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Dunne v. Fireman''s Fund American Insurance Co.

Decided: February 24, 1976.

JOHN DUNNE, ROBERT BICKLEY AND FRANK SPANN, PLAINTIFFS-RESPONDENTS,
v.
FIREMAN'S FUND AMERICAN INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND THE COUNTY OF MORRIS, DEFENDANT-THIRD PARTY PLAINTIFF-APPELLANT, V. THE STATE OF NEW JERSEY, THIRD-PARTY DEFENDANT-RESPONDENT



For reversal and remandment -- Justices Mountain, Sullivan, Pashman and Schreiber and Judge Conford. For affirmance -- None. The opinion of the Court was delivered by Schreiber, J.

Schreiber

This is another round in the litigation of Paul and Irene Cashen against three Morris County detectives, John Dunne, Robert Bickley and Frank Spann, for monetary redress because of an illegal search of the Cashen home in June 1970. Illegality resulted from the allegedly erroneous affidavit upon which the search warrant issued. We are now called upon to decide whether the County of Morris, or its liability insurance carrier, Fireman's Fund American Insurance Company (Fireman's Fund), or neither is obligated to furnish a defense for the detectives in the Cashen suit.

Initially the County of Morris was joined as a defendant in the Cashen suit because of its asserted vicarious responsibility

for acts of the three detectives. The trial court had granted motions for summary judgment in favor of all defendants. On appeal the Appellate Division reversed as to the three detectives, but affirmed the dismissal as to the County of Morris. Cashen v. Spann, 125 N.J. Super. 386 (App. Div. 1973). The Appellate Division reasoned that the detectives, in preparing the affidavit upon which the search warrant was predicated (Bickley executed the affidavit, Spann submitted information contained therein, and Dunne participated in drafting it), were agents of the State and not of the County. Accordingly, the judgment of dismissal in favor of Morris County was upheld.

We affirmed. 66 N.J. 541 (1975), cert. den. 423 U.S. 829, 96 S. Ct. 48, 46 L. Ed. 2d 46 (1975). Justice Pashman, writing for a unanimous court, carefully noted that

Fireman's Fund had issued to Morris County a comprehensive general liability insurance policy for the calendar year 1970. Thus the incident in question occurred within the policy's time coverage. The Cashen complaint charged Dunne, Spann and Bickley with false arrest and imprisonment, libel, slander, invasion of privacy, assault and battery, and negligence. The policy expressly excluded coverage of liability for libel, slander, or violation of right of privacy, but provided subject matter coverage for other torts such as negligence. Because of this situation Fireman's Fund entered into a reservation of rights agreement with the County under which it agreed to furnish a defense for the County and the detectives. The agreement also provided that the County and Fireman's Fund would share the defense costs.

The parties reserved their rights to assert their respective positions as to coverage. Thereupon Fireman's Fund undertook defense of the action on behalf of the detectives and the County. The carrier engaged in pretrial discovery, successfully moved for summary judgment, and defended the favorable trial court determinations before the Appellate Division. After receipt of the Appellate Division's decision, the company refused to continue to defend the detectives.

Dunne, Bickley and Spann then instituted this action by complaint and order to show cause in the Superior Court, Chancery Division, against Fireman's Fund and the County of Morris for an order directing them to defend and pay any lawful settlement or judgment in the Cashen suit. The County filed a crossclaim against Fireman's Fund in which it sought an order directing the carrier to assume responsibility for any relief to which the plaintiffs might be entitled. The County also filed a third party complaint against the State in which it asserted that the State was obligated to defend the detectives and pay any judgment rendered against them.

On the return day of the order to show cause the trial court found that the County of Morris should indemnify the plaintiffs if they were found to be liable "for something they ought not to pay for where in good faith they did what they were told to do because they didn't have a lawyer." The Court entered an order that the "County of Morris shall continue to appear and represent" Dunne, Bickley and Spann. The trial court refused to dismiss the third party complaint against the State and entered no order with respect to that complaint.

The County of Morris appealed to the Appellate Division from that part of the order directing the County to appear and represent the three ...


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