EVANSTON INSURANCE COMPANY v. CROCILLA et al
OPINION. Signed by Judge Noel L. Hillman on 12/26/2012. (tf, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
EVANSTON INSURANCE COMPANY,
t/a A-WAY TO RELAX,
Civil A. No. 12-101(NLH)(AMD)
MICHAEL A. GOROKHOVICH
200 LAKE DRIVE EAST
CHERRY HILL, NJ 08002
Attorneys for plaintiff
GLEN J. LEARY
LAW OFFICES OF GLEN J. LEARY
1510 BLACKWOOD CLEMENTON RD
BLACKWOOD, NJ 08012
Attorney for defendant
HILLMAN, District Judge
This matter has come before the Court on the parties’ crossmotions for summary judgment in this insurance coverage dispute.
For the reasons expressed below, plaintiff’s motion will be
granted, and defendant’s motion will be denied.
Plaintiff, Evanston Insurance Company, filed this
declaratory judgment action, claiming that it does not have a
duty to defend or indemnify defendant, Elisabeth Crocilla and her
massage therapy business, A-Way to Relax, in a lawsuit brought by
Mia Wernega against Crocilla and her business in New Jersey
Superior Court, Gloucester County on September 23, 2011.
state court action, Wernega claims that after she began to
receive massage therapy by Crocilla in March 2009, Crocilla
improperly touched her in a sexually explicit manner on two
The first incident allegedly occurred on December 25,
2009, when Crocilla came to Wernega’s home and “made sexual
advances that culminated in Defendant Crocilla touching
[Wernega’s] private parts.”
The second incident allegedly
occurred on December 28, 2009, when Wernega had another massage
therapy session with Crocilla, and during this session, “Crocilla
massaged [Wernega’s] body for approximately 40 minutes before
removing her covering,” and then “improperly touched [Wernega] in
a sexually explicit manner.”
Wernega claims that these incidents
constituted battery, sexual assault, intentional infliction of
emotional distress, professional negligence, general negligence,
and negligent infliction of emotional distress.
When Crocilla’s alleged conduct occurred, she was covered
under a master policy of insurance issued to the Associated
Bodywork and Massage Professional by Evanston Insurance Company.1
Crocilla contends that A-Way To Relax is also covered
under the insurance policy as she is one-in-the-same as her
business. Evanston argues that only Crocilla is covered.
After Crocilla was served with Wernega’s complaint, she informed
Evanston of the complaint, and sought defense and
Evanston denied Crocilla’s claim and her appeal
of that denial on the basis of four exclusions in the insurance
Evanston then brought this declaratory judgment action
against Crocilla, who has lodged a cross-claim against Evanston
for bad faith.
Both parties have now moved for summary judgment.
This Court has jurisdiction over this matter pursuant to 28
U.S.C. § 1332 because there is complete diversity of citizenship
between the parties and the amount in controversy exceeds
Summary Judgment Standard
Summary judgment is appropriate where the Court is satisfied
that the materials in the record, including depositions,
documents, electronically stored information, affidavits or
declarations, stipulations, admissions, or interrogatory answers,
demonstrate that there is no genuine issue as to any material
fact and that the moving party is entitled to a judgment as a
matter of law.
Celotex Corp. v. Catrett, 477 U.S. 317, 330
Because the Court finds that the insurance policy provides no
coverage for the Wernega complaint, the issue is immaterial to
resolution of this matter.
(1986); Fed. R. Civ. P. 56(a).
If review of cross-motions for
summary judgment reveals no genuine issue of material fact, then
judgment may be entered in favor of the party deserving of
judgment in light of the law and undisputed facts.
Foods Corp. v. Romeo Jr., 150 F.3d 298, 302 (3d Cir. 1998)
Evanston’s declaratory judgment claim against
The Evanston insurance policy issued to Crocilla contains
provisions that exclude coverage for any “claim or suit” “arising
out of or caused in whole or in part by” (1) the actual or
alleged physical contact of a sexual nature, (2) assault and/or
battery, (3) any dishonest, fraudulent, criminal or malicious
act, or (4) violation of any statute or governmental rule or
Pursuant to these exclusions, Evanston contends that
Crocilla is not entitled to a defense or indemnification under
the insurance policy relating to the state court suit against
As a primary matter, in New Jersey, insurance contracts are
subject to special rules of interpretation because they are
contracts of adhesion.
Zacarias v. Allstate Ins. Co., 775 A.2d
1262, 1264 (N.J. 2001) (citations omitted).
When there is
ambiguity, the insurance policy should be interpreted to “comport
with the reasonable expectations of the insured, even if a close
reading of the written text reveals a contrary meaning.”
Even in the absence of ambiguity, however,
“[u]nder certain circumstances, . . . the plain meaning of policy
language may be overcome if it conflicts with the reasonable
expectations of the insured.”
Am. Motorists Ins. Co. v. L-C-A
Sales Co., 713 A.2d 1007, 1013 (N.J. 1998) (citation omitted).
With regard to insurance policy exclusions, the New Jersey
courts have held that they must be narrowly construed and that
the burden is on the insurer to bring the case within the
Id. (citation omitted).
“Nevertheless, [New Jersey
courts] adhere to the principle that an insurance policy should
generally be interpreted ‘according to its plain and ordinary
meaning,’ so as not to disregard the ‘clear import and intent’ of
a policy exclusion.”
Id. (citations omitted).
If an insurance
policy’s terms are capable of supporting two distinct outcomes as
to whether there is coverage, however, “the subject language must
be interpreted in favor of the insured.”
Mazzilli v. Accident &
Cas. Ins. Co. of Winterthur, Switzerland, 170 A.2d 800, 803 (N.J.
“Courts are bound to protect the insured to the full
extent that any fair interpretation will allow.”
As for the duty to defend, it is broader then the duty to
Rosario ex rel. Rosario v. Haywood, 799 A.2d 32, 40
(N.J. Super. Ct. App. Div. 2002) (citation omitted).
insurer’s duty to defend an action against its insured is
measured by the allegations contained in the complaint.
v. CNA Ins. Companies, 588 A.2d 864, 867-68 (N.J. Super. Ct. App.
Div. 1991) (citing Ohio Cas. Ins. Co. v. Flanagin, 210 A.2d 221
(N.J. 1965)) (other citations omitted).
The duty to defend arises when the complaint states a
claim constituting a risk falling within the purview of
the policy language. If the pleadings state facts
bringing the injury within the coverage of the policy,
the insurer must defend regardless of the insured’s
ultimate liability to the complainant. The nature of
the damage claim, rather than the actual details of the
accident or the ultimate liability of the insurer,
determines whether the insurer is obliged to defend.
Id. (citations omitted).
Moreover, “if a complaint includes
multiple or alternative causes of action, the duty to defend will
attach as long as any of them would be a covered claim and it
continues until all of the covered claims have been resolved.”
Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255 (N.J. 1992).
In this case, Crocilla does not necessarily disagree that
Wernega’s state court complaint against her contains claims that
are excluded from coverage under her insurance policy.
argues, however, that Evanston must provide a defense and
indemnification because (1) the complaint contains covered
claims, such as professional and general negligence, (2) it is
unclear how Wernega’s alleged injuries occurred, as they may have
arisen out of covered conduct, such as draping or massaging, as
opposed to excluded conduct, (3) she has not been found to have
committed any criminal sexual act, and (4) the policy exclusion
relating to criminal activity is ambiguous.
To support her position, Crocilla primarily relies upon
Flomerfelt v. Cardiello, 997 A.2d 991 (N.J. 2010).
Flomerfelt, the plaintiff sustained injuries after she overdosed
on alcohol and drugs during a party hosted by the defendant at
his parents’ home while they were out of town.
complaint asserted that her injuries were caused by the
defendant, who provided her with drugs and alcohol, served her
alcohol when she was visibly intoxicated, and failed to promptly
summon the rescue squad when she was found, unconscious, on the
porch the next day.
The defendant tendered to his parents’ home
owners’ insurer the defense of the plaintiff’s complaint, and
sought indemnification under the policy.
The insurer declined to
provide a defense or indemnification, however, because the home
owners’ policy excluded claims “[a]rising out of the use, . . .
transfer or possession” of controlled dangerous substances.
Flomerfelt, 997 A.2d at 994.
The New Jersey Supreme Court was tasked with determining
when an insurer is obligated to provide a defense to complaints
resting on multiple claimed causes, where some claimed causes
would provide coverage while others would be excluded.
discussing various cases and tests, the court found that after
laying the complaint and the policy side-by-side, it appeared
that some claims potentially could not “arise out of” the
plaintiff’s drug use.
Id. at 1005-06 (explaining, “If, for
example, the finder of fact were to conclude that alcohol
ingestion, either in the context of the social host serving
plaintiff when she was visibly intoxicated, or in combination
with a delay in summoning aid, was the cause for the injuries, or
set the chain of events in motion, and that there was not a
substantial nexus between drugs at the party and the injuries,
the claim would fall within the coverage of the policy and would
not be barred by the exclusion.”).
The Court therefore concluded
that the duty to defend continues as long as there is a
potentially covered claim, and the insurer was obligated to
provide the defendant with a defense.2
Id. at 1006.
In this case, Crocilla argues that because Wernega claims
The Court then noted that the record did not permit it to
resolve the question of the insurer’s duty to indemnify. The
[I]n those thorny situations in which there are some
covered theories coupled with alternatives in which the
claim would not be covered, the insurer has several
options available to it. They include opting to defend
under a reservation of rights, declining to do so,
preferring to await the outcome and to reimburse its
insured if the finder of fact decides the injury did
not “arise out of” drug use, as we have defined it, or
electing to litigate the coverage issue in advance of a
trial on plaintiff’s claim, disputing the proof of
causation against its insured first. The duty to
defend, however, is not dependent upon whether there is
a finding that the claim is covered; instead it
attaches because our analysis of the exclusion
demonstrates that there are potentially covered claims.
Flmoerfelt, 997 A.2d at 1006.
that her injuries “arise out of” Crocilla’s alleged professional
negligence as a masseur (a covered claim) and also from her
alleged sexual assault and battery (excluded claims), Evanston
should provide her with a defense, and ultimately indemnify her
should it be determined that Crocilla did not engage in any
Evanston, however, argues that all of
Wernega’s claims “arise out of” Crocilla’s alleged improper
sexual contact with Wernega, and despite the claim for
professional negligence, sexual contact is the sole predicate act
for all claims.
Thus, Evanston argues that there are no multiple
causes of Wernega’s injuries that can be severed into covered and
Instead, Evanston argues that the alleged
conduct of Crocilla is clearly excluded under the insurance
policy, and it therefore is not obligated to provide either a
defense or indemnification.
The Court agrees with Evanston.
When the Wernega complaint
is placed side-by-side to the Evanston insurance policy, it is
clear that none of Wernega’s claims are covered by the policy.
The policy provides that any “claim or suit” “arising out of or
caused in whole or in part by” “the actual or alleged physical
contact of a sexual nature” is excluded from coverage.
incidents that give rise to Wernega’s claims both entail
Crocilla’s alleged sexually inappropriate touching of Wernega’s
Wernega’s entire complaint therefore “arises out
of” “the actual or alleged physical contact of a sexual nature”
Thus, even if only this one exclusion applies, it
encompasses the whole of Wernega’s claims, regardless of the
various legal theories of recovery she advances.4
because Wernega’s entire complaint is subject to a policy
exclusion, Evanston is entitled to judgment in its favor on its
declaratory judgment claim against Crocilla.
We note here the admonishment of the New Jersey Supreme
Court that an insurer’s indiscriminate use of the “arising out
of” language without further definition will render that phrase
ambiguous and justify a judicial gloss of a narrower exclusion in
so-called concurrent causation cases. Even if this were a
concurrent causation rather than a single causation case and we
applied the narrower definition here, it is clear that all of
Wernega’s claims “originate in,” “grow out of” and have a
‘substantial nexus” with the same excluded act of an intentional
sexual assault. See Flmoerfelt, 997 A.2d at 1004-5.
To prove professional negligence, a plaintiff must show
that the defendant professional breached the applicable standard
of care. See Gardner v. Pawliw, 696 A.2d 599, 608 (N.J. 1997).
In her professional negligence count, Wernega ostensibly seeks to
prove that Crocilla’s alleged touching of her private parts
deviates from the standard of care applicable to massage
therapists. Thus, even though Wernega advances a covered claim
in title, it constitutes an excluded claim in substance. The
same can be said for the complaint’s “General Negligence” and
“Negligent Infliction of Emotional Distress” claims. The only
difference between the general negligence claim and the
professional negligence claim is that the former drops the
allegation that Crocilla’s was a licensed professional. Both are
predicated on the factual allegation that Crocilla “[took]
advantage of Plaintiff and her body.” Similarly, the negligent
infliction of emotional distress claim centers on Crocilla’s
alleged “touching of Plaintiff’s private parts,” conduct alleged
to be “outrageously inappropriate” and “deliberate, willful, and
reckless.” In sum, however couched, each of the claims in the
complaint arise out of an allegation of a sexual assault or
unwanted touching of a sexual nature.
Crocilla’s bad faith claim against Evanston
Crocilla claims that Evanston’s refusal to accept her tender
in the state court action and the denial of her claim for defense
and indemnification was done in bad faith.
The duty of good
faith and fair dealing pervades insurance contracts, and the
prospective insured must not misrepresent or conceal information
concerning risks entailed in coverage under an insurance policy.
Sears Mortg. Corp. v. Rose, 634 A.2d 74, 84 (N.J. 1993)
An insurance company, as the dominant
party, has an even greater obligation than the insured to act in
good faith--it must not put “technical encumbrances or hidden
pitfalls” in the way of unsophisticated customers that would
undermine their “reasonable expectations.”
Under New Jersey law, a plaintiff must establish two primary
elements to prove bad faith in the insurance context: 1) that the
insurer lacked a “fairly debatable” reason for its failure to pay
a claim, and 2) that the insurer knew or recklessly disregarded
the lack of a reasonable basis for denying the claim.
John Hancock Mutual Life Ins. Co., 118 Fed. Appx. 594, 599 (3d
Cir. 2004) (citing Pickett v. Lloyd's, 621 A.2d 445, 454 (N.J.
Because the Court has found that Crocilla is not entitled to
a defense or indemnification under the insurance policy, it
cannot be found that Evanston acted in bad faith in denying her
Even though insurance policy exclusions should be narrowly
construed, their import and intent cannot be disregarded.
plain and ordinary reading of the policy exclusions at issue in
this case clearly shows that at least one exclusion encompasses
all the claims brought against Crocilla by Wernega in state
Accordingly, Evanston is entitled to judgment in its
favor on its claim that it is not obligated to provide a defense
or indemnification to Crocilla, and it is entitled to judgment on
Crocilla’s bad faith claim.
An appropriate Order will be
Date: December 26, 2012
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?