On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-4799-03.
The opinion of the court was delivered by: S.L. Reisner, J.A.D.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
APPROVED FOR PUBLICATION January 9, 2008
Before Judges Weissbard, S.L. Reisner and Baxter.
In this insurance coverage case, plaintiff Piermount Iron Works, Inc. (Piermount), joined by Travelers Property Casualty Company of America (Travelers), J.T. Magen & Company, Inc. (Magen), Morris Winograd Agency (Winograd), and Insurex, Inc. (Insurex) (collectively appellants), appeal from a series of trial court orders all dated May 24, 2006, denying appellants' summary judgment motions and granting summary judgment in favor of defendant Evanston Insurance Company (Evanston) and third-party defendant Burns & Wilcox, Ltd. We consolidated appellants' appeals, and we now reverse the grant of summary judgment and remand for further proceedings on limited issues.
This case presents the issue as to the proper interpretation of the following clause in an umbrella insurance policy issued by Evanston to Piermount*fn1 19. When We Do Not Renew If we decide not to renew this policy, we will mail or deliver to the first named insured shown in the Declarations written notice of the non-renewal not less than 30 days before the expiration date or such other period as may be required by law.
If notice is mailed, proof of mailing will be sufficient proof of notice.
There is no dispute that Evanston did not give its insured thirty days prior notice of an intent not to renew the policy, or of Evanston's intent not to renew unless its insured met certain additional requirements not previously imposed as a condition precedent to renewal. These included filling out a new contractor's questionnaire, in addition to the usual renewal application, and paying a nearly five-fold premium increase before Evanston would bind coverage. Evanston did not advise the insured of these requirements until after the policy expired. The policy's expiration date was March 13, 2002, about two weeks before an accident befell one of Piermount's employees. On March 14, 2002, Insurex faxed a renewal application to B & W and requested that coverage be bound. Instead of binding coverage as it had in the past, Evanston refused to bind coverage until Piermount completed a new questionnaire and satisfied additional requirements.
Because Evanston is a surplus lines carrier, it was not required under New Jersey insurance regulations to provide notice of non-renewal or to include the specific non-renewal clause found in paragraph 19 of its policy. See N.J.A.C. 11:1-20.1(a). However, New Jersey insurance regulations require other types of commercial insurers to include this clause in their policies. See N.J.A.C. 11:1-20.2. The clause is a part of the standard ISO policy used by non-surplus lines insurers, and the meaning of the non-renewal notice requirement has been construed in case law. The non-renewal notice provision is construed to require an insurer to give notice of a conditional as well as an absolute intent not to renew a policy. See Barbara Corp. v. Bob Maneely Ins. Agency, 197 N.J. Super. 339, 344 (App. Div. 1984), app. dism., 102 N.J. 339 (1985).
Appellants contend that the clause in the Evanston policy should be construed in a manner consistent with the regulations. Based on case law as well as uncontroverted evidence in the record concerning the standard practice in the surplus lines industry, we agree with appellants. We also conclude that failure to give the required notice resulted in continued coverage through the date of the accident.
We, therefore, reverse the trial court order granting summary judgment to Evanston and remand for entry of an order granting summary judgment in favor of Piermount and the other appellants on the coverage issue. We also remand to the trial court to resolve Evanston's claims concerning late notice of the accident, and any claims for counsel fees that any of the parties may assert.
These are the most pertinent facts. The case arises from a construction accident that befell Jay Jacobs, an employee of the subcontractor Piermount, on March 28, 2002. J.T. Magen was the general contractor on the project. The accident occurred on a project in New York, and Jacobs sued Magen in New York. Jacobs prevailed against Magen in that litigation and Magen also obtained summary judgment for indemnification against Piermount.
Magen then sought coverage as an additional insured on Piermount's primary policy from Lexington Insurance Co. and its excess policy from Evanston. Evanston denied coverage. The Jacobs suit settled for $2 million with Lexington paying half and Magen's liability insurer, Travelers, paying half. Piermount sued Evanston in New Jersey seeking a declaration of umbrella liability coverage; Travelers intervened, seeking reimbursement for its $1 million contribution to the settlement. Piermount also sued Winograd, its insurance broker, Insurex, the surplus lines broker through which Winograd sought to ...