with the issue, and because the Court wanted to give the parties and future litigants guidance on a difficult issue.
Second, the rulings are consistent because of the Court's consideration of Elizabethtown's settlement with the developers. In the first ruling, the Court showed that it was reluctant to enforce the settlement on its face. That reluctance arose out of an intuitive belief that Elizabethtown structured the settlement so that it could fall within the purview of its insurance contracts. Thus, the Court stressed that the settlement did not, in and of itself, prove that there was an occurrence. In the second ruling, the Court found that General Exclusion K(b)(3) clearly intended to cover the situation in this case. The Court then stated that relying solely on the settlement would thwart the intent of the insurance policy, and that the Court would not yield to form over substance. Thus, the Court's second ruling rendered the first ruling moot. Indeed, if there was no occurrence then there would be no need to reach the issue presented by General Exclusion K(3)(b). Hence, the latter provision thumps the issue of occurrence and in a sense obviates the need for a trial on the occurrence issue.
Upon reviewing the parties' submissions, the Court is convinced that its prior rulings are correct. The Court found that General Exclusion K(3)(b) applied to this case because Elizabethtown "failed to . . . perform a contract or agreement in accordance with its terms." In reaching that decision, the Court rejected Elizabethtown's argument that its negligence, and not its breach of contract, caused the damages. The Court affirms and reiterates that decision because regardless of what Elizabethtown argues, it failed to fulfill its agreement to provide water, and that failure caused the developers' damages.
Elizabethtown's second argument is that Hartford waived its right to rely on General Exclusion K because Hartford did not list the exclusion when it sent Elizabethtown the letter disclaiming coverage in April 1993. Elizabethtown relies on Continental Insurance Co. v. Beecham, 836 F. Supp. 1027 (D.N.J. 1993), to support this argument. Elizabethtown concludes that the Court did not address the merits of this argument because it is not mentioned in the Opinion.
The Court did not address this argument because Elizabethtown did not "actually" raise it in its opposition brief and because the Court found the arguments to be irrelevant. Elizabethtown now argues that it mistakenly used "estoppel" instead of "waiver" in footnote two on the thirty-ninth page of its opposition brief. Footnote two states: "Hartford should be estopped from asserting the . . . products liability exclusion here because it never formally disclaimed coverage on [that] ground but only raised [that] exclusion in their June 4, 1997[,] more specific answers to Elizabethtown's interrogatories." Eliz. Br. at 39 n.2 (citing Beecham, 836 F. Supp. 1027). Elizabethtown now contends that the import of its argument was that Hartford waived the right to use the exclusion in a motion for summary judgment because it failed to raise the exclusion in their letter disclaiming coverage.
As stated supra, the Court generally refuses to hear new arguments on a motion for reargument. In this case, Elizabethtown's waiver argument is very close to a new argument. In its initial brief, Elizabethtown placed its "estoppel" argument in a one-sentence footnote on the thirty-ninth page. In its motion for reargument, Elizabethtown expanded its waiver argument to one and one-quarter pages in its moving brief and two single-spaced pages in its reply brief. If Elizabethtown wanted to rely on the waiver argument, it should have made the argument more prominent in its opposition brief so that defendants would have had the opportunity to address it.
That being said, the Court will address the argument because "technically" Elizabethtown raised it and because the Court accepts Elizabethtown's concession that it confused the terms estoppel and waiver. The Court notes, however, that other Courts might not be so lenient, and that Elizabethtown should be more cautious when designing and writing its briefs.
Waiver involves the intentional relinquishment of a known right. See Shebar v. Sanyo Bus. Sys. Corp., 111 N.J. 276, 291, 544 A.2d 377 (1988). To prove waiver, a party must show that the other party knew of its rights and deliberately intended to relinquish them. See id. "Questions of waiver, therefore, are usually questions of intent, which are factual determinations that should not be made on a motion for summary judgment." Id. Elizabethtown argues that Hartford must be deemed to know the provisions in its policies, and that its failure to raise the exclusion after a two-month investigation into Elizabethtown's claim '"constitutes a deliberate intention to relinquish or abandon those defenses and/or exclusions."
The general rule, however, does not apply to this case because Hartford did not waive its right to raise General Exclusion K(3)(b). A brief review of the procedural history is necessary for a complete understanding of the issue. In September 1991, the developers filed the case that ultimately gave rise to this action. In or about the middle of June 1993, Elizabethtown informed defendants of its claim for coverage. On July 1, 1993, Elizabethtown forwarded its case file on the underlying action to Hartford. On August 9, 1993, Hartford wrote Elizabethtown a letter stating that it was going to investigate the case and was reserving its rights under the policy. An internal memorandum written during the investigation mentioned General Exclusion K(b)(3):
If by some chance, it was determined that there was an allegation of an occurrence in this complaint, our policy still probably includes an exclusion for . . . property that has not been physically injured, arising out of a delay or failure by the insured . . . to perform a contract or agreement in accordance with contract terms.
On August 31, 1993, Hartford informed Elizabethtown that it would not cover the losses because it did not believe that there was an occurrence or property damage as defined in the insurance policy. Thus, it appears as though Hartford did not rely on or discuss any of its exclusions because of its belief that the liability provisions did not provide coverage.
In November 1994, Elizabethtown settled the underlying action with the developers. In July 1995, Elizabethtown filed its Complaint in this Court. In or around March 1996, defendants moved for partial summary judgment on the Third Count of Elizabethtown's Complaint, which stated a claim for "bad faith refusal to defend and indemnify." In its reply brief dated March 14, 1996, Hartford discussed its reasons for disclaiming coverage. In addition to the reasons stated in its letter of August 1993, Hartford addressed the exclusions. As for General Exclusion K(3)(b), Hartford stated:
Frankly, it is very difficult to see how the plaintiff will escape the effect of this particular exclusion. The exclusion seems to clearly apply in this particular case. Nevertheless, for the purposes of this motion, it is only necessary to cite this particular exclusion for the purpose of demonstrating once again that there were sound reasons for the denial of coverage on behalf of  Hartford.