(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).
Argued October 21, l996 -- Decided January 28, 1997
Pollock, J., writing for a unanimous Court.
The issue in this appeal is whether a homeowner's policy covers the vicarious liability of a named
insured arising under N.J.S.A. 18A:37-3 for the intentional vandalism of a public school by the homeowner's
minor son.
Kevin Conway (Conway) is insured under a homeowner's policy issued by Property Casualty
Company (PCC). The policy covers liability for property damage caused by an “occurrence,” which the
policy defines as an “accident.” The policy does not define “accident.” The policy excludes from coverage
bodily injury or property damage, “which is expected or intended by the insured.” It does not state whether
the determination that an event is unexpected or unintended should be from the perspective of all those
covered under the policy or from that of only the named insured.
Conway's fifteen-year old son, acting without parental permission, took some beer from the Conway
residence. After drinking the beer, he and another juvenile broke into the Glen School, which is owned by
the Ridgewood Board of Education and leased to the YMCA of Ridgewood for use as a child care center
and kindergarten. The two juveniles caused damage to the school in the total amount of over $11,000.
Pursuant to a restitution order of the Family Part, Conway paid one-half of the Board's damages, and the
other juvenile's family paid the balance.
Thereafter, the YMCA instituted an action against Conway to recover for damage to its property.
In the complaint, the YMCA claims that Conway is liable under N.J.S.A. 2A:53A-15, which imposes liability
on parents for the acts of a minor child if the parent “fails or neglects to exercise reasonable supervision and
control of the conduct of such infant. . . .” PCC concedes coverage for the claim under that statute.
However, the YMCA also claims that Conway is vicariously liable for his son's acts under N.J.S.A. 18A:37-3,
which holds parents or guardians of minors liable for damage to public or nonpublic school property caused
by those minors.
PCC sought a declaratory judgment that its policy did not cover Conway's liability because his son's
vandalism of the school property was not an “accident” within the meaning of the policy. Conway's son is
covered under the policy as a relative who resided in Conway's household. The Law Division ruled that the
policy did not provide coverage. The Appellate Division reversed.
The Supreme Court granted certification.
HELD: The appropriate balance of the goals of deterrence and compensation is to recognize coverage for
vicarious parental liability under N.J.S.A. 18A:37-3 so parents can compensate the school for damage caused
by their child.
1. In the judicial construction of insurance policies, courts construe ambiguities liberally in favor of the
insured. By failing to define “accident,” PCC has introduced ambiguity into the definition of “occurrence.”
(pp. 4-5)
2. Courts give terms their ordinary meaning. Merely because an act is intentional from the perspective of
one insured, it need not be expected from that of another insured. (p.5)
3. Whether a homeowner's policy covers a parent's vicarious liability under N.J.S.A. 18A:37-3 for a child's
vandalism of a school is an issue of first impression. Decisions from other jurisdiction support the conclusion
that a homeowner's policy covers such liability. (pp. 5-8)
4. Providing coverage for the insured parent or guardian does not violate public policy by subverting the
deterrent effect of vicarious parental liability under N.J.S.A. 18A:37-3 or by contravening the prohibition
against insurance for intentional acts. Rather, recognizing coverage increases the likelihood that funds will
be available to compensate for damage to school property while keeping intact parental responsibility for
damages caused by the negligent supervision of minor children. (pp. 8-9).
The judgment of the Appellate Division is AFFIRMED.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN, GARIBALDI, STEIN and
COLEMAN join in JUSTICE POLLOCK's opinion.
SUPREME COURT OF NEW JERSEY
A-
20 September Term 1996
PROPERTY CASUALTY COMPANY OF MCA,
Plaintiff-Appellant,
v.
KEVIN G. CONWAY, individually and
as guardian ad litem and natural
parent of Ryan Conway,
Defendant-Respondent,
and
THE BOARD OF EDUCATION OF
RIDGEWOOD, NEW JERSEY,
Defendant,
and
YW/YMCA OF RIDGEWOOD, NEW JERSEY, a
charitable organization,
Defendant-Respondent.
Argued October 21, 1996 -- Decided January 28, 1997
On certification to the Superior Court,
Appellate Division, whose opinion is reported
at
284 N.J. Super. 622 (1995).
Alan H. Bernstein argued the cause for
appellant (Brach, Eichler, Rosenberg, Silver,
Bernstein, Hammer & Gladstone, attorneys;
Melissa E. Flax, on the brief).
Kevin G. Conway argued the cause pro se.
John Badagliacca submitted a letter in lieu
of brief on behalf of YW/YMCA of Ridgewood
New Jersey (Garrity, Graham & Favetta,
attorneys).
The opinion of the Court was delivered by
POLLOCK, J.
The issue is whether a homeowner's policy covers the
vicarious liability of a named insured arising under N.J.S.A.
18A:37-3 for the intentional vandalism of a public school by the
homeowner's minor son. The Law Division ruled that the policy
did not provide coverage, but the Appellate Division reversed.
284 N.J. Super. 622 (1995).
We granted certification,
143 N.J. 517 (1996), and now
affirm.
Defendant, Kevin Conway ("Conway" or "the insured") is insured under a homeowner's policy issued by Property Casualty Co. ("PCC"). The policy provides:
DEFINITIONS:
3. "insured" means you and residents of your
household who are:
a. your relatives. . .
5. "occurrence" means an accident, including
exposure to conditions, which results, during
the policy period, in bodily injury or
property damage.
SECTION II - EXCLUSIONS
1. Coverage E -- Personal Liability. . .
do[es] not apply to bodily injury or property
damage:
a. which is expected or intended by the
insured; . . .
SECTION II - CONDITIONS
2. Severability of Insurance. This
insurance applies separately to each insured.
PCC's policy covers liability for property damage caused by
an "occurrence," which the policy defines as an "accident." The
policy, however, does not define "accident." It also does not
state whether the determination that an event is unexpected or
unintended should be from the perspective of all those covered
under the policy or from that of only the named insured.
The facts in the underlying action highlight the
significance of those omissions. On November 29, 1991, Conway's
15-year old son, acting without parental permission, took some
beer from the Conway residence. After drinking the beer, he and
another juvenile broke into the Glen School, which is owned by
the Ridgewood Board of Education (the "Board") and leased to the
YMCA of Ridgewood (the "YMCA"). According to the YMCA, it uses
the property as a child-care center and kindergarten. The two
juveniles caused considerable damage to the school. The Board
and YMCA respectively claimed damages of $1,702 and $9,582.
Pursuant to a restitution order of the Family Part, Conway paid
one-half of the Board's damages, and the other juvenile's family
paid the balance.
The YMCA instituted an action against Conway to recover for
damage to its property. In one count, the YMCA claims that
Conway is liable under N.J.S.A. 2A:53A-15, which imposes
liability on parents for the acts of a minor child if the parent
"fails or neglects to exercise reasonable supervision and control
of the conduct of such infant. . . ." PCC concedes that its
policy provides coverage for the claim under N.J.S.A. 2A:53A-15.
The YMCA also claims that Conway is vicariously liable for
his son's acts under N.J.S.A. 18A:37-3, which provides:
The parents or guardian of any minor who
shall injure any public or nonpublic school
property shall be liable for damages for the
amount of the injury to be collected by the
board of education of the district or the
owner of the premises in any court of
competent jurisdiction, together with costs
of suit.
In the present action, PCC seeks a declaratory judgment that
its policy does not cover Conway's liability because his son's
vandalism of the school property was not an "accident" within the
meaning of the policy. Conway's son is covered under the policy
as a relative who resided in Conway's household. From the son's
perspective, the damage was intended and expected and, therefore,
not an "accident" or "occurrence." From Conway's perspective,
however, his son's vandalism was both unintended and unexpected
and, therefore, would be covered under the policy. The question
is whether we should view the son's acts of vandalism from his
perspective or from that of his father.
One of the most basic precepts governing judicial construction of insurance policies is that courts construe ambiguities liberally in favor of the insured. Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990). Insurers write the policies, and fairness suggests that insureds should receive the
benefit of any ambiguities. By failing to define "accident," PCC
has introduced ambiguity into the definition of "occurrence."
Consequently, in defining "accident" and "occurrence" we shall
construe any ambiguity against the insurer and in favor of the
insured.
Another precept of statutory construction is that courts
give terms their ordinary meaning. Service Armament Co. v.
Hyland,
70 N.J. 550, 556 (1976). That precept suggests that
merely because an act is intentional from the perspective of one
insured, it need not be expected from that of another insured.
Basically, an accident is an unintended or unexpected event.
Consistent with that premise, Webster's Third New International
Dictionary (1976) includes among the definitions of an
"accident": "an event or condition occurring by chance or arising
from unknown or remote causes . . . an unforeseen unplanned event
or condition . . . a [usually] sudden event or change occurring
without intent or volition through carelessness, unawareness,
ignorance, or a combination of causes and producing an
unfortunate result . . . an unexpected happening causing loss or
injury which is not due to any fault or misconduct on the part of
the person injured but from the consequences of which he may be
entitled to some legal relief. . ."
Whether a homeowner's policy covers a parent's vicarious
liability under N.J.S.A. 18A:37-3 for a child's vandalism of a
school is an issue of first impression. See Piscataway Tp. Bd.
of Educ. v. Caffiero,
86 N.J. 308, 321 n. 8 (reserving decision
on the issue), appeal dismissed,
454 U.S. 1025,
102 S.Ct. 560,
70 L.Ed.2d 470 (1981). We gain insight into the proper resolution
by considering analogous decisions of the lower courts. In
Lansco v. Dept. of Envtl. Protection,
138 N.J. Super. 275 (Ch.
Div. 1975), aff'd o.b.,
145 N.J. Super. 433 (App. Div. 1976),
certif. denied
73 N.J. 57 (1977), a third party had tampered with
Lansco's oil tanks, which leaked petroleum on its property and
ultimately into the Hackensack River. The Chancery Division
required Lansco's insurer to cover the damage. Although Lansco
was strictly liable under N.J.S.A. 23:5-28, the court viewed the
intentional act from the perspective of the insured. Id. at 282.
Because a third party caused the leak, it was not expected or
intended by Lansco. Ibid. Thus, Lansco was entitled to
coverage. Similarly, in Howell v. Ohio Cas. Ins. Co.,
130 N.J.
Super. 350, 354 (App. Div. 1974), the Appellate Division required
a homeowner's insurer to provide coverage for a wife's loss to
her personal property after her husband intentionally set fire to
their home. The court ruled that the husband was responsible for
the arson and that his fraud should not be imputed to his wife.
Ibid. The implication of those opinions in this matter is that
the intentional act of the insured's child should not preclude
coverage for the insured's vicarious liability.
Decisions from other jurisdictions support the conclusion
that a homeowner's policy covers the vicarious liability of
insureds under a parental liability for the intentional acts of the insured's minor son. In Arenson v. National Auto. and Cas. Ins. Co., 286 P.2d 816, 817 (Cal. 1955), the named insured's minor son started a fire that damaged a school. The son, as a resident of the insured's household, satisfied the definition of an "insured." Id. at 818. In holding that the father was entitled to coverage, the court noted that he had not participated in the son's act. Ibid. Relying on Arenson, the Texas Court of Civil Appeals ruled that a homeowner's insurance covered a named insured when his son, an added insured, damaged property of another. Walker v. Lumbermens Mut. Cas. Co., 491 S.W.2d 696, 698-99 (Tex. Civ. App. 1973). The court held that the policy covered the father's vicarious statutory liability for the damage caused by his son. Id. at 699. Similarly, in Unigard Mut. Ins. Co. v. Argonaut Ins. Co., 579 P.2d 1015, 1017 (Wash. Ct. App. 1978), an eleven year-old boy set fire to a school building. The court held that the policy's exclusion for intentional acts did not exclude the parents from coverage. Id. at 1019. Although both the boy and parents were "insureds," the policy provision between the insurer and the parents was separable from that between the insurer and the boy. Ibid. Hence, the parents were entitled to coverage for liability arising out of alleged negligent supervision of their son. Ibid. See also White v. LeGendre, 359 So.2d 652 (La. Ct. App. 1978) (holding mother covered under homeowner's policy for vicarious
statutory liability arising from son's assault and battery on a
minor child).
A badly divided Ohio Supreme Court reached the contrary
conclusion that a homeowner's policy did not cover a father's
statutory liability for damage inflicted by his son on the
property of another. Randolph v. Grange Mut. Cas. Co.,
385 N.E.2d 1305 (Ohio 1979). A three-judge plurality reasoned that
although the liability may have been unexpected or accidental,
the damage was not. Id. at 1306. Therefore, the damage did not
constitute an "accident" or "occurrence" within the meaning of
the policy. Id. at 1307. We find unpersuasive the Ohio Court's
emphasis on the expected nature of the damage as distinguished
from the unexpected nature of the liability. The better-reasoned
cases, in our opinion, are those from California, Louisiana,
Texas, and Washington. See discussion supra, N.J. at
(slip op. at 6-7).
We also find unpersuasive PCC's contention that providing
coverage for the insured would violate public policy by
subverting the deterrent effect of vicarious parental liability
under N.J.S.A. 18A:37-3 and by contravening the prohibition
against insurance for intentional acts. N.J.S.A. 18A:37-3 has
two goals: compensating school districts for their losses and
deterring delinquent behavior. Caffiero, supra, 86 N.J. at 316.
Implicit in the goal of deterrence is the premise that parents
play a decisive role in raising their children. Neither the
terms nor history of the statute, however, indicate that the
Legislature believed that permitting parents to insure against
vicarious liability would subvert the goal of deterrence. A
child who causes damage to school property remains subject to
parental discipline and criminal charges. Recognizing coverage
for the parents, moreover, does not lead to coverage for the
child who intentionally damages school property. A child,
however, is an unlikely source of funds to pay for damage.
Permitting parents to insure against their vicarious liability
increases the likelihood that funds will be available to
compensate for damage to school property. Denying the insurance
could expose parents, many of whom may be doing the best they
can, to financial ruin. Parents, moreover, remain liable under
N.J.S.A. 2A:53A-15 for the negligent supervision of children who
willfully or maliciously destroy the property of another. Here,
PCC concedes coverage for the negligent-supervision claim. We
conclude that the appropriate balance of the goals of deterrence
and compensation is to recognize coverage for vicarious parental
liability under N.J.S.A. 18A:37-3 so parents can compensate the
school for damage caused by their child. See Voorhees v.
Preferred Mut. Ins. Co.,
128 N.J. 165, 181 (1992) (balancing
prohibition against insurance for willful wrongdoing against
compensation of victim).
The judgment of the Appellate Division is affirmed.
CHIEF JUSTICE PORITZ and JUSTICES HANDLER, O'HERN,
GARIBALDI, STEIN and COLEMAN join in JUSTICE POLLOCK's opinion.
NO. A-20 SEPTEMBER TERM 1996
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court
PROPERTY CASUALTY COMPANY OF MCA,
Plaintiff-Appellant,
v.
KEVIN G. CONWAY, individually
and as guardian ad litem and
natural parent of Ryan Conway,
Defendant-Respondent,
and
THE BOARD OF EDUCATION OF
RIDGEWOOD, NEW JERSEY,
Defendant,
and
YW/YMCA OF RIDGEWOOD, NEW
JERSEY, a charitable organization,
Defendant-Respondent.
DECIDED January 28, 1997
Chief Justice Poritz PRESIDING
OPINION BY Justice Pollock
CONCURRING OPINION BY
DISSENTING OPINION BY