Atlantic Employers Ins. Co. v. Tots & Toddlers Pre-School Day Care Center, Inc.
| Decision Date | 02 March 1990 |
| Docket Number | PRE-SCHOOL |
| Citation | 239 N.J.Super. 276,571 A.2d 300 |
| Parties | ATLANTIC EMPLOYERS INSURANCE COMPANY, Plaintiff-Respondent, v. TOTS & TODDLERSDAY CARE CENTER, INC., RLN, Inc., t/a Tots & Toddlers Learning Center, Robert Knighton, Nancy Knighton, DYFS and Jeffrey Denbo, Defendants-Respondents, and R.S., individually and as Guardian ad Litem for K.S., Jr. and S.S., minors, individually, jointly and severally and K.S., Sr., individually; J.C., individually and as Guardian ad Litem for J.W.C., minor, individually and M.C., individually; T.B., individually and as Guardian ad Litem for M.B., minor, individually, and C.B., individually; C.G., individually and as Guardian ad Litem for A.G., minor, individually, and T.G., individually, Intervenors-Appellants. |
| Court | New Jersey Superior Court — Appellate Division |
John W. Trimble, for intervenors-appellants (John W. Trimble on the brief).
Parker, McCay and Criscuolo for plaintiff-respondent, Atlantic Employers Ins. Co. (Stacy L. Moore, Jr., of counsel, Richard M. Berman, on the brief).
No brief was filed on behalf of defendants-respondents.
Before Judges DREIER, SCALERA and D'ANNUNZIO.
The opinion of the court was delivered by
SCALERA, J.A.D.
This is an action for declaratory judgment by Atlantic Employers Insurance Company (Atlantic), the insurance carrier for RLN, Inc., trading as Tots & Toddlers Day Care Center (Tots & Toddlers) and Robert Knighton and Nancy Knighton, his wife, as "owners" thereof.
The appellants, as proposed intervenors, are the various children who were allegedly sexually abused while attending the insured day care center and their parents. The parents have collectively filed two personal injury suits alleging specifically that Robert Knighton sexually abused their children while they were attending the day care center and that Nancy Knighton and the corporation were negligent in allowing it to happen. Their suits assert causes of action for negligence and intentional tort. 1
Atlantic sought a declaration in this suit that, under the insurance policy issued by it to Tots and Toddlers and Robert and Nancy Knighton, it did not have to provide a defense for the other complaints filed by appellants or indemnify for any consequent judgments.
Appellants filed a timely motion to intervene in this suit, and Atlantic filed a motion for summary judgment, both of which were heard together. The defendants, as named insureds, apparently felt themselves to be judgment-proof and did not bother to answer this complaint. The trial judge denied appellants the right to intervene based on his reasoning that the insurance policy issued by Atlantic was a contract for indemnification rather than one in which appellants could be considered as third-party beneficiaries. However, he did permit appellants to argue fully the merits of Atlantic's summary judgment motion which he ultimately granted. Both of these determinations are the subject of this appeal.
Appellants assert that they should have been permitted to intervene concerning the liability coverage question raised by Atlantic. Also, they claim that disposition by way of summary judgment in favor of Atlantic was inappropriate here since Atlantic has an obligation to provide a defense to the defendants and indemnify them for any judgments obtained in their underlying suits.
R. 4:33-1 deals with intervention of right and provides that:
Upon timely application anyone shall be permitted to intervene in an action if the applicant claims an interest relating to the property or transaction which is the subject of the action and he is so situated that the disposition of the action may as a practical matter impair or impede his ability to protect that interest, unless the applicant's interest is adequately represented by the existing parties.
Where intervention of right is not allowed, one may obtain permissive intervention under R. 4:33-2:
Upon timely application anyone may be permitted to intervene in an action if his claim or defense and the main action have a question of law and fact in common.... In exercising its discretion the court shall consider whether the intervention will unduly delay or prejudice the adjudication of the rights of the original parties.
We believe that the trial court's denial of appellants' motion to intervene was erroneous under either rule. The rule respecting intervention as of right should be liberally construed. State v. Lanza, 39 N.J. 595, 600, 190 A.2d 374 (1963), cert. den., 375 U.S. 451, 84 S.Ct. 525, 11 L.Ed.2d 477 (1964); Zanin v. Iacono, 198 N.J.Super. 490, 495, 487 A.2d 780 (Law Div.1984). "The test is 'whether the granting of the motion will unduly delay or prejudice the rights of the original parties.' " Looman Realty Corp. v. Broad St. Nat. Bk. of Trenton, 74 N.J.Super. 71, 78, 180 A.2d 524 (App.Div.1962), cert. den., 37 N.J. 520, 181 A.2d 782 (1962). The motion to intervene was timely filed here and no such harm would have resulted by permitting the appellants to intervene.
R. 4:33-1 simply requires the applicant to claim "an interest" relating to the property or transaction which is the subject of the action. Here, the appellants clearly have such an interest in the insurance "transaction" between Atlantic and the named defendants, as insureds. Cf. N.J.S.A. 17:28-2; In re Estate of Gardinier, 40 N.J. 261, 265, 191 A.2d 294 (1963). Moreover, under R. 4:33-1, an applicant must be so situated that the disposition of the action may, as a practical matter, impair or impede his ability to protect that interest. Here a ruling in favor of Atlantic probably would render any judgment entered in favor of the appellants in the other litigation uncollectable. Finally, Atlantic's suit was not otherwise opposed and appellants' interests thereby were not adequately represented.
We do note, however, that for the purpose of this appeal the trial judge's error in denying intervention was not overly prejudicial. R. 2:10-2. He did allow appellants to argue fully at the summary judgment hearing just as if they formally had been granted permission to intervene, and gave full consideration to their arguments. However, since we are remanding this matter for further proceedings on the substantive issue, we feel constrained to reverse the denial of applicants' motion to intervene and order their entry as such.
Directing our attention to the merits of the summary judgment, appellants argue that it was erroneously granted because there remains a genuine issue of material fact concerning the "intent" of the defendants to inflict injury on the children which would fall without the exclusionary language of the policy.
The insurance policy issued by Atlantic provides:
LIABILITY CLAIMS WE WILL COVER
If you or another insured has a legal responsibility to pay a claim someone made based on bodily injury, personal injury, or property damage, resulting from an occurrence, we will pay that claim if it is covered under this policy.
An occurrence,
means an accident, including continuous or repeated exposure to the same event, that results, during the policy, in loss or damage to your property, or in bodily injury, personal injury, or property damage. Such injury or damage must be neither expected nor intended by the insured.
However, the policy specifically excludes coverage for personal injury that results from,
Any violation of a penal statute or ordinance committed by an insured or with your knowledge or consent;
In Lyons v. Hartford Ins. Group, 125 N.J.Super. 239, 310 A.2d 485 (App.Div.1973), certif. den., 64 N.J. 322, 315 A.2d 411 (1974), we recognized that coverage does exist under such an exclusion "for the unintended results of an intentional act, but not for damages assessed because of an injury intended to be inflicted." Id. at 245, 310 A.2d 485. Several years later in Ambassador Insurance Company v. Montes, 76 N.J. 477, 489, 388 A.2d 603 (1978), the Supreme Court of New Jersey adopted the general rule as set forth by the Lyons court.
There seems to be no dispute that if, as alleged, Robert Knighton sexually molested the children, then he had the requisite level of intent to be found guilty of sexual molestation, based on the criminal statutes of this State. But appellants insist that this does not necessarily mean that he intended the damages or injuries incurred by the children as a result of such actions. While socially unacceptable, they argue a pedophile or other sexual deviant may not necessarily intend to cause his or her victims any injury even though that behavior may constitute criminal activity. Further, they insist that the existence of such intent cannot automatically be imputed to the other insureds under the policy so as to exclude coverage. Thus, they conclude, while intent may be found to exist for statutory purposes, that element, with regard to the infliction of the injuries for purposes of policy coverage, is open to factual dispute. Finally, they contend simply that coverage cannot be excluded because it would contravene public policy. We reject this position.
While we find no New Jersey cases directly on point, in Fireman's Fund Ins. Co. v. Hill, 314 N.W.2d 834 (Minn.1982), the Supreme Court of Minnesota, in construing a similar exclusion...
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