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The full case caption appears at the end of this opinion. PER CURIAM The issue in this appeal is whether certain policies of insurance provide coverage for acts of sexual harassment that form the basis for an employment discrimination suit. The lawsuit was initiated by Suzanne Miller, a factory worker employed by Artex Knitting Mills, Inc. (Artex). Miller filed a thirteen-count complaint against Artex and John McClure, her immediate supervisor at Artex, and others, seeking damages for alleged acts of sexual harassment committed by McClure against her during her employment. Three insurance policies are at issue. The first is a workers’ compensation/employers’ liability policy issued by New Jersey Re-Insurance Co. (New Jersey Re-Insurance) to Artex; the second is a comprehensive general liability (CGL) policy issued by Atlantic Mutual Insurance Co. (Atlantic) to Artex; and the third is a homeowner’s policy issued by Huron Insurance Co. (Huron) to McClure. McClure filed a third-party action against those insurers to compel them to provide coverage for him for the acts alleged in Miller’s suit. The complaint filed by Miller alleged in detail a number of vulgar sexual comments directed to her by McClure, offensive touchings by McClure in a sexual manner and the threatening of her by McClure with a gun, in addition to other events. Miller asserted that she suffered physical, psychological and emotional damage as a result of McClure’s acts. On McClure’s third-party suit, the trial court granted summary judgment to New Jersey Re-Insurance under it’s workers’ compensation and employers’ liability policy issued to Artex, concluding that as an Artex employee, McClure was not entitled to coverage. Under the policy’s definition, Artex itself was an insured as the identified employer. The trial court also concluded that McClure was not entitled to coverage under the CGL policy issued by Atlantic to Artex and that the homeowner’s policy issued to McClure by Huron did not provide coverage because Miller’s claims against McClure were excluded under the provision excluding claims arising out of sexual molestation or mental abuse as well as under the exclusion for claims arising out of or in connection with the insured’s business. The Appellate Division granted McClure’s motion for leave to appeal the orders entered by the trial court. The Appellate Division affirmed the trial court’s judgment. The court agreed that under the workers’ compensation and employers’ liability policy issued to Artex, Artex, but not McClure, came within the policy’s definition of “an insured.” With regard to the CGL policy, the court found that although coverage existed for Artex employees such as McClure for liability due to personal injury caused by acts of the employee within the scope of employment by Artex, because Miller accused McClure of sexual harassment during the course of her employment by Artex and while supervised by McClure, there was no coverage for McClure under the policy because of the policy’s provision that “no employee is an insured for bodily injury or personal injury… to a co-employee while in the course of his or her employment.” Also, coverage for McClure was held to be excluded by the provision that there was no coverage for “harassment, humiliation, discrimination or other employment-related practices, policies, acts or omissions.” The Appellate Division also concluded that the CGL policy did not cover McClure for the following acts alleged by Miller in her complaint: restraining Miller from leaving a bathroom while he attempted to kiss her and restraining her in his car; threatening Miller with a gun and shooting it in the air; and negligently subjecting Miller to an unreasonable risk of emotional disturbance. The court concluded there was no coverage under the CGL policy because the complaint alleged acts by McClure that would be excluded because they occurred within the scope of his employment, and if he was not acting within the scope of his employment, then he was not “an insured” under the CGL policy. Finally, under McClure’s homeowner’s policy, the Appellate Division agreed in part with the trial court that the business exclusion of the policy applied to bar coverage for those of Miller’s claims that were actionable because of her employment relationship with McClure. The claims of quid pro quo and hostile work environment sexual harassment in violation of New Jersey’s Law Against Discrimination would be excluded under the homeowner’s coverage provisions. The court noted, however, that the gun episode and the alleged offensive touchings of Miller by McClure, acts not dependent on the employment relationship, would not be excluded as a business claim. The sexual molestation exclusion of the homeowner’s policy would, as the trial court found, apply to the claims based on sexual touching. Miller’s allegation of an invasion of privacy due to McClure’s sexually-oriented comments and questions was held to be excluded from coverage under the “mental abuse” portion of the exclusion. Alternatively, the Appellate Division saw the egregious and reprehensible conduct alleged in the complaint as barred by the homeowner’s policy’s exclusion of claims for “injury… expected or intended by the insured.” HELD: The judgment of the Appellate Division is AFFIRMED for the reasons expressed in the opinion below. Neither the workers’ compensation/employers’ liability policy, the comprehensive general liability policy, nor the homeowner’s policy provides coverage for the acts of sexual harassment alleged in the complaint. CHIEF JUSTICE PORITZ and JUSTICES O’HERN, GARIBALDI, STEIN, COLEMAN, LONG and VERNIERO join in this opinion.
SUZANNE MILLER V. JOHN MCCLURE SUPREME COURT OF NEW JERSEY A- 60 September Term 1998 SUZANNE MILLER, Plaintiff, v. JOHN MC CLURE, Individually and as a Supervising Employee of ARTEX, Defendant and Third Party Plaintiff-Appellant, and ARTEX KNITTING MILLS, INC., (“ARTEX”); ARTHUR POTTASH, Individually and in his capacity as an officer, shareholder, director and manager of ARTEX and in his capacity as the Supervisor of Plaintiff and McClure; BERNARD GERBARG, Individually and in his capacity as an officer, shareholder, director and manager of ARTEX and in his capacity as the Supervisor of Plaintiff and McClure; and JOHN DOE COMPANY, XYZ CORPORATION and ABC PARTNERSHIP, fictitious names, representing any and all entities owned and controlled by Pottash and Gerbarg and which employed McClure and Miller; jointly, severally and in the alternative, Defendants, v. ATLANTIC MUTUAL INSURANCE COMPANY, NEW JERSEY RE INSURANCE COMPANY and HURON INSURANCE COMPANY, Third Party Defendants Respondents. Argued November 29, 1999– Decided December 22, 1999 On certification to the Superior Court, Appellate Division, whose opinion is reported at ___ N.J. Super. ___ (1998). Gregory D. Saputelli argued the cause for appellant (Obermayer, Rebmann, Maxwell & Hippell, attorneys; Kimberly D. Sutton, on the brief). Wendy L. Mager argued the cause for respondent Atlantic Mutual Insurance Company (Smith, Stratton, Wise, Heher & Brennan, attorneys; Ms. Mager and Susan L. Olgiati, on the brief). Robert M. Smolen argued the cause for respondent Huron Insurance Company (Swartz, Campbell & Detweiler, attorneys). Michael J. Marone argued the cause for respondent New Jersey Re Insurance Company (McElroy, Deutsch & Mulvaney, attorneys; John T. Coyne, on letter in lieu of brief). PER CURIAM The judgment is affirmed, substantially for the reasons expressed in the opinion of the Appellate Division, reported at ___ N.J. Super. ___ (1998). CHIEF JUSTICE PORITZ and JUSTICES O’HERN, GARIBALDI, STEIN, COLEMAN, LONG, and VERNIERO join in this PER CURIAM opinion.
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