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Villamil v. Sentinel Insurance Company, Ltd.

United States District Court, D. New Jersey

December 21, 2018



          Freda L. Wolfson, United States District Judge.

         This matter comes before the Court on the Motion for summary judgment by Defendants Sentinel Insurance Company, Limited (“Sentinel”) and The Hartford Financial Insurance Company's (cumulatively, “Defendants”) on insurance coverage claims asserted in the Complaint of Plaintiffs Tere Villamil (“Ms. Villamil”) and Villa Components, Inc. d/b/a/ La Jolie Salon and Spa (“La Jolie”) (cumulatively, “Plaintiffs”). The instant dispute arises from Defendants' denial of Plaintiffs' insurance claim in connection with damages caused as a result of a storm which occurred in the Princeton, New Jersey, area on July 30, 2016. For the reasons set forth below, Defendants' Motion is GRANTED.


         Sentinel issued an insurance policy, i.e., the “Hartford Spectrum Business Insurance Policy” (“the Policy”), to La Jolie, a beauty salon located at the intersection of Witherspoon and Hulfish Streets, in Princeton, New Jersey, for the period from June 15, 2016 to June 15, 2017. Sentinel's Statement of Undisputed Facts (“Defs.' Statement of Facts”), ¶¶ 1-2. La Jolie occupies two floors in the Hulfish Building. Id. ¶ 3, Exhibits E & F. A descending stairwell, enclosed by three concrete walls, leads to La Jolie's lower floor, which is below the street level and accessible through a glass door entrance. Id. ¶ 26, Exhibit H. Moreover, a landing area with a drain inlet is located at the bottom of the stairwell; the stairwell, however, is not protected by a roof and “is subject to direct entry of rains, snow and all elements.” Id.

         The Policy's terms and provisions, in relevant part, obligate the insurer to provide coverage for the “physical loss of or physical damage to Covered Property” that is “caused by or resulting from a covered Cause of Loss.” Id. ¶ 21. Specifically, Covered Property and Cause of Loss are defined pursuant to the Agreement to include:

1. Covered Property
b. Business Personal Property located in or on the building(s) described in the Declarations at the “scheduled premises” or in the open (or in a vehicle) within 1, 000 feet of the “scheduled premises, ” including:
(1) Property you own that is used in your business;
(2) Tools and Equipment owned by your employees, which are used in your business operations
(3) Property of others that is in your care, custody or control; [and]
(4) “Tenant Improvements and Betterments”
3. Covered Cause of Loss
Risks of Direct Physical Loss unless the loss is
a. Excluded in Section B., Exclusions
b. Limited in Paragraph A.4 Limitations; that follow.

Id. ¶ 21, Exhibit A.

         However, the Policy's terms and provisions do not provide coverage for damage or loss arising from “[f]lood, including the accumulation of surface water” or “[w]ater that backs up from a sewer or drain”; indeed, as the Policy sets forth: “[s]uch loss or damage is excluded regardless of [whether] any other [covered] cause or event . . . contributes concurrently or in any sequence to the loss.” Id. ¶ 22, Exhibit S. Notwithstanding that exclusion, the Parties entered into a seperate “STRETCH” agreement, which modifies the contract to include additional coverage for various forms of physical loss or physical damage, including those arising from:

17. Sewer and Drain Back Up
The following Additional Coverage is added:
We will pay for direct loss of or physical damage to Covered Property solely caused by water that backs up from a sewer or drain. This coverage is included within the Covered Property Limits of Insurance.
We will not pay for water or other materials that back up from any sewer or drain when it is caused by any flood. This applies regardless of the proximity of the flood to Covered Property. Flood includes the accumulation of surface water, waves, tides, tidal waves, overflow of steams or other bodies of water, or their spray, all whether driven by wind or not that enters the sewer drain system.

Id. ¶ 23, Exhibit Q.

         During the policy period, on July 30, 2016, a severe thunderstorm, estimated to constitute a two hundred to five hundred year storm, resulted in approximately five to seven inches of rain within a two-hour period.[1] Id. ¶¶ 4, 5-7. As a consequence, water pooled at the bottom of the stairwell which is next to La Jolie's lower floor entrance, and subsequently, the water leaked through the building's glass door entrance, causing the building to sustain damages. Id. ¶¶ 12-13.On the day after the storm, Ms. Villamil telephoned Sentinel to report an insurance claim and provided the following explanation to a representative:[2]

Thank you for calling The Hartford, this is Christina, how may I help you?
Tere Villamil: Hi, yes, this is Tere Villamil, I'm calling from La Jolie Salon & Spa in Princeton, uh, we have had a flood in our lower level yesterday that was quite awful, actually. I'll send you a video. Um, and the first floor was damaged of the business and I need to put in a claim. I also put in a claim with the landlord as well.
Christina: New Jersey, ok. And when did this flood happen?
Tere Villamil: Yesterday. Uh, we were there the entire day trying to clean it all up. I sent the email and a notice to my agent, but I was in the middle of cleaning so I never called you. I called the landlord first.
Christina: Oh, okay.
Tere Villamil: Yesterday's um extreme rain that we got in two hours ...

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