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BMK Fights to Preserve Important Insurance Coverage Ruling

BMK Fights to Preserve Important Insurance Coverage Ruling

Jul 20, 2015

Ken Moskowitz, Steve Rowland and Shalom Stone are representing an international storage and logistics company in connection with an insurance coverage dispute that presents a substantial issue of New Jersey law. The matter has already been litigated in the U.S. District Court of New Jersey and the Third Circuit Court of Appeals, and the coverage issue may now be resolved by the New Jersey Supreme Court.

BMK won summary judgment for its client in the federal trial court. The District Court held that our client was entitled to coverage under its Commercial General Liability (CGL) insurance policy for the damages caused by the client’s subcontractor to property belonging to a customer. Among other things, the District Court held that the property damage at issue constituted an “occurrence” under the CGL policy, and that the client was entitled to indemnity under the policy and to reimbursement of the attorneys’ fees that had been expended in litigating the coverage matter.

The Third Circuit heard oral argument on the insurance carrier’s appeal in June 2015, and recently took the extraordinary measure of petitioning the New Jersey Supreme Court for certification to resolve what the Third Circuit regards to be a substantial and unsettled question of New Jersey insurance law.

Specifically, the Third Circuit has asked the New Jersey Supreme Court to resolve the issue of whether the damage caused to the property of the insured’s customer by the defective work of the insured’s subcontractor constitutes an “occurrence” under the standard form of CGL policy that has been in effect since 1986. The case presents an important and recurring issue not only in New Jersey, but nationwide. Courts across the country have repeatedly cited New Jersey law (the Weedo doctrine) in addressing the issue which may now be resolved directly by New Jersey’s highest court.

Coincidentally, the day before the Third Circuit petitioned the New Jersey Supreme Court for certification in our client’s case, the New Jersey Appellate Division in Cyprus Point Condominium Association, Inc. v. Adria Towers, LLC, A-2767-13T1, held that, in analogous circumstances, a subcontractor’s faulty workmanship constitutes an “occurrence” within the meaning of the insured general contractor’s CGL policy.

In the event that the New Jersey Supreme Court certifies the issue presented in our client’s case, the matter will likely be heard early next year.

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