Insurance Policy Exclusion Was Clear and Did Not Require a Causal Relationship

Norman International, Inc. v. Admiral Ins. Co., 251 N.J. 538 (2022). This case arose out of an injury to an employee of Home Depot in Nassau County, New York while he was using a blind cutting machine that was maintained by one of the plaintiffs (“Richfield”). The employee sued Richfield for his injuries. Richfield notified its insurer, defendant Admiral, but Admiral invoked an exclusion and contended that Admiral was not obligated to assign counsel to represent Richfield or to indemnify Richfield against any damages awarded to the employee.

As Judge Fuentes, writing for a unanimous Supreme Court, recounted, the exclusion that Admiral invoked “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.”

Richfield brought an action for a declaratory judgment that Admiral was obligated to defend Richfield. Admiral won summary judgment from the Law Division, which rejected Richfield’s claim that the exclusion was ambiguous. Richfield appealed, and 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.” Admiral then obtained Supreme Court review, and the Court reversed and reinstated the summary judgment, applying de novo review.

Judge Fuentes held 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.”

Certain language in the exclusion, Judge Fuentes observed, “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.” But the Appellate Division did not sufficiently consider other verbiage in the exclusion, but instead “read key language out of the policy.” Ultimately, he said, “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.” The Court thus reversed the Appellate Division and remanded to the Law Division for further proceedings.