Written By Attorneys John M. Clark and Erin E. Nulty
Note: This article is an interpretation of current law and is offered for informational purposes only. This material is not legal advice and should not be construed or used as a substitute for the advice of an attorney.
In Certain Underwriters at Lloyd's, London vs. Delino, John Clark and Erin Nulty obtained a favorable decision from the Appellate Division of the New Jersey Superior Court affirming the trial court's judgment that the insurer had no duty to defend and indemnify the insured under a homeowner's policy for claims brought against the insured in Worker's Compensation Court. Relying on the coverage provided under his homeowner's policy, the insured had attempted to implead Certain Underwriters at Lloyd's, London ("Lloyd's") in an action brought by a worker injured on the insured's property during renovations to the premises.
The insured, who was also a general contractor, purchased property for renovation and obtained a homeowner's policy to provide insurance coverage for the unoccupied property during its rehabilitation. During construction, the insured, acting as a general contractor, hired a subcontractor to install flooring. One of the subcontractor's employees was injured while working on the insured's property. Neither the general contractor nor the subcontractor had worker's compensation insurance. The injured worker brought an action in Worker's Compensation Court against the subcontractor, the general contractor, and the insured as owner of the contracting business.
Prior to a coverage determination in the Worker's Compensation Court, Lloyd's filed a Motion for an Order to Show Cause in the Superior Court of New Jersey seeking a judgment declaring that Lloyd's had no obligation under the homeowner's policy to provide a defense and indemnification to the insured for claims brought against him seeking worker's compensation benefits. The lower court agreed, entered judgment in Lloyd's favor, and the insured appealed.
The insured's appeal was based on the following main arguments: (1) the trial court did not have jurisdiction to decide the worker's compensation coverage issue, and (2) coverage should have been provided for the insured's claim because (a) the language of the homeowner's policy is ambiguous and/or (b) reformation is necessary due to misrepresentations regarding coverage.
With respect to the first issue, the Appellate Court agreed with Lloyd's position that the Superior Court had concurrent jurisdiction with the Worker's Compensation Court to decide the issue of whether the homeowner's policy provided coverage for the injured worker's claim. The Court found no error in the trial court's acceptance of primary jurisdiction over the matter.
With respect to the second issue, the Appellate Court agreed with Lloyd's argument that the policy language was not ambiguous and that the unambiguous language of the policy excluded coverage for worker's compensation benefits. The Court gave short shrift to the insured's reformation argument and agreed with Lloyd's position that the insured failed to produce any evidence that Lloyd's made any misrepresentations regarding the policy. In fact, the Court noted that the insured had failed to allege that he had any personal dealings with Lloyd's or that his agent was working as Lloyd's broker. The Opinion stated, "even if the broker conveyed the impression that the policy would extend more expansive coverage than the Lloyd's policy provides, this would not be a basis for imposing responsibility upon Lloyd's to defend and indemnify [the insured]."
If you have any questions concerning this case, or would like to receive a copy of the opinion, please contact John Clark or Erin Nulty.
