## Facts

- Joseph Satkin owned an old, deteriorated multi-family wooden building in Passaic, New Jersey, occupied by multiple residents and slated for demolition.
- A fire broke out in the building’s stairwell in the early morning of May 11, 1973; the fire spread rapidly and killed four people, including Marilyn Ortega Perez.
- Satkin was later convicted of arson, conspiracy to commit arson, and felony murder for intentionally causing the fire.
- Ambassador Insurance Company issued Satkin a comprehensive general liability policy covering liability arising from an “occurrence,” later described as an “accident” resulting in bodily injury that the insured “neither expected nor intended.”
- Rafael Montes, as administrator of Marilyn Ortega Perez’s estate, filed a wrongful-death and personal-injury action against Satkin.
- Ambassador refused to defend Satkin and filed a declaratory judgment action seeking a ruling of no coverage.

## Issues

1. Whether deaths resulting from an intentionally set fire can fall within liability coverage for an “occurrence” defined as an “accident” not “expected nor intended” by the insured.
2. Whether public policy bars liability insurance coverage for civil damages arising from the insured’s intentional, criminal arson and related felony murder.

## Decision

- The New Jersey Supreme Court affirmed the judgment requiring coverage for the tort claimants’ claims against Satkin.
- The Court rejected denial of coverage based solely on an objective finding that injury was “reasonably to be expected” from setting the fire.
- The Court treated the relevant inquiry under “expected or intended” as whether the insured actually intended bodily injury or was substantially certain it would occur.
- The Court held public policy did not bar liability coverage in these circumstances because payment would compensate innocent victims rather than reward the insured’s wrongdoing.

## Legal Principles

- Under “expected or intended” injury language in liability coverage, foreseeability or objective reasonableness alone is insufficient; the focus is on the insured’s subjective intent or substantial certainty that bodily injury would result.
- An insured’s intentional act does not automatically defeat “occurrence/accident” coverage if the resulting injuries were not intended and were not substantially certain from the insured’s standpoint.
- Public policy prohibits insuring an intentional wrongdoer against direct benefit from criminal conduct, but it may permit liability coverage where indemnity principally serves to compensate innocent third-party victims.
- In assessing public policy limits, courts distinguish between protecting the insured from consequences that would encourage wrongdoing and preserving a compensation fund for persons harmed by the insured.

## Conclusion

The court required the insurer to provide liability coverage for wrongful-death claims arising from the insured’s intentional arson because the policy’s “expected or intended” standard turned on intent or substantial certainty of bodily injury, and public policy favored compensating innocent victims rather than denying recovery due to the insured’s criminal conduct.


Ambassador Ins. Co. v. Montes, 76 N.J. 477, 388 A.2d 603 (N.J. 1978)