In Norman International Inc. et al. v. Admiral Insurance Co.(A-24-21/086155) (Decided August 10, 2022), the Supreme Court of New Jersey upheld Admiral Insurance Co.’s denial of coverage to a window coverings company, concluding that the insurer properly relied on a policy exclusion. According to the court, the policy’s broad and unambiguous language makes clear that a causal relationship is not required in order for the exclusionary clause to apply; rather, any claim “in any way connected with” the insured’s operations or activities in a county identified in the exclusionary clause is not covered under the policy.
Facts of Norman International Inc. et al. v. Admiral Insurance Co.
The case centered on an exclusionary clause in a commercial general liability insurance policy issued by Admiral Insurance Company (Admiral) to Richfield Window Coverings, LLC (Richfield). The clause provides that the policy does not cover any liability “arising out of, related to, caused by, contributed to by, or in any way connected with . . . [a]ny operations or activities performed by or on behalf of any insured” in certain counties in New York, including Nassau County.
Richfield sells window coverage products, including blinds, to national retailers like Home Depot and provides retailers with machines to cut the blinds to meet the specifications of the retailers’ customers. Its representatives answer questions the employees may have about the operation of the cutting machines and window covering products. Richfield’s representatives thereafter visit the retailers’ establishments to maintain and repair the machines and replace the cutting blades as needed. Richfield also provides a user manual for retailers’ employees to learn how to use the cutting machine and conducts onsite training for employees. The field sales representative in this case visited the Home Depot store at issue every two to three weeks.
Colleen Lorito, an employee of a Home Depot located in Nassau County, was injured while operating the blind cutting machine. She and her husband filed a civil action against Richfield, asserting claims for product liability, breach of warranty, and loss of spousal services. Admiral denied any obligation to defend or indemnify, asserting the claims were not covered under the policy based on the Designated New York Counties Exclusion.
Richfield filed a declaratory judgment action seeking to compel Admiral to defend it in the Lorito case and, if necessary, indemnify it against any monetary damages awarded to the plaintiffs. While the Law Division granted summary judgment in favor of Admiral, the Appellate Division reversed. It found that “Richfield’s limited activities and operations have no causal relationship to the causes of action or allegations.”
NJ Supreme Court Decision in Norman International Inc. et al. v. Admiral Insurance Co.
The New Jersey Supreme Court reversed, finding that Admiral did not have a duty to defend. According to the court, the Appellate Division’s analysis relied on “too narrow a reading of the exclusionary provision of the policy at issue.” As Judge Fuentes wrote on behalf of the unanimous court:
Its broad and unambiguous language makes clear that a causal relationship between Richfield’s conduct and plaintiff’s injuries is not required in order for the exclusionary clause to apply; rather, any claim “in any way connected with” Richfield’s operations or activities in a county identified in the exclusionary clause is not covered under the policy. Here, Richfield’s operations in Nassau County — an excluded county — are alleged to be connected with the injuries sustained by the Home Depot employee. Admiral has no duty to defend a claim that it is not contractually obligated to indemnify in the event Richfield does not prevail at trial.
In reaching its decision, the New Jersey Supreme Court emphasized that there was no dispute that Lorito was injured in Nassau County, one of the counties listed in the exclusionary clause. Accordingly, the key issue was whether Richfield’s activities at the store were sufficient to trigger the policy’s Designated New York Counties Exclusion.
The New Jersey Supreme Court ultimately concluded the inclusion was triggered and, thus, Richfield’s claim was not covered under the policy and Admiral did not have a duty to defend. In support, Justice Fuentes noted that to focus on a causal relationship reads key language out of the policy because the phrases “in any way connected with” and “related to” do not require any element of causation. According to the court, the fact that Richfield provided the machine to Home Depot is enough to trigger the exclusion because the phrase “in any way connected with” merely requires that the two are linked in some way, even if they are only tangentially connected. “There is clearly a connection between Richfield providing the machine to Home Depot and Lorito’s injuries: had Richfield not provided the machine to the Home Depot, Lorito would not have been using it and would not have accidentally severed her fingers,” he wrote. Justice Fuentes further cited that Richfield employees regularly visited the store to change the blades and fix the machine, and the company provided a manual and trained employees on how to use the machine. “Given those facts, the injuries were also ‘related to’ Richfield’s actions at the store,” he explained.