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Ware Industries, Inc. v. Wausau Underwriters Insurance Co.

Superior Court of New Jersey, Appellate Division

October 24, 2013

WARE INDUSTRIES, INC., Plaintiff-Appellant,
v.
WAUSAU UNDERWRITERS INSURANCE COMPANY and LIBERTY MUTUAL INSURANCE COMPANY, Defendants-Respondents.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued May 7, 2013

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-9102-10.

Barry J. Muller argued the cause for appellant (Fox Rothschild LLP, attorneys;

Mr. Muller and Jeffrey M. Pollock, of counsel and on the briefs).

Dana C. Argeris argued the cause for respondents (Marshall, Dennehey, Warner, Coleman & Goggin, attorneys; Ms. Argeris and Michael A. Gorokhovich, on the brief).

Before Judges Messano, Lihotz and Ostrer.

OPINION

OSTRER, J.A.D.

This appeal requires us to determine the scope of an insurer's duty to defend an insured under Indiana law. An employee of plaintiff Ware Industries, Inc. (Ware) was injured on the job at a Ware facility in Indiana. Defendant Wausau Underwriters Company (Wausau), which provided worker's compensation and employer liability insurance to Ware, paid worker's compensation benefits to Enrique Herrera, Jr. Herrera then filed a complaint in Indiana against Ware, alleging Ware failed to train him properly, knowingly provided him with inappropriate equipment, and deliberately intended or knew injury was certain to occur. After Wausau refused to defend, Ware filed its complaint in New Jersey, seeking a declaratory judgment that Wausau had a duty to defend and indemnify.[1] The trial court granted Wausau's motion for summary judgment based on the policy exclusion of intentional conduct. Having considered Ware's arguments in light of the undisputed facts and governing Indiana law, we affirm in part and dismiss in part for mootness.

I.

The Wausau policy covers Ware and numerous Ware entities in at least thirteen states, including Indiana, but apparently not New Jersey. The policy covers bodily injury caused by accident or disease.

Part One of the policy provides worker's compensation insurance as required by each of the states. It "applies to bodily injury by accident or bodily injury by disease." The policy provides, "We will pay promptly when due the benefits required of you by the workers compensation law." The accompanying duty to defend excluded uncovered claims, stating:

We have the right and duty to defend at our expense any claim, proceeding or suit against you for benefits payable by this Insurance. We have the right to investigate and settle these claims, proceedings or suits.
We have no duty to defend a claim, proceeding or suit that is not covered by this Insurance.

Part Two of the policy provides employer's liability insurance. It also "applies to bodily injury by accident or bodily injury by disease, " provided, among other things, the "bodily injury must arise out of and in the course of the injured employee's employment by you." Part Two insures Ware against any "sums [it] legally must pay as damages because of bodily injury to [its] employees, provided the bodily injury is covered by this Employers Liability Insurance." Payable damages included damages to third parties as a result of injury to a Ware employee. However, the policy excluded coverage for the following: "any obligation imposed by a workers compensation, occupational disease, unemployment compensation, or disability benefits law, or any similar law, " and "bodily injury intentionally caused or aggravated by you."

The duty to defend under Part Two closely tracks the comparable Part One provision, stating:

We have the right and duty to defend, at our expense, any claim, proceeding or suit against you for benefits payable by this Insurance. We have the right to investigate and settle these claims, proceedings and suits.
We have no duty to defend a claim, proceeding or suit that is not covered by this Insurance. We have no duty to defend or continue defending after we have paid our applicable limit of liability under this Insurance.

Herrera's January 2010 application for worker's compensation benefits from Ware alleged that on May 31, 2008, he suffered a fractured pelvis and other significant injuries when he was crushed by a steel coil.[2] Herrera was operating a forklift. He alleged Ware was grossly negligent in providing him "an unsafe forklift" and "by failing to properly train employees." Herrera was found to have suffered sixty percent whole person permanent partial impairment. Wausau paid Herrera's ...


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