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LENOX v. SCOTTSDALE INSURANCE CO.

May 5, 2005.

ROBERT LENOX, Plaintiff,
v.
SCOTTSDALE INSURANCE CO., Defendant.



The opinion of the court was delivered by: STANLEY CHESLER, Magistrate Judge

OPINION

THIS MATTER comes before the Court on cross-motions by Plaintiff and Defendant for Summary Judgment (docket items 10 and 11). The Court having considered the papers submitted by the parties, and for good cause shown, grants Defendant's Motion and denies Plaintiff's Motion for the reasons set forth below.

I. PROCEDURAL BACKGROUND

  On or about March 8, 2004, Plaintiff Robert Lenox filed a declaratory judgment action in the Superior Court of New Jersey, Law Division, Ocean County, New Jersey. Defendant Scottsdale Insurance Company filed a Notice of Removal in the United States District Court for the District of New Jersey on or about May 12, 2004, on diversity jurisdiction grounds. On or about March 23, 2005, both Plaintiff and Defendant filed Motions for Summary Judgment, which the Court now considers. II. UNDISPUTED FACTS

  Plaintiff Lenox owns a home in Brick, New Jersey. Purchasers of homes in lots at Nejecho Beach are eligible to become members of the Nejecho Beach Club ("Club"), (Nejecho Beach Club Cert. of Incorp., at 4), and at the time Plaintiff purchased his home in 2000, he joined the Club. (Pl.'s Dep. at 12, lines 16-20.) At the time, club membership dues included an initiation fee of $125.00 and annual dues of approximately $75. (Id. at 13, lines 10-18.) Annual dues are currently approximately $125.00 per member, and the club membership includes 52 households. (Sullivan Dep. at 16, lines 8-18.) Member dues are used to pay Club operating expenses, including taxes, office supplies, and the insurance policy described below. (Id. at 15, lines 10-24.)

  Nejecho Beach Club holds a "Commercial General Liability Coverage" insurance policy ("Policy") issued by Scottsdale Insurance Company. (Id. at 15, lines 21-24; Def.'s Ex. D & E.) The Club is the only named insured and additional coverage is provided to officers and directors of the Club while acting in their official duties. (Ins. Policy, located at Def.'s Ex. E.) The Policy includes an additional insured endorsement entitled "Additional Insured — Club Members." (Policy, Pl.'s Ex. J, at 7.) The provision "modifies insurance" provided under the general liability coverage of the Policy. (Id.). It reads as follows: "WHO IS AN INSURED (Section II) is amended to include as an insured any of your members, but only with respect to their liability for your activities or activities they perform on your behalf." (Id.) The terms of this provision are not defined.

  On June 30, 2001, Plaintiff went to the Club with his girlfriend and other friends, including Andrew Veloce, to "enjoy the beach, to drink some beer and have a good time and play some horse shoes and swim." (Pl.'s Dep. at 62, lines 6-16.) While at the Club, Plaintiff jumped in the water off of a bulkhead. (Id., at 81, lines 21-25.) When Plaintiff jumped, he made contact with Mr. Veloce's body, which resulted in Mr. Veloce falling into the water. (Id., at 88, lines 10-19; 91, lines 11-21.) Mr. Veloce landed headfirst in the water, and suffered a fracture of his C3 vertebrae. (Veloce Dep. at 36, lines 12-14; 43, lines 6-8.)

  Subsequently, on or about June 30, 2003, Mr. Veloce initiated a personal injury lawsuit against Plaintiff Lenox and the Nejecho Beach Club in the Superior Court of New Jersey, Law Division, Ocean County. Following questions as to indemnification for any resulting liability in the underlying personal injury lawsuit, the instant action was filed by Plaintiff Lenox against the Club's insurance carrier, Scottsdale, in Superior Court of New Jersey. The action was then removed by Defendant to this Court. Both parties have filed Motions for Summary Judgment, which the Court now considers.

  III. LEGAL STANDARD

  A party seeking summary judgment must "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." Fed.R.Civ.P. 56(c); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996). In deciding whether there is a disputed issue of material fact, the Court must view the underlying facts and draw all reasonable inferences in favor of the non-moving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Pennsylvania Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995). 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 (1986). Once the moving party has properly supported its showing of no triable issue of fact and of an entitlement to judgment as a matter of law, the non-moving party "must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita, 475 U.S. at 586; see also Anderson, 477 U.S. at 247-48. The non-moving party must "go beyond the pleadings and by [its] own affidavits, or by the `depositions, answers to interrogatories, and admissions on file,' designate `specific facts showing that there is a genuine issue for trial.'" Celotex, 477 U.S. at 324; Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992) ("to raise a genuine issue of material fact . . . the [non-moving party] need not match, item for item, each piece of evidence proffered by the movant," but rather "must exceed the `mere scintilla' threshold"), cert. denied, 507 U.S. 912 (1993).

  IV. DISCUSSION

  At issue in this case is to what extent Nejecho Beach Club members are covered under the Policy held by the Club, and more specifically, whether the Policy covers any liability attributed to Plaintiff Lenox for the injuries sustained by Andrew Veloce on June 30, 2001. The primary argument between the parties focuses on the Additional Insured Endorsement of the Club's Policy and its terms. Plaintiff argues that the terms of this provision include his activities at the Club on June 30, 2001, and as such cover any liability for Mr. Veloce's injuries. Defendant, however, asserts the provision is more limited and does not encompass the breadth of activities suggested by Plaintiff. For the reasons discussed below, the Court finds the terms of the endorsement unambiguous and declines to read the provision to include Plaintiff's activities and actions on the day in question. A. Ambiguity of the Endorsement

  This Court is asked to interpret the terms of the additional insured endorsement, which sets forth coverage under the Scottsdale Policy, and is the center of the dispute between the parties. The "Additional Insured — Club Members" provision reads as follows:
WHO IS AN INSURED (Section II) is amended to include as an insured any of your members, but only with respect to their liability for your activities or activities they perform on your behalf.
The Policy itself provides no definitions relevant to this provision and thus the Court is essentially asked to determine what the word "activities" means in the context of this Policy and whether coverage is extended to Plaintiff Lenox.

  Plaintiff acknowledges that the additional insurance coverage provided to Club members is limited to Club "activities" or activities performed "on behalf of" the Club. However, Plaintiff argues that without definition, these phrases are unclear and ambiguous such that the limitations of coverage under the Policy for members is uncertain and requires interpretation. Further, Plaintiff notes that when an insurance policy is ambiguous, the ambiguity is resolved against the insurer. Morag v. Continental Ins. Co., 375 N.J. Super. 56, 61 (App.Div. 2005); see also Fed. Home Loan Mortg. Corp. v. Scottsdale Ins. Co., 316 F.3d 431, 444 (3d Cir. 2003) ("New Jersey Courts apply principles of liberal construction in examining insurance policy language . . . tak[ing] a broad and liberal view so that the policy is construed in favor of the insured.") Therefore, Plaintiff urges this Court to read the provision as ambiguous and then suggests various avenues for interpretation, including the Club Constitution and By-Laws, and his own expectations as a due-paying member. Using these means for interpretation, Plaintiff argues that the provision reads in favor of coverage for liability stemming from Mr. Veloce's accident. Defendant argues that the plain language of this provision is clear and unambiguous, demonstrating that the Club and its insurer did not intend to extend unlimited coverage to ...


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