February 11, 2008
HARTZ MOUNTAIN INDUSTRIES, INC., H-CRANFORD CONDUIT LIMITED PARTNERSHIP AND H-CRANFORD CREDIT LIMITED PARTNERSHIP, PLAINTIFFS-APPELLANTS,
PRESERVER INSURANCE COMPANY AND AINSLIE GAGE, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Civil Part, Bergen County, L-13423-04.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued: January 7, 2008
Before Judges Stern, Collester and C.L. Miniman.
Plaintiffs Hartz Mountain Industries, Inc., H-Cranford Conduit Limited Partnership and H-Cranford Credit Limited Partnership (collectively Hartz) appeal from a January 8, 2007, judgment following a bench trial dismissing the complaint on the ground that the slip-and-fall injuries suffered by defendant Ainslie Gage (Gage) were not caused by the negligence of B. Hirth Paving Company (Hirth), which contracted to provide snow and ice removal services on the property of Hartz. As a consequence, the judge concluded that Gage's injuries did not arise out of the work contemplated by the policy issued by defendant Preserver Insurance Company (Preserver) to Hirth and, thus, Hartz was not entitled to defense and indemnification from Preserver. Because Hartz was an additional insured under the Preserver policy and the accident occurred while Hirth was in the process of salting the property, we reverse and remand for further proceedings.
The facts giving rise to this claim for coverage occurred on January 7, 2003. At that time, Hirth was under contract to perform snow and ice removal from the property of Hartz located at 750 Walnut Avenue, Cranford. The contract required Hirth to remove snow and ice from all roads, parking lots and driveways on the property and prioritized the work. First, roads were to have top priority and to "be addressed first and continually as necessary." Second, driveways into parking lots and access roads around the buildings were to be plowed and sanded. Third, Hirth was to address the parking areas near the building entrances and the spots most frequently used. Fourth and last, the remote parking areas were to be plowed and sanded. The property contained 142,275 square feet of roadways and driveways and 393,628 square feet of parking stalls and aisles, some of which were below buildings. Even without the parking stalls and aisles under buildings, the square footage of parking areas to be plowed and salted was more than the square footage of roadways and driveways.
Under the contract, Hirth was required to indemnify Hartz from all claims and losses arising from or out of the work even if Hartz was wholly or partly at fault. The indemnity clause provided in pertinent part:
[Hirth] hereby agrees to save harmless and indemnify [Hartz] . . . from any and all claims, suits, demands, damages, charges, liabilities, losses, costs and expenses including attorneys' fees arising from or out of (a) the work incidental to or resulting from any and all operations performed by [Hirth] under or pursuant to any of the provisions of this Order whether or not any acts, of [Hartz] . . . contributed thereto in whole or in part, (b) any injury to, or death of, any person or persons, or damage to or destruction of property, occurring wholly or in part in conjunction with or resulting from the work or by reason of any act, omission or negligence of [Hirth] . . . whether or not any acts, errors, omissions or negligence of [Hartz] contributed thereto in whole or in part . . . .
Additionally, Hirth was required to maintain certain types and levels of insurance and, as to all general liability policies, was to name Hartz as an additional injured. Compliance with this requirement was to be proven by delivery of a certificate of insurance prior to commencement of work containing the following language: "Hartz Mountain Industries, Inc., and its respective subsidiaries, affiliates, partnerships, successors and assigns are included as additional insureds. This Insurance is primary and non-contributing with any insurance carried by Hartz." Hirth complied with this requirement by delivering a certificate of liability insurance dated December 6, 2002, adding Hartz as an additional insured under the blanket additional insured endorsement of the Preserver policy. Hartz had no other insurance applicable to this loss.
On January 7, 2003, at about 5:00 a.m. Hartz advised Hirth of icy conditions existing at 750 Walnut Avenue. Hirth arrived at the site at about 6:00 a.m. and began salting the premises. It took two truck loads to salt the entire premises. With only a portion of the premises salted, Hirth ran out of salt and left the site to reload its truck. While it was gone Gage, an employee of Fleet Bank, a Hartz tenant, slipped and fell on black ice on an unsalted roadway as she was walking from a parking lot to the entrance to Fleet Bank. Hartz' building supervisor walked over to Gage and saw that she was lying on icy pavement in a driveway leading to the parking lot. Hirth returned to the site and saw that an ambulance was near the entrance to the bank.
Hirth's principal acknowledged Gage was lying in a roadway that Hirth was obliged to salt. In the statement he gave to Preserver's adjuster and at his deposition, Hirth's principal stated that he ran out of salt after salting the perimeter road and the portion of the parking lot near the entrance to Public Service Electric & Gas Co., although at trial he denied salting any portion of the parking lot before he ran out of salt. Hirth's principal also admitted that after he reloaded he returned to the parking lot near the entrance to Public Service and finished salting all of the parking areas open to the sky. He did not salt under the buildings because his truck was too tall to fit. He admitted at trial that he had not salted any of the secondary roads before he reloaded.
After Gage sued, Hartz tendered its defense to Preserver, which refused to defend and indemnify Hartz under its policy. The injured employee sued both Hirth and Hartz and her action was settled by both defendants sharing fifty percent of the settlement amount, subject to a declaration of the rights of Hartz under Preserver's policy.
Hartz sued Preserver under the policy. It did not join Hirth under its contractual indemnification undertaking and, as a consequence, Hartz relies solely on the terms of the policy. The certificate of insurance issued to Hartz in the "Schedule of DESCRIBED PREMISES and LIMITS OF INSURANCE" describes "OPTIONAL COVERAGES" included in the policy "only for the Prm/Bldg/Occ(s) as specified below." The included location was for one snowplowing truck for one building, one occupant described as "ADDITIONAL INSURED - OWNERS, LESSEES OR CONTRACTORS AUTOMATIC STATUS."
The standard "Business Advantage Special Form Business Insurance Policy" contains various amendments and endorsements. The policy defines an "insured" as "[a]n organization other than a partnership, joint venture or limited liability company" designated in the Declarations." That standard definition was amended by endorsement to provide:
A. Section II - Who Is An Insured is amended to include as an insured any person or organization for whom you are performing operations when you and such person or organization have agreed in writing in a contract or agreement that such person or organization be added as an additional insured on your policy. Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured. A person's or organization's status as an insured under this endorsement ends when your operations for that insured are completed.
The description of business liability coverage found in Section II.A.1.a-d was replaced by an "Extension Endorsement." That endorsement defines coverage for business liability as follows: "We will pay those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' . . . to which this insurance applies. We will have the right and duty to defend the insured against any 'suit' seeking those damages." The extension endorsement provides that the insurance applies to "bodily injury" only if "[t]he 'bodily injury' . . . is caused by an 'occurrence' that takes place in the 'coverage territory' . . . during the policy period."
Turning to the additional-insured exclusions, the endorsement provides:
This insurance does not apply to:
b. 'Bodily injury' . . . occurring after:
(1) All work, including materials, parts or equipment furnished in connection with such work, on the project (other than service, maintenance or repairs) to be performed by or on behalf of the additional insured(s) at the site of the covered operations has been completed; or
(2) That portion of "your work" out of which the injury or damage arises has been put to its intended use by any person or organization other than another contractor or subcontractor engaged in performing operations for a principal as a part of the same project.
In deciding the issues before it, the trial judge did not discuss the terms of the contract between Hartz and Hirth nor did he discuss the various provisions of the Preserver insurance policy. Neither did the judge resolve any factual disputes, making only cursory findings of fact. After citing Westchester Fire Insurance Co. v. Continental Insurance Cos., 126 N.J. Super. 29, 37 (App. Div. 1973), aff'd o.b., 65 N.J. 152 (1974), the judge concluded:
In light of the testimony and other evidence presented, this Court cannot conclude, even through the broadest logical interpretation of the policy language, that the requisite connection or degree of relationship exists between [Hirth]'s negligent acts and/or omissions, and Gage's injuries. Specifically, testimony was elicited which indicated that, based on the time at which Hirth was called to [Hartz's] property, coupled with the guidelines provided by [Hartz], Hirth had been unable to reach the area in which [Gage] fell. To that end, despite [Hartz's] assertions to the contrary, this Court does not believe that the evidence presented indicated that Hirth had deviated from the guidelines provided. On the contrary, all evidence presented tended to show that Hirth did, in fact, proceed as instructed, and simply had been called to the site to begin work at a time which did not provide him a sufficient opportunity to reach the area in question. As such, under no construction of the policy language can this Court conclude that Gage's injury, after Hirth's having not had the opportunity to address the area in question, arose out of the work contemplated by the policy.
A motion for a new trial was denied on January 24, 2007. The judge concluded that there was no miscarriage of justice under the law because the evidence presented at trial did not support Hartz's contentions. He also concluded that the contract did not provide for insurance arising out of "any incident occurring during inclement weather" and that "Hirth's only promise was to perform its work in accordance with the rules provided by Hartz, and to perform only when dispatched by Hartz." Because Hirth was performing its obligations appropriately, there was no substantial nexus between the injury and the work. This appeal followed.
Hartz contends that the trial court misconstrued the law governing "arising-out-of" endorsements and ignored conclusive evidence establishing a substantial nexus between the accident and Hirth's operations under the contract and incorrectly relied on concepts of negligence. Hartz next asserts that even if a negligence standard applied, the undisputed facts established that Hirth was negligent in performing its operations under the contract. Finally, Hartz argues that the trial judge should have recused himself based on a conflict of interest in that the judge's nephew once worked for Preserver's defense counsel, albeit not on this matter.
A judge has a duty to make findings of fact and conclusions of law "in all actions tried without a jury." R. 1:7-4(a). "Failure to perform that duty constitutes a disservice to the litigants, the attorneys and the appellate court." Curtis v. Finneran, 83 N.J. 563, 569-70 (1980) (quotations omitted). Moreover, "[n]aked conclusions do not satisfy the purpose of R. 1:7-4." Id. at 570. When a trial judge has complied with Rule 1:7-4(a), our review is limited.
Findings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence. New Jersey Turnpike Authority v. Sisselman, 106 N.J. Super. 358 (App. Div. 1969), certif. den., 54 N.J. 565 (1969). It has otherwise been stated that "our appellate function is a limited one: we do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice," Fagliarone v. Twp. of No. Bergen, 78 N.J. Super. 154, 155 (App. Div. 1963), and the appellate court therefore ponders whether, on the contrary, there is substantial evidence in support of the trial judge's findings and conclusions. Weiss v. I. Zapinsky, Inc., 65 N.J. Super. 351, 357 (App. Div. 1961).
[Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974).]
See also Sager v. O.A. Peterson Const. Co., 182 N.J. 156, 163-64 (2004); Mizrahi v. Cannon, 375 N.J. Super. 221, 227 (App. Div. 2005). However, "[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference." Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
Although an insurance policy is a contract between the insurer and insured, there are special rules governing the interpretation of insurance policies. Gibson v. Callaghan, 158 N.J. 662, 669 (1999).
"[A]n insurance policy should be interpreted according to its plain and ordinary meaning." Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992). "But because insurance policies are adhesion contracts, courts must assume a particularly vigilant role in ensuring their conformity to public policy and principles of fairness." Ibid.
Thus, when the language of the policy is clear, and in the absence of any ambiguity, courts "'should not write for the insured a better policy of insurance than the one purchased.'" Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990) (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)). However, because the insurance company is an "expert in the field," when the meaning of a phrase in a policy is ambiguous, the Court has held that the "ambiguit[y] . . . [is] to be interpreted in favor of the insured. . . ." Gibson v. Callaghan, 158 N.J. 662, 670 (1999).
[Jolley v. Marguess, 393 N.J. Super. 255, 268 (App. Div. 2007).]
"It has often been stated that '[Insureds] are entitled to the broad measure of protection necessary to fulfill their reasonable expectations [and they] should not be subjected to technical encumbrances or to hidden pitfalls. . . .'" Bromfeld v. Harleysville Ins. Cos., 298 N.J. Super. 62, 74 (App. Div. 1997) (quoting Kievit v. Loyal Protective Life Ins. Co., 34 N.J. 475, 482 (1961)). "[P]olicies should be construed liberally in . . . favor [of insureds] to the end that coverage is afforded 'to the full extent that any fair interpretation will allow.'" Kievit, supra, 34 N.J. at 482 (quoting Danek v. Hommer, 28 N.J. Super. 68, 76 (App. Div. 1953), aff'd, 15 N.J. 573 (1954)).
With these principles in mind, a judge deciding a question of coverage under a policy must examine the policy language carefully. The Preserver policy defines the term "additional insured" and Hartz clearly fell within that definition. The policy then limited the scope of that status as follows: "Such person or organization is an additional insured only with respect to liability arising out of your ongoing operations performed for that insured. A person's or organization's status as an insured under this endorsement ends when your operations for that insured are completed." (Emphasis added.) The policy further provided that it did not apply to bodily injury occurring after the completion of Hirth's work at Hartz's premises. The issue before the trial judge and before us is whether the liability to Gage arose out of Hirth's ongoing operations.
We have considered the meaning of the phrase "arising out of" in insurance policies. In Westchester Fire we stated that the phrase did not justify a requirement that "the injury is a direct and proximate result, in a strict legal sense, of the" insured risk. Rather, "the phrase 'arising out of' must be interpreted in a broad and comprehensive sense to mean 'originating from' or 'growing out of'" the insured risk. Westchester Fire, supra, 126 N.J. Super. at 38.
So interpreted, there need be shown only a substantial nexus between the injury and the [insured risk] in order for the obligation to provide coverage to arise. The inquiry should be whether the negligent act which caused the injury, although not foreseen or expected, was in the contemplation of the parties to the insurance contract a natural and reasonable incident or consequence of the [insured risk], and thus a risk against which they might reasonably expect those insured under the policy would be protected. Whether the requisite connection or degree of relationship exists depends upon the circumstances of the particular case.
[Ibid. (citations omitted)]
See also County of Hudson v. Selective Ins. Co., 332 N.J. Super. 107, 114-15 (App. Div. 2000); Pep Boys v. Cigna Indem. Ins. Co. of N. Am., 300 N.J. Super. 245, 250 (App. Div. 1997); Harrah's Atl. City, Inc. v. Harleysville Ins. Co., 288 N.J. Super. 152, 157-58 (App. Div. 1996); Franklin Mut. Ins. Co. v. Sec. Indem. Ins. Co., 275 N.J. Super. 335, 340-41 (App. Div.), certif. denied, 139 N.J. 185 (1994).
When Gage fell on black ice, Hirth was in the midst of salting Hartz's property to melt ice in order to render the roadways, driveways and parking stalls and aisles safe for driving and walking and had failed to salt all roadways and driveways before salting some parking areas. Had Hirth salted all roadways and driveways before any parking areas, which it clearly could have accomplished because they comprised less than half of the work, the driveway on which Gage fell would have been salted before Hirth went to reload his truck. Thus, it seems abundantly clear that Gage's injuries had a substantial nexus to Hirth's ongoing operations performed for Hartz. The fact that Hirth was not on the property at the moment of the accident is not determinative. Coverage for Hartz as an additional insured had not ended because Hirth's operations were not yet complete. They were only interrupted to reload with more salt. Even if the phrase "arising out of" is ambiguous, the phrase must be construed in favor of the insured, that is, in favor of coverage. Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992). Thus, Hartz was entitled to a defense and indemnification under the Preserver policy as an additional insured. The issue of whether Hirth was or was not negligent has no bearing on Hartz's status as an additional insured under the Preserver policy.
Reversed and remanded for a determination of the amount of attorney fees for which Preserver is liable and for entry of a judgment for indemnification with respect to the $47,500 contributed by Hartz to the settlement of the underlying third-party action.
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