SHREE RIDDHI SIDDHI HOSPITALITY, LLC VS. SCOTTSDALE INSURANCE COMPANY(L-0627-15, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-5210-15T2
SHREE RIDDHI SIDDHI
HOSPITALITY, LLC,
Plaintiff-Appellant,
v.
SCOTTSDALE INSURANCE COMPANY,
Defendant-Respondent.
_______________________________
Argued October 30, 2017 – Decided November 29, 2017
Before Judges O'Connor and Vernoia.
On appeal from Superior Court of New Jersey,
Law Division, Monmouth County, Docket No.
L-0627-15.
Mauro C. Casci argued the cause for appellant.
George A. Prutting, Jr., argued the cause for
respondent (Prutting & Lombardi, attorneys;
Gavin Fung and Mr. Prutting, on the brief).
PER CURIAM
Plaintiff Shree Riddhi Siddhi Hospitality LLC appeals from
an order granting defendant Scottsdale Insurance Company's summary
judgment motion in this insurance coverage dispute. Because we
agree with the motion court's determination that the insurance
policy clearly and unambiguously excludes coverage for plaintiff's
property damage loss from a sewerage backup, we affirm.
The facts are not disputed. An apartment owned by plaintiff
suffered extensive property damage as the result of a sewerage
backup. Plaintiff sought coverage for the property damage under
its insurance policy with defendant. Defendant disclaimed
coverage, asserting the policy contained an express general
exclusion for damages caused by "[w]ater or water-borne material
which backs up through sewers or drains."
Plaintiff filed the pending insurance coverage action.
Defendant filed a summary judgment motion. In an oral opinion,
the court found the policy's clear language excluded coverage for
damages caused by sewerage backups, and entered an order granting
summary judgment to defendant. This appeal followed.
We conduct a de novo review of a trial court's grant of
summary judgment, and apply the same standard as the trial court.
Conley v. Guerrero, 228 N.J. 339, 346 (2017). The movant is
entitled to summary judgment if the record shows "there is no
genuine issue as to any material fact and "the moving party is
entitled to a judgment or order as a matter of law." Ibid.(quoting Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co.
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of Pittsburgh, 224 N.J. 189, 199 (2016)); see also R. 4:46-2(c).
Interpretation of an insurance policy presents a legal question,
which we review de novo. Selective Ins. Co. of Am. v. Hudson E.
Pain Mgmt. Osteopathic Med. & Physical Therapy, 210 N.J. 597, 605
(2012).
There are general principles that guide our interpretation
of an insurance policy. "[C]overage provisions are to be read
broadly, exclusions are to be read narrowly, potential ambiguities
must be resolved in favor of the insured, and the policy is to be
read in a manner that fulfills the insured's reasonable
expectations." Ibid. However, where "the plain language of [a]
policy is unambiguous, we will not engage in a strained
construction to support imposition of liability or write a better
policy for the insured than the one purchased." Templo Fuente,
supra, 224 N.J. at 200; accord Abboud v. Nat'l Union Fire Ins.
Co., 450 N.J. Super. 400, 406-07 (App. Div. 2017).
Where a provision in an insurance policy "is subject to more
than one reasonable interpretation, it is ambiguous[.]" Templo
Fuente, supra, 224 N.J. at 200. It is "[o]nly where there is a
genuine ambiguity" that a court should "read the policy in favor
of the insured." Ibid. A genuine ambiguity exists if "the
phrasing of the policy is so confusing that the average policy
holder cannot make out boundaries of coverage." Ibid.
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Applying these principles, we discern no basis to reverse the
court's determination that the policy does not provide coverage
for plaintiff's property damages. It is undisputed the damages
were caused by a sewerage backup, and the policy includes a clear
exclusion for such damages. In pertinent part, the General
Exclusions provision states:
A. We do not insure for loss caused directly
or indirectly by any of the following.
. . . .
3. Water Damage
Water Damage means:
. . . .
b. Water or water-borne material which
backs up through sewers or drains or
which overflows or is discharged from a
sump, sump pump or related equipment . .
. .
There is no ambiguity in this provision. It expressly
excludes from coverage the precise damages for which plaintiff
seeks coverage under the policy: water damage caused by a backup
through a sewer line. Indeed, plaintiff does not allege this
clear and unequivocal language otherwise excludes from coverage
the property damage it sustained. Instead, plaintiff contends
there are other provisions in the policy that create an ambiguity
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about coverage, and that the ambiguities should be resolved in its
favor as the insured.
More particularly, plaintiff relies on a policy provision
entitled "Perils Insured Against," which in pertinent part
identifies the physical losses covered by the policy. The Perils
Insured Against provision broadly states there is coverage
"against risk of direct physical loss to property described in
Coverages A and B." Coverage A is the coverage applicable here
because it is for the dwelling on plaintiff's property where the
sewerage backup occurred.1
The Perils Insured Against provision, however, has certain
exclusions. In the first instance, the provision states that the
policy does not provide coverage "for loss . . . [e]xcluded under
General Exclusions." Thus, the Perils Insured Against provision
plainly states that coverage is not provided for losses excluded
under the General Exclusions. Again, plaintiff does not dispute
that the General Exclusion provision unambiguously excludes
property damage caused by sewerage backups from coverage under the
policy.
1
Coverage B, which applies to other structures on the property,
is not pertinent here because plaintiff seeks coverage only for
damage to the dwelling, which is expressly covered under Coverage
A.
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Subsection (c) of the Perils Insured Against provision
excludes from coverage losses resulting from eight separately
delineated causes. Paragraph c.(8) excludes from coverage losses
caused by "[a]ny of the following":
(a) Wear and tear, marring, deterioration;
(b) Mechanical breakdown, latent defect,
inherent vice, or any quality in property that
causes it to damage or destroy itself;
(c) Smog, rust or other corrosion, mold, wet
or dry rot;
(d) Smoke from agricultural smudging or
industrial operations;
(e) Discharge, dispersal, seepage, migration
release or escape of pollutants unless the
discharge, dispersal, seepage, migration,
release or escape is itself caused by a Peril
Insured Against named under Coverage C.2
. . . .
(f) Settling, shrinking, bulging or expansion,
including resultant cracking, of bulkheads,
pavements, patios, footings, foundations,
walls, floors, roofs or ceilings; or
(g) Birds, vermin, rodents, insects or
domestic animals.
2
In general terms, the Coverage C provision of the policy provides
coverage for "personal property, usual to the occupancy as a
dwelling." Plaintiff here sought coverage for property damage
under Coverage A. Subsection c.(8)(e) also includes a definition
of pollutants that is not applicable to plaintiff's coverage claim.
6 A-5210-15T2
The undisputed facts establish, and plaintiff does not
dispute, that the sewerage backup that caused plaintiff's claimed
property damages was not the result of any of the conditions or
occurrences identified in subsection c.(8). A sewerage backup is
not one of the causes of loss in subsection c.(8). Moreover,
defendant did not deny coverage because plaintiff's losses were
caused by any of the conditions or occurrences listed in subsection
c.(8). Thus, under the plain language of the policy, the subsection
c.(8) exclusions have no application to plaintiff's claimed loss
and do not support plaintiff's claimed entitlement to coverage.
Ignoring the inapplicability of subsection c.(8) to its
coverage claim, plaintiff argues the policy is ambiguous because
it contains an "Exception To c.(8)" provision which, according to
plaintiff, suggests that damages caused by sewerage backups are
covered. We are not persuaded.
The Exception To c.(8) provision does not create an ambiguity
concerning the coverage for plaintiff's claimed loss because it
details only exceptions to the exclusions from coverage in
subsection c.(8) of the policy. The Exception To c.(8) provision,
however, is inapplicable here because plaintiff's losses were not
caused by any of the conditions or occurrences in subsection c.(8).
Plaintiff cannot conjure up coverage or an ambiguity in the policy
by relying on an exception to defined exclusions that are
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inapplicable to the cause of plaintiff's loss and were not relied
upon by defendant to deny coverage. See Stafford v. T.H.E. Ins.
Co., 309 N.J. Super. 97, 105 (App. Div. 1998) (finding far-fetched
interpretations of a policy are insufficient to create an ambiguity
requiring coverage). Plaintiff was not entitled to coverage under
the plain language of the General Exclusions and the Perils Insured
Against provision's unambiguous reiteration that coverage is not
provided for losses excluded under the General Exclusions.
Plaintiff was not denied coverage under subsection c.(8), and
therefore the exceptions to the subsection c.(8) exclusions
detailed in the Exception To c.(8) provision are inapplicable and
do not create an ambiguity concerning coverage.
Moreover, even if the Exception To c.(8) provision applied,
its plain language requires rejection of plaintiff's coverage
claim for two reasons. First, the provision unambiguously states
that it does not provide coverage where "the loss is otherwise
excluded."3 Again, losses caused by sewerage backups are otherwise
excluded by the General Exclusions and again in the Perils Insured
Against provision. Second, the Exception To c.(8) provision
provides coverage, as an exception to the exclusions in subsection
c.(8), for "an accidental discharge or overflow of water . . .
3
The Exception To c.(8) provision states that it does not extend
coverage to losses excluded under the General Exclusions.
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from within . . . a sewer pipe off" of plaintiff's property.
Here, there is no claim that plaintiff's losses were caused by
discharge from within a sewer pipe off of plaintiff's property.
To the contrary, the undisputed facts show plaintiff's losses
resulted from a discharge of water from a sewer pipe that was
within plaintiff's apartment.
In sum, we are convinced the policy is not "so confusing that
the average policyholder cannot make out the boundaries of
coverage," and therefore reject plaintiff's assertion there was a
genuine ambiguity in the policy that should be resolved in favor
of finding coverage. Weedo v. Stone-E-Brick, Inc., 81 N.J. 233,
247 (1979). The motion court correctly determined that losses due
to sewerage backups, like the losses sustained by plaintiff, are
excluded from coverage under the plain language of the General
Exclusions and the Perils Insured Against provision.
Affirmed.
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