On appeal from the Superior Court of New Jersey, Chancery Division, Middlesex County, C-288-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Cuff and Lintner.
This appeal involves an insurance dispute between two insurance carriers providing first-party property damage coverage for office premises located at 25 Main Street in Hackensack. Following an adverse decision in binding arbitration requiring it to contribute $109,513.25 toward an insurance settlement, totaling $156,026.69, plaintiff, Continental Casualty Insurance Company (Continental), filed a complaint naming Selective Way Insurance Company (Selective) as defendant, seeking to vacate the arbitration award. Both parties filed cross-motions for summary judgment. After hearing argument on the motions, the judge entered summary judgment in favor of Continental, setting aside the arbitration award. Following denial of its motion for reconsideration, Selective filed this appeal. We now affirm.
On March 26, 2004, the property in question sustained significant water damage as a result of flooding purportedly caused by a defective water filter located in the premises leased by tenant, Cole, Schotz, Meisel and Forman. At the time, the tenant was covered with a property damage policy issued by Selective. At the same time, the landlord, Court Plaza Associates, was insured by plaintiff Continental.
Selective reached a settlement with the tenant agreeing to cover the loss for $156,026.69. Both Continental and Selective were signatories to the Arbitration Forums, Inc. Special Arbitration Agreement, which required both carriers to submit certain inter-company disputes to binding arbitration. Based upon its contention that once the damage property was repaired it would inure to the benefit of the landlord, Selective filed for Special Arbitration with Arbitrations Forums, Inc., seeking contribution from Continental.
Continental responded, asserting in part that the matter did not qualify under the compulsory provisions of Article First of the Special Arbitration Rules because "the companies did not provide concurrent coverage to the same parties." It also asserted that it provided no coverage to the tenant, it was in the process of adjusting the loss submitted by its insured, and the insurable interest, if any, that its insured had in the residual value of the carpeting damaged in the rental premises, was negligible. On the merits, it claimed that the landlord and tenant had entered into a third amended lease, which granted an allowance to the tenant of $244,788.45 for the removal and replacement of all the carpeting and, because the old carpeting had not been replaced by the time of the loss, it had no residual value.
The Special Arbitration Forum provided its Decision Notice on February 8, 2005, finding Continental covered 87.50% of the loss. The following explanation was given:
The original lease was for 16 years & terminated in 2006. At the time of the loss, there were 2 years left on the lease. Therefore, Co 1 (Selective) is responsible for 1/8 and 2 [Continental] is responsible for 7/8. Damages were not contested by [Continental]. No proof was offered that the $244,788.45 that was negotiated in the 2004 lease extension was directed to pay for these betterments/improvements. [Continental] offered no proof to support their contention that they had paid for any of the damages.
Appealing the award pursuant to the rules of Arbitration Forums, Continental asserted, "Continental's insured is not listed as an insured or additional insured for property covered under the Selective Way policy." Continental then reiterated Article First of the Compulsory Provision of the Special Arbitration Rules, which provides in pertinent part:
Upon settlement of a claim or suit, signatory companies must submit any unresolved disputes to Arbitration Forums, Incorporated . . . where:
(b) each has issued separate polices of property or casualty insurance providing . . . concurrent coverage to the same party or parties asserted to cover an accident, occurrence or event out of which a first or third party claim or suit ...