NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-1237-14T3
ESSEX INSURANCE COMPANY,
Plaintiff,
v.
NEW JERSEY PAN-AFRICAN CHAMBER OF COMMERCE & INDUSTRY, INC.; VACCARO ASSOCIATES, LLC; HAROLD BERLOW, individually and in his official capacity as owner of 700 BANGS AVENUE LLC; 700 BANGS AVENUE LLC; MLB CONSTRUCTION AND CONSULTING, INC.; FRENCH & PARRELLO ASSOCIATES, P.A.; GRAY, WATT & PARTNERS; COLLECTIVE CONCRETE, INC.; ATLANTIC SHEET PILE, INC., NOREAST, INC.; STEVEN A. TARDY, individually and in his official capacity as agent/employee of FRENCH & PARRELLO ASSOCIATES, P.A.; JAMES WATT, individually and in his official capacity as agent/employee of GRAY, WATT & PARTNERS; DAVID ZOLTAK, individually and in his official capacity as agent/employee of NOREAST, INC; MELBER GEOVANNY TINITANA; WORK ARCHITECTURE AND DESIGNS, INC.; CONCRETE CONSTRUCTION AND COUNSELING, INC.; APPLEGATE ENGINEERING SERVICE, INC.; and CERTIFIED TESTING AND INSPECTIONS, INC.,
Defendants, and
NAVIGATORS SPECIALTY INSURANCE COMPANY,
Defendant/Third-Party Plaintiff- Respondent/Cross-Appellant,
SCOTTSDALE INSURANCE COMPANY,
Third-Party Defendant-Appellant/ Cross-Respondent.
———————————————————————————————
Argued March 6, 2017 – Decided September 14, 2017
Before Judges Sabatino, Nugent, and Haas.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2320-08.
Gary S. Kull argued the cause for appellant/cross-respondent (Carroll, McNulty & Kull LLC, attorneys; Mr. Kull and Blake Palmer, of counsel and on the brief).
Michael A. Gorokhovich argued the cause for respondent/cross-appellant (Gorokhovich Insurance & Commercial Litigation LLC, attorneys; Mr. Gorokhovich, of counsel and on the brief).
PER CURIAM
This is a declaratory judgment action to determine insurance
coverage for a property damage claim and a personal injury claim,
both of which accrued when a building collapsed. The plaintiffs
in those actions alleged construction activity on adjacent land
2 A-1237-14T3 caused the collapse. On this appeal, Scottsdale Insurance Company,
the insurer of a subcontractor who drove piling at the construction
site, appeals from three orders that, collectively, required
Scottsdale to reimburse defense costs to Navigators Specialty
Insurance Company, the insurer of the general contractor at the
construction site. In issuing its orders, the court rejected,
among other Scottsdale arguments, that a "Subsidence Exclusion"
in its policy excluded coverage. We find the subsidence exclusion
clause unambiguous and applicable. We thus reverse the summary
judgment order.
The material facts are undisputed. Construction was underway
on 700 Bangs Avenue, LLC's Asbury Park property, which was adjacent
to New Jersey Pan-African Chamber of Commerce & Industry, Inc.'s
building, the building that partially collapsed during the
construction. 700 Bangs had contracted with a general contractor
insured by Navigators to build a condominium complex. The general
contractor sub-contracted the timber and sheet metal pile work to
a pile company insured by Scottsdale. As required by the sub-
contract, the pile company and Scottsdale named the general
contractor as an additional insured on Scottsdale's Commercial
General Liability policy.
During construction - after the pile subcontractor had driven
timber and sheet pile with a pile driving machine but before the
3 A-1237-14T3 subcontractor had removed certain sheet piles - the Pan-African
building partially collapsed, injuring a construction worker. As
a result of the collapse, the Pan-African building had to be
demolished. The Pan-African Chamber of Commerce commenced a
property damage action and the construction worker commenced a
personal injury action.
The plaintiff in this declaratory judgment action, Essex
Insurance Company, had issued a commercial general liability
policy to 700 Bangs. Essex filed this action seeking an order
declaring it owed no obligation to defend or indemnify, among
others, the general contractor. Essex also sought a declaration
that the general contractor's insurance company, Navigators, was
obligated to defend and indemnify 700 Bangs. Navigators filed a
third-party complaint against Scottsdale, alleging, among other
things, that Scottsdale was obligated to provide a defense to the
general contractor.
Essex successfully moved for summary judgment.1 On cross-
motions for summary judgment filed by Navigators and Scottsdale,
the trial court entered an order of partial summary judgment for
Navigators, declaring that Scottsdale had a duty to defend the
1 We affirmed the trial court's grant of summary judgment to Essex. Essex Ins. Co. v. New Jersey Pan-African Chamber of Commerce & Indus., No. A-1178-11 (App. Div. Aug. 27, 2013).
4 A-1237-14T3 general contractor in the underlying property damage and personal
injury actions. In doing so, the court rejected Scottsdale's
argument that its policy's subsidence exclusion excluded coverage.
The trial court denied Scottsdale's motion for reconsideration and
later entered an order requiring Scottsdale to reimburse
Navigators $210,021.49, the cost of Navigators' defense of its
insured, the general contractor. The court denied Navigators'
application for fees. Scottsdale filed an appeal and Navigators
filed a cross appeal.
Scottsdale raises five arguments on appeal: its policy's
subsidence clause excluded coverage; coverage under its additional
insured endorsement was limited to the general contractor's
vicarious liability; the additional insured endorsement naming the
general contractor did not become effective until after the acts
for which Scottsdale's insured, the pile subcontractor, were
allegedly liable; the general contractor did not qualify as an
additional insured under the Scottsdale policy; and the Scottsdale
policy's residential exclusion precluded coverage. Navigators
contests these arguments in its cross-appeal, alternatively argues
the Scottsdale policy should be reformed to void its residential
exclusion, and also argues the trial court erroneously denied its
fee application.
5 A-1237-14T3 We review a trial court's order granting summary judgment de
novo, applying the same standard the trial court applies, namely,
the standard set forth in Rule 4:46-2(c). Conley v. Guerrero, 228
N.J. 339, 346 (2017). Mindful of this standard, we first address
whether Scottsdale had a duty to defend the general contractor in
light of its policy's subsidence exclusion. The exclusion states:
This policy does not apply to "bodily injury" or "property damage" caused by, resulting from, attributable or contributed to, or aggravated by the subsidence of land as a result of landslide, mudflow, earth sinking or shifting, resulting from operations of the named insured or any subcontractor of the named insured.
In rejecting Scottsdale's contention the subsidence clause
excluded coverage, the trial court acknowledged the exclusion was
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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-1237-14T3
ESSEX INSURANCE COMPANY,
Plaintiff,
v.
NEW JERSEY PAN-AFRICAN CHAMBER OF COMMERCE & INDUSTRY, INC.; VACCARO ASSOCIATES, LLC; HAROLD BERLOW, individually and in his official capacity as owner of 700 BANGS AVENUE LLC; 700 BANGS AVENUE LLC; MLB CONSTRUCTION AND CONSULTING, INC.; FRENCH & PARRELLO ASSOCIATES, P.A.; GRAY, WATT & PARTNERS; COLLECTIVE CONCRETE, INC.; ATLANTIC SHEET PILE, INC., NOREAST, INC.; STEVEN A. TARDY, individually and in his official capacity as agent/employee of FRENCH & PARRELLO ASSOCIATES, P.A.; JAMES WATT, individually and in his official capacity as agent/employee of GRAY, WATT & PARTNERS; DAVID ZOLTAK, individually and in his official capacity as agent/employee of NOREAST, INC; MELBER GEOVANNY TINITANA; WORK ARCHITECTURE AND DESIGNS, INC.; CONCRETE CONSTRUCTION AND COUNSELING, INC.; APPLEGATE ENGINEERING SERVICE, INC.; and CERTIFIED TESTING AND INSPECTIONS, INC.,
Defendants, and
NAVIGATORS SPECIALTY INSURANCE COMPANY,
Defendant/Third-Party Plaintiff- Respondent/Cross-Appellant,
SCOTTSDALE INSURANCE COMPANY,
Third-Party Defendant-Appellant/ Cross-Respondent.
———————————————————————————————
Argued March 6, 2017 – Decided September 14, 2017
Before Judges Sabatino, Nugent, and Haas.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2320-08.
Gary S. Kull argued the cause for appellant/cross-respondent (Carroll, McNulty & Kull LLC, attorneys; Mr. Kull and Blake Palmer, of counsel and on the brief).
Michael A. Gorokhovich argued the cause for respondent/cross-appellant (Gorokhovich Insurance & Commercial Litigation LLC, attorneys; Mr. Gorokhovich, of counsel and on the brief).
PER CURIAM
This is a declaratory judgment action to determine insurance
coverage for a property damage claim and a personal injury claim,
both of which accrued when a building collapsed. The plaintiffs
in those actions alleged construction activity on adjacent land
2 A-1237-14T3 caused the collapse. On this appeal, Scottsdale Insurance Company,
the insurer of a subcontractor who drove piling at the construction
site, appeals from three orders that, collectively, required
Scottsdale to reimburse defense costs to Navigators Specialty
Insurance Company, the insurer of the general contractor at the
construction site. In issuing its orders, the court rejected,
among other Scottsdale arguments, that a "Subsidence Exclusion"
in its policy excluded coverage. We find the subsidence exclusion
clause unambiguous and applicable. We thus reverse the summary
judgment order.
The material facts are undisputed. Construction was underway
on 700 Bangs Avenue, LLC's Asbury Park property, which was adjacent
to New Jersey Pan-African Chamber of Commerce & Industry, Inc.'s
building, the building that partially collapsed during the
construction. 700 Bangs had contracted with a general contractor
insured by Navigators to build a condominium complex. The general
contractor sub-contracted the timber and sheet metal pile work to
a pile company insured by Scottsdale. As required by the sub-
contract, the pile company and Scottsdale named the general
contractor as an additional insured on Scottsdale's Commercial
General Liability policy.
During construction - after the pile subcontractor had driven
timber and sheet pile with a pile driving machine but before the
3 A-1237-14T3 subcontractor had removed certain sheet piles - the Pan-African
building partially collapsed, injuring a construction worker. As
a result of the collapse, the Pan-African building had to be
demolished. The Pan-African Chamber of Commerce commenced a
property damage action and the construction worker commenced a
personal injury action.
The plaintiff in this declaratory judgment action, Essex
Insurance Company, had issued a commercial general liability
policy to 700 Bangs. Essex filed this action seeking an order
declaring it owed no obligation to defend or indemnify, among
others, the general contractor. Essex also sought a declaration
that the general contractor's insurance company, Navigators, was
obligated to defend and indemnify 700 Bangs. Navigators filed a
third-party complaint against Scottsdale, alleging, among other
things, that Scottsdale was obligated to provide a defense to the
general contractor.
Essex successfully moved for summary judgment.1 On cross-
motions for summary judgment filed by Navigators and Scottsdale,
the trial court entered an order of partial summary judgment for
Navigators, declaring that Scottsdale had a duty to defend the
1 We affirmed the trial court's grant of summary judgment to Essex. Essex Ins. Co. v. New Jersey Pan-African Chamber of Commerce & Indus., No. A-1178-11 (App. Div. Aug. 27, 2013).
4 A-1237-14T3 general contractor in the underlying property damage and personal
injury actions. In doing so, the court rejected Scottsdale's
argument that its policy's subsidence exclusion excluded coverage.
The trial court denied Scottsdale's motion for reconsideration and
later entered an order requiring Scottsdale to reimburse
Navigators $210,021.49, the cost of Navigators' defense of its
insured, the general contractor. The court denied Navigators'
application for fees. Scottsdale filed an appeal and Navigators
filed a cross appeal.
Scottsdale raises five arguments on appeal: its policy's
subsidence clause excluded coverage; coverage under its additional
insured endorsement was limited to the general contractor's
vicarious liability; the additional insured endorsement naming the
general contractor did not become effective until after the acts
for which Scottsdale's insured, the pile subcontractor, were
allegedly liable; the general contractor did not qualify as an
additional insured under the Scottsdale policy; and the Scottsdale
policy's residential exclusion precluded coverage. Navigators
contests these arguments in its cross-appeal, alternatively argues
the Scottsdale policy should be reformed to void its residential
exclusion, and also argues the trial court erroneously denied its
fee application.
5 A-1237-14T3 We review a trial court's order granting summary judgment de
novo, applying the same standard the trial court applies, namely,
the standard set forth in Rule 4:46-2(c). Conley v. Guerrero, 228
N.J. 339, 346 (2017). Mindful of this standard, we first address
whether Scottsdale had a duty to defend the general contractor in
light of its policy's subsidence exclusion. The exclusion states:
This policy does not apply to "bodily injury" or "property damage" caused by, resulting from, attributable or contributed to, or aggravated by the subsidence of land as a result of landslide, mudflow, earth sinking or shifting, resulting from operations of the named insured or any subcontractor of the named insured.
In rejecting Scottsdale's contention the subsidence clause
excluded coverage, the trial court acknowledged the exclusion was
presumptively valid. The court noted, however, the complaints
in the underlying actions alleged the subcontractor's conduct
caused vibrations and erosions to the surrounding land. The court
reasoned that for the exclusion to apply, Scottsdale was required
to prove "that the subsidence was caused by an earth movement,
which includes earth rising, sinking, shifting, or subsiding,
landslide, or mudflow." Thus, the court framed the issue as
"whether vibrations caused by [the pile subcontractor's] operation
caused one of these specific events." The court concluded,
"[r]easonable minds can disagree as to whether vibrations mean
6 A-1237-14T3 earth shifting or sinking. The policy does not provide for a
definition of earth shifting. Additionally, the policy does not
negate coverage for all 'earth movements,' which would have
encompassed vibrations."
Denying Scottsdale's motion for reconsideration, the court
reiterated that "[w]hether vibrations can be considered a type of
earth shifting is a matter of contention. Thus, the subsidence
exclusion is an ambiguous one and Scottsdale is not entitled to
reconsideration on this issue."
Scottsdale contends the trial court erred when it determined
"Scottsdale must prove that the subsidence was caused by an earth
movement. . . ." Scottsdale asserts it was instead required
"merely [to] show that the allegations of the [u]nderlying
[a]ctions fall within the language of the exclusion." According
to Scottsdale, the allegations in the underlying actions'
complaints fall squarely within its policy's subsidence exclusion,
which was unambiguous.
Navigators contends the trial court correctly concluded the
Scottsdale policy's subsidence exclusion is ambiguous. According
to Navigators, because the clause consists of "four sub-clauses
strung together by [three] causal relationships in reverse order,
where the first listed causal relationship is broader than the two
7 A-1237-14T3 subsequent causal links which require only a 'resulting from'
relationship," the clause is hopelessly obtuse.
Navigators and Scottsdale dispute whether Scottsdale owed
Navigator's insured and Scottsdale's additional insured — the
general contractor — a duty to defend. "The duty to defend comes
into being when the complaint states a claim constituting a risk
insured against." Voorhees v. Preferred Mut. Ins. Co., 128 N.J.
165, 173 (1992) (quoting Danek v. Hommer, 28 N.J. Super. 68, 77
(App. Div. 1953), aff'd o.b., 15 N.J. 573 (1954)). Thus, a court
determines "[w]hether an insurer has a duty to defend . . . by
comparing the allegations in the complaint with the language of
the policy. When the two correspond, the duty to defend arises,
irrespective of the claim's actual merit." Ibid.
Here, Scottsdale contends the property damage and personal
injury complaints did not state a claim against a risk it insured
because the claim fell within its policy's subsidence exclusion.
Exclusions in insurance policies are presumptively valid and
enforceable "if they are 'specific, plain, clear, prominent, and
not contrary to public policy.'" Flomerfelt v. Cardiello, 202
N.J. 432, 441 (2010) (quoting Princeton Ins. Co. v. Chunmuang, 151
N.J. 80, 95 (1997)). In contrast, courts will find "a genuine
ambiguity to arise where the phrasing of the policy is so confusing
8 A-1237-14T3 that the average policyholder cannot make out the boundaries of
coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979).
Generally, exclusions are narrowly construed. Flomerfelt,
supra, 202 N.J. at 442. The insurer has the burden of bringing
the case within the exclusion. Am. Motorists Ins. Co. v. L-C-A
Sales Co., 155 N.J. 29, 41 (1998). Courts must be careful,
however, "not to disregard the 'clear import and intent' of a
policy's exclusion." Flomerfelt, supra, 202 N.J. at 442 (quoting
Westchester Fire Ins. Co. v. Cont'l Ins. Cos., 126 N.J. Super. 29,
41 (App. Div. 1973), aff'd o.b., 65 N.J. 152 (1974)). Far-fetched
interpretations of a policy exclusion are insufficient to create
an ambiguity requiring coverage. Stafford v. T.H.E. Ins. Co., 309
N.J. Super. 97, 105 (App. Div. 1998).
Whether the terms of an insurance contract are "clear or
ambiguous is . . . a question of law." Nester v. O'Donnell, 301
N.J. Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident
Life and Cas. Ins. Co., 828 F. Supp. 275, 282 (D.N.J. 1992), aff'd,
993 F.2d 877 (3d Cir. 1993)). For that reason, we owe no deference
to the trial court's decision about the issue. Manalapan Realty,
L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
In the case before us, the complaints' allegations fall within
the Scottsdale policy's subsidence exclusion. The first amended
property damage complaint — included in the summary judgment record
9 A-1237-14T3 — alleges during the excavation and construction of the footing
and foundation for 700 Bangs' new building, various entities
affiliated with the construction, among other activities, used
"heavy machine operation, like a pile driver or backhoe, upon or
near [Pan-African's] building." The complaint alleges defendants
- including Scottsdale's insured, the pile subcontractor - after
removing soil from excavated portions of their property, "did
force and drive into the bottom of the excavation timber pile
piers and at points along their east, north and west boundary
lines certain matched heavy steel sheet piling, which pilings
defendants proceeded to drive, by means of a heavy machine similar
to a piledriver, into the bottom of the excavation."
The complaint further alleges "[t]hese operations did jar and
cause the surrounding land to vibrate, which caused the soil
underlying the foundation of [the Pan-African] building to erode
and subside down into the excavation. The strong vibrations,
under and against [the Pan-African] building caused the building
to shake, the exterior walls to crack and the roof to become
uneven." The complaint attributes the building's collapse to
these and other construction activities on 700 Bangs' land.
The second amended personal injury complaint alleges the
"wall collapse and resultant personal injuries were caused" by,
among other acts and omissions, defendants "forc[ing] and
10 A-1237-14T3 [driving] timber pile piers and heavy steel sheet piling by means
of a heavy machine which caused the faring vibrations and erosion
to the surrounding land and its foundation of the [Pan—African]
building."
These complaints allege the pile-driving activity caused
vibrations which in turn caused the soil beneath the Pan-African
building's foundations to "erode and subside down into the
excavation"; and caused "erosion to the surrounding land." The
allegations fall within the clear import and intent of the
Scottsdale policy's exclusion for subsidence of land caused by
earth sinking or shifting, resulting from operations of the pile
subcontractor. Flomerfelt, supra, 202 N.J. at 441.
Although we do not necessarily disagree with the trial court's
observation that "[r]easonable minds can disagree as to whether
vibrations mean earth shifting or sinking," that statement is
incomplete. The property damage and personal injury complaints
did not merely allege vibrating sand or soil beneath the Pan-
African building's foundation caused the collapse. Rather, they
allege the vibrations generated by construction activity caused
the sand or soil to "erode and subside down into the excavation."
The earth's erosion and subsiding down into the excavation
constituted earth "sinking or shifting" and thus fell within the
policy's exclusion.
11 A-1237-14T3 Navigators' lengthy argument to the contrary, with its
multiple charts, is the kind of strained interpretation that
overlooks the exclusion's clear import and intent. As we have
previously held, such interpretations are "[in]sufficient to
create an ambiguity requiring coverage." Stafford, supra, 309
N.J. Super. at 105.
Moreover, this is not a situation where "the entangled and
professional interpretation of an insurance underwriter is pitted
against that of an average purchaser of insurance." DiOrio v. New
Jersey Manufacturers Ins. Co., 79 N.J. 257, 270 (1979). To the
contrary, Navigators is itself an insurer that issues policies
consisting of multiple coverage clauses and exclusions, as
evidenced by the commercial general liability policy it issued to
the general contractor in this case. We are confident Navigators
had little difficulty understanding the import and intent of the
Scottsdale policy's subsidence exclusion.
In view of our disposition of the parties' dispute concerning
the subsidence exclusion, we need not address Scottsdale's
remaining arguments or the arguments on Navigators' cross appeal.
We reverse the orders resulting in the grant of summary judgment
to Navigators and remand for the entry of an order of summary
judgment in favor of Scottsdale.
Reversed and remanded. We do not retain jurisdiction.
12 A-1237-14T3 13 A-1237-14T3