CHENG HUI XIE v. VIOLA TILE AND MARBLE LLC

Annotate this Case

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0299-21

CHENG HUI XIE and CHUN
RONG ZHU, his wife,

Plaintiffs-Appellants,

VIOLA TILE AND MARBLE LLC
d/b/a VIOLA TILE & REMODELING,
SALVATORE VIOLA, GASPARE
VIOLA, and STONE KING PLAZA LLC,

Defendants.
__________________________________

MASSACHUSETTS BAY INSURANCE
COMPANY,

Plaintiff-Respondent,

STONE KING PLAZA LLC,

Defendant-Appellant.
__________________________________

Argued November 15, 2021 – Decided December 16, 2021
Before Judges Sabatino, Mayer and Natali.

On appeal from the Superior Court of New Jersey, Law
Division, Middlesex County, Docket No. L-0805-20.

Christina Vassiliou Harvey argued the cause for
appellants Cheng Hui Xie and Chun Rong Zhu
(Lomurro, Munson, Comer, Brown & Schottland LLC,
attorneys; Richard Galex, of counsel; Christina
Vassiliou Harvey, of counsel and on the brief).

Liwu Hong argued the cause for appellant Stone King
Plaza LLC. (Liwu Hong, attorney, joins in the brief of
appellants Cheng Hui Xie and Chun Rong Zhu).

Kenneth E. Sharperson argued the cause for respondent
Massachusetts Bay Insurance Company (Weber
Gallagher Simpson Stapleton Fires & Newby LLP,
attorneys; Kenneth E. Sharperson, of counsel and on the
brief).

PER CURIAM

This matter returns to us by way of a September 20, 2021 order from the

New Jersey Supreme Court granting leave to appeal and remanding to review

the legal issues on the merits. After hearing counsel's arguments, we reverse

and remand to the trial court.

A-0299-21
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The facts are undisputed. On December 2, 2019, plaintiff Cheng Hui Xie 1

suffered an injury while working at Stone King USA, Inc. (SK USA). SK USA

sold custom kitchen and bathroom cabinets and countertops. Defendant Viola

Tile & Marble, LLC (Viola) removed a kitchen wall unit from SK USA.

However, Viola's representative left a part of the unit, a large stone countertop,

hanging from a wall in SK USA's store. The countertop was supported solely

by a ladder and some pieces of wood. Plaintiff, believing the stone piece

presented a danger to customers in SK USA's showroom, attempted to secure

the countertop. In the process, the countertop fell on plaintiff's head, causing

him to suffer serious and debilitating injuries and leaving him permanently

disabled.

SK USA rented space from defendant Stone King Plaza LLC (SK Plaza).

SK Plaza owned a strip mall, consisting of several different stores, located in

Middlesex Borough. Various family members held interests in SK Plaza.

Plaintiff's brother, Tommy Xie, held a sixty percent interest as a member of SK

Plaza. He also was the managing member of SK Plaza. Plaintiff, an investor in

SK Plaza, held a twenty percent interest as a member of SK Plaza. Another

1
Chun Rong Zhu is plaintiff's wife and asserted a per quod claim based on her
husband's injuries. We use the term plaintiff to refer to Cheng Hui Xie.
A-0299-21
3
family member held the remaining twenty percent interest in SK Plaza. On the

day of the accident, plaintiff was not working or performing services for SK

Plaza. Plaintiff did not receive compensation from SK Plaza.

At the time of the accident, plaintiff worked for SK USA. Based on his

status as an employee of SK USA and his significant injuries, plaintiff filed a

petition for workers' compensation benefits. He eventually received

compensation benefits from SK USA.

Plaintiff also filed a personal injury action against Viola and others. On

May 11, 2020, plaintiff amended the complaint to add SK Plaza as a defendant.

Tommy Xie purchased liability insurance from Massachusetts Bay

Insurance Company (MBIC) for SK USA and SK Plaza. Under the policy, SK

USA is a named insured and SK Plaza is an additional named insured. SK Plaza

requested MBIC defend and indemnify it against plaintiff's personal injury

claim.

While investigating plaintiff's claim, MBIC learned SK USA and SK

Plaza were owned by the same individuals. Based on this information, MBIC

sent a reservation of rights letter, informing SK Plaza that plaintiff "would be

considered a Who is An Insured under the policy" and thus coverage would be

denied under the policy's Workers' Compensation and Employer's Liability

A-0299-21
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exclusions. MBIC subsequently filed a declaratory judgment action seeking a

judicial determination that it had no duty to defend or indemnify SK Plaza in

plaintiff's personal injury action.2

After brief discovery, MBIC moved for summary judgment, arguing the

Workers' Compensation and Employer's Liability exclusions in its policy

precluded coverage. In granting the motion, the judge found SK Plaza and SK

USA were named insureds under MBIC's policy, plaintiff was an employee of

SK USA, and plaintiff was a part owner of both SK USA and SK Plaza. As a

member of SK Plaza, the judge determined plaintiff met the definition of an

"insured" and the Employer's Liability exclusion applied. Based on these

findings, the judge held MBIC had no duty to defend or indemnify SK Plaza

against plaintiff's claim.3 The judge attached a written statement of reasons to

his January 20, 2021 order.

2 In an October 16, 2020 order, plaintiff's personal injury action and MBIC's
declaratory judgment action were consolidated.
3
Because the motion judge found the Employer's Liability exclusion in MBIC's
policy applied, he did not determine whether the Worker's Compensation
exclusion also applied.

A-0299-21
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Plaintiff moved for reconsideration, which was denied by a different

judge.4 Plaintiff filed a motion for leave to appeal the orders granting summary

judgment and denying reconsideration. On May 20, 2021, this court denied

plaintiff's motion for leave to appeal.

Plaintiff then appealed to the New Jersey Supreme Court. On September

20, 2021, the Court granted plaintiff's motion for leave to appeal and summarily

remanded the matter to this court to consider the trial court's orders on the

merits. Xie v. Viola Tile & Marble, LLC, 248 N.J. 393 (2021). The Court also

granted SK Plaza's motion for leave to appeal. Xie v. Viola Tile & Marble,

LLC, 248 N.J. 402 (2021).

We review a trial judge's decision on a motion for summary judgment de

novo. Branch v. Cream-O-Land Dairy, 244 N.J. 567, 582 (2021). A motion for

summary judgment must be granted "if the pleadings, depositions, answers to

interrogatories and admissions on file, together with the affidavits, if any, show

that there is no genuine issue as to any material fact challenged and that the

moving party is entitled to a judgment or order as a matter of law." R. 4:46-

2(c). The parties agree there are no genuine issues of material fact precluding

our review of the issue on the merits.

4
The original motion judge died unexpectedly in February 2021.
A-0299-21
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The issue presented is purely legal, involving the contractual

interpretation of MBIC's insurance policy issued to SK USA and SK Plaza. We

review a purely legal issue de novo. Manalapan Realty, L.P. v. Twp. Comm. of

Manalapan, 140 N.J. 366, 378 (1995); see also Pickett v. Moore's Lounge, 464 N.J. Super. 549, 554-55 (App. Div. 2020) (citing Abboud v. Nat'l Union Fire

Ins. Co. of Pittsburgh, Pa., 450 N.J. Super. 400, 406 (App. Div. 2017)).

When interpreting insurance contract provisions, we look to the plain

meaning of the contractual language. Oxford Realty Grp. Cedar v. Travelers

Excess & Surplus Lines Co., 229 N.J. 196, 207 (2017). "If the language is clear,

that is the end of the inquiry." Ibid. (quoting Chubb Custom Ins. Co. v.

Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008)). A court should not

"engage in a strained construction to support the imposition of liability" or write

a more beneficial policy for the insured. Progressive Cas. Ins. Co. v. Hurley,

166 N.J. 260, 273 (2001).

The fact that parties offer conflicting interpretations of a policy's

contractual provisions does not render the policy language ambiguous. Fed. Ins.

Co. v. Campbell Soup Co., 381 N.J. Super. 190, 195 (App. Div. 2005) (citing

Powell v. Alemaz, Inc., 335 N.J. Super. 33, 44 (App. Div. 2000)). "A genuine

ambiguity arises only when 'the phrasing of the policy is so confusing that the

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average policy holder cannot make out the boundaries of coverage.'" Ibid.

(quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)).

With these legal principles in mind, we summarize the relevant provisions

in MBIC's policy. The "Who is An Insured" clause provides an entity is insured

if "designated in the Declarations as . . . [a] limited liability company."

Members of the limited liability company are also insureds "but only with

respect to the conduct of [the limited liability company's] business."

The policy requires MBIC to "pay those sums that the insured becomes

legally obligated to pay as damages because of 'bodily injury' or 'property

damage' to which this insurance applies. [MBIC] will have the right and duty

to defend the insured against any 'suit' seeking those damages." MBIC invoked

two policy provisions in denying defense and indemnification to SK Plaza for

plaintiff's bodily injury claim – the Workers' Compensation exclusion and the

Employer's Liability exclusion.

As a member and employee of SK Plaza, MBIC argued plaintiff's claim

against SK Plaza was barred by the Workers' Compensation Act (WCA),

N.J.S.A. 34:15-1 to -146. During oral argument, MBIC appeared to abandon its

argument based on the Workers' Compensation exclusion.

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Even if MBIC intended to press its position under this exclusion, we reject

that argument based on the definitions section of the WCA. Under N.J.S.A.

34:15-36,

members of a limited liability company . . . who
actively perform services on behalf of the . . . limited
liability company . . . shall be deemed an 'employee' of
the . . . limited liability company . . . for purposes of
receipt of benefits and payment of premiums pursuant
to this chapter, if the . . . limited liability company . . .
elects, when the workers' compensation policy of the .
. . limited liability company . . . is purchased or
renewed, to obtain coverage for the . . . limited liability
company members.

There is no evidence on this record that (1) plaintiff actively performed any

services for SK Plaza on the day of the accident and (2) SK Plaza elected to

purchase workers' compensation insurance for its members.

MBIC also cited information posted on the Department of Labor and

Workforce Development website, arguing SK Plaza was required to maintain

workers' compensation insurance and failed to do so. However, information

posted on a website, untethered to supporting statutory or regulatory authority

within an agency's rulemaking powers, lacks the force of law. See In re N.J.A.C.

7:1B-1.1, 431 N.J. Super. 100, 133 (App. Div. 2013) (stating an agency's

website, explaining processes for granting a waiver of the agency's rules that

differs from the governing statute, was "beyond merely facilitating

A-0299-21
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administrative implementation of the rules . . . and actually, to some extent,

announc[ing] new substantive requirements").

Having concluded the Workers' Compensation exclusion is inapplicable,

we consider whether the judge erred in determining MBIC had no duty to defend

and indemnify SK Plaza against plaintiff's personal injury claim under the

Employer's Liability exclusion. This provision excludes coverage for "[b]odily

injury to [a]n 'employee' of the insured arising out of and in the course of: (a)

[e]mployment by the insured; or (b) [p]erforming duties related to the conduct

of the insured's business."

MBIC claims that because plaintiff is an employee of SK Plaza, SK Plaza

is not entitled to coverage. Under the policy, MBIC correctly asserts a limited

liability company, and its members, are an insured. However, the coverage

exclusion in MBIC's policy is triggered if injured party is an employee of the

limited liability company and "only with respect to the conduct of [the limited

liability company's] business." MBIC offered no evidence plaintiff was an

employee of SK Plaza or conducting business on behalf of SK Plaza at the time

of his injury.

MBIC contends a member of a limited liability company is a de facto

employee of the limited liability company. Because plaintiff was a member of

A-0299-21
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SK Plaza, MBIC argues plaintiff was an employee of SK Plaza. We reject this

argument as unsupported by MBIC's own definition of the term "employee" in

its policy.

MBIC's policy clearly and simply defines the term "employee" as

including "a 'leased worker'" but excluding "a 'temporary worker.'" Nowhere in

MBIC's policy is a member of a limited liability company defined as an

"employee." If MBIC intended to include a member of the limited liability

company as an insured, MBIC could, and should, have expressly so stated in

defining the term "employee."

Nor do the cases relied upon by MBIC support its claim that every member

of a limited liability company is also an employee of the limited liability

company as a matter of law. Members of limited liability companies often

provide purely investment capital or other form of financial support and never

actually perform any work on behalf of the company.

Based on our review of the record, there is no evidence supporting the

application of the Employer's Liability exclusion under MBIC's policy. Plaintiff

was not an employee of SK Plaza, and the record is devoid of any facts

demonstrating plaintiff was "[p]erforming duties related to the conduct of [SK

A-0299-21
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Plaza]'s business" at the time of his injury to invoke the Employer's Liability

exclusion.

Any remaining arguments are without sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

Reversed. We do not retain jurisdiction.

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