Court Opinion

ID: 9650472
Source: CourtListenerOpinion
Date Created: 2023-08-23 15:39:01.197782+00
Date Added: 2024-06-11T18:12:22.092836
License: Public Domain

Justice LaVECCHIA,
concurring in judgment.
I concur in the judgment of the Court for the simple reason that I find the Court’s decision in The Salem Group v. Oliver, 128 N.J. 1, 607 A.2d 138 (1992), to be controlling. Although I believe Justice Clifford, in a dissent joined by Justice Garibaldi, had the better argument in Salem Group, the majority in that case concluded otherwise and established a dual or concurring causation test for determining whether there exists a duty to defend under a homeowner’s policy notwithstanding a specific policy exclusion, id. at 3, 607 A.2d 138, a test that Pennsylvania General Insurance Company (Penn General) did not ask us to reconsider.1
*459In Salem Group, the insured’s minor nephew was injured while operating an all-terrain vehicle (ATV). Ibid. The nephew’s complaint against the insured included a count alleging social host liability because the insured had apparently provided his nephew with alcohol prior to the ATV accident. Ibid. The insurer refused to defend or indemnify the insured because a clause in the homeowner’s insurance policy excluded from coverage “any loss ... for bodily injury ... arising out of ... operation, ownership, or use of ... motor vehicles owned ... by ... an insured.” Ibid. Despite acknowledging that the operation of a motor vehicle—the ATV—was a cause of the nephew’s injuries, the Court in Salem, Group held that the insurer had a duty to defend “because the alcohol and the ATV allegedly were concurrent causes of [the nephew’s] accident.” Id. at 6, 607 A.2d 138. That holding in Salem Group set the stage for subsequent case law, which has required that, to eliminate a duty to defend, an insurance policy must unambiguously state that an exclusion will operate notwithstanding any concurrent or sequential causation issues even when the policy’s exclusion is otherwise clear and specific. See Farmers’ Mut. Ins. Co. of Salem County v. Allstate Ins. Co., 341 N.J.Super. 346, 353-54, 775 A.2d 514 (App.Div.2001) (stating that homeowner’s insurance policy “expressly excludes coverage under any theory of concurrent contributing causes”); cf. Simonetti v. Selective Ins. Co., 372 N.J.Super. 421, 431, 859 A.2d 694 (App.Div. 2004) (finding homeowner’s insurance coverage for policy that “does not contain an anti-concurrent or anti-sequential clause ..., which would exclude coverage when a prescribed excluded peril, alongside a covered peril, either simultaneously or sequentially, causes damage to the insured”).
No doubt, in drafting the policy that is in dispute in the present matter the insurer attempted to distance itself as far as possible from behavior inconsistent with public policy—namely, the use of illegal drugs—to avoid any obligation to provide coverage for injuries that arise from the use of such contraband. The policy reflects a clear desire not to be liable for any injuries having a substantial nexus to the illegal behavior associated with drugs and *460their use, hence the policy exclusion’s use of the words “arising out of,” which convey a broader reach than a direct causative effect. See Am. Motorists Ins. Co. v. L-C-A Sales Co., 155 N.J. 29, 35, 713 A.2d 1007 (1998) (“The phrase arising out of has been defined broadly ... to mean conduct originating from, growing out of or having a substantial nexus with the activity for which coverage is provided.” (internal quotation marks and citations omitted)); see also Prudential Prop. & Cas. Ins. Co. v. Brenner, 350 N.J.Super. 316, 322, 795 A.2d 286 (App.Div.2002) (holding that killing of drug-dealer was not covered under homeowner’s insurance policy because exclusion denied coverage for injuries “ ‘arising out of the use, sale, manufacture, delivery transfer, or possession’ of illegal drugs”).
This case presents an even more compelling basis to find that the insurer has no more duty to the insured than existed in Salem Group, because the exclusion in issue here is in accord with the public policy of our state, which clearly opposes the use of illegal drugs. See, e.g., N.J.S.A. 2C:35-l.l(b) (“[T]he unlawful use ... of [illegal drags] continues to pose a serious and pervasive threat to the health, safety and welfare of the citizens of this State.”). New Jersey courts have not hesitated to look to public policy when interpreting insurance contracts. See, e.g., Pizzullo v. N.J. Mfrs. Ins. Co., 196 N.J. 251, 270, 952 A.2d 1077 (2008) (stating that, in regard to insurance policies, “we have long assume[d] a particularly vigilant role in ensuring their conformity to public policy and principles of fairness” (alteration in original) (internal quotation marks and citation omitted)). And, not only does the exclusion support public policy by disapproving of the use of illegal drugs, it is also sensible from the point-of-view of an insurer who cannot accurately formulate underwriting guidelines because the use of illegal drugs is by its very nature an illicit activity.
Here, however, the complaint did not allege that plaintiff was injured due to the use of illegal drugs alone, but rather that plaintiff was injured due to a mixed cause: a drug she claimed was provided by the insured’s son and alcohol provided and served to her at the party when she already was inebriated. Plainly, the *461latter addresses a social host theory of liability that is independent of the policy exclusion for illegal drugs and would be covered under the policy. But, wrapped together—as the claims are in the complaint and in the experts’ reports opining as to the cause of Wendy Flomerfelt’s injuries-—the two are intertwined.2 How those claims sort out at trial remains to be seen.
In this setting, and for purposes of resolving whether there exists a duty to defend plaintiffs third-party complaint, the issue has been settled by Salem Group. Because the instant policy did not unambiguously declare that coverage would be excluded for injuries arising out of the use of illegal drugs “regardless of any other ca%ise or event contributing concurrently or in any sequence to the loss,” or words to that effect,3 the holding in Salem Group is *462controlling. See Simonetti, supra, 372 N.J.Super. at 431, 859 A.2d 694 (relying on fact that insurer utilized clause excluding coverage for concurrent or sequential causes in one section of policy and not in another). If Penn General had included a clause excluding coverage in cases where the use of illegal drugs was a concurrent or contributing cause of personal injury, it would not have a duty to defend Matthew Cardiello.4 But, because Penn General did not include such a clause in the insurance policy, a defense must be provided until more is known about the cause or causes of Wendy Flomerfelt’s injuries.5
For that reason, and that reason alone, I concur in the judgment reached today. As stated, a different outcome is preferable because the better-reasoned view in Salem Group was expressed by Justices Clifford and Garibaldi in dissent; however, that per*463spective did. not prevail. Accordingly, although I do not embrace the reasoning espoused by the majority in Salem Group, it nevertheless remains precedent deserving of respect. That respect for stare decisis is the simple, and sole, reason for my concurrence in the judgment reached today.
Justice RIVERA-SOTO joins in this opinion.
For reversal and remandment—Chief Justice RABNER and Justices LONG, LaVECCHIA, ALBIN, WALLACE, RIVERA-SOTO and HOENS—7.
Opposed—None.

 Instead, Penn General focuses on the phrase "arising out of” in the exclusion and argues that that phrase should be interpreted to mean "incident to” or "in connection with” and does not denote any type of causal link.

 The majority states that
[a] vivid and useful depiction of the method to be utilized in evaluating an insurer's duty to defend is ... that "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, and in reaching a conclusion, doubts should be resolved in favor of the insured.” [Ante at 445, 997 A.2d at 998 (quoting Danek v. Hommer, 28 N.J.Super. 68, 77, 100 A.2d 198 (App.Div.1953), aff'd o.b., 15 N.J. 573, 105 A.2d 677 (1954)).]
While that language may present a helpful visualization tool, it should also be remembered that "[i]nsureds expect their coverage and defense benefits to be determined by the nature of the claim against them, not the fortuity of how the plaintiff, a third party, chooses to phrase the complaint against the insured.” SL Indus., Inc. v. Am. Motorists Ins. Co., 128 N.J. 188, 198-99, 607 A.2d 1266 (1992). For instance, the complaint does not allege that alcohol alone caused Wendy Flomerfelt's injuries. However, the experts' reports suggest that alcohol could have been the sole cause of her injuries, and one of the experts opined that genetic predispositions and a prior history of drug abuse could have also caused her injuries. Even though such possibilities were not mentioned in the complaint, they should be considered when determining the insured's duty to defend, because we should not allow an "insurance company to construct a formal fortress of the third-party's pleadings and to retreat behind its walls.” Id. at 199, 607 A.2d 1266 (internal quotation marks and citation omitted).

 Penn General obviously knew how to incorporate that language because it included such a clause in the same policy's provisions concerning exclusions *462applicable to property damage. The policy provides, in the context of property damage only, that coverage for direct or indirect loss "is excluded regardless of any other cause or event contributing concurrently or in any sequence to the loss.”

 Other alternatives might also achieve Penn General’s desired outcome. This Court has upheld application of a conduct-based exclusion that applies notwithstanding a lack of causation. See Aviation Charters, Inc. v. Avemco Ins. Co., 170 N.J. 76, 77-78, 784 A.2d 712 (2001) (excluding coverage for damage to aircraft "operated in flight by a pilot who is not an 'approved' pilot” despite fact that damage was not caused by pilot’s actions (quotation marks omitted)). There the non-causation-based exclusion was evident from its wording, and was unlike the wording presented in this matter. The "arising out of” language here is identical to that used in Salem Group, hence the seminal importance of that holding to the instant matter.

 The majority in Salem Group, supra, was careful to limit its holding to an insurer’s duty to defend, and did not suggest that the insurer had a duty to indemnify the insured under a concurrent causation theory. 128 N.J. at 6, 607 A.2d 138. The majority opinion in the present matter is similarly limited. See ante at 457-58, 997 A.2d at 1005-06. If it is established that Wendy Flomerfelt suffered injuries "arising out of” the use of illegal drugs she ingested at the party and that Matthew Cardiello had knowledge of such use, Penn General will have no duty to indemnify Matthew Cardiello. Again, I understand the majority to be in accord with that conclusion. See ante at 454—56, 997 A.2d at 1004-05.