On appeal from Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1522-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted September 12, 2011
Before Judges Parrillo, Grall and Alvarez.
All-Tech, Inc. (All-Tech) is among the defendants in a civil action to recover damages for premature deterioration and failure of 167 exterior decks in a residential apartment complex. They were built by All-Tech's subcontractor, F. Dias Construction Company (Dias). East Coast Residential Associates, LLC, the present owner of the apartment complex, commenced the litigation, which has been settled.
This appeal involves All-Tech's third-party claim for a defense and indemnification pursuant to a commercial general liability (CGL) policy issued to Dias by third-party defendant Preferred Mutual Insurance Company (Preferred). All-Tech is an "additional insured" under an endorsement to that policy, but the insurance does not apply to property damage "occurring after" the completion of Dias's work or "occurring after" the decks were put to their "intended use" by the customer.
On cross-motions for summary judgment, the trial court determined Preferred's policy required it to defend All-Tech. Preferred did not comply. Following the settlement of East Coast's lawsuit, the court entered a $169,072.53 judgment against Preferred on All-Tech's third-party claim. It includes All-Tech's costs of a defense and its $62,500 contribution to the settlement.
Preferred appeals from that judgment. Because East Coast alleges property damages occurring after the events that terminate All-Tech's coverage as an additional insured and because the additional facts developed prior to summary judgment do not show damage at an earlier point in time, Preferred owed All-Tech no duty of defense or indemnification. Abouzaid v. Mansard Gardens Assocs., 207 N.J. 67, 79-81 (2011). Accordingly, we reverse.
The facts asserted in the complaint and disclosed in the record on summary judgment are as follows. East Coast purchased the apartment complex in 2007. The prior owner had hired AllTech to install 167 apartment decks in 2002. All-Tech retained Dias as the subcontractor, and the subcontract required Dias to defend, indemnify and hold All-Tech harmless for "all liability and damages, losses, claims and expenses resulting directly or indirectly from or in connection with [Dias's] performance [under the subcontract]." It further obligates Dias to maintain "contractual insurance coverage, naming All-Tech, Inc. as an additional insured as required under [their] contract to protect or indemnify All-Tech, Inc. against all such liabilities and claims which may arise."
All-Tech purchased and Dias installed flame-safe lumber that was marketed as suitable for exterior decks by the manufacturer and distributor, and All-Tech also advised the property owner that the lumber was appropriate for the project. All-Tech's work consisted of framing the structure of the decks and installing the decking and the posts to secure railings. That work was completed in 2003. The manufacturer of the lumber was first called to inspect the decks after a complaint of deterioration in August 2006. In 2007, the prior owner sold East Coast the premises and its right to pursue claims against those responsible for the decks.
In East Coast's civil action, it alleged that the lumber utilized was not suitable for the purpose as represented and was improperly installed, which led to the deterioration of the decks and made them unsafe. According to East Coast's expert, construction errors contributed to the decks' premature deterioration by creating an environment promoting mildew, fungus and rotting. Specifically, the decks' boards were placed too close together and wrong-side-up, which allowed water to pool on and penetrate the surface, and the nails used were prone to rusting, which also allowed water to seep into the boards.
East Coast sought the cost of total replacement and other unspecified consequential damages. It did not identify damage to structures other than the decks, their walking surfaces and the destabilization of the posts for the railings.*fn1 East Coast also claimed that the decks and railings posed a risk to persons, but it did not allege that anyone had been injured.
East Coast charged All-Tech with breaches of the express and implied warranties and the warranty of suitability for a particular purpose, breach of contract, unjust enrichment, strict liability, fraud and consumer fraud ...