Hanover Ins. Group v. Cameron

• Decision Date: 08 January 1973
• Citation: 298 A.2d 715,122 N.J.Super. 51
• Parties: HANOVER INSURANCE GROUP, Plaintiff, v. Philip CAMERON et al., Defendants.
• Court: New Jersey Superior Court

Page 51

122 N.J.Super. 51

298 A.2d 715

HANOVER INSURANCE GROUP, Plaintiff, v. Philip CAMERON et al., Defendants.

Superior Court of New Jersey Chancery Division.

Jan. 8, 1973.

Anthony G. Wahl, Morristown, for plaintiff (Vogel, Chait & Wacks, Morristown, attorneys).

Howard C. Trueger, Morristown, for defendant Philip Cameron.

Brian M. Laddey, Morristown, for defendant Rosemary Karl (Porzio, Bromberg & Newman, Morristown, attorneys).

David B. Rand, Morristown, for defendants Peter Schloemp, Stephen E. Goggin, and Albert Chrone (Schenck, Price, Smith & King, Morristown, attorneys).

STAMLER, J.S.C.

This declaratory judgment action brings into sharp focus the problems anticipated by Burd v. Sussex Mutual Ins. Co., 56 N.J. 383, 267 A.2d 7 (1970), along with those beyond the contemplation of the Burd decision.

Difficult questions of grave concern are posed to judges in calendar control. The financial burdens imposed upon plaintiffs in personal injury cases impatiently looking to the trial in the Law Division, the uncertain plight of the insured in determining whether he will be required to provide his own defense, and the distance and the manner in which the insurer may travel on behalf of the insured in investigating and participation in pretrial discovery, are just some of the problems. The most difficult problem is the continued legitimacy of the 'reservation of rights' agreements between insurer and insured approved by the Supreme Court in Burd, supra, and Merchants Indemnity Corp. of New York v. Eggleston, 37 N.J. 114, 179 A.2d 505 (1962).

In attempting solutions this court is mindful of the limitations imposed upon trial courts in Reinauer Realty Corp. v. Paramus, 34 N.J. 406, 415, 169 A.2d 814 (1961).

The timing of both the Law and Chancery Division suits is significant. The proceedings in the Law Division case (Rosemary Karl, individually and as executrix of the estate of Edward Karl, deceased v. Cameron, L--11405--70) disclose in relevant part:

1. Complaint filed December 18, 1970.

2. Summons dated December 21 and December 28, 1970.

3. Summons served on: defendant Cameron, January 11, 1971; defendant Chrone, December 30, 1970; defendant Goggin, December 31, 1970; defendant Schloemp, December 21, 1970 (by mail).

4. Answer filed by all defendants except Cameron, March 3, 1971.

5. Order directing Cameron to file answer, May 6, 1971.

6. Answer filed by Cameron, May 11, 1971.

7. Notice to file pretrial memorandum, January 18, 1972.

8. Notice of trial mailed March 13, 1972.

9. Notice of motion by Cameron for stay of Law Division action pending Chancery Division determination or, alternatively, relieving counsel. (Arguments on the motion heard on May 17, 1972; meeting May 24, 1972, assignment judge, Chancery Division judge and all counsel in both actions).

10. Order staying Law Division action pending determination of Chancery Division action entered June 6, 1972. (Pretrial discovery was conducted in interim periods and the case was on the Law Division calendar call a number of times).

The Chancery Division proceedings in the present case, Hanover Ins. Co. v. Cameron, (C--1280--71) in relevant part reveal:

1. Complaint for declaratory judgment by insurer filed only against the insured on December 29, 1971.

2. Summons served on Cameron January 10, 1972.

3. Answer for Cameron by Legal Aid Society filed April 4, 1972. (Meeting of May 24, 1972 referred to above.)

4. Consent order to amend complaint to include all indispensible parties filed May 31, 1972.

5. Amended complaint filed May 31, 1972.

6. Order accelerating discovery, establishing timetable and fixing September 22, 1972 as date for pretrial conference filed July 10, 1972.

7. Answers by all additional defendants to amended complaint filed July 13 and July 19, 1972.

8. Pretrial order entered September 22, 1972 fixing trial date as November 27, 1972.

9. Trial in Chancery Division November 27, 1972.

10. Decision reserved November 29, 1972. (Discovery was conducted strictly in accordance with the order of July 10, 1972.)

Hanover in its complaint demands a determination that it is neither obligated to pay nor obligated to defend notwithstanding the issuance to Cameron of a homeowner's Policy which was in effect on the date of the incident which gave rise to the Law Division action. (However, Hanover at the pretrial offered to defend, using counsel of Its choice.) The disclaimer is based on Hanover's contention that Cameron's act which resulted in the death of Karl was an intentional act excluded from coverage. All codefendants in the Chancery Division action (plaintiff and all defendants in the Law Division action) take the position that Cameron was covered. Defendants also contend that even if he were not covered, Hanover cannot disclaim because of the equitable grounds of estoppel, waiver, unclean hands and the unenforceability of a 'reservation of rights' agreement signed by Cameron.

When an insurance company by way of declaratory judgment action seeks an adjudication of noncoverage, it has the burden of proof of the facts alleged in the complaint. Concord Ins. Co. v. Miles, 118 N.J.Super. 551, 289 A.2d 267 (App.Div.1972). This burden shifts only if and when the court must consider any affirmative defenses.

As to Hanover's disclaimer, the following findings of fact and conclusions of law are made:

On February 8, 1968 Hanover issued a standard homeowner's Policy to Cameron. It was for a term of three years. The following excerpts are relevant to the main issue:

1. COVERAGE E--PERSONAL LIABILITY

(a) Liability: To pay on behalf of the Insured all sums which the insured shall become legally obligated to pay as damages because of bodily injury or property damage, and the Company shall defend any suit against the Insured alleging such bodily injury or property damage and seeking damages which are payable under the terms of this policy, even if any of the allegations of the suit are groundless, false or fraudulent; but the Company may make such investigation and settlement of any claim or suit as it deems expedient.

SPECIAL EXCLUSIONS

SECTION II OF THIS POLICY DOES NOT APPLY:

(c) * * * under Coverages E and F, to bodily injury or property damage caused intentionally by or at the direction of the Insured; * * *

In late November or early December 1968 Cameron was in the sauna in the Madison Y.M.C.A. One other person was present in the sauna and, as Cameron later related to Y.M.C.A. officials and a Madison police officer, this other person not known to Cameron made physical homosexual advances. These were thwarted by Cameron's hurried departure from the sauna area. A week or so thereafter Cameron reported the incident to defendant Schloemp, physical director of the Y.M.C.A. Cameron was unable to identify the man in the sauna bath. Schloemp advised Cameron that if he should see the man again, Schloemp was to be notified and Cameron was to point him out to Schloemp.

On December 19, 1968 Cameron related the incident to a friend of his, a Madison police officer on routine foot patrol. Cameron received the same advice from the police officer. However, when questioned by Cameron as to what he could do to repel a physical advance, the police officer advised that if Cameron were unable to 'get away from him because he won't let you go, that you have a right to defend yourself even if you have to hit him * * *.' The officer's report contained the following: 'Cameron told me that the guy was real big, and that he didn't want any part of him.'

During the weeks that followed Cameron was at the sauna on a number of occasions but did not see the man.

On January 6, 1969, at approximately 7:15 p.m., Cameron asked Schloemp to open the sauna bath for him. While Cameron was in the sauna, a young man joined him. This young man and Cameron were in the sauna when the individual that both Cameron and Schloemp sought to identify joined them. The youth left, leaving Cameron and the man alone in the bath. When the man spoke to him and offered him a ride home, Cameron replied that he had his own car and immediately left the sauna and went to the shower room where he showered. He then proceeded to his locker and dressed. Cameron next went upstairs to Schloemp's office and told him that he now could point out the man to Schloemp. Schloemp described Cameron as being very excited. Schloemp preceded Cameron down the stairs to the locker room area. Schloemp passed the open door to the sauna room and continued to the shower-locker area. As Cameron passed the entrance to the sauna, he saw the man emerging and shouted, 'There he is.' Cameron suddenly raised his arm and pointed his finger, which was now quite close to the face of the approaching man. According to Cameron, the man's right hand suddenly came up and Cameron reacted to the sudden movement by swinging his arm. The man fell unconscious on the floor and both Schloemp and Cameron attempted to aid him. The man was later identified as Edward Karl. The Madison police were notified and Karl, severely injured, was taken by ambulance to Morristown Memorial Hospital. Statements were taken by the police the next day from Schloemp and Cameron. Karl died 11 months later on December 6, 1969, never having regained consciousness.

On December 18, 1970 Karl's widow, individually and as executrix, filed the complaint in the Law Division against Cameron, Schloemp and two other employees of the Y.M.C.A. As to Cameron the complaint alleged that he 'did negligently and wantonly' strike Karl. Hanover had been notified of the incident on April 9, 1969. It takes the position that Cameron's action was intentional and falls clearly within the exclusionary clause of the policy quoted above.

Defendants collectively assert that since the complaint in the Law Division only alleges 'negligent and wanton' conduct and not 'intentional' conduct, Hanover cannot disclaim coverage. Although in some jurisdictions a carrier may be so foreclosed, at...