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Utuk v. Liberty Mutual Fire Insurance Co.


March 10, 2009


On appeal from Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-1490-07.

Per curiam.


Submitted February 10, 2009

Before Judges Graves and Ashrafi.

Plaintiffs Enoch Utuk and Enobong Utuk appeal from a summary judgment order dismissing their complaint for coverage under a homeowner's insurance policy issued to them by Liberty Mutual Fire Insurance Company (Liberty Mutual) and an order denying their motion for reconsideration. We affirm both orders.

On May 10, 2006, plaintiffs submitted a claim to Liberty Mutual for structural damage to their residence, which included a sinking floor and cracked walls. In their claim, plaintiffs stated the damage occurred on or about April 30, 2006, and the cause of the damage was unknown.

At defendant's request, Tom McNamara, MSME, of Hard Facts Engineering inspected plaintiffs' residence and foundation "to determine within reasonable engineering and scientific certainty, the cause of the sinking floor and wall fractures."

McNamara reported his findings as follows:

1. The subject residence has settled due to the deteriorated 2 by 4 floor truss system located within the crawl space.

2. The crawl space ventilation system has been blocked by the insured. Improper ventilation is the cause for the dry rotted timber as well as mold.

3. Due to standing ground water, the crawl space should be fitted with a drywell and dedicated sump pump.

4. The residence is not in danger of collapse, however continued stress will be prevalent until the insured follows the corrections outlined in our recommendation section of this report.

Based on McNamara's findings, Liberty Mutual denied coverage because its policy did not insure against risk of loss to property caused by "wet or dry rot." However, in response to plaintiffs' administrative appeal, Liberty Mutual agreed to a second engineering evaluation to be performed by Harald Greve, P.E., SECB.

After inspecting plaintiffs' residence, Greve concluded that "the wood sill plate was improperly constructed at or below grade level, which is a code violation." Consequently, ground water that was "soaking the sill plate" and "soaking the perimeter timber wall framing," induced a "compressive type failure at the timber sill," and this caused the "wall bulge and floor deflections." Based on these findings, Liberty Mutual once again denied plaintiffs' claim because its policy did "not insure for loss caused directly or indirectly" by "surface water," and it did not insure for loss to property caused by "[f]aulty, inadequate or defective . . . [d]esign . . . workmanship . . . construction . . . [or] grading."

Following the denial of their claim, plaintiffs instituted this declaratory judgment action. During discovery, plaintiffs provided defendant with estimates for the cost of anticipated repairs, but they never obtained a report or statement from anyone indicating the cause of the structural damage to their home.

In their opposition to Liberty Mutual's summary judgment motion, plaintiffs claimed they had a reasonable expectation that the damage to their home would be covered by their homeowner's policy and that the cause of the damage to their residence was an issue of fact to be decided by a jury. The trial court concluded, however, that plaintiffs' reasonable expectations were not violated because the insurance policy issued by Liberty Mutual was clear and unambiguous. The court explained:

A "genuine ambiguity . . . arise[s] where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage. In that instance, application of the test of the objectively reasonable expectation of the insured often will result in benefits coverage never intended from the insurer's point of view." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 598 (2001).

The [c]court finds that the insurance policy is not ambiguous. Section I of the Policy is entitled "Perils Insured Against." Under Section I Exclusions, explains "we do not insure for loss caused directly or indirectly by any of the following . . . (c) Water Damage meaning . . . surface water . . ." See Insurance Policy, Defendant's Exhibit A at page 8. The policy continues with part (2) which states "we do not insure for loss of property described in coverages A and B caused by any of the following . . . Faulty, inadequate or defective . . . design, specifications, workmanship, repair, construction, renovation, remodeling, grading, compaction . . ." See Insurance Policy, Defendant's Exhibit A at page 8. The doctrine of reasonable expectations is not invoked because the policy is not ambiguous.

The [c]court finds that Plaintiff has not met its burden in bringing forth evidence to overcome the evidence offered by Defendant that the cause was excluded from coverage. Reading both inspection reports carefully, and in the absence of any refutation of such findings in Plaintiff's reply pleading, the [c]court does not know how a jury could conclude other than that the floor sagged and the walls cracked because of a breach in the wood sill plate. The breach could have been caused because the sill plate was constructed improperly and/or because the surface water which collected in crawl space deteriorated the wood sill plate. Both of these causes are explicitly excluded from the policy coverage.

Therefore, because the insurance contract language is not ambiguous and the loss is not covered by the express terms of the policy, Defendant's Motion for Summary Judgment is GRANTED.

We affirm substantially for the reasons set forth by Judge Johnson in his written decision on March 31, 2008. His findings are supported by substantial credible evidence in the record, Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974), and his conclusions based on those findings are legally sound. It is well established that when the plain language of an insurance policy is clear and unambiguous, the terms of the policy should be enforced. Pizzullo v. New Jersey Mfrs. Ins. Co., 196 N.J. 251, 270 (2008); see also Universal Underwriters Ins. Co. v. CNA Ins. Co., 308 N.J. Super. 415, 420 (App. Div. 1998) ("We find no ambiguity in the respective language employed in the policies and, of course, we cannot make a better contract for either party than they themselves have made.").

Plaintiffs' claim that the court erred in denying their motion for reconsideration is equally without merit. As Judge Johnson noted, plaintiffs failed to demonstrate that their covered claim for water damage in 2001 is in any way related to their present claim for structural damage, which occurred on or about April 30, 2006. Because plaintiffs failed to present any new evidence regarding the cause of the current damage to their home, the court did not err in denying plaintiffs' motion for reconsideration.


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