Norman International, Inc. v. Admiral Insurance Company (086155) (Morris County and Statewide)

SYLLABUS
This syllabus is not part of the Court’s opinion. 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 Court and may not summarize all portions of the opinion.
Norman International, Inc. v. Admiral Insurance Company (A-24-21) (086155)
Argued February 28, 2022 -- Decided August 10, 2022
FUENTES, P.J.A.D. (temporarily assigned), writing for a unanimous Court.
This appeal concerns an exclusionary clause in a commercial general liability
insurance policy issued by Admiral Insurance Company (Admiral) to Richfield
Window Coverings, LLC (Richfield). The clause states that the policy does not
cover any liability “arising out of, related to, caused by, contributed to by, or in any
way connected with . . . [a]ny operations or activities performed by or on behalf of
any insured” in certain counties in New York, including Nassau County.
Richfield sells window coverage products, including blinds, to national
retailers like Home Depot and provides retailers with machines to cut the blinds to
meet the specifications of the retailers’ customers. Its representatives answer
questions the employees may have about the operation of the cutting machines and
window covering products. Richfield’s representatives thereafter visit the retailers’
establishments to maintain and repair the machines and replace the cutting blades as
needed. Richfield also provides a user manual for retailers’ employees to learn how
to use the cutting machine and conducts onsite training for employees. The field
sales representative in this case visited the Home Depot store at issue every two to
three weeks.
Colleen Lorito, an employee of a Home Depot located in Nassau County, was
injured while operating the blind cutting machine. She and her husband filed a civil
action against Richfield, asserting claims for product liability, breach of warranty,
and loss of spousal services. Admiral denied any obligation to defend or indemnify,
asserting the claims were not covered under the policy based on the Designated New
York Counties Exclusion.
Richfield filed a declaratory judgment action seeking to compel Admiral to
defend it in the Lorito case and, if necessary, indemnify it against any monetary
damages awarded to the plaintiffs. The Law Division granted summary judgment in
favor of Admiral. The Appellate Division reversed, finding that “Richfield’s limited
activities and operations have no causal relationship to the causes of action or
allegations.” The Court granted certification. 248 N.J. 540 (2021).
1
HELD: The policy’s broad and unambiguous language makes clear that a causal
relationship is not required in order for the exclusionary clause to apply; rather, any
claim “in any way connected with” the insured’s operations or activities in a county
identified in the exclusionary clause is not covered under the policy. Richfield’s
operations in an excluded county are alleged to be connected with the injuries for
which recovery is sought, so the exclusion applies. Admiral has no duty to defend a
claim that it is not contractually obligated to indemnify.
1. Generally, to ascertain whether there is a duty to defend, the complaint should be
laid alongside the policy and a determination made as to whether, if the allegations
are sustained, the insurer will be required to pay the resulting judgment, with any
doubts resolved in favor of the insured. There are times, however, when comparing
the causes of action in the complaint to the exclusionary clause will not provide an
answer as to whether there is a potentially covered claim. That situation occurs
“when coverage, i.e., the duty to pay, depends upon a factual issue which will not be
resolved by the trial.” Burd v. Sussex Mut. Ins. Co., 56 N.J. 383, 388 (1970). In
such cases, “the duty to defend may depend upon the actual facts and not upon the
allegations in the complaint.” Ibid. (pp. 14-15)
2. Here, the threshold question is whether the claims asserted by Lorito are covered
by the Admiral policy, whereas the underlying issues in the complaint would require
the factfinder to decide whether there was a manufacturing defect, design defect, or
a failure to provide adequate warnings, and whether Richfield was negligent in
causing Lorito’s injuries. None of those underlying issues would require the
factfinder to address the applicability of the policy exclusion. The Appellate
Division did not cite Burd in its analysis, instead setting forth the general standard
that a “complaint should be laid alongside the policy” to determine a duty to defend.
Going forward, in similar situations, courts should indicate when an issue requires
consideration of facts beyond the complaint. (pp. 16-17)
3. Insurance policies are reviewed using contract principles, and the agreement will
be enforced as written when its terms are clear in order that the expectations of the
parties will be fulfilled. If the policy exclusion uses terms that make it plain that
coverage is unrelated to any causal link, it will be applied as written and courts will
“not read a causal nexus into the otherwise plain terms.” Flomerfelt v. Cardiello,
202 N.J. 432, 443 (2010). The Court has not directly considered the meaning of the
language “in any way connected with.” But, in Flomerfelt, the Court found the
phrases “incident to” and “in connection with” to apply broadly, meaning “the injury
is connected in any fashion, however remote or tangential.” Id. at 456. (pp. 18-21)
4. Here, there is no dispute that Lorito was injured in Nassau County, one of the
counties listed in the exclusionary clause. Therefore, the relevant issue is whether
Richfield’s activities at the store are sufficient to trigger the exclusion -- that is, did
2
they “actually or allegedly aris[e] out of, [or are they] related to, caused by,
contributed to by, or in any way connected with” the activities of Richfield or “on
behalf of” Richfield? To focus on a causal relationship reads key language out of
the policy because the phrases “in any way connected with” and “related to” do not
require any element of causation. Lorito was injured while using the blind cutting
machine, which was provided by Richfield. The fact that Richfield provided the
machine to Home Depot is enough to trigger the exclusion because the phrase “in
any way connected with” merely requires that the two are linked in some way, even
if they are only tangentially connected. Richfield employees also went to the store
on a regular basis to change the blades and fix the machine, and Richfield provided a
manual and trained employees on how to use the machine. Given those facts, the
injuries were also “related to” Richfield’s actions at the store. The activities by the
insured constitute a sufficient basis to trigger the policy’s Designated New York
Counties Exclusion. The claim filed by Richfield is not covered under the policy
and Admiral did not have a duty to defend. (pp. 21-23)
REVERSED and REMANDED to the trial court.
CHIEF JUSTICE RABNER and JUSTICES PATTERSON, SOLOMON, and
PIERRE-LOUIS join in JUDGE FUENTES’s opinion.
3
SUPREME COURT OF NEW JERSEY
A-24 September Term 2021
086155
Norman International, Inc., and
Richfield Window Coverings, LLC,
d/b/a Nien Made (USA), Inc.,
Plaintiffs-Respondents,
v.
Admiral Insurance Company,
Defendant-Appellant.
On certification to the Superior Court,
Appellate Division.
Argued Decided
February 28, 2022 August 10, 2022
Justin N. Kinney argued the cause for appellant (Kinney
Lisovicz Reilly & Wolff, attorneys; Justin N. Kinney,
Michael S. Chuven, and Timothy P. Smith, of counsel
and on the briefs).
Ryan Milun argued the cause for respondents (The Milun
Law Firm, attorneys; Ryan Milun, on the brief).
JUDGE FUENTES (temporarily assigned)
delivered the opinion of the Court.
1
This appeal concerns an exclusionary clause in a commercial general
liability insurance policy. This exclusionary provision specifically denies
coverage for any incidents, costs, or expenses arising out of or related to
operations or activities performed by or on behalf of the insured in certain
counties in the State of New York.
Richfield Window Coverings, LLC, d/b/a Nien Made (USA), Inc.
(Richfield), is a seller of window coverings, blinds, shades, and shutters
headquartered in Santa Fe Springs, California. Richfield sells its products to
national retailers such as Home Depot, Walmart, and Bed Bath & Beyond.
Richfield also provides the retailers with cutting machines designed to cut the
blinds to meet the customers’ specifications.
Admiral Insurance Company (Admiral), located in Mount Laurel, New
Jersey, issued a general liability insurance policy to Richfield containing an
exclusionary clause, which expressly states that the policy does not provide
coverage for any liability “arising out of, related to, caused by, contributed to
by, or in any way connected with . . . [a]ny operations or activities performed
by or on behalf of any insured” in certain specifically identified counties in
New York, including Nassau County. The exclusionary clause also states the
insurer “shall have no duty to investigate, defend or indemnify any insured
against any loss, claim, [or] ‘suit’” arising in an excluded county.
2
Here, an employee of a Home Depot store located in Freeport, in Nassau
County, New York, was injured while operating a blind cutting machine
provided to Home Depot and maintained by Richfield. The Home Depot
employee filed a civil action in Nassau County against Richfield seeking
compensatory damages. When Richfield notified Admiral of the lawsuit, the
insurer invoked the policy’s exclusionary clause and asserted it was not
contractually obligated to assign counsel to represent Richfield in the Nassau
County litigation, or to indemnify Richfield against any damages awarded to
the Home Depot employee.
Richfield filed a declaratory judgment action in the Superior Court and
argued Admiral had a duty to defend the insured because the terms
“operations” and “activities” in the policy’s Designated New York Counties
Exclusion were ambiguous and subject to multiple interpretations, and thus
must be construed in favor of the insured. The Law Division judge rejected
that argument and granted Admiral’s motion for summary judgment. The
judge held that allegations of “bodily injury” that are “merely ‘related to’ or
‘in any way connected with’ [Richfield’s] ‘activities or operations’ within the
Home Depot store [are] sufficient to trigger the New York Counties exception”
in the Admiral policy.
3
The Appellate Division reversed, finding there was no “causal
relationship” between Richfield’s activities involving the blind cutting
machine and the causes of action raised in the complaint.
We believe that the Appellate Division’s analysis relied on too narrow a
reading of the exclusionary provision of the policy at issue. Its broad and
unambiguous language makes clear that a causal relationship between
Richfield’s conduct and plaintiff’s injuries is not required in order for the
exclusionary clause to apply; rather, any claim “in any way connected with”
Richfield’s operations or activities in a county identified in the exclusionary
clause is not covered under the policy. Here, Richfield’s operations in Nassau
County -- an excluded county -- are alleged to be connected with the injuries
sustained by the Home Depot employee. Admiral has no duty to defend a
claim that it is not contractually obligated to indemnify in the event Richfield
does not prevail at trial. We thus reverse the judgment of the Appellate
Division and affirm substantially for the reasons expressed by the Law
Division judge.
I.
A.
We derive the following facts from the record developed by the parties
in the course of discovery.
4
Richfield sells Nien Made window coverage products to national
retailers. Home Depot is one of the retailers that purchases window coverage
products from Richfield. Richfield also provides retailers with machines to cut
the blinds to meet the specifications of the retailers’ customers. In addition to
shipping the cutting machines to the retailer, Richfield’s representatives
answer general questions the employees may have about the operation of the
cutting machines and window covering products. Richfield’s representatives
thereafter visit the retailers’ establishments to maintain and repair the
machines and replace the cutting blades as needed. Richfield also provides a
user manual for retailers’ employees to learn how to use the cutting machine
and conducts onsite training for employees.
Harjit Singh is the president of Richfield. In his deposition testimony,
Singh confirmed Richfield does not have a contractual relationship with its
buyers. Instead, the relationship is governed by a “supplier buying
agreement.” Richfield receives payment from buyers like Home Depot after it
ships its window covering products. Once the buyer receives and pays for the
shipments, the products are deemed the buyer’s property, regardless of
whether they sell all or some of the product to retail purchasers.
During his deposition, Singh provided the following explanation of
Richfield’s distribution process:
5
Q. . . . . Does Richfield do business in New York?
....
A. We don’t do business directly in New York at all.
We sell to customers who do business in New York.
Q. Okay. But you’re selling products in New York,
correct?
A. We don’t sell products in New York. We sell
products to Home Depot, Walmart, Bed Bath & Beyond
and all these companies. And they sell our products in
their stores. So we don’t sell products in those stores.
Q. I understand you’re not selling the product in the
stores, but do you sell the product to the stores?
A. No. We sell the product to the parent company, and
their companies decide where the product goes to.
Some stores may not have the product. Some stores do.
Q. I didn’t understand that distinction. Stores don’t get
the product directly from you?
A. No.
Q. Okay. It’s sold to a parent, Home Depot?
A. Yes.
Q. But do stores get the machine directly from you?
A. Yes.
Although Richfield’s supplier agreement with Home Depot does not
expressly mention the blind cutting machines, Singh made clear the cutting
machines were an “implicit” part of Richfield’s blinds sales because they
6
provided the “cutting solution” needed to ensure the blinds fit the dimensions
of windows.
Richfield delivers the blind cutting machine to the store and Home
Depot installs it. Richfield’s “field sales representatives” visit the stores to
train Home Depot employees about Richfield’s products. The field sales
representative in this case visited the Home Depot store at issue every two to
three weeks.
Home Depot employees are the only ones who operate the blind cutting
machines. If problems arise, Home Depot personnel are required to call
Richfield’s customer service number or report the problem via Richfield’s
website. Singh reaffirmed it is “incumbent and inclusive in the activities and
work of” the field sales representatives to respond to customers’ service calls
and to repair the blade cutting machines or supply the customer with a new one
if the machine is beyond repair. Richfield also works with Home Depot to
design the “bay” where Richfield’s product and cutting machine are displayed.
Singh estimated that, in 2017, Richfield’s business with Home Depot
constituted sixty percent of its sales and that ninety-five percent of Richfield
products sold by Home Depot required the use of the blind cutting machine. It
is thus clear that Home Depot’s sale of Richfield’s products was inextricably
tied to the availability of the blind cutting machines, making Home Depot’s
7
use of the machine “a necessity” for Richfield. Singh denied, however, that
Home Depot’s use of the cutting machines constitutes an activity or operation
of Richfield because it is “Home Depot’s activities, not ours.” He nevertheless
acknowledged that “[t]he machines are provided as part of our business
activities we have at Home Depot” and that Richfield could not sell its
products without the machine.
B.
On August 12, 2017, Colleen Lorito, an employee of Home Depot
located in Nassau County, New York, was operating the blind cutting machine
when her left hand came into contact with the blade, severing parts of her
fingers. Lorito claimed the machine did not have a safety guard at the time of
the accident. On September 14, 2018, she and her husband filed a civil action
against Richfield alleging negligent design, breach of express warranty, breach
of implied warranty, failure to warn, strict liability for manufacturing defect,
strict liability for design defect, and loss of spousal services.
Admiral denied “any obligation to defend or indemnify Nien Made and
Nien Made USA,”1 asserting the claims were not covered under the Admiral
policy based on the Independent Contractors Exclusion and the Designated
1
Nien Made USA is the trade name for Richfield.
8
New York Counties Exclusion. This appeal concerns only the Designated New
York Counties Exclusion, which provides:
This insurance does not apply to “bodily injury”,
“property damage” or “personal and advertising
injury”, including costs or expenses, actually or
allegedly arising out of, related to, caused by,
contributed to by, or in any way connected with:
(1) Any operations or activities performed by or on
behalf of any insured in the Counties shown in the
Schedule above; or
(2) Any premises, site or location owned, leased,
occupied, maintained or used by or on behalf of any
insured in the Counties shown in the Schedule above.
We shall have no duty to investigate, defend or
indemnify any insured against any loss, claim, “suit,”
demand, fine or other proceeding alleging injury or
damages of any kind, to include but not limited to
“bodily injury,” “property damage,” or “personal and
advertising injury” to which this endorsement applies.
[(emphases added).]
The schedule referenced in this exclusionary provision lists the
following counties: “Bronx, Kings, Nassau, New York, Queens, Richmond,
Rockland, Suffolk and Westchester Counties in the State of New York.”
(emphasis added). It is undisputed that Lorito was injured while performing a
work-related function as an employee of a Home Depot located in Nassau
County, New York.
9
Richfield filed a declaratory judgment action against Admiral in the Law
Division, Morris County, seeking to compel Admiral to assign counsel to
defend it in the Lorito case and, if necessary, indemnify it against any
monetary damages awarded to the plaintiffs. Admiral filed a responsive
pleading that included a counterclaim seeking a judicial declaration that it did
not have an “obligation to defend or indemnify [p]laintiffs for the Underlying
Action.”
The parties initially attempted to resolve the issue through non-binding
arbitration. The arbitrator found in favor of Admiral, noting that the
Designated New York Counties Exclusion applied and unambiguously denied
Richfield coverage in this case. Richfield filed notice for a trial de novo and
moved for summary judgment. Admiral also moved for summary judgment.
The Law Division judge heard argument on the parties’ cross-motions for
summary judgment and ultimately granted Admiral’s motion, declaring it had
no duty to defend or indemnify Richfield. The motion judge found that
[i]t is undisputed that the Admiral policy
unambiguously contains a “Designated New York
Counties Exception,” which states, “[t]his insurance
does not apply to ‘bodily injury,’ ‘property damage,’ or
‘personal and advertising injury,’ including costs or
expenses actually or allegedly arising out of, related to,
caused by, contributed to by, or in any way connected
with: (1) any operations or activities performed by or
on behalf of any insured in the Counties shown in the
10
schedule above.” . . . It is also undisputed that the
Home Depot store where . . . Lorito was employed and
injured is located in Nassau County, New York, one of
the excluded New York counties. . . . Thus, if
Richfield, or any other party on behalf of Richfield,
performed “operations or activities” within the Nassau
County Home Depot, [then] the “Designated New York
Counties Exception” would preclude coverage for the
underlying action.
In response to Richfield’s appeal, the Appellate Division reversed and
remanded the case, finding “the motion judge erred in granting summary
judgment to defendant on the basis of the ‘Designated New York Counties
Exclusion.’” The appellate court found that “Richfield’s limited activities and
operations have no causal relationship to the causes of action or allegations .”
The appellate court also concluded that the claims here did not have any
“relationship with the maintenance or repair of the blind cutting machines, the
training of Home Depot employees, or the cleaning of the machines ,” which
was the extent of Richfield’s connection to this Home Depot.
C.
We granted Admiral’s petition for certification, asking this Court to
determine whether the New York Counties Exclusion applies here. 248 N.J.
540 (2021).
11
II.
A.
Admiral argues the Appellate Division erred in “relying on the
allegations of the complaint” because “the factual issues relevant to the
applicability of the New York Counties Exclusion will not be decided in the
Underlying Action.” Admiral claims the decision of the Appellate Division
“pulverized the standard for insurers to determine whether they owe a duty to
defend” established by this Court in Burd v. Sussex Mutual Insurance Co., 56
N.J. 383, 388-89 (1970). According to Admiral, the Appellate Division
erroneously relied on the limited description reflected in the complaint instead
of the relevant facts adduced during discovery, which established that the
underlying event occurred in Nassau County, thus triggering the exclusion.
Admiral maintains there is no duty to defend in the absence of a duty to
indemnify. Thus, the Appellate Division decision creates a conflict of interest
in requiring it to defend.
Admiral also argues the Appellate Division incorrectly interpreted the
terms of the Designated New York Counties Exclusion and failed to appreciate
the significance of the clause’s disjunctive list and the use of the word “or,”
which directs that the exclusion is satisfied if any of the terms apply. Finally,
12
Admiral asserts the terms of the policy’s exclusionary clause do not require a
causal relationship between Lorito’s injury and Richfield’s activities .
B.
Richfield argues the Appellate Division correctly “applied well-
settled . . . case law on the interpretation of insurance policies and properly
considered all relevant facts.” Richfield argues Burd is not applicable here
because the coverage question can be decided by resolving the issues in the
underlying action. According to Richfield, a Nassau County jury must
determine how Lorito was injured. That determination, Richfield argues, “will
ultimately be used to either trigger indemnity coverage or not.”
Richfield also argues the Appellate Division did not create a new duty to
defend when there is no duty to indemnify because the court focused only on
determining whether the exclusion applied rather than on deciding the
indemnity issue. Finally, Richfield argues the appellate court did not limit its
consideration to the facts alleged in the complaint.
III.
“We review a grant of summary judgment de novo, applying the same
standard as the trial court.” Woytas v. Greenwood Tree Experts, Inc., 237 N.J.
501, 511 (2019). Under
that standard, summary judgment should be granted
“when ‘the pleadings, depositions, answers to
13
interrogatories and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as
to any material fact challenged and that the moving
party is entitled to a judgment or order as a matter of
law.’”
[Ibid. (quoting Brill v. Guardian Life Ins. Co. of Am.,
142 N.J. 520, 528-29 (1995)); accord R. 4:46-2(c).]
“To decide whether a genuine issue of material fact exists, the trial court
must ‘draw[] all legitimate inferences from the facts in favor of the non-
moving party.’” Friedman v. Martinez, 242 N.J. 450, 472 (2020) (alteration in
original) (quoting Globe Motor Co. v. Igdalev, 225 N.J. 469, 480 (2016)).
A.
1.
The issue in this case is whether Admiral has a duty to defend Richfield
against the Loritos’ claims. See Flomerfelt v. Cardiello, 202 N.J. 432, 444
(2010) (explaining that a court may have to determine if there is a duty to
defend “in advance of a conclusive decision about coverage,” which may not
be clearly ascertained before discovery or trial).
Generally, to ascertain whether there is a duty to defend, “[t]he
complaint should be laid alongside the policy and a determination made as to
whether, if the allegations are sustained, the insurer will be required to pay the
resulting judgment,” with any doubts “resolved in favor of the insured.”
14
Abouzaid v. Mansard Gardens Assocs., LLC, 207 N.J. 67, 79-80 (2011)
(quoting Danek v. Hommer, 28 N.J. Super. 68, 77 (App. Div. 1953), aff’d o.b.,
15 N.J. 573 (1954)).
There are times, however, when comparing the causes of action in the
complaint to the exclusionary clause will not provide an answer as to whether
there is a potentially covered claim. That situation occurs “when coverage,
i.e., the duty to pay, depends upon a factual issue which will not be resolved
by the trial.” Burd, 56 N.J. at 388. In such cases, “the duty to defend may
depend upon the actual facts and not upon the allegations in the complaint.”
Ibid. Stated differently, if coverage will not be an issue resolved during trial,
it may not be sufficient to look only at the complaint because the duty to
defend depends on facts not relevant to the causes of action in the complaint.
See ibid.Writing for the Court in Burd, Chief Justice Weintraub proposed the
following factual scenario to illustrate how to address this threshold issue:
[I]f a policy covered a Ford but not a Chevrolet also
owned by the insured, the carrier would not be
obligated to defend a third party’s complaint against the
insured which alleged the automobile involved was the
Ford when in fact the car involved was the Chevrolet.
The identity of the car, upon which coverage depends,
would be irrelevant to the trial of the negligence action.
[Ibid.]
15
The Court in Burd acknowledged the potential conflict of interest
created “if the trial will leave the question of coverage unresolved so that the
insured may later be called upon to pay,” or if the insurer’s defense may
“prejudice the insured.” Id. at 389. In Burd, for example, coverage depended
on whether there was intentional injury inflicted because there was an
exclusion for such harm. Ibid. If that coverage issue were not decided before
the insurance company had to defend, it would give the insurance carrier the
incentive to not defend strongly on the issue of intentional harm, because if the
harm was intentionally caused, the claim would fall within the exclusionary
clause in the policy. Id. at 389-90; accord Hartford Accident & Indem. Co. v.
Aetna Life & Cas. Ins. Co., 98 N.J. 18, 25 (1984) (noting “it is even clearer
here than in Burd that the coverage question could not properly be resolved by
the trial of the underlying action” because the cause of action in the complaint
was for failure to warn but coverage depended on the “date [the] plaintiff . . .
suffered bodily injury”). Id. at 28.
2.
Here, the threshold question is whether the claims asserted by Lorito are
covered by the Admiral policy, whereas the underlying issues in the complaint
would require the factfinder to decide whether there was a manufacturing
defect, design defect, or a failure to provide adequate warnings, and whether
16
Richfield was negligent in causing Lorito’s injuries. None of those underlying
issues would require the factfinder to address the applicability of the policy
exclusion.
The Appellate Division did not cite Burd in its analysis, instead setting
forth the general standard that a “complaint should be laid alongside the
policy” to determine a duty to defend. (quoting Flomerfelt, 202 N.J. at 445).
Going forward, in similar situations, courts should indicate when an issue
requires consideration of facts beyond the complaint. But here, despite the
standard cited, the appellate court noted the trial court’s consideration of facts
from discovery, including that Richfield employees visited the store to change
the machine’s blades, perform maintenance on the machine, and provide
training resources to employees, each of which was not discussed in the
complaint.
As we now turn to the policy’s exclusionary clause to determine whether
the activities and operations of Richfield were sufficient to trigger the
coverage exclusion or whether Admiral has a duty to defend, we specify that
our analysis included consideration of those facts beyond the complaint
necessary to determine the duty to defend issue. See Hartford Accident &
Indem. Co., 98 N.J. at 25; Burd, 56 N.J. at 388.
17
B.
1.
Insurance policies are reviewed using contract principles, and the
“agreement ‘will be enforced as written when its terms are clear in order that
the expectations of the parties will be fulfilled.’” Mem’l Props., LLC v.
Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012) (quoting Flomerfelt, 202 N.J. at
441). Terms in the contract “are given their ‘plain and ordinary meaning.’”
Ibid. (quoting Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992)).
Exclusionary clauses will be “presumed valid if they are ‘specific, plain, clear,
prominent and not contrary to public policy.’” Id. at 528 (quoting Princeton
Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)). While these clauses are
“typically construed narrowly . . . ‘courts apply the meaning that supports
coverage rather than the one that limits it’” if the terms are ambiguous. Ibid.(quoting Flomerfelt, 202 N.J. at 442).
“The burden is the carrier’s to bring the case within the policy
exclusion.” Burd, 56 N.J. at 399. If there is a causal link required by an
exclusion, “courts must consider its nature and extent because evaluating that
link will determine the meaning and application of the exclusion.” Flomerfelt,
202 N.J. at 442-43. Alternatively, “if the exclusion uses terms that make it
plain that coverage is unrelated to any causal link, it will be applied as
18
written,” and we will “not read a causal nexus into the otherwise plain terms.”
Id. at 443.
Certain language in an exclusion makes clear that a causal link is
required, for example, if the language requires that the injuries be “caused by”
or “contributed to by” actions by the insured. See id. at 443-44; Contribute,
Merriam-Webster, https://www.merriam-webster.com/dictionary/contribute
(last visited July 11, 2022) (“to play a significant part in making something
happen”). When the language does not explicitly require a causal element, the
court must determine to what degree the policy intended a causal connection.
Flomerfelt, 202 N.J. at 443.
In Flomerfelt, the exclusionary clause in the policy included the term
“arising out of.” Id. at 439. In that case, this Court noted previous case law
had interpreted the phrase “expansively to define the link between the conduct
and the covered activity as ‘originating from,’ ‘growing out of’ or having a
‘substantial nexus.’” Id. at 452 (quoting Am. Motorists Ins. Co. v. L-C-A
Sales Co., 155 N.J. 29, 35 (1998)). The Court found that although “[e]ach of
those potential definitions includes a causal link between the excluded act and
the injury, . . . none requires that the excluded act be the proximate cause of
the injury.” Id. at 454.
19
We have not directly considered the meaning of the language “in any
way connected with.” But, in Flomerfelt, we found the phrases “incident to”
and “in connection with” to apply broadly, meaning “the injury is connected in
any fashion, however remote or tangential.” Id. at 456. Similarly, other courts
have interpreted the meaning of “connected with” broadly, based on the
dictionary definition of “connected.” See Misiti, LLC v. Travelers Prop. Cas.
Co. of Am., 61 A.3d 485, 493 (Conn. 2013). The Merriam-Webster dictionary
defines “connected,” in part, as “1. joined or linked together” and “2. having
the parts or elements logically linked together.” Ibid.; see Connected,
Merriam-Webster, https://www.merriam-webster.com/dictionary/connected
(last visited July 11, 2022).
Although not in the insurance context, New Jersey courts have
considered the language “related to” and interpreted it as being broader than
“arising out of.” See Yale Materials Handling Corp. v. White Storage &
Retrieval Sys., Inc., 240 N.J. Super. 370, 375 (App. Div. 1990) (“An
arbitration provision covering claims ‘relating to’ a contract is broader than
one which covers claims merely arising out of a contract.”).
When there are multiple phrases included in the exclusion itself, “courts
separately consider the meaning of each phrase and then collectively analyze
the intent of the exclusion.” Flomerfelt, 202 N.J. at 452. A list of multiple
20
terms, separated by commas and the word “or,” is disjunctive, and only one is
necessary to trigger the exclusion. See Simmons v. Mercado, 247 N.J. 24, 41
(2021) (“The use of ‘or’ plainly indicates that any of those . . . listed actions is
sufficient to satisfy the . . . definition.”).
With those principles in mind, we turn to the exclusionary clause at issue
here.
2.
Once again, the exclusionary clause lists which counties are excluded,
and states that “[t]his insurance does not apply to ‘bodily injury’ . . . actually
or allegedly arising out of, related to, caused by, contributed to by, or in any
way connected with . . . [a]ny operations or activities performed by or on
behalf of any insured.” The parties do not dispute the enforceability of that
clause, but rather its applicability in this case.
Interpreting the clause, the Appellate Division considered the causes of
action in Lorito’s complaint and the activities of Richfield and found “no
causal relationship.” That comparison was not correct because the language of
the exclusion clearly and unambiguously requires that the injuries, not the
causes of action, be connected to the actions of the insured. Therefore, the
appellate court should have considered the connection between Lorito’s
21
injuries and Richfield’s activities at the store to determine if the exclusion
applies.
There is no dispute that Lorito was injured in Nassau County, one of the
counties listed in the exclusionary clause. Therefore, the relevant issue is
whether Richfield’s activities at the store are sufficient to trigger the exclusion
-- that is, did they “actually or allegedly aris[e] out of, [or are they] related to,
caused by, contributed to by, or in any way connected with” the activities of
Richfield or “on behalf of” Richfield? Because the exclusion test is
disjunctive, each phrase in the exclusion must be considered separately , any
one of which would be sufficient to trigger the exclusion. See Flomerfelt, 202
N.J. at 452; Simmons, 247 N.J. at 41-42.
With respect to that inquiry, the Appellate Division focused on a causal
relationship, but that approach reads key language out of the policy.
Ultimately, whether there is any causal connection between the actions and
injuries is not dispositive because the phrases “in any way connected with” and
“related to” have been interpreted broadly and do not require any element of
causation.
Lorito was injured while using the blind cutting machine, which was
provided by Richfield. The fact that Richfield provided the machine to Home
Depot is enough to trigger the exclusion because the phrase “in any way
22
connected with” merely requires that the two are linked in some way, even if
they are only tangentially connected. See Flomerfelt, 202 N.J. at 456. There
is clearly a connection between Richfield providing the machine to Home
Depot and Lorito’s injuries: had Richfield not provided the machine to the
Home Depot, Lorito would not have been using it and would not have
accidently severed her fingers.
The connection between Richfield and Lorito’s injuries does not stop
there because Richfield did more than just provide the machine to Home
Depot. Richfield employees went to the store on a regular basis to change the
blades and fix the machine. And, of particular relevance here, Richfield
provided a manual and trained employees on how to use the machine. Given
those facts, the injuries were also “related to” Richfield’s actions at the store.
The record reflects Richfield’s involvement in the sale of window blinds in
this store, which included providing the machine, providing maintenance, and
training Home Depot employees. That involvement is sufficient to connect
Richfield with the use and operation of the blind cutting machine.
We hold that the activities by the insured constitute a sufficient basis to
trigger the policy’s Designated New York Counties Exclusion clause. The
claim filed by Richfield is not a covered claim under the policy and Admiral
did not have a duty to defend.
23
IV.
For those reasons, we reverse the judgment of the Appellate Division
and remand the matter to the trial court for proceedings consistent with this
opinion.
CHIEF JUSTICE RABNER and JUSTICES PATTERSON, SOLOMON,
and PIERRE-LOUIS join in JUDGE FUENTES’s opinion.
24