LIGUORI et al v. CERTAIN UNDERWRITERS AT LLOYDS LONDON SUBSCRIBING TO POLICY #AJD8955

Filing 19

OPINION. Signed by Judge Robert B. Kugler on 7/17/2015. (dmr)

NOT FOR PUBLICATION

(Doc. No. 10)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
CAMDEN VICINAGE
___________________________________
:
JOSEPH LIGUORI and
:
LISA LIGUORI,
:
:
Plaintiffs,
:
:
Civil No. 14-5898 (RBK/KMW)
v.
:
:
OPINION
CERTAIN UNDERWRITERS
:
AT LLOYDS LONDON
:
SUBSCRIBING TO POLICY
:
#AJD8955,
:
:
Defendant.
___________________________________
KUGLER, United States District Judge:
This matter comes before the Court on Defendant’s Motion for Summary Judgment
pursuant to Fed. R. Civ. P. 56. (Doc. No. 10.) The subject of this motion is Plaintiffs Joseph
(“Joseph”) and Lisa (“Lisa”) Liguori’s (collectively “Plaintiffs”) Complaint, in which Plaintiffs
assert claims for breach of contract and breach of the implied covenant of good faith and fair
dealing. For the reasons stated herein, Defendant’s Motion will be denied.
I.

FACTUAL BACKGROUND1
Plaintiffs own a residential property located at 1927 Ocean Avenue, Borough of Seaside

Heights, Ocean County, New Jersey. (Compl. ¶ 2.) Plaintiff purchased an insurance policy,
Policy No. AJD8955 (the “Policy”), from Certain Underwriters at Lloyds London (“Defendant”),

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When considering a motion for summary judgment, the Court views the facts underlying the claims in the light
most favorable to the non-moving party. See Petruzzi’s IGA Supermarkets, Inc. v. Darling-Delaware Co., Inc., 998
F.2d 1224, 1230 (3d Cir. 1993).

which covered the property at issue in this matter for the period of August 23, 2012 through
August 23, 2013. (Def.’s Statement of Undisputed Material Facts (“SMF”) ¶ 1.) The Policy
included insurance coverage for damage caused by wind but did not cover damage caused by
flooding. (See Policy, attached to Def.’s Br. as Ex. B.) Furthermore, the policy included a statute
of limitations that provided that “[n]o action can be brought unless the policy provisions have
been compiled with and the action is started within one year after the date of loss.” (Id.)
On October 29, 2012, Superstorm Sandy struck the New Jersey coast. (Compl. ¶ 10.)
Subsequently, on November 1, 2012, Defendant received notice of loss that occurred as a result
of Superstorm Sandy to Plaintiffs’ property covered by the Policy. (Def.’s SMF ¶ 2.) As a
result, Defendant’s adjuster Raphael and Associates (“R&A”) retained an engineer from Paul
Zamrowski Associates, Inc. (“Zamrowski”) to inspect Plaintiffs’ property. (Id. ¶ 3.) In a report
dated December 27, 2012, Zamrowski concluded that “water surge/flooding demolished the
house” and that “wind may have caused cosmetic damage that was insignificant relative to the
demolition of the house by the flooding.” (Id. ¶ 4; Zamrowski Report, attached to Def.’s Br. as
Ex. E.)
On February 25, 2013, R&A, on behalf of Defendant, sent a letter to Plaintiffs regarding
Plaintiffs’ claim for damages to their property. The second paragraph reads:
We are pleased to inform you damages resulting from wind are covered
under your Property Insurance Policy. Our inspection revealed damages to your
property. We enclose our estimate of repair which totals $. After the recoverable
depreciation in the amount of $ and your wind deductible of $ has been applied this
renders a net claim of $. Under separate cover a check of $ will be forwarded to
the policy address. If you have any questions in this matter, please feel free to
contact the undersigned.
(Letter from R&A to Plaintiffs, Attached to Def.’s Br. as Ex. F (“February 25 Letter”).)
However, the letter continued, saying, “the claim submitted for flooding, which caused water
damage to the risk premises is expressly excluded in this policy. We regret to inform you this
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policy, in this instance, will not respond to indemnify you for your damages.” Id. The letter
concluded that Defendant “reserve[d the] right[] to amend, alter or supplement this letter should
information become known in the future that would affect the content of this letter.” Id.
Plaintiffs did not respond to the February 25 letter but filed a Complaint in the Superior
Court of New Jersey, Law Division, on August 21, 2014, nearly 19 months after the February 25
Letter. (Def.’s SMF ¶ 7.) Plaintiffs’ Complaint asserts claims for breach of contract and breach
of the implied covenant of good faith and fair dealing due to Defendant’s alleged failure to cover
damage to Plaintiffs’ property that was caused by wind. (See generally Compl. Counts I and II.)
Defendant filed the present Motion for Summary Judgment pursuant to Fed. R. Civ. P. 56 on
August 21, 2014, arguing that the action is barred by the applicable statute of limitations.
II.

LEGAL STANDARD
The Court should grant a motion for summary judgment when the moving party “shows

that there is no genuine dispute as to any material fact and that the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). An issue is “material” to the dispute if it could alter
the outcome, and a dispute of a material fact is “genuine” if “a reasonable jury could return a
verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986);
Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (“Where the
record taken as a whole could not lead a rational trier of fact to find for the nonmoving party,
there is no ‘genuine issue for trial.’”) (quoting First Nat’l Bank of Az. v. Cities Serv. Co., 391
U.S. 253, 289 (1968)). In deciding whether there is any genuine issue for trial, the court is not to
weigh evidence or decide issues of fact. Anderson, 477 U.S. at 248. Because fact and credibility
determinations are for the jury, the non-moving party’s evidence is to be believed and
ambiguities construed in its favor. Id. at 255; Matsushita, 475 U.S. at 587.

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Although the movant bears the burden of demonstrating that there is no genuine issue of
material fact, the non-movant likewise must present more than mere allegations or denials to
successfully oppose summary judgment. Anderson, 477 U.S. at 256. The nonmoving party must
at least present probative evidence from which the jury might return a verdict in his favor. Id. at
257. The movant is entitled to summary judgment where the non-moving party 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.” Celotex Corp. v. Catrett, 477 U.S. 317,
322 (1986).
III.

DISCUSSION
New Jersey has a six-year statute of limitations for contractual actions. N.J. Stat. §

2a:14-1. That six-year statute of limitations ordinarily applies to insurance actions. Breen v.
New Jersey Mfrs. Indem. Ins. Co., 105 N.J. Super. 302, 309 (Ch. Div. 1969), aff’d, 109 N.J.
Super. 473 (App. Div. 1970). However, the statute of limitations may be shortened by the terms
of an insurance contract. Gahney v. State Farm Ins. Co., 56 F. Supp. 2d 491, 495 (D.N.J. 1999)
(citing James v. Fed. Ins. Co., 5 N.J. 21, 24 (1950)). Both parties to the instant claim agree that
the contractual one-year statute of limitations found in Plaintiffs’ insurance policy is binding.
At issue in the instant claim is whether the operation of the “equitable tolling doctrine”
allows Plaintiffs to bring this suit more than one year after the accrual date of their property loss.
Specifically, in response to Defendant’s Motion for Summary Judgment, Plaintiffs contend that
Defendant is estopped from raising a statute of limitations defense because the February 25 letter
was insufficient to end the tolling of that statute of limitations.2

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Plaintiffs also allege that Defendant is estopped from raising a statute of limitations defense because it failed to
issue payment for damage that it agreed was covered under the policy. However, the Court need not address this
issue since it determines that the February 25 letter was insufficient to end the tolling period and will deny
Defendant’s motion for summary judgment on those grounds.

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In this context, the New Jersey Supreme Court has determined that contractual limitation
provisions should not run uninterrupted from the date of loss, as it would allow the statute of
limitations to run while the insurance company investigated the loss. Peloso v. Hartford Ins. Co.,
56 N.J. 514, 521 (1970). In Peloso Court held that:
the fair resolution . . . is to allow the period of limitation to run from
the date of the casualty but to toll it from the time an insured gives
notice until liability is formally declined. In this manner, the literal
language of the limitation is given effect; the insured is not penalized
for the time consumed by the company while it pursues its
contractual and statutory rights to have a proof of loss, call the
insured in for examination, and consider what amount to pay; and
the central idea of the limitation provision is preserved since an
insured will only have 12 months to institute suit.
Id. Thus, the one-year statute of limitations is tolled from the time the insured gives notice of
loss until the time that the insurance company “formally denies coverage.” Id.
To determine whether the one-year statute of limitations bars Plaintiffs’ claim, the Court
must determine whether the February 25 letter was, on its face, an unambiguous formal denial so
as to resume the running of the statute of limitations.
In arguing that the February 25 letter was ambiguous, and therefore not a clear and
unequivocal denial, Plaintiff relies primarily on Azze v. Hanover Ins. Co., 336 N.J. Super. 630
(App. Div. 2001), cert. denied, 168 N.J. 292 (2001). In Azze, the plaintiffs filed an insurance
claim with their homeowner’s insurance carrier, Hanover Insurance Company (“Hanover”) in
August of 1995 after a waterbed burst and caused significant damage to their property. Id. at
635. In September of 1995, Hanover sent the Azze’s a letter, stating that Handover was unable
to cover damage stemming from the burst waterbed. Id. at 634.
More than two-years later, on October 23, 1997, the Azze’s filed a complaint seeking
enforcement of their insurance coverage under their homeowner’s insurance policy. Id. at 635.
Hanover filed a motion for summary judgment asserting that the statute of limitations barred the
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Azze’s claim. Id. The motions judge found that the 1995 letter constituted a clear and
unequivocal denial of the Azze’s claim and granted Hanover’s motion. Id. On appeal, the
Azze’s argued that their claim was not time barred under equitable tolling principles because
Hanover’s letter was not a clear and unequivocal denial. Id. at 637.
The Superior Court of New Jersey, Appellate Division agreed with the Azze’s and found
that the letter was ambiguous. Id. at 641. Notably, the court found the denial letter was not
“sufficiently unequivocal because of the special circumstances that surrounded the claim.” Id.3
At the time the denial letter was sent, the Azze’s were negotiating with Hanover on the issue of
coverage for their structural damage claim arising from the same waterbed incident. Id. at 64243. These negotiations went well into 1996. Id. at 643. The court determined that because the
two claims “stemmed from the same policy, and because the negotiations regarding a section of
that claim were ongoing well after the September 1995 denial letter, a reasonable insured might
well believe that the limitations period would not restart until after the structural damage claim
was settled.” Id. The court concluded that the September 1995 letter was not an unequivocal
denial and, therefore, the statute of limitations continued to be tolled from August 1995 through
January 1997. Id. Thus, the action was timely filed under equitable tolling principles. Id.; see
also Inacio v. State Farm Fire & Cas. Co., Civ. No. 14-4953, 2015 WL 457049, at *6-7 (D.N.J.
Feb. 3, 2015) (holding that the defendant’s letter was not an unequivocal notice of denial because
“special circumstances,” a lack of “denial language,” and a statement in the letter that invited the
plaintiff to supply new information was ambiguous).

The court in Azze also found that the letter was ambiguous because it “refer[ed] to the submission of new
information.” 336 N.J. Super. at 641. “One might reasonably wonder why Hanover would require more
information, if coverage has already been unequivocally denied . . . [a] very rational conclusion would be that the
denial is not, in fact, final, but instead represents a preliminary finding that remains open to revision.” Id. at 64142. Additionally, the court determined that the suggestion to contact the Department of Insurance “could reasonably
lead a person to conclude that contact with DOI was actually a prerequisite to a lawsuit.” Id. at 642.
3

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Turning to Plaintiffs’ claim, the Court finds that Azze is analogous. First, this claim
apparently involves “special circumstances,” suggesting that Defendant’s February 25 letter was
ambiguous. See Azze, 336 N.J. Super. at 642-43. Plaintiffs filed a claim with Defendants for
“storm damages” caused by Superstorm Sandy, not a specific claim for flood damages which
was not covered by their policy. (Liguori Claim, Nov. 1, 2012, attached to Def.’s Br. as Ex. C.)
While the February 25 letter expressly denied claims for flood damage, it also told Plaintiffs that
it was “pleased to inform [them] damages resulting from wind” were covered under the policy.
This would entirely consistent with Plaintiffs’ Policy, which covered wind damage. Dollar
amounts of the estimates of the total damages Plaintiffs would receive were left blank but the
letter did state that Defendant’s inspection revealed wind damage to Plaintiffs’ property. Based
on a reasonable reading of the language, it would appear that Plaintiffs were to receive some
money for the wind damage to their property.4 From Defendant’s perspective, this paragraph is
at best ambiguous and is at worst an agreement to pay Plaintiffs’ wind damage claim. In other
words, the Court cannot find that there was unequivocal “denial language” in the February 25
letter with regard to any wind damage covered under Plaintiff’s policy.
Secondly, the February 25 letter stated that Defendant reserved the right to amend or
supplement the letter “should information become known in the future that would affect the
content of this letter.” This language is similar to that in the Azze letter, which the court found
could be read ambiguously, since one might reasonably wonder why new information could
become relevant in the future if the denial was final at the time. While such a statement on its
own is not enough to render the letter ambiguous, it lends further support to Plaintiffs’ position

4

At the very least, the paragraph may have been boilerplate language that R&A failed to remove from the February
25 letter. Either way, it renders any denial of coverage in the remainder of the letter ambiguous as to a denial of
coverage for wind damage.

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that the letter was ambiguous. Cf. Zaun v. Franklin Ins. Co., No. L-1000-12, 2013 WL 1104777,
at *2-3 (N.J. Super. App. Div. March 19, 2013) (affirming the trial court’s grant of summary
judgment where a denial letter included an express denial and clearly set out the one-year statute
of limitations provision, but also invited newly available information).
Defendant’s argument that Azze is inapplicable because Plaintiffs have not
submitted affidavits with respect to this motion indicating they were misled by the February 25
letter, and that equitable estoppel does not apply here because Plaintiffs have not provided
evidence of detrimental reliance, is inapposite. The Azze court itself did not require the
plaintiffs to make such a showing and Defendant cites to nothing that suggests Plaintiffs here are
required to do as much in order to survive summary judgment. Instead, it is for the Court to
decide whether the language in the February 25 letter was clear, and if so it should interpret the
meaning of that language. See Zaun, 2013 WL 1104777, at *3 (noting that where “the language
of the letter was the only ‘fact’ necessary for the trial court to reach its conclusion …
[i]nterpretation of the language is a purely legal question appropriate for summary judgment.”)
(citing Spaulding Composites Co. v. Liberty Mut. Ins. Co., 346 N.J. Super. 167, 173 (App. Div.
2001) rev'd on other grounds sub nom., Spaulding Composites Co. v. Aetna Cas. & Sur. Co., 176
N.J. 25 (2003)). Where, however, the parties dispute the meaning of the language and ambiguity
in the language subjects it to more than one reasonable interpretation, summary judgment is not
appropriate. Mylan Inc. v. SmithKline Beecham Corp., 723 F.3d 413, 418-19 (3d Cir. 2013).
Here the Court finds that the language is at the very least ambiguous, and that it would be
reasonable for an insured, upon receiving a letter that stated that the insurer was “pleased” to
inform them that wind damage would be covered, to expect the insurer to subsequently cover the
damage to the insureds’ property caused by wind.

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Based on the lack of a clear denial of Plaintiffs’ claim with respect to wind damage, the
language in the letter that Defendant was “pleased” to inform Plaintiff that wind damage would
be covered, and Defendant’s open-ended statement that the letter could be amended should new
information become available, the Court finds that the February 25 letter was not an
unambiguous denial of Plaintiffs’ insurance claim. Therefore, the Court cannot conclude that
Plaintiffs’ claims are clearly barred by the statute of limitations, and Defendant’s Motion for
Summary Judgment must be denied.
IV.

CONCLUSION
For the reasons expressed above, Defendants’ Motion for Summary Judgment will be

DENIED. An accompanying Order shall enter.

Dated: 7/17/2015

s/ Robert B. Kugler__
ROBERT B. KUGLER
United States District Judge

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