ROBERT CUSAMANO VS. NEW JERSEY INSURANCE UNDERWRITING ASSOCIATION (DC-005153-18, ATLANTIC COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-1704-18T2

ROBERT CUSAMANO
and JULIE MARZANO,

Plaintiffs-Respondents,

v.

NEW JERSEY INSURANCE
UNDERWRITING ASSOCIATION,

Defendant-Appellant.
______________________________

Submitted February 13, 2020 – Decided March 3, 2020

Before Judges Suter and DeAlmeida.

On appeal from the Superior Court of New Jersey, Law
Division, Atlantic County, Docket No. DC-005153-18.

Gennet Kallmann Antin Sweetman & Nichols, PC,
attorneys for appellant (Richard S. Nichols, on the
brief).

Singley, Gindele & Rinaldi, LLC, attorneys for
respondents (Brian J. James, on the brief).

PER CURIAM
 The New Jersey Insurance Underwriting Association 1 (defendant) appeals

following a judgment entered on December 15, 2018, against it in favor of

plaintiffs, Robert Cusamano and Julie Marzano. We reverse that judgment and

the orders dated September 25, 2018 and December 8, 2018, denying defendant's

motion for summary judgment and granting plaintiffs' summary judgment

motion. The trial court erred by determining plaintiffs' property damage claim

for water damage from a leaking pipe was covered by the named perils insurance

policy issued by defendant. This policy, which covered specifically named

perils, did not provide coverage.

I.

Plaintiffs used the first floor of their duplex in Ventnor for a summer

vacation home and rented out the upper floor. In July 2017, plaintiffs discovered

water dripping out of the kitchen cabinets and covering the floor, and the kitchen

ceiling had a bubble in it and was moist. A plumber determined the leak was

coming from a "rotted connection" in the drain line from the tub in the apartment

above.

1
Defendant is an association created by statute consisting of all insurers
authorized in New Jersey to write property insurance on a direct basis and
provides insurance to insureds who cannot obtain "essential property insurance"
in the normal insurance market. See N.J.S.A. 17: 37A-3, -8(a).
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 Plaintiffs' duplex was insured under a property insurance policy issued by

defendant. On September 11, 2017, defendant denied coverage, advising

plaintiffs that "[w]ater is not one of the named perils under this policy."

Plaintiffs filed a complaint against defendant claiming water damage was

covered by the policy and defendant breached the policy by declining coverage.

The complaint alleged defendant acted in bad faith by denying the claim and

requested an award of compensatory and punitive damages. Defendant's answer

denied the policy covered these types of damages.

Defendant's motion for summary judgment was denied on September 25,

2018. In its memorandum of decision, the trial court noted the policy exclusions

did not list "damages caused by water leaking from pipes." The trial court found,

based on this ambiguity in the exclusions, plaintiffs had a "reasonable

expectation that they were covered for such damages under a homeowner's

insurance policy. The reasonable expectation was created by [d]efendant's

failure to list water damage from leaking pipes in the exclusions section of the

policy."

Plaintiffs' subsequent motion for summary judgment was granted on

December 8, 2018. That order provided defendant "owes [p]laintiffs coverage

for the damage suffered at their home as a result of a water leak[.]" Having

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determined the policy covered plaintiffs' claim, the trial court conducted a bench

trial on the issue of damages only, entering a judgment for $9061.97 plus costs

against defendant in favor of plaintiffs.

On appeal, defendant contends the trial court erred by not considering the

limited coverage provided by this policy. It argues because there was no

ambiguity about the coverage, the trial court did not need to consider the

reasonable expectations of the policyholder. Defendant asserts the trial court

erred by considering the policy exclusions because they did not create coverage. 2

II.

We review a trial court's orders granting or denying summary judgment

under the same standard employed by the motion judge. Globe Motor Co. v.

Igdalev, 225 N.J. 469, 479 (2016). The question is whether the evidence, when

viewed in a light most favorable to the non-moving party, raises genuinely

disputed issues of fact sufficient to warrant resolution by the trier of fact, or

whether the evidence is so one-sided that one party must prevail as a matter of

law. Templo Fuente De Vida Corp. v. Nat'l Union Fire Ins. Co., 224 N.J. 189,

199 (2016); see also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540

2
Defendant also argued the trial court erred by calculating actual cash value
damages. In light of our decision, we have no need to address this issue.
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(1995). Our review is plenary. Bhagat v. Bhagat, 217 N.J. 22, 38 (2014)

(providing that an appellate court reviews a summary judgment order applying

the same standard as the motion judge). Our review of a trial court's legal

interpretations, including the interpretation of a contract, is de novo. Town of

Kearny v. Brandt, 214 N.J. 76, 92 (2013). The interpretation of an insurance

contract is a question of law, the review of which we undertake de novo.

Polarome Int'l, Inc. v. Greenwich Ins. Co., 404 N.J. Super. 241, 260 (App. Div.

2008).

We consider this insurance policy in the context of well-established

principles. Insurance policies are considered "contracts of adhesion," and as

such, are "construed liberally in [the insured's] favor" to provide coverage "to

the full extent that any fair interpretation will allow." Longobardi v. Chubb Ins.

Co. of N.J., 121 N.J. 530, 537 (1990) (alteration in original) (quoting Kievit v.

Loyal Protective Ins. Co., 34 N.J. 475, 482 (1961)). "If the policy terms are

clear, courts should interpret the policy as written and avoid writing a better

insurance policy than the one purchased." President v. Jenkins, 180 N.J. 550,

562 (2004). "A 'genuine ambiguity' arises only 'where the phrasing of the policy

is so confusing that the average policyholder cannot make out the boundaries of

coverage.'" Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 274 (2001)

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(quoting Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979)). If there is an

ambiguity in the insurance contract, we "interpret the contract to comport with

the reasonable expectations of the insured, even if a close reading of the written

text reveals a contrary meaning." Zacarias v. Allstate Ins. Co., 168 N.J. 590,

595 (2001).

The policy of insurance issued to plaintiffs by defendant was a "named

perils" policy, meaning that it "provided for loss caused by particular perils

included in the policy." George J. Kenny & Frank A. Lattal, New Jersey

Insurance Law § 20-2 at 697 (2019 ed.). The party asserting coverage has the

burden to prove the damages were caused by one of the perils named in the

policy. See 1–1 Appleman on Insurance Law & Practice § 1.11 (2d ed. 2011).

The specific perils covered by this policy were listed in the "Perils Insured

Against" section. This section provides that "[u]nless the loss is excluded in

[the exclusions section]," defendant "insure[s] for direct physical loss to the

property covered caused by[]," and then listed specific perils, which included

fire or lightning; internal explosion; windstorm or hail; explosion; riot or civil

commotion; aircraft; vehicles; smoke; volcanic eruption; vandalism or malicious

mischief. The policy did not list water damage from leaking pipes as a covered

peril. The only mention of water in this section was the "breakage of water

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pipes" by explosion. It was not disputed the water leak that damaged plaintiffs'

property came from a deteriorated pipe in the kitchen ceiling; no explosion was

involved. Therefore, the peril that plaintiffs alleged caused the damages was

not a "peril insured against" under the policy.

Plaintiffs argue the trial court was correct to find the policy was

ambiguous based on the "General Exclusions" section of the policy. That

section provided:

GENERAL EXCLUSIONS

A. We do not insure for loss caused directly or
indirectly by any of the following. Such loss is
excluded regardless of any other cause or event
contributing concurrently or in any sequence to the
loss.

....

3. Water Damage, meaning:

a. flood, surface water, waves, tidal water, overflow of
a body of water or spray from any of these, whether or
not driven by wind[;]

b. water which backs up through sewers or drains or
which overflows from a sump; or

c. water below the surface of the ground, including
water which exerts pressure on or seeps or leaks
through a building, sidewalk, driveway, foundation,
swimming pool or other structure.

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The trial court concluded that a "reasonable expectation" was created under the

policy by not listing "water damage from leaking pipes in the exclusions section

of the policy." Plaintiffs contend on appeal that when the "policy . . . carve[s]

out narrowly defined definitions of excluded losses, it blurs the boundaries of

where coverage begin or ends." We disagree.

An exclusion "is a limitation or restriction on the insuring clause."

Weedo, 81 N.J. at 247 (quoting Haugan v. Home Indem. Co., 197 N.W.2d 18,

22 (S.D. 1972)). It "does not extend or grant coverage." Ibid. It is an exclusion

from coverage. As the Court stated in Weedo, "the basic principle [is] that

exclusion clauses subtract from coverage rather than grant it." Ibid.

In this case, the covered perils defined the outer bounds of coverage. The

exclusions pertain only to what is covered. Ibid. They are limitations on

coverage. Ibid. The "perils insured against" section of the policy did not include

water damage. "If the policy terms are clear, [we must] interpret the policy as

written and avoid writing a better insurance policy than the one purchased."

Hardy v. Abdul-Matin, 198 N.J. 95, 101-02 (2009) (quoting Jenkins, 180 N.J. at

562). Because water damage was not a covered peril, there was no reason to

consider the policy's exclusions.

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 The December 15, 2018 judgment is reversed. The September 25, 2018

order denying defendant's motion for summary judgment is reversed. The

December 8, 2018 order granting plaintiffs' summary judgment is reversed.

Plaintiffs' complaint is dismissed.

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