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December 11, 2014


Argued October 21, 2014 Decided

Before Judges Messano and Hayden.

On appeal from the Superior Court of New Jersey, Law Division, Warren County, Docket No. L-0114-12.

Arthur J. Russo argued the cause for appellants (Russo Law Offices, L.L.C., attorneys; Mr. Russo, on the brief).

Robert W. Muilenburg argued the cause for respondent (Coughlin Duffy, L.L.P., attorneys; Mr. Muilenburg, of counsel and on the brief; Amanda K. Coats, on the brief).


Plaintiffs William and Crystal Hurst filed suit against a number of defendants alleging damages as a result of William's exposure to toxic mold while teaching from September 2003 through January 2005 in a temporary classroom.1 Penn Lyon Homes Corporation, also trading as PLH Corporation ("PLH"), one of the named defendants, allegedly designed and constructed the classroom unit. PLH defaulted, and plaintiff ultimately settled with the remaining defendants.2

Plaintiff commenced a declaratory judgment action against defendant American Zurich Insurance Company, which had issued a commercial general liability policy to PLH, effective September 1, 2003 through September 1, 2004 ("the 2003 policy"). Defendant answered, admitting that it issued the 2003 policy, and further admitting that American Guarantee Liability Insurance Company had issued a commercial general liability policy to PLH, effective September 1, 2004 through September 1, 2005 ("the 2004 policy").3 Defendant subsequently moved for summary judgment, arguing that plaintiff's claims were excluded under the policies. Plaintiff cross-moved for summary judgment, and also moved to exclude the certification of Mark Kinder, defendant's employee, served in support of defendant's motion.

After considering oral argument, Judge Amy O'Connor issued an oral opinion on the record granting defendant summary judgment and denying plaintiff's cross-motion. She entered a conforming order dated June 7, 2013, and this appeal followed.

Plaintiff reiterates the arguments made before Judge O'Connor. He contends that the judge misapplied summary judgment standards in assessing the "numerous disputed material facts" regarding the 2003 and 2004 policies. Plaintiff also argues that Judge O'Connor failed "to apply the applicable law regarding interpretation of policies of insurance." Lastly, plaintiff contends the judge should not have considered Kinder's certification because defendant failed to comply with Rule 4:17-7.

We have considered these arguments in light of the record and applicable legal standards. We affirm.

In reviewing a grant of summary judgment, we apply the "same standard of review that governs the trial court." Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 524 (2012) (quoting Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (internal citation omitted)). We first determine whether the moving party demonstrated there were no genuine disputes as to material facts. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J. Super. 224, 230 (App. Div.), certif. denied, 189 N.J. 104 (2006).

[A] determination whether there exists a "genuine issue" of material fact that precludes summary judgment requires the motion judge to consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party.

[Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).]

We then decide "whether the motion judge's application of the law was correct." Atl. Mut. Ins. Co., supra, 387 N.J. Super. at 231. Interpretation of an insurance contract is a matter of law subject to our de novo review. Sealed Air Corp. v. Royal Indem. Co., 404 N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601 (2008) (citation omitted).

Plaintiff's argument largely centers upon the differences between the fungus exclusion contained in the 2003 policy, and the fungus exclusion contained in the 2004 policy. Both policies included a "Commercial General Liability Coverage Form," which, we gather from the record presented, is a standard form used by the industry. Section One of both policies sets forth the coverages provided, and, in particular, Coverage A sets out the insuring agreement regarding claims for bodily injury and property damage. Pursuant to identical definitional provisions contained in each policy, claims for bodily injury or property damage include those resulting from a "'[p]roducts-completed operations hazard.'" The parties do not dispute that plaintiff's claim falls squarely within the definition of a "products-completed operation hazard."4

The 2003 policy contained a "Fungus Exclusion Endorsement" that provided

This endorsement modifies insurance provided under the

Commercial General Liability Coverage Part

Products/Completed Operations Liability Coverage Part

This insurance does not apply to "bodily injury" . . . caused directly or indirectly, in whole or in part, by

1. Any "fungus(i)" or "spore(s)", or

2. Any substance, vapor or gas produced by or arising out of any "fungus(i)" or

"spore(s)", or

3. Any material, product, building component, building or structure that contains, harbors, nurtures or acts as a medium for any "fungus(i)" or "spore(s)"

regardless of any other cause, event, material, product and/or building component that contributed concurrently or in any sequence to that injury or damage.

Plaintiff concedes that this exclusion applies to any claim he may have had under the 2003 policy.

The exclusion language in the 2004 policy was slightly different. It provided

This endorsement modifies insurance provided under the

Commercial General Liability Coverage Part

The following exclusion is added to paragraph 2. Exclusions of Section I. Coverage A Bodily Injury And Property Damage Liability and paragraph 2. Exclusions of Coverage B Personal AND Advertising Injury Liability

2. Exclusions

This insurance does not apply to

Fungi or Bacteria

A. "Bodily injury", "property damage"

or "personal and advertising injury" caused directly or indirectly by the actual, alleged or threatened inhalation of, ingestion of, contact with, exposure to, existence of, or presence of any

1. "Fungi" or "bacteria"; or

2. Substance, vapor or gas

produced by or arising out of any "fungi" or "bacteria".

Based on these differences and other evidence in the motion record, plaintiff contends that he was entitled to summary judgment because the fungus exclusion did not apply to bodily injury claims arising from a "products-completed hazard," as in this case. Alternatively, he contends that the 2004 policy is ambiguous, and we should conclude that it provided coverage by application of well-recognized interpretive tools. Lastly, plaintiff argues that defendant was not entitled to summary judgment because of material factual disputes that should have been resolved in his favor. R. 4:46-2.

Considering this final argument first, we disagree that there were genuine disputes of material facts that foreclosed the possibility of summary judgment. Plaintiff points to the report of his expert, Armando Castellini of Castellini Insurance Services, who opined that the 2004 exclusion did not apply to products-completed claims of bodily injury. While there may be occasions where the opinion of an insurance expert is relevant and helpful to the factfinder, in our view, it is improper for an expert to render an opinion on a pure question of law, i.e., the interpretation of an insurance contract, which as we already noted, is an issue reserved solely to the motion judge, and, in turn, to us. Presumably, as judges, we are competent to divine the meaning of an insurance policy.

We turn, therefore, to the terms of the 2004 policy, applying some well-known tenets of interpretation. "An insurance policy is a contract that will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled. 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) (citations and internal quotation marks omitted).

"If the terms are not clear, but instead 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." Ibid. (citations omitted). "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.'" Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 274 (2001) (quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)). And, whether ambiguous or not, when a court construes the terms of a policy of insurance, it "'should not write for the insured a better policy . . . than the one purchased.'" Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 537 (1990) (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)); see also Flomerfelt, supra, 202 N.J. at 441 ("[W]hen considering ambiguities and construing a policy, courts cannot write for the insured a better policy of insurance than the one purchased.") (citation and internal quotation marks omitted).

"[P]olicies should be construed liberally in [the insured's] favor to the end that coverage is afforded to the full extent that any fair interpretation will allow." Hurley, supra, 166 N.J. at 273 (second alteration in the original) (citations and internal quotation marks omitted). Exclusions are generally narrowly construed, and the burden is on the insurer to bring the claim within the exclusionary language. Flomerfelt, supra, 202 N.J. at 442. Nevertheless, "[e]xclusionary clauses are presumptively valid and are enforced if they are specific, plain, clear, prominent, and not contrary to public policy." Id. at 441 (citations and internal quotation marks omitted).

We agree with Judge O'Conner that the 2004 policy is unambiguous. The policy included three separate coverages, but only one, Coverage A, applied to bodily injury and property damage claims. The policy declaration page lists only "GENERAL LIABILITY COVERAGE," and contained only one price for the applicable premium.

The fungus exclusion in the 2004 policy clearly stated that it applied to the general liability coverages provided under Coverage A and Coverage B, the personal and advertising injury coverage. There was no separate coverage for "products-completed operations," a defined term that impacted claims for personal injury and property damage. We agree with Judge O'Connor's analysis that claims for bodily injury arising from PLH's off-site activities or products were subsumed within Coverage A, and, therefore, the fungus and bacteria exclusion applied.

We acknowledge plaintiff's arguments that other form endorsements contained in the 2004 policy specifically stated that they applied to the "Commercial General Liability Coverage Part" and the "Products/Completed Operations Coverage Part" of the policy. However, plaintiff can point to no coverage under the 2004 policy that applied to his claim, except that contained in Coverage A. The fact that a form exclusionary endorsement lists two coverages to which it applies does not transmute an unambiguous policy that provides specific coverages into an ambiguous policy that creates a separate coverage out of thin air.

We reject plaintiff's other arguments regarding traditional tenets of interpretation that apply to ambiguous insurance contracts. For example, we see no merit in plaintiff's claim that PLH had a reasonable expectation of coverage for claims arising from mold and fungus in its products. As we said in Am. Wrecking Corp. v. Burlington Ins. Co., 400 N.J. Super. 276 (App. Div. 2008), "[C]ourts should resort to the doctrine of reasonable expectations only when the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Id. at 285 (quoting Nunn v. Franklin Mut. Ins. Co., 274 N.J. Super. 543, 549-50 (App. Div. 1994) (internal quotation marks omitted)). Here, the policy provided only a single coverage for bodily injury and property damages, and the exclusion's own terms made clear it applied to that coverage.

Based on the above, we need not consider plaintiff's argument regarding Kinder's certification. To the extent we have not specifically addressed plaintiff's other contentions, we conclude they lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).


1 Since Crystal Hurst's claim is wholly-derivative of her husband's, we use the singular "plaintiff" throughout the balance of this opinion.

2 At oral argument, plaintiff advised that default judgment was never entered against PLH.

3 A single answer was filed on behalf of both insurers. We refer to both using the singular "defendant" throughout the balance of this opinion.

4 Both policies included the following definition

[]"Products-completed operations hazard"

a. Includes all "bodily injury" and "property damage" occurring away from premises you own or rent and arising out of "your product" or "your work" except

(1) Products that are still in your physical possession; or

(2) Work that has not yet been completed or abandoned. . . .