April 23, 2008
CERTAIN UNDERWRITERS AT LLOYD'S, LONDON SUBSCRIBING TO POLICY LH00016, PLAINTIFF-RESPONDENT,
LOUIS PEREZ AND ARANGO FLOORING, DEFENDANTS, AND RONALD DELINO, DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-1198-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued April 8, 2008
Before Judges Skillman, Yannotti and LeWinn.
Defendant Ronald Delino is a general contractor who does business under the name Delman Contracting. Defendant Delino owned an unoccupied house in Chatham that he was rehabilitating. Delino entered into a subcontract for flooring work with defendant Arango Wood Floors. Defendant Louis Perez was an employee of Arango. On August 2, 2005, Perez was injured during the course of his employment. Arango did not have insurance coverage for workers' compensation benefits at the time of this accident.
Perez filed claims for benefits in the Division of Workers' Compensation against both Arango and Delman Contracting. Perez's claim against Delman Contracting was based on N.J.S.A. 34:15-79, which provides in pertinent part:
Any contractor placing work with a subcontractor shall, in the event of the subcontractor's failing to carry workers' compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor.
Before Perez's accident, Delino had obtained a homeowner's insurance policy issued by plaintiff Lloyd's for the house he was rehabilitating. The pertinent provisions of that policy are quoted later in this opinion.
Delino and Delman Contracting filed a motion in the Division of Workers' Compensation to implead Lloyd's and adjudicate its responsibility under the homeowner's policy issued to Delino to defend Perez's workers' compensation claim and indemnify Delino and Delman Contracting for any benefits they might be liable to pay Perez. Lloyd's responded to this motion, but before the response was heard, Lloyd's filed this action in the Law Division for a declaratory judgment that the policy it issued to Delino does not provide coverage for Perez's workers' compensation claim. The trial court entered an order to show cause which stayed proceedings in the Division of Workers' Compensation pending final resolution of the coverage issue.
On the return date, the trial court concluded in an oral opinion that the policy Lloyd's issued to Delino does not provide coverage for Perez's workers' compensation claim. Accordingly, the court entered a final judgment declaring that Lloyd's "has no duty to defend or indemnify Ronald Delino and/or Delman Contracting against any claims made by Louis Perez in Workers' Compensation Court arising out his injuries sustained at 11 Joanna Way, Chatham, New Jersey on or about August 2, 2005."
On appeal, Delino argues that the trial court erred in staying proceedings in the Division of Workers' Compensation and deciding the coverage issue rather than allowing the Division to decide this issue. Even assuming Delino could have impleaded Lloyd's in the proceedings before the Division and obtained a determination as to whether Delino's homeowners policy provided coverage for Perez's claim, see Williams v. Bituminous Cas. Corp., 51 N.J. 146, 150 (1968), the trial court had concurrent jurisdiction to decide this issue, see Gerhardt v. Cont'l Ins. Cos., 48 N.J. 291, 294-95 (1966). Moreover, even if the trial court should have allowed the Division of Workers' Compensation to decide the coverage issue in the first instance, we are satisfied the determination of this issue involves solely interpretation of the policy, and therefore, that we should decide the merits.
The homeowner's policy that Lloyd's issued to Delino expressly excluded coverage for workers' compensation benefits. Coverage E, entitled "Personal Liability," excluded coverage for 4. "Bodily Injury" to any person eligible to receive any benefits voluntarily provided or required to be provided by an "insured" under any:
a. Workers' compensation law[.]
Similarly, Coverage F, entitled "Medical Payments to Others," excluded coverage for any person eligible to receive benefits voluntarily provided or required to be provided under any:
a. Workers' compensation law[.]
In addition to these exclusions, the Lloyd's policy also excludes coverage for any personal liability for "Bodily injury" . . . arising out of or in connection with a "business" conducted from an "insured location" or engaged in by an "insured", whether or not the "business" is owned or operated by an "insured" or employs an "insured".
We are satisfied that, under the plain language of the Lloyd's policy, Delino's alleged liability under N.J.S.A. 34:15-79 for the payment of workers' compensation benefits because of Arango's failure to carry workers' compensation insurance coverage constitutes a liability "for benefits . . . required to be provided under any . . . Workers' Compensation Law" within the intent of workers' compensation benefits exclusions of the policy. See Gordon v. New Hampshire Ins. Co., 89 N.J. Super. 246, 252 (App. Div. 1965). Furthermore, there is no basis for a claim that Delino had a reasonable expectation of coverage because his alleged liability for compensation benefits is not based on his employment of Perez but rather his use of a subcontractor who failed to carry workers' compensation coverage, because the policy excludes coverage for any liability arising out of a business conducted on the insured premises.
Delino's alleged status as general contractor for the renovation of the insured premises clearly constituted a business within the intent of this exclusion.
Finally, we note that Delino does not allege that he had any personal dealing with Lloyd's or that the insurance broker through which he obtained the homeowner's policy was acting as Lloyd's agent. Therefore, even if the broker conveyed the impression to Delino that the policy would extend more expansive coverage than the Lloyd's policy provides, this would not be a basis for imposing responsibility upon Lloyd's to defend and indemnify Delino.
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