October 23, 2007
WHP 9, INC., AND THE EL-AD GROUP, PLAINTIFFS-APPELLANTS,
CENTENNIAL INSURANCE COMPANY, DEFENDANT-RESPONDENT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-4508-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued telephonically October 3, 2007
Before Judges Coburn, Fuentes and Chambers.
Plaintiffs, WHP 9, Inc., and the El-Ad Group ("WHP"), sued defendant Centennial Insurance Company in the Law Division. WHP claimed that it was entitled to coverage for losses suffered while building a residential housing project. The claim was based on a Builder's Risk Policy issued to WHP by defendant. On defendant's initial motion for summary judgment, the judge ruled for WHP. On defendant's motion for reconsideration, the judge reversed his ruling, holding that there was no coverage under the insurance policy. WHP appeals, and we affirm the denial of coverage.
The material facts are undisputed. WHP, a real estate developer, was involved in a $6 million, multi-building residential construction project in North Bergen. Before beginning construction, WHP used a commercial insurance broker to obtain from defendant a Builder's Risk insurance policy, which provided first party property insurance coverage but not liability insurance, and a liability policy from Zurich Insurance Company. The application for the Builder's Risk Policy indicated that the replacement value of the completed project was $6 million, and the value of the sewer pipe was neither reported to defendant nor included in the new construction cost. Around November 2001, one of WHP contractors, while driving piles for footings, punctured a 36 inch, cast iron storm sewer pipe that ran under the property. Ultimately, WHP was going to connect its waste system to the sewer pipe, which, however, had never served the WHP property before. The damage was discovered in 2002, and about eight months later, in March 2003, the sewer pipe's owner, Township of North Bergen, issued a stop construction order. At that point, the project was nearly complete.
As a result of North Bergen's action, WHP suffered a loss of rental income and incurred other "soft costs," in excess of $3 million. WHP filed a claim with defendant, which was denied on the ground that the sewer pipe was not covered property as that term is defined by the policy. North Bergen filed suit against WHP for the damages to the sewer pipe, which appear to have been $50,000, and Zurich defended WHP, ultimately settling the case with North Bergen.
Defendant's insurance policy provides for payment for loss to "Covered Property," and defines that term, in pertinent part, in the following manner:
1. COVERED PROPERTY
Covered property means your property or the property of others for which you are liable, consisting of,
a. Buildings or structures as described in this Coverage Form Declarations while under construction, erection, or fabrication, including the costs of foundations and underground property such as pipes, flues, drains, electrical wires, piers, and pilings; and excavation, grading, and filling; if such costs are included in the completed value of the project.
But this does not include existing buildings or structures to which improvements, alterations, repairs or additions are being made.
On appeal, WHP offers the following arguments:
A. THE BUILDER'S RISK POLICY COVERS THE DAMAGES SUFFERED BY WHP AS A RESULT OF THE PIPELINE ACCIDENT.
1. The Damages Arising from the Pipeline Accident are Covered Because the Builder's Risk Policy Insures Losses for "Property of Others For Which [WHP Is] Liable."
2. The Storm Water Pipeline is "Covered Property" Because It Is Included in "the Completed Value of the Project" Under The Builder's Risk Policy.
(a) Courts Have Held that the Completed Value of a Structure Includes Objects Not Directly Part of the Insured Project.
(b) WHP's Witness Yoel Shargian Testified that the Storm Water Pipeline was part of the "Completed Value of the Project."
(c) The Township Recognized That the Storm Water Pipeline Was An Integral Part of the Project.
(d) Centennial's Supplemental Certifications of Irene Olijnyk and C. Roderick Black, Offered for the First Time on Reconsideration, Are Irrelevant.
B. AT A MINIMUM, THE KEY TERMS OF THE BUILDER'S RISK POLICY ARE AMBIGUOUS AND SHOULD BE CONSTRUED AGAINST CENTENNIAL.
1. The Policy Language "Property of Others for Which You are Liable" is Ambiguous and Should Be Construed Against Centennial.
2. At The Very Least, The Policy Language "Completed Value of the Project" is Ambiguous and Should be Construed Against Centennial.
C. NEW JERSEY LAW DOES NOT RECOGNIZE AN EXCEPTION TO CONTRA PROFERENTEM FOR SO-CALLED "SPECIALIZED COMMERCIAL POLICIES."
D. THE TRIAL COURT ERRED IN CONCLUDING THAT THE POLICY WAS NOT SUBJECT TO CONTRA PROFERENTEM BECAUSE IT CONTAINED "TERMS OF ART."
E. THE TRIAL COURT ERRED IN RELYING ON THE SUPPLEMENTAL CERTIFICATION AND SO-CALLED EXPERT TESTIMONY OF DALE FREDIANI.
1. Insurance Policy Interpretation is a Matter of Law and the Trial Court Should Not Have Considered the Supplemental Expert Certification of Dale Frediani.
F. THE TRIAL COURT'S RULING IMPROPERLY DEFEATED THE POLICYHOLDER WHP'S REASONABLE EXPECTATIONS OF COVERAGE.
G. THE TRIAL COURT ERRED IN GRANTING CENTENNIAL'S MOTION FOR RECONSIDERATION.
1. Centennial's Motion for Reconsideration Should Have Been Denied Because the Standard for Reconsideration was Not Met.
2. Centennial Improperly Raised New Arguments For the First Time in its Motion for Reconsideration.
3. WHP Had No Opportunity For Discovery, No Opportunity For Depositions and No Opportunity To Cross-Examine Centennial's Supplemental Witnesses.
4. Summary Judgment Is Inappropriate Were the Outcome Turns on Expert Testimony.
5. The Trial Court Erred in Concluding That Available Insurance Coverage Is Subject to the Limits of the Civil Authority Provision in the Builder's Risk Policy.
After carefully considering the record and briefs, we affirm substantially for the reasons expressed by Judge Charles in his thorough and well-reasoned oral opinion delivered on March 14, 2006. Nonetheless, we add the following comments, addressing first WHP's claim that Judge Charles erred in granting defendant's motion for reconsideration.
Generally, a request for reconsideration is committed to the sound discretion of a court. Cummings v. Bahr, 295 N.J. Super. 374, 384 (App. Div. 1996). The ultimate goal to be served is the interest of justice. Ibid. When a trial judge concludes that reconsideration is in order because his prior decision was palpably incorrect, appellate intervention would be wrong. Ibid. Here, WHP contends that the coverage provisions of the policy clearly supported its position and that the judge wrongly considered additional factual material submitted by defendant on the motion for reconsideration. Since we are satisfied that defendant's additional certifications were unnecessary, and that the case is controlled by the policy language, we perceive no just ground for saying the judge erred in reconsidering his first decision.
WHP relies primarily on the policy language stating that covered property includes, not only WHP's property, but the "property of others for which you are liable . . . ." It then argues that since it was liable for damaging the sewer pipe, the sewer pipe was covered property. Even assuming that the just quoted phrase might be read in isolation as providing coverage for the pipe, the full context clearly shows that was not intended. To come within the concept of covered property more is required by this policy. Specifically, the building or "structure" must have been described in the "Coverage Form Declarations" and must be "under construction, erection or fabrication." In addition, the policy clearly states that excluded from the category of covered property are "existing . . . structures to which . . . alterations, repairs or additions are being made . . . ." Here, the sewer pipe was an existing structure that was not included in the completed value of the project and it was not being constructed, erected, or fabricated. Furthermore, the project included alteration of that existing structure by connection of WHP's waste removal system. Consequently, the clear and express language of the policy provided no coverage.
The words of an insurance policy "should be given their ordinary meaning, and in the absence of an ambiguity, a court should not engage in a strained construction to" impose liability. Longbardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990). A true ambiguity occurs "where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979). When, as here, the policy is clear and meets the insured's reasonable expectations, we enforce the policy as written. Walker-Rogge v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989); Killeen Trucking, Inc. v. Great American Surplus Lines Ins. Co., 211 N.J. Super. 712, 716 (App. Div. 1986).
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