2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit 7-20-2005 

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w . vi ll anova . e du/thir dc ir c uit_2005/813NOT P RE CE DE NT I AL UN I TED STATES CO UR T OF A PP EALS F O R T H E T H IR D C IR C U IT N os . 04- 1029, 04- 1124 and 04- 1125 WI L L I AM S T E P HAN; KAT HR YN T . S T E P HAN; JA C K B . M O N T I; K A T H Y M O N T I, t/ a HOL L Y B E AC H C ONDOMI NI UM AS S OC I AT I ON

(an U n inco rpo rated A sso ciati o n ); HOL L Y B E AC H C ONDOMI NI UM AS S OC I AT I ON A ppel l ant s / C r os s A ppel l ees v. T RA NS P OR T AT I ON I NS UR ANC E CO M P ANY, A ppel l ee/ C r os s A ppel l ant APP EAL F ROM THE UNI TE D ST ATE S DI S TRI CT C OURT

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J ul y1, 2005 B efor e: R O T H , R E N D E L L , and B A R R Y , C i r cui tJ udges

( O pi ni on Fi l ed: J ul y20, 2005)

OP I NI ON2

B A R R Y , C i r cui tJ udge A p p e llan ts (“ th e O w n e rs” ) a re th e o w n e rs o f a th re e -sto ryc o n d o m in iu m lo c a ted in W i l dw ood, N ew J er s ey . T he O w ner s obt ai ned an i ns ur ance pol i cyfr om T r ans por t at i on I ns ur ance C om pany( “Tra ns por t at i on”) fort he condomi ni um . T he condomi ni um bui l di ng i s s uppor t ed byw ood pi l i ngs ext endi ng upw ar d fr om t he gr ound. I n Sept ember , 1999, t he O w ner s not i ced thatt he bui l di ng w as s w ay i ng dur i ng w i nd gus t s , and theyr et ai ned I r vi ng Fruchtm an t o i ns pectt he bui l di ng’ s pi l i ng foundat i on s y s t em. Fruchtm an di s cover ed
s ubt err anea n deca yi n 17 of the 29 pi l i ngs , and det erm i ned thatt he pr oper t yw as s ubj ect to co ll ap se if e x p o sed to w ind s o f 9 0 m il es p er h o u r or g rea ter. B ase d o n F ruc h tm an ’s
r epor t , t he O w ner s under t ook an ext ens i ve r emedi at i on pr oj ectt o corr ectt he founda t i on p ro b lem , at a n e x p e n se o f a p p ro x im a tely$ 1 1 3 ,0 0 0 . T h e O w n e rs s o u g h t co v e ra g e f o r th is p rojec t f ro m T ra n sp o rta tio n . W h e n T ra n sp o rta tio n re f u se d , the O w n e rs c o m m e n c e d th is act i on. T h e in su ra n c e p o licysp e c if ica llye x c lu d e s “ f

o u n d a tio n s o f

b u ild in g s. . . if

th e ir fou nd at i on s ar e below . . . [t ]he sur face o f t he g round , ” and l oss r esul t i ng from “rust
corr os i on, fungus , deca y , det er i or i at i on, hi dden orl at entdefe ct . ” N onethel es s , t he pol i cy does pr ovi de forcover age “ caus ed bycol l aps e of a bui l di ng. . . i f the col l aps e i s caus ed by . . . hi dden dec ay . ” A pp. 229a, 246a, 249a. U nderN ew J er s eyl aw , w hi ch governs i nt erpr et at i on of the pol i cy , cover age f orcol l aps e i ncl udes a col l aps e w hi ch has noty et occurr ed buti s “i m m i nent . ” See Bucz ek v
. C ont i nentalI ns . C o. , 378 F. 3d 284, 290 ( 3d3

C i r . 2004) ( ci t i ng Fant is Foods , I nc. v. N or th R i verI

ns . C o. , 75 3 A . 2d 17 6, 18 3 (N . J. Super . C t . A pp. D i v. 2000) ) . T hus , t he i s s ue pr es ent ed i n t hi s cas e i s w hethert he condomi ni um w as i n dangerof i m m i nentcol l aps e. Pr i ort o t r i al , t he D i s t r i ctC our thel d a D au berthear i ng and conc l uded that Fruchtm an w as qual i fi ed t o t es t i fyas a t echni cal expert . T he C our tal s o t ook “j udi ci al not i ce thatt he W i l dw ood, N ew J er s eyr egi on i s s om et i m es hi tbyhur r i cane s w i t h w i nd
s peeds exce edi ng 90 m . p. h. ” St ephan v. C ont i nentalC as ual t y I ns . C o. , 2 0 0 3 U .S . D ist. L E X IS 7 5 6 8 , * 1 0 -11 (D . N . J. M ay6 , 2 0 0 3 ). T h e ju ryf

o u n d th a t th e O w n e rs h a d f a iled to p ro v e th a t th e c o n d o m in iu m w o u ld col l aps e i f expos ed t o 90 m i l e perhourw i nds . T he O w ner s appea l ed, ar gui ng t hatt hey
w ere en ti tl ed to jud g m en t as a m att er o f law , p u rsua n t t o F ed R . C iv. P. 50 . T h e O w n ers al s o t ake i s s ue w i t h t he l anguage of the D i s t r i ctC our t ’ s j ur yi ns t ruct i ons , and ar gue that t he D i s t r i ctC our ts houl d have pe r m i t t ed W i l l i am S t ephan t o t es t i fyas t o t he ca us e of the bui l di ng’ s pr opens i t yt o s w ayi n t he w i nd. T r ans por t at i on cr os s - appea l ed fr om t he D istric t C o u rt’s o rd e r p e rm itt in g F ru c h tm a n to tes tifya s a n e x p e rt. W e nee d notdel ve i nt o anyof thes e i s s ues , how ever , beca us e ourr ece ntdeci s i on i n B ucz ek v
. C ont i nentald is p o s e s o f th e in s ta n t c a s e . B ucz ek i nvol ved a s i m i l art hr ees t or ycondomi ni um i n W i l dw ood, N ew J er s ey , w i t h s i m i l arr ot t i ng w ooden pi l i ngs . T he
ow ner s i n B ucz ek

r epl ace d t he pi l i ngs and s oughtr ei m bur s ementfr om t he s ame i ns ur ance c o m p a n y, u n d e ra p o l i c y v i r tu a l l y i d e n t i c a l t o t h a ti n t h i s c a s e . T h e s a m e a t t o r n e ysT h e D i s t r i c tC o u r te n t e r e d j u d g m e n tf o rT r a n s p o r t a t i o n o n D e c e m b e r3 1 , 2 0 0 3 . We 1 i s s ued ourdeci s i on i n B ucz ek on A ugus t6, 2004. B eca us e w e w i l l aff

i r m t he j udgm enti n favorof Tra ns por t at i on, w e nee d notr eac h 2 T r a n s p o r t a t i o n ’ s c r o s s - a p p e a l c o n c e r n i n g F ru c h t m a n ’ s t e s t i m o n y. 4 handl ed both cas es , and the s ame D i s t r i ctJ udge pr es i ded overbot h t r i al s . I ndeed, dur i ng pr ocee di ngs i n t hi s cas e, t he D i s t r i ctJ udge fr equent l yr efe r ence d hi s hol di ngs i n t he B ucz ek m a t t e r , a to n e p o i n tn o t i n g t h a t“ I w a s n ’ tg o i n g t o c h a n g e m y B ucz ek t ype rul i ngs . . . l ett he C i r cui thave i t . ” A pp. 334b. 1 I n B ucz ek , as here, F rucht m an tes t i fi ed that90 m i l e per ho ur w i nd s w ou l d cau se t he condomi ni um t o col l aps e. T he D i s t r i ctJ udge t ook j udi ci al not i ce of t he fa ctt hat90
m i l e perhourw i nds s om et i m es hi tW i l dw ood, N ew J er s ey , and ul t i m at el yent er ed j udgm enti n favorof the condomi ni um ow ner s . I n r ever s i ng, w e hel d t hat“s uch a thr eat is n o t im m in e n t a n d c a n n o t s e rv e to s u p p o rt a f in d in g o f ‘c o lla p s e .’” 3 7 8 F .3 d a t 2 9 1 , n . 5 . M or eover , w e not ed that“the i ns ur er ’ s obl i gat i on t o r ei m bur s e foract s t aken t o pr es erve orpr ot ectC over ed Pr oper t ydoes notext end t o r equi r e r ei m bur s ementforpr event i on of d a m a g e to p ro p e rtyth a t is e x c lu d e d f ro m c o v e ra g e o r f

o r a c irc u m sta n c e th a t is n o t a cover ed ca us e of l os s . ” I d. at293. T her e i s no m eani ngful di s t i nct i on betw een B ucz ek and thi s cas e. Fur t herm or e, h e re , as n o ted a b o v e , the ju rym a d e th e sp e c if ic f in d in g th a t th e O w n e rs h a d f a iled to p rov e tha t th e c o n d o m inium w o u ld co ll ap se if e x p o sed to 9 0 m il e p er h o u r w ind s. We will , the ref

ore, af f irm the f ina l judgme nt of December 31, 2003. 2