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New Jersey Manufacturers Insurance Company v. Delta Plastics Corporation

380 N.J. Super. 532, 883 A.2d 399 (App. Div. 2005)

WORKERS COMPENSATION; INSURANCE—Even though a workers compensation insurance policy may exclude coverage for bodily injury intentionally caused or aggravated by the insured employer, conduct alleged to be substantially certain to cause injury is not, subjectively, an injury intentionally caused and therefore the insurer has the obligation to provide defense for such a claim.

A plastics company employee was injured on the job “while working on certain film winding equipment.” The employer’s workers compensation carrier assumed the company’s defense and paid benefits. The employee then sued various entities, including his employer, alleging that his employer “acted in an intentional or otherwise grossly negligent manner by providing the defective machine and rendered the machine unsafe by altering the machine and rendering it unsafe [sic] and requiring [the injured worker] to work under conditions that produced a substantial certainty that [its worker] would sustain injury, which conduct of [the plastics company] was a proximate cause of the abovementioned injuries to [the worker].” By alleging “intentional” conduct and a “substantial certainty” of injury, the employee sought to avoid the workers’ compensation bar. It was undisputed that the injured worker never alleged that his employer or his co-workers “subjectively intended to cause him injury, but only that [his employer’s] conduct in ‘altering the machine’ and requiring him to work on the altered machine created circumstances that were ‘substantially certain’ to result in injury.”

The workers compensation policy expressly excluded “bodily injury intentionally caused or aggravated by [the insured].” Further, under the policy, the insurance company had “no duty to defend a claim, proceeding or suit that [was] not covered by” the insurance policy. When the employee withdrew his tort claim against his employer, the insured-employer continued to seek recovery of the costs of the defense. The Appellate Division held that the insurance company was obligated to provide the defense under the policy. It cited a recently issued decision in Beseler Co. v. N.J. Mfrs. Ins. Co., in which it concluded “that the insured plaintiff [, an insured employer, was] entitled to coverage because there [was] no assertion that the bodily injury was ‘intentionally caused or aggravated by the insured as opposed to an injury caused by an intentional act of the employer that resulted in the injury.’” According to the Court, “[t]he intentional wrong exception to the workers’ compensation bar includes more than injury resulting from a subjective intent to injure. ... The ‘substantial certainty’ standard is ‘another method by which a plaintiff could prove an intentional wrong.’” It found that the “plain language of the policy exclusion” was not clear. According to the Court, “[t]he exclusion would be unambiguous if it expressly excluded coverage for ‘all intentional wrongs within the exception allowed by N.J.S.A. 34:15-8.’” It didn’t. In the Court’s view, conduct that is alleged to be “substantially certain” to cause injury is not, subjectively, an “injury intentionally caused.” Further, even if the policy language were deemed to be unambiguous, “the reasonable expectations of the insured must be considered.” Essentially, the Appellate Division believed the exclusion related only to “true intentional torts,” not merely to injuries that result from intentional conduct.

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