Scarfi v. Aetna Cas. & Sur. Co.

CourtNew Jersey Superior Court – Appellate Division
Citation233 N.J.Super. 509,559 A.2d 459
PartiesJohn SCARFI, Michael Scarfi, Al De Santis and Donald De Santis, Plaintiffs-Respondents, v. AETNA CASUALTY & SURETY COMPANY, Defendant-Appellant.
Decision Date30 May 1989

Leary, Bride, Tinker & Moran, for defendant-appellant (W. Stephen Leary, Cedar Knolls, of counsel and on the brief).

Herten, Burstein, Sheridan & Cevasco, for plaintiffs-respondents (Philip F. Sheridan, of counsel; Mark P. Marotta, Hackensack, on the brief).

Before Judges MICHELS, LONG and KEEFE.

The opinion of the court was delivered by


Defendant Aetna Casualty & Surety Company appeals from a summary judgment of the Law Division entered in favor of plaintiffs John Scarfi, Michael Scarfi, Al De Santis and Donald De Santis in this action in which plaintiffs sought a declaratory judgment that Aetna's Comprehensive General Liability Insurance (CGL) policy afforded coverage to plaintiffs for claims against them arising out of an accident involving a vehicle owned by plaintiffs' corporation.

This suit arises as a result of Aetna's refusal to defend or indemnify plaintiffs in connection with an action instituted by Carlos Arias (Arias) for injuries sustained when a school van driven by Arias and a dump truck driven by Daniel J. Bubenik (Bubenik) collided, allegedly as a result of the negligent operation of the truck by Bubenik. Arias sued Bubenik and Bratt & Doxey Supply Co. (Bratt & Doxey), which was Bubenik's employer and the corporation that owned the truck. Arias also sued plaintiffs, who were the directors of Bratt & Doxey.

On the recommendation of one of its employees, Bratt & Doxey hired Bubenik to drive a 1974 GMC dump truck for it. Bubenik had approximately one-and-one-half years experience as a driver of a smaller dump truck than the one he was to drive for Bratt & Doxey. Before deciding to hire Bubenik, Bratt & Doxey officials asked Bubenik's insurer about his driving record; inquired of Bubenik's previous employer about his employment record, and required Bubenik to test drive the truck. Apparently satisfied with Bubenik's credentials, Bratt & Doxey hired Bubenik in early 1984, at which time Bubenik was informed of his duties as a driver and instructed how to inspect the lug nuts and the air brakes on the truck.

On the morning of August 23, 1984, the day of the accident, Bubenik hauled a load of sand from Bratt & Doxey's property in Park Ridge, New Jersey, to a site across the New York State line. On the return trip, as Bubenik was traveling south on Spring Valley Road in Ramapo, New York, he drove the truck over a slight rise in the road and noticed a small car slowing to turn left at an intersection a short distance from his truck. When Bubenik applied his brakes, the truck skidded and spun into the northbound lane, striking a school van traveling in the opposite direction. Bubenik, who was thrown to the floor upon impact and suffered a concussion, was fairly unclear in his deposition regarding how the accident occurred. He testified, however, that the truck had never before skidded when the brakes were applied, and he concluded that the rainy conditions coupled with oil that he later noticed on the road might have contributed to the reaction of the truck.

Arias instituted suit against Bubenik and Bratt & Doxey to recover for personal injuries caused by Bubenik's allegedly negligent operation of the truck. Arias subsequently amended his complaint to include claims against plaintiffs for negligence in the hiring and training of Bubenik and in the repair and maintenance of the truck. Bratt & Doxey's insurer, Aetna, denied coverage and refused to defend or indemnify plaintiffs in connection with the underlying suit under its CGL policy, but undertook the defense of Bubenik, Bratt & Doxey and plaintiffs under its Business Auto policy. 1

Plaintiffs thereupon instituted this action for a declaration that the Aetna CGL policy afforded them coverage for the claims asserted in the underlying suit. The trial court, on cross-motions for summary judgment, held that Aetna's CGL policy covered the allegations of the amended complaint and, therefore, that Aetna had a duty to defend and indemnify plaintiffs in the underlying suit instituted by Arias. This appeal followed.

The principle thrust of Aetna's contention is that the CGL policy did not provide coverage to plaintiffs for the negligent hiring asserted in the amended complaint. Specifically, Aetna argues that the CGL policy excluded coverage for claims arising out of the ownership, operation and use of an automobile and that the Business Auto policy issued to Bratt & Doxey more properly afforded coverage for such claims.

Aetna's CGL policy, in pertinent part, provides:

The company will 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

to which this insurance applies, caused by an occurrence, and the company shall have the right and duty to defend any suit against the insured seeking damages on account of such bodily injury or property damage, even if any of the allegations of the suit are groundless, false or fraudulent, and may make such investigation and settlement of any claim or suit as it deems expedient, but the company shall not be obligated to pay any claim or judgment or to defend any suit after the applicable limit of the company's liability has been exhausted by payment of judgments or settlements.


This insurance does not apply: ...

(b) to bodily injury or property damage arising out of the ownership, maintenance, operation, use, loading or unloading of

(1) any automobile or aircraft owned or operated by or rented or loaned to any insured, or

(2) any other automobile or aircraft operated by any person in the course of his employment by any insured....

Aetna's Business Auto policy, in pertinent part, provides:

1. We will pay all sums the insured legally must pay as damages because of bodily injury or property damage to which this insurance applies, caused by an accident and resulting from the ownership, maintenance or use of a covered auto.

2. We have the right and duty to defend any suit asking for these damages. However, we have no duty to defend suits for bodily injury or property damage not covered by this policy. We may investigate and settle any claim or suit as we consider appropriate. Our payment of the LIABILITY INSURANCE limit ends our duty to defend or settle.

Our function in construing a policy of insurance, as with any other contract, is to search broadly for the probable common intent of the parties in an effort to find a reasonable meaning in keeping with the express general purposes thereof. See Fidelity Union Trust Co. v. Robert, 36 N.J. 561, 567, 178 A.2d 185 (1962); American Home Assur. Co. v. Hartford Ins. Co., 190 N.J.Super. 477, 484, 464 A.2d 1128 (App.Div.1983); Tooker v. Hartford Acc. and Indem. Co., 128 N.J.Super. 217, 222-223, 319 A.2d 743 (App.Div.1974); Ins Co. of State of Penna. v. Palmieri, 81 N.J.Super. 170, 179, 195 A.2d 205 (App.Div.1963), certif. den., 41 N.J. 389, 197 A.2d 15 (1964). In this pursuit, the language used in a policy of insurance should be given its ordinary and usual meaning. See Killeen Trucking, Inc. v. Great American Surplus Lines Ins. Co., 211 N.J.Super. 712, 714, 512 A.2d 590 (App.Div.1986); Lansco, Inc. v. Dep't of Environmental Protection, 138 N.J.Super. 275, 281-282, 350 A.2d 520 (Ch.Div.1975), aff'd o.b., 145 N.J.Super. 433, 368 A.2d 363 (App.Div.1976), certif. den., 73 N.J. 57, 372 A.2d 322 (1977). Moreover, when the language of the policy is clear, the court is bound to enforce its terms as they are written, James v. Federal Insurance Co., 5 N.J. 21, 24, 73 A.2d 720 (1950); Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43, 161 A.2d 717 (1960), so as to fulfill the objectively reasonable expectations of the parties to the contract. Werner Industries, Inc. v. First State Ins. Co., 112 N.J. 30, 35-36, 548 A.2d 188 (1988); Rao v. Universal Underwriters Ins. Co., 228 N.J.Super. 396, 411-412, 549 A.2d 1259 (App.Div.1988). Finally, we are mindful of the corollary of construction that a strict interpretation is required where the clause in question is one of exclusion or exception designed to limit the protection afforded by the general coverage provisions of the policy. Butler v. Bonner & Barnewell, Inc., 56 N.J. 567, 576, 267 A.2d 527 (1970); Mazzilli v. Acc. & Cas. Ins. Co. of Winterthur, 35 N.J. 1, 8, 170 A.2d 800 (1961). However, we must not disregard the clear import and intent of the exclusionary clauses in the policy.

With these principles in mind, we have no hesitancy in concluding that, under the CGL policy, Aetna had no duty to defend or indemnify plaintiffs with respect to the underlying suit. An insurer's duty to defend an insured against a lawsuit is well defined in Lumbermen's Mutual Casualty Co. v. United Services Automobile Ass'n, 218 N.J.Super. 492, 497, 528 A.2d 64 (App.Div.1987), as follows:

The duty to defend is determined by comparing the allegations of the complaint with the coverage provisions of the policy: the duty exists only if the complaint states a theory of recovery for which coverage is provided by the policy; there is no duty as to counts not covered. Hartford Acc. & Indemn. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18, 21-23, (1984); Burd v. Sussex Mutual Insurance Co., 56 N.J. 383, 388-389, (1970). The duty to defend is measured without regard to the ultimate merits of the cause of action: if the complaint alleges facts which, if proved, would constitute a covered risk, the insurer must defend even though if its insured wins at trial, the insurer will have no duty to pay. Hence, it is said that the duty to defend is independent of or broader than the duty to pay. Danek v. Hommer, 28 N.J.Super. 68, 79, 100 A.2d 198 (App.Div.1953),...

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