July 10, 2012
GLENDA SALLEY AND GLORIA SALLEY, PLAINTIFFS-APPELLANTS,
NASIR A. BESHAY AND ABL INSURANCE INC., DEFENDANTS, AND ASSURANCE COMPANY OF AMERICA, DEFENDANT-RESPONDENT.
GLENDA SALLEY AND GLORIA SALLEY, PLAINTIFFS-RESPONDENTS,
NASIR A. BESHAY AND ABL INSURANCE INC., DEFENDANTS-APPELLANTS, AND ASSURANCE COMPANY OF AMERICA, DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Hudson County, Docket No. L-5850-08.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Submitted: June 12, 2012 -
Before Judges Axelrad and Parrillo.
These back-to-back appeals involve the obtaining and interpretation of a builder's risk insurance policy. Plaintiffs Gloria and Glenda Salley, mother and daughter, had constructed the foundation and frame of a home on their property, and then sought to obtain a builder's risk insurance policy. They met with Nasir Beshay, president of ABL Insurance Services, Inc. (ABL), and he obtained a policy through Assurance Company of America (Assurance). After a fire caused damage to the property, plaintiffs were denied coverage by Assurance because the policy did not cover existing structures. Plaintiffs appeal the grant of summary judgment in favor of Assurance, arguing the terms of the policy were ambiguous and they were not given a copy of the policy before the fire. Beshay and ABL appeal the jury verdict and judgment against them based on a theory of negligence and breach of acceptable professional standards, arguing there was no basis to pierce the corporate veil and the court erroneously limited cross-examination. We affirm in both cases.
Plaintiffs filed an amended complaint against defendants Beshay, ABL, and Assurance on February 13, 2009. Plaintiffs claimed a fire caused extensive damage to their property in Jersey City, and Assurance declined payment on a builder's risk insurance policy that covered the property. Plaintiffs further alleged that if their loss were not properly covered by the policy, it was the result of professional errors by Beshay and ABL in processing and obtaining the policy. Defendants filed responsive pleadings.
Assurance moved for summary judgment. By oral decision and order of April 30, 2010, Judge Peter F. Bariso, Jr. granted summary judgment in favor of Assurance, dismissing plaintiffs' complaint with prejudice. The case against Beshay and ABL was tried by a jury in October 2010, with Judge Barry P. Sarkisian presiding. The jury rendered a verdict in favor of plaintiffs. Pursuant to a stipulation of damages, the court entered a judgment on October 27, 2010 for plaintiffs in the amount of $135,000. These appeals ensued and were calendared back-to-back.
The following facts are adduced from the summary judgment record and the trial testimony of plaintiffs and Beshay. Plaintiffs are the owners of property in Jersey City, where they began construction of a two-family home in 2005. The foundation and framing of the home were completed at that time, and sewer pipes were installed.
On or about January 29, 2007, plaintiffs met with Beshay, the president of ABL. Gloria*fn1 testified she scheduled the meeting because they needed a builder's risk insurance policy to obtain a $234,000 mortgage from their bank. Gloria testified that in her presence her daughter informed Beshay that the framing, foundation, and part of the roof were constructed on the property. Gloria certified she informed Beshay that although the construction project was unfinished, she intended to complete the project. In contrast, Beshay testified that plaintiffs told him the project had not yet been started and construction would not begin until after they obtained insurance.
Beshay contacted Streetsmart Risk Managers, an independent third-party insurance agent, to place the insurance application over the phone. The completed application, which plaintiffs did not see, was submitted to Assurance. The application indicated that plaintiffs sought a $235,000 "One-Shot New Construction" policy for one year, the project had not started, and plaintiffs were not seeking existing structure coverage. Assurance issued plaintiffs a builder's risk insurance policy. Plaintiffs received the declaration page from Beshay, and it was accepted by the bank.
There was no further construction. In August 2007, a fire caused extensive damage to the property. Plaintiffs submitted a claim to Assurance for the damage. Assurance denied coverage under the policy based on damage to a pre-existing structure.
Plaintiffs' complaint against Assurance was dismissed on summary judgment. Judge Bariso found the coverage provisions within the Assurance policy were unambiguous and did not provide coverage for "buildings or structures where construction was started or completed prior to the inception date of the policy." As a result of the undisputed fact that the damaged structure existed prior to the inception date of the Assurance policy, he found plaintiffs were not entitled to coverage for the damage to the existing foundation and frame under the express language of the policy.
At trial, defendants sought to question plaintiffs about a homeowner's policy that might have been in effect at the time of the fire to demonstrate that a reason why plaintiffs did not tell Beshay about the pre-existing structure was because they thought it was covered by homeowner's insurance. The judge permitted defendants to inquire whether plaintiffs had a homeowner's insurance policy on the property and whether they disclosed that to Beshay, "as it goes to the relevance of the credibility of the witness and full disclosure." However, the judge refused to allow further questioning relating to the policy because "the level of confusion that will create in the jury's mind under [N.J.R.E.] 403 is such that I'm not prepared to let you develop that point." Thus, the judge allowed questioning "for the limited purpose of going into the completeness of a discussion that took place between the plaintiff[s] and [Beshay]" without allowing defendants to explore the level of the policy or whether it covered the damage on plaintiffs' property, as it would be "confusing to the jury and prejudicial." The jury found in favor of plaintiffs.
In plaintiffs' appeal, Docket No. A-1366-10, they raise the following arguments:
DEFENDANT ASSURANCE'S MOTION FOR SUMMARY JUDGMENT SHOULD HAVE BEEN DENIED BECAUSE THE TERMS OF THE INSURANCE POLICY WERE AMBIGUOUS.
A. The terms "Covered Property" and "structure" are ambiguous.
B. The trial court erred when it granted Assurance['s] motion for summary judgment.
ASSURANCE'S SUMMARY JUDGMENT MOTION SHOULD HAVE BEEN DENIED BECAUSE THE PLAINTIFFS WERE NOT GIVEN A COPY OF THE INSURANCE POLICY BEFORE THE FIRE.
In defendants' appeal, Docket No. A-1824-10, they raise the following arguments:
THE COURT ERRED IN NOT ALLOWING NASIR BESHAY TO BE REMOVED FROM THE CASE.
THE COURT PREJUDICED DEFENDANTS['] CASE AS TO THE CREDIBILITY OF THE PLAINTIFFS BY NOT ALLOWING DEFENDANTS TO QUESTION PLAINTIFFS FULLY REGARDING OTHER INSURANCE ON THE PROPERTY.
Based on our review of the record and applicable law, we are not persuaded by any of these arguments and affirm both appeals.
When reviewing the grant of summary judgment, we apply the same standard as the trial court under Rule 4:46-2. Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In doing so, we view the evidence in the light most favorable to the non-moving party. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). The legal conclusions of the trial court are reviewed de novo, without any special deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995).
On appeal, plaintiffs renew the arguments made to Judge Bariso that the terms "covered property" and "structure" are ambiguous in the insurance policy. They urge that it is not clear whether or not an existing foundation is covered by the policy, precluding the entry of summary judgment. We disagree.
New Jersey courts interpret insurance policies using "their plain, ordinary meaning." Zacarias v. Allstate Ins. Co., 168 N.J. 590, 595 (2001). "If the policy terms are clear, courts should interpret the policy as written and avoid writing a better insurance policy than the one purchased." President v. Jenkins, 180 N.J. 550, 562 (2004). However, if the terms of the policy are ambiguous, they are "often construed in favor of the insured." Id. at 563.
An ambiguity is created "[w]hen an insurance policy's language fairly supports two meanings, one that favors the insurer, and the other that favors the insured[.]" Ibid. "'[W]here the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage[,]'" an ambiguity exists. Customized Distrib. Servs. v. Zurich Ins. Co., 373 N.J. Super. 480, 487 (App. Div. 2004) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)), certif. denied, 183 N.J. 214 (2005). Thus, when the terms of an insurance policy are ambiguous, "courts should 'interpret the contract to comport with the reasonable expectations of the insured.'" President, supra, 180 N.J. at 563 (quoting Zacarias, supra, 168 N.J. at 595).
Here, the builder's risk insurance policy, in pertinent part, provided:
1. COVERED PROPERTY, as used in the Coverage form means:
a. Property which has been installed, or is to be installed in any commercial structure and/or any single family dwelling, private garage, or other structures that will be used to service the single family dwelling at the location which you have reported to us. This includes:
(6) Foundations of buildings and foundations of structures in the course of construction.
2. PROPERTY NOT COVERED Covered Property does not include:
a. Existing building or structure to which an addition, alteration, improvement or repair is being made, unless specifically endorsed;
d. Existing Inventory, unless specifically endorsed;
1. Existing Inventory means buildings or structures where construction was started or completed prior to the inception date of this policy.
Specifically, plaintiffs argue the policy is ambiguous because it covers foundations which have been installed, but does not cover existing inventory. They contend it is not clear from the language whether a foundation of a structure or building would be included under the definition of existing inventory. Therefore, plaintiffs argue a foundation constructed prior to the inception of the policy appears to be both covered and not covered property, and the policy thus should be construed in favor of coverage. We are not persuaded by this argument.
Judge Bariso found:
[I]n this policy, Assurance defines existing inventory as buildings or structures where construction was started or completed prior to the inception date of the policy. That to me is the critical language in deciding this application, not whether or not the word foundation is in one paragraph and not in another, but there is no ambiguity in the existing inventory paragraph that clearly talks about prior to the inception date of the policy.
The policy is not ambiguous. Considering the plain and ordinary meaning of the language, foundations during the course of construction would be covered, but not if they existed prior to the inception date of the policy. The policy very clearly states that existing inventory is not covered, which means "buildings or structures where construction was started or completed prior to the inception date of this policy" are not covered. As the policy terms are clear, the court should interpret the policy as written.
It is undisputed that the damaged structure, for which plaintiffs sought coverage, was constructed prior to the inception date of the policy, and no further construction was completed after the policy went into effect in January 2007. Based on the language of the builder's risk insurance policy, the structure fits the definition of "existing inventory" and was therefore not covered under the terms of the policy. Notably, plaintiffs' application for coverage, prepared by Beshay, did not request coverage for existing structures. The opportunity for existing structure coverage was available separately, adding further support to the argument that existing structures were not covered under the policy as written, and Assurance properly denied coverage. As the language of the policy was not ambiguous, the existing structure on plaintiffs' property was not covered, and summary judgment was properly granted in favor of Assurance.
Plaintiffs assert a newly-minted argument that summary judgment should not have been granted because they were not given a copy of their insurance policy prior to the fire and did not have a chance to review it for errors. They argue that because they informed Beshay the foundation and frame existed on the property, they were under the impression their policy covered the existing structure, and "there should be a remand for a determination by the fact finder as to what the plaintiffs knew or reasonably should have known about the coverage exclusion."
We discern no reason to address this issue raised for the first time on appeal. See Nieder v. Royal Indem. Ins. Co., 62 N.J. 229, 234 (1973) (holding that "appellate courts will decline to consider questions or issues not properly presented to the trial court when an opportunity for such a presentation is available unless the questions so raised on appeal go to the jurisdiction of the trial court or concern matters of great public interest" (internal quotation marks and citation omitted)). We note, however, that Gloria testified she received the declaration page, on which the box next to "Existing Building(s) or Structure(s)" is not checked, demonstrating she was likely aware of the lack of coverage in this area.
Turning to defendants' appeal, we have explained the liability of corporate officers as follows:
"A director or officer of a corporation does not incur personal liability for its torts merely by reason of his [or her] official character, but a director or officer who commits the tort or who directs the tortious act to be done, or participates or cooperates therein, is liable to third persons injured thereby, even though liability may also attach to the corporation for [the] tort." [McGlynn v. Schultz, 95 N.J. Super. 412, 416 (App. Div.) (quoting Sensale v. Applikon Dyeing & Printing Corp., 12 N.J. Super. 171, 175 (App. Div. 1951)), certif. denied, 50 N.J. 409 (1967).]
Thus, if an officer in a corporate entity commits a tort, he or she is still liable for his or her own actions. Ibid.
In the context of insurance, one who holds himself out to the public as an insurance broker "owes a duty to his [or her] principal to exercise reasonable skill, care and diligence in effecting the insurance[.]" Rider v. Lynch, 42 N.J. 465, 480 (1964). This is because there is a "fiduciary relationship between the professional and the client" that is "no more evident than in the area of insurance coverage." Aden v. Fortsh, 169 N.J. 64, 78 (2001). Essentially, it is a professional malpractice concept, and "[a] broker engaged to obtain insurance must exercise reasonable skill and 'is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which his [or her] principal seeks to be protected.'" Id. at 79 (quoting Rider, supra, 42 N.J. at 476). Accordingly, "an insurance broker who agrees to procure a specific insurance policy for another but fails to do so may be liable for damages resulting from such negligence." Aden, supra, 169 N.J. at 79.
Here, Beshay, as the insurance broker, owed an individual duty to plaintiffs to obtain an insurance policy on their behalf. As a professional in the field of insurance brokerage, Beshay had a duty to act with reasonable knowledge and skill. Judge Sarkisian appropriately explained the concept of negligence to the jury and asked it to consider whether Beshay, as an officer of ABL and as a professional insurance broker who offered his services to the public, was negligent in not complying with the standard of care that the law imposes on defendants who perform work as insurance brokers. In rendering its verdict, the jury found, five to one, that plaintiffs were damaged as a result of Beshay's negligence in failing to advise Assurance that a house had been partially constructed on the property. Therefore, the jury found Beshay breached his individual duty to obtain a proper insurance policy, and a judgment for damages was properly entered against Beshay.
A trial court has "broad discretion" to determine "both the relevance of the evidence to be presented and whether its probative value is substantially outweighed by its prejudicial nature." Green v. N.J. Mfrs. Ins. Co., 160 N.J. 480, 492 (1999). We do not overturn a trial judge's determination pursuant to N.J.R.E. 403, "'unless it can be shown that the trial court palpably abused its discretion, that is, that its finding was so wide of the mark that a manifest denial of justice resulted.'" Ibid. (quoting State v. Carter, 91 N.J. 86, 106 (1982)). We discern no abuse of discretion by Judge Sarkisian in limiting questions regarding a homeowner's policy to its existence; he amply explained his justification for the ruling.