MD RETAIL CORP. et al v. GUARD INSURANCE GROUP

Filing 59

OPINION. Signed by Chief Judge Jerome B. Simandle on 3/27/2017. (TH, )

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

MD RETAIL CORP. d/b/a/
MONMOUTH BEACH SUPERMARKET and
MS RETAIL CORP. d/b/a SEA
BRIGHT SUPERMARKET

HONORABLE JEROME B. SIMANDLE

Civil Action No.
14-6589 (JBS/KMW)

Plaintiffs,
OPINION

v.
GUARD INSURANCE GROUP,
Defendant.

APPEARANCES:
Robert Brian Ponziano, Esq.
107 E. Court Street
Doylestown, PA 18901
Attorney for Plaintiffs
Brandon L. Sipple, Esq.
Jeremiah L. O’Leary, Esq.
Jonathan M. Zagha, Esq.
FINAZZO, COSSOLINI, O’LEARY, MEOLA &
36 Cattano Ave., Suite 500
Morristown, NJ 07960
Attorneys for Defendant

HAGER, LLC

SIMANDLE, Chief Judge:
INTRODUCTION
In this insurance coverage action, Plaintiffs MD Retail
Corp. (hereinafter, “MD Retail”) and MS Retail Corp.
(hereinafter, “MS Retail”)(together “Plaintiffs”) allege that
Defendant AmGuard Insurance Company (hereinafter, “AmGuard” or
“Defendant”) breached its contractual obligation to pay benefits
under a commercial property insurance policy by denying coverage

after Hurricane Sandy caused damage to Plaintiffs’ buildings and
loss of business income.

Defendant moves for summary judgement

because it argues that Plaintiffs lack evidence that any damage
occurred and that even if it did occur, such damage was not
caused by a covered loss.

Whether various opinions offered by

Plaintiffs to support their claimed losses are admissible as
expert opinions under Rule 702 of the Federal Rules of Evidence
must also be addressed, and the Court convened a Daubert hearing
on those issues, as discussed herein.
For the reasons that follow, Defendant’s motion for summary
judgment will be granted in part and denied in part.
BACKGROUND1
A. Factual Background2
Supermarkets MD Retail and MS Retail, located in Monmouth
Beach, New Jersey, are co-owned by Dhiren Amin and Suresh Patel.
Defendant issued Policy No. MDBP303727 to MD Retail for the

1

The Court has diversity jurisdiction over this action pursuant
to 28 U.S.C. § 1332.
2 The Court distills this undisputed version of events from the
parties’ statements of material facts, affidavits, and exhibits,
and recounts them in the manner most favorable to Plaintiff, as
the party opposing summary judgment. The Court disregards, as
it must, those portions of the parties’ statements of material
facts that lack citation to relevant record evidence (unless
admitted by the opponent), contain improper legal argument or
conclusions, or recite factual irrelevancies. See generally L.
CIV. R. 56.1(a); see also Kemly v. Werner Co., 151 F. Supp. 3d.
496, 499 n. 2 (D.N.J. 2015) (disregarding portions of the
parties’ statements of material facts on these grounds); Jones
v. Sanko Steamship Co., Ltd., 148 F. Supp. 3d 374, 379 n. 9
(D.N.J. 2015) (same).
2

period from March 9, 2012 to March 9, 2013, which provided
coverage to MD Retail for direct physical loss of or damage to
their supermarket located at 73 Riverdale Road, Monmouth Beach,
New Jersey 07750. (Def.’s Statement of Material Facts at ¶ 1.)
Defendant also issued Policy No. MSBP304540 to MS Retail for the
period from July 7, 2012 to July 7, 2013 which provided coverage
to MS Retail for direct physical loss of or damage to their
supermarket located at 1160 Ocean Avenue, Sea Bright, NJ 07760.
(Id. at ¶ 2.)

The MD and MS Retail policies both state, in

relevant part:
Section 1 – Property
A. Coverage
We will pay for direct physical loss of or damage to
Covered Property at the premises described in the
Declarations caused by or resulting from any Covered Cause
of Loss.
1. Covered Property
Covered Property includes Buildings as described under
Paragraph a. below, Business Personal Property as described
under Paragraph b. below, or both, depending on whether a
Limit of Insurance is shown in the Declarations for that
type of property. Regardless of whether coverage is shown
in the Declarations for Buildings, Business Personal
Property, or both, there is no coverage for property
described under Paragraph 2. Property Not Covered.
(Prislupsky Decl., Exs. 1-2.) The Declarations in the MD Retail
policy contained a Limit of Insurance of $650,000 for “Business
Personal Property Coverage,” and in May 2012, Defendant issued
an endorsement that added a “Building Coverage Limit” of
$1,600,000. (Id. at Ex. 1; Zagha Cert., Ex. 1.)

As a result, at

the time of Hurricane Sandy, the MD Retail policy insured both
3

“Buildings” and “Business Personal Property” as Covered
Property.
On the other hand, the Declarations for the MS Retail
Policy included a Limit of Insurance of $650,000 for “Business
Personal Property,” but no further endorsement for “Buildings”
coverage. (Prislupsky Decl. Ex. 2.)

So at the time of Hurricane

Sandy, the MS Retail policy insured only “Business Personal
Property” as Covered Property.
Both policies contain the following definitions for
“Buildings” and “Business Personal Property:”
a. Buildings, meaning the buildings and structures at
the premises described in the Declarations,
including:
(1) Completed additions;
(2) Fixtures, including outdoor fixtures;
(3) Permanently installed:
(a) Machinery; and
(b) Equipment;
(4) Your personal property in apartments,
rooms or common areas furnished by you as
landlord;
(5) Personal property owned by you that is
used to maintain or service the buildings
or structures or the premises, including:
(a) Fire extinguishing equipment;
(b) Outdoor furniture;
(c) Floor coverings; and
(d) Appliances used for refrigerating,
ventilating, cooking, dishwashing
or laundering;
(6) If not covered by other insurance:
(a) Additions under construction,
alterations, and repairs to the
buildings or structures;
(b) Materials, equipment, supplies and
temporary structures, on or within
100 feet of the described
premises, used for making
4

additions, alternations or repairs
to the buildings or structures.
b. Business Personal Property located in or on the
buildings at the described premises or in the open
(or in a vehicle) within 100 feet of the described
premises, including:
(1) Property you own that is used in your
business;
(2) Property of others that is in your
care, custody or control, except as
otherwise provided in Loss Payment
Property Loss Conditions Paragraph
E.5.d.(3)(b);
(3) Tenant’s improvements and betterments.
Improvements and betterments are fixtures,
alterations, installations or additions
(a) Made a part of the building or
structure you occupy but do not
own; and
(b) You acquired or made at your
expense but cannot legally remove;
(4) Leased personal property which you have
a contractual responsibility to insure,
unless otherwise provided for under
Paragraph 1.b.(2); and
(5) Exterior building glass, if you are a
tenant and no Limit of Insurance is shown
in the Declarations for Building property.
The glass must be owned by you or in your
care, custody or control.

(Prislupsky Decl., Exs. 1 and 2.)(emphasis added)

Both policies

also contain an exclusion for loss or damage caused by water:
B. Exclusions
1. We will not pay for loss or damage caused directly or
indirectly by any of the following. Such loss or damage is
excluded regardless of any other cause or event that
contributes concurrently or in any sequence to the loss.
These exclusions apply whether or not the loss event
results in widespread damage or affects a substantial area.
.
.
.
g. Water
5

(1) Flood, surface water, waves (including tidal wave
and tsunami), tides, tidal water, overflow of any body of
water, or spray from any of these, all whether or not
driven by wind (including storm surge);
(2) Mudslide or mudflow;
(3) Water that bucks up or overflows or is otherwise
discharged from a sewer, drain, sump, sump pump or related
equipment;
(4) Water under the ground surface pressing on, or
flowing or seeping through:
(a) Foundations, walls, floors or paved surfaces;
(b) Basements, whether paved or not; or
(c) Doors, windows or other openings; or
(5) Waterborne material carried or otherwise moved by
any of the water referred to in Paragraph (1), (3) or (4),
or material carried or otherwise moved by mudslide or
mudflow.
(Id.)

Relatedly, both policies also contained a limitation of

coverage for loss or damage to the interior of the buildings
caused by certain types of water:
4. Limitations
a. We will not pay for loss or damage to:
.

.

.

(5) The interior of any building or structure caused
by or resulting from rain, snow, sleet, ice, sand
or dust, whether driven by wind or not, unless:
(a) The building or structure first sustains damage by
a Covered Cause of Loss to its roof or walls
through which the rain, snow, sleet, ice, sand or
dust enters; or
(b) The Loss or damage is caused by or results from
thawing of snow, sleet or ice on the building or
structure.
(Id.)(emphasis added). Finally, both policies contain coverage
for “Business Income”:
(1)

Business Income
(a) We will pay for the actual loss of Business Income
you sustain due to the necessary suspension of your
6

“operations” during the “period of restoration.” The
suspension must be caused by direct physical loss or
damage to property at the described premises. The loss
or damage must be caused by or result from a Covered
Cause of Loss. With respect to loss or damage to
personal property in the open or personal property in
a vehicle, the described premises include the area
within 100 feet of the site at which the described
premises are located.
(Id.)
Following Hurricane Sandy, which occurred in October 2012,
MD Retail and MS Retail submitted insurance claims to Defendant
for alleged damage sustained to their respective supermarkets.
Defendant issued a denial letter to MD Retail on December 19,
2012 and to MS Retail on December 20, 2012 based on both
policies’ exclusion for “Water.” (Id., Exs. 3, 5.)

On December

28, 2012, Plaintiffs, their public adjuster Robert DeCecco, and
a representative of Defendant inspected a part of the MD Retail
roof that Plaintiffs believed had “dropped due to the storm.”
(Zagha Cert., Ex. 4.)

Then, the following month, DeCecco

advised Plaintiffs that they should retain a structural engineer
to opine on the existence of any damage and the cause of such
damage, and that they should obtain an electrical engineer to
inspect the HVAC units “to determine if they were damaged as
well.” (Id.)

DeCecco wrote several more letters to Plaintiffs

through September 2013 asking for an update on the status of
Plaintiffs’ attempts to obtain structural (for the roof) and

7

electrical (for the HVAC units) engineering analyses. (Zagha
Cert., Ex. 6.)
In a September 20, 2013 letter to Mr. DeCecco, Defendant
explained that because there was no evidence that the exterior
of the MD Retail building sustained damage as a result of a
covered cause of loss, its claim for damage “above the flood
line” was unsupported. (Zagha Cert., Ex. 8.)

Defendant invited

MD Retail to submit any evidence of such damage to support the
claim. Id.

MD Retail has yet to produce a report, analysis, or

other opinion from a licensed structural engineer opining that
the roof of its building sustained wind damage in connection
with the Hurricane (Def. SMF at ¶ 10.)3

Additionally, since

October 29, 2012, none of the HVAC units at the MD Retail
Building that are included in MD Retail’s insurance claim to
AmGuard have been inspected on MD Retail’s behalf by a licensed
electrical engineer to determine whether they sustained damage
in connection with Hurricane Sandy. (Id. at ¶ 11.)
Mr. DeCecco eventually sent Defendant a $79,000 estimate
from S&D General Construction for roof work, a $105,000 estimate
from Sagu Construction for interior work, and a $64,000 estimate
from Amber Heating & Air, LLC for HVAC replacement and

3

Nor did MD Retail or anyone on its behalf has produced a single
photograph that showed damage to the roof following Hurricane
Sandy (Def. SMF at ¶ 7.)
8

associated work. (Zagha Cert., Ex. 9.)4

However, Defendant

issued another denial letter on November 4, 2013 and explained
that it had no evidence of exterior damage as the result of wind
(a covered cause of loss).(Prislupsky Decl., Ex. 4.)
Regarding MS Retail, since October 29, 2012, none of the
rooftop HVAC units at the MS Retail Building that are included
in MS Retail’s insurance claim to AmGuard have been replaced.
(Id. at ¶ 15.)

Like with the MD Retail building, since October

29, 2012, none of the HVAC units at the MS Retail Building that
are included in MS Retail’s insurance claim to AmGuard have been
inspected on MS Retail’s behalf by a licensed electrical
engineer to determine whether they sustained damage in
connection with Hurricane Sandy. (Id. at ¶ 16.)

Furthermore,

neither MS Retail nor anyone acting on its behalf has produced
any photographs evidencing any damage to the MS Retail HVAC
units (Id. at ¶ 17.) Finally, Defendant has paid MS Retail up to
the policy limit regarding alleged damage to awnings and outdoor
signage in connection with Hurricane Sandy. (Id. at ¶ 19.)5

4

During discovery, MD Retail demanded $145,000 for work
performed by E&A Woodworks on the roof, $64,000 for work Amber
Heating performed on the HVAC units, and $54,000 in lost
business income. (Zagha Cert., Ex. 10.)
5 During discovery, MS Retail demanded for $34,166.77 for roof
and ceiling tile repair, $13,161 for the pylon sign, $6,634 for
front molder letters, $9,523 for the front canopy (less $7,500
paid by AmGuard) as well as $60,000 for alleged necessary
replacement of the HVAC units on the roof. (Id.)
9

B. Procedural History
Plaintiffs filed their Complaint against Defendant on
October 23, 2014, asserting two counts of breach of contract for
failing to pay for the claims discussed above. [Docket Item 1.]
After pretrial discovery, Defendant filed its motion for summary
judgment, which included challenges to the admissibility of the
opinions of Plaintiff’s proposed experts, Carl Brown and Brian
Jimenez. [Docket Item 47.]6

The Court conducted a Daubert

hearing on March 7, 2017. [Docket Item 58.]7
STANDARD OF REVIEW
A. Summary Judgment Standard, Generally
Summary judgment is appropriate if “there is no genuine
issue as to any material fact and the moving party is entitled
to judgment as a matter of law.”

Alabama v. North Carolina, 560

U.S. 330, 344 (2010) (citations and internal quotation marks
omitted); see also FED. R. CIV. P. 56(a).
In evaluating Defendant’s motion for summary judgment, the
Court must view the material facts in the light most favorable

6

Before Defendant filed its motion for summary judgment,
Plaintiff filed a motion in limine seeking preclusion of
Defendant’s presumed expert, Harris Gross. [Docket Item 42.]
Defendant has decided not to rely on Mr. Gross’s opinion on
summary judgment. As a result, as explained in this Court’s
August 2, 2016 letter to the parties, the Court will dismiss
Plaintiff’s motion as premature, without prejudice to renewal
(if preserved) following entry of the parties’ Joint Final
Pretrial Order. [Docket Item 46.]
7 The official hearing transcript is not available, so all
hearing citations are to unpaginated notes of testimony.
10

to the non-moving party, and make every reasonable inference in
that party’s favor.

See Scott v. Harris, 550 U.S. 372, 378

(2007); Halsey v. Pfeiffer, 750 F.3d 273, 287 (3d Cir. 2014).
An inference based upon “‘speculation or conjecture,’” however,
“‘does not create a material factual dispute sufficient to
defeat summary judgment.’”
omitted).

Halsey, 750 F.3d at 287 (citations

Rather, the non-moving party must support each

essential element with concrete record evidence.

See Celotex

Corp. v. Catrett, 477 U.S. 317, 322-23 (1986).
“Where the record taken as a whole could not lead a
rational trier of fact to find for the non-moving party,” the
Court may grant summary judgment.

Matsushita Elec. Indus. Co.,

Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986).
DISCUSSION
A. Admissibility of Plaintiffs’ Contractor Affidavits as
Expert Opinion
Because Plaintiffs’ theory of liability hinges to an extent
upon expert testimony (and because the Court may consider only
admissible evidence on summary judgment), the Court addresses,
at the outset, Defendant’s objections to the admissibility of
the reports of Plaintiff’s proposed experts, Mr. Brown and Mr.
Jimenez.

Defendant argues that Plaintiffs’ reliance on the

Brown and Jimenez Affidavits as “expert reports” to establish
the cause of the alleged damage to MD and MS Retail is not valid
under Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579
11

(1993). (Def. Br. at 32.)

Plaintiff responds that their

“experience and specialized knowledge” and their “specific level
of involvement with these losses” is sufficient to opine about
the cause of the damage, and “the use of an engineer, while
helpful, is not a requirement under this policy to afford
coverage for the loss.” (Opp’n at 10-11.)
Federal Rule of Evidence 702 “embodies a trilogy of
restrictions on expert testimony: [1] qualification, [2]
reliability, and [3] fit.”

Schneider v. Fried, 320 F.3d 396,

404 (3d Cir. 2003) (citing In re Paoli R.R. Yard PCB Litig., 35
F.3d 717, 741–43 (3d Cir. 1994)); see also Fed. R. Evid. 702.
Rule 702 embraces a “liberal policy of admissibility.” Pineda v.
Ford Motor Co., 520 F.3d 237, 243 (3d Cir. 2008) (quoting
Kannankeril v. Terminix Int'l, Inc., 128 F.3d 802, 806 (3d Cir.
1997)). “Vigorous cross-examination, presentation of contrary
evidence, and careful instruction on the burden of proof are the
traditional and appropriate means of attacking shaky but
admissible evidence.” Daubert, 509 U.S. at 596.

While the Third

Circuit embraces a liberal policy of admissibility, a court
still “must examine the expert’s conclusions in order to
determine whether they could reliably flow from the facts known
to the expert and the methodology used.” In re TMI Litigation,
193 F.3d 613, 665-66 (3d Cir. 1999). “A court may conclude there
is simply too great a gap between the data and the opinion
12

proffered.” Id. at 666.

Defendant argues that the Jimenez and

Brown Affidavits meet none of the three “trilogy of
restrictions” required by the Third Circuit to constitute valid
expert opinion.
1. Qualifications
The qualification prong of Daubert refers to the
requirement that the witness possess specialized expertise.

The

Third Circuit has “interpreted the specialized knowledge
requirement liberally, and ha[s] stated that this policy of
liberal admissibility of expert testimony extends to the
substantive as well as the formal qualification of experts.”
Waldorf v. Shuta, 142 F.3d 601, 625 (3d Cir. 1998)(citing In re
Paoli, 35 F.3d at 741)). “[A] broad range of knowledge, skills,
and training qualify an expert as such.” Calhoun v. Yamaha Motor
Corp., 350 F.3d 316, 321 (3d Cir. 2003) (quoting In re Paoli, 35
F.3d at 741).
Carl Brown is a mechanical engineer who is President of E&A
Woodworks, LLC and a New Jersey-licensed general contractor who
inspected the roof and the interior of the two buildings
immediately after Hurricane Sandy, who has worked as a
professional contractor for commercial construction within the
Monmouth County community “before and after Hurricane Sandy.”
(Brown Aff. at ¶ 4.)

He received his degree in mechanical

engineering from Kean College in 1986, and has been working in
13

the general contracting business for the past 25 years.

Mr.

Brown has a home improvement contractor’s license, which is
required by the State of New Jersey. (Brown Dep. 14:24-25.)
Before the storm, Mr. Brown did some “touch up work” and
“maintenance” to the buildings before the storm. (3/7/17 Hr’g.)
After the storm, Mr. Brown observed the damage to the two
buildings caused by the storm, determined the cause of the
damage to the two buildings, repaired the damage to the roof and
interior at MD Retail and performed remedial work at MS Retail.
(Brown Aff. at ¶¶ 1-3, 6, 9-10.)

Mr. Brown has opined that the

cause of the water damage to the interior of both buildings was
the result of high winds and wind driven rain that damaged the
roof, flashing and shingles (events covered by the policies).
(Id. at ¶ 11.)
Brian Jimenez is a New Jersey-licensed HVAC technician for
Amber Heating and Air, LLC who inspected the HVAC system on the
roof of each building immediately after Hurricane Sandy.
(Jimenez Aff. ¶¶ 2, 4.)

He graduated from Union County

Vocational-Technical School in 2000 with a degree in HVAC-R and
after working a several companies doing residential and
commercial service, he started his own business five years ago.
Like Mr. Brown, he had a home improvement license during the
time of the Hurricane and the ensuing repairs. (Jimenez Dep. at
19:8.)

Before the storm, he completed “basic maintenance” on
14

the HVAC units, which included changing the air filters,
cleaning the drains, and cleaning the coils.

After the storm,

upon request from Mr. Amin, he observed the damage to the two
HVAC systems caused by the storm, determined the cause of the
damage, replaced the HVAC units at MD Retail and performed
remedial work at MS Retail. (Opp’n at 19.)8

Mr. Jimenez has

opined that the HVAC units on the roofs experienced electric
power surges during Hurricane Sandy that caused damage to the
systems. (Jimenez Aff. ¶ 9.)9

Mr. Brown and Mr. Jimenez

performed “routine maintenance” on both buildings before
Hurricane Sandy, and noted that the roofs and interiors as well

8

Mr. Brown states that “[i]t is my opinion within reasonable
certainty that the approximately 75 mph wind gusts generated
during Hurricane Sandy 2012 caused damage to the roof of both
Supermarkets. This wind opened the roof and allowed wind driven
rain to enter the building through the damaged flashing and
shingles causing water damage to the interior of each building
above the flood line. I have ruled out other causes of the
damage to the roof and water infiltration because to my
knowledge there was never a water leakage problem before
Hurricane Sandy 2012 and the tearing and lifting damage observed
on the two roofs is consistent with approximately 75 mph wind
gusts.” (Brown Aff. ¶ 11.)
9 Mr. Jimenez states that “it is my opinion within reasonable
certainty that the approximately 75 mph wind gusts generated
during Hurricane Sandy 2012 together with electrical power
surges caused the irreparable destruction to the HVAC units of
both Supermarkets. I have ruled out other causes of the
irreparable damage because to my knowledge the units were
operating prior to the storm and the type of damage observed to
the wires, circuits, and motors is consistent with wind and wind
driven rain damage and power surges.” (Jimenez Aff. ¶ 9.)

15

as the HVAC systems “were in good shape” and “in good working
order” before the Hurricane and “there were no roof leaks at
either building.” (Exs. K and L to Opp’n).
Regarding Mr. Brown, Defendant argues that since he is not
a structural engineer, he is “simply unqualified to make such a
determination, by his own admission” that wind was the cause of
the alleged roof damage. (Def. Br. at 34.)

On the other hand,

Mr. Brown’s Affidavit states: “I have extensive experience in
roofing and I am skilled at recognizing the cause of roof
failures and compromises in the residential and commercial
setting.” (Brown Aff. ¶ 2.)

Plaintiffs also submit an Affidavit

from their public claims adjuster, Mr. DeCecco, explaining that
“[w]hile [he] suggested that a structural engineer inspect the
roof and an electrical engineer inspect the HVAC units at MD
Retail, in no way were engineers required in order from MD
Retail to qualify for coverage for this loss . . . [Defendant]
could have decided to accept coverage on their own or could have
consulted with the contractors who performed the repair work.”
(DeCecco Aff. at ¶ 6.)
Similarly, Defendant argues that Mr. Jimenez is unqualified
to provide an opinion that wind or power surge caused damage to
any of the HVAC units because he admitted that he is not an
electrical engineer (Jimenez Dep. 23:5-13), and he did not have
an HVAC contractor’s license during the time he claims to have
16

inspected the HVAC units. (Def. Br. at 34.)

Plaintiffs point to

Mr. DeCecco’s Affidavit, which states that “an electrical
engineer was not required in order for MS Retail to qualify for
HVAC coverage.” (DeCecco Aff. at ¶ 6.)

As a result, they argue

that “[t]here is no one more qualified to discuss the cause,
scope and value of the damage to the HVAC units then (sic) the
HVAC technician who performed the repair work soon after the
loss occurred.” (Opp’n at 29.)

Regarding the HVAC contractor’s

license, Jimenez testified that he “had a home improvement
license” at the time of his inspections, but did not have an
HVAC contractor’s license because New Jersey had “just came out
with it” and he “applied for it –when they came out with the
license . . . [a]nd the state was just so slow at getting them
back to people, it ended up taking two years to get it.”
(Jimenez Dep. 20:5, 21-25.)

As a result, Mr. Jimenez’s first

HVAC contractors license was valid from August 14, 2015 to June
30, 2016. (Id. at 8-10; see also Ex. 18 to Zagha Cert.)
The Court finds that Plaintiffs have demonstrated that Mr.
Brown and Mr. Jimenez meet the qualification prong of Daubert.
Defendant provides no support, either in caselaw or in the
insurance policies, for the proposition that testing from a
structural and/or electrical engineer is necessary to meet the
qualification prong of Daubert.

As a result, given the liberal

standard that the Third Circuit employs the Court is
17

sufficiently satisfied that Mr. Brown and Mr. Jimenez have the
qualifications necessary to render an expert opinion in this
matter.10

More specifically, Mr. Brown is qualified to offer

opinions as a highly experienced commercial construction manager
regarding the cause and extent of roofing and interior damage.
He testified to having extensive experience over the past 25
years with the causes and repairs of roofing damage on
commercial structures, including the standard types of roods
involved on the MD and MS Retail stores in this case.

Mr.

Jimenez is less experienced than Mr. Brown, but his training and
experience is focused upon HVAC troubleshooting, repair and
replacement, and he holds a Master HVAC license.

His experience

includes determining the presence and cause of electrical surges
and the resulting damage the surge can produce in the HVAC unit.
He is qualified to use specialized electrical tests to determine
the functioning and useful life of an HVAC system.

10

While he is

Defendants argue that Plaintiffs never served any of the
required disclosures pursuant to Rule 26(a)(2)(B), Fed. R. Civ.
P, such as statements of compensation, prior publications, and
prior testimony. (Def. Br. at 35.) As a result, they argue that
the affidavits are inadmissible to serve as expert opinion
regarding the existence or cause of any alleged damage. (Id.)
Plaintiffs assert that both contractors “have affirmed reports
in conformity with Fed. R. Civ. P. 26(a)(2)(B).” (Opp’n at 24.)
The Court has not found any curricula vitae or Rule 26(a)(2)(B)
report in the record. However, the Court finds any Rule 26(a)
deficiencies harmless because the necessary disclosures were
covered in Mr. Brown and Mr. Jimenez’s depositions, as explained
in the Daubert hearing. Neither has testified in court before,
published any relevant material, or has been paid to testify.
18

not an electrical engineer, Mr. Jimenez is sufficiently
qualified to express an opinion as to the cause and nature of
the claimed damage to the HVAC units herein, and any deficiency
in his qualifications goes to the weight of his proposed
testimony.
2. Reliability
Next, the Daubert requirement of reliability focuses upon
whether the expert’s conclusion rests upon “the ‘methods and
procedures of science’ rather than on ‘subjective belief or
unsupported speculation.’”

Calhoun v. Yamaha Motor Corp.,

U.S.A., 350 F.3d 316, 321 (3d Cir. 2003) (quoting Daubert v.
Merrell Dow Pharm., Inc., 509 U.S. 579, 589 (1993)); see also
Kemly v. Werner Co., 151 F. Supp. 3d 496, 503 (D.N.J. 2015)
(describing the same analytical framework); Krys v. Aaron, 112
F. Supp. 3d 181, 189-90 (D.N.J. 2015) (same).11
In certain circumstances, admissible expert testimony may
derive from an expert's knowledge and experience. Oddi v. Ford
Motor Co., 234 F.3d 136, 158 (3d Cir. 2000).

11

Kumho addressed

The Third Circuit has provided factors that a trial judge may
consider in determining reliability: 1) whether a method
consists of a testable hypothesis; 2) whether the method has
been subject to peer review; 3) the known or potential rate of
error; 4) the existence and maintenance of standards controlling
the technique's operation; 5) whether the method is generally
accepted; 6) the relationship of the technique to methods which
have been established to be reliable; 7) the qualifications of
the expert witness testifying based on the methodology; and 8)
the non-judicial uses to which the method has been put. In Re
Paoli, 35 F.3d at 742.
19

the applicability of Daubert to non-scientific experts. Kumho
Tire Co., Ltd. v. Carmichael, 526 U.S. 137 (1999)

In non-

scientific cases, such as here, the Daubert factors “may or may
not be pertinent in assessing reliability, depending on the
nature of the issue, the expert's expertise, and the subject of
his testimony.” Kumho, 526 U.S. at 150.

Thus, “the relevant

reliability concerns may focus upon personal knowledge or
experience.” Id. at 152.

The objective of Daubert's gatekeeping

role, however—“to ensure the reliability and relevancy of expert
testimony”—remains unchanged. Id.

In any case, the district

court enjoys “considerable discretion” to “determine the
criteria for judging reliability under the particular
circumstances.” Betterbox Communications Ltd. v. BB
Technologies, Inc., 300 F.3d 325, 329 (3d Cir. 2002). “If the
witness is relying solely or primarily on experience, then the
witness must explain how that experience leads to the conclusion
reached, why that experience is a sufficient basis for the
opinion, and how that experience is reliably applied to the
facts.” Advisory Committee Notes, 2000 Amendments, Fed. R. Evid.
702.
Defendant argues that neither affidavit contains any
discussion regarding the methodologies employed by Mr. Brown and
Mr. Jimenez in connection with their causation determinations.
(Def. Br. at 34.)

Mr. Brown testified that when he examined MD
20

Retail after the loss, the ceiling tiles had fallen out of their
grids “like sponges,” and the flashing had “ripped up” which
created an “open hole” that allowed rain to “funnel right into
the building.” (3/7/17 Hr’g.)

Regarding causation, Mr. Brown

stated that he came to the conclusion regarding wind damage
because “I knew what was happening. I knew what the winds were.
I mean it’s no secret that we had anywhere from 75 to 90, 90mile-an-hour winds at any given time.” (Brown Dep. 45:1-7.)

He

further stated that “I’ve been in the business for so long, I’m
able to look at something and sort of come to a pretty accurate
conclusion of what the cause was.” (Id. at 19:10-12.)

As a

result, he opined that at MD Retail, the “wind just blew the
flashing off the top and opened a funnel into the building.”
(3/7/17 Hr’g.)
Regarding MS Retail, after the storm, Mr. Brown observed
that the ceiling tiles “were like sponges, soaked up a lot of
water,” with loose and missing flashing on the roof. (Id. at
78.)

He opined that wind caused the flashing and the roof

shingles to be misplaced as a result of the storm. (Id. at 79.)
Mr. Brown added that regarding methodology, “100 out of 100
contractors are going to look at a roof and if a piece of metal
flashing is missing,” they’ll be able to identify the cause.
(Id. at 87.)

He explained that there is “no sophisticated

testing that goes on in this case.” (Id.)
21

Defendant argues that Mr. Brown’s theory fails to take into
account many other possible causes of the building damages, but
the argument appears to challenge the persuasiveness of his
theory rather than the reliability of it. See, e.g., Heller v.
Shaw Indus., Inc., 167 F.3d 146, 156 (3d Cir. 1999)(“To require
the experts to rule out categorically all other possible causes
for an injury would mean that few experts would ever be able to
testify.”)(internal citation omitted).

The alleged flaws in Mr.

Brown’s report are more properly the subject of crossexamination at trial, and do not support the wholesale exclusion
of this analysis from the factfinder.

The Court therefore finds

that the methodology underpinning Mr. Brown’s opinion – namely,
his familiarity with the properties and examination of them
after the storm combined with his extensive roofing and
contracting experience – is sufficiently reliable to admit at
trial. See Spearman Industries, Inc. v. St. Paul Fire and Marine
Ins. Co., 138 F. Supp. 2d 1088, 1098 (N.D. Ill. 2001)(admitting
a contractor’s testimony that roof damage was solely caused by a
winter storm in light of “his practical work experience in
various phases of the roofing industry” and the fact that “his
opinions are based on his specialized knowledge of roofing and
roofing materials.”).
Mr. Jimenez opined that “[w]inds of this intensity will
cause damage to electrical systems, circuits and motors
22

contained in HVAC units of the type that were on the roof of the
two supermarkets,” and that the HVAC units had to be replaced
“due to extensive damage from Hurricane Sandy’s approximately 75
mph wind gusts and wind driven rain.” (Jimenez Aff. ¶ 6.)

Mr.

Jimenez further explained that he had to replace all HVAC units
at MD Retail due to a “power surge,” an interruption in
electricity that was “recorded and reported through the Monmouth
County area during the storm.” (Id. at ¶ 7.)

In terms of his

methodology, for MD Retail, Mr. Jimenez used a multimeter,
tested the resistance on three circuits, and determined that the
three HVAC units on the roof of MD Retail had “bad compressors”
and needed to be replaced. (3/7/17 Hr’g.)

He inspected the

fuses on the units and found that they all had blown, and this
likely was the result of excess voltage. (Id.)

He demonstrated

through photos of the MD Retail HVAC units (Ex. D-1 at 3/7/17
hearing) the evidence of power surge causing the meltdown of
electrical equipment evident after the storm, together with the
missing protective panels lost to the winds of the storm.

This

power surge “was probably caused by the rain and the crazy winds
blowing down power lines.” (Jimenez Dep. 100:13-18.)

Defendant

argues that Mr. Jimenez’s power surge theory fails to take into
account many other possible causes of the HVAC unit damage, but
again, that argument appears to challenge the persuasiveness of
his theory rather than the reliability of it.
23

Mr. Jimenez

explained that “this is the way to test,” and that there is “no
other way you’re going to do it with that type of compressor.”
(3/7/17 Hr’g.) Mr. Jimenez then replaced two of the unit
himself. (Id.)
Regarding the three HVAC units at MS Retail, Mr. Jimenez
explained that after the storm, he observed that they were
“inoperable” because there was “no power to them.” (Id. at 15.)
He employed that same process as he did at MD Retail, using a
multimeter to check the compressors, and went through all of the
motors, electrical controls to look for burnt wires. (Id. at
30.)

He explained how he is able to test the circuitry of the

HAC units even when there is a loss of external power by using
his multimeter, as he testifies he did in this case.

He opined

that electrical damage caused by power surges (caused by the
Hurricane) caused damage to the MS Retail HVAC units.

Mr.

Jimenez recommended replacing the units, but does not believe
they have been replaced yet.
The Court finds that Plaintiffs have sufficiently
demonstrated that the causation opinions of Mr. Brown and Mr.
Jimenez are reliable under Kumho.

As discussed above, Mr. Brown

and Mr. Jimenez have both explained these methodologies of
testing and observation at the Daubert hearing.

These methods

are the standards used by roofing and HVAC experts in the field,
they are relied upon in advising commercial property owners and
24

managers concerning repair and replacement of roofing and HVAC
systems, and they are capable of being replicated.12

The Court

is satisfied after a Daubert hearing that their knowledge and
experience with the properties combined with their credible
testing methods, although relatively basic, demonstrate that
their opinions are reliable regarding not only the scope and
value of the damage to MD and MS Retail, but also regarding the
cause of the damage. See Dinker v. Nationwide Mut. Ins. Co., No.
10-315, 2013 WL 6813900, at *3 (S.D. Tex. Dec. 23,
2013)(admitting expert’s testimony regarding cause-of-loss
because he “used well-accepted methods that meet minimum
standards of reliability”).
3. Fit
Finally, the “fit” requirement is based upon the text of
Rule 702, which requires that an “expert’s scientific, technical
or other specialized knowledge . . . help the trier of fact to
understand the evidence or to determine a fact in issue.” Fed.
R. Evid. 702(a).

To be helpful, expert testimony must be

“sufficiently tied to the facts of the case that it will aid the
jury in resolving a factual dispute.” United States v. Schiff,
602 F.3d 152, 173 (3d Cir. 2010)(quotation marks and citation
omitted).

Conversely, “expert evidence which does not relate to

12

As Mr. Brown testified regarding replication, “100 out of 100
roofing contractors will identify the problem as the missing
flashing.” (3/7/17 Hr’g)
25

an issue in the case is not helpful.” United States v. Ford, 481
F.3d 215, 219 n.6 (3d Cir. 2007) (quotation marks and citation
omitted). “The standard is not that high, ‘but is higher than
bare relevance.’” Schiff, 602 F.3d at 173 (citation omitted).
Defendant argues that the proffered testimony does not fit
within the facts of the case because their reference to YouTube
videos include “no explanation as to how the videos are relevant
to the unexplained testing or methodologies employed.” (Def. Br.
at 35.)

Furthermore, the weather reports and new articles “bear

no indication as to why they are specifically relevant to
determining the cause of any alleged damage.” (Id.)

Plaintiffs

reply that the opinions, reflected in their affidavits and
testimony, “focus only on what they have done or seen during the
many phases of these claims,” so their findings would certainly
assist a jury in determining the nature and cause of the various
damages. (Opp’n at 33.)

The Court finds that Plaintiffs have

clearly satisfied the fit requirement, as Mr. Brown and Mr.
Jimenez’s familiarity with the properties, the damage and the
repairs, as expressed in the Daubert hearing, would certainly
aid the jury.
Given the Third Circuit’s liberal policy on expert
admissibility and the Court’s thorough analysis of the
contractors during the Daubert hearing, the Court finds that the
Brown and Jimenez Affidavits are admissible under Rule 702,
26

regarding the scope and value of the damages, as well as
causation.

Therefore, the Brown and Jimenez Affidavits will be

considered as part of Plaintiff’s opposition to summary
judgment.
B. Defendant’s Motion for Summary Judgment
Moving on to the merits, Defendant argues that Plaintiffs
do not have competent evidence, such as photographs, reports or
expert opinion establishing a genuine factual dispute regarding
both (1) the existence of damage to covered property; and (2)
that the cause of the alleged damage was the result of a covered
cause of loss as required by the at-issue insurance policies.
The interpretation of an insurance contract is a question
of law for the court to determine, and can often be resolved on
summary judgment. Weedo v. Stone-E-Brick, Inc., 155 N.J. Super.
474, 479 (App. Div. 1977), rev’d on other grounds, 81 N.J. 233
(1979).

In coverage disputes, the insured party has the burden

“to bring the claim within the basic terms of the policy.”
Reliance Ins. Co. v. Armstrong World Indus. Inc., 292 N.J.
Super. 365, 377 (App. Div. 1996).

The burden then shifts to the

insurer to show that a loss is otherwise excluded by an
applicable exclusion, such that the damages claimed are not
covered. Flomerfelt v. Cardiello, 997 A.2d 991, 997-98 (N.J.
2010). “Exclusions are presumptively valid and will be given
effect if specific, plain, clear, prominent, and not contrary to
27

public policy.” Colliers Lanard & Axilbund v. Lloyds of London,
458 F.3d 231, 236 (3d Cir. 2006).

For purposes of obtaining

summary judgment, defendant’s burden is to show that, factually,
plaintiff has failed to meet its prima facie case, Bilotti v.
Accurate Forming Corp., 188 A.2d 24 (N.J. 1963), or that as a
matter of law, defendant has demonstrated the applicability of
an exclusion, thereby negating coverage.

We consider the two

properties separately.
1. MD Retail’s Claim for Roof Repairs, Interior Repairs
Above the Flood Line, HVAC Replacement, and Rental
Payments
MD Retail claims that Defendant owes it $145,000 for roof
and interior damage repairs, $64,000 for HVAC repairs, and
$54,000 for rental expenses.

The Court examines the record

supporting each claim in turn.
a. Roof Repairs
Defendant first argues that neither MD Retail, its public
adjuster Robert DeCecco, nor Mr. Brown have a single photograph
of the roof following the Hurricane that even suggests that the
roof was damaged. (Def. Br. at 28.)

Additionally, it argues

that Plaintiffs have no evidence as to the cause of the alleged
sinking roof – whether by water, wind, roof defect, negligent
work, etc. (Id. at 29.)

As a result, they argue, there is no

genuine issue of material fact regarding roof damage.
Plaintiffs respond that roof damage is a covered cause of
28

loss under Section (A)(1)(a) of the policy and point to language
from Mr. DeCecco’s January 5, 2013 letter to Plaintiffs
documenting a December 2012 inspection where they all “went up
to the roof area where [Plaintiffs] showed the adjuster a
section of the roofing system that [they] indicated had dropped
due to storm.” (Ex. 4 to Zagha Cert.)

Mr. Brown also explained

that upon visiting MD Retail after the storm, he noticed that
“[h]alf of the metal flashings, which sort of seal up those
edges along those perforations, were actually gone, just blown
off,” which lead to “compromised . . . roof perforations.”
(Brown Dep. 29: 3-7.)

Upon inspection, Mr. Brown could

“actually see into the interior of the store.” (Id. at 32:2223.)

Additionally, Plaintiffs submitted November 28, 2012

photographs that Donald Michels, Defendant’s Field Inspector,
took of the water-damaged ceiling tiles and upper walls. (Exs. B
and C to Pl.’s Opp’n).13

More generally, Plaintiffs argue that

“it was reasonable for Mr. DeCecco and the contractors to rely
on AmGuard’s inspectors to document what they and everyone else
had observed while examining the roof,” so Plaintiffs “should
not be penalized for not doing the work of the insurer if

13

Notably, while many of Mr. Michels’ pictures include the
damaged interior of MD and MS Retail, they do not include any of
the roof. Plaintiffs do submit one picture of MS Retail’s roof,
dated November 9, 2012. (Exs. E and F to Opp’n.)
29

AmGuard now argues the damage and repairs were not adequately
documented.” (Opp’n at 10, 25.)
Given the above evidence, the Court finds that there is a
genuine dispute of material fact regarding roof damage at MD
Retail.

New Jersey law is clear that the plaintiff bears the

burden of establishing that a loss occurred within the coverage
of the insurance contract before the burden shifts to the
insurer regarding the applicability of any exclusions. Hartford
Accident & Indem. Co. v. Aetna Life & Casualty Ins. Co., 483
A.2d 402 (N.J. 1984); see also Building Materials Corp. of
America v. Allstate Ins. Co., 424 N.J. Super. 448, 464-65 (App.
Div. 2012)(“If the insured offers sufficient credible evidence
to establish a prima facie loss within the coverage of the
policy, the burden of proving that the loss falls within the
exclusionary provisions of the policy shifts to the
insurer.”)(collecting cases).

Here, Plaintiff has met its

burden, through eyewitness testimony as to the condition and
damage to this MD Retail roof, and the Affidavit and causation
testimony of Mr. Brown, as Mr. Brown states “[t]he wind driven
rain that entered the building through the opening in the roof
caused extensive damage throughout the upper portion of the
building above the flood line.

The extreme wind gusts generated

during Hurricane Sandy 2012 caused the metal flashing members on
the roof to be ripped up.” (Brown Aff. at ¶ 9.)
30

Mr. Brown was

familiar with the MD Retail property both before the storm and
after the storm, and his testimony on scope of the damage and
causation leads the Court to deny motion for summary judgment
regarding MD Retail’s roof damage.

Notwithstanding various

weaknesses in Plaintiff MD Retail’s proofs, which will
undoubtedly be exposed at trial, a reasonable jury, giving the
Plaintiff the benefit of reasonable inferences, could find for
Plaintiff on this claim.
b. Interior Repairs
Next, regarding MD Retail’s claim for interior damage above
the flood line, Defendant argues that Plaintiffs have put forth
no photographs depicting the existence of a wind-created opening
in the roof that caused interior damage above the flood line.
(Id. at 29.)14

Defendant also argues that MD Retail has no

evidence to support its contention that “rain,” as opposed to
wind-driven sea water or flood water, entered the building from
the roof to cause interior damage above the flood line. (Id. at
29.)

Defendant argues that this distinction matters because the

policy only provides coverage for rain entering the interior

14

According to Mr. DeCecco, items damaged above the flood line
(at both buildings) include the “ceiling tiles and grid, the
lighting and electrical wiring and upper walls damaged by
rainwater that entered through the damaged roof.” (DeCecco Aff.
¶¶ 2-3.) Furthermore, Mr. Brown explains that his repair work
included “all damaged ceiling tiles, insulation, lighting and
electrical wiring.” (Brown Aff. at ¶ 9.)
31

through a breach in the exterior, but not sea or flood water.
(Id. at 9, 29.)15
Plaintiff MD Retail argues that interior damage is covered
under Section (A)(b)(1) & (3) of its policy, and that the owners
and their contractors are not required to take photographs of
the roof or interior before making repairs. (Opp’n at 12.) In
addition to the testimony of Mr. Brown, who personally observed
to MD Retail after the storm and found that the ceiling tiles
were “falling out of the grids” and looked like “sponges”
(3/7/17 Hr’g), Plaintiff provides photographs of the damaged
interior and ceiling that Mr. DeCecco took before and during
repairs. (Ex. D to Pl.’s Opp’n), as well as pictures of the
damaged interior and ceiling that Rick Harris, one of
Defendant’s claim adjusters, took on November 9, 2012. (Ex. I to

15

Here, Plaintiff MD Retail denies Paragraph 9 in Defendant’s
Statement of Material Facts, which states that “MD Retail has no
evidence that rain, as opposed to wind-driven sea water or flood
water, entered the building from the roof to cause interior
damage above the flood line.” However, Plaintiff’s reasoning
does not reference any affidavits or other documents and thus
fails to dispute the fact for purposes of the Motion. Local
Civil Rule 56.1(a) requires that the opponent to summary
judgment dispute a fact furnished by the movant by citing to
affidavits and other documents. Where record citations are not
included and are not readily apparent, a party’s factual
assertions may be disregarded. See, e.g., Webster v. Dollar
General, 197 F. Supp. 3d 692, 696 n.5 (D.N.J. 2016)(“The Court
disregards, as it must, those portions of the parties’
statements of material facts that lack citation to relevant
record evidence (unless admitted by the opponent), recites
factual irrelevancies, and/or recounts information that the
Court struck from the summary judgment record.”)
32

Pl.’s Opp’n.)

Specifically, Mr. Harris took three photographs

from MD Retail’s storage room noting water damage from the roof,
and three photographs from the main room showing damaged ceiling
tiles from “roof leaking water.” (Id.)

Mr. Harris also took

several photographs from MS Retail’s main room and bathroom
labelled “staining from roof water leaking,” “water damaged from
ceiling leaking,” and “water damage to ceiling and walls from
leaking roof.” Id.
The Court finds that MD Retail has put forth sufficient
evidence to create a genuine issue of material fact on the issue
of interior repairs.

In addition to Mr. Brown’s expert

testimony, there are several photographs in the record showing
extensive damage to the interior of the building above the high
water mark of the flood line.

While Defendant relies on the

“Water” exclusion, arguing that Plaintiff presents no evidence
that rain, as opposed to wind-driven sea water or flood water,
entered the building from the roof to cause interior damage
above the flood line, as explained previously, the burden is on
the insurer to prove that the loss falls within an exclusion.
Defendant has presented no evidence that it was sea water or
flood water that entered through the roof to cause interior
damage.

At a minimum, Plaintiff is entitled to the reasonable

inference that water damage to ceilings and walls flowed down
from the visible roof openings, and not upward from any flood
33

waters.

As a result, the Court denies summary judgment on

interior repairs.
c. HVAC Repairs
Next, Defendant argues that MD Retail’s $64,000 claim for
replacement of its rooftop HVAC units is unsupported because (1)
the units were approaching the end of their life expectancy
before the storm, (2) the units “were never inspected by a
licensed electrical engineer to determine whether they sustained
damage in connection with the storm,” and (3) even if the units
were damaged from the storm, MD Retail “has not proffered
competent evidence as to whether the units were damaged by a
covered cause of loss.” (Def. Br. at 30.)

MD Retail argues in

response that the HVAC repairs are covered under Section
(A)(b)(1) and (3) of their policy, and offer Mr. Jimenez’s
eyewitness testimony and Affidavit and photographs (Ex. D-1 at
3/7/17 hearing) as support.

Mr. Jimenez opined that the HVAC

units had “at least an additional 10 year life expectancy” at
the time of the Hurricane, and provided several photographs of
the HVAC units before and after the Hurricane showing severe
damage to the units. (Exs. F and L to the Opp’n; Ex. D-1)

He

has opined that the high winds from the Hurricane knocked down
power lines, which caused a power surge, thereby causing
irreparable damage to the HVAC units. (3/7/17 Hr’g.)

Defendant

argues that Plaintiff provides no evidence that the HVAC repairs
34

at MD Retail would escape the “Water” exclusion, but the burden
is on the insurer to establish that, and they have not done so.
As a result, summary judgment is denied as to the HVAC damage at
MD Retail.
d. Rental Payments
Finally, Defendant argues that MD Retail cannot support its
claim for rental payments and lost business income because the
cause of such damage was due to an excluded cause of loss –
flooding. (Id. at 30.)

Plaintiff MD Retail argues that Rental

Payments are covered under Section (A)(5)(f), and submit an
affidavit from their accountant, Sunil J. Shah, CPA, explaining
that MD Retail was “unable to conduct business from the date of
Hurricane Sandy on October 29, 2012 until the date of
restoration on August 2, 2013.” (Shah Aff. at ¶ 4.)

As a

result, Plaintiff asks for $54,000, which covers rental expenses
from November 2012 until July 2013 at $6,000 per month. (Id. at
¶ 5.)

Plaintiffs further argue, but without support, that the

“[f]lood damage part of the loss was cleared out and repaired
relatively quickly compared to the roof and ceiling,” so they
are entitled to compensation for the loss in lease income during
the period of restoration of the roof and ceiling. (Opp’n at
15.)

The record shows that MD Retail was flooded for months

after the Hurricane, but flooding is an excluded cause of loss
pursuant to the policy’s “Water” exclusion.
35

Given that

Defendant has met its burden that the exclusion applies, and
Plaintiff has put forth no evidence explaining whether flooding
or something else caused a loss in business income, the Court
grants summary judgment on this claim.16
2. MS Retail’s Claim for Roof Repairs, Interior Repairs
Above the Flood Line, and HVAC Replacement
MS Retail claims that Defendant owes $34,166.77 for
interior damage repairs, $60,000 for HVAC repairs, and $29,318
in awning and outdoor sign repairs.

Roof repairs at MS Retail

are no longer at issue.17
a. Interior Repairs
Defendant argues that Plaintiff MS Retail’s claim for
interior damage above the flood line is unsupported because even
if such damage occurred, it does not constitute damage to

16

Plaintiffs also deny Paragraph 12 in Defendant’s SMF, which
states “MD Retail was closed for business for approximately nine
months, due to necessary repairs caused by approximately four
feet of flooding following Storm Sandy.” Again, however,
Plaintiffs fail to support this statement with a record
citation. The Court therefore deems the facts in Paragraph 12
uncontested. See McCann v. Unum Provident, 921 F. Supp. 2d 353,
358-359 (D.N.J. 2013)(“failure to reference evidence of record
demonstrates that there is no reason to disbelieve” facts as set
forth by adversary”).
17 Defendant argues that MS Retail’s claims for roof repairs are
unsupported because it is indisputable that the MS Retail Policy
only provided coverage for “Business Personal Property” and not
“Buildings,” and that Plaintiffs’ landlord, Scot Bell, confirmed
that he was responsible for roof repairs. (Def. Br. at 30.)
Plaintiffs concede that “MS Retail does not have a claim for the
roof and shingle damage,” so the Court will grant Defendant’s
motion for summary judgment regarding MS Retail’s roof damage.
(Opp’n at 17.)
36

“Covered Property” insured by the MS Retail policy, which only
covers “Business Personal Property” and not “Buildings,” as
previously described. (Def. Br. at 31.)18

Plaintiff MS Retail

argues in response that the interior damage is covered under
Section (A)(b)(3)(“Business Personal Property”) of their Policy
because “all damaged items were either purchased and installed
by MS or acquired by MS Retail.” (Opp’n at 17.)

MS Retail

presents evidence from the November 22, 2012 report of Rick
Harris from Pacesetter Claims Service, noting that “[i]nterior
water damage to the ceiling tiles, paneling, drywall, and paint
on the upper walls do (sic) to the water entering from the roof
because of wind damage to shingles, which is covered in this
policy.” (Ex. I to Opp’n.)

MS Retail also attaches the

affidavit of Mr. Brown, which describes the interior damage at
MS Retail as including the ceiling grid, ceiling tiles, drywall,
fluorescent strip lights and acoustic grid fixtures. (Brown Aff.
at ¶ 10.)
MS Retail’s evidence on interior repairs is sufficient to
create a genuine issue of material fact, as there is evidence in
the record that damage to portions of MS Retail’s ceiling and
lights would be considered “Business Personal Property” instead

18

It is undisputed that MS Retail did not have the endorsement
for “Buildings” that MD Retail had. (Zagha Cert. ¶ 1.)
37

of the not-covered “Buildings” portion of their policy.19

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). “Business Personal
Property” is defined in relevant part as: (1) property you own
that is used in your business; (2) property of others that is in
your care, custody or control, and (3) tenant’s improvements and
betterments - improvements and betterments are fixtures,
alterations, installations or additions (a) made a party of the
building or structure you occupy but do not own; and (b) you
acquired or made at your expense but cannot legally remove.”
(Id.)
In addition to the ambiguity of the policy, the Harris
report stating that the various items are covered by the policy
along with the portions of Mr. Bell’s Affidavit stating that MS
Retail “is the owner of the interior suspended ceiling grid and
suspended ceiling tiles, paneling, drywalls and paint,
fluorescent strip lights and acoustic grid fixtures” is
sufficient to create a genuine issue as to interior damage
coverage. (Bell Aff. ¶ 4).

A fixture is defined as “personal

19

The definition of “Buildings” in the MS Retail policy includes
(1) completed additions; (2) fixtures, including outdoor
fixtures; and (3) permanently installed machinery and equipment.
(Prisulupsky Decl. at ¶ 2.)
38

property that is attached to land or a building and that is
regarded as an irremovable part of the real property, such as a
fireplace built into a home.” Fixture, BLACK’S LAW DICTIONARY (10th
ed. 2014.)

The above items could be covered as Business

Personal Property under “property you own that is used in your
business” as well as “fixtures, alterations, installations or
additions made a part of the building or structure you occupy
but do not own.”

Certainly ceiling tiles and fluorescent strip

were made a part of the building that MS Retail occupied but did
not own.

Given these factual disputes regarding the

classification of the various damaged items as “Business
Personal Property,” the Court denies summary judgment on this
claim.
b. HVAC Repairs
Defendant next argues that MS Retail’s claims for
replacement of the HVAC units is unsupported because there is no
evidence that the HVAC units are damaged, as the units were
still in operation as of January 2016, over three years since
the storm. (Def. Br. at 31.)

Additionally, it argues that MS

Retail has no photographic evidence of the damage, the units
were never inspected by an electrical engineer, and there is no
evidence that the units were damaged by a covered cause of loss.
Finally, it argues that the lease agreement between MS Retail

39

and Mr. Bell requires Bell to pay for the damage to the HVAC
units. (Ex. J to Opp’n.)20
The Court agrees with Defendant that MS Retail has
submitted no evidence that the HVAC units were damaged.

MS

Retail admits that it has no photographic evidence depicting any
damage to the HVAC units (Pl.’s Response to Def. SMF at ¶ 17),
and that the HVAC units are still in service today. (Id. at ¶
15.)

Although Mr. Jimenez states that the units “were

functioning properly prior to Hurricane Sandy,” and “[u]pon
examination of the HVAC units” after the Hurricane, he “noticed
that none of the units were functioning properly and have to be
replaced.” (Jimenez Aff. ¶ 8,) he has not in fact inspected
these units since power was restored to the building to learn
that they are actually functioning.

Mr. Jimenez added that the

“existing HVAC units have to be replaced due to extensive damage
from Hurricane Sandy’s approximately 75 mph wind gusts and wind
driven rain.”

(Id.)

But Mr. Jimenez retracted his opinion that

the wind caused damage to the MS Retail HVAC units, as discussed
below.

His understanding is that none are working now (Id.;

20

Regarding this last argument, Mr. Bell explains that MS Retail
“is responsible for the maintenance, repair and/or replacement
of all [HVAC] Units.”20 (Bell Aff. ¶ 4.) Defendant essentially
concedes this argument in its Reply Brief, and, assuming MS
Retail can prove damages at trial, HVAC unit damage would be
covered as “Business Personal Property.”
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3/7/17 Hr’g) is likewise not admissible because it has no basis;
the parties agree that these HVAC units are working now.
At the Daubert hearing, Mr. Jimenez clarified that he saw
no evidence of wind damage to the MS Retail HVAC units, and that
he agrees with the statement that “it is fair to say that the
units at MS Retail did not suffer any wind damage.” (3/7/17
Hr’g.)

It further became clear that these HVAC units are

functioning today despite having no repairs since the storm, and
that Mr. Jimenez was unaware of that crucial fact when he
submitted his Affidavit containing a contrary opinion that these
units were “irreparable.” (See Jimenez Aff. ¶¶ 8-9.)

Likewise,

his statement in his Affidavit that “[t]he condition of the
wires, circuits and motors of the HVAC units was consistent with
power surge damage” and that the units are “irreparable” (Id. ¶
8), which is identical to her verbiage as to the MD Retail HVAC
damage (Id. ¶ 7 and attached photos), has no support in the
record.

Plaintiff MS Retail has produced no evidence regarding

any storm-caused damage to MS Retail HVAC units affecting their
operability after power was restored and continuing to the
present day.

Mr. Jimenez is not competent to offer such

testimony since his last visit to MS Retail was in 2012 in the
immediate aftermath of the storm and he has not returned since.
(3/7/17 Hr’g.)

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In summary, there is no material dispute of fact regarding
the continued operability of the MS Retail HVAC system, and no
reasonable jury could find for Plaintiff MS Retail on this
issue.

Summary judgment will be granted in favor of Defendant

dismissing MS Retail’s claimed loss of HVAC units.
c. Awning and Outdoor Signage Repairs
Finally, Defendant argues that Plaintiff’s claims for
awnings and outdoor signage repairs are unsupported because
Defendant already paid the claim up to the policy limit.

MS

Retail responds that the November 22, 2012 Pacesetter Claims
Service report states that the policy limit for outdoor signage
and awnings is $30,000, but this contradicts the actual policy,
which states that the limit is $7,500. (Ex. I to Opp’n.)

MS

Retail even admits in its Response to Defendant’s SMF that
Defendant paid MS Retail the policy limit regarding alleged
damage to awnings and outdoor signage. (Pl.’s Response to Def.’s
SMF, ¶ 19.)21

Given that MS Retail was already paid the $2,500

limit of insurance for awnings damage and $5,000 limit of
insurance for outdoor signs, there is no dispute that the

21

Plaintiff complains that Defendant “cherry-picked” portions of
deposition transcripts to present in its summary judgment
motion, thereby “distort[ing] the true meaning of the testimony
and the scope of the opinions.” (Opp’n at 21 n.3). Nothing in
Rule 56 prevented Plaintiff from attaching other portions of the
various deposition transcripts to its Opposition, but it has
failed do so. As a result, the Court declines to hold
Defendant’s motion “insufficient, incomplete and misleading.”
(Id.)
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applicable policy limits have been paid and the Court grants
summary judgment on these claims. (Def. Br. 23-24, 32.)
CONCLUSION
In sum, the motion for summary judgment will be granted in
part and denied in part.

The accompanying Order will be

entered.

March 27, 2017
Date

s/ Jerome B. Simandle
JEROME B. SIMANDLE
Chief U.S. District Judge

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