NEWPORT ASSOCIATES PHASE I DEVELOPERS LIMITED PARTNERSHIP v. TRAVELERS CASUALTY AND SURETY COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

NEWPORT ASSOCIATES PHASE I

DEVELOPERS LIMITED PARTNERSHIP

and NEWPORT ASSOCIATES

DEVELOPMENT COMPANY,

Plaintiffs-Appellants,

v.

TRAVELERS CASUALTY AND SURETY

COMPANY, f/k/a AETNA CASUALTY

AND SURETY COMPANY, PACIFIC

EMPLOYERS INSURANCE COMPANY,

SCOTTSDALE INSURANCE COMPANY,

CENTURY INDEMNITY COMPANY,

f/k/a CALIFORNIA UNION INSURANCE

COMPANY, AMERICAN INSURANCE

COMPANY,

Defendants-Respondents,

and

WESTCHESTER SURPLUS LINES INSURANCE

COMPANY, f/k/a INDUSTRIAL INSURANCE

COMPANY OF HAWAII, LTD., and AON

CORPORATION,

Defendants.

____________________________________

NEWPORT ASSOCIATES PHASE I

DEVELOPERS LIMITED PARTNERSHIP,

Plaintiff-Appellant,

v.

TRAVELERS CASUALTY AND SURETY

COMPANY, PACIFIC EMPLOYERS INSURANCE

COMPANY, SCOTTSDALE INSURANCE COMPANY,

and CENTURY INDEMNITY COMPANY,

Defendants-Respondents.

____________________________________

January 16, 2015

 

Argued December 4, 2013 Decided

Before Judges Grall, Nugent, and Accurso.

On appeal from Superior Court of New Jersey, Law Division, Hudson County, Docket Nos. L-3070-09 and L-3101-09.

Dennis J. Krumholz and Vanessa M. Kelly argued the cause for appellants (Riker Danzig Scherer Hyland & Perretti LLP, and Kelly & Associates, attorneys; Mr. Krumholz and Marilynn R. Greenberg, of counsel; Jaan M. Haus, Kathleen C. Gannon, and Vanessa M. Kelly, on the briefs).

Robert W. Mauriello argued the cause for respondent Travelers Casualty and Surety Company (Graham Curtin, P.A., attorneys; Mr. Mauriello, Jr., on the brief).

Paul R. Koepff (Clyde & Co.) argued the cause for respondent Pacific Employers Insurance Company and Century Indemnity Company (Siegal & Park, attorneys; Lawrence A. Serlin, on the brief).

Danielle M. DeGeorgio argued the cause for respondent Scottsdale Insurance Company (Docket No. L-3101-09) (Faust Goetz Schenker & Blee, LLP, attorneys; Ms. DeGeorgio, on the brief.)

Gary S. Kull argued the cause for respondent Scottsdale Insurance Company (Carroll McNulty & Kull, LLC, attorneys; Denise Marra DePekary and Blake Palmer, of counsel and on the brief).

Brian R. Ade argued the cause for respondent American Insurance Company (Rivkin Radler, LLP, attorneys; Mr. Ade, of counsel and on the brief; Francis J. Leddy, III, on the brief).

The opinion of the court was delivered by

NUGENT, J.A.D.

In this declaratory judgment action seeking insurance coverage for environmental contamination, plaintiffs Newport Associates Development Company and Newport Associates Phase I Developers Limited Partnership (Newport Phase I) appeal the orders denying their summary judgment motion and granting summary judgment to the defendant insurers on two grounds: plaintiffs were not "insureds" under primary and excess comprehensive general liability (CGL) insurance policies issued during 1983, 1984, and 19851 to an Indiana Corporation named Melvin Simon & Associates, Inc. (MSA), a developer of shopping malls throughout the country and a parent company of some of the entities that comprise the plaintiff partnerships; and enforceable absolute pollution exclusions in certain of the excess policies excluded plaintiffs' claims. We reverse the orders granting summary judgment as to the 1983 and 1984 policies and affirm the orders granting summary judgment as to the 1985 policies.

I.

Plaintiff Newport Phase I filed this declaratory judgment action in 2009 seeking insurance coverage under the 1985 policies for the costs of remediating contamination emanating from land in Jersey City acquired by plaintiff in 1985 known as the Elk Trucking site, the site where a company once manufactured coal gas, a process that resulted in coal tar contaminating ground and ground water.2 Newport Phase I sought indemnification under primary and excess insurance policies issued in 1985 to MSA, a holding company that controlled entities with partial ownership interests in Newport Phase I's partners.

In a separate consolidated complaint, Newport Phase I named as a defendant an insurance company that had not been named in the first action and alleged, among other things, bad faith claims against the insurers. The month after Newport Phase I filed its complaint, a defendant removed the case to federal court, but three months later, the federal court remanded it due to lack of diversity jurisdiction.

Following remand to the Law Division, the court limited discovery to two threshold issues: whether Newport Phase I was a named insured under the policies at issue; and whether the absolute pollution exclusions in certain policies were enforceable. The parties conducted discovery and Newport Phase I amended its complaint five times. The fifth amended complaint, the last to be filed before the parties filed summary judgment motions, included Newport Associates Development Company as a plaintiff and alleged that Newport Associates Development Company had acquired in 1984 and 1985 property that had been contaminated by coal tar emanating from the Elk Trucking site. Newport Associates Development Company sought coverage under primary and excess policies issued in 1983, 1984, and 1985 and included a professional negligence claim against an insurance broker, Aon Corporation, the successor to Alexander & Alexander of Indiana, Inc. (A&A), one of MSA's former insurance brokers.

After plaintiffs dismissed with prejudice their claims as to certain excess policies, the parties filed summary judgment motions. The court denied plaintiffs' motion, granted defendants' motions, dismissed the complaint, and signed implementing orders. The court later entered amended orders as well as an order dismissing with prejudice a bad faith claim against a defendant.3

Plaintiffs unsuccessfully sought leave to file an interlocutory appeal. Thereafter, they settled their remaining claim against the insurance broker and filed this appeal.

Plaintiffs are seeking coverage under primary and excess policies issued to MSA for three policy years: July 1, 1983 July 1, 1984 (the 1983 policies); July 1, 1984 July 1, 1985 (the 1984 policies); and July 1, 1985 - July 1, 1986 (the 1985 policies). MSA obtained the 1983 and 1984 policies through its insurance broker, the Mossler Insurance Agency, Inc. (Mossler). By November 1984, MSA had appointed A&A as its exclusive insurance agent. A&A obtained the 1985 policy for MSA.

The central issue in this appeal concerning the 1983 and 1984 policies is whether plaintiffs were subsidiaries, affiliated companies, or newly acquired or formed entities, "controlled by" MSA. The central issue concerning the 1985 policies is whether the "named insured" endorsement that defined named insureds as wholly owned MSA subsidiaries which plaintiffs were not should be reformed.

The defendants and the policies they issued to MSA during the policy years are as follows

1983 Policies (July 1, 1983 July 1, 1984)

Insurer

Policy Layer

Policy Number

Policy Limit

Travelers (Aetna)4

Primary

27 GL 17 SRA

$1 million

American Insurance

First Excess

XLB 1569281

$50 million

Travelers (Aetna)

Second Excess

27 XN 236 WCA

$50 million

Pacific Employers5

Third/Fourth Excess

XCC 01353

$50 million

Century

Fourth Excess

CIZ 425522

$5 million

1984 Policies (July 1, 1984 July 1, 1985)

Insurer

Policy Layer

Policy Number

Policy Limit

Travelers (Aetna)

Primary

27 GL 19 SRA

$1 million

American Insurance

First Excess

XLB 1668806

$50 million

Travelers (Aetna)

Second Excess

27 XN 254 WCA

$50 million

Century

Third Excess

CIZ 425540

$10 million

Pacific Employers

Third/Fourth Excess

XSC 011372

$45 million

1985 Policies (July 1, 1985 - July 1, 1986)

Insurer

Policy Layer

Policy Number

Policy Limit

Traveler (Aetna)

Primary

27 GL 21 SRA

$1 million

Pacific Employers

First Excess

XMO 25002

$10 million

Scottsdale

Second Excess

XUM 001240

$5 million

California Union6

Third Excess

ZCX08229

$5 million

Industrial Indemnity

Third Excess

JE 8950790

$5 million

Travelers (Aetna)

Fourth Excess

27 XN 287 WCA

$25 million

Travelers (Aetna)

Fifth Excess

27 XN 288 WCA

$7 million

Century

Fifth Excess

CIZ 426579

$2.5 million

Pacific Employers7

Fifth Excess

XCC 011409

$5.5 million

American Insurance

Sixth Excess

XLX 1749006

$10 million

The three primary CGL policies issued by Travelers each identified MSA as the named insured. The 1983 policy included a provision entitled "Persons Insured" which stated in pertinent part

Each of the following is an insured under this insurance to the extent set forth below

. . . .

(c) If the named insured is designated in the declarations as other than an individual, partnership or joint venture, the organization so designated and any executive officer, director or stockholder thereof while acting within the scope of his duty as such;

. . . .

This insurance does not apply to bodily injury or property damage arising out of the conduct of any partnership or joint venture of which the insured is a partner or member and which is not designated in this policy as a named insured.

Each of the policies also included a "Named Insured" endorsement. The endorsements in the 1983 and 1984 policies stated in relevant part

It is agreed that . . . Named Insured, is amended to include the following

. . . .

any subsidiary, affiliated company, newly acquired or formed entity, controlled by Melvin Simon, a general partnership.[8]

The final "named insured" endorsement in the 1985 policy, which superseded previous endorsements, defined "named insured" to mean, in pertinent part

[MSA] including all wholly owned subsidiaries and corporations which it now owns directly or indirectly or which it may hereafter hold, acquire or constitute.

The 1985 policy notes that it was typed on September 16, 1985. Travelers bound coverage, however, from the policy's inception date, July 1, 1985. The "Premium Bearing Binder" provided that the policy form and endorsements were "continuing coverage as afforded by [the 1984 policy]." As previously noted, the 1984 policy included as insureds entities controlled by MSA. Nearly identical language was initially included in the 1985 policy. Sometime after the policy was issued in September 1985, the named insured endorsement was superseded by the endorsement which defined "named insured" as "[MSA] including all wholly owned subsidiaries and corporations which it now owns directly or indirectly or which it may hereafter hold, acquire or constitute."

Although MSA was insured under numerous umbrella or excess policies in addition to Traveler's primary policies, most of the excess policies "followed form" to the primary policies in the respective years. The 1985 excess policy issued by Pacific Employers, which provided the first layer of excess coverage for that policy year, defined named insured as

[MSA] including all wholly owned subsidiaries and corporations in which it owns or may own directly or indirectly now or hereafter hold, acquired [sic] or constituted [sic].

. . . .

Any entity managed by MS Management or Melvin Simon and/or Herbert Simon or any subsidiary entity of [MSA] under a contract requiring the manager to purchase insurance for the named entities.

Three of the 1985 excess policies contained absolute pollution exclusion clauses at issue on this appeal. The policies are those issued by Pacific Employers, Scottsdale, and Century. The absolute pollution exclusion in the Pacific Employers policy provided

Absolute Pollution Exclusion Endorsement

It is agreed that any exclusion in the policy relating to the discharge, dispersal, release or escape of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants is replaced by the following

to bodily injury or property damage arising out of the discharge, dispersal, release or excape [sic] of smoke, vapors, soot, fumes, acids, alkalis, toxic chemicals, liquids or gases, waste materials or other irritants, contaminants or pollutants into or upon land, the atmosphere or any watercourse or body of water.

This insurance also does not apply to any cost or expense arising out of any government demand or request that an Insured test for, assess, monitor, clean-up, remove, contain, treat, detoxify, or neutralize any such irritants, contaminants or pollutants.

This Company shall not have the duty to defend any claim or suit seeking to impose such costs, expenses, liability for such damages, or any other relief.

The Scottsdale excess umbrella liability policy "followed form" to the underlying Pacific Employers policy. The Century excess policy also "follow[ed] form" to the underlying Pacific Employers policy.

The facts underlying plaintiffs' claims that they are insureds under the Travelers' primary policies involve the development of a large tract of land in Jersey City consisting of more than 230 acres bordered on one side by the Hudson River (the Newport Tract). In 1977, Jersey City and the Jersey City Redevelopment Agency (JCRA) adopted the Northern Waterfront Redevelopment Plan. The plan, as amended in October 1980, proposed to permit development of the blighted Newport Tract "for a high intensity, mixed-use Urban Center." The plan included development of a shopping mall, commercial offices, and residential housing. In July 1981, the JCRA entered into a "Contract For the Sale of Land for Private Redevelopment" with an Ohio corporation named The Glimcher Company (Glimcher). Glimcher, however, sought others to join it in redeveloping the Newport Tract. Glimcher was ultimately joined by MSA the company whose policies are at issue on this appeal and the Lefrak Organization, Inc., a New York Corporation. Glimcher, MSA, and Lefrak did not acquire and develop the Newport Tract. Rather, they created subsidiary partnerships and other business entities to acquire and develop it.

The first partnership was formed between Glimcher and an MSA subsidiary. MSA, one of the nation's largest developers of shopping centers and malls, was a holding company. Each time it decided to develop a mall, its lawyers and other professionals created new entities to develop or operate the project. Consistent with that business model, MSA's wholly-owned subsidiary, S.N.P., Inc. (SNP), entered into a partnership agreement with Glimcher on June 30, 1981.

The partnership, which they called The Glimcher Partnership, was "a general partnership under the laws of the State of New Jersey for the sole purpose of acquiring, owning, developing, improving, operating and managing [the Newport Tract]." Under the partnership agreement, each partner held a fifty-percent interest which established "the percentages in which the Partners share in the profits and losses of the Partnership[.]" Glimcher assigned its redevelopment contract with JCRA to The Glimcher Partnership.

The Glimcher Partnership Agreement was amended in August 1981 to change its name to Harbourside Development Company; in September 1982 to change its name to Harbour City Development Company; and in July 1983 - the month the 1983 policies were issued - to change its name to Newport City Development Company. The name was later changed to Newport Associates Development Company.9

As previously noted, July 1983 was the month the 1983 primary and excess insurance policies were issued to MSA. Thus, at the inception of the 1983 policy year, Newport Associates Development Company had two partners, each with a fifty percent partnership interest: SNP, the wholly owned MSA subsidiary, and Glimcher.10 Newport Phase I did not exist and the Elk Trucking Site had yet to be acquired.

From July 1981, a month after the Glimcher Partnership was formed, through the end of the 1983 policy year in July 1984, the partnership and Jersey City Redevelopment Agency began to acquire properties throughout the Newport Tract. According to Glimcher's vice president of development, from the inception of Newport Associates Development Company, SNP took the "leading role[.]" An MSA vice president, Randolph Foxworthy, testified at his deposition that before Lefrak joined the partnership, there may have been some work going on at the site, "but the bulk of what was going on . . . was my efforts in Washington D.C. and in Jersey City to arrange public financing and the land acquisition that was going on."

Although MSA was one of the country's leading developers of shopping centers and malls, neither MSA nor Glimcher had expertise in the development of residential housing and commercial offices. Because the project was to include approximately 9000 housing units and 4.3 million square feet of office space, MSA solicited the Lefrak Organization (Lefrak), which had expertise in the development of housing and commercial offices. On January 13, 1983, seven months before the inception of the 1983 policies, Lefrak wrote a letter "intended to be a memorandum of understanding" to MSA. The memorandum of understanding confirmed that MSA was "desirous of joining with [Lefrak] . . . for the purpose of jointly developing this property." Lefrak agreed to "immediately undertake with MSA the processing of supervising the development including any architectural or engineering work that has to be done in connection with the first 1,000 housing units, the development of a 1,000,000 square foot regional mall and approximately 500,000 square feet of office space." Upon certain conditions set forth in the memorandum, including the receipt of public funding, Lefrak also agreed to be responsible for fifty-percent of approximately $15,000,000 "[SNP] has advanced . . . for land cost and other development related cost to this point."

Despite the memorandum of understanding, Lefrak did not enter into a formal partnership agreement with SNP and Glimcher until March 8, 1985, four months before Newport Phase I acquired the Elk Trucking site. On March 8, 1985, Newport Associates Development Company amended its partnership agreement. In addition to SNP and Glimcher, a third entity, a subsidiary of Lefrak, became a partner. The name of the new Lefrak entity was Newport Real Estate Dev. Corp.11 Under the amended partnership agreement, Lefrak was a 42.50 percent partner, SNP a 42.35 percent partner, and Glimcher a 15.15 percent partner. SNP and Lefrak were "Co-Managing Partner[s]." The parties amended the partnership agreement three weeks later to change the partnership percentages: SNP's to 42.275 percent, Glimcher's to 15.30 percent, and Lefrak's to 42.425 percent. The Elk Trucking site had not been acquired by any of the MSA, Glimcher, or Lefrak entities when the 1984 policies expired on July 1, 1985.

Newport Associates Development Company did not acquire the Elk Trucking site. Rather, along with a wholly owned subsidiary corporation, it formed a partnership called Newport GPI Limited Partnership. Newport GPI then formed a partnership with Newport Associates, Inc., another wholly owned subsidiary of Newport Associates Development Company, and the resulting partnership was plaintiff Newport Phase I. None of the entities had any employees at the time. All of the individuals who were directly involved in the initial stages of the Newport Tract's development were employed by MSA, Lefrak, or Glimcher.

Newport Phase I purchased the Elk Trucking site on July 11, 1985, ten days after the inception of the 1985 policies. Thus, plaintiffs were not wholly owned MSA subsidiaries at the inception of the 1985 policies or when Newport Phase I purchased the Elk Trucking site.

Plaintiffs were aware in 1983 that there was contamination on the Newport Tract, though the parties dispute the extent of plaintiffs' knowledge about coal tar contamination on the Elk Truck site. In May 1983, a company called Ecological Analysts, Inc. prepared a report, "Assessment of Soils Analysis for the Newport City Development Project[,]" which revealed that "polycyclic aromatic hydrocarbons (PAH) were present in the soil at varying depths and concentrations" and concluded that the PAH "do not represent an unusual hazard to the public[.]" The report identified the historical industrial activity on the Newport Tract, including the Jersey City Gas Works.

In October 1983, Frederick Worstell, MSA's project engineer who was "totally involved in the Environmental Impact Statement," authored a memo concerning "Insurance Requirements [at] Newport City Project." Worstell expressed concern about "liability coverage for the development as a result of soil contamination." He deemed it "prudent that we make sure that we have proper protection for the future." Citing a recent law in Massachusetts requiring owners of contaminated property to provide cleanup regardless of whether the landowner caused the condition, Worstell wrote that "[o]ur public documentation of the soil condition at the project site will certainly subject us to continued scrutiny over the course of time."

In a March 14, 1984 memo to Foxworthy, Worstell confirmed conversations they had had about obtaining "non-sudden pollution insurance." In a second memo two weeks later, Worstell noted they were still working to identify and resolve the contamination issues from the regulatory perspective, and that "[t]he casualty liability and insurance issues have not been reviewed in depth." He also noted that the insurance question could be "handled in two ways 1) through a brokerage house, or 2) through an independent agent. The advantage of using an insurance broker with experience in the environmental field is that they typically have in-house environmental assessment staffs or a consulting firm subsidiary." In April 1984, MSA applied to an insurer for environmental impairment liability insurance for Newport, but the coverage was not quoted because the parties could not get sufficient reinsurance participation.

In June 1984, an insurance risk manager authored a report to MSA recommending that MSA appoint its own risk manager and develop a risk policy. The report pointed out the need to further consider MSA's potential environmental liability at various locations, particularly the Newport Tract

Your current liability contracts (Auto, G.L. and Umbrella) all contain an exclusion for such a loss unless the discharge is sudden and accidental. It has been suggested to us by your agent that there is a major potential exposure arising out of your New Jersey project and there may be some unrecognized exposure arising out of your other operations.

The report added that MSA was "exploring the cost of such coverage through the Mossler Agency," MSA's broker at the time, and would determine whether or not "to insure or non-insure this exposure."

Also in June 1984, Risk Science International provided MSA with a comparison of available "nonsudden pollution insurance[,]" and Marsh & McLennan gave MSA a firm quote from a company that was willing to write environmental impairment insurance for the Newport project. Responding to the quote in an internal memo, Foxworthy noted that the company's proposal provided "as good a coverage as anyone. However[,] we may have some problems." Coverage for property owned or controlled by the insured was excluded, and Foxworthy queried, since "[w]e are going to own all buildings on the site . . . [c]ould this exclusion come back to haunt us?" Furthermore,

[p]ayments to improve preexisting pollution conditions are excluded. All [of] our conditions are preexisting. If something happened which forced repair work . . . in opening the site we were required to remove contaminated soil that to then was covered up we would not have insurance coverage. [It appears that the next word is "Obviously"] the big problem is claims "made" not claims "incurred" coverage.

According to a February 1985 risk assessment performed for MSA, environmental impact tests again indicated the presence in site soil of significant levels of metals including lead, but other environmental tests suggested that no significant metal levels were likely to migrate. An April 1985 project remedial plan confirmed that site soil samples indicated varying PAHs, and one of nine groundwater samples tested positive for concentrations of benzene and other solvents. The results of the site investigations were contained in three site assessments made in 1983 and 1984. One assessment had concluded that the site could be successfully redeveloped and occupied if the required mitigation was performed.

On March 13, 1985, there was an accident on the property involving fallen transformers and an oil spill. Although plaintiffs had yet to acquire the property, JCRA notified MSA on behalf of Newport Associates Development Company because of the pending transfer. Asserting coverage under its policy with Aetna, MSA notified the carrier of a possible pollution claim on site. On November 13, 1985, Aetna informed MSA that, based on several policy provisions and exclusions as well as on MSA's prior knowledge and the failure of timely notice, it was reserving its rights to deny coverage regarding the March 1985 oil spill.

Plaintiffs produced evidence that it was only after acquiring the Elk Trucking Site that they became aware of the coal tar contamination. They acknowledged that Newport Phase I "ultimately" discovered that the coal tar had migrated off-site, contaminating both groundwater and sediments in the Hudson River. Some of the adjoining properties had been acquired by Newport Associates as part of the development of the Harbourside Tract.

In March 1988, Newport Phase I entered into a consent order with the New Jersey Department of Environmental Protection and agreed to investigate, delineate, and remediate the coal tar contamination. Twenty-one years later, in June 2009, Newport Phase I filed this declaratory judgment action.

Plaintiffs presented evidence of the parties' "course of dealing" to support their claims that there was a mutual intent to cover all MSA operating entities through the corporate insurance program from 1982 to 1988. Travelers was MSA's long-time insurance carrier and "knew it was common for [MSA] to enter into partnerships with non-[MSA] entities to own and operate their malls." Furthermore, in addition to Travelers' awareness of MSA's operations, its broker, A&A, knew MSA owned and operated a vast shopping center enterprise and had specific knowledge of the Newport Project.

Plaintiffs also presented underwriting materials that MSA's brokers had provided to Travelers. Mossler provided general liability exposure worksheets to Travelers to facilitate the underwriting of the 1983 CGL policy, which purportedly included two New Jersey exposures for NADC that were to be included under the policy. Additionally, marketing materials provided to Travelers, for what it claims were for underwriting purposes for the 1983 and 1985 policy years, listed the Newport Project as a "current project." Furthermore, during the 1985 policy year, A&A provided Travelers with a package of renewal information for the 1986 policy year which also listed the Newport project as a current development property.

II.

When a party appeals from an order granting summary judgment, our review is de novo and we apply the same standard as the trial court under Rule 4:46-2. Liberty Surplus Ins. Corp. v. Nowell Amoroso, P.A., 189 N.J. 436, 445-46 (2007); Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). First, we determine whether the moving party has demonstrated there were no genuine disputes as to material facts, and then we decide whether the motion judge's application of the law was correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230-31 (App. Div.), certif. denied, 189 N.J. 104 (2006). In doing so, we view the evidence in the light most favorable to the non-moving party, Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), and review the legal conclusions of the trial court de novo, without any special deference. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Because the interpretation of language in contracts, including insurance contracts, involves questions of law, our review of a trial court's interpretation of an insurance policy is de novo. Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605 (2012).

Here, the summary judgment motions concern insurance policies. "The fundamental principle of insurance law is to fulfill the objectively reasonable expectations of the parties." Werner Indus. Inc. v. First State Ins. Co., 112 N.J. 30, 35 (1988). Generally, when interpreting an insurance policy, we give its words their plain, ordinary meaning. Kimber Petroleum Corp. v. Travelers Indem. Co., 298 N.J. Super. 286, 300 (App. Div.), certif. denied, 150 N.J. 26 (1997). Courts should not "engage in a strained construction to support the imposition of liability." Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 273 (2001).

If a policy's language is clear, the policy should be enforced as written to fulfill the reasonable expectations of the parties. Passaic Valley Sewerage Comm'rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596, 608 (2011). In other words, "[i]f the language of a particular provision is clear and unambiguous, the inquiry is concluded." Ohio Cas. Ins. Co. v. Island Pool & Spa, Inc., 418 N.J. Super. 162, 169 (App. Div.), certif. denied, 206 N.J. 329 (2011). Courts must "'avoid writing a better insurance policy than the one purchased.'" Villa v. Short, 195 N.J. 15, 23 (2008) (quoting President v. Jenkins, 180 N.J. 550, 562 (2004)).

On the other hand, if a policy's terms are ambiguous "they are construed against the insurer and in favor of the insured, in order to give effect to the insured's reasonable expectations." Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010) (citing Doto v. Russo, 140 N.J. 544, 556 (1995); Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165, 175 (1992)). For that reason, if the policy language "fairly supports two meanings, one that favors the insurer, and the other that favors the insured, the policy should be construed to sustain coverage." Jenkins, supra, 180 N.J. at 563. "An exception to that rule exists for sophisticated commercial entities that do not suffer from the same inadequacies as the ordinary unschooled policyholder and that have participated in the drafting of the insurance contract." Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 179 N.J. 87, 102 (2004).

"A genuine ambiguity arises only where the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Hurley, supra, 166 N.J. at 274 (citation and internal quotation marks omitted). When determining whether the phrasing of an insurance policy clause is ambiguous, "we consider whether clearer draftsmanship by the insurer would have put the matter beyond reasonable question." Passaic Valley, supra, 206 N.J. at 608.

Whether the terms of an insurance contract are "'clear or ambiguous is . . . a question of law.'" Nester v. O'Donnell, 301 N.J. Super. 198, 210 (App. Div. 1997) (quoting Kaufman v. Provident Life & Cas. Ins. Co., 828 F. Supp. 275, 282 (D.N.J. 1992), aff'd, 993 F.2d 877 (3d Cir. 1993)). If a policy's terms are ambiguous, "a court may look to extrinsic evidence as an aid to interpretation." Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008) (citing Nester, supra, 301 N.J. Super. at 210. "In determining whether a contract is ambiguous, a court must consider the words of the agreement, alternative meanings suggested by counsel, and extrinsic evidence offered in support of those meanings." Newport Assocs. Dev. Co. v. Travelers Indem. Co., 162 F.3d 789, 792 (3d Cir. 1998) (applying New Jersey law) (internal quotation marks and citations omitted). "If the nonmoving party presents a reasonable alternative reading of the contract, then a question of fact as to the meaning of the contract exists which can only be resolved at trial." Ibid.

With those principles in mind, we turn to the primary policies issued to MSA by Travelers during the 1983 and 1984 policy periods. Plaintiffs argue that they were insured under the 1983 and 1984 Travelers' primary policies because the policies defined "named insured" to include entities "controlled by" MSA. They assert that the trial court applied an incorrect definition of "control" because it ascribed the meaning of a controlling ownership interest in the entity rather than a dictionary definition of the term. Plaintiffs also argue that the trial court failed to consider evidence that demonstrated they were controlled by MSA. Alternatively, plaintiffs argue that if the term "controlled" is deemed to be ambiguous, the court should have applied the doctrine of contra preferentum to construe the ambiguity against Travelers, who drafted it. Lastly, plaintiffs assert that they are entitled to coverage under the Travelers' 1983 and 1984 primary policies as a result of the certificates of insurance issued by A&A: an argument that the trial court did not address.

Travelers argues that the summary judgment should be affirmed because the trial court properly found that "the Travelers Policies, historical documents and sworn deposition testimony . . . made clear that [p]laintiffs are not Named Insureds under the Travelers policies[.]" Travelers asserts that the facts developed on the motion record were so one-sided, that the trial judge correctly decided Travelers should have prevailed as a matter of law. Travelers emphasizes, among other things, that MSA never had a controlling ownership interest in either plaintiff; nothing in the partnership agreements required MSA to obtain insurance through MSA's corporate insurance program; and MSA, Lefrak, and Glimcher created plaintiffs "among the numerous other entities that they created, in order to 'shelter' the liabilities emanating from the Newport site, including but not limited to the known environmental liabilities, from the top-tier entities."12

We agree with plaintiffs that the phrase "controlled by [MSA]" in the named insured endorsements is subject to two different interpretations, namely, ownership control and managerial control; and that the trial court erred by restricting the interpretation of the phrase to a controlling ownership interest.

The term "controlled" is not defined in the 1983 and 1984 Travelers policies.13 Plaintiffs cite the Merriam-Webster Dictionary for the proposition that control means "to exercise restraining or directing influence over" or to "regulate"; and the American Heritage Dictionary of English Language 400 (4th Ed. 2000) that defines "control" to mean "exercis[ing] authoritative or dominating influence over." Plaintiffs argue that the word "control" focuses on the acts of directing, managing and exercising influence, a much broader concept than "controlling interest" as found by the trial court. We do not necessarily disagree with plaintiffs' resort to dictionary definitions to demonstrate that the word "control" is susceptible to different meanings. Nevertheless, in the context of corporations and partnerships, the word "control" can refer to either the management of a company's day-to-day operations or to a majority ownership interest. Either definition could be applied to business entities such as corporations, partnerships, and limited liability companies. Moreover, "clearer draftsmanship by [an] insurer" could have readily "put the matter beyond reasonable question." Passaic Valley, supra, 206 N.J. at 608. Accordingly, we conclude as a matter of law that "control" as used in the policies is susceptible of two different meanings and therefore ambiguous.

Plaintiffs next argue that if the term "controlled by" is found to be ambiguous, the doctrine of contra preferentum requires that the ambiguity be construed against Travelers. We discern from that argument that plaintiffs contend the policy should be construed to include MSA subsidiaries over which MSA exercised managerial control. We reject that argument.

There is ample evidence in the record to support that the policies at issue "cover[ed] commercial risks procured through a broker, and thus involved parties on both sides of the bargaining table who were sophisticated with regard to insurance." Werner Industries, Inc., supra, 112 N.J. at 38. An exception to the doctrine "exists for sophisticated commercial entities that do not suffer from the same inadequacies as the ordinary unschooled policyholder and that have participated in the drafting of the insurance contract." Benjamin Moore, supra, 179 N.J. at 102.

MSA and the companies it controls are sophisticated commercial entities that procured insurance through regional and national brokers. The changes in the named insured endorsements in the 1983 and 1985 policies were initiated by language suggested by MSA's brokers to Travelers. The brokers certainly negotiated with Travelers. Because the doctrine of contra preferentum is inapplicable, then the fact finder must apply "[t]he fundamental principle of insurance law" and determine "the objectively reasonable expectations of the parties." Werner Industries, Inc., supra, 112 N.J. at 35. That determination requires a trial and the resolution of numerous factual issues that the parties dispute.

It is unnecessary to repeat the conflicting factual proofs developed on the summary judgment motion and which are recounted above. On the one hand, plaintiffs presented evidence from which the court could infer, depending on its credibility determinations, that the parties intended that plaintiffs be covered under the 1983 and 1984 Travelers policies. That evidence includes the nature of MSA's insurance program throughout the policy years; the underwriting information MSA's brokers provided to Travelers with respect to the risks to be insured, including risks in New Jersey and the Newport Tract; Travelers' payment of claims arising in New Jersey or the rejection of such claims based on the exclusions in the policies; and A&A's providing certificates of insurance that would have been copied to Travelers.

On the other hand, Travelers has produced evidence which, if found credible, could lead to the conclusion that the parties did not intend plaintiffs to be covered under the 1983 and 1984 policies. That evidence included MSA's non-allocation of premiums to plaintiffs; plaintiffs' seeking environmental impairment insurance for properties within the Newport Tract; and plaintiffs seeking, through Lefrak, insurance for risks directly related to the development of the Newport Tract. Virtually all the countervailing proofs presented by the parties on the summary judgment record are fact sensitive and could be accepted or rejected based upon the court's credibility determination.

Plaintiffs also argue that they are named insureds under the 1983 and 1984 policies "as a result of the certificates of insurance issued by A&A, agent of [Travelers]." Plaintiffs assert that Travelers is bound by the certificates issued by its agent, A&A and, in any event, Travelers is estopped from denying coverage. Plaintiffs' argument is without sufficient merit to warrant extended discussion in a written opinion. R. 2:11-3(e)(1)(E). We add only these brief comments. Certificates of insurance do not create or bind coverage. A standard certificate of insurance only evidences the existence of the policies to which it refers; it does not alter the terms of an indemnity agreement or the parties' contract, nor does it alter or amend the terms of the policies to which it refers. New Appleman on Insurance 3.03A(2) (Law Library Ed. 2014). A standard certificate of insurance is not an insurance policy. Ibid. Rather, a standard certificate that could be considered "'a worthless document' which does 'no more than certify that insurance existed on the day the certificate was issued.'" Ibid. (quoting Bradley Real Estate Trust v. Plummer & Rowe Ins. Agency, 609 A.2d 1233 (N.H. 1992)).

Although we reject plaintiffs' argument that the certificates created coverage, they would nonetheless be admissible at trial on the issue of whether the parties intended plaintiffs to be covered under the policies.

Even if it were determined that the Travelers policies included entities over which MSA claims it exercised managerial control, there are material factual disputes as to whether MSA actuallyexercised managerial control over plaintiffs, and if so, when that occurred. Although it is not clear whether plaintiffs are seeking coverage under the 1984 policy for Newport Phase I, that issue illustrates the problem. On the record before us, it is questionable whether MSA exercised any control over Newport Phase I during that short time frame between the entity's inception and the expiration of the 1984 policy.

For the foregoing reasons, we reverse the summary judgment orders as to 1983 and 1984 policies and remand the case for a trial as to those policies.14

III.

We reach a different result with respect to the 1985 Travelers' policies.

Plaintiffs argue that the overwhelming evidence that they presented to the trial court demonstrated that the parties intended all of MSA's operating entities to be covered under the 1985 Travelers primary policy. In support of that contention, they cite much of the evidence that they have cited in support of their claims with respect to the 1983 and 1984 Travelers policies. Plaintiffs also argue that the parties made a mutual mistake which requires reformation of the policy, and that the trial court overlooked several other of its arguments.

The 1985 endorsement was clear and unambiguous. It defined the named insured as MSA "including all wholly owned subsidiaries and corporations which it now owns directly or indirectly or which it may hereafter hold, acquire, or constitute." There is nothing ambiguous about the meaning of "wholly owned subsidiaries" and plaintiffs do not suggest there is. Rather, they claim the trial court failed to consider subparagraphs A & B that followed and provided

A) If the named insured is a partnership, joint venture or syndicate, the partners. If a partner is a corporation, then its agents, stockholders, employees and executive officers and directors.

B) If the named insured is an estate or trust the successors, executors, administrators, trustees or beneficiaries while acting as such.

Plaintiffs argue that because paragraphs A and B are introduced by the clause "[i]n respect to above," they clarify the definition of "named insured" in the immediately preceding paragraph and that "[p]lainly, inherent in the definition of each of a 'partnership, joint venture or syndicate' and an 'estate or trust' is the premise that none can be a wholly owned subsidiary." From that proposition, plaintiffs argue that the endorsement "raises an inference that something broader than the narrow language of the first paragraph is intended."

Plaintiffs' argument would require us to violate the principle that courts should not engage in strained constructions to support the imposition of liability. Hurley, supra, 166 N.J. at 273. We decline to utilize a rule of construction that would "have the effect of making a plain agreement ambiguous and then construing it in favor of the insured." Passaic Valley, supra, 206 N.J. at 608. As we have previously explained, "[i]f the language of a particular provision is clear and unambiguous, the inquiry is concluded." Island Pool & Spa, supra, 418 N.J. Super. at 169.

Plaintiffs next contend that the language of the named insured endorsement was a mutual mistake and therefore should be reformed. Plaintiffs argue that the endorsement did not include the language A&A initially proposed, namely

Any entity managed by MS Management or Melvin Simon and/or Herbert Simon or any subsidiary entity of [MSA] under a contract requiring the manager to purchase insurance for the named entities.

New Jersey courts will reform a contract for mutual mistake where the parties have "met and reached a prior existing agreement" that the document does not express. Bonnco Petrol, Inc. v. Epstein, 115 N.J. 599, 608 (1989). In order to apply the doctrine of mutual mistake, however, the misunderstanding cannot be unilateral; rather, the same mistake must be shared by both parties. Id. at 609. Moreover, to grant reformation, there must be clear and convincing proof that the reformed contract rather than the original is the one the parties intended. Cent. State Bank v. Hudik-Ross Co., 164 N.J. Super. 317, 323 (App. Div. 1978). Although the summary judgment standard does not require proof by clear and convincing evidence, "[a]n issue of fact is genuine only if, considering the burden of persuasion at trial, the evidence submitted by the parties on the motion . . . would require submission of the issue to the trier of fact." R. 4:46-2(c).

Significantly, MSA's broker, A&A, had proposed the "wholly owned subsidiaries" language. Plaintiffs have not demonstrated a material fact as to whether the language in the endorsement resulted from a mutual mistake.

For the reasons previously explained, we reject plaintiffs' argument that they were named insureds under the 1985 policy as a result of the certificates of insurance issued by A&A. Plaintiffs' remaining arguments concerning the 1985 policy endorsement are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Plaintiffs next argue that they are "named insureds" under the 1985 excess policies because they were entities managed by Melvin Simon, and thus fall within the definition of "named insured." They reason that "the 1985 Pacific Employers Umbrella/Excess Policy contained the following 'named insured' language"

Named Insured

Melvin Simon and Associates, Inc. including all wholly owned subsidiaries and corporations in which it owns or may own directly or indirectly now or hereafter hold, acquired or constituted.

* * *

In addition

Any entity managed by MS Management or Melvin Simon and/or Herbert Simon or any subsidiary entity of Melvin Simon & Associates, Inc. under a contract requiring the manager to purchase insurance for the named entities.

Plaintiffs reason that the second, third, fourth, and fifth excess layer policies "follow form" to the 1985 Pacific Employers Excess policy; that the first clause was the result of a mutual mistake as they previously argued with respect to the 1985 Travelers primary policies; and that the "In Addition" clause cures the mistake and covers each of the operating entities, including plaintiffs, because each was managed by Melvin Simon through its employees and companies until the mall became operational.

We reject plaintiffs' argument concerning the first clause for the reasons previously discussed with respect to the 1985 Travelers primary policies. In their argument concerning the second clause, plaintiffs assert that they were "managed by Melvin Simon," but they fail to address the additional language "under a contract requiring the manager to purchase insurance for the named entities." Plaintiffs do not further elaborate. Accordingly, their taking the policy language out of context leads us to reject their argument.

IV.

Because we have determined that plaintiffs were not named insureds under the 1985 excess policies, we need not address their arguments that the defendants who issued those policies should be estopped or otherwise barred from asserting the absolute pollution exclusions in the policies.

We have considered plaintiffs' remaining arguments and find them to be without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E).

Affirmed in part, reversed in part, and remanded for further proceedings consistent with this opinion.

1 Plaintiffs also attempt to include in this appeal policies issued in 1982. Plaintiffs did not include those policies in either their complaint or any of their five amended complaints, and the trial court did not address them. Consequently, we also decline to address them.

2 Plaintiffs have included neither the original pleadings nor most of the amended pleadings in the record, but the parties do not appear to dispute that Newport Phase I was the sole plaintiff named in the original complaint and sought coverage only under the policies issued in 1985.

3 The defendant, Scottsdale Insurance Company, issued a 1985 excess policy. Plaintiffs have not explicitly argued that the trial court erred by dismissing its bad faith claim against Scottsdale. In any event, we have determined that plaintiffs were not named insureds under the Scottsdale policy.

4 Travelers identifies itself in its brief as "Travelers Casualty and Surety Company f/k/a The Aetna Casualty and Surety Company." Our references to "Travelers" therefore includes Aetna, which issued the primary policies that are the subject of this appeal.

5 This policy is not identified in the complaint. Plaintiffs apparently did not become aware of this coverage layer in time to amend their complaint before the summary judgment motions were filed.

6 Plaintiffs voluntarily dismissed their claims under this policy as well as the Industrial Indemnity policy that also provided the third tier of excess coverage for this policy year.

7 As noted previously, Pacific Employers was never named as a defendant. Nor was American Insurance, which issued the sixth excess policy in the 1985 policy year.

8 The record is not clear about the relationship between Melvin Simon, a General Partnership, and MSA. There is some evidence in the record that the partnership "owns" MSA. The parties do not appear to dispute that MSA was the named insured under the policies.

9 An amended certificate of trade name is included in the appellate record. According to that certificate, which was executed in December 1986, Newport Associates Development Company was "Formerly Newport City Development Company." None of the parties appears to dispute that plaintiff Newport Associates Development Company is the name of the partnership formerly known as Newport City Development Company. For that reason, we will refer to the partnership from this point forward as Newport Associates Development Company.

10 In 1982, The Glimcher Company, its principals, and others formed a limited partnership called The Glimcher Jersey Company. Thereafter, The Glimcher Company withdrew from The Glimcher Partnership and The Glimcher Jersey Company was admitted to the Partnership. We continue to refer to "Glimcher" for purposes of clarity.

11 We refer to Newport Real Estate Dev. Corp. as "Lefrak" for purposes of clarity. Lefrak did not own any of the insurance policies that are at issue in this appeal.

12 Defendants Pacific Employers and Century assert that "[w]ith respect to Defendants pre-1985 policies, they join with and incorporate the arguments of the other insurer defendants in support of the trial court's 'named insured' ruling pertaining to such policies, as to whose provisions [defendant]'s high excess policies follow form." The American Insurance Company included as insureds under its policy "[MSA] and its owned or controlled corporations, partnerships, or proprietorships as now or hereafter constituted." Accordingly, our discussion concerning "control" applies to the American Insurance Company's 1983 and 1984 policies.

13 The "named insured" endorsement in the CGL policy Travelers issued to MSA for the period July 1, 1987 through July 1, 1988 included as named insured "any subsidiary, affiliated company, newly acquired or formed entity, owned, controlled or managed by a Melvin Simon entity, or for which that entity is responsible for placing insurance."

14 Because the Pacific Employers and Century "pre-1985" policies followed form to the Travelers policies, we reverse the summary judgment orders that were entered respecting the Pacific Employers and First Indemnity pre-1985 policies. Further, because the American Insurance 1983 and 1984 policies also applied to subsidiaries controlled by MSA, we also reverse the summary judgment orders as to the 1983 and 1984 American policies.