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Bradford v. Ross University School of Veterinary Medicine


March 9, 2009


On appeal from Superior Court of New Jersey, Law Division, Middlesex County, L-406-06.

Per curiam.


Argued December 3, 2008

Before Judges Stern and Payne.

On January 22, 2004, Daniel Bradford was shot and killed at the Conaree Beach Cottages, located near Basseterre on the island of St. Kitts, West Indies. Approximately two years later, on January 19, 2006, Daniel's brother, Nathan Bradford, as administrator of the Estate of Daniel Bradford and on behalf of the wrongful death beneficiaries, filed suit in New Jersey against various parties, including Jeffrey and Deborah Ward. Count One of the complaint alleged, among other things, that the Wards, as owners of the property where Daniel was shot and lessors of that property to Daniel, breached their duty to make the premises safe and secure and their duty to exercise reasonable care to avoid risk of foreseeable harm by warning Daniel of the dangers posed by criminal elements in the area.

Count Two alleged, among other things, that the Wards breached their duty to not allow criminal activities on the premises.

The Wards tendered the defense of the action to their liability insurer, Caribbean National Insurance Company, which declined coverage because suit was not venued in St. Kitts. The Wards then tendered the defense of the action to Allstate Insurance Company, which had issued a renters policy listing the apartment in Woodstown, New Jersey that the Wards were occupying at the time of the crime. Allstate denied coverage under its policy, but on November 18, 2006, it entered into a non-waiver agreement with the Wards that authorized it to proceed with the investigation of the incident, negotiate for settlement of the compensatory damage claim, defend against the Bradford suit, and perform other acts without waiver of its right to assert non-coverage.

On June 19, 2006, Allstate filed a complaint against the Wards seeking a declaration that the St. Kitts property did not qualify as an insured premises under the policy. Allstate further alleged that, because the policy excluded coverage for "bodily injury or property damage arising out of the past or present business activities of an insured person," coverage by Allstate was not afforded to the Wards. Allstate's complaint was consolidated with the Bradford matter on August 25, 2006.

On January 24, 2007, the Wards filed an amended answer and counterclaim against Allstate, seeking a declaratory judgment against it.

On November 8, 2007, Allstate filed a motion for summary judgment against the Wards, which was heard on December 21, 2007. Following the hearing, Allstate's motion was denied on the ground that an issue of fact existed as to whether the Wards' use of the cottage as a rental property was a business activity and whether their expectation as to coverage was reasonable. In a later oral opinion, the judge addressed the issue of whether the St. Kitts property constituted an "insured premises." The judge again found factual issues to exist. An order denying summary judgment was entered on January 2, 2008, and reconsideration was denied in an order dated January 23, 2008. We granted Allstate's motion for leave to appeal.


The record in this matter, viewed in a light most favorable to the Wards,*fn1 discloses that they and another couple jointly purchased two cottages on St. Kitts in March 1999 anticipating that they would be used for vacations and eventual retirement.

One cottage had been previously named Vientomarsol and the other was Coral Reef. The cottages were separately deeded, but encircled by a single fence. In February 2003, the Wards purchased the other couple's interest in the properties.

At the time of the initial property purchase, the Wards were residing in Clarklake, Michigan in a home that they had owned for approximately twelve years. During a portion of that period, Jeffrey Ward also rented an apartment in South Haven, Michigan. The Wards sold the Clarklake residence in December 2002 and took up residence elsewhere in Michigan in rental quarters. In July 2003, the Wards moved to Woodstown, New Jersey, renting an apartment there until May 2004. During their residence in Clarklake, the Wards were covered by a policy of homeowners insurance issued by Allstate. Thereafter, they were covered by renters policies, also issued by Allstate. Deborah Ward testified in her deposition that she procured the New Jersey coverage by telephone from an agency in Mullica Hill, and that she requested coverage identical to the renters coverage previously issued by Allstate in Michigan. The terms of the Michigan coverage are not set forth in the record, and no argument is made that they differed from the coverage obtained in New Jersey.

The Wards have admitted that they never disclosed to Allstate their ownership of property on St. Kitts. In their brief on appeal, the Wards argue that during the call to the agent in Mullica Hill, no one "asked Mrs. Ward if the Wards owned any other property that could be covered by the policy." In support of that assertion, we have been referred to a minuscript of Deborah Ward's deposition testimony. However, that transcript reflects only the following exchange:

Q: Was there any discussion about the St. Kitts property during that phone call that you had with the Labrasi Agency in July of 2003?

A: No, there was not.

And later:

Q: When you were in conversation with someone at the Labrasi Agency in July of 2003 was there - did you have any conversation about any other property other than the 150 West Avenue address in Woodstown?

A: No.

Deborah Ward also testified that when she had obtained the renters policy on the premises in Michigan, there was no discussion about the property in St. Kitts.

The New Jersey policy application contains the following question and answer:

Is there any store, business or professional activity in the building, or the applicant's premises, or at additional premises owned by the applicant? NO Deborah Ward has neither confirmed nor denied giving this answer, which is consistent with the Wards' position that their continuous rental of the St. Kitts cottages did not constitute a business - a position that we reject. However, the application is not signed by her, and there is no evidence in the record that would indicate that it was reviewed by her.

At the time that they purchased the St. Kitts property, the Wards participated in the purchase of an insurance policy from Caribbean National Insurance Company that included liability coverage for the property. In his deposition, Jeffrey Ward stated that liability coverage was obtained because the Wards anticipated renting the property to tourists, which they commenced doing approximately six months after the property was purchased in order to cover some of their expenses. Jeffrey acknowledged that the prior owner had "made a living renting these places out."

For a period of time, the Wards rented their cottage on a short-term basis to tourists at a rental of $80 per night, establishing a website to advertise the cottage's availability. Additionally, the Wards rented a cottage for one and one-half years to a local builder, and rented a cottage to another individual on two occasions for several months. In late 2001 or 2002, the Wards commenced renting the two cottages to students at Ross University School of Veterinary Medicine. The Vientomarsol cottage was rented to Brian Dubrosky for a year to a year and one-half, ending in December 2002. From December 2002 to his death in January 2004, the cottage was rented to Daniel Bradford, whose father paid market rent of $490 per month on Daniel's behalf. According to a letter from Daniel Bradford, he learned of the cottage from a Ross University website listing. Jeffrey Ward testified at his deposition that the rentals to Dubrosky and Bradford were "back to back." The Coral Reef cottage was rented to Jamie and Steve Marietti from the Spring to the Fall of 2002. Eric Molina followed them, and Francisco Tarrado rented the cottage from May 2003 to January 2004. It is not clear from the record whether the Coral Reef cottage was continuously rented during this period.

From the outset, a friend, Sharon Stapleton, acted as the Wards' property manager, collecting rents, paying bills and maintaining the premises. Initially, she received ten to fifteen percent of any rents collected as payment for her services. However, after obtaining employment at Ross University, she ceased to accept such payments.

During the years 1999, 2000, 2001, and 2002, the Wards used the Coral Reef cottage for vacation, as intended, making improvements there. However, they were unable to use the cottage for their vacation in 2003 because it was occupied by Eric Molina, and they stayed elsewhere. The Wards have not returned to St. Kitts since the murder, and the cottages have been largely abandoned. The Wards claim that although their goal was to turn a profit on the rentals, they never did so. At the time of their depositions, the Wards had filed amended tax returns reflecting the losses sustained.

After Allstate had filed its motion for summary judgment, both Deborah and Jeffrey Ward signed certifications that stated that when the New Jersey policy was obtained from Allstate, it was the Wards' belief that the policy would cover them "for all property liability lawsuits brought against me or us in the State of New Jersey."


As we have noted, the Allstate renters policy in effect at the time of the murder was obtained by telephone from an agency in Mullica Hill. The declarations page of the policy listed as the "location of property insured," 150 West Ave. Apt 1215, Woodstown, NJ 08098-1151. No mention of the property on St. Kitts appears anywhere in the policy. The policy defined "insured premises" as

a) the residence premises; and

b) under Section II [Family Liability and Guest Medical Protection] only:

1) the part of any other premises, other structures and grounds used by you as a residence. This includes premises, structures and grounds you acquire for your use as a private residence while this policy is in effect.

"Residence premises" is, in turn, defined as that portion of any building used by you as a private residence, excluding any portion used for business purposes, which is described on the Policy Declarations.

"Business" is defined, in relevant part, as:

a) any full or part-time activity of any kind engaged in for economic gain and the use of any part of any premises for such purposes. . . .

b) any property rented or held for rental by an insured person. Rental of your residence premises isn't considered a business when:

1) it is rented occasionally for residential purposes; . . .

The policy also contains two exclusions of relevance to this matter:

We do not cover bodily injury or property damage arising out of the past or present business activities of an insured person. and

We do not cover bodily injury or property damage arising out of any premises, other than an insured premises, owned, rented or controlled by an insured person.


In commencing our discussion of the coverage issues raised by this appeal, we set forth the governing principles applicable in this context. The interpretation of an insurance policy is a matter of law, entrusted to the court, National Union Fire Ins. Co. of Pittsburgh Pa. v. Transp. Ins. Co., 336 N.J. Super. 437, 443 (App. Div. 2001). When engaging in such interpretation, a policy should be construed in accordance with its plain and ordinary meaning. Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 272-73 (2001); Atlantic Mut. Ins. Co. v. Palisades Safety & Ins. Assoc., 364 N.J. Super. 599, 604 (App. Div. 2003). "If the policy terms are clear, courts should interpret the policy as written and avoid writing a better insurance policy than the one purchased." President v. Jenkins, 180 N.J. 550, 562 (2004). However, because insurance policies are contracts of adhesion, if any ambiguity exists, the ambiguity must be construed so as to effect the reasonable expectations of the insured. Villa v. Short, 195 N.J. 15, 23 (2008). "That is, if the policy 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.'" Ibid. (quoting President, supra, 180 N.J. at 563).

The burden lies with the Wards to demonstrate that their claim falls within the basic terms of Allstate's policy. Adron, Inc. v. Home Ins. Co., 292 N.J. Super. 463, 473 (App. Div. 1996). Allstate bears the burden of demonstrating that coverage is excluded. Ibid. When interpreting policy exclusions, we must construe them narrowly. Villa, supra, 195 N.J. at 23-24. Clauses that extend coverage are to be viewed broadly. Id. at 24.

On appeal, the Wards claim that the St. Kitts property was used as their "residence" from March through April 1999, February though March of 2000, February through March of 2001 and March of 2002. They state further that "during the period of time in question, the St. Kitts property was the only property owned by [them]." The Wards then adopt the motion judge's determination that the Allstate policy's definition of insured premises was ambiguous, and that a factual issue existed whether the Wards had a reasonable belief that the cottages were insured under their Allstate renters coverage.

Allstate, on the other hand, argues that the facts do not support the Wards' claim that the St. Kitts property constituted their residence at the time of the murder, since they had merely vacationed there in the years 1999 to 2002, the property was occupied by others thereafter, and the Wards did not anticipate utilizing the property as a retirement home until long after the policy at issue had expired. Allstate argues in these circumstances that the property did not qualify as an insured premises under the clear and unambiguous terms of the policy. It argues further that coverage was specifically excluded by the provision, quoted above, stating that bodily injury arising out of premises other than insured premises was not covered.

We agree with Allstate's position, finding no ambiguity in the policy's definition of "insured premises" and nothing within that definition that would provide coverage in this instance. In this regard, we also note that Daniel Bradford was renting the Vientomarsol cottage when he was murdered. There is no evidence in the record that the Wards ever occupied that cottage. Deposition testimony confirms that, when vacationing on St. Kitts, they always stayed in the Coral Reef cottage. Thus, the Wards have failed to meet their burden of establishing the existence of coverage under their New Jersey renters policy. Similarly, we find that Allstate has met its burden of demonstrating that the unlisted premises exclusion in its policy is applicable in these circumstances. As the Court held when construing the same exclusion in Wickner v. Am. Reliance Ins. Co., 141 N.J. 392 (1995):

The unlisted premises exclusion contained in the American Reliance policy is intended to preclude from coverage injuries or property damage arising out of property that is owned by the insured but unlisted in the policy. The reason for the exclusion is that the unlisted property and the risks associated with it have not been included in the underwriting consideration or the determination of the cost of the policy. [Id. at 398.]


We are also satisfied that Allstate has met its burden of establishing the applicability to the Wards' claim of the business activities exclusion contained in its policy. The definition of "business" that we previously quoted includes, in paragraph a), "part-time activity of any kind engaged in for economic gain and the use of any part of any premises for such purposes" and, in paragraph b), "any property rented or held for rental by an insured person." Although the latter portion of this definition excludes occasional rentals of the insured's residence premises for residential purposes, such is not the case here, since the property in question was not the Wards' residence premises, as we previously stated. Moreover, it was not "occasionally" rented, but instead, had been continuously rented from at least the beginning of 2002 to January 2004. Thus, the Wards' rental activities clearly constituted a business activity. Wickner, supra, 141 N.J. at 400. In that decision, the Wickner Court observed, in language equally applicable here:

American Reliance and the Wickners contracted specifically for homeowner insurance and coverage of specific personal risks associated with a homeowner's activities. The inclusion in the policy of a business activities exclusion indicates that the policy was not intended to provide the more expansive coverage for risks associated with business or commercial activity. Because the insurer should be liable only for risks bargained for in the insurance contract, coverage for injuries arising out of business or commercial activities should be precluded. [Ibid.]

We do not regard the absence of profit from the Wards' rental activities to avoid this exclusion from coverage. First of all, the definition contained in paragraph b) of business as property rented or held for rental does not require that a profit be made. Further, the definition of business in paragraph a) only requires that the activity be engaged in for economic gain. It does not require evidence of a profit. And, as we have noted, Jeffrey Ward testified at his deposition that the Wards' goal was to turn a profit on their cottage rentals, although that did not in fact occur. A number of cases have held that a business need not be successful or the primary source of the insured's income to constitute a business pursuit. See, e.g., Heggen v. Mountain West Farm Bureau Mut. Ins. Co., 715 P.2d 1060, 1063 (Mont. 1986) (insured's activity of holding steer-roping contests, making between $1,200 and $1,500 per year, a sum that did not meet expenses, nonetheless constituted a business pursuit); Sanders v. Wallace, 884 S.W.2d 300, 305 (Mo. App. 1994) ("Simply because he was not successful in his endeavor does not mean he was no longer involved in business."); Wiley v. Travelers Ins. Co., 534 P.2d 1293, 1295 (Okla. 1974) ("Whether there is or is not actual profit is immaterial. . . . If a business suffers a loss, was it not a business? The answers are obvious. Profit motive, not actual profit, makes a pursuit a business pursuit.").

Thus, both aspects of the definition of "business" are applicable in this case, as is the exclusion of coverage for bodily injury arising out of business activities. In this matter, unlike Pettinato v. Cigna Prop. & Cas. Co., 303 N.J. Super. 576 (Law Div. 1997), upon which the motion judge relied, the death of Daniel Bradford, although caused by an unknown third person, arose directly from the Wards' business activities, because Bradford would not have been at the location if he had not leased the property from the Wards.*fn2


The Wards argue that they reasonably anticipated that coverage of the St. Kitts cottages would exist under their New Jersey renters policy. We are satisfied that such is not the case. As we have noted, when the Wards purchased the St. Kitts property in 1999, they and their co-owners obtained a Caribbean National insurance policy to cover it that included liability coverage. They did so despite having an existing homeowner's policy for their Michigan residence. Further, the Wards admitted that the Caribbean National policy included liability coverage because of their plan to rent the St. Kitts property to tourists and others.

When Deborah Ward obtained their renters policy while living in New Jersey, she mentioned only the New Jersey apartment, offering no indication that she sought additional coverage for the St. Kitts property. The policy itself was a "renters," not a "homeowner" policy. Moreover, that policy, delivered to the Wards, clearly indicates on the declarations page under "Location of Property Insured" only the New Jersey address. We do not regard it as reasonable for the Wards to have anticipated coverage of property they owned in the West Indies under a rental policy, particularly when only the location of the rented residence appeared on the declarations sheet. See Greer ex rel. Peterson v. Naklicki, 379 N.J. Super. 153, 160 (App. Div.) (holding that the declarations sheet "must be deemed to define coverage and the insured's expectation of coverage.") (quoting Lehrhoff v. Aetna Cas. and Sur. Co., 271 N.J. Super. 340, 3447 (App. Div. 1994), certif. denied, 185 N.J. 390 (2005)).

As a final matter, we note that when the Bradford suit was filed, the Wards tendered the defense of the matter to Caribbean National. It was only after that company had denied coverage that the Wards turned to Allstate.

The Wards additionally assert that they should be afforded coverage pursuant to our decision in Solomon v. Continental Ins. Co., 122 N.J. Super. 125 (App. Div. 1972). In that case, a gunsmith shop, located in a chicken coop on the Solomons' property and operated by the Solomons' nonresident son, caught fire. A fireman, allegedly injured as the result of an explosion of gunpowder caused by the fire, sued the Solomons.

Their insurer, Continental, denied coverage. Following a jury trial of the coverage issue, the judge found against the Solomons on all issues. We reversed. In the portion of our decision upon which the Wards rely, we held that when Continental's agent failed to ask any questions of the Solomons when issuing homeowner's coverage except for the number of rooms in the residence, and then stated "[y]ou're insured for all," coverage could not be avoided on the ground that a portion of the premises was used for a gunsmith operation. We held that "[i]t is the insurer's burden to obtain, through its representatives, all information pertinent to the risk . . . ." Id. at 134.

We are unwilling to extend Solomon to the present circumstance, involving owned property located in another country, determining that it would impose an unreasonable burden on an insurance agent responding to a request for renters coverage for an apartment in New Jersey to make sufficient inquiry to determine that the Wards also owned "vacation" property in the West Indies.*fn3 If the Wards sought coverage from Allstate for that property, it was their obligation to request it. Moreover, there is no evidence in this case, such as that which existed in Solomon, suggesting that the Wards were assured that all of their coverage needs had been met by the issuance of Allstate's renters policy.

In summary, we are satisfied that the Wards failed to meet their burden of demonstrating the existence of liability coverage for the Bradford suit pursuant to Allstate's renters policy. We are also satisfied that Allstate met its burden of demonstrating that any coverage otherwise available was precluded by the policy's business activities exclusion. Because the policy at issue was not ambiguous, we decline to apply precedent deferring to the reasonable expectations of the parties. Moreover, we find no basis to conclude that the Wards' alleged expectations of coverage were reasonable in the circumstance.


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