STANLEY WEISS v. NEW JERSEY MANUFACTURERS INSURANCE COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-5219-13T3

STANLEY and LEAH WEISS on behalf

of themselves and all other

similarly situated,

Plaintiffs-Appellants,

v.

NEW JERSEY MANUFACTURERS

INSURANCE COMPANY,

Defendant-Respondent.

__________________________________

May 15, 2015

Argued April 21, 2015 - Decided

Before Judges Reisner, Koblitz and Higbee.

On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-856-14.

Appellants argued the cause pro se.

Matthew S. Slowinski argued the cause for respondent (Slowinski Atkins, L.L.P., attorneys; Mr. Slowinski, on the brief).

PER CURIAM

Homeowners Stanley and Leah Weiss1 appeal from the June 13, 2014 orders denying their motion for summary judgment, which sought insurance coverage of damage to their property caused by an oil spill from their underground fuel storage tank, and granting defendant New Jersey Manufacturers Insurance Company (NJM)'s motion to dismiss the complaint for failure to state a claim, pursuant to Rule 4:6-2(e). The parties agree that this appeal raises a legal issue requiring the interpretation of plaintiffs' homeowners insurance policy. We affirm both orders.

The Weiss NJM Homeowners Insurance Policy (Policy), in effect on the date of the discovery of the oil leakage and attached as an exhibit to plaintiffs' complaint, is divided into two pertinent general sections. Section I, Property Coverages and Exclusions, contains the first-party coverage provisions with exclusions. Section II, Liability Coverages and Exclusions, contains the liability coverage provisions for claims made against the insured. The policy contains the following pertinent provisions

Section I PROPERTY COVERAGES[:]

A. Coverage A Dwelling

. . . .

2. We do not cover land, including land on which the dwelling is located.

B. Coverage B - Other Structures

. . . .

2. We do not cover

a. Land, including land on which the other structures are located[.]

Within Section II - Liability Coverages of plaintiffs' policy, it provides the following

Section II LIABILITY COVERAGES

A. Coverage E Personal Liability

If a claim is made or a suit is brought against an insured for damages because of bodily injury or property damage caused by an occurrence to which the coverage applies, we will

1. Pay up to our limit of liability for damages for which an insured is legally liable . . . .

Exclusion F in Section II of the plaintiff's policy, the "owned property" exclusion, denies coverage when the only damage is to property owned by the insured. Exclusion F provides in pertinent part

SECTION II EXCLUSIONS

F. Coverage E Personal Liability

Coverage E does not apply to

. . . .

2. Property damage to property owned by an insured. This includes costs or expenses incurred by an insured or others to repair, replace, enhance, restore or maintain such property to prevent injury to a person or damage to property of others; whether on or away from an insured location;

3. Property damage to property rented to, occupied or used by or in the care of an insured. This Exclusion does not apply to property damage cause by fire, smoke or explosion[.]

In 2009, NJM sent plaintiffs a letter with a "NOTICE OF NEW EXCLUSIONS AND COVERAGE ADDITION TO YOUR POLICY" attached, explaining that NJM was eliminating liability coverage for leaking fuel tanks, but policyholders could purchase $100,000 in coverage by paying for a special endorsement (HO-76N) "of coverage for liability claims that result from fuel leakage." The Notice repeats the language of the cover letter, with emphasis, stating, "The annual premiums for the $100,000 liability coverage for fuel leak endorsement (HO-76N) will be:" and then indicates that the endorsement will cost an additional $230 a year. Later in the Notice, in all bold capital letters, it states

PLEASE CONSIDER PURCHASING THE HO-76N LIABILITY COVERAGE ENDORSEMENT FOR FUEL SYSTEM LEAKS FOR YOUR POLICY THAT BEGINS IN 2010.

The Notice further states that for policies renewed in 2009, "there will be $10,000 of coverage provided, at no charge, for remediation and/or restoration costs to your property that are a direct result of covered liability claims for fuel leakage." The Notice continues, "For policies that renew in 2010, this coverage is not provided unless the HO-76N endorsement . . . has been purchased." This site restoration coverage was incorporated under Additional Coverages in Section I of plaintiff's policy, paragraph E.14 and provides in pertinent part

E. Additional Coverages

. . . .

14. Site Restoration

In the event of a covered liability loss resulting in bodily injury or property damage arising out of, caused by or contributed to by the discharge, dispersal, disposal, emission, escape, flowing, leaching, migration, release, seepage or spillage of fuel from a fuel system or storage container, we will pay an amount not exceeding a maximum limit of $10,000 for site restoration towards damaged property cause by your site remediation.

[Emphasis added.]

The 2009 letter also contained a "Renewal Notice," which included questions asking plaintiffs to state whether they wished to purchase the HO-76N endorsement.2 At the bottom of the first page of the Renewal Notice it advised plaintiffs to read the entire Renewal Notice as well as answer all the questions. On the second page, plaintiffs acknowledged that they owned one active underground oil fuel tank that was last tested against leakage in May 2005. On the fourth page the Renewal Notice states

If you have a fuel tank on your property you can purchase an endorsement that offers limited liability coverage. This endorsement will be available for your 2010 policy. If you are interested in purchasing this endorsement for your next renewal, make the appropriate selection below.

Annual costs for $100,000 Liability Coverage are

For above ground tanks: $30

For other (basement/crawl space): $30

For underground tanks

under 15 yrs old $150

15 yrs and greater $230

[Emphasis added.]

Plaintiffs completed this section of the Renewal Notice by indicating that they wished to purchase the $230 HO-76N endorsement. The last page of the Renewal Notice is signed by both plaintiffs and dated May 13, 2009.

NJM also sent plaintiffs a copy of the HO-76N endorsement, titled "LIMITED ESCAPED FUEL LIABILITY COVERAGE," which was attached to plaintiffs' complaint, explaining the additions and deletion of certain provisions of their policy. It is clear from the use of the word "liability" in the title that the policy changes relate only to liability coverage for fuel leakage.

In 2013, when plaintiffs removed the home's underground oil tank, they discovered it had leaked onto their property alone, causing an estimated $15,732 in damages. NJM denied coverage because plaintiffs' homeowner policy under Section I Property Coverages does not cover damage to the land itself except for $10,000 in coverage in connection with a liability claim, and because the "owned property" exclusion of Section II Exclusion F, denies coverage to property owned by the insured.

Rule 4:6-2(e) permits defendant to seek a dismissal for the failure to state a claim. We review a motion to dismiss for failure to state a cause of action under the same standard as that applied by the trial court. Seidenberg v. Summit Bank, 348 N.J. Super. 243, 250 (App. Div. 2002). Our review of the trial court's determination pursuant to Rule 4:6-2(e) is de novo because it is a conclusion of law. Frederick v. Smith, 416 N.J. Super. 594, 597 (App. Div. 2010), certif. denied, 205 N.J. 317 (2011) (citation omitted).

An appellate court reviewing a motion to dismiss must limit its inquiry to the "'legal sufficiency of the facts alleged on the face of the complaint.'" Green v. Morgan Props., 215 N.J. 431, 451 (2013) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). The paramount question when "determining the adequacy of a pleading [is] whether a cause of action is 'suggested' by the facts." Printing Mart, supra, 116 N.J. at 746 (citation omitted).

"The interpretation of an insurance contract is a question of law which we decide independently of a trial court's conclusions." Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div. 2008) (citation omitted), certif. denied, 199 N.J. 133 (2009). In Memorial Properties, our Supreme Court stated that "[i]nsurance policies are construed in accordance with principles that govern the interpretation of contracts; the parties' agreement will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled." Mem l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012) (citation and internal quotation marks omitted). "In considering the meaning of an insurance policy, we interpret the language according to its plain and ordinary meaning." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010) (citation and internal quotation marks omitted). Our Supreme Court explained, however, that any ambiguities must be "resolved in favor of the insured." Mem'l Props., supra, 210 N.J. at 525 (citations omitted).

"[T]he 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)). "If the policy terms are clear, courts should interpret the policy as written and avoid writing a better insurance policy than the one purchased." President v. Jenkins, 180 N.J. 550, 562 (2004) (citation omitted).

In Cobra Products, we noted that "an insured bears the burden of establishing that a claim is within the basic policy terms." Cobra Prods., Inc. v. Fed. Ins. Co., 317 N.J. Super. 392, 401 (1998) (citing Diamond Shamrock Chems. v. Aetna, 258 N.J. Super. 167, 216 (App. Div. 1992), certif. denied, 134 N.J. 481 (1993)), certif. denied, 160 N.J. 89 (1999). "The insurer has the burden of establishing application of an exclusion." Ibid. (citing Hartford Accident & Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18, 26 (1984)). "[I]f the words used in an exclusionary clause are clear and unambiguous, 'a court should not engage in a strained construction to support the imposition of liability.'" Flomerfelt, supra, 202 N.J. at 442 (quoting Longobardi v. Chubb Ins. Co., 121 N.J. 530, 537 (1990)).

Liability insurance "is often described or alternatively known as third-party insurance since liability insurance does not directly recompense the insured for the insured's own loss." Universal Underwriters Grp. v. Heibel, 386 N.J. Super. 307, 317 (App. Div. 2006) (emphasis added) (citation and internal quotation marks omitted).

Plaintiffs argue that when they read the policy changes created by their purchase of the HO-76N endorsement there was no need to study the policy further because the endorsement led them to a reasonable expectation that their policy would cover the cost of cleaning up oil leakage on their property, even if the damage did not extend to their neighbor's property. Plaintiffs also assert that their homeowner policy was ambiguous and we should therefore read the contract in their favor. Plaintiffs argue as well that NJM incorrectly denied their claim because their policy did provide coverage due to the potential of an oil spillage on their property damaging a third-party's property. We disagree.

In Signo Trading, the insured commenced an action against its insurance carrier because the carrier refused to cover the cost of cleaning up environmental contamination found on the insured's property. State v. Signo Trading Int'l, Inc., 130 N.J. 51, 56 (1992). Morton Springer & Co., Inc. (Springer), the insured, owned a warehouse that was burned to the ground revealing hazardous waste. Id. at 55. The Department of Environmental Protection (DEP) ordered Springer and its tenants on the property, which included Signo Trading International, Inc., to clean up the property, but they failed to comply. Ibid. DEP obtained a judgment of enforcement. Ibid. When Springer and its tenants continued not to comply, the trial court ordered the DEP to clean the property, with expenses to be later paid by Springer. Id. at 55-56. While the cleanup was taking place, Springer filed a third-party complaint against its insurance carrier seeking indemnification. Id. at 56. As in this case, Springer's policy contained an "owned property" exclusion. Ibid. Our Supreme Court found the "owned property" exclusion enforceable and denied Springer's claim stating that

[U]nder its clear terms, the policy does not cover the costs of cleanup performed by or on behalf of an insured on its own property when those costs are incurred to alleviate damage to the insured's own property and not to the property of a third party.

[Id. at 63.]

As in Signo Trading, plaintiffs' policy clearly and unambiguously states that it excludes coverage for "property damage to property owned by the insured[,]" other than that incurred as a result of damage to a third party.

Plaintiffs' argument that his policy should cover the potential threat of property damage to a third party was also rejected by the Signo Trading Court, which stated that the "policy at issue indemnifies the insured only for damage to the property of a third party and not for the threat of such damage." Id. at 65. Plaintiffs' policy under Section II - Exclusion F.2 specifically provided that it does not cover "costs or expenses incurred by an insured . . . to prevent . . . damage to property of others" when the property damage is solely on "property owned by an insured." NJM referred to coverage for liability claims only, over and over again, in the 2009 cover letter sent by NJM, the Notice of Exclusions and Coverage Addition to Your Policy, the Renewal Notice, the HO-76N endorsement, and the homeowners policy. Plaintiffs were clearly informed as to the extent of the additional coverage they purchased for $230, and it did not cover an oil spill that was confined to their own property. Plaintiffs' complaint was properly dismissed as it failed to state a claim upon which relief could be granted.

The remaining arguments raised by the insureds are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed.

1 Stanley Weiss indicated in Count II of his complaint, seeking to be named representative of a class of litigants, that he was admitted to the bar of New Jersey in 1959 and has handled numerous complex civil litigation matters including insurance cases.

2 Although the 2009 letter and attachments were not attached to plaintiffs' complaint, the Renewal Notice was attached to plaintiffs' summary judgment motion, which was heard by the trial judge at the same time as NJM's motion to dismiss for failure to state a claim.