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Epic Management, Inc. v. Harleysville Insurance Company of New Jersey

August 31, 2010


On appeal from Superior Court of New Jersey, Chancery Division, Ocean County, Docket No. C-117-08.

Per curiam.


Argued May 25, 2010

Before Judges Wefing, Grall and LeWinn.

Plaintiff, Epic Management, Inc. (Epic), the general contractor for the Township of Lakewood on a project to a build a baseball stadium, filed a declaratory judgment action against the insurers of Epic's subcontractor, CJ Contractors, Inc. (CJ), seeking a determination that CJ's insurers, defendants Harleysville Insurance Company of New Jersey (Harleysville), Travelers Property Casualty Company of America (Travelers) and Selective Insurance Company of America (Selective) are responsible for payment of a $219,310.80 judgment Epic recovered against CJ. That judgment represents costs Epic incurred in defending against a negligence action brought by Lakewood to recover damages for the stadium's leaking roof. Lakewood's claims in that underlying litigation were settled; Epic obtained a release; and CJ's insurers funded the entire settlement but did not pay the judgment Epic obtained against CJ. On CJ's appeal from the judgment in favor of Epic, we affirmed. Twp. of Lakewood v. Epic Mgmt., Inc., No. A-2866-07 (App. Div. July 20, 2009) (slip op. at 9).

Epic commenced this declaratory action against the insurers who are the defendants after learning that CJ had dissolved and was insolvent. On cross-motions for summary judgment, the trial judge determined that the insurers' policies do not cover Epic's claims. The judge also rejected Epic's claim that the insurers, by providing a defense to CJ in the Lakewood action, acquired the status of real parties in interest and the obligation to pay CJ's judgment.*fn3

Based on our review of the record presented on appeal, we affirm because defendants are entitled to judgment as a matter of law.*fn4 Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (2004). Selective did not insure CJ or Epic; there is no evidence that the damage was the result of an "occurrence" involving covered property damage during the term of the Travelers' policy; Harleysville's policy does not cover Epic's attorneys fees and costs; and the insurers are not real parties in interest.

These facts are relevant to the work performed for Lakewood and the discovery of problems with the roof. Lakewood retained Epic to serve as the general contractor for the construction of a new baseball stadium on April 19, 2000. On July 28, 2000, Epic and CJ entered into a subcontract, pursuant to which CJ was to perform "all drywall, carpentry and asphalt shingle roofing work" on the stadium. According to Lakewood, the stadium roof had "missing and damaged asphalt shingles," "protruding and loose nails," and "dimpling of the steel decking underside."

The subcontract between Epic and CJ includes three provisions relevant to CJ's obligation to provide a defense. Article 23.1 of the subcontract between Epic and CJ provides:

[T]he Subcontractor hereby assumes entire responsibility and liability for any and all damage or injury of any kind or nature whatever . . . to all persons, whether employees of the Subcontractor or otherwise, and to all property, caused by, resulting from, arising out of or occurring in connection with the execution of the Work; and if any claims for such damage or injury . . . be made or asserted, whether or not such claims are based upon Epic's or the Owner's alleged active or passive negligence or participation in the wrong . . . the Subcontractor agrees to indemnify and save harmless Epic and the Owner . . . from and against any and all such claims . . . including legal fees and disbursements that Epic or the Owner . . . may directly or indirectly sustain . . . . [(Emphasis added).]

Article 30.1 provides:

If . . . any suit in contract, for negligence, tort, or otherwise is made or asserted against Epic arising out of, or in connection with work or services performed hereunder by the subcontractor, then the subcontractor shall hold Epic . . . harmless and indemnify Epic and such other parties to the fullest extent as determined by law for any such claims. This indemnity includes the payment by the subcontractor of attorneys' fees and costs incurred by Epic in the defense of such claims and actions. [(Emphasis added).]

Further, Article 23.2 provides:

Before commencing the Work, the Subcontractor shall procure and maintain, at its own expense, until completion and final acceptance of the Project at least the following insurance from insurance companies satisfactory to Epic:

3. Comprehensive General Liability including blanket contractual, products and completed operations . . . .

CJ commenced work on September 29, 2000 and substantially completed its work by March 9, 2001. Thereafter, it performed some "punchlist" items, which were completed around March 2003.

The stadium opened on April 11, 2001. A letter dated May 8, 2007, written by a representative of Harleysville to CJ, includes this information. In July 2001, Lakewood hired a superintendent of public property. "Shortly thereafter," the superintendent met with a representative of the "Blue Claws," the baseball organization using the stadium. During that meeting, the Blue Claws' representative reported roof leaks. In Township of Lakewood, supra, slip op. at 3, we noted that Lakewood commenced the underlying litigation because of leaks in the stadium's roof.

On review of the trial judge's determination on these motions for summary judgment and the record that has been provided to us on appeal, we treat the material facts as undisputed.*fn5 When, as here, "the facts are not contested and the trial court's decision turns on a question of law, the 'trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Dempsey v. Alston, 405 N.J. Super. 499, 509 (App. Div.) (quoting Manalapan Realty v. Manalapan Twp. Comm., 140 N.J. 366, 378 (1995)), certif. denied, 199 N.J. 518 (2009). In these circumstances, an appellate court's review is de novo.

Id. at 509 (citing Toll Bros., Inc. v. Twp. of W. Windsor, 173 N.J. 502, 549 (2002)). Moreover, "[t]he interpretation of an insurance contract is a question of law which [the appellate court] decide[s] independently of a trial court's conclusions." Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div. 2008), certif. denied, 199 N.J. 133 (2009).

Applying the standards governing our review, we address the orders entered in favor of each defendant-insurer separately below.


A. Claims Under the Travelers Policy

Travelers insured CJ from September 21, 2000 through September 21, 2001 pursuant to a Commercial General Liability (CGL) policy that was modified by endorsements. Epic is not included as a named insured under that policy, but Epic is included in a certificate of insurance issued by the broker acting as Travelers' agent. The trial judge, apparently resolving the issue of the import of the broker's certificate in Epic's favor, turned to consider whether Epic, as a named insured, had a claim covered by the policy.

Although the judge mistakenly referred to the policy as a "claims-made policy," the judge addressed the Travelers policy as one triggered by an occurrence within the policy period. The judge concluded that there was insufficient evidence to warrant a finding of an "occurrence" within the policy period under a fair reading of the ...

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