May 13, 2010
WILFREDAH KUSIMBA, PLAINTIFF-APPELLANT,
S&J ENTERPRISE, INC., CARL M. LOVE, JR., FROG TRUCKING, JAMES ROGERS, RODNEY DENZMORE, YELLOW TRANSPORT, DEFENDANTS, AND ESSEX INSURANCE COMPANY, DEFENDANT-RESPONDENT.
On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-242-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued March 8, 2010
Before Judges Reisner and Chambers.
Plaintiff Wilfredah Kusimba appeals from the trial court order of February 6, 2008, declaring that defendant Essex Insurance Company (Essex) has no duty to indemnify and defend defendant FROG Trucking (FROG) in this lawsuit. We affirm, concluding that plaintiff's claim against FROG fell within an exclusion in FROG's insurance policy with Essex, and hence, Essex was not obligated to defend and indemnify FROG in this litigation.
This suit was brought by plaintiff for personal injuries arising out of a multi-vehicle accident that took place on September 15, 2005. On that day, the vehicle plaintiff was operating was struck by a truck belonging to defendant S & J Enterprise, Inc. (Enterprise). From the State Trooper's report of the accident, it appears that the brakes on Enterprise's truck failed, causing the accident. Because the truck brakes had been repaired by FROG prior to the accident, FROG was also brought in as a defendant in the case.
FROG had a commercial general liability policy with Essex. At the outset, before an answer had been filed on behalf of FROG, Essex disclaimed coverage in a letter dated January 29, 2007, to FROG. Plaintiff then named Essex as a direct defendant and moved for summary judgment, seeking a declaration that Essex's policy provided FROG with coverage for the accident. While the motions were pending, on October 2, 2007, FROG assigned its rights to coverage for the accident under the Essex policy to plaintiff.
On November 16, 2007, the trial court held for plaintiff and entered an order directing Essex to provide coverage to FROG for plaintiff's accident and directing Essex to file an answer on behalf of FROG. Essex filed a motion for reconsideration. While the motion was pending, Essex sent a letter dated January 7, 2008, to FROG, explaining that it would be providing a defense to FROG pursuant to the court order, but under a complete reservation of rights. The letter advised that Essex believed that its policy provided no coverage, and as a result, it would be seeking reconsideration of the court order and may pursue an appeal. While the motion for reconsideration was pending, counsel retained by Essex filed an answer on behalf of FROG.
On February 6, 2008, the trial court granted the motion for reconsideration and determined that Essex did not have a duty to defend and indemnify FROG with respect to plaintiff's claims. It denied plaintiff's motion for summary judgment and granted Essex's cross-motion for summary judgment. This is the order that is the subject of this appeal.
Essex did not receive the order until May 30, 2008. In a letter dated June 4, 2008, Essex advised FROG of the order and stated that it would not be responsible for any liability of FROG arising from the suit. Essex did agree to continue to provide a defense for FROG on a gratuitous basis until the conclusion of the trial.
The case was listed for trial on February 9, 2009, and on that date plaintiff, FROG, and Essex reached a conditional stipulation of dismissal preserving all rights on appeal. Under the terms of the stipulation, plaintiff's claims against FROG were dismissed; however, plaintiff's right to appeal the February 6, 2008, order granting summary judgment to Essex was preserved.
On appeal, plaintiff contends that the terms of the Essex policy provide FROG with coverage for the claims. Plaintiff also maintains that Essex waived or is estopped from denying coverage because it provided a defense of FROG in the litigation without a proper reservation of rights.*fn1 In opposition, Essex asserts that plaintiff's claim falls within two auto exclusions and the products/completed operations hazard exclusion in the policy. Essex also disputes plaintiff's waiver or estoppel argument, recounting the reservation of rights letters it sent to FROG as noted above.
In our review of a trial court's decision on a summary judgment motion, we apply the same standard as the trial court. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). A party is entitled to summary judgment if the record presents no genuine issue of material fact and the movant is entitled to judgment as a matter of law. R. 4:46-2(c).
In determining whether an exclusion precludes a claim, we apply the usual rules of interpretation regarding the construction of insurance policies. When interpreting a contract, "we look to the plain language of the policy" and if the terms in the policy are clear, we will enforce the policy as written. Villa v. Short, 195 N.J. 15, 23 (2008). We will not write "a better insurance policy than the one purchased." Ibid. (quoting President v. Jenkins, 180 N.J. 550, 562 (2004)). However, if the meaning of the language in a policy is ambiguous, "we construe the language to 'comport with the reasonable expectations of the insured.'" Ibid. (quoting Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001)). Further, if one reasonable interpretation of the language favors coverage and the other does not, we will interpret the policy to provide coverage. Ibid.
We construe exclusions in insurance policies narrowly, and the burden is on the insurer to establish that the claim falls within an exclusion. Id. at 23-24. Any ambiguity in an exclusion will be construed against the insurer. Am. Wrecking Corp. v. Burlington Ins. Co., 400 N.J. Super. 276, 282-83 (App. Div. 2008). However, an exclusion that is "specific, plain, clear, prominent and not contrary to public policy" will be enforced. Id. at 283 (quoting Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)).
Our review of the policy indicates that it contains a clear, prominent, and unambiguous exclusion entitled "PRODUCTS/COMPLETED OPERATIONS HAZARD EXCLUSION." That exclusion provides that "[t]his insurance does not apply to 'bodily injury' or 'property damage' included within the 'products/completed operations hazard.'" The policy defines "products/complete operations hazard" as including "all 'bodily injury' and 'property damage' occurring away from premises you own or rent and arising out of 'your product' or 'your work.'"
The definition of "your work" includes "work or operations performed by you or on your behalf." Hence the policy does not provide coverage for bodily injury that occurred away from FROG's premises and that arose from FROG's work or operations.
Plaintiff's claim falls within this exclusion because plaintiff's bodily injury took place away from FROG's premises and it arose out of FROG's work, namely FROG's alleged negligent repair of the brakes on Enterprise's truck. Plaintiff has not identified any specific language in this exclusion that is ambiguous. Because plaintiff's claim so clearly falls within this exclusion, we do not reach the additional question of whether the auto exclusions also apply.
Plaintiff's argument that Essex failed to make a valid reservation of rights is not of sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We note that on January 29, 2007, Essex sent a letter denying coverage for plaintiff's claim. On January 7, 2008, after entry of the trial court's order of November 16, 2007, finding coverage, Essex undertook FROG's defense with a clear and unambiguous reservation of rights. The letter gave the insured the opportunity to choose its own counsel at Essex's expense. After the trial court granted Essex's motion for reconsideration and concluded that FROG did not have coverage under the policy, Essex sent a letter dated June 4, 2008, once again advising its insured that the policy provided no coverage. The letter states that "Essex Insurance Company will not indemnify FROG Trucking for any damages, liability, verdict or judgment arising out of, or relating to, this claim and lawsuit." In light of all of this correspondence, the insured was on notice that Essex was defending FROG under a reservation of rights.