On appeal from Superior Court of New Jersey, Law Division, Middlesex County, L-406-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
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?