SHREE RIDDHI SIDDHI HOSPITALITY, LLC VS. SCOTTSDALE INSURANCE COMPANY(L-0627-15, MONMOUTH COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: November 29, 2017
• Docket: A-5210-15T2
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-5210-15T2

SHREE RIDDHI SIDDHI HOSPITALITY, LLC,

Plaintiff-Appellant,

v.

SCOTTSDALE INSURANCE COMPANY,

Defendant-Respondent.

_______________________________

Argued October 30, 2017 – Decided November 29, 2017

Before Judges O'Connor and Vernoia.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-0627-15.

Mauro C. Casci argued the cause for appellant.

George A. Prutting, Jr., argued the cause for respondent (Prutting & Lombardi, attorneys; Gavin Fung and Mr. Prutting, on the brief).

PER CURIAM

Plaintiff Shree Riddhi Siddhi Hospitality LLC appeals from

an order granting defendant Scottsdale Insurance Company's summary judgment motion in this insurance coverage dispute. Because we

agree with the motion court's determination that the insurance

policy clearly and unambiguously excludes coverage for plaintiff's

property damage loss from a sewerage backup, we affirm.

The facts are not disputed. An apartment owned by plaintiff

suffered extensive property damage as the result of a sewerage

backup. Plaintiff sought coverage for the property damage under

its insurance policy with defendant. Defendant disclaimed

coverage, asserting the policy contained an express general

exclusion for damages caused by "[w]ater or water-borne material

which backs up through sewers or drains."

Plaintiff filed the pending insurance coverage action.

Defendant filed a summary judgment motion. In an oral opinion,

the court found the policy's clear language excluded coverage for

damages caused by sewerage backups, and entered an order granting

summary judgment to defendant. This appeal followed.

We conduct a de novo review of a trial court's grant of

summary judgment, and apply the same standard as the trial court.

Conley v. Guerrero, 228 N.J. 339, 346 (2017). The movant is

entitled to summary judgment if the record shows "there is no

genuine issue as to any material fact and "the moving party is

entitled to a judgment or order as a matter of law." Ibid.

(quoting Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co.

2 A-5210-15T2 of Pittsburgh, 224 N.J. 189, 199 (2016)); see also R. 4:46-2(c).

Interpretation of an insurance policy presents a legal question,

which we review de novo. Selective Ins. Co. of Am. v. Hudson E.

Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605

(2012).

There are general principles that guide our interpretation

of an insurance policy. "[C]overage provisions are to be read

broadly, exclusions are to be read narrowly, potential ambiguities

must be resolved in favor of the insured, and the policy is to be

read in a manner that fulfills the insured's reasonable

expectations." Ibid. However, where "the plain language of [a]

policy is unambiguous, we will not engage in a strained

construction to support imposition of liability or write a better

policy for the insured than the one purchased." Templo Fuente,

supra, 224 N.J. at 200; accord Abboud v. Nat'l Union Fire Ins.

Co., 450 N.J. Super. 400, 406-07 (App. Div. 2017).

Where a provision in an insurance policy "is subject to more

than one reasonable interpretation, it is ambiguous[.]" Templo

Fuente, supra, 224 N.J. at 200. It is "[o]nly where there is a

genuine ambiguity" that a court should "read the policy in favor

of the insured." Ibid. A genuine ambiguity exists if "the

phrasing of the policy is so confusing that the average policy

holder cannot make out boundaries of coverage." Ibid.

3 A-5210-15T2 Applying these principles, we discern no basis to reverse the

court's determination that the policy does not provide coverage

for plaintiff's property damages. It is undisputed the damages

were caused by a sewerage backup, and the policy includes a clear

exclusion for such damages. In pertinent part, the General

Exclusions provision states:

A. We do not insure for loss caused directly or indirectly by any of the following.

. . . .

3. Water Damage

Water Damage means:

b. Water or water-borne material which backs up through sewers or drains or which overflows or is discharged from a sump, sump pump or related equipment . . . .

There is no ambiguity in this provision. It expressly

excludes from coverage the precise damages for which plaintiff

seeks coverage under the policy: water damage caused by a backup

through a sewer line. Indeed, plaintiff does not allege this

clear and unequivocal language otherwise excludes from coverage

the property damage it sustained. Instead, plaintiff contends

there are other provisions in the policy that create an ambiguity

4 A-5210-15T2 about coverage, and that the ambiguities should be resolved in its

favor as the insured.

More particularly, plaintiff relies on a policy provision

entitled "Perils Insured Against," which in pertinent part

identifies the physical losses covered by the policy. The Perils

Insured Against provision broadly states there is coverage

"against risk of direct physical loss to property described in

Coverages A and B." Coverage A is the coverage applicable here

because it is for the dwelling on plaintiff's property where the

sewerage backup occurred.1

The Perils Insured Against provision, however, has certain

exclusions. In the first instance, the provision states that the

policy does not provide coverage "for loss . . . [e]xcluded under

General Exclusions." Thus, the Perils Insured Against provision

plainly states that coverage is not provided for losses excluded

under the General Exclusions. Again, plaintiff does not dispute

that the General Exclusion provision unambiguously excludes

property damage caused by sewerage backups from coverage under the

policy.

1 Coverage B, which applies to other structures on the property, is not pertinent here because plaintiff seeks coverage only for damage to the dwelling, which is expressly covered under Coverage A.

5 A-5210-15T2 Subsection (c) of the Perils Insured Against provision

excludes from coverage losses resulting from eight separately

delineated causes. Paragraph c.(8) excludes from coverage losses

caused by "[a]ny of the following":

(a) Wear and tear, marring, deterioration;

(b) Mechanical breakdown, latent defect, inherent vice, or any quality in property that causes it to damage or destroy itself;

(c) Smog, rust or other corrosion, mold, wet or dry rot;

(d) Smoke from agricultural smudging or industrial operations;

(e) Discharge, dispersal, seepage, migration release or escape of pollutants unless the discharge, dispersal, seepage, migration, release or escape is itself caused by a Peril Insured Against named under Coverage C.2

(f) Settling, shrinking, bulging or expansion, including resultant cracking, of bulkheads, pavements, patios, footings, foundations, walls, floors, roofs or ceilings; or

(g) Birds, vermin, rodents, insects or domestic animals.

2 In general terms, the Coverage C provision of the policy provides coverage for "personal property, usual to the occupancy as a dwelling." Plaintiff here sought coverage for property damage under Coverage A. Subsection c.(8)(e) also includes a definition of pollutants that is not applicable to plaintiff's coverage claim.

6 A-5210-15T2 The undisputed facts establish, and plaintiff does not

dispute, that the sewerage backup that caused plaintiff's claimed

property damages was not the result of any of the conditions or

occurrences identified in subsection c.(8). A sewerage backup is

not one of the causes of loss in subsection c.(8). Moreover,

defendant did not deny coverage because plaintiff's losses were

caused by any of the conditions or occurrences listed in subsection

c.(8). Thus, under the plain language of the policy, the subsection

c.(8) exclusions have no application to plaintiff's claimed loss

and do not support plaintiff's claimed entitlement to coverage.

Ignoring the inapplicability of subsection c.(8) to its

coverage claim, plaintiff argues the policy is ambiguous because

it contains an "Exception To c.(8)" provision which, according to

plaintiff, suggests that damages caused by sewerage backups are

covered. We are not persuaded.

The Exception To c.(8) provision does not create an ambiguity

concerning the coverage for plaintiff's claimed loss because it

details only exceptions to the exclusions from coverage in

subsection c.(8) of the policy. The Exception To c.(8) provision,

however, is inapplicable here because plaintiff's losses were not

caused by any of the conditions or occurrences in subsection c.(8).

Plaintiff cannot conjure up coverage or an ambiguity in the policy

by relying on an exception to defined exclusions that are

7 A-5210-15T2 inapplicable to the cause of plaintiff's loss and were not relied

upon by defendant to deny coverage. See Stafford v. T.H.E. Ins.

Co., 309 N.J. Super. 97, 105 (App. Div. 1998) (finding far-fetched

interpretations of a policy are insufficient to create an ambiguity

requiring coverage). Plaintiff was not entitled to coverage under

the plain language of the General Exclusions and the Perils Insured

Against provision's unambiguous reiteration that coverage is not

provided for losses excluded under the General Exclusions.

Plaintiff was not denied coverage under subsection c.(8), and

therefore the exceptions to the subsection c.(8) exclusions

detailed in the Exception To c.(8) provision are inapplicable and

do not create an ambiguity concerning coverage.

Moreover, even if the Exception To c.(8) provision applied,

its plain language requires rejection of plaintiff's coverage

claim for two reasons. First, the provision unambiguously states

that it does not provide coverage where "the loss is otherwise

excluded."3 Again, losses caused by sewerage backups are otherwise

excluded by the General Exclusions and again in the Perils Insured

Against provision. Second, the Exception To c.(8) provision

provides coverage, as an exception to the exclusions in subsection

c.(8), for "an accidental discharge or overflow of water . . .

3 The Exception To c.(8) provision states that it does not extend coverage to losses excluded under the General Exclusions.

8 A-5210-15T2 from within . . . a sewer pipe off" of plaintiff's property.

Here, there is no claim that plaintiff's losses were caused by

discharge from within a sewer pipe off of plaintiff's property.

To the contrary, the undisputed facts show plaintiff's losses

resulted from a discharge of water from a sewer pipe that was

within plaintiff's apartment.

In sum, we are convinced the policy is not "so confusing that

the average policyholder cannot make out the boundaries of

coverage," and therefore reject plaintiff's assertion there was a

genuine ambiguity in the policy that should be resolved in favor

of finding coverage. Weedo v. Stone-E-Brick, Inc., 81 N.J. 233,

247 (1979). The motion court correctly determined that losses due

to sewerage backups, like the losses sustained by plaintiff, are

excluded from coverage under the plain language of the General

Exclusions and the Perils Insured Against provision.

Affirmed.

9 A-5210-15T2