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Franklin Packaging Co. v. California Union Insurance Co.

Decided: November 14, 1979.

FRANKLIN PACKAGING COMPANY, A NEW JERSEY CORPORATION, PLAINTIFF-APPELLANT,
v.
CALIFORNIA UNION INSURANCE COMPANY, DEFENDANT AND THIRD-PARTY PLAINTIFF-RESPONDENT, AND HARRY KOOK & SONS, DEFENDANT AND THIRD-PARTY DEFENDANT



On appeal from Superior Court, Law Division, Hudson County.

Seidman, Michels and Devine.

BY THE COURT.

Plaintiff brought suit against its insurer, California Union Insurance Company (California), seeking recovery of damages to its premises and stock alleged to have been caused by vandalism and the flooding which followed. California filed a third-party suit against Harry Kook & Sons, a plumbing contractor, for indemnification, and plaintiff then amended its complaint to include the contractor as a direct defendant.

Defendant California issued a standard fire insurance policy to plaintiff which included coverage for "direct loss by Vandalism and Malicious Mischief." The terms "vandalism" and "malicious mischief" are defined to mean "only willful and malicious damage to or destruction of the property covered hereunder."

Another section of the policy states:

WATER EXCLUSION: This Company shall not be liable for loss caused by, resulting from, contributed to or aggravated by any of the following --

(a) flood, surface water, waves, tidal water or tidal waves, overflow of streams or other bodies of water, or spray from any of foregoing, all whether driven by wind or not;

(b) water which backs up through sewers or drains;

(c) water below the surface of the ground including that which exerts pressure on or flows, seeps or leaks through sidewalks, driveways, foundations, walls, basement or other floors, or through doors, windows or any other openings in such sidewalks, driveways, foundations, walls or floors;

unless loss by explosion as insured against hereunder ensues, and then this Company shall be liable for only such ensuing loss.

At some time during the Memorial Day weekend of 1974 vandals broke into plaintiff's warehouse and drove a "high-low truck" into a water-cooled air conditioning unit, breaking a valve which created a constant flow of water. The air conditioning system was designed to permit water to run out of a half-inch pipe into a six-inch drain connected to the city sewer system. Notwithstanding the broken valve, the water would have drained out of the building but for a blockage in the six-inch pipe below the first floor caused by a burlap bag left in a drain on the same day by codefendant and third-party defendant Harry Kook & Sons while doing plumbing work.*fn1 As a result of the blockage the air conditioning water backed up, causing damage to plaintiff's inventory.

Defendant moved for summary judgment on the ground that the damage was caused by an excluded risk. Initially the trial judge denied summary judgment because the amount of damage to the air conditioner caused by vandalism, as distinguished from water, could not be determined. Subsequently, defendant offered to pay into court the sum of $378 covering the amount of damage to the air conditioner as claimed by plaintiff. The trial judge then ...


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