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July 15, 1965

The FIDELITY AND CASUALTY COMPANY OF NEW YORK, a New York corporation authorized to do business in New Jersey, Plaintiff,
CARLL AND RAMAGOSA, INC., a New Jersey corporation, Casino Pier Co., a New Jersey corporation, and David Thompson, Margaret Thompson, James Thompson, Jack Dye and Mrs. Jack (Fictitious) Dye, Defendants

The opinion of the court was delivered by: COHEN

A judicial determination is sought in this diversity action adjudicating the obligations, if any, under a liability insurance policy, of the plaintiff, The Fidelity and Casualty Company of New York (Fidelity), to investigate a fire and defend its assureds in a pending state court tort action for death and injuries to minor children sustained on an amusement pier in the City of Wildwood, New Jersey.

On August 4, 1964 at approximately 6:00 P.M., four minor children, Gregory Thompson, Michael Thompson, James Thompson and Melody Dye, all under the age of fourteen years, while joyfully engaged as occupants of an amusement device, known as the 'Mars Ride', tragically sustained injuries resulting in the death of all but James Thompson, the sole survivor. The cause of this disaster was a hostile and raging fire. At the time in question, the defendant-counterclaimant, Carll and Ramagosa, Inc. (Carll), was the amusement pier tenant operator under a lease with the defendant, Casino Pier Co. (Casino), the owner of the mercantile and amusement ventures, known as the Casino Pier Arcade, situated on the boardwalk at Oak and Cedar Avenues, in Wildwood, New Jersey. Fidelity had issued its liability insurance policy No. LZ25155, which was in effect at the time in question, to Carll as tenant-operator, and Casino as an added assured by virtue of its ownership of the premises.

 When notified of the fire by Carll, and of claims and potential litigation, Fidelity promptly disclaimed liability by notice dated August 19, 1964. Two weeks later, Fidelity filed in this court the present complaint for Declaratory Judgment, *fn1" seeking absolution under its policy from any obligation to investigate the mishap, to defend court litigation assertable against the assureds Carll and Casino, and endeavoring to insulate itself from liability by reason of any judgments potentially recoverable against the defendants. Shortly thereafter, Carll instituted a similar action in the Superior Court of New Jersey, Cape May County, requesting the judicial imposition of such obligations upon Fidelity. In September, 1964, Fidelity secured removal of the Carll action to this Court. Both actions will be considered as consolidated for purposes of expedition. In the main action, Carll has counterclaimed, asserting policy coverage of the claims against it, and Casino, as the added assured, has crossclaimed against Carll to indemnify and save it harmless under the Fidelity policy.

 In addition to the declaratory judgment sought by plaintiff, all parties have filed motions for summary judgment seeking construction of the liability policy as a matter of law. In reaching its conclusion, the Court has before it the liability insurance policy, the amusement pier lease, a deposition, affidavits and the pleadings constituting the record.

 The crucial issue is whether Fidelity's liability insurance contract with Carll and Casino provides such coverage as to impose upon it the obligations of investigation and defense of litigation arising out of the fire, as well as ultimate liability in the event that judgment is returned against either or both of its assureds.

 Fidelity insists that regardless of the cause of the fire, the injuries and deaths of the minor children resulted from their occupancy of the 'Mars Ride' amusement device, a hazard specifically within an exclusionary clause of its policy, thus absolving it from obligation or liability. The exclusionary clause, a typewritten as distinguished from a printed provision, inserted by Fidelity as an addendum to its policy reads as follows:

 'It is hereby understood and agreed that this policy excludes coverage for any claims arising out of the insureds interest as 'tenant' and 'operator' of any and all amusement devices, danceland and shooting gallery.'

 The insurance contract to which the above is attached is a standard form Comprehensive General Liability, America Fore Loyalty Group printed policy issued by Fidelity to Carll wherein the insurer agreed as follows:

 'Insuring Agreements

 1. Coverage A -- Bodily Injury 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, sickness or disease including death at any time resulting therefrom sustained by any person and caused by accident.

 Coverage B -- Property Damage Liability

 To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of injury to or destruction of property including the loss of use thereof caused by accident.

 11. Defense, Settlement Supplementary Payments

 With respect to such insurance as is afforded by this policy, the company shall (a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof even if such suit is groundless, false or fraudulent, but the company may make such investigation, negotiation and settlement of any claim or suit as it deems expedient.' There follows printed standard 'exclusions' relating to products hazard, contract obligations other than independent contractors, workmen's compensation provisions, etc. Attached to the policy declarations sheet is a separate 'Exclusion of Products Hazard,' as well as an amendment of the Alcoholic Beverage exclusion clause, both in printed form. The endorsement for the additional assured, Casino, contains the following schedule: "SCHEDULE Premiums Designation of Premises Name of Additional Bodily Property (Part Leased to Named Assured Injury Damage Insured) Liability Liability Casino Pier Wildwood, N.J. Casino Pier Co. 82.30 1.10 Total Premium $ 82.30 $ 1.10 (Included in pol.)"


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