An automobile insurance carrier has been ordered to pay $1.5 million to settle the claim of a teenager paralyzed in a car crash after consuming alcoholic beverages at the policyholder’s home.

Palisades Safety and Insurance Management Corp. refused to cover a claim against party host Joanna Curcio of Toms River, claiming it was not obligated to pay for claims not related to the policyholder’s auto.

But Ocean County Superior Court Judge Craig Wellerson ruled, in Vrskovy v. Curcio, that the company wrongly denied coverage and that the claim concerning the party was covered under terms of a $1 million, general liability endorsement of the auto policy.

Wellerson held on Oct. 9 that the settlement between Curcio and the disabled teen, which totaled $2 million, was reasonable, says plaintiffs lawyer David Freeman of Mazie, Slater, Katz & Freeman in Roseland.

In earlier decisions, he found the circumstances of the case followed those of Griggs v. Bertram, 88 N.J. 347 (1982), where the Supreme Court held that when an insurer breaches its coverage obligation, the insured may enter into a direct settlement with the injured plaintiff, allowing her to protect her assets while permitting the plaintiff to pursue his claims against the insurer.

Vlastimil Vrskovy was 18 when he attended the November 2009 party celebrating the 19th birthday of Curcio’s daughter, Jessica. Another guest, Lanette Datoli, then 19, became intoxicated and had a car crash while driving home. Vrskovy was on his way to lend her assistance when he, too, had an accident.

Vrskovy became paralyzed below the waist, has limited use of his arms, and uses a wheelchair. He suffers from sexual dysfunction, neurogenic bowel and bladder, impaired sensation and neuropathic pain. His blood-alcohol concentration after the crash was .205, more than 2 ½ times the legal limit.

Vrskovy sued Curcio and her boyfriend, Robert Wynne, claiming both attended the party and provided alcoholic beverages for the underage guests. They denied being present, but several guests at the party said otherwise in depositions. Wynne settled for $500,000, and Harleysville Insurance, Curcio’s homeowner’s insurance carrier, tendered her $500,000 policy.

Curcio had a $1 million auto policy with Palisades, but it took the position that it did not cover Vrskovy’s claim. Barbara Sheridan, a lawyer representing Palisades, said the language “couldn’t be clearer” and added that a declaration page indicated that the excess liability coverage was limited to claims for the policyholder’s cars.

Vrskovy agreed to settle with Curcio for $2 million and to release her from liability so that her personal assets would not be at risk. She in turn assigned him the right to seek relief under Griggs.

Wellerson found the Palisades policy language “could be clearer” and said “there’s nothing in the optional excess liability coverage language that would indicate to any reasonable person that their excess coverage is limited to providing only coverage for automobiles that were operated under their ownership or direction.”

Wellerson said the policy language “doesn’t say personal excess liability coverage for automobile accidents. It says personal excess liability coverage. When you go to the definition of personal excess liability coverage, it says any liability which you are faced with involving bodily injury to a third person, to another.”

Palisades also argued the $2 million settlement was unreasonably large, considering the comparative negligence of Vrskovy and the possibility a jurors might have apportioned a smaller amount of liability to Curcio if they accepted her assertion that she was not at the party.

Freeman countered with a list of verdicts and settlements for greater than $2 million involving paralyzed plaintiffs.

Among the cases he cited was Verni v. Aramark, in which his firm obtained a jury verdict of $105 million and ultimately settlement for $26 million. That case was brought on behalf of a girl, 2, who was left paralyzed in a crash caused by a drunken football fan who was served beer while already intoxicated at Giants Stadium.

Wellerson found that apportion of fault between parties in the case is precluded when one tortfeasor has a duty to prevent the other from causing harm, as the Supreme Court ruled in Blazovic v. Andrich, 124 N.J. 90 (1991).

Sheridan, of Debra Hart’s office in Morganville, represented Palisades along with Glenn Curving of Riker, Danzig, Scherer, Hyland & Perretti in Morristown. They did not return calls about the case.