On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-9004-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Winkelstein, Fuentes and Gilroy.
Plaintiff, J. Fletcher Creamer & Son, Inc., appeals from the August 22, 2008 order that dismissed its complaint with prejudice for failure to state a claim upon which relief could be granted, and denied its cross-motion for leave to file a second-amended complaint. We reverse and remand for further proceedings consistent with this opinion.
On November 15, 2007, plaintiff filed a declaratory judgment action against defendants, Pennsylvania Manufacturers Association Insurance Company (PMA) and the St. Paul Fire & Marine Insurance Company (St. Paul), seeking a declaration that the two insurers were obligated to defend and indemnify it for a property damage claim asserted by Public Service Electric & Gas Company (PSE&G). In June 2008, the insurers filed separate motions, each seeking to dismiss plaintiff's complaint for failure to state a claim upon which relief could be granted. Plaintiff cross-moved for leave to file a second-amended complaint. On August 22, 2008, the trial court entered an order, supported by an oral decision, granting defendants' motions to dismiss with prejudice and denying plaintiff's cross-motion.
Plaintiff is a multi-faceted contracting company. PMA insured plaintiff under a commercial general liability (CGL) policy of insurance from December 3, 1997 through March 31, 1999. St. Paul insured plaintiff under a similar policy for the period from March 31, 1999 through June 28, 1999. PSE&G is a public utility that owns and maintains a 375,000 volt oil-filled pipe transmission cable in and near the east end of the 10th Street railroad tunnel in Jersey City. Metromedia Fiber Network, Inc. (Metro), is a business that provides digital communications infrastructure solutions.
On February 3, 1999, while installing a fiber optic cable on behalf of Metro, plaintiff cut through PSE&G's transmission cable, causing approximately $2,500,000 in damages. Immediately following the accident, plaintiff participated in the repair of the cable. Nevertheless, on June 28, 1999, the cable failed because water entered it, allegedly as a result of the February 3, 1999 accident, causing PSE&G to suffer additional damages.
On February 2, 2005, PSE&G filed a complaint against plaintiff and Metro, only referencing the damage claim of February 3, 1999. On service of the summons and complaint, plaintiff tendered the pleadings to PMA. PMA defended plaintiff under a reservation of rights. In November 2005, PMA ascertained that PSE&G was alleging damages not only from the February 3, 1999 incident, but also from the June 28, 1999 cable failure. Because PMA's insurance policy expired prior to the second incident, PMA advised plaintiff on April 24, 2006, to "place the subsequent carrier to PMA on notice regarding the 6/28/99 occurrence. Once that is accomplished, discussions will take place with that carrier regarding sharing of the defense costs and allocation of damages from potentially two separate occurrences."
On August 2, 2007, plaintiff advised St. Paul of the June 1999 incident and of PMA's contention that that claim should be covered by St. Paul as a separate incident. On August 16, 2007, PMA disclaimed coverage for any damages relating to the June 1999 incident, advising plaintiff that it would "continue to defend [plaintiff] with regard to PSE&G's complaint," but only as to "the 'property damage' caused by the 2/3/99 'occurrence' which took place during [its] policy period." As a result, plaintiff tendered the June 1999 claim to St. Paul.
Because of a coverage dispute by the two insurers concerning the June 1999 claim, St. Paul requested that plaintiff enter into a Standstill Agreement with it and PMA, under which all parties would withhold instituting suit against each other regarding coverage for the June 1999 claim. On October 19, 2007, St. Paul sent plaintiff a letter reserving "its right to disclaim [coverage] based upon the fact that there was no 'event' as that term is used in the policy," and "the accident which is the subject of [PSE&G's] complaint . . . happened on February 3, 1999."
On November 15, 2007, plaintiff filed a declaratory judgment action against PMA and St. Paul, seeking judgment declaring that either, or both, insurers were obligated to defend and indemnify plaintiff with respect to all claims asserted by PSE&G. On December 20, 2007, PSE&G settled its claim against plaintiff for $685,000. The two insurers funded the settlement. In the interim, notwithstanding the coverage dispute between the two insurers, PMA provided plaintiff a defense to the PSE&G lawsuit until the matter settled. On May 16, 2008, plaintiff filed an ...