On appeal from Superior Court, Law Division, Bergen County.
Pressler, Dreier and Kleiner. The opinion of the Court was delivered by Pressler, P.J.A.D.
[267 NJSuper Page 539] This is an insurance coverage declaratory judgment action. Plaintiff Search EDP, Inc., a New Jersey corporation, operates an employment agency. Plaintiff Neal P. Monda is one of its personnel placement counselors. Search EDP has a personnel consultants' errors and omissions policy issued to it by defendant American Home Assurance Company. It has a business general casualty and liability policy and a commercial umbrella liability insurance policy issued by defendant Franklin Mutual Insurance Company. Plaintiffs appeal from a summary judgment dismissing, as against both insurers, their complaint seeking a defense and indemnity in an underlying action brought against them by Lisa and Billy Gonzalez. We affirm as to Franklin but reverse as to American Home.
The facts relevant to the coverage issue are simple and undisputed. The Gonzalez complaint against plaintiffs was filed in September 1991. It alleges a cause of action based on plaintiffs' asserted professional negligence. More particularly, it alleges that in September 1990, plaintiffs, having negligently screened and evaluated the personal qualifications of one William Donohue, referred Donohue to Toys 'R' Us for employment as a computer programmer. Donohue was hired. Several months later, he "violently assaulted" Lisa Gonzalez, a co-worker, seriously injuring her. The implication of the complaint is that had plaintiffs properly conducted a background check of Donohue, as its professional undertaking obliged it to do, it would have been alerted to Donohue's alleged unstable or assaultive tendencies and would either have passed that information on to his prospective employer or not have placed him at all. Consequently, Gonzalez asserts that her injuries at Donohue's hand were caused by plaintiffs' professional negligence. Her husband sued per quod.
Search EDP sought a defense and indemnification for it and its employee from both its errors and omissions carrier, American Home, and its general liability carrier, Franklin. Both disclaimed, relying on specific exclusion clauses of their respective policies, and this coverage action ensued. On motion and cross-motions for summary judgment, the trial Judge sustained the position of both defendants.
The Franklin policies are typical business liability and casualty policies providing broad coverage for a wide range of business risks and containing the exclusions typical of such policies, such as risks covered by workers' compensation, automobile negligence, and the like. Exclusion number 11 of the business policy, encaptioned "Professional," provides as follows:
We do not cover bodily injury, property damage, or personal injury arising out of the rendering or failure to render any sort of professional services.
The commercial umbrella policy contains an even more explicit exclusion, which provides that
It is agreed that this policy shall not apply to liability arising out of the rendering of or failure to render professional services, or any error or omission, malpractice
or mistake of a professional nature committed by or on behalf of the named insured in the conduct of any of the insured's business activities.
The risks excluded by this provision are, of course, precisely the risks covered by American Home's errors and omissions policy, whose initial coverage statement on the first page of ...