Court Opinion

ID: 4703104
Source: CourtListenerOpinion
Date Created: 2021-07-13 14:11:42.33481+00
Date Added: 2024-06-11T08:06:29.215357
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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.

                                                         SUPERIOR COURT OF NEW JERSEY
                                                         APPELLATE DIVISION
                                                         DOCKET NO. A-0353-20

NORMAN INTERNATIONAL,
INC., and RICHFIELD WINDOW
COVERINGS, LLC, d/b/a NIEN
MADE (USA), INC.,

           Plaintiffs-Appellants,

v.

ADMIRAL INSURANCE
COMPANY,

     Defendant-Respondent.
___________________________

                    Submitted June 3, 2021 – Decided July 13, 2021

                    Before Judges Alvarez and Mitterhoff.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Morris County, Docket No. L-0177-19.

                    The Killian Firm, PC, attorneys for appellants (Ryan
                    Milun, on the briefs).

                    Kinney Lisovicz Reilly & Wolff, PC, attorneys for
                    respondent (Justin N. Kinney and Michael S. Chuven,
                    of counsel and on the brief).
PER CURIAM

      In this insurance coverage case, plaintiffs Norman International, Inc.

(Norman) and Richfield Window Coverings, LLC (Richfield) appeal from two

orders entered on September 14, 2020 granting summary judgment to defendant

Admiral Insurance Co. and denying Richfield's motion for summary judgment.

Having carefully reviewed the record, and in light of the applicable legal

principles, we reverse and remand.

      We discern the following material facts from the record before us, viewed

in the light most favorable to plaintiffs, the non-moving parties. Polzo v. Cnty.

of Essex, 209 N.J. 51, 56 n.1 (2012) (citing Brill v. Guardian Life Ins. Co. of

Am., 142 N.J. 520, 523 (1995)). Richfield is owned by Norman which, in turn,

is owned by Nien Made Enterprise (Nien Made). Norman manufactures window

coverings, including blinds, shades, and shutters, that are sold by Richfield to

national retailers like Home Depot.     Norman is also involved with certain

"corporate functions," which include procuring insurance.

      Richfield sells the products to Home Depot through a "Supplier Buying

Agreement" for a flat fee. Richfield provides Home Depot with blind cutting

machines, designed and manufactured by Nien Made, which are operated only

by Home Depot employees to modify its products for Home Depot customers.

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                                       2
        Defendant issued Norman a commercial general liability policy, effective

from 2017 to 2018, under which Richfield and Nien Made are "Named

Insureds." Under the policy, defendant had the duty to defend and to "pay those

sums that the insured becomes legally obligated to pay as damages because of

'bodily injury' or 'property damage' to which this insurance applies." However,

defendant had "no duty to defend the insured against any 'suit' seeking damages

for 'bodily injury' or 'property damage' to which this insurance does not apply."

        In that regard, the insurance agreement between the parties had several

relevant exclusions. The "Injury to Independent Contractors Exclusion" reads ,

in part:

              It is agreed this insurance does not apply to "bodily
              injury", "property damage" or "personal and
              advertising injury" to:

              1. Any independent contractor hired directly or
              indirectly by you or on your behalf;

              2. Any employee of any independent contractor hired
              directly or indirectly by you or on your behalf . . . .

        The "Designated New York Counties Exclusion" reads, in pertinent part,

that:

              This insurance does not apply to "bodily injury",
              "property damage" or "personal and advertising
              injury", including costs or expenses, actually or

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             allegedly arising out of, related to, caused by,
             contributed to by, or in any way connected with:

                    (1) Any operations or activities performed by or
                    on behalf of any insured in the Counties shown in
                    the Schedule above . . . .

Nine counties are listed, one of which is Nassau County.

      Under the "Added Coverages" section of the "Manufacturers and

Distributors Enhanced Coverage" provision, it reads:

             It is agreed "your product" includes "engineering and
             design work" performed by you and which is
             incorporated by you into "your product"; however, this
             insurance does not apply to:

                    (1) "Engineering and design work" performed by
                    others on your behalf; or

                    (2) "Engineering and design work" performed by
                    you for others.

             For the purposes of this endorsement, "engineering and
             design work" means the making, drawing, planning,
             drafting, formulating or developing . . . a plan,
             specification or formula. 1

1
   Defendant argues that, in the event we reverse the motion judge's order, it is
nonetheless entitled to a declaration that it has no obligation to indemnify plaintiffs
pursuant to this provision. We decline to reach defendant's argument since this issue
was not addressed by the motion judge. See Ins. Co. of N. Am. v. Gov't Emps. Ins.
Co., 162 N.J. Super. 528, 537 (App. Div. 1978) (declining to resolve on appeal an
issue not addressed by the trial court).
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                                          4
      During the policy period, Colleen Lorito, a Home Depot employee, was

injured while operating the blind cutting machine at a store located in Nassau

County. She and her husband filed a complaint in Nassau County against Nien

Made alleging negligent design, breaches of express and implied warranties,

failure to warn, as well as strict liability for both manufacturing and design

defects.

      In October 2018, after Richfield provided notice of the pending claim,

defendant denied any obligation to defend or indemnify Richfield pursuant to

the "Injury to Independent Contractors Exclusion," the "Designated New York

Counties Exclusion," and the "Manufacturers and Distributors Enhanced

Coverage" provision. After unsuccessfully challenging the denial of coverage,

Richfield filed a Law Division complaint against defendant seeking a

declaratory judgment that it was entitled to defense under the policy. After

defendant filed an answer, the parties filed competing motions for summary

judgment.

      From the bench, the judge determined that the "Injury to Independent

Contractors Exclusion" was inapplicable under the circumstances.2 He reserved

2
  Apparently satisfied with that ruling, defendant did not file a cross-appeal. In the
absence of a cross-appeal, we will not address this issue. See Walrond v. Cnty. of
Somerset, 382 N.J. Super. 227, 231 n. 2 (App. Div. 2006).
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                                          5
his decision with respect to the applicability of the "Designated New York

Counties Exclusion."     On September 14, 2020, the motion judge granted

defendant's motion, denied Richfield's motion, and dismissed plaintiffs'

complaint. In his accompanying written opinion, the judge found persuasive the

fact that "Richfield assists with the regular maintenance and repair work of the

machines," "assists in the employee training for the machines," "is the contact

for troubleshooting issues with the machines," and "performs cleaning of the

machines."   The judge concluded that these operations and activities were

sufficient to trigger the "Designated New York Counties Exclusion" because

they were directly related to the blind cutting machine and were essential to the

business relationship between Richfield and Home Depot.

      On appeal, plaintiffs raise the following arguments for our consideration:

             POINT I

             EXCLUSIONARY LANGUAGE IN AN INSURANCE
             POLICY DOES NOT APPLY IN A VACUUM. HERE,
             THE TRIAL COURT ERRED BY APPLYING THE
             "DESIGNATED    NEW     YORK    COUNTIES"
             EXCLUSION WITHOUT CROSS-REFERENCING
             AND     COMPARING       WHETHER     THE
             ALLEGATIONS IN THE UNDERLYING LORITO
             COMPLAINT ACTUALLY TRIGGERED THE
             EXCLUSION.

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            POINT II

            THE STATEMENTS BY POMS, RICHFIELD'S
            FORMER INSURANCE BROKER, WHICH WERE
            MADE   OUTSIDE    THE    SCOPE  OF   ITS
            AUTHORITY[,] ARE NOT BINDING AND CANNOT
            CHANGE    THE    ALLEGATIONS   OF   THE
            COMPLAINT, WHICH GUIDE THE COVERAGE
            ANALYSIS.

      It is well-settled that we review a summary judgment decision by "the

same standard that governs the motion judge's determination." RSI Bank v.

Providence Mut. Fire Ins. Co., 234 N.J. 459, 472 (2018) (citing Bhagat v.

Bhagat, 217 N.J. 22, 38 (2014)). A motion for summary judgment should be

granted only "if the pleadings, depositions, answers to interrogatories and

admissions on file, together with the affidavits, if any, show that there is no

genuine issue as to any material fact challenged" and the party seeking this relief

"is entitled to a judgment or order as a matter of law." R. 4:46-2(c). "[U]nder

the indulgent summary-judgment standard of review," Polzo, 209 N.J. at 75,

courts must consider the factual record, and reasonable inferences that can be

drawn from those facts, "in the light most favorable to the non-moving party,"

to decide whether the moving party was entitled to judgment as a matt er of law.

IE Test, LLC v. Carroll, 226 N.J. 166, 184 (2016) (citing Brill, 142 N.J. at 540).

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      "The interpretation of an insurance contract is a question of law for the

court to determine, and can be resolved on summary judgment." Adron, Inc. v.

Home Ins. Co., 292 N.J. Super. 463, 473 (App. Div. 1996) (citing Weedo v.

Stone-E-Brick, Inc., 155 N.J. Super. 474, 479 (App. Div. 1977)). An insurance

contract "will be enforced as written when its terms are clear in order that the

expectations of the parties will be fulfilled." Flomerfelt v. Cardiello, 202 N.J.

432, 441 (2010). We interpret an insurance policy in accordance with the

document's "plain and ordinary meaning." Mem'l Props., LLC v. Zurich Am.

Ins. Co., 210 N.J. 512, 525 (2012) (quoting Flomerfelt, 202 N.J. at 441). Any

ambiguities "are construed against the insurer and in favor of the insured."

Flomerfelt, 202 N.J. at 441. Exclusionary clauses, however, "are typically

construed narrowly with the onus 'on the insurer to bring the case within the

exclusion.'" Mem'l Props., LLC, 210 N.J. at 528 (quoting Flomerfelt, 202 N.J.

at 442).

      Turning to the "Designated New York Counties Exclusion," there is no

dispute that Lorito's injuries were sustained in Nassau County. Thus, that

exclusion applies only if Lorito's "bodily injury" actually or allegedly arose out

of, was related to, was caused by, was contributed to by, or was in any way

                                                                            A-0353-20
                                        8
connected with any "operations or activities performed by or on behalf of"

plaintiff. We conclude that it was not.

      "[A]n insurer's duty to defend an action against the insured is measured

by the allegations contained in the complainant's pleadings."          Voorhees v.

Preferred Mut. Ins. Co., 246 N.J. Super. 564, 569 (App. Div. 1991). "As a

practical matter, the determination of an insurer's duty to defend requires review

of the complaint with liberality to ascertain whether the insurer will be obligated

to indemnify the insured 'if the allegations are sustained.'" Abouzaid v. Mansard

Gardens Assocs., LLC, 207 N.J. 67, 79 (2011) (quoting Danek v. Hommer, 28

N.J. Super. 68, 77 (App. Div. 1953)). "[T]he complaint should be laid alongside

the policy and a determination made as to whether, if the allegations are

sustained, the insurer will be required to pay the resulting judgment, and in

reaching a conclusion, doubts should be resolved in favor of the insured."

Flomerfelt, 202 N.J. at 445 (quoting Danek, 28 N.J. Super. at 77). "[I]t is the

nature of the claim asserted, rather than the specific details of the incident or the

litigation's possible outcome, that governs the insurer's obligation." Id. at 444

(citing Ohio Cas. Ins. Co. v. Flanagin, 44 N.J. 504, 512 (1965)).

      Even viewing the complaint filed by the Loritos with liberality, we

conclude that Richfield's limited activities and operations have no causal

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                                          9
relationship to the causes of action or allegations therein. The complaint alleges

six distinct causes of action: negligent design, breaches of express and implied

warranties, failure to warn, and strict liability for both manufacturing and design

defects. These claims have no relationship with the maintenance or repair of the

blind cutting machines, the training of Home Depot employees, or the cleaning

of the machines. Because any "doubts should be resolved in favor of the

insured," Flomerfelt, 202 N.J. at 445 (quoting Danek, 28 N.J. Super. at 77), we

conclude the motion judge erred in granting summary judgment to defendant on

the basis of the "Designated New York Counties Exclusion."

      To the extent we have not addressed defendant's remaining arguments, we

are satisfied they are without sufficient merit to warrant further discussion in a

written opinion. R. 2:11-3(e)(1)(E).

      Reverse and remanded.

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