On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-5759-07.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Fisher and Sapp-Peterson.
These are interlocutory appeals*fn1 challenging various orders issued by the Law Division denying the parties' motions and cross-motions for summary judgment, and denying their motions for reconsideration. We reverse the trial court's determination that N.J.A.C. 11:1-20.2(c) applies to renewal policies. We nonetheless remand to the trial court for further proceedings.
The salient facts are not in dispute. Plaintiff Nova Development Group, Inc. (Nova) is engaged in the business of environmental material abatement in New Jersey and New York. Its principal place of business is located at 189 Townsend Street, New Brunswick, New Jersey. Beginning in 2003, defendant Scott Swan (Swan), who at the time was employed as an insurance producer by defendant J.J. Farber-Lottman Co., Inc. (Lottman),*fn2 an insurance brokerage firm, placed insurance coverage for Nova that included commercial general liability (CGL) insurance. Swan procured the policies through American Safety Insurance Services, Inc. (ASIS), the program manager of American Safety Casualty Insurance Company (ASCIC),*fn3 and ASIS issued the CGL policies. The last CGL policy that Swan placed for Nova was for the June 25, 2006 to June 25, 2007 policy period.
On March 8, 2006, Andrea Leroy of ASIS sent an e-mail to Swan with an attachment captioned, "Employee Contractual Liability Exclusion Endorsement." According to Nancy Duval, ASIS' Director of Technical Underwriting, this endorsement was added to the policies of insureds with either addresses or operations in New York to exclude coverage for employee injuries because of the laws and legal climate in New York. Although Swan claims he discussed this policy change with Todd Grant, Nova's President, Swan acknowledged during his deposition that he never sent Nova this endorsement. However, on March 9, 2008, ASIS did send to Nova a Notice of Policy Conditional Renewal, which stated:
This notice is to advise that we are agreeable to renewing this policy subject to the following: Change in or reduction of coverage; Increased deductible or retention; Addition of an exclusions [sic] or Increase in premium of more than ten percent.
Your renewal premium is TBD and is due by 7/25/2006[.]
If the premium is not paid by the due date, coverage will cease on the due date indicated above.
The policy was renewed for the period June 25, 2006, through June 25, 2007. There is no dispute that neither ASIS nor Swan, either prior to or at the time the policy was renewed, ever sent a copy of the exclusion endorsement to Nova.
In March 2006, Nova entered into a subcontract agreement with Edison Construction Management, L.L.C. (Edison) for asbestos removal. The subcontract required Nova to name, as additional insureds under its CGL policies, Edison and the property's owner, EPL Exchange Company, LLC (EPL), as well as others identified in the subcontract or identified by EPL. Exhibit B of the subcontract contained the "Standard General Conditions" and called for Nova to provide defense and indemnification on behalf of those parties identified in Exhibit B.
On September 5, 2006, Nova's employee, Darius Kelner, was injured while working at a New York City project. Later that month, Kelner filed a complaint in New York state court seeking to recover damages for his claimed injuries. Edison and EPL were among the defendants named in the action. ASIS refused to provide a defense on their behalf because Nova's subcontract with the general contractor did not meet the definition of an "insured contract" for which ASIS' duty to provide coverage would be triggered. Additionally, ASIS indicated that even if the parties were entitled to coverage, ASIS' coverage would not take effect until the limits of the parties' primary insurance policy were exhausted. Edison and EPL filed a third-party action against Nova on February 20, 2007 for contribution, indemnification and breach of contract for failing to procure adequate insurance coverage under the subcontract agreement.
Nova sought coverage in connection with its defense against the third-party action. ASIS denied coverage, citing the same reasons it denied coverage to Edison and EPL. On August 2, 2007, Nova filed a complaint in the Law Division against Swan/Lottman alleging failure to maintain appropriate insurance coverage, negligence, fraud, misrepresentation, violation of the Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -184, and unfair or deceptive trade practices.
On October 2, 2007, counsel for Swan/Lottman requested indemnification from ASIS under a Preferred Producer Agreement with ASIS. Under that agreement, ASIS agreed to hold Swan/Lottman harmless and to indemnify them against claims resulting from ASIS' error or omission in servicing any policy or endorsement, or failure of a policyholder to receive "any notice affecting coverage, where we send notices directly to the policyholder, except to the extent that [Swan/Lottman] caused, contributed to, or compounded such error[.]" ASIS denied coverage in a letter dated November 2, 2007, in which it stated:
After a careful review and analysis of your correspondence and the Preferred Producer Agreement, it is ASIS['] position at this time, that it does not have a duty to indemnify Farber. ASIS can demonstrate that it sufficiently notified Nova Development Group, Inc., (the insured) of the policy coverage change to Policy No. ENV014151-06-01. Moreover, ASIS can demonstrate that it notified Farber on several different occasions by various methods of communication of the policy coverage change to Policy No. ENV014151-06-01. Further, if ASIS committed an error in notifying the insured, ASIS ...