CIS MANAGEMENT, INC. v. COMMERCE & INDUSTRY INSURANCE COMPANY
2:23-cv-02689
| D.N.J. | Mar 5, 2025Background
- CIS Management, Inc. (“CIS”) managed Oakwood Plaza Apartments, where a fatal shooting occurred in 2014.
- The estate of the deceased sued CIS in New Jersey state court (the “Fullman Roberts Matter”).
- CIS held three insurance policies: with Harleysville, Commerce & Industry Insurance Company (“Commerce”), and Endurance American Specialty Insurance Company (“Endurance”).
- The Endurance policy provided $1 million general liability coverage but only $25,000 for assault and battery; this sublimit was exhausted in 2020.
- The dispute centers on whether, after the Endurance sublimit was exhausted, Commerce must cover the remainder of CIS’s defense costs under its excess policy.
- Both sides filed cross-motions—Plaintiffs for declaratory judgment, Commerce for summary judgment—on whether the Commerce policy is triggered.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether exhaustion of a $25,000 sublimit in the Endurance policy triggers coverage under Commerce's excess policy | CIS: "Applicable limits" in Commerce policy means any reduction, including the sublimit exhaustion, triggers excess coverage. | Commerce: The excess policy only attaches when $1 million in scheduled underlying insurance is exhausted; sublimits do not suffice. | Commerce policy only triggered after $1 million in underlying coverage is exhausted; sublimit exhaustion alone does not suffice. |
| Whether ambiguous terms in the Commerce policy should be construed in favor of CIS | CIS: Ambiguity in "applicable limits" must be interpreted in insured's favor per NJ law. | Commerce: No ambiguity; policy terms, read in context, require exhaustion of stated $1 million limit. | No ambiguity found; no basis to interpret contract in insured's favor. |
| Whether Commerce has any obligation to defend/indemnify CIS for remaining costs in the Fullman Roberts Matter | CIS: With Endurance exhausted, Commerce is now on the hook as next insurer. | Commerce: Attachment point not met; no obligation until $1 million exhausted. | No obligation for Commerce until $1 million threshold reached. |
| Whether the Harleysville policy is relevant to interpreting Commerce's obligations | CIS: Harleysville is excess to other valid insurance, including Commerce, so order matters. | Commerce: Harleysville's status irrelevant unless Commerce's excess is triggered by $1 million exhaustion. | Harleysville's terms are immaterial absent Commerce's coverage being triggered by $1 million exhaustion. |
Key Cases Cited
- Newport Assocs. Dev. Co. v. Travelers Indem. Co. of Ill., 162 F.3d 789 (3d Cir. 1998) (insurance contracts interpreted by their plain, ordinary meaning; ambiguity is question of law)
- Gibson v. Callaghan, 730 A.2d 1278 (N.J. 1999) (contracts should not be rewritten to be more favorable than purchased; exclusions construed narrowly)
- Sumitomo Mach. Corp. v. AlliedSignal, Inc., 81 F.3d 328 (3d Cir. 1996) (ambiguity exists where contract is susceptible to more than one meaning)
- L-C-A Sales Co. v. Am. Motorists Ins. Co., 713 A.2d 1007 (N.J. 1998) (interpretation of exclusion clauses and construction of ambiguities in favor of insured)
- Weedo v. Stone-E-Brick, Inc., 405 A.2d 788 (N.J. 1979) (test for ambiguity: whether the phrasing is so confusing that the average policyholder cannot make out the boundaries of coverage)
- Hardy ex rel. Dowdell v. Abdul–Matin, 965 A.2d 1165 (N.J. 2009) (policy provisions should not be read in isolation or to render other provisions meaningless)