Court Opinion

ID: 4171606
Source: CourtListenerOpinion
Date Created: 2017-05-25 13:12:40.879257+00
Date Added: 2024-06-11T14:23:33.582542
License: Public Domain

SYLLABUS

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)

      Oxford Realty Group Cedar v. Travelers Excess and Surplus Lines Company (A-85-15) (077617)

Argued January 31, 2017 -- Decided May 25, 2017

FERNANDEZ-VINA, J., writing for a unanimous Court.

         In this appeal, the Court considers coverage under a surplus lines insurance contract and determines
whether debris removal coverage applies in addition to the policy’s endorsement limiting flood coverage for all
losses “resulting from Flood to buildings, structures or property in the open” in the covered flood zone.

         Plaintiffs Oxford Realty Group Cedar, CLA Management, and R.K. Patten LLC (collectively, Oxford) own
and manage an apartment complex located on in Long Branch, New Jersey (the Property). The Property is located
in Flood Zone A according to National Flood Insurance Program classifications. Oxford entered into an insurance
contract with defendant Travelers Excess and Surplus Lines Company (Travelers) to insure the Property.

         The Property suffered significant flood damage when Superstorm Sandy struck New Jersey in October
2012. Oxford submitted a claim to Travelers pursuant to the Policy. Oxford claimed flood damage in excess of
$1,000,000 and $207,961.28 in debris removal costs. Travelers asserted that all damage caused by the flood was
subject to the $1,000,000 limitation for a flood occurrence and paid Oxford only $1,000,000 on its claim.

          In July 2013, Oxford sued Travelers in Superior Court. Both parties moved for partial summary judgment
on the issue of Travelers’ liability for the debris removal costs.

         The trial court granted partial summary judgment in favor of Travelers. The court did not find the Policy to
be ambiguous regarding flood coverage and debris removal coverage. The court acknowledged that the
Supplemental Coverage Declarations appeared to allow additional debris removal coverage but concluded that the
Limit of Insurance for Flood nullified any coverage for flood damage above $1,000,000.

          The court further held that “the general condition that the debris removal is an additional coverage must
yield to the specific term in the Supplemental Coverage Declarations that the [$1,000,000] coverage applies to ‘all
losses’ caused by flood.” Accordingly, the trial court granted partial summary judgment in favor of Travelers. In
August 2014, the court granted summary judgment in favor of Travelers on all remaining counts.

         The Appellate Division reversed the grant of summary judgment and remanded for entry of judgment in
favor of Oxford. The panel concluded that the Policy required the provision of up to $500,000 for debris removal
coverage in addition to the $1,000,000 flood limit. The panel held that the $1,000,000 limitation in the
Supplemental Coverage Declarations applied only to insured buildings rather than insured occurrences. In contrast,
the panel held that the Property Coverage Form’s additional debris removal coverage applied to all Covered
Property, not just Oxford’s buildings. The panel further reasoned that the Flood Endorsement did not limit Oxford’s
damages to $1,000,000 because the endorsement applied “only to loss or damage to covered property caused by
flood, meaning Oxford’s building.” (Emphasis added).

         The Court granted Travelers’ petition for certification. 227 N.J. 216 (2016).

HELD: Although the Policy assigns debris removal a coverage sublimit, it does not constitute a self-contained policy
provision outside the application of the $1,000,000 flood limit. Because the terms of the Policy are not ambiguous, the
Court need not address contentions about contra proferentem or the doctrine of reasonable expectations.

1. Surplus lines insurance policies, governed by N.J.S.A. 17:22-6.40 to -6.84, offer coverage in specialized situations.
Surplus lines policies insure risks which insurance companies authorized or admitted to do business in New Jersey have

                                                          1
refused to cover by reason of the nature of the risk. These policies are unique in that the insured parties engage in high
risk enterprises for which insurance could only be obtained from a surplus lines carrier through a broker. Insureds
procure surplus lines policies covering commercial risk through insurance brokers, thus involving parties on both sides
of the bargaining table who are sophisticated regarding matters of insurance. (p. 13)

2. In assessing the meaning of provisions in an insurance contract, courts first look to the plain meaning of the
language at issue. If the language is clear, that is the end of the inquiry. If an ambiguity exists, the court will resort
to tools and rules of construction beyond the corners of the policy. But courts will not manufacture an ambiguity
where none exists. An insurance policy is not ambiguous merely because two conflicting interpretations of it are
suggested by the litigants. Nor does the separate presentation of an insurance policy’s declarations sheet, definition
section, and exclusion section necessarily give rise to an ambiguity. (pp. 13-15)

3. Ordinarily, our courts construe insurance contract ambiguities in favor of the insured via the doctrine of contra
proferentem. Sophisticated commercial insureds, however, do not receive the benefit of having contractual
ambiguities construed against the insurer. Similar to the doctrine of contra proferentem, the doctrine of reasonable
expectations, under which the insured’s “reasonable expectations” are brought to bear on misleading terms and
conditions of insurance contracts, is less applicable to commercial contracts. (pp. 15-16)

4. The Flood Endorsement places a hard cap on the amount recoverable for flood damage. Under that section,
“[t]he most [Travelers] will pay for the total of all loss or damage caused by Flood . . . is the single highest Annual
Aggregate Limit of Insurance specified for Flood shown in [Section B.14 of] the Supplemental Coverage
Declarations.” (Emphasis added). Section B.14 sets that Limit of Insurance at $1,000,000. Thus, the Flood
Endorsement categorically denies any flood damage coverage in excess of $1,000,000. The Flood Endorsement also
clarifies that this $1,000,000 ceiling will apply even if more than one Limit of Insurance applies, such as the Limit
of Insurance for debris removal in the Supplemental Coverage Declarations. There is no indication that this
limitation applies only to Oxford’s buildings. The Policy limits Oxford’s flood coverage to $1,000,000 and
therefore will be enforced as written. (pp. 16-19)

5. The Eighth Circuit addressed a similar issue in Altru Health System v. American Protection Insurance Co., 238
F.3d 961 (8th Cir. 2001). The insured plaintiff and insurer defendant contracted to cover a commercial hospital.
One section of the contract provided coverage for losses incurred during “Interruption by Civil Authority.” A severe
flood damaged the hospital and caused a civil authority to close the hospital temporarily. The insured claimed that
losses sustained from the civil authority’s closure of the hospital applied in addition to the $1,500,000 flood limit.
The court reasoned that the Civil Authority coverage was not “a self-contained policy provision” to which the flood
limit did not apply. Rather, the court held that the $1,500,000 flood limit applied to all damages caused by an
occurrence of flood, even if the contract assigned individual sublimits to specific types of damages. Thus, Altru
Health supports the conclusion that the $500,000 debris removal limit does not apply in addition to the Flood
Endorsement’s $1,000,000 limit. Although the Policy assigns debris removal a coverage sublimit, it does not
constitute a self-contained policy provision outside the application of the $1,000,000 flood limit. (pp 19-20)

6. Because the Court does not find the terms of the Policy ambiguous, it does not address Oxford’s contentions
about contra proferentem or the doctrine of reasonable expectations. (pp 20-21)

         The judgment of the Appellate Division is REVERSED, and the trial court’s grant of summary judgment
in favor of Travelers is REINSTATED.

         JUSTICE ALBIN, DISSENTING, expresses the view that the insurance contract is hopelessly ambiguous
and needlessly complex. Because reasonable minds can differ about the meaning and interplay of the flood
insurance and debris removal clauses in the insurance policy and because Travelers drafted the ambiguous policy
terms, the insured’s interpretation should prevail under the doctrines of contra proferentem and reasonable
expectations, according to Justice Albin.

      CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, and SOLOMON join in
JUSTICE FERNANDEZ-VINA’s opinion. JUSTICE ALBIN filed a separate, dissenting opinion in which
JUSTICE TIMPONE joins.

                                                            2
                                       SUPREME COURT OF NEW JERSEY
                                         A-85 September Term 2015
                                                  077617

OXFORD REALTY GROUP CEDAR,
CLA MANAGEMENT, and R.K.
PATTEN, LLC,

    Plaintiffs-Respondents,

         v.

TRAVELERS EXCESS AND SURPLUS
LINES COMPANY,

    Defendant-Appellant.

         Argued January 31, 2017 – Decided May 25, 2017

         On certification to the Superior Court,
         Appellate Division.

         Wystan M. Ackerman, a member of the
         Connecticut and New York bars, argued the
         cause for appellant (Robinson & Cole,
         attorneys; Mr. Ackerman and Michael J.
         Mernin, on the brief).

         Allan Maitlin argued the cause for
         respondents (Sachs, Maitlin, Fleming &
         Greene, attorneys; Mr. Maitlin and
         Christopher Klabonski, on the brief).

    JUSTICE FERNANDEZ-VINA delivered the opinion of the Court.

    In this appeal, we consider competing arguments about a

surplus lines insurance contract’s coverage for a flood

occurrence.   Specifically, we are called upon to determine

whether debris removal coverage applies in addition to the

policy’s endorsement limiting flood coverage for all losses

                                 1
“resulting from Flood to buildings, structures or property in

the open” in the policy’s covered flood zone.

    The insured contracted, through the services of a licensed

broker, with the insurer to obtain the surplus lines coverage

for certain commercial apartment buildings.    The insurance

policy provided limits of insurance for the insured’s buildings

and business personal property.     The policy also listed limits

of insurance for various occurrences and expenses, including

debris removal.     According to the policy, the debris removal

coverage could apply in addition to certain limits of insurance

for covered property under certain conditions.

    Although the original insurance policy disclaimed all flood

coverage, the parties added an endorsement to obtain access to

flood coverage.     The endorsement limited flood coverage to

$1,000,000, a sum delineated in the supplemental coverage

declarations.

    The insured’s property sustained severe damage during

Superstorm Sandy.    The insured claimed debris removal coverage

in addition to $1,000,000 in flood damage.     The insurer refused

to pay any amount above the $1,000,000 flood damage cap in the

endorsement.    The insured sued for the debris removal coverage.

    The trial court determined that the policy unambiguously

capped the insured’s recovery at $1,000,000.     The Appellate

                                   2
Division reversed and held that the debris removal provisions

applied in addition to the $1,000,000 flood limit.

    For the reasons set forth in this opinion, we hold that the

insurance policy unambiguously capped the insured’s recovery at

$1,000,000.    Accordingly, we reverse the decision of the

Appellate Division granting additional debris removal coverage.

                                  I.

                                  A.

    The material facts are not in dispute.     Plaintiffs Oxford

Realty Group Cedar, CLA Management, and R.K. Patten LLC

(collectively, Oxford) own and manage an apartment complex

located on Patten Avenue in Long Branch, New Jersey (the

Property).    The Property is located in Flood Zone A according to

National Flood Insurance Program classifications.    Oxford

entered into an insurance contract with defendant Travelers

Excess and Surplus Lines Company (Travelers) to insure the

Property.     That insurance policy (the Policy) was effective

between February 1, 2012, and February 1, 2013.

    The Policy provided protection for the Property in the

event of certain occurrences.    Four sections of the Policy are

pertinent to this matter:     the Property Coverage Form; the Flood

Endorsement; the Supplemental Coverage Declarations; and the

General Conditions.

Property Coverage Form

                                   3
    The Property Coverage Form constitutes the insuring

agreement and proceeds to delineate the boundaries of coverage

under the Policy.   It thus establishes the structure for

analyzing how the Policy’s parts work together.    Section A’s

Insuring Agreement states that

           [Travelers] will pay for direct physical loss
           or damage to Covered Property at premises as
           described in the most recent Statement of
           Values . . . caused by or resulting from a
           Covered Cause of Loss. Covered Cause of Loss
           means risks of direct physical loss unless the
           loss is excluded in Section D., Exclusions;
           limited in Section E., Limitations; or
           excluded or limited in the Supplemental
           Coverage Declarations or by endorsements.

    Under Section B, Coverage explains what is and is not

covered.   The section notes at the outset that

           [c]overage is provided for Covered Property
           and Covered Costs and Expenses . . . unless
           excluded in Section C., Property and Costs Not
           Covered. Coverage applies only when a Limit
           of Insurance is shown in the Supplemental
           Coverage Declarations for the specific type of
           Covered   Property   or  Covered   Costs   and
           Expenses, except for items B.2.a., d., e., g.,
           h. and i.[,] which do not require a specific
           Limit of Insurance to be shown.

    Section B.1 addresses “Covered Property” and B.2 addresses

“Covered Costs and Expenses.”    “Covered Property” includes

“Building(s)” and “Business Personal Property,” among other

property items.   Under Section B.2, “Covered Costs and Expenses”

include “Debris Removal,” among other services and expenses.

Section B.2.a. addresses debris removal:

                                 4
(1) [Travelers] will pay the necessary and
reasonable expense incurred by [Oxford] to
remove debris of Covered Property, other than
“Outdoor Property[,]” caused by or resulting
from a Covered Cause of Loss that occurs
during the policy period.

. . . .

(2)   For  this   Debris  Removal      Coverage,
[Travelers] will pay up to 25% of:

  (a)     The amount [Travelers] pays for the
          direct physical loss or damage to
          the Covered Property; plus

  (b)     The deductible in this policy
          applicable to that direct physical
          loss or damage.

  This limit is part of and not in addition
  to the Limit of Insurance that applies to
  the lost or damaged Covered Property.
  But if:

  (a)(i) The sum of direct physical loss
  or damage and debris removal expense
  exceeds the Limit of Insurance; or

  (ii) The debris removal expense exceeds
  the above 25% limitation;

  and

  (b)     A Limit of Insurance is specified in
          the      Supplemental       Coverage
          Declarations for Debris Removal
          (additional);

  [Travelers] will also pay an additional
  amount, up to the Limit of Insurance
  specified in the Supplemental Coverage
  Declarations    for   Debris    Removal
  (additional)[.]

                        5
    Section D of the Property Coverage Form lists “Exclusions”

and specifically disavows any coverage for flood under the

Property Coverage Form’s terms.

Flood Endorsement

    Although the Property Coverage Form excludes flood damage,

the parties to this insurance contract added a Flood Endorsement

to the Policy to provide for flood occurrence coverage.   Section

F of the Flood Endorsement sets a cap for the flood coverage.

Specifically, Section F states that

         [t]he most [Travelers] will pay for the total
         of all loss or damage caused by Flood in any
         one policy year is the single highest Annual
         Aggregate Limit of Insurance specified for
         Flood shown in the Supplemental Coverage
         Declarations. This limit is part of, and does
         not increase, the Limits of Insurance that
         apply under this policy.

         Subject to the single highest Annual Aggregate
         Limit of Insurance:

         1. Any individual Aggregate Limit of Insurance
            shown   in   the   Supplemental    Coverage
            Declarations   for   Flood   is  the   most
            [Travelers] will pay in any one policy year
            for all loss or damage to which that Limit
            of Insurance applies.

         2. If more than one Annual Aggregate Limit of
            Insurance applies to loss or damage under
            this endorsement in any one occurrence,
            each limit will be applied separately, but
            the most [Travelers] will pay under this
            endorsement for all loss or damage in that
            occurrence is the single highest Annual
            Aggregate Limit of Insurance applicable to
            that occurrence.

                                  6
Supplemental Coverage Declarations

    In the Policy’s Supplemental Coverage Declarations section,

the insurance agreement establishes that the insurance “applies

on a Blanket basis” for coverage, and Section A identifies that

covered property shall include “Buildings” and “Business

Personal Property.”   Specific values are assigned under Blanket

Limits of Insurance for the entire Covered Property.

    Section B then delineates the Limits of Insurance for all

types of various expenses and occurrences.       Of particular

relevance for this case are these provisions.       Section B.6

provides a $250,000 limit for “Outdoor Property including Debris

Removal, in any one occurrence.”       Section B.7 states, “Debris

Removal (additional), in any one occurrence:       [The Limit of

Insurance is] $500,000.”    And, Section B.14 addresses the Limit

of Insurance for Flood.    According to Section B.14:

         Flood -- aggregate in any one policy year, for
         all   losses  covered   under   this   policy,
         commencing with the inception date of this
         policy:

            a. Occurring at Insured Premises resulting
               from Flood to buildings, structures or
               property in the open within Flood Zone A
               . . . or property in or on buildings or
               structures located within such Flood
               Zones:

            [The Limit of Insurance is] $1,000,000.

General Conditions

                                   7
     In addition, in its General Conditions section, the Policy

includes Section O, which addresses and explains the Limits of

Insurance that apply under this contract.   According to Section

O:

         1. The most [Travelers] will pay for loss or
            damage in any one occurrence is the
            applicable specified Limit(s) of Insurance
            shown   in   the   Supplemental   Coverage
            Declarations, Schedules, Coverage Form(s)
            or endorsement(s).

         2. Under the Property Coverage Form, unless
            otherwise stated in the Supplemental
            Coverage Declarations, or by endorsement:

            a. Payments under the following Covered
               Costs and Expenses will not increase the
               applicable Covered Property Limit(s) of
               Insurance:

              (1)   Debris Removal. But if a Limit of
                    Insurance   for    Debris   Removal
                    (additional) is specified in the
                    Supplemental Coverage Declarations,
                    that Limit of Insurance will apply
                    in addition to the applicable
                    Covered    Property     Limit    of
                    Insurance;
         . . . .

            b. The Limits of Insurance that are
               specified for the remaining Covered
               Costs and Expenses are in addition to
               the   Covered  Property  Limit(s)  of
               Insurance.

                               B.

     The Property suffered significant flood damage when

Superstorm Sandy (Sandy) struck New Jersey in October 2012.

After Sandy, Oxford undertook repair efforts, including “the

                                8
removal of damaged or undamaged portions of the building complex

and the removal of the debris which resulted from the

construction and from the damage caused by the flood.”   Shortly

thereafter, Oxford submitted a claim to Travelers pursuant to

the Policy.   Oxford claimed flood damage in excess of

$1,000,000.   Additionally, Oxford claimed $207,961.28 in debris

removal costs.

    Oxford sought to recover the debris removal costs as an

amount due over and above the $1,000,000 of flood coverage

provided under the Flood Endorsement.   Travelers, however,

asserted that all damage caused by the flood was subject to the

$1,000,000 limitation for a flood occurrence.   Accordingly,

Travelers paid Oxford only $1,000,000 on its claim.

    In July 2013, Oxford sued Travelers in Superior Court.

Oxford sought to hold Travelers accountable for payment of up to

$500,000 for debris removal costs in addition to the $1,000,000

paid for flood damage under the Policy.   In February and March

2014, both parties moved for partial summary judgment on the

issue of Travelers’ liability for the debris removal costs.

    In April 2014, the trial court issued a written decision

granting partial summary judgment in favor of Travelers.      The

court did not find the Policy to be ambiguous regarding flood

coverage and debris removal coverage.   The court acknowledged

that the Supplemental Coverage Declarations appeared to allow

                                 9
additional debris removal coverage in Section B.7, but concluded

that Section B.14’s Limit of Insurance for Flood nullified any

coverage for flood damage above $1,000,000.

    The court further held that “the general condition that the

debris removal is an additional coverage must yield to the

specific term in the Supplemental Coverage Declarations that the

[$1,000,000] coverage applies to ‘all losses’ caused by flood.”

Accordingly, the trial court granted partial summary judgment in

favor of Travelers.   In August 2014, the court granted summary

judgment in favor of Travelers on all remaining counts.

    Thereafter, Oxford appealed the grant of summary judgment.

In an unpublished per curiam opinion, the Appellate Division

reversed the grant of summary judgment and remanded for entry of

judgment in favor of Oxford.     The Appellate Division agreed with

the trial court that the flood coverage and debris removal

coverage were unambiguous.     However, the panel concluded that

the Policy required the provision of up to $500,000 for debris

removal coverage in addition to the $1,000,000 flood limit.

    The panel held that the $1,000,000 limitation in Section

B.14 of the Supplemental Coverage Declarations applied only to

insured buildings rather than insured occurrences.     In contrast,

the panel held that the Property Coverage Form’s additional

debris removal coverage applied to all Covered Property, not

just Oxford’s buildings.     The panel further reasoned that the

                                  10
Flood Endorsement did not limit Oxford’s damages to $1,000,000

because the endorsement applied “only to loss or damage to

covered property caused by flood, meaning Oxford’s building.”

(Emphasis added).   The panel concluded that Travelers was

required to pay an additional $207,961.28 for debris removal

under the Policy.

    We granted Travelers’ petition for certification.    227 N.J.

216 (2016).

                                II.

    Travelers argues that the terms of the Policy unambiguously

cap all flood-related coverage at $1,000,000 per flood

occurrence.   Specifically, Travelers highlights the Flood

Endorsement’s statement that “[t]he most [Travelers] will pay

for the total of all loss or damage caused by Flood in any one

policy year is the single highest Annual Aggregate Limit of

Insurance specified for Flood shown in the Supplemental Coverage

Declarations,” which is $1,000,000 under Section B.14 of the

Supplemental Coverage Declarations.

    Travelers further contends that the words “Covered Property

Limit(s) of Insurance” in Section O.2 of the Policy’s General

Conditions refer to the value of Oxford’s buildings and business

personal property, not the limitations for flood coverage.

Similarly, Travelers avers that Section B.2.a. of the Property

Coverage form and Section B.7 of the Supplemental Coverage

                                11
Declarations refer to the value of Oxford’s buildings and

business personal property.   In addition, Travelers maintains

that Oxford is incapable of invoking the doctrine of reasonable

expectations because it is a sophisticated commercial entity,

which procured the specific Policy through use of a professional

broker.

    In contrast, Oxford claims that the Policy unambiguously

provides up to $500,000 in debris removal coverage in addition

to the $1,000,000 flood limit.   According to Oxford, Section B.7

of the Supplemental Coverage Declarations, Section O.2 of the

General Conditions, and Section B.2.a. of the Property Coverage

Form all grant an additional $500,000 in debris removal

coverage.   Oxford contends that the Limits of Insurance

referenced in those sections are not the values of its buildings

and personal property, but instead separate coverage limits such

as the $1,000,000 flood limitation.

    Alternatively, Oxford argues that if this Court finds the

Policy to be ambiguous, we should construe the terms in its

favor.    Oxford avers that the Policy is so confusing that an

average policyholder would be incapable of ascertaining the

boundaries of coverage.   Oxford further asserts that, even if

this Court determines that the Policy technically disfavors

coverage, the doctrine of reasonable expectations demands

additional debris removal coverage.    Essentially, Oxford takes

                                 12
the position that any policyholder not involved in the insurance

industry is an unsophisticated policyholder.

                                III.

    Surplus lines insurance policies, governed by N.J.S.A.

17:22-6.40 to -6.84, offer coverage in specialized situations.

Surplus lines policies insure “risks which insurance companies

authorized or admitted to do business in [New Jersey] have

refused to cover by reason of the nature of the risk.”        R.R.

Roofing & Bldg. Supply Co. v. Fin. Fire & Cas. Co., 85 N.J. 384,

389 (1981).    These policies are unique in that the insured

parties “engage[] in high risk enterprises for which insurance

could only be obtained from a surplus lines carrier” through a

broker.   Am. Wrecking Cor. v. Burlington Ins. Co., 400 N.J.

Super. 276, 283 (App. Div. 2008).        Insureds procure surplus

lines policies covering commercial risk through insurance

brokers, thus involving parties on both sides of the bargaining

table who are sophisticated regarding matters of insurance.

Ibid.; Werner Indus., Inc. v. First State Ins. Co., 112 N.J. 30,

38 (1988).

    In assessing the meaning of provisions in an insurance

contract, courts first look to the plain meaning of the language

at issue.    Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am.,

195 N.J. 231, 238 (2008).   “If the language is clear, that is

the end of the inquiry.”    Ibid.    Thus, “in the absence of an

                                    13
ambiguity, a court should not ‘engage in a strained construction

to support the imposition of liability’ or write a better policy

for the insured than the one purchased.”   Ibid.

(quoting Progressive Cas. Ins. Co. v. Hurley, 166 N.J. 260, 272-

73 (2001)); see also George J. Kenny & Frank A. Lattal, N.J.

Ins. Law § 4-2:3, at 75 (2016 ed.).

      In many insurance contract disputes, the parties disagree

as to the plain meaning of contractual provisions, or claim that

the provisions are ambiguous.   The presence of an ambiguity is

key because “if an ambiguity exists, the court will resort to

tools and rules of construction beyond the corners of the

policy.”   Kenny & Lattal, supra, § 4-3, at 76.    But our courts

will not manufacture an ambiguity where none exists.     Chubb,

supra, 195 N.J. at 238; Longobardi v. Chubb Ins. Co., 121 N.J.

530, 537 (1990); see also Kenny & Lattal, supra, § 4-3:1, at 77-

79.

      “An ‘insurance policy is not ambiguous merely because two

conflicting interpretations of it are suggested by the

litigants.’”   Fed. Ins. Co. v. Campbell Soup Co., 381 N.J.

Super. 190, 195 (App. Div. 2005) (quoting Powell v. Alemaz,

Inc., 335 N.J. Super. 33, 44 (App. Div. 2000)), certif. denied,

186 N.J. 365 (2006).   Nor does the separate presentation of an

insurance policy’s declarations sheet, definition section, and

                                14
exclusion section necessarily give rise to an ambiguity.

Zacarias v. Allstate Ins. Co., 168 N.J. 590, 602-03 (2001).

    Ordinarily, our courts construe insurance contract

ambiguities in favor of the insured via the doctrine of contra

proferentem.    Progressive, supra, 166 N.J. at 273.   In applying

contra proferentem, courts “adopt the meaning that is most

favorable to the non-drafting party.”     Pacifico v. Pacifico, 190

N.J. 258, 267 (2007) (citing 5 Corbin on Contracts § 24.27

(Perillo ed., rev. ed. 1998)).     Sophisticated commercial

insureds, however, do not receive the benefit of having

contractual ambiguities construed against the insurer.        Chubb,

supra, 195 N.J. at 246; Werner Indus., supra, 112 N.J. at 38.

Contra proferentem is a consumer-protective doctrine “only

available in situations where the parties have unequal

bargaining power.     If both parties are equally ‘worldly-wise’

and sophisticated, contra proferentem is inappropriate.”

Pacifico, supra, 190 N.J. at 268.

    The doctrine of reasonable expectations is a related

doctrine commonly applied in cases where an ambiguity is

alleged.    Kenny & Lattal, supra, §§ 4-5 to 4-5:1, at 84-87; 28

Eric Mills Holmes, Appleman on Insurance § 173.10[C] (2d ed.

2008).     Under that doctrine, “the insured’s ‘reasonable

expectations’ are brought to bear on misleading terms and

conditions of insurance contracts and genuine ambiguities are

                                  15
resolved against the insurer.”    Di Orio v. N.J. Mfrs. Ins. Co.,

79 N.J. 257, 269 (1979).    Similar to the doctrine of contra

proferentem, the doctrine of reasonable expectations is less

applicable to commercial contracts.     See Nunn v. Franklin Mut.

Ins. Co., 274 N.J. Super. 543, 549-51 (App. Div. 1994)

(distinguishing commercial policy from homeowners policy).

                                 IV.

    The Appellate Division held that the terms of the Policy

were unambiguous and provided Oxford with additional debris

removal coverage.    We cannot agree.   The terms of the Policy

unambiguously place a $1,000,000 total on recovery for all flood

occurrence losses.

    To begin, we look to the explicit terms of the Flood

Endorsement and Section B.14 of the Supplemental Coverage

Declarations.   It is undisputed that, absent the Flood

Endorsement, the Policy would not cover any flood damage.

    Section F of the Flood Endorsement places a hard cap on the

amount recoverable for flood damage.    Under that section,

         [t]he most [Travelers] will pay for the total
         of all loss or damage caused by Flood . . . is
         the single highest Annual Aggregate Limit of
         Insurance specified for Flood shown in
         [Section B.14 of] the Supplemental Coverage
         Declarations. This limit is part of, and does
         not increase, the Limits of Insurance that
         apply under this policy.

         [(Emphasis added).]

                                 16
Section F.2 fortifies this hard cap by explaining that, even if

multiple Annual Aggregate Limits of Insurance apply to flood

damage, the Limit of Insurance specified in Section B.14 of the

Supplemental Coverage Declarations is the most Travelers will

pay.    Section B.14 sets that Limit of Insurance at $1,000,000.

       Thus, the Flood Endorsement categorically denies any flood

damage coverage in excess of $1,000,000.    The Flood Endorsement

also clarifies that this $1,000,000 ceiling will apply even if

more than one Limit of Insurance applies, such as the Limit of

Insurance for debris removal in Section B.7 of the Supplemental

Coverage Declarations.    Therefore, the Flood Endorsement

controls the extent of flood coverage and it is not modified by

the rest of the Policy’s terms.

       The Appellate Division arrived at a different conclusion

regarding the Flood Endorsement and Section B.14 of the

Supplemental Coverage Declarations.    In the appellate panel’s

reading, the $1,000,000 cap on flood coverage applied only to

Oxford’s buildings.

       In reaching this conclusion, the appellate panel opined

that Section B.14 of the Supplemental Coverage Declarations

provided a $1,000,000 limit for all losses “resulting from Flood

to buildings.”   The full text of Section B.14, however, belies

this interpretation.   Section B.14.a. provides $1,000,000 in

flood coverage for all damage “resulting from Flood to

                                  17
buildings, structures, or property” within Flood Zone A.     There

is no indication that this limitation applies only to Oxford’s

buildings.   Additionally, the Appellate Division’s reading

disregards the Flood Endorsement’s express language limiting

coverage for all damage and loss caused by flood to the highest

Annual Aggregate Limit of Insurance: $1,000,000.     Thus, a plain

reading of the Policy’s text conflicts with the Appellate

Division’s holding.

     The Property Coverage Form and General Conditions further

support our reading.   Both Section B.2.a. of the Property

Coverage Form and Section O.2.a. of the General Conditions set

forth circumstances in which Oxford may claim debris removal

coverage in addition to Covered Property Limits of Insurance.

Covered Property Limits of Insurance are values assigned to

Oxford’s buildings and business personal property.    As a result,

those sections provide debris removal coverage in addition to

the values of Oxford’s buildings and business personal property.

Those sections do not add coverage to limitations for

occurrences such as flood or fire.1

1 Oxford’s reliance upon Section O.2 of the General Conditions is
unconvincing, further, because that section increases coverage
“unless otherwise stated . . . by endorsement.” Thus, even if
Section O.2 applied to the flood limit, the terms of the Flood
Endorsement would negate any increase in coverage.
                                18
    Therefore, we do not find the Policy’s provision of flood

coverage and debris removal coverage to be ambiguous.       Oxford’s

alternative reading presents a conflicting interpretation

suggested by litigants rather than a genuine ambiguity.       Fed.

Ins. Co., supra, 381 N.J. Super. at 195.     The Policy limits

Oxford’s flood coverage to $1,000,000 and therefore will be

enforced as written.   Longobardi, supra, 121 N.J. at 537.

    We also find support for our opinion in the decisions of

other jurisdictions.   See Chubb, supra, 195 N.J. at 238

(“[C]ourts frequently look to how other courts have interpreted

the same or similar language in standardized contracts to

determine what the parties intended, especially where rules in

aid of interpretation fail to offer a clear result.”)

    The Eighth Circuit addressed a similar issue in Altru

Health System v. American Protection Insurance Co., 238 F.3d 961

(8th Cir. 2001).   The insured plaintiff and insurer defendant

contracted to cover a commercial hospital.     Id. at 962-63.     One

section of the contract provided coverage for losses incurred

during “Interruption by Civil Authority.”     Id. at 963.   The

parties subsequently added flood coverage to the contract,

capping the insurer’s liability “for losses resulting from any

one Flood disaster” at $1,500,000.   Id. at 962-63.    A severe

flood damaged the hospital and caused a civil authority to close

the hospital temporarily.   Id. at 962.    The insured claimed that

                                19
losses sustained from the civil authority’s closure of the

hospital applied in addition to the $1,500,000 flood limit.

Ibid.

    The court disagreed and concluded that the Civil Authority

coverage limit did not apply in addition to the $1,500,000 flood

limit.   Id. at 963-65.   The court reasoned that the Civil

Authority coverage was not “a self-contained policy provision”

to which the flood limit did not apply.     Ibid.   Rather, the

court held that the $1,500,000 flood limit applied to all

damages caused by an occurrence of flood, even if the contract

assigned individual sublimits to specific types of damages.

Ibid.

    Thus, Altru Health supports our conclusion that the

$500,000 debris removal limit does not apply in addition to the

Flood Endorsement’s $1,000,000 limit.     Although the Policy

assigns debris removal a coverage sublimit, it does not

constitute a self-contained policy provision outside the

application of the $1,000,000 flood limit.     See also El-Ad 250

W. LLC v. Zurich Am. Ins. Co., 988 N.Y.S.2d 462 (N.Y. Sup. Ct.

2014) (declining to apply additional coverage from other

sublimits of an insurance policy in addition to a flood limit

when a single occurrence of flood caused various damages),

aff’d, 13 N.Y.S.3d 68 (N.Y. App. Div. 2015).

                                 20
    Because we do not find the terms of the Policy ambiguous,

we need not address Oxford’s contentions about contra

proferentem or the doctrine of reasonable expectations.     See

Pacifico, supra, 190 N.J. at 267-68 (characterizing contra

proferentem as doctrine of last resort applied to ambiguities);

Di Orio, supra, 79 N.J. at 269-70 (declining to apply doctrine

of reasonable expectations absent ambiguous or misleading

terms).

                               V.

    The judgment of the Appellate Division is reversed, and the

trial court’s grant of summary judgment in favor of Travelers is

reinstated.

     CHIEF JUSTICE RABNER and JUSTICES LaVECCHIA, PATTERSON, and
SOLOMON join in JUSTICE FERNANDEZ-VINA’s opinion. JUSTICE ALBIN
filed a separate, dissenting opinion in which JUSTICE TIMPONE
joins.

                               21
                                       SUPREME COURT OF NEW JERSEY
                                         A-85 September Term 2015
                                                  077617

OXFORD REALTY GROUP CEDAR,
CLA MANAGEMENT, and R.K.
PATTEN, LLC,

    Plaintiffs-Respondents,

         v.

TRAVELERS EXCESS AND SURPLUS
LINES COMPANY,

    Defendant-Appellant.

    JUSTICE ALBIN dissenting.

    The majority finds that the language of the insurance

policy at issue unambiguously limits the insured’s damages to

$1,000,000 in flood coverage.   The Appellate Division found that

the policy’s language unambiguously provides, in addition to the

flood-insurance coverage, $500,000 for debris removal costs.

Both cannot be right, and neither is wholly wrong.   Both sides

have reasonable arguments because the insurance contract is

hopelessly ambiguous and needlessly complex.   Deciphering an

insurance contract should not be comparable to breaking the

Enigma code.

    Because reasonable minds can differ about the meaning and

interplay of the flood insurance and debris removal clauses in

the insurance policy and because Travelers drafted the ambiguous

                                1
policy terms, I believe that the insured’s interpretation should

prevail under the doctrines of contra proferentem and reasonable

expectations.   I therefore respectfully dissent.

                                 I.

    Oxford purchased an insurance policy that provides coverage

for damages caused by flood.    Oxford also purchased additional

coverage for debris removal.    The question is whether this

insurance policy provides reimbursement for the cost of debris

removal above the limit for damages caused by flood.    I disagree

with the majority that there is only one ineluctable answer.

One reasonable interpretation that can be teased from the

ninety-one-page insurance policy is that Oxford is entitled to

reimbursement for debris removal after exceeding the limit for

damages caused by flood.

    Here is the policy language that leads to that conclusion.

                                 A.

    The section entitled “Supplemental Coverage Declarations”

sets the “Limits of Insurance” for certain losses.    Paragraph 14

states that the aggregate limit “for all losses covered under

this policy” for “Flood” is $1,000,000.    Paragraph 7, however,

states that the limit for “Debris Removal (additional), in any

one occurrence,” is $500,000.    According to the policy terms,

reimbursement for debris removal is “additional,” which in

common parlance means “added, extra, or supplementary to what is

                                  2
already present or available.”   The New Oxford American

Dictionary 18 (2d ed. 2005).   That language suggests that flood

loss is covered up to a limit of $1,000,000 but that

reimbursement for debris removal in the amount of $500,000 is

“additional” to any loss exceeding the flood limit.

    This interpretation is strengthened by the instruction that

“[f]or application of Limits of Insurance refer to Section O,”

which is located in the General Conditions section of the

policy.   The preamble to the General Conditions section states

that “[a]ll coverages included in this policy are subject to the

following conditions,” one of which is Section O.    Section

O.2.a.(1) provides that “if a Limit of Insurance for Debris

Removal (additional) is specified in the Supplemental Coverage

Declarations, [it] will apply in addition to the applicable

Covered Property Limit of Insurance.”   (Emphasis added).

    Oxford’s interpretation is further bolstered by Section

B.2.a.(1) and (2) of the Property Coverage Form that addresses

debris removal.   Section B.2.a.(1) generally provides that

Travelers “will pay the necessary and reasonable expense

incurred by the Insured to remove debris of Covered Property . .

. caused by or resulting from a Covered Cause of Loss that

occurs during the policy period.”    Section B.2.a.(2)

specifically provides that if:

          (a)(i) The sum of direct physical loss or

                                 3
          damage and debris removal expense exceeds the
          Limit of Insurance; or

          (ii) The debris removal expense exceeds the
          above 25% limitation; and

          (b) A Limit of Insurance is specified in the
          Supplemental Coverage Declarations for Debris
          Removal (additional); [then]

          [Travelers] will also pay an additional
          amount, up to the Limit of Insurance specified
          in the Supplemental Coverage Declarations for
          Debris Removal (additional).

          [(Emphasis added).]

    Oxford’s claim appears to meet the preconditions for

additional debris removal coverage.   Oxford’s total claimed loss

of $1,207,961.28 exceeds the $1,000,000 flood-insurance limit,

and the Supplemental Coverage Declarations explicitly provides

for up to $500,000 of additional debris removal as a separate

limit.   Therefore, a reasonable interpretation of the insurance

policy allows for $500,000 of debris removal as an additional

coverage above the $1,000,000 limit of insurance applying to a

flood loss.

                                B.

    The majority takes the position that the Flood Endorsement

stands apart from the remainder of the contract and controls the

extent of flood coverage available to Oxford.   Ante at ___ (slip

op. at 17).   That approach leads the majority to conclude that

the Flood Endorsement separately controls the limit of coverage

                                 4
for any damage stemming from a flood.   Id. at ___ (slip op. at

16-17).

    But the Flood Endorsement is not an island unto itself; it

is inextricably interwoven into an insurance policy that must be

read as a whole.   See Manahawkin Convalescent v. O’Neill, 217

N.J. 99, 118 (2014) (“Contracts should be read ‘as a whole in a

fair and common sense manner.’” (quoting Hardy ex rel. Dowdell

v. Abdul-Matin, 198 N.J. 95, 103 (2009))).   The Flood

Endorsement must be viewed in conjunction with the Property

Coverage Form, the Supplemental Coverage Declarations, and the

General Conditions of the policy.   Doing so would lead a

reasonable insured to believe that debris removal coverage is

additional to flood coverage.

    At the very least, “the phrasing of the policy is so

confusing that the average policyholder cannot make out the

boundaries of coverage.”   Weedo v. Stone-E-Brick, Inc., 81 N.J.

233, 247 (1979).   In construing an insurance contract, if the

“language of a policy will support two meanings, one favorable

to the insurer and the other to the insured, the interpretation

favoring coverage should be applied.”   Cypress Point Condo.

Ass’n v. Adria Towers, L.L.C., 226 N.J. 403, 416 (2016) (quoting

Butler v. Bonner & Barnewell, Inc., 56 N.J. 567, 575 (1970)).

    Given the uncertain scope of coverage, Oxford should

receive the benefit of having the contractual ambiguity

                                5
construed against the insurer under the doctrines of contra

proferentem and reasonable expectations.

                                 II.

    An insurance policy is not an ordinary contract, but rather

a “contract[] of adhesion between parties who are not equally

situated.”    Nav-Its, Inc. v. Selective Ins. Co. of Am., 183 N.J.

110, 118 (2005) (alteration in original) (quoting Doto v. Russo,

140 N.J. 544, 555 (1995)).    Under the doctrine of contra

proferentem, “a court generally will adopt the meaning that is

most favorable to the non-drafting party,” or, stated

differently, an interpretation against the draftsman.    Chubb

Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231, 238

(2008).   The doctrine of contra proferentem applies to a

commercial entity that did not “participate[] in the drafting of

the insurance contract.”    See Benjamin Moore & Co. v. Aetna Cas.

& Sur. Co., 179 N.J. 87, 102 (2004).    “[O]nly where it is clear

that an insurance policy was ‘actually negotiated or jointly

drafted,’ and where the policyholder had bargaining power and

sophistication, is the rule of strict construction of policy

terms against the insurer not invoked.”    Owens-Illinois, Inc. v.

United Ins. Co., 264 N.J. Super. 460, 488 (App. Div. 1993)

(quoting AIU Ins. Co. v. FMC Corp., 799 P.2d 1253, 1265 (Cal.

1990)), rev’d in part and remanded on other grounds, 138 N.J.

437 (1994).

                                 6
    Although Oxford is a commercial entity, there is no

evidence to suggest that it negotiated the terms of this

insurance contract with Travelers.      The insurance policy is an

amalgamation of standardized forms and boilerplate language

spread over nearly one-hundred pages of dense and confusing

verbiage.   Under our jurisprudence, any ambiguity about the

scope of coverage should be resolved in favor of Oxford.

                                 III.

    The doctrine of reasonable expectations is another

interpretive canon for construing ambiguous insurance contracts.

In a case involving a sophisticated insured, a governmental

entity, this Court stated that ambiguous terms should be

resolved “against the insurer and in favor of the insured to

give effect to the insured’s reasonable expectations.”      Passaic

Valley Sewerage Comm’rs v. St. Paul Fire & Marine Ins. Co., 206

N.J. 596, 601, 608 (2011); see also Stone-E-Brick, supra, 81

N.J. at 247 (stating that reasonable expectations of insured

commercial entity prevail if legitimate ambiguity arises from

phrasing of insurance policy).

    The majority’s strained and hyper-technical analysis is at

variance with the interpretive canons that favor the insured

when a policy is so riddled with ambiguity that no clear

understanding can be reached about the scope of an insurance

contract.   One sensible interpretation of the policy is that the

                                  7
“additional” debris removal coverage was intended to supplement

the reimbursement available for flood.   That interpretation

justifies Oxford’s reasonable expectations.

                               IV.

    Because the majority finds certitude where ambiguity

abounds and because Oxford is denied the benefit of its

reasonable interpretation of an insurance policy that entitles

it to debris removal coverage, I respectfully dissent.

                                8