ROBERT BERMAN et al. v. JOSEPH M. PIRRELLO, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4736-04T24736-04T2

ROBERT BERMAN and IIA BERMAN,

Plaintiffs,

v.

JOSEPH M. PIRRELLO; ELIZABETH ANN

HAYDEN PIRRELLO; ANCHOR PEST

CONTROL, INC., a New Jersey

Corporation; MICHAEL FORTE,

Individually; WESTERN PEST SERVICES,

a New Jersey Corporation; ALEX

MIELNIKOWSKI, Individually; HOME

TECH ENGINEERING, INC., a New Jersey

Corporation and ROBERT SCHWALBENBERG,

Individually,

Defendants,

and

JOSEPH M. PIRRELLO and ELIZABETH

ANN HAYDEN PIRRELLO,

Third-Party Plaintiffs-Appellants,

v.

STATE FARM INSURANCE COMPANIES,

Third-Party Defendant-Respondent.

______________________________________

 

Argued March 14, 2006 - Decided March 24, 2006

Before Judges Collester and S.L. Reisner.

On appeal from the Superior Court of New

Jersey, Law Division, Essex County,

L-5402-03.

Mark A. Clemente argued the cause for appellants (Clemente, Mueller & Tobia, attorneys; Mr. Clemente, on the brief).

Kevin J. Conyngham argued the cause for respondent (Zimmerer, Murray & Conyngham, attorneys; Mr. Conyngham, on the brief).

PER CURIAM

Defendant homeowners appeal from a trial court order granting summary judgment in favor of their homeowner's insurance company, State Farm, dismissing their claim for defense and indemnification. We find no merit in plaintiffs' appellate contentions and we affirm.

I

This is what happened. Defendants, Joseph and Elizabeth Ann Hayden Pirrello, sold their house to plaintiffs, Robert and Iia Berman. The buyers claimed that they discovered substantial hidden termite damage shortly after they moved into the house. They sued, claiming that defendants either intentionally or negligently concealed the damage. Defendants filed a third party complaint against their insurer, State Farm, after the company rejected their claim for defense and indemnification. Plaintiffs' lawsuit against the Pirrellos was eventually dismissed, and defendants are now seeking to recover their defense costs from State Farm.

The State Farm policy provided defendants with liability coverage for suits for "damages because of bodily injury or property damage . . . caused by an occurrence." "Occurrence" is defined as "an accident, including exposure to conditions, which result in bodily injury or property damage."

In an oral opinion, the trial judge concluded that plaintiffs' complaint sounded either in breach of contract or intentional tort, neither of which was covered under the policy, and that the misrepresentation of termite infestation was not an "occurrence" under the policy.

II

We are aware that the Supreme Court is currently considering a case, Lemay v. Reilly, certif. granted, 179 N.J. 373 (2004), which presents the issue of coverage for a seller's negligent misrepresentations concerning the condition of property. Based on existing case law and our review of the language of the State Farm policy, we conclude there was no coverage and no duty to defend.

We agree with defendants that plaintiffs' complaint can be read as sounding in negligence as well as intentional tort, see SL Industries v. American Motorists Insurance Company, 128 N.J. 188, 208 (1992), but that does not carry the day for them. This case does not turn on whether defendants' alleged acts were negligent or intentional but rather on whether the complaint alleges facts that could possibly fit within the language of the policy. See Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 173 (1992). The issue is: can negligent failure to disclose termite infestation be characterized as an "occurrence" or "accident" and if so, does the complaint allege that the "accident" resulted in property damage?

The complaint alleges that, after multiple pest inspections, and representations by defendants concerning the absence of pest infestation, plaintiffs agreed to buy the house. Five days after they moved in, they discovered massive termite damage. Even under a generous reading of the complaint, plaintiffs were not alleging that the defendants' actions "caused" or "resulted in" property damage. Rather, they alleged that the damage already existed and defendants merely concealed it, intentionally or unintentionally. Defendants' alleged acts would not qualify as an "occurrence," because their conduct did not cause any property damage. If years went by and undisclosed termites caused new damage to the house, one might plausibly argue that defendants' conduct caused "property damage" within the meaning of the policy. But merely failing to disclose existing damage does not fit the policy's definition of an "accident" that "results" in property damage.

This case is readily distinguishable from McClellan v. Feit, 376 N.J. Super. 305 (App. Div. 2005), where an undisclosed oil tank leaked, causing new damage. Further, the policy in that case did not require that property damage be caused by an occurrence.

We find no merit in defendants' argument that the economic injury to plaintiffs, stemming from the need to repair the termite damage, constitutes "property damage" within the meaning of the policy. The policy defines "property damage" as "physical damage to or destruction of tangible property." Taken in the context in which it is used in the policy, the unambiguous meaning of this phrase is damage to property, not damage to plaintiffs' financial well-being. Heldor Indus. v. Atl. Mut. Ins., 229 N.J. Super. 390, 397 (App. Div. 1988).

Affirmed.

 

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A-4736-04T2

March 24, 2006