Bardis v. Stinson (NJ Sup. Court 2014 – App. Div)
Practice Areas: First Party, Insurance Coverage and Bad Faith
In the unpublished decision of Bardis v. Stinson, a divided appellate panel reversed the trial court’s grant of summary judgment to the defendant, Cumberland Insurance Company, and remanded for further proceedings.
The plaintiff sustained property damages as a result of a basement foundation wall collapse. Upon investigation, the plaintiff’s homeowners insurer, Cumberland, determined that the loss was caused by defective construction of the foundation wall and hydrostatic pressure, neither of which triggered coverage under the plaintiff’s dwelling policy.
Subsequent to Cumberland’s denial of coverage for the wall collapse, suit was instituted by the plaintiff. Plaintiff’s expert opined that the collapse was caused by defective construction of the foundation wall combined with excessive loads from retained soil and an adjacent masonry chimney.
The plaintiff’s dwelling policy contained a supplemental collapse coverage provision providing coverage for collapses under certain limited circumstances, including where the collapse is caused by hidden decay or defective construction if the collapse occurs during the construction. Neither hydrostatic pressure nor excessive horizontal loads are covered causes of loss under that provision.
Cumberland filed a motion for summary judgment seeking dismissal of the Complaint on the basis that neither parties’ expert identified a cause of loss covered under the collapse coverage provision. Plaintiff opposed Cumberland’s motion and argued that the cause of the loss could be construed as hidden decay because the structural integrity of the foundation wall deteriorated over time as a result of perpetual horizontal loads bearing upon the wall. The trial court granted Cumberland’s motion, holding that neither parties’ expert attributed the collapse to “decay” or any other covered cause of loss. In so holding, the trial court rejected the plaintiff’s argument that the term “decay” was ambiguous.
The Appellate Division reversed the trial court’s ruling in a 2-1 decision. The majority found that the definition of “decay” encompasses a gradual decline in strength and held that a question of fact existed as to whether the wall gradually weakened or decayed before collapsing. In a dissenting opinion, the minority agreed with the trial court’s finding that the meaning of the term “decay” is not the same as the meaning of the term “defect,” and found that neither of the parties’ experts attributed the collapse to “decay.” In its conclusion, the dissent remarked that “[o]ne cannot force a square peg into a round hole.”
The Appellate Division’s decision was appealed by Cumberland Insurance Company. This appeal was heard by the New Jersey Supreme Court in 2016. The New Jersey Supreme Court reversed the judgment of the Appellate Division and reinstated the trial court’s ruling granting summary judgment in favor of Cumberland. Click here for more information regarding the New Jersey Supreme Court decision.