Opinion
DOCKET NO. A-3525-11T1
07-18-2014
GERALD ROMANO and NANCY ROMANO, his wife, Plaintiffs-Appellants, v. METROPOLITAN PROPERTY & CASUALTY INSURANCE COMPANY, Defendant-Respondent, v. TRI-STATE BUILDING SPECIALTIES, INC., Defendant.
Mark F. Hughes, Jr., argued the cause for appellants. Karyn Dobroskey Rienzi argued the cause for respondent (Post & Schell, P.C., attorneys; Lee H. Eckell and Karyn Dobroskey Rienzi, on the briefs).
NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
Before Judges Reisner and Ostrer.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2456-10.
Mark F. Hughes, Jr., argued the cause for appellants.
Karyn Dobroskey Rienzi argued the cause for respondent (Post & Schell, P.C., attorneys; Lee H. Eckell and Karyn Dobroskey Rienzi, on the briefs). PER CURIAM
Plaintiffs Gerald and Nancy Romano appeal from an August 27, 2010, order dismissing for failure to state a claim various tort claims against their homeowner's insurer, defendant Metropolitan Property & Casualty Insurance Company (Met); and a February 6, 2012, order granting Met summary judgment dismissal of the remaining counts of the complaint. Having considered plaintiffs' arguments in light of the factual record and applicable law, we affirm.
I.
We discern the following facts from the record, affording plaintiffs all favorable inferences. Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995).
Plaintiffs had maintained homeowner's insurance from Met for several years before notifying the insurer of a claim on February 4, 2008. According to their complaint, plaintiffs noticed in late 2007 and January 2008, that the roof over their rear patio was sagging. As depicted in photographs taken in February 2008, the roof slanted slightly down, away from the house's rear wall, where it was attached just below three of the four rear second-floor windows. Nancy Romano stated that mold was visible on the outside siding and on the bottom of one of the window frames. Gerald Romano stated the roof over the rear patio was "mushy." He claimed that he notified Met of the roof's condition.
The insurer is identified on the declarations page of the policy as Metropolitan Group Property and Casualty Insurance Co.
Whether plaintiffs knew earlier than late 2007 that the roof was failing was disputed. According to Met's notes of the initial claim, Nancy Romano reported the claim; she stated she discovered two years earlier that the roof got "wet, stain[ed] and soft" and one year earlier she saw mold around her bedroom, back of siding, window and sheet rock[]." Nancy Romano denied making those statements, except that one could see mold on the outside siding under her bedroom window, and she saw mold on the bottom of the window frame.
Met retained Eagle Adjusting Services (Eagle) to inspect and adjust the claim. On February 10, 2008, Eagle's inspector, John Kennedy, found that the rear windows apparently were installed improperly and "the lower sashes [were] starting to rot." He stated, "The rear porch has a 1% slope and it was shingled. This has lead [sic] to the roof rotting from water that seeped under the shingles. This roof should be a solid membrane or rolled roof. There is a 2' tree growing in the roof." Photographs depicted a slender sapling, and large clumps of moss growing on the roof shingles. White vinyl slats, which served as a ceiling within the patio, bulged downward. Some of the slats had fallen or were removed during the inspection — the parties differed on the issue — revealing rotting wood under the roof. A crack ran the length of the concrete patio floor. The inspector recommended that Met deny the claim because of "repeated leak damage" and "poor construction."
Kennedy also reported that Nancy Romano said that water had been leaking through the rear wall of the master bedroom for a year, which she later denied saying. Gerald Romano later certified that he had the plastic slat ceiling installed in 1996, and it remained intact, so he could not see the underside of the porch roof. He stated he walked on the lower patio roof in January 2008, while cleaning the gutters and the roof felt "mushy," so he promptly reported the damage on February 2.
On February 19, 2008, Met rejected the claim, citing policy exclusions for losses resulting from wear and tear, defective design and construction, and water damage. The policy generally covered "sudden and accidental direct physical loss or damage to the property . . . ." That coverage expressly included losses involving collapse:
sudden and accidental direct physical loss to covered property involving collapse of a building or any part of a building caused only by one or more of the following:
. . .
B. hidden decay of the structure;
. . .
E. weight of ice, snow, sleet or rain which collects on a roof; or
F. use of defective material or methods in construction, remodeling or renovation if the collapse occurs during the course of the construction, remodeling, or renovation.
. . . .
Collapse does not include settling, cracking, shrinking, bulging or expansion.
[(Emphasis added).]
These coverage provisions were followed by exclusions, stating:
SECTION I - LOSSES WE DO NOT COVER
1. We do not cover loss or damage to the property . . . which results directly or indirectly from any of the following:
A. wear and tear; . . . inherent vice; deterioration; latent defect; rust; mold; aging; mechanical breakdown; wet or dry rot;2. We do not insure under any Section I coverage for any loss which would not have happened in the absence of one or more of the following excluded events. We do not insure for any such loss regardless of: (a)
. . .
D. settling, cracking, shrinking, bulging, or expansion of pavements, patios, foundations, supports, walls, floors, roofs, or ceilings.
. . . .
the cause of the excluded event; or (b) other causes of the loss; or (c) whether such causes acted at the same time or in any other sequence with the excluded event to produce or contribute to the loss. The excluded events referred to are:
A. Water damage, meaning:3. We do not insure under any coverage for any loss consisting of one or more of the items below. Further, we do not insure for any loss described in paragraphs 1. and 2. above regardless of whether one or more of the following: (a) directly or indirectly cause, contribute to or aggravate the loss; or (b) occur before, at the same time, or after the loss or any other cause of the loss:
1. flood; surface water, waves, tidal water or overflow of any body of water, or spray from any of these, whether or not driven by wind.C. Collapse, except as specifically provided in Section I - Additional Coverages for Collapse.
. . . .
. . . .
. . .
B. Defective, inadequate, faulty or unsound:
. . .
2. design, specifications, workmanship, repair, construction, grading, compaction renovation,
remodeling;
3. materials used in construction, repair, renovation or remodeling; or
4. maintenance;
of any property whether on or off the residence premises. Property includes land, structures or improvements of any kind.
In response to plaintiffs' request, Met retained Jody DeMarco, P.E., to conduct an engineer's inspection of the property. In her March 13 report of her March 3, 2008, inspection, she stated:
The roof structure was found to be in poor condition from long-term exposure to moisture intrusion. The plywood sheathing is severely rotted from years of exposure to moisture . . . .
The patio roof joists are in poor condition, are sagging and are rotted in areas . . . . The roof joints are sagging due to the inadequate size of the members. . . . The 2x6s used as joints . . . do not meet current code for load carrying or deflection requirements.
DeMarco opined the roof was failing because of the inadequate sizing of the joists and water penetration. Also, the "low slope roof," with "1 inch of rise in 12 inches of run" was half as steep as required for the type of shingles used. Instead, given the roof's "diminished" "water shedding abilities," it required an "alternate roofing system . . . such as a membrane roof system." DeMarco also reported that Gerald Romano noticed the condition of the patio roof a year before making the claim. In his motion opposition, Gerald Romano denied making that statement to DeMarco.
Met affirmed the denial of plaintiffs' claim on March 18. Plaintiffs did not independently effectuate any repairs, asserting they lacked the financial means to do so. The porch roof partially fell in September 2008, and directed and funneled water toward the door, according to Gerald Romano. As a result, water entered the ground floor, creating dampness and mold. Gerald Romano asked Met to review the claim again. Met reiterated its denial in a November 10, 2008, letter. Met informed the Romanos three days later they needed to repair the porch, or risk losing their insurance coverage.
In June 2009, in response to plaintiffs' request, Met agreed to re-assess the claim again. DeMarco returned to the property in July and reported that the roof had "partially collapsed." DeMarco also found that water had intruded into the house's lower level, because the patio's concrete slab was cracked and sloped toward the house's rear wall and door. However, plaintiffs argue the slab slopes away from the house.
DeMarco also found water intrusion in the bow window located along the lower level of the house; as well as in a second-floor bedroom window, located at the same elevation as the porch roof flashing. Both of these intrusions began to occur after the porch roof collapsed. In a supplemental August 2009 report, DeMarco opined that the failure to repair the wall and flashing after the patio roof collapsed caused the water intrusion at the second-floor window.
"[S]heet metal used in waterproofing." Merriam-Webster's Collegiate Dictionary 461 (11th ed. 2012).
On August 21, Met granted plaintiffs' claim for repairs, solely as to the "partial collapse of . . . [the] patio roof, the bow window, and the upstairs bedroom window sill and wall." Met denied coverage for the water damage on the main level of the home because the cracks in the concrete slab were not related to the porch roof's collapse. Met's net payment was $6,153.47, which was based on an itemized repair estimate that Kennedy prepared, after deducting depreciation. Met did not explicitly state the grounds for partially granting the claim, or what contractual provisions it relied upon.
Plaintiffs accepted the payment, but continued to dispute their claim with Met. Plaintiffs also retained their own inspector who found mold in various rooms in the house and recommended remediation.
After extensive correspondence between counsel for plaintiffs and Met, plaintiffs filed their complaint on May 12, 2010. Plaintiffs alleged that Met breached its insurance contract by paying an inadequate sum for repairs and otherwise denying coverage for damage to the roof, and the consequential damage to the house. (Count One). Plaintiffs also alleged a breach of warranty, based on Met's advertising slogan, "Get Met. It Pays." (Count Two). Plaintiffs asserted claims for "strict liability in tort," (Count Three); "prima facie tort," based on Met's alleged bad faith in administering the policy, (Count Four); and loss of consortium, based on Nancy Romano's allergic reaction to the mold in the house, (Count Five).
Plaintiffs also filed suit against Tri-State Building Specialties, Inc. They alleged they hired Tri-State to perform various repairs, but it failed to do so. Those claims are not before us.
In August 2010, Judge John R. Tassini granted in part Met's motion to dismiss the complaint for failure to state a claim. The court dismissed the tort-related counts, finding there was no strict liability in tort based on an insurance contract; prima facie tort was not available when there were other potentially viable causes of action; and the loss of consortium count was derivative of the tort claims.
During the course of discovery, Judge Honora O'Brien Kilgallen, to whom the case was transferred, granted Met's motion for a protective order, relieving it of the obligation to respond to plaintiffs' request for information related to Met's advertising slogan, "Get Met Life. It pays." Judge Kilgallen found the requests overbroad and burdensome. She noted that the slogan had not been used in twenty years and there was no evidence that it was contained in plaintiffs' policy.
Roughly a year later, in an oral opinion, Judge Kilgallen granted Met's motion for summary judgment dismissal of the remaining counts of the complaint. Judge Kilgallen found that the "Get Met. It Pays" slogan was mere puffery, and did not create a warranty, or constitute a representation of fact. She relied on Rodio v. Smith, 123 N.J. 345 (1991), in which the Court denied a fraudulent misrepresentation claim based on another insurer's slogan, "'You're in good hands'". The judge also noted the slogan was discontinued in the 1980s; and no reasonable person could believe that the slogan literally meant that Met would pay every claim submitted.
Regarding the breach-of-contract claim, Judge Kilgallen held that there was no genuine issue of material fact regarding the cause of the roof collapse as Kennedy's and DeMarco's opinions were unrebutted by an expert on behalf of plaintiffs. "Nothing in the record . . . except the plaintiffs' bare allegation, shows that the collapse was due to factors other than the contractually excluded causes of poor workmanship, long-standing wear and tear, and or failure to maintain the roof." The judge also held that "the clear and unambiguous terms of the homeowner's insurance contract preclude the plaintiffs' claims as a matter of law." The court found that damage to the roof was clearly visible, even before plaintiffs filed their first claim.
On appeal, plaintiffs argue that their losses were encompassed by the provision covering sudden and accidental collapse arising out of hidden decay. They argue this coverage provision was not limited by the exclusions for wear and tear, defective design, and defective maintenance. Plaintiffs renew their claim that Met's failure to pay breached an alleged warranty created by its advertising slogan, "Get Met. It Pays." Finally, they briefly argue that their tort claims should be reinstated in the event the contract and breach of warranty claims are dismissed.
II.
We review de novo the trial court's Rule 4:6-2 dismissal of the tort claims, and its summary judgment dismissal of the contract and warranty claims, applying the same standard as the trial court. Henry v. N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010) (summary judgment); Rezem Family Assocs. v. Borough of Millstone, 423 N.J. Super. 103, 113-14 (App. Div.) (motion to dismiss), certif. denied, 208 N.J. 366 (2011). With respect to a summary judgment motion, "the appellate court should 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, supra, 204 N.J. at 330. Regarding a motion to dismiss, we limit our inquiry "'to examining the legal sufficiency of the facts alleged on the face of the complaint.'" Nostrame v. Santiago, 213 N.J. 109, 127 (2013) (quoting Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989) ).
Applying these principles, we consider plaintiffs' arguments in support of their tort claims to lack sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We also affirm the dismissal with prejudice of plaintiffs' breach of warranty claim, grounded in the "Get Met. It Pays." slogan. We do so substantially for the reasons stated by Judge Kilgallen. Just as the slogan "'You're in good hands with Allstate'" was not a misrepresentation of fact, see Rodio, supra, 123 N.J. at 348, the slogan "Get Met. It Pays" is not a warranty to pay claims. No further comment is necessary. R. 2:11-3(e)(1)(E).
We restrict our discussion to consideration of plaintiffs' contract claim. The interpretation of an insurance contract presents a question of law, which we review de novo. Selective Ins. Co. of Am. v. Hudson E. Pain Mqmt., 210 N.J. 597, 605 (2012). "When the terms of an insurance contract are clear, it is the function of a court to enforce it as written and not to make a better contract for either of the parties." Kampf v. Franklin Life Ins. Co., 33 N.J. 36, 43 (1960); see also Flomerfelt v. Cardiello, 202 N.J. 432, 441 (2010). While ambiguities will be resolved in favor of an insured, Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512, 525 (2012), a policy is not ambiguous simply because different wording could make the provision clearer, Villa v. Short, 195 N.J. 15, 26 (2008). We consider whether "the phrasing of the policy is so confusing that the average policyholder cannot make out the boundaries of coverage." Weedo v. Stone-E-Brick, Inc., 81 N.J. 233, 247 (1979). These general principles apply to the interpretation of policy exclusions. Flomerfelt, supra, 202 N.J. at 442 (stating that a "fair interpretation" must be utilized and rejecting notion that "any far-fetched interpretation of a policy exclusion will be sufficient to create an ambiguity requiring coverage" (internal quotation marks and citations omitted)).
Having reviewed the policy in light of the undisputed facts, plaintiffs' contract claim was properly dismissed. We recognize that a "collapse peril insured against does not require that structures fall." Fantis Foods, Inc. v. N. River Ins. Co., 332 N.J. Super. 250, 260 (App. Div.), certif. denied, 165 N.J. 677 (2000). "[R]ather, without any narrowing internal definition, such a policy must be taken to cover any serious impairment of structural integrity that connotes imminent collapse threatening the preservation of the building as a structure or the health and safety of occupants and passers-by." Ibid. An exclusion for "settling, cracking, shrinking, bulging or expansion," does not bar coverage where structural integrity is seriously impaired. Ibid. Extending plaintiffs all favorable inferences, and for the sake of argument, we may presume, based on Kennedy's and DeMarco's reports, that the structural integrity of the patio roof was already seriously impaired in February 2008, such that collapse was "imminent" — even though actual collapse occurred seven months later. Cf. Buczek v. Cont'l Cas. Ins. Co., 378 F.3d 284, 291 (3d Cir. 2004) (interpreting "imminent" under Fantis to mean "ready to take place: near at hand" and "likely to happen without delay" (internal quotation marks and citations omitted)).
Nonetheless, coverage did not exist. First, the policy coverage for collapse was provided when caused "only by one or more" of several specific identified causes. (Emphasis added). The word "only" in this context appears to mean "exclusively." Thus, if an excluded cause operated together with an identified cause, then there would be no coverage. Cf. Flomerfelt, supra, 202 N.J. at 447-48 (stating that when "the claimed causes, one covered and one not, combine to produce an indivisible loss, our appellate courts have rejected claims for coverage").
Moreover, this is not a case "in which multiple events, one of which is covered, occur sequentially in a chain of causation to produce a loss." Flomerfelt, supra, 202 N.J. at 447. In such a case, "the loss is covered if a covered cause starts or ends the sequence of events leading to the loss." Ibid.
In this case, the opinions of Kennedy and DeMarco were undisputed. See D'Alessandro v. Hartzel, 422 N.J. Super. 575, 581 (App. Div. 2011) (requiring expert testimony concerning construction or design defects). They opined that the failure of the roof resulted from its defective design; the roof was not pitched steeply enough to shed water given the nature of the roof covering, and the roof lacked an impermeable barrier. They also concluded that the roof was not well maintained for years. These conditions fall within the policy exclusions for losses arising from "[d]efective, inadequate, faulty or unsound . . . design, specifications, workmanship, repair, construction, grading, compaction renovation, remodeling . . . and materials used in construction, repair, renovation or remodeling; or . . . maintenance . . . ."
We need not rely on the exclusion in paragraph 1 of Section I "Losses We Do Not Cover" for, among other things, "wear and tear . . . deterioration . . . wet or dry rot." The same exclusion also denies coverage for losses resulting from "vermin, rodents, [and] insects." The additional coverage for collapse covers collapse caused by "hidden decay of the structure" and "hidden insect or hidden vermin damage." The coverage for collapse from "hidden decay" would be illusory if the "deterioration" exclusion applied, since decay is synonymous with deterioration. Likewise, the coverage for "hidden insect . . . [or] vermin damage" would be rendered illusory by the "vermin [and] insects" exclusion. See 5 Michael Raibman & Paul Walker-Bright, New Appleman on Insurance Law Library Edition § 45.06[3][b] (2014) ("Collapse coverage often states that property is insured against collapse caused by 'hidden decay,' but the main insuring provisions exclude coverage for loss caused by corrosion, decay, deterioration, and the like. Questions arise regarding what constitutes 'hidden decay' and how the exclusions for corrosion and decay interact with coverage for collapse caused by 'hidden decay ' ").
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Second, plaintiffs misplace reliance on the identified cause of the collapse, "hidden decay of the structure." "The term 'hidden' is not ambiguous, and in ordinary usage something is considered hidden if it is 'out of sight.'" See 5 Raibman & Walker-Bright, New Appleman on Insurance Law Library Edition, supra, § 45.06[3][b]. However, decay is not hidden if a reasonably objective person would conclude that structural deterioration was underway, even if they could not directly view it. We find persuasive the analysis of the United States District Court in Sandalwood Condominium Ass'n at Wildwood v. Allstate Insurance Co., 294 F. Supp. 2d 1315, 1318-19 (M.D. Fla. 2003). The insurer alleged that the owner was well aware for many years of a "'long history of termite and water damage'" preceding the collapse. Id. at 1318. The insurer urged the court to adopt a meaning of "hidden" that incorporated a standard of actual or constructive knowledge. Ibid. The court agreed.
The Court determines that in order to recover under the policy, Sandalwood [the insured] must demonstrate that the damage to the structural integrity of the Complex was not visible and that Sandalwood neither knew nor should have known of the structural damage with sufficient time to allow for repairs before it reached the stage of "collapse." An insured must also take reasonable steps to correct damage before it undermines the structural integrity of the building. Of course, under appropriate circumstances, a property owner may know of termite damage, but while acting reasonably, not know that the damage is threatening the structural integrity of the building. In most cases, the reasonableness of the owner's actions, or lack of action, is a question for the jury.See also Wurst v. State Farm Fire & Cas. Co., 431 F. Supp. 2d 501, 505 (D.N.J. 2006) (finding that decay was not "hidden" under terms of homeowner's insurance contract when insured's expert admitted to seeing cracks and salt deposits on basement wall and insured's girlfriend testified that she also saw cracks).
[Id. at 1319 (citations omitted).]
In this case, the decay of the patio roof was visible. Even if we afford plaintiffs the favorable inference that the vinyl-slat ceiling obscured the joists and plywood roof until Kennedy's inspection, the vinyl slat ceiling visibly bulged downward, indicating the presence of a problem above, if not the actual collection of water. Nancy Romano admitted that a year prior to the claim, she began to see mold growing around the bedroom window, which was located just above the point where the patio roof was moored to the exterior wall. Large clumps of moss were visible on the roof, as was a sapling, taking root in the shingles. This vegetation did not appear overnight. Thus, plaintiffs knew or should have known well before February 2008 that the roof was retaining water, and not operating properly. In short, the decay was not hidden.
Affirmed.
I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF APPELLATE DIVIDION