Court Opinion

ID: 4558481
Source: CourtListenerOpinion
Date Created: 2020-08-25 14:09:20.819442+00
Date Added: 2024-06-11T08:45:59.972893
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                     APPROVAL OF THE APPELLATE DIVISION

                                     SUPERIOR COURT OF NEW JERSEY
                                     APPELLATE DIVISION
                                     DOCKET NO. A-2330-17T2

NICOLE PICKETT, on behalf
of the ESTATE OF ROGER
WADDELL PICKETT, II,

        Plaintiff,                               APPROVED FOR PUBLICATION

                                                          August 25, 2020
v.
                                                       APPELLATE DIVISION
MOORE'S LOUNGE (also known
as BILL AND RUTH'S) and
JAMES D. CORLEY, JR.,

        Defendants,

and

EMRO, INC.,

        Defendant/Third-Party
        Plaintiff-Appellant,

v.

NORTHFIELD INSURANCE
COMPANY 1,

        Third-Party Defendant-
        Respondent,

and

1
     Improperly pled as Northland Insurance Company.
PETROCCI AGENCY, LLC,

     Third-Party Defendant.
__________________________

            Argued October 29, 2019 – Decided August 25, 2020

            Before Judges Messano, Ostrer and Vernoia.

            On appeal from the Superior Court of New Jersey,
            Law Division, Hudson County, Docket No. L-5292-
            15.

            Jonathan Michael Ettman argued the cause for
            appellant (Feitlin, Youngman, Karas & Gerson, LLC,
            attorneys; Frederick Evan Gerson, on the briefs).

            Francis E. Borowsky, Jr., argued the cause for
            respondent (Borowsky & Borowsky, LLC, attorneys;
            Francis E. Borowsky, Jr., of counsel and on the brief;
            Adam K. Gallagher, on the brief).

      The opinion of the court was delivered by

OSTRER, J.A.D.

      This insurance coverage case requires us to interpret the assault-or-

battery exclusion in a tavern's commercial general liability policy.             In

excluding damage claims "arising out of any act of 'assault' or 'battery'

committed by any person," the exclusion expressly encompasses claims

"arising out of . . . any act or omission in connection with the preve ntion or

suppression of such 'assault' or 'battery.'" The estate of Roger Pickett, a tavern

patron, sued the tavern owner, EMRO, Inc., for damages after a tavern invitee

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fatally shot Pickett following a verbal argument. The estate alleged EMRO

negligently permitted the shooter to enter the tavern armed, remain there, and

then intentionally shoot Pickett. EMRO and its insurance producer, whom

EMRO sued for failing to procure adequate coverage, settled with the estate.

Then, EMRO sought indemnification from its insurer, Northfield Insurance

Co., for its settlement share and defense costs.        In denying coverage,

Northfield invoked the assault-or-battery exclusion. Then followed EMRO's

action against Northfield, the court's summary judgment dismissal, and th e

present appeal.   As we conclude that the exclusion unambiguously bars

EMRO's indemnification claim, we affirm.

                                       I.

      Early on New Year's Day, Pickett and James D. Corley got into an

argument in Moore's Lounge in Jersey City. As Pickett turned to walk away,

Corley shot him three times, killing him. Corley was convicted of aggravated

manslaughter, N.J.S.A. 2C:11-4(a)(1), and is currently incarcerated.

      Pickett's estate alleged the tavern's staff subjected Pickett and other

customers to a weapons search before they entered, but Corley, a retired police

officer and a regular customer, was allowed to enter with a concealed weapon.

The estate also alleged that the staff continued to serve Corley after he had

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                                       3
already consumed excessive amounts of alcohol and displayed signs of

intoxication.

      The estate's seven-count complaint against Corley and EMRO 2 included

a wrongful death count against all defendants, based on defendants' "actions

and/or negligence"; an assault and battery claim against Corley, for

intentionally shooting Pickett; and a claim against EMRO for violating the

Licensed Alcoholic Beverage Server Fair Liability Act, N.J.S.A. 2A:22A-2,

for serving Corley alcohol despite his excessive consumption and visible

intoxication.

      The remaining four counts alleged EMRO's negligence.          In three of

those counts, the estate alleged EMRO negligently managed its employees

whose incompetence and unfitness caused Pickett's death. One count pertained

to negligent hiring; another to training, supervision and oversight; and a third

to retention. The estate also alleged generally that EMRO negligently failed to

ensure that Pickett, as a business invitee, was free from reasonably foreseeable

criminal activity.

      EMRO sought a defense and indemnification from Northfield. EMRO

had provided Northfield with a notice of claim shortly after the shooting. As it

2
  The estate initially named the tavern by its common name, Moore's Lounge,
which was also known as Bill and Ruth's; and the estate included fictitiously
named persons and entities.

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                                       4
did in response to the notice, Northfield invoked the policy's assault-or-battery

exclusion and denied EMRO's request for coverage. 3 A policy endorsement

entitled "EXCLUSION - ASSAULT OR BATTERY," under the heading

"PROVISIONS," states:

            1. The following exclusion is added to Paragraph 2.,
            Exclusions, of SECTION I – COVERAGES –
            COVERAGE        A    BODILY       INJURY      AND
            PROPERTY DAMAGE LIABILITY:

            Assault Or Battery

            "Bodily injury" or "property damage" arising out of
            any act of "assault" or "battery" committed by any
            person, including any act or omission in connection
            with the prevention or suppression of such "assault" or
            "battery".

                  ....

            3. The following is added to the DEFINITIONS
            Section:

            "Assault" means any attempt or threat to inflict injury
            to another, including any conduct that would
            reasonably place another in apprehension of such
            injury.

            "Battery" means any intentional, reckless or offensive
            physical contact with, or any use of force against, a
            person without his or her consent that inflicts some
            injury, regardless of whether the resulting injury
            inflicted is intended or expected.

3
  The insurer also invoked the policy's liquor exclusion. For reasons s tated
below, we need not address it in detail.

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                                       5
      Along with its answer to the estate's complaint, EMRO filed its third -
                                                     4
party complaint against Northfield for coverage.         EMRO also sued its

"agent/broker" for damages caused by its negligence and breach of promise to

procure adequate coverage. 5

      In their settlement with the estate, EMRO and the insurance producer

agreed to pay $50,000 and $100,000 respectively. The settlement expressly

provided that Northfield was not a party to the settlement, and EMRO reserved

its rights to proceed against it.     EMRO thereafter moved for summary

judgment against Northfield, seeking indemnification of its $50,000

settlement, plus $45,251.77 in defense fees and costs. Northfield cross -moved

for summary judgment.

      In granting summary judgment to Northfield, the trial court held that the

assault-or-battery exclusion barred EMRO's claim, because the estate sought

damages for bodily injury arising out of Corley's assault or battery of Pickett,

and the estate's negligence-based claims referred to, as the policy stated, "any

4
   EMRO also included claims against Northfield of fraud, bad faith, and
violation of the Unfair Claims Settlement Practices Act.
5
   EMRO did not precisely define its producer's role. See TWBC III, Inc. v.
Certain Underwriters at Lloyd's London Subscribing to Policy No. 894 305481
92, 323 N.J. Super. 60, 65 (App. Div. 1999) (distinguishing between insurance
agent and broker under N.J.S.A. 17:22A-2(f) and -2(g), since repealed by L.
2001, c. 210, § 27, which uses the term "insurance producer," N.J .S.A.
17:22A-28).

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                                       6
act or omission in connection with the prevention or suppression of such

'assault' or 'battery.'"   The court analyzed two cases involving different

versions of assault-or-battery exclusions: Stafford v. T.H.E. Insurance Co.,

309 N.J. Super. 97 (App. Div. 1998), holding the exclusion barred the insured's

claim, and L.C.S. Inc. v. Lexington Insurance Co., 371 N.J. Super. 482 (App.

Div. 2004), reaching the opposite result. We discuss the two cases at length

below.

      The trial court also noted that EMRO did not contest that the liquor

exclusion applied to the estate's claim under the Licensed Alcoholic Beverage

Service Fair Liability Act and its allegation that EMRO furnished alcoholic

beverages to Corley after he was already under the influence. Therefore, the

court also granted summary judgment "as to the liquor liability exception."

      On appeal, EMRO contends the trial court misapplied Stafford and

L.C.S., and the assault-or-battery exclusion does not apply to the estate's

negligence-based claims, because the policy is ambiguous and does not

expressly exclude claims based on negligent hiring, training and retention.

                                      II.

      This appeal turns on a purely legal question: our interpretation of the

Northfield policy. See Abboud v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa.,

450 N.J. Super. 400, 406 (App. Div. 2017) (stating "[i]nterpretation of an

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                                       7
insurance policy . . . present[s] a legal question, which we review de novo").

As the record discloses no genuine issue of material fact, our resolution of t hat

question will determine whether Northfield was entitled to summary judgment.

See Templo Fuente de Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh,

Pa., 224 N.J. 189, 199 (2016) (stating that a movant is entitled to summary

judgment if the record discloses no genuine issue of material fact and "the

moving party is entitled to a judgment or order as a matter of law"). We

consider these issues do novo. Ibid.

      The principles governing our interpretative task are well-settled. "If 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." Id. at 200 (internal quotation marks and

citations omitted). A provision is ambiguous if it is "subject to more than one

reasonable interpretation," and "[o]nly where there is genuine ambiguity, that

is, where the phrasing of the policy is so confusing that the average

policyholder cannot make out the boundaries of coverage, should the

reviewing court read the policy in favor of the insured."          Ibid. (internal

quotation marks and citations omitted).      "Consistent with these rules, our

courts will enforce exclusionary clauses if 'specific, plain, clear, prominent,

and not contrary to public policy,' notwithstanding that exclusions generally

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                                        8
'must be narrowly construed,' and the insurer bears the burden to demonstrate

they apply." Abboud, 450 N.J. Super. at 407 (quoting Flomerfelt v. Cardiello,

202 N.J. 432, 441-42 (2010)).

      Turning to the policy terms, the assault-or-battery exclusion bars claims

against the insured for bodily injury that arise out of an assault or battery. The

estate alleged that Corley intentionally shot Pickett. The estate thereby alleged

a "battery," because the policy defines "battery" as an "intentional, reckless or

offensive . . . use of force against, a person without his . . . consent that inflicts

some injury." Although Corley was convicted of recklessly causing Pickett's

death, see N.J.S.A. 2C:11-4(a)(1), his recklessness also satisfies the policy's

"battery" definition.

      We need not decide whether excluding bodily injury claims "arising out

of any act of 'assault' or 'battery'" would alone suffice to bar EMRO's claim for

a defense and indemnification of the estate's negligence-based claims. That is

because the exclusion of claims arising out of an assault or battery express ly

"includ[es] any act or omission in connection with the prevention or

suppression of such 'assault' or 'battery.'"         Thus, the exclusion plainly

encompasses negligent acts or omissions that fail to prevent or suppress the

assault or battery. That embraces the estate's general allegation that EMRO

negligently failed to exercise reasonable care to assure the tavern was a safe

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                                          9
place. The exclusion also embraces the estate's allegation that, as a result of

EMRO's negligent personnel management (i.e. hiring, training and retention),

EMRO's staff did not prevent Corley from shooting Pickett. Specifically, staff

allowed Corley to enter with a gun, allowed him to retain the gun throughout

the evening as he became more intoxicated, and did not intervene when he

began arguing with Pickett. 6

      In Stafford, we found that a differently worded assault-or-battery

exclusion barred the insured's claim for a defense and indemnification. The

underlying suit involved the bodily injury claims of three nightclub patrons

who were shot by fellow patrons. 309 N.J. Super. at 104-05. The plaintiffs

asserted claims of inadequate security, and negligent employee hiring, training

and supervision, among other claims.        Id. at 101.   However, the policy

specifically mentioned forms of negligent personnel management, as well as

"any other negligent action." Id. at 104.

      Like the Northfield policy, the nightclub's policy generally excluded

claims arising out of an assault or battery, stating, "NO coverage of any kind

(including but not limited to cost of defense) is provided by this policy for

Bodily Injury and/or Property Damage arising out of or caused in whole or in

6
   With respect to the liquor exclusion, one may distinguish between the
decision to continue to serve Corley alcohol, and the decision to allow him to
retain his weapon.

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                                       10
part by an assault and/or battery." Ibid. Referring to negligence-based claims,

it added, "Further, NO coverage is provided if the underlying operative facts

constitute an assault and/or battery irrespective of whether the claim alleges

negligent hiring, supervision and/or retention against the insured or any other

negligent action." Ibid.

      We reversed the trial court, which found the provision ambiguous. We

rejected the insured's argument that the provision should be interpreted to

exclude claims related to assaults or batteries that the insured's own employees

committed. Id. at 104. We held that the "Further" clause did not limit the

exclusion's scope; rather, it provided, "by way of example" that it

encompassed claims of "'negligent hiring, supervision and/or retention' which

are obvious refuges for a plaintiff seeking to avoid the assault and battery

exclusion." Id. at 105. We noted that the "sentence goes on to include 'any

other negligent action' thus placing the insured on notice that it is the facts of

the case and not the craft of the plaintiff's lawyer which will determine the

applicability of the exclusion." Ibid.

      We reject EMRO's contention that Stafford is of little import, because

the policy exclusion in that case expressly referred to "negligent hiring,

supervision and/or retention" of employees. In some respects, the Northfield

exclusion is clearer than the one in Stafford, because it expressly refers to both

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                                         11
"acts" and "omissions" that would prevent or suppress the assault or battery;

the exclusion in Stafford refers only to "any other negligent action." Without

doing so expressly, the Northfield policy excludes claims of negligent hiring,

training, supervision or retention, by referring broadly to "any act or omission"

that could prevent or suppress the assault or battery.

      We also reject EMRO's contention that L.C.S., in which the court found

that a bar was entitled to a defense and indemnification, compels us to find the

Northfield exclusion does not clearly exclude coverage for the estate's

negligence-based claims against EMRO. L.C.S. involved a policy exclusion

much like Northfield's. The exclusion stated that the insurance did not apply

to bodily injury and certain other claims "arising out of assault and battery or

out of any act or omission in connection with the prevention or suppression of

such acts," adding (unlike the Northfield policy), "whether caused by or at the

instigation of or direction of the Insured, his employees, patrons or other

persons." 371 N.J. Super. at 487.

      The nature of the plaintiff's underlying claims distinguish L.C.S. from

this case. In a three-count complaint, the bar patron in L.C.S. claimed: (1) a

bar's bouncer intentionally assaulted him by punching him in the face; (2) the

bouncer negligently performed his duties; and (3) the bar negligently hired,

trained, employed and supervised its bouncers and employees. Id. at 486-87.

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                                        12
Thus, the bar's alleged negligence in managing its bouncers, was both (1) an

act or omission in connection with a bouncer's assault, and (2) an act or

omission in connection with a bouncer's negligence.         The exclusion would

plainly not encompass the latter.

      The L.C.S. court recognized that "[i]t is the nature of the claim for

damages, not the details of the accident or the ultimate outcome, which

triggers the obligation to defend," and "[w]hen multiple alternative causes of

action are set forth, the duty to defend will continue until every covered claim

is eliminated." Id. at 490. The court recounted that at trial, neither the patron-

plaintiff nor his witnesses said "whether he was intentionally assaulted or

negligently injured while being escorted from the bar."        Id. at 489.    The

plaintiff ultimately settled with the bar based on his complaint's second count,

which alleged the bouncer's negligence. Ibid. The L.C.S. court held that if the

patron's "injuries were caused by a negligent act unrelated to the assault and

battery, as he allege[d] in count two of the complaint, then the exclusion relied

on by [the insurer] is clearly inapplicable." Id. at 494.

      In contrast, the Pickett estate did not alternatively allege that Corley

negligently shot Pickett. The bar's alleged negligence was connected only with

an assault or battery. Thus, the Northfield policy's exclusion encompasse s the

estate's claim against EMRO.

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       We acknowledge that the L.C.S. court considered it significant that the

policy exclusion in Stafford explicitly referred to negligent personnel

management. The L.C.S. court stated that absent such an explicit provision, "it

is not clear to the average reader that the . . . exclusion covers the alleged

negligent activity in the third count of the [bar patron's] complaint." Id. at

492.    The third count alleged negligent hiring, training, employment, or

supervision of the insured's bouncers and employees; and alleged the bar

patron's injuries resulted from that negligence.

       We do not share that view about the necessity of explicitly referring to

personnel management, for the reasons we have already stated in discussing

Stafford. The Northfield policy broadly excludes damage claims " arising out

of . . . any act or omission in connection with the prevention or suppression of

such 'assault' or 'battery'".   The average reader would have no difficulty

understanding that the policy thereby excludes claims that an insured could

have prevented an assault, had it not negligently managed its staff, or

negligently failed to maintain a safe environment for its customers. As noted,

we will not "engage in a strained construction to support the imposition of

liability." Templo Fuente, 224 N.J. at 200.

       Furthermore, the L.C.S. court's assessment of the "average reader" was

unnecessary to its decision. The insurer in L.C.S. was obliged to defend and

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                                       14
indemnify because the negligent management of personnel alleged in count

three of the L.C.S. complaint was connected to the negligently caused injury as

alleged in count two, not an assault or battery.

      Our interpretation of the Northfield exclusion also finds support in the

persuasive decisions of other courts. We recognize the variability of assault -

or-battery exclusions in commercial general liability policies.      One treatise

identifies a "standard" CGL policy exclusion that includes elements from the

Northfield policy, as well as the policies in L.C.S. and Stafford. It states:

            Restaurants, bars, taverns, night clubs, fraternal and
            social clubs endorsement:

            The coverage under this policy does not apply to
            "bodily injury," "property damage," "personal and
            advertising injury," or any injury, loss or damage
            arising out of assault and/or battery, or out of any act
            or omission in connection with the prevention or
            suppression of such acts, whether caused by or at the
            instigation or direction of any Insured, Insured's
            employees, patrons or any other person. Nor does this
            insurance apply with respect to any charges or
            allegations of negligent hiring, training, placement or
            supervision.

            [Miller's Standard Insurance Policies Annotated 721.A
            (7th ed. 2019).]

      However, courts have found unambiguous virtually the same exclusion

found in the Northfield policy, or the policy in L.C.S. In St. Paul Surplus

Lines Insurance Co. v. 1401 Dixon's, Inc., 582 F. Supp. 865, 866 (E.D. Pa.

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1984), the policy mirrored the one in L.C.S. Applying Pennsylvania law, the

court issued a declaratory judgment that the policy excluded the insured bar's

claim for indemnification and coverage arising out of a patron's death. The

victim's mother sued the bar. She alleged that after participants in a barroom

brawl were told to take their dispute outside, one of the participants violently

struck her son from behind as he happened to stumble upon the brawl. Id. at

867.   The victim's mother alleged her son was assaulted and the bar was

negligent in failing to prevent or stop the fight and to maintain order. Ibid.

The court held the policy exclusion was "clearly worded and free from

ambiguity." Id. at 869. The court reasoned that the exclusion "extends beyond

the actual assault and battery to cover injuries arising 'out of any act or

omission in connection with the prevention or suppression' of an assault and

battery. This clause applies . . . to negligence in failing to stop or prevent its

occurrence." Id. at 868. See also Essex Ins. Co. v. Yi, 795 F. Supp. 319, 324

(N.D. Cal. 1992) (following St. Paul Surplus Lines in interpreting a similar

exclusion under California law).

       Applying Maryland law, the court in First Financial Insurance Co. v.

GLM, Inc., 88 F. Supp. 2d 425 (D. Md. 2000), reached the same conclusion.

The exclusion in that case mirrored Northfield's. Id. at 427. The insured bar

sought a defense and indemnification related to a stabbed patron's personal

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                                       16
injury complaint. The patron alleged that the bar failed to provide adequa te

security, because the doorman left his post, allowing the perpetrator to reenter

the bar after he was ejected; and the bar negligently hired incompetent staff.

The court found that both allegations qualified as claims "arising out of

defendant's '. . . omission in connection with the prevention . . . of an assault or

battery' causing [the victim's] bodily injuries."       Id. at 429-30.    See also

Acceptance Ins. Co. v. Winning Concepts of Westport, Inc., 842 S.W.2d 206,

208 (Mo. Ct. App. 1992) (holding that "[n]egligently hiring persons with

violent propensities which negligence results in an individual being assaulted

and battered is an act or omission in connection with the prevention or

suppression of assault and battery and therefore is excluded under the terms of

the policy"); Hernandez v. First Fin. Ins. Co., 802 P.2d 1278, 1280 (Nev.

1990) (stating that "negligent hiring constitutes a failure to prevent an assault

and battery" and "[f]ailure to prevent an assault and battery is covered by the

broad language in this particular exclusion, which refers to 'any . . . omission

in connection with the prevention' of assault and battery").        See generally,

Kimberly J. Winbush, Validity, construction, and effect of assault and battery

exclusion in liability insurance policy at issue, 44 A.L.R.5th 91, § 8 (1996)

(addressing "[e]xclusions for assault and battery and any act in connection

with the prevention or suppression of assault and battery").

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                                        17
      In sum, we are persuaded that the assault-or-battery exclusion in

EMRO's policy with Northfield precluded EMRO's claim for indemnification

of its defense costs and its share of the settlement paid to the estate. To the

extent not addressed, EMRO's remaining arguments lack sufficient merit to

warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

      Affirmed.

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