FARMERS MUTUAL FIRE INSURANCE COMPANY OF SALEM COUNTY v. JAMES ZARATE JONATHAN ZARATE JOHN ZARATE JUAN ZARATE ZAMCO INC DAVID PARKS LAURIE PARKS JENNIFER PARKS (2011)

Defendant Flora Mari (Mari) appeals from a trial court order granting summary judgment to Farmers Mutual Fire Insurance Company of Salem County (Farmers), declaring that Mari is not entitled to coverage under her homeowner's insurance policy.   Coverage was sought for a pending negligent parenting and supervision claim against her, brought by defendants David and Laura Parks (the Parks) and the Estate of Jennifer Parks, their daughter (Jennifer).¹  After reviewing the record in light of the contentions advanced on appeal, we affirm, essentially for the reasons set forth in Judge David B. Rand's comprehensive oral opinion of September 1, 2009.

Mari is the mother of James Zarate, who has been found guilty of the murder of Jennifer.   Mari sought coverage under her homeowner's policy, and Farmers brought a declaratory judgment action against Mari, disclaiming coverage and indemnification because James acted willfully or knowingly.   Following extensive oral argument, Judge Rand granted summary judgment to Farmers.

Under the policy issued by Farmers, Mari was the named insured.   The Farmers' policy defined an “[i]nsured” as, “residents of your household ․ your relatives.”   Mari's son James was a resident of her household during the relevant time period and therefore was an insured as defined by the policy.   The policy however contained the following exclusion of coverage provisions:

SECTION II D—LIABILITY NOT INSURED

We do not provide insurance under Section II for any sort of damages, expenses, liability, or loss directly or indirectly, wholly or partially, aggravated by, consisting of, or resulting from the following — even if an occurrence otherwise covered contributes to such concurrently or in any sequence.

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4. ENDANGERMENT OR HARM EXCLUSION

We do not cover bodily injury or property damage, whether or not expected or intended by any insured, that is a consequence of an insured's willfully harmful act or knowing endangerment.

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SECTIONS I AND II—OTHER LOSS AND LIABILITY NOT INSURED

We provide no insurance for any sort of damages, expenses, liability, or loss directly or indirectly, wholly or partially, aggravated by, consisting of, or resulting from the following — even if the loss or an occurrence otherwise covered contributes to such concurrently or in any sequence.

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D. Knowing violation of penal law or ordinance committed by, or with the consent of, an insured;  statutory fines or liability;  exemplary or punitive damages.

The recent decision of the Supreme Court in Villa v. Short, 195 N.J. 15 (2008) interpreted similar exclusionary language.   There, plaintiff was sexually abused when she was a young child by her mildly intellectually disabled uncle.  Id. at 19.   On becoming an adult, she filed suit for damages, naming not only her uncle as a defendant, but her grandparents with whom he resided at the time, contending that they had negligently supervised their son.  Ibid. The grandparents maintained a homeowners' liability policy with Allstate Insurance Company, but Allstate contended there was no coverage for the grandparents on the basis of the following exclusionary clause:

We do not cover any bodily injury or property damage which may reasonably be expected to result from the intentional or criminal acts of an insured person or which is in fact intended by an insured person.

[Id. at 20.]

The Court rejected the grandparents' contention that the policy language was ambiguous, which would entitle them coverage under the well-settled principles that ambiguities in an insurance policy must be construed in favor of the insured.  Charles Beseler Co. v. O'Gorman & Young, Inc., 188 N.J. 542, 545–546 (2006) (quoting Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001));  McClellan v. Feit, 376 N.J.Super. 305, 321 (App.Div.2005), and that exclusionary clauses should be narrowly construed.  Villa, supra, 195 N.J. at 23;  S.T. Hudson Engineers, Inc. v. Penn. Nat'l. Mut. Cas. Co., 388 N.J.Super. 592, 604, (App.Div.2006), certif. denied, 189 N.J. 647, (2007).   In rejecting the insureds' argument, the Court stated that it agreed “that the phrase ‘an insured’ in insurance policy exclusions is not ambiguous․  [T]he policy language also excluded all insureds from coverage for damages caused by the intentional or criminal acts of an insured.”  Villa, supra, 195 N.J. at 26.

The clause at issue in the Farmers' policy is clear and unambiguous;  it excluded coverage for any insured for the willful or knowing acts of an insured.   After a jury trial, James was found guilty of the purposely or knowingly murder of Jennifer.   James's “willfully harmful act or knowing endangerment” of Jennifer would exclude coverage and therefore the homeowners' policy provided no coverage to his mother Mari.

Judge Rand correctly concluded that Mari was not entitled to coverage under the policy issued by Farmers.

The order under review is affirmed.

FOOTNOTES

FN1. For ease of definition, we refer to Jennifer Parks by her first name..  FN1. For ease of definition, we refer to Jennifer Parks by her first name.

PER CURIAM