12 A.3d 719
N.J. Super. Ct. App. Div.2011Background
- Island Pool was hired to repaint an in-ground pool in Tenafly and drained the pool to perform the work.
- A temporary pump was installed to prevent subterranean water pressure while painting began.
- During June 3, 2006 heavy rainfall caused the pump to fail, the pool to lift from the ground, crack, and require replacement.
- Damages extended to adjacent decking and landscaping, totaling $89,315.65, which Island Pool repaired or replaced.
- Ohio Casualty denied coverage for the pool damage under exclusions j(5) and (6), but indemnified landscaping and decking costs.
- Island Pool sought coverage; the Law Division granted Island Pool summary judgment for coverage and awarded counsel fees; the appellate court reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether j(5) ongoing operations exclusion bars coverage for pool damage | Ohio Casualty: exclusion applies because damage occurred to property Island Pool was actively working on. | Island Pool: exclusion does not apply; damages are consequential to insured's operations not excluded as Weedo-based reasoning. | Yes; j(5) excludes coverage for the pool damage during ongoing operations. |
| Whether the attorney's fees award to Island Pool was proper | Ohio Casualty: fee award was improper due to reversal of coverage issue on appeal. | Island Pool: prevailing insured entitled to attorney's fees under Rule 4:42-9(a)(6). | Fees reversed; not upheld. |
Key Cases Cited
- Weedo v. Stone-E-Brick, Inc., 81 N.J. 233 (1979) (distinguishes business risks from insured tort liability in CGL coverage)
- Pekin Insurance Co. v. Willett, 301 Ill. App. 3d 1034 (1999) (upholds j(5) ongoing operations exclusion in pool-damage case)
- Van Ginhoven v. State Farm, 788 So. 2d 389 (Fla. Ct. App. 2001) (supports application of j(5) exclusion to ongoing pool work)
- Hardy v. Abdul-Matin, 198 N.J. 95 (2009) (courts enforce clear policy exclusions to restrain coverage)
- Flomerfelt v. Cardiello, 202 N.J. 432 (2010) (insurance contract interpretation: unambiguous terms govern)