NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0829-06T50829-06T5

HIGH POINT INSURANCE COMPANY

(formerly known as Prudential

Property and Casualty Insurance

Company of New Jersey),

Plaintiff-Respondent,

v.

J.M. (a minor), K.M. (a minor) by

their G/A/L G.M. and C.M., G.M. and

C.M. Individually, and GEORGE VAN DYKE,

Defendants-Appellants,

and

SHERYL VAN DYKE,

Defendant.

_____________________________________________________

Argued October 29, 2007 - Decided

Before Judges Stern, C.S. Fisher and

C.L. Miniman.

On appeal from the Superior Court of New Jersey

Law Division, Somerset County, Docket No. L-751-05.

Stephen T. Sullivan, Jr., argued the cause for

appellants (Keefe Bartels, attorneys; Mr. Sullivan

and John E. Keefe, Jr., on the brief).

Frank Cofone, Jr., argued the cause for

respondent (D'Amico & Cofone, attorneys;

Mr. Cofone, on the brief).

The opinion of the court was delivered by

STERN, P.J.A.D.

Plaintiff, High Point Insurance Company, commenced this action seeking a declaration that it was not obligated to provide a defense or indemnification under a homeowner's policy in a personal injury action filed against its insureds, Sheryl and George Van Dyke. Sheryl was charged with sexual abuse of a minor and her husband, George, was charged with not having prevented it. In a memorandum decision, Judge Harriet Derman granted summary judgment to High Point as to both insureds. Defendants in the declaratory action, the victims, J.M. and K.M., their parents and George Van Dyke, appeal from the resulting judgment. They argue:

I. UNDER THE TERMS OF THE VAN DYKE POLICY, HIGH

POINT WAS REQUIRED TO INDEMNIFY GEORGE VAN

DYKE FOR HIS NON-INTENTIONAL MISCONDUCT.

A. THE TRIAL COURT FAILED TO FOLLOW CONTROLLING

SUPREME COURT PRECEDENT THAT APPLIES A

SUBJECTIVE INTENT TO INJURE TEST TO DETERMINE

COVERAGE.

B. THERE WAS NO EVIDENCE THAT GEORGE VAN DYKE

HAD A SUBJECTIVE INTENT TO INJURE EITHER

JM OR KM; CONSEQUENTLY, THE TRIAL COURT

WRONGFULLY GRANTED HIGH POINT'S MOTION FOR

SUMMARY JUDGMENT.

II. HIGH POINT WRONGFULLY REFUSED TO DEFEND OR

INDEMNIFY SHERYL VAN DYKE FOR ANY OF THE CLAIMS

MADE BY JM OR KM.

A. SHERYL VAN DYKE'S GUILTY PLEA DID NOT

CONCLUSIVELY ESTABLISH AN INTENT TO INJURE

EITHER JM OR KM.

B. HIGH POINT WAS REQUIRED TO DEFEND SHERYL

VAN DYKE UNTIL THE TRIAL COURT BARRED HER

FROM PRESENTING HER DURESS DEFENSE.

I.

The personal injury action, filed by the guardians for J.M. and K.M., alleged that Sheryl Van Dyke "physically, sexually and emotionally molested plaintiff J.M.," and that K.M., his younger sister, suffered "serious and permanent emotional and physical injury[,]" as a result of Sheryl's actions. The complaint also alleged that Sheryl's husband, George, "knew, or should have known of [Sheryl's] aberrant and deviant behavior, and . . . did nothing to prevent [it] or warn the appropriate people[.]"

Counts one and two of the amended complaint alleged negligence on the parts of the Van Dykes; count three alleged "intentional and/or negligent infliction of emotional distress"; count four alleged "assault, battery, sexual assault and battery"; count five alleged losses suffered by the parents as a result of the defendants' acts; and count six alleged willful, "wanton and reckless disregard for the safety and welfare" of the victims. George denied negligence on his part, and denied malice. George filed a cross-claim for contribution and indemnification, and alleged that Sheryl was negligent and her negligence caused the harm of which plaintiffs complained. Sheryl admitted to the relationship with J.M., but denied all other allegations of the complaint. Sheryl also alleged that the "relationship was initiated and forced by J.M. under threats of violence to defendant and her children."

The allegations against Sheryl and George stem from events that occurred between August 1999 and April 2000. On May 19, 2000, Sheryl was arrested for the sexual assault of J.M. and endangering the welfare of K.M. On December 19, 2003, she pled guilty to one count of second-degree sexual assault against J.M. and one count of endangering the welfare of J.M. and K.M. Sheryl was apparently sentenced to probation with time served and required to attend counseling.

The Van Dykes were insured under a homeowner's insurance policy issued by High Point. In response to the complaint filed by J.M. and K.M. and their parents, by letter dated January 27, 2003, High Point informed George that it would defend him under a "reservation of . . . rights" and would "retain an attorney to defend . . . against all claims asserted in the . . . complaint." High Point, however, retained the right to "deny coverage" or "withdraw" its representation if the "facts warrant[ed]." High Point also informed George that it was not "agreeing to indemnify" him or pay any judgment and would not provide coverage for punitive damages. In its letter dated January 26, 2004, High Point further informed George that "[s]hould discovery reveal either active or passive intentional action on your part, we reserve the right to deny coverage and withdraw from your defense." Sheryl's defense was declined by High Point and she obtained independent representation. The Van Dykes settled the case with J.M., K.M. and their parents, individually and as guardians, and this action was commenced to determine High Point's liability.

The policy provides coverage for liability. With respect to "personal liability," it provides:

If a claim is made or a suit is brought against an Insured for damages because of bodily injury, including personal injury, or property damage caused by an occurrence to which this coverage applies we will:

The term "bodily injury" is defined as "bodily harm, sickness, or disease, including required care, loss of services and death that results." The term "occurrence" is defined as "an accident, including exposure to conditions, which results during the policy period in bodily injury or . . . property damage." However, the policy contains an exclusion, and does not "apply to bodily injury or property damage: . . . which is expected or intended by the insured." The policy does not define what is meant by the words "expected or intended."

In her memorandum decision, Judge Harriet Derman granted summary judgment to the carrier, finding that the conduct of both Sheryl and George were not covered by the policy, and that the exclusion applied. As to Sheryl, the judge wrote:

The Policy provides coverage for personal injuries caused by "occurrences," but does not provide any coverage for the intended actions of the insured. Therefore the Policy does not provide coverage for the conduct of Sheryl Van Dyke because her actions were intentional and there is no protection for this kind of behavior under the Policy. Atlantic Employers Ins. Co. v. Tots & Toddlers Pre-School Day Care Ctr., 239 N.J. Super. 276 (App. Div.) [certif. denied, 122 N.J. 147 (1990)] (sexual abuse of children was not covered by liability insurance). In Tots & Toddlers, personal injury lawsuits were filed against an insured day care center, alleging sexual abuse by an employee of the center. The trial judge granted the insurance company's summary judgment motions and found no coverage. The Appellate Court affirmed as to the perpetrator defendant but remanded as to other defendants, holding that their supervision of the alleged perpetrator raised jury questions of negligence. Ibid.

Sheryl Van Dyke sexually molested a minor child. For public policy reasons an objective approach must be utilized when determining whether Sheryl Van Dyke's conduct was intentional because if a subjective approach is used it would be possible to sexually abuse a child and not cause an injury. Id. at 283. The Appellate Division found that to be an "unacceptable conclusion." Ibid. There can be coverage for unintended consequences, but a child abuser, regardless of intent, is not going to be provided insurance coverage in the State of New Jersey. Ibid.

[Citations reformatted.]

As to George, Judge Derman found no coverage, reasoning as follows:

George Van Dyke argues that under the terms of the Policy High Point must indemnify him because his misconduct was non-intentional. He also argues that his behavior should be examined subjectively and because the Policy is ambiguous, he must be afforded coverage. In some circumstances, New Jersey Courts have applied a subjective test to determine whether conduct is excluded by an insurance policy. See Lyons v. Hartford Ins. Group, 125 N.J. Super. 239 (App. Div. 1973), certif. denied, 64 N.J. 322 (1974), Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (1992). These cases, however, are not child molestation cases and do not address the issue before this court.

. . . .

In J.C. v. N.B., 335 N.J. Super. 503 (App. Div. 2000), certif. denied, 168 N.J. 294 (2001), appellant and her husband were defendants in a claim alleging that he had committed sexual abuse on an acquaintance's infant daughter and that appellant was negligent in failing to prevent or warn of the harm. In a third-party complaint, appellant argued that she was entitled to coverage under a homeowner policy issued by respondent insurer. The Appellate Division examined the exact issue before this Court, whether insurance policies are to be interpreted to provide liability coverage for the spouse of a molester, and granted summary judgment in favor of the insurer. The facts of J.C., as well as the facts before this Court, can be easily distinguished from [Tots & Toddlers], as that case involved workers in a school as opposed to a spouse of a child molester. The J.C. court also found that the policy to protect children from sexual molestation was paramount to the policy of protecting marriages. In making this determination, the Court referenced the underlying policy that was the basis of the decision in J.S. v. R.T.H., 155 N.J. 330 (1998), which is to protect children by imposing a duty on a spouse to report suspected molestation by the other spouse regardless of any negative impact it may have on the marriage. The J.C. Court stated:

Judicial insistence on insurance coverage for D.B[.]'s tort would be inconsistent with the policies reflected in the Court's opinion in J.S. The Court recognized that the imposition of liability on a spouse in D.B.'s circumstance would tend to interfere with marital privacy and the insureds' interest in a stable marital relationship, but the Court determined that protecting children from sexual abuse was more important. Without insurance coverage, a spouse whose husband or wife is a child abuser is more likely to carry out the duties imposed by J.S. promptly. Insurance would provide such a spouse with an undue incentive to value the stability and privacy of the marriage over the well-being of the child-victim. J.C., supra, 335 N.J. Super. at 509-510.

Mr. Van Dyke may not have intended harm to the Plaintiff children; the nature of the invasion, however, prevents it from being denominated an accident.

. . . .

The public policy of the State of New Jersey is clear and it does not allow for insurance policies to be interpreted so as to provide liability coverage for spouses of sexual molesters. By allowing coverage, Lyons and Voorhees do not violate the public policy interest in protecting children; the torts in these cases do not involve sexual

exploitation of children. [Tots & Toddlers] did not reject coverage, but it dealt with workplace supervision and surveillance issues of a commercial policy. Mr. Van Dyke can reasonably expect that if he maintains his household steps negligently, his homeowner policy will provide coverage; he cannot reasonably expect that if he failed to protect children exposed to his wife's sexual proclivities and he knew about it or should have known about it, he would have coverage. There is no ambiguity in the Policy. J.C., supra, 335 N.J. Super. at 505.

[Citations reformatted.]

We agree and affirm the judgment substantially for the reasons expressed by Judge Derman. We add the following.

II.

Defendants argue the judge "wrongfully failed to follow long-standing and well-established New Jersey Supreme Court precedent that requires a trial court to apply a subjective test to an insured's intent to injure in determining whether coverage is available." They further assert that under "the proper test," summary judgment "would have been denied