NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5526-15T1

 A-0033-16T1

THERESA WEAR and RICHARD 

WEAR,

Plaintiffs/IntervenorsAppellants,

v.

SELECTIVE INSURANCE COMPANY,

Defendant-Respondent.

________________________________

WOODBURY MEDICAL CENTER 

ASSOCIATES, LLP,

Plaintiff-Respondent,

v. 

SELECTIVE INSURANCE COMPANY,

Defendant-Appellant.

________________________________ 

Argued April 18, 2018 – Decided

Before Judges Koblitz, Manahan and Suter.

On appeal from Superior Court of New Jersey, 

Law Division, Gloucester County, Docket No. 

L-1583-13. 

Bruce H. Zamost argued the cause for 

appellants Theresa Wear and Richard Wear (in 

A-5526-15) and respondents (in A-0033-16)

(Helmer, Conley & Kasselman, PA, attorneys; 

Bruce H. Zamost, of counsel and on the 

brief). 

APPROVED FOR PUBLICATION

July 20, 2018

APPELLATE DIVISION

July 20, 2018
2 A-5526-15T1

Richard J. Mirra argued the cause for 

respondent Selective Insurance (in A-5526-

15) and appellant in (A-0033-16) (Hoagland, 

Longo, Moran, Dunst & Doukas, LLP, 

attorneys; Richard J. Mirra, of counsel and 

on the briefs; John C. Simons, on the 

briefs).

Mitchell H. Kizner argued the cause for 

respondent Woodbury Medical Center 

Associates, LLP (Flaster Greenberg, PC, 

attorneys; Mitchell H. Kizner, of counsel 

and on the brief). 

The opinion of the court was delivered by

MANAHAN, J.A.D.

The instant case presents another example of the 

complexities sometimes involved with the resolution of insurance 

coverage disputes based upon exceptions to coverage. The 

principal issue is whether exclusionary language in a policy 

issued to Woodbury Medical Center Associates, LLP (Woodbury 

Medical) by Selective Insurance Company (Selective) precluded 

coverage for an environmental personal injury claim by Theresa 

Wear and a per quod claim by Richard Wear (collectively the 

Wears).

Having considered the record in light of controlling law, 

we affirm in part and reverse in part.
3 A-5526-15T1

I.

Woodbury Medical is the owner of an office building in 

Woodbury, New Jersey. Theresa Wear worked in the building as a 

registered nurse (RN) for Underwood Medical Center. She claimed 

to suffer injuries due to exposure to alleged toxic conditions 

in the building. In their complaint against Woodbury Medical, 

the Wears averred that Theresa was injured due to "exposure to 

mold and the HVAC [(heating, ventilation and air conditioning)] 

filter fragments from when the HVAC system was activated in the 

basement of the property." The Wears further averred that 

Woodbury Medical had a duty to keep the premises safe from: "1) 

hazardous toxic condition[s]; 2) dangerous air pollutants; 3) 

aspergillus fungus/mold hazards; and 4) other environmental 

dangers." 

Selective issued a commercial umbrella and business owners 

insurance policy (the policy) to Woodbury Medical, which was in 

effect at the time of the Wears' claim. The policy provided 

Woodbury Medical with "protection for business liability for any 

bodily injury 'to which this insurance applies.'" The policy 

included a fungi or bacteria exclusion: 

A. The following exclusion is added to 

Paragraph B.1., Exclusions – Application To 

Business Liability Coverage:
4 A-5526-15T1

q. Fungi or Bacteria

(1) "Bodily injury[,"] "property 

damage" or "personal and 

advertising injury" which would 

not have occurred, in whole or in 

part, but for the actual, alleged 

or threatened inhalation of, 

ingestion of, contact with, 

exposure to, existence of, or 

presence of, any "fungi" or 

bacteria on or within a building 

or structure, including its 

contents, regardless of whether 

any other cause, event, material 

or product contributed concurrently 

or in any sequence to such injury 

or damage. 

(2) Any loss, cost or expenses 

arising out of the abating, 

testing for, monitoring, cleaning 

up, removing, containing, 

treating, detoxifying, 

neutralizing, remediating or 

disposing of, or in any way 

responding to, or assessing the 

effects of, "fungi" or bacteria, 

by an insured or by any other 

person or entity. 

. . . . 

B. The following definition is added [to] 

Paragraph F. Liability And Medical Expenses 

Definitions:

1. "Fungi" means any type or form 

of fungus, including mold or 

mildew and any mycotoxins, spores, 

scents or by-products produced or 

release [sic] by fungi.

[(Emphasis added).]
5 A-5526-15T1

Woodbury Medical notified Selective of the Wears' claim in 

May 2011. In August 2012, after conducting an investigation, 

Selective issued a denial of coverage letter referencing the 

exclusionary language in the policy. The letter stated that the 

"policy in effect for Woodbury does not provide coverage for any 

and all bodily injuries alleged by Theresa Wear arising out of 

her exposure to mold, mildew, fungi or bacteria or medical 

expenses" as they were, among other unrelated reasons, "excluded 

by virtue of Fungi or Bacteria Exclusion Endorsement Forms . . . 

contained in the policies." Selective did not issue a 

reservation of rights letter as it took the position that the 

anti-concurrent and anti-sequential language in the exclusion 

precluded coverage even if there were other causes which may 

have contributed to the injury.

Woodbury Medical instituted an action against Selective, 

later amended, seeking a declaration that Selective was required 

to defend and indemnify Woodbury Medical in the Wears' 

litigation. Woodbury Medical moved for partial summary 

judgment. Selective filed a cross-motion for summary judgment 

maintaining there was no coverage for the claims. 

On January 9, 2015, the judge granted Woodbury Medical's 

motion for partial summary judgment and ordered that Selective 

immediately fund Woodbury Medical's defense in the underlying 
6 A-5526-15T1

action, reimburse Woodbury Medical for expenses it already 

incurred in the defense of the Wears' litigation, and pay 

attorneys' fees incurred by Woodbury Medical in the declaratory 

judgment action.1 In a separate order, also dated January 9, 

2015, the judge denied Selective's cross-motion for summary 

judgment. On January 22, 2015, in a supplemental order, the 

judge clarified that the January 9, 2015 order was "to be 

considered an interlocutory order applying ONLY to the defense 

obligations of Selective . . . ." The supplemental order also 

provided that the trial in the declaratory judgment action was 

to be adjourned until a resolution was reached in the Wears' 

litigation.

In reaching the determination on Selective's obligation to 

defend, the judge stated:

The [c]ourt certainly reviewed the 

factual basis as alleged by Ms. Ware, [sic] 

who claims that she suffered bodily injury 

as a result of exposure to hazardous 

conditions.

I acknowledge that there is an 

allegation that relates to the mold, but I 

am in agreement with the plaintiff's 

 

1 On July 17, 2015, the judge awarded $177,550 to Woodbury 

Medical for reimbursement of past counsel fees and costs for the 

time period of March 3, 2013 through April 2015, pursuant to the 

January 9, 2015 order. The judge also awarded $83,635 to 

Woodbury Medical for reimbursement of past counsel fees and 

costs for the declaratory judgment action.
7 A-5526-15T1

counsel. There also definitely is an 

allegation that pertains to the fibers from 

the filter, the air conditioning system, or 

the filter fragments. It is an environmental 

hazard that is claimed. It is something 

besides the mold issue, the [c]ourt finds.

I understand your arguments. But I do 

find that there has been an indication of 

other environmental damages and based on the 

case law, I find that there is a duty to 

defend in this instance. I have examined the 

complaint. I have reviewed the policy 

limitations. But if there are any doubts, 

they are to be resolved in favor of the 

insured.

Based on the cases as cited by 

plaintiff's counsel, I do find that the 

insurance company is required to defend in 

this instance.

[D]efendant does owe the plaintiff the 

duty in the underlying lawsuit. It's 

appropriate here because there is another 

cause for Ms. Ware’s [sic] injuries. 

Selective moved for leave to appeal, which we denied. 

Selective then moved before the Law Division to stay the order 

compelling it to fund Woodbury Medical's defense, which was 

denied. Thereafter, Woodbury Medical moved to enforce 

litigant's rights and Selective cross-moved for reconsideration 

of both the order requiring Selective to provide a defense and 

the order denying a stay. The judge granted Woodbury Medical's 

motion to enforce litigant's rights and ordered Selective to pay 

Woodbury Medical counsel fees for its defense in the Wears' 
8 A-5526-15T1

litigation within thirty days. Selective again moved for leave 

to appeal, which we denied.2

By agreement of the parties, the Wears' litigation was 

submitted to arbitration. At the conclusion of the testimonial 

hearing, the arbitrator rendered a one-page written award in 

favor of the Wears for $300,000. The arbitrator noted that the 

award was for a "claim by RN for workplace exposure to toxic 

aspergillus mold."

After the rendering of the award, the Wears and Woodbury 

Medical entered into a consent order amicably resolving the 

Wears' litigation. The consent order contained the following 

essential terms. A judgment would be entered in favor of the 

Wears against Woodbury Medical in the amount of $300,000. 

Woodbury Medical would assign its coverage rights to the Wears, 

who then bore the burden of proceeding against Selective "with 

respect to Selective's obligation to indemnify [Woodbury 

Medical] for the claims brought and judgment obtained . . . 

under liability insurance policies issued by Selective." The 

Wears would "never . . . execute upon [Woodbury Medical] or its 

assets, or those of its past, present and future principals 

. . . in order to collect the [j]udgment, or . . . in any other 

 

2 Selective did not comply with the order mandating payment of 

counsel fees, nor has it done so to date.
9 A-5526-15T1

way seek payment of the [j]udgment or any other sum from 

[Woodbury Medical] . . . ." The Wears relinquished all claims 

against Woodbury Medical whether or not they were successful 

against Selective. The order stated: "[N]o injury was suffered 

by [the Wears] as a result of exposure to mold at premises owned 

by [Woodbury Medical]."

The Wears moved to intervene as plaintiffs in the 

declaratory action. Among other arguments, the Wears asserted 

Selective was obligated to pay the $300,000 judgment premised 

upon our Supreme Court's holding in Griggs v. Bertram, 88 N.J. 

347 (1982) and premised upon principles of equitable estoppel 

due to Selective's bad faith and wrongful refusal to defend. 

The motion to intervene was granted by order on June 26, 

2015. The order limited intervention to "coverage and/or 

indemnification under the policy of insurance issued to Woodbury 

Medical . . . ." The order provided that the Wears were 

substituted for Woodbury Medical for the purpose of asserting 

indemnification only and not to assert claims for "bad faith" or 

failure to defend against Selective.

In support of their motion, the Wears provided an expert 

report by Robert J. Laumbach, who opined that mold was not a 

cause of Theresa's injuries. Selective moved to bar the expert 

report and for summary judgment dismissing the Wears' 
10 A-5526-15T1

intervention. Selective argued the consent order was 

unenforceable based upon Griggs. 

By order of December 23, 2015, the judge denied all 

motions. In her attached statement of reasons, the judge found 

a Griggs analysis was triggered as Selective wrongfully denied 

Woodbury Medical a defense by continuously failing to comply 

with the January 9, 2015 order. The judge further noted that 

the "Griggs analysis is triggered regardless of whether an 

insurer ultimately prevails on the question of coverage pursuant 

to Passaic Valley."3 The judge held that the issue of bad faith 

pertaining to the settlement remained open "pending future 

discovery and/or future [m]otion practice." Regarding the issue 

of the expert's report, the judge held the Wears' expert was not 

barred from testifying since "[t]he present action, though 

related to the underlying Wear matter, is a separate, distinct 

case with a separate discovery period." 

On January 20, 2016, Selective filed a motion to settle the 

form of the December 23, 2015 orders and to determine the scope 

of the hearing to be conducted. The Wears cross-moved for 

partial summary judgment under the reasonableness prong of the 

Griggs analysis. Thereafter, by consent order dated February 

 

3 Passaic Valley Sewerage Comm'rs v. St. Paul Fire & Marine Ins. 

Co., 206 N.J. 596 (2011).
11 A-5526-15T1

26, 2016, the Wears and Selective settled the terms of the 

December 23, 2015 orders. The consent order provided that the 

monetary settlement between Woodbury Medical and the Wears based 

upon the arbitration award satisfied the reasonableness prong 

under Griggs. The consent order further provided that the sole 

issue in contest was whether the settlement between Woodbury 

Medical and the Wears was made in good faith. The good faith 

issue was to be determined by the judge on the papers submitted.

 After argument and after considering the record and papers, 

the judge issued an oral opinion in which she held that the 

Wears did not meet the second prong of the Griggs settlement 

enforcement analysis. The judge found a lack of good faith as 

"there [has] been a total effort made by the Wears and Woodbury 

Medical to force this issue to be covered by Selective because 

they knew of the mold exclusion . . . ." As such, the judge 

found the settlement "which places a 100 percent liability on 

Selective," to be a sham and concluded the settlement was 

unenforceable against Selective. The oral decision was 

memorialized in an order. The order also dismissed the 

intervenor complaint with prejudice.4 

 

4 The judge also granted Woodbury Medical's motion without 

prejudice for an amendment of the July 2015 order regarding the 

counsel fees owed by Selective. The judge added fees incurred 

by Woodbury Medical for the medical expert provided to the Wears 

(continued)
12 A-5526-15T1

The Wears filed a motion for a new trial and judgment 

notwithstanding the verdict.5 The motion was denied in an 

August 2016 order. The Wears filed an appeal. Selective filed 

a separate appeal of numerous orders concerning its duty to 

defend and to pay counsel fees as well as the denial of stays.6 

We granted Selective's motion to consolidate the appeals.

On appeal, Selective raises the following points:7

POINT I

THE TRIAL COURT ERRED IN GRANTING PARTIAL 

SUMMARY JUDGMENT REQUIRING SELECTIVE TO 

DEFEND WMCA DESPITE THE CLEAR EXCLUSION OF 

COVERAGE FOR INJURIES CAUSED BY MOLD, IN 

WHOLE OR IN PART, REGARDLESS OF WHETHER ANY 

OTHER CAUSE CONTRIBUTED CONCURRENTLY OR IN 

ANY SEQUENCE TO THE ALLEGED INJURIES.

POINT II

THE TRIAL COURT MISCONSTRUED FLOMERFELT V. 

CARDIELLO, 202 N.J. 432 (2010) WHICH DOES 

NOT APPLY TO THE FACTS OF THIS CASE.

 

(continued)

to the total sum of fees owed by Selective for the declaratory 

action.

5 We note that there was no trial on any of the issues.

6 Selective's notice of appeal recites thirteen discrete orders 

including two orders of the Appellate Division denying leave to 

appeal.

7 Although the Wears' appeal was filed prior to Selective's 

appeal, we address Selective's points on appeal first for 

clarity.
13 A-5526-15T1

POINT III

THE TRIAL COURT ORDERS TO COMPEL SELECTIVE 

TO ASSUME [WOODBURY MEDICAL]'S DEFENSE 

DESPITE THE CONFLICT OF INTEREST BETWEEN 

SELECTIVE AND [WOODBURY MEDICAL] AND DESPITE 

THE FACT THAT THE COVERAGE ISSUE WOULD NOT 

BE RESOLVED IN THE UNDERLING [SIC] ACTION 

WAS ERROR.

On appeal, the Wears raise the following points:

POINT I 

THE LAW OF THE CASE DOCTRINE WAS VIOLATED 

WHEN THE TRIAL JUDGE MADE AN ENTIRELY 

CONTRADICTORY RULING ON THE KEY ISSUE, 

WHETHER THE SETTLEMENT WAS ONE OF GOOD FAITH

OR BAD FAITH, BASED ON IDENTICAL EVIDENCE. 

ON [DECEMBER 23, 2015], THE TRIAL COURT 

RULED THAT BAD FAITH WAS ABSENT, IN ITS 

ADJUDICATION OF WHETHER JUDICIAL ESTOPPEL 

WAS APPLICABLE TO PLAINTIFFS' ADOPTION OF 

ONE CAUSATION THEORY OVER ANOTHER. FOUR 

MONTHS LATER, ON [APRIL 1, 2016], THE TRIAL 

COURT HELD THAT THE SETTLEMENT CONSTITUTED A 

BAD FAITH SHAM. WHEN A JUDGE DECIDES NOT TO 

FOLLOW THE LAW OF THE CASE DOCTRINE, 

DECISIONAL LAW REQUIRES THAT THE JUDGE 

EXPLAIN THE REASONS FOR THAT DEPARTURE AND 

THE SUBSTANTIALLY DIFFERENT EVIDENCE THAT 

WAS NOT PREVIOUSLY AVAILABLE. [R.] 1:6-

2(F). SISLER V. GANNETT CO., 222 N.J. 

SUPER. 153 [] (APP. DIV. 1987), CERTIF. 

DENIED, 110 N.J. 304 [] (1988). THE TRIAL 

COURT FAILED TO DO SO HERE AND IN DOING SO 

WRONGLY DECLINED TO ENFORCE THIS GRIGGS

SETTLEMENT AGAINST SELECTIVE.

POINT II

THE LAW OF THE CASE DOCTRINE WAS VIOLATED 

WHEN THE TRIAL JUDGE MADE AN ENTIRELY 

CONTRADICTORY RULING ON THE KEY ISSUE, 

WHETHER THE SETTLEMENT WAS ONE OF GOOD FAITH 

OR BAD FAITH, BASED ON IDENTICAL EVIDENCE. 
14 A-5526-15T1

ON [DECEMBER 23, 2015], THE TRIAL COURT 

RULED THAT THE SETTLEMENT WAS, PRIMA FACIE, 

THE PRODUCT OF GOOD FAITH. FOUR MONTHS 

LATER, ON [APRIL 1, 2016], THE TRIAL COURT 

HELD THAT THE SETTLEMENT CONSTITUTED A BAD 

FAITH SHAM. WHEN A JUDGE DECIDES NOT TO 

FOLLOW THE LAW OF THE CASE DOCTRINE, 

DECISIONAL LAW REQUIRES THAT THE JUDGE 

EXPLAIN THE REASONS FOR THAT DEPARTURE AND 

THE SUBSTANTIALLY DIFFERENT EVIDENCE THAT 

WAS NOT PREVIOUSLY AVAILABLE. [R.] 1:6-

2(F). SISLER V. GANNETT CO., 222 N.J. 

SUPER. 153 [] (APP. DIV. 1987), CERTIF. 

DENIED, 110 N.J. 304 [] (1988). THE TRIAL 

COURT FAILED TO DO SO HERE AND IN DOING SO 

WRONGLY DECLINED TO ENFORCE THIS GRIGGS

SETTLEMENT AGAINST SELECTIVE.

POINT III

IT WAS SELECTIVE'S BURDEN TO PROVE THAT THE 

SETTLEMENT WAS A BAD FAITH SHAM. HOWEVER, 

THE TRIAL COURT WRONGLY SHIFTED THAT BURDEN 

TO THE WEARS TO PROVE THAT THE SETTLEMENT 

WAS NOT A SHAM, A BURDEN-SHIFTING WHICH 

VISITED A MISCARRIAGE OF JUSTICE UPON THE 

WEARS.

POINT IV

THE UNIVERSE OF EVIDENCE PRESENTED BY THE 

PARTIES WAS IDENTICAL THROUGHOUT THE 

CONTRADICTORY TRIAL COURT RULINGS OF 

[DECEMBER 23, 2015] ON THE ONE HAND AND THE 

RULINGS OF [APRIL 1, 2016] AND [AUGUST 12, 

2016] ON THE OTHER. SELECTIVE CHOSE TO 

REFRAIN FROM OBTAINING AN EXPERT WITNESS ON 

THE GOOD FAITH ISSUE, DESPITE AN EXTENSION 

OF TIME TO DO SO. EACH OF SELECTIVE'S 

ARGUMENTS THAT THE SETTLEMENT WAS AN UTTER 

SHAM WERE ANALYZED AND REJECTED BY THE TRIAL 

COURT ON [DECEMBER 23, 2015] AND NOTHING WAS 

PRESENTED TO REBUT THE COMPREHENSIVE EXPERT 

CONCLUSIONS OF PLAINTIFFS' OCCUPATIONAL AND 

ENVIRONMENTAL MEDICINE/INDUSTRIAL HYGIENE 
15 A-5526-15T1

EXPERT, ROBERT J. LAUMBACH, M.D., M.P.H., 

C.I.H. 

POINT V

THE TRIAL COURT COMMITTED REVERSIBLE ERROR 

IN ITS [AUGUST 12, 2016] AND [APRIL 1, 2016] 

RULINGS BECAUSE THOSE RULINGS WRONGLY 

DISREGARDED PARAGRAPH 1 OF THE CONSENT ORDER 

OF [FEBRUARY 26, 2016].

II.

We commence by addressing Selective's argument that the 

judge erred in granting partial summary judgment to Woodbury 

Medical in holding Selective had a duty to defend. Selective 

argues "[t]here was no allegation that [Theresa] suffered 

divisible injuries due to separate and discrete etiologies or 

that exposure to mold was not a principal cause of her 

symptoms." As such, the policy's exclusion, which included 

anti-concurrent and anti-sequential language, barred coverage. 

Woodbury Medical argues in reply that Selective had a duty to 

defend as the Wears alleged alternative causes of injury, 

separate and apart from mold.

The judge's determination that Selective had a duty to 

defend was decided by the grant of summary judgment. Thus, the 

judge's conclusions and interpretation of the record are not 

entitled to our deference. We apply the same standard the judge 

applied in ruling on summary judgment. W.J.A. v. D.A., 210 N.J. 

229, 237 (2012). 
16 A-5526-15T1

At the outset, we agree with the judge that, when disputes 

arise between the insured and insurer, the duty of an insurer to 

defend is generally determined by a side-by-side comparison of 

the policy and the complaint, and is triggered when the 

comparison demonstrates that if the complaint's allegations were 

sustained, an insurer would be required to pay the judgment.

Sears Roebuck & Co. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 

340 N.J. Super. 223, 241-42 (App. Div. 2001); see also Danek v. 

Hommer, 28 N.J. Super. 68, 77 (App. Div. 1953). "In making that 

comparison, it is the nature of the claim asserted, rather than 

the specific details of the incident or the litigation's 

possible outcome, that governs the insurer's obligation." 

Flomerfelt, 202 N.J. at 444 (citation omitted). 

The interpretation of an insurance policy upon established 

facts is a question of law for the court to determine.

Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 428 (App. 

Div. 2004). "Generally, '[w]hen interpreting an insurance 

policy, courts should give the policy's words "their plain, 

ordinary meaning."'" Nav-Its, Inc. v. Selective Ins. Co., 183 

N.J. 110, 118 (2005) (quoting President v. Jenkins, 180 N.J. 

550, 562 (2004)). "An insurance policy is a contract that will 

be enforced as written when its terms are clear in order that 

the expectations of the parties will be fulfilled." Flomerfelt, 
17 A-5526-15T1

202 N.J. at 441 (citing Kampf v. Franklin Life Ins. Co., 33 N.J. 

36, 43 (1960)).

As this court held in New Jersey Manufacturers Insurance 

Co. v. Vizcaino, in permitting the dispute of uncovered claims, 

courts protect both parties by ensuring that the insurer does 

not incur responsibility for uncovered claims and that the 

insured is entitled to both defense and indemnity if the dispute 

is resolved in its favor. 392 N.J. Super. 366, 370 (App. Div. 

2007). In line with those principles, exclusions in insurance 

policies are presumptively valid and enforceable "if they are 

'specific, plain, clear, prominent, and not contrary to public 

policy.'" Flomerfelt, 202 N.J. at 441 (quoting Princeton Ins. 

Co. v. Chunmuang, 151 N.J. 80, 95 (1997)). In contrast, courts 

will find "a genuine ambiguity to arise where the phrasing of 

the policy is so confusing that the average policyholder cannot 

make out the boundaries of coverage." Weedo v. Stone-E-Brick, 

Inc., 81 N.J. 233, 247 (1979).

Generally, exclusions are narrowly construed. Flomerfelt, 

202 N.J. at 442. The insurer has the burden of bringing the 

case within the exclusion. Am. Motorists Ins. Co. v. L-C-A 

Sales Co., 155 N.J. 29, 41 (1998). Courts must be careful, 

however, "not to disregard the 'clear import and intent' of a 

policy's exclusion . . . ." Flomerfelt, 202 N.J. at 442 
18 A-5526-15T1

(quoting Westchester Fire Ins. Co. v. Cont'l Ins. Cos., 126 N.J. 

Super. 29, 41 (App. Div. 1973)). Far-fetched interpretations of 

a policy exclusion are insufficient to create an ambiguity 

requiring coverage. Stafford v. T.H.E. Ins. Co., 309 N.J. 

Super. 97, 105 (App. Div. 1998). 

In a situation where "two or more identifiable causes — one 

a covered event and one excluded — may contribute to a single 

property loss," there is coverage absent an anti-concurrent or 

anti-sequential clause in the policy. See Simonetti, 372 N.J. 

Super. at 431 (citing Assurance Co. of Am., Inc. v. Jay-Mar, 

Inc., 38 F. Supp. 2d 349, 352-54 (D.N.J. 1999)). As noted, the 

policy at issue contains within the exclusion language an anticoncurrent and anti-sequential clause and excludes coverage from 

any loss or damage "regardless of whether any other cause, 

event, material or product contributed concurrently or in any 

sequence to such injury or damage." We do not consider the 

exclusion language to be ambiguous. A fair reading of the 

exclusion is that, despite other potential causes, mold must be 

excluded as a causative factor in order for there to be a 

covered loss. 

The judge concluded that Selective owed a defense to 

Woodbury Medical while acknowledging that mold was averred in 

the complaint as a causative factor. The judge found that the 
19 A-5526-15T1

complaint averred other "environmental" hazards as causative 

factors thus requiring a defense. However, other than 

referencing those allegations, the judge did not analyze whether 

the anti-concurrent and anti-sequential language in the

exclusion would bar coverage or, at a minimum, raise a 

substantial question as to the existence of coverage. 

Succinctly, in the absence of a comparison of the complaint 

with the exclusion's anti-concurrent and anti-sequential 

language, we conclude that the issue of coverage was not of such 

clarity at this stage of the action to require Selective to 

defend. In reaching our conclusion, we are informed by the 

following.

Neither the duty to defend nor the duty to indemnify 

"exists except with respect to occurrences for which the policy 

provides coverage." Hartford Accident & Indem. Co. v. Aetna 

Life & Cas. Ins. Co., 98 N.J. 18, 22 (1984). Here, the judge 

cited Flomerfelt as authority, which provides that:

in circumstances in which the underlying 

coverage question cannot be decided from the 

face of the complaint, the insurer is 

obligated to provide a defense until all 

potentially covered claims are resolved, but 

the resolution may be through adjudication 

of the complaint or in a separate proceeding 

between insured and insurer either before or 

after that decision is reached.

[202 N.J. at 447.]
20 A-5526-15T1

There are two exceptions to this general rule. 

The insurer need not provide the defense at 

the outset if the allegations include claims 

that are not covered by the policy as well 

as claims that are covered or if the 

question of coverage is not, by its nature, 

capable of determination in the underlying 

action against the insured. In those 

situations, the insurer's obligation to 

defend becomes an obligation to reimburse

for defense costs to the extent that the 

defense is later determined to have been 

attributable to the covered claims and, if 

coverage is not determinable in the 

underlying action, it is later determined 

that there was in fact coverage.

[Muralo Co., Inc. v. Employers Ins. of 

Wausau, 334 N.J. Super. 282, 289-90 (App. 

Div. 2000).]

In short, "[i]f an insurer believes that the evidence indicates 

that the claim is not covered, the insurer is not always 

required to provide a defense." Polarome Int'l, Inc. v. 

Greenwich Ins. Co., 404 N.J. Super. 241, 274 (App. Div. 2008); 

see Passaic Valley, 206 N.J. at 615-18 (explaining that Burd v. 

Sussex Mut. Ins., 56 N.J. 383, 393-95 (1970) permits an insurer 

to fulfill its defense obligations by reserving rights and 

disputing coverage, thereby translating its obligation into one 

for reimbursement if it is later adjudged that the claims were 

within the policy covenant to pay); see also Grand Cove II 

Condo. Ass'n, Inc. v. Ginsberg, 291 N.J. Super. 58, 73-75 (App. 

Div. 1996) (discussing problems that can arise with respect to 
21 A-5526-15T1

the duty to defend and conversion of that duty to one of 

reimbursement).

"Although the duty to defend is broader than the duty to 

pay, the duty 'is not broader in the sense that it extends to 

claims not covered by the covenant to pay.'" Grand Cove II, 291 

N.J. Super. at 72 (quoting Horesh v. State Farm Fire & Cas. Co., 

265 N.J. Super. 32, 38 (App. Div. 1993)). Therefore, "[i]f an 

excluded claim is made, the insurer has no duty to undertake the 

expense and effort to defeat it, however frivolous it may appear 

to be." Ibid. (quoting Horesh, 265 N.J. Super. at 39). 

Grand Cove II addressed an alternative to the duty to 

defend, "the duty to reimburse."

Where a conflict exists between an 

insurer and its insured by virtue of the 

insurer's duty to defend mutually-exclusive 

covered and non-covered claims against the 

insured, the duty to defend is translated 

into a duty to reimburse the insured for the 

cost of defending the underlying action if 

it should ultimately be determined, based on 

the disposition of that action, that the 

insured was entitled to a defense.

[Burd, 56 N.J. at 390.]

Similarly, where an insurer did not 

undertake defense of the case at the 

inception of the litigation, the duty to 

defend may be converted into a duty to 

reimburse. [SL Indus., Inc. v. Am. 

Motorists Ins. Co., 128 N.J. 188, 200 

(1992).]

[Id. at 73-74 (citations omitted).]
22 A-5526-15T1

In Grand Cove II, this court found the insurance coverage issues 

in the case created problems with the trial court's mandate that 

the insurance company must immediately assume defense of all the 

causes of action of the insured. Id. at 74-75. Such issues 

included, but were not limited to: the trial court's concession 

that certain claims were not covered, an inherent conflict due 

to late-raised claims, and the fact that the underlying 

litigation would not resolve the coverage issues. Ibid. 

Therefore, we held the "insurers' duty to defend should have 

been converted to a duty to reimburse pending the outcome of the 

coverage litigation." Id. at 76.

Here, through our comparison of the averments in the 

complaint to the policy's exclusion, we conclude it was 

premature to order Selective to assume responsibility for the 

defense since it was unclear, based on the anti-concurrent and 

anti-sequential language in the exclusion, whether any claims 

would be covered. Therefore, as in Grand Cove II, we hold that 

the duty to defend should be converted to a duty to reimburse 

pending resolution of the coverage action. 

III.

Given our determination that the decision obligating 

Selective to defend was premature, it follows that the decision 

holding that Griggs applied was without basis. The predicate 
23 A-5526-15T1

for the application of Griggs is whether there was a breach of 

duty by Selective by its failure to defend Woodbury Medical. 

Only if Selective was determined to be in default of that duty 

would it trigger indemnification. In Griggs, our Supreme Court 

held: 

Where an insurer wrongfully refused 

coverage and a defense to its insured, so 

that the insured is obliged to defend 

himself in an action later held to be 

covered by the policy, the insurer is liable 

for the amount of the judgment obtained 

against the insured or of the settlement 

made by him. The only qualifications to 

this rule are that the amount paid in 

settlement be reasonable and that the 

payment be made in good faith.

[Griggs, 88 N.J. at 364 (citing Fireman's 

Fund Ins. Co. v. Security Ins. Co. of 

Hartford, 72 N.J. 63, 71 (1976) (quoting 

N.J. Mfrs. Indem. Ins. Co. v. U.S. Cas. Co., 

91 N.J. Super. 404, 407-08 (App. Div. 

1966))).]

As our Supreme Court held in Passaic Valley, a good-faith 

challenge to coverage is not a breach of an obligation to 

defend. 206 N.J. at 617. Here, we are satisfied that Selective 

was within its rights to dispute coverage based upon the 

language of the policy's exclusion. Vizcaino, 392 N.J. Super. 

at 370. 

We are also satisfied that, in reaching its claim decision, 

Selective did not breach its duty to act in good faith. 

Fireman's Fund, 72 N.J. at 73. Saliently, Woodbury Medical has 
24 A-5526-15T1

not argued, as in Griggs, that there was an unreasonable delay

by Selective in regard to its coverage decision so as to 

prejudice the defense.

In sum, in the absence by Selective of a breach of its duty 

to defend, Griggs was inapplicable.

Having determined that the judge's decision to apply Griggs

to the enforcement of the settlement was a premature finding of 

a breach of duty to defend, we vacate the orders that were the 

product of that decision. Specifically, those orders are the 

consent order between Selective and the Wears dated February 26, 

2016, and the order denying enforcement of the settlement. 

We also reverse the order dismissing the declaratory 

judgment action and remand the action for its resolution. In 

conformance therewith, we affirm the decision to allow the Wears 

to intervene in the declaratory judgment action.

In reaching our decision, we express no view on the 

enforcement of the settlement reached between the Wears and 

Woodbury Medical should there be a judicial determination of 

coverage. 

IV.

Finally, we turn to the judge's award of fees and costs to 

Woodbury Medical, premised upon Rule 1:10-3.
25 A-5526-15T1

We review a trial court's order enforcing litigant's rights 

pursuant to Rule 1:10-3 under an abuse of discretion standard. 

Barr v. Barr, 418 N.J. Super. 18, 46 (App. Div. 2011); see 

also Innes v. Carrascosa, 391 N.J. Super. 453, 498 (App. Div. 

2007). An abuse of discretion occurs when a decision was "made 

without a rational explanation, inexplicably departed from 

established policies, or rested on an impermissible basis."

Flagg v. Essex Cty. Prosecutor, 171 N.J. 561, 571 (2002).

The decision to award counsel fees "rests within the sound 

discretion of the trial court." Maudsley v. State, 357 N.J. 

Super. 560, 590 (App. Div. 2003). We afford trial courts 

"considerable latitude in resolving fee applications . . . ." 

Grow Co. v. Chokshi, 424 N.J. Super. 357, 367 (App. Div. 2012). 

Such "determinations by trial courts will be disturbed only on 

the rarest occasions, and then only because of a clear abuse of 

discretion." Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 

444 (2001) (quoting Rendine v. Pantzer, 141 N.J. 292, 317 

(1995)).

We are satisfied that the judge exercised appropriate 

discretion with regard to the award of fees and costs to 

Woodbury Medical for Selective's non-compliance with the court's 

January 9, 2015 order. Selective's motions to stay were denied, 

both before the judge and before this court, yet Selective 
26 A-5526-15T1

continuously refused to comply with the orders. While Selective 

was within its right to seek review of the orders with which it 

disagreed, in the absence of a stay or reversal, it was not free 

to ignore those orders. 

That stated, the quantum of counsel fees was based on those 

incurred by Woodbury Medical in the defense of the action as of 

January 9, 2015. Since we have determined that the award for 

counsel fees based upon Selective's failure to defend was 

premature, Woodbury Medical's entitlement to counsel fees is 

limited to those incurred in prosecuting the motion to enforce 

litigant's rights. Upon remand, Woodbury Medical may seek 

reimbursement for those counsel fees and associated costs before 

the Law Division. 

Affirmed in part. Reversed in part. We do not retain 

jurisdiction.

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