Dionicio Rodriguez v. Shelbourne Spring, LLC

SYLLABUS

This syllabus is not part of the Court’s opinion. It has been prepared by the Office

of the Clerk for the convenience of the reader. It has been neither reviewed nor

approved by the Court and may not summarize all portions of the opinion.

Dionicio Rodriguez v. Shelbourne Spring, LLC (A-39-23) (089044)

Argued September 9, 2024 -- Decided December 12, 2024

FASCIALE, J., writing for a unanimous Court.

In this appeal, the Court considers whether the Hartford Underwriters

Insurance Company (Hartford) is obligated to defend SIR Electric LLC (SIR) -- the

insured and the employer -- against an employee’s workplace personal injury

lawsuit. The lawsuit alleges that SIR’s negligence, gross negligence, recklessness,

and intentional wrongdoing caused the employee to suffer bodily injury during an

accident on the job.

After being injured while working for SIR, plaintiff Dionicio Rodriguez filed

a petition for workers’ compensation benefits under SIR’s Workers’ Compensation

and Employers’ Liability Policy with Hartford. After Rodriguez began receiving

benefits under the Hartford Policy, he filed a personal injury complaint seeking

money damages for his workplace injuries and named SIR as a defendant. SIR

tendered the defense of the complaint to Hartford. Hartford disclaimed any

obligation to provide a defense, and SIR filed a third-party complaint against

Hartford, claiming that Hartford wrongfully disclaimed defense coverage.

The trial judge granted Hartford’s motion to dismiss SIR’s complaint,

concluding that the Hartford Policy expressly excluded intent-based claims. SIR

moved for reconsideration and filed a motion to amend its third-party complaint,

contending for the first time that the Hartford Policy’s enhanced intentional injury

exclusion (EII exclusion) violated public policy. The judge denied both motions,

concluding that the Hartford Policy excluded insurance coverage for intentional

conduct by SIR and that amendment would be futile. The Appellate Division

affirmed. The Court granted leave to appeal. 257 N.J. 247 (2024).

HELD: Here, Hartford has no duty to defend the employer. The employee’s

allegations of simple negligence, gross negligence, and recklessness (the negligence-

based claims), which are subject to the workers’ compensation exclusivity bar, are

not covered under Part One of the insurance policy and are excluded from coverage

under Part Two of the policy. Additionally, the employee’s allegations of

intentional wrongdoing are excluded under the policy.

1

1. An insurer is contractually obliged to provide the insured with a defense against

all actions covered by the insurance policy. Therefore, whether an insurer has a duty

to defend is determined by comparing the allegations in the complaint with the

language of the insurance policy. When the two correspond, the duty to defend

arises, irrespective of the claim’s actual merit. But an insurer has no duty to defend

against a claim, which measured by the pleadings, even if successful, would not be

within the policy coverage. (pp. 7-8)

2. The New Jersey Workers’ Compensation Act reflects a historic trade-off whereby

employees relinquished their right to pursue common-law remedies in exchange for

automatic entitlement to certain, but reduced, benefits whenever they suffered

injuries by accident arising out of and in the course of employment. Workers’

compensation is thus the exclusive remedy for injured employees who qualify under

the Act. The only exception to that “exclusivity bar” or “workers’ compensation

bar” is for injuries caused by “intentional wrongs,” for which an employee may still

seek redress under common law causes of action. In Laidlow v. Hariton Machinery

Co., Inc., the Court clarified the test to determine when an employer’s conduct rises

to the level of an “intentional wrong” under N.J.S.A. 34:15-8. 170 N.J. 602, 617

(2002). Here, Rodriguez raised claims based on negligence, gross negligence, and

recklessness on the one hand, and Laidlow claims on the other. Accordingly,

Rodriguez’s negligence-based claims are distinct from his Laidlow claims and are

limited by the Act’s exclusivity bar. Laidlow claims, by contrast, are not limited by

the Act’s exclusivity bar. (pp. 8-12)

3. The Court reviews in detail the allegations set forth in Rodriguez’s complaint and

the relevant provisions of Part One of the Hartford Policy. Part One incorporates by

reference the requirements set forth in the workers’ compensation law, which covers

employees’ accidental bodily injuries “arising out of and in the course of [their]

employment, of which the actual or lawfully imputed negligence of the employer is

the natural and proximate cause.” N.J.S.A. 34:15-1. Rodriguez’s personal injury

lawsuit does not seek benefits as defined by the Act; instead, it seeks money

damages as compensation for his workplace injuries. Rodriguez already recovered

those benefits available under Part One of the Hartford Policy for his injury, and

Hartford satisfied its contractual obligation to SIR by providing Rodriguez with

those workers’ compensation benefits separate from this action. With regard to

Rodriguez’s Laidlow claims, Part One applies only to benefits under the Act and

cannot impose a duty to defend for claims of intentional misconduct, which fall

outside the Act. Therefore, Part One of the Hartford Policy imposes no duty to

defend SIR against any of Rodriguez’s claims. (pp. 12-17)

4. Part Two of the Hartford Policy provides employers’ liability insurance. It

expressly excludes from coverage both “[a]ny obligation imposed by a workers

compensation . . . law” (Exclusion C4) and “[b]odily injury intentionally caused or

2

aggravated” by the covered employer (Exclusion C5), and it specifies that Hartford

has “no duty to defend a claim, proceeding or suit that is not covered by this

insurance.” Part Two also contains the so-called EII exclusion, which states that,

“[w]ith respect to Exclusion C5, this insurance does not cover any and all intentional

wrongs within the exception allowed by N.J.S.A. 34:15-8.” Part Two thus expressly

excludes from coverage -- in Exclusion C4 -- any claims covered by workers’

compensation law, and so does not require Hartford to defend SIR against

Rodriguez’s claims of negligence, gross negligence, and recklessness. Turning to

Rodriguez’s Laidlow claims, or claims of intentional wrongdoing, Part Two imposes

no duty on Hartford to defend SIR because those claims are not covered by the

Hartford Policy through Exclusion C5 and the EII exclusion. (pp. 17-23)

5. Finally, the Court concludes that the trial judge properly denied SIR’s motion for

leave to amend its third-party complaint as futile. The Court’s case law and long-

standing jurisprudence undermine SIR’s belated contention that intentional wrong

exclusions are generally inconsistent with public policy. And more specific legal

developments support the validity of the exclusions here. After the Court found C5

exclusions in two employers’ liability policies to be ambiguous, see Charles Beseler

Co. v. O’Gorman & Young, Inc., 188 N.J. 542, 548 (2006); N.J. Mfrs. Ins. Co. v.

Delta Plastics Corp., 188 N.J. 582, 582 (2006), the Compensation Rating and

Inspection Bureau added language to the standard C5 exclusion, which the New

Jersey Department of Banking and Insurance (DOBI) approved in 2007. The EII

exclusion in the Hartford Policy contains language identical to the language

approved by DOBI and complies with the Court’s holding in Beseler by including

“express language excluding conduct substantially certain to result in injury.” 188

N.J. at 548. Thus, SIR’s amendment would be futile because the challenged

intentional wrong exclusions comply with Beseler and Delta Plastics and have been

DOBI-approved since 2007; they are not against public policy. (pp. 23-27)

AFFIRMED.

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, PIERRE-LOUIS,

WAINER APTER, and NORIEGA join in JUSTICE FASCIALE’s opinion.

JUSTICE HOFFMAN did not participate.

3

SUPREME COURT OF NEW JERSEY

A-39 September Term 2023

089044

Dionicio Rodriguez,

Plaintiff,

v.

Shelbourne Spring, LLC, Green Power

Developers, LLC, Unity Construction,

Rocco A. Dimichino, Sundance Electric Co.,

LLC, SF Johnson Electrical, Inc.,

Facility Solutions Group, Johnson Controls

Security Solutions, LLC, and

Managed Business Communications, Inc.,

Defendants,

and

SIR Electric, LLC,

Defendant/Third-Party

Plaintiff-Appellant,

v.

Hartford Underwriters

Insurance Company,

Third-Party Defendant-Respondent.

On appeal from the Superior Court,

Appellate Division.

1

Argued Decided

September 9, 2024 December 12, 2024

Benjamin Clarke argued the cause for appellant

(DeCotiis, Fitzpatrick, Cole & Giblin, attorneys;

Benjamin Clarke and Gregory J. Hazley, on the brief).

Katherine E. Tammaro argued the cause for respondent

(Wilson, Elser, Moskowitz, Edelman & Dicker,

attorneys; Katherine E. Tammaro, on the brief).

JUSTICE FASCIALE delivered the opinion of the Court.

In this appeal, we consider whether the Hartford Underwriters Insurance

Company (Hartford) is obligated to defend SIR Electric LLC (SIR) -- the

insured and the employer -- against an employee’s workplace personal injury

lawsuit. The lawsuit alleges that SIR’s negligence, gross negligence,

recklessness, and intentional wrongdoing caused the employee to suffer bodily

injury during an accident on the job.

Here, Hartford has no duty to defend the employer. The employee’s

allegations of simple negligence, gross negligence, and recklessness (the

negligence-based claims), which are subject to the workers’ compensation

exclusivity bar, are not covered under Part One of the insurance policy and are

excluded from coverage under Part Two of the policy. Additionally, the

2

employee’s allegations of intentional wrongdoing, known as Laidlow 1 claims,

are excluded under the policy.

We therefore affirm the Appellate Division’s judgment upholding the

trial judge’s dismissal, without leave to amend, of SIR’s third-party complaint

against Hartford.

I.

SIR is an electrical contractor that employed plaintiff Dionicio

Rodriguez. Hartford issued a Workers’ Compensation and Employers’

Liability Policy to SIR. Although we will analyze the Hartford Policy in

greater detail, Part One of the Hartford Policy provides workers’ compensation

insurance for “benefits” under workers’ compensation law. And Part Two of

the Hartford Policy provides employers’ liability insurance for “damages

because of bodily injury,” but excludes from coverage, among other claims,

bodily injury intentionally caused by SIR. While on the job, Rodriguez

opened an electrical panel on a breaker and injured himself.

Rodriguez initially filed a petition for workers’ compensation benefits

under Part One of the Hartford Policy. Hartford complied with its contractual

obligation and processed that petition. After Rodriguez began receiving those

1

Laidlow v. Hariton Mach. Co., Inc., 170 N.J. 602, 606 (2002) (addressing

the intentional wrong exception to the Workers’ Compensation Act’s exclusive

remedy, as set forth in N.J.S.A. 34:15-8).

3

benefits, he filed a personal injury complaint seeking money damages for his

workplace injuries and named SIR as a defendant. SIR tendered the defense of

the complaint to Hartford.

Hartford disclaimed any obligation to provide a defense. Notably,

Hartford determined that SIR’s policy excluded “any obligation imposed by a

workers compensation . . . law” and “[b]odily injury intentionally caused by

[SIR].” Hartford concluded that it accordingly had no duty to defend SIR

against Rodriguez’s claims.

SIR filed a third-party complaint against Hartford, claiming that

Hartford wrongfully disclaimed defense coverage. SIR argued that although

Rodriguez’s complaint included allegations of intentional wrongdoing, it also

included specific allegations of non-intentional wrongdoing, such as “gross

negligence” and “simple negligence,” which SIR contended were covered by

the Hartford Policy.

Hartford filed a ----

Rule 4:6-2(e) motion to dismiss SIR’s third-party

complaint, and SIR cross-moved for summary judgment. The trial judge

granted Hartford’s motion and denied SIR’s cross-motion, concluding that the

Hartford Policy expressly excluded intent-based claims. In denying SIR’s

cross-motion, the judge determined, “Hartford has no duty to defend SIR

against [Rodriguez’s] common law tort suit.”

4

SIR moved for reconsideration and filed a motion to amend its third-

party complaint, contending for the first time that the Hartford Policy’s

enhanced intentional injury exclusion (EII exclusion) violated public policy.

The judge denied reconsideration and characterized the sum of Rodriguez’s

allegations to be “specifically and solely a Laidlow claim.” He concluded that

the Hartford Policy excluded insurance coverage for intentional conduct by

SIR. Consistent with his earlier ruling, the judge explained that “an employee

otherwise has no [tort] cause of action against [an] employer for a work-related

injury.” The judge denied SIR’s motion to amend as moot because the

amendment would be futile.

On leave to appeal, the Appellate Division affirmed the orders

dismissing SIR’s third-party complaint, denying SIR’s cross-motion for

summary judgment, and denying SIR’s motion to amend its third-party

complaint.

We granted SIR’s motion for leave to appeal. 257 N.J. 247 (2024).

II.

Relying on unpublished Appellate Division decisions, 2 SIR argues

primarily that Hartford owes SIR a duty to defend against Rodriguez’s

2

The parties acknowledge that unpublished opinions do not constitute

precedent and are not binding. Except for limited circumstances, which do not

5

allegations of negligence and gross negligence. SIR contends that the

appellate court “ignored SIR’s primary contention . . . that a duty to defend

exists in the workers’ compensation part, [Part One], of [the Hartford Policy].”

It also asserts that the appellate court erred by focusing exclusively on Part

Two of the Hartford Policy and the related endorsement to the Hartford Policy

containing the EII exclusion. SIR maintains that the judge erred by denying its

motion to amend its third-party complaint, reiterating that the EII exclusion is

against public policy.

Hartford argues that it has no duty to defend SIR against Rodriguez’s

“negligence-based” allegations because those workplace bodily injury tort

claims are unrelated to “benefits” under the workers’ compensation law. As to

Rodriguez’s Laidlow allegations, whether they are characterized as intentional

wrongdoing, “gross negligence,” or “recklessness,” Hartford asserts that the

Hartford Policy expressly excludes those claims. Hartford contends that SIR

waived its argument that the EII exclusion violates public policy and that, in

any case, SIR’s assertion is groundless.

apply here, “no unpublished opinion shall be cited by any court.” See R. 1:36-

3 (governing unpublished opinions).

6

III.

Long-standing legal principles govern the question of whether Hartford

has a duty to defend SIR against Rodriguez’s claims.

A.

A duty to defend arises from an insurer’s contractual obligation under

the language of the insurance policy. Hartford Accident & Indem. Co. v.

Aetna Life & Cas. Ins. Co., 98 N.J. 18, 22 (1984). Specifically, “[a]n insurer

is contractually obliged to provide the insured with a defense against all

actions covered by the insurance policy.” Abouzaid v. Mansard Gardens

Assocs. LLC, 207 N.J. 67, 79 (2011).

An insurer’s duty to defend is broader than its duty to indemnify. Danek

v. Hommer, 28 N.J. Super. 68, 79 (App. Div. 1953), aff’d o.b., 15 N.J. 573

(1954). A duty to defend “comes into being when the complaint states a claim

constituting a risk insured against,” regardless of the claim’s likelihood of

success. Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 173 (1992)

(quoting Danek, 28 N.J. Super. at 77). Indeed, the duty to defend will arise

even if “the claims are poorly developed and almost sure to fail,” id. at 174, so

long as they “comprehend[] an injury which may be within the policy,”

Abouzaid, 207 N.J. at 80 (quoting Danek, 28 N.J. Super. at 78). “Liability of

the insured to the plaintiff is not the criterion; it is the allegation in the

7

complaint of a cause of action, which, if sustained, will impose a liability

covered by the policy.” Danek, 28 N.J. Super. at 77 (emphasis added).

Therefore, “[w]hether an insurer has a duty to defend is determined by

comparing the allegations in the complaint with the language of the insurance

policy. When the two correspond, the duty to defend arises, irrespective of the

claim’s actual merit.” Voorhees, 128 N.J. at 174. But an insurer has no duty

to defend against a claim, “which measured by the pleadings, even if

successful, would not be within the policy coverage.” Danek, 28 N.J. Super. at

77.

We interpret the insurance policy terms de novo. AC Ocean Walk, LLC

v. Am. Guarantee & Liab. Ins. Co., 256 N.J. 294, 312 (2024). “[A]n insurance

policy should be interpreted according to its plain and ordinary meaning,” with

any ambiguities “resolved in favor of the insured.” Voorhees, 128 N.J. at 175.

But courts cannot “engage in a strained construction to support the imposition

of liability or write a better policy for the insured than the one purchased.” AC

Ocean Walk, 256 N.J. at 312 (internal quotation marks omitted) (quoting

Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238

(2008)).

8

The covered-claim limitation on the duty to defend is particularly

significant here, given the carefully constructed compromise that undergirds

our workers’ compensation scheme.

In 1911, the Legislature enacted the New Jersey Workers’ Compensation

Act, N.J.S.A. 34:15-1 to -147, reflecting a “historic trade-off whereby

employees relinquished their right to pursue common-law remedies in

exchange for automatic entitlement to certain, but reduced, benefits whenever

they suffered injuries by accident arising out of and in the course of

employment.” Millison v. E.I. Du Pont de Nemours & Co., 101 N.J. 161, 174

(1985). Once the employer and employee agree to the trade-off, 3

“compensation for personal injuries . . . by accident arising out of and in the

course of employment shall be made by the employer without regard to the

negligence of the employer.” N.J.S.A. 34:15-7. Although employees may

receive “swift and certain compensation payments” under the Act, they give up

their right to a “potentially larger recovery in a common-law action” for

negligence against their employer. Millison, 101 N.J. at 174. Accordingly,

3

An employer and employee must agree to be bound by the Workers’

Compensation Act through an “express or implied” agreement. N.J.S.A.

34:15-7. Such an agreement is presumed unless expressly stated otherwise.

Id. at -9. Here, it is undisputed that SIR and Rodriguez are bound by the Act.

9

workers’ compensation is the exclusive remedy for injured employees who

qualify under the Act. See id. at 169.

The only exception to that “exclusivity bar” or “workers’ compensation

bar” is for injuries caused by “intentional wrongs,” for which an employee

may still seek redress under common law causes of action. See id. at 177;

Schmidt v. Smith, 155 N.J. 44, 49 (1998) (“In exchange for this statutory

remedy, the employee surrenders rights to sue the employer or fellow

employees at common law except in cases where the injury stems from

intentional wrongs committed by the employer or the fellow employees.”); see

also N.J.S.A. 34:15-8 (“If an injury or death is compensable under this article,

a person shall not be liable to anyone at common law or otherwise on account

of such injury or death for any act or omission occurring while such person

was . . . injured or killed, except for intentional wrong.”).

In Laidlow, this Court clarified the test to determine when an employer’s

conduct rises to the level of an “intentional wrong” under N.J.S.A. 34:15-8,

holding that

(1) the employer must know that his actions are

substantially certain to result in injury or death to the

employee, and (2) the resulting injury and the

circumstances of its infliction on the worker must be

(a) more than a fact of life of industrial employment

and (b) plainly beyond anything the Legislature

intended the Workers’ Compensation Act to immunize.

10

[Richter v. Oakland Bd. of Educ., 246 N.J. 507, 536

(2021) (quoting Laidlow v. Hariton Mach. Co., Inc.,

170 N.J. 602, 617 (2002)).]

Under that test, “an intentional wrong is not limited to actions taken with a

subjective desire to harm, but also includes instances where an employer

knows that the consequences of those acts are substantially certain to result in

such harm.” Laidlow, 170 N.J. at 613. But the “substantial certainty” test is

still a high standard to meet: to avoid allowing employees to circumvent the

Act, courts “must demand a virtual certainty” before employees can proceed

under the intentional wrong exception to sue their employer in tort. Van Dunk

v. Reckson Assocs. Realty Corp., 210 N.J. 449, 470 (2012) (quoting Millison,

101 N.J. at 178).

As noted above, Rodriguez raised claims based on negligence, gross

negligence, and recklessness on the one hand, and Laidlow claims on the other.

The trial judge concluded on reconsideration that the entirety of Rodriguez’s

allegations “specifically and solely” amounted to a Laidlow claim. We

disagree with the trial judge’s characterization and conclude that the

negligence-based claims are different from Rodriguez’s intent-based Laidlow

claims.

In Van Dunk, this Court held that although the employer committed an

“exceptional wrong” in directing an employee to enter a trench in violation of

11

OSHA guidelines, the employee did not meet the Millison and Laidlow

intentional-wrong test because a potentially grossly negligent, or even

reckless, act was not an “intentional wrong.” 210 N.J. at 472. It follows that

if gross negligence is not enough to meet the Millison and Laidlow intentional-

wrong test, neither is simple negligence. 4 This Court emphasized that “[t]he

dividing line between negligent or reckless conduct on the one hand and

intentional wrong on the other hand must be drawn with caution” to avoid

employees finding a loophole to the Act’s exclusivity bar. Van Dunk, 210 N.J.

at 470 (quoting Millison, 101 N.J. at 178) (emphasis added). Accordingly,

Rodriguez’s negligence, gross negligence, and recklessness claims are distinct

from his Laidlow claims and are limited by the Act’s exclusivity bar. Laidlow

claims, by contrast, are not limited by the Act’s exclusivity bar.

B.

Against that legal backdrop, we consider whether Hartford owes a duty

to defend here. We begin by reviewing Rodriguez’s tort claims against SIR,

and we then examine the terms of the Hartford Policy.

In his complaint, Rodriguez makes the following allegations:

4

See also 1 Modern Workers Compensation § 102.12 at 160 (Thomson

Reuters, June 2024 ed.) (“In states which exclude only intentional torts from

the exclusivity provision, gross negligence tort actions are barred.”).

12

30. S[IR] Electric recklessly directed

[Rodriguez] to perform an abnormally dangerous

activity in opening an electrical panel without any

training or warnings in complete disregard for his

health and safety.

31. S[IR] Electric was grossly negligent in

requiring [Rodriguez] to perform an abnormally

dangerous activity in opening an electrical panel

without any training or warnings in complete disregard

for his health and safety.

....

37. Defendants were negligent for their failure to

properly safeguard the premises.

38. Defendants were negligent in their actions

and omissions, which proximately caused

[Rodriguez]’s accident.

....

45. Defendants were negligent in permitting a

dangerous condition to exist.

46. Defendants were negligent in the ownership,

operation, maintenance, upkeep, monitoring,

supervision and management of the property and the

construction site . . . .

47. Defendants were negligent in the hiring,

employment, and/or continued employment of [their]

employees/contractors.

....

49. Defendant S[IR] Electric intentionally

disregarded known safety features, required

[Rodriguez] to work on electrical equipment without

13

safety devices, without warnings and knowing there

was a substantial certainty that [Rodriguez] would be

harmed, and thereby intentionally or with substantial

certainty, exposed [Rodriguez] to the risk of death or

serious injury.

....

52. Defendant S[IR] Electric’s conduct was so

egregious as to cause a reasonable person to conclude

with substantial certainty that [Rodriguez] would be

injured in the very manner in which occurred to

[Rodriguez].

53. [Rodriguez]’s resulting injuries and the

context surrounding them are more than a fact of life of

electrical employment and are plainly beyond anything

the [L]egislature could have contemplated as entitling

the employees to recover only under the Compensation

Act.

....

55. S[IR] Electric’s reckless indifference for

[Rodriguez]’s safety and well-being rise to the level of

a Laidlow claim[,] piercing the Workers Compensation

Act bar.

....

67. As a result of the negligence of the

Defendants as set forth herein, [Rodriguez] was caused

serious injuries, including monetary damages, pain and

suffering, and out of pocket cost(s).

....

70. As a result of the negligence of the

Defendants, singly, in combination, jointly, and

severally, [Rodriguez] has been damaged in an amount

14

that exceeds the jurisdictional limits of all lower

[c]ourts that would otherwise have jurisdiction herein,

and demands damages, compensatory damages, pre-

judgment interest, costs and disbursements in this

action.

[(emphases added).]

We now turn to the language of the Hartford Policy itself.

C.

The Hartford Policy is divided into several parts, and the parties have

raised arguments about Part One and Part Two of the policy. We consider each

in turn.

1.

Part One of the Hartford Policy provides workers’ compensation

insurance and states:

A. How This Insurance Applies

This workers compensation insurance applies to bodily

injury by accident or bodily injury by disease. Bodily

injury includes resulting death[.]

....

B. We Will Pay

We will pay promptly when due the benefits required of

you by the workers compensation law.

C. We Will Defend

15

We have the right and duty to defend at our expense any

claim, proceeding or suit against you for benefits

payable by this insurance. We have the right to

investigate and settle these claims, proceedings or suits.

We have no duty to defend a claim, proceeding or suit

that is not covered by this insurance.

[(emphases added).]

Part One of the Hartford Policy incorporates by reference the

requirements set forth in the workers’ compensation law. As we have noted,

the Act covers employees’ accidental bodily injuries “arising out of and in the

course of [their] employment, of which the actual or lawfully imputed

negligence of the employer is the natural and proximate cause.” N.J.S.A.

34:15-1. For claims alleging conduct other than intentional wrongdoing by an

employer, workers’ compensation “is not cumulative or supplemental to the

tort system, but is wholly substitutional.” 1 Modern Workers’ Compensation

§ 102.1 at 67.

Money damages for negligence-based tort claims do not fall under the

policy language, “benefits . . . required by a workers’ compensation law,”

which instead include recovery of medical benefits under N.J.S.A. 34:15-15;

death benefits for dependents under N.J.S.A. 34:15-13; and temporary

disability benefits, permanent total benefits, or permanent partial benefits

under N.J.S.A. 34:15-12(a) to (c), regardless of fault. Because money

16

damages based on tort claims are not “benefits” and thus are not a covered

risk, Hartford has no duty under Part One to defend SIR against Rodriguez’s

claims seeking such damages. Rodriguez’s personal injury lawsuit does not

seek benefits as defined by the Act; instead, it seeks money damages as

compensation for his workplace injuries. Rodriguez already recovered those

benefits available under Part One of the Hartford Policy for his injury, and

Hartford satisfied its contractual obligation to SIR by providing Rodriguez

with those workers’ compensation benefits separate from this action.

SIR does not argue that Part One covers Rodriguez’s Laidlow allegations

of intentional wrongdoing. That is because Part One applies only to benefits

under the Act and cannot impose a duty to defend for claims of intentional

misconduct, which fall outside the Act.

Therefore, Part One of the Hartford Policy imposes no duty to defend

SIR against any of Rodriguez’s claims.

2.

Part Two of the Hartford Policy provides employers’ liability insurance.

Employers’ liability insurance “is intended to serve as a gap-filler providing

protection to the employer in those situations where the employee has a right

to bring a tort action despite provisions of the workers’ compensation statute.”

Schmidt, 155 N.J. at 49-50 (internal quotation marks omitted) (quoting

17

Producers Dairy Delivery Co. v. Sentry Ins. Co., 718 P.2d 920, 927 (Cal.

1986)). N.J.S.A. 34:15-71 and -72 require an employer to “make sufficient

provision for the complete payment of any obligation which he may incur to an

injured employee.” Unless the Commissioner of Insurance approves an

employer to provide its own liability insurance under N.J.S.A. 34:15-77, every

employer “shall insure and keep insured his liability in any stock company or

mutual association authorized to engage in workmen’s compensation or

employer’s liability insurance in this State.” N.J.S.A. 34:15-78.

Employers’ liability policies must cover both claims for benefits in the

Division of Workers’ Compensation and claims for workplace injuries in a

common law court that fall outside of the workers’ compensation system.

Schmidt, 155 N.J. at 49 (citing N.J.S.A. 34:15-72). In practice, “[w]orkers’

compensation policies are routinely written in combination with an employers’

liability policy. The purpose of this combination of coverage is to provide

protection for injured employees in those situations where workers’

compensation insurance itself may not apply.” George J. Kenny & Frank A.

Lattal, New Jersey Insurance Law § 19-4:1 (2024) (emphasis added).

Part Two of the Hartford Policy sets forth the following relevant terms

and limitations of coverage for employers’ liability insurance:

A. How This Insurance Applies

18

This employers liability insurance applies to bodily

injury by accident or bodily injury by disease. Bodily

injury includes resulting death.

....

B. We Will Pay

We will pay all sums that you legally must pay as

damages because of bodily injury to your employees,

provided the bodily injury is covered by this Employers

Liability Insurance.

....

C. Exclusions

This insurance does not cover:

....

4. Any obligation imposed by a workers

compensation, occupational disease,

unemployment compensation, or disability

benefits law, or any similar law;

5. Bodily injury intentionally caused or

aggravated by you;

....

D. We Will Defend

We have the right and duty to defend, at our expense,

any claim, proceeding or suit against you for damages

payable by this insurance. We have the right to

investigate and settle these claims, proceedings and

suits.

19

We have no duty to defend a claim, proceeding or suit

that is not covered by this insurance. We have no duty

to defend or continue defending after we have paid our

applicable limit of liability under this insurance.

[(emphases added).]

The Hartford Policy contains an additional “New Jersey Part Two

Employers Liability Endorsement,” applying “only to the insurance provided

by Part Two (Employers Liability Insurance).” That is the so-called EII

exclusion, which states that,

[w]ith respect to Exclusion C5, this insurance does not

cover any and all intentional wrongs within the

exception allowed by N.J.S.A. 34:15-8 including but

not limited to, bodily injury caused or aggravated by an

intentional wrong committed by you or your

employees, or bodily injury resulting from an act or

omission by you or your employees, which is

substantially certain to result in injury.

[(emphases added).]

Like Part One, Part Two of the Hartford Policy covers suits for damages

“because of bodily injury by accident.” Whereas Part One covers obligations

under the Act, however, Part Two expressly excludes from coverage -- in

Exclusion C4 -- “obligation[s] imposed by a workers compensation,

occupational disease, unemployment compensation, or disability benefits law,

or any similar law.” As we have seen, the Act covers employees’ accidental

bodily injuries “arising out of and in the course of [their] employment, of

20

which the actual or lawfully imputed negligence of the employer is the natural

and proximate cause.” N.J.S.A. 34:15-1. And because negligence, gross

negligence, and recklessness claims are processed exclusively through

workers’ compensation, they consequently are “obligations imposed solely by

a workers’ compensation . . . law” under Exclusion C4. See Millison, 101 N.J.

at 176-77; Laidlow, 170 N.J. at 611; N.J.S.A. 34:15-8.

The C4 exclusion thus aligns with the purpose of requiring employers to

carry both workers’ compensation insurance and employers’ liability

insurance: it is a logical reflection of the gap-filling purpose of employers’

liability insurance because it excludes from coverage under Part Two claims

that are already covered under Part One. There is no gap to be filled here for

the negligence, gross negligence, and recklessness claims against SIR because

Part One already provided the required workers’ compensation coverage -- the

exclusive remedy available -- for those claims. See Millison, 101 N.J. at 176-

77; Laidlow, 170 N.J. at 611; N.J.S.A. 34:15-8. Employers’ liability coverage

is meant to protect the employer “in those situations where the employee has

the right to bring a tort action outside of the workers’ compensation bar,” 5

5

For example, although the C4 exclusion excludes coverage for the

negligence-based claims, the employers’ liability policy has been held to cover

employee workplace sexual harassment claims “when the harassment results in

bodily injury.” See also Kenny & Lattal, § 19-4:4 (citing Schmidt, 155 N.J. at

44, 46).

21

Kenny & Lattal, § 19-4:2, and here, Rodriguez does not have a right to bring

his negligence-based claims outside of the bar. In short, Part Two of the

Hartford Policy does not require Hartford to defend SIR against Rodriguez’s

non-Laidlow claims because they are excluded from coverage under Exclusion

C4.

SIR’s reliance on Danek v. Hommer is misplaced. In Danek, the

husband of an injured employee brought a common law action against the

employer for loss of consortium. 28 N.J. Super. at 72-73. The appellate court

held that although the husband’s exclusive remedy fell under the Act, the

insurance carrier nonetheless had a duty to defend the employer in the

husband’s action because the policy agreed to cover “any suits . . . alleging

such injuries and demanding damages or compensation” even if such suits are

“wholly groundless.” Id. at 74, 78-79. Notably, this Court affirmed Danek for

the reasons set forth by the Appellate Division. See 15 N.J. 573 (1954). The

policy in Danek was much broader than the Hartford Policy and did not

contain exclusions to the duty to defend. See 28 N.J. Super. at 72. Here,

unlike Danek, the language of the Hartford Policy provides no coverage,

regardless of the ultimate question of SIR’s liability to Rodriguez.

22

Turning to Rodriguez’s Laidlow claims, or claims of intentional

wrongdoing, Part Two imposes no duty on Hartford to defend SIR because

those claims are not covered by the Hartford Policy.

The C5 exclusion specifically excludes from insurance coverage any

claims for “[b]odily injury intentionally caused or aggravated by [SIR].” The

EII exclusion elaborates on C5 by excluding “all intentional wrongs within the

exception allowed by N.J.S.A. 34:15-8 including . . . bodily injury caused or

aggravated by an intentional wrong . . . which is substantially certain to result

in injury.” The Laidlow claims of intentional wrongdoing in the complaint are

expressly excluded under the plain language of the Part Two policy exclusions

as “intentionally caused or aggravated” by SIR under the C5 exclusion and as

“substantially certain to result in injury” under the EII exclusion endorsement.

Because the claims are not covered by the Hartford Policy, they cannot trigger

a duty to defend on the part of the insurer.

In sum, none of Rodriguez’s claims -- whether for negligent, grossly

negligent, or recklessly indifferent conduct or for intentional wrongdoing --

fall within the coverage established in either Part One or Part Two of the

Hartford Policy.

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IV.

Finally, we conclude that the trial judge properly denied SIR’s motion

for leave to amend its third-party complaint as futile. See C.V. v. Waterford

Twp. Bd. of Educ., 255 N.J. 289, 306 (2023). An amendment is futile “when

the newly asserted claim is not sustainable as a matter of law. In other words,

there is no point to permitting the filing of an amended pleading when a

subsequent motion to dismiss must be granted.” Ibid. (quoting Notte v.

Merchs. Mut. Ins. Co., 185 N.J. 490, 501 (2006)).

SIR moved for reconsideration and filed a motion to amend its third-

party complaint, contending for the first time that the Hartford Policy’s EII

exclusion violated public policy. At oral argument, SIR acknowledged that it

filed its motion to amend only after the trial judge found Hartford did not owe

SIR a duty to defend under Part Two. Contrary to SIR’s contention, the EII

exclusion does not violate public policy. Amending the pleading to bring that

argument would therefore have been futile.

Exclusions from coverage for intentional acts are common. This Court

has consistently reiterated the principle that “[p]olicy provisions that exclude

coverage resulting from intentional wrongful acts are ‘common,’ are ‘accepted

as valid limitations’ and are consistent with public policy.” Harleysville Ins.

Cos. v. Garitta, 170 N.J. 223, 231 (2001) (alteration in original) (quoting

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Allstate Ins. Co. v. Malbec, 104 N.J. 1, 6 (1986)). In Allstate, we held that an

exclusion in an automobile liability insurance policy for the insured’s

intentional wrongful acts did not violate public policy. 104 N.J. at 13. In

Harleysville, we upheld an intentional wrong exclusion in a homeowner’s

insurance policy. 170 N.J. at 225-26. Our case law and long-standing

jurisprudence undermine SIR’s belated contention that intentional wrong

exclusions are generally inconsistent with public policy.

And more specific legal developments support the validity of the

exclusions here. In two companion cases, this Court considered C5 exclusions

in employers’ liability policies -- like the C5 exclusion in the Hartford Policy -

- that excluded coverage for bodily injury intentionally caused or aggravated

by the employer. See Charles Beseler Co. v. O’Gorman & Young, Inc., 188

N.J. 542, 548 (2006); N.J. Mfrs. Ins. Co. v. Delta Plastics Corp., 188 N.J. 582,

582 (2006).

In those cases, this Court held that the C5 exclusions did “not

unambiguously exclude injuries falling under the ‘substantially certain’ prong

of the intentional-wrong exception recognized by Laidlow.” Beseler, 188 N.J.

at 547. Because the exclusions did not unambiguously exclude coverage, we

held that the insurers were obligated to defend the employers. Id. at 547-48.

Due to the “lack of express language excluding conduct substantially certain to

25

result in injury,” the C5 exclusions were ambiguous and thus construed in

favor of the insured employers. Id. at 548.

Following Beseler and Delta Plastics, the Compensation Rating and

Inspection Bureau (CRIB), pursuant to its authority to change its policy forms

set forth in the New Jersey Workers’ Compensation and Employers’ Liability

Insurance Manual (Manual), N.J.S.A. 34:15-90.2(i), amended the Manual to

include an updated New Jersey Part Two Employers Liability Endorsement.

The endorsement added language to the standard C5 exclusion because CRIB

found it was necessary “to restore the intent of the policy exclusion for

intentional injury.” CRIB Manual Amendment Bulletin #436 (2007). CRIB

found that our rulings in Beseler and Delta Plastics on the C5 exclusion

“represent[ed] a significant erosion of the exclusive remedy provision of the

[Act] and may lead to the increased costs in the price of workers compensation

and employers liability insurance.” Ibid. Thus, to restore the C5 intentional

wrong exclusion while conforming with our directive that such an exclusion

must be unambiguous, the new endorsement was amended. It provides that

[w]ith respect to Exclusion C5, this insurance does not

cover any and all intentional wrongs within the

exception allowed by N.J.S.A. 34:15-8 including but

not limited to, bodily injury caused or aggravated by an

intentional wrong committed by you or your

employees, or bodily injury resulting from an act or

omission by you or your employees, which is

substantially certain to result in injury.

26

[CRIB Manual Amendment Bulletin #436, Exhibit 1,

effective July 1, 2007.]

The New Jersey Department of Banking and Insurance (DOBI) approved

the Manual Amendment Bulletin #436, which included the amended

endorsement to the C5 exclusion, in a letter dated May 23, 2007. The EII

exclusion in the Hartford Policy contains language identical to the language

approved by DOBI in 2007 and complies with our holding in Beseler by

including “express language excluding conduct substantially certain to result

in injury.” 188 N.J. at 548. Indeed, the EII exclusion has been in existence for

seventeen years.

Thus, SIR’s amendment would be futile because the challenged

intentional wrong exclusions are not against public policy. Rather, those

exclusions comply with Beseler and Delta Plastics and have been DOBI-

approved since 2007. See Kenny & Lattal, § 19-4:2 n.20.

V.

We affirm the Appellate Division’s judgment, which upheld the trial

judge’s order dismissing SIR’s third-party complaint against Hartford, and

conclude that Hartford has no duty to defend SIR against Rodriguez’s on-the-

job personal injury lawsuit.

27

CHIEF JUSTICE RABNER and JUSTICES PATTERSON, PIERRE-LOUIS,

WAINER APTER, and NORIEGA join in JUSTICE FASCIALE’s opinion.

JUSTICE HOFFMAN did not participate.

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