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Bellek v. Harleysville Insurance Company of New Jersey


October 18, 2010


On appeal from Superior Court of New Jersey, Law Division, Somerset County, Docket No. L-1682-08.

Per curiam.


Submitted September 21, 2010

Before Judges Payne and Baxter.

Plaintiffs Robert W. Bellek and Lily Pad Ponds appeal from an order of summary judgment entered by Judge Fred H. Kumpf in favor of defendant Harleysville Insurance Company dismissing plaintiffs' coverage action. We affirm.


On August 10, 2007, Pleasant Run L.L.C., the owner of real property in Flemington, New Jersey, filed a complaint in the Special Civil Part seeking damages from Lily Pad Ponds, Inc. and its principal, Robert W. Bellek (jointly, Bellek). It claimed, in Count One, that Bellek breached his contract to open and close a pond owned by Pleasant Run and to perform monthly maintenance on it (deemed the "Work") in a workmanlike manner and in accordance with specifications. It alleged in Count Two that Bellek negligently performed the Work; in Count Three that Bellek breached express and implied warranties in connection with the Work; in Count Four that Bellek breached his duty of good faith and fair dealing; in Count Five that Bellek made intentionally false representations in connection with the quality of the Work; in Count Six that Bellek made negligently false representations; in Count Seven that Bellek breached the Consumer Fraud Act in connection with the Work; and in Count Eight that Bellek had been unjustly enriched by the acceptance of certain payments in connection with the Work.

Upon service of the complaint, Bellek tendered the claim to Harleysville Insurance Company, his company's commercial liability insurer under Commercial Package Policy MPA 6J7064, with a demand for defense and indemnification. By letter dated August 21, 2007, coverage was denied. Harleysville's letter stated that the complaint contained no allegations of "property damage" or "bodily injury" resulting from an "occurrence" as defined by the policy. Additionally, Harleysville noted that the policy at issue did not provide coverage for contractual liability or damages resulting from "your work"; that the complaint was silent as to the date of the breaches, which might fall outside of Harleysville's periods of coverage; and that the punitive and treble damages sought by Pleasant Run were uninsurable as a matter of law in New Jersey. Harleysville instructed Bellek to retain his own counsel, but to inform it of "[a]ny additional information or materials which you have or may obtain [that] may cause us to review our present coverage position."

Bellek retained counsel to defend against the suit by Pleasant Run, and that action was subsequently voluntarily dismissed. On November 7, 2008, Bellek and Lily Pad Ponds, Inc. filed suit against Harleysville, seeking in Count One a declaration of coverage for the expenses incurred in defending against Pleasant Run's complaint. In Count Two, they claimed breach by Harleysville of a duty to investigate; in Count Three they alleged that Harleysville had violated the New Jersey Consumer Fraud Act; in Count Four they claimed common-law fraud; in Count Five they alleged bad faith on Harleysville's part; and in Count Six they sought an award of punitive damages.

The keystone to Bellek's argument was the claim that, although he knew of no third-party damage that would bring Pleasant Run's claim within Harleysville's coverage, Harleysville nonetheless had an independent duty of investigation in that regard, which it breached. In that connection, the following colloquy took place between the judge and counsel for Bellek, Hugo Pfaltz, during argument on cross-motions for summary judgment:

THE COURT: What is the actual damages that are being sought [in the underlying case]?

MR. PFALTZ: I never found out. That's the reason they withdrew it. I got them to withdraw it. . . .

I never got an adequate definition of what the damages they were talking about were. That was what the result should have been . . . , but it should have been Harleysville that did it, not me.

Judge Kumpf did not accept Bellek's position as an accurate statement of governing law and, in the absence of any material disputes of fact, granted summary judgment to Harleysville. This appeal followed.


The policy at issue in this case contained a number of provisions relevant to coverage. The insuring agreement stated that:

a. We will pay those sums that the insured becomes legally obligated to pay as damages because of "bodily injury" or "property damage" to which this insurance applies. We will have the right and duty to defend the insured against any "suit" seeking those damages. However, we will have no duty to defend the insured against any "suit" seeking damages for "bodily injury" or "property damage" to which this insurance does not apply.

"Property damage" was defined as:

a. Physical injury to tangible property, including all resulting loss of use of that property. . . .

b. Loss of use of tangible property that is not physically injured. . . .

Exclusions from coverage included, under "Damage To Property":

(5) That particular part of real property on which you or any contractors or subcontractors working directly or indirectly on your behalf are performing operations, if the "property damage" arises out of those operations; or

(6) That particular part of any property that must be restored, repaired or replaced because "your work" was incorrectly performed on it.

An additional policy exclusion, entitled "Damage to your Work" excluded coverage for:

"Property damage" to "your work" arising out of it or any part of it and included in the "products completed operations hazard."

"Your work," in turn, was defined as:

a. Mean[ing]

(1) work or operations performed by you or on your behalf; and

(2) Materials, parts or equipment furnished in connection with such work or operations.

b. Includ[ing]

(1) Warranties or representations made at any time with respect to the fitness, quality, durability, performance or use of "your work" and

(2) The providing of or failure to provide warnings or instructions.

Finally, "Products-completed operations hazard" was defined as a. Includ[ing] all . . . "property damage" occurring away from premises you own or rent and arising out of . . . "your work" except:

(2) Work that has not yet been completed or abandoned.


Having reviewed the legal arguments of counsel in light of applicable precedent and the policy terms that we have set forth, we affirm the order of Judge Kumpf substantially on the basis of his thoughtful and comprehensive preliminary opinion in the matter. We add only that the exclusion of coverage for claims of faulty workmanship, in the absence of claims for damage to other property caused by that workmanship, was exhaustively discussed and confirmed by the Supreme Court in Weedo v. Stone-E-Brick, Inc. 81 N.J. 233 (1979). The law in that regard remains unchanged.

Additionally, the parties have brought to our attention the Court's decision in Flomerfelt v. Cardiello, 202 N.J. 432 (2010), which was decided after the briefing in the present appeal was completed. That decision, if anything, confirms our conclusion in this case, since it restates the principle that, to determine whether a duty to defend exists, "'the complaint should be laid alongside the policy and a determination made as to whether, if the allegations are sustained, the insurer will be required to pay the resulting judgment, and in reaching a conclusion, doubts should be resolved in favor of the insured.'"

Id. at 445 (quoting Danek v. Hommer, 28 N.J. Super. 68, 77 (App. Div. 1953), aff'd o.b., 15 N.J. 573 (1954). In the present matter, Bellek raised no cognizable doubt on appeal to challenge Judge Kumpf's determination that Harleysville had no obligation to provide a defense against Pleasant Run's suit. We find Flomerfelt to be otherwise factually inapposite to the present matter.



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