On appeal from Superior Court of New Jersey, Law Division, Cumberland County, Docket No. L-940-09.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Skillman, Parrillo and Espinosa.
Plaintiff Selective Way Insurance (Selective) sought a declaratory judgment that it did not owe a defense or indemnification for its insured, defendant Arthur J. Ogren, Inc. (Ogren), for claims arising from damages that were manifested approximately two years prior to Selective's policy period. Selective now appeals from an order that denied summary judgment to it and we reverse.
Selective issued a commercial general liability (CGL) policy to Ogren with limits of $1,000,000 per occurrence for the policy period of 8/17/97 to 8/17/98 (the "Policy"). The Policy was renewed annually until 8/17/01. Pursuant to the terms of the Policy, one of the prerequisites for coverage is that "the 'bodily injury' or 'property damage' occurs during the policy period." "Occurrence" is defined as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions."
On October 1, 2007, the Cumberland County Board of Chosen Freeholders (Cumberland) initiated suit against Ogren and others, seeking to recover for property damage caused by allegedly faulty work performed in the expansion and renovation of the Cumberland County Courthouse, Cumberland County Board of Chosen Freeholders v. Vitetta Group, P.C., et al. Docket No. CUM-L-962-07 (the underlying action). The work performed by Ogren was substantially completed in August 1995, and a temporary certificate of occupancy was issued on August 16, 1995. According to Cumberland's amended complaint, damages began to accrue shortly after completion of the Courthouse Project when pervasive, ongoing water leakage occurred throughout the four walls of the new construction and the renovation portions of the Courthouse Project resulting in exterior and interior damage, including mold, cracking of cast stone window sills, cornices and coping units and failed masonry.
The complaint further alleged that the direct and proximate cause of the damages was the negligence of Ogren and others in the construction.
Ogren provided notice of this claim and a copy of the summons and complaint to Selective. By letter dated November 29, 2007, Selective acknowledged the claim and agreed to defend Ogren in the matter under a reservation of rights, including the right to disclaim for the counts of the complaint that alleged claims against Ogren. The letter explicitly advised:
This policy does not provide coverage or a defense for "bodily injury" or "property damage" which occurs outside the policy period. Given the investigation to date, there remains a strong possibility that this occurrence occurred outside your policy period of insurance with Selective Way Insurance Company.
It is undisputed that, as revealed in discovery in the underlying action, Cumberland first became aware of the property damage attributed to Ogren's negligence in 1995 and that efforts to repair the damage began in November 1995. By letter dated February 26, 2009, Selective notified Ogren that none of the claims asserted in the underlying action qualified for coverage under the Policy because the loss did not occur during Selective's policy period and that Selective therefore could not offer either a defense or indemnification against those claims. Selective's letter also noted that CNA Insurance, which "provided general liability insurance to [Ogren] covering the period of this loss," had provided counsel to Ogren in defense of the underlying action.
Selective filed a complaint for declaratory relief, seeking a declaration pursuant to N.J.S.A. 2A:16-50 to -62 that it is not obligated under the terms of the Policy to defend or indemnify Ogren regarding the claims in the underlying action.
Ogren filed an answer and counterclaim for declaratory judgment. Thereafter, Selective filed a motion for summary judgment. Both Cumberland and Ogren opposed the motion, arguing that coverage should be available because the leaks continued and caused property damage after 1995 and into the policy period.
The trial court denied Selective's motion. In so doing, the court found the continuous-trigger theory articulated in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994) applicable because of the continuing nature of the property damage. Selective filed a motion for ...