Court Finds That NJM Had No Duty To Pay For Defense Of Guest Who Committed Assault Until Incident Is Determined To Be Negligent Or Intentional

This matter arises from the physical assault of a guest, plaintiff Colin Yurcisin, who attended a party hosted by defendant Justin Magariello.  While at the party, plaintiff alleges that a fellow guest, Ryan Fleming, who was intoxicated, punched him in the face multiple times causing serious injury. Plaintiff Yurcisin sued Fleming for his injuries. In the case of Yurcisin v. Fleming, 2022 N.J. Super. Unpub. LEXIS 457 (App. Div. March 21, 2022), the issue was whether NJM owed a duty to defend and indemnify the defendant guest (Fleming) who committed the assault upon plaintiff. 

Fleming had been charged with second degree aggravated assault as a result of the incident.  At his plea hearing, Fleming testified that plaintiff was sitting at a chair at the party, “minding his own business” when Fleming struck him about six times in the face.  He admitted that his contact was purposeful and knowing.  However, his admission at the plea hearing was made under a civil reservation that the plea would not be evidential in any civil proceeding.

Thereafter, the plaintiff filed a personal injury action against Fleming and the homeowners who hosted the party (the Magariellos).  Plaintiff alleged that Fleming was liable for negligently and/or intentionally causing injury to him or his improper, unauthorized and/or illegal conduct and maliciously and/or negligently assaulting him.

Fleming was insured under his parents’ NJM homeowner’s policy and he requested that NJM provide him with a defense and indemnification against plaintiff’s claims.  NJM denied coverage, claiming that the incident between Fleming and Yurcisin was not a covered occurrence as defined in the policy.

NJM contended that the incident would not be classified as an accident because the plaintiff’s claimed bodily injury was “expected or intended” by an insured, which was excluded under its policy.  NJM also considered Fleming’s actions intentional.

The parties did not dispute that the policy did not provide coverage or a duty to defend for Fleming’s intentional acts.  The issue was whether the acts could be deemed negligent and, hence, covered under the NJM policy.

NJM filed a complaint for a declaratory judgment, seeking a declaration that it had no obligation to provide a defense or liability coverage to Fleming for the plaintiff’s claims.  The declaratory action and the personal injury action were thereafter consolidated.

Fleming was defended in the personal injury and declaratory judgment action by privately retained counsel.  The plaintiff moved for summary judgment in the declaratory judgment action to compel NJM to defend and indemnify Fleming against plaintiff’s claims.  In turn, NJM cross-moved for summary judgment for a ruling that it had no obligation to cover Fleming against the plaintiff’s claims and, thus, no duty to defend or indemnify Fleming for those claims.  Fleming also moved for summary judgment to compel NJM to defend and indemnify him against plaintiff’s claims.

The trial court issued three orders, denying all three motions for summary judgment but still required NJM to defend Fleming.  It found that there was a genuine issue of material fact whether plaintiff’s injuries were caused by Fleming’s negligent, reckless or intentional acts.  The Court also directed that the declaratory judgment action be tried before the personal injury action was tried.

Despite denying the summary judgment motions, the trial court found that NJM had a duty to defend Fleming and was responsible for Fleming’s attorney’s fees in the actions.  The Court ordered NJM to assign counsel to defend Fleming and to pay his attorney’s fees and costs he had incurred in the consolidated actions. 

NJM filed a motion for reconsideration, which was also denied.  Thereafter, NJM appealed the orders directing it to provide counsel to Fleming and to pay the attorney’s fees incurred for the services rendered by Fleming’s personal attorney in both actions and denying its motion for reconsideration and directing it to pay the attorney’s fees and costs to Fleming’s personal counsel.

Under prior case law, the New Jersey Supreme Court explained when there are covered and noncovered claims in a complaint, “the insurer has two options: (1) it can assume the defense if the insured agreed, with a reservation of its rights to, dispute coverage; or (2) it can refuse to defend and dispute its obligations later, so as to translate its obligation into one to reimburse the insured if it is later adjudged that the claim was one within the policy covenant to pay.”  The Supreme Court also recognized in prior case law that it might be appropriate to decide the coverage issue and, thus, the insurer’s duty to defend, before trial of the underlying claim.

The Appellate Division noted that, given the underlying facts and allegations, it was not surprising that NJM’s position diverged from Fleming’s position, NJM contended that the plaintiff’s injuries were caused by Fleming’s intentional assault, not negligence.  The Court stated that if NJM prevailed on that issue, NJM would not owe a duty to defend or indemnify Fleming from the plaintiff’s claims because the occurrence would be excluded from coverage.

The Appellate Division had no issue with the trial court directing that the declaratory judgment action be tried before the personal injury action.  It noted that under the circumstances, “the better course is for the declaratory judgment action to be decided on the merits before the personal injury action.”  The Court stated that “[w]hether coverage exists for the occurrence is a legal issue to be decided by the Court, not a jury.”  Thus, the Appellate Division affirmed the ruling that the declaratory judgment action be tried and decided before the trial of the personal injury action.  The Court remanded for that purpose but stayed the personal injury action until that decision is rendered.

However, the Appellate Division disagreed with the trial court’s order directing NJM to provide counsel to Fleming in the consolidated actions.  It noted that an “insurer is obligated to provide the insured with a defense against all actions covered by the insurance policy.”  But, the duty to defend arises only when the complaint states a claim constituting a risk insured against. 

The Appellate Division noted that the declaratory judgment had not yet been tried and the issue of whether the incident was a covered occurrence remained undecided.  Under the language of the policy, it did not obligate NJM to provide Fleming with a defense to the declaratory judgment action.

The Appellate Division vacated the order requiring NJM to provide defense counsel in the personal injury action.  It found that NJM was only obligated to provide defense counsel in the personal injury action if Fleming prevailed on the declaratory judgment action.  It also reversed the order directing NJM to provide counsel to Fleming in the declaratory judgment action, noting that NJM owed no such duty.

The Appellate Division also disagreed with the trial court’s award of counsel fees and costs to Fleming’s privately retained counsel.  Attorney’s fees may be awarded in favor of a successful claimant under New Jersey Court Rules.  The term successful claimant is broadly defined as a party that “succeeds on any significant issue and litigation which achieves some benefit the parties sought in bringing suit.”

The Appellate Division stated that Fleming was not a successful claimant until he prevailed on the coverage issue.  Because the coverage issue remained undecided, Fleming was not yet a successful claimant and not yet entitled to a counsel fee award.  The Appellate Division found that the counsel fee awards in both actions were premature and vacated those awards without prejudice to Fleming who may renew his claim for counsel fees and costs if he prevailed in the declaratory judgment action.

Tags: coverage, insurance, negligence