Salem Group v. Oliver

CLIFFORD, J.

dissenting.

With today’s decision the majority elects to march to the beat of a different — and gratingly-out-of-sync — drummer. In adopting the dual- or concurring-causation test for finding a duty to defend under a homeowner’s policy notwithstanding a specific policy exclusion, the Court joins a small handful of states— Illinois, Minnesota, and Wisconsin — that have been lured into finding such a duty by the California Supreme Court’s roundly-*7criticized decision in State Farm Mutual Automobile Insurance Co. v. Partridge, 10 Cal.3d 94, 109 Cal.Rptr. 811, 514 P.2d 123 (1973). See Vanguard Insurance Co. v. Clarke, 438 Mich. 463, 475 N.W.2d 48, 49 & n. 2, 51 n. 5 (Mich.1991). Because I am satisfied that Vanguard, specifically rejected by this Court, see ante at 6, 607 A.2d at 140, closely adheres to New Jersey’s case law and represents the better view, I would follow that opinion. I would therefore reverse, substantially for the reasons stated by Judge Stern in his dissenting opinion in the Appellate Division, 248 N.J.Super. 265, 279, 590 A.2d 1194 (1991).

Newman, the named insured, seeks a judgment requiring his homeowner’s insurer, The Salem Group (Salem), to defend the suit brought against him by Carl Oliver. The fifth count of Oliver’s complaint — the count at issue here — alleges that Newman gave Oliver, then a minor, intoxicating liquor; that Oliver became intoxicated; and that “as the proximate result of plaintiff Carl Oliver’s consumption of alcoholic beverages supplied to him by defendant Dallas Newman, plaintiff Carl Oliver operated an all-terrain vehicle in such a manner as to cause an accident, severely injuring himself.” The question is whether Salem must defend Newman on that count or whether the standard owned automobile exclusion in Newman’s homeowner’s policy applies to relieve the insurer of that duty. The exclusion provides in pertinent part, with refreshing lack of ambiguity, that there is no coverage “for bodily injury arising out of operation or use of motor vehicles owned by an insured.”

As the distinguished dissenting judge below observed:

While the complaint alleges that the consumption of alcoholic beverages caused Oliver to operate the motor vehicle negligently, count five itself acknowledges that those injuries occurred because, and only because, of the accident that resulted from the use or operation of the vehicle. However, even though the serving of alcoholic beverages is an act. independent of and isolated from the subsequent use and operation of the motor vehicle, no amount of “legalese” can change the fact that the injuries that Oliver suffered resulted from, and were caused by, the use and operation of the vehicle. That is so notwithstanding the fact that there may have been a number of contributing causes to the accident, *8which occurred while Oliver was using and operating the ATV. [248 N.J.Super. at 279-80, 590 A2d 1194 (footnote omitted).]

Because Oliver’s injuries arose out of his operation of Newman’s ATV, the policy’s exclusion fits like a glove. As pointed out in Allstate Insurance Co. v. Moraca, 244 N.J.Super. 5, 581 A.2d 510 (App.Div.1990), the exclusion’s requirement that the claimant’s injuries “arise out of the use” of a motor vehicle is satisfied by a showing that the accident or injury “was connected with,” “had its origins in,” “grew out of,” “flowed from,” or “was incident to” the use of an automobile. Id. at 13 n. 5, 581 A.2d 510 (citing Hogle v. Hogle, 167 Conn. 572, 356 A.2d 172 (Conn.1975)). Judge Stern, dissenting below, relied as well on Judge Michels’ comprehensive opinion in Scarfi v. Aetna Casualty & Surety Co., 233 N.J.Super. 509, 559 A.2d 459 (App.Div.1989), which adopts the view that “ ‘[cjoverage does not turn on the legal theory under which liability is asserted, but on the cause of the injury.’ ” Id. at 519, 559 A.2d 459 (quoting Farmers Ins. Group v. Nelsen, 78 Or.App. 213, 715 P.2d 492, 494 (Or.Ct.App.), review denied, 301 Or. 241, 720 P.2d 1280 (Or.1986)).

We need not struggle here with the often-perplexing issue of causation, because the causation inquiry in the insurance context is, mercifully, different from the same inquiry in the tort area. The Michigan Supreme Court in Vanguard, supra, 475 N.W.2d 48, reminds us that in Bird v. St. Paul Fire & Marine Insurance Co., 224 N.Y. 47, 120 N.E. 86, 88 (1918), Judge Cardozo declared that “there is a tendency [in tort law] to go farther back in the search for causes than there is in the law of contracts. Especially in the law of insurance, the rule is that, ‘you are not to trouble yourself with distant causes.’ ” (quoting Ionides v. Universal Marine Ins. Co., 14 C.B.[N.S.] 289, 108 Eng.C.L. 259 (1863)) (citations omitted). Those who view with suspicion any authority that is almost three-quarters of a century old — even if it is Cardozo — may gain comfort from a more recent (and more folksy) statement of the principle:

*9In the heyday of the Wright Brothers, an illustrative quip gained some vogue that it was not the fall from an airplane that was injurious, but the landing. Insurance looks to the landing, tort to the proximate cause of the fall. Tort excludes the landing for purposes of fixing liability, but may go back in the chain of causation until it reaches a broken link. [Bruener v. Twin City Fire Ins. Co., 37 Wash.2d 181, 222 P.2d 833 (Wash.1950).]

Or:

[Pjroximate cause has a different meaning in insurance cases [from its meaning] in tort cases. In tort cases the rules of proximate cause are applied for the single purpose of fixing culpability, and for that reason the rules reach back of both the injury and the physical cause to fix the blame on those who created the situation in which the physical laws of nature operated; in insurance cases the concern is not with the question of culpability or why the injury occurred, but only with the nature of the injury and how it happened. [43 Am.Jur.2d Insurance § 463 (2d ed. 1982) (footnote omitted).]

In this case Oliver sustained injury when, in his intoxicated state, he caused Newman’s ATV to topple over. That is how he was injured. The injury arose out of his operation and use of Newman’s vehicle, and therefore the exclusion applies.

Giving effect to the exclusion in Salem’s policy comports with the economic realities of the situation. Insurance is structured with an eye to avoiding double coverage for the same risk. Salem’s owned-motor-vehicle exclusion is designed to accomplish that desirable end. The law required Newman to carry liability insurance on his ATV. See N.J.S.A. 39:3C-20a. In disregard of that law, he did not have ATV coverage; but that unfortunate lapse on his part should not impel a court to fudge the scheme contemplated by the law. Notably, the exclusion at issue in this case sweeps in not only ATVs owned by the insured but also certain watercraft and aircraft. The purpose of limiting the exclusion to those devices is obvious: alternative insurance is available and required by law; therefore, contrary to the Court’s analytically-convenient but factually-hokum assertion to the contrary, ante at 4, 607 A. 2d at 139, insurance consumers cannot reasonably expect that their homeowner’s coverage will extend to such devices. Their homeowner’s rates reflect that limitation of coverage.

*10I would reverse the judgment of the Appellate Division and remand the cause to the Law Division for entry there of judgment in favor of Salem, without costs.

GARIBALDI, J., joins in this dissent. For affirmance — Chief Justice WILENTZ, Justices HANDLER, POLLOCK, O’HERN and STEIN — 5. For reversal — Justices CLIFFORD and GARIBALDI — 2.