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ASSURANCE CO. OF AMERICA, INC. v. JAY-MAR

February 10, 1999

ASSURANCE COMPANY OF AMERICA, INC., A NEW YORK CORPORATION, PLAINTIFF,
v.
JAY-MAR, INC., D/B/A ABSECON HOME CENTER, A NEW JERSEY CORPORATION, DEFENDANT/THIRD-PARTY PLAINTIFF, V. JOHNSTON INSURANCE AGENCY, INC., THIRD-PARTY DEFENDANT.



The opinion of the court was delivered by: Brotman, District Judge.

Presently before the Court is the motion of plaintiff Assurance Company of America, Inc. ("Assurance") and the cross-motion of third-party defendant Johnston Insurance Agency, Inc. ("Johnston") for summary judgment pursuant to Fed. R.Civ.P. 56.

I. FACTUAL AND PROCEDURAL BACKGROUND

In 1990, Jay-Mar, Inc. ("Jay-Mar"), d/b/a Absecon Home Center, with its principals Jay and Marilyn Weisman, purchased the premises located at 401 White Horse Pike and opened a True Value Hardware Store. The premises is located at the intersection of Route 30 (Whitehorse Pike) and Route 9 in Absecon, New Jersey. Through the insurance brokering services of Johnston Insurance Agency, Inc. ("Johnston"), Jay-Mar purchased an insurance policy from Assurance effective from January 27, 1997 through January 27, 1998.

Due to heavy rains on August 21, 1997, water entered the Jay-Mar premises from the ground level, causing substantial damage. According to Jay-Mar's liability expert, Charles J. Penza, P.E., the rainstorm which damaged the Jay-Mar premises was classified as twice the magnitude of a "one in a hundred year" event.

Jay-Mar reported its loss to Johnston, thereby requesting coverage from Assurance. Jay-Mar believed that the damage its property sustained was due to the backup or overflow of rainwater from nearby storm sewers, a cause of loss covered by its insurance policy. Believing that the damage was caused by surface water flooding, a cause of loss not covered by Jay-Mar's insurance policy, Assurance denied Jay-Mar's claim for coverage.

On September 30, 1997, Assurance filed this action against Jay-Mar seeking a declaratory judgment that it was not liable for Jay-Mar's loss. On December 18, 1997, Jay-Mar filed an answer, a counterclaim against Assurance, and a third-party complaint against Johnston. On February 1, 1999, Assurance filed a motion for summary judgment and Johnston filed a cross-motion for summary judgment.

II. DISCUSSION

A. STANDARD FOR SUMMARY JUDGMENT

The standard for granting a motion for summary judgment is a stringent one, but it is not insurmountable. Fed.R.Civ.P. 56 provides that summary judgment may be granted only when materials of record "show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Serbin v. Bora Corp., 96 F.3d 66, 69 n. 2 (3d Cir. 1996). In deciding whether there is a disputed issue of material fact, the court must grant all reasonable inferences from the evidence to the non-moving party. The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

Supreme Court decisions mandate that a summary judgment motion must be granted unless the party opposing the motion "provides evidence `such that a reasonable jury could return a verdict for the nonmoving party.'" Lawrence v. National Westminster Bank New Jersey, 98 F.3d 61, 65 (3d Cir. 1996) (quoting Anderson, 477 U.S. at 248, 106 S.Ct. 2505). Once the moving party has carried its burden of establishing the absence of a genuine issue of material fact, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986). The non-moving party must "make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial." Serbin, 96 F.3d at 69 n. 2 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)); see also Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991) (declaring that non-movant may not "rest upon mere allegations, general denials, or . . . vague statements"). Thus, if the non-movant's evidence is merely "colorable" or is "not significantly probative," the court may grant summary judgment. Anderson, 477 U.S. at 249-50, 106 S.Ct. 2505.

B. ASSURANCE'S LIABILITY FOR JAY-MAR'S LOSS

1. The Insurance Policy

The insurance policy at issue in this case contains the following ...


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