ROB K. CONSTRUCTION & COMPANY VS. RUTGERS CASUALTY Â INSURANCE COMPANY(L-5506-12, HUDSON 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NOT FOR PUBLICATION WITHOUT THE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-2833-14T4
ROB K. CONSTRUCTION
& COMPANY,
Plaintiff-Appellant,
v.
RUTGERS CASUALTY INSURANCE
COMPANY, and AMERICAN
EUROPEAN INSURANCE GROUP, INC.,
Defendants-Respondents,
and
MERCHANTS INSURANCE GROUP,
RUTGERS ENHANCED INSURANCE
COMPANY, and UNITED INTERNATIONAL
INSURANCE COMPANY,
Defendants.
________________________________________________________________
Argued January 10, 2017 – Decided June 27, 2017
Before Judges Reisner and Rothstadt.
On appeal from the Superior Court of New
Jersey, Law Division, Hudson County, Docket
No. L-5506-12.
Louis J. Santore argued the cause for
appellant.
Robert M. Brigantic argued the cause for
respondents (Lebowitz, Oleske, Connahan &
Kassar, LLC, attorneys; Mr. Brigantic, on the
brief).
PER CURIAM
Plaintiff Rob K. Construction & Co., a general contractor,
appeals from a trial judge's involuntary dismissal of its complaint
at the end of plaintiff's case, R. 4:37-2(b). Plaintiff's
complaint alleged that defendant American European Insurance Group
(AEIG), through its related entity defendant Rutgers Casualty
Insurance Company (Rutgers), wrongfully denied coverage for a
claim made by an employee of one of plaintiff's subcontractors.
The claim arose when the employee was injured at a job site
that was under plaintiff's supervision. Plaintiff alleged the
claim was covered by the commercial general liability policy
defendants issued to plaintiff. The trial judge, relying upon the
policy's express language and representations made by plaintiff
in its application for insurance, determined that defendants
properly denied coverage. On appeal, plaintiff argues that the
judge ignored plaintiff's reasonable expectation of coverage, as
established by the evidence presented to the jury, and failed to
strictly construe the policy's exclusion of coverage for injuries
to contractors and employees of contractors. We disagree and
affirm.
2 A-2833-14T4
The facts adduced at trial by plaintiff are summarized as
follows. Plaintiff was formed in 2004 by its principal, Robert
Krakowiak,1 an assistant portfolio manager at a financial
institution, to perform maintenance on portfolio properties held
by a coworker. During the ensuing years, the nature of plaintiff's
business expanded to include home renovations and, ultimately, new
construction. Beginning in 2008, plaintiff started to build homes
in New York "worth more than $500,000." Plaintiff served as the
general contractor for these new construction projects, working
with clients to develop the architectural plan and hiring
subcontractors to perform the work.
Plaintiff applied for general liability insurance in early
2006 and represented to its agent and defendants that plaintiff
had one employee, did not hire subcontractors, and only performed
remodeling work as compared to structural work. Krakowiak
understood that this information impacted the type of coverage
plaintiff required. Based on that information, Rutgers issued a
general liability policy to plaintiff. The premium for the policy
at the time of the subject claim was $1,352.00. According to a
representative from AEIG, had plaintiff purchased insurance
1
Krakowiak holds a bachelor's degree in biochemistry from
Syracuse University, but was exposed to the construction trade by
his father who was builder.
3 A-2833-14T4
coverage for general contractors the premium would be "at least
tenfold" more expensive.
Plaintiff renewed the policy from year to year without ever
informing defendants of any change in plaintiff's operations. For
example, on March 4, 2009, plaintiff submitted a policy holder
report to defendants that stated plaintiff was engaged in interior
remodeling, with annual sales of $30,000, which Krakowiak
acknowledged was "a grossly under-estimated statement of . . . net
sales."
The policy that defendants issued each year contained an
exclusion entitled "Exclusion of Injury to Employees, Contractors
and Employees of Contractors." The exclusion provided:
This insurance does not apply to:
. . . .
II. "bodily injury" to any contractor or any
"employee" of any contractor arising out of
or in the course of the rendering or
performing services of any kind or nature
whatsoever by such contractor or "employee"
of such contractor for which any insured may
become liable in any capacity[.]
Krakowiak testified at trial that he understood a claim made
by an injured employee of a subcontractor would be excluded from
coverage, although he admitted that he did not read the policy
"carefully enough."
4 A-2833-14T4
The underlying claim occurred in June 2011, when an employee
of plaintiff's plumbing sub-contractor was allegedly injured at
one of plaintiff's job sites. The injured worker sued plaintiff
in New York. Plaintiff gave notice of the claim to defendants,
who denied coverage, citing, among other bases, the exclusion for
employees of contractors cited above. Defendants' denial of
coverage resulted in plaintiff filing the complaint in this matter.
Plaintiff's complaint was tried before a jury and presided
over by Judge Francis B. Schultz. At the end of the plaintiff's
case, defendants moved for dismissal. Plaintiff opposed the
motion, arguing that the evidence established that it had a
reasonable expectation of coverage.
Judge Schultz granted the motion and placed his reasons on
the record. The judge began by setting forth the standard for
determining a motion to dismiss pursuant to Rule 4:37-2(b),
including the requirement that all favorable inferences be
afforded to the nonmoving party. The judge rejected plaintiff's
contention that it had a reasonable expectation of coverage, as
Krakowiak did not read the policy, nor offer any proof that
"anything in the policy caused him to believe he had coverage for
bodily injury claims made by [a subcontractor's] employees at the
work site," or that defendants had led him to believe as much.
The judge also pointed out that plaintiff never advised defendants
5 A-2833-14T4
that it was operating a business that included the participation
of subcontractors and their employees. Rather, the application
supported the conclusion that Krakowiak "was [running] a one man
operation." The judge stated:
Had the plaintiff submitted an application,
indicating that [it] had some contractors
that[, it] was doing structural work, that
[it] had gross sales of between 500,000 and a
million, if each house sold for half a
million[,] and [it] did one or two a year[;]
had [plaintiff] put in there that [it] had
gross sales of half a million to a million
that [it] was using subcontractors, then the
plaintiff could maintain an argument to the
effect of well, I told the insurance company.
I told the [broker], . . . who forwarded it
on to the insurance company, that I was
building houses for half a million dollars.
That I had other people on the job site.
And[,] therefore, I was entitled to reasonably
expect that the policy would cover me for
that. But [it] doesn't. Plaintiff does not
contend that any applications were given other
than the ones I just read. [Plaintiff]
doesn't say that[,] wait a minute, I sent
something to the insurance company telling
them what kind of work I was actually doing.
No.
So based on the applications that the
plaintiff sent in where [it] denied having any
subcontractors[ and stated its] gross sales
were $30,000[, t]here's nothing inconsistent.
There's nothing even in the application that
would entitle the plaintiff to say [its]
reasonable expectations were not fulfilled by
the exclusion. The exclusion was consistent
with [its] own application. I should also
point out that the independent producer . . .
knew that Rutgers would not cover the
6 A-2833-14T4
plaintiff if he had workers on the job site[,]
and they wouldn't have placed it with Rutgers.
Judge Schultz also noted that the premium plaintiff paid was
for a "bare bones" policy that was consistent with plaintiff's
application, so that it too could not have given rise to any
"reasonable expectation" of coverage for the claim.
The judge concluded by stating:
Looking at that exclusion, I can say that
every single word in the exclusion is and can
be understood by anyone picking up this
document and being able to read it. Simply
put, there was no coverage for injuries
sustained by a worker on the job site.
. . . .
[Therefore], there is nothing to go to a jury.
So the plaintiff's case is dismissed in its
entirety.
On appeal, plaintiff contends that the judge misapplied the
standard for consideration of a motion filed pursuant to Rule
4:37-2(b) and that he failed to strictly construe the disputed
exclusion against defendants.2
In our review of a trial judge's grant of a motion for an
involuntary dismissal at the end of plaintiff's case, R. 4:37-
2(b), we apply the same standard as the trial court. ADS Assocs.
2
Plaintiff also argues it was entitled to a jury trial to
resolve its dispute. We are somewhat bewildered by this argument
since the matter was indeed brought before a jury for trial. For
this reason, we do not consider plaintiff's argument.
7 A-2833-14T4
Grp. v. Oritani Sav. Bank, 219 N.J. 496, 511 (2014). A motion for
involuntary dismissal is premised "on the ground that upon the
facts and upon the law the [non-moving party] has shown no right
to relief." R. 4:37-2(b). The motion shall be denied if "'the
evidence, together with the legitimate inferences therefrom, could
sustain a judgment in favor' of the party opposing the motion."
Dolson v. Anastasia, 55 N.J. 2, 5 (1969) (quoting R. 4:37-2(b)).
If a court, "'accepting as true all the evidence which supports
the position of the party defending against the motion and
according him the benefit of all inferences which can reasonably
and legitimately be deduced therefrom,' finds that 'reasonable
minds could differ,' then 'the motion must be denied.'" ADS
Assocs. Grp., supra, 219 N.J. at 510-11 (quoting Verdicchio v.
Ricca, 179 N.J. 1, 30 (2004)). Under this standard, we "must
examine the evidence, together with legitimate inferences which
can be drawn therefrom, and determine whether the evidence could
have sustained a judgment in favor of the party who opposed the
motion." Craggan v. IKEA USA, 332 N.J. Super. 53, 61 (App. Div.
2000) (quoting Tannock v. N.J. Bell Tel., 223 N.J. Super. 1, 6
(App. Div. 1988)).
Applying this standard, we find plaintiff's arguments to be
without sufficient merit to warrant discussion in a written
opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the
8 A-2833-14T4
reasons expressed by Judge Schultz in his oral decision, as we
agree that even applying the liberal principles favoring the
insured that guide our review of coverage interpretation disputes,
see Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt., 210 N.J.
597, 605 (2012) (providing "coverage 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"), plaintiff offered no evidence that the policy's
exclusion was contrary to its reasonable expectations. In any
event, there was no need to interpret the clear language of the
exclusion. See Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010)
(quoting Princeton Ins. Co. v. Chunmuang, 151 N.J. 80, 95 (1997))
(stating "[e]xclusionary clauses are presumptively valid and are
enforced if they are 'specific, plain, clear, prominent, and not
contrary to public policy'").
Affirmed.
9 A-2833-14T4