Cypress Point Condominium Association, Inc. v. Adria Towers
118 A.3d 1080
| N.J. Super. Ct. App. Div. | 2015Background
- Cypress Point Condominium Association sued its developer (Adria Towers), the developer's insurers (Evanston and Crum & Forster), and subcontractors after subcontractors’ defective work (roofing, flashing, windows, EIFS, sealants, etc.) caused water infiltration and damage to common areas and unit interiors.
- Plaintiff sought coverage under the developer's commercial general liability (CGL) policies, which follow the ISO 1986 standard CGL form.
- Trial court granted summary judgment to Evanston, finding no "property damage" or "occurrence" under the policy; the court dismissed claims against Crum & Forster as moot and denied reconsideration.
- On appeal, the sole threshold question was whether the subcontractors’ unintended consequential damages to other property constitute "property damage" and an "occurrence" under the policy; exclusions were left for remand if threshold coverage exists.
- The policy at issue includes the 1986-era "Your Work" exclusion with a subcontractor exception (i.e., damage to your work arising out of it is excluded unless the damaged work was performed on your behalf by a subcontractor).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether unintended, consequential damage caused by subcontractors’ defective workmanship constitutes "property damage" and an "occurrence" under the 1986 ISO-form CGL policy | Consequential harm to common areas and units is "physical injury to tangible property" and resulted from an unintended "accident" (an "occurrence"); threshold coverage exists and exclusions can be litigated on remand | Relying on Weedo/Firemen's, defective construction is a business risk (not an occurrence) and thus not property damage under the policy | Reversed: consequential damages here qualify as "property damage" and an "occurrence" under the 1986 ISO form; remanded for consideration of policy exclusions (not decided) |
Key Cases Cited
- Weedo v. Stone-E-Brick, Inc., 81 N.J. 233 (N.J. 1979) (pre-1986 CGL precedent holding contractor’s own defective work generally represents an uninsurable business risk)
- Firemen’s Ins. Co. of Newark v. Nat’l Union Fire Ins. Co., 387 N.J. Super. 434 (App. Div. 2006) (applied pre-1986 ISO form to deny coverage for replacement of defective work)
- Hartford Ins. Grp. v. Marson Constr. Corp., 186 N.J. Super. 253 (App. Div. 1982) (distinguishes business-risk repairs from tort liability for damage to third-party property)
- Newark Ins. Co. v. Acupac Packaging, Inc., 328 N.J. Super. 385 (App. Div. 2000) (noting damage to third-party property is tort liability, not a business risk)
- Voorhees v. Preferred Mut. Ins. Co., 128 N.J. 165 (N.J. 1992) (accidental nature of occurrence assessed by whether insured intended or expected injury)
- U.S. Fire Ins. Co. v. J.S.U.B., Inc., 979 So. 2d 871 (Fla. 2007) (Florida Supreme Court holding post-1986 CGL form can treat unintended consequential construction damage as an "occurrence" and "property damage")
- French v. Assurance Co. of Am., 448 F.3d 693 (4th Cir. 2006) (applying Maryland law to hold similar post-1986 policy language covers unexpected consequential property damage caused by subcontractors)