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Flomerfelt v. Cardiello


May 18, 2009


On appeal from the Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-630-07.

Per curiam.


Argued March 24, 2009

Before Judges Fuentes, Gilroy and Chambers.

Defendant Pennsylvania General Insurance Company (PGIC) appeals from the order of April 24, 2008, denying its motion for summary judgment and requiring it to defend and indemnify plaintiff Matthew Cardiello in an underlying personal injury action. We reverse.

Cardiello brought this declaratory judgment action against PGIC seeking a declaration that PGIC is obliged to indemnify and defend him in a suit brought against him by Wendy Flomerfelt. On cross-motions for summary judgment, the trial court granted summary judgment in favor of Cardiello. We granted PGIC leave to appeal.

Our review of a trial court's decision on motions for summary judgment is de novo. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We apply the same standard as the trial court, namely that a motion for summary judgment will be granted if "there is no genuine issue as to any material fact challenged and [] the moving party is entitled to a judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). We give no deference to the trial court's interpretation of the law or its determination of the legal consequences that flow from undisputed facts. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).

Flomerfelt has sued Cardiello for injuries she sustained when she overdosed on drugs and alcohol. On Saturday evening, July 26, 2003, Cardiello, then age twenty, held a party at his parents' home while they were away. Flomerfelt, then age twenty-one, attended the party. Along with other guests, she ingested alcohol and illegal drugs. She overdosed on these substances and lost consciousness the next morning while still at the Cardiello home. Flomerfelt contends that Cardiello delayed in calling for medical help and that this delay exacerbated the consequences of the overdose.

Flomerfelt was placed in intensive care at the hospital where she was found to have suffered from a drug overdose. The hospital's diagnoses for her included acute respiratory failure secondary to drug overdose, acute renal failure, shock liver, some hearing loss, and other serious medical conditions. Her toxicology testing was positive for cocaine, marijuana, opiates, and alcohol.

Flomerfelt's expert witness, Dr. Michael Buccigrossi, a health effects scientist, stated in his report of December 8, 2006, that her medical condition upon admission to the hospital can be described as "a life threatening condition" involving a "cascade of primary organ system failures, followed by a vicious cycle of secondary vascular effects acting synergistically and ultimately resulting in a rapid and continuous downward spiral in the condition of her health." He concluded that "[h]er critical condition at the time of admission to [the] hospital and her current hearing loss were brought on by a multiple drug overdose and were exacerbated by a delay in receiving appropriate medical attention." He indicated that marijuana, opiates, cocaine, and alcohol were found in her urine and that the latter three have been associated with organ failure.

At his deposition, Buccigrossi testified that he did not know the quantities of alcohol or illegal drugs that Flomerfelt had consumed. He explained that "with multiple chemical exposures like this, [it is] very difficult, if not impossible, to separate out which drugs were responsible for which health effects." He could not say whether her hearing loss is due to the cocaine, opiates, or alcohol. He acknowledged that with small amounts of marijuana and cocaine, but a large quantity of alcohol, she could have sustained the same kind of injury.

The medical report of James Z. Cinberg, M.D., F.A.C.S., prepared for Cardiello's parents in the underlying litigation, also concludes that Flomerfelt's hearing loss is due to the consumption of opiates, marijuana, and alcohol.

PGIC homeowner's policy issued to Cardiello's parents excludes from coverage claims for bodily injury "[a]rising out of the use, sale, manufacture, delivery, transfer or possession by any person of a controlled substance(s) as defined by the Federal Food and Drug Law at 21 U.S.C.A. Sections 811 and 812. Controlled Substances include, but are not limited to, cocaine, LSD, marijuana and all narcotic drugs." This exclusion does not apply to properly prescribed drugs nor does it apply to insureds "who have no knowledge of the involvement with a controlled substance(s)."

Due to this language, PGIC contends that it has no duty to defend or indemnify Cardiello. In opposition, Cardiello argues that PGIC cannot show a substantial nexus between Flomerfelt's injuries and the drugs, because no medical expert can ascertain what portion of her injuries are attributable to her drug use.

An exclusion in an insurance policy is "narrowly construed," and the insurer has the burden of proving that the exclusion applies. Proformance Ins. Co. v. Jones, 185 N.J. 406, 415 (2005) (citing Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)). However, where an exclusion is "specific, plain, clear, prominent, and not contrary to public policy" it is presumptively valid. Princeton Ins. Co. v. Chunmuang, supra, 151 N.J. at 95 (quoting Doto v. Russo, 140 N.J. 544, 559 (1995)).

In Prudential Prop. & Cas. Ins. Co. v. Brenner, 350 N.J. Super. 316 (App. Div. 2002), we had occasion to interpret an identical exclusion, in the context of a wrongful death action where the insured was implicated in the shooting of a drug dealer. There we noted that the language of this exclusion is "clear and unambiguous." Id. at 322. We found that the provision "excludes coverage for injuries which arise out of, are connected with, or are incident to the use and possession of illicit drugs." Ibid. We concluded that the nexus between the death and the illegal drugs precluded coverage. Id. at 323.

In our application of this exclusion to the facts of this case, we note that in the context of insurance policies, the phrase "arising out of," whether used to define coverage or an exclusion, is interpreted "broadly." Id. at 322. It is a phrase that is viewed "expansively." Am. Motorist Ins. Co. v. L-C-A Sales Co., 155 N.J. 29, 35 (1998). "Arising out of" refers to "conduct 'originating from,' 'growing out of' or having a 'substantial nexus' with the activity for which coverage is provided." Ibid. (quoting Records v. Aetna Life & Cas. Ins., 294 N.J. Super. 463, 468 (App. Div. 1996), certif. denied, 151 N.J. 463 (1997)). The phrase "arising out of" when used in an exclusion in a homeowner's policy has also been described as meaning "'was connected with,' 'had its origins in,' 'grew out of,' 'flowed from,' or 'was incident to.'" Id. at 35-36 (quoting Allstate Ins. Co. v. Moraca, 244 N.J. Super. 5, 13 n.1 (App. Div. 1990)).

In this case, although the experts are unable to precisely identify the extent to which Flomerfelt's injuries were caused by the illegal drugs, the hospital records and Flomerfelt's expert as well as the expert for Cardiello's parents all attribute her injuries to the multiple effects of the drugs and alcohol. Under these circumstances, we conclude that PGIC presented facts evidencing that Flomerfelt's injuries were sufficiently connected to the illegal drugs so that they can be deemed "arising out of the use" of illegal drugs within the meaning of the exclusion.

Accordingly, we reverse entry of summary judgment in favor of Cardiello, and we reverse the denial of PGIC's motion for summary judgment.


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