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LLC v. United States Liability Insurance Co.

United States District Court, D. New Jersey

September 29, 2018

VINELAND 820 N. MAIN ROAD, LLC, Plaintiff,

          SABINA DHILLON LAW FIRM OF SABINA DHILLON, LLC On behalf of Plaintiff. RICHARD S. NICHOLS GENNET, KALLMANN, ANTIN, SWEETMAN & NICHOLS, PC On behalf of Defendant United States Liability Insurance Company.

          LAWRENCE BRENT BERG MARSHALL, DENNEHEY, WARNER, COLEMAN & GOGGIN CHERRY HILL On behalf of Defendants Biondi Insurance Agency, Inc. and Steven Tramontana.


          NOEL L. HILLMAN, U.S.D.J.

         This case concerns the denial of an insurance claim and the interpretation of a protective devices condition in an insurance contract. Presently before the Court is Defendant, United States Liability Insurance Company's (“USLIC”) Motion for Summary Judgment, Defendants Biondi Insurance Agency, Inc.'s (“Biondi”) and Steven Tramontana's Motion for Summary Judgment and Plaintiff's Cross-Motion for Summary Judgment. For the reasons expressed below, Defendants' motions will be granted and Plaintiff's motion will be denied.


         We take our brief recitation of the facts from Defendants' Statements of Material Facts.[1] Plaintiff, Vineland 820 N. Main Road, LLC (“Vineland 820”), is solely owned by Inderpreet Singh. Vineland 820 owns premises located at 820 N. Main Road, Vineland, New Jersey. It appears that sometime in 2014, either Paula Jones or Sandy Davis, two individuals working for Vineland 820 who managed the property, contacted Tramontana, an insurance producer with Biondi, about obtaining property insurance. The contents of those conversations is unknown.[2] In order to procure insurance, Biondi worked with a company named Tri-State. Tri-State would provide insurance quotes and send out applications to different insurance companies, including USLIC, based on the information Biondi provided. Biondi did not write insurance policies and could not bind coverage.

         Singh stated that he believed he also spoke with Tramontana at some point, but could not remember the content of the conversation. Singh only remembers that he spoke with Tramontana about payment and that at some point an individual at Biondi requested “some building patch up” to be done before issuance of a bond. According to Singh, the request was to fix paint on the building and “some flashing of the roof or something along those lines” before coverage was bound. Singh did not believe “any electrical issue[s]” needed to be fixed nor that Biondi or Tramontana asked him to do so.[3]

         Eventually, Biondi - through Tri-State - found that USLIC was willing to insure the property. On September 19, 2014, USLIC issued a property insurance policy covering the premises located at 820 N. Main Road, Vineland, New Jersey.[4] Part of the policy contained a form labeled CP 142 and titled “Protective Devices Or Services Provisions.”[5] The policy required, as a condition of insuring the building, that Plaintiff “have and maintain the Protective Devices or Services listed” in an incorporated schedule.

         The schedule required that “[a]ll electric is on functioning and operational circuit breakers.”[6] This was identified by symbol “P-6” on the schedule. The policy stated:

         With respect to . . . “P-6” . . . [USLIC] will not pay for loss or damage caused by or resulting from fire if, prior to the fire, [Plaintiff]:

(1) Knew of any suspension or impairment in any protective safeguard listed in the Schedule . . . and failed to notify [USLIC] of that fact; or
(2) Failed to maintain any protective safeguard listed in the Schedule . . ., and over which you had control, in complete working order.

         According to both USLIC's and Plaintiff's expert reports, on May 7, 2015, a fire started in the wiring on the second floor of 820 N. Main Road. USLIC's expert, Louis H. Gahagan, opined that the “main electrical panel” for the second-floor apartment that caught fire was actually a “fuse panel box.” Undisputed pictures reveal that, in fact, this was a fuse panel box with four fuses. Plaintiff's own expert admits the existence of this “fused subpanel, ” states that the “original wiring serving the fuse box was in use, ” and “3 of the type TL 30A fuses were open and showed signs of current through them.”

         Plaintiff, however, suggests in his argument that the “fused subpanel was protected by a circuit breaker.” Plaintiff suggests that his expert, John M. Tobias, opined that the circuit breaker serving the fused subpanel, was operational and confirmed “no malfunction of the fuses.” This is not consonant with the expert's own words, which state, in full: “It is not circuit breakers.” No. similar form has been produced in relation to the policy with USLIC. known if these breaker [sic] functioned (opened) but the report that an occupant functioned the circuit breakers prior to arrival of the fire department suggests they did not.” (emphasis added).

         Moreover, Plaintiff points to the expert reports and a Vineland Fire Investigation Unit Incident Report (“Incident Report”) to assert that the fuses were not the cause of the fire. Instead, the two expert reports and the Incident Report suggest a wire in the ceiling leading to the ceiling fan was the likely cause of the fire. Defendants do not dispute that this was the likely cause of the fire.

         After the fire, Tramontana forwarded Vineland 820's claim to USLIC. Besides this ministerial act, Tramontana testified that Biondi “do[es] nothing with claims” and that he did nothing further with the instant claim. USLIC denied Plaintiff's insurance claim in a June 8, 2015 letter, citing the above-mentioned breach of the Protective Device condition.

         Plaintiff filed a complaint on May 2, 2017, alleging wrongful denial of claims, bad faith, failure to conduct a reasonable investigation, breach of contract, breach of implied covenant of good faith and fair dealing, breach of fiduciary duty, and requested punitive damages. USLIC answered on June 8, 2017 and Biondi and Tramontana answered on June 9, 2017. Discovery ensued. USLIC filed a Motion for Summary Judgment on December 14, 2017, Plaintiff filed its opposition on January 2, 2018, USLIC filed its reply brief on January 9, 2018. On March 1, 2018, Biondi and Tramontana filed a Motion for Summary Judgment, Plaintiff filed its opposition on April 9, 2018, and Biondi and Tramontana filed their reply brief on April 30, 2018. Plaintiff filed its Motion for Summary Judgment on March 15, 2018, Defendants filed their opposition on April 9 and 10, 2018, and Plaintiff filed its reply on May 1, 2018.


         A. Subject Matter Jurisdiction

         This Court has jurisdiction over Plaintiff's claims under 28 U.S.C. § 1332, as the requirements of diversity are met.

         B. Standard for Motion for Summary Judgment

         Summary judgment is appropriate where the Court is satisfied that “‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits if any,' . . . demonstrate the absence of a genuine issue of 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, 322-23 (1986) (citing Fed.R.Civ.P. 56).

         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. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (citing Anderson, 477 U.S. at 255).

         Initially, the moving party bears the burden of demonstrating the absence of a genuine issue of material fact. Celotex, 477 U.S. at 323 (“[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact.”); see Singletary v. Pa. Dep't of Corr., 266 F.3d 186, 192 n.2 (3d Cir. 2001) (“Although the initial burden is on the summary judgment movant to show the absence of a genuine issue of material fact, ‘the burden on the moving party may be discharged by “showing”-that is, pointing out to the district court-that there is an absence of evidence to support the nonmoving party's case' when the nonmoving party bears the ultimate burden of proof.” (citing Celotex, 477 U.S. at 325)).

         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. Celotex, 477 U.S. at 324. A “party opposing summary judgment ‘may not rest upon the mere allegations or denials of the . . . pleading[s].'” Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001). For “the non-moving party[] to prevail, [that party] must ‘make a showing sufficient to establish the existence of [every] element essential to that party's case, and on which that party will bear the burden of proof at trial.'” Cooper v. Sniezek, 418 Fed.Appx. 56, 58 (3d Cir. 2011) (citing Celotex, 477 U.S. at 322). 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 257.

         C. Choice of Law Governing USLIC Insurance Policy

          Before deciding the substantive issues presented in these cross-motions for summary judgment, this Court must first determine which state's law to apply in interpreting the insurance contract. Only USLIC has identified and briefed this choice of law issue. None of the parties dispute - in either their motions, responses, or replies - USLIC's position requiring New Jersey substantive law to be applied.[7]Nevertheless, the Court briefly includes a choice of law analysis in order to satisfy itself that New Jersey substantive law is correctly applied in this case.

         The first step in determining which state's substantive law should apply is to determine which state's choice of law rules apply. Federal law requires a federal court sitting in diversity to apply the choice of law rules of the forum state in which it sits. Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941). This Court sits in New Jersey, so it will apply New Jersey choice of law rules.

         Next, according to New Jersey law, the Court determines whether there is an actual conflict between the state laws at issue. Lebegern v. Forman, 471 F.3d 424, 428 (3d Cir. 2006). No. party has identified a conflict between the relevant laws of the possibly interested states. Considering the domicile of the parties is Delaware, Pennsylvania, and New Jersey, each of these states may potentially have an interest in their law applying to this dispute. We will assume here, solely for purposes of this analysis, that a true conflict exists between the laws of these states.

         Finally, the Court determines, in the face of a true conflict, which state's substantive law should apply. When analyzing a fire insurance policy, “a court looks first to the Restatement [(Second) of Conflict of Laws] section 193.” Pfizer, Inc. v. Emp'rs Ins. of Wasau, 712 A.2d 634, 637-38 (N.J. 1998) (quoting Gilbert Spruance Co. v. Pa. Mfrs. Ass'n Ins. Co., 629 A.2d 885, 893 (N.J. 1993)) (emphasis in original).

         Restatement § 193 provides:

The validity of a contract of fire, surety or casualty insurance and the rights created thereby are determined by the local law of the State which the parties understood was to be the principal location of the insured risk during the term of the policy, unless with respect to the particular ...

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