NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited . R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2847-24
PRINCETON INSURANCE COMPANY,
Plaintiff-Appellant/ Cross-Respondent,
v.
CURI/MEDICAL MUTUAL INSURANCE COMPANY OF NORTH CAROLINA,
Defendant-Respondent/ Cross-Appellant,
and
KENNEDY HEALTH ALLIANCE,
Defendant. _____________________________
Submitted March 24, 2026 – Decided May 1, 2026
Before Judges Firko and Vinci.
On appeal from the Superior Court of New Jersey, Law Division, Camden County, Docket No. L-3356-23. Saiber LLC, attorneys for appellant/cross-respondent (Jennine DiSomma, of counsel and on the briefs; Vincent C. Cirilli, on the briefs).
Thomas Thomas & Hafer, LLP and Mark D. Malloy (Meissner, Tierney, Fisher & Nichols SC) of the Wisconsin, Illinois and Minnesota bars, admitted pro hac vice, attorneys for respondent/cross-appellant (Gregory C. Kunkle and Mark D. Malloy, on the briefs).
PER CURIAM
In this insurance coverage declaratory judgment action, defendant
CURI/Medical Mutual Insurance Company of North Carolina (MMIC) and
plaintiff Princeton Insurance Company (PIC) cross-appeal from a January 31,
2025 order granting in part and denying in part their cross-motions for summary
judgment. PIC also appeals from an April 25, 2025 order denying its motion for
reconsideration. We reverse the January 31 order to the extent it denied MMIC's
motion for summary judgment and granted PIC's cross-motion.
I.
The relevant facts are uncontroverted. The dispute in this case is over the
parties' respective obligations to pay the $1.5 million settlement of an underlying
medical malpractice lawsuit against Kennedy Health Alliance (KHA) and its
employee, Dr. Adeshola Fakulujo (malpractice action). In the malpractice
action, the plaintiffs alleged Dr. Fakulujo committed malpractice, and KHA was
A-2847-24 2 jointly and severally vicariously liable for his malpractice. MMIC and PIC
agreed to settle the malpractice action by each paying $750,000 toward the
settlement, subject to their rights to litigate their respective obligations to pay
the settlement and defense costs incurred in connection with the malpractice
action.
KHA obtained a professional liability insurance policy from PIC with
applicable limits of liability of $1 million for each claim (PIC policy). The
insuring agreement of the PIC policy provides, in relevant part, that PIC "will
pay on behalf of [KHA] . . . 'damages' and 'defense expenses' for 'claims' for
'injury' to which this insurance applies caused by the rendering or failure to
render 'professional services.'" There is no dispute that the PIC policy affords
coverage for KHA's alleged liability in the malpractice action. There is also no
dispute that Dr. Fakulujo is not an insured under the PIC policy, and the PIC
policy does not afford coverage to him personally for his medical malpractice.
KHA, as the named insured, obtained a second professional liability
insurance policy from MMIC (MMIC policy). The "insuring agreements"
section of the professional liability coverage part of the MMIC policy contains
three different and independent types of insurance: (1) entity liability (EL); (2)
A-2847-24 3 physician's and surgeon's professional liability (PL); and (3) designated
employee liability (DE).
The MMIC policy provides that "[i]n consideration of the payment of
premium, in reliance upon the statements in the [d]eclarations made a part
hereof, and subject to all of the terms of this policy, we agree with the . . . named
insured in the [d]eclarations to provide insurance as follows." The
"[d]eclarations" page of the MMIC policy lists only the PL and DE coverages
and sets forth limits of liability applicable only to those coverages. The
declarations page does not list EL coverage or set forth limits of liability
applicable to EL coverage. Specifically, the declarations page provides:
A-2847-24 4 "Section V[-]persons insured" of the MMIC policy provides that "[e]ach
of the following is an insured under this policy":
(a) the named insured;
(b) under EL, the insured entity, and any officer, partner, member, or stockholder thereof with respect to the acts or omissions of others, provided no officer, partner, member, or stockholder of an insured entity shall be an insured under this subparagraph with respect to liability for his or her personal acts;
(c) under PL, any physician for whom such coverage is afforded under this policy as indicated in the [d]eclarations page;
(d) under DE, any employee . . . for whom such coverage is afforded under this policy as indicated in the [d]eclarations page while working within the scope of [their] duties at the direction of the named insured or insured entity.
The definitions section of the MMIC policy provides, "[n]amed insured
means the person(s) or organization(s) designated as the named insured in the
[d]eclarations of this policy." The term "[i]nsured means any person or
organization qualifying as an insured under [s]ection V-[p]ersons insured
provisions of this policy." "Insured entity means any corporation, partnership,
association, limited liability company, or joint venture designated and scheduled
as an insured on this policy."
A-2847-24 5 The PL insuring agreement provides, in relevant part, "[w]e will pay on
behalf of an insured scheduled on this policy all sums that the insured shall
become legally obligated to pay as damages because of . . . bodily
injury . . . caused by a medical incident to which this insurance applies." The
MMIC policy contains a "schedule of physicians" that provides "[c]overage for
the individuals named below is limited to medical professional services
performed for the named insured only." The endorsement lists Dr. Fakulujo and
others as insureds under the PL insuring agreement.
The DE insuring agreement similarly provides, in relevant part, "[w]e will
pay on behalf of an insured scheduled on this policy all sums that the insured
shall become legally obligated to pay as damages because of . . . bodily
injury . . . caused by a medical incident to which this insurance applies." The
MMIC policy contains a "schedule of designated employees" that provides
"[c]overage for the individuals named below is limited to medical professional
services performed for the named insured only." The endorsement lists a
registered nurse and two nutritionists as insureds under the DE insuring
agreement.
The EL insuring agreement of the MMIC Policy provides, in relevant part,
"[w]e will pay on behalf of an insured all sums that an insured shall become
A-2847-24 6 legally obligated to pay as damages because of . . . bodily injury . . . caused by
a medical incident to which this insurance applies." The limits of liability
section of the MMIC policy applicable to EL coverage provides, "[o]ur total
liability for all damages because of all bodily injury . . . shall not exceed the
limit of liability stated in the [d]eclarations as the aggregate as respects EL" and
"[o]ur total liability for all damages because of all bodily injury . . . arising from
any one medical incident shall not exceed the limit of liability stated in the
[d]eclarations as applicable to each medical incident as respects EL."
The MMIC policy also contains an endorsement titled "NO ENTITY
COVERAGE–CLAIMS MADE," which amends the claims made coverage
provisions of all the insuring agreements as well as an exclusion unrelated to the
issues raised on this appeal.
II.
PIC filed a three-count declaratory judgment complaint against MMIC
and KHA. It alleged: (1) KHA "is an insured under the . . . MMIC [p]olicy
entitled to EL coverage for the" malpractice action; (2) the "EL coverage for
KHA under the . . . MMIC policy is primary to coverage under the" PIC policy
based on the "'[o]ther [i]nsurance' provisions contained in the . . . MMIC
[p]olicy and the [PIC] [p]olicy"; and (3) MMIC is obligated to reimburse PIC
A-2847-24 7 for defense costs PIC incurred defending KHA in the malpractice action because
"EL coverage exists for KHA" and "is primary to coverage under the [PIC]
[p]olicy."
After the close of discovery, PIC moved for summary judgment and
MMIC cross-moved for summary judgment. On January 31, 2025, following
oral argument, the court entered an order granting and denying both motions in
part supported by an oral opinion.
With respect to PIC's claim that the MMIC policy provides EL coverage
for KHA, the court found KHA "is insured under the policy and the
language . . . does not exclude it." The court found "the named insured always
has the most coverage" and the court had "never heard of an entity listed as the
named insured . . . and there not being coverage."
Having determined the MMIC policy affords EL coverage to KHA, the
court turned to the other insurance provisions of the policies. It found
"[b]oth . . . policies are primary policies" and there is "absolutely no indication
in the dec[laration] sheets that one was basically written up as a pure excess."
The court stated the applicable limits of the MMIC policy and the PIC policy
are both $1 million, "[s]o it looks like it[ is] [fifty]/[fifty]."
A-2847-24 8 Next, the court addressed PIC's claim that the MMIC policy must be
exhausted before the PIC policy is triggered based on Commercial Union
Insurance Companies v. Chubb Group of Insurance Companies (Commercial
Union II), 101 N.J. 24 (1985). The court noted that in Commercial Union II,
our Supreme Court reversed the Appellate Division's decision in Commercial
Union Insurance Companies v. Chubb Group of Insurance Companies
(Commercial Union I), 194 N.J. Super. 69 (App. Div. 1984) "substantially for
the reasons expressed in the dissenting opinion" and "the Supreme Court
adopted it. It[ is] the law."
Specifically, the dissenting judge in Commercial Union I, after addressing
the limited issue before the court in that case, concluded that "[w]here one
liability policy covers an employee for his own negligence and another covers
his employer for the same negligence, the employee's policy must first be
exhausted before the employer's carrier may be called upon to pay." 194 N.J.
Super. at 82 (Brody, W., dissenting). The dissenting judge reasoned that "[t]his
reflects the common-law rule that a negligent employee must indemnify his
employer whose liability is only vicarious." Ibid.
The dissenting judge found "that indemnification is implemented by a
clause in the [employer's] policy wherein [the employer's insurer] is 'subrogated
A-2847-24 9 to all the insured's rights of recovery . . . against any person.'" Ibid. The judge,
in reliance on Maryland Casualty Company v. New Jersey Manufacturers
(Casualty) Insurance Company, 48 N.J. Super. 314 (App. Div. 1958),
determined that "[t]o avoid a 'circuity of action,' the . . . policy covering the
[employee] individually . . . must pay the injured party before the
[employer's] . . . policy is called upon to pay for the [employer's] vicarious
liability." Id. at 83.
In addressing PIC's claim, the court stated it was not clear "whether or not
[the Supreme Court] actually adopted" that portion of the dissenting opinion and
stated, "maybe they did, maybe they did[ not]." Based on the dissent in
Commercial Union I, the court concluded the MMIC policy affording
malpractice coverage for Dr. Fakulujo must be exhausted before the PIC policy
is called upon to pay for KHA's vicarious liability.
Ultimately, the court determined MMIC must pay $1 million toward the
settlement of the malpractice action and PIC must pay $500,000. The court
rejected PIC's claim for reimbursement of defense costs incurred defending
KHA in the malpractice action because it had a duty to defend KHA. PIC moved
for reconsideration, which the court denied on April 25, 2025. This appeal
followed.
A-2847-24 10 On appeal, MMIC contends the court erred in: (1) finding the MMIC
policy affords EL coverage to KHA; and (2) ruling that principles of
contribution require exhaustion of the MMIC policy before PIC's policy is
triggered. On its cross-appeal, PIC contends: (1) the MMIC policy affords EL
coverage to KHA "with separate limits from Dr. Fakulujo"; (2) KHA is also
entitled to coverage under the PL coverage part of the MMIC policy; (3) the
"other insurance" clauses in the policies "make MMIC primary and [PIC]
excess" and "MMIC must pay the remaining settlement amount of $500,000 on
behalf of KHA"; and (4) "MMIC must reimburse [PIC] for the attorneys' fees
and costs that it paid on behalf of KHA" in connection with the malpractice
III.
Our review of a trial court's grant or denial of a motion for summary
judgment is de novo. Samolyk v. Berthe, 251 N.J. 73, 78 (2022). We apply the
same standard as the trial court and consider "whether the competent evidential
materials presented, when viewed in the light most favorable to the non-moving
party, are sufficient to permit a rational factfinder to resolve the alleged disputed
issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am.,
142 N.J. 520, 540 (1995).
A-2847-24 11 The interpretation of an insurance policy constitutes a question of law.
Powell v. Alemaz, Inc., 335 N.J. Super. 33, 37 (App. Div. 2000). An insurance
policy "will be enforced as written when its terms are clear in order that the
expectations of the parties will be fulfilled." Norman Int'l, Inc. v. Admiral Ins.
Co., 251 N.J. 538, 552 (2022) (quoting Mem'l Props., LLC v. Zurich Am. Ins.
Co., 210 N.J. 512, 525 (2012)).
"In considering the meaning of an insurance policy, we interpret the
language 'according to its plain and ordinary meaning.'" Flomerfelt v. Cardiello,
202 N.J. 432, 441 (2010) (quoting Voorhees v. Preferred Mut. Ins. Co., 128 N.J.
165, 175 (1992)). "If the plain language of the policy is unambiguous, we will
'not "engage in a strained construction to support the imposition of liability" or
write a better policy for the insured than the one purchased.'" Templo Fuente
De Vida Corp. v. Nat'l Union Fire Ins. Co. of Pittsburgh, 224 N.J. 189, 200
(2016) (quoting Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J.
231, 238 (2008)).
IV.
Based on our de novo review, we are convinced the court incorrectly
determined the MMIC policy affords EL coverage to KHA. The professional
liability coverage part of the MMIC policy expressly states coverage is afforded
A-2847-24 12 "[i]n consideration of the payment of premium, [and] in reliance on the
statements in the [d]eclarations made part hereof." The declarations page of the
MMIC policy clearly provides that the only coverages afforded by the policy are
PL and DE. The MMIC policy does not include EL coverage because it is not
included in the declarations page as one of the coverages afforded by the policy.
Consistent with this interpretation, the claims made coverage endorsement
to the MMIC policy expressly states "NO ENTITY COVERAGE" is included in
the policy. Additionally, the limits of liability section of the MMIC policy
applicable to EL coverage provides that such coverage, if afforded, "shall not
exceed the limit of liability stated in the [d]eclarations . . . as respects EL." It is
undisputed the declarations page does not include any applicable limits of
liability "as respects EL."
In addition, the declarations page indicates MMIC only charged KHA
premiums for PL and DE coverage. There is no premium listed for EL coverage
and PIC does not offer any evidence to show KHA paid a premium for EL
coverage. Based on the plain language of the MMIC policy—including the
professional liability coverage part, the declarations page, the "no entity
coverage-claims made" endorsement, and the limits of liability section—the
A-2847-24 13 language is clear that the MMIC policy does not include EL coverage for any
person or entity, including KHA.
We decline to consider PIC's contention, which was not asserted in its
complaint, that KHA is entitled to coverage under the PL insuring agreement.
Generally, we refuse to consider arguments that are raised for the first time on
appeal. State v. Galicia, 210 N.J. 364, 383 (2012). Even if we were to consider
PIC's argument, we are convinced it lacks merit.
The persons insured provision of the MMIC policy provides that PL
coverage is afforded for "any physician for whom such coverage is afforded
under this policy as indicated in the [d]eclarations page." The insuring
agreement of the PL coverage part affords coverage "on behalf of an insured
scheduled on this policy." The "schedule of physicians" applicable to the PL
coverage part provides that "[c]overage for the individuals named below is
limited to medical professional services performed for the named insured only."
KHA is not included as an insured on the schedule and is not "an insured
scheduled on this policy" for purposes of the PL insuring agreement, nor is it a
"physician . . . as indicated in the [d]eclarations page" entitled to coverage under
the PL insuring agreement.
A-2847-24 14 V.
We are unconvinced by PIC's argument that MMIC's limits of liability
must be exhausted before the PIC policy is triggered based on principles of
common law indemnity. The court determined MMIC's policy must be
exhausted before PIC's policy is triggered based solely on the dissent in
Commercial Union I. The relevant portion of the dissent, however, was non-
binding dicta.
In Commercial Union I, the sole issue presented on appeal was whether a
"professional liability insurance policy" issued to a medical group also
"provided coverage to a doctor who was an individual defendant." 194 N.J.
Super. at 71. Indeed, the dissenting judge recognized the court was
"presented . . . with a single issue to decide: does the coverage afforded an
individual doctor in the corporation policy include coverage for his
malpractice[?]" Id. at 80 (Brody, W., dissenting). In his dissenting opinion,
however, after addressing that limited question, the judge also opined on the
issue of priority of coverage between that "corporation policy" and an excess
policy. Ibid. We do not read the Supreme Court's opinion as adopting that
portion of the dissenting opinion. See Commercial Union II, 101 N.J. at 24.
A-2847-24 15 It was that section of the dissenting opinion that the trial court relied on
in granting PIC's motion and on which PIC relies on appeal. Because that
section of the dissent was extraneous to the issue presented on appeal, it
represents non-binding dicta. See K.D. v. A.S., 462 N.J. Super. 619, 628 (App.
Div. 2020) ("Dictum is a statement by a judge 'not necessary to the decision then
being made[,]' and 'as such it is entitled to due consideration but does not invoke
the principle of stare decisis.'") (quoting Bandler v. Melillo, 443 N.J. Super. 203,
210 (App. Div. 2015)).
We are unpersuaded by PIC's argument, unsupported by any language
contained in the insurance policies at issue, that principles of common law
indemnity require exhaustion of the MMIC policy before the PIC policy is
triggered. Importantly, PIC's coverage obligations are determined by the terms
of the PIC policy as applied to the claims asserted in the malpractice action. PIC
concedes KHA is an insured under the PIC policy and the claims asserted against
KHA are covered by the PIC policy. Moreover, the PIC policy is not an excess
policy.
In the malpractice action, KHA was alleged to be jointly and severally
liable with Dr. Fakulujo for the full amount of any verdict. KHA's alleged
liability, therefore, included the full amount of any judgment plaintiffs obtained,
A-2847-24 16 without regard to any right of recovery KHA may have against Dr. Fakulujo
based on common law indemnity. In addition, neither KHA's liability to the
plaintiffs in the malpractice action nor PIC's obligation to provide insurance
coverage to KHA in connection with the malpractice action was limited to
amounts in excess of Dr. Fakulujo's available insurance coverage. KHA is
jointly and severally liable for the full amount of any judgment in, or settlement
of, the malpractice action, and PIC is obligated to afford insurance coverage to
KHA up to its limits of liability notwithstanding any possible claim KHA may
have for common law indemnity from Dr. Fakulujo.
PIC's argument misconstrues the nature of common law indemnity. Under
common law indemnity, "[a] person who, without personal fault, has become
subject to tort liability for the unauthorized and wrongful conduct of another, is
entitled to indemnity from the other for expenditures properly made in the
discharge of such liability." Polidori v. Kordys, 217 N.J. Super. 424, 433 (App.
Div. 1987) (citation omitted).
Here, to the extent KHA was vicariously liable for Dr. Fakulujo's
negligence, KHA may have the right to assert a claim for common law indemnity
against Dr. Fakulujo. KHA does not have a right to pursue a direct action against
MMIC. See Cruz-Mendez v. Isu/Insurance Servs., 156 N.J. 556, 566-67 (1999)
A-2847-24 17 (explaining that as a general rule, an injured third party may not maintain a
"direct action" against the tortfeasor's insurer until damages have first been fixed
by a final judgment or settlement) (citing Tuckey v. Harleysville Ins. Co., 236
N.J. Super. 221, 226 (App. Div.1989)). The fact that KHA may have a right to
common law indemnification against Dr. Fakulujo is irrelevant to the question
of priority of insurance coverage afforded by the PIC policy and the MMIC
PIC's argument that its policy is not triggered because it is subrogated to
KHA's right to seek common law indemnity from Dr. Fakulujo is unavailing.
PIC's right to subrogation only arises "[i]n the event of any payment under [the
PIC] policy." PIC cannot, as it attempts to do here, use the possibility of a future
right to subrogation preemptively to defeat coverage under its policy. PIC's
right to subrogation arises only after it pays a covered claim. PIC did not have
a right to subrogation merely because its insured is allegedly liable and,
therefore, cannot rely on the subrogation provision in its policy in support of its
priority of coverage argument.
In addition, PIC would only be subrogated to KHA's "rights of recovery
against any person or organization." As discussed, KHA's right to recovery
based on common law indemnity would be against Dr. Fakulujo, not MMIC.
A-2847-24 18 Neither KHA nor PIC would be able to maintain a direct action against MMIC
for common law indemnity. By claiming MMIC is obligated to exhaust its limits
before the PIC policy is triggered based on principles of common law indemnity,
that is effectively what PIC is attempting to do. There is no basis, therefore, for
PIC's claim that principles of common law indemnification require MMIC to
exhaust its limits of liability before the PIC policy is triggered.
We are not persuaded that principles of common law indemnity can
override the express terms of the insurance policies at issue. PIC is obligated,
pursuant to the express terms of its policy, to pay the full amount of KHA's
liability in the malpractice action without regard to any right to common law
indemnification KHA may have against Dr. Fakulujo.
Our decision in Maryland Casualty does not dictate a different result.
There, the employer's insurer asserted a claim for common law indemnification
against the tortfeasor employee and the employee's insurer based on its right to
subrogation after paying a covered claim. Maryland Casualty, 48 N.J. Super. at
318-19. We determined, under those circumstances, that the employer's insurer
should be permitted to assert an indemnification claim, based on its right to
subrogation, against the employee's insurer to prevent "circuity of action." Id.
at 328.
A-2847-24 19 We did not conclude, as PIC argues here, that the limits of the employee's
insurer's insurance policy had to be exhausted before the employer's policy was
triggered. The question of priority of coverage was not implicated in that case
because the employer's insurer had already paid a covered claim and was seeking
reimbursement based on its right to subrogation. Nor did we conclude, as PIC
attempts to do here, that the employer's insurer did not need to actually assert a
claim for indemnification against the tortfeasor employee or the employee's
insurer to obtain reimbursement.
In this case, PIC did not assert a claim for reimbursement based on
common law indemnity against Dr. Fakulujo or MMIC. The question of whether
PIC now has a right to seek common law indemnification from Dr. Fakulujo or
MMIC is not before us on this appeal, and we offer no opinion on the viability
of such a claim if it is brought in the future.
PIC's arguments relating to the applicable limits of liability under the
MMIC policy, the "other insurance" provisions of the policies, and the recovery
of defense costs are premised on its claim that KHA is entitled to EL coverage
under the MMIC policy. Because we concluded it is not, we need not address
those arguments.
A-2847-24 20 We reverse the January 31, 2025 order to the extent it found KHA is
entitled to EL coverage under the MMIC policy and MMIC must exhaust its
applicable $1 million limit of liability before the PIC policy is triggered. PIC
and MMIC are each responsible for one half of the settlement amount as they
previously paid. PIC is not entitled to reimbursement of defense fees and costs
it paid on behalf of its insured, KHA, in connection with the malpractice action
because it owed KHA an independent duty to defend and its claim for
reimbursement is based on the contention that KHA is entitled to EL coverage
under the MMIC policy, which we reject.
Reversed and remanded for the entry of judgment in conformity with this
opinion. We do not retain jurisdiction.
A-2847-24 21