Rosario v. The Hartford Fire Ins. Co.

• Court: New Jersey Superior Court — Appellate Division
• Writing for the Court: PER CURIAM
• Decision Date: 04 January 2023
• Docket Number: A-1968-20
• Citation: Rosario v. The Hartford Fire Ins. Co., A-1968-20 (N.J. Super. App. Div. Jan 04, 2023)
• Parties: VICTOR ROSARIO, NILDA MALDONADO, JOSE FLORES, and NOEMI FLORES, Plaintiffs-Appellants, v. THE HARTFORD FIRE INSURANCE CO., and THE WESTERN WORLD INSURANCE CO., Defendants-Respondents.

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VICTOR ROSARIO, NILDA MALDONADO, JOSE FLORES, and NOEMI FLORES, Plaintiffs-Appellants, v. THE HARTFORD FIRE INSURANCE CO., and THE WESTERN WORLD INSURANCE CO., Defendants-Respondents.

No. A-1968-20

Superior Court of New Jersey, Appellate Division

January 4, 2023

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.

Argued November 1, 2022

On appeal from the Superior Court of New Jersey, Law Division Cumberland County, Docket No. L-0814-18.

Louis Giansante argued the cause for appellants (Giansante &Assoc., LLC, attorneys; Louis Giansante, of counsel and on the briefs).

Michael S. Komar (Menz Bonner Komar &Koenigsberg LLP) of the New York bar, admitted pro hac vice, argued the cause for respondent The Hartford Insurance Co. (Menz Bonner Komar & Koenigsberg LLP, and Michael S. Komar, attorneys; Michael S. Komar, Patrick D. Bonner, Jr., and Lindsay T. Weibel, on the brief).

Margaret F. Catalano argued the cause for respondent The Western World Insurance Co. (Kennedys CMK LLP, attorneys; Margaret F. Catalano and Suzanne Q. Chamberlin, of counsel and on the brief).

Before Judges Gilson, Rose and Gummer.

PER CURIAM

In this insurance coverage dispute, plaintiffs appeal from three February 8, 2021 Law Division orders, dismissing their second amended complaint against the defendant insurance carriers on dispositive cross-motions. Having obtained a nearly $2 million judgment against the bankrupt developer of their residential properties - for failing to disclose their homes were built on contaminated properties - plaintiffs sought the proceeds of the comprehensive general liability (CGL) policies issued by the defendant insurance carriers to the developer (underlying action). The motion judge in the present action concluded the pollution exclusion contained in defendants' CGL policies precluded coverage. We agree and affirm.

We summarize the facts, which are undisputed, from the record before the motion judge. We set forth, in some detail, the protracted procedural posture of the underlying action to lend context to the issues raised on appeal.

Plaintiffs Victor Rosario and Nilda Maldonado purchased a single-family home on 4th Street in Vineland from developer Marco Construction and Management, Inc. in February 2006. Five months later, in July 2006, plaintiffs Jose Flores and Noemi Flores purchased from Marco Construction a singlefamily home on the adjacent lot. Unbeknownst to plaintiffs, before Marco Construction subdivided the lots, they were utilized by the previous owner and co-developer, Stephan Musey, Jr., for commercial purposes that contaminated the property.

Purchased by Musey in 1972, the site was utilized to operate a car dealership, autobody and repair shops, and a gas station. The property was serviced by underground gasoline and waste oil tanks. Automotive fluids and waste oil were discharged into floor drains and the soil. In 1988, the underground storage tanks were removed from the site without proper notice to the authorities. Thereafter, the Department of Environmental Protection (DEP) directed Musey to conduct a remedial investigation of the property, but it was not completed.

In 2002, prospective purchaser, Carmen A. Trischitta, retained an environmental consultant to assess the property. During the investigation, the assessor discovered the outstanding environmental issues and notified the DEP. Musey accepted responsibility and agreed to remediate the site. Instead, he leveled the property with contaminated soil.

On December 31, 2004, Musey and Dominic Antonini, the principal of Marco Construction, executed a joint venture agreement to develop the property. Antonini was apprised of the property's prior usage. Before Marco Construction took title to the property in February 2005, Antonini received several documents confirming the presence of outstanding environmental issues on the site; thereafter, Trischitta told Antonini the property was contaminated. Later that year, Antonini built two single-family homes on the subdivided lot. However, Antonini failed to disclose the environmental issues to the realtors or prospective purchasers, including plaintiffs.

Between February 2005 and February 2006, Marco Construction remained the owner of the portion of the property until it was purchased by plaintiffs Rosario and Maldonado. Between February 2005 and July 2006, Marco Construction owned the portion of the property until it was purchased by the Flores plaintiffs. Accordingly, the following CGL policies issued by the defendant insurance carriers to Marco Construction are at issue in this appeal: (1) defendant Hartford Fire Insurance Company's policy, in effect from April 20, 2004 to May 20, 2005 (Hartford policy); and (2) defendant Western World Insurance Company's policy issued for the following year, May 20, 2005 to May 20, 2006 (Western World policy).

Both policies provided substantially similar coverage. Relevant here, that coverage obligated the carriers to pay on the insured's behalf "those sums that the insured becomes legally obligated to pay as damages because of 'bodily injury' or 'property damage' to which this insurance applies."^[1] The policies further stated: "This insurance applies to 'bodily injury' and 'property damage' only if" it is "caused by an 'occurrence' that takes place in the 'coverage territory'; and . . . occurs during the policy period."

Each policy contained virtually identical pollution exclusions and exceptions to those exclusions. In pertinent part, the policies provided:

(1) "Bodily injury "or "property damage" arising out of the actual, alleged or threatened discharge, dispersal, seepage, migration, release or escape of "pollutants":

(a) At or from any premises, site or location which is or was at any time owned or occupied by, or rented or loaned to any insured. However, this subparagraph does not apply to: ....

(ii) "Bodily injury" or "property damage" for which you may be held liable, if you are a contractor and the owner or lessee of such premises, site or location has been added to your policy as an additional insured with respect to your ongoing operations performed for that additional insured at that premises, site or location and such premises, site or location is not and never was owned or occupied by, or rented or loaned to, any insured, other than that additional insured [(pollution exclusion exception)] ....

(2) Any loss, cost or expense arising out of any:

(a) Request, demand, order or statutory or regulatory requirement that any insured or others test for, monitor, clean up, remove, contain, treat, detoxify or neutralize, or in any way respond to, or assess the effects of, "pollutants"; or

(b) Claim or suit by or on behalf of a governmental authority for damages because of testing for, monitoring, cleaning up, removing, containing, treating, detoxifying, or neutralizing, or in any way responding to, or assessing the effects of, "pollutants."

[(Emphasis added).]

The policies also contained exclusions for expected or intended injury, precluding coverage, in pertinent part, for: "'Bodily injury' or 'property damage' expected or intended from the standpoint of the insured." In addition, Western World's policy excluded coverage for known injuries or damages, defined as "bodily injury or property damage which first occurs before the inception date of the policy but continues to occur during the policy period if such bodily injury or property damage is known to any insured prior to the inception date of this policy." Further, the Western World policy included an endorsement, precluding coverage for "any claim for punitive or exemplary damages."

On February 14, 2005, Marco Construction's insurance agent issued a certificate of liability insurance to Sterling Bank, naming Hartford as the insurer. Similarly, on August 18, 2005, the agent issued another certificate of liability insurance to Sterling Bank, naming both Western World and Hartford as insurers. Sterling Bank was not named as an additional insured on either certificate.

In January 2008, plaintiffs filed the underlying action against Marco Construction, Antonini, Musey^[2] and others, alleging violations of the Consumer Fraud Act, N.J.S.A. 56:8-1 to -20, and the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-23.11 to -.24, and causes of action for misrepresentation, negligence, and equitable fraud. Plaintiffs also asserted a claim for breach of contract against Marco Construction.

In May 2008, Marco Construction, through its insurance agent, filed a notice of claim under the Hartford policy, advising: "Claimants allege that insured subdivided a property that had known chemical pollutants. "A copy of plaintiffs' complaint was annexed to the notice. Following an investigation, on August 11, 2008, Hartford denied coverage under the pollution and expected or intended injury exclusions set forth in its policy.^[3]

During the discovery period, Marco Construction twice renewed its demand for coverage under the Hartford policy. On February 4, 2010, and March 24, 2010, Hartford reiterated its denial of coverage based, in pertinent part, on the pollution exclusion set forth in the Hartford policy. In its March 24, 2010 denial letter, Hartford rejected Marco Construction's claim that the pollution exclusion exception applied "because Marco [Construction] acquired title to the property in question." In the alternative, "the owner or lessee of the property was not added to the policies as an additional insured with respect to [Marco Construction's] ongoing operations."

In their January 10, 2013 Rova...