On appeal from the Superior Court of New Jersey, Law Division, Monmouth County.
King, Ashbey and Skillman. The opinion of the court was delivered by King, P.J.A.D.
[235 NJSuper Page 68] In this case the plaintiff seeks to recover an $8,500 sanction entered against him in Federal District Court under F.R.Civ.P. 11 from his homeowner's insurer under the "personal injury" feature of that liability policy. United States District Court Judge Anne Thompson entered the sanction after finding that an employment discrimination claim filed by the plaintiff was frivolous and vexatious. We conclude that the award against the plaintiff by the judge was an entirely punitive sanction and that our public policy precludes the plaintiff from recovering that sum from his liability insurer.
The plaintiff, Larry S. Loigman (Loigman), is an attorney licensed to practice law in New Jersey. In 1981 he applied for a position as a police officer in Middletown Township. He did not get the job. In 1982 he filed complaints with the New Jersey Division on Civil Rights (the Division) and the New Jersey Civil Service Commission (the Civil Service). He also filed a complaint with the Equal Employment Opportunity Commission (EEOC). The Civil Service complaint was dismissed on procedural grounds. In the Division, a five-day hearing before Administrative Law Judge Lavery resulted in a determination adverse to Loigman. The Director of the Division reviewed the matter and upheld the ruling in favor of Middletown Township. An appeal to this court from the Division was dismissed because Loigman did not obtain and file a transcript of the administrative hearing.
On January 28, 1987 Loigman filed a complaint in the United States District Court against Middletown Township (Middletown), its Township Committee, the Department of Personnel of the State of New Jersey, and Kerry Parker, Esquire (Parker). The suit alleged religious discrimination and sought damages, injunctive relief and attorney's fees. Loigman alleged that Parker, Middletown's attorney, had presented perjured testimony against him at the State-level administrative hearing. Federal Judge Thompson granted the defendants' motions for summary judgment and dismissed this action. Parker also sought and obtained sanctions under F.R.Civ.P. 11 amounting to $8,500.
Loigman forwarded the Rule 11 application to The Hanover Insurance Companies (Hanover), the defendants here, and requested a defense. Hanover declined coverage under the comprehensive personal liability feature of his homeowner's policy. Loigman then unsuccessfully opposed the Rule 11 application himself.
The homeowner's insurance policy upon which Loigman sought coverage in relevant part under "Coverage E -- Personal
Liability," in addition to the standard insuring agreement, provided:
For an additional premium,*fn1 under Coverage E -- Personal Liability, the definition bodily injury is amended to include personal injury.
"Personal injury" means injury arising out of one of more of the following offenses:
1. false arrest, detention or imprisonment, or malicious prosecution;
2. libel, slander or defamation of character; or
3. invasion of privacy, wrongful eviction or ...