Figueroa v. Hartford Ins. Co.

• Decision Date: 19 June 1990
• Citation: 241 N.J.Super. 578,575 A.2d 888
• Parties: Lucy FIGUEROA, Administratrix ad Prosequendum of the Estate of Jose Figueroa, and Lucy Figueroa, Individually, Plaintiff-Appellant, v. HARTFORD INSURANCE COMPANY, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

Page 578

241 N.J.Super. 578

575 A.2d 888

Lucy FIGUEROA, Administratrix ad Prosequendum of the Estate of Jose Figueroa, and Lucy Figueroa, Individually Plaintiff-Appellant, v. HARTFORD INSURANCE COMPANY, Defendant-Respondent.

Superior Court of New Jersey Appellate Division.

Argued May 1, 1990.

Decided June 19, 1990.

William D. Levinson, for plaintiff-appellant (Levinson, Axelrod, Wheaton & Grayzel, attorneys; Richard J. Levinson, of counsel; Robert E. Bennett, Edison, on the brief).

Eugene M. Purcell, for defendant-respondent (Purcell, Ries, Shannon & Mulcahy, attorneys; Eugene M. Purcell, Bedminster, of counsel and on the brief).

Before Judges MICHELS, DEIGHAN and BROCHIN.

The opinion of the court was delivered by

MICHELS, P.J.A.D.

Plaintiff Lucy Figueroa, as administratrix ad prosequendum of the estate of Jose Figueroa and individually, appeals from a summary judgment of the Law Division entered in favor of defendant Hartford Insurance Company in this action to recover under an automobile insurance policy.

The facts giving rise to this appeal are not in dispute. In February 1982, Douglas Lynch (Lynch) struck and killed Jose Figueroa (decedent) with his automobile. In May 1982, Lynch was indicted and charged with murder in violation of N.J.S.A. 2C:11-3, aggravated assault in violation of N.J. S.A. 2C:12-1b(1) and possession of a weapon without any explainable lawful purpose in violation of N.J.S.A. 2C:39-3(e). Lynch was subsequently found guilty of manslaughter in violation of N.J.S.A. 2C:11-4b(2) and was sentenced to State Prison for ten years with a three-year period of parole ineligibility. In August 1984, we affirmed Lynch's conviction and the sentence imposed in an unpublished opinion State v. Lynch, (A-2944-82T4). The New Jersey Supreme Court denied Lynch's petition for certification in February 1985. State v. Lynch, 101 N.J. 215, 501 A.2d 897 (1985).

At the time of the incident in question, Lynch was insured under an automobile insurance policy issued by defendant which contained the standard exclusion for intentional acts. Specifically, the insurance policy, in pertinent part, provided:

This policy does not apply ... to bodily injury or property damage caused intentionally by or at the direction of the insured.

In March 1982, defendant learned of the incident and undertook an investigation. A non-waiver agreement was signed by the parties. Although there is some disagreement as to what steps defendant took to investigate the incident, defendant acquired newspaper articles, spoke to the police, acquired the names of three witnesses and spoke to Lynch's attorney. In June 1982, defendant disclaimed coverage on the basis of the intentional acts exclusion in the policy. Specifically, the disclaimer letter stated:

Your policy 79 GM 653042 under Section 1, Liability, Part 5 Exclusion states:

"this policy does not apply under Section I, Paragraph (b) to bodily injury or property damage caused intentionally by or at the direction of the insured."

Based on that Exclusion, we will be unable to provide you with any coverage under the above-mentioned policy.

We will, however, consider any new information you wish to present to us and will reconsider the matter after the charges presently pending against the insured are decided and/or when the official investigation becomes available to us.

In October 1982, plaintiff filed suit against Lynch seeking damages resulting from decedent's death. In December 1985, a default judgment was entered against Lynch in favor of plaintiff in the amount of $767,325.00 together with $289,964.76 in pre-judgment interest. Lynch subsequently assigned to plaintiff any and all rights and interest he had against defendant under his insurance policy as well as the judgment.

In April 1987, plaintiff instituted this action against defendant seeking to recover under Lynch's insurance policy the amount of the default judgment, together with the accrued interest. Plaintiff claimed that defendant breached its insurance contract with Lynch, negligently investigated and handled Lynch's case and breached the covenants of good faith and fair dealing implied in the insurance contract. After issue was joined, defendant moved for summary judgment. Judge Lintner in the Law Division held that voluntary manslaughter involves a criminal intent and, as such, defendant was not liable under the intentional acts exclusion clause of the insurance policy. The trial court also ruled that defendant's conduct during its investigation did not create coverage under principles of estoppel. Accordingly, summary judgment was granted in favor of defendant. This appeal followed.

I.

Plaintiff first contends that she is entitled to judgment under the holding in Ruvolo v. American Casualty Co., 39 N.J. 490, 189 A.2d 204 (1963), because "proof of the insured's incapacity to act in accordance with reason, will remove tortiously committed acts from the exclusionary provisions of the carrier's policy." In other words, plaintiff claims that Lynch was so overcome by passion when he committed the homicide that he was not acting "intentionally" within the meaning of the intentional acts exclusion clause of the policy. We disagree.

Preliminarily, we note that "[p]olicy provisions that exclude coverage for liability resulting from intentional wrongful acts are 'common,' are 'accepted as valid limitations,' and are consistent with public policy." Allstate Ins. Co. v. Malec, 104 N.J. 1, 6, 514 A.2d 832 (1986); Ruvolo v. American Casualty Co., supra, 39 N.J. at 496, 189 A.2d 204. In fact, it has been held that it is against public policy for an insurance carrier to provide coverage for intentional wrongs as such would encourage malicious action without regard for the pecuniary consequences. Ambassador Ins. Co. v. Montes, 76 N.J. 477, 482-483, 388 A.2d 603 (1978). As the Ambassador Court noted:

Were a person able to insure himself against the economic consequences of his intentional wrongdoing, the deterrence attributable to financial responsibility would be missing. Further, as a matter of moral principle no person should be permitted to allege his own turpitude as a ground for recovery. Accordingly, we have accepted the general principle that an insurer may not contract to indemnify an insured against the civil consequences of his own willful criminal act. [Id. at 4831, 388 A.2d 603].

Exclusionary clauses are, however, to be strictly construed against the insurance carrier. "[T]he insured is entitled to protection to the full extent that any reasonable interpretation of them will permit." Ruvolo v. American Casualty Co., supra, 39 N.J. at 498, 189 A.2d 204. Accordingly, "[t]he burden is the carrier's to bring the case within the policy exclusion." Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 399, 267 A.2d 7 (1970). United Rental Equip. Co. v. Aetna Life & Casualty Ins. Co., 74 N.J. 92, 99, 376 A.2d 1183 (1977).

It is also well settled in New Jersey that an injured party is collaterally estopped from relitigating an insured's intent after such has been settled in a previous criminal action. New Jersey Mfrs. Ins. Co. v. Brower, 161 N.J.Super. 293, 391 A.2d 923 (App.Div.1978). See Allstate Ins. Co. v. Schmitt, 238 N.J.Super. 619, 633, 570 A.2d 488 (App.Div.1990); Tal v. Franklin Mut. Ins. Co., 172 N.J.Super. 112, 117, 410 A.2d 1194 (App.Div.), certif. den., 85 N.J. 103, 425 A.2d 267 (1980). See also Erie Ins. Co. v. Belcher, 718 F.Supp. 475, 478 (S.D.W.Va.1989); Annotation, Insurance Coverage--Conviction, 35 A.L.R. 4th 1063 (1985). Cf. Garden State Fire & Casualty Co. v. Keefe, 172 N.J.Super. 53, 410 A.2d 718 (App.Div.), certif. den., 84 N.J. 389, 420 A.2d 317 (1980). In other words, where an insured has been adjudged guilty of intentional criminal conduct, a party injured by the insured's actions has no cause of action against the insured's carrier for damages where the policy in question specifically excludes coverage for injuries caused by intentional acts. New Jersey Mfrs. Ins. Co. v. Brower, supra, 161 N.J.Super. at 299-300, 391 A.2d 923; Tal v Franklin Mut. Ins. Co., supra, 172 N.J.Super. at 116-117, 410 A.2d 1194.

In New Jersey Mfrs. Ins. Co. v. Brower, supra, the insured Brower shot and wounded William Geschke. Brower was convicted of assault with intent to kill. The jury's verdict against Brower was predicated upon a finding that Geschke's injuries were intentionally inflicted by Brower. On appeal in the coverage action, the issue raised was whether the doctrine of collateral estoppel barred Geschke from relitigating with Brower's insurance carrier, the question of Brower's intent at the time of the incident. We determined that Geschke was barred from relitigating the issue and affirmed the grant of summary judgment in favor of the insurance carrier. Discussing the doctrine of collateral estoppel, we noted:

The doctrine of collateral estoppel is a branch of the broader law of res judicata which bars relitigation of any issue actually determined in a prior action generally between the same parties and their privies involving a different claim or cause of action. This doctrine has been applied in civil actions to conclude a party as to an issue actually determined against it not only in prior civil actions, but in prior criminal proceedings as well. Thus a criminal conviction can bar the person convicted and his privies as to an issue of fact necessarily determined by the conviction and material to a civil litigation to which he is a party. In fact, in New Jersey evidence of a judgment convicting a party of an indictable offense may be introduced against that party in a civil proceeding to prove any fact essential to sustain the judgment.

The doctrine of collateral estoppel is not rendered inapplicable by virtue of the fact that the parties in the civil action are not the same as those in the criminal proceeding. Complete identity of parties is no longer required. Collateral estoppel until recently...