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Alexander v. National Fire Insurance of Hartford

July 13, 2006


On Appeal from the United States District Court for the Eastern District of Pennsylvania (D.C. No. 03-cv-01511).

The opinion of the court was delivered by: Aldisert, Circuit Judge


District Judges: The Honorable Michael M. Baylson and Juan R. Sanchez.

Argued June 13, 2006

Before: FISHER, ALDISERT and LOURIE,*fn1 Circuit Judges.


This appeal by National Fire Insurance Company of Hartford ("National Fire"), the insurer of the Sunnyside Up Condominium Association, requires us to decide whether its policy covers claims incurred when a second-story exterior wooden deck attached to one of the association's units collapsed and caused injuries to a number of people who were on the deck. The unit was owned by Jeffrey and Gail Alexander. After National Fire refused to defend or participate in the settlement of the personal injury claims, the Alexanders filed a complaint in the United States District Court for the Eastern District of Pennsylvania seeking to declare that National Fire's policy issued to the Condominium Association covered the incident. In a summary judgment dated March 3, 2004, the District Court determined that the Alexanders' loss was indeed covered by the National Fire policy. In a later summary judgment dated January 19, 2005, the District Court held that the coverage provided by National Fire for this loss was primary, and that the two policies issued separately to the Alexanders by third-party defendants Shelby Insurance Co. and United States Fidelity and Guaranty Company ("USF&G") were excess. National Fire appeals both grants of summary judgment. We will affirm.*fn2



The Sunnyside Up Condominium Association, which is located in Sea Isle City, New Jersey, consists of two condominium units-one on the first floor and one, the Alexanders', on the second-both of which had wooden decks, stacked one on top of the other. From August 25 to September 1, 2001, the Alexanders leased their unit to Agnes Cunningham. On August 26, 2001, the Alexanders' deck collapsed with 11 people on it. Following the collapse, negligence causes of action were brought against the Alexanders in the New Jersey Superior Court in Cape May County that alleged that the collapse was caused by the Alexanders' negligent construction and maintenance of the deck. Those claims have all been settled, so what remains is the allocation of the payment of the settlement and defense costs among the three insurance companies who are parties to the present suit.


Following the collapse, the Alexanders hired a contractor, Dennis A. Funk, to examine the damage. After inspecting the deck, Funk drafted a letter that detailed the construction of the deck and the reasons for its collapse. Funk's letter was presented to the District Court in the instant litigation, and because National Fire did not object to its introduction, the Court considered the letter as "stating uncontested facts." Mar. 3, 2004 D. Ct. Op., app. at 324a. The relevant portions of Funk's letter are as follows:

While reviewing the photos of the deck collapse the other day in your office it was clear what caused the support system to fail. But first I would like to describe how the deck was constructed. At the house bound side the deck joists were supported against the ledge board using a series of metal joist hangers. Those hangers support the joists with a small shelf that fits up under the bottom side of the joist. The ledger is installed first, followed usually by the joist hangers, then the joists, and the finally [sic] the decking. Joist hangers are used at this end because the joists cannot be nailed through the ledger board, they can only be toe-nailed to the ledger board. Prior to the common use of joist hangers, a wood shelf, usually a wood 2 x 4 or a 2 x 3 was nailed to the ledger and the deck joists were notched to sit ontop [sic] of this shelf. On the outward end of this deck, the deck joists were attached to the deck box joist by nailing through the box joist into the individual joist ends. After the joists were nailed another box joist was installed on the outward end to support the decking system between the 4 x 4 vertical columns.

The failure of the deck system occurred due to the deterioration of the nails used to support the outbound end of the deck joists. . . . .

Letter of Dennis Funk, app. at 37a (emphasis added).*fn3


The Condominium Association was organized under a Master Deed of Declaration of Condominium (the "Master Deed"). Relevant to the present dispute, Subsection F of the Master Deed addresses the Alexanders' deck as follows:


1. Common Elements subject to Exclusive Easements:

a. Any balcony or patio to which there is a direct access from the interior of a unit shall constitute a common element subject to exclusive easement for the exclusive use of the owner of such Federal Rules of Appellate Procedure). Because our resolution of this appeal will be based upon the interaction of the terms of the Master Deed, the National Fire policy and the New Jersey Condominium Act, rather than the factual distinctions illustrated in the drawings, we need not delve into this question. See infra sections III-IV.

Master Deed, app. at 134a. Subsection G specified that the owners of both units shall each have a 50% interest in the Association's common elements, and Subsection L specified that common expenses, as defined by the New Jersey Condominium Act, N.J. Stat. Ann. §§ 46:8B-1 to -38 (2006), shall be shared equally between the two unit owners. Master Deed, app. at 135a-138a. Subsection N of the Master Deed addressed the owners' duties of maintenance and repair as follows:

N. MAINTENANCE AND REPAIR: The Association, at its expense shall be responsible for the cleaning, maintenance, repair and any required replacement of the Common Elements, as defined by the Condominium Act which include . . . any and all erection permitted to be constructed on said common area under the Zoning Laws of the City of Sea Isle City, etc. Individual Condominium Unit Owners shall be responsible at their own expense for the maintenance, repair and replacement of all portions of their individual Units as defined by the Condominium Act, which responsibility shall include the maintenance and repair of the inside of all walls forming or dividing each Condominium Unit, plumbing systems, electrical systems, interior side of windows, etc., within each unit. . . .

Master Deed, app. at 138a.

Significant to this latter provision, on May 28, 1997, one of the two 4x4 vertical post columns supporting the deck was replaced. The costs of this repair were apparently split equally between the unit owners. These vertical posts, however, were not the components of the deck that failed.


At the time of the deck collapse, the Alexanders maintained condominium unit insurance coverage with USF&G. They also maintained separate homeowners liability and umbrella liability insurance coverage with Shelby. As heretofore stated, the Condominium Association maintained insurance coverage with National Fire.*fn4 The National Fire policy provided first-party ...

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