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Um v. Cumberland Insurance Group


March 13, 2008


On appeal from the Superior Court of New Jersey, Law Division, Camden County, L-5941-03.

Per curiam.


Argued February 11, 2008

Before Judges Lintner, Graves and Alvarez.

In this appeal, plaintiffs, Yong S. Um and Jennifer M. Um, challenge two orders for summary judgment. The first, entered on March 17, 2006, dismissed their complaint for first party insurance coverage against defendant Cumberland Mutual Fire Insurance Company (Cumberland). The second, entered on June 9, 2006, dismissed plaintiffs' tort cause of action against RNR Contractors Incorporated (RNR).*fn1 We affirm both orders.

In the Spring 2001, plaintiffs purchased a home located at 6 Tanbark Court in Voorhees, which was originally constructed in 1987. An inspection performed prior to plaintiffs' closing revealed "no noted major structural problems with the house." Plaintiffs installed a marble floor near the entryway and hardwood floors elsewhere in the home. Cumberland provided plaintiffs with a homeowners' insurance policy for a term from July 31, 2002 to July 31, 2003.

In 2002,*fn2 construction began on Centennial Mill, a residential real estate development, adjacent to plaintiffs' property. The general contractor, Pulte Homes of New Jersey (Pulte), entered into Subcontractor Agreements with Haas Sand and Gravel, L.L.C. (Haas S&G), Robert E. Haas, Inc. (Haas Inc.) and RNR. RNR agreed to perform "Erosion and Sedimentation Control . . . Pipe Utility Installation . . . complete installation of curb [and] . . . proper earth compaction."

Haas, Inc. and Haas S&G (collectively referred to as Haas) were responsible for demolition, placement of fill and top soil, and compaction of earth. Haas worked on the project from November 16, 2002, until October 11, 2004. Haas's equipment consisted of off-road trucks, excavators, dozers, and loaders, with between two and twelve vehicles being used at any particular time.

In the Spring 2003, plaintiffs experienced what they described as intense and continued vibrations in their home during the construction work, resulting in physical damage to their home. The damage included leaking at the living room skylights, creating brown water stains, nail pops throughout the home, broken plumbing in an upstairs bathroom, sagging kitchen cabinets that pulled away from the wall, large cracks in the basement foundation wall, sagging hardwood floors, misaligned wood columns, and cracks in the garage floor, the fireplace, and the chimney. According to plaintiffs, the wooden exterior steps pulled away from the front landing, only two of the home's fourteen windows opened without difficulty, and the sliding glass door came off its track.

In response to complaints, Remington & Vernick Engineers, Inc. (Remington), an engineering firm retained by the Township, contacted Pulte on January 8, April 25, and May 9, 2003, requesting that it investigate plaintiffs' complaints and take appropriate action. Pulte responded that the geo-technical engineer supervising the construction assured it that compaction or vibrations could not be affecting plaintiffs' home. On September 10, 2003, Kenneth Brzozowki, Pulte's Land Manager, informed Remington that vibration monitoring revealed "that the construction activities cannot be causing the damages claimed." Brzozowki claimed that the area had been experiencing unusually high amounts of rainfall, which "caus[ed] the water table to rise and make sump pumps run more frequently and cause potential house settlement." Brzozowki obtained a report prepared by Geo-Technology Associates, Inc. (GTA), which concluded that the vibration levels from the construction activities "could not have caused damage to the adjacent properties."

John J. Hare, R.A., P.E., P.P., inspected plaintiffs' home in August and December 2003 at plaintiffs' request. On February 18, 2004, Hare again inspected plaintiffs' property, finding that "various defects were increasing in size and number."

During a March 9, 2004, inspection, Hare "found that they continued to increase." Hare observed: "Garage slab cracking due to loss of contact support caused by soil settlement . . .

[m]asonry foundation wall cracks . . . [k]itchen and dining room floor are out of level due to settlement of supporting structure [and] . . . [s]supporting nailing and joints throughout the house have been dislodged and deformed due to current settlement stresses in the structure."

In a February 9, 2005, report, Hare indicated that it is apparent that the developer was using heavy track equipment such as bulldozers, front end loaders and back hoes, as well as vibrating sheeps foot rollers for excavation, grading and compaction operations. In addition, the evidence indicates that the developer was performing dewatering activities in close proximity to [plaintiffs'] residence. Dewatering reduces pore water pressure and in the case of soils containing a clay constituent releases water of crystallization softening the soil, developing higher plasticity; both conditions allowed for and caused additional soil consolidation and settlement of the soil supporting the foundation of [plaintiffs'] residence. In addition, the extensive vibrations caused by the heavy equipment contributed to the relatively short time period in which the soils below [plaintiffs'] foundation consolidated.

Also, the shock waves from the vibrations having an effect of minor earthquakes transmitted through the soil in a manner similar to the way sound waves are transmitted in air, transmitted vibrations to [plaintiffs'] structure causing the immediate visible damage to the gypsum wallboard and contributed to the fracturing of the rigid cinder aggregate masonry materials, which are extremely sensitive to such vibrations.

Hare opined that the tests conducted by GTA "did not provide a comprehensive investigation scenario capable of measuring and determining the extent of the influence of the various construction activities being conducted by Pulte" adjacent to plaintiffs' home.

Noting that on each visit he observed "additional cosmetic and structural damage not visible on any of [his] prior visits," Hare concluded:

It was my professional opinion at the time of each visit and is my professional opinion now, to a reasonable degree of engineering certainty, that the initial damages observed and additional damages were due to the continued and [ongoing] construction activities in close proximity to [plaintiffs'] residence. These damages include cracking and nail pop outs in the gypsum wall board; cracking in the masonry foundation, chimney and fireplace; settlement of the concrete slab on grade floors and exterior paving and steps; [and] damage to the sliding glass door and window frames. (emphasis added).

Robert J. Monaco, P.E., of Peter Vallas Associates, Inc. (PVA), inspected plaintiffs' home on May 11, 2005, at Cumberland's request. Monaco noted that plaintiffs' property "has a downward slope in grade elevation from the street level downward to [the] rear property line." Monaco observed

"[n]umerous cracks throughout the foundation walls, finished basement walls, upstairs finished walls, around the fire place stone masonry, and the exterior foundation extension walls." In the basement, Monaco found "numerous fine vertical and random cracks in the CMU block wall . . . [and] timber and steel support girders that exhibit some movement." On the first floor, Monaco observed "cracks above the doorway lintel of the kitchen as well as misaligned cabinet doors in the kitchen cabinetry. There were also fine cracks along the junction between the living room wall and the locked ceiling." In the garage, Monaco noticed "medium random cracks in the concrete floor slab as well as poured concrete at the junction with the wall of the garage. There was [also] a .75 inch gap between the concrete steps between the garage and the doorway entrance to the home." There, "the girder supported by steel round columns . . . [was] twisted in that the columns appear[ed] out of plum."

At various locations throughout the home, Monaco observed sheetrock nails popping. "[T]he skylights in the cathedral ceiling of the living room exhibit[ed] some water seepage . . . [and] vertical cracks were noted through the concrete . . . foundation wall extensions." Only two of the home's fourteen windows were "operat[ing] without difficulty."

Monaco concluded that the damage he observed throughout the house was "substantially the result of problems in [its] design and construction." He further opined that a small percentage of the cracks were attributed to excessive vibrations from construction, including from large earth moving operations. However, he concluded that "damages from vibrations to a well built home would be minimal and less than 2% of the overall damages visible in [plaintiffs'] home since 2003."

On October 20, 2003, plaintiffs filed their complaint seeking coverage from Cumberland. Cumberland filed a third-party complaint naming Pulte, RNR, and Haas. Plaintiffs thereafter filed an amended complaint naming the third-party defendants as first-party defendants, alleging negligence, nuisance, inherently dangerous activities, and trespass.

We consider first plaintiffs' assertion that the judge erred in granting summary judgment in favor of Cumberland. Section I A of the homeowners' insurance policy provided MAIN PROPERTY COVERAGES and contained Coverages A, B, C, and D. Coverage A, entitled "YOUR DWELLING," provided coverage for plaintiffs' dwelling, i.e., home and any structures attached thereto. Coverage B covered unattached structures on the residence premises, while Coverage C covered personal property, and Coverage D covered loss of use.

Section I D of the policy, entitled "LOSSES NOT INSURED," included the following provision:

We do not provide insurance under Section I for any sort of damage or loss directly or indirectly, wholly or partially, aggravated by, consisting of, or resulting from the following - even if loss otherwise covered contributes to such concurrently or in any sequence.


A. Earth movement (including but not limited to earth rising, sinking, shifting, or subsiding; landslide; mudflow) aggravated by or resulting from any natural or human made causes . . . .


A. Wear and tear . . . .

B. Buckling, bulging, contracting, cracking, expansion, settling, shrinkage, or sinking of ceilings, floors, roofs, walls, driveways, foundations, patios, pavements, or pools.

Section I E, entitled "SPECIAL SECTION I CONDITIONS," included subsection 3, entitled "LOSS - SCOPE OF LOSS COVERED UNDER SECTION I."

Loss includes solely fortuitous direct physical damage or destruction, including direct physical damage or disappearance caused by theft to the extent that such is covered here. Certain indirect (that is, consequential) damage or destruction or loss of use may also be covered.

The covered causes of loss are described in the coverage form attached here.

"CAUSES OF LOSS COVERED HERE," in the HOMEOWNERS FORM (Form 87) provided the following:


Subject to all applicable provisions here, property covered under Coverages A and B and Coverage C is insured for fortuitous direct physical loss, as described here, as follows:



That results from the causes of loss described below applicable to Coverage C; any other fortuitous direct physical loss not otherwise excluded here.


That results from the following described causes of loss.

Vehicles or Aircraft.

Also listed under COVERAGE C are causes including fire, collapse, explosion, theft, and water damage.

Generally, an individual is entitled to insurance coverage if the policy language is ambiguous. Our courts on numerous occasions have resolved unclear policy language in favor of the insured. See, e.g., Sparks v. St. Paul Ins. Co., 100 N.J. 325, 336 (1985); Search EDP, Inc. v. Am. Home Insurance, 267 N.J. Super. 537, 542 (App. Div. 1993), certif. denied, 135 N.J. 466 (1994); and Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 273-74 (2001). We have also extended coverage where the language is unambiguous but the denial of coverage would frustrate the insured's reasonable expectations. Sparks, supra, 100 N.J. at 338. Thus, even when the policy language is clear but denial of coverage contravenes the insured's reasonable expectations, our courts have ruled for the insured. In Werner Indus., Inc. v. First State Ins. Co., 112 N.J. 30 (1988), our Supreme Court explained the underlying rationale for the reasonable expectations doctrine, which is triggered despite unambiguous language where "'the insurance contract is inconsistent with public expectations and commercially accepted standards.'" Id. at 35 (quoting Sparks, supra, 100 N.J. at 338). In such instances, "'judicial regulation of insurance contracts is essential in order to prevent overreaching and injustice.'" Ibid. (quoting Sparks, supra, 100 N.J. at 338).

Normally, "when an insurance policy uses an exclusion which bars coverage for losses caused by a particular peril, the exclusion applies only if the excluded peril was the 'efficient proximate cause' of the loss." Zurich Am. Ins. Co. v. Keating Bldg. Corp., 513 F. Supp. 2d 55, 70 (D.N.J. 2007) (quoting Auto Lenders Acceptance Corp. v. Gentilini Ford, Inc., 181 N.J. 245, 257 (2004)). Thus, an insured is normally afforded coverage where an "included cause of loss is either the first or last step in the chain of causation which leads to the loss." Assurance Co. of Am., Inc. v. Jay-Mar, Inc., 38 F. Supp. 2d 349, 353 (D.N.J. 1999) (citing Franklin Packaging Co. v. Cal. Union Ins. Co., 171 N.J. Super. 188, 191 (App. Div. 1979) (where vandals broke into insured's warehouse and caused flood, resulting in damage to inventory, court held that vandalism, a covered cause of loss, was proximate cause even though water damage was excluded under the policy), certif. denied, 84 N.J. 434 (1980); Stone v. Royal Ins. Co., 211 N.J. Super. 246, 251 (App. Div. 1986) (where sump pump hose broke and flooded insured's basement, court held broken household appliance, a covered cause of loss, was proximate cause even though losses caused by subsurface water were excluded under the policy)).

Plaintiffs assert that they are entitled to coverage under the "CAUSES OF LOSS COVERED HERE" portion of Form 87 which provides coverage for fortuitous direct physical loss to their dwelling resulting from vehicles. They argue that the foregoing section conflicts with the exclusion for direct and indirect loss from earth moving, thus requiring us to resolve the conflict in their favor. They also urge us to apply the efficient proximate cause test to determine that the damage caused in the first sequence by construction vehicles, a covered loss, should apply even though the contributing cause, earth moving, does not.

However, the plain language used in Section I D indicates that the policy was drafted to eliminate the efficient proximate cause doctrine. Such an exclusion is not inconsistent with public expectations or commercially accepted standards. "[E]xclusionary language designed to avoid the 'efficient proximate cause doctrine' is enforceable." Assurance, supra, 38 F. Supp. 2d at 354. In Assurance, the insured claimed that the damage sustained was caused by an overflow of rainwater from storm sewers, a covered cause of loss, while the insurer asserted that the damage was caused by surface water flooding, an excluded cause of loss. Id. at 351. There, the policy contained a clause stating, "We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss." Id. at 352. Therefore, although the first in the sequence of events was a covered loss, the insured was unable to recover because the contract specifically provided that there would "be no coverage for loss due to sequential causes even where the first or the last cause is an included cause of loss." Id. at 354.

Cumberland's policy language, like the policy in Assurance, did not provide "insurance under Section I for any sort of damage or loss directly or indirectly, wholly or partially, aggravated by, consisting of, or resulting from the following - even if loss otherwise covered contributes to such concurrently or in any sequence." Here, the parties to the insurance contract agreed there would be no coverage due to sequential loss even where the first cause is covered when the consequential loss is from "[e]arth movement (including but not limited to earth rising, sinking, shifting, or subsiding . . .) . . . aggravated by or resulting from any natural or human made causes." Contrary to plaintiffs' contention, the exclusion did not frustrate their reasonable expectations of coverage.

We also reject plaintiffs' contention that the section providing for coverage for losses from "fortuitous direct physical loss" resulting from vehicles is in conflict with the sequential exclusion for earth movement. The express coverages described in Coverage C and applied to Coverages A and B for loss resulting from vehicles is subject to losses "not otherwise excluded here." The use of the word "direct" is also consistent with the exclusion for sequential losses.

Lastly, we briefly address plaintiffs' assertion that the judge erred in dismissing their complaint against RNR. Plaintiffs' maintain that the judge erred in dismissing their negligence claim because there existed a genuine issue of material fact. We disagree. The judge determined that plaintiffs' expert rendered a net opinion because it was bare of any "factual evidence or basis for his conclusions." Recognizing that an expert's opinion may be supplemented at the time of trial, the judge noted that "something as factually easy as this should not rest upon defendant to disprove as much as the plaintiffs to prove since they had brought this action." At oral argument before us, counsel advised that, at the time the judge decided RNR's motion for summary judgment, there had already been several adjourned trial dates and trial had been scheduled to begin within two weeks. Plaintiffs' counsel also conceded at oral argument that Hare's report only dealt with causal relationship for plaintiffs' damage and did not address any negligence, wrongful conduct, or a deviation from an acceptable standard of care regarding the construction work performed by RNR. A reading of Hare's report confirms counsel's concession. Hare's professional opinion was limited to causal relationship, that the damage to plaintiffs' home "was due" to the continuing, ongoing construction activities on the adjacent property. He expressed no opinion as to plaintiffs' allegations of negligence on the part of RNR, the general contractor, or other subcontractors. The judge apparently took the lack of any factual allegations of negligence to mean that Hare had rendered a net opinion.

When consideration is given to the age of the case, the imminent trial date, and plaintiffs' concession that they lacked any expert proof establishing negligence on the part of RNR, we are satisfied that it is appropriate for us to affirm the order granting summary judgment, albeit, for different reasons than those expressed by the judge in her decision rendered from the bench on June 9, 2006. See Isko v. Planning Bd. of Livingston Twp., 51 N.J. 162, 175 (1968). Simply stated, plaintiffs' failure to provide any expert proof establishing negligent conduct on behalf of RNR renders meaningless their contention on appeal that the order dismissing their allegations that RNR negligently performed its construction work was error. We are satisfied that plaintiffs' assertion on appeal that the judge erred because there was a genuine issue of material fact respecting RNR's negligence lacks sufficient merit to warrant further discussion in a written opinion. R. 2:11-(e)(1)(E).


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