MICHAEL LUBIK v. HARLEYSVILLE INSURANCE COMPANY OF NEW JERSEY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

MICHAEL LUBIK,

Plaintiff-Appellant,

v.

HARLEYSVILLE INSURANCE COMPANY

OF NEW JERSEY,

Defendant-Respondent.

__________________________________________

February 27, 2014

Argued October 16, 2013 Decided

Before Judges Sabatino and Hayden.

On appeal from the Superior Court of New Jersey, Law Division, Burlington County, Docket No. L-468-12.

Timothy J. McIlwain argued the cause for appellant.

Lance J. Kalik argued the cause for respondent (Riker Danzig Scherer Hyland & Perretti, L.L.P., attorneys; Mr. Kalik, of counsel and on the brief; John Atkin, on the brief).

PER CURIAM

Plaintiff Michael Lubik appeals from a September 28, 2012 Law Division order granting summary judgment to defendant Harleysville Insurance Company of New Jersey (Harleysville) and dismissing his complaint for insurance coverage. We affirm.

The material facts are not in dispute. Plaintiff owned Unit 800 of a condominium complex situated in Ventnor. On October 5, 2010, water leaked into plaintiff's condominium unit from a water line located in Unit 1000, two floors above plaintiff's unit, causing approximately $60,000 in damages.

Plaintiff had a "Dwelling 89 Fire" policy, also called a "Perils Insured Against" policy, with Harleysville, which covered specified property damage for his residence. The declaration page lists the "Location Address" as "4800 [Boardwalk], Unit 800." The policy provided coverage for direct physical loss by perils listed in the policy, including:

12. Accidental discharge or overflow of water or steam from within a plumbing, heating, air conditioning or automatic fire protection sprinkler system or from a household appliance. . . .

This peril does not include loss:

. . . .

e. on the Described Location caused by accidental discharge or overflow which occurs off the Described Location.

The policy frequently used the term "Described Location," but did not specifically define it. References simply are made throughout the policy to the owner of the Described Location, a tenant of the Described Location, and an owner and family member of the Described Location.

Defendant made a claim concerning the water damage to Harleysville. Following an investigation, Harleysville denied coverage based on Clause 12(e) of the "Perils Insured Against" section of plaintiff's policy because the water that caused the damage came from off the Described Location. Plaintiff conversely argued that Clause 12(e) did not apply to the damage at issue, contending that the Described Location connoted the entire condominium building. This appeal primarily concerns the meaning of Described Location in the policy.

On February 14, 2012, plaintiff filed a civil complaint against Harleysville seeking a declaratory judgment that his policy covered the damage to his unit. Plaintiff's causes of action also included breach of contract; breach of the implied covenant of good faith and fair dealing; unjust enrichment; violation of the New Jersey Consumer Fraud Act, N.J.S.A. 56:8-1 to -20; and wrongful delay or denial of an insurance claim. Harleysville filed its answer denying plaintiff's claims.

The judge set the end of the discovery period as August 20, 2012. On August 14, 2012, plaintiff requested that Harleysville consent to an extension of the discovery period, but Harleysville refused. On August 17, 2012, plaintiff informed Harleysville that he was planning to move to extend discovery, and he intended to produce a public insurance adjuster as an expert to testify at trial.

Also on August 17, 2012, Harleysville filed a motion to dismiss pursuant to Rule 4:6-2(e), which was automatically converted to a motion for summary judgment. R. 4:6-2. On August 29, 2012, nine days after the expiration of the discovery period, plaintiff filed a notice of motion returnable on September 14, 2012, seeking leave to extend discovery in order to provide defendants with his expert report. Plaintiff also sought to adjourn the September 14, 2012 return date of Harleysville's motion.

On September 13, 2012, the trial judge and both parties had a conference call during which Harleysville objected to plaintiff's adjournment request. Nevertheless, the judge adjourned the return date of both motions until September 28, 2012, and permitted plaintiff to file supplemental opposition to Harleysville's motion. On September 18, 2012, plaintiff provided a complete, signed copy of the expert's report, and acknowledged in the cover letter the September 28, 2012 return date.

On September 27, 2012, the trial judge faxed both parties her tentative opinions, and Harleysville also served plaintiff with copies of the opinions. The next day, the judge held the scheduled oral argument on both motions. Plaintiff did not appear. The judge denied plaintiff's motion to extend discovery and granted Harleysville's motion for summary judgment.

The judge found that the Described Location in Clause 12(e) of the "Perils Insured Against" section of plaintiff's insurance clearly referred to his specific unit only, which was the location stated on the policy's declaration page as the Location Address. Thus, as the water from Unit 1000 originated off the Described Location, the judge reasoned, it was not a covered peril under the straightforward policy terms. To hold otherwise, the judge concluded, would require her to construe the Described Location in plaintiff's insurance policy as "the entire condominium building," which unrealistically suggested that plaintiff was "providing insurance for the entire building." The judge determined such a reading was contrary to the plain meaning of the words of the policy.

Addressing plaintiff's motion to extend discovery, the judge found that plaintiff had failed to file his motion returnable prior to the conclusion of discovery, as required by Rule 4:24-1(c). Because plaintiff had failed to provide an explanation for his late filing, give any reason why discovery had not been completed in time, or even make a proffer that good cause existed for the requested extension, the judge concluded that an extension was not warranted. This appeal followed.

On appeal, plaintiff again claims that the Described Location means the entire condominium building. Hence, he submits, the water originating from Unit 1000 did not come from off the Described Location, but from the Described Location itself, which makes the damage a peril covered by the policy. Additionally, plaintiff argues that the term Described Location is ambiguous, as it could mean the dwelling unit or the entire building, and this ambiguity must be resolved in his favor. Moreover, plaintiff contends that the portion of the policy in question is an exclusionary clause, which warrants additional scrutiny.

We begin with a review of the well-established principles concerning interpretation of insurance contracts that guide our analysis. "An insurance policy is a contract that will be enforced as written when its terms are clear and in order that the expectations of the parties will be fulfilled." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). An insurance policy should be interpreted in accordance with the plain and ordinary meaning of its terms. Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012) (citing Flomerfelt, supra, 202 N.J. at 441).
Any genuine ambiguities must be resolved in favor of the insured. Ibid. However, language in a contract is not rendered ambiguous simply because different wording could possibly make a provision more clear. Villa v. Short, 195 N.J. 15, 26 (2008) (citing Argent v. Brady, 386 N.J. Super. 343, 352 (App. Div. 2006)). Rather, "the test for determining if an ambiguity exists is whether 'the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage.'" Nunn v. Franklin Mut. Ins. Co., 274 N.J. Super. 543, 548 (App. Div. 1994) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)).

"[W]hen considering ambiguities and construing a policy, courts cannot 'write for the insured a better policy of insurance than the one purchased.'" Flomerfelt, supra, 202 N.J. at 441 (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)). Moreover, the courts must not read one provision such that another provision is rendered meaningless. Homesite Ins. Co. v. Hindman, 413 N.J. Super. 41, 47 (App. Div. 2010).

However, "[i]n exceptional circumstances, 'even an unambiguous contract has been interpreted contrary to its plain meaning so as to fulfill the reasonable expectations of the insured.'" Gibson v. Callaghan, 158 N.J. 662, 671 (1999) (quoting Werner Indus., Inc. v. First State Ins. Co., 112 N.J. 30, 35-36 (1988)). "In instances in which the insurance contract is inconsistent with public expectations and commercially accepted standards, judicial regulation of insurance contracts is essential in order to prevent overreaching and injustice." Sparks v. St. Paul Ins. Co., 100 N.J. 325, 338 (1985). We apply "an objective standard of reasonableness" in determining what a policyholder's reasonable expectations are. Clients' Sec. Fund of the Bar of N.J. v. Sec. Title & Guar. Co., 134 N.J.358, 372 (1993) (citing Sears Mortg. Corp. v. Rose, 134 N.J.326, 347 (1993)); see alsoProgressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 274 (2001).

In general, "the insured has the burden 'to bring the claim within the basic terms of the policy.'" S.T. Hudson Eng'rs, Inc. v. Pa. Nat'l Mut. Cas. Co., 388 N.J. Super. 592, 603 (App. Div. 2006) (quoting Reliance Ins. Co. v. Armstrong World Indus., Inc., 292 N.J. Super. 365, 377 (App. Div. 1996)), certif. denied, 189 N.J. 647 (2007). If the policy language "supports two reasonable meanings, one favorable to the insurer and one favorable to the insured, the interpretation supporting coverage will be applied." Ibid..

If the clause being evaluated is an exclusionary clause, such clauses must be construed narrowly, and "'the burden is on the insurer to bring the case within the exclusion.'" Gibson, supra, 158 N.J. at 671 (quoting Am. Motorists Ins. Co. v. L-C-A Sales Co., 155 N.J. 29, 41 (1998)). "However, exclusionary provisions are presumptively valid and will be given effect if specific, plain, clear, prominent, and not contrary to public policy." Homesite Ins. Co., supra, 413 N.J. Super. at 46 (citing Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997)).

"The interpretation of an insurance contract is a question of law for the court to determine, and can be resolved on summary judgment." Adron, Inc. v. Home Ins. Co., 292 N.J. Super. 463, 473 (App. Div. 1996) (citing Weedo v. Stone-E-Brick, Inc., 155 N.J. Super. 474, 479 (App. Div. 1977), rev'd on other grounds, 81 N.J. 233 (1979)). Additionally, whether an insured's expectations are objectively reasonable is a question of law to be determined by the court. Bromfeld v. Harleysville Ins. Cos., 298 N.J. Super. 62, 79 (App. Div. 1997).

In an appeal from the grant of summary judgment, we utilize "'the same standard [of review] that governs the trial court.'" Mem'l Props., LLC, supra, 210 N.J. at 524 (quoting Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010)). Thus the evidence must be viewed "in the light most favorable to the non-moving party" and must be analyzed to determine "whether the moving party was entitled to judgment as a matter of law." Ibid. (citing Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 523 (1995)).

As a preliminary matter, Clause 12(e) is not an exclusionary provision, and thus does not require additional scrutiny. See Gibson, supra, 158 N.J. at 671. It is contained in the "Perils Insured Against" section, which lists the policy coverage parameters; it is not contained in the "General Exclusions" section. Furthermore, if it were an exclusionary provision, it would nonetheless be enforceable because it is "specific, plain, clear, prominent, and not contrary to public policy." Homesite Ins. Co., supra, 413 N.J. Super. at 46.

Moreover, we do not find Clause 12(e) to be ambiguous. Plaintiff's policy does not define the term Described Location. Rather, it refers to the Location Address as plaintiff's specific unit, Unit 800. Looking at the plain and ordinary meaning of the term Described Location, the only reasonable conclusion is that the Described Location is the location set forth as the Location Address in the declaration page. The failure to specifically define the term does not render the term utilized ambiguous. See Villa, supra, 195 N.J. at 26. The terms utilized are not so confusing that the average policyholder would not understand the Described Location to be the Location Address of the specific unit for which he or she was paying for coverage. See Nunn, supra, 274 N.J. Super. at 548.

Moreover, plaintiff's hypothesis that the "dwelling" is Unit 800 and the Described Location is the entire building, is patently unreasonable. This supposition suggests that plaintiff thought he had purchased insurance to cover the entire condominium building. Plaintiff proffered no evidence that he received any information from defendant about the policy that would have given rise to a reasonable expectation that the Described Location was the entire building. In our view, based upon review of the entire policy, only one reasonable interpretation exists. See S.T. Hudson Eng'rs, Inc., supra, 388 N.J. Super. at 603.

Plaintiff is attempting to rewrite his policy to afford him more coverage than he bargained for. See Flomerfelt, supra, 202 N.J. at 441. As defendant points out, plaintiff chose to purchase a limited "Perils Insured Against" policy as opposed to a policy that covers all risks. Since plaintiff failed to demonstrate that the damage caused by water from another unit in the building was covered under the basic terms of his policy, defendant was entitled to a judgment as a matter of law. See Mem'l Props., LLC, supra, 210 N.J. at 524.

Plaintiff also maintains that even if the terms of the policy do not cover damages from water coming outside of his covered unit, he reasonably thought the policy covered it. We reject plaintiff's argument that under these circumstances the doctrine of reasonable expectations applies. As Clause 12(e) is not ambiguous, our job is to enforce the terms as they were agreed upon by the parties. See State v. Signo Trading Int'l Inc., 130 N.J. 51, 62-63 (1992). Additionally, plaintiff has failed to show any "exceptional circumstances" that would warrant interpreting the provisions of the policy contrary to their plain meaning. See Gibson, supra, 158 N.J. at 671. Clause 12(e) is not contrary to public policy and its enforcement will not cause injustice. See Sparks, supra, 100 N.J. at 338.

Moreover, if the reasonable expectations doctrine did apply, plaintiff's interpretation of Clause 12(e) is not objectively reasonable in light of the clear language of the entire Perils Insured Against policy. See Clients' Sec. Fund of the Bar of N.J., supra, 134 N.J. at 372. Plaintiff wants us to torture the language in his policy to afford him coverage that he did not purchase; we decline to do so. As the objective reasonableness of a clause is a question of law, summary judgment was appropriate. See Bromfeld, supra, 298 N.J. Super. at 79.

In sum, applying the applicable legal principles, we are convinced that the insurance contract was not ambiguous and met the objectively reasonable expectations of the insured. The insurance contract clearly and straightforwardly stated that water damage from outside of plaintiff's unit was not a covered peril. Summary judgment was appropriate here because plaintiff has not met his burden of proving that the claim is within the basic terms of his policy. See S.T. Hudson Eng'rs, Inc., supra, 388 N.J. Super. at 603.

Plaintiff also argues that the trial judge abused her discretion in denying his motion to extend discovery because no undue prejudice would have occurred. We disagree.

A party may move for an extension of discovery by a motion "made returnable prior to the conclusion of the applicable discovery period." R. 4:24-1(c). If, as here, there has not yet been notice of an arbitration or trial date, grant of the extension requires only good cause shown. Ponden v. Ponden, 374 N.J. Super. 1, 9-11 (App. Div. 2004), certif. denied, 183 N.J. 212 (2005). Good cause is a flexible concept and the court can consider numerous factors. Leitner v. Toms River Reg'l Schs., 392 N.J. Super. 80, 87-88 (App. Div. 2007). Our "'review is limited to a determination of whether the trial court mistakenly exercised its discretion in denying plaintiff's motion for an extension of discovery period under R. 4:24-1(c).'" Id. at 87 (citation omitted).

Here, the trial judge did not abuse her discretion in denying plaintiff's motion. The discovery period ended on August 20, 2012. Plaintiff did not file his extension motion until August 29, 2012; thus, his motion was untimely and procedurally deficient. See Jatczyszyn v. Marcal Paper Mills, Inc., 422 N.J. Super. 123, 134 (App. Div. 2011).

Moreover, plaintiff failed to demonstrate the requisite good cause necessary to be granted an extension. Plaintiff contended in his motion papers that discovery had not previously been extended and pointed out that defendant did not seek discovery until late during the discovery period. However, plaintiff provided no explanation whatsoever why he did not name an expert and supply his report during the discovery period.

The record reveals no reason why the expert's report could not have been filed within the discovery period; plaintiff had not demonstrated due diligence in pursuing discovery; no unique discovery issues existed; and the case was ready for final disposition as only a question of law remained. Moreover, the expert's opinion on the interpretation of the insurance policy, which plaintiff utilized in arguing his contentions both at the trial court and before us, does not alter the legal analysis of the policy language. Based on the foregoing, the trial judge did not abuse her discretion in denying plaintiff's motion, which was both untimely and devoid of good cause.

Plaintiff also contends, among other arguments, that the trial judge did not address his arguments with specificity, which demonstrated that the judge did not consider his arguments, and he was denied due process because he was not provided with sufficient written notice of oral argument on Harleysville's motion for summary judgment. These arguments lack merit and do not warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).