NORMAN INTERNATIONAL, INC. VS. ADMIRAL INSURANCE COMPANY (L-0177-19, MORRIS COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE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
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-0353-20
NORMAN INTERNATIONAL,
INC., and RICHFIELD WINDOW
COVERINGS, LLC, d/b/a NIEN
MADE (USA), INC.,
Plaintiffs-Appellants,
v.
ADMIRAL INSURANCE
COMPANY,
Defendant-Respondent.
___________________________
Submitted June 3, 2021 – Decided July 13, 2021
Before Judges Alvarez and Mitterhoff.
On appeal from the Superior Court of New Jersey, Law
Division, Morris County, Docket No. L-0177-19.
The Killian Firm, PC, attorneys for appellants (Ryan
Milun, on the briefs).
Kinney Lisovicz Reilly & Wolff, PC, attorneys for
respondent (Justin N. Kinney and Michael S. Chuven,
of counsel and on the brief).
PER CURIAM
In this insurance coverage case, plaintiffs Norman International, Inc.
(Norman) and Richfield Window Coverings, LLC (Richfield) appeal from two
orders entered on September 14, 2020 granting summary judgment to defendant
Admiral Insurance Co. and denying Richfield's motion for summary judgment.
Having carefully reviewed the record, and in light of the applicable legal
principles, we reverse and remand.
We discern the following material facts from the record before us, viewed
in the light most favorable to plaintiffs, the non-moving parties. Polzo v. Cnty.
of Essex, 209 N.J. 51, 56 n.1 (2012) (citing Brill v. Guardian Life Ins. Co. of
Am., 142 N.J. 520, 523 (1995)). Richfield is owned by Norman which, in turn,
is owned by Nien Made Enterprise (Nien Made). Norman manufactures window
coverings, including blinds, shades, and shutters, that are sold by Richfield to
national retailers like Home Depot. Norman is also involved with certain
"corporate functions," which include procuring insurance.
Richfield sells the products to Home Depot through a "Supplier Buying
Agreement" for a flat fee. Richfield provides Home Depot with blind cutting
machines, designed and manufactured by Nien Made, which are operated only
by Home Depot employees to modify its products for Home Depot customers.
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Defendant issued Norman a commercial general liability policy, effective
from 2017 to 2018, under which Richfield and Nien Made are "Named
Insureds." Under the policy, defendant had the duty to defend and 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." However,
defendant had "no duty to defend the insured against any 'suit' seeking damages
for 'bodily injury' or 'property damage' to which this insurance does not apply."
In that regard, the insurance agreement between the parties had several
relevant exclusions. The "Injury to Independent Contractors Exclusion" reads ,
in part:
It is agreed this insurance does not apply to "bodily
injury", "property damage" or "personal and
advertising injury" to:
1. Any independent contractor hired directly or
indirectly by you or on your behalf;
2. Any employee of any independent contractor hired
directly or indirectly by you or on your behalf . . . .
The "Designated New York Counties Exclusion" reads, in pertinent part,
that:
This insurance does not apply to "bodily injury",
"property damage" or "personal and advertising
injury", including costs or expenses, actually or
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allegedly arising out of, related to, caused by,
contributed to by, or in any way connected with:
(1) Any operations or activities performed by or
on behalf of any insured in the Counties shown in
the Schedule above . . . .
Nine counties are listed, one of which is Nassau County.
Under the "Added Coverages" section of the "Manufacturers and
Distributors Enhanced Coverage" provision, it reads:
It is agreed "your product" includes "engineering and
design work" performed by you and which is
incorporated by you into "your product"; however, this
insurance does not apply to:
(1) "Engineering and design work" performed by
others on your behalf; or
(2) "Engineering and design work" performed by
you for others.
For the purposes of this endorsement, "engineering and
design work" means the making, drawing, planning,
drafting, formulating or developing . . . a plan,
specification or formula. 1
1
Defendant argues that, in the event we reverse the motion judge's order, it is
nonetheless entitled to a declaration that it has no obligation to indemnify plaintiffs
pursuant to this provision. We decline to reach defendant's argument since this issue
was not addressed by the motion judge. See Ins. Co. of N. Am. v. Gov't Emps. Ins.
Co., 162 N.J. Super. 528, 537 (App. Div. 1978) (declining to resolve on appeal an
issue not addressed by the trial court).
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During the policy period, Colleen Lorito, a Home Depot employee, was
injured while operating the blind cutting machine at a store located in Nassau
County. She and her husband filed a complaint in Nassau County against Nien
Made alleging negligent design, breaches of express and implied warranties,
failure to warn, as well as strict liability for both manufacturing and design
defects.
In October 2018, after Richfield provided notice of the pending claim,
defendant denied any obligation to defend or indemnify Richfield pursuant to
the "Injury to Independent Contractors Exclusion," the "Designated New York
Counties Exclusion," and the "Manufacturers and Distributors Enhanced
Coverage" provision. After unsuccessfully challenging the denial of coverage,
Richfield filed a Law Division complaint against defendant seeking a
declaratory judgment that it was entitled to defense under the policy. After
defendant filed an answer, the parties filed competing motions for summary
judgment.
From the bench, the judge determined that the "Injury to Independent
Contractors Exclusion" was inapplicable under the circumstances.2 He reserved
2
Apparently satisfied with that ruling, defendant did not file a cross-appeal. In the
absence of a cross-appeal, we will not address this issue. See Walrond v. Cnty. of
Somerset, 382 N.J. Super. 227, 231 n. 2 (App. Div. 2006).
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his decision with respect to the applicability of the "Designated New York
Counties Exclusion." On September 14, 2020, the motion judge granted
defendant's motion, denied Richfield's motion, and dismissed plaintiffs'
complaint. In his accompanying written opinion, the judge found persuasive the
fact that "Richfield assists with the regular maintenance and repair work of the
machines," "assists in the employee training for the machines," "is the contact
for troubleshooting issues with the machines," and "performs cleaning of the
machines." The judge concluded that these operations and activities were
sufficient to trigger the "Designated New York Counties Exclusion" because
they were directly related to the blind cutting machine and were essential to the
business relationship between Richfield and Home Depot.
On appeal, plaintiffs raise the following arguments for our consideration:
POINT I
EXCLUSIONARY LANGUAGE IN AN INSURANCE
POLICY DOES NOT APPLY IN A VACUUM. HERE,
THE TRIAL COURT ERRED BY APPLYING THE
"DESIGNATED NEW YORK COUNTIES"
EXCLUSION WITHOUT CROSS-REFERENCING
AND COMPARING WHETHER THE
ALLEGATIONS IN THE UNDERLYING LORITO
COMPLAINT ACTUALLY TRIGGERED THE
EXCLUSION.
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POINT II
THE STATEMENTS BY POMS, RICHFIELD'S
FORMER INSURANCE BROKER, WHICH WERE
MADE OUTSIDE THE SCOPE OF ITS
AUTHORITY[,] ARE NOT BINDING AND CANNOT
CHANGE THE ALLEGATIONS OF THE
COMPLAINT, WHICH GUIDE THE COVERAGE
ANALYSIS.
It is well-settled that we review a summary judgment decision by "the
same standard that governs the motion judge's determination." RSI Bank v.
Providence Mut. Fire Ins. Co., 234 N.J. 459, 472 (2018) (citing Bhagat v.
Bhagat, 217 N.J. 22, 38 (2014)). A motion for summary judgment should be
granted only "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 the party seeking this relief
"is entitled to a judgment or order as a matter of law." R. 4:46-2(c). "[U]nder
the indulgent summary-judgment standard of review," Polzo, 209 N.J. at 75,
courts must consider the factual record, and reasonable inferences that can be
drawn from those facts, "in the light most favorable to the non-moving party,"
to decide whether the moving party was entitled to judgment as a matt er of law.
IE Test, LLC v. Carroll, 226 N.J. 166, 184 (2016) (citing Brill, 142 N.J. at 540).
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"The interpretation of an insurance contract is a question of law for the
court to determine, and can be resolved on summary judgment." Adron, Inc. v.
Home Ins. Co., 292 N.J. Super. 463, 473 (App. Div. 1996) (citing Weedo v.
Stone-E-Brick, Inc., 155 N.J. Super. 474, 479 (App. Div. 1977)). An insurance
contract "will be enforced as written when its terms are clear in order that the
expectations of the parties will be fulfilled." Flomerfelt v. Cardiello, 202 N.J.
432, 441 (2010). We interpret an insurance policy in accordance with the
document's "plain and ordinary meaning." Mem'l Props., LLC v. Zurich Am.
Ins. Co., 210 N.J. 512, 525 (2012) (quoting Flomerfelt, 202 N.J. at 441). Any
ambiguities "are construed against the insurer and in favor of the insured."
Flomerfelt, 202 N.J. at 441. Exclusionary clauses, however, "are typically
construed narrowly with the onus 'on the insurer to bring the case within the
exclusion.'" Mem'l Props., LLC, 210 N.J. at 528 (quoting Flomerfelt, 202 N.J.
at 442).
Turning to the "Designated New York Counties Exclusion," there is no
dispute that Lorito's injuries were sustained in Nassau County. Thus, that
exclusion applies only if Lorito's "bodily injury" actually or allegedly arose out
of, was related to, was caused by, was contributed to by, or was in any way
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connected with any "operations or activities performed by or on behalf of"
plaintiff. We conclude that it was not.
"[A]n insurer's duty to defend an action against the insured is measured
by the allegations contained in the complainant's pleadings." Voorhees v.
Preferred Mut. Ins. Co., 246 N.J. Super. 564, 569 (App. Div. 1991). "As a
practical matter, the determination of an insurer's duty to defend requires review
of the complaint with liberality to ascertain whether the insurer will be obligated
to indemnify the insured 'if the allegations are sustained.'" Abouzaid v. Mansard
Gardens Assocs., LLC, 207 N.J. 67, 79 (2011) (quoting Danek v. Hommer, 28
N.J. Super. 68, 77 (App. Div. 1953)). "[T]he complaint should be laid alongside
the policy and a determination made as to whether, if the allegations are
sustained, the insurer will be required to pay the resulting judgment, and in
reaching a conclusion, doubts should be resolved in favor of the insured."
Flomerfelt, 202 N.J. at 445 (quoting Danek, 28 N.J. Super. at 77). "[I]t is the
nature of the claim asserted, rather than the specific details of the incident or the
litigation's possible outcome, that governs the insurer's obligation." Id. at 444(citing Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504, 512 (1965)).
Even viewing the complaint filed by the Loritos with liberality, we
conclude that Richfield's limited activities and operations have no causal
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relationship to the causes of action or allegations therein. The complaint alleges
six distinct causes of action: negligent design, breaches of express and implied
warranties, failure to warn, and strict liability for both manufacturing and design
defects. These claims have no relationship with the maintenance or repair of the
blind cutting machines, the training of Home Depot employees, or the cleaning
of the machines. Because any "doubts should be resolved in favor of the
insured," Flomerfelt, 202 N.J. at 445 (quoting Danek, 28 N.J. Super. at 77), we
conclude the motion judge erred in granting summary judgment to defendant on
the basis of the "Designated New York Counties Exclusion."
To the extent we have not addressed defendant's remaining arguments, we
are satisfied they are without sufficient merit to warrant further discussion in a
written opinion. R. 2:11-3(e)(1)(E).
Reverse and remanded.
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