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Board of Education of the Borough of Florham Park v. Utica Mutual Insurance Company

October 31, 2001

BOARD OF EDUCATION OF THE BOROUGH OF FLORHAM PARK, PLAINTIFF
v.
UTICA MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT, AND SELECTIVE INSURANCE COMPANY, DEFENDANT-RESPONDENT



On appeal from Superior Court of New Jersey, Law Division, Morris County, MRS-L-2106-99.

Before Judges Petrella, Steinberg and Alley.

The opinion of the court was delivered by: Petrella, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 17, 2001

Utica Mutual Insurance Company (Utica)*fn1 appeals from a judgment in a declaratory judgment action ordering it to indemnify plaintiff Board of Education of the Borough of Florham Park (Board) for its liability under N.J.S.A. 18A:16-6.1. Utica asserts that coverage is available only under a policy issued by defendant Selective Insurance Company (Selective). Alternatively, it asserts that if there is coverage under its policy, Selective's policy also provides coverage.

Utica argues that: (1) the judge erred in concluding that it provided the Board coverage under its policy; (2) alternatively, if both the Utica and Selective policies are ambiguous as to the triggering mechanism, then coverage should be provided under both policies; (3) the decision in Meeker Sharkey Associates, Inc. v. National Union Fire Insurance Co., 208 N.J. Super. 354 (App. Div. 1986), relied upon by the motion judge, was wrongly decided as it failed to follow the Supreme Court's decision in Patterson Tallow Co., Inc. v. Royal Globe Insurance Co., 89 N.J. 24 (1982); and (4) assuming coverage exclusively by Selective, or concurrently with Utica, then Utica is entitled to full or partial reimbursement of the monies it paid.

The judge ruled that Utica had the sole obligation to supply insurance coverage to the Board for indemnification for one of its employees, David Ford, who successfully defended a criminal action brought against him. Utica was required to pay, pursuant to responsibility of the Board under N.J.S.A. 18A:16-6.1, $487,831.08, in counsel fees and expenses Ford incurred in his successful defense of the criminal action. In addition, Utica was ordered to pay, pursuant to R. 4:42-9(a)(6), $190 in costs and $26,675 in counsel fees incurred by the Board in pursuing the declaratory judgment action.*fn2

The underlying facts giving rise to the insurance coverage dispute, essentially between the two insurance carriers, arose when Ford, a teacher employed by the Board, on June 19, 1996 was charged with sexually assaulting and recklessly endangering the welfare of four of his female students. Ford was indicted, criminally tried, and, on March 26, 1999, acquitted after a trial of all charges. Following his acquittal, Ford filed a claim with the Board pursuant to N.J.S.A. 18A:16-6.1 for reimbursement of his counsel fees and expenses in successfully defending the criminal action.

Selective provided the appropriate insurance coverage to the Board from July 1, 1993 through July 1, 1996. An endorsement to Selective's policy stated, in relevant part:

5. Subject to its terms, conditions and exclusions, this Coverage Part shall conform to the terms of the New Jersey compiled statutes - Title 18A:12-20, 18A:16-6 and 18A:16-6.1, their supplements, revisions and amendments.

Utica provided insurance to the Board from July 1, 1996 through July 1, 1999. An endorsement included in its policy stated, in pertinent part:

A. NEW JERSEY LAWS

Such insurance as is afforded by the Policy applies to the obligations imposed upon you by N.J.S.A. 18A:12-20; 18A:16-6; and if permitted by law, 18A:16-6.1.

The Board sought indemnification from either or both insurers under the endorsements in their respective policies. Selective proceeded under a ...


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