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Hanover Insurance Group v. Cameron

Decided: January 8, 1973.


Stamler, J.s.c.


This declaratory judgment action brings into sharp focus the problems anticipated by Burd v. Sussex Mutual Ins. Co. , 56 N.J. 383 (1970), along with those beyond the contemplation of the Burd decision.

Difficult questions of grave concern are posed to judges in calendar control. The financial burdens imposed upon plaintiffs in personal injury cases impatiently looking to the trial in the Law Division, the uncertain plight of the insured in determining whether he will be required to provide his own defense, and the distance and the manner in which the insurer may travel on behalf of the insured in investigating and participation in pretrial discovery, are just some of the problems. The most difficult problem is the continued legitimacy of the "reservation of rights" agreements between insurer and insured approved by the Supreme Court in Burd, supra , and Merchants Indemnity Corp. of New York v. Eggleston , 37 N.J. 114 (1962).

In attempting solutions this court is mindful of the limitations imposed upon trial courts in Reinauer Realty Corp. v. Paramus , 34 N.J. 406, 415 (1961).

The timing of both the Law and Chancery Division suits is significant. The proceedings in the Law Division case (Rosemary Karl, individually and as executrix of the estate of Edward Karl, deceased v. Cameron , L-11405-70) disclose in relevant part:

1. Complaint filed December 18, 1970.

2. Summons dated December 21 and December 28, 1970.

3. Summons served on: defendant Cameron January 11, 1971; defendant Chrone. December 30, 1970; defendant Goggin December 31, 1970; defendant Schloemp December 21, 1970 (by mail).

4. Answer filed by all defendants except Cameron, March 3, 1971.

5. Order directing Cameron to file answer, May 6, 1971.

6. Answer filed by Cameron, May 11, 1971.

7. Notice to file pretrial memorandum, January 18, 1972.

8. Notice of trial mailed March 13, 1972.

9. Notice of motion by Cameron for stay of Law Division action pending Chancery Division determination or, alternatively, relieving counsel. (Arguments on the motion heard on May 17, 1972; meeting May 24, 1972, assignment judge, Chancery Division Judge and all counsel in both actions).

10. Order staying Law Division action pending determination of Chancery Division action entered June 6, 1972. (Pretrial discovery was conducted in interim periods and the case was on the Law Division calendar call a number of times).

The Chancery Division proceedings in the present case, Hanover Ins. Co. v. Cameron , (C-1280-71), in relevant part reveal:

1. Complaint for declaratory judgment by insurer filed only against the insured on December 29, 1971.

2. Summons served on Cameron January 10, 1972.

3. Answer for Cameron by Legal Aid Society filed April 4, 1972. (Meeting of May 24, 1972 referred to above.)

4. Consent order to amend complaint to include all indispensable parties filed May 31, 1972.

5. Amended complaint filed May 31, 1972.

6. Order accelerating discovery, establishing timetable and fixing September 22, 1972 as date for pretrial conference filed July 10, 1972.

7. Answers by all additional defendants to amended complaint filed July 13 and July 19, 1972.

8. Pretrial order entered September 22, 1972 fixing trial date as November 27, 1972.

9. Trial in Chancery Division November 27, 1972.

10. Decision reserved November 29, 1972. (Discovery was conducted strictly in accordance with the order of July 10, 1972.)

Hanover in its complaint demands a determination that it is neither obligated to pay nor obligated to defend notwithstanding the issuance to Cameron of a homeowner's Policy which was in effect on the date of the incident which gave

rise to the Law Division action. (However, Hanover at the pretrial offered to defend, using counsel of its choice.) The disclaimer is based on Hanover's contention that Cameron's act which resulted in the death of Karl was an intentional act excluded from coverage. All codefendants in the Chancery Division action (plaintiff and all defendants in the Law Division action) take the position that Cameron was covered. Defendants also contend that even if he were not covered, Hanover cannot disclaim because of the equitable grounds of estoppel, waiver, unclean hands and the unenforceability of a "reservation of rights" agreement signed by Cameron.

When an insurance company by way of declaratory judgment action seeks an adjudication of noncoverage, it has the burden of proof of the facts alleged in the complaint. Concord Ins. Co. v. Miles , 118 N.J. Super. 551 (App. Div. 1972). This burden shifts only if and when the court must consider any affirmative defenses.

As to Hanover's disclaimer, the following findings of fact and conclusions of law are made:

On February 8, 1968 Hanover issued a standard homeowner's Policy to Cameron. It was for a term of three years. The following ...

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