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Wickner v. American Reliance Ins. Co.

July 31, 1995

HARVEY WICKNER AND BONITA WICKNER, PLAINTIFFS-APPELLANTS,
v.
AMERICAN RELIANCE INSURANCE COMPANY, DEFENDANT-RESPONDENT, AND FITCHBURG MUTUAL INSURANCE COMPANIES, JEFFREY C. SYMEONIDES AND CRUM & FORSTER INSURANCE COMPANIES, DEFENDANTS.



On certification to the Superior Court, Appellate Division, whose opinion is reported at 273 N.J. Super. 560 (1994).

Justices Handler, Pollock, Garibaldi and Coleman join in the per curiam opinion. Justice Stein has filed a separate Dissenting opinion in which the Chief Justice and Justice O'hern join.

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

HARVEY WICKNER, ET AL. V. AMERICAN RELIANCE INSURANCE COMPANY. ET AL. (A-112-94)

Argued February 27, 1995 -- Decided July 31, 1995

PER CURIAM

Harvey and Bonita Wickner resided at a home on Bergen Street in Harrison, New Jersey. From May 19, 1984 to July 11, 1985, the Wickners also owned a three-family residence on Warren Street in Harrison, which they rented. Within one month of the Wickners' conveyance of the Warren Street property, Marina Avila allegedly tripped and fell on the sidewalk abutting the Warren Street residence, sustaining serious injuries. Avila sued the new owners of the premise for negligent construction, maintenance, and repair of the sidewalk. Avila also sued the Wickners, as previous owners of the property, and the builders of the property.

The Wickners had cancelled their insurance policy on the Warren Street property after the conveyance of title. They requested coverage from their homeowner's insurance provider, American Reliance Insurance Co. (American Reliance), under a general liability-coverage provision included in the policy on the Bergen Street residence. American Reliance refused to cover the claim on the basis of two exclusionary provisions in the policy. One provision excluded coverage for bodily injury or property damage arising out of property owned by the insured but unlisted in the policies. The other provision excluded coverage for bodily injury or property damage arising out of business activities of the insured. Because of American Reliance's denial of coverage, the Wickners were required to pay for their own defense in the Avila action.

The Wickners were eventually dismissed from the Avila suit, but not until after they had incurred $140,000 in legal expenses. The Wickners thereafter instituted suit against American Reliance, asserting that it had wrongfully denied coverage for the occurrence alleged by Avila and had wrongfully failed to provide them with a defense in that lawsuit. The Wickners contend that neither exclusionary provision relied on by American Reliance applies to bar coverage because Avila's accident, which triggered the Wickners' liability, occurred after they had sold the property.

The trial court granted the Wickners' summary judgment motion against American Reliance, finding that American Reliance's policy covered the Wickners under the personal liability section of the policy, and that neither exclusion was applicable.

On appeal, the Appellate Division reversed the trial court's decision and remanded the matter for entry of judgment in favor of American Reliance. The Appellate Division concluded that the two exclusions precluded coverage for the occurrence alleged by Avila.

The Supreme Court granted certification.

HELD: Two exclusion provisions in the American Reliance Insurance Company homeowner's policy insuring Harvey and Bonita Wickner clearly and unambiguously bar liability coverage for the personal-injury lawsuit against the insureds. Therefore, American Reliance did not have a duty to defend the Wickners in that lawsuit.

1. In Cogliati v. Ecco High Frequency Corp., this Court held that a predecessor in title who had created or maintained a dangerous sidewalk condition should remain liable to the injured pedestrian regardless of the fact that the property has been conveyed. In the context of a Cogliati claim, the exclusion provision applicable to owned but unlisted property was clear and unambiguous. Contrary to the Dissent's assertion, the Cogliati court did not impose a duty on the predecessor in title to maintain the property free from dangerous conditions that are created after the sale of the property. Thus, because the post-transfer duty recognized in Cogliati arises from the predecessor in title's prior ownership, it does not introduce an ambiguity in the exclusions in their application to the facts of this case. (pp. 4-6)

2. It is illogical and anomalous to assume that an insurance policy precluding coverage for personal injuries or property damage arising out of property owned by an insured but unlisted in the policy could be interpreted to cover such claims simply because the insured had sold the property and, hence, did not "own the property at the time of the occurrence giving rise to liability. Ownership of the premises, and the insured's conduct as an incident of that ownership, gives rise to the potential loss. Thus, if that owned property is not listed in the policy, it is excluded from coverage under the policy. (p. 7)

3. The Wickners contend that the unlisted premises exclusion is inapplicable to property no longer owned by the insured unless there is an express alienation clause. An alienation clause usually provides that property that was owned when the insurance policy went into effect but was sold or alienated during the term of the policy will not be covered with respect to liability arising from an occurrence after the property was alienated. This record does not support the Conclusion that the reasonable expectation of the parties to an insurance contract will have been in any way influenced by the omission of an alienated property clause from the insurance policy. (pp. 7-8)

4. If the policy exclusions were found not to apply in this context, then insureds would be given more insurance protection for having sold their property than would be attributable to them during the time they owned the property. That interpretation can be neither derived from the language of the policy, reasonably inferred from the intentions of the parties, nor imputed as their reasonable expectations. Similar reasoning applies to the business activities exclusion. It is the insured's conduct creating the dangerous condition, not the insured's status at the time of the occurrence, that is significant. Because the insurer should be liable only for risks bargained for in the insurance contract, coverage for injuries arising out of business or commercial activity should be precluded. The Wickners' ownership of the Warren Street property was clearly a business pursuit. Thus, Avila's injury arose out of the Wickners' business activities and, thus, constitutes conduct excluded from coverage. (pp. 8-10)

Judgment of the Appellate Division is AFFIRMED.

JUSTICE STEIN, Dissenting, in which the CHIEF JUSTICE and JUSTICE O'HERN join, is of the view that, in the context of this Court's decision in Cogliati, the two exclusions -- one for bodily injury or property damage arising out of property owned by the insured but unlisted in the policy and the other for bodily injury or property damage arising out business activities of the insured -- are sufficiently ambiguous to impose on the insurer the duty to provide a defense to the suit against the Wickners arising from an injury that occurred on the sidewalk abutting the property they formerly had owned.

JUSTICES HANDLER, POLLOCK, GARIBALDI and COLEMAN join in the per curiam opinion. JUSTICE STEIN has filed a separate Dissenting opinion in which the CHIEF JUSTICE and JUSTICE O'HERN join.

PER CURIAM

Plaintiffs, Harvey and Bonita Wickner, resided at a home at 620 Bergen Street in Harrison, New Jersey. They also owned a three-family residence at 328 Warren Street in Harrison, from May, 19, 1984 to July 11, 1985, which they rented. Less than one month after selling the Warren Street property, Marina Avila allegedly tripped and fell on the sidewalk abutting the three-family residence, sustaining serious injuries. Avila sued the new owners of the premises for negligent construction, maintenance, and repair of the sidewalk. Avila also included the Wickners as previous owners of the property, as well as the builders of the property, as defendants in the suit.

The Wickners canceled their insurance policy on the Warren Street property after the conveyance of title. They requested coverage from their homeowners' insurance provider, defendant, American Reliance Insurance Company (American Reliance), under a general liability-coverage provision included in the policy on their Bergen Street residence. American Reliance refused to cover the liability on the basis of two exclusionary provisions in the policy, which, respectively, excluded liability coverage for bodily injury or property damages arising out of property owned but unlisted in the policy and out of business activities of the insured. The Wickners were thus forced to finance the defense of the Avila action on their own.

The Wickners were eventually dismissed from that suit, but not until after they had incurred $143,000 in legal expenses. Plaintiffs thereafter instituted this action against American Reliance, asserting that it had wrongfully denied coverage for the occurrence alleged by Avila, and had wrongfully failed to provide plaintiffs with a defense in that lawsuit. Plaintiffs contend that neither exclusionary provision relied on by American Reliance applies to bar coverage because Ms. Avila's accident, which triggered the Wickners' liability, occurred after they had sold the property.

The trial court granted the plaintiffs' summary judgment motion against American Reliance, determining that American Reliance's policy covered plaintiffs under the personal liability section of the policy, and that neither exclusion was applicable. It entered judgment against American Reliance for $65,453.04 for failure to provide coverage in the Avila lawsuit and $77,855.98 for costs, counsel fees, and interest in this suit to enforce liability coverage and for legal assistance that had been wrongfully denied.

On appeal the Appellate Division reversed the trial court's summary judgment and remanded the case to the Law Division for entry of judgment in favor of American ...


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