Court Opinion

ID: 2815789
Source: CourtListenerOpinion
Date Created: 2015-07-09 14:28:31.179124+00
Date Added: 2024-06-11T11:28:12.817442
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
                APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-2767-13T1

CYPRESS POINT CONDOMINIUM
ASSOCIATION, INC.,                    APPROVED FOR PUBLICATION

      Plaintiff-Appellant/                  July 9, 2015
      Cross-Respondent,
                                        APPELLATE DIVISION
v.

ADRIA TOWERS, L.L.C.; D. LOUREIRO
MASONRY CONTRACTOR; DEAN MARCHETTO
ASSOCIATES, P.C.; PEREIRA CONSTRUCTION,
L.L.C.; AMERICAN ARCHITECTURAL
RESTORATION; METRO HOMES, L.L.C.;
COMMERCE CONSTRUCTION MANAGEMENT, L.L.C.;
WATERFRONT MANAGEMENT SYSTEMS, L.L.C.;
NCF GLAZING & ERECTING, INC.; and
MDNA FRAMING, INC.,

      Defendants,

and

WEATHER-TITE,

      Defendant/Third-Party
      Plaintiff,

v.

PEREIRA CONSTRUCTION, L.L.C., and
AMERICAN ARCHITECTURAL RESTORATION,

      Third-Party Defendants,

and
EVANSTON INSURANCE COMPANY,

      Defendant/Third-Party
      Plaintiff-Respondent/
      Cross-Appellant,

and

NATIONAL INDEMNITY COMPANY,

      Third-Party Defendant,

and

CRUM & FORSTER SPECIALTY
INSURANCE COMPANY,

      Third-Party Defendant-
      Respondent/Cross-Appellant.

____________________________________________

          Argued May 27, 2015 – Decided July 9, 2015

          Before   Judges      Yannotti,   Fasciale   and
          Hoffman.

          On appeal from Superior Court of New Jersey,
          Law Division, Hudson County, Docket No. L-
          2260-11.

          Mark M. Wiechnik argued the cause for
          appellants/cross-respondents Cypress Point
          Condominium Association, Inc., (Ansell Grimm
          & Aaron, P.C., attorneys; Mr. Wiechnik and
          Breanne M. DeRaps, on the brief).

          Elliott   Abrutyn   argued   the  cause   for
          respondent/cross-appellant Evanston Insurance
          Company (Morgan Melhuish Abrutyn, attorneys;
          Mr. Abrutyn, of counsel; Mr. Abrutyn and
          Thomas G. Rantas, on the brief).

          John   S.  Favate   argued  the   cause  for
          respondent/cross-appellant Crum & Forster
          Specialty Insurance Company (Hardin, Kundla,

                                  2                         A-2767-13T1
              McKeon & Poletto, P.A.,               attorneys; George R.
              Hardin and Arthur A.                  Povelones, Jr., of
              counsel; Mr. Hardin,                  Mr. Povelones, and
              Brian C. Alfson, on the              brief).

     The opinion of the court was delivered by

FASCIALE, J.A.D.

     Plaintiff,       a     condominium                association,       brought     claims

against the association's developer, Adria Towers, L.L.C. (the

"developer"),      the     developer's             insurers,           Evanston    Insurance

Company   ("Evanston")       and     Crum          &    Forster    Specialty       Insurance

Company ("Crum & Forster") (collectively the "insurers"), and

various subcontractors (the "subcontractors").                                 The developer

served as the general contractor on the condominium project and

hired   the    subcontractors        who       performed          all    the    construction

work.     Plaintiff sought coverage from the insurers under the

developer's      commercial        general             liability        ("CGL")    insurance

policies for consequential damages caused by the subcontractors'

defective work.1

     The judge determined that there was no "property damage" or

"occurrence"     as   required       by    the         policy     to    trigger    coverage,

granted    summary        judgment        to       Evanston,       and     dismissed       the

complaint against Crum & Forster as moot.                               Plaintiff appeals

1
  The insurers' policies contain the same pertinent language. We
therefore refer to the policies hereinafter in the singular (the
"policy").   Plaintiff's standing to bring this lawsuit is not
contested on appeal.

                                               3                                     A-2767-13T1
from a January 31, 2014 order denying reconsideration of the

order    granting   summary    judgment    to   Evanston.        The   insurers

cross-appeal from various orders contending that if we reverse

on plaintiff's appeal, then we should address their arguments

raised, but not considered, by the judge.2

      We review the denial of a motion for reconsideration to

determine      whether   the   trial   court    abused    its   discretionary

authority.      Cummings v. Bahr, 295 N.J. Super. 374, 389 (App.

Div. 1996).      When reviewing an order granting summary judgment,

we apply the same standards that the trial court applied when

ruling on the motion.          Oyola v. Xing Lan Liu, 431 N.J. Super.

493, 497 (App. Div.), certif. denied, 216 N.J. 86 (2013).

      The sole question in this appeal is whether consequential

damages to the common areas of the condominium complex and to

the     unit   owners'   property,     caused      by   the   subcontractors'

defective work, constitute "property damage" and an "occurrence"

under the policy.        We consider this issue by interpreting the

plain    language   of   the    policy,    which    follows     the    Insurance

2
   Evanston cross-appeals from orders dated March 16, 2012
(granting plaintiff's motion to assert a direct claim against
Evanston); November 8, 2013 (granting summary judgment to
Evanston); December 12, 2013 (dismissing Crum & Forster's third-
party complaint against Evanston); and January 31, 2014 (denying
plaintiff's motion for reconsideration). Crum & Forster cross-
appeals from the December 12, 2013 order dismissing as moot
plaintiff's claims against it.

                                       4                                A-2767-13T1
Services   Office,   Inc.'s   ("ISO")   1986   standard   CGL    form     (the

"1986 ISO form").       Applying the relevant standards, we reverse

the   order   denying    reconsideration,      set   aside      the    orders

dismissing plaintiff's complaint, and remand with instructions

to consider the insurers' alternate contentions that plaintiff's

claims are otherwise excluded under the policy.

      We hold that the unintended and unexpected consequential

damages caused by the subcontractors' defective work constitute

"property damage" and an "occurrence" under the policy.               We base

this holding in part on the developer's reasonable expectation

that, for insurance risk purposes, the subcontractors' faulty

workmanship is to be treated differently than the work of a

general contractor.       We reach that conclusion by viewing the

policy as a whole and distinguishing Weedo v. Stone-E-Brick,

Inc., 81 N.J. 233 (1979), and Firemen's Insurance Co. of Newark

v. National Union Fire Insurance Co., 387 N.J. Super. 434 (App.

Div. 2006), two opinions construing ISO's 1973 standard CGL form

(the "1973 ISO form").

                                 I.

      We view the facts in the light most favorable to plaintiff,

as we must do at this stage.      Brill v. Guardian Life Ins. Co. of

Am., 142 N.J. 520, 540 (1995).

                                   5                                  A-2767-13T1
    The     subcontractors     failed        to    properly      install    the     roof,

flashing, gutters and leaders, brick and EIFS facade, windows,

doors,    and   sealants    (the    "faulty        workmanship").          The     faulty

workmanship amounted to what has typically been considered in

the construction industry as defective work.                       In the insurance

industry, such replacement costs are usually regarded as a cost

of doing business and are considered a "business risk."                                See

Heldor Indus. v. Atl. Mut. Inc. Co., 229 N.J. Super. 390, 396

(App. Div. 1988) (stating that "the insured assumes the risk of

necessary replacement or repair . . . as a part of the cost of

doing business").     Plaintiff has not argued that the replacement

costs constitute "property damage" and an "occurrence" under the

policy.

    According to plaintiff, the faulty workmanship also caused

consequential     damages    to    the   "common         areas    and   unit     owners'

property     [including]      damage       to       steel     supports,        exterior

sheathing and interior sheathing and sheetrock, insulation and

other     interior   areas    of     the      building,          both   visible        and

latent[.]"      Some unit owners experienced "water infiltration at

the interior window jambs and sills[,]" and "roof leaks."                           Other

unit owners "experienced significant damage to the interior of

their    units,   including       exterior        wall   sheathing,     wall      cavity

                                         6                                       A-2767-13T1
insulation, insulation sheetrock, wall finishes, wood flooring,

and trim."

     In relation to sharing the cost of risks as a matter of

insurance     underwriting,           consequential            damages     flowing     from

defective work are vastly different than the costs associated

with replacing the defective work.                       See Hartford Ins. Grp. v.

Marson Constr. Corp., 186 N.J. Super. 253, 258-59 (App. Div.

1982)    (holding      that    defective          work    causing    damage      to   other

property is not a business risk), certif. denied, 93 N.J. 247

(1983); Newark Ins. Co. v. Acupac Packaging, Inc., 328 N.J.

Super.    385,   392-93       (App.    Div.       2000)    (noting       that   damage     to

third-party property is a tort liability and not a business risk

or work performance issue).

     On     appeal,     plaintiff           raises       two    principal       arguments.

First, plaintiff contends that under a plain reading of the

language    in   the    policy,       the    consequential         damages      constitute

"property damage" and an "occurrence."                         Plaintiff asserts that

we   must    conduct      this    initial          threshold       analysis.          If   a

determination is made that "property damage" and an "occurrence"

exist, plaintiff concedes that the insurers would be free to

argue, on remand, that plaintiff's claims are otherwise excluded

under the terms of the policy.

                                              7                                   A-2767-13T1
    Second, plaintiff argues that the judge erroneously placed

substantial reliance on the holdings in Weedo and Firemen's to

determine     whether      there    existed    "property          damage"      and     an

"occurrence."        Plaintiff        maintains      that        those    cases      are

distinguishable because they (1) involved only replacement costs

flowing from a business risk rather than consequential damages

caused by defective work; and (2) interpreted different policy

language.

                                       II.

    We begin by addressing plaintiff's first contention, that

there exists "property damage" and an "occurrence" under the

plain   language    of     the     policy.     The    following          well-settled

principles inform our analysis of the policy's terms.

    A     court's   interpretation       of   an   insurance          contract    is    a

determination of law.        Sealed Air Corp. v. Royal Indem. Co., 404

N.J. Super. 363, 375 (App. Div.), certif. denied, 196 N.J. 601

(2008).      We   afford    no   special     deference      to    a    trial   court's

interpretation of the law and the legal consequences that flow

from the established facts.              Manalapan Realty, L.P. v. Twp.

Comm. of Manalapan, 140 N.J. 366, 378 (1995).                         Accordingly, we

review a trial court's interpretation of an insurance policy de

novo.     Sealed Air, supra, 404 N.J. Super. at 375.

                                         8                                     A-2767-13T1
       An    insurance     policy      must       be    construed    "as   a    whole    and

effect given to every part thereof."                       Herbert L. Farkas Co. v.

N.Y.    Fire    Ins.     Co.,   5   N.J.      604,       610   (1950);     Arrow     Indus.

Carriers, Inc. v. Cont'l Ins. Co. of N.J., 232 N.J. Super. 324,

334-35 (App. Div. 1989) (noting that our "responsibility is to

give effect to the whole policy, not just one part of it").

When     interpreting       insurance         contracts,        we    begin     by    first

examining the plain language of the policy.                           Pizzullo v. N.J.

Mfrs. Ins. Co., 196 N.J. 251, 270-71 (2008).                          If the terms are

clear,      then    we   give   them    their          plain   and   ordinary    meaning.

Ibid.       Construction of the insurance policy must be "consistent

with the insured's reasonable expectations."                         Sealed Air, supra,

404 N.J. Super. at 376 (internal citation and quotation marks

omitted).

       Here, the language of the policy follows the 1986 ISO form.

The policy provides the terms for coverage in Section I, A.1,

with certain words defined in Section V.                       These sections provide

in pertinent part:

               SECTION I – COVERAGES

               COVERAGE A.      BODILY INJURY & PROPERTY DAMAGE
               LIABILITY

               1.   Insuring Agreement.

                     a. We will pay those sums that the
                     Insured becomes legally obligated
                     to pay as damages because of . . .

                                              9                                    A-2767-13T1
               "property damage" to which    this
               insurance [policy] applies.

                    . . . .

               b. This insurance applies to . . .
               "property damage" only if:

                    (1) The . . . "property
               damage"    is    caused    by an
               "occurrence" that takes place in
               the "coverage territory"; and
                    (2) The . . . "property
               damage" occurs during the policy
               period.3

               . . . .

         SECTION V – DEFINITIONS

               . . . .

         13.      "Occurrence"   means   an   accident,
         including continuous or repeated exposure to
         substantially   the   same   general   harmful
         conditions.

               . . . .

         16.   "Property damage" means:

               a. Physical injury to tangible
               property, including all resulting
               loss of use of that property
               . . .; or

               b.   Loss  of   use  of  tangible
               property that   is not physically
               injured.

3
  The parties do not dispute that the alleged "property damage"
occurred within the "coverage territory" and policy period.

                               10                         A-2767-13T1
Although the policy does not define the term "accident," our

Supreme    Court       has    held    that     "the      accidental           nature    of    an

occurrence       is    determined        by    analyzing            whether    the     alleged

wrongdoer intended or expected to cause an injury."                             Voorhees v.

Preferred Mut. Ins. Co., 128 N.J. 165, 183 (1992).

      Section     I,     A.1     is   followed          by    Section     I,    A.2,       which

provides    separate         language     excluding           various    claims.           Thus,

before reaching the policy's exclusions, the insuring agreement

requires that there be an initial determination of whether there

is   "property        damage"     and    an    "occurrence."              Construing         the

language in Section I, A.1, we conclude that the consequential

damages here amount to "property damage" and an "occurrence."

      As    to     whether       there        exists         "property        damage,"       the

consequential         damages    clearly       constitute           "physical     injury      to

tangible property."             The faulty workmanship damaged "the common

areas and unit owners' property[.]"                          The interior structures,

including    the       drywall,       insulation,            wall    finishes,       and    wood

flooring, were damaged by water infiltration from the faulty

workmanship.          As a result, the consequential damages constitute

"property damage" as defined under the policy.

      As    to        whether     there        exists          an     "occurrence,"          the

consequential         damages    amount       to   an    unexpected       and    unintended

"continuous      or     repeated        exposure        to    substantially          the    same

                                              11                                       A-2767-13T1
general harmful conditions."               The insurers do not contend, and

we    cannot    reasonably     believe,      that    the    subcontractors      either

expected       or   intended   for    their       faulty    workmanship    to     cause

"physical injury to tangible property."                    Thus, the consequential

damages constitute an "occurrence" as defined in the policy.

                                           III.

       Turning to plaintiff's second argument, we conclude that in

granting summary judgment, the trial judge erroneously applied

the    holdings      in   Weedo      and     Firemen's.         Those     cases     are

distinguishable because they (1) involved only replacement costs

flowing from a business risk, rather than consequential damages

caused by defective work; and (2) interpreted different language

than the policy language in this appeal.

                                            A.

       In Weedo, the Court did not resolve whether consequential

damages    resulting       from      subcontractors'          faulty    workmanship

constituted "property damage" or an "occurrence."                       Rather, the

Court focused only on issues related to insurance coverage.                         The

insurer conceded that "but for the exclusions in the policy,

coverage would obtain."           Weedo, supra, 81 N.J. at 237-38 n.2.

Implicit in this concession, therefore, is the tacit admission

that there was an "occurrence" and "property damage."

                                            12                               A-2767-13T1
        The Weedo Court, in interpreting the 1973 ISO form, held

that there was no insurance coverage for "faulty workmanship

.   .   .    where      the   damages    claimed       [were      solely]    the    cost      of

correcting the work itself."                  Id. at 235.          The Court considered

such business-risk damages to be uninsurable.                              Id. at 240-41.

Here,       unlike      in    Weedo,    the      consequential        damages       are       not

defective-work           damages.        In    other      words,     the     consequential

damages      are     distinct     from     the     cost     of    correcting       the       work

itself.        Thus, the holding in Weedo is not dispositive on the

issue presented in this appeal.

        In Firemen's, we also interpreted the 1973 ISO form.                                   We

concluded that there was no "property damage" or "occurrence,"

and thus no insurance coverage, for damages that were solely

related to replacing sub-standard firewalls because the damages

were a business risk, not consequential damages.                                Firemen's,

supra, 387 N.J. Super. at 443-45.                   We noted in Firemen's, unlike

here, that there were no allegations of damages to the "rest of

the     building,"        and    we    followed       Weedo       indicating       that       the

replacement        of    the    defective      work    —    a     business    risk       —    was

uninsurable.         Id. at 443, 446.

        Even    though         Firemen's      did     not        involve     consequential

damages, we acknowledged that "the risk of . . . [consequential]

damage to property caused by faulty workmanship," like here, is

                                              13                                     A-2767-13T1
a different type of risk than the cost of doing business.                    Id.

at 443 (internal citations and quotation marks omitted).                       We

stated that

            [u]nlike business risks . . . where the
            tradesman    commonly      absorbs    the    cost
            attendant upon the repair of his faulty
            work, the accidental injury to property or
            persons    substantially      caused     by   his
            unworkmanlike      performance     exposes    the
            contractor to almost limitless liabilities.
            While   it   may    be   true   that   the   same
            neglectful craftsmanship can be the cause of
            both a business expense of repair and a loss
            represented    by    damage   to    persons   and
            property, the two consequences are vastly
            different in relation to sharing the cost of
            such   risks    as   a   matter    of   insurance
            underwriting.

            [Ibid. (emphasis added) (quoting Weedo,
            supra,   81   N.J.   at   239-40) (internal
            quotation marks omitted).]

      Thus, this case falls within the caveat that                  Weedo and

Firemen's    expressly   recognized,       and   accords     with   our     prior

holdings in Hartford Insurance, supra, 186 N.J. Super. at 258-

59, and Newark Insurance, supra, 328 N.J. Super. at 393.                       We

emphasize that the consequential damages here are not the cost

of   replacing   the   defective   work     —    that   is   the    improperly

installed roof, flashing, gutters and leaders, brick and EIFS

facade,     windows,   doors,   and    sealants.           Those    costs    are

considered a business risk associated with faulty workmanship.

Rather, the consequential damages are those additional damages

                                      14                               A-2767-13T1
to the common areas of the condominium building and the unit

owners' property.        The consequential damages are therefore not

the cost of correcting the defective work, such as the cost of

replacing    the    stucco   in     the        Weedo   case    or   replacing      the

firewalls as in Firemen's, but rather the cost of curing the

"property    damage"     arising     from        the    subcontractors'       faulty

workmanship.

                                          B.

     There are also two critical differences between the 1973

ISO form considered in Firemen's and the 1986 ISO form in this

case.      These   differences     provide        additional      support   for    our

conclusion that the trial court's reliance on the holding in

Firemen's is misguided.

     First, "occurrence" is defined differently.                        The 1973 ISO

form defines "occurrence" as "'an accident . . . which results

in . . . property damage neither expected nor intended from the

standpoint of the insured.'"          Firemen's, supra, 387 N.J. Super.

at 441.     Here, the policy defines "occurrence" as "an accident,

including continuous or repeated exposure to substantially the

same general harmful conditions."                "Property damage," therefore,

is   not    directly     included     in        the    policy's     definition      of

"occurrence,"      and   Firemen's    is       consequently       not   squarely    on

point.

                                          15                                 A-2767-13T1
    Second and most importantly, the 1986 ISO form includes a

significant exception to an exclusion not contained in the 1973

ISO form.    Due to this exception, we conclude that for insurance

risk purposes, consequential damages caused by a subcontractor's

faulty   workmanship   are   considered    differently      than   property

damage caused by a general contractor's work.

    Pertinent to our conclusion that reliance on Firemen's is

misplaced,    the   policy   contains     the   following    exclusionary

language that did not appear in the policy we considered in

Firemen's:

            2. Exclusions.

            This insurance does not apply to:

                       . . . .

                l. Damage to Your Work [the "Your
                Work" Exclusion]4

                     "Property damage" to "your
                work" arising out of it or any
                part of it . . . .

                     This exclusion does not apply
                if the damaged work or the work
                out of which the damage arises was
                performed on your behalf by a
                subcontractor.                [The
                "subcontractor's exception"].

                [(Emphasis added).]

4
  The "Your Work" exclusion is premised on the concept of the
contractor's business risk.

                                  16                               A-2767-13T1
The policy defines "Your Work" as:

             a. Work or operations performed by you or on
             your behalf; and

             b. Materials, parts or equipment furnished
             in connection with such work or operations.

      Although we need not resolve whether plaintiff's property

damage claims are excluded under the policy, the addition of the

subcontractor's     exception   is    of     critical    importance    when

determining     whether   the   subcontractors'     faulty    workmanship

causing consequential damages amounts to "property damage" and

an "occurrence" under the policy.          The subcontractor's exception

did not appear in ISO forms before 1986.                Commentators have

observed that ISO added the subcontractor's exception because

             the insurance and policyholder communities
             agreed that the CGL policy should provide
             coverage for defective construction claims
             so long as the allegedly defective work had
             been performed by a subcontractor rather
             than the policyholder itself. This resulted
             both   because  of   the   demands of   the
             policyholder community (which wanted this
             sort of coverage) and the view of insurers
             that the CGL was a more attractive product
             that could be better sold if it contained
             this coverage.

             [Christopher    C.    French,    Construction
             Defects:   Are They "Occurrences"?, 47 Gonz.
             L. Rev. 1, 8-9 (2011) (citing Jeffery W.
             Stempel, Stempel on Insurance Contracts §
             14.13d at 14-224.8 (3d ed. supp. 2007)).]

ISO   also    provided    guidance    regarding    the    subcontractor's

exception by making clear that the policy "'cover[ed] damage

                                     17                           A-2767-13T1
caused by faulty workmanship to other parts of work in progress;

and damage to, or caused by, a subcontractor's work after the

insured's operations are completed.'"            U.S. Fire Ins. Co. v.

J.S.U.B., Inc., 979 So. 2d 871, 879 (Fla. 2007) (alteration in

original)   (emphasis   added)     (quoting   ISO    Circular,      Commercial

General Liability Program Instructions Pamphlet, No. GL-86-204

(July 15, 1986)).

      As a practical matter, it is very difficult for a general

contractor to control the quality of a subcontractor's work.                 If

the   parties   to   the    insurance     contract    did    not    intend     a

subcontractor's faulty workmanship causing consequential damages

to constitute "property damage" and an "occurrence," as those

terms are defined in the policy, then it begs the question as to

why there is a subcontractor's exception.

      The absence of such an exception in the 1973 ISO form is

important because in defining "property damage" to effectuate

insurance   coverage,      we   previously    rejected      any    attempt   to

separate a subcontractor's faulty workmanship from that of a

general contractor.        In Firemen's, supra, we recognized that

cases interpreting the 1973 ISO form "equate[d] subcontractors

with general contractors for the purposes of determining whether

there was 'property damage[.]'"           387 N.J. Super. at 446.            But

here, the policy includes the subcontractor's exception.                 Thus,

                                     18                               A-2767-13T1
as a matter of an insurance underwriting risk, the exception

treats consequential damages caused from faulty workmanship by

subcontractors differently than damage caused by the work of

general contractors.

    Even though we were not required to consider whether there

was an "occurrence" in Firemen's because we had concluded that

there was no "property damage," we noted that "the majority rule

[at that time was] that faulty workmanship [did] not constitute

an 'occurrence.'"    Id. at 448.     We made that statement, however,

analyzing the 1973 ISO form in a case involving only damages

related to a business risk.

    In Firemen's, we cited out-of-state case law involving the

pre-1986 ISO form, which provided that "'[t]he completed product

is to be viewed as a whole, not as a grouping of component

parts.'"   Id. at 446 (quoting Knutson Constr. Co. v. St. Paul

Fire & Marine Ins. Co., 396 N.W.2d 229, 236-37 (Minn. 1986)).

But once again, we were construing a different insurance policy

and equating, for insurance underwriting risk purposes, the work

of subcontractors with that of general contractors.               Here, the

trial   court's   treatment   of   the   subcontractors'   work    and   the

developer's completed product "as a whole," ignores the import

and purpose of the subcontractor's exception.

                                    19                             A-2767-13T1
       Thus, looking at the policy in its entirety, the developer

would reasonably expect that consequential damages caused by the

subcontractors' faulty workmanship constituted "property damage"

and an "occurrence."         This reasonable expectation is supported

by     applying   the    definitions         of   "property     damage"    and

"occurrence" together with the subcontractor's exception and its

purpose.

                                       IV.

       We also find persuasive that "the majority rule [currently]

is   that   construction     defects    [causing   consequential    damages]

constitute 'occurrences[.]'"           Construction Defects, supra, 47

Gonz. L. Rev. at 24-26.        The leading case decided by the Florida

Supreme Court, United States Fire Insurance Co., supra, held

that    under   the   same   policy    language    as   here,   consequential

damage caused by defective work constituted "property damage"

and an "occurrence" under the policy.              979 So. 2d at 889-891.

The Court concluded that

            faulty workmanship that is neither intended
            nor expected . . . can constitute an
            "accident" and thus an "occurrence" under a
            post-1986 standard form CGL policy. We
            further conclude that physical injury to the
            completed project that occurs as a result of
            the defective work can constitute "property
            damage" as defined in a CGL policy.

            [Id. at 891.]

                                       20                            A-2767-13T1
It is notable that the Florida Supreme Court distinguished the

holding in Weedo by stating that Weedo "involved the issue of

whether there was coverage for the contractor's own defective

work, [and] was dependent on the policy language of pre-1986 CGL

policies,    including      the     relevant       insuring     provisions    and

applicable exclusions."          Id. at 882.

      Other courts have also reached the same conclusion.                     The

United States Court of Appeals for the Fourth Circuit, applying

Maryland law, found that under the same policy language as here,

liability coverage existed "for the cost to remedy unexpected

and   unintended         [consequential]       property       damage    to    the

contractor's otherwise non-defective work-product caused by the

subcontractor's defective workmanship."                 French v. Assurance Co.

of Am., 448 F.3d 693, 706 (4th Cir. 2006); see also Construction

Defects, supra, 47 Gonz. L. Rev. at 25-27, n.78-92 (listing

cases that reached similar holdings from the Supreme Courts of

Georgia, Texas, Kansas, Indiana, Minnesota, Alaska, Mississippi,

South Carolina, South Dakota, Tennessee, and Wisconsin).

      The   judge   in    this    case   found     persuasive    the   reasoning

expressed    by   the    Third    Circuit     in   an    unpublished   and   non-

precedential      case,     Pennsylvania         National     Mutual    Casualty

Insurance Co. v. Parkshore Development Corp., 403 Fed. Appx. 770

(3d Cir. 2010).     The Third Circuit remarked that we concluded in

                                         21                             A-2767-13T1
Firemen's    that      "faulty      workmanship[,]          whether    performed        by   a

contractor       or    subcontractor[,]            which    causes     damage      to    the

general contractor's work[,] is not an 'occurrence.'"                               Id. at

772.     In Firemen's, however, we interpreted the 1973 ISO form,

which omitted any reference to the subcontractor's exception to

the "Your Work" exclusion.               As a result, any such reliance on

Firemen's is respectfully misplaced.

                                          V.

       Interpreting       "occurrence"         under       the     policy    to    include

unexpected and unintended consequential damages caused by the

subcontractors' faulty workmanship will not convert the policy

into a performance bond.              See United States Fire, supra, 979 So.

2d at 887-88.         A performance bond guarantees the completion of a

construction contract if a contractor defaults, and unlike an

insurance policy, it benefits the project owner rather than the

contractor.           Ribeira   &     Lourenco      Concrete       Constr.    v.   Jackson

Health    Care    Assoc.,       254    N.J.    Super.       445,    451-54    (App.     Div.

1992).    A surety, unlike a liability insurer, is also entitled

to indemnification from the contractor.                      Montefusco Excavating &

Contractor Co. v. Cnty. of Middlesex, 82 N.J. 519, 525 (1980).

       Moreover, although we express no opinion as to the weight

of any potential cross-claim against the subcontractors or their

insurance     companies,        we     note    that        the     policy    contains        an

                                              22                                   A-2767-13T1
endorsement requiring that the subcontractors name the developer

as    an    additional      insured     on     the    subcontractors'       insurance

policies,     and   the     endorsement       requires    the    subcontractors      to

maintain CGL insurance in an amount of at least "equal" to the

insurance provided in the policy.                    As a result, such purported

added      insurance     protections     further       prevent    the   policy      from

acting solely like a performance bond by arguably shifting the

insurers' indemnification obligations to the subcontractors and

their insurance companies.

                                          VI.

      Finally, concluding that plaintiff met the definitions of

"property damage" and "occurrence" under the policy does not

automatically mean that insurance coverage exists.                          We do not

reach the question of whether plaintiff is entitled to insurance

coverage under the policy.               The insurers contended before the

judge      that   even    if    there     were       "property    damage"     and    an

"occurrence"        under      the     policy,       plaintiff's     claims      would

otherwise be excluded.               The judge never reached those issues,

and we decline to do so here.

      It is well-established that we "may exercise such original

jurisdiction as is necessary to complete the determination of

any     matter    on     review."        R.     2:10-5.          However,    original

jurisdiction should be exercised with "great frugality" and not

                                          23                                  A-2767-13T1
when   there     is    a   need   to    "weigh[]      evidence    anew"   or   "mak[e]

independent factual findings[.]"                     State v. Micelli, 215 N.J.

284,    293    (2013)        (alterations       in    original)     (citations       and

internal quotation marks omitted).                   The Micelli Court cautioned

against what the insurers are now urging us to do.

       Although we decline to exercise original jurisdiction and

address    the      issues    raised     by   the     insurers    in   their    cross-

appeals,      the     insurers    may    argue,      as   plaintiff    concedes,       on

remand that the exclusions in the policy preclude coverage.

       Reversed and remanded for further proceedings consistent

with this opinion.           We do not retain jurisdiction.

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