NOT FOR PUBLICATION WITHOUT THE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-1015-15T3
SELECTIVE INSURANCE
COMPANY OF AMERICA,
Plaintiff-Respondent,
v.
TRH BUILDERS, INC., JAMES
MEEHAN, KATHLEEN MEEHAN, and
J. RICHARD CARNALL,
Defendants,
and
ROBERT "BOB" MEYER and
BOB MEYER COMMUNITIES,
Defendant-Appellant.
_______________________________________________
Submitted February 16, 2017 – Decided September 11, 2017
Before Judges Hoffman, O'Connor and Whipple.
On appeal from Superior Court of New Jersey,
Law Division, Burlington County, Docket No.
L-2339-12.
The Killian Firm, PC, attorneys for
appellant (Ryan Milun and Eugene Killian,
Jr., on the brief).
Hill Wallack, LLP, attorneys for respondent
(Todd J. Leon, of counsel and on the brief;
Jonathan D. Pavlovcak, on the brief).
PER CURIAM
Defendant Bob Meyer Communities, Inc., (BMC) appeals from a
September 25, 2015 order denying its motion for reconsideration
of a December 9, 2013 order, which had denied its and granted
plaintiff Selective Insurance Company of America's motion for
summary judgment. We reverse and remand for further
proceedings.
I
In or about 2000, BMC was the general contractor for an
entity that built residential dwellings. BMC contracted with
various subcontractors to perform the necessary work, one of
which was defendant TRH Builders, Inc. (TRH). TRH framed and
installed doors and windows in the dwellings. At the time it
performed its work, TRH was insured under commercial general
liability (CGL) policies issued by plaintiff. One policy was in
effect from March 16, 2001 to March 16, 2002, and the other from
March 16, 2002 to August 29, 2002.
Well after the second policy expired, the homeowners of
five of the homes discovered some of the wood in the walls of
their homes was rotting. The homeowners eventually filed
complaints against BMC, which in turn filed complaints against
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TRH. In its complaints, BMC alleged the manner in which TRH
constructed the doors and windows of the subject homes permitted
water to infiltrate inside of the walls, causing the subject
damage. TRH failed to respond to any of BMC's complaints; BMC
eventually obtained default judgments against TRH, which the
court found partly responsible for the damage.
TRH, which went out of business in or about 2005, did not
satisfy those judgments. BMC requested plaintiff pay the
judgments in accordance with the policies plaintiff issued to
TRH, but plaintiff refused. Plaintiff then filed a complaint
seeking a declaratory judgment it did not have a duty to
indemnify or defend TRH for the complaint filed by one of the
homeowners. In response, BMC filed a counterclaim seeking a
declaratory judgment the subject policies provided coverage for
the damages caused by TRH's defective work, including those that
were the subject of the judgments entered against BMC.
After the close of discovery, both parties filed competing
motions for summary judgment. Among other things, plaintiff
argued there was no evidence either BMC or the homeowners were
actually damaged when either policy was in effect. Relying upon
one of its expert's reports, BMC countered there was conclusive
evidence damage to the property occurred during the policy
periods.
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Among other things, engineer Thomas R. Kulp, BMC's expert,
stated improper flashing around the doors and windows caused
water to infiltrate through the stucco and stone cladding on the
homes. He claimed water infiltrated as soon as the homes were
constructed, and became trapped inside the walls. Within four
to six weeks of infiltration, mold developed. In a
certification submitted in support of BMC's motion and in
opposition to plaintiff's motion for summary judgment, Kulp
noted all of the subject homes were completed well within the
period TRH's insurance policies with plaintiff were in effect.
Each policy provided, in pertinent part:
1.b. This insurance applies to . . .
"property" damage only if:
(1) The . . . "property damage" is
caused by an "occurrence" that
takes place in the "coverage
territory"; and
(2) The . . . "property damage"
occurs during the policy period.
The policies defined "occurrence" and "property damage" as
follows:
12. "Occurrence" means an accident,
including continuous or repeated exposure to
substantially the same general harmful
conditions . . . .
15. "Property damages" means:
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a. Physical injury to tangible
property, including all resulting
loss of use of that property. All
such loss of use shall be deemed
to occur at the time of the
physical injury that caused it; or
b. Loss of use of tangible
property that is not physically
injured. All such loss of use
shall be deemed to occur at the
time of the "occurrence" that
caused it.
When it granted plaintiff's and denied BMC's respective
summary judgment motions, the trial court framed the issue as
whether the infiltrated water caused actual damage when the
policies were in effect. The court recognized it was BMC's
position the damage occurred when mold formed four to eight
weeks after water infiltrated, and that such infiltration began
once each home was constructed.
However, the court concluded the law governing the subject
CGL policies did not mandate coverage "when the wrongful act
itself is committed[,] which [here] is the installation of the
windows[,]" but at "the time when the complaining party . . .
was actually damaged." The court acknowledged "[Kulp's report]
clearly identified and provided evidence that the mechanism for
the water intrusion was there," but then determined his report
failed to provide evidence of "any water intrusion, when it
occurred, or even if mold developed." Thus, because in its view
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no actual damage was sustained during either policy period, the
court held plaintiff did not have to provide coverage for the
subject damage, and granted plaintiff's and denied BMC's motion
for summary judgment.
BMC filed a motion for reconsideration, essentially
contending the court overlooked key evidence. The court
reconsidered the evidence, but again found there was no evidence
of any actual damage occurring during the subject policy
periods, and denied the motion. In addition, the court held
because the damage was discovered after both policies expired,
plaintiff did not have to provide coverage.
II
On appeal, BMC asserts the following for our consideration:
POINT I: THE TRIAL COURT INCORRECTLY HELD
THAT THE PROPERTY DAMAGE TO THE VARIOUS
LIBERTY PLACE RESIDENTS CAUSED BY THE FAULTY
WORKMANSHIP OF TRH DID NOT MANIFEST DURING
THE APPLICABLE POLICY PERIOD.
POINT II: THE TRIAL COURT FAILED TO CONSIDER
THE EXPERT REPORT PROVIDED BY BMC
INCORRECTLY HOLDING THAT IT WAS A "NET
OPINION."
POINT III: AT A MINIMUM THERE WAS AN ISSUE
OF FACT AS TO WHETHER THE PROPERTY DAMAGE
MANIFESTED DURING THE SELECTIVE POLICY
PERIOD AS BMC PRODUCED AN EXPERT REPORT ON
THIS ISSUE AND SELECTIVE HAD USED
CIRCUMSTANTIAL DATA RELATED TO THE DISCOVERY
OF DAMAGE BY THE VARIOUS HOMEOWNERS.
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POINT IV: NONE OF THE OTHER DEFENSES OR
EXCLUSIONS IN THE INSURANCE POLICY RAISED BY
SELECTIVE ARE APPLICABLE TO BAR COVERAGE AND
THEREFORE, CANNOT SUPPORT SUMMARY JUDGMENT.
POINT V: THE TRIAL COURT INCORRECTLY FAILED
TO CONSIDER OR APPLY THE CONTINUOUS TRIGGER
THEORY IN CONNECTION WITH THE TIME OF THE
OCCURRENCE; PARTICULARLY GIVEN THE RECENT
DECISION OF THE NEW JERSEY SUPREME COURT IN
POTOMAC.
POINT VI: BMC IS PROPERLY "STANDING IN THE
SHOES" OF TRH IN THIS LITIGATION, AS VARIOUS
JUDGMENTS HAVE BEEN ENTERED AGAINST TRH AND
BECAUSE TRH IS DEFUNCT AND NO LONGER IN
BUSINESS, BMC MAY PROPERLY SEEK A RECOVERY
DIRECTLY FROM TRH'S INSURANCE CARRIER,
SELECTIVE.
It is undisputed the subject policies are what are known as
"occurrence" policies. Such policies provide coverage for
"property damage" claims the insured becomes legally obligated
to pay if the property damage is caused by an occurrence that
takes place during the policy period. An "occurrence" is
defined in both policies as "an accident, including continuous
or repeated exposure to substantially the same general harmful
conditions." BMC maintains the damage occurred during either
one of the policy periods; plaintiff argues the damage did not
occur until the problems caused by the deficient workmanship
were discovered.
It is well established "the time of the occurrence of an
accident within the meaning of an indemnity policy is not the
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time the wrongful act was committed but the time when the
complaining party was actually damaged." Hartford Accident &
Indem. Co. v. Aetna Life & Cas. Ins. Co., 98 N.J. 18, 27 (1984)
(quoting Miller Fuel Oil Co. v. Ins. Co. of N. Am., 95 N.J.
Super. 564, 578 (App. Div. 1967)). In Hartford, the Court found
the defendant carrier had no duty to indemnify its insured
against a claim the insured had negligently failed to warn of
the dangers of a drug ingested by the minor plaintiff in the
underlying liability action, because there was no evidence the
plaintiff suffered any bodily injury during the policy period.
The Court held it is when damage has been sustained that
triggers coverage. Id. at 27-29.
As explained in the treatise Appleman on Insurance, a:
CGL policy will be triggered if the injury
is determined to have "actually" occurred
within the CGL policy period, irrespective
of when the injury first manifested itself
or when the third-party claimant was
initially exposed to the injurious
substance. The main issue is when the
injury actually occurred. The injury need
not be manifest, but the injury must exist
in fact. The insurers' obligations to
indemnify the insured arise when the real
injury occurs during the policy period.
[20 Eric M. Holmes, Appleman on Insurance
§ 129.2 at 204-05 (2d ed. 2002).]
Here, through its expert, BMC provided evidence the mold
and rot formed during the policy period. According to the
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expert, that mold and rot caused the damage to the wood about
which the homeowners later complained and formed the basis for
the actions they brought against BMC. The evidence provided in
the expert's report raised a genuine, material issue of fact
sufficient enough to defeat plaintiff's motion for summary
judgment, see R. 4:46-2(c), at least with respect to plaintiff's
claim the actual damage did not occur during the policy period.
Thus, the trial court erred when it failed to recognize on BMC's
motion for reconsideration it had overlooked the significance of
probative, competent evidence. See D'Atria v. D'Atria, 242 N.J.
Super. 392, 401 (Ch. Div. 1990).
Further, we do not agree the expert's opinion was net.
"The net opinion rule is a 'corollary of [N.J.R.E. 703] . . .
which forbids the admission into evidence of an expert's
conclusions that are not supported by factual evidence or other
data.'" Townsend v. Pierre, 221 N.J. 36, 53-54 (2015) (quoting
Polzo v. Cty. of Essex, 196 N.J. 569, 583 (2008)). "Simply put,
the net opinion rule 'requires an expert to give the why and
wherefore of his or her opinion, rather than a mere
conclusion.'" State v. Townsend, 186 N.J. 473, 494 (2006)
(quoting Rosenberg v. Tavorath, 352 N.J. Super. 385, 401 (App.
Div. 2002)). The witness's conclusions can be based on his
qualifications and personal experience, with or without citation
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to academic literature. Id. at 495. We are satisfied from our
review of the subject expert's report there was sufficient
evidence within that document to overcome the claim the opinion
was net.
Accordingly, we reverse the September 25, 2015 order
denying BMC's motion for reconsideration of the December 9, 2013
order, and vacate that portion of the December 9, 2013 order
that granted plaintiff summary judgment. For the reasons
provided, there is a question of fact whether actual damages
were sustained during the policy periods.
However, we do not vacate the provision in the December 9,
2013 order that denied BMC's motion for summary judgment,
because plaintiff raised arguments in support of its motion for
summary judgment that were not considered and decided by the
trial court. Accordingly, we remand this matter to the trial
court so that it may consider those remaining arguments.
Finally, we do not consider the arguments raised in Points
IV, V, and VI, because the trial court did not address such
arguments and, therefore, we decline to do so in the first
instance. See Ins. Co. of N. Am. v. Gov't Emps. Ins. Co., 162
N.J. Super. 528, 537 (App. Div. 1978).
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Reversed and remanded for further proceedings consistent
with this opinion. We do not retain jurisdiction.
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