NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2767-13T1
CYPRESS POINT CONDOMINIUM ASSOCIATION, INC., APPROVED FOR PUBLICATION
Plaintiff-Appellant/ July 9, 2015 Cross-Respondent, APPELLATE DIVISION v.
ADRIA TOWERS, L.L.C.; D. LOUREIRO MASONRY CONTRACTOR; DEAN MARCHETTO ASSOCIATES, P.C.; PEREIRA CONSTRUCTION, L.L.C.; AMERICAN ARCHITECTURAL RESTORATION; METRO HOMES, L.L.C.; COMMERCE CONSTRUCTION MANAGEMENT, L.L.C.; WATERFRONT MANAGEMENT SYSTEMS, L.L.C.; NCF GLAZING & ERECTING, INC.; and MDNA FRAMING, INC.,
Defendants,
and
WEATHER-TITE,
Defendant/Third-Party Plaintiff,
v.
PEREIRA CONSTRUCTION, L.L.C., and AMERICAN ARCHITECTURAL RESTORATION,
Third-Party Defendants,
and EVANSTON INSURANCE COMPANY,
Defendant/Third-Party Plaintiff-Respondent/ Cross-Appellant,
NATIONAL INDEMNITY COMPANY,
Third-Party Defendant,
CRUM & FORSTER SPECIALTY INSURANCE COMPANY,
Third-Party Defendant- Respondent/Cross-Appellant.
____________________________________________
Argued May 27, 2015 – Decided July 9, 2015
Before Judges Yannotti, Fasciale and Hoffman.
On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket No. L- 2260-11.
Mark M. Wiechnik argued the cause for appellants/cross-respondents Cypress Point Condominium Association, Inc., (Ansell Grimm & Aaron, P.C., attorneys; Mr. Wiechnik and Breanne M. DeRaps, on the brief).
Elliott Abrutyn argued the cause for respondent/cross-appellant Evanston Insurance Company (Morgan Melhuish Abrutyn, attorneys; Mr. Abrutyn, of counsel; Mr. Abrutyn and Thomas G. Rantas, on the brief).
John S. Favate argued the cause for respondent/cross-appellant Crum & Forster Specialty Insurance Company (Hardin, Kundla,
2 A-2767-13T1 McKeon & Poletto, P.A., attorneys; George R. Hardin and Arthur A. Povelones, Jr., of counsel; Mr. Hardin, Mr. Povelones, and Brian C. Alfson, on the brief).
The opinion of the court was delivered by
FASCIALE, J.A.D.
Plaintiff, a condominium association, brought claims
against the association's developer, Adria Towers, L.L.C. (the
"developer"), the developer's insurers, Evanston Insurance
Company ("Evanston") and Crum & Forster Specialty Insurance
Company ("Crum & Forster") (collectively the "insurers"), and
various subcontractors (the "subcontractors"). The developer
served as the general contractor on the condominium project and
hired the subcontractors who performed all the construction
work. Plaintiff sought coverage from the insurers under the
developer's commercial general liability ("CGL") insurance
policies for consequential damages caused by the subcontractors'
defective work.1
The judge determined that there was no "property damage" or
"occurrence" as required by the policy to trigger coverage,
granted summary judgment to Evanston, and dismissed the
complaint against Crum & Forster as moot. Plaintiff appeals
1 The insurers' policies contain the same pertinent language. We therefore refer to the policies hereinafter in the singular (the "policy"). Plaintiff's standing to bring this lawsuit is not contested on appeal.
3 A-2767-13T1 from a January 31, 2014 order denying reconsideration of the
order granting summary judgment to Evanston. The insurers
cross-appeal from various orders contending that if we reverse
on plaintiff's appeal, then we should address their arguments
raised, but not considered, by the judge.2
We review the denial of a motion for reconsideration to
determine whether the trial court abused its discretionary
authority. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App.
Div. 1996). When reviewing an order granting summary judgment,
we apply the same standards that the trial court applied when
ruling on the motion. Oyola v. Xing Lan Liu, 431 N.J. Super.
493, 497 (App. Div.), certif. denied, 216 N.J. 86 (2013).
The sole question in this appeal is whether consequential
damages to the common areas of the condominium complex and to
the unit owners' property, caused by the subcontractors'
defective work, constitute "property damage" and an "occurrence"
under the policy. We consider this issue by interpreting the
plain language of the policy, which follows the Insurance
2 Evanston cross-appeals from orders dated March 16, 2012 (granting plaintiff's motion to assert a direct claim against Evanston); November 8, 2013 (granting summary judgment to Evanston); December 12, 2013 (dismissing Crum & Forster's third- party complaint against Evanston); and January 31, 2014 (denying plaintiff's motion for reconsideration). Crum & Forster cross- appeals from the December 12, 2013 order dismissing as moot plaintiff's claims against it.
4 A-2767-13T1 Services Office, Inc.'s ("ISO") 1986 standard CGL form (the
"1986 ISO form"). Applying the relevant standards, we reverse
the order denying reconsideration, set aside the orders
dismissing plaintiff's complaint, and remand with instructions
to consider the insurers' alternate contentions that plaintiff's
claims are otherwise excluded under the policy.
We hold that the unintended and unexpected consequential
damages caused by the subcontractors' defective work constitute
"property damage" and an "occurrence" under the policy. We base
this holding in part on the developer's reasonable expectation
that, for insurance risk purposes, the subcontractors' faulty
workmanship is to be treated differently than the work of a
general contractor. We reach that conclusion by viewing the
policy as a whole and distinguishing Weedo v. Stone-E-Brick,
Inc., 81 N.J. 233 (1979), and Firemen's Insurance Co. of Newark
v. National Union Fire Insurance Co., 387 N.J. Super. 434 (App.
Div. 2006), two opinions construing ISO's 1973 standard CGL form
(the "1973 ISO form").
I.
We view the facts in the light most favorable to plaintiff,
as we must do at this stage. Brill v. Guardian Life Ins. Co. of
Am., 142 N.J. 520, 540 (1995).
5 A-2767-13T1 The subcontractors failed to properly install the roof,
flashing, gutters and leaders, brick and EIFS facade, windows,
doors, and sealants (the "faulty workmanship"). The faulty
workmanship amounted to what has typically been considered in
the construction industry as defective work. In the insurance
industry, such replacement costs are usually regarded as a cost
of doing business and are considered a "business risk." See
Heldor Indus. v. Atl. Mut. Inc. Co., 229 N.J. Super. 390, 396
(App. Div. 1988) (stating that "the insured assumes the risk of
necessary replacement or repair . . . as a part of the cost of
doing business"). Plaintiff has not argued that the replacement
costs constitute "property damage" and an "occurrence" under the
policy.
According to plaintiff, the faulty workmanship also caused
consequential damages to the "common areas and unit owners'
property [including] damage to steel supports, exterior
sheathing and interior sheathing and sheetrock, insulation and
other interior areas of the building, both visible and
latent[.]" Some unit owners experienced "water infiltration at
the interior window jambs and sills[,]" and "roof leaks." Other
unit owners "experienced significant damage to the interior of
their units, including exterior wall sheathing, wall cavity
6 A-2767-13T1 insulation, insulation sheetrock, wall finishes, wood flooring,
and trim."
In relation to sharing the cost of risks as a matter of
insurance underwriting, consequential damages flowing from
defective work are vastly different than the costs associated
with replacing the defective work. See Hartford Ins. Grp. v.
Marson Constr. Corp., 186 N.J. Super. 253, 258-59 (App. Div.
1982) (holding that defective work causing damage to other
property is not a business risk), certif. denied, 93 N.J. 247
(1983); Newark Ins. Co. v. Acupac Packaging, Inc., 328 N.J.
Super. 385, 392-93 (App. Div. 2000) (noting that damage to
third-party property is a tort liability and not a business risk
or work performance issue).
On appeal, plaintiff raises two principal arguments.
First, plaintiff contends that under a plain reading of the
language in the policy, the consequential damages constitute
"property damage" and an "occurrence." Plaintiff asserts that
we must conduct this initial threshold analysis. If a
determination is made that "property damage" and an "occurrence"
exist, plaintiff concedes that the insurers would be free to
argue, on remand, that plaintiff's claims are otherwise excluded
under the terms of the policy.
7 A-2767-13T1 Second, plaintiff argues that the judge erroneously placed
substantial reliance on the holdings in Weedo and Firemen's to
determine whether there existed "property damage" and an
"occurrence." Plaintiff maintains that those cases are
distinguishable because they (1) involved only replacement costs
flowing from a business risk rather than consequential damages
caused by defective work; and (2) interpreted different policy
language.
II.
We begin by addressing plaintiff's first contention, that
there exists "property damage" and an "occurrence" under the
plain language of the policy. The following well-settled
principles inform our analysis of the policy's terms.
A court's interpretation of an insurance contract is a
determination of law. Sealed Air Corp. v. Royal Indem. Co., 404
N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601
(2008). We afford no special deference to a trial court's
interpretation of the law and the legal consequences that flow
from the established facts. Manalapan Realty, L.P. v. Twp.
Comm. of Manalapan, 140 N.J. 366, 378 (1995). Accordingly, we
review a trial court's interpretation of an insurance policy de
novo. Sealed Air, supra, 404 N.J. Super. at 375.
8 A-2767-13T1 An insurance policy must be construed "as a whole and
effect given to every part thereof." Herbert L. Farkas Co. v.
N.Y. Fire Ins. Co., 5 N.J. 604, 610 (1950); Arrow Indus.
Carriers, Inc. v. Cont'l Ins. Co. of N.J., 232 N.J. Super. 324,
334-35 (App. Div. 1989) (noting that our "responsibility is to
give effect to the whole policy, not just one part of it").
When interpreting insurance contracts, we begin by first
examining the plain language of the policy. Pizzullo v. N.J.
Mfrs. Ins. Co., 196 N.J. 251, 270-71 (2008). If the terms are
clear, then we give them their plain and ordinary meaning.
Ibid. Construction of the insurance policy must be "consistent
with the insured's reasonable expectations." Sealed Air, supra,
404 N.J. Super. at 376 (internal citation and quotation marks
omitted).
Here, the language of the policy follows the 1986 ISO form.
The policy provides the terms for coverage in Section I, A.1,
with certain words defined in Section V. These sections provide
in pertinent part:
SECTION I – COVERAGES
COVERAGE A. BODILY INJURY & PROPERTY DAMAGE LIABILITY
1. Insuring Agreement.
a. We will pay those sums that the Insured becomes legally obligated to pay as damages because of . . .
9 A-2767-13T1 "property damage" to which this insurance [policy] applies.
. . . .
b. This insurance applies to . . . "property damage" only if:
(1) The . . . "property damage" is caused by an "occurrence" that takes place in the "coverage territory"; and (2) The . . . "property damage" occurs during the policy period.3
SECTION V – DEFINITIONS
13. "Occurrence" means an accident, including continuous or repeated exposure to substantially the same general harmful conditions.
16. "Property damage" means:
a. Physical injury to tangible property, including all resulting loss of use of that property . . .; or
b. Loss of use of tangible property that is not physically injured.
3 The parties do not dispute that the alleged "property damage" occurred within the "coverage territory" and policy period.
10 A-2767-13T1 Although the policy does not define the term "accident," our
Supreme Court has held that "the accidental nature of an
occurrence is determined by analyzing whether the alleged
wrongdoer intended or expected to cause an injury." Voorhees v.
Preferred Mut. Ins. Co., 128 N.J. 165, 183 (1992).
Section I, A.1 is followed by Section I, A.2, which
provides separate language excluding various claims. Thus,
before reaching the policy's exclusions, the insuring agreement
requires that there be an initial determination of whether there
is "property damage" and an "occurrence." Construing the
language in Section I, A.1, we conclude that the consequential
damages here amount to "property damage" and an "occurrence."
As to whether there exists "property damage," the
consequential damages clearly constitute "physical injury to
tangible property." The faulty workmanship damaged "the common
areas and unit owners' property[.]" The interior structures,
including the drywall, insulation, wall finishes, and wood
flooring, were damaged by water infiltration from the faulty
workmanship. As a result, the consequential damages constitute
"property damage" as defined under the policy.
As to whether there exists an "occurrence," the
consequential damages amount to an unexpected and unintended
"continuous or repeated exposure to substantially the same
11 A-2767-13T1 general harmful conditions." The insurers do not contend, and
we cannot reasonably believe, that the subcontractors either
expected or intended for their faulty workmanship to cause
"physical injury to tangible property." Thus, the consequential
damages constitute an "occurrence" as defined in the policy.
III.
Turning to plaintiff's second argument, we conclude that in
granting summary judgment, the trial judge erroneously applied
the holdings in Weedo and Firemen's. Those cases are
distinguishable because they (1) involved only replacement costs
flowing from a business risk, rather than consequential damages
caused by defective work; and (2) interpreted different language
than the policy language in this appeal.
A.
In Weedo, the Court did not resolve whether consequential
damages resulting from subcontractors' faulty workmanship
constituted "property damage" or an "occurrence." Rather, the
Court focused only on issues related to insurance coverage. The
insurer conceded that "but for the exclusions in the policy,
coverage would obtain." Weedo, supra, 81 N.J. at 237-38 n.2.
Implicit in this concession, therefore, is the tacit admission
that there was an "occurrence" and "property damage."
12 A-2767-13T1 The Weedo Court, in interpreting the 1973 ISO form, held
that there was no insurance coverage for "faulty workmanship
. . . where the damages claimed [were solely] the cost of
correcting the work itself." Id. at 235. The Court considered
such business-risk damages to be uninsurable. Id. at 240-41.
Here, unlike in Weedo, the consequential damages are not
defective-work damages. In other words, the consequential
damages are distinct from the cost of correcting the work
itself. Thus, the holding in Weedo is not dispositive on the
issue presented in this appeal.
In Firemen's, we also interpreted the 1973 ISO form. We
concluded that there was no "property damage" or "occurrence,"
and thus no insurance coverage, for damages that were solely
related to replacing sub-standard firewalls because the damages
were a business risk, not consequential damages. Firemen's,
supra, 387 N.J. Super. at 443-45. We noted in Firemen's, unlike
here, that there were no allegations of damages to the "rest of
the building," and we followed Weedo indicating that the
replacement of the defective work — a business risk — was
uninsurable. Id. at 443, 446.
Even though Firemen's did not involve consequential
damages, we acknowledged that "the risk of . . . [consequential]
damage to property caused by faulty workmanship," like here, is
13 A-2767-13T1 a different type of risk than the cost of doing business. Id.
at 443 (internal citations and quotation marks omitted). We
stated that
[u]nlike business risks . . . where the tradesman commonly absorbs the cost attendant upon the repair of his faulty work, the accidental injury to property or persons substantially caused by his unworkmanlike performance exposes the contractor to almost limitless liabilities. While it may be true that the same neglectful craftsmanship can be the cause of both a business expense of repair and a loss represented by damage to persons and property, the two consequences are vastly different in relation to sharing the cost of such risks as a matter of insurance underwriting.
[Ibid. (emphasis added) (quoting Weedo, supra, 81 N.J. at 239-40) (internal quotation marks omitted).]
Thus, this case falls within the caveat that Weedo and
Firemen's expressly recognized, and accords with our prior
holdings in Hartford Insurance, supra, 186 N.J. Super. at 258-
59, and Newark Insurance, supra, 328 N.J. Super. at 393. We
emphasize that the consequential damages here are not the cost
of replacing the defective work — that is the improperly
installed roof, flashing, gutters and leaders, brick and EIFS
facade, windows, doors, and sealants. Those costs are
considered a business risk associated with faulty workmanship.
Rather, the consequential damages are those additional damages
14 A-2767-13T1 to the common areas of the condominium building and the unit
owners' property. The consequential damages are therefore not
the cost of correcting the defective work, such as the cost of
replacing the stucco in the Weedo case or replacing the
firewalls as in Firemen's, but rather the cost of curing the
"property damage" arising from the subcontractors' faulty
workmanship.
B.
There are also two critical differences between the 1973
ISO form considered in Firemen's and the 1986 ISO form in this
case. These differences provide additional support for our
conclusion that the trial court's reliance on the holding in
Firemen's is misguided.
First, "occurrence" is defined differently. The 1973 ISO
form defines "occurrence" as "'an accident . . . which results
in . . . property damage neither expected nor intended from the
standpoint of the insured.'" Firemen's, supra, 387 N.J. Super.
at 441. Here, the policy defines "occurrence" as "an accident,
including continuous or repeated exposure to substantially the
same general harmful conditions." "Property damage," therefore,
is not directly included in the policy's definition of
"occurrence," and Firemen's is consequently not squarely on
point.
15 A-2767-13T1 Second and most importantly, the 1986 ISO form includes a
significant exception to an exclusion not contained in the 1973
ISO form. Due to this exception, we conclude that for insurance
risk purposes, consequential damages caused by a subcontractor's
faulty workmanship are considered differently than property
damage caused by a general contractor's work.
Pertinent to our conclusion that reliance on Firemen's is
misplaced, the policy contains the following exclusionary
language that did not appear in the policy we considered in
Firemen's:
2. Exclusions.
This insurance does not apply to:
l. Damage to Your Work [the "Your Work" Exclusion]4
"Property damage" to "your work" arising out of it or any part of it . . . .
This exclusion does not apply if the damaged work or the work out of which the damage arises was performed on your behalf by a subcontractor. [The "subcontractor's exception"].
[(Emphasis added).]
4 The "Your Work" exclusion is premised on the concept of the contractor's business risk.
16 A-2767-13T1 The policy defines "Your Work" as:
a. Work or operations performed by you or on your behalf; and
b. Materials, parts or equipment furnished in connection with such work or operations.
Although we need not resolve whether plaintiff's property
damage claims are excluded under the policy, the addition of the
subcontractor's exception is of critical importance when
determining whether the subcontractors' faulty workmanship
causing consequential damages amounts to "property damage" and
an "occurrence" under the policy. The subcontractor's exception
did not appear in ISO forms before 1986. Commentators have
observed that ISO added the subcontractor's exception because
the insurance and policyholder communities agreed that the CGL policy should provide coverage for defective construction claims so long as the allegedly defective work had been performed by a subcontractor rather than the policyholder itself. This resulted both because of the demands of the policyholder community (which wanted this sort of coverage) and the view of insurers that the CGL was a more attractive product that could be better sold if it contained this coverage.
[Christopher C. French, Construction Defects: Are They "Occurrences"?, 47 Gonz. L. Rev. 1, 8-9 (2011) (citing Jeffery W. Stempel, Stempel on Insurance Contracts § 14.13d at 14-224.8 (3d ed. supp. 2007)).]
ISO also provided guidance regarding the subcontractor's
exception by making clear that the policy "'cover[ed] damage
17 A-2767-13T1 caused by faulty workmanship to other parts of work in progress;
and damage to, or caused by, a subcontractor's work after the
insured's operations are completed.'" U.S. Fire Ins. Co. v.
J.S.U.B., Inc., 979 So. 2d 871, 879 (Fla. 2007) (alteration in
original) (emphasis added) (quoting ISO Circular, Commercial
General Liability Program Instructions Pamphlet, No. GL-86-204
(July 15, 1986)).
As a practical matter, it is very difficult for a general
contractor to control the quality of a subcontractor's work. If
the parties to the insurance contract did not intend a
subcontractor's faulty workmanship causing consequential damages
to constitute "property damage" and an "occurrence," as those
terms are defined in the policy, then it begs the question as to
why there is a subcontractor's exception.
The absence of such an exception in the 1973 ISO form is
important because in defining "property damage" to effectuate
insurance coverage, we previously rejected any attempt to
separate a subcontractor's faulty workmanship from that of a
general contractor. In Firemen's, supra, we recognized that
cases interpreting the 1973 ISO form "equate[d] subcontractors
with general contractors for the purposes of determining whether
there was 'property damage[.]'" 387 N.J. Super. at 446. But
here, the policy includes the subcontractor's exception. Thus,
18 A-2767-13T1 as a matter of an insurance underwriting risk, the exception
treats consequential damages caused from faulty workmanship by
subcontractors differently than damage caused by the work of
general contractors.
Even though we were not required to consider whether there
was an "occurrence" in Firemen's because we had concluded that
there was no "property damage," we noted that "the majority rule
[at that time was] that faulty workmanship [did] not constitute
an 'occurrence.'" Id. at 448. We made that statement, however,
analyzing the 1973 ISO form in a case involving only damages
related to a business risk.
In Firemen's, we cited out-of-state case law involving the
pre-1986 ISO form, which provided that "'[t]he completed product
is to be viewed as a whole, not as a grouping of component
parts.'" Id. at 446 (quoting Knutson Constr. Co. v. St. Paul
Fire & Marine Ins. Co., 396 N.W.2d 229, 236-37 (Minn. 1986)).
But once again, we were construing a different insurance policy
and equating, for insurance underwriting risk purposes, the work
of subcontractors with that of general contractors. Here, the
trial court's treatment of the subcontractors' work and the
developer's completed product "as a whole," ignores the import
and purpose of the subcontractor's exception.
19 A-2767-13T1 Thus, looking at the policy in its entirety, the developer
would reasonably expect that consequential damages caused by the
subcontractors' faulty workmanship constituted "property damage"
and an "occurrence." This reasonable expectation is supported
by applying the definitions of "property damage" and
"occurrence" together with the subcontractor's exception and its
purpose.
IV.
We also find persuasive that "the majority rule [currently]
is that construction defects [causing consequential damages]
constitute 'occurrences[.]'" Construction Defects, supra, 47
Gonz. L. Rev. at 24-26. The leading case decided by the Florida
Supreme Court, United States Fire Insurance Co., supra, held
that under the same policy language as here, consequential
damage caused by defective work constituted "property damage"
and an "occurrence" under the policy. 979 So. 2d at 889-891.
The Court concluded that
faulty workmanship that is neither intended nor expected . . . can constitute an "accident" and thus an "occurrence" under a post-1986 standard form CGL policy. We further conclude that physical injury to the completed project that occurs as a result of the defective work can constitute "property damage" as defined in a CGL policy.
[Id. at 891.]
20 A-2767-13T1 It is notable that the Florida Supreme Court distinguished the
holding in Weedo by stating that Weedo "involved the issue of
whether there was coverage for the contractor's own defective
work, [and] was dependent on the policy language of pre-1986 CGL
policies, including the relevant insuring provisions and
applicable exclusions." Id. at 882.
Other courts have also reached the same conclusion. The
United States Court of Appeals for the Fourth Circuit, applying
Maryland law, found that under the same policy language as here,
liability coverage existed "for the cost to remedy unexpected
and unintended [consequential] property damage to the
contractor's otherwise non-defective work-product caused by the
subcontractor's defective workmanship." French v. Assurance Co.
of Am., 448 F.3d 693, 706 (4th Cir. 2006); see also Construction
Defects, supra, 47 Gonz. L. Rev. at 25-27, n.78-92 (listing
cases that reached similar holdings from the Supreme Courts of
Georgia, Texas, Kansas, Indiana, Minnesota, Alaska, Mississippi,
South Carolina, South Dakota, Tennessee, and Wisconsin).
The judge in this case found persuasive the reasoning
expressed by the Third Circuit in an unpublished and non-
precedential case, Pennsylvania National Mutual Casualty
Insurance Co. v. Parkshore Development Corp., 403 Fed. Appx. 770
(3d Cir. 2010). The Third Circuit remarked that we concluded in
21 A-2767-13T1 Firemen's that "faulty workmanship[,] whether performed by a
contractor or subcontractor[,] which causes damage to the
general contractor's work[,] is not an 'occurrence.'" Id. at
772. In Firemen's, however, we interpreted the 1973 ISO form,
which omitted any reference to the subcontractor's exception to
the "Your Work" exclusion. As a result, any such reliance on
Firemen's is respectfully misplaced.
Interpreting "occurrence" under the policy to include
unexpected and unintended consequential damages caused by the
subcontractors' faulty workmanship will not convert the policy
into a performance bond. See United States Fire, supra, 979 So.
2d at 887-88. A performance bond guarantees the completion of a
construction contract if a contractor defaults, and unlike an
insurance policy, it benefits the project owner rather than the
contractor. Ribeira & Lourenco Concrete Constr. v. Jackson
Health Care Assoc., 254 N.J. Super. 445, 451-54 (App. Div.
1992). A surety, unlike a liability insurer, is also entitled
to indemnification from the contractor. Montefusco Excavating &
Contractor Co. v. Cnty. of Middlesex, 82 N.J. 519, 525 (1980).
Moreover, although we express no opinion as to the weight
of any potential cross-claim against the subcontractors or their
insurance companies, we note that the policy contains an
22 A-2767-13T1 endorsement requiring that the subcontractors name the developer
as an additional insured on the subcontractors' insurance
policies, and the endorsement requires the subcontractors to
maintain CGL insurance in an amount of at least "equal" to the
insurance provided in the policy. As a result, such purported
added insurance protections further prevent the policy from
acting solely like a performance bond by arguably shifting the
insurers' indemnification obligations to the subcontractors and
their insurance companies.
VI.
Finally, concluding that plaintiff met the definitions of
"property damage" and "occurrence" under the policy does not
automatically mean that insurance coverage exists. We do not
reach the question of whether plaintiff is entitled to insurance
coverage under the policy. The insurers contended before the
judge that even if there were "property damage" and an
"occurrence" under the policy, plaintiff's claims would
otherwise be excluded. The judge never reached those issues,
and we decline to do so here.
It is well-established that we "may exercise such original
jurisdiction as is necessary to complete the determination of
any matter on review." R. 2:10-5. However, original
jurisdiction should be exercised with "great frugality" and not
23 A-2767-13T1 when there is a need to "weigh[] evidence anew" or "mak[e]
independent factual findings[.]" State v. Micelli, 215 N.J.
284, 293 (2013) (alterations in original) (citations and
internal quotation marks omitted). The Micelli Court cautioned
against what the insurers are now urging us to do.
Although we decline to exercise original jurisdiction and
address the issues raised by the insurers in their cross-
appeals, the insurers may argue, as plaintiff concedes, on
remand that the exclusions in the policy preclude coverage.
Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
24 A-2767-13T1