ROBINHOOD PLAZA, INC. VS. CITY COUNCIL OF THE CITY OF JERSEY CITY(L-5825-10, HUDSON COUNTY AND STATEWIDE)
A-1070-15T2
| N.J. Super. Ct. App. Div. | Jun 9, 2017Background
- Schultz Furriers leased premises and operated a retail fur business; its commercial property policy with Travelers covered business income for policy period Oct. 31, 2011–Oct. 31, 2012.
- Superstorm Sandy (Oct. 2012) caused off-premises transformers to be knocked down and a power outage; Schultz closed from Oct. 29–Nov. 5, 2012 and claimed business-interruption losses.
- Travelers tendered $2,500 relying on a Power Pac Endorsement; Schultz sought substantially more and sued after Travelers disclaimed additional coverage.
- Policy generally covered business income from direct physical loss at the described premises but expressly excluded loss caused by failure/fluctuation of utility services when the cause occurred away from the described premises.
- Schultz argued alternative coverage: (1) Equipment Breakdown/Service Interruption extension and (2) Civil Authority; it also asserted ambiguity and bad faith by Travelers.
- The trial court granted Travelers’ summary judgment, concluding the exclusion and the Power Pac Endorsement (which extended but capped coverage at $2,500) controlled; this appeal followed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether policy ambiguity requires construing coverage for Schultz | Policy ambiguous; ambiguities resolved for insured, so coverage should be read in Schultz’s favor | Policy terms clear; exclusion and endorsements unambiguous | No ambiguity; court applied plain terms for coverage and exclusions in favor of insured only where ambiguity exists; summary judgment for Travelers |
| Whether Business Income coverage applies for loss caused by off-premises power failure | Loss of income resulted from power failure and should be covered | Policy excludes loss from utility failure when cause occurs away from premises | Exclusion applies; off-premises transformer failure excluded business income coverage |
| Whether Equipment Breakdown/Service Interruption extension covers loss from utility transformer failure/windstorm | Equipment Breakdown extension and Service Interruption can cover utility-owned equipment breakdowns causing outage | Definition of "breakdown" requires physical damage to covered equipment; endorsement excludes losses caused by windstorm; Schultz produced no evidence of a covered "breakdown" | No coverage under that extension; Schultz failed to show "breakdown" as defined and windstorm exclusion applied |
| Whether Civil Authority or bad-faith claim provides additional coverage or relief | Civil authority closure or bad-faith denial of benefits warrants coverage/bad-faith damages | No total prohibition of access occurred; Travelers’ denial beyond $2,500 was consistent with policy and not in bad faith | Civil Authority not triggered (access not totally prevented); no bad faith—coverage was "fairly debatable" and Travelers complied with policy by paying $2,500 |
Key Cases Cited
- Mem'l Props., LLC v. Zurich Am. Ins. Co., 210 N.J. 512 (insurance terms given plain meaning; ambiguities resolved for insured)
- Longobardi v. Chubb Ins. Co., 121 N.J. 530 (policies construed liberally for insured but courts should not rewrite policy)
- United Rental Equip. Co. v. Aetna Life & Cas. Ins. Co., 74 N.J. 92 (insurer bears substantial burden to show exclusion applies)
- Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520 (summary judgment standard)
- Pickett v. Lloyd's, 131 N.J. 457 (bad-faith claim requires insurer to have denied benefits without a debatable coverage issue)