August 11, 2010
RIVER VALE AT HOLIDAY FARMS CONDOMINIUM ASSOCIATION-APARTMENT SECTION, INC., PLAINTIFF-RESPONDENT,
GREATER NEW YORK MUTUAL INSURANCE COMPANY, DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Bergen County, Docket No. L-1390-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued May 4, 2010
Before Judges Carchman, Lihotz and Ashrafi.
Defendant Greater New York Mutual Insurance Company appeals from a judgment following a bench trial holding it liable to plaintiff on a policy of insurance for water damage caused to plaintiff's building by a burst water pipe. It also appeals from two orders limiting its defenses. We affirm.
Plaintiff River Vale at Holiday Farms Condominium Association-Apartment Section, Inc., is the owner of a six-story building housing about 150 residents. On March 6, 2007, water from an underground pipe flooded lobbies of the building and caused substantial damage. The elevators stopped running and all electricity had to be shut off. The residents were evacuated for several days until all safety requirements could be satisfied.
Plaintiff immediately engaged the services of a contractor to determine the cause of the flooding and to make repairs. The contractor drilled holes and narrowed the source of the water to the utility/boiler room. Under that room, a water main came vertically through the concrete floor and then branched off to service the building. Using cameras inserted into the water main line, the contractor was able to locate a crack in the pipe about three feet underneath the floor.
At trial, it was established that the water main came horizontally underneath the exterior wall of the building and below the utility room before making a ninety-degree turn at an elbow to the vertical pipe, which rose through the utility room floor. The elbow was encased in a concrete block called the "thrust block," which was intended to keep the elbow in place and prevent a "water hammer," which is a "big thrust" of water pressure that tends to pull the pipe down and out of the elbow.
The contractor made repairs to the building at a cost of $38,156.11. At the time of the flooding, plaintiff was insured by defendant under an all risk commercial insurance policy. Plaintiff made a claim on its insurance policy for all its damages, which were stipulated at trial to be $225,351.91.
The policy provided coverage for "water damage," defined as "accidental discharge or leakage of water or stream as the direct result of the breaking apart or cracking of any part of a system or appliance (other than a sump system including its related equipment and parts) containing water or stream." However, defendant denied the claim on the basis of three exclusions in the policy: for damages caused by subterranean water, earth movement, and settling/cracking. Defendant contended that the damages were caused by settling and earth movement under the "thrust block" that resulted in subterranean water flooding the building.
Plaintiff brought an action for a declaratory judgment that its damages were covered by the policy and for payment of its claim. Defendant moved for summary judgment based on the exclusions of the policy. The motion for summary judgment was denied by written opinion of Judge Jonathan N. Harris, who found that genuine issues of fact existed as to whether settling or earth movement caused the water main to burst and that, because of ambiguity in the language of the subterranean water exclusion, that provision did not apply to a pipe installed under the floor of the building to supply water.
The case was heard at trial by Judge Estela M. De La Cruz without a jury. During the trial, Judge De La Cruz granted plaintiff's motion to exclude the testimony of one of its two proffered expert witnesses, F. Patrick Reilly, on the subject of the cause of the pipe bursting. The judge concluded that Reilly's report contained only a net opinion. The judge denied plaintiff's motion to bar defendant's other expert witness, Alan Fidellow, on the same ground. After those rulings, defendant requested that Reilly be permitted to testify as a fact witness on the subject of his observations of the broken pipe. The judge denied that application under N.J.R.E. 403.
At trial, the court heard from four witnesses: a representative of plaintiff, the contractor who investigated and made repairs, and an expert for each side on the cause of the burst water pipe. On April 24, 2009, the judge issued a written decision finding in favor of plaintiff and awarding the stipulated damages of $225,351.91 plus $23,717.91 in prejudgment interest and costs of $350.00.
Defendant appealed, making the following arguments:
I. THE ORDER DENYING DEFENDANT'S SUMMARY JUDGMENT MOTION SHOULD BE REVERSED, AND SUMMARY JUDGMENT ENTERED IN FAVOR OF DEFENDANT AS SETTLEMENT CAUSED AND CONTRIBUTED TO THE LOSS ALLEGED BY PLAINTIFF
II. THE DENIAL OF DEFENDANT'S SUMMARY JUDGMENT MOTION SHOULD BE REVERSED AND JUDGMENT ENTERED IN FAVOR OF THE DEFENDANT AS THE LOSS SUFFERED BY THE PLAINTIFF WAS CAUSED BY WATER UNDER THE GROUND SURFACE AND THEREFORE EXCLUDED UNDER THE POLICY OF INSURANCE
III. THE JUDGMENT OF THE COURT BELOW SHOULD BE REVERSED, AS THE TRIAL COURT ERRED IN BARRING THE TESTIMONY OF F. PATRICK REILLY AND PREVENTED DEFENDANT FROM INTRODUCING TESTIMONY THAT WOULD HAVE SUPPORTED MR. FIDELLOW'S TESTIMONY AND REBUTTED MR. SCHWARTZ'S TESTIMONY
IV. THE JUDGMENT OF THE COURT BELOW SHOULD BE REVERSED, AS THE COURT'S DECISION WAS AGAINST THE WEIGHT OF THE EVIDENCE
V. THE DAMAGES FOR THE PERFORMANCE OF THE WORK BY DUTRA EXCAVATING & SEWER IS EXCLUDED UNDER DEFENDANT'S POLICY
We have reviewed the record and considered these arguments. We conclude that the trial judges applied the law correctly, reviewed the evidence carefully, and reached conclusions fully supported by the facts and the law.
We acknowledge our standard of review from each of the orders on appeal. As to summary judgment, we apply the same standard under Rule 4:46-2(c) that governs the trial court. See Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Prudential Prop. & Cas. Ins. Co. v. Boyland, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
With respect to the exclusion of defendant's expert, the trial court has discretion to determine if expert testimony is admissible. See Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008); State v. Summers, 176 N.J. 306, 312 (2003); C.W. v. Cooper Health Sys., 388 N.J. Super. 42, 64 (App. Div. 2006); Depalma v. Building Inspection Underwriters, 350 N.J. Super. 195, 216-17 (App. Div. 2002). In making that determination, the court may also consider whether an expert has provided sufficient explanation for his conclusions or has proffered an inadmissible net opinion. See Hisenaj, supra, 194 N.J. at 24.
The trial court also has broad discretion to exclude evidence under N.J.R.E. 403. State v. Lykes, 192 N.J. 519, 534 (2007); Verdicchio v. Ricca, 179 N.J. 1, 34 (2004). Rulings of the trial court pursuant to N.J.R.E. 403 will not be overturned on appeal unless there was a palpable abuse of discretion, a finding "so wide off the mark that a manifest denial of justice resulted." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999) (quoting State v. Thompson, 59 N.J. 396, 420 (1971)). Only if there is a "clear error of judgment" should the court's ruling under N.J.R.E. 403 be overturned. State v. Koedatich, 112 N.J. 225, 313 (1988), cert. denied, 488 U.S. 1017, 109 S.Ct. 813, 102 L.Ed. 2d 803 (1989).
As to the trial court's decision after the bench trial, "[f]indings by the trial judge are considered binding on appeal when supported by adequate, substantial and credible evidence." Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). "[W]e do not disturb the factual findings and legal conclusions of the trial judge unless we are convinced that they are so manifestly unsupported by or inconsistent with the competent, relevant and reasonably credible evidence as to offend the interests of justice." Ibid. (quoting Fagliarone v. Twp. of N. Bergen, 78 N.J. Super. 154, 155 (App. Div.), certif. denied, 40 N.J. 221 (1963)). So long as "there is sufficient credible evidence in the record to support the findings[,]" we defer to the trial court. Brunson v. Affinity Fed. Credit Union, 199 N.J. 381, 397 (2009) (quoting State v. Adams, 194 N.J. 186, 203 (2008)); accord State v. Chun, 194 N.J. 54, 88-89, cert. denied, ___ U.S. ___, 129 S.Ct. 158, 172 L.Ed. 2d 41 (2008). An appellate court "may not 'engage in an independent assessment of the evidence as if it were the court of first instance.'" In re Taylor, 158 N.J. 644, 656 (1999) (quoting State v. Locurto, 157 N.J. 463, 471 (1999)).
Applying these standards of review, we find no ground to disturb the trial judges' rulings and decision. We affirm the judgment of the Law Division essentially for the reasons stated in the written opinion of Judge Harris supporting his order of January 13, 2009, denying summary judgment; the oral decision of Judge De La Cruz on March 18, 2009, excluding the testimony of defendant's expert Reilly under N.J.R.E. 703 as a net opinion and under N.J.R.E. 403 to the extent Reilly was proffered as a fact witness, which ruling was subsequently documented by an order nunc pro tunc dated June 25, 2009; and the written decision of Judge De La Cruz following trial awarding the amount of stipulated damages plus prejudgment interest and costs, Rule 2:11-3(e)(1)(A).
Defendant also argues that the work performed by the contractor for $38,156.11 was excluded under a separate provision of the insurance policy not addressed by the trial court. The policy included the following provisions:
Covered Property does not include:
f. The cost of excavations, grading, back filling or filling;
m. Underground pipes, flues or drains[.]
Defendant asserts that the contractor's work constituted excavation and repair of underground pipes.
The contractor's work was not to excavate or perform grading, backfilling, or filling, but to locate and repair the leak. Upon finding the source of the leak, the contractor "dug under the building" and "saw . . . where . . . the piping came through the floor." It also dug out a hole in the utility room floor to take out the pipe and locate the break in the pipe to stop further damage to the building. This work was not in furtherance of excavation, but to locate and repair damages covered under the policy. Because the policy does not clearly exclude such repair work, and because this court must resolve any ambiguities in plaintiff's favor, see Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601 (2008), we conclude that the contractor's work was not excluded under the policy.
Furthermore, the pipe that the contractor replaced, at a cost of approximately $800, was not an "underground pipe" because it came up from under the ground into the utility room.
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