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Bromfeld v. Harleysville Ins. Companies

February 27, 1997


On appeal from the Superior Court of New Jersey, Law Division, Essex County.

Approved for Publication March 3, 1997.

Before Judges Dreier, Newman and Villanueva. The opinion of the court was delivered by VILLANUEVA, J.A.D.

The opinion of the court was delivered by: VILLANUEVA

The opinion of the court was delivered by

VILLANUEVA, J.A.D.(retired and temporarily assigned on recall).

Defendants, Huron Insurance Company (Huron) and The Harleysville Insurance Companies (Harleysville), appeal from a summary judgment entered against them in the amount of $107,151.92 plus interest for damages caused by the collapse of a basement wall in plaintiffs' house. Huron *fn1 had issued a homeowner's insurance policy ("Policy") which plaintiffs claim covered the loss or they reasonably expected covered the loss.

Plaintiffs, Lawrence Bromfeld and Carole Ann Bromfeld, have been living at 48 Wingate Drive, Livingston, New Jersey, since February of 1970. Their house is a typical two-story suburban design. On January 28, 1994, Mrs. Bromfeld returned home to find that her basement was flooded and various items, including furniture, were floating in the water. Upon closer inspection, Mrs. Bromfeld determined that the water was approximately one-foot deep. She also noticed that the entire rear exterior wall had caved into the basement, and that the ceiling on the same side of the basement was down and the lighting fixtures were hanging from the ceiling. Plaintiffs moved out of the house for almost seven months and lived elsewhere until the damage was repaired.

On January 27, 1994 at 1:00 a.m. there had been seven inches of snow cover which was reduced to one inch from the rain and above-freezing temperatures. Although it had been raining the following morning, it was not raining at the time that Mrs. Bromfeld made her observations.

Plaintiffs made a claim under the Policy. Defendants did not deny the claim nor honor it. On July 22, 1994, plaintiffs filed a complaint in the Superior Court seeking compensatory and punitive damages for defendants' breach of the Policy and their covenant of good faith. No answer was filed to the complaint until December 6, 1994. In the interim, on August 19, 1994, plaintiffs demanded an appraisal of their loss pursuant to the terms of their insurance policy. When no response was made, on October 20, 1994, plaintiffs filed a motion to compel the appraisal. In March 1995 the defendants complied.

The defendants' appraiser and the plaintiffs' appraiser agreed on the building loss of $85,631.92, personal property loss of $7,520 and a loss of use of the premises of $14,000, for a total loss of $107,151,92. The plaintiffs' expert, John J. Hare, was deposed and testified that:

The wall collapsed due to the additional loads applied eccentrically to the foundation wall due to the installation of the wood deck combined with the unusually high snow/ice loads coupled with wind. The wall collapsed catastrophically due to the lack of any available tensile bond strength of the interior shell of the masonry.

In his report Hare stated:

Due to the nature of the construction of wood frame exterior bearing walls, roof wind and snow floor loads, as well as wall wind loads, are transmitted eccentrically to the foundation wall. This generates bending stresses, both tension and compression, in the foundation wall which must be counteracted by internal resistance within the wall. The wall is acting as a beam/column with an eccentrically applied vertical load. The lack of mortar bond at the interface of the 8" to 12" transition prevented the wall from developing an internal couple to resist the eccentrically applied loads. The addition of the exterior deck magnified the above problem in that the surcharge snow drift load which would normally accumulate at the ground level 2-1/2 to 3 feet below the mud sill, was transferred by the ledger board of the deck to the header at the face of the first floor joists, applying this additional load eccentrically to the 8" masonry upper course. It is my professional opinion that the failure [was] initiated at the upper portion of the wall which fell inward to hit and be restrained by the interior wood stud wall. This caused the wall to crack at the base which then slid inward kicking out the bottom of the stud wall.

The defendants' expert, Henry R. Naughton, attributed the collapse to underground soil pressure on the rear foundation wall, specifically indicating in his report that the collapse was "the result of excessive lateral loading from the wet soil and not as a consequence of eccentric loading from the deck." He concluded that the wall collapsed "as a result of rain and warmer temperatures, water infiltrated the soil increasing the lateral pressure against the wall and decreasing the soil strength. The increased wet soil lateral pressure caused the wall to fail and the decreased soil strength resulted in a soil shear failure driving a soil wedge into the basement area." Although defendants sent their expert to examine the premises within five days of the loss, they never advised plaintiffs whether the loss would be paid.

Defendants moved for summary judgment to dismiss plaintiffs' complaint. Plaintiffs opposed the motion and cross-moved for summary judgment. After hearing argument, the trial court ruled from the bench that the Policy violates the New Jersey Plain Language Law, N.J.S.A. 56:12-1 to -13, and the reasonable expectations doctrine. An order granting summary judgment to the plaintiffs against defendants in the amount of $107,151.92 together with prejudgment interest in the amount of $3,745, for a total of $110,896.92 was entered on March 15, 1996.

On March 28, 1996, defendants filed a notice of appeal. On April 2, 1996, the trial court filed a fourteen-page supplemental written opinion.


On appeal, defendants argue that the trial court erred in two respects. First, the court improperly found that the Policy violated the Plain Language Law and that defendants were liable thereunder. Second, the court failed to grant summary judgment in favor of the defendants.

Defendants argue that the trial court's decision which awarded summary judgment to plaintiffs was based solely on the grounds that the Policy violated the Plain Language Law. Although the trial court relied upon the applicability of the reasonable expectations doctrine to this case in its opinion from the bench, when it thereafter issued a supplemental written opinion, it stated: "Summary judgment was granted at oral argument in favor of the plaintiffs, solely upon New Jersey's Plain Language Statute." However, in any event, a trial court's judgment can be affirmed on any grounds applicable, whether or not used by the court below. See Isko v. Planning Board of Livingston, 51 N.J. 162, 175, 238 A.2d 457 (1968); Yun v. Ford Motor Co., 276 N.J. Super. 142, 647 A.2d 841 (App. Div. 1994), rev'd on other grounds, 143 N.J. 162, 669 A.2d 1378 (1996); Walker v. Briarwood Condo. Ass'n., 274 N.J. Super. 422, 644 A.2d 634 (App. Div. 1994); Liebeskind v. Mayor and Municipal Council of Bayonne, 265 N.J. Super. 389, 627 A.2d 677 (App. Div. 1993).

Under the Plain Language Law, defendants argue that they are entitled to a finding of no liability pursuant to N.J.S.A. 56:12-5. Section 5 of the Plain Language Law protects an insurer from liability under that statute where the insurer has followed (or relied upon a predecessor having followed) the established procedure for obtaining "plain language" approval of a policy form. It provides as follows:

Nonliability Conditions

There shall be no liability under sections 3 and 4 if: a. both parties to the contract have performed their obligations under the contract, b. the creditor, seller, insurer or lessor attempts in good faith to comply with this act in preparing the consumer contract, c. the contract is in conformity with a rule, regulation, or the opinion or interpretation of the Attorney General or the Commissioner of Insurance, in regard to contracts of insurance provided for in subsection c. of section 1 of this act (C. 56:12-1c), or d. the consumer supplied the contract or the portion of the contract to which the consumer objects.

[N.J.S.A. 56:12-5 (emphasis supplied).]

As provided by subsection (c) of Section 5, an insurer cannot be liable under Sections 3 or 4 (N.J.S.A. 56:12-3 and 4) if the policy it issued is in "conformity with a rule, regulation, or the opinion or interpretation ... of the Commissioner of Insurance."

Furthermore, Section 8 provides that the Commissioner of Insurance ("Commissioner") may certify policies such as the Policy in question, and, at subparagraph (d), provides:

Any consumer contract certified pursuant to this section is deemed to comply with this act. Certification of a consumer contract pursuant to this section is not otherwise an approval of the contract's legality or legal effect.

[N.J.S.A. 56:12-8d.]

The two sections clearly anticipate the promulgation by the Commissioner of regulations regarding approval of policy forms under the statute, and explicitly protects insurers relying on approved forms.

Pursuant to N.J.S.A. 56:12-1 to -13, the Commissioner promulgated regulations pertaining to the implementation of the Plain Language Law, codified at N.J.A.C. 11:2-18 et seq., which, in effect, provide that defendants had no obligation to obtain independent certification from the Commissioner as to the Policy's compliance with the Plain Language Law. As stated in Section 11:2-18.5(e) of the New Jersey Administrative Code:

Pursuant to N.J.S.A. 56:12-5, an insurer need not request an opinion as to compliance with the Plain Language Law for policy forms identical to those which have already been certified for some other insurer or rating organization.

Pursuant to the Plain Language Law and procedures established by the Commissioner, the HO-3 policy form (which comprises the bulk of the coverage terms and conditions of the Policy) was approved by the Commissioner and adopted by defendants for use. It is not in dispute that the policy terms to which plaintiffs object are part of the form so approved. The Office of the Commissioner confirmed that the HO-3 policy form in question had been submitted by the Insurance Services Organization with the appropriate request for Plain Language Certification, and that the policy form was subsequently approved. Although the Office of the Commissioner did not provide the form or correspondence which ...

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