Memorial Properties, LLC v. Zurich American Insurance
210 N.J. 512
| N.J. | 2012Background
- Memorial Properties and Mt. Hebron own and operate Liberty Grove Memorial Gardens (cemetery/crematory) and faced seven underlying suits by decedents' families in NJ and NY alleging illegal harvesting of remains 2003–2005.
- Plaintiffs claimed the remains were tampered with before cremation and tissue/bone were unlawfully removed for sale, with discovery of the scheme in 2006.
- Memorial and Mt. Hebron claimed they received bodies in sealed containers and were unaware of tampering; they were not charged in criminal investigations.
- They sought defense and indemnification under two policies: Assurance (2003, bodily injury including mental anguish) and Maryland (2006, bodily injury but with an improper handling exclusion).
- Trial court granted summary judgment for insurers; Appellate Division affirmed; the case was certified and proceeded to this Court.
- Court held neither policy covers the NJ/NY claims; occurrence timing and the exclusionary clause preclude coverage and defense duties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do the policies cover damages for emotional distress discovered in 2006? | Memorial argues acts in 2003 caused liability and 2006 discovery should not bar coverage. | Assurance coverage triggers at the time of actual damage (2006 discovery); Maryland exclusion controls. | No coverage under Assurance; occurrence in 2006 and outside policy period. |
| Does Maryland's improper handling exclusion bar all claims? | Claims include negligence not strictly improper handling; exclusion should not blanket all theories. | Exclusion encompasses disarticulation, improper handling, and related acts; covers entire suit. | Yes, exclusion bars coverage for all seven claims. |
| Did Maryland have a duty to defend given potential covered theories? | Some theories might be covered despite exclusions. | Exclusion eliminates covered claims; no duty to defend. | No duty to defend; Maryland properly declined. |
| What is the governing occurrence rule for these policies? | Occurrence aligns with wrongful acts in 2003. | Occurrence is when damages were sustained (2006). | Occurrence occurred in 2006; outside Assurance period; no coverage. |
| Are the claims arising from emotional distress outside the policy periods under NJ law? | New Jersey/ New York plaintiffs plead damages rooted in initial handling of remains. | Damage arises upon discovery in 2006; outside policy window. | Claims fall outside policy periods; no coverage. |
Key Cases Cited
- Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18 (N.J. 1984) (occurrence timing tied to when damage occurs, not when act occurs)
- Yarrington v. Camarota, 138 N.J. Super. 398 (App. Div. 1971) (occurrence concept tied to damage; later affirmed)
- Deodato v. Hartford Ins. Co., 143 N.J. Super. 396 (Law Div. 1976) (negligence timing vs. occurrence in insurance context)
- Flomerfelt v. Cardiello, 202 N.J. 432 (N.J. 2010) (duty to defend and contract interpretation principles)
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (N.J. 1992) (contract interpretation and ambiguities in insurance policies)
- Am. Motorists Ins. Co. v. L-C-A Sales Co., 155 N.J. 29 (N.J. 1998) (interpretation of exclusions and coverage boundaries)
- Princeton Ins. Co. v. Chunmuang, 151 N.J. 80 (N.J. 1997) (validity and construction of exclusionary clauses)
- Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530 (N.J. 1990) (narrow construction of exclusions when unambiguous)