Court Opinion

ID: 6325124
Source: CourtListenerOpinion
Date Created: 2022-03-21 14:07:00.181707+00
Date Added: 2024-06-11T09:19:13.982877
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-3750-20

COLIN YURCISIN,

          Plaintiff,

v.

RYAN FLEMING, JUSTIN
MAGARIELLO, MARK
MAGARIELLO, and CAROL
MAGARIELLO,

     Defendants.
___________________________

NEW JERSEY
MANUFACTURERS
INSURANCE COMPANY,

          Plaintiff-Appellant,

v.

RYAN FLEMING, COLIN
YURCISIN, JUSTIN
MAGARIELLO, MARK
MAGARIELLO, and CAROL
MAGARIELLO,

          Defendants-Respondents.
___________________________

           Argued February 9, 2022 – Decided March 21, 2022

           Before Judges Hoffman, Whipple, and Geiger.

           On appeal from an interlocutory order of the Superior
           Court of New Jersey, Law Division, Mercer County,
           Docket Nos. L-0691-17 and L-2053-17.

           Stephen J. Foley, Jr., argued the cause for appellant
           New Jersey Manufacturers Insurance Company
           (Campbell, Foley, Delano & Adams, LLC, attorneys;
           Stephen J. Foley, Jr., on the briefs).

           Scott A. Krasny argued the cause for respondent Ryan
           Fleming (Furlong and Krasny, attorneys; Scott A.
           Krasny, on the brief).

           Kenneth W. Elwood argued the cause for respondent
           Colin Yurcisin (Blume, Forte, Fried, Zerres &
           Molinari, PC, attorneys; Kenneth W. Elwood, on the
           brief).

PER CURIAM

      These consolidated cases arise from the physical assault of a guest by

another guest at a party, and the resulting dispute between New Jersey

Manufacturers Insurance Company (NJM) and its insured regarding whether

NJM owed a duty to defend and indemnify the guest who committed the

assault.

      We derive the following facts from the motion record. Ryan Fleming

and Colin Yurcisin were guests at a party hosted by Justin Magariello at the

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                                     2
home of his parents, Mark and Carol Magariello.           Yurcisin alleged that

Fleming, who was intoxicated, punched him in the face multiple times, causing

serious injuries.

      Fleming was charged with second-degree aggravated assault. As part of

his entry into pretrial intervention (PTI), Fleming pled guilty pursuant to Rule

3:28-5(b)(2). At the plea hearing, Fleming testified that Yurcisin was sitting at

a chair at the party, "minding his own business" when Fleming struck Yurcisin

approximately six times in the face. Fleming further acknowledged at the plea

hearing that his conduct was a "purposeful and knowing act."           Fleming's

admissions at the plea hearing were made under a civil reservation that the

plea would not be evidential in any civil proceeding pursuant to Rule 3:9-2.

      On April 3, 2017, Yurcisin filed a personal injury action against Fleming

and the Magariellos (Docket No. L-691-17). In his eight-count complaint,

Yurcisin alleged that Fleming is liable for "negligently and/or intentionally

caus[ing] injury to [Yurcisin] for his improper, unauthorized and/or illegal

conduct" (count four), and "maliciously and/or negligently assault[ing]"

Yurcisin (count five). The remaining aspects of count four and the other six

counts are directed against the Magariellos. 1

1
  The complaint alleges the Magariellos: (a) negligently "created or caused to
be created certain dangerous and hazardous conditions that led to [Yurcisin's]

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                                        3
      Fleming was insured under his parents' NJM homeowner's policy (the

policy).   Fleming requested that NJM provide him with a defense and

indemnify him against Yurcisin's claims.       NJM denied coverage and the

obligation to provide a defense for Fleming's acts, claiming the incident

between Fleming and Yurcisin was not a covered occurrence as defined in the

policy.

      NJM contended that the incident between Fleming and Yurcisin "would

not be classified as an accident." NJM asserted that because Yurcisin was

claiming bodily injury and emotional damages which was "expected or

intended" by an insured, coverage for the incident was excluded.           NJM

considered Fleming's actions "entirely intentional."      NJM also noted that

injuries" by "serving, providing or otherwise making available, alcohol to
[Fleming], while he was 'visibly intoxicated'" (count one); (b) were liab le as a
social host for not providing a reasonable and safe premises to Yurcisin (count
two); (c) were liable as social hosts for negligently, recklessly and unlawfully
serving alcoholic beverages to Fleming, and knew or should have known he
was under the influence or impaired by the consumption of alcoholic
beverages (count three); (d) were vicariously liable for the negligent and/or
intentional acts of Fleming by serving alcohol to Fleming, (count four); (e)
failed to warn or alert Yurcisin to the dangers of being present (count six); (f)
created and/or maintained a nuisance that resulted in Yurcisin's injuries (count
seven); and (g) are liable for negligently hiring, training, overseeing, and
supervising the persons who served alcoholic beverages to Fleming, which
facilitated and/or permitted Fleming's wrongful conduct (count eight). The
Magariellos are covered by a different homeowner's policy. Mark and Carol
Magariello were granted summary judgment dismissing the claims against
them. The Magariellos have not participated in this appeal.

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                                       4
Fleming never provided a statement explaining what happened at the party,

and for those reasons, could not defend him in the personal injury action.

      The policy provides coverage and indemnifies, holds harmless, and

defends claims "brought against an insured for damages because of bodily

injury or property damage caused by an occurrence to which this coverage

applies[.]" "Occurrence" is defined as "an accident, including continuous or

repeated exposure to substantially the same general harmful conditions, which

results, during the policy period in . . . bodily injury; or . . . property damage."

      "Bodily injury" is defined as "bodily harm, sickness or disease,

including required care, loss of services and death that results." The policy

also provides coverage for "the necessary medical expenses that are incurred

or medically ascertained within three years from the date of an accident

causing bodily injury" by a person "off the insured location, if the bodily

injury . . . [i]s caused by the activities of an insured."

      For occurrences that are covered, the policy affords a defense to insureds

at NJM's expense by counsel of NJM's choice, "even if the suit is groundless,

false or fraudulent."

      The policy excludes coverage and the duty to defend for the intentional

acts of insureds, stating that coverage for bodily injury, property damage, and

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                                          5
medical expenses, and the duty to provide a defense to such claims, does not

apply to:

            Expected Or Intended Injury

            Bodily injury or property damage, with respect to all
            insureds which is expected or intended by an insured
            even if the bodily injury or property damage:

            (a) Is of a different kind, quality, or degree than
            initially expected or intended; or

            (b) Is sustained by a different person, entity, real or
            personal property than initially expected or intended.

Yurcisin and Fleming do not dispute that the policy does not provide coverage

or a duty to defend for Fleming's intentional acts.

      NJM filed a complaint for a declaratory judgment that it had no

obligation to provide a defense or liability coverage to Fleming for Yurcisin's

claims (Docket No. L-2053-17). Fleming was defended in the personal injury

and declaratory judgment actions by privately retained counsel, Scott A.

Krasny. Fleming and the Magariellos filed answers contesting the declaratory

judgment action and Fleming filed a counterclaim against NJM.

      The trial court consolidated the actions and granted summary judgment

to Carol and Mark Magariello. Those rulings are not part of this appeal.

      Yurcisin moved for summary judgment in the declaratory judgment

action to compel NJM to defend and indemnify Fleming against Yurcisin's

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                                        6
claims. In turn, NJM cross-moved for summary judgment for a ruling that it

had no obligation to cover Fleming against Yurcisin's claims, and thus, had no

duty to defend, indemnify, and hold Fleming harmless from those claims.

Fleming then moved for summary judgment to compel NJM to defend and

indemnify him against Yurcisin's claims.

      The court issued three orders on August 2, 2019. It denied all three

motions for summary judgment but still required NJM to defend Fleming

against Yurcisin's claims.    The court found there was a genuine issue of

material fact whether Yurcisin's injuries were caused by Fleming's negligent,

reckless, or intentional acts. The court noted Fleming's testimony at the plea

hearing was admissible for impeachment purposes despite the civil reservation.

The court also directed that the declaratory judgment action be tried before the

personal injury action.

      Counsel appointed by NJM to defend Fleming moved to compel Krasny

to withdraw from the personal injury action. Fleming cross-moved to compel

NJM to provide him with counsel in both the personal injury and declaratory

judgment actions, and to pay Krasny's counsel fees and costs. Yurcisin filed a

similar motion against NJM.

      Despite denying summary judgment, the court found NJM had a duty to

defend Fleming and was responsible for Fleming's attorney's fees in the

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                                       7
consolidated actions.   The court ordered NJM to assign counsel to defend

Fleming and to pay the attorney's fees and costs he had incurred in the

consolidated actions. Krasny submitted a certification of fees and costs and a

substitution of attorney in the personal injury action.

      NJM moved for reconsideration of the order compelling it to pay

Fleming's attorney's fees and to provide counsel for him in the consolidated

actions. NJM raised a two-fold argument. First, NJM claimed that ordering it

to pay its own counsel and its adversary's counsel in the same case created a

conflict of interest. Second, NJM claimed it was error to require it to pay

attorney's fees before Fleming prevailed in the declaratory judgment action.

The court denied reconsideration and awarded $12,240 in attorney's fees and

costs to Krasny in the consolidated actions through April 9, 2020.

      By leave granted, NJM appeals from the orders: (1) directing it to

provide counsel to Fleming in the consolidated actions and to pay the

attorney's fees and costs incurred for the services rendered by Krasny in both

actions; and (2) denying its motion for reconsideration and directing it to pay

attorney's fees and costs to Krasny. This appeal followed.

      NJM raises the following points for our consideration:

            POINT I

            NJM'S HOMEOWNERS POLICY DOES NOT
            PROVIDE  COVERAGE  TO   DEFENDANT

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                                        8
             FLEMING    FOR  DEFENSE   OF    THE
             DECLARATORY [JUDGMENT] ACTION FILED
             AGAINST HIM.

             POINT II

             THE TRIAL COURT ORDERS COMPELLING NJM
             TO PROVIDE DEFENDANT FLEMING WITH A
             DEFENSE TO THE ACTION FOR DECLARATORY
             JUDGMENT VIOLATES THE LONGSTANDING
             AND WELL-ESTABLISHED "AMERICAN RULE"
             REGARDING THE PAYMENT OF ATTORNEY[']S
             FEES.

             POINT III

             ENFORCEMENT OF THE TRIAL COURT'S
             INTERLOCUTORY ORDERS REQUIRING NJM TO
             NOW PAY DEFENDANT FLEMING'S COUNSEL
             FEES WILL DEPRIVE NJM OF THE ABILITY TO
             APPEAL FROM THOSE ORDERS AND RECOUP
             ANY PAYMENTS MADE FOLLOWING A
             VERDICT IN ITS FAVOR IN THE DECLARATORY
             ACTION.     REVERSAL   OF   THE  ORDERS
             REQUIRING PAYMENT OF FEES IN ADVANCE
             OF THE ENTRY OF FINAL JUDGMENT,
             THEREFORE, IS REQUIRED AT THIS TIME. (Not
             Raised Below).

      "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 v. Cardiello, 202 N.J. 432, 441 (2010) (citing Kampf v. Franklin

Life Ins. Co., 33 N.J. 36, 43 (1960); Scarfi v. Aetna Cas. Sur. Co., 233 N.J.

Super. 509, 514 (App. Div. 1989)).           "In considering the meaning of an

insurance policy, we interpret the language 'according to its plain and ordinary

                                                                              A-3750-20
                                         9
meaning.'" Ibid. (quoting Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165,

175 (1992)). "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.'" Templo Fuente de

Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 200 (2016)

(quoting Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231,

238 (2008)). Where the terms are ambiguous, they are construed against the

insurer and in favor of the insured. Flomerfelt, 202 N.J. at 441.

      Insurance policies commonly include exclusions from coverage.

"Exclusionary clauses are presumptively valid[,]" ibid., and will be enforced if

the clauses are "'specific, plain, clear, prominent, and not contrary to public

policy,' notwithstanding that exclusions generally 'must be narrowly

construed,' and the insurer bears the burden to demonstrate they apply."

Abboud v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., 450 N.J. Super. 400,

407 (App. Div. 2017) (quoting Flomerfelt, 202 N.J. at 441-42).

      The parties do not dispute that the policy does not afford coverage for

intentional conduct, such as an intentional assault.       However, Yurcisin's

complaint asserts causes of action against Fleming based upon both intentional

and negligent conduct.     The complaint alleges that Fleming is liable for

"negligently and/or intentionally caus[ing] injury to [Yurcisin] for his

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                                       10
improper, unauthorized and/or illegal conduct" (count four), and "maliciously

and/or negligently assault[ing]" Yurcisin (count five). Despite his testimony

during factual basis for his guilty plea, Fleming now contends that he "blacked

out" during the incident and has no memory of the event.

      Our Supreme Court has addressed the complications that may arise when

an insured is sued on alternate theories of liability, such as negligent and

intentional torts. The Court recognized that "if there are multiple theories of

liability, only some of which would be covered, the interests of the insured and

insurer may not coincide." Flomerfelt, 202 N.J. at 446 (citing Burd v. Sussex

Mut. Ins. Co., 56 N.J. 383, 389-90 (1970)). Because the Yurcisin's complaint

alleges Fleming is liable for negligent and intentional conduct, we address the

principles governing an insurer's duties to defend and indemnify its insureds.

            Those duties are neither identical nor coextensive, and
            therefore, must be analyzed separately. Although a
            definitive conclusion that a policy by its terms affords
            no coverage, and therefore that there is no duty of
            indemnification, also means that there is no duty to
            defend, coverage questions may not have clear
            answers in advance of discovery or trial. As a result,
            courts are often required to evaluate whether the
            insurer owes its insured a duty to defend in advance of
            a conclusive decision about coverage.          In those
            circumstances, the separate principles that govern the
            duty to defend must be considered and applied.

                  An insurer's duty to defend an action brought
            against its insured depends upon a comparison
            between the allegations set forth in the complainant's

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                                       11
            pleading and the language of the insurance policy. 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 govern the
            insurer's obligation.

                  In evaluating the complaint for this purpose,
            doubts are resolved in favor of the insured and,
            therefore, in favor of reading claims that are
            ambiguously pleaded, but potentially covered, in a
            manner that obligates the insurer to provide a defense.
            Similarly, if a complaint includes multiple or
            alternative causes of action, the duty to defend will
            attach as long as any of them would be a covered
            claim and it continues until all of the covered claims
            have been resolved.

            [Flomerfelt, 202 N.J. at 444 (citations omitted).]

      Stated another way, the duty to defend arises when a comparison of the

allegations in the complaint with the language of the policy

            reveals that, if the allegations of the complaint are
            sustained, the insurer will be required to pay any
            resulting judgment. Any doubts are resolved in favor
            of the insured. Liability of the insured to the plaintiff
            is not the criterion; it is the allegation in the complaint
            of a cause of action which, if sustained, will impose a
            liability covered by the policy.            When multiple
            alternative causes of action are stated, the duty will
            continue until every covered claim is eliminated.

            [S.T. Hudson Eng'rs, Inc. v. Pa. Nat. Mut. Cas. Co.,
            388 N.J. Super. 592, 606 (App. Div. 2006) (citations
            and internal quotation marks omitted).]

      Our Supreme Court has explained that when there are covered and

uncovered claims alleged in a complaint, the insurer has two options: (1) it can

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                                        12
"assume the defense if the insured agreed, with a reservation of its right to

dispute coverage"; or (2) it can "refuse to defend and dispute its obligations

later, so as to 'translate its obligation into one to reimburse the insured if it is

later adjudged that the claim was one within the policy covenant to pay. '"

Flomerfelt, 202 N.J. at 446 (quoting Burd, 56 N.J. at 390).

      In Burd,"the Court recognized that it might be appropriate to decide the

coverage question, and thus the insurer's duty to defend, before trial of the

underlying claim." Flomerfelt, 202 N.J. at 446. The Court reasoned:

                   Whenever the carrier's position so diverges from
            the insured's that the carrier cannot defend the action
            with complete fidelity to the insured, there must be a
            proceeding in which the carrier and the insured,
            represented by counsel of their own choice, may fight
            out their differences. That action may, as here, follow
            the trial of the third party's suit against the insured.
            Or, unless for special reasons it would be unfair to do
            so, a declaratory judgment proceeding may be brought
            in advance of that trial by the carrier or the insured, to
            the end that the third-party suit may be defended by
            the party ultimately liable.

            [Burd, 56 N.J. at 391.]

      Accordingly, in instances where "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"

                                                                             A-3750-20
                                        13
declaratory judgment action "between insured and insurer either before or after

that decision is reached." Flomerfelt, 202 N.J. at 447.

      Here, given the nature of the underlying facts and allegations, it is not

surprising that NJM's position diverges from Fleming's position. Pursuant to

the trial court's order, NJM provided Fleming with defense counsel. In turn,

Krasny provided a substitution of counsel in the personal injury action.

      NJM contends Yurcisin's injuries were caused by Fleming's intentional

assault, not negligence. If NJM prevails on that issue, NJM does not owe a

duty to defend or indemnify Fleming from Yurcisin's claims since the

occurrence would be excluded from coverage.

      The trial court directed that the declaratory judgment action shall be

tried before the personal injury action. We discern no abuse of discretion by

so ruling. Under these circumstances, the better course is for the declaratory

judgment action to be decided on the merits before the personal injury actio n.

Whether coverage exists for the occurrence is a legal issue to be decided by the

court, not a jury. See Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super.

363, 375 (App. Div. 2008) ("The interpretation of contracts and their

construction are matters of law for the court subject to de novo review.").

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                                       14
      We affirm the ruling that the declaratory judgment action should be tried

and decided before the trial of the personal injury action. We remand for that

purpose and stay the personal injury action until that decision is rendered.

      We part company with the trial court's order directing NJM to provide

counsel to Fleming in the consolidated actions. An insurer is obligated to

provide the insured with a defense against all actions covered by the insuranc e

policy. Hartford Accident & Indemn. Co. v. Aetna Life & Cas. Ins. Co., 98

N.J. 18, 22 (1984).     An insurer's duty to defend arises only "when the

complaint states a claim constituting a risk insured against."      Voorhees v.

Preferred Mut. Ins. Co., 128 N.J. 165, 173 (1992) (quoting Danek v. Hommer,

28 N.J. Super. 68, 77 (App. Div. 1953), aff'd o.b., 15 N.J. 573 (1954)).

      Here, the declaratory judgment action has not yet been tried and the

issue of whether the incident was a covered occurrence remains undecided.

Moreover, the language of the policy does not obligate NJM to provide

Fleming with a defense to the declaratory judgment action.          Because the

declaratory judgment will be tried first, we vacate the order requiring NJM to

provide defense counsel in the personal injury action. NJM is only obligated

to provide defense counsel in the personal injury action if Fleming prevails in

the declaratory judgment action. We express no position on the outcome of

the declaratory judgment action.

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                                       15
      We reverse the orders directing NJM to provide counsel to Fleming in

the declaratory judgment action. We hold that NJM owes no such duty.

      We also part company with the trial court's award of counsel fees and

costs to Krasny privately retained counsel in the consolidated actions. "In an

action upon a liability or indemnity policy of insurance," attorney's fees may

be awarded "in favor of a successful claimant." R. 4:42-9(a)(6). "The term

successful claimant is broadly defined as a party that 'succeed[s] on any

significant issue in litigation which achieves some benefit the parties sought in

bringing suit.'" Occhifinto v. Olivo Constr. Co., 221 N.J. 443, 450-51 (2015)

(alteration in original) (quoting R.M. v. Supreme Ct. of N.J., 190 N.J. 1, 10

(2007)). Here, Fleming is not a successful claimant until he prevails on the

coverage issue as the result of expending counsel fees. Id. at 451 (quoting

Transamerica Ins. Co. v. Nat'l Roofing, Inc., 108 N.J. 59, 63 (1987)).

      Accordingly, when an insured prevails in a declaratory judgment action

by a finding of coverage for the incident, an award of counsel fees to the

insured is appropriate. Sears Mortg. Corp. v. Rose, 134 N.J. 326, 356 (1993)

(citing R. 4:42-9(a)(6)); accord Aquino v. State Farm Ins. Cos., 349 N.J.

Super. 402, 410 (App. Div. 2002).       Conversely, counsel fees will not be

awarded to an insured in prosecuting or defending a declaratory judgment

                                                                          A-3750-20
                                       16
action where it is later determined that no coverage exists. W9/PHC Real Est.

LP v. Farm Family Cas. Ins. Co., 407 N.J. Super 177, 203 (App. Div. 2009).

      Because the coverage issue remains undecided, Fleming is not yet "a

successful claimant" entitled to a counsel fee award under Rule 4:42-9(a)(6).

The counsel fee awards in both actions were premature. We vacate those

awards without prejudice to Fleming renewing his claim for counsel fees and

costs if he prevails in the declaratory judgment action.

      In light of our ruling, we do not separately address the denial of NJM's

motion for reconsideration.

      We affirm the denial of Fleming's motion for sanctions against NJM.

The application for sanctions lacks sufficient merit to warrant discussion in a

written opinion. R. 2:11-3(e)(1)(E).

      Affirmed in part, reversed in part, vacated in part, and remanded for

further proceedings consistent with this opinion. We do not retain jurisdiction.

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                                       17