TUCCI v. THE HARTFORD FINANCIAL SERVICES GROUP, INC. et al

Filing 65

OPINION FILED. Signed by Judge Jerome B. Simandle on 6/27/11. (js)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

PETER A. TUCCI, SR.,

HON. JEROME B. SIMANDLE

Plaintiff,

Civil No. 08-4925 (JBS/JS)

v.
OPINION
THE HARTFORD FINANCIAL
SERVICES GROUP, INC., et al.,
Defendants.

APPEARANCES:
Carlo Scaramella, Esq.
LAW OFFICES OF CARLO SCARAMELLA, LLC
One Greentree Centre, Suite 201
10000 Lincoln Drive East
Marlton, NJ 08053
Counsel for Plaintiff
Thomas E. Schorr, Esq.
SMITH, STRATTON, WISE, HEHER & BRENNAN, LLP
2 Research Way
Princeton, NJ 08540
Counsel for Defendants
SIMANDLE, District Judge:
This matter is before the Court on two motions for summary
judgment by Defendants Twin City Fire Insurance Company (“Twin
City”) and Hartford Casualty Insurance Company (“Hartford”)
against claims of bad faith, breach of contract, and declaratory
judgment raised by Plaintiff, Peter A. Tucci, Sr.

Defendant Twin

City moves for summary judgment of Plaintiff’s declaratory
judgment claim in Count V.

[Docket Item 41.]

Defendant Hartford

moves for summary judgment of Plaintiff’s counts alleging bad

faith (Counts I-III) and additionally moves to dismiss the action
without prejudice in favor of contractual appraisal.
Item 42.]

[Docket

Because the Court concludes that Plaintiff’s insurance

policy is not ambiguous in the disputed portions, and that
Defendants’ delays in paying Plaintiff’s claim and denial of
certain areas of coverage were undisputably based on valid or at
least debatable reasons, the Court will grant Defendant
Hartford’s motion.

Additionally, because the Court concludes

that Plaintiff’s policy language regarding advertising injury
coverage is not ambiguous, and that the policy excluded the duty
to defend against claims for trademark violations, the Court will
grant Defendant Twin City’s motion for summary judgment.

I.

FACTS AND PROCEDURAL HISTORY
This case revolves around a parcel of land and the buildings

thereon located at 2015 Burlington Mount Holly Road in
Westhampton, New Jersey, and the insurance policy covering it.
For at least 30 years, there have been hotels operating on the
property.

Plaintiff has owned the land in question for decades,

but only took possession of the buildings there in 2006 after he
evicted the long-term tenants for material breach of their lease.
As a result, Plaintiff took out additional insurance on the
property by expanding his existing policy, issued by Defendants.
Upon taking possession of the property on September 1, 2006,

2

Plaintiff discovered that the hotel buildings had been vandalized
and that furnishings and fixtures he had expected to be there had
been removed.

He subsequently filed a claim for vandalism and

theft with Defendant Hartford, but has never been able to resolve
his claim.

This litigation followed.

The following facts are not meaningfully disputed in the
record.
A.

History of the Property

Plaintiff inherited the land at 2015 Burlington Mount Holly
Road from his parents, and became sole owner in 1985.

(Tucci

Examination Under Oath at 7:17-23, Schorr Cert. Ex. 1.)

His

family had been renting the property to long-term tenants since
at least 1958, pursuant to a 99-year ground lease.
Agreement at 1, HA 1316, Rose Cert. Ex. 2.)1

(Lease

The tenants had

built and operated hotels on the land over the decades.
EUO at 9:19-22.)

(Tucci

Since at least 1999, a Howard Johnson Motor

Lodge hotel franchise was operated on the property.
Agreement, Rose Cert. Ex. 3.)

(Management

For all times relevant, the

leaseholder of the land was an entity known as Northeast
Hospitality Properties, or a derivation thereof.
12:7.)

(Id. at 11:22-

In 1999, Northeast Hospitality Properties (“Northeast”)

1

Many of the documents submitted in evidence were Bates
numbered by Defendant Hartford Casualty as “HA XXXX.” Where
applicable and useful, the Court will include these Bates numbers
for ease of reference.
3

entered into a management agreement with an entity called Vraj
Brig PA, LLC (“Vraj Brig”) under which Vraj Brig assumed
management and operational control over the premises.
(Management Agreement at 1-2.)
In addition to the Howard Johnson motel, there were also
three other buildings on the land, which were operated as an
independent hotel (the “ABC buildings”).
Patel 2, Schorr Cert. Ex. 2.)

(See Aerial Photo, Ex.

Prior to September of 2006, the

ABC buildings were largely occupied by guests referred and
subsidized by the Burlington County Department of Social
Services.

(Patel Dep. at 33:14-20, Schorr Cer. Ex. 2.)

Between

the Howard Johnson and the ABC buildings, the complex had more
than 140 rooms.

(Dec. 8, 2006 Schleifer Report, HA 1299-1303,

Rose Cert. Ex. 4.)
Northeast was responsible under the lease for all expenses
and taxes on the property, and additionally paid monthly rent to
Plaintiff amounting to $20,000.

(Tucci Dep. at 452:1-25.)

According to the Management Agreement that Northeast signed with
Vraj Brig in 1999, this rent was to be paid by Vraj Brig, who
also paid an additional $15,000 monthly “manager’s fee” to
Northeast.

(Management Agreement at 5, HA 1371.)

Yashvant

Patel, an employee of Vraj Brig, testified that the manager’s fee
was actually closer to $11,000 per month, which is consistent
with Northeast’s 2005 Income Statement.

4

(Patel Dep. at 88:9-13;

Northeast Income Statement, Scaramella Cert. Ex. 4 at HA 1221.)
In addition to operating the two hotels, Vraj Brig also
leased space in one of the buildings to a restaurant operator.
(Patel Dep. at 100:16-24.)

Vraj Brig owned the furniture and

appliances in the hotel properties, including hotel room beds and
laundry machines.2

(Patel Dep. at 70:1-16, 66:13-25.)

Additionally, the owner of the restaurant owned the furnishings
and equipment of the restaurant.
B.

(Id. 102:14-15, 106:22-23.)

Eviction of Northeast and Expansion of Insurance Policy

Plaintiff began eviction proceedings against Northeast in
late 2005 due to, at least in part, Northeast’s failure to
acquire adequate insurance on the property.
19:14.)

(Tucci EUO at 18:8-

On July 21, 2006, Plaintiff prevailed when the Superior

Court of Burlington County, Law Division, entered a judgment of
possession of the hotel premises to Plaintiff.
Order, Schorr Cert. Ex. 3.)

(July 21, 2006

The court subsequently entered a

2

The Court notes that Plaintiff denies the truth of this
statement, but also notes that Plaintiff offers no competent
evidence to dispute this testimony, other than to point out that
Mr. Patel also believed that Vraj Brig owned the locks on the
doors in the hotel. (Pl.’s Resp. Tto Def. Hartford’s Statement
of Material Facts at ¶ 6.) The Court infers from this statement
that Plaintiff does not believe that Mr. Patel is correct in
stating that Vraj Brig owned the door locks, and thereby implies
that Mr. Patel’s testimony regarding ownership is not credible.
On summary judgment, however, a party opposing summary judgment
may not “prevail merely by discrediting the credibility of the
movant's evidence; it must produce some affirmative evidence.”
Big Apple BMW, Inc. v. BMW of N. Amer., Inc., 974 F.2d 1358, 1363
(3d Cir. 1992).
5

stay of execution of its judgment, and ordered that “the status
quo is to be maintained by all parties . . . . There shall be no
destruction, disposal or sale of any property at the leased
premises that is not in the ordinary course of the business of
the motel.”

(Aug. 8, 2006 Order, Schorr Cert. Ex. 4.)

In anticipation of the eviction, Plaintiff worked with his
insurance broker, the Geisenheimer Agency, to modify his existing
insurance policy with Hartford.
43:1, Schorr Cert. Ex. 8.)

(Geisenheimer Dep. at 42:22-

Plaintiff’s existing policy, number

13 UUN CR9352, already covered twenty two commercial properties
in various locations throughout New Jersey.
HA 1839-49.)

(Rose Cert. Ex. 1,

Plaintiff’s broker requested that the policy be

expanded to cover the hotel premises at 2015 Burlington Mount
Holly Road, to cover both the buildings themselves and their
contents up to $3,500 per room, and also to cover loss of income
at the premises up to $1,000,000.

(Jul. 27, 2006 Geisenheimer e-

mail, Schorr Cert. Ex. 8.)
Plaintiff’s Hartford policy offered four different areas of
coverage: 1) Property Choice, 2) Commercial Inland Marine, 3)
Commercial Auto, and 4) Commercial General Liability.
Cert. Ex. 1 at HA 1818-19.)

(Rose

Within each of these areas, the

policy provided for coverage of specific kinds of property and
loss.

Within Property Choice, the policy provided for payment of

the actual cash value or replacement cost of damage or loss of

6

buildings and business personal property located on covered
premises (“property coverage”).
1870-71.)

(Rose Cert. Ex. 1 at HA 1857,

The Property Choice area of coverage also provided for

“Business Interruption” coverage, in the form of business income
loss or rental income loss (“income coverage”).
1 at HA 1760-61.)

(Rose Cert. Ex.

Income coverage would pay the insured for the

“actual loss of business income” that results from a disruption
of business due to damage or loss to a covered premises.

(Id.)

Plaintiff’s policy had previously offered a maximum building
and property coverage (described in the policy as the Blanket
Buildings and Business Personal Property coverage) of $13,960,900
and income coverage (described in the policy as the Blanket
Special Business Income coverage) of $100,000.

(Rose Ex. 1, HA

1833-35.)
C.

The Policy

On August 3, 2006, Hartford increased the coverage of
Plaintiff’s policy, as detailed in Endorsement 2 to the policy.
(Rose Cert. Ex. 1, HA 1736-1759.)

Endorsement 2 added the hotel

premises at 2015 Burlington Mount Holly Road as “Premises 23" and
modified the policy to increase the policy’s blanket Buildings
and Business Personal Property coverage to $19,442,900 and
increased the policy’s blanket Business Income coverage to $1
million.

(Id. at HA 1736-37, 1740.)

The specific description of

the hotel property, listed as Premises No. 23, specified that the

7

covered buildings and business personal property would be covered
under the blanket building and personal property limit, and that
business income losses would be covered under the blanket special
business income limit.

(HA 1757-58.)

As a result of this

increased coverage, Plaintiff’s premiums more than doubled, from
$44,160 to $92,142.

(HA 1816, 1736.)

Plaintiff testified that, when applying for coverage, he did
not request a specific business income coverage limit, but merely
trusted Mr. Geisenheimer to set the coverage level appropriately.
(Tucci Dep. at 636:10-17, Schorr Cert. Ex. 14.)

He also

testified that he was unaware that business income coverage had a
separate coverage limit distinct from the blanket property
coverage limit.

(Tucci Dep. at 629:4-15.)

Plaintiff’s policy defined property covered under “business
personal property” to include, in addition to the insured’s own
property, “personal property owned by others, that is in your
care, custody or control” but excluded property that is “owned by
your tenants.”

(Rose Cert. Ex. 1, at HA 1857-58.)

Under Plaintiff’s 99-year ground lease agreement with
Northeast, upon termination of the lease, the landlord acquires
the buildings and structures on the land, including “alterations,
changes, additions and improvements which may have been made upon
the premises (except movable furniture or movable trade fixtures
put in at the expense of Tenant)” and the tenant is authorized to

8

“remove all of Tenant’s personal property from the demised
premises, and all property not so removed shall be deemed to have
been abandoned . . . .”

(Lease Agreement at HA 1333-34.)

Plaintiff’s policy additionally included, in the area of
Commercial General Liability coverage (which was issued by
Defendant Twin City, rather than Hartford Casualty), a “Personal
and Advertising Injury Liability” provision, which provides:
We will pay those sums that the insured
becomes legally obligated to pay as damages
because of "personal and advertising injury"
to which this insurance applies. We will have
the right and duty to defend the insured
against any "suit" seeking those damages.
However, we will have no duty to defend the
insured against any "suit" seeking damages for
"personal and advertising injury" to which
this insurance does not apply.
(Rose Cert. Ex. 1 at HA 1933.)

The policy defines “personal and

advertising injury” to include, among other things, “Oral,
written or electronic publication of material that slanders or
libels a person or organization or disparages a person’s or
organization’s goods, products or services” and also includes
“Copying, in your ‘advertisement,’ a person’s or organization’s
‘advertising idea’ or style of ‘advertisement.’” (Id. at HA
1945.)
The policy excludes from coverage “infringement of
intellectual property rights.”

The IP exclusion specifies that

the policy does not cover
‘Personal and advertising injury’ arising out
9

of any violation of any intellectual property
rights such as copyright, patent, trademark,
trade name, trade secret, service mark or
other designation of origin or authenticity.
However, this exclusion does not apply to
infringement, in your ‘advertisement’, of . .
. Slogan, unless the slogan is also a
trademark, trade name, service mark or other
designation of origin or authenticity . . .
(Id. at 1934.)
Finally, the Policy included a mandatory appraisal clause in
the event of a disputed claim.

The procedure laid out in the

policy stated that
If we and you disagree on the amount of loss,
either may make written demand for an
appraisal of the loss. In this event, each
party will select a competent and impartial
appraiser. The two appraisers will select an
umpire. If they cannot agree, either may
request that selection be made by a judge of a
court having jurisdiction. The appraisers will
state separately the amount of loss. If they
fail to agree, they will submit their
differences to the umpire. A decision agreed
to by any two will be binding. Each party
will:
a. Pay its chosen appraiser; and
b. Bear the other expenses of the appraisal
and umpire equally.
If there is an appraisal, we will still retain
our right to deny the claim on the grounds
that it is not covered under this policy.
(Id. at HA 1850.)
D.

Removal and Transfer of Possession of Hotel Premises

On August 17, 2006, the Superior Court of Burlington County
ordered that the warrant of removal it had granted to Plaintiff
in July would be stayed only until August 31.

10

(Aug. 17, 2006

Order, Schorr Cert Ex. 5.)

Consequently, in mid-August,

Northeast and Vraj Brig prepared to depart the premises and made
arrangements for the removal of their property.

Mr. Patel of

Vraj Brig testified that he offered the continued management
services of Vraj Brig to Plaintiff, who declined the offer.
(Patel Dep. at 66:5-12.)

Failing that, Mr. Patel offered,

instead, to sell or lease the property of Vrag Brig, including
the furnishings and appliances, in the hotels to Plaintiff, who
refused that offer as well.

(Patel Dep. at 66:20-25, 67:11-15.)

Mr. Patel additionally testified that he witnessed Plaintiff
reject a similar offer from the restaurant owner.

(Id. at

103:12-106-3.)
Plaintiff had visited the hotel premises on August 2 with an
individual named Vincent Ciro, whom Plaintiff anticipated
employing as the new hotel and property manager.
299:1-14.)

(Patel Dep. at

Both Plaintiff and Mr. Ciro submitted certifications

to the Superior Court of Burlington County testifying that they
were unimpressed with the condition of the premises.

Mr. Ciro

certified that he believed that, due to the neglect and disrepair
of the buildings, “the hotel was not in a proper rentable
condition” and that it “would require the expenditure of
approximately $900,000 to $1.2 million dollars” to bring the
hotel into reasonable condition.
7, Schorr Cert. Ex. 6.)

(Aug. 15, 2006 Ciro Cert. ¶¶ 4,

Plaintiff certified that he observed

11

“the poor condition of the property.

Such poor condition

included mold, stained carpeting, non-functioning HVAC systems,
evidence of water infiltration and leaks, peeling paint,
crumbling concrete on stairways . . . and other evidence of
deterioration and neglect.”

(Aug. 15, 2006 Tucci Cert. ¶ 3,

Schorr Cert. Ex. 7.)
In the final few days of August, Vraj Brig began to move all
of the furniture and equipment out of the hotels, loading them
into multiple trucks which were parked outside the buildings.
(Patel Dep. at 71:1-7.)

Mr. Patel saw Plaintiff on the premises

during this time when the property was being moved out of the
hotels.

(Id. at 70:18-25.)

On August 31, 2006, after everything

had been moved out, Mr. Patel offered to walk through the
property with Plaintiff to account for the condition of the
property, but Plaintiff declined.

(Id. at 73:1-4.)

Vraj Brig

had removed virtually everything from the hotels, including HVAC
units from the walls, the hot water heater, a communication
system, and the locks on the doors.

(Id. at 70:3-16.)

Additionally, the restaurant owner had removed all of his
equipment and furnishings from the restaurant.

(Id. at 106:22-

23.)
Despite the fact that he had been informed that all the
movable furnishings would be removed from the premises, Plaintiff
testified that he expected, when he arrived at the premises on

12

September 1, 2006, that the hotel would immediately be
operational.

(Tucci Dep. at 459:3-7, Scaramella Decl. Ex. 1.)

Plaintiff testified that he had based this expectation on the
language of the August 8, 2006 Order of the Burlington County
Superior Court, which ordered that “the status quo is to be
maintained by all parties” and that “[t]here shall be no
destruction, disposal or sale of any property at the leased
premises that is not in the ordinary course of the business of
the motel.”

(Aug. 8, 2006 Order; Tucci Dep. at 449:15-25.)

When Plaintiff arrived on September 1, he discovered that,
in addition to the movable furnishings, several items of property
that he considered to be fixtures had been removed as well,
including the door locks, and the HVAC units.

Additionally,

Plaintiff discovered substantial vandalism that had occurred
throughout the premises, including spraypaint in bathrooms and
holes in the walls.
Schorr Ex. 14.)
decommissioned.”
E.

(Hotel Report at 3, attached as Tucci 1 to

Plaintiff described the facility as “totally
(Id.)

Submitting the Claim to Hartford

Plaintiff called his insurance broker to discuss the damage
almost immediately.

(Geisenheimer Dep. at 49:21-50:10.)

In that

conversation, Plaintiff told Mr. Geisenheimer that he believed
the vandalism had been committed by the tenants because of the
eviction notice.

(Id. at 49:24-25.)

13

Mr. Geisenheimer testified

that, after the two discussed whether to submit the damage to
Hartford as a claim for vandalism and/or theft, Plaintiff decided
that he would not because he had been planning to renovate the
premises anyway, and the policy is “not a maintenance policy.”
(Id. at 50:3-7.)

Consequently, Mr. Geisenheimer did not notify

anyone at Hartford of the damage or the possibility of a claim.
(Id.)
However, approximately six weeks later, on or around October
15, 2006, Plaintiff called Mr. Geisenheimer again and announced
that, after consulting with an attorney, he wanted to put in a
claim on the damage and loss after all.

(Id. at 58:23-25.)

Mr.

Geisenheimer told him that, in order to do so, he would need to
submit a police report.

(Id. At 58:25-59:2.)

Within a few days,

Plaintiff had supplied the police report, and the claim was
submitted to Hartford on October 18, 2006.

(Loss Notice Form,

Rose Cert. Ex. 6.)
F.

Claim Adjustment Begins

On October 23, 2006, Jonathan Rose, an authorized claim
adjuster from Hartford Casualty, wrote to Plaintiff on behalf of
Hartford, acknowledging the claim and advising Plaintiff to abide
by the terms in his policy regarding “General Duties in Event of
Loss.”

(Oct. 23, 2006 Letter, Rose Cert Ex. 7.)

The terms

include protecting the damaged property, taking an inventory of
all damaged property, permitting Hartford to inspect the property

14

and examine financial records, and otherwise generally
cooperating with the investigation and claim adjustment.

(Id.)

The letter also advised Plaintiff that, because “timely notice of
the loss was not provided,” Hartford would need to conduct a
“full investigation . . . to determine if coverage exists for
this loss.”

(Id.)

Over the following few months, Hartford hired a building
inspector and Plaintiff retained an adjuster to assist with the
claim adjustment process.

(Rose Cert. ¶ 11; Oct. 25, 2006

Gillespie Letter, Rose Cert. Ex. 8.)

Plaintiff’s adjuster, Todd

Gillespie, hired a building inspector to assist with the building
and business personal property claim.
23, Schorr Cert. Ex. 12.)

(Gillespie Dep. at 68:3-

In late October or early November,

2006, the two building inspectors, along with Jonathan Rose,
conducted an inspection of the property.

(Rose Cert. ¶ 11.)

Both inspectors prepared estimates of property damage.
Hartford’s inspector, Joseph Schliefer, Sr., of Schleifer
Associates, initially estimated damage due to vandalism at
approximately $477,000, while Plaintiff’s inspector, Carl
Rodriguez of Mejor Consulting Group, estimated the loss at
approximately $636,000.

(Dec. 8, 2006 Schleifer Rept., Rose

Cert. Ex. 4; Nov. 30, 2006 Mejor Rept., Rose Cert. Ex. 5.)
In response to requests, Mr. Gillespie sent Hartford certain
documentation of the property, including Northeast’s 99-year

15

ground lease, the Vraj Brig management agreement, and the deed to
the land.

Mr. Gillespie later submitted the Mejor Consulting

estimate to Hartford.

(Rose Cert. ¶ 15, Ex. 5.)

Hartford

requested additional information from Mr. Gillespie, such as
documentation of ownership of some claimed items of loss such as
the hotel door locks, the HVAC units, and the restaurant
equipment, and inquired into when Plaintiff would be submitting a
business income claim.

(Feb. 2, 2007 Rose Letter, Rose Cert. Ex.

10.)
On February 2, 2007, Mr. Gillespie notified Hartford that he
had been advised by Plaintiff that there were “additional damages
not represented” on the Mejor report, and that he would forward a
supplemental claim for the additional damages later.
2007 Gillespie Letter, Rose Cert. Ex. 11.)

(Feb. 2,

During the month of

February, 2007, Mr. Gillespie contacted Plaintiff several times
with requests for various forms of documentation to support both
the property damage claim as well as a business income claim.
(Mar. 1, 2007 Gillespie Letter, Schorr Cert. Ex. 11.)

In early

March, Mr. Gillespie received a letter from Plaintiff explaining
that Plaintiff was dissatisfied with the way Gillespie was
handling the insurance loss.
Schorr Cert. Ex. 11.)

(Gillespie Dep. at 97:16-98:8,

Shortly thereafter, Mr. Gillespie spoke

with Plaintiff on the telephone, where it was “agreed that
[Plaintiff] wanted to proceed on his own at that point.”

16

(Id. at

99:13-14.)
After Plaintiff fired Mr. Gillespie, Hartford heard nothing
further from Plaintiff until a May 4, 2007 meeting, where
Plaintiff presented Hartford with his revised property claim,
which had increased substantially to approximately $3,217,000.
Plaintiff did not present his business income claim at the
meeting.

(Rose Cert. ¶ 15.)

Shortly thereafter, Jonathan Rose

of Hartford memorialized the revised claim and requested
documents that could support the unexpectedly high claim, such as
contractor designs, invoices, estimates, drawings and lists of
contractors involved in the repair.

(May 15, 2007 Rose Letter,

Rose Cert. Ex. 12.)
G.

Claim Adjustment Stalls

From May of 2007 until the initial filing of this action in
July of 2008, the adjustment process stalled.

In July of 2007,

Plaintiff presented his business income claim for the first time,
requesting approximately $1.5 million.
Letter, Rose Cert. Ex. 14.)

(Jul. 20, 2007 Tucci

Hartford requested supporting

documentation of the claim shortly thereafter.
Rose Letter, Rose Cert. Ex. 14.)

(Jul. 31, 2007

Indeed, over the course of the

next year, Hartford reiterated its requests for documentation of
Plaintiff’s claims for building and property damage and business
income at least ten times without receiving any documentation in
response.

(Jul. 31, 2007 Rose Letter, Rose Cert. Ex. 14; Aug.

17

21, 2007 Rose Letter, Rose Cert. Ex. 16; Sep. 28, 2007 Rose
Letter, Rose Cert. Ex. 17; Nov. 8, 2007 Gable Letter, Rose Cert.
Ex. 20; Dec. 14, 2007 Gable Letter, Rose Cert. Ex. 21; Jan. 21,
2008 Gable e-mail, Rose Cert. Ex 23; Feb. 26, 2008 Rose e-mail,
Rose Cert. Ex. 24; Mar. 10, 2008 Gable Letter, Rose Cert. Ex. 25;
Apr. 25, 2008 Rose Letter, Rose Cert. Ex. 27; May 20, 2008 Rose
Letter, Rose Cert. Ex. 28.)

However, Hartford’s internal records

indicate that around the time that Plaintiff submitted his
initial business income claim, Jonathan Rose had noted to his
file that based, in part, on the information gleaned from the
income statements of the previous tenant Northeast, he might
estimate a business income claim of approximately $50,000 per
month.

(Internal Hartford Notes Rept., Scaramella Decl. Ex. 4 at

HA 0995.)
Several months after the May meeting, Plaintiff requested an
advance on his property claim on July 20, 2007, which Hartford
offered to pay in the amount of $200,000 on July 31.
Exs. 31 & 32.)

(Rose Cert.

The parties continued to meet and exchange

revised estimates and claims.

On October 19, 2007, for example,

Jonathan Rose met with Plaintiff and counsel, where Plaintiff
presented a slightly reduced property claim of $2,631,000.
Cert. ¶ 23, Ex. 18.)

(Rose

Plaintiff’s revised property claim included

more detail than his May 2007 claim did, including, for example,
line items for 76 king-sized beds, three commercial clothes

18

dryers, 114 HVAC units, and repairs to a 4.5 ton damaged roof-top
HVAC unit.

(Rose Cert. Ex. 18, HA 0645-48.)

In short, Plaintiff

was seeking insurance coverage for the loss of property he never
owned and the near-total refurbishment of a hotel complex he had
personally certified to a court of law as exhibiting several
significant signs of “deterioration and neglect” prior to taking
possession.

(Aug. 15, 2006 Tucci Cert.)

However, throughout the year, Plaintiff continued to refuse
Hartford any documentary evidence that could support the validity
of his insurance claims.

Plaintiff explained in deposition

testimony that he did not provide such documentation at the time,
not because he did not have any such documentation (he later
provided documents during discovery)3, but because he did not
think the requests were necessary; and the fact that they were
demanded was an example of Hartford’s bad faith.

(Tucci Dep. at

326:3-5, 329:3-7.)
Despite Tucci’s failure to document his claims, Hartford
endeavored to finalize the claim.

Hartford’s building inspector

revised his initial property damage estimate multiple times,
taking into account information he was able to divine from

3

In October of 2009, more than twelve months after filing
suit in this action, and in response to a discovery request by
Defendants, Plaintiff sent Defendants approximately twenty pages
of financial records printed out from Plaintiff’s computer,
dating back to October of 2006, providing considerably more
information than had previously been provided to Hartford.
(Scaramella Decl. Ex. 5; Tucci Dep. at 9:2-21.)
19

Plaintiff’s business property claims.

Mr. Schleifer’s final

estimate of property damage totaled $623,746 in replacement
value.

(Mar. 10, 2008 Gable Letter, Rose Cert. Ex. 25.)

Based

on this estimate, Hartford finally offered to pay Plaintiff the
remaining undisputed amount of property damage based on its
building inspector’s upwardly-revised damage estimate, which
would have amounted to an initial payment of approximately
$287,000 to complete the inspector’s “actual cash value loss”
estimate and an additional $135,000 upon proof of finalized
repairs to bring payment up to the inspector’s “full replacement
cost” estimate.

(May 20, 2008 Rose Letter, Rose Cert. Ex. 28.)

However, prior to sending Plaintiff the check, Hartford
required that he sign an “undisputed proof of loss” statement,
which set out their estimates of total damage figures and
depreciation values.

(Id.)

Plaintiff refused to sign the form,

expressing the concern that doing so would amount to an admission
that he agreed with Hartford’s determination of the full damages
and depreciation value.
Ex. 31.)

(July 3, 2008 Tucci Letter, Rose Cert.

He requested, instead, that he be allowed to sign the

partial proof of loss form that he had been offered in 2007.
(Id.)

Hartford explained that if he wished, they had no

objection to Plaintiff annotating or modifying the proof of loss
form to indicate his qualifications and understanding that the
form did not amount to an admission of limitations of coverage or

20

value (July 18, 2008 Gable e-mail, Rose Cert. Ex. 32), but
Plaintiff nonetheless refused.
Plaintiff stated in several of his letters to Hartford that
he was being forced to shoulder most of the costs of the
restoration of his hotel without the assistance of Hartford.
(See e.g., Mar. 24, 2008 Tucci Letter, Scaramella Decl. Ex. 4.)
However, Plaintiff testified that he was not financially
constrained or limited in his restoration by the failure of
Hartford to pay additional advances on his claims.

(Tucci Dep.

at 390:3-14.)
H.

Appraisal

In the spring of 2008, Hartford wrote to Plaintiff
requesting that, since the sides were clearly not going to reach
a voluntary agreement on the final claim, they submit the dispute
to appraisal, as mandated in Plaintiff’s policy.
Rose Letter, Rose Cert. Ex. 28.)

(May 20, 2008

Plaintiff initially indicated

an agreement with the proposal, representing that he was
searching for an appraiser, (July 3, 2008 Tucci Letter), but
ultimately informed Hartford of his intent, instead, to pursue
his claim in litigation rather than appraisal.
Gable Letter, Rose Cert. Ex. 34.)

(Sep. 8, 2008

Hartford responded that

Plaintiff’s decision to file suit was “in direct contravention of
his duty under the policy to engage in the appraisal process . .
. .”

(Id.)

21

I.

Howard Johnson Trademark Action; Personal and
Advertising Injury Coverage

Meanwhile, Howard Johnson International, Inc. (“HJI”) filed
suit in federal court, naming as defendants Peter Tucci
(Plaintiff in the instant action) as well as Vraj Brig and an
individual named Pankaj Sheth.

See Howard Johnson Int'l, Inc. v.

Vraj Brig, LLC, Civ. No. 08–1466, 2010 WL 215381 (D.N.J. Jan. 14,
2010).

HJI brought claims of trademark infringement against the

defendants because Mr. Tucci refused to take down a Howard
Johnson billboard on the property visible from a highway after
HJI had terminated the franchise agreement with Vraj Brig in
October of 2006.

(HJI Complaint, Scherer Cert. Ex. 2

¶¶ 37-47.)

In July of 2008, Plaintiff filed a claim with Twin City for
his defense costs under his Hartford policy’s commercial general
liability coverage.

Along with the claim, Plaintiff sent a copy

of the complaint filed by HJI.

(Scherer Cert. ¶ 4.)

Defendant

Twin City evaluated Plaintiff’s claim, determined that it fit
within the intellectual property exclusion to his policy’s
“personal and advertising injury” coverage, and on July 30, 2008,
sent him a letter denying coverage.

(Scherer Cert. Ex. 3.)

On January 14, 2010, the United States District Court for
the District of New Jersey granted summary judgment in favor of
Mr. Tucci, holding that he could not be held liable for violating
the Lanham Act, 15 U.S.C. §§ 1114(1) and 1125(a), because there
was no evidence that Mr. Tucci had used HJI’s marks in connection
22

with the offer or provision of goods or services.

Howard Johnson

Int’l, 2010 WL 215381 at * 6.
J.

Procedural History

Plaintiff filed this action in July of 2008 in the Superior
Court of Burlington County, Law Division, and Defendants removed
the action to this Court on October 3, 2008.

[Docket Item 1.]

Plaintiff moved to remand on October 28, 2008 [Docket Item 9]
which the Court denied on February 25, 2009.
23.]

[Docket Items 22 &

Shortly before the Court entered its decision on the motion

to remand, Plaintiff filed a Second Amended Complaint, which is
his currently operative complaint, on December 16, 2008. [Docket
Item 20.]

On November 15, 2010, Defendants Hartford Financial

Services Group, Twin City, and Hartford Casualty filed motions
for summary judgment.

[Docket Items 40, 41 & 42.]

Plaintiff

opposed the motions of Defendants Twin City and Hartford Casualty
on March 21, 2011 and notified the Court that he consented to the
voluntary dismissal of Hartford Financial.
& 55.]

[Docket Items 53, 54

Thereafter, the Court dismissed Defendant Hartford

Financial.

Defendants Twin City and Hartford Casualty filed

reply briefs on May 2, 2011. [Docket Items 63 & 64.]

II.

DISCUSSION
A.

Standard of Review

Summary judgment is appropriate "if the movant shows that
23

there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law."
P. 56(a).

Fed. R. Civ.

A dispute is “genuine” if “the evidence is such that a

reasonable jury could return a verdict for the non-moving party.”
See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).

A

fact is "material" only if it might affect the outcome of the
suit under the applicable rule of law.

Id.

Disputes over

irrelevant or unnecessary facts will not preclude a grant of
summary judgment.

Id.

Summary judgment will not be denied based on mere
allegations or denials in the pleadings; instead, some evidence
must be produced to support a material fact.

Fed. R. Civ. P.

56(c)(1)(A); United States v. Premises Known as 717 S. Woodward
Street, Allentown, Pa., 2 F.3d 529, 533 (3d Cir. 1993).

The

nonmoving party must “do more than simply show that there is some
metaphysical doubt as to the material facts.”

Matsushita Elec.

Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986).
[Rule 56] mandates the entry of summary judgment,
after adequate time for discovery and upon motion,
against a party who fails to make a showing
sufficient to establish the existence of an element
essential to that party’s case, and on which that
party will bear the burden of proof at trial. In
such a situation, there can be “no genuine issue as
to any material fact,” since a complete failure of
proof concerning an essential element of the
nonmoving party’s case necessarily renders all
other facts immaterial.
Celotex, 477 U.S. at 323.

24

However, the Court will view any evidence in favor of the
nonmoving party and extend any reasonable favorable inferences to
be drawn from that evidence to that party.
526 U.S. 541, 552 (1999).

Hunt v. Cromartie,

See also Scott v. Harris, 550 U.S.

372, 378 (2007) (The district court must “view the facts and draw
reasonable inferences in the light most favorable to the party
opposing the summary judgment motion.”)
B.

Coverage Disputes

Plaintiff seeks relief under multiple theories in his Second
Amended Complaint.

His first three counts allege different

version of the same claim: that Hartford’s delay in settling his
claims and denial of coverage over certain portions of his claims
amounted to a breach of its duty of good faith and fair dealing
as articulated in Pickett v. Lloyd’s, 131 N.J. 457 (1993).
Plaintiff’s fourth count alleges that Hartford has breached its
contract, and his fifth claim seeks a declaratory judgment that
Twin City’s denial of his advertising injury claim was in
violation of the terms of the policy and a breach of the duty of
good faith and fair dealing.
In order to assess Plaintiff’s right to relief under the
duty of good faith, the Court must first sort through certain
underlying disputes over coverage issues.

While neither party

disputes that the physical vandalism done to the structure of the
buildings on the premises is covered under the policy, Plaintiff

25

has, since filing his claim in the fall of 2006, sought to
recover for the removal by Vraj Brig and the restaurant operator
of the movable furnishings and trade fixtures, which Hartford has
consistently maintained are not covered under his policy.
Additionally, Plaintiff’s business income loss claims have all
exceeded $1 million, which Hartford maintains is the limit of
coverage under his policy.

Finally, Plaintiff has sought to

recover for various repairs he has made to the roofs and HVAC
unit of some of the hotel buildings, which Hartford maintains is
not covered under his policy as the roofs were not damaged due to
vandalism.

The Court agrees with Hartford that none of these

disputed areas of loss are covered under the unambiguous language
of Plaintiff’s policy, for reasons now explained.
1.

Business income coverage $1 million limitation

Plaintiff’s various claims under his business income
coverage have all exceeded $1 million.

Plaintiff argues that he

did not understand the policy to impose such a limit on his
business income coverage because the policy is ambiguous on this
issue.
Under New Jersey law, courts interpreting insurance
contracts should give the words of the policy “their ordinary
meaning, and in the absence of an ambiguity, a court should not
engage in a strained construction to support the imposition of
liability.”

Longobardi v. Chubb Ins. Co. of New Jersey, 121 N.J.

26

530, 537 (1990).

“Although courts should construe insurance

policies in favor of the insured, they should not write for the
insured a better policy of insurance than the one purchased.”
Id. (internal quotations omitted).

A policy is deemed ambiguous

under New Jersey law if the “phrasing of the policy is so
confusing that the average policyholder cannot make out the
boundaries of coverage.”

Weedo v. Stone-E-Brick, Inc., 81 N.J.

233, 247 (1979) (quoted in Longobardi.)
Plaintiff argues that the language governing the limits of
Plaintiff’s business income coverage in his Policy’s Endorsement
2 is ambiguous for three reasons.

First, Plaintiff points to the

first two pages of Endorsement 2, where the “Blanket Limits” are
described.

(Rose Cert. Ex. 1 at HA 1736-37.)

Plaintiff points out that the paragraph describing the
blanket limit of the buildings and personal property coverage is
contained in a single paragraph in the middle of the page, and
the $19,442,900 total limit of that coverage is prominently
displayed.

However, Plaintiff notes, the parallel paragraph,

four rows below, describing the blanket limit of the business
income coverage is split between the first and second pages, so
that an inattentive reader might interpret the first page to
suggest that the line “Special Business Income Coverage Is Added”
(located toward the bottom of the page) is in reference to the
buildings and business personal coverage blanket limit described

27

above, rather than, instead, turning the page to encounter the
continuation of the business income paragraph which clearly
states “Blanket Limit: $1,000,000."
Secondly, Plaintiff points out that the lines below the
“Blanket Limit: $1,000,000" line indicate that the blanket limit
for the rental income has been deleted.

This, Plaintiff argues,

could be interpreted to mean that a blanket limit of $1 million
for rental income had been deleted.
Finally, Plaintiff argues that the language of Endorsement 2
is confusing because of the ways that it uses the terms “business
interruption” and “special business income” but does not specify
what is confusing about how these terms are used.
The Court finds that this section of the policy is not
ambiguous.

An average policyholder of a multimillion dollar

commercial policy like Plaintiff’s would not be unable to make
out that the paragraph describing the blanket limit of the
business income coverage had wrapped from the first page to the
second.

Such a policyholder would, no doubt, be assisted in his

or her interpretation of the limits of the policy by the phrase
at the top of the second page “Policy Changes (Continued)” and
from that deduce that the floating and unattached “Blanket Limit:
$1,000,000" is referring to information from the first page.
Indeed, the average policyholder would also be aware that the
previous business income blanket limit on the policy was not $1

28

million, but was, instead, $100,000 (see HA 1835) and would,
therefore, not be confused by the close proximity of the
$1,000,000 blanket limit to the change in the rental income.
The Court acknowledges that the first page is mildly
confusing because the declarations regarding the changes to the
coverage blanket limits begins to wrap to the second page without
a definitive line indicating that the footer text below is
unconnected to the blanket limit declaration.

However, the Court

concludes that the average policyholder would read the rest of
the text of the Endorsement and, therefore, encounter three pages
later, on page HA 1740, that business income coverage has a
$1,000,000 limit in any one occurrence.

Thus, even if the

unexpected wrap between the first and second page raised a
question in the policyholder’s mind, the second description of
the policy limit three pages later would eliminate any confusion.
Therefore, because the Court has found that the policy language
is not ambiguous, it must decline Plaintiff’s invitation to rewrite his insurance policy on this point and will conclude that
Plaintiff’s business income coverage is subject to the
unambiguous $1 million limit.
2.

Business personal property and insurable interest

Secondly, Plaintiff argues that the movable furnishings and
trade fixtures owned by Vraj Brig and the restaurant owner should
be covered under his policy as business personal property.

29

Therefore, Plaintiff argues, he should be reimbursed for their
“loss” after they were removed by their owners on August 31,
2006.
Plaintiff argues for this surprising result by claiming
that, while he may not have had actual ownership of or legal
title to the personal property of Vraj Brig and the restaurant
owner, he had an “insurable interest” in them.

Both parties

appear to agree that the clear terms of the policy would tend to
exclude from coverage property on covered premises that is not
owned by the insured.

(See Rose Cert. Ex. 1 at HA 1858.)

However, Plaintiff argues that while the property itself may not
be covered under the policy, he had an insurable interest in that
property that entitles him to recover for their loss.
The New Jersey Supreme Court has held that in certain
circumstances, an individual may have an insurable interest in
property that he or she does not technically own.
Jersey Ins. Underwriting Ass’n, 82 N.J. 594 (1980).

Miller v. New
There, the

Court held that for an individual holding an insurance policy
governing property he or she does not own, “[t]he extent of
coverage would be measured by the reasonable expectations of the
insured, taking account of events subsequent to the time of the
loss.”

Id. at 602 (internal quotations omitted).

Plaintiff argues that the circumstances prior to September
1, 2006 created in him a reasonable expectation of retaining this

30

property despite the fact that he did not own it.

He argues that

this interest began when Hartford issued its expanded coverage of
the hotel premises because Plaintiff requested and paid premiums
on a policy that covers up to $3,500 per room of the hotel to
cover the contents of each room.

Secondly, Plaintiff argues that

the Burlington County Superior Court’s August 8, 2006 order to
the parties that “[t]here shall be no destruction, disposal or
sale of any property at the leased premises that is not in the
ordinary course of the business of the motel” caused him to
believe that Vraj Brig was, therefore, prohibited from removing
its property from the premises prior to Plaintiff’s taking
possession on September 1, 2006.
Cert. Ex. 4.)

(Aug. 8, 2006 Order, Schorr

The Superior Court’s Order, staying execution of

the warrant of removal, would expire on August 31, 2006, as
discussed above.

(Aug. 17, 2006 Order, Schorr Cert. Ex. 5.)

By

August 31, Vraj Brig and the restaurant owner removed all their
furnishings in order to tender possession on September 1, 2006,
as discussed above.
The combination of having purchased insurance that he
believed would cover the personal property he did not own, in
addition to his interpretation of the Burlington County Superior
Court’s order, Plaintiff argues, created in his mind an
expectation of being able to assume possession of the hotel on
September 1, 2006 and begin to operate it immediately, apparently

31

with the free use of the furnishings owned by those he had
recently evicted.
The Court finds that, to the extent that Plaintiff had such
an expectation at all, no reasonable factfinder could conclude it
was a reasonable one as required under Miller.

First, the Court

notes that there is undisputed testimony that Plaintiff was aware
that Vraj Brig claimed ownership of the furnishings and fixtures
of the hotel.

Indeed, there is undisputed testimony that

Plaintiff was even offered the opportunity to buy or rent the
property from Vraj Brig in the weeks immediately prior to
September 1, 2006, which he rejected.

The Court finds that it

would not be reasonable for anyone in Plaintiff’s position to
expect to be able to make use of goods he did not own, that he
knew were being removed by the true owner, and that he had
declined the offer to purchase or rent.

Further, no reasonable

interpretation of the Superior Court’s orders of August 8 and 17,
2006, supports a conclusion that the tenants could not remove
their property on August 31, 2006.

Consequently, the Court

concludes that Plaintiff’s business personal property coverage is
limited to those items of property that fit within the ordinary
meaning of the definition of “covered property” in his policy,
which excluded property owned by residents or tenants of the

32

(Rose Cert. Ex. 1 at HA 1857-58.)4

Plaintiff.
3.

Coverage of repairs to the roofs

Plaintiff additionally argues that his policy should also
provide coverage of his repairing the roof HVAC systems and
restoring the roofs of the buildings, which was necessary,
Plaintiff argues, to prevent additional damage from water
infiltration and freezing.

Plaintiff does not dispute that these

repairs were not fixing damage caused by vandalism, but argues
that, under his “Extra Expense” coverage, Hartford has agreed to
“pay Extra Expenses to repair or replace property, but only to
the extent it reduces the amount of loss that otherwise would
have been payable under this Coverage Form.”

(Rose Cert. Ex. 1,

HA 1874.)
The Court finds that this provision of the policy does not
create an obligation on the part of Hartford to pay for repairs
to the roof to prevent leaks unrelated to the vandalism.

The

quoted section of the policy expressly states that the obligation
to reimburse repairs of this kind extends only when the repair
would “reduce the amount of loss that otherwise would have been

4

Plaintiff additionally argues that the fact that the
ownership status of particular items of property are disputed
between himself and Hartford raises a sufficient dispute of fact
to survive summary judgment on this point. This is not so. The
Court’s ruling on this issue is not declaring the ownership
status of any particular item of property, but is merely stating
that, as a matter of law, Plaintiff’s business personal property
coverage does not include items of property owned by residents or
tenants of Plaintiff, pursuant to the terms of his policy.
33

payable under this Coverage Form.”

The case of Plaintiff’s roofs

leaking does not fit within this condition.

There is no evidence

in the record establishing that the leaks in the roofs or
problems with the roof HVAC were the result of, or the cause of,
damage or loss that would be covered under the policy.

Thus,

there is no evidence from which a factfinder could conclude that
the leaks in the roofs would reduce any loss for which Hartford
would be obligated to pay.

(See Covered Causes of Loss and

Exclusions Form, Rose Cert. Ex. 1 at HA 1892-98.)
The Third Circuit has held that
the insurer's obligation to reimburse for acts
taken to preserve or protect Covered Property
does not extend to require reimbursement for
prevention of damage to property that is
excluded from coverage or for a circumstance
that is not a covered cause of loss.
Buczek v. Continental Cas. Ins. Co., 378 F.3d 284, 293 (3d Cir.
2004).

Plaintiff’s argument to the contrary is, frankly, legally

frivolous.

Thus, the Court concludes that Hartford is not

obligated under the provision of the policy cited by Plaintiff to
cover repairs to the roofs absent evidence that the roofs were
damaged by a covered cause of loss.
B.

Hartford’s Duty of Good Faith and Fair Dealing

Having concluded that Plaintiff’s insurance coverage does
not extend to covering business personal property that was not
owned by Plaintiff at the time of the damage, nor to the roof
repairs Plaintiff has undertaken since September 1, 2006, and
34

that Plaintiff’s business income coverage is limited to $1
million, the Court will now turn to determining whether
Plaintiff’s claims for breach of the duty of good faith will
survive summary judgment.

The New Jersey Supreme Court has held

that
an insurance company may be liable to a
policyholder for bad faith in the context of
paying benefits under a policy. The scope of
that duty is not to be equated with simple
negligence.
In the case of denial of
benefits, bad faith is established by showing
that no debatable reasons existed for denial
of the benefits.
In the case of processing
delay, bad faith is established by showing
that no valid reasons existed to delay
processing the claim and the insurance company
knew or recklessly disregarded the fact that
no valid reasons supported the delay.
Pickett, 131 N.J. at 481.

Thus, to survive summary judgment on

these claims, Plaintiff must point to a genuine dispute of
material fact over whether Hartford had a debatable reason for
denial of any benefits claimed, or disputes of fact establishing
both that Hartford had no valid reason to delay processing the
claim and that Hartford knew it had no valid reason.

The Court

concludes, based on this complete record, that there is no
dispute of fact that Hartford had at least a debatable reason to
deny payment of Plaintiff’s claims in excess of the coverage
permitted under his policy, and there is no dispute of fact that
Hartford had a valid reason to delay processing the otherwise
valid portions of his claims.

35

Plaintiff contends that Hartford delayed paying the
undisputed portion of his claim and denied his claims for
recovery on the theft of property and damage to much of the hotel
premises for no debatable reason.
With regard to Hartford’s denial of Plaintiff’s claims for
recovery in excess of his policy, the Court finds that Hartford
had better than merely debatable reasons for such denial.
Because the Court has already determined that Plaintiff is not
entitled under his policy to recover for Vraj Brig’s removal of
its movable furnishings and other business personal property
Plaintiff did not own, the Court must conclude that Hartford’s
denial of those portions of his claim were not in bad faith.

The

same result is required for Hartford’s denial of Plaintiff’s
claims to recover for the repair of the roofs, and Hartford’s
denial of any portion of Plaintiff’s business income claim in
excess of $1 million.

Thus, the only question that remains is

whether Hartford’s delay in payment of the undisputed portion of
Plaintiff’s claim was in bad faith.
Plaintiff points to several facts in the record that he
contends raise a dispute of fact over whether Hartford had a
valid reason to delay payment.

First, Plaintiff argues that

Hartford had access to sufficient pieces of information, such as
the Northeast lease, the Northeast income statements, and
Schleifer’s inspection reports, that would have enabled it to

36

offer full actual cash value within a few months of the
vandalism.

Second, Plaintiff argues that his own persistent

refusal to provide documentation of his claims was not a valid
reason for Hartford to delay.

He explains that Hartford should

not have needed any documentation of his property claim at all in
order to justify paying the actual cost value portion of his
claim, as he would be entitled to such a payment whether he
repaired and replaced the lost and damaged property or not.
Finally, Plaintiff argues that, at the very least, after Hartford
received Plaintiff’s financial printouts in October of 2009, it
should then have paid his claims.

Additionally, Plaintiff points

out that Hartford has never offered an advance payment on any
undisputed portion of his business income claim, despite the fact
that uncontested evidence in the record demonstrates that
Hartford’s adjuster Jonathan Rose had speculated that a business
income claim of $50,000 per month could be justified.
The Court finds Plaintiff’s arguments to be unavailing.

At

least two potentially valid reasons for the delay in paying
Plaintiff’s property claims are undisputed in the record, as is
an additional valid reason for delaying payment of Plaintiff’s
business income claim.

First, it is undisputed that Plaintiff

refused to provide reasonable documentation requested by Hartford
to verify Plaintiff’s claims.

In a recent non-precedential

opinion, the Third Circuit found that an insurance claimant’s

37

“failure to produce requested documents in a timely manner”
established a valid or debatable reason to delay or deny his
claim.

Ketzner v. John Hancock Mutual Life Ins. Co., 118 F.

App’x 594, 599 (3d Cir. 2004).

The Court finds this reasoning

persuasive, and disagrees with Plaintiff’s argument that, because
Ketzner was a case about bad faith denial rather than bad faith
delay, that the case has no applicability here.

See Pickett v.

Lloyd’s, 131 N.J. at 474 (recognizing that, under New Jersey law,
the tests for bad faith denial and bad faith delay are
“essentially the same”).

The case at bar provides an even

stronger case for the validity of Hartford’s delay than the
insurer in Ketzner, given that Hartford’s investigation of his
claim (hindered by Plaintiff’s recalcitrance) has revealed
Plaintiff’s repeated attempts to recover for losses not covered
under his policy.

The prominence of Plaintiff’s multiple invalid

claims presents ample justification for the insurer’s caution in
processing disputed claims.
The Court holds that Plaintiff cannot unilaterally determine
when the insurer has enough information and refuse thereafter to
cooperate with the insurer’s reasonable requests for material,
substantiating information.

See DeMasi v. Lexington Ins. Co.,

2010 WL 3075674, N.J. Super at * 8 (App. Div. Jul. 23, 2010) (“We
do not find plaintiff's argument of substantial compliance
persuasive. The fact that he may have furnished other information

38

does not excuse his failure to comply with a request for
information that was material to Lexington's investigation.”)
Second, the Court concludes that Plaintiff’s refusal to sign
the undisputed proof of loss form is a valid reason to delay
settling Plaintiff’s property claim.

The policy itself states

that Plaintiff’s signing a proof of loss form is a prerequisite
to Hartford’s obligation to pay any claim.
HA 1850.)

(Rose Cert. Ex. 1 at

Hartford even agreed to permit Plaintiff to insert his

conditions or qualifications upon the form to preserve
Plaintiff’s position, as discussed above, which demonstrated
Hartford’s flexibility and responsiveness, contrary to
Plaintiff’s unsupported argument.
Finally, even if Plaintiff were able to point to evidence in
the record that raised a dispute of fact over whether these
reasons to delay paying Plaintiff’s property claim were valid,
the Court would still be compelled to grant Defendant summary
judgment, as Plaintiff has pointed to no evidence in the record
that would raise a dispute of fact over whether Hartford knew or
was recklessly indifferent to the invalidity of either of these
reasons.

No reasonable factfinder, even giving Plaintiff the

benefit of any favorable inferences arising from this evidence,
could find in Plaintiff’s favor that Hartford had no debatable
reason to delay paying Plaintiff’s property claim.
On a similar basis, the Court finds that Hartford’s delay in

39

processing Plaintiff’s business income claim is based on a valid
reason because Plaintiff has refused to provide substantiating
documentation that would permit Hartford’s adjuster to verify the
appropriate coverage period and appropriate quantity of income
lost.

That Hartford had access to piecemeal sources of such

information is no better a rejoinder to the delay of the business
income claim than to the property claim.

The Court also finds

that Jonathan Rose’s internal note regarding Plaintiff’s business
income claim was not a conclusion of the company based on
verifiable data, sufficient to justify the payment.

One reason

apparent from the record why the notation was incomplete as a
finding of business income loss is that it contains no estimate
as to the duration of the period of loss, but merely states that,
over an undetermined period, Plaintiff may be able to justify a
loss of $50,000 per month.

Thus, the Court determines that

Plaintiff’s failure to provide sufficient data on which to base a
claim for business income loss is a valid reason to delay the
payment of that claim.
Therefore, because Plaintiff has not met his burden of
pointing to evidence sufficient to raise a dispute of fact over
the essential elements of his bad faith claims, the Court will
grant Defendant Hartford’s motion for summary judgment upon

40

Counts I-III of the Second Amended Complaint.5
C.

The HJI Trademark Defense Claim

Defendant Twin City also seeks summary judgment against
Plaintiff’s request for a declaratory judgment that Twin City
owed Plaintiff a duty to defend it against HJI’s trademark
infringement action.

Because the Court finds the intellectual

property exclusion unambiguous, the Court will grant Defendant
Twin City’s motion.
Plaintiff argues that Twin City wrongly denied his claim
that it owed him a duty to defend against HJI’s trademark action
because the policy language governing the “personal and
advertising injury” coverage in his policy is ambiguous.
Specifically, Plaintiff argues that HJI’s trademark action
arguably fits within the coverage of the policy because
Plaintiff’s use of HJI’s logo and trademarks as alleged by HJI
amounted to an “advertising idea” covered under the policy.

(See

Scherer Cert. Ex. 1 at HA 1945) (defining “personal and
advertising injury” to include “copying, in your ‘advertisement,’
a person’s or organization’s ‘advertising idea’ or style of
‘advertisement.’”)

5

Because the Court has concluded that summary judgment over
these claims is warranted, it need not reach Defendant’s argument
in favor of granting summary judgment against Plaintiff’s
requested punitive damages, other than to observe that
Plaintiff’s claim for punitive damages necessarily fails as a
matter of law for lack of underlying liability.
41

Further, Plaintiff argues that the policy’s exclusion for
infringement of intellectual property rights does not apply to
his case because the policy only excludes “personal and
advertising injury arising out of any violation of any
intellectual property rights . . .” (Id. at HA 1934) (emphasis
added.)

Plaintiff argues that the exclusion cannot apply to him

because the United States District Court of the District of New
Jersey found that, as a matter of law, he had not violated HJA’s
trademarks as alleged.

Howard Johnson Int’l, 2010 WL 215381 at

*6.
Plaintiff’s argument is unavailing.

The plain and

unambiguous language of the policy reads that Twin City “will
have no duty to defend the insured against any ‘suit’ seeking
damages for ‘personal and advertising injury’ to which this
insurance does not apply.”

(Scherer Cert. Ex. 1 at HA 1933.)

Thus, because HJI was seeking damages for trademark violations,
and the insurance policy does not apply to trademark violations,
Plaintiff’s defense of HJI’s suit clearly fell outside the scope
of the policy provision.

It is enough that HJI’s suit sought

damages for trademark violations, whether or not HJI ultimately
proves such violations, that excluded the HJI suit from Twin
City’s duty to defend Plaintiff.

When the policy language is

unambiguous, the Court must enforce it’s plain meaning, which in
this case means that Defendant Twin City had no obligation to

42

provide for Plaintiff’s defense.
Finally, the Court agrees with Defendant’s argument that
Plaintiff’s interpretation of the policy, beyond being an
unreasonable interpretation of the language, would result in the
absurd implication that the insurer would be forced to defend
every intellectual property claim that is filed against an
insured up until the end of the case when the insurer would then
learn if it did, in fact, have the duty to provide such defense.
The Court is persuaded that such an interpretation would not be
reasonable in light of the clear purpose of the intellectual
property exclusion, which is to offer no defense or
indemnification in a suit for violations of trademark rights.
Because the Court has concluded that Plaintiff’s claim was
correctly denied, the Court must also enter summary judgment
against Plaintiff’s bad faith denial claim against Twin City.
D.

Dismissal Without Prejudice

Finally, Defendant Hartford asks the Court to dismiss the
action without prejudice to reopening at the conclusion of the
policy’s mandatory appraisal process.

New Jersey contract law

permits such dismissal to enforce the terms of a contract
containing a mandatory appraisal clause.

See Rock-N-Rolls Auto

Salon, Inc. v. United States Fidelity & Guaranty Co., 2006 WL
1675699, N.J. Super. at *2 (App. Div. 2006) (affirming dismissal
to compel appraisal).

43

Plaintiff argues that such dismissal would be inappropriate
in the instant case for two reasons.

First, Plaintiff argues

that because the parties’ disputes involved unresolved coverage
disputes, which required determination in a court of law rather
than in an appraisal, the Court should deny the request.

Second,

Plaintiff argues that Defendants have selected a biased
appraiser.
With regard to Plaintiff’s first concern, the Court notes
that all known disputes over the scope of coverage have now been
resolved, and the only remaining issues of dispute between the
parties are factual and valuation questions well suited to
resolution in an appraisal.
On Plaintiff’s second argument, the Court is similarly
unpersuaded.

While New Jersey courts have recognized the

importance of the impartiality of the appraisers in a disputeresolving appraisal, not every connection and potential sympathy
necessarily renders the appraiser biased or partial.

See Heller

v. Hartz Mountain Indus., Inc., 270 N.J. Super. 143, 156-57 (L.
Div. 1993) (defining disinterested appraiser as “impartial,
unbiased, free from partisanship and able to do equal justice
between the parties;” finding appraiser subject to the direction
or control of one of the parties to not be impartial).

Thus,

Plaintiff’s argument that Hartford’s proposed appraiser has
accepted payment from Hartford for his preparation of an expert

44

report in this matter, without more, is insufficient for the
Court to find him biased.

As Hartford points out, the policy

itself requires that each party pay its own appraiser, which
necessarily implies that the sufficient level of impartiality can
be compatible with being paid by only one side to the dispute.
(Rose Cert. Ex. 1 at HA 1850.)

Moreover, there is no allegation

that Hartford’s appraiser has demonstrated or expressed bias in
favor of Hartford or against Tucci, nor that his impartiality
could reasonably be questioned on some other ground.

The Court

agrees that, absent evidence of having a pecuniary interest in
the outcome or being subject to one side’s direction or control,
or some other more substantial bias, or other basis to question
the appraiser’s impartiality, the Court will not set aside the
parties’ agreement to submit disputes to an appraisal in this
case, consistent with the general preference for the appraisal
procedure recognized by New Jersey courts.

Ward v. Merrimack

Mut. Fire Ins. Co., 332 N.J. Super. 515, 528 (App. Div. 2000).
The Court will, consequently, enforce the terms of the contract
and dismiss this action without prejudice to pursuit of the
remaining issues in the contractual appraisal process.

IV.

CONCLUSION
For the foregoing reasons, the Court concludes that

Plaintiff’s Hartford insurance policy does not provide more than

45

$1 million in blanket coverage for business income loss.
Additionally, the Court concludes that the policy likewise does
not obligate Hartford to pay for repairs done to a roof that was
not damaged by a covered cause.

The Court also finds that

Plaintiff’s business personal property does not cover property
that does not belong to the insured and that is not in his care,
custody and control.

The Court also concludes that Plaintiff’s

personal and advertising injury policy does not cover defending
Plaintiff against trademark claims, even though Plaintiff was
later found to have not violated any intellectual property right.
Further, the Court concludes that summary judgment should be
entered against Plaintiff’s bad faith claims against both
Hartford and Twin City.

And finally, the Court concludes that

the action should be dismissed without prejudice to resolving the
remaining disputes (pertaining to the quantum of the covered
loss) in the contractual appraisal process.

June 27, 2011
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
United States District Judge

46