Before Judges Coburn, Axelrad and Bilder.
The opinion of the court was delivered by: Coburn, J.A.D.
On appeal from Superior Court of New Jersey, Law Division, Ocean County.
This case involves a question of liability insurance coverage under a homeowner's policy. J.C. filed the underlying tort action against the insureds, D.B. and her husband N.B., alleging that N.B. had committed repeated acts of sexual abuse on her infant daughter M.C. The abuse occurred over a period of four years in the insureds' home. The complaint sought damages from N.B. for his intentional conduct and from D.B. for her negligence in failing to prevent or warn of the harm. In the third-party complaint, D.B. asserted that she was entitled to coverage under the policy issued by Allstate Insurance Company ("Allstate").
The Allstate homeowner's policy provided coverage for claims against the insureds for bodily injury arising from "accidental loss" and excluded coverage for bodily injury "which may reasonably be expected to result from the intentional or criminal acts of an insured person or which are in fact intended by an insured person." It also imposed "joint obligations" on the insureds, stating that the "acts . . . of an insured person will be binding upon another person defined as an insured person."
The Law Division granted Allstate summary judgment. D.B. appeals, contending that she was wrongly denied coverage. She asserts that the policy is ambiguous and should be construed in her favor. Alternatively, she asserts that if the policy is clear, it should nonetheless be construed to provide coverage to meet her reasonable expectations and that the denial of coverage is against public policy. Since D.B.'s arguments are unsound, we affirm.
We consider first the provision extending coverage. This policy extended coverage to its insureds for claims of bodily injury arising out of "accidental loss" without defining that phrase. Although the failure to define "accident" may render a coverage provision ambiguous in some circumstances, Property Cas. Co. of MCA v. Conway, 147 N.J. 322, 326-30 (1997), there is no ambiguity in the context of this case.
In Conway, the Court was concerned with a question of insurance coverage with respect to the statutorily imposed vicarious liability of parents for their child's intentional damage to school property. See N.J.S.A. 18A:37-3. The policy provided coverage for an "occurrence," which it defined as an "accident" without defining the term accident; it excluded coverage for property damage "which is expected or intended by the insured," and it contained a clause entitled "Severability of Insurance" which stated, "[t]his insurance applies separately to each insured." 147 N.J. at 325.
The Court, applying the principle that the words of an insurance policy should be given their ordinary and plain meaning, defined an accident as "an unintended or unexpected event." Id. at 327. Given that definition and the cited policy provisions, the Court determined that "[b]y failing to define 'accident' [the insurance company had] introduced ambiguity into the definition of 'occurrence.'" Id. at 326. The ambiguity arose because the policy "d[id] not state whether the determination that an event is unexpected or unintended should be from the perspective of all those covered under the policy or from that of only the named insured." Id. at 325. Consequently, the Court held that although there was no coverage for the child because of the exclusion, there was coverage for the parents because from their perspective the incident was both unintended and unexpected. Id. at 326-30.
D.B.'s circumstance is entirely distinguishable from that of the parents in Conway whose liability was vicarious. The cause of action against her was defined by the Court in J.S. v. R.T.H., 155 N.J. 330 (1998).
[W]hen a spouse has actual knowledge or special reason to know of the likelihood of his or her spouse engaging in sexually abusive behavior against a particular person or persons, a spouse has a duty of care to take reasonable steps to prevent or warn of the harm. [A] breach of such duty constitutes a proximate cause of the resultant injury, the sexual abuse of the victim. [Id. at 352.]
Thus, D.B. would only be liable for her own tortious conduct if she knew that the intentional and illegal activity was ongoing, or she had special reason to know that it was likely to occur, and she unreasonably failed to prevent or warn of the harm. Although the bodily injury for which she was being sued may have been unintended from her perspective, in light of the definition of the tort it was not unexpected; consequently, it was not an accident from her perspective and it was outside the coverage extended by the policy. See Allstate Ins. Co. v. Steele, 74 F.3d 878, 880 (8th. Cir. 1996); cf. Jessica M.F. v. Liberty Mut. Fire Ins. Co., 561 N.W.2d 787, 790-91 (Wis. App. 1997).
We consider next the exclusion. The absence of coverage is fortified by the exclusion from coverage of bodily injury "which may reasonably be expected to result from intentional or criminal acts of an insured person or which are in fact intended by an insured person." (Underlining added). D.B. contends this exclusion is ambiguous from her perspective. We disagree.
Conway concerned a policy exclusion that referred to property damage "'expected or intended by the insured'" and provided that the "'insurance applie[d] separately to each insured.'" 147 N.J. at 325 (emphasis added). Here, the exclusion speaks of an intentional or criminal act of "an insured person." (Underlining added.) N.B. was "an" insured person and he committed acts that were both intentional and criminal. Furthermore, the policy imposes "joint obligations" rather than providing separate coverage to each insured and expressly ...