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Nazario v. Lobster House

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


May 5, 2009

JOSE AND JUANITA NAZARIO, HUSBAND AND WIFE, PLAINTIFFS,
v.
THE LOBSTER HOUSE, COLD SPRING FISH & SUPPLY CO., DEFENDANTS-THIRD-PARTY PLAINTIFFS-RESPONDENTS,
v.
FIRST STATE PACKING, INC., AND GEORGIA PACIFIC, THIRD-PARTY DEFENDANTS, AND FIRST STATE PACKING, INC., THIRD-PARTY DEFENDANT-FOURTH-PARTY PLAINTIFF,
v.
INTERNATIONAL PAPER CO., FOURTH-PARTY DEFENDANT.
ESSEX INSURANCE COMPANY, PLAINTIFF-APPELLANT,
v.
COLD SPRING FISH & SUPPLY CO., THE LOBSTER HOUSE, DEFENDANTS-RESPONDENTS, AND JOSE NAZARIO AND JUANITA NAZARIO, DEFENDANTS, AND COLD SPRING FISH & SUPPLY CO., THE LOBSTER HOUSE, DEFENDANTS/THIRD-PARTY PLAINTIFFS,
v.
J. BYRNE AGENCY, INC., THIRD-PARTY DEFENDANTS.
SIRIUS AMERICA INSURANCE CO., PLAINTIFF-APPELLANT,
v.
COLD SPRING FISH & SUPPLY CO., T/A THE LOBSTER HOUSE, DEFENDANTS-RESPONDENTS, AND JOSE NAZARIO AND JUANITA NAZARIO, DEFENDANTS, AND UNITED NATIONAL INSURANCE COMPANY, DEFENDANTS-RESPONDENTS.

On appeal from the Superior Court of New Jersey, Law Division, Cumberland County, Docket Nos. L-159-05, L-304-05, and L-171-06.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted March 4, 2009

Before Judges Fisher, Baxter and King.

Two primary insurance providers appeal decisions estopping them from denying coverage and requiring them to exhaust their policy limits before the insured's umbrella policy is triggered. Because the "reservation of rights" letters were inadequate, and failed to inform the insured that the offers to defend could be "accepted or rejected," and the plain language of the contracts establishes that each primary provider is responsible for $1 million per occurrence, we affirm the trial courts' decisions.

I.

This is the complex procedural history. The underlying tort action was filed against defendants The Lobster House and its parent company Cold Spring Fish & Supply Company (Cold Spring) resulting from an accident sustained by Jose Nazario (Nazario), a Perrone Door Company employee, while he was installing overhead garage doors at Cold Spring's warehouse facility in Cape May, New Jersey. Cold Spring timely notified its primary insurers Essex Insurance Company (Essex) and Sirius America Insurance Company (Sirius) of the incident.

On November 3, 2004 and February 25, 2005 Essex sent Cold Spring letters disclaiming coverage for The Lobster House but advising Cold Spring that Essex would investigate and defend the matter on Cold Spring's behalf while retaining its rights to disclaim coverage. Essex then filed a complaint against Cold Spring on March 24, 2005, seeking a declaration that Cold Spring and its subsidiary co-defendant The Lobster House were not entitled to coverage or defense under the Essex insurance policy.

On March 2, 2005 and July 8, 2005 Sirius sent Cold Spring letters advising that the Lobster House should not be a party to the action, assigning counsel, and informing Cold Spring that Sirius would handle the case with "full and complete reservation of any and all rights." Sirius also recommended that Cold Spring retain separate counsel. On April 1, 2005 Essex filed an answer on Cold Spring's behalf asserting separate defenses and cross-claims for contribution against all co-defendants.

On April 11, 2005 Essex moved to consolidate the declaratory judgment action with the underlying action and the court granted the motion on May 13, 2005. On or about October 6, 2005 Essex filed a motion for summary judgment seeking a determination that the Essex policy provided no coverage in the underlying action; the motion was denied as premature.

On February 16, 2006 Sirius sought a judicial declaration that it was not obligated to indemnify or defend Cold Spring in the underlying action because the Sirius policy did not cover the warehouse or the warehouse operations where the incident occurred. Cold Spring hired Barker, Douglass & Scott, P.C. as personal counsel, and the firm filed an answer and counterclaim on or about April 12, 2006. Sirius moved to consolidate all three pending cases, and Judge G. Thomas Bowen, J.S.C., granted the motion on July 21, 2006.

Essex again moved for summary judgment seeking a coverage determination on July 13, 2006. Cold Spring filed a motion for summary judgment on or about July 20, 2006 seeking a ruling that it was owed a defense and indemnification from both Essex and Sirius. Sirius filed a cross-motion for summary judgment dated August 9, 2006. A hearing addressing all three motions for summary judgment was held on November 17, 2006.

On January 25, 2007 Judge Bowen issued a written opinion granting Cold Spring's motion for summary judgment and denying the motions of Essex and Sirius. The judge ruled that while neither Essex nor Sirius actually provided coverage for the underlying tort claim, the reservation of rights letters issued by the insurers were not effective to prevent estoppel of the insurers from withdrawing coverage because these letters failed "to inform [Cold Spring] that the offer[s] (to defend) may be accepted or rejected."

Both Sirius and Essex filed motions for reconsideration. The insurers sought clarification of Judge Bowen's order and opinion as to the amount of coverage to be provided by Sirius and Essex in light of a commercial umbrella policy issued by United National Insurance Company (United National). Judge Bowen did not rule on the amount for which each carrier was responsible, and denied both motions for reconsideration.

Thereafter, Sirius and Essex each tendered the full $1 million primary policy limits to assist in the resolution of the underlying claim. Cold Spring assigned the insurers its rights under the United National umbrella policy so that "in the event either or both Sirius and Essex are successful in avoiding coverage on appeal, both agree to seek indemnification from United National . . . ." On June 8, 2007 United National was joined as a direct defendant.

On or about October 30, 2007 United National filed a motion for summary judgment. The umbrella insurer sought an order declaring that the $1 million policy limits of both Sirius and Essex must be paid before the United National policy was triggered because Judge Bowen's decision estopped the providers from withdrawing coverage.

Both Sirius and Essex filed cross-motions. Sirius sought an order declaring that the umbrella coverage was triggered after payment of $1 million total of underlying insurance, and that United National shall reimburse Sirius $500,000 of its policy limits paid toward resolution of the underlying action. Essex's motion was similar.

A hearing was held before Judge Michael Brooke Fisher, J.S.C., on December 7, 2007 and United National's motion for summary judgment was granted on the same date. The primary insurers' cross-motions for summary judgment were denied.

Both Sirius and Essex filed notices of appeal on February 29, 2008. The insurers appeal 1) Judge Bowen's January 25, 2007 order in favor of Cold Spring, 2) Judge Bowen's May 8, 2007 denial of the insurers' motions for reconsideration, and 3) Judge Fisher's December 7, 2007 judgment in favor of United National.

II.

Here is the further factual context to aid understanding. Cold Spring is a Cape May, New Jersey company engaged in the business of wholesale seafood, restaurant operations, ice sales and boat fuel sales; The Lobster House is the company's trade name and the name of an insured premises. Cold Spring hired Perrone Door Company, an independent contractor, to install an overhead warehouse door. During the October 13, 2004 installation, Nazario, a Perrone employee was injured when he fell from a ladder.

II-A. The Sirius America Policy

Sirius America issued Cold Spring a commercial general liability insurance policy with an "each occurrence" limit of $1 million. The Sirius policy lists the insured as Cold Spring Fish & Supply Co., et. al. T/A The Lobster House. The relevant provisions of the policy cover the restaurant premises, "products and/or completed operations," and liquor liability at The Lobster House Restaurant and the Raw Bar/Fish Market at Schellenger's Landing in Cape May.

Sirius's March 2, 2005 letter to Cold Spring acknowledged "receipt of a lawsuit filed against [The Lobster House]" and assigned the firm of Cooper Levenson April Neidelman & Wagenheim (Cooper Levenson) as counsel. The letter also stated that it was Sirius' understanding that the Lobster House should not be part of the action because the incident occurred in the packing plant, which was insured by Essex.

On July 8, 2005 Sirius sent a second letter advising that it would undertake the defense and investigation of the matter "pursuant to a full Reservation of Rights," but recommending that Cold Spring retain its own counsel:

While we are willing to undertake at our expense the investigation and handling of the above-referenced claims being made against you, Sirius does so with full and complete reservation of any and all rights under the terms, provisions, covenants and conditions of the Sirius policy of liability insurance, including, but not limited to right to deny coverage. Sirius has appointed the law firm of Cooper Levenson to assume defense of this matter.

If it is determined through the investigation that the forklift driver was an employee of the warehouse/packing plant and performing services directly related to his employment at the packing plant, coverage under this policy will not apply and Sirius will withdraw the defense by Cooper Levenson. Thus, we recommend that you hire separate counsel at your own cost to monitor the case and that you encourage your attorney to coordinate efforts with the attorney provided for you by Sirius.

II-B. The Essex Policy

Essex issued a marine general liability insurance policy to Cold Spring with an "each occurrence" limit of $1 million. The policy lists 906 Schellenger's Landing as an insured property, and contains exclusions for negligent hiring or supervision and for independent contractors and subcontractors.

Essex's November 3, 2004 letter to Cold Spring advised that "Essex Insurance Company will proceed to investigate, handle and defend this matter on [Cold Spring's] behalf while retaining its rights to restrict or disclaim coverage accordingly," and will "retain the right to assert any and all policy defenses which may arise."

In a second letter, dated February 25, 2005, Essex informed Cold Spring that it had "retained the law firm of Barnaba & Marconi to protect [Cold Spring's] interest in this matter," and asked Cold Spring to "please provide [the firm] with [Cold Spring's] full and utmost cooperation." Essex stated that it would defend Cold Spring "as to all Counts and damages sought in the lawsuit, but indemnify [Cold Spring] for only those which are covered under the terms of the policy," and advised that "any damages which are awarded arising out of negligent hiring, training, or supervision are specifically excluded and are [Cold Spring's] sole responsibility and not that of Essex Insurance Company."

II-C. The United National Umbrella Policy

Cold Spring also maintained "umbrella/excess" insurance coverage through a policy issued by United National with an aggregate and each occurrence limit of $5 million and a self-insured retention of $10,000. The policy listed both Sirius and Essex as underlying insurers -- each having a $1 million policy limit for each occurrence giving rise to liability.

At her deposition, the insurance account manager involved in securing insurance coverage for Cold Spring explained that the umbrella policy would be triggered "[i]f there were a claim over [the limit of] the general liability policy," or "if a covered loss was not covered by that policy." She stated that the United National policy was a "true umbrella policy" which she secured because it is the "broadest policy you can purchase and secure for a client." The umbrella policy would apply "[w]hen the each occurrence limit of a million would be exhausted."

The United National policy provided that the umbrella insurance company would pay on behalf of its insured "that portion of [the] 'ultimate net loss' in excess of the 'retained limit' because of 'bodily injury' or 'property damage' to which this insurance applies." The policy defined "retained limit" as the greater of (1) the sum of amounts applicable to any claim or suit from underlying insurance or (2) the self-insured retention of $10,000.

Regarding primary insurance policies, the umbrella policy provides that it "will pay only [its] share of the amount of 'ultimate net loss,'*fn1 if any, that exceeds the sum of: (1) [t]he total amount that all such other insurance would pay for the loss in the absence of this insurance; and (2) [t]he total of all deductible and self-insured amounts under this or any other insurance."

III.

An appellate court reviews a judge's grant of summary judgment de novo, applying the same standard as the Law Division Judge. Turner v. Wong, 363 N.J. Super. 186, 198-99 (App. Div. 2003) (citing Antheunisse v. Tiffany, 229 N.J. Super. 399, 402 (App. Div. 1988), certif. denied, 115 N.J. 59 (1989)). This court first decides whether there is a genuine issue of fact and if there is not, then second, whether the trial court's ruling on the law was correct. Antheunisse, supra, 229 N.J. Super. at 402.

The principal issue on this appeal is whether the judge properly applied the doctrine of estoppel to bar Essex and Sirius from denying coverage to its insureds. In a liability insurance case, "[c]ontrol of the defense is vitally connected with the obligation to pay the judgment." Merchants Indem. Corp. v. Eggleston, 37 N.J. 114, 127 (1962). Success "may depend upon skill in investigation, in negotiations for settlement, and in the conduct of the lawsuit," and "[j]ust as a carrier would hardly agree to pay a judgment after defense by the insured, so it cannot expect the insured to pay for a judgment when it controlled the litigation." Ibid. It is "universally agreed that the defense of an action against the insured is incompatible with a denial of liability unless the carrier has reserved the issue of its liability by appropriate measures." Id. at 126.

If an insurer "wishes to control the defense and simultaneously reserve a right to dispute liability, it can do so only with the consent of the insured." Id. at 127. Agreements may be "inferred from an insured's failure to reject an offer to defend upon those terms, but to spell out acquiescence by silence, the letter must fairly inform the insured that the offer may be accepted or rejected." Id. at 127-28 (emphasis added); see also Sneed v. Concord Ins. Co., 98 N.J. Super. 306, 314 (App. Div. 1967).

When an insurer takes on the defense of a claim against its insured, "[s]uch undertaking, with full knowledge of the fact, in the absence of a non-waiver agreement between the insurer and insured imposes liability on the insurer." Caiola v. Aetna Life Ins. Co., 13 N.J. Misc. 845, 847 (Sup. Ct. 1935), aff'd, 116 N.J.L. 381 (E. & A. 1936). This liability is "grounded on the doctrine of waiver or estoppel." Ibid.

Where an insurance policy does not cover a particular loss, "the relevant thought is 'estoppel,' and undoubtedly prejudice is an essential ingredient." Eggleston, supra, 37 N.J. at 129. A "carrier's duty to pay judgments is co-extensive with all suits it defends," and "[t]his is true even when the claim is clearly outside the terms of the policy." Goldmann v. Lumber Mut. Cas. Ins. Co., 30 N.J. Super. 281, 286 (Cty. Ct. 1954). By assuming the defense of a claim, "the scope of the undertaking between the insurer and the insured is thereby extended." Caiola, supra, 13 N.J. Misc. at 847-48.

Estoppel "may arise by silence or omission where one is under a duty to speak or act." Carlsen v. Masters, Mates & Pilots Pension Plan Trust, 80 N.J. 334, 341 (1979). One "shall not be permitted to repudiate an act done or position assumed where that course would work injustice to another who, having a right to do so, has relied thereon." N.J. Suburban Water Co. v. Harrison, 122 N.J.L. 189, 194 (E. & A. 1939).

Trying to "surmise or recreate what avenues the insured might otherwise have pursued in such a situation if it had had a clear field to act on its own during the time the matter is preempted by the carrier" would be "speculative, unproductive and unfair," for "[t]hat 'course cannot be rerun.'" Griggs v. Bertram, 88 N.J. 347, 362 (1982) (quoting Eggleston, supra, 37 N.J. at 129). Circumstances such as these "justify the imputation of prejudice sufficient to raise an estoppel against the insurer." Ibid.

The imputation of prejudice, however, is not an absolute rule. Am. Handling Equip., Inc. v. T. C. Moffatt & Co., 184 N.J. Super. 131, 141 (App. Div. 1982). An insurer's conduct "must constitute 'a material encroachment upon the rights of an insured to protect itself by handling the claim [or suit] directly and independently of the insurer' before the presumption of prejudice can arise." Id. at 142 (quoting Griggs, supra, 88 N.J. at 359).

Despite the limited circumstances under which prejudice is not presumed,*fn2 the Court has emphasized that it has "no intention of disturbing the rule restated in [Eggleston] and explicitly acknowledged in this jurisdiction for almost fifty years, to the effect that once a carrier undertakes to defend, it is estopped to deny coverage." Sussex Mut. Ins. Co. v. Hala Cleaners, Inc., 75 N.J. 117, 125 (1977). In Sussex, where the Court found that an insurance company's filing of an answer did not deem the insurer to have "controlled the defense," the Court iterated that the "salutary rule" set forth in Eggleston "retains its full vigor but it is inapplicable here because the essential ingredient of an undertaking to defend is missing." Ibid.

In his letter opinion dated January 25, 2007 Judge Bowen concluded that there was no actual coverage under the Sirius or the Essex policies but that the reservation of rights letters sent by each insurer were not drafted in a fashion sufficient to accomplish this desired objective. Therefore, the insurers were estopped from raising issues of non-coverage. Regarding Sirius, he found "no coverage under the Sirius policy for the wholesale warehouse operation," but concluded that "the [July 8, 2005] reservation of rights letter . . . did not qualify as a reservation of rights letter which would prevent estoppel of the insurer from withdrawing coverage" because the "requirement that '. . . the letter must fairly inform the insured that the offer (to defend) may be accepted or rejected,' ha[d] not been met." As for Essex, the court concluded that the policy's negligent hiring and contractor-subcontractor exclusions resulted in a lack of coverage for the subject loss. However, the judge found that "there was no [] reservation of rights which gave rise to an implied agreement for [Essex] to undertake and continue to defend insured in spite of reserving (or denying) coverage."

Judge Bowen concluded that "[d]oing nothing and hiring an attorney would have the same result with respect to this issue" because "the proposal that the insured hire its own attorney could not affect the fact that Sirius [and Essex] controlled litigation, no matter what the insured did." By hiring its own attorney, the insured "could not gain . . . control over the litigation, nor diminish the control of the insurer[s]." Further, "[t]he fact that Cold Spring did hire its own attorneys is not effective as a showing the insured was not prejudiced because, again, prejudice is presumed by the absence of control of the litigation."

Sirius argues that "[t]he trial court erroneously applied the doctrine of estoppel to the Sirius policy which did not provide coverage in the first instance for the claimed loss." It contends that its policy only insured operations related to the restaurant business and the Raw Bar, and that this is "evident not only from the structure of the Sirius policy Declaration sheet, [and] the Commercial Insurance application . . . but also by virtue of the fact that separate coverage was purchased for the warehouse and the warehouse operations through Essex Insurance Company." Sirius notes that "Essex did not decline coverage based upon location of the incident, nor did Essex claim that the warehouse and/or its operations were not covered by its policy," but declined coverage "based upon the Independent Contractors/Sub-contractors Endorsement exclusion, and the Hiring and/or Supervision Exclusion." Conversely, Sirius declined coverage "because the Sirius policy does not insure the warehouse or the operations at the warehouse where the underlying incident occurred, nor did the alleged bodily injury arise out of the ownership, maintenance or use of the Restaurant or Raw Bar/Fish Market, which are the insured premises under the Sirius policy."

Sirius further alleges that its communications with Cold Spring represented a valid reservation of rights, and that Sirius "did not take control of the litigation but simply appointed counsel to investigate the claim since there was a potential for coverage . . . ." It noted that the July 8, 2005 letter "specifically identified potential conflicting issues of interest" and notified Cold Spring that Sirius would undertake "the investigation and handling of the claims made against the Lobster House under a full and complete reservation of any and all rights under the terms, provisions, covenants, and conditions of the Sirius policy." The letter also explained that the firm's assumption of defense did not constitute a waiver of any provision of the Sirius policy.

Essex claims that it "promptly notified" Cold Spring of its position that there was no coverage available by filing a declaratory judgment action less than one month after the filing of the underlying action. Further, Essex "issued its first reservation of rights letter on November 3, 2004," and its second letter was "sent on February 25, 2005."

Both Sirius and Essex take issue with Judge Bowen's statement that "prejudice is presumed by the absence of control of the litigation." They argue that the trial court "overlooked the fact that it can be demonstrated that Cold Spring suffered no prejudice as a result of the representation," and contend that "a rebuttable presumption should have been applied." Sirius emphasizes that Cold Spring retained personal counsel "to serve as defense counsel and to monitor the action on its behalf," filing third party pleadings, attending depositions, and defending against declaratory judgment actions. Likewise, Essex argues that "Cold Spring's personal counsel had the opportunity to participate or consult with counsel retained by Essex to defend the [u]nderlying [a]ction."

Also, Sirius and Essex claim that the cases on which Judge Bowen relied are distinguishable from the present action. For example, Sirius asserts that Griggs*fn3 "contained an exclusion which excludes coverage for the intentional acts of the insured," whereas in the instant matter "there was no coverage under the Sirius policy for the underlying claims." As for Eggleston, Sirius alleges that "the court was not dealing with a lack of policy coverage, but rather a claim of misrepresentation or fraud in the inception of the coverage."

United National counters that "[d]efense counsel appointed by [Sirius and Essex] participated in all aspects of this claim, from the filing of the answer, attending depositions, filing third party complaints against other entities, and even negotiating the settlement of the claim." As both insurers "maintained control of the defense through settlement," their involvement was "substantial and continuous," rendering meritorious the trial court's decision to estop the insurers from withdrawing coverage.

Because Essex and Sirius actively assumed defense of the claim but did not disclaim liability or reserve its rights through "appropriate measures" as set forth in Eggleston, we affirm the trial judge's finding that both insurers are estopped from denying coverage. In order to establish Cold Spring's acquiescence through silence, the insurers were required to "fairly inform the insured that the offer may be accepted or rejected," and their failure to do so renders proper the grant of summary judgment in Cold Spring's favor. Eggleston, supra, 37 N.J. at 127-28.

We find nothing in Eggleston or its progeny which suggests that the insured must prove actual prejudice to create coverage, or that the carrier may prove lack of prejudice to avoid coverage by estoppel, when a fully informed written consent is lacking. The control of the litigation without proper consent equates to creating the coverage without qualification under Eggleston.

Judge Conford's expression for this court in Sneed v. Concord Ins. Co., 98 N.J. Super. 306, 314 (App. Div. 1967), clearly fits the situation before us:

Merchants Ind. Corp. v. Eggleston, 37 N.J. 114 (1962), makes it clear that the letter mentioned does not constitute a valid non-waiver agreement. Such an agreement requires the consent of the insured, as he gives up valuable rights in respect of control of investigation and negotiations for settlement as well as, later, of the defense of any action instituted by the claimant. While an agreement may be inferred from an insured's failure to reject an offer to control the defense and at the same time reserve a right to dispute liability, yet to spell out acquiescence by silence the letter must fairly inform the insured that the offer may be accepted or rejected. There is no question but that [the insurer]'s letter of August 1, 1963 was not an offer at all, but a unilateral declaration of its intention to control the investigation and, impliedly, the entire handling of the claim, while reserving the right to disclaim whenever it saw fit to do so. Certainly the letter did not apprise [the insured] that he was free to accept or reject [the insurer]'s intended course of action. [Ibid. (internal quotations and citations omitted).]

When the Supreme Court desires to make prejudice to the insured a consideration before coverage is denied, the Court has clearly said so. For example, before effectively disclaiming for breach of the "notice of accident as soon as practical" provision, the carrier has the burden of proof of breach of the condition and "a likelihood of appreciable prejudice" therefrom, according to Chief Justice Weintraub. Cooper v. Gov't Employees Ins. Co., 51 N.J. 86, 94 n.3 (1968). But nothing qualifies the Eggleston holding with a requirement of proof of prejudice to the non-consenting insured to obviate the coverage created by estoppel. If the Supreme Court had desired to make proof of prejudice material in the Eggleston context, the Court would have clearly said so, as it did in Cooper, supra.

IV.

At the outset of his December 7, 2007 decision granting summary judgment in favor of United National, Judge Fisher declared that he would be applying the law of the case doctrine, and that he was "not going to change [Judge Bowen's] opinion." As for Judge Bowen's decision, Judge Fisher stated:

So, I have no opinion as to whether or not Judge Bowen's ruling will, you know, withstand appeal. I do feel that while he didn't say it, per se, in that opinion, that the -- the natural corollary, and implication is that he found there to be a million each, and without saying it, that's how I read it . . . And, it seems logical to me to grant the summary judgment of United [National].

Judge Fisher's "initial inclination" was that "it was at least implicit in [Judge Bowen's] ruling that the coverages were a million each," and that "it makes eminent common sense for this matter to go immediately to the Appellate Division because there is a very good chance, if -- if Judge Bowen was wrong, then there's no second issue for [Judge Fisher] to deal [with]."

Sirius contends that the trial court erred in concluding that both Sirius and Essex should be responsible for their $1 million policy limits, a finding that "does not comport with the intent of the Umbrella policy since the primary policies are not concurrent and insure separate and distinct risks." United National "could only have had the reasonable expectation of $1 million in primary coverage for the subject accident," and "[i]t is inequitable for United National to reap the benefit of the estoppel awarded to Cold Spring." The estoppel, if applicable at all, "was only intended to be for the benefit of the insured - not the umbrella insurance carrier."

Essex argues that the definition of "retained limit" as stated in the United National policy is ambiguous,*fn4 "creat[ing] genuine interpretation difficulty in determining when the United National Policy affords coverage to Cold Spring," and that as such "the policy should be interpreted in favor of Cold Spring by declaring that the United National Policy is triggered after the payment of one million dollars of primary insurance." Further, Essex contends that because of the different coverage afforded by each insurer "Cold Spring did not expect both the Essex and Sirius policies to afford coverage to Cold Spring for the claim . . . in the underlying personal injury action." As such, the court "must find that the United National policy does not meet Cold Spring's expectations" because "Cold Spring reasonably expected that the coverage under its umbrella policy would be triggered following Essex and Sirius' contributions of $500,000 each."

Regarding Essex's ambiguity argument, United National counters that the policy section regarding retained limits and underlying insurance refers to the "sum of the amounts applicable to any claim or underlying suit," and if no underlying insurance applies, then the retained limit is the "self insured retention." As for the reasonable expectations argument, United National claims that the insurers are "now attempting to turn the above principle on its head by arguing that the reasonable expectation of Cold Spring did not include coverage from both Essex and Sirius," which is "contrary to the reasoning behind Eggleston and its progeny, which grants estoppel to the insured because of the reasonable expectation of coverage that is fostered by the insured in the absence of an adequate reservation of rights letter."

A reading of the Essex and Sirius insurance policies reveals that each had a limit of $1 million per "occurrence." Similarly, the "underlying insurance" listed in the United National umbrella policy included the Essex and Sirius policies, and again stated that each had a $1 million limit per occurrence. As the warehouse incident was a single "occurrence," it follows that when the policy's terms are given their plain meaning, both Sirius and Essex are responsible for $1 million each in satisfaction of the settlement before the umbrella policy is triggered.

V.

We decline to consider the validity of the assignment by Cold Spring to Essex and Sirius of a cause of action against United National. Essex argues that this issue was not raised at the trial court level and therefore should not be considered on appeal. The well-settled rule is "that our appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available 'unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest.'" Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (quoting Reynolds Offset Co., Inc. v. Summer, 58 N.J. Super. 542, 548 (App. Div. 1959), certif. denied, 31 N.J. 554 (1960)). We agree.

We affirm the rulings in the Law Division.


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