Hartford Acc. & Indem. Co. v. Aetna Life & Cas. Ins. Co.
Decision Date | 15 November 1984 |
Parties | HARTFORD ACCIDENT & INDEMNITY COMPANY, Plaintiff-Appellant, v. AETNA LIFE & CASUALTY INSURANCE COMPANY, Defendant-Respondent. |
Court | New Jersey Supreme Court |
Clarkson S. Fisher, Jr., West Long Branch, for plaintiff-appellant (Evans, Koelzer, Osborne & Kreitzman, Red Bank, attorneys).
Michael B. Oropollo, Newark, for defendant-respondent (Hoagland, Longo, Oropollo & Moran, Newark, attorneys; Jonathan Bubrow, Dunellen, on the brief).
The Appellate Division affirmed the judgment in favor of defendant, Aetna Life & Casualty Insurance Company, substantially for the reasons set forth in the comprehensive written opinion of Judge Skillman. We granted plaintiff's petition for certification and likewise affirm substantially for the reasons expressed by Judge Skillman. His unpublished opinion reads in pertinent part as follows:
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* * * "The trial began on August 30, 1982 and was continued on September 1, 1982. * * * At the close of Hartford's case Aetna moved to dismiss. * * * The court at that time indicated that it would file a written opinion detailing its reasons * * * for dismissing at the close of plaintiff's case.
The company will pay on behalf of the Insured all sums which the insured shall become legally obliged to pay as damages because of ... bodily injury ... to which this insurance applies, caused by an occurrence, and the company shall have the ... duty to defend any suit against the insured seeking damages on account of such bodily injury ... even if any of the allegations of the suit are groundless, false or fraudulent ... [Emphasis added].
The insured says the carrier is obligated to defend an action whenever the complaint alleges a basis of liability within the covenant to pay. That is the general approach. Ohio Casualty Ins. v. Flanagin, 44 N.J. 504, 514 (1965); Danek v. Hommer, 28 N.J.Super. 68, 77 (App.Div.1953), aff'd o.b., 15 N.J. 573 (1954). But when coverage, i.e., the duty to pay, depends upon a factual issue which will not be resolved by the trial of the third party's suit against the insured, the duty to defend may depend upon the actual facts and not upon the allegations in the complaint. So, for example, if a policy covered a Ford but not a Chevrolet also owned by the insured, the carrier would not be obligated to defend a third party's complaint against the insured which alleged the automobile involved was the Ford when in fact the car involved was the Chevrolet. The identity of the car, upon which coverage depends, would be irrelevant to the trial of the negligence action.
The sense of the covenant is to defend suits involving claims which the carrier would have to pay if the claimant prevailed in the action. The covenant to defend is thus identified with the covenant to pay. That is the basis of the rule that ordinarily a carrier who defends unsuccessfully may not later deny coverage, absent an express agreement with the insured reserving a right to deny coverage. Merchants Indemnity Corp. v. Eggleston, 37 N.J. 114, 127 (1962). The obligation to defend 'groundless, false or fraudulent' claims does not mean that the carrier will defend claims which would be beyond the covenant to pay if the claimant prevailed. It means only that a carrier may not refuse to defend a suit on the ground that the claim asserted against the insured cannot possibly succeed because either in law or in fact there is no basis for a plaintiff's judgment.
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[I]f the trial will leave the question of coverage unresolved so that the insured may later be called upon to pay, ... the carrier should not be permitted to control the defense.
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In such circumstances the carrier should not be estopped from disputing coverage because it refused to...
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