NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE COMMITTEE ON OPINIONS SUPERIOR COURT OF NEW JERSEY BENVERNEUTO WEBSTER, Plaintiff, ESSEX COUNTY v. DOCKET NO. ESX-L-7656-12 PALLADIUM ASSOCIATES, LLC, A/K/A SENSATIONS ENTERTAINMENT GROUP, OPINION LLC D/B/A PALLADIUM BALLROOM NIGHT CLUB A/D/B/A CLUB SENSATIONS; 48 BRANFORD PLACE ASSOCIATES, LLC, ET AL., Defendants SUPERIOR COURT OF NEW JERSEY MIA JANE STEPHENS, GENERAL ADMINISTRATOR AND ADMINISTRATOR AD PROSEQUENDUM OF THE ESTATE OF ANDRE HENRY, DECEASED, Plaintiff, ESSEX COUNTY v. DOCKET NO. ESX-L-70-14 48 BRANFORD PLACE ASSOCIATES, LLC, DUBROW MANAGEMENT CORP., ET AL. Defendants. And 48 BRANFORD PLACE ASSOCIATES, LLC, DUBROW MANAGEMENT CORP.; DAVID DUBROW; STEVEN LENTER; CHEN & RICHO CORP.; POPCORN PLAZA; 177 FRANKLIN

STREET ASSOCIATES, LLC, Third Party Plaintiffs, v. CHUBB GROUP OF INSURANCE COMPANIES T/A CHUBB; EXECUTIVE RISK SPECIALTY INSURANCE CO. AND YORK RISK SERVICES CORP. AS AGENTS, UNDERWRITERS, ADMINISTRATORS, AND/OR REPRESENTATIVES OF CHUBB; UNITED STATES LIABILITY INSURANCE GROUP, ET AL. Third Party Defendants. Decided November 18, 2015 By Stephanie A. Mitterhoff, J.S.C. STATEMENT OF FACTS This matter arises from a shooting in a nightclub on May 12, 2012. The nightclub is located at 48 Branford Place, Newark, New Jersey. At the time of the incident, the property was owned by 48 Branford Place Associates, LLC (hereinafter 48 Branford ) and leased to Palladium Associates, LLC (hereinafter Palladium ). During a hip-hop concert at the premises, Plaintiff s decedent, Andre Henry, was shot and killed and co-plaintiff, Benverneuto Webster, was injured by an unknown assailant. Thereafter, Plaintiffs brought suit alleging that the defendant Landlord 48 Branford and the defendant tenant Palladium were negligent in failing to provide adequate security for the event, which was a proximate cause of the decedent s death and of Plaintiff Webster s injuries. 2

At the time of the incident, Defendant Executive Risk Specialty Insurance Company (hereinafter Executive Risk ) had issued a general liability policy of insurance to 48 Branford. Defendant United States Liability Insurance Company (hereinafter USLI ) had issued a policy of insurance to the lessee, Palladium, with an additional insured endorsement for 48 Branford. Both policies disclaimed coverage based on policy exclusions for assault and battery. Accordingly, after this lawsuit was filed, 48 Branford brought a Third-Party Complaint seeking a defense and indemnification from its own carrier, Executive Risk, and from USLI based on its status as an additional insured. Executive Risk brings the within motion for summary judgment, seeking to dismiss the Third-Party Complaint due to the assault and battery exclusion contained in the policy. Executive Risk also seeks to dismiss the claim for an alleged breach of a duty on the part of Executive Risk to ensure that the Third-Party Plaintiffs insurance brokers procured appropriate insurance coverage. USLI brings a cross-motion for summary judgment, incorporating the same facts and arguments raised by Executive Risk. DISCUSSION I. The Summary Judgment Standard Defendants motion for summary judgment is governed by Rule 446-2, which provides that summary judgment should be granted if "the pleadings, depositions, answers to interrogatories and admissions on file, together with 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." R. 446-2. In Brill, the Supreme Court explained that in determining whether a genuine issue of material fact exists, the question is whether the competent evidential materials presented, when viewed in the light most favorable to the nonmoving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in 3

favor of the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Brill explained that [c]redibility determinations will continue to be made by a jury and not the judge, but when the evidence is so one-sided that one party must prevail as a matter of law, the trial court should not hesitate to grant summary judgment. Ibid. (citations and internal quotation marks omitted). II. The Plain Language of USLI S Insurance Policy Precludes Coverage As a starting proposition, the words of an insurance policy are to be given their plain, ordinary meaning. Harleysville Ins. Cos. v. Garitta, 170 N.J. 223, 231 (2001). The New Jersey Supreme Court has stated that the language in an insurance policy underscores the basic notion that the premium paid by the insured does not buy coverage for all... damage but only for that type of damage provided for in the policy. Hardy ex rel. Dowdell v. Abdul-Matin, 198 N.J. 95, 102 (2009). Exclusionary clauses are presumptively valid and are enforced if they are specific, plain, clear, prominent, and not contrary to public policy. Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). If the words used in an exclusionary clause are clear and unambiguous, a court should not engage in a strained construction to support the imposition of liability. Id. at 442. The Appellate Division addressed an assault and battery exclusion in Stafford v. T.H.E. Ins. Co., 309 N.J. Super. 97 (App. Div. 1998). In Stafford, the plaintiffs were patrons at an Atlantic City nightclub known as Club Mirage when gunfire erupted, injuring all three plaintiffs. The shots were fired by another patron and not by Club Mirage employees. At the time of the incident Club Mirage was covered by a commercial general liability policy issued by Defendant T.H.E. Insurance Company. T.H.E. disclaimed coverage due to an assault and battery exclusion 4

for bodily injury claims, and therefore refused to defend and indemnify the nightclub. The exclusion in Stafford stated as follows In consideration of the premium charged, it is agreed that NO coverage of any kind (including but not limited to the cost of defense) is provided by this policy for Bodily Injury and/or Property Damage arising out of or caused in whole or in part by an assault and/or battery. Further NO coverage is provided if the underlying operative facts constitute an assault and/or battery irrespective of whether the claim alleges negligent hiring, supervision, and/or retention against the insured and/or any other negligent action. This endorsement supplements any other provision(s) of the policy to the extent it is not inconsistent therewith. In the event this endorsement is deemed inconsistent with any other provisions of the policy, then this endorsement overrides and replaces that provision. T.H.E. sought summary judgment based on the exclusion after it was joined in the case by the defendant nightclub who sought a declaration that it was entitled to coverage under the policy. The trial judge held that the assault and battery exclusion was ambiguous, citing to a sentence that appeared to say the exclusion only applied to employees, and the insurer appealed. Specifically, the judge stated that the second sentence of the exclusion stating that no coverage would be provided if the underlying operative facts constitute an assault and/or battery irrespective of whether the claim alleges negligent hiring, supervision, and/or retention against the insured and/or any other negligent action, suggested that the exclusion was intended to apply only to employees, such as bouncers. Stafford, supra, 309 N.J. Super. at 101-102. In that regard, the court reasoned that you could not hire, supervise or retain a patron in the legal sense of the word. Finding the exclusion ambiguous as to whether it was intended to exclude claims arising from assaults by employees or by anyone including employees, the court denied T.H.E. s motion for summary judgment. Id. at 102. In reversing the trial court s decision, the Appellate Division looked at the plain language of the policy and the exclusion and concluded, we see no ambiguity whatsoever in the terms of 5

the exclusion. Its language plainly indicates to the average reader that, no matter who commits the assault and battery, no coverage will be provided. Id. at 105. The court noted that the second sentence of the exclusion began with the word further, which means in addition. That the second sentence was not mere surplusage, the court found, was highlighted by its contrapuntal use of the words operative facts and claim. Regardless of how a claim is framed, if the operative facts constitute an assault and battery, the exclusion applies. Id. at 105. The court mused that the second sentence referring to negligent hiring, supervision, and/or retention was intended to explicitly exclude those types of claims which, the court found, are obvious refuges for a plaintiff seeking to avoid the assault and battery exclusion. Regardless, the court noted, the exclusion went further by excluding any other negligent action alleged against the insured where the operative facts arise from an assault and battery. Id. at 105. See also Perez v. El Bamboo Bar/Club, 2007 WL 2081472 (App. Div. 2007)(coverage was properly disclaimed where assault and battery exclusion expressly excluded coverage for acts or omissions in the employment, investigation, supervision, reporting to the authorities or failure to report, or retention of a person for whom any insured is or ever was legally responsible, which results in assault and battery, as well as any act or omission in the prevention or suppression of an assault or battery). In this case, USLI issued Policy CGLCP1557619 to Palladium with an effective date of January 6, 2012. The policy has an additional insured endorsement that names only 48 Branford Associates LLC. The USLI policy contains an assault and battery exclusion which is similar to that in Stafford as containing an explicit exclusion for negligent hiring and supervision. Specifically, USLI s assault and battery exclusion states This insurance does not apply to any claim, demand or suit based on assault or battery or out of any act or omission in connection with the prevention or 6

suppression of any assault or battery including the use of reasonable force to protect persons or property... Further, no coverage is provided for any claim, demand or suit in which the underlying operative facts include assault or battery. This exclusion applies to all bodily injury sustained by any person including emotional distress and mental anguish, arising out of directly or indirectly resulting from in consequence of or in any way involving assault or battery whether alleged, threatened or actual including but not limited to assault or battery arising out of or caused in whole or in part by negligence or other wrongdoing with respect to (a) hiring, placement, employment, training, supervision or retention of a person for whom any insured is or ever was legally responsible. Assault means threat or use of force on another that causes that person to have apprehension of eminent, harmful or offensive conduct, whether or not the threat or use of force is alleged to be negligent, intentional or criminal in nature. Battery means negligent or intentional wrongful physical contact with another without consent that results in physical or emotional injury. [USLI Br., at 5]. The court finds that the plain language of the USLI Assault and Battery Exclusion excludes coverage for the loss in this case. Specifically, as in Stafford, the exclusion states that no coverage is provided for any claim, demand or suit in which the underlying operative facts include assault or battery. As in Stafford, the policy expressly excludes any claim for negligent hiring, placement, employment, training, supervision or retention of a person for whom any insured is or ever was legally responsible where the underlying operative facts constitute an assault and battery. Moreover, the exclusion is broader than that in Stafford as specifying that the exclusion applies regardless of whether the assault or battery is conducted by or with the knowledge of an employee. Although the policy does not define the terms assault or battery, the New Jersey Appellate Division has consistently held that being shot constitutes an assault and battery within the meaning of such exclusionary language. See Stafford, 309 N.J. Super. 97; Perez, supra, 2007 WL 2081472. 7

According to Plaintiff Stephens Complaint, Andre Henry was intentionally and maliciously shot and killed at the concert by an unknown assailant. According to Plaintiff Webster s complaint, he alleges he was assaulted, and specifically, shot with a firearm. See Executive Risk Br., at 6. Therefore, the court concludes that because the operative facts of the Complaints constitute an assault and battery the plain language of USLI s policy excludes coverage for the claims brought against the Third-Party Plaintiffs in this action. III. Defendant Executive Risk s Insurance Policy Does Not Preclude Coverage The other policy in this case as to which Third Party Plaintiff Branford Place seeks coverage is the Executive Risk Specialty Insurance Company Policy number 009 983601900 with a policy period of July 30, 2011 to July 30, 2012, which was issued to 48 Branford Place Assoc., LLC as the named insured. Like the USLI policy, the Executive Risk policy contains an assault and battery exclusion. The language of the exclusion, however, differs. Specifically, the exclusion contained in Executive Risk s policy states as follows This insurance does not apply to any damages, loss, cost or expense arising out of, giving rise to or in any way related to any actual or alleged a. Assault; or b. Battery, Whether provoked or unprovoked, or out of any act or omission in connection with such assault or battery. This exclusion applies regardless of whether such assault or battery is conducted by or with the knowledge or consent of the insured or an employee of the insured. Unlike the exclusion in the USLI policy and the Stafford decision, the Executive Risk policy does not expressly exclude claims for hiring, placement, employment, training, supervision or retention of a person for whom any insured is or ever was legally responsible where the underlying operative facts constitute an assault or battery. Nevertheless, Executive Risk invites the court to overlook that omission arguing that because the claims of negligence 8

relating to Defendants failure to take reasonable care to hire and supervise adequate security personnel in order to provide a safe environment for their patrons are causally connected to the intentional tort claims of assault and battery, those claims should be deemed excluded as arising out of the assault or as acts or omissions in connection with the assault. A similar invitation to thus extend the exclusion was rebuffed by the Appellate Division in L.C.S., Inc. v. Lexington Ins. Co., 371 N.J. Super. 482 (App. Div. 2004). L.C.S. involved an assault on a patron by an employee of a Belmar nightclub, D Jais Bar, Inc. Following the assault, the plaintiff filed a three-count complaint against the bar. Count One alleged an intentional assault by the bar employee. Count Two alleged that the assault constituted the negligent performance of the bar employee s duties. Count Three alleged that Defendant D Jais bar was negligent in the hiring, training, employment and supervision of its bouncers and employees. After suit was instituted, AIG, as the authorized representative of Lexington Insurance Company, D Jais general commercial liability carrier, disclaimed coverage on the basis of an assault and battery exclusion. Specifically, the exclusion read as follows This insurance does not apply to Bodily Injury, Property Damage. Personal Injury, Advertising Injury, or Medical Expenses arising out of assault or battery or out of any act or omission in connection with the prevention or suppression of such acts, whether caused by or at the instigation of or direction of the insured, his employees, patrons or other patrons. (emphasis added). The disclaimer letter indicated that the policy afforded no coverage for Count One because it alleged an intentional assault by Fiore on Cosgrove. Coverage on Count Two was disclaimed on the grounds that the alleged negligence in the performance of Fiore s duties arises from the assault and/or its prevention or suppression. Coverage for Count Three was disclaimed on the basis that D Jais is not afforded coverage, since the negligent hiring, training, employment or 9

supervision of Larry Fiore arises out of the assault or any act or omission in connection with the prevention or suppression of such acts. After settling the case with the Plaintiff, D Jais filed a declaratory judgment action seeking a determination that it was entitled to a defense and indemnity under the policy. The trial judge agreed, holding that the assault and battery exclusion did not exclude coverage for Count Three of the Complaint asserting negligent hiring, training, employment and supervision of plaintiff s bouncers and employees, and the Appellate Division affirmed. In so holding, the court noted that an insurer s duty to defend an action is determined by whether the allegations set forth in the pleadings fall within the purview of the policy language. L.C.S., supra, 371 N.J. Super. at 490, citing Ohio Cas. Ins. Co. v. Flanagan, 44 N.J. 504, 512 (1985)(other citations omitted). It is the nature of the claim for damages and not the nature of the accident or the ultimate outcome on the question of liability that triggers the obligation to defend. L.C.S., supra, 371 N.J. Super. at 490, citing Flanagan, supra, 44 N.J. at 512. If the complaint is ambiguous as to whether the claim is covered under the policy, doubts are resolved in favor of the insured and therefore for coverage. L.C.S, supra, 371 N.J. Super. at 490, citing Central Nat l Ins. Co. v. Utica Nat l Ins. Group, 232 N.J. Super. 467, 470 (App. Div. 1989). The duty to defend is triggered when the complaint states a claim constituting a risk insured against. That duty is not abrogated by the fact that the cause of action may be groundless, false or fraudulent. L.C.S., supra, 371 N.J. Super. at 490. Liability of the insured to the plaintiff is not the criterion; rather, it is the allegation in the complaint of a cause of action that, if sustained, will impose a liability covered by the policy. Ibid. Thus, in resolving whether a defense is owed, the complaint should be laid alongside the policy and the court must determine whether, if the allegations are sustained, the insurer will be required to pay the resulting 10

judgment. Ibid. In conducting this analysis, all doubts should be resolved in favor of the insured. Ibid. The court in L.C.S. distinguished the exclusion at issue from the exclusion in Stafford, noting that the obvious distinction is that while the Stafford exclusion specifically included allegations of negligent hiring and supervision, it is not clear to the average reader whether the Lexington exclusion covers the alleged negligent activity in the third count of the Cosgrove complaint. Id. at 492. It is clear from the court s review of the policy language in the Executive Risk policy that unlike the assault and battery exclusion in Stafford, and like that exclusion in L.C.S., there is no clear indication to the average reader that claims of negligent hiring, supervision, retention or inadequate crowd control would be excluded under the assault and battery exclusion. There being no other provision in the policy that would exclude such claims, and laying the policy alongside the complaint, the court finds that allegations of negligence in the complaint allege a risk that is covered under the policy, giving rise to a duty to defend. Whether the allegations have merit shall be determined through discovery. IV. Neither Insurer Owed a Duty to Ensure that their Insured s Broker Procured Appropriate Coverage Third-Party Plaintiffs allege in their complaint that the named insurers in this case, including Defendant Executive Risk and Defendant USLI, owed them a duty to properly supervise, select and assure that their brokers, agents, representatives or other similar affiliates provide their insured with the necessary coverage to insure the [Third-Party Plaintiffs ] business risks. An insurer s duties to an insured only exist by virtue of the insurance policy that was, in fact, issued. See Mem l Properties, LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 529 (2012). 11

Insurance companies owe no duty to their insureds regarding the procuring of adequate insurance coverage; rather, that is a duty owed by the intermediary broker. Insurance intermediaries in this State must act in a fiduciary capacity to the client [b]ecause of the increasing complexity of the insurance industry and the specialized knowledge required to understand all of its intricacies...the fiduciary relationship gives rise to a duty owed by the broker to the client to exercise good faith and reasonable skill in advising insureds. Triarsi v. BSC Group Servs., LLC, 422 N.J. Super. 104 (App. Div. 2011); citing Weinisch v. Sawyer, 123 N.J. 333, 340, (1991). Here, Third-Party Plaintiffs claims against the named insurance company defendants for breaching a duty owed to them to ensure that adequate coverage was procured must fail, as no such duty is recognized in the State of New Jersey. Accordingly, the Third-Party Plaintiffs claims in Count 10 of the complaint are hereby dismissed. CONCLUSION In conclusion, for the foregoing reasons, USLI s Motion for Summary Judgment is granted in its entirety. That part of Executive Risk s Motion for Summary Judgment seeking a finding that it may deny coverage is denied. Finally, Count 10 of Third-Party Plaintiffs Complaint is dismissed with prejudice. 12