Oxford Realty Group Cedar v. Travelers Excess and Surplus Lines Company (077617)
160 A.3d 1263
| N.J. | 2017Background
- Oxford (commercial owner) purchased a surplus-lines insurance policy from Travelers for apartment buildings in FEMA Flood Zone A; policy term Feb 1, 2012–Feb 1, 2013.
- The Property Coverage Form excluded flood, but parties added a Flood Endorsement limiting all flood losses to a single annual aggregate of $1,000,000 (Supplemental Coverage Declarations § B.14).
- The Policy separately lists debris-removal coverage: a base debris-removal payment (up to 25% of loss) that is part of the property limit, and a stated "Debris Removal (additional)" sublimit of $500,000 in the Supplemental Coverage Declarations (§ B.7) that applies when debris costs plus direct loss exceed property limits.
- Superstorm Sandy caused flood damage and debris; Oxford claimed $1,207,961.28 (including $207,961.28 debris removal) and sought the $500,000 additional debris-removal sublimit on top of the $1,000,000 flood cap.
- Trial court granted Travelers summary judgment holding the Flood Endorsement unambiguously capped total flood recovery at $1,000,000; Appellate Division reversed, awarding the additional debris-removal amount; the Supreme Court granted certification.
Issues
| Issue | Oxford's Argument | Travelers' Argument | Held |
|---|---|---|---|
| Whether debris-removal "additional" sublimit applies in addition to Flood Endorsement $1,000,000 cap | "Debris Removal (additional)" (§B.7) and Property/General-Conditions language make debris removal payable in addition to occurrence limits, so Oxford is entitled to up to $500,000 extra | Flood Endorsement §F caps "the total of all loss or damage caused by Flood" at the single highest annual aggregate ($1,000,000); debris sublimits are subparts of Covered Property limits and do not increase flood aggregate | Held for Travelers: the Flood Endorsement unambiguously caps all flood-related recovery at $1,000,000; additional debris sublimit does not expand that cap. |
| Whether the policy language is ambiguous | If ambiguous, interpret in favor of insured; Oxford also invokes reasonable expectations | Policy language is plain: Flood Endorsement expressly limits total flood losses to the annual aggregate; no ambiguity exists | Court: Policy unambiguous; no resort to contra proferentem or reasonable-expectations doctrines. |
| Whether Covered Property Limits in General Conditions refer to occurrence caps or to values of insured property | Oxford: "Limits of Insurance" references include occurrence limits like the $1,000,000 flood limit and thus debris-additional applies to those limits | Travelers: "Covered Property Limit(s) of Insurance" refers to values for buildings/business personal property (not to occurrence aggregate limits) | Court: Interprets Covered Property Limits as values of insured buildings/BPP; debris-additional applies to those property limits, not to occurrence caps like flood. |
| Precedential effect of similar out-of-state decisions | Oxford cites interpretive arguments and general canons favoring insured | Travelers cites decisions (e.g., Altru Health System) holding occurrence-specific caps govern all sublimits arising from same occurrence | Court finds those authorities (including Altru) persuasive: occurrence cap controls and subsumes sublimits for damages caused by that occurrence. |
Key Cases Cited
- Chubb Custom Ins. Co. v. Prudential Ins. Co. of Am., 195 N.J. 231 (2008) (plain-language rule: courts enforce unambiguous policy terms and avoid strained constructions)
- Longobardi v. Chubb Ins. Co., 121 N.J. 530 (1990) (doctrine limiting court invention of ambiguity)
- Pacifico v. Pacifico, 190 N.J. 258 (2007) (contra proferentem applies against drafter absent sophistication/negotiation)
- DiOrio v. N.J. Mfrs. Ins. Co., 79 N.J. 257 (1979) (reasonable expectations doctrine applies to misleading or ambiguous policy terms)
- Altru Health Sys. v. American Protection Ins. Co., 238 F.3d 961 (8th Cir. 2001) (occurrence-specific flood cap applied to subsuming coverages; sublimits not automatically additional to flood aggregate)