he employers liability section of the contract was to provide 

compensation for bodily injuries to workers falling outside the workers' 

compensation system." Id. at 51-52. That included, the Court said, "injuries 

intentionally caused by fellow employees, for example." Id. at 52. In other 

words, the coverage included claims placed outside the exclusivity provision by 

N.J.S.A. 34:15-8. 

The Court explained that the Legislature required employers to obtain 

insurance "to assure that this statutory remedy [of workers' compensation] given 

in lieu of a common law remedy is not illusory." Id. at 49. The employer's 

liability coverage "is intended to serve as a 'gap-filler' providing protection to 
23 A-1614-19

the employer in those situations where the employee has a right to bring a tort 

action despite provisions of the workers' compensation statute." Id. at 49-50 

(quoting Producers Dairy Delivery Co. v. Sentry Ins. Co., 718 P.2d 920, 927 

(Cal. 1986)).

The Court also held that policies issued pursuant to the compulsory 

insurance requirements could not undermine that goal: "In short, the terms of a 

policy issued pursuant to N.J.S.A. 34:15-78 cannot conflict with the statutory 

mandate that there be coverage provided for all occupational injuries." Id. at 49 

(emphasis added). 

This broad view of the scope of mandated coverage may well override the 

AmGuard exclusion of claims for intentional wrongs or actions substantially 

certain to cause injury. But, we need not decide that question in this case. 

Interstate does not seek indemnification for a liability or "obligation" it has 

incurred to its "injured employee," N.J.S.A. 34:15-71. Interstate seeks 

indemnification for its own defense costs. That lies outside the statutory 

mandate and the public policy that motivated it. Therefore, there is no basis to 

set aside the policy's exclusion of costs to defend Rodriguez-Ortiz's intentional 

tort claims.
24 A-1614-19

D.

We next dispatch Interstate's argument that because AmGuard did not 

respond to the civil suit, it should be estopped from denying coverage. The 

governing principles are well-established. "[W]here, after timely notice, 

adequate opportunity to investigate a claim, and the knowledge of a basis for 

denying or questioning insurance coverage, the insurance carrier fails for an 

unreasonable time to inform the insured of a potential disclaimer, it is estopped 

from later denying coverage under the insurance policy." Griggs v. Bertram, 88 

N.J. 347, 363-64 (1982). And "[p]rejudice justifying an estoppel against the 

insurer will be presumed where 'there has been a long lapse of time without any 

indication by the insurance carrier of a loss or rejection of coverage, during 

which the insured justifiably expects to be protected by the carrier.'" Reliance 

Ins. Co. v. Armstrong World Indus., Inc., 292 N.J. Super. 365, 375-76 (App. 

Div. 1996) (quoting Griggs, 88 N.J. at 362).

However, AmGuard did not fail to respond to the suit "for an unreasonable 

time," Griggs, 88 N.J. at 363, "during which [Interstate] justifiably expect[ed] 

to be protected," id. at 362. First, the workers' compensation claim did not 

necessarily put AmGuard "on notice of the potential for a common law claim 

until the filing of the complaints." See N.J. Mfrs. Ins. Co. v. Joseph Oat Corp., 
25 A-1614-19

287 N.J. Super. 190, 197-98 (App. Div. 1995), abrogated on other grounds 

by Beseler, 188 N.J. at 548 n.2. If Interstate expected to be protected by 

AmGuard, it would have demanded a defense from AmGuard instead of Essex; 

and it would not have filed an answer to Rodriguez-Ortiz's complaint even 

before AmGuard received the complaint (from Rodriguez-Ortiz's attorney). An 

insured is not entitled to recover expenses "prior to the insured's tendering the 

defense to the insurer." SL Indus., 128 N.J. at 200. While mere notice 

conceivably may imply a tender, the circumstances here imply the opposite: that 

Interstate was not seeking AmGuard's defense.

E.

We briefly comment on Interstate's contention that denying it a defense 

would frustrate its reasonable expectations. Interstate relies on the statement of 

its co-owner, Miguel Suarez Hernandez, that his insurance producer told him 

that Interstate "would be protected" "if an employee was hurt on one of the jobs 

. . . [and] if the employee sued Interstate in the Workers Compensation Court or 

in . . . Superior Court." That is not enough to overcome plain policy language.

We reviewed the "reasonable expectations" doctrine in Abboud, where we 

explained that an insured's "reasonable expectations" will override the plain 

meaning of a policy only in "exceptional circumstances." 450 N.J. Super. at 408 
26 A-1614-19

(quoting Doto v. Russo, 140 N.J. 544, 556 (1995)). "Courts may vindicate the 

insured's reasonable expectations over the policy's literal meaning 'if the text 

appears overly technical or contains hidden pitfalls, cannot be understood 

without employing subtle or legalistic distinctions, is obscured by fine print, or 

requires strenuous study to comprehend.'" Id. at 409 (quoting Zacarias, 168 N.J. 

at 601). Also, the expectations must be "real" and "'objectively reasonable.'" 

Id. at 410 (quoting Templo Fuente de Vida Corp. v. Nat'l Union Fire Ins. Co. of 

Pittsburgh, Pa., 224 N.J. 189, 210 (2016)).

Interstate has failed to demonstrate that AmGuard's policy is so obscure 

that Suarez Hernandez's alleged expectation should triumph over the policy's 

language. Furthermore, his general statement that his agent told him Interstate 

"would be protected" falls short of establishing a real and reasonable expectation 

that defense costs would be covered, no matter what. This is not a case where 

"the scope of coverage is so narrow that it 'would largely nullify the insurance'

and defeat the purpose for which it was obtained." Id. at 410 (quoting Sparks v. 

St. Paul Ins. Co., 100 N.J. 325, 337-39 (1985)).

To the extent not addressed, plaintiff's remaining arguments lack 

sufficient merit to warrant written discussion. R. 2:11-3(e)(1).
27 A-1614-19

Affirmed in part, reversed in part and remanded. We do not retain 

jurisdiction.