NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4516-12T1

TEMPLO FUENTE DE VIDA CORP.

and FUENTE PROPERTIES, INC.,

Plaintiffs-Appellants,

v.

NATIONAL UNION FIRE INSURANCE

COMPANY OF PITTSBURGH, P.A.,

Defendant-Respondent.

___________________________________

Argued: May 21, 2014 – Decided:

Before Judges Fuentes, Fasciale and Haas.

On appeal from the Superior Court of New 

Jersey, Law Division, Hudson County, Docket 

No. L-2975-11.

Mitchell B. Seidman argued the cause for 

appellants (Seidman & Pincus, LLC, 

attorneys; Mr. Seidman and Andrew J. Pincus, 

on the brief).

Andrew L. Indeck argued the cause for 

respondent (Weber Gallagher Simpson 

Stapleton Fires and Newby, LLP, attorneys; 

Mr. Indeck, of counsel and on the brief; 

Jessica V. Henry, on the brief).

PER CURIAM

Plaintiffs Templo Fuente De Vida Corp. (Templo) and Fuente 

Properties, Inc. (Fuente) (collectively plaintiffs) appeal from 

the February 27, 2013 orders of the Law Division granting 

June 6, 2014
2 A-4516-12T1

defendant National Union Fire Insurance Company of Pittsburgh, 

P.A.'s motion for summary judgment and denying plaintiffs' 

motion for partial summary judgment. Plaintiffs also appeal 

from the court's May 15, 2013 order denying their motion for 

reconsideration. We affirm.

The facts underlying this appeal are not disputed. Templo 

is a New Jersey corporation that operates a church and child day 

care center. In early 2002, Templo decided to relocate and to 

construct a new church and day care center and, in June 2002, it 

entered into an agreement with Morris Mortgage, Inc. (MMI), 

under which MMI agreed to secure the loans Templo needed to 

purchase the land and complete the project. Templo created 

Fuente to acquire the property. 

In September 2002, plaintiffs entered into a contract to 

purchase property in North Bergen for the project for 

$3,200,000. They made a $320,000 down payment. MMI did not 

promptly secure the necessary financing and, as a result, 

plaintiffs paid the seller an additional $130,000 to extend the 

mortgage commitment deadline. In February 2003, MMI alleged 

that it had obtained funding for the project through Merl 

Financial Group, Inc. (Merl), which agreed to provide a 

$15,900,000 loan to plaintiffs in return for a $159,000 

commitment fee. Merl later increased the loan commitment to 
3 A-4516-12T1

$20,900,000 and plaintiffs paid Merl an additional $50,000 

commitment fee. In September 2003, the loan commitment was 

again revised so that plaintiffs could obtain "early funding of 

the loan proceeds" in order to close on the property. 

Plaintiff's paid Merl $209,000 as an early commitment fee.

By this time, the seller of the property had issued a "time 

is of the essence" notice to plaintiffs, which obligated them to 

close on the property by October 8, 2003. However, Merl advised 

plaintiffs that it could not secure the necessary funds until 

November 24, 2003. Plaintiffs then paid the seller $100,000 to 

extend the closing deadline. 

Without notifying plaintiffs, Merl assigned the loan to 

Heritage Capital Corporation (Heritage Capital), which then 

assigned it to Independent Capital Credit Corporation 

(Independent). Both of these entities were affiliated with 

Merl, although Merl told plaintiffs they were independent 

companies. Neither of these companies provided the promised 

loan funds to plaintiffs and, as a result, the seller refused to 

extend the closing date and plaintiffs were unable to complete 

the purchase. Plaintiffs asserted that they expended over 

$1,000,000 in attempting to purchase the property.

On November 24, 2003, Merl transferred its interests to 

First Independent Financial Group (First Independent) and Merl 
4 A-4516-12T1

continued its operations under First Independent's name. In 

late 2005, defendant issued an insurance policy to First 

Independent for a policy period that ran from January 1, 2006 

until January 1, 2007. This policy provided First Independent 

with liability insurance for losses caused by the "wrongful 

acts" of its directors, officers, and employees, except to the 

extent that First Independent indemnified these individuals. 

The term "wrongful acts" was defined in the policy as "any 

breach of duty, neglect, error, misstatement, misleading 

statement, omission or act by any such Insureds in their 

respective capacities as such, or any matter claimed against 

such Insured solely by reason of their status as directors, 

officers or [e]mployees" of First Independent.

To be eligible for coverage under the policy, the losses 

had to arise from a claim first made "during the Policy Period 

or the Discovery Period (if applicable) and reported to the 

Insurer pursuant to the terms of this policy." The notice 

provisions of the policy stated that:

(a) The Company or the Insureds shall, as a 

condition precedent to the obligations of 

the Insurer under this policy, give written 

notice to the Insurer of any Claim made 

against an Insured as soon as practicable

and either:

(1) anytime during the Policy Period or 

during the Discovery Period (if applicable); 

or
5 A-4516-12T1

(2) within [thirty] days after the end of 

the Policy Period or the Discovery Period 

(if applicable), as long as such Claim is 

reported no later than [thirty] days after 

the date such Claim was first made against 

an Insured.

[(Emphasis added).]

On November 22, 2005, plaintiffs filed a complaint alleging 

breach of contract and tort claims in the Law Division against 

MMI, MMI's principal, Merl, Merl's affiliates, including 

Heritage Capital, and their principals. Plaintiffs never served 

this complaint. On December 2, 2005, plaintiffs filed an 

amended complaint adding two John Doe defendants. 

Plaintiffs served the amended complaint, and the corporate 

entities and individuals allegedly covered by defendant's 

insurance policy with First Independent (the insureds) 

acknowledged receipt of it on February 21, 2006. However, they 

did not provide notice of the complaint to defendant until 

August 28, 2006. 

Defendant thereafter sent the insureds three letters 

disclaiming coverage. The first letter, dated September 11, 

2006, advised the insureds that plaintiffs' allegations were 

directed to Heritage Capital and its affiliates and principals, 

and that such claims were specifically excluded from coverage 

under the terms of the policy. The letter further stated:
6 A-4516-12T1

The purpose of this correspondence is 

to advise you that [the Policy] does not 

provide coverage for this claim. This 

coverage evaluation may be subject to 

amendment and/or supplementation because the 

applicability of certain exclusions, terms 

and conditions cannot be fully determined 

until the facts are more fully developed. 

[Defendant] reserves all rights, defenses 

and privileges under the Policy, at law or 

in equity, including the right to disclaim 

or otherwise amend or supplement our 

coverage analysis as forthcoming information 

dictates.

. . . . 

Given our position as outlined above, 

we have not addressed certain other 

provisions of the Policy which may also 

limit and/or preclude coverage for this 

claim.

In a second disclaimer of coverage letter, issued on March 

6, 2007, defendant advised the insureds that the exclusion noted 

in the September 2006 letter did not apply, but that there were 

other reasons for denying coverage. The letter specifically 

referred to the requirement that claims must be received within 

the policy period and that an insured must provide notice of the 

claim to defendant "as soon as practicable." The letter also 

stated:

With regard to the notice requirements of 

the Policy, it appears that the claims in 

the Amended Complaint were reported to 

[defendant] on or about August 28, 2006 and, 

therefore, the claims were reported to 

[defendant] during the period of the Policy. 

More than this notice is required to 
7 A-4516-12T1

establish coverage under this claims-made 

Policy, however. A covered claim also must 

have been "first made" against an insured 

during the period of the Policy . . . .

No information has been provided to 

[defendant] which evinces when written

notice of the Complaint and Amended 

Complaint first was received by any of the 

foregoing.

The letter concluded with the following reservation of rights:

If you have any questions concerning this 

disclaimer of coverage, or if you have 

additional information which you would like 

to bring to the attention of [defendant] 

with regard to [its] coverage position, 

please do not hesitate to contact 

[defendant, whose] review of this 

information shall be without waiver of 

[defendant's] denial of coverage and will be

made under a full reservation of 

[defendant's] right to alter or amend the 

within disclaimer of coverage.

Finally, on March 30, 2009, defendant sent the insureds a 

third letter disclaiming coverage as to three individuals 

allegedly associated with First Independent. This letter stated 

that the claims were not covered because plaintiffs' amended 

complaint did not set forth claims against these individuals in 

their role as officers of First Independent. However, defendant 

requested additional information concerning one of the officers.

On June 29, 2007, plaintiffs filed a second amended 

complaint, adding additional defendants and claims. For the 

first time, the complaint noted that Merl was a subsidiary and 
8 A-4516-12T1

affiliate of First Independent. On October 2, 2007, plaintiffs 

amended their complaint to specifically add First Independent as 

a defendant.1

On June 5, 2009, plaintiffs entered into a settlement 

agreement with the insureds. The parties agreed that the 

insureds were liable to plaintiffs for $3,613,220.52, which 

included the expenditures plaintiffs made to acquire the 

property; a sum for lost appreciation of the land; and 

$2,100,000 "representing the value of the child day care center 

[p]laintiffs lost as a result of the" insureds' actions. The 

insureds agreed to pay plaintiffs $102,750 of this liability and 

assign their claims against defendant for coverage to plaintiffs 

for the remaining amount due.

On June 2, 2011, plaintiffs filed a complaint against 

defendant seeking a declaratory judgment granting them coverage 

under the policy. On December 14, 2012, plaintiffs moved for 

partial summary judgment, and defendant filed its own motion for 

summary judgment on January 15, 2013. Following oral argument 

on February 8, 2013, Judge Patrick Arre issued a thorough 

written decision granting defendant's motion for summary 

judgment and denying plaintiffs' motion. 

 

1 Plaintiffs subsequently made additional amendments to its 

complaint, which are not relevant to the issues presented in 

this appeal. 
9 A-4516-12T1

The judge found that the insureds did not provide defendant 

with notice of plaintiffs' claim "as soon as practicable" and, 

therefore, coverage was barred under the specific terms of the 

policy. The policy period ran from January 1, 2006 until 

January 1, 2007. The insureds were served with plaintiffs' 

first amended complaint on February 21, 2006, but they did not 

provide defendant with notice of the claim until August 28, 

2006, over six months after plaintiffs served them with the 

complaint. No explanation for this lengthy delay was provided. 

The judge noted that, in Associated Metals & Minerals Corp. 

v. Dixon Chemical & Research, Inc., 82 N.J. Super. 281, 316-17 

(App. Div. 1963), certif. denied, 42 N.J. 501 (1964), we held 

that a delay of five and one-half months in notifying an insurer 

was not "as soon as practicable" under the terms of a similar 

policy and, therefore, the insurer properly denied coverage. 

The judge stated:

Applying Associated Metals to the facts 

of this case, the court has no choice but to 

find that the assigning insureds failed to 

provide written notice to [defendant] as 

soon as practicable, and therefore, were not 

entitled to coverage. In the present 

case[,] the assigning insureds waited more 

than six months from service of the First 

Amended Complaint before finally putting 

[defendant] on notice of the claims against 

them. Additionally, as in Associated 

Metals, [plaintiffs have] failed to produce 

any evidence for the record explaining or 

attempting to justify this delay; and none 
10 A-4516-12T1

of the assigning insureds, nor anyone from 

[their law firm] have been deposed. Thus, 

the undisputed facts before this court show 

that an unexplained six month delay exists 

between the time when the claims were first 

made (February 21, 2006) and when 

[defendant] was [first given] written notice 

of the claims (August 28, 2006). And just 

as the unexplained five and a half month 

delay in Associated Metals was unreasonable, 

so too is the six month delay present in 

this case. Therefore, this court finds as a 

matter of law [that] the assigning insureds 

did not provide written notice of the claims 

against them to [defendant] as soon as 

practicable, and therefore, are not entitled 

to coverage. Furthermore, because the 

assigning insureds are not entitled to 

coverage under the Policy, [plaintiffs] — as 

the assignee[s] — [have] no right to 

coverage either.

[(Footnote omitted).]

Judge Arre also rejected plaintiffs' argument that 

defendant had to show that it was prejudiced by the insureds' 

failure to notify them of the claim as soon as practicable 

before denying coverage. Relying upon the Supreme Court's 

decision in Zuckerman v. National Union Fire Insurance Co., 100 

N.J. 304, 324 (1985), the judge held that no prejudice needed to 

be shown. On February 27, 2013, the judge issued orders 

granting defendant's summary judgment motion, and denying 

plaintiffs' motion. 

Plaintiffs moved for reconsideration, asserting that the 

judge had not considered their argument that defendant should be 
11 A-4516-12T1

estopped from denying coverage because it did not specifically 

raise the insureds' failure to provide notice of the claim "as 

soon as practicable" in its three disclaimer letters. Judge 

Arre denied the motion in a thoughtful oral opinion. The judge 

found that defendant "responded to the assigning insured[s']

initial claim within three weeks and has continually denied 

coverage since that time. [Defendant] has never at any time 

through its actions or inactions given [plaintiffs] reason to 

believe that coverage existed" and, therefore, estoppel could 

not be applied against defendant. This appeal followed.

On appeal, plaintiffs renew the same arguments they 

unsuccessfully presented to Judge Arre. They concede there are 

no disputed material facts and that, under our holding in 

Associated Metals, the insureds did not provide notice of 

plaintiffs' claim to defendant "as soon as practicable" under 

the policy. Nevertheless, they again assert that defendant can 

not rely upon this provision to deny coverage unless it can show 

that it was prejudiced by the insureds' delay in providing 

notice, and that defendant should be estopped from denying 

coverage.

We are not persuaded by plaintiffs' arguments and affirm 

substantially for the reasons expressed by Judge Arre. There 

was no dispute as to any of the material facts and, therefore, 
12 A-4516-12T1

this matter was clearly ripe for summary judgment. Brill v. 

Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995). 

Moreover, plaintiffs concede that, while the insureds provided 

notice of plaintiffs' claim to defendant within the policy 

period, they did not do so "as soon as practicable" as required 

by the policy. The policy defendants provided to the insureds 

clearly required that notice be provided both within the policy 

period and as soon as practicable. "'[W]hen the language of an 

insurance policy is clear, [appellate courts] must enforce its 

terms as written.'" Thompson v. James, 400 N.J. Super. 286, 291 

(App. Div. 2008) (second alteration in original) (quoting 

Conduit & Found. Corp. v. Hartford Cas. Ins. Co., 329 N.J. 

Super. 91, 99 (App. Div.), certif. denied, 165 N.J. 135 (2000)). 

Because the insureds did not meet both of the notice 

requirements that were unambiguously expressed in the policy, we 

conclude that coverage was properly denied to the insureds and, 

by extension, to plaintiffs as their assignees.

Like the trial judge, we reject plaintiffs' argument that 

defendant can only disclaim coverage if it can demonstrate that 

it was prejudiced by the insureds' failure to provide notice as 

soon as practicable. There are two different types of insurance 

policies: "claims made" and "occurrence" policies, and they 

differ based on how coverage is triggered. Under "claims made" 
13 A-4516-12T1

policies, coverage depends on when the insured notified the 

insurer of the claim. Med. Inter Ins. Exch. of N.J. v. Health 

Care Ins. Exch., 278 N.J. Super. 513, 518, 521 (App. Div.),

certif. denied, 140 N.J. 329 (1995). Thus, the policy in this 

case, which made coverage dependent on the insureds providing 

defendant with notice of the claim within the policy period and 

as soon as practicable, was clearly a "claims made" policy.

Under "occurrence" policies, coverage depends on when the 

act or omission giving rise to the claim occurred. Id. at 518. 

For occurrence policies, when the insured does not provide 

timely notice, the insurer must establish prejudice in order to 

avoid coverage. Cooper v. Gov't Emps. Ins. Co., 51 N.J. 86, 94 

(1968). However, that is not the case for claims made policies, 

like the one involved in this case. In Zuckerman, the Supreme 

Court distinguished between claims made policies and occurrence 

policies, holding that for claims made policies, an insurer need 

not show that it was prejudiced by an insured's failure to 

provide notice "as soon as practicable." Zuckerman, supra, 100 

N.J. at 324. The Court stated that requiring an insurer to 

make such a showing would constitute "an unbargained-for 

expansion of coverage, gratis, resulting in the insurance 

company's exposure to a risk substantially broader than that 

expressly insured against in the policy." Ibid.; see also Med. 
14 A-4516-12T1

Inter. Ins. Exch., supra, 278 N.J. Super. at 520-21 (citing 

Zuckerman and indicating that the appreciable prejudice 

requirement does not apply to claims made policies).

Plaintiffs ask us to distinguish Zuckerman or limit it so 

that it does not reach the claims made policy involved in this 

case. We decline this invitation because we discern no basis 

for distinguishing the Court's clear holding in Zuckerman from 

the facts in this case. Contrary to plaintiffs' contention, the 

Court did not limit its holding to cases where notice first 

occurred outside the policy period and it plainly stated that 

"[t]he Cooper doctrine" that requires prejudice to be shown for 

occurrence policies has "no application whatsoever to a 'claims 

made' policy . . . ." Zuckerman, supra, 100 N.J. at 324 

(emphasis added). In a subsequent decision, the Court confirmed 

"the total inapplicability of the Cooper doctrine to a true 

'claims made policy[.]" Sparks v. St. Paul Ins. Co., 100 N.J.

325, 342 (1985) (emphasis added). "[A]s an intermediate 

appellate court, we are bound to follow and enforce the 

decisions of the Supreme Court." Kaye v. Rosefielde, 432 N.J. 

Super. 421, 470-71 (App. Div. 2013). We do so here and 

therefore reject plaintiffs' contention that defendant had to 

show prejudice in order to invoke the notification requirements 

of this claims made policy.
15 A-4516-12T1

Finally, plaintiffs showed no grounds for estopping 

defendant from denying coverage based on the insureds' failure 

to provide notice of the claim as soon as practicable after its 

receipt. In its disclaimer letters, defendant never conceded 

that the insureds met both of the notice requirements of the 

policy and gave no indication whatsoever that the claim would 

ever be granted. We therefore agree with Judge Arre's decision 

to reject this argument for the reasons expressed in his oral 

opinion denying plaintiffs' motion for reconsideration.

Affirmed.