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Legal Memorandum: Stay Pending Resolution in Another State

Issue: What are the requirements to stay a proceeding pending resolution of an action in another state?

Area of Law: Litigation & Procedure
Keywords: An action pending in another state; Concurrent jurisdiction; Comity principles
Jurisdiction: New Jersey
Cited Cases: 281 N.J. Super. 216; 286 N.J. Super. 24; 668 A.2d 67
Cited Statutes: None
Date: 08/01/2010

Exclusions in insurance policies must be “construed narrowly and strictly against the insurer and, like coverage, in accordance with the expectations of the insured.”  Travelers Indem. Co. v. Bloomington Steel & Supply Co., 718 N.W.2d 888, 894 (Minn. 2006).

No Minnesota cases appear to have directly addressed a wrongful-act exclusion.  However, the Eighth Circuit Court of Appeals opinion applying Missouri insurance law is instructive.  In American Home Assurance Co. v. Pope 591 F.3d 992, 999-1000 (8th Cir. 2010) the court applied the universal principles of insurance policy construction and concluded that the knowingly wrongful act exclusion in a professional services liability policy was ambiguous and therefore must be construed in favor of the insured.  It reasoned:

The ambiguous nature of the contract becomes apparent when the conduct expressly covered by the policy is compared and contrasted with the conduct expressly excluded.  First, the contract states it will insure damages resulting from a “wrongful act,” defined, in relevant part, as “any actual or alleged negligent act, error, or omission.” . . . Then, the contract excludes coverage for liabilities resulting from a knowingly wrongful act.  The parties provide two quite different interpretations for this knowingly wrongful act exclusion.

 

American Home asserts, because Dr. Strnad knew he had a duty to report [abuse] and violated that duty, Dr. Strnad committed a knowingly wrongful act, and his conduct is expressly excluded under the policy.  Kelly maintains the knowingly wrongful act exclusion is an exclusion for intentional, not […]

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