New Jersey Transit Corp. v. Certain Underwriters at Lloyd's London, 012721 NJSC, A-72-19

Docket NºA-72-19, A-73-19
Opinion JudgePER CURIAM.
Party NameNew Jersey Transit Corporation, Plaintiff-Respondent, v. Certain Underwriters at Lloyd's London, Maiden Specialty Insurance Company, RSUI Indemnity Company, and Westport Insurance Corporation, Defendants-Appellants, and Torus Specialty Insurance Company, Defendant-Appellant, and Hudson Specialty Insurance Company and Ironshore Specialty ...
AttorneyShawn L. Kelly and Michael J. Smith argued the cause for appellant StarStone Specialty Insurance Company, f/k/a Torus Specialty Insurance Company (Dentons U.S. and Stewart Smith, attorneys; Shawn L. Kelly, Jonathan D. Henry, Erika M. Lopes-McLeman, Michael J. Smith, and Bryan W. Petrilla, on the ...
Judge PanelPER CURIAM. CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in this opinion. CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, ALBIN, PATTERSON, FERNANDEZ-VINA, SOLOMON, and PIERRE-LOUIS join in this opinion.
Case DateJanuary 27, 2021
CourtSupreme Court of New Jersey

New Jersey Transit Corporation, Plaintiff-Respondent,

v.

Certain Underwriters at Lloyd's London, Maiden Specialty Insurance Company, RSUI Indemnity Company, and Westport Insurance Corporation, Defendants-Appellants,

and

Torus Specialty Insurance Company, Defendant-Appellant,

and

Hudson Specialty Insurance Company and Ironshore Specialty Insurance Company, Defendants.

Nos. A-72-19, A-73-19

Supreme Court of New Jersey

January 27, 2021

Argued January 4, 2021

On certification to the Superior Court, Appellate Division, whose opinion is reported at 461 N.J.Super. 440 (App. Div. 2019).

Shawn L. Kelly and Michael J. Smith argued the cause for appellant StarStone Specialty Insurance Company, f/k/a Torus Specialty Insurance Company (Dentons U.S. and Stewart Smith, attorneys; Shawn L. Kelly, Jonathan D. Henry, Erika M. Lopes-McLeman, Michael J. Smith, and Bryan W. Petrilla, on the briefs).

Robert W. Fisher, a member of the Georgia bar, admitted pro hac vice, argued the cause for appellants RSUI Indemnity Company and Westport Insurance Corporation (Clyde & Co US, attorneys; Kevin M. Haas, Robert W. Fisher, Taylor L. Davis, a member of the Georgia bar, admitted pro hac vice, and James M. Bauer, a member of the Georgia bar, admitted pro hac vice, on the briefs).

Kenneth H. Frenchman, a member of the New York bar, admitted pro hac vice, argued the cause for respondent (Cohen Ziffer Frenchman & McKenna, attorneys; Robin L. Cohen, Kenneth H. Frenchman, Marc T. Ladd, a member of the New York bar, admitted pro hac vice, and Alexander M. Sugzda, a member of the New York bar, admitted pro hac vice, on the brief).

PER CURIAM.

This appeal involves an insurance coverage dispute arising out of water damage caused by Superstorm Sandy to properties owned by plaintiff New Jersey Transit Corporation (NJ Transit).

At the time Superstorm Sandy struck New Jersey in October 2012, N.J. Transit carried a $400 million multi-layered property insurance policy program through eleven insurers. When N.J. Transit sought coverage for the water damage to its properties brought about by the storm, certain of its insurers invoked the $100 million flood sublimit in N.J. Transit's policies and declined to provide coverage up to the policy limit.

NJ Transit filed an action seeking a declaratory judgment against those insurers. The trial court found that the $100 million flood sublimit did not apply to N.J. Transit's claims; it also found that the insurers had not submitted sufficient evidence to support their claims for reformation of the policies. The court accordingly entered summary judgment in favor of N.J. Transit and denied the insurers' motions for summary judgment.

The Appellate Division affirmed, 461 N.J.Super. 440, 448 (App. Div. 2019), finding that "the water damage to [NJ Transit's] properties that occurred during Superstorm Sandy is not subject to the $100 million flood sublimit," id. at 457.

The appellate court first considered the insurers' argument that the Sandy-related damage to N.J. Transit's properties was subject to the flood sublimit because that damage met either of two separate definitions of "flood" in the policies: either "[t]he overflow, release, rising, back-up, runoff or surge of surface water;" or "[t]he unusual or rapid accumulation or runoff of surface water from any source." Id. at 454-55.

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