Insurance company off the hook for $750K+ personal injury award
The company prevailed before the New Jersey Appellate Division in its argument that it is not required to cover a personal injury claim because the injured person lived with the policyholder.
Federal Insurance Co. will not have to pay a more than $750,000 judgment after the company prevailed before the New Jersey Appellate Division in its argument that it is not required to cover a personal injury claim because the injured person lived with the policyholder.
Mary Ann Iaeck, the plaintiff in this matter, fell down the steps of a condominium where she lived with the homeowner, Patricia Barnaba. The two women had a verbal lease and Iaeck paid rent to Barnaba. On March 20, 2019, Iaeck fell down a stairway in the condo due to the lights being out, the handrail being loose, and because Barnaba had placed boxes and other things on the steps, according to the opinion.
Iaeck suffered ”injuries to her left leg, including a displaced fracture of her tibia and fibula and compartment syndrome with compartment pressures of ninety,” as a result of the fall. Iaeck had multiple surgeries which left her with permanent scarring, according to the opinion.
Counsel for Iaeck sent a letter to Federal, through which Barnaba held an insurance policy that covered Barnaba’s home and provided personal liability coverage, according to the opinion. The portion of the policy concerning personal liability covered damages Barnaba was legally obligated to pay for personal injuries.
Following an investigation, Federal sent Barnaba a letter denying its obligation to cover her in relation to Iaeck’s injuries by stating that such coverage was excluded under the policy’s ”Covered person’s or dependent’s personal injury” exclusion, the opinion said.
In part, the policy language at issue stated that “[w]e also do not cover any damages for personal injury for which a spouse, a family member, a person who lives with you, or a person named in the Coverage Summary can be held legally liable, in any way, to you or a family member,” the opinion said.
The plaintiff appealed two orders issued by the trial court—first, an order granting summary judgment to Federal based on an exclusion of coverage for persons who live with the policyholder, and second, an order denying Iaeck’s motion for summary judgment in her favor.
“Because the Federal insurance policy is clear and unambiguous in excluding coverage for Barnaba’s liability for plaintiff’s injuries, we affirm,” the per curiam opinion said, which was issued by Judges Robert J. Gilson, Patrick DeAlmeida and Avis Bishop-Thompson.
In December 2019, Iaeck sued Barnaba for negligence in causing her fall. That complaint was later amended to assert direct claims against Federal and sought a declaratory judgement that the policy provided coverage for Iaeck’s injuries, according to the opinion.
The Monmouth County Superior Court entered a default judgment against Barnaba in February 2020. The trial court then conducted a proof hearing in April 2021, and Barnaba did not appear. Ultimately, a judgment of $766,303.07 was entered in favor of Iaeck against Barnaba.
“Even if we read the exclusion narrowly, its plain language applies to plaintiff’s personal injury claims,” the Appellate Division said. “There is no ambiguity. In defining its coverage, the policy clearly states that the coverage applies unless an exclusion applies.”
The opinion called the exclusions “clearly written” and held that it is not contrary to public policy for an insurer to exclude coverage for liability for injuries to people who live with the covered person.
“No New Jersey case has analyzed the meaning of the phrase ‘lives with’ in the context of an insurance exclusion,” the opinion said. “Cases from other jurisdictions have consistently interpreted the phrase ‘lives with’ as unambiguous and plain in its meaning.”
In support of its contention, the Appellate Division cited a U.S. Court of Appeals for the Third Circuit opinion in State Farm Mut. Auto. Ins. v. Quinn (2003); an Eighth Circuit opinion in Stoner v. State Farm Mut. Auto. Ins. (1986); and an Illinois Appellate Court opinion in Coley v. State Farm Mut. Auto. Ins. (1989).
“In short, the Federal policy is clear and unambiguous in excluding from coverage Barnaba’s liability for plaintiff’s personal injuries,” the opinion said. “The trial court, therefore, correctly granted summary judgment to Federal and denied summary judgment to plaintiff.”
Counsel for Iaeck, Matthew G. Bonanno of Rebenack, Aronow & Mascolo, and counsel for Federal, Timothy M. Jabbour and Neli Kharbedia of Tressler, did not immediately respond to requests for comment.