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Howard Berger Co., LLC v. Liberty Mutual Fire Insurance

United States District Court, D. New Jersey

May 23, 2017





          NOEL L. HILLMAN, U.S.D.J.

         This matter concerns whether an electrical outage at Plaintiff's business caused by Superstorm Sandy is covered under an insurance policy issued by Defendant. Presently before the Court is the motion of Defendant for summary judgment on Plaintiff's claim that Defendant breached the parties' insurance contract by not indemnifying Plaintiff for its covered losses. For the reasons expressed below, Defendant's motion will be granted.


         Defendant Liberty Mutual Fire Insurance Company issued an All Risk Policy of Insurance, effective August 1, 2012 through August 1, 2013, to Plaintiff Howard Berger Co., LCC, [1] and that policy was in effect on October 29, 2012 when Superstorm Sandy impacted the Cranbury, New Jersey area where Plaintiff is located. The storm caused Plaintiff to be without electrical power, supplied by Jersey Central Power & Light Company, from October 29, 2012 until November 4, 2012.

         Electricity is produced at the electric company's generating plant, which transmits high-voltage electric power downstream through transmission lines to transmission substations and then to distribution substations that connect the electricity to customers. The Cranbury substation delivers electricity to Plaintiff on Circuit 4783. The Cranbury substation receives electricity from the D82 transmission line. The D82 transmission line is supported by utility poles, including a 65' wooden pole which broke as a result of Sandy's strong winds. That failure of the D82 transmission line caused the Cranbury substation to de-energize, and become unable to provide electricity to Circuit 4783 which supplied Plaintiff with its electricity. The distribution line that directly provided electricity to Plaintiff was also impacted by the storm.

         As a result, Plaintiff claims that it suffered business income losses in excess of $1, 900, 000.00. Plaintiff submitted a claim to Defendant detailing its losses and costs associated with the damages it suffered, but Defendant denied Plaintiff's claim on the basis that the electric service was interrupted due to the failure of overhead transmission and distribution lines, which is a non-covered cause of loss of utilities under the policy.

         Plaintiff filed a one-count breach of contact complaint against Defendant, claiming that its damages are covered losses under the policy. Defendant has moved for summary judgment in its favor, taking the same position as its claim denial. Plaintiff has opposed Defendant's motion.


         A. Subject matter jurisdiction

         This Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000. The citizenship of the parties is as follows: Plaintiff's sole member is also an LLC, Main, LLC (“Main”). Main's members are four corporations and an LLC, Walker Lake Holdings, LLC. Accounting for each of the members of the sole member of Plaintiff LLC, including the corporations and the members of Walker Lake, Plaintiff is a citizen of New York, New Jersey, Delaware, and Connecticut. (Docket No. 45). Defendant is a corporation duly organized and existing under and by virtue of the laws of Wisconsin, having its principal place of business in Massachusetts. (Id.)

         B. Standard for Summary Judgment

         Summary judgment is appropriate where the Court is satisfied that the materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, or interrogatory answers, demonstrate that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 330 (1986); Fed.R.Civ.P. 56(a).

         An issue is “genuine” if it is supported by evidence such that a reasonable jury could return a verdict in the nonmoving party's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A fact is “material” if, under the governing substantive law, a dispute about the fact might affect the outcome of the suit. Id. In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence “is to be believed and all justifiable inferences are to be drawn in his favor.” Marino v. Industrial Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)(quoting Anderson, 477 U.S. at 255).

         Initially, the moving party has the burden of demonstrating the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). Once the moving party has met this burden, the nonmoving party must identify, by affidavits or otherwise, specific facts showing that there is a genuine issue for trial. Id. Thus, to withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict those offered by the moving party. Anderson, 477 U.S. at 256-57. A party opposing summary judgment must do more than just rest upon mere allegations, general denials, or vague statements. Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

         C. Analysis

         The Third Circuit has summarized New Jersey law governing the interpretation of insurance contracts:

Generally, “when interpreting an insurance policy, courts should give the policy's words their plain, ordinary meaning.” Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J. 110, 869 A.2d 929, 933 (2005) (internal quotation marks and citation omitted). “If the policy language is clear, the policy should be interpreted as written, [but][i]f the policy is ambiguous, the policy will be construed in favor of the insured.” Id. (internal citations omitted). Exclusions in an insurance policy should be narrowly construed. Id. at 934 (citing Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 698 A.2d 9, 16 (1997)). The insurer has the burden of bringing the claim within the exclusion. Princeton Ins., 698 A.2d at 16-17. Nonetheless, “exclusions are presumptively valid and will be given effect if ‘specific, plain, clear, prominent, and not contrary to public policy.'” Id. at 17 (quoting Doto v. Russo, 140 N.J. 544, 659 A.2d 1371, 1378 (1995)); see also Am. Motorists Ins. Co. v. L-C -A Sales Co., 155 N.J. 29, 713 A.2d 1007, 1013-14 (1998) (finding that a policy exclusion precluded coverage because it was “clear and unambiguous” and not contrary to public policy). New Jersey courts also “endeavor to interpret insurance contracts to accord with the objectively reasonable expectations of the insured.” See Nav-Its, 869 A.2d at 934 (internal quotation marks ...

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