The opinion of the court was delivered by: Pollock, J.
Argued September 28, 1998
On certification to the Superior Court, Appellate Division.
Plaintiff, Hector Cruz-Mendez ("Cruz-Mendez") or ("plaintiff"), was injured after lighting a firework left from a display exhibited by Girone, Inc. ("Girone") for the Montclair Golf Club ("Golf Club"). The primary issue is whether plaintiff may maintain a strict-liability claim directly against Girone's insurers based on an insurance policy that they issued pursuant to N.J.S.A. 21:3-5. Other issues include whether plaintiff must prove that the fireworks display was a proximate cause of his injury and whether plaintiff's comparative negligence, N.J.S.A. 2A:15-5.1 to -5.8, constitutes an affirmative defense.
On July 4, 1991, the Golf Club sponsored a fireworks display on its property in the Township of West Orange ("Township"). Five days after the display, Cruz-Mendez, a Golf Club grounds keeper, found a firework in the glove compartment of a golf cart used for groundskeeping. He recognized the device as a firework, which he said looked "similar to the ones [he] had cleaned up on July 5th." Cruz-Mendez removed the firework from the glove compartment. The fuse was burned. He believed that the firework had exploded. Nevertheless, Cruz-Mendez enlarged a small hole in the device with a "small shovel" to reach an unburned part of the fuse. Then he lit the fuse. The firework exploded, injuring his left hand.
Before conducting a fireworks display in New Jersey, the exhibitor must obtain a municipal permit. Grant of the permit is subject to the conditions of N.J.S.A. 21:3-3 and -5. N.J.S.A. 21:3-3 provides:
"The governing body of any municipality . . . may, upon application in writing, upon the posting of a suitable bond, grant a permit for the purchase, possession and public display of fireworks by municipalities . . . or other organizations or groups of individuals, approved by the governing body of such municipality to whom the application is made. The governing body is authorized by resolution, to grant such permission when such display is to be handled by a competent operator, to be approved by the chiefs of the police and fire departments of the municipality. . . . After such permit shall have been granted, sales, possession, and use of fireworks for such display shall be lawful for that purpose only." N.J.S.A. 21:3-5 provides:
The governing body of the municipality shall require surety which may be cash, government bonds, personal bond, or other form of insurance in a sum of not less than twenty-five hundred dollars ($2,500.00), conditioned for the payment of all damages, which may be caused either to a person or persons or to property, by reason of the display so as aforesaid licensed, and arising from any acts of the licensee, his agents, employees or subcontractors. Such surety shall run to the municipality in which the license is granted, and shall be for the use and benefit of any person, persons, or the owner or owners of any property so damaged, who is or are authorized to maintain an action thereon, or his or their heirs, executors, administrators, successors or assigns.
Girone and the Golf Club agreed in a written contract on the procedure for obtaining the permit from the Township. Girone promised to provide the Golf Club with a fireworks pyrotechnician, as well as other personnel, materials, and equipment. Additionally, Girone agreed to "furnish PUBLIC LIABILITY AND PROPERTY DAMAGE INSURANCE in accordance with the limits set forth by the governing body having jurisdiction naming CUSTOMER [the Golf Club] as additional insured." In turn, the Golf Club agreed to provide Girone with "all necessary permits," a "Permit Authorization Form," and an "Insurance Requisition Form."
On April 8, 1991, Joseph B. Dillenbeck, a vice president of the Golf Club, completed and delivered to Girone the Insurance Requisition Form, which indicated that the Golf Club and the Township were to be named as additional insureds in the Certificate of Insurance ("Certificate"). The Certificate ultimately named Girone, the Golf Club, and the Township as insureds. It stated that the insurance policy (the "policy") provided "General Liability Insurance," including "Premises/Operations," "Contractual Liability," "Products/Completed Operations," and "Public Display" coverage. The Golf Club submitted the Certificate, as part of its "Application for Permission to Conduct Fireworks Display," to the Township.
When completing the application, in response to the question, "Is this application accompanied by the Surety Bond required by Chapter 51 of the Laws of 1937?," the Golf Club answered: "Yes." Despite this response, Mr. Dillenbeck testified on deposition that he understood the policy as "strictly a liability coverage for both personal injury and property damage, and I assume that's what the Township means when they refer to surety. It's really not the correct term."
In a resolution that tracked the terms of N.J.S.A. 21:3-5, the Township approved the Golf Club's application for a fireworks-display permit, subject to the following condition:
Proof of general liability in the sum of $1,000,000 and $2,000,000 providing for the payment of all damages to persons and/or property arising from any acts of the licensee, its agents, employees or subcontractors with the Township of West Orange and the Montclair Golf Club as additional insureds and shall be for the use and benefit of any person, persons or owner or owners of any property so damaged who is or are authorized to maintain an action thereon, or his or their heirs, executors, administrators, successors or assigns.
The policy was a standard policy issued to members of the American Pyrotechnic Association. Girone previously had been covered under an identical policy for the two prior years. For the period of January 1, 1991, to January 1, 1992, the policy provided "general liability" and "display or special effects liability" coverage, with limits of $1 million per accident and $2 million in the aggregate. The policy stated:
Underwriters agree subject to the Insuring Agreements, Exclusions, Conditions, Definitions and Declarations contained in this Policy, to indemnify the Insured . . . in respect of their [sic] operations anywhere in the World, for Ultimate Net Loss by reason of the liability imposed upon the Insured by law or assumed under contract, for damages in respect of a Claim . . . which arises solely by reason of:
a. Bodily Injury b. Property Damage
resulting from an Accident.
[T]he following are included in the definition of the `Insured' ...