On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-000956-02.
Before Judges Skillman, Collester and Parrillo.
The opinion of the court was delivered by: Parrillo, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 21, 2004
We granted leave to appeal the entry of summary judgment in favor of defendant Selective Insurance Co. (Selective). The trial court found there was no coverage under plaintiffs' homeowner's insurance policy for the mold contamination and other damages to their home allegedly caused by water from a torrential rainstorm. Their all-risks homeowner's policy with defendant covered physical loss to property. Defendant, however, disclaimed liability under clauses excluding"loss caused by... mold" and damage resulting from"faulty... design... workmanship... [and] maintenance." We find a question of fact regarding causation, and ultimately coverage, and therefore, reverse and remand.
We view the facts and all reasonable inferences therefrom in the light most favorable to the party against whom summary judgment was entered. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). Plaintiffs, Joseph and Susan Simonetti, are the owners and residents of a home insured by Selective continually since 1998, having purchased the newly constructed residence on March 27, 1995. Within a year or two of moving into the house, plaintiffs noticed leaks in one of the windows in the first floor den and notified the builder Hovnanian who then caulked the window. Thereafter, plaintiffs intermittently discovered further leaking from the same window, usually after substantial rainfalls, and as late as March, 2001, but when the problem was reported, Hovnanian told plaintiffs it was their responsibility to caulk the windows because this was just normal wear and tear.
On June 16, 2001, there was a severe rainstorm, and a very substantial water leak caused damage throughout plaintiffs' home, including the den, the room where the previous leaks had taken place, the upstairs bedroom, and the back of the house where wind had blown off siding. Plaintiffs reported the damage to Selective on June 19, 2001, and defendant's representative visited the home a few days later to examine the damage. At that time, however, plaintiffs did not inform the representative of any prior damage attributable to leaking water.
Plaintiffs discovered mold growth in their home on August 28, 2001, about two months after the June rainstorm, and immediately notified Selective. Defendant responded on August 30, 2001, by sending plaintiffs a reservation of rights that cited certain provisions from Selective's homeowner's policy excluding coverage for mold. Plaintiffs' file was then sent to defendant's environmental claims unit where it was initially determined that the homeowner's policy covered mold and its remediation.
In late September, 2001, plaintiffs' claim was transferred to another Selective representative, Louis Crisci, a property specialist with expertise in mold, who visited the house in October. According to a letter sent by plaintiffs' attorney to Mr. Crisci, while at the house, Mr. Crisci informed the plaintiffs that they would be covered for a period of up to siX months up to $2,400.00 per month in rental expenses and an additional $600.00 per month as a furniture allowance.
On October 30, 2001, Mr. Crisci obtained documents from Royal Specialty Underwriting, Inc. (Royal), Hovnanian's insurer, including a report dated September 19, 2001, by Harvey A. Kagan, Sc.D., P.E., of International Environmental Services, Inc., issued to Royal. The report indicated that the water damage to plaintiffs' house appeared to have occurred from the time in 1997 that the plaintiffs first noticed the leakage in the den. According to Kagan, water leakage was due to a combination of design defects and waterproofing workmanship defects. These defects included, among other things, numerous rooflines creating complex intersections, an insufficiently short gutter along the bedroom roof, and the failure to install a cricket or diverter upslope from the nursery wall. In fact, an October 1, 2001 report by plaintiffs' expert engineer, Al Vasys, also determined that the water intrusion was a direct result of poor workmanship during the original construction of the house. According to Vasys, the method of stucco and flashing application resulted in gaping holes in the wall permitting water entry into the wall cavity.
The homeowner's policy in question covered"direct loss to property described in Coverage A and B only if that loss is a physical loss to property." The relevant exclusion clause stated:"We do not insure, however, for loss:
Wear and tear, marring, deterioration; Inherent vice, latent defect, mechanical breakdown; Smog, rust or other corrosion, mold, wet or dry rot...[ ]" Another ...