On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-5559-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted November 17, 2008
Before Judges R. B. Coleman and Sabatino.
In this dispute over insurance coverage, defendant/third-party plaintiff-appellant Jovil Inc., also identified as Jovil Construction, Inc. (Jovil), appeals from an August 6, 2007 order of the Law Division granting summary judgment in favor of third-party defendant-respondent Merchants Insurance Company (Merchants). That order determined that Merchants owes no duty to defend or indemnify Jovil with regard to certain consolidated actions arising out of an August 3, 2005 fire. We reverse.
As required by Rule 4:46-2(c), we view the facts in the light most favorable to Jovil. Such facts may be summarized as follows. On August 3, 2005, there was a fire at a construction site in Jersey City where Jovil had been acting as a plumbing subcontractor. Jovil was sued for fire damage by the owners of the affected properties in consolidated actions in the Law Division, in Hudson County, and in connection with the claims of the owners, a judgment or judgments of over $768,000 were entered against Jovil. In those consolidated actions, Jovil filed a third-party complaint against Merchants, seeking a defense and insurance coverage. Upon notice of motion dated June 28, 2007, Merchants moved for summary judgment, which was granted by order dated August 6, 2007, for reasons stated on the record that same date.
In short, the motion judge ruled as a matter of law that Jovil's policy had been effectively cancelled for non-payment before the fire took place. More specifically, the motion judge concluded that "[e]ven though Merchants failed to provide adequate notice under its policy,*fn1 Jovil subsequently entered into a verbal agreement with Merchants Insurance on June 24, 2005,... [and] therefore waived its right to argue that Merchants Insurance failed to provide the required notice of cancellation pursuant its insurance policy."
In its statement of material facts, Merchants acknowledges that it provided insurance coverage to Jovil during the period May 22, 2003 to May 26, 2004*fn2 and that it offered to renew and did renew an insurance policy to Jovil for the period May 22, 2005 to May 22, 2006. If kept in force, that policy would have covered losses due to a fire such as the occurrence of August 3, 2005. The critical issue on appeal is whether there are any genuine issues of material fact in dispute with respect to Merchants' cancellation of Jovil's policy before the fire occurred.
The renewal certificate for the coverage period from May 22, 2005 to May 22, 2006 stated as follows: "In consideration of the payment of the premium shown on the declarations page, the numbered policy is renewed for the policy term shown, subject to all the terms and conditions of the policy including forms and endorsements unless otherwise specified." As mandated by New Jersey law, Merchants' insurance policy contained the following clause regarding cancellation for non-payment:
7. Cancellation of Policies in Effect for 60 days or More.
a. If this policy has been in effect for 60 days or more, or is a renewal of a policy we issued, we may cancel this policy only for one or more of the following reasons:
(1) Nonpayment of premium;
b. If we cancel this policy based on Paragraphs 7.a. (1)..., we will mail or deliver a written notice, to the first Named Insured and any person entitled to notice under this policy, at least 10 days before the effective date of cancellation.....
c. In the notice of cancellation which is sent to the first Named Insured, we will state the reason for cancellation. For cancellation due to the nonpayment of premium, the notice will state the effect of nonpayment by the due date. Cancellation for nonpayment of premium will not be effective if payment ...