WOLFSON, United States District Judge:
This matter comes before the Court on the Motion for summary judgment by Defendants
Sentinel issued an insurance policy, i.e., the "Hartford Spectrum Business Insurance Policy" ("the Policy"), to La Jolie, a beauty salon located at the intersection of Witherspoon and Hulfish Streets, in Princeton, New Jersey, for the period from June 15, 2016 to June 15, 2017. Sentinel's Statement of Undisputed Facts ("Defs.' Statement of Facts"), ¶¶ 1-2. La Jolie occupies two floors in the Hulfish Building. Id. ¶ 3, Exhibits E & F. A descending stairwell, enclosed by three concrete walls, leads to La Jolie's lower floor, which is below the street level and accessible through a glass door entrance. Id. ¶ 26, Exhibit H. Moreover, a landing area with a drain inlet is located at the bottom of the stairwell; the stairwell, however, is not protected by a roof and "is subject to direct entry of rains, snow and all elements." Id.
The Policy's terms and provisions, in relevant part, obligate the insurer to provide coverage for the "physical loss of or physical damage to Covered Property" that is "caused by or resulting from a covered Cause of Loss." Id. ¶ 21. Specifically, Covered Property and Cause of Loss are defined pursuant to the Agreement to include:
Id. ¶ 21, Exhibit A.
However, the Policy's terms and provisions do not provide coverage for damage or loss arising from "[f]lood, including the accumulation of surface water" or "[w]ater that backs up from a sewer or drain"; indeed, as the Policy sets forth: "[s]uch loss or damage is excluded regardless of [whether] any other [covered] cause or event ... contributes concurrently or in any sequence to the loss." Id. ¶ 22, Exhibit S. Notwithstanding that exclusion, the Parties entered into a seperate "STRETCH" agreement, which modifies the contract to include additional coverage for various forms of physical loss or physical damage, including those arising from:
Id. ¶ 23, Exhibit Q.
During the policy period, on July 30, 2016, a severe thunderstorm, estimated to constitute a two hundred to five hundred year storm, resulted in approximately five to seven inches of rain within a two-hour period.
Id.
Defendants ultimately denied Plaintiffs' insurance claim on the basis "that the cause of loss was a flood," which is not covered under the provisions of the Policy or Stretch agreement. Pls.' Response, ¶ 19. In that regard, (1) the manner in which the water accumulated at the base of the salon's stairwell; (2) and whether that water constitutes "surface water" are disputed on this motion. Indeed, as the basis for denying coverage, Defendants maintain that heavy rain flooded areas in Princeton, including the intersection of Hulfish and Witherspoon Street, at which corner the Hulfish Building is located. Id. ¶¶ 4, 11. Exhibit D. Moreover, Defendants posit that the flood water flowed over the curb and accumulated at the bottom of the stairwell which led to the lower level, prior to entering the premises through the glass door, notwithstanding Plaintiffs' efforts to block it with partially filled garbage bags from the inside of the building. Id. ¶¶ 12-13, Exhibit J.
Plaintiffs, on the other hand, contend that the water which entered through the lower level of the premises does not constitute flood water. Plaintiffs' Response, ¶ 13. Rather, as a consequence of the storm, Plaintiffs maintain that water accumulated on the building's roof and, in turn, entered the building's drain system. Plaintiffs' Counter Statement of Facts ("Pls.' Statement of Facts"), ¶ 32. The high volume of water which entered the building's drain system created an "over-pressurization" and, as a consequence, that water "ejected through the Salon's numerous sinks and through the [Salon's] toilets," and drains. Id. ¶ 33. According to Plaintiffs, that water also, as opposed to the flood water from the street, accumulated at the bottom of the salon's stairwell, entered the premises, and caused the damage. Pls.' Response, ¶ 4.
Subsequent to the denial of coverage, on March 8, 2018, Plaintiffs filed the instant Complaint against Defendants, asserting claims for: (a) breach of contract; and (b) a bad faith violation. Now, Defendants move for summary judgment on the basis that Plaintiffs have failed to demonstrate a genuine dispute of a material fact as to the issue whether surface water contributed to the damage which the building sustained on July 30, 2016. Plaintiffs oppose the Motion.
Summary Judgment is appropriate "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 and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). A factual dispute is genuine only if there is "a sufficient evidentiary basis on which a reasonable jury could find for the non-moving party," and it is material only if it has the ability to "affect the outcome of the suit under governing law." Kaucher v. County of Bucks, 455 F.3d 418, 423 (3d Cir. 2006); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Disputes over irrelevant or unnecessary facts will not preclude a grant of summary judgment. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. "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
The party moving for summary judgment has the initial burden of showing the basis for its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). "If the moving party will bear the burden of persuasion at trial, that party must support its motion with credible evidence ... that would entitle it to a directed verdict if not controverted at trial." Id. at 331, 106 S.Ct. 2548. On the other hand, if the burden of persuasion at trial would be on the nonmoving party, the party moving for summary judgment may satisfy Rule 56's burden of production by either (1) "submit[ting] affirmative evidence that negates an essential element of the nonmoving party's claim" or (2) demonstrating "that the nonmoving party's evidence is insufficient to establish an essential element of the nonmoving party's claim." Id. Once the movant adequately supports its motion pursuant to Rule 56(c), the burden shifts 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." Id. at 324, 106 S.Ct. 2548; see also Matsushita, 475 U.S. at 586, 106 S.Ct. 1348; Ridgewood Bd. of Ed. v. Stokley, 172 F.3d 238, 252 (3d Cir. 1999). In deciding the merits of a party's motion for summary judgment, the court's role is not to evaluate the evidence and decide the truth of the matter, but to determine whether there is a genuine issue for trial. Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Credibility determinations are the province of the factfinder. Big Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
There can be "no genuine issue as to any material fact," however, if a party fails "to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322-23, 106 S.Ct. 2548. "[A] complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial." Id. at 323, 106 S.Ct. 2548; Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992).
The Parties agree that a severe thunderstorm, resulting in approximately five to seven inches of rain within a two-hour period, occurred on July 30, 2016 in the Princeton area. The severity of the storm caused the street directly in front of the Hulfish Building to flood. Moreover, a pool of water ultimately accumulated at the bottom of the stairwell that provides access to La Jolie's lower level entrance, and subsequently entered the premises through the glass door of the salon. However, the Parties dispute whether the pooled water constitutes surface water, and in turn, how water accumulated at the bottom of the stairwell.
In that regard, Defendants contend that the water, which entered the premises of the salon, resulted from an accumulation of "flood water" that is not covered under the terms of the Policy. In support, Defendants argue that Princeton's storm sewer system was overwhelmed by severe rain, which ultimately caused the street immediately outside of the Hulfish Building to flood on July 30, 2016. Def.'s Brief, at 5. According to Defendants, the flood water subsequently flowed over the curb of the
Conversely, Plaintiffs argue that the water which ultimately entered the lower floor of the salon does not constitute surface water, because it originated from the roof of the building notwithstanding the fact it was rain water. According to Plaintiffs, the roof water subsequently entered the building's drain system, the volume of which caused "over pressurization" and, in turn, water flowed back out of the sink drains, toilets, and building's drains, including the drain which is located at the bottom of the stairwell. Plaintiffs Memorandum of Law in Opposition to Defendants' Motion for Summary Judgment ("Pls.' Opp. Brief"), at 2.
Indeed, Plaintiffs contends that no flood water entered the building. Plaintiffs argue that the building's pumps were equipped with backflow preventers, and, therefore, "none of the water that entered the building originated in the city's sewer system." Pls.' Response, ¶ 4. In addition, while Plaintiffs acknowledge that the street directly outside of the Hulfish Building flooded, that water, as Plaintiffs argue, could not have accumulated at the bottom of the salon's stairwell. Pls.' Opp. Brief, at 2. In that connection, Plaintiffs aver that the street's eight-inch curb prevented the flood water from "flow[ing] over." Id. Accordingly, because the only water which could have entered the building was non-flood water, Plaintiffs maintain that coverage was improperly denied.
The interpretation of an insurance contract or policy is a legal question typically reserved for a court. Sealed Air Corp. v. Royal Indemn. Co., 404 N.J.Super. 363, 375, 961 A.2d 1195 (App. Div.), certif. denied, 196 N.J. 601, 960 A.2d 396 (2008). In that regard, as a general matter, "[i]nsurance policies are construed in accordance with principles that govern the interpretation of contracts; the parties' agreement `will be enforced as written when its terms are clear in order that the expectations of the Parties will be fulfilled.'" Memorial Properties, LLC v. Zurich American Ins. Co., 210 N.J. 512, 525, 46 A.3d 525 (2012) (quoting Flomerfelt v. Cardiello, 202 N.J. 432, 441, 997 A.2d 991 (2010)). It is, thus, a contractual principle that courts must give the policy terms their plain and ordinary meaning. Id. Only when a policy's language is ambiguous, may a court rely upon extrinsic or parol evidence to determine the intent of the parties; however, where the language of the contract is clear, extrinsic evidence may not be considered. Chubb Custom Ins. Co. v. Prudential Ins. Co., 195 N.J. 231, 238, 948 A.2d 1285 (2008) ("If the language is clear, that is the end of the inquiry."). Courts must not "write for the insured a better policy of insurance than the one purchased." Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529, 562 A.2d 208 (1989).
Moreover, to establish insurance coverage, the insured, such as Plaintiffs, "bears the initial burden of showing that the harm [claimed] ... falls within the scope of the policy." State Farm Fire & Cas. Co. v. Estate of Mehlman, 589 F.3d 105, 110 (3d Cir. 2009); Reliance Ins. Co. v. Armstrong World Indus., Inc., 292 N.J.Super. 365, 377, 678 A.2d 1152 (App. Div. 1996) (burden is on the insured "to bring the claim within the basic terms of the policy"); Hartford Acci. & Indem. Co. v. Aetna Life & Casualty Ins. Co., 98 N.J. 18, 26, 483 A.2d 402
Here, the Policy, in relevant part, states as follows: "[w]e will pay for direct physical loss of or physical damage to Covered Property at the premises ... caused by or resulting from a Covered Cause of Loss." Brief in Support of Sentinel Insurance Company's Motion for Summary Judgment ("Defs.' Brief"), Exhibit Q. Moreover, while the Policy, itself, does not cover damages which arise from "[w]ater that backs up from a sewer or drain," the Parties entered into an additional Stretch agreement. The "terms and conditions of the [P]olicy" are applicable to the Stretch Agreement; however, the Stretch Agreement obligates Defendants to provide additional coverage, including:
Brief in Support of Sentinel Insurance Company's Motion for Summary Judgment ("Def.'s Brief"), Exhibit Q (emphasis added).
Notably, Plaintiffs do not argue that this provision is somehow ambiguous, or that it should be voided. Based on the plain and unambiguous language of the agreement which must be enforced, to acquire coverage, Plaintiffs must show that the salon sustained damages "solely" from water that backed up from a sewer or drain. See, e.g., Memorial Properties, LLC v. Zurich American Ins. Co., 210 N.J. 512, 525, 46 A.3d 525 (2012) ("Insurance policies are construed in accordance with principles that govern the interpretation of contracts; the parties' agreement will be enforced as written when its terms are clear in order that the expectations of the parties will be fulfilled.") (citation and quotation marks omitted). Stated differently, Plaintiffs bear the initial burden of demonstrating that flood water did not, in any way, contribute to the damages which the building sustained. MD Retail Corp. v. Guard Ins. Grp., 2017 WL 1164499, at *11, 2017 U.S. Dist. LEXIS 44996, at *27 (D.N.J. March 27, 2017) ("New Jersey law is clear that the plaintiff bears the burden of establishing that a loss occurred within the coverage of the insurance contract before the
To carry such a burden, Plaintiffs rely on the expert opinions of Jack West ("Mr. J West"), Robert West ("Mr. R. West"), and Michael Melleski ("Mr. Melleski").
First, Mr. J. West, the borough engineer, provided an opinion as to the cause of the disputed water damage in a three-sentence email. That email addresses the flood water on the street outside of the Hulfish Building and the drain which is located at the bottom of the stairwell, leading to the salon's lower level entrance:
Pls.' Opposition Brief, Exhibit C. Moreover, in a deposition, Mr. J. West further explained the opinion which he rendered in his email:
Id., Exhibit B. In sum, Mr. J. West opined that water accumulated at the bottom of the stairwell, because the intensity of the rain caused the drain to clog and cease functioning. Moreover, his explanation supports the fact that rain water also pooled at the stairwell's base, as opposed to only the water that drained from the roof, contrary to Plaintiff's position that the water that accumulated solely came from the roof through the backed up drain.
Mr. R. West also provided an expert opinion as to the cause of the disputed damage that is confined to the following two brief points:
Id., Exhibit I. Furthermore, during a deposition which took place on February 20, 2018, Mr. R. West stated:
Id., Exhibit Y. Thus, Mr. R. West opined that the water which accumulated at the bottom of the stairwell consisted, at a minimum, of water which welled out of the lower level drain in addition to rain water that fell directly into that area.
Third, Mr. Melleski, a public insurance adjuster, similarly explained that the cause of loss resulted from a blockage in the drain system: "the water that damages your client's occupied space came from the reverse flow under pressure due to a blockage in the drain system. The building has a combined plumbing system that receives storm water and sewage water and then is pumped into the city's sewer system. The pumps were actively trying to pump the water out to the sewer until an over pressurization occurred and set the water in a reverse direction." According to Mr. Melleski, the damages were sustained, at least in part, by an over pressurization of the drain system.
Here, drawing every favorable inference from the expert reports, the Court finds that the entry of summary judgment is, nevertheless, appropriate. To the extent that the water from the roof of the building can be categorized as non-flood water
Aside from the plain language of the Stretch agreement, the applicable anti-concurrent and anti-sequential provision of the Policy provides the proverbial final nail in the coffin as to Plaintiffs' insurance coverage claim. Indeed, the first page of the Stretch agreement clearly indicates that, "[e]xcept as otherwise stated in this endorsement, the terms and conditions of the policy apply to the insurance stated below." Defs.' Brief, Exhibit Q. That statement incorporates the main Policy's anti-concurrent and anti-sequential provision into the Stretch agreement, which provides:
Defs.' Brief, Exhibit A. Similar anti-concurrent and anti-sequential provisions are routinely enforced by courts in New Jersey, and, as applied to this case, function to exclude all coverage for a loss occasioned by a flood, even when a flood acts concurrently or sequentially with a covered peril, such as sewer back up. Jacobsen v. Hartford Ins. Co. Flood & Home (Sandy), No. 14-3094, 13-6910, 13-7160, 2017 WL 1239145, at *12 n.17, 2017 U.S. Dist. LEXIS 52591, at *32 n.17 (D.N.J. March 31, 2017); Lam Investment Research, LLC v. Pub. Serv. Mutual Ins. Co., No. 12-5576, 2016 WL 6634931, at *2, 2016 U.S. Dist. LEXIS 45116, at *4 (D.N.J. April 1, 2016); Assurance Co. of Am., Inc. v. Jay-Mar, Inc., 38 F.Supp.2d 349, 354 (D.N.J. 1999); Petrick v. State Farm Fire & Cas. Co., No. L-43-07, 2010 WL 3257894, at *3, 2010 N.J. Super. Unpub. LEXIS 1964, at *7 (App. Div. Aug. 13, 2010); Ashrit Realty LLC v. Tower Nat'l Ins. Co., No. A-1647-13T4, 2015 WL 248490, at *2, 2015 N.J. Super. Unpub. LEXIS 107, at *5 (App. Div. Jan. 20, 2015) (citing Simonetti v. Selective Ins. Co., 372 N.J.Super. 421, 699, 859 A.2d 694 (App. Div. Oct. 15, 2004)).
Plaintiffs do not argue that the anti-concurrent and anti-sequential provision, here, is ambiguous or in violation of New Jersey public policy. Rather, Plaintiffs cite various non-binding cases in which anti-concurrent and anti-sequential provisions were not enforced, including Lam Inv. Research, LLC v. Public Serv. Mut. Ins. Co., No. 12-5576, 2016 WL 6634931, 2016 U.S. Dist. LEXIS 45116 (D.N.J. April 1, 2016); Somerset Indus. v. Lexington Ins. Co., 639 F.Supp.2d 532 (E.D. Pa. 2009); and Bishops, Inc. v. Penn Nat'l Ins., 984 A.2d 982 (Pa. Super 2009). However, the cases upon which Plaintiffs rely are readily distinguishable from the instant dispute.
Unlike Lam Inv. Research and Bishops, Inc., the Policy's anti-concurrent and antisequential provision is clearly applicable. Indeed, the Stretch agreement explicitly states that "the terms and conditions of the policy apply to the insurance stated below," including its sewer and drain back up provision. Moreover, unlike Somerset Indus., Plaintiffs, here, did not pay an additional premium to remove the Policy's flood and surface water exception. To the contrary, the Stretch agreement's sewer and drain back up provision provides additional coverage for damages which "solely" arise from non-flood water that backs up from a sewer or drain. In fact, that provision specifically states that "THIS IS NOT FLOOD INSURANCE," and that Defendants "will not pay for water or other materials that back up from any sewer or drain when it is caused by any flood." Accordingly, because both the Stretch agreement and the anti-concurrent and anti-sequential provision exclude coverage for any damages from a drain and sewer backup caused by flood water, and because Plaintiff has failed to raise a genuine issue of material fact that flood water, indeed, entered the building, summary judgment is granted in favor of Defendants.
For the foregoing reasons, Defendants' Motion for summary judgment is
