OXFORD REALTY GROUP v. TRAVELERS EXCESS AND SURPLUS LINES COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

OXFORD REALTY GROUP CEDAR,

CLA MANAGEMENT, and R.K.

PATTEN, LLC,

Plaintiffs-Appellants,

v.

TRAVELERS EXCESS AND SURPLUS

LINES COMPANY,

Defendant-Respondent.

_____________________________

March 14, 2016

Argued January 11, 2016 Decided

Before Judges Simonelli, Carroll and Sumners.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-4214-13.

Allan Maitlin argued the cause for appellants (Sachs, Maitlin, Fleming & Greene, attorneys; Mr. Maitlin, of counsel and on the briefs; Christopher Klabonski, on the briefs).

Wystan M. Ackerman (Robinson & Cole, LLP) of the New York bar, admitted pro hac vice, argued the cause for respondent (Michael J. Mernin (Robinson & Cole) and Mr. Ackerman, attorneys; Mr. Ackerman and Mr. Mernin, of counsel and on the brief).

PER CURIAM

In this insurance coverage matter, plaintiffs Oxford Realty Group Cedar, CLA Management and R.K. Patten, LLC (collectively, Oxford) sustained flood damage to an apartment complex in Long Branch as a result of Hurricane Sandy in excess of $1 million. Oxford sought coverage under a surplus lines policy issued by defendant Travelers Excess and Surplus Lines Company (Travelers) for $207,961.28 for the costs of debris removal of property damaged by the flood in addition to the policy's $1 million coverage for flood damage to the property. Oxford appeals from the April 15, 2014 Law Division order, which denied its motion for partial summary judgment, granted partial summary judgment to Travelers, and dismissed Oxford's claim for debris removal costs. For the following reasons, we reverse and remand for entry of judgment in Oxford's favor.

Our standard of review is well-established. We review a ruling on a motion for summary judgment de novo, applying the same standard governing the trial court. Davis v. Brickman Landscaping, Ltd., 219 N.J. 395, 405 (2014). Thus, we consider, as the motion judge did, "'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.'" Id.at 406 (citation omitted).

If there is no genuine issue of material fact, we must then "'decide whether the trial court correctly interpreted the law.'" DepoLink Court Reporting & Litig. Support Servs. v. Rochman, 430 N.J. Super. 325, 333 (App. Div. 2013) (citation omitted). "As a general proposition, '[a] trial court's interpretation of the law and the legal consequences that flow from established facts are not entitled to any special deference.'" Polarome Int'l v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div. 2008) (alteration in original), certif. denied, 199 N.J. 133 (2009) (quoting Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J.366, 378 (1995)), certif. denied, 199 N.J.133 (2009). "The interpretation of an insurance contract is a question of law which we decide independently of a trial court's conclusions." Ibid. Because the issue in this appeal involves the interpretation of an insurance contract, we review the matter de novo.

An insurance policy must be read as a whole, Hardy ex rel. Dowdell v. Abdul-Matin, 198 N.J. 95, 103 (2009), and will be enforced as written when its terms are clear. Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012). "[C]ourts 'should not write for the insured a better policy of insurance than the one purchased.'" Boddy v. Cigna Prop. & Cas. Cos., 334 N.J. Super. 649, 658 (App. Div. 2000) (quoting Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 (1989)). Absent an ambiguity, courts should not engage in a strained construction to support the imposition of liability. Flomerfelt v. Cardiello, 202 N.J. 432, 442 (2010). If a policy provision is ambiguous, we construe the provision in favor of the insured, considering the insured's reasonable expectations. Shotmeyer v. N.J. Realty Title Ins. Co., 195 N.J. 72, 82-83 (2008). Language in a policy of insurance is genuinely ambiguous when "the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979). However, if a provision is not ambiguous or otherwise misleading, we need not consider the "objectively reasonable expectation" of the average policyholder in interpreting the policy. Ibid. Applying these principles to Travelers' policy, we find no ambiguity. We construe the policy to provide coverage of up to $500,000 for debris removal in addition to the $1 million limit for flood damage to the property.

We begin with an analysis of the pertinent policy provisions. The policy's Property Coverage Form provided as follows, in pertinent part

[Travelers] will pay for direct physical loss or damage to Covered Property at premises . . . caused by or resulting from a Covered Cause of Loss. Covered Cause of Loss means risks of direct physical loss unless the loss is excluded in Section D, Exclusions . . . or excluded or limited in the Supplemental Coverage Declarations or by endorsements.

The Property Coverage Form defined "covered property," in part, as "buildings," and provided coverage for damage to the covered property resulting from a covered cause of loss in the amount of the limits of insurance shown in the Supplemental Coverage Declarations.

The Property Coverage Form specifically excluded flood as a covered cause of loss. A flood endorsement modified the coverage provided under the Property Coverage Form to add flood as a covered cause of loss. Accordingly, loss or damage to covered property caused by a flood fell under the provisions of the policy.

The Property Coverage Form also provided coverage for costs and expenses, such as debris removal of covered property, as follows

COVERED COSTS AND EXPENSES

a. Debris Removal

(1) [Travelers] will pay the necessary

and reasonable expense incurred by the Insured to remove debris of Covered Property . . . caused by or resulting from a Covered Cause of Loss that occurs during the policy period. . . .

(2) For this Debris Removal Coverage, [Travelers] will pay up to 25% of

(a) The amount [Travelers] pays for the direct physical loss or damage to the Covered Property; plus

(b) The deductible in this applicable to that direct physical loss or damage.

This limit is part of and not in addition to the Limit of Insurance that applies to the lost or damaged Covered Property. But if

(a)(i) The sum of direct physical loss or damage and debris removal expenses exceeds the Limit of Insurance; or

(ii) The debris removal expense exceeds the above 25% limitation;

and

(b) A Limit of Insurance is specified in the Supplemental Coverage Declarations for Debris Removal (additional);

[Travelers] will also pay an additional amount, up to the Limit of Insurance specified in the Supplemental Coverage Declarations for Debris Removal (additional)[.]

[(Emphasis added).]

Stated simply, if the covered property was damaged by a covered cause of loss, then debris removal of the damaged covered property was a covered cost and expense, but the limit of insurance for debris removal specified in the Supplemental Coverage Declarations would be part of, and not additional to, the limit of insurance for the damage to the covered property. However, if the amount of damage to the covered property and debris removal exceeded the limit of insurance for the covered property, and if there was a limit of insurance specified in the Supplemental Coverage Declarations for "Debris Removal (additional)," the policy required Travelers to pay an additional amount up to the amount specified in the Supplemental Coverage Declarations for debris removal.

The Supplemental Coverage Declarations contained limits of insurance for "Debris Removal (additional)" and "Flood," and provided as follows, in pertinent part

A. BLANKET LIMITS: Insurance applies on a Blanket basis only to a coverage for which a Limit of Insurance is shown below . . .

. . . .

B. LIMITS OF INSURANCE - For application of Limits of Insurance refer to Section O. Limits of Insurance in the General Conditions

. . . .

7. Debris Removal (additional), in any one occurrence: $500,000

. . . .

14. Flood - aggregate in any one policy for all losses covered under this policy, commencing with the inception date of this policy

a. Occurring at Insured Premises resulting from Flood to buildings, structures or property in the open within Flood Zone A[1] . . . or property in or on buildings or structures located within such Flood Zones: $1,000,000

[(Emphasis added).]

The General Conditions, Section O provided as follows, in pertinent part

All coverages included in this policy are subject to the following conditions

. . . .

O. LIMITS OF INSURANCE

1. The most [Travelers] will pay for loss or damage in any one occurrence is the applicable specified Limit(s) of Insurance shown in the Supplemental Coverage Declarations, Schedules, Coverage Forms(s) or endorsement(s).

2. Under the Property Coverage Form, unless otherwise stated in the Supplemental Coverage Declarations, or by endorsement

a. Payments under the following Covered Costs and Expenses will not increase the applicable Covered Property Limit(s) of Insurance

(1) Debris Removal. But if a Limit of Insurance for Debris Removal (additional) is specified in the Supplemental Coverage Declarations, that Limit of Insurance will apply in addition to the applicable Covered Property Limit of Insurance[.]

[(Emphasis added).]

The flood endorsement limited the amount of insurance for loss or damage caused by a flood as follows

The most [Travelers] will pay for the total of all loss or damages caused by Flood in any one policy year is the single highest Annual Limit of Insurance specific for Flood in the Supplemental Coverage Declarations. This limit is part of, and does not increase, the Limits of Insurance that apply under this policy.

[(Emphasis added).]

Travelers contends this provision limited Oxford's recovery to a total of $1 million, the amount specified in the Supplemental Coverage Declarations for "Flood." We disagree.

The Property Coverage Form provided coverage for loss or damage to covered property defined, in part, as "buildings." The Supplemental Coverage Declarations provided a limit of insurance of $1 million for all losses "resulting from Flood to buildings[.]" (Emphasis added). Accordingly, the $1 million limit of insurance in the Supplemental Coverage Declarations applied only to damage to Oxford's building. The Property Coverage Form provided additional coverage for debris removal of damaged covered property. Because the sum of the damage to the building and debris removal expenses exceeded the limit of insurance of $1 million for the building, and because the Supplemental Coverage Declarations specified a limit of insurance of $500,000 for "Debris Removal (additional)," the Property Coverage Form and General Conditions required Travelers to pay up to $500,000 for debris removal in addition to the $1 million limit of insurance applicable to the damage to the building.

The flood endorsement does not change this outcome. The endorsement applies only to loss or damage to covered property caused by flood, meaning Oxford's building. The endorsement does not mention costs and expenses, and although it contains certain exclusions, there is no exclusion for debris removal. Accordingly, we conclude that the policy, read as a whole, clearly and unambiguously provides additional coverage for the costs and expenses of debris removal of the covered property damaged by the flood in the limit of insurance specified in the Supplemental Coverage Declarations for "Debris Removal (additional)." Consequently, Travelers must pay Oxford $207,961.28 for the debris removal.

Reversed and remanded for entry of judgment in Oxford's favor and against Travelers in the amount of $207,961.28.

1 There is no dispute that the subject property was located in Flood Zone A.