On appeal from Superior Court of New Jersey, Law Division, Salem County, Docket No. L-344- 97.
Judges Skillman, Conley and Lesemann.
The opinion of the court was delivered by: Skillman, P.J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
As amended September 18, 2001
The issue presented by this appeal is whether the owners of a boat are provided insurance coverage under their homeowners policy or their watercraft liability policy for a swimming accident involving passengers on the boat that occurred while the boat was grounded on a sandbar in the middle of a river.
On August 3, 1996, defendants William and Claudia Fuse went on a boating trip in the Salem River on their thirty-two foot motorized watercraft. The passengers included two young children, Kareemah and Kevin H. Johnson, Jr., who were siblings. The Fuses navigated their boat to a sandbar at the mouth of the river, turned off the engine, and dropped the anchor. The children went swimming, using a swim platform at the back of the boat to enter the water. The Fuses remained on the boat. At some point, the children, who were not wearing life jackets, got in water that was over their heads and began to float away. Mr. Fuse jumped in the water and was able to rescue Kareemah. However, Kevin was pulled below the surface and drowned.
On the date of this accident, the Fuses had a watercraft liability policy, issued by defendant Allstate Insurance Company (Allstate), which provided in pertinent part:
We will pay all sums arising from an accidental loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property damage resulting from the ownership, maintenance, or use of covered watercraft, boat equipment or boat trailers.
The Fuses also had a homeowners policy, issued by plaintiff Farmers' Mutual Insurance Company of Salem County (Farmers), which contained an exclusion from liability coverage, discussed in greater detail later in this opinion, for "bodily injury . . . arising out of . . . or use . . . of any . . . watercraft owned or operated by . . . any insured."
Anticipating that the swimming accident would result in a personal injury action against the Fuses, Farmers brought this coverage action against Allstate, the Fuses, Kevin Jr.'s estate, and Kareemah's and Kevin Jr.'s father and mother, Kevin H. Johnson, Sr. and Shirley Michelle Bradley. Farmers' complaint sought a declaration that because the accident arose out of the Fuses' use of their boat, the watercraft policy issued by Allstate provides coverage and the homeowners policy issued by Farmers excludes coverage for the accident.
Ms. Bradley was subsequently appointed administratrix of Kevin Jr.'s estate. While this coverage action was pending, she and the children's father, Kevin Sr., filed a wrongful death and survivorship action on behalf of Kevin Jr.'s estate and a personal injury action on behalf of Kareemah.
After discovery was completed in the coverage action, Farmers brought the matter before the trial court by a motion for summary judgment. The court ruled in Farmers' favor and entered final judgment, declaring that Farmers has no duty to defend or indemnify the Fuses and that Allstate is obligated to defend and indemnify the Fuses in connection with any and all claims arising out of the accident. The court concluded that the children's swimming by the side of the boat was "part of the continuous boating outing and activities that were part of the usage of [the] watercraft."
No New Jersey case has considered the coverage provided by a watercraft liability policy such as Allstate issued to the Fuses or the parallel exclusion from coverage for watercraft-related accidents in the Farmers homeowners' policy. However, there is a long line of New Jersey case law interpreting coverage provisions in automobile liability policies comparable to the coverage provision of the Allstate watercraft liability policy as well as the standard exclusion in homeowners' policies for accidents arising out of the use of an automobile, which is the same exclusion applicable to an accident arising out of the use of a watercraft. See, e.g., Home State Ins. Co. ex. rel Randell v. Continental Ins. Co., 313 N.J. Super. 584, 589-94 (App. Div. 1998), aff'd o.b., 158 N.J. 104 (1999); Diehl v. Cumberland Mut. Fire Ins. Co., 296 N.J. Super. 231, 235-38 (App. Div.), certif. denied, 149 N.J. 144 (1997); Daus v. Marble, 270 N.J. Super. 241, 248-50 (App. Div. 1994); Scarfi v. Aetna Cas. & Sur. Co., 233 N.J. Super. 509 (App. Div. 1989); Williamson v. Continental Cas. Co., 201 ...