FOUZIA SALIH VS. OHIO SECURITY INSURANCE CO. (L-3038-16, PASSAIC 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NOT FOR PUBLICATION WITHOUT THE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-1179-17T1

FOUZIA SALIH,

Plaintiff-Appellant,

v.

OHIO SECURITY INSURANCE
COMPANY,

Defendant-Respondent.
_________________________________

Submitted October 22, 2018 – Decided December 3, 2018

Before Judges Fasciale and Gooden Brown.

On appeal from Superior Court of New Jersey, Law
Division, Passaic County, Docket No. L-3038-16.

Gallant, Bergstralh & Hadgis, PC, attorneys for
appellant (David S. Bergstralh, on the brief).

Methfessel & Werbel, attorneys for respondent (Marc
L. Dembling and Stephen R. Katzman, of counsel and
on the brief).

PER CURIAM
 In this insurance coverage dispute, plaintiff Fouzia Salih appeals from the

October 19, 2017 Law Division order granting summary judgment to defendant

Ohio Security Insurance Company (Ohio Security), and dismissing her

complaint with prejudice. We affirm.

We confine our review to the motion record before the Law Division

judge, Ji v. Palmer, 333 N.J. Super. 451, 463-64 (App. Div. 2000), viewing the

evidence in the light most favorable to plaintiff. Angland v. Mountain Creek

Resort, Inc., 213 N.J. 573, 577 (2013) (citing Brill v. Guardian Life Ins. Co.,

142 N.J. 520, 523 (1995)).

Plaintiff owned property on Main Street in Paterson, which she leased to

Jehad Daher, who operated a restaurant on the property. On October 12, 2015,

Daher contacted plaintiff's son, Massy Salih, and informed him that there was

water and an odor at the restaurant. When Massy1 arrived, he immediately

noticed water and a very foul odor that prevented him from entering the property

any further. Massy contacted Anytime Plumbing, which inspected the property

and informed him that there was a clog in the restaurant's toilet, which resulted

in dirty water, including human feces, overflowing out of the toilet, and into the

1
We refer to the Salihs by their first names to avoid any confusion caused by
their common surname. We intend no disrespect.
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restaurant. The water caused heavy damage to the property's tiles, basement,

first-floor bathroom, and kitchen, and destroyed the water heater and furnace.

The damage rendered the property inoperable, and Daher stopped paying

rent. In order to restore the property, Massy hired Sure Kleen Restoration to

remove the damaged tiles and dry wall, and to clean and sanitize the premises.

Plaintiff also hired Metro Public Adjustment (Metro). Metro's representative,

Chris Powers, determined that plaintiff's loss was caused by a discharge of water

that resulted in $162,933.63 in total damages to the property.

Plaintiff filed a claim with her insurance provider, defendant Ohio

Security. After an initial investigation and inspection by its insurance adjuster,

defendant determined that the "cause of loss" was "from a back[-]up of raw

sewage and not an overflow." As a result, in a letter dated February 5, 2016,

defendant denied coverage for losses in excess of its $25,000 policy sublimit.

In making its decision, defendant relied on its policy provisions and information

gathered from Sure Kleen Restoration, confirming that the loss was from a sewer

back-up, as well as the plumber, who "used a snake to clear the sewer line to

remedy the issue."

According to defendant, although under the "Water Exclusion

Endorsement," the insurance policy generally excluded water damage from

A-1179-17T1
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"[w]ater that backs up or overflows or is otherwise discharged from a sewer,

drain, sump, sump pump or related equipment," there was limited coverage

extended under the "Custom Protector Plus Endorsement" (custom

endorsement). Under the custom endorsement, the "Water Exclusion

Endorsement" was "deleted and replaced," and coverage was extended for

"direct physical loss or damage caused by water . . . [w]hich backs up into a

building or structure through sewers or drains which are directly connected to a

sanitary sewer or septic system."

However, coverage under the custom endorsement was limited to a

maximum of $25,000 and

[c]overage for loss of [b]usiness [i]ncome or [e]xtra
[e]xpense, whether provided by this endorsement or
elsewhere, [did] not apply if a loss [was] covered only
as a result of this endorsement.

If coverage [was] provided elsewhere in [the] policy for
the same loss or damage as the coverage provided under
this endorsement, the coverage under this endorsement
[would] apply excess over that other coverage unless
otherwise stated.

Based on these policy provisions, defendant issued checks to Sure Kleen

Restoration for $16,652.76, and plaintiff for $8347.24, for a combined total of

$25,000.

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 Because plaintiff's expenses to maintain and restore the property exceeded

$25,000, on June 6, 2016, plaintiff filed a complaint, alleging defendant

"breached its contractual obligations to pay benefits to [p]laintiff for a loss

covered under [d]efendant's policy of insurance." Relying on the custom

endorsement, defendant moved for summary judgment. Plaintiff opposed the

motion, relying on the business income provision of the insurance policy, which

states that

[defendant] will pay for the actual loss of [b]usiness
[i]ncome [plaintiff] sustain[s] due to the necessary
"suspension" of [plaintiff's] "operations" during the
"period of restoration[.]" The "suspension" must be
caused by direct physical loss of or damage to property
. . . . The loss or damage must be caused by or result
from a [c]overed [c]ause of [l]oss.

Although the "Causes of Loss-Special Form" (cause of loss form)

excluded from coverage "[w]ater that backs up or overflows from a sewer, drain,

or sump," the cause of loss form extended coverage for water damage, defined

as an "accidental discharge or leakage of water . . . as the direct result of the

breaking apart or cracking of a plumbing, heating, air conditioning, or other

system or appliance . . . that is located on the described premises and contains

water or steam." According to plaintiff, because the damage resulted from an

"accidental discharge" of water from a blockage in the plumbing system within

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the property, rather than a sewer back-up originating outside of the property, the

$25,000 sublimit in the custom endorsement did not apply, and plaintiff was

entitled to recoup lost business income.

Following oral argument, in an October 19, 2017 written opinion, the

motion judge granted summary judgment to defendant. The judge determined

that the custom endorsement limitation controlled and rejected plaintiff's

reliance on "multiple cases from other jurisdictions to support" her position "that

'water must back-up through a sewer/drain/sump off the insured premises for the

limitation relied upon by the defense to apply.'" Finding no genuine issue as to

any material fact, the judge acknowledged that an insurance policy is a contract

to be enforced as written, and that policy exclusions are ordinarily strictly

construed against the insurer.

However, relying on Oxford Realty Grp. Cedar v. Travelers Excess &

Surplus Lines Co., 229 N.J. 196 (2017), the judge explained:

[T]he parties here have presented the court with two
different interpretation[s] of the subject "all-risk"
policy. Defendant asserts that the policy is
unambiguous and restricts [p]laintiff to a maximum
sublimit in the amount [of] $25,000. . . . [P]laintiff
asserts that [she] is also entitled to compensation for
lost [b]usiness [i]ncome that resulted from the
"accidental discharge of water from a toilet. . . ."

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 Similar to the Oxford policy, . . . [d]efendant's
all-risk policy originally disclaimed coverage of all
damage that resulted from "water that backs up or
overflows from sewer, drain, or sump." . . . This
exclusion was also stated in the [w]ater [e]xclusion
[e]ndorsement, which specifically excluded coverage
for "water that backs up or overflows or is otherwise
discharged from a sewer, drain or sump, sump pump, or
related equipment." . . . This provision was then
deleted pursuant to the [custom endorsement].

....

Th[e] [custom endorsement] language . . . is
analogous to the [g]eneral [c]onditions clause of the
Oxford insurance [policy] discussed by the Supreme
Court of New Jersey. The [custom endorsement] put
[p]laintiff on notice that the [b]usiness [i]ncome will
not be covered if the loss coverage is only created as a
result of the endorsement, namely [b]ack-[u]p of
[s]ewers or [d]rains. Plaintiff may only seek coverage
for the "accidental discharge of water from the toilet"
under the [b]ack-[u]p of [s]ewer or [d]rains provision
in the policy because the policy would have prohibited
any coverage for the water damage. It is only the
additional coverage extensions for back[-]up of sewers
or drains that allows for coverage for discharge of water
from the toilet. In the [g]eneral [p]olicy, the Cause of
Loss-Special Form . . . clearly states that [d]efendant
"will not pay for loss or damage caused directly or
indirectly" . . . by "water that backs up or overflows
from a sewer, drain, or swamp . . . ."

Therefore [p]laintiff purchased and bargained for
coverage for water damage in the [custom
endorsement] which states the most we will pay [for]
loss [or] damage under this [c]overage [e]xtension is
$25,000.[]

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The judge entered a memorializing order and this appeal followed.

We review a grant of summary judgment applying the same standard used

by the trial court. Steinberg v. Sahara Sam's Oasis, LLC, 226 N.J. 344, 366

(2016). That standard is well-settled.

[I]f the evidence of record — the pleadings,
depositions, answers to interrogatories, and affidavits
— "together with all legitimate inferences therefrom
favoring the non-moving party, would require
submission of the issue to the trier of fact," then the trial
court must deny the motion. On the other hand, when
no genuine issue of material fact is at issue and the
moving party is entitled to a judgment as a matter of
law, summary judgment must be granted.

[Ibid. (quoting R. 4:46-2(c)).]

Thus, we must "first decide whether there was a genuine issue of material

fact, and if none exists, then decide whether the trial court's ruling on the law

was correct." Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010)

(citing Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167

(App. Div. 1998)). Here, we agree there are no factual disputes, and the issue

on appeal presents solely a question of law. "[T]he interpretation of an insurance

contract is a question of law which we decide independent of the trial court's

conclusions." Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 428 (App.

Div. 2004). We begin by reviewing some general principles.

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 According to New Jersey law, an "all-risk" policy like the policy at issue

in this case, covers all fortuitous losses that an insured peril proximately causes,

unless an exclusion applies. See Ariston Airline & Catering Supply Co., Inc. v.

Forbes, 211 N.J. Super. 472, 479 (Law Div. 1986). Nonetheless, an insurance

policy is "construed in accordance with principles that govern the interpretation

of contracts . . . [and] the parties' agreement 'will be enforced as written when

its terms are clear in order that the expectations of the parties will be fulfilled.'"

Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012) (quoting

Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010)).

To that end, "[i]n considering the meaning of an insurance policy, we

interpret the language 'according to its plain and ordinary meaning.'"

Flomerfelt, 202 N.J. at 441 (quoting Voorhees v. Preferred Mut. Ins. Co., 128

N.J. 165, 175 (1992)). However, "if the controlling language of a policy will

support two meanings, one favorable to the insurer and the other to the insured,

the interpretation favoring coverage should be applied." Cypress Point Condo.

Ass'n v. Adria Towers, LLC, 226 N.J. 403, 416 (2016) (quoting Butler v. Bonner

& Barnewell, Inc., 56 N.J. 567, 576 (1970)).

Further, "New Jersey courts often have construed ambiguous language in

insurance policies in favor of the insured and against the insurer." Doto v.

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Russo, 140 N.J. 544, 556 (1995). However, "in the absence of an ambiguity, a

court should not engage in a strained construction to support the imposition of

liability," Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530, 537 (1990), "or

write a better policy for the insured than the one purchased," Chubb Custom Ins.

Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238 (2008). Moreover, "our

courts will not manufacture an ambiguity where none exists." Oxford Realty

Grp. Cedar, 229 N.J. at 207.

In order to determine whether an ambiguity exists in an insurance policy,

the test is whether "'the phrasing of the policy is so confusing that the average

policyholder cannot make out the boundaries of coverage.'" Nunn v. Franklin

Mut. Ins. Co., 274 N.J. Super. 543, 548 (App. Div. 1994) (quoting Weedo v.

Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)). However, simply because

different wording could possibly make a provision clearer does not render the

language ambiguous. Argent v. Brady, 386 N.J. Super. 343, 352 (App. Div.

2006). Additionally, "[a]n 'insurance policy is not ambiguous merely because

two conflicting interpretations of it are suggested by the litigants.'" Oxford

Realty Grp. Cedar, 229 N.J. at 207 (quoting Fed. Ins. Co. v. Campbell Soup Co.,

381 N.J. Super. 190, 195 (App. Div. 2005)).

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 Applying these principles, we agree with the judge that defendant was

entitled to summary judgment as a matter of law. Plaintiff argues the judge erred

by relying on Oxford Realty to support her finding that the policy was not

ambiguous, and erred in accepting defendant's interpretation "on how the loss is

to be categorized." We disagree.

In Oxford Realty, plaintiff insured an apartment complex in Long Branch

with defendant Travelers Insurance. 229 N.J. at 200. After suffering severe

flood damage during Superstorm Sandy, plaintiff submitted a claim to Travelers

for debris removal coverage, in addition to $1,000,000 in flood damage. Id. at

203-04. When Travelers responded "that all damage caused by the flood was

subject to the $1,000,000 limitation for a flood occurrence" contained in the

flood endorsement, plaintiff sued for the debris removal coverage. Id. at 204.

After analyzing the policy's Property Coverage Form, Flood Endorsement,

Supplemental Coverage Declarations, and General Conditions, the Court

concluded "[t]he terms of the [p]olicy unambiguously place[d] a $1,000,000

total on recovery for all flood occurrence losses." Id. at 209. The Court held

that "the Flood Endorsement categorically denie[d] any flood damage coverage

in excess of $1,000,000," even "if more than one Limit of Insurance applie[d],"

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and that "the Flood Endorsement control[led] the extent of flood coverage and

. . . [was] not modified by the rest of the Policy's terms." Ibid.

The Court determined that because the Property Coverage Form, "list[ed]

'Exclusions' and specifically disavow[ed] any coverage for flood[s] under the

Property Coverage Form's terms," id. at 202, "[i]t [was] undisputed that, absent

the Flood Endorsement, the Policy would not cover any flood damage ." Id. at

209. Therefore, according to the Court, "the parties to this insurance contract

added a Flood Endorsement to the Policy to provide for flood occurrence

coverage," id. at 202, but the Supplemental Coverage Declaration capped

recovery for flood damage at $1,000,000. Id. at 203.

Here, like Oxford Realty, defendant's policy originally stated that

"[defendant] will not pay for loss or damage caused directly or indirectly" by

"water that backs up or overflows from a sewer, drain, or sump." The Water

Exclusion Endorsement also specifically excluded coverage for "[w]ater that

backs up or overflows or is otherwise discharged from a sewer, drain, sump,

sump pump, or related equipment.” However, this exclusionary language was

"deleted and replaced" by the custom endorsement, which added water damage

coverage for sewer backups, similar to how Traveler's Flood Endorsement added

coverage for floods in Oxford Realty. However, the custom endorsement also

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limited recovery to a maximum of $25,000, and excluded loss for business

income or extra expenses, analogous to the General Conditions clause in Oxford

Realty.

We are satisfied that the policy terms are clear, unambiguous, and support

defendant's interpretation. Like the judge, we reject plaintiff's attempt to create

ambiguity and to support an alternate interpretation of the policy provisions by

relying on "case law . . . from jurisdictions throughout the United States that

differentiate[] a 'sewer back-up' from an 'accidental discharge of water.'" As the

Court acknowledged in Oxford Realty, "the separate presentation of an

insurance policy's declarations sheet, definition section, and exclusion section

[does not] necessarily give rise to an ambiguity," id. at 207-08 (citing Zacarias

v. Allstate Ins. Co., 168 N.J. 590, 602-03 (2001)), and neither does the

suggestion of "'two conflicting interpretations . . . by the litigants.'" Id. at 207

(quoting Fed. Ins. Co., 381 N.J. Super. at 195).

Affirmed.

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