Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Villa v. Short

June 5, 2008

DANIELLE M. VILLA, PLAINTIFF,
v.
JOHN F. SHORT, JOHN DOES (1-10) AND ABC CORPORATION (1-10), DEFENDANTS AND THIRD-PARTY PLAINTIFFS, AND JOSEPH SHORT, INDIVIDUALLY AND AS EXECUTOR OF THE ESTATE OF ELSIE SHORT, DEFENDANT AND THIRD-PARTY PLAINTIFF-APPELLANT,
v.
ELIZABETH ANN MULDER, JANE DOES (1-10) AND ABC INSURANCE (1-10), THIRD-PARTY DEFENDANTS, AND ALLSTATE NEW JERSEY INSURANCE COMPANY, THIRD-PARTY DEFENDANT-RESPONDENT.



On certification to the Superior Court, Appellate Division.

SYLLABUS BY THE COURT

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

This case concerns whether a homeowner's insurance policy provides coverage to homeowners who are sued in connection with sexual assaults committed by their son. The precise question is whether the policy excludes coverage for all insureds if any insured under the policy commits an intentional or criminal act.

Joseph and Elsie Short owned a home in Williamstown, New Jersey. They obtained homeowner's insurance with Allstate New Jersey Insurance Company (Allstate). The Shorts have two children, Elizabeth and John. Elizabeth married and on November 25, 1978, gave birth to Danielle Villa. John, who has lived with his parents at all times, was diagnosed as mildly mentally retarded when he was six years old. In 1983, while on a family vacation, John sexually abused his niece, Danielle. At the time, John was twenty-one years old and Danielle was five. On various occasions between 1983 and 1988, John sexually assaulted Danielle at his parents' house in Williamstown.

On November 23, 1998, just prior to her twentieth birthday, Danielle Villa filed a complaint in Superior Court, alleging that John sexually molested her between 1983 and 1988. She also sued her grandparents, Joseph and Elsie Short, for negligent supervision of John in failing to prevent the sexual assaults. Because Elsie Short had died in 1991, Danielle filed the complaint against Elsie's estate (the Court's reference to Joseph refers to both Joseph and the Estate of Elsie Short). Allstate declined to defend against Danielle's complaint. Allstate claimed that based on the exclusions in the homeowner's policy for intentional or criminal acts, the policy did not provide coverage. Joseph retained his own counsel, filed an answer, and also filed a third-party complaint against Allstate seeking a declaratory judgment that coverage was available to satisfy the claims of Danielle and to pay his attorney's fees. In addition, Joseph impleaded Danielle's mother, demanding contribution and indemnification.

There were two Allstate policy forms in effect during the relevant period. An earlier policy form contained the criminal acts exclusion language and a coverage severability clause. A later policy form contained similar coverage and exclusion language, but replaced the severability language with a "joint obligations" clause.

The trial court concluded that the homeowner's policy did not afford coverage because of the intentional-acts exclusion and dismissed Joseph's complaint. Joseph appealed. In an unpublished opinion, the Appellate Division affirmed. The panel held that, because John was "an insured person" under the policy and the losses arose from his intentional or criminal acts, the policy denied coverage for all insureds, including him and his parents. The panel reached this conclusion notwithstanding John's mental disability. The panel did not address the severability clause of the earlier policy form nor did it consider the joint obligations clause in the subsequent form.

The Supreme Court granted Joseph's petition for certification.

HELD: The homeowner's policy language that excludes coverage for the "intentional or criminal acts of an insured person" operates to exclude coverage for all insureds under the policy, and not merely for the insured who committed the intentional or criminal act.

1. The issue is whether the intentional acts exclusion clause in the Allstate policy clearly and unambiguously excludes from coverage all insureds for the intentional act of "any" insured, or whether the clause is ambiguous and therefore requires an interpretation in favor of the insureds. An insurance policy is a contract. Because of the vast differences in the bargaining positions between an insured and an insurance company in the drafting of an insurance policy, the Court pays special attention and applies special rules of interpretation to such contracts. The Court first looks to the plain language of the policy and any ambiguities are construed to sustain coverage. (Pp. 9-11)

2. Consistent with the interpretation of the Appellate Division in this case, two other recent Appellate Division decisions have held that "an insured" is synonymous with "any insured," and therefore the acts of one insured person are sufficient to disqualify other insured persons from coverage. Argent v. Brady, 386 N.J. Super. 343 (App. Div. 2006); J.C. v. N.B., 335 N.J. Super. 503 (App. Div. 2000). The Supreme Court is in accord with the views expressed by the Appellate Division in these cases. The phrase "an insured" in insurance policy exclusions is not ambiguous and the Court will not search for ambiguities where there are none. In the present case, the policy language excludes all insureds from coverage for damages caused by the intentional or criminal acts of an insured. The New Jersey cases cited by Joseph in support of his interpretation contain different policy language, i.e., "the insured," and therefore are not controlling. Allstate's use of the words "an insured" eliminated the ambiguity that is inherent in the words "the insured." Such language plainly excludes coverage for all insureds when any insured commits an intentional or criminal act. (Pp. 11-15)

3. The Court does not read the severability clause to infuse ambiguity into the plain language of the policy exclusion for the intentional or criminal acts of an insured. The severability provision merely makes the coverage available to each insured who is entitled to it up to the limits on the declarations page. The provision does not affect the unambiguous exclusion for intentional or criminal acts of an insured. (Pp. 15-17)

The judgment of the Appellate Division is AFFIRMED.

JUSTICE LONG filed a separate, DISSENTING opinion, in which JUSTICE HOENS joins, stating that the policy's intentional acts exclusion language is not clear and unambiguous and that an ordinary person, unschooled in the minutiae of insurance law interpretation, could reasonably have concluded that coverage would exist in the absence of intentional wrongdoing.

CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA and RIVERA-SOTO join in JUSTICE WALLACE's opinion. JUSTICE LONG filed a separate, dissenting opinion, in which JUSTICE HOENS joins. JUSTICE ALBIN did not participate.

The opinion of the court was delivered by: Justice Wallace, Jr.

Argued January 7, 2008

This case concerns whether a homeowner's insurance policy provides coverage to homeowners who are sued in connection with sexual assaults committed by their son. The precise question is whether the policy excludes coverage for all insureds if any insured under the policy commits an intentional or criminal act. The trial court concluded that the intentional-acts exclusion applied and granted summary judgment in favor of the insurer. The Appellate Division affirmed. We agree and hold that the policy language that excludes coverage for the "intentional or criminal acts of an insured person" operates to exclude coverage for all insureds under the policy, and not merely for the insured who committed the intentional or criminal act.

I.

Joseph and Elsie Short owned a home in Williamstown, New Jersey. They obtained homeowner's insurance with Allstate New Jersey Insurance Company (Allstate). The Shorts have two children, Elizabeth and John. Elizabeth married and on November 25, 1978, gave birth to Danielle Villa. John, who has lived with his parents at all times, was diagnosed as mildly mentally retarded when he was six years old. Because of his disability, John received special education services while in school and, afterward, vocational training in various household and janitorial tasks that enabled him to get a job at a nursing home. John relied on his parents to help him with managing money and he had his own bedroom in their home.

In 1983, while on a family vacation in Ocean City, New Jersey, John sexually abused his niece, Danielle. At the time, John was twenty-one years old and Danielle was five. Thereafter, on various occasions between 1983 and 1988, John sexually assaulted Danielle at his parents' house in Williamstown. John warned Danielle not to tell anyone, but finally Danielle revealed the abuse to her mother in 1990. The family immediately confronted John, who admitted that he had molested Danielle. Joseph was aware that his son knew about sex, and he and his wife were present when John purchased sexually explicit magazines. Danielle claimed that John would show those magazines to her.

On November 23, 1998, just prior to her twentieth birthday, Danielle Villa filed a complaint in Superior Court, alleging that John sexually molested her between 1983 and 1988. She also sued her grandparents, Joseph and Elsie Short, for negligent supervision of John in failing to prevent the sexual assaults. Because Elsie Short had died in 1991, Danielle filed the complaint against Elsie's estate. For ease of presentation, our reference to Joseph is meant to include both Joseph Short and the Estate of Elsie Short.

Joseph sought to have Allstate defend against Danielle's complaint, but Allstate declined. Allstate claimed that based on the exclusions in the homeowner's policy for intentional or criminal acts, the policy did not provide coverage. Joseph retained his own attorney, filed an answer to Danielle's complaint, and filed a third-party complaint against Allstate seeking a declaratory judgment that coverage was available to satisfy the claims of Danielle and to pay his attorney's fees. Joseph also impleaded Danielle's mother, demanding contribution and indemnification.

There were two policy forms in effect during the relevant period: policy form AU429, which was in effect from June 1, 1983 to June 1, 1985; and form AU9601, which was in effect thereafter. Under Part 1 of Section II, "Coverage X: Family Liability Protection," the earlier policy form, AU429, provided coverage as follows:

We will pay all sums arising from the same loss which an insured person becomes legally obligated to pay as damages because of bodily injury or property ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.