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MD Retail Corp. v. Guard Insurance Group

United States District Court, D. New Jersey

March 27, 2017

MD RETAIL CORP. d/b/a/ MONMOUTH BEACH SUPERMARKET and MS RETAIL CORP. d/b/a SEA BRIGHT SUPERMARKET Plaintiffs,
v.
GUARD INSURANCE GROUP, Defendant.

          Robert Brian Ponziano, Esq. Attorney for Plaintiffs

          Brandon L. Sipple, Esq. Jeremiah L. O'Leary, Esq. Jonathan M. Zagha, Esq. Finazzo, Cossolini, o'leary, meola & hager, Llc Attorneys for Defendant

          OPINION

          HONORABLE JEROME B. SIMANDLE JUDGE

         I. INTRODUCTION

         In this insurance coverage action, Plaintiffs MD Retail Corp. (hereinafter, “MD Retail”) and MS Retail Corp. (hereinafter, “MS Retail”)(together “Plaintiffs”) allege that Defendant AmGuard Insurance Company (hereinafter, “AmGuard” or “Defendant”) breached its contractual obligation to pay benefits under a commercial property insurance policy by denying coverage after Hurricane Sandy caused damage to Plaintiffs' buildings and loss of business income. Defendant moves for summary judgement because it argues that Plaintiffs lack evidence that any damage occurred and that even if it did occur, such damage was not caused by a covered loss. Whether various opinions offered by Plaintiffs to support their claimed losses are admissible as expert opinions under Rule 702 of the Federal Rules of Evidence must also be addressed, and the Court convened a Daubert hearing on those issues, as discussed herein.

         For the reasons that follow, Defendant's motion for summary judgment will be granted in part and denied in part.

         II. BACKGROUND [1]

         A. Factual Background [2]

         Supermarkets MD Retail and MS Retail, located in Monmouth Beach, New Jersey, are co-owned by Dhiren Amin and Suresh Patel. Defendant issued Policy No. MDBP303727 to MD Retail for the period from March 9, 2012 to March 9, 2013, which provided coverage to MD Retail for direct physical loss of or damage to their supermarket located at 73 Riverdale Road, Monmouth Beach, New Jersey 07750. (Def.'s Statement of Material Facts at ¶ 1.) Defendant also issued Policy No. MSBP304540 to MS Retail for the period from July 7, 2012 to July 7, 2013 which provided coverage to MS Retail for direct physical loss of or damage to their supermarket located at 1160 Ocean Avenue, Sea Bright, N.J. 07760. (Id. at ¶ 2.) The MD and MS Retail policies both state, in relevant part:

Section 1 - Property 1
A. Coverage
We will pay for direct physical loss of or damage to Covered Property at the premises described in the Declarations caused by or resulting from any Covered Cause of Loss.
1. Covered Property
Covered Property includes Buildings as described under Paragraph a. below, Business Personal Property as described under Paragraph b. below, or both, depending on whether a Limit of Insurance is shown in the Declarations for that type of property. Regardless of whether coverage is shown in the Declarations for Buildings, Business Personal Property, or both, there is no coverage for property described under Paragraph 2. Property Not Covered.

(Prislupsky Decl., Exs. 1-2.) The Declarations in the MD Retail policy contained a Limit of Insurance of $650, 000 for “Business Personal Property Coverage, ” and in May 2012, Defendant issued an endorsement that added a “Building Coverage Limit” of $1, 600, 000. (Id. at Ex. 1; Zagha Cert., Ex. 1.) As a result, at the time of Hurricane Sandy, the MD Retail policy insured both “Buildings” and “Business Personal Property” as Covered Property.

         On the other hand, the Declarations for the MS Retail Policy included a Limit of Insurance of $650, 000 for “Business Personal Property, ” but no further endorsement for “Buildings” coverage. (Prislupsky Decl. Ex. 2.) So at the time of Hurricane Sandy, the MS Retail policy insured only “Business Personal Property” as Covered Property.

         Both policies contain the following definitions for “Buildings” and “Business Personal Property:”

         a. Buildings, meaning the buildings and structures at the premises described in the Declarations, including:

(1) Completed additions;

         (2) Fixtures, including outdoor fixtures;

(3) Permanently installed:

         (a) Machinery; and

(b) Equipment;

         (4) Your personal property in apartments, rooms or common areas furnished by you as landlord;

(5) Personal property owned by you that is used to maintain or service the buildings or structures or the premises, including:

         (a) Fire extinguishing equipment;

(b) Outdoor furniture;

         (c) Floor coverings; and

(d) Appliances used for refrigerating, ventilating, cooking, dishwashing or laundering;

         (6) If not covered by other insurance:

(a) Additions under construction, alterations, and repairs to the buildings or structures;

         (b) Materials, equipment, supplies and temporary structures, on or within 100 feet of the described premises, used for making additions, alternations or repairs to the buildings or structures.

b. Business Personal Property located in or on the buildings at the described premises or in the open (or in a vehicle) within 100 feet of the described premises, including:
Property you own that is used in your business;
(2) Property of others that is in your care, custody or control, except as otherwise provided in Loss Payment Property Loss Conditions Paragraph E.5.d. (3)(b);
(3) Tenant's improvements and betterments. Improvements and betterments are fixtures, alterations, installations or additions(a) Made a part of the building or structure you occupy but do not own; and

         (b) You acquired or made at your expense but cannot legally remove;

(4) Leased personal property which you have a contractual responsibility to insure, unless otherwise provided for under Paragraph 1.b. (2); and

         (5) Exterior building glass, if you are a tenant and no Limit of Insurance is shown in the Declarations for Building property. The glass must be owned by you or in your care, custody or control.

(Prislupsky Decl., Exs. 1 and 2.)(emphasis added) Both policies also contain an exclusion for loss or damage caused by water:

         B. Exclusions

1. We will not pay for loss or damage caused directly or indirectly by any of the following. Such loss or damage is excluded regardless of any other cause or event that contributes concurrently or in any sequence to the loss. These exclusions apply whether or not the loss event results in widespread damage or affects a substantial area.
. . . g. Water
(1) Flood, surface water, waves (including tidal wave and tsunami), tides, tidal water, overflow of any body of water, or spray from any of these, all whether or not driven by wind (including storm surge);
(2) Mudslide or mudflow;
(3) Water that bucks up or overflows or is otherwise discharged from a sewer, drain, sump, sump pump or related equipment;
(4) Water under the ground surface pressing on, or flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings; or
(5) Waterborne material carried or otherwise moved by any of the water referred to in Paragraph (1), (3) or (4), or material carried or otherwise moved by mudslide or mudflow.

(Id.) Relatedly, both policies also contained a limitation of coverage for loss or damage to the interior of the buildings caused by certain types of water:

         4. Limitations

         a. We will not pay for loss or damage to:

. . .
(5) The interior of any building or structure caused by or resulting from rain, snow, sleet, ice, sand or dust, whether driven by wind or not, unless:
(a) The building or structure first sustains damage by a Covered Cause of Loss to its roof or walls through which the rain, snow, ...

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