(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).
and Selective Insurance Company (A-60-01)
Argued March 25, 2002 -- Decided June 13, 2002
COLEMAN, J., writing for a majority of the Court.
The issue in this appeal is whether it is the filing of criminal charges against an officer or employee of a board of education, or the acquittal or dismissal of the charges, that triggers coverage under an insurance policy issued to satisfy the board’s statutory obligation to indemnify such employees when criminal charges are disposed of in their favor.
On June 19, 1996, David Ford, a teacher employed by the Borough of
Florham Park Board of Education (Board), was arrested and charged with sexual assault
and reckless endangerment of four female students. He was acquitted of all charges
on March 26, 1999. Ford then demanded reimbursement from the Board in the
amount of $487,831.08 for counsel fees and legal expenses. The Board sought indemnification
from Selective Insurance Company (Selective) and Utica Mutual Insurance Company (Utica).
Selective provided coverage from July 1, 1993 to July 1, 1996, twelve days
after Ford’s arrest. The Utica policy was in force from July 1, 1996
to July 1, 1999, and was thus in effect at the time of
Ford’s acquittal. Both policies define the event triggering coverage by reference to the
Board’s statutory obligation, N.J.S.A. 18A:12-20, 16-6 and 16-6.1. Utica denied coverage because its
policy was not in effect at the time Ford was arrested and charged.
Selective denied coverage because its policy had expired before Ford’s acquittal. Consequently, the
Board filed a declaratory judgment action against both carriers.
Concluding that the language in both policies was ambiguous as to the triggering
event, and relying on Meeker Sharkey Associates, Inc. v. National Union Fire Insurance
Co.,
208 N.J. Super 354 (App. Div. 1986), the trial court held that
the Utica policy bore the risk because it was the policy in force
when Ford was acquitted. Meeker held that under N.J.S.A. 18A:16-6.1 the triggering even
for insurance coverage is an acquittal or final disposition in favor of the
employee.
The Appellate Division reversed, concluding that the event triggering coverage was when the
Board’s officer or employee was actually damaged; i.e., when Ford was arrested and
charged. The Appellate Division further held that Meeker was inapplicable because that case
incorrectly focused on when the insured, the Board, and not the complaining party,
was actually damaged. Instead, the Appellate Division relied on Paterson Tallow Co. v.
Royal Globe Insurance Cos.,
89 N.J 24 (1982), in which the Court held
that coverage was triggered by the filing of the complaint and not by
the favorable termination of the proceedings.
The Supreme Court granted Selective’s petition for certification.
HELD: The event that triggers coverage under an insurance policy issued to satisfy
a board of education’s statutory obligation to indemnify its officers and employees is
the acquittal or other disposition of the criminal charges in favor of the
officer or employee.
1. It is undisputed that Ford is entitled to reimbursement by the Board
for counsel fees and expenses incurred in defending the criminal charges. Read collectively,
N.J.S.A. 18A:12-20, 16-6 and 16-6.1 require that a board of education defray such
costs when the criminal charges: (1) arose out of and in the course
of the performance of the duties of that person, and (2) resulted in
a final disposition in favor of such person. An acquittal is clearly a
final disposition that is favorable to any criminal defendant. (Pp. 6-8)
2. While a court should not write for the insured a better policy
than the one purchased, any ambiguities in insurance policies must be resolved in
favor of the insured. Indemnification obligations generally accrue only on an event fixing
liability, rather than on preliminary events that eventually may lead to liability but
have not yet occurred. In this case, because both policies incorporate by reference
the statutory language in N.J.S.A 18A:16-6.1 and related provisions, and applying Bower v.
Board of Education of East Orange, 149 N.J. 416 (1997), the language of
the policies is not ambiguous. (Pp. 9-11)
3. The Appellate Division’s reliance on Paterson Tallow is misplaced. In that case,
the insured initiated the filing of the criminal charges in the context of
a malicious prosecution claim, and it is reasonable to use that conduct as
the triggering event. However, in a statutory indemnification case, the triggering event is
not the filing of the criminal charges. The applicable analysis is that found
in Meeker Sharkey: The triggering event under the indemnification for criminal defense expenses
statutes is the favorable disposition of all criminal charges against the Board employee
or officer. (Pp. 11-15)
Judgment of the Appellate Division is REVERSED.
JUSTICE LONG has filed a separate dissenting opinion, expressing the view that what
is covered in an indemnity policy is an occurrence and that the covered
occurrence in this matter, as in Paterson Tallow, was the institution of a
criminal prosecution.
CHIEF JUSTICE PORITZ and JUSTICES STEIN, VERNIERO, LaVECCHIA and ZAZZALI join in JUSTICE
COLEMAN’S opinion. JUSTICE LONG filed a separate dissenting opinion.
SUPREME COURT OF NEW JERSEY
A-
60 September Term 2001
BOARD OF EDUCATION OF THE BOROUGH OF FLORHAM PARK,
Plaintiff,
v.
UTICA MUTUAL INSURANCE COMPANY,
Defendant-Respondent,
and
SELECTIVE INSURANCE COMPANY,
Defendant-Appellant.
Argued March 25, 2002 – Decided June 13, 2002
On certification to the Superior Court, Appellate Division, whose opinion is reported at
344 N.J. Super. 558 (2001).
Sharon Handrock Moore argued the cause for appellant (Gebhardt & Kiefer, attorneys; Ms.
Moore and Arthur D. Fialk, on the briefs).
Francis X. Garrity argued the cause for respondent (Garrity, Graham, Favetta & Flinn,
attorneys; Rudolph G. Morabito, of counsel and on the brief).
The opinion of the Court was delivered by
COLEMAN, J.
This appeal involves a dispute between two insurance companies over what triggers coverage
for criminal defense indemnification expenses under their respective policies for board of education
employees. We are required to decide whether it is the filing of criminal
charges against an officer or employee of a board of education, or the
acquittal or dismissal of the charges, that triggers coverage under an insurance policy
issued to satisfy the board’s statutory obligation to indemnify such employees when criminal
charges are disposed of in their favor. The trial court found that the
triggering event was the favorable disposition, here an acquittal. The Appellate Division reversed,
holding that the triggering event was the filing of the criminal charges. Bd.
of Educ. of Florham Park v. Utica Mut. Ins. Co.,
344 N.J. Super. 558, 566 (2001). We disagree, and hold that the triggering event is the
acquittal or other disposition of the criminal charges in favor of the officer
or employee of the board of education.
On June 19, 1996, David Ford, a teacher employed by the Borough of Florham Park Board of Education (Board), was arrested and charged with sexually assaulting and recklessly endangering the welfare of four of his female students. A jury acquitted Ford of all charges on March 26, 1999. Thereafter, he demanded that the Board reimburse him pursuant to N.J.S.A. 18A:16-6.1 for $487,831.08 in counsel fees and expenses incurred in successfully defending the criminal action. In response to that demand, the Board sought coverage from Selective Insurance Company (Selective) and Utica Mutual Insurance Company (Utica) for its obligation to Ford.
At the time of Ford’s arrest, the Board was insured by Selective under a policy that provided coverage from July 1, 1993 to July 1, 1996. Thus, the Board had coverage under Selective’s policy until twelve days after Ford’s arrest. The Selective policy included the following endorsement:
With respect to the operation of any college or school by you or on your behalf:
5. Subject to its terms, conditions and exclusions, this Coverage Part shall conform to
the terms of the New Jersey compiled statutes -- Title 18A:12-20, 18A:16-6 and
18A:16-6.1, their supplements, revisions and amendments.
From July 1, 1996 to July 1, 1999, the Board was insured under
Utica’s policy. An endorsement to that policy also refers to the relevant statutes
and provides:
A. NEW JERSEY LAWS
Such insurance as is afforded by the Policy applies to the obligations imposed
upon you by N.J.S.A. 18A:12-20; 18A:16-6; and if permitted by law, 18A:16-6.1.
Consequently, both policies define the triggering event by reference to the Board’s statutory
obligation.
In a letter dated May 12, 1999, Utica disclaimed coverage on the ground
that its policy was not in effect when Ford was criminally charged on
June 19, 1996. Shortly thereafter, Selective informed the Board on June 4, 1999
that “[c]overage under the Endorsement . . . allows for reimbursement of legal
fees/expenses of employees of the Board of Education who are found not guilty
in a criminal trial.” The letter also stated that “coverage is available for
Mr. Ford’s criminal attorney fees under . . . the Endorsement . .
. for reimbursement of legal fees/expenses of Mr. Ford as he was found
not guilty of sexual misconduct in a criminal trial.” Selective denied coverage, however,
for any legal expenses that were incurred after its policy expired, and also
reserved the right to deny all coverage.
Faced with denial of coverage by the carrier on the risk when the
criminal charges were filed and the carrier on the risk when Ford was
acquitted on the charges, the Board filed the present declaratory judgment action against
both carriers. Following a hearing, the trial court determined that Utica was responsible
for coverage of the Board’s liability to indemnify Ford for the legal fees
and expenses incurred by him because Utica was on the risk when Ford
was acquitted. The trial court concluded that the language of both policies was
ambiguous in that neither policy explicitly sets forth the triggering event for coverage
of the Board’s liability under N.J.S.A. 18A:16-6.1. Nonetheless, the court felt bound by
Meeker Sharkey Associates, Inc. v. National Union Fire Insurance Co.,
208 N.J. Super. 354, 358 (App. Div. 1986), which held that under N.J.S.A. 18A:16-6.1 the triggering
event for insurance coverage is an acquittal or final disposition in favor of
the employee.
The Appellate Division reversed, concluding that the triggering event for coverage pursuant to
the controlling statutes is when the Board’s officer or employer is actually damaged.
The court found that Ford actually was damaged when the criminal charges were
filed against him, and that at that time “damages started to accrue, although
damages are contingent on a successful disposition in his favor.” Bd. of Educ.
of Florham Park, supra, 344 N.J. Super. at 565, 566. The panel distinguished
Meeker Sharkey as “incorrectly focus[ing] on the time when the insured, i.e., the
board, and not the complaining party, was actually damaged. As a result, it
should not have been followed here.” Id. at 566. The panel also found
Meeker Sharkey inapplicable because that panel interpreted an ambiguous endorsement to provide coverage
on the date of acquittal. Id. at 566-67. Finally, the panel concluded that
the “final disposition” language of N.J.S.A. 18A:16-6.1 does not address the triggering event
for coverage, but rather provides the time when the defendant in a criminal
action is entitled to reimbursement from the Board. Id. at 567. Accordingly, Selective
was directed to pay Ford’s reasonable counsel fees and expenses pursuant to N.J.S.A.
18A:16-6.1.
We granted Selective’s petition for certification,
171 N.J. 44 (2002), and now reverse.
Selective argues that the Appellate Division erred in failing to follow the holding in Meeker Sharkey that an acquittal is a triggering event for coverage under N.J.S.A. 18A:16-6.1. Selective maintains that “[w]hat is required for the indemnification obligation upon the Board is only that the criminal defendant and the conduct have the necessary employment relationship, and that the criminal charges be resolved favorably to the employee.” Therefore, according to Selective, “[n]othing is triggered until that final resolution” because the “controlling factor . . . in defining the essence of the indemnification claim and in imposing that requirement on the Board is defined by the term of N.J.S.A. 18A:16-6.1, as is the policy coverage which references the statute.”
It is undisputed that Ford is entitled to reimbursement by the Board for his counsel fees and expenses incurred in defending the criminal charges based on N.J.S.A. 18A:16-6.1. The insurance policies refer to that statute as well as N.J.S.A. 18A:16-6 and N.J.S.A. 18A:12-20 in defining what triggers coverage. Those statutes provide:
Whenever any civil or administrative action or other legal proceeding has been or shall be brought against any person holding any office, position or employment under the jurisdiction of any board of education, including any student teacher or person assigned to other professional pre-teaching field experience, for any act or omission arising out of and in the course of the performance of the duties of such office, position, employment or student teaching or other assignment to professional field experience, the board shall defray all costs of defending such action, including reasonable counsel fees and expenses, together with costs of appeal, if any, and shall save harmless and protect such person from any financial loss resulting therefrom . . . . Any board of education may arrange for and maintain appropriate insurance to cover all such damages, losses and expenses.
[N.J.S.A. 18A:16-6.]
Should any criminal or quasi-criminal action be instituted against any such person for
any such act or omission and should such proceeding be dismissed or result
in a final disposition in favor of such person, the board of education
shall reimburse him for the cost of defending such proceeding, including reasonable counsel
fees and expenses of the original hearing or trial and all appeals. .
. . Any board of education may arrange for and maintain appropriate insurance
to cover all such damages, losses and expenses.
[N.J.S.A. 18A:16-6.1.]
Whenever a civil, administrative, criminal or quasi-criminal action or other legal proceeding has
been or shall be brought against any person for any act or omission
arising out of and in the course of the performance of his duties
as a member of a board of education, and in the case of
a criminal action such action results in final disposition in favor of such
person, the board of education shall defray all costs of defending such action,
including reasonable counsel fees and expenses, together with costs of appeal, if any,
and shall save harmless and protect such person from any financial loss resulting
therefrom. . . . Any board of education may arrange for and maintain
appropriate insurance to cover all such damages, losses and expenses.
[N.J.S.A. 18A:12-20.]
Read collectively, those statutes obligate a board of education to defray all costs
incurred by an officer or employee of the board in defending criminal charges
filed against the person where those charges: (1) arose out of and in
the course of the performance of the duties of that person, and (2)
resulted in a final disposition in favor of such person. Clearly, an acquittal
is a final disposition that is favorable to any criminal defendant. N.J.S.A. 18A:16-6.1
specifically authorizes a board of education to purchase “appropriate insurance to cover all
such damages, losses and expenses” the board may be obligated to pay. Rather
than specifying what event triggers coverage under their respective policy, each carrier relied
on the foregoing statutes to describe the scope and purpose of the insurance
provided.
“It is well-settled that insurance policies are contracts of adhesion and, as such,
are subject to special rules of interpretation.” Fairlawn Indus., Ltd. v. Gerling Am.
Ins. Co.,
342 N.J. Super. 113, 117 (App. Div. 2001) (citing Longobardi v.
Chubb Ins. Co. of N.J.,
121 N.J. 530, 537 (1990)). In interpreting the
language of an insurance contract, a court must first attribute to the words
their plain and ordinary meaning. Zacarias v. Allstate Ins. Co.,
168 N.J. 590,
595 (2001). Indeed, “[i]n the absence of any ambiguity, courts ‘should not write
for the insured a better policy of insurance than the one purchased.’” Gibson
v. Callaghan,
158 N.J. 662, 670 (1999) (quoting Walker Rogge, Inc. v. Chelsea
Title & Guar. Co.,
116 N.J. 517, 529 (1989)). However, where the policy
language reveals ambiguity, a court must resolve that ambiguity in favor of the
insured. Voorhees v. Preferred Mut. Ins. Co.,
128 N.J. 165, 175 (1992). In
such circumstances, an insurance contract is interpreted to effectuate the reasonable expectations of
the insured. Gibson, supra, 158 N.J. at 671.
Under the statutory language incorporated by reference into the policies, we must decide
whether the institution of criminal charges or acquittal on those charges triggers coverage.
Indemnification obligations generally accrue only on an event fixing liability, rather than on
preliminary events that eventually may lead to liability but have not yet occurred.
Holloway v. State,
125 N.J. 386, 399 (1991); see also United N.Y. Sandy
Hook Pilots Ass’n v. Rodermond Indus.,
394 F.2d 65, 75 (3d Cir. 1968)
(stating that cause of action for indemnification accrues when liability is fixed by
judgment against or payment by indemnitee); Wolverine Ins. Co. v. Tower Iron Works,
Inc.,
370 F.2d 700, 703 (1st Cir. 1966) (stating that cause of action
for indemnification accrues when indemnitee suffers loss by paying injured person); McGlone v.
Corbi,
59 N.J. 86, 94-95 (1971) (stating that cause of action for indemnification
accrues at time judgment is rendered against indemnitee for underlying claim); Adler’s Quality
Bakery, Inc. v. Gaseteria, Inc.,
32 N.J. 55, 81 (1960) (same).
Because both policies incorporate by reference the statutory language concerning the Board’s reimbursement
obligation, we conclude that the language of the policies is not ambiguous. In
Bower v. Board of Education of East Orange,
149 N.J. 416, 423 (1997),
this Court explained that
N.J.S.A. 18A:16-6.1, read in connection with the complimentary provisions of N.J.S.A. 18A:16-6, prescribes
a two-part standard for determining whether board of education employees are entitled to
indemnification of counsel fees and expenses incurred in the defense of criminal charges:
(1) any act or omission on which the criminal charges are based must
arise ‘out of and in the course of the performance of the duties’
of the position held by the employee, and (2) the charges must either
be dismissed or result in a final disposition favorable to the employee.
Based on our holding in Bower, the right of a board of education
employee to reimbursement or indemnification accrues when the criminal charges result in an
acquittal or otherwise are dismissed.
The Appellate Division’s reliance on Paterson Tallow Co. v. Royal Globe Insurance Cos.,
89 N.J. 24 (1982), is misplaced. In that case, the former employer-insured filed
criminal charges against a former employee. Id. at 26. While those charges were
pending, the former employer purchased an insurance policy that provided coverage for malicious
prosecution. Id. at 26-27. During the coverage period under the policy, the former
employee was acquitted of the criminal charges. Id. at 27. The former employee
then sued his former employer alleging malicious prosecution. Ibid. When the insurance carrier
denied coverage, the former employer-insured initiated a declaratory judgment action. Id. at 28.
The insurer sought to dismiss the declaratory judgment action on the ground that
all of the acts alleged to constitute malicious prosecution occurred prior to issuance
of the policy. Ibid. The trial court granted the motion and the Appellate
Division affirmed. Id. at 28-29. This Court also affirmed and held that the
“offense of malicious prosecution is substantially completed once the [malicious prosecution] complaint is
filed, and the favorable termination of the maliciously prosecuted proceedings is merely a
prerequisite to the filing of the suit.” Id. at 34.
Unlike the present case, Paterson Tallow was the insured and its own conduct
triggered its liability when Paterson Tallow initiated criminal charges against an employee. In
that respect, it is reasonable to use the action or conduct of the
insured in filing the criminal charges as the “triggering event” for liability for
malicious prosecution. In a statutory indemnification case, however, the “essence” of the claim
is not the filing of the criminal charges. The Board cannot and does
not control the filing of the criminal charges. Instead, the Board’s liability is
triggered by the event specified in the statutes, namely a final disposition of
those charges in favor of the Board’s employee. Furthermore, the Court in Paterson
Tallow recognized the unique nature of a malicious prosecution claim, stating that although
in general an occurrence for purposes of insurance coverage depends on when the
complaining party is actually damaged, that analysis is “inapplicable to a malicious prosecution
claim because ‘damage begins to flow from the very commencement of the tortious
conduct——the making of the criminal complaint.’” Id. at 31 (quoting Muller v. Fuel
Oil Co. v. Ins. Co. of North Am.,
95 N.J. Super. 564, 579
(1967)).
The reasoning adopted by the Appellate Division in Meeker Sharkey is instructive. In
that case, a board of education employee was indicted on May 6, 1980
on ten counts of misconduct in office and unlawfully obtaining school district funds.
Meeker Sharkey, supra, 208 N.J. Super. at 356. The board of education’s policy
was amended on July 1, 1981 to cover the liability imposed upon the
board of education by N.J.S.A. 18A:16-6 and N.J.S.A. 18A:16-6.1. The board of education
employee was acquitted of all charges at the conclusion of two trials on
July 23, 1981 and December 16, 1981. Approximately $28,000 in counsel fees and
expenses were sought as reimbursement for the criminal defense from the carrier. Ibid.
The trial court granted summary judgment to the carrier because the indictment had
been filed almost fourteen months prior to the effective date of the insurance
coverage. Id. at 357.
In determining whether the policy covered the board of education during the relevant
times, the Meeker Sharkey court distinguished Paterson Tallow. Ibid. Although recognizing that in
both cases “an indictment occurred prior to the date of issuance of the
policy and the acquittal occurred during the term of coverage,” the court explained
that the coverage question in Paterson Tallow related to a civil damages suit
for malicious prosecution and not an “N.J.S.A. 18A:16-6.1 reimbursement claim.” Ibid. The court
further distinguished Paterson Tallow on the ground that “the tort of malicious prosecution
is sui generis.” Ibid. (citing Muller, supra, 95 N.J. Super. at 576). The
court then noted that
“[a]s a general rule the time of the ‘occurrence’ of an accident within
the meaning of an indemnity policy is not the time the wrongful act
was committed but the time when the complaining party was actually damaged.”
[Ibid. (quoting Muller, supra, 95 N.J. Super. at 578).]
Finally, the court pointed out that “the applicable tenets of insurance contract interpretation
require coverage where the policy language will support two meanings.” Id. at 358.
In that respect, the court recognized that the terms
“occurrence” and “offense” . . . may suggest a pre-July 1, 1981 coverage
trigger date. However, the endorsement incorporated the statutory language of N.J.S.A. 18A:16-6.1 which
requires dismissal or “final disposition” of a criminal action to trigger the obligation
to reimburse for counsel fees——and that occurred post-July 1, 1981 and during the
policy year.
[Ibid.]
The court reasoned that the reasonable expectations of the average insured required coverage
because of the “‘final disposition’ language of the statute incorporated into the policy.”
Ibid. The court concluded that
[t]he statute itself provides the most workable and readily ascertainable date to fix
liability and coverage, to wit: dismissal (of the criminal action) or final disposition
(in favor of the Board’s employee) including all appeals. Since the acquittals in
this case occurred during the policy year and constituted final dispositions, there was
coverage.
[Id. at 359.]
The board of education therefore incurred no obligation to indemnify or reimburse until
the acquittal. Ibid.
We agree with the analysis in Meeker Sharkey and hold that the triggering
event under the indemnification for criminal defense expenses statutes is the favorable disposition
of all criminal charges against the Board employee or officer. When multiple policies
refer to the same statutes to define the triggering mechanism that is based
on when the insured incurs an obligation to indemnify or reimburse an employee,
the “continuous trigger” doctrine is inapplicable and only one carrier is liable. See
Owens-Illinois, Inc. v. United Ins. Co.,
138 N.J. 437, 451 (1994). Here, because
Ford incurred no reimbursable expenses prior to his acquittal, only Utica’s policy is
triggered. At the time of the acquittal the Selective policy had expired and
no reimbursable expenses had been incurred during the time that policy was in
effect.
The judgment of the Appellate Division is reversed.
CHIEF JUSTICE PORITZ and JUSTICES STEIN, VERNIERO, LaVECCHIA, and ZAZZALI join in JUSTICE COLEMAN’s opinion. JUSTICE LONG filed a separate dissenting opinion.
SUPREME COURT OF NEW JERSEY
A- 60 September Term 2001
BOARD OF EDUCATION OF THE BOROUGH OF FLORHAM PARK,
Plaintiff,
v.
UTICA MUTUAL INSURANCE COMPANY,
Defendant-Respondent,
and
SELECTIVE INSURANCE COMPANY,
Defendant-Appellant.
LONG, J. dissenting.
I would affirm the judgment of the Appellate Division insofar as it concludes
that the triggering event for coverage was the filing of the criminal complaint
against Ford, and would adopt the reasoning of Paterson Tallow over that of
Meeker Sharkey. In my view, the outcome of Meeker Sharkey was driven by
the fact that there was insurance coverage only on the date of the
acquittal, not on the date the criminal charges were filed. Under the rules
governing the interpretation of ambiguous insurance contracts, the outcome in favor of accessing
the only available insurance coverage was foreordained.
On the contrary here, as Judge Petrella, writing for the Appellate Division, observed:
[T]he Florham Park Board was covered by Selective at the institution of the
criminal action, and Utica at its termination. The Board had the requisite insurance
coverage. The only question for the court was which party would have to
pay the indemnification. . . .
[T]he “final disposition” language of N.J.S.A. 18A:16-6.1 does not address the triggering event
for coverage. Rather, it concerns when the defendant in a criminal action is
entitled to reimbursement from the Board.
Put another way, the acquittal requirement is merely a prerequisite to an action by an employee for indemnification.
The coverage issue is entirely distinct. What is covered in an indemnity policy is an occurrence. The covered occurrence in Paterson Tallow was the institution of a criminal prosecution. So it is here. The ultimate vindication of Ford, through his acquittal, merely provided evidence of what had been the case all along, that he was innocent and had incurred expenses in defending himself that legitimately belonged to the Board. Insurers insure occurrences and not knowledge of occurrences. It was from the indictment that damage flowed to Ford and spilled over on the Board of Education.
Although, as the divergent opinions of the majority and the Appellate Division reflect, the legalities may be debatable, what is not debatable is the policy effect of the majority’s holding. First, it places Boards of Education at peril of non-renewal by the company that is insuring a Board at the time criminal charges are filed. Second, it creates a disincentive for other insurers to step in and provide coverage. Third, it places such an insurer at the distinct advantage of setting premiums based not on the actuarial possibility that a criminal charge will be brought during its policy term but on the knowledge that one has already been brought.
The policies at issue are ambiguous regarding the insurance trigger and the statutes they incorporate do not resolve the ambiguity. Although superficially, the majority ruled in favor of the Board, the existence of two insurers at the pivotal points guaranteed coverage in any event. The notion that an ambiguous policy is to be interpreted in a light most favorable to the insured and against the drafter should have encompassed consideration of the difficult situation the majority’s opinion has set up for Boards of Education. For those reasons, I dissent.
SUPREME COURT OF NEW JERSEY
NO. A-60 SEPTEMBER TERM 2001
ON CERTIFICATION TO Appellate Division, Superior Court
BOARD OF EDUCATION OF THE
BOROUGH OF FLORHAM PARK,
Plaintiff,
v.
UTICA MUTUAL INSURANCE
COMPANY,
Defendant-Respondent,
and
SELECTIVE INSURANCE COMPANY,
Defendant-Appellant.
DECIDED June 13, 2002
Chief Justice Poritz PRESIDING
OPINION BY Justice Coleman
CONCURRING OPINION BY
DISSENTING OPINION BY Justice Long
CHECKLIST