JOHN MICHAEL VAZQUEZ, District Judge.
The present matter comes before the Court on two motions: (1) Plaintiff American Fire and Casualty Company's ("American Fire" or "Plaintiff') motion for summary judgment; and (2) Defendant Cairn & Forster Specialty Insurance Company's ("Defendant" or "Cairn & "Forster") motion for summary judgment, both pursuant to federal Rule of Civil Procedure 56.
This case sterns from an underlying action brought by K. Hovnanian Construction Management, Inc. ("Hovnanian") in Pennsylvania state court.
Elite performed construction work for Hovnanian on the Project, which was substantially completed in June of 2001. PSOMF ¶ 7. American Fire issued an insurance policy to Elite which covered the period from June 1, 2001 (the date the work was completed at the project) to June 1, 2003. Id. Crum & forster also issued a general commercial liability insurance policy to Elite for two policy periods: from June 1, 2003 through June 1, 2004 and then from June 1, 2004 through June 1, 2005. DePekary Decl. Ex. B. Harleysville Insurance Company issue a policy to Elite after the Crurn & Forster's policies. PSOMF ¶ 9. American Fire and Harleysville provided defense to Elite in the underlying case and also contributed to a settlement. Id. ¶ 13.
The critical issue in this case turns on when water damage, caused by Elite's allegedly faulty workmanship, "manifested" at the Project. Unit-owners at the Project provided documentation of water infiltration in their residences. See DePekary Decl. Ex. G. These notes date from 2001 through 2007
On January 25, 2008, moisture testing was performed at the Project. See Declaration of Kyle Heisner ("Heisner Deci.") (D.E. 35-1) Ex. S, Ex. T. This testing, done by the Falcon Group, found a lack of sealant where the window trim met the windows and showed deficiencies related to the flashings
Plaintiff initiated the current action on July 28, 2014. D.E. 1. Defendant answered Plaintiffs complaint on September 9, 2014, alleging numerous affirmative defenses and a counterclaim seeking a declaratory judgment "declaring the rights and obligations of the parties under policies of insurance" issued by each party to this action. D.E. 6. After the close of discovery, each party moved for summary judgment. D.E. 29, 30. Both parties oppose each other's motions. D.E. 35, 36.
A moving party is entitled to summary judgment where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). A fact in dispute is material when it "might affect the outcome of the suit under the governing law" and is genuine "if the evidence is such that a reasonable jury could return a verdict for the non-moving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary facts will not preclude granting a motion for summary judgment. Id. "In considering a motion for summary judgment, a district court may not make credibility determinations or engage in any weighing of the evidence; instead, the non-moving party's evidence `is to be believed and all justifiable inferences are to be drawn in his favor." Marino Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting Anderson, 477 U.S. at 255)). A court's role in deciding a motion for summary judgment is not to evaluate the evidence and decide the truth of the matter, but rather "to determine whether there is a genuine issue for trial." Anderson, 477 U.S. at 249.
The showing required to establish that there is no genuine issue of material fact depends on whether the moving party bears the burden of proof at trial. On claims for which the moving party does not bear the burden of proof, the movant must demonstrate "that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). In contrast, "[w]hen the moving party has the burden of proof at trial, that party must show affirmatively the absence of a genuine issue of material fact." In re Bressman, 327 F.3d 229, 238 (3d Cir. 2003) (quoting United States v. four Parcels of Real Prop., 941 F.2d 1428, 1438 (11th Cir. 1991)). This affirmative showing requires the moving party to show that "on all the essential elements of its case on which it bears the burden ofproof at trial, no reasonable jury could find for the non-moving party." Id.
Once the moving party satisfies its initial burden, the burden shifis to the nonmoving party to "go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Celotex Corp., 477 U.S. at 324 (internal quotation marks omitted). To withstand a properly supported motion for summary judgment, the nonmoving party must identify specific facts and affirmative evidence that contradict the moving party. Anderson, 477 U.S. at 250. "[I]f the non-movant's evidence is merely `colorable' or is `not significantly probative,' the court may grant summary judgment." Messa v. Omaha Prop. & Cas. Ins. Co., 122 F.Supp.2d 523, 528 (D.N.J. 2000) (quoting Anderson, 477 U.S. at 249-50)).
Both parties agree that under New Jersey Law, the manifestation trigger theory applies to first-party insurance cases while the continuous trigger theory applies to third-party insurance cases. Pl. Br at 13-15; Def Opp'n at 21. Plaintiff argues that since the underlying matter was a third-party claim, the continuous trigger theory applies. Pl. Br. at 15. Defendant responds that under either theory, its insurance responsibilities end once the occurrence giving rise to coverage manifests. Def Opp'n at 2024.
In the insurance context, a "trigger" refers to an event or occurrence that requires coverage under a policy. Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437, 447 (1994) ("[T]he term `trigger' is merely a label for the event or events that under the terms of the insurance policy determines whether a policy must respond to a claim in a given set of circumstances." (internal quotations and citation omitted)). Depending on the type of policy, New Jersey courts have found different types of triggers to apply. A "continuous trigger" results in continual coverage for the entire time from initial exposure to actual manifestation of the injury or damage. Id. at 450; see also El-Ad Grp. v. Northbrook Prop. & Cas. Ins. Co., No. 03-0041, 2006 WL 840683$, at *4 (D.N.J. Mar. 15, 2006) ("The continuous trigger theory "holds that a loss occurs for purposes of coverage continuously from the point in time when the damage actually began to the time when it became manifest."). For example, in a case of asbestos inhalation, the continuous trigger theory results in coverage from the date of the initial exposure through the date the asbestosis manifested. Owens-Illinois, 138 N.J. at 450. A "manifest trigger," by comparison, results in coverage only on the date that the damage or injury manifests. Id.
The applicable trigger can materially impact the amount of coverage available. In particular, under the continuous trigger theory, coverage may be available under multiple policies. Id. In other words, the continuous trigger captures any applicable insurance policy in effect from the date of first exposure to manifestation. The manifest trigger, on the other hand, only applies to the policy in effect on the date that the injury or damage manifests. However, under either theory, the manifestation date is critical because the insured is not entitled to coverage after that date.
In Winding Hit/s Condominium Association, Inc. v. North American Specialty Insurance Co., 332 N.J.Super. 85, 93 (App. Div. 2000), the New Jersey Appellate Division determined that the manifest trigger rule applies in first-party insurance cases while the continuous trigger theory applies in third-party coverage cases. The parties here do not dispute that this is a third-party insurance case, because it results from Hovnanian's suit in the underlying matter, or that the continuous trigger rule applies. See Pl. Br. at 14 & Def. Opp'n at 20-21. Instead, Defendant simply argues that under either the manifestation or continuous trigger theory, Defendant should prevail. Def. Opp'n at 20-21.
As noted, the date that the damage manifests is necessary in determining the scope of liability under the continuous trigger theory. Under New Jersey law, the loss is "manifest" when "the injury becomes reasonably apparent or known to the ctaimant." El-Ad Grp., 2006 WL 8406838, at *5. In Winding Hills, the court determined the manifestation date to be when the plaintiff was "adequately apprised. . . of the general scope and causes" of the loss. 332 N.J. Super. at 89. furthen-nore, "the fact that additional problems of the same type were uncovered at a later date [did] not affect setting the manifestation date earlier because the plaintiff was aware of the `essential difficulties' at the earlier date." El-Ad Grp., 2006 WL 840683$, at *5 (citing Winding Hills Condo. Ass'n, 332 N.J. Super. at 90).
Here, the parties dispute the date of manifestation. Compare Def. Br. at 18-19 (alleging manifestation began prior to June 1, 2003, when the Crum & Forster policy was first issued) with Pl. Opp'n at 11 (stating that "the property damage . . . did not `manifest' until January 2008"). Both parties agree that policies in place afler the date of manifestation are not subject to coverage. See Def. R.Br. at 1; Pl. Opp'n at 11. Thus, if the manifestation date is prior to 2003, as Defendant suggests, then Defendant is not liable under its subsequently issued policies. On the other hand, if the manifestation date is in 200$, then both Plaintiff and Defendant would be liable for the damage that occurred within their respective policy periods.
In support of Defendant's contention, it cites to "ongoing complaints" by unit owners of water infiltration "coming specifically from the windows [] installed by Elite." Def. R.Br. at 7. This, alleges Defendant, demonstrates that Elite's work caused water infiltration prior to the inception of the Crum & Forster policies. Def. Br. at 19. Additionally, Defendant contends that the documentation shows that "both [] Hovnanian and Elite were aware of the alleged defects and water infiltration stemming from Elite's work prior to the Crurn & Forster policy period(s)." Def. R.Br. at 6-7.
Plaintiff seems to argue that an expert is required to determine when "manifestation" occurs. See Pl. Opp'n at 12. Plaintiff supports its argument by alleging that the letters sent to Crum & Forster identifying the water issues "do not provide any indication as to the source of the water," and therefore "are not sufficient to establish a pre-policy manifestation." Id. at 6. This is because the notes from unit owners fail to demonstrate that "the alleged defective construction by Elite Contractors was discovered or should have been discovered." Id. Thus, Plaintiff alleges that the appropriate manifestation date is in January of 2008, when expert moisture testing was performed on the units and the cause of the damage was determined. Id. at 12.
In El-Ad Group v. Northbrook Property & Casualty Insurance Corporation, Judge Linares confronted the issues of the cause of a loss and when it manifested. 2006 WE 8406838, at *5.
The first issue in El-Ad Grottp was whether the loss was due to a "settlement" or a "collapse." Id. at *5 If it was due to a collapse, then the plaintiff was covered, but if it was due to a settlement, then plaintiff was not covered. Id. The second issue was the date that the damage became manifest. If the loss was manifest prior to the policy period, then the plaintiff lacked coverage. After weighing "numerous tenant complaints," expert reports, and other evidence, Judge Linares determined that there were genuine issues of material fact as to both the nature of the loss and the date the loss was manifest. Id. at *6. Thus, the court in El-Ad Group found that a reasonable factfindei-could find that the loss was either a settlement or a collapse, and that under either scenario, there were facts suggesting that the loss manifested both before and after the effective date of the policy. Id. Therefore, Judge Linares denied each party's motions for summary judgment. Id.
As to the manifestation date, Judge Linares observed that before the policy, there were numerous tenant complaints, expert reports, and remediation efforts. Id. at *5 As a result, the court concluded that there was "evidence prior to the policy start date of June 2000 from which a fact finder could determine that a loss should have been reasonably apparent to [the plaintiff] before this date." Id. at *6. Judge Linares also determined that a reasonable factfinder could reach the opposite conclusion, i.e. that the loss occurred during the policy period, in light of the evidence. Id. Among other evidence, Judge Linares pointed to the fact that the town had only required repairs prior to the damage in 2001 and that no tenants had been forced to vacate before that date. Id.
Here, as in El-Ad Group, a reasonable factfinder could find that the damage manifested prior to Defendant's policy period, but a reasonable factfinder could also find that the damage manifested later. Importantly, when viewing Plaintiffs motion, the Court must make all reasonable inferences in favor of Defendant and then do the reverse when reviewing Defendant's motion. In short, there is a combination of factors, including the unit-owner reports and expert testing, that creates a genuine issue of material factual as to when Elite should have been "reasonably aware" that its actions caused the damage.
In Defendant's favor, the Project was, at a minimum, substantially completed prior to the effective date of Crum & forster's policies. See Cypress Point Condo Ass'n v. Selective Way Ins. Co., No. HUD-L-936-14, 2015 N.J. Super. Unpub. LEXIS 721, at *15 (Law Div. Mar. 30, 2015) (noting that a factor supporting a finding of manifestation was that the damage occurred soon after the project was substantially completed and eight years before the insurance policy was effective). In addition, there is evidence from unit-owners' written complaints indicating water infiltration beginning in 2001 in the areas worked on by Elite. See DePekary Deci., Ex. G (notes from unit owners complaining of water infiltration in 2003), id. Ex. N, at 7-8 (note from Joe and Linda Ferroni on December 16, 2002 complaining of water infiltration in and around lower level windows). Thus, when reviewing Plaintiffs motion, and drawing all factual inferences in favor of Defendant, there is evidence from which a reasonable factfinder could conclude that the damage manifested before Defendant's policies.
On the other hand, the only expert report cited indicates that causation was definitively determined after Defendant's policies were in effect.
Finally, Plaintiff requests recovery of attorneys' fees and costs in prosecuting this matter pursuant to New Jersey Rule 4:42-9(a)(6). See Pl. Br. at 16. Since the Court is denying Plaintiffs motion for summary judgment, it is not a "successful claimant" as required by Rule 4:42-9(a)(6). See Rule 4:42-9(a)(6) (permitting an award of counsel fees in "an action upon a liability or indemnity policy of insurance, in favor of a successful claimant") (emphasis added). Therefore, the Court denies Plaintiffs request for attorneys' fees and costs.
For the reasons set forth above and for good cause shown, the Court
Defendant's brief in support of its motion for summary judgment will be referred to hereinafter as "Def. Br." (D.E. 29-1); Plaintiffs opposition to Defendant's motion will be referred to as "Pl. Opp'n" (D.E. 35); and Defendant's reply brief will be referred to as "Def. R.Br." (D.E. 38).
