Judge Susan Claypoole, J.S.C. Burlington County, granted Summary Judgment in favor of National Union Fire Insurance Company of Pittsburgh, Pa., on November 28, 2016, in a Declaratory Judgment action brought by the Willingboro Township School District in New Jersey. Willingboro sought a defense and indemnification for an underlying Law Division action brought by Willingboro's human resources manager asserting gender discrimination and retaliation.
In this matter, National Union was represented by Andrew L. Indeck and Jane Kelsey, Partners with Weber Gallagher in Warren, New Jersey.
The coverage dispute arose because National Union took the position that the human resources manager's claim for which Willingboro sought coverage was not "first made" during the applicable National Union policy period. National Union alleged that the claim was "first made" over a year before the policy went into effect, when the manager filed an Equal Employment Opportunity Commission (EEOC) complaint with the New Jersey Division of Civil Rights. National Union had previously issued a claims-made policy insuring Willingboro for the time frame when the EEOC complaint was filed. Willingboro never reported the EEOC complaint and never sought a defense or indemnity against that claim. The manager ultimately dismissed her EEOC complaint and filed a Law Division employment practices claim during the subsequent National Union policy period. Willingboro submitted the Law Division complaint to National Union seeking a defense and indemnity during the subsequent policy period. National Union disclaimed coverage asserting that in fact the Law Division action was "first made" with the filing of the EEOC complaint.
Discovery in the Declaratory Judgment Action established that the manager's Law Division action alleged identical facts and causes of action when compared to those asserted in the earlier filed EEOC complaint. Willingboro, however, relied upon the case of Bd. of Education of Union Twp. v. NJ Boards Assoc. Ins. Group., 315 N.J. Super. 586 (App. Div. 1998) to argue that the Law Division action constituted a different "claim" than the prior EEOC complaint, as it was premised upon additional or different causes of action.
In granting summary judgment to National Union, the Court distinguished the Bd. of Education decision and determined that inasmuch as the factual assertions of the manager's Law Division Action "were derived from the same, or essentially the same, facts alleged in the EEOC proceeding," that the manager's Law Division employment action was "first made" with her filing of the EEOC complaint. Accordingly, the Court ruled that the Law Division claim fell under the express and unambiguous terms of an exclusion within the National Union policy precluding coverage for claims which were derived from the same, or essentially the same, facts alleged in a previously unreported proceeding. Accordingly, the Court determined that the claims asserted were not covered by the policy because the claim was not "first made" during the applicable policy period and National Union was entitled to Summary Judgment.
Comment: In the context of employment practice claims, Courts throughout the country have ruled that the initiation of EEOC proceedings, and not subsequent court filings for the same or related allegations, controls in determining when a claim is "first made." The addition of new parties and/or causes of action should be insufficient to establish a subsequent lawsuit as a "new claim." There are currently no New Jersey reported decisions that address this issue. The Court did not address this issue head on in its written opinion, but instead relied upon a related and clearly applicable exclusion. However, the Willingboro case established a legal and factual predicate in New Jersey for the proposition that the Law Division action was simply a continuation of the mandatory legal process that began with the filing of the EEOC complaint and therefore was not a new claim entitling the school district to coverage.
For more information, please contact Andrew L. Indeck at aindeck@wglaw.com or 973.854.1064, or Jane Kelsey at jkelsey@wglaw.com or 973.854.1078.