Opinions of the United
2005 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-20-2005

Stephan v. Transp Ins Co
Precedential or Non-Precedential: Non-Precedential

Docket No. 04-1029




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Recommended Citation
"Stephan v. Transp Ins Co" (2005). 2005 Decisions. Paper 813.
http://digitalcommons.law.villanova.edu/thirdcircuit_2005/813


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                                              NOT PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT


          Nos. 04-1029, 04-1124 and 04-1125


    WILLIAM STEPHAN; KATHRYN T. STEPHAN;
        JACK B. MONTI; KATHY MONTI, t/a
   HOLLY BEACH CONDOMINIUM ASSOCIATION
          (an Unincorporated Association);
   HOLLY BEACH CONDOMINIUM ASSOCIATION
                             Appellants/Cross Appellees

                           v.

    TRANSPORTATION INSURANCE COMPANY,
                       Appellee/Cross Appellant


APPEAL FROM THE UNITED STATES DISTRICT COURT
        FOR THE DISTRICT OF NEW JERSEY
                D.C. Civil No. 01-cv-01555
     District Judge: The Honorable Joseph E. Irenas


       Submitted Under Third Circuit LAR 34.1(a)
                    July 1, 2005


  Before: ROTH, RENDELL, and BARRY, Circuit Judges


             (Opinion Filed: July 20, 2005)


                      OPINION
BARRY, Circuit Judge

          Appellants (“the Owners”) are the owners of a three-story condominium located in

Wildwood, New Jersey. The Owners obtained an insurance policy from Transportation

Insurance Company (“Transportation”) for the condominium. The condominium building

is supported by wood pilings extending upward from the ground. In September, 1999, the

Owners noticed that the building was swaying during wind gusts, and they retained Irving

Fruchtman to inspect the building’s piling foundation system. Fruchtman discovered

subterranean decay in 17 of the 29 pilings, and determined that the property was subject

to collapse if exposed to winds of 90 miles per hour or greater. Based on Fruchtman’s

report, the Owners undertook an extensive remediation project to correct the foundation

problem, at an expense of approximately $113,000. The Owners sought coverage for this

project from Transportation. When Transportation refused, the Owners commenced this

action.

          The insurance policy specifically excludes “foundations of buildings. . .if their

foundations are below. . . [t]he surface of the ground,” and loss resulting from “rust

corrosion, fungus, decay, deterioriation, hidden or latent defect.” Nonetheless, the policy

does provide for coverage “caused by collapse of a building. . .if the collapse is caused

by. . .hidden decay.” App. 229a, 246a, 249a. Under New Jersey law, which governs

interpretation of the policy, coverage for collapse includes a collapse which has not yet

occurred but is “imminent.” See Buczek v. Continental Ins. Co., 

, 290 (3d



                                                2
Cir. 2004) (citing Fantis Foods, Inc. v. North River Ins. Co., 

, 183 (N.J.

Super. Ct. App. Div. 2000)). Thus, the issue presented in this case is whether the

condominium was in danger of imminent collapse.

       Prior to trial, the District Court held a Daubert hearing and concluded that

Fruchtman was qualified to testify as a technical expert. The Court also took “judicial

notice that the Wildwood, New Jersey region is sometimes hit by hurricanes with wind

speeds exceeding 90 m.p.h.” Stephan v. Continental Casualty Ins. Co., 2003 U.S. Dist.

LEXIS 7568, * 10-11 (D.N.J. May 6, 2003).

       The jury found that the Owners had failed to prove that the condominium would

collapse if exposed to 90 mile per hour winds. The Owners appealed, arguing that they

were entitled to judgment as a matter of law, pursuant to Fed R. Civ. P. 50. The Owners

also take issue with the language of the District Court’s jury instructions, and argue that

the District Court should have permitted William Stephan to testify as to the cause of the

building’s propensity to sway in the wind. Transportation cross-appealed from the

District Court’s order permitting Fruchtman to testify as an expert.

       We need not delve into any of these issues, however, because our recent decision

in Buczek v. Continental disposes of the instant case. Buczek involved a similar three-

story condominium in Wildwood, New Jersey, with similar rotting wooden pilings. The

owners in Buczek replaced the pilings and sought reimbursement from the same insurance

company, under a policy virtually identical to that in this case. The same attorneys



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handled both cases, and the same District Judge presided over both trials. Indeed, during

proceedings in this case, the District Judge frequently referenced his holdings in the

Buczek matter, at one point noting that “I wasn’t going to change my Buczek type

rulings...let the Circuit have it.” App. 334b.1

       In Buczek, as here, Fruchtman testified that 90 mile per hour winds would cause

the condominium to collapse. The District Judge took judicial notice of the fact that 90

mile per hour winds sometimes hit Wildwood, New Jersey, and ultimately entered

judgment in favor of the condominium owners. In reversing, we held that “such a threat

is not imminent and cannot serve to support a finding of 

, n. 5.

Moreover, we noted that “the insurer’s obligation to reimburse for acts taken to preserve

or protect Covered Property does not extend to require reimbursement for prevention of

damage to property that is excluded from coverage or for a circumstance that is not a

covered cause of loss.” 

       There is no meaningful distinction between Buczek and this case. Furthermore,

here, as noted above, the jury made the specific finding that the Owners had failed to

prove that the condominium would collapse if exposed to 90 mile per hour winds. We

will, therefore, affirm the final judgment of December 31, 2003.2



   1
    The District Court entered judgment for Transportation on December 31, 2003. We
issued our decision in Buczek on August 6, 2004.
   2
   Because we will affirm the judgment in favor of Transportation, we need not reach
Transportation’s cross-appeal concerning Fruchtman’s testimony.

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