In De Chacon v. Caesars Entertainment Corp., et al., the New Jersey Appellate Division issued an unpublished opinion affirming summary judgment in favor of United Services Automobile Association (USAA), holding that a homeowners insurance policy issued in New York did not provide coverage for injuries arising from an intentional assault at an Atlantic City casino .

Background of the Case

The case arose from a physical altercation at Bally’s Atlantic City in September 2018, during which defendant Michael Nieves punched plaintiff Jesse De Chacon, causing significant bodily injury. Nieves later pled guilty to third-degree aggravated assault. De Chacon and a co-plaintiff sued Nieves and others for damages and later asserted claims against USAA, which had issued a homeowners policy to Nieves’s parents in New York.

USAA denied coverage, asserting it had no duty to defend or indemnify Nieves. The trial court dismissed the plaintiffs’ direct claims against USAA, denied their attempt to intervene in Nieves’s coverage action, and ultimately granted summary judgment to USAA on Nieves’s cross-claim seeking coverage.

Choice of Law: New York Law Applies

A central issue on appeal was whether New Jersey or New York law governed interpretation of the insurance policy.

The court observed that there was a conflict between New York and New Jersey law. Under NY law, “an insured who pleaded guilty to assault is not entitled to insurance coverage…because the issue of his intent to inflict bodily injury on the other person is no longer in question.” Under NJ law, “an insured who pleaded guilty to assault may still be entitled to insurance coverage for damages caused by the assault.”

The Appellate Division held that New York law applied because New York had the most significant interests in the law applying to the insurance policies issued in New York, covering a New York home, and issued to New York residents.

The court rejected the argument that New Jersey law should apply simply because the incident occurred in New Jersey. The court held that New York had the most significant relationship to the insurance contract and therefore applied to the questions of insurance coverage.

No “Occurrence” and No Coverage

Applying New York law, the Appellate Division held that Nieves’s conduct did not constitute an “occurrence” under the policy, which defined coverage-triggering events as accidents. The court also held that Nieves’s guilty plea to aggravated assault was dispositive under New York law, estopping him from arguing that the incident was accidental or unintentional.

As a result, USAA had no duty to defend or indemnify him for the claims arising from the assault.

Same Result Under New Jersey Law

Notably, the court also observed that even if New Jersey law had applied, the outcome would have been the same. Based on the record, Nieves subjectively intended to cause at least some injury when he struck the plaintiff, which precluded coverage under New Jersey’s insurance law as well.

Key Takeaways

This decision reinforces several important principles in insurance coverage disputes:

• Courts will apply the law of the state with the most significant relationship to the insurance contract, not necessarily the location of the incident or injury.
• Intentional assaults are often not covered “occurrences” under standard homeowners policies.
• Under New York law a guilty plea to an assault offense precludes a policyholder from characterizing the conduct as accidental for coverage purposes.
• Exceptions for lawful or reasonable force are narrowly construed and fact-specific.

Contact us to discuss your insurance coverage issues. We represent parties seeking coverage such as policyholders, insureds, additional insureds, and tendering parties.

Attorney Advertising. This article is for informational purposes only and does not constitute legal advice.

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Jonathan P. Vuotto, Esq.
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Direct: (973) 532-6242

Thomas P. Sheridan, Esq.
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