March 5, 2008
JOSEPHINE GABRIELE, AS ADMINISTRATRIX AD PROSEQUENDUM FOR THE HEIRS-AT-LAW OF SALVATORE GABRIELE, DECEASED, AND ADMINISTRATRIX OF THE ESTATE OF SALVATORE GABRIELE, DECEASED, STEPHANIE GABRIELE, A MINOR BY HER GUARDIAN AD LITEM, JOSEPHINE GABRIELE, PAMELA GABRIELE, A MINOR BY HER GUARDIAN AD LITEM JOSEPHINE GABRIELE, GIOVANNI GABRIELE, A MINOR BY HIS GUARDIAN AD LITEM JOSEPHINE GABRIELE AND JOSEPHINE GABRIELE, INDIVIDUALLY, PLAINTIFFS,
LYNDHURST RESIDENTIAL COMMUNITY, LLC; DAIBES & COMPANY; DAIBES BROTHERS, INC.; PYRAMID CONSTRUCTION & ENGINEERING; JM3 CONSTRUCTION; ALEXANDRE PAIVA CONSTRUCTION, INC.; ALL AMERICAN HAULING & RECYCLING; BRAVANTE AUTOMATIC SPRINKLER; DOWN NECK EQUIPMENT RENTAL; DAMON ASSOCIATES; VIJAY KALE ARCHITECTS, P.C.; ANCHOR CONCRETE PRODUCTS; LYNDHURST RESIDENTIAL CONTRACTORS; DAIBES CONSTRUCTION CO., DEFENDANTS, AND PYRAMID CONSTRUCTION & ENGINEERING, LLC, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
ESSEX INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.
On appeal from Superior Court of New Jersey, Law Division, Bergen County, Nos. L-3080-06 and L-7340-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued December 19, 2007
Before Judges Wefing, Parker and R. B. Coleman.
Essex Insurance Company ("Essex") appeals from a trial court order granting summary judgment to Pyramid Construction & Engineering, LLC ("Pyramid") and declaring that Essex is obligated to defend and indemnify Pyramid in connection with claims asserted against it in litigation captioned Gabriele v. Pyramid. After reviewing the record in light of the contentions advanced on appeal, we affirm.
Pyramid was the prime contractor on a construction project known as Riverside Plaza located in Lyndhurst, New Jersey.
Pyramid was insured under a commercial general liability policy issued by Essex. On August 3, 2005, Salvatore Gabriele was killed at the jobsite when he was struck by falling debris. At the time of his death, Gabriele was employed by Bravante Automatic Sprinkler Co. which was a subcontractor on the project but not a subcontractor of Pyramid.
A wrongful death action was commenced, seeking damages on behalf of Gabriele's estate and his survivors, and Pyramid was joined as a defendant in that action. Pyramid notified Essex, which declined coverage. Essex relied upon one portion of the "Additional Conditions Endorsement" attached to Pyramid's policy. The concluding paragraph of that endorsement stated:
Further, there is no coverage under this policy for 'bodily injury', 'personal injury' or 'property damage' sustained by any contractor, self-employed contractor, and/or subcontractor, or any employee, leased worker, temporary worker or volunteer help of the same.
Since Gabriele was an employee of a subcontractor on the site, Essex maintained that the claim for damages following his death was excluded under this language.
Pyramid then filed a declaratory judgment action that was consolidated with the pending wrongful death suit. The question of whether Pyramid was entitled to coverage under the Essex policy was presented to the trial court on cross-motions for summary judgment. Pyramid contended that the policy was, at best, ambiguous and that under well-settled principles of construction, it was entitled to coverage under the policy. The trial court agreed; it granted Pyramid's motion and denied that of Essex. This appeal followed.
Pyramid restates the argument it made below. It points both to the placement of this language within the policy and to the declarations page of the policy which indicates that contractors and subcontractors are included within the policy's coverage. Essex, on the other hand, contends that no ambiguity exists at all in the policy language and that the trial court erred when it relied on the doctrine of reasonable expectations.
We note the apparent facial conflict between the policy's declarations page, which indicates unrestricted coverage for subcontractors and the exclusionary language upon which Essex relies. In such a posture,
[w]e recognize those well-settled principles governing the interpretation of contracts of insurance that mandate broad reading of coverage provisions, narrow reading of exclusionary provisions, resolution of ambiguities in the insured's favor, and construction consistent with the insured's reasonable expectations. [Search EDP v. American Home Assurance Co., 267 N.J. 537, 542 (App. Div. 1993).]
Our task is not merely to scrutinize the particular clause upon which Essex relies but to look at the entire policy.
[T]he question of whether an insurance policy is ambiguous is not resolved by focusing upon the language contained in one section of the contract. Instead, the offending section should be read in the context of the entire policy in order to determine whether harmony can be found between the alleged ambiguous language and the remainder of the policy. [Morrison v. American Intern. Ins. Co., 381 N.J. Super. 532, 541 (App. Div. 2002) (citations omitted).]
The language in question is the concluding paragraph to a section which clearly deals with Pyramid's own subcontractors, requiring Pyramid to use only subcontractors who are insured under policies naming Pyramid as an additional insured and providing a level of coverage equal to that afforded to Pyramid under the Essex policy. There is no indication to the insured that Essex intended that language to have any application beyond that limited context and we decline to give it the broader scope for which Essex urges.
Insurance policies are contracts of adhesion, and New Jersey courts scrutinize their terms and application because of the great "imbalance between insurance companies and insureds in their respective understanding of the [policies'] terms and conditions." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 594 (2001). The words of an insurance policy should be given their plain meaning, but when the language used creates an ambiguity, the policy should be interpreted to conform to the reasonable expectations of the insured. Kievit v. Loyal Protect. Life Ins. Co., 34 N.J. 475, 482 (1961).
In Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 429 (App. Div. 2004), we noted that where a particular phrase "is capable of being interpreted in the manner sought by the insurer, 'where another interpretation favorable to the insured reasonably can be made that construction must be applied.'" "When an insurance policy's language fairly supports two meanings, one that favors the insurer, and the other that favors the insured, the policy should be construed to sustain coverage." President v. Jenkins, 180 N.J. 550, 563 (2004).
A policy is not ambiguous, however, merely because two parties can offer conflicting interpretations of the language. Simonetti, supra, 372 N.J. Super. at 428. The ambiguity must be genuine, that is, one which prevents the average policyholder from determining the boundaries of his coverage. Id. at 428-29.
We are not persuaded by the contention which Essex made to the trial court, and repeats to us, that the ordinary principles governing construction of an insurance policy, including that of the doctrine of reasonable expectations, should not apply to this policy because it is a surplus lines policy. "Surplus lines insurance involves New Jersey risks which insurance companies authorized or admitted to do business in this State have refused to cover by reason of the nature of the risk." Railroad Roofing & Building Supply Co. v. Financial Fire & Cas. Co., 85 N.J. 384, 389 (1981). In such an instance, a surplus lines agent may "'export' the insurance coverage--place it with an 'unauthorized' insurer." Ibid. Surplus lines insurance is regulated by the surplus lines law, N.J.S.A. 17:22-6.40 to 6.65. Nothing within that statute would support the conclusion that the ordinary principles guiding construction of insurance policies should not apply to a surplus lines policy, and Essex has not cited to us any reported authority standing for that proposition. We can perceive no reason in logic or policy for adopting such a position. Bryan Const. Co., Inc. v. Employers' Surplus Lines Ins. Co., 60 N.J. 375 (1972).
The order under review is affirmed.
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