SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0170-15T1

SCHULTZ FURRIERS, INC.,

Plaintiff-Appellant,

v.

TRAVELERS CASUALTY INSURANCE

COMPANY OF AMERICA,

Defendant-Respondent.

________________________________

Argued April 25, 2017 – Decided May 3, 2017

Before Judges Yannotti, Fasciale and 

Sapp-Peterson.

On appeal from Superior Court of New Jersey, 

Law Division, Essex County, Docket No. L-2281-

13.

Mauro C. Casci argued the cause for appellant 

(Law Offices of Mauro C. Casci, attorneys; Mr. 

Casci, on the brief).

Christopher S. Finazzo argued the cause for 

respondent (Finazzo, Cossolini, O'Leary, 

Meola & Hager, L.L.C., attorneys; Rachel R.

Hager, on the brief).

PER CURIAM

In this insurance declaratory judgment lawsuit, Schultz 

Furriers, Inc. (plaintiff) appeals from two July 24, 2015 orders: 

NOT FOR PUBLICATION WITHOUT THE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.
2 A-0170-15T1

one granting Travelers Casualty Insurance Company of America's 

(defendant) motion for summary judgment; and the other denying

plaintiff's cross-motion for summary judgment. We affirm. 

Plaintiff leased the premises and operated a business selling 

luxury outerwear and fur garments, in addition to garment cleaning, 

storage, and repair services. Plaintiff obtained a commercial 

insurance policy from defendant covering certain losses pertaining 

to that business. The effective date of the insurance policy was 

from October 31, 2011 to October 31, 2012. 

In October 2012, Superstorm Sandy knocked down certain 

electrical transformers, which disrupted the power supply, and 

caused plaintiff to close its business. Plaintiff filed an 

insurance claim with defendant seeking coverage associated with 

its business interruption. Defendant disclaimed coverage, and 

plaintiff filed this complaint. 

In pre-trial discovery, plaintiff produced documents

establishing that its business was closed due to the power outage 

from October 29, 2012 through November 5, 2012. Defendant, relying 

on a "Power Pac Endorsement" in the insurance policy, tendered 

plaintiff $2500 for the business loss. Although plaintiff sought 

coverage for more than $2500, defendant concluded that this payment 

constituted the maximum amount of insurance coverage for the 

business interruption. In issuing the orders under review, the 
3 A-0170-15T1

judge agreed with defendant's interpretation of the insurance 

policy and rendered a comprehensive written decision in which he 

analyzed the pertinent policy language.

On appeal, plaintiff argues the language of the insurance 

policy is ambiguous; the insurance policy is an "all risk" policy 

and the burden of proving an exclusion rests with defendant; 

plaintiff is entitled to insurance coverage under the civil 

authority section of the policy; and defendant breached its 

covenant of good faith and fair dealing. 

Summary judgment may be granted when, considering the 

evidence in the light most favorable to the non-moving party, 

there is no genuine issue of material fact and the moving party 

is entitled to judgment as a matter of law. R. 4:46-2(c); see 

also Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 

(1995). When reviewing an order granting summary judgment, this 

court applies "the same standard governing the trial court." Oyola 

v. Liu, 431 N.J. Super. 493, 497 (App. Div.), certif. denied, 216 

N.J. 86 (2013). 

The interpretation of insurance contracts is a matter of law 

and subject to de novo review. Sealed Air Corp. v. Royal Indem. 

Co., 404 N.J. Super. 363, 375 (App. Div.), certif. denied, 196 

N.J. 601 (2008). This court owes no deference to the motion 

judge's conclusions on issues of law. Manalapan Realty, L.P. v. 
4 A-0170-15T1

Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995). Here, the 

question on appeal is a legal issue pertaining to the insurance 

policy language. 

"Insurance policies are construed in accordance with 

principles that govern the interpretation of contracts; 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)). "The terms of insurance contracts are given their 

'plain and ordinary meaning,' with ambiguities resolved in favor 

of the insured." Ibid. (quoting Flomerfelt, supra, 202 N.J. at 

441). Therefore, insurance policies "should be construed 

liberally in [the insured's] favor to the end that coverage is 

afforded to the full extent that any fair interpretation will 

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

(alteration in original) (quoting Kievit v. Loyal Protective Life 

Ins. Co., 34 N.J. 475, 482 (1961)). 

"Although courts should construe insurance policies in favor 

of the insured, they 'should not write for the insured a better 

policy of insurance than the one purchased.'" Ibid. (quoting 

Walker Rogge, Inc. v. Chelsea Title & Guar. Co., 116 N.J. 517, 529 

(1989)). "[I]nsurance contracts are to be construed in a manner 
5 A-0170-15T1

that recognizes the reasonable expectation of the insured." 

Simonetti v. Selective Ins. Co., 372 N.J. Super. 421, 429 (App. 

Div. 2004). Moreover, "[w]hen an insurance carrier puts in issue 

its coverage of a loss under a contract of insurance by relying 

on an exclusionary clause, it bears a substantial burden of 

demonstrating that the loss falls outside the scope of coverage." 

United Rental Equip. Co. v. Aetna Life & Cas. Ins. Co., 74 N.J.

92, 99 (1977). 

Pursuant to the Business Income and Extra Expense section of 

the insurance policy, defendant would have been obligated to pay 

for actual loss of business income caused by the direct physical 

loss of or damage to the property at the described premises. 

Plaintiff alleged, however, that the business loss resulted from 

the downed transformers offsite, not direct physical damage to the 

leased premises. 

Moreover, the insurance policy also expressly excluded loss 

or damage caused "directly or indirectly" by the "failure or 

fluctuation" of power or other utility services "if the cause of 

the failure or fluctuation occurs away from the described 

premises." The policy stated in relevant part:

B. EXCLUSIONS

1. We will not pay for loss or damage caused 

directly or indirectly by any of the 

following. Such loss or damage is excluded 
6 A-0170-15T1

regardless of any other cause or event that 

contributes concurrently or in any sequence 

to the loss. These exclusions apply whether

or not the loss event results in widespread 

damage or affects a substantial area.

. . . .

e. Utility Services

The failure or fluctuation of power or other 

utility service supplied to the described 

premises, however caused, if the cause of the 

failure or fluctuation occurs away from the 

described premises.

But if the failure or fluctuation of power or 

other utility service results in a Covered 

Cause of Loss, we will pay for the loss or 

damage resulting from that Covered Cause of 

Loss.

As a result, these provisions in the insurance policy specifically 

excluded the claimed loss.

Plaintiff argues that it was entitled to insurance coverage 

under the extension for Equipment Breakdown Coverage language of 

the policy. However, this language also provides no basis for 

coverage. The pertinent sections of the insurance policy as to 

this argument include:

7. Coverage Extensions 

. . . .

i. Equipment Breakdown

(1) When a Limit of Insurance is shown in the 

Declarations for Building or Business Personal 

Property at the described premises, you may 
7 A-0170-15T1

extend that insurance to apply to direct 

physical loss of or damage to Covered Property 

at the described premises caused by or 

resulting from a "breakdown" to "covered 

equipment[."]

With respect to otherwise covered Business 

Income and Extra Expense, "breakdown" to 

"covered equipment" will be considered a 

Covered Cause of Loss. 

If an initial "breakdown" causes other 

"breakdowns", all will be considered one 

"breakdown[."] All "breakdowns" that manifest 

themselves at the same time and are the result 

of the same cause will also be considered one 

"breakdown[."]

(2) Under this Coverage Extension, the 

following coverages also apply:

. . .

(c) Service Interruption

When the Declarations show that you have 

coverage for Business Income and Extra 

Expense, you may extend that insurance to 

apply to loss caused by or resulting from a 

"breakdown" to equipment that is owned, 

operated or controlled by a local public or 

private utility or distributor that directly 

generates, transmits, distributes or provides 

the following utility services:

(i) "Water Supply Services";

(ii) "Communication Supply Services"; or

(iii) "Power Supply Services[."]

The policy defines "breakdown" and "power supply services" 

as follows:

G. Property Definitions
8 A-0170-15T1

2. "Breakdown"

a. Means:

(1) Failure of pressure or vacuum equipment;

(2) Mechanical failure, including rupture or

bursting caused by centrifugal force; or

(3) Electrical failure including arcing;

that causes physical damage to "covered 

equipment" and necessitates its repair or 

replacement; and

b. Does not mean:

(1) Malfunction, including but not limited to 

adjustment, alignment, calibration, cleaning 

or modification;

(2) Leakage at any valve, fitting, shaft seal, 

gland packing, joint or connection;

(3) Damage to any vacuum tube, gas tube, or 

brush;

(4) Damage to any structure or foundation 

supporting the "covered equipment" or any of 

its parts;

(5) The functioning of any safety or 

protective device; or 

(6) The cracking of any part on any internal 

combustion gas turbine exposed to the products 

of combustion.

. . .

22. "Power Supply Services"

a. Means the following types of property 

supplying electricity, steam or gas to the 

described premises:
9 A-0170-15T1

(1) Utility generating plants;

(2) Switching stations;

(3) Substations;

(4) Transformers; and

(5) Transmission lines; and

b. Does not mean overhead transmission lines.

An endorsement to the insurance policy, which was also issued 

at the inception of the policy, stated:

EQUIPMENT BREAKDOWN – SERVICE INTERRUPTION 

LIMITATION

This endorsement modifies insurance provided 

under the following:

BUSINESSOWNERS PROPERTY COVERAGE SPECIAL FORM

A. The BUSINESSOWNERS PROPERTY COVERAGE 

SPECIAL FORM is changed as follows:

1. The following is added to paragraph A.7. 

Coverage Extensions i. Equipment Breakdown:

(9) With respect to Service Interruption 

coverage, we will not pay under this Coverage 

Extension for loss or damage caused by or 

resulting from any of the following:

(a) Fire;

(b) Lightning;

(c) Windstorm or hail;

(d) Explosion (except for steam or centrifugal 

explosion);

(e) Smoke;

(f) Aircraft or vehicles;

(g) Riot or civil commotion;

(h) Vandalism;

(i) Sprinkler Leakage;

(j) Falling objects;

(k) Weight of snow, ice or sleet;

(l) Freezing; or

(m) Collapse.

[(Emphasis added).]
10 A-0170-15T1

The language relied upon by plaintiff covers business losses 

resulting from the breakdown of equipment owned, operated or 

controlled by a public utility. Plaintiff, however, did not 

produce any credible evidence to raise a factual dispute to

establish that its business losses were due to a breakdown of 

equipment as the policy has defined that term. Moreover, the 

policy expressly excluded business losses resulting from a 

windstorm.

On January 9, 2012, defendant modified the insurance policy 

by attaching a "Power Pac Endorsement," on which defendant relied 

to fully pay plaintiff's claim. The parties dispute whether the 

Power Pac Endorsement increased or limited insurance coverage 

under the policy. The Power Pac Endorsement states: 

This endorsement modifies insurance provided 

under the following:

BUSINESSOWNERS PROPERTY COVERAGE SPECIAL FORM

A. The BUSINESSOWNERS PROPERTY COVERAGE 

SPECIAL FORM is changed as follows:

. . . 

8. The following Coverage Extensions are 

added:

. . . 

c. Utility Services – Time Element

(1) When the Declarations show that you have 

coverage for Business Income and Extra 
11 A-0170-15T1

Expense, you may extend that insurance to 

apply to the loss of Business Income or Extra 

Expense caused by the interruption of service 

to the described premises. The interruption 

must result from direct physical loss or 

damage by a Covered Cause of Loss to the 

following property not on the described 

premises:

(a) "Water Supply Services";

(b) "Communication Supply Services"; or

(c) "Power Supply Services[."]

(2) We will pay the actual loss sustained from 

the initial time of service(s) failure at the 

described premises but only when the service 

interruption at the described premises exceeds 

24 hours immediately following the direct 

physical loss or damage. Coverage does not 

apply to any reduction of income after service 

has been restored to your premises.

(3) The most we will pay for loss under this 

Coverage Extension in any one occurrence is 

$2,500 at each described premises.

We agree with defendant, as did the motion judge, that the 

Power Pac Endorsement extended rather than limited insurance 

coverage. Without this endorsement, plaintiff was not entitled 

to insurance coverage for its power outage. That is so because 

the language of the Equipment Breakdown/Service Interruption 

Limitation unambiguously excluded coverage for loss or damage 

caused by windstorms. 

The Power Pac Endorsement allowed plaintiff's claim and 

capped the amount of insurance coverage. It provided $2500 of 

coverage for the type of loss sustained by plaintiff. 
12 A-0170-15T1

Consequently, defendant satisfied its obligation under the policy 

by paying plaintiff $2500 for business interruption due to power 

outage. 

We conclude that plaintiff's remaining arguments are without 

sufficient merit to warrant discussion in a written opinion. R.

2:11-3(e)(1)(E). We add the following brief remarks.

Plaintiff is not entitled to insurance coverage under the 

Civil Authority Extension portion of the policy. The civil 

authority section allows coverage for losses "caused by action of 

civil authority that prohibits access to the described premises." 

Plaintiff concedes it would be required to show that access was 

"totally and completely prevented, i.e. made impossible." Such 

is not the case here. Plaintiff's owner testified that he had 

accessed the building himself shortly after the storm and before 

the streets were cleared of debris. The town's fire department 

also verified that although many trees fell and blocked roads, 

there were alternate routes accessible if a road was completely 

blocked. 

Finally, there exists no evidence that defendant breached its 

covenant of good faith and fair dealing with plaintiff. As we 

have stated, the insured "must establish the merits of his or her 

claim for benefits. If there is a valid question of coverage, 

i.e., the claim is 'fairly debatable,' the insurer bears no 
13 A-0170-15T1

liability for bad faith." Wacker-Ciocco v. Gov't Emps. Ins. Co.,

439 N.J. Super. 603, 611 (App. Div. 2015) (quoting Pickett v. 

Lloyd's, 131 N.J. 457, 473-74 (1993)). Defendant denied 

plaintiff's claims beyond the $2500 cap in accordance with the 

terms and conditions of the insurance policy. There is no evidence 

of bad faith on behalf of defendant.

Affirmed.