On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County.
Before Judges King, Havey, and A.a. Rodriguez.
RODRIGUEZ, A. A., J.S.C. (temporarily assigned)
By leave granted, Torcon Construction Co. (Torcon) appeals the denial of a motion for summary judgment entitling it to coverage and a defense by USF&G of the personal injury claim filed by plaintiff. We reverse on the authority of Maryland Casualty Co. v. New Jersey Manufacturers, 48 N.J. Super. 314, 323-324, 137 A.2d 577 (App. Div.), aff'd, 28 N.J. 17, 145 A.2d 15 (1958), and our view that the severability of interests of multiple insureds contemplated in the policy requires that result.
Torcon Construction Company, Inc. (Torcon) was the general contractor in charge of building an addition to a shopping mall. Tectonic Construction Company (Tectonic) was one of the subcontractors on the project. Tectonic agreed to obtain:
worker's compensation insurance, public liability insurance, property damage insurance, and contractual liability insurance [in specified amounts] . . . protecting the owner, the contractor, and its subcontractors against all claims for damages and personal injuries, including death, or property damage suffered by persons which result directly or indirectly from the operations of the subcontractor under this agreement. . . .
Tectonic also agreed to name Torcon as an additional insured in that policy and to submit to Torcon a certificate of insurance before it began work. Tectonic procured a policy from USF&G naming Torcon as an additional insured and forwarded a certificate of insurance to Torcon.
Shortly after Tectonic commenced work on the site, plaintiff, a Tectonic employee, fell on improperly graded mud and was injured. Plaintiff filed a complaint against Torcon and Vollers Excavating and Construction Co. (Vollers), the subcontractor on site responsible for surface grading. Vollers had a similar agreement with Torcon to provide public liability insurance. Its carrier is Continental Casualty Company (Continental).
Torcon demanded that USF&G assume its defense. However, USF&G refused either to cover or defend Torcon with respect to plaintiff's lawsuit based on the following policy exclusion clause:
Exclusion j. [The policy shall not apply] to bodily injury to any employee of the insured arising out of and in the course of his employment by the insured or to any obligation of the insured to indemnify another because of damages arising out of such injury, but this exclusion does not apply to liability assumed by the insured under an incidental contract.
Consequently, USF&G was joined as a third party defendant. Both USF&G and Torcon moved for summary judgment. The motion was granted in favor of USF&G. The Judge found that, because the policy language referred to "the Insured" and both Torcon and Tectonic were named "Insureds," Exclusion j. applied to employees of either entity, regardless of an employment relationship. On appeal, Torcon contends the Judge incorrectly interpreted the policy language in light of existing law.
USF&G argues that "the insured" was intended to include any insured listed in its policy whether the named insured or an additional insured. Thus, neither Torcon nor Tectonic would be entitled to coverage for any suit brought by an employee of either for injuries arising during the course of their employment. Thus, Torcon would not be covered for this lawsuit even though it was not plaintiff's employer. Torcon, on the other hand, argues that Exclusion j. precluded coverage only for insureds which are the actual employers ...