THE TRAVELERS LLOYDS INSURANCE COMPANY v. RIGID GLOBAL BUILDINGS, LLC et al

Filing 58

OPINION. Signed by Judge Madeline Cox Arleo on 2/13/2020. (ams, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

THE TRAVELERS LLOYDS INSURANCE
COMPANY,
Plaintiff,

Civil Action No. 18-5814

v.

OPINION

RIGID GLOBAL BUILDINGS, LLC, et al.,
Defendants.
ARLEO, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court by way of Plaintiff Travelers Lloyds Insurance
Company’s (“Plaintiff” or “Travelers”) Motion for Summary Judgment. ECF No. 50. For the
reasons that follow, the Motion is GRANTED.
I.

FACTUAL BACKGROUND1
This matter is an insurance dispute concerning whether damages flowing from alleged

construction deficiencies at Grand Slam’s facilities are covered under the policies Plaintiff issued
to Rigid Building Systems, Ltd. (“RBS”).2

The facts are drawn from Defendants Grand Slam Partners, LLC’s and Randolph Enterprises, LLC’s (collectively
“Grand Slam”) Statement of Material Facts, ECF No. 53.18 (“GS SOMF”).
1

2

In December 2010, RBS filed for bankruptcy, and in January 2011 the bankruptcy court approved a sale of RBS to
Rigid Global Buildings, LLC (“RGB”). Travelers Compl. ¶ 4, ECF No. 1. As explained in more detail infra,
throughout the underlying state court action relevant to this matter, RBS and RGB were referred to collectively as
“Rigid.” For simplicity, the Court will do the same in this Opinion, unless a distinction between RBS and RGB is
necessary.

1

A.

The Tennis Center

In 2007, Jennifer Rogers, the principal of Grand Slam, contracted with non-party Beta
Realty Unit 6, LLC (“Beta”) to develop an indoor tennis center in Randolph, New Jersey. GS
SOMF ¶ 2; Grand Slam Third Amended Complaint ¶¶ 24-26, ECF No. 53.4 (“Grand Slam
Compl.”). Beta worked with The Adkins Group, Inc. (“Adkins”) to design the center, and Adkins
contracted with Rigid to manufacture a pre-engineered metal building for the site. GS SOMF
¶¶ 3-4. The tennis center was built and opened for business in 2009. Grand Slam Compl. ¶ 58.
B.

The Grand Slam Action

On October 15, 2015, Grand Slam brought a negligence action for damages against various
contractors, including Rigid,3 based on water leaks that occurred at the tennis center between 2009
and 2012, particularly following Hurricane Irene (August 2011) and Superstorm Sandy (October
2012), see GS SOMF ¶¶ 9, 13, 16, as well as a partial roof collapse following a snow storm in
February 2014, see Grand Slam Compl. ¶¶ 72-76. The suit proceeded in the Superior Court of
New Jersey, Law Division, Morris County (the “Grand Slam Action”). GS SOMF ¶ 9.
At oral argument on motions in limine, Grand Slam’s counsel agreed that it would not
introduce “any receipts or any costs for” damages between 2009 and 2011, Grand Slam April 30,
2018 Hearing Tr. at 29:4-30:3, ECF No. 50.11, and the trial court entered an order that Grand Slam
was “prohibited from presenting evidence of any damages from events in 2009 to 2011.” ECF
No. 50.10 (“Grand Slam in limine Order”).4

3

The Grand Slam Complaint named RGB as a defendant; Adkins brought a third-party complaint against both RGB
and RBS. See Pl. Mem. at 2, ECF No. 50.1; Adkins Compl., ECF No. 50.8. As previously noted, RGB and RBS
were treated collectively as “Rigid” at the Grand Slam trial. See Grand Slam Order of Judgment, ECF No. 50.12.
4

This motion in limine was specifically offered by Rigid. See Grand Slam April 30, 2018 Hearing Tr. at 28:19-29:8.

2

At trial, a central theory of liability was that Rigid had only designed the tennis center to a
“Ground Snow Load” of thirty pounds-per-square-foot (“PSF”), when the Township of
Randolph’s building code required a Ground Snow Load of thirty-five PSF. Id. ¶¶ 47, 60; see also
May 8, 2018 Grand Slam Trial Tr. at 54:11-55:10, ECF No. 50.9. Grand Slam also presented
evidence that, upon inspection following the partial collapse in February 2014, Rigid’s preengineered metal structure was missing bolts, the rod bracing was not tight, and the frame was
“deflected” and “deformed.” See, e.g., May 3, 2018 Grand Slam Trial Tr. at 16:1-18, 184:7-8,
ECF No. 53.9. The tennis center was closed for several months for repairs following the partial
collapse, and once the repairs were complete, one of the tennis center’s six courts was not usable.
See Grand Slam Mem. at 9-11 (collecting trial transcript citations), ECF No. 53.
Ultimately, the jury found for Grand Slam and, on August 2, 2018, a judgment in the
amount of $1,633,036.65 was entered against Rigid. Grand Slam Order of Judgment at 2. The
jury found that Rigid was responsible for:
•

10% of the damages flowing from “the structural repair of the collapsed portion of
the [tennis center].” Grand Slam May 29, 2018 Trial Tr. at 92:17-93:7, ECF No.
50.13.

•

55% of the damages flowing from “the structural repair to bring the [tennis center]
building to code.” Id. at 94:1-15.

•
•

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33% of the damages for “past business loss.” Id. at 95:8-20.
33% of the damages for “future business loss.” Id. at 96:10-22.5

These four jury findings will be collectively referred to as the “Jury Damages Verdict.”

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C.

The Travelers Policies

Plaintiff issued two consecutive occurrence-based commercial general liability (“CGL”)
policies to RBS; the first was effective from March 1, 2009 to March 1, 2010 and the second was
effective from March 1, 2010 to March 1, 2011 (the “Travelers Policy Periods”). See ECF No.
50.15 (the “Travelers Policies”). The Travelers Policies provide that Plaintiff “will pay those sums
that the insured becomes legally obligated to pay as damages because of ‘bodily injury’ or
‘property damage’ to which this insurance applies.” Id. at 15. To trigger coverage, bodily injury
or property damage must be “caused by an ‘occurrence’ that takes place in the ‘coverage
territory,’” and must occur during the policy period, subject to various exclusions laid out in the
policy. Id. at 15-19.
“Occurrence” is defined as “an accident, including continuous or repeated exposure to
substantially the same harmful conditions.” Id. at 28. “Property damage” is defined as:
a.
Physical injury to tangible property, including all resulting loss of use of
that property. All such loss of use shall be deemed to occur at the time of the
physical injury that caused it; or
b.
Loss of use of tangible property that is not physically injured. All such loss
of use shall be deemed to occur at the time of the “occurrence” that caused it.
Id. at 29.
II.

PROCEDURAL HISTORY
Plaintiff filed this action on April 9, 2018. See Travelers Compl. The one-count Complaint

seeks a declaration that the damages awarded in the Grand Slam Action are not covered by the
Travelers Policies and that Plaintiff is not obligated to defend or indemnify Rigid for the claims in
the Grand Slam Action. Id. ¶¶ 28-35. Plaintiff moved for summary judgment on July 19, 2019,
ECF No. 50, which Grand Slam opposes, ECF No. 53.

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III.

LEGAL STANDARD
Pursuant to Federal Rule of Civil Procedure 56(c), a motion for summary judgment will be

granted if the pleadings, depositions, answers to interrogatories, and admissions on file, together
with available affidavits, show that there is no genuine dispute as to any material fact and that the
moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). “[S]ummary judgment
may be granted only if there exists no genuine issue of material fact that would permit a reasonable
jury to find for the nonmoving party.” Miller v. Ind. Hosp., 843 F.2d 139, 143 (3d Cir. 1988). All
facts and inferences must be construed in the light most favorable to the non-moving party. Peters
v. Del. River Port Auth., 16 F.3d 1346, 1349 (3d Cir. 1994).
IV.

DISCUSSION
Plaintiff argues that summary judgment is warranted because no property damage

“occurred” during either policy period, and thus the Travelers Policies do not cover the damages
awarded in the Grand Slam Action. The Court agrees.
A.

Traditional Theory

Plaintiff first asserts that Rigid’s liability in the Grand Slam Action did not arise from any
“occurrence” that took place during the Travelers Policy Periods. Pl. Mem. at 7.
As noted, the Travelers Policies define “occurrence” as “an accident, including continuous
or repeated exposure to substantially the same harmful conditions.” Travelers Policies at 28. In
construing a nearly identical term, the New Jersey Supreme Court held: “As a general rule, the
time of the ‘occurrence’ of an accident within the meaning of an indemnity policy is not the time
the wrongful act was committed but the time when the complaining party was actually damaged.”

5

Hartford Accident & Indem. Co. v. Aetna Life & Casualty Ins. Co., 98 N.J. 18, 27 (1984) (citing
Muller Fuel Oil Co. v. Ins. Co. of N. Am., 95 N.J. Super. 564, 578 (App. Div. 1967)).
Here, Grand Slam was not “actually damaged” until after the Travelers Policies had
expired. As explained above, Grand Slam could not—and indeed, was barred from—presenting
any evidence of damages from the 2009 to 2011 time period. See Grand Slam in limine Order
at 2. The $1.6 million verdict against Rigid was based exclusively on the costs to repair structural
damage to the tennis center from the partial roof collapse in February 2014 and the business losses
that flowed from that collapse. See Jury Damages Verdict. As such, the “occurrence” which led
to “property damage”—the February 2014 partial roof collapse—occurred well after the expiration
of the Travelers Policies in March 2011. This result is consistent with the interpretation of the
term “occurrence” in other construction defect cases. See, e.g., Yarrington v. Camarota, 138 N.J.
Super. 398, 402-03 (App. Div. 1971) (finding that fire resulting from negligence in construction
was not an “occurrence” within the CGL insurance policy in effect at the time of construction
because the fire “occurred eight months after the [relevant] policy period” ended), aff’d sub nom.
Yarrington v. Baldwin Manor, Inc., 60 N.J. 169 (1972); Deodato v. Hartford Ins. Co., 143 N.J.
Super. 396, 402-03 (Law Div. 1976) (finding that damage to roof in 1973 that arose from
negligence in construction was not an “occurrence” for purposes of earlier policies), aff’d 154 N.J.
Super. 263 (App. Div. 1977); Epic Mgmt., Inc. v. Harleysville Ins. Co. of N.J., 2010 WL 3516902,
at *3-4 (N.J. Super. Ct. App. Div. Aug. 31, 2010) (similar). Because Grand Slam cannot point to
any proof of damages from the Travelers Policy Periods, they cannot demonstrate an “occurrence”
triggering coverage under the Travelers Policies.

6

B.

Continuous Trigger Theory

Relying on Potomac Insurance Co. of Illinois ex rel. OneBeacon Insurance Co. v.
Pennsylvania Manufacturers Association Insurance Co., 215 N.J. 409, 425 (2013), Grand Slam
argues that an “occurrence” took place under the “continuous trigger” theory of injury. See Grand
Slam Mem. at 15-19. The Court disagrees.
The continuous trigger theory of injury for third-party personal injury and property damage
claims was first articulated in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994), where
the New Jersey Supreme Court decided “what constitutes an ‘occurrence’ for purposes of
determining which insurers must provide coverage to an insured named as a defendant in asbestosrelated . . . cases.” Potomac, 215 N.J. at 422 (citing Owens-Illinois, 138 N.J. at 449-51, 474-75).6
The theory “was fashioned to address the difficulties of establishing with scientific certainty when
the harmful effects of a progressive disease or injury have occurred.” Air Master & Cooling, Inc.
v. Selective Ins. Co. of Am., 452 N.J. Super. 35, 47 (App. Div. 2017).
Repeating—not abandoning—the general rule that the timing of an “occurrence” is “not
the time the wrongful act is committed but the time when the complaining party is actually
damaged,” Owens-Illinois, 138 N.J. at 452 (citing Hartford Accident, 98 N.J. at 18), the New
Jersey Supreme Court found that personal injury from asbestos “occurs when asbestos is inhaled
and retained in the lungs,” owing to “the progressive nature of asbestos-induced disease.” Id.
at 454 (internal citations and quotation marks omitted). The decision was premised on several
policy considerations, including “mak[ing] the most efficient use of the resources available . . .
[and] provid[ing] incentives that parties should engage in responsible conduct that will increase,

Importantly, the definition of “occurrence” at issue in Owens-Illinois is substantially identical to the definition in the
Travelers Policies. See 138 N.J. at 447 (“An ‘occurrence’ means ‘an accident, including continuous or repeated
exposure to conditions, which results in Bodily Injury or Property Damage neither expected nor intended from the
standpoin[t] of the Insured.’”)
6

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not decrease, available resources.” Id. at 472. Thus, “when progressive indivisible injury or
damage results from exposure to injurious conditions for which civil liability may be imposed,
courts may reasonably treat the progressive injury or damage as an occurrence within each of the
years of a CGL policy.” Id. at 478.7
In the years following Owens-Illinois, New Jersey courts have expanded the continuous
trigger theory to numerous other “progressive forms of third-party injuries,” including
“environmental contamination,” “cases involving harmful exposure to substances,” and
“implicitly . . . in a construction defect context” regarding one insurer suing a co-insurer for
litigation defense costs. See Air Master, 452 N.J. Super. at 45-46, 48 (collecting cases); Potomac,
215 N.J. at 424-25 (same).
In arguing for coverage, Grand Slam relies primarily on Air Master, where the Appellate
Division found that the “progressively-worsening nature of a variety of construction defects, such
as water infiltration or mold, logically support the application of the continuous-trigger doctrine,”
452 N.J. Super. at 48. See Grand Slam Mem. at 16-19. A close reading of Air Master, however,
does not compel a finding of coverage.
Air Master involved an occurrence-based CGL insurance coverage dispute regarding
progressive, third-party property damage from water infiltration, allegedly caused by “defective
construction work” on the roof of a residential condominium building.8 452 N.J. Super. at 38-39.
Though residents began to lodge complaints as early as 2008, the Appellate Division “declined to
treat” that evidence “as conclusive proof that the progressive injury had sufficiently ‘manifested’

7

The Court explained that the continuous trigger theory also requires a method for allocating damages across multiple
insurers: “the extent to which each triggered policy shall provide indemnity . . . is related to both the time on the risk
and the degree of risk assumed.” Owens-Illinois, 138 N.J. at 479.
The insurance policy at issue in Air Master contained a definition of “occurrence” that is substantially identical to
that in the Travelers Policies. See 452 N.J. Super. at 41 (defining “occurrence” as “an accident, including continuous
or repeated exposure to substantially the same general harmful conditions”).
8

8

by that time” for purposes of the continuous trigger and remanded to the trial court for further fact
development on the “occurrence” of the damages. Id. at 54-55.
The Air Master panel relied heavily on the reasoning from Winding Hills Condominium
Association, Inc. v. North American Specialty Insurance Co., 332 N.J. Super. 85 (App. Div. 2000),
which was a “first-party case applying the manifestation theory of coverage.” Air Master, 452
N.J. Super. at 51.9 Winding Hills also involved construction defects that appeared over time. In
November 1989, plaintiffs in the case hired an engineering consultant to conduct a periodic review
of their property. 332 N.J. Super. at 88. As part of that review, the consultant identified “structural
deficiencies” in two buildings in 1990. Id. The plaintiffs then retained those consultants to
“determine the extent and cause of the deficiencies,” which they did via a report issued in January
1991. Id. The Winding Hills panel concluded that the date of the January 1991 report was “the
first date upon which plaintiff had knowledge of the loss and hence [was] the date on which the
loss was manifest” for insurance coverage purposes. Id. at 89. The Air Master panel applied this
reasoning to find that an occurrence is manifest at “the revelation of the inherent nature and scope
of th[e] injury.” 452 N.J. Super. at 53. The “manifestation cannot be merely tentative (as [the
consultant’s] original observations of structural problems in Winding Hills apparently were) . . .
[n]or must the manifestation be definitive or comprehensive.” Id. at 53.
Applying that reasoning here, the Court is satisfied that Rigid is not entitled to coverage
under a continuous trigger theory. “[P]roperty damage must, in fact, occur before an insurer’s
liability on a CGL policy can be invoked under the ‘continuous trigger’ theory.” Aetna Cas. &
Sur. Co. v. Ply Gem Indus., Inc., 343 N.J. Super. 430, 457 (App. Div. 2001). Here, all of the

9

While Winding Hills involved a first-party claim, to which the continuous trigger theory did not apply, the Appellate
Division in Air Master reasoned that the “manifestation theory” of injury applicable to first-party claims raises issues
that are instructive in determining the scope of coverage under the continuous trigger theory for third-party claims.
See Air Master, 452 N.J. Super. at 51-52.

9

damages attributed to Rigid in the Grand Slam Action relate to the 2014 partial roof collapse. See
Jury Damages Verdict. Indeed, Grand Slam offered absolutely no proofs of damages from 2009
to 2011—the Travelers Policy Periods. See Grand Slam in limine Order. Grand Slam’s assertion
that there were “water leaks at the Tennis Center . . . as early as 2009,” GS SOMF ¶ 16, even if
accepted as true, is insufficient to trigger coverage. If an expert consultant’s initial observations
of structural damages were insufficient to manifest an occurrence for purposes of coverage, see
Winding Hills, 332 N.J. Super. at 88, then Grand Slam’s reports of early leaks at the tennis center—
devoid of any evidence whatsoever that they contributed to the damages assigned to Rigid in the
Grand Slam Action—are clearly too “tentative” to trigger coverage.10 See Air Master, 454 N.J.
Super. at 53-54 (finding that anecdotal reports of water damage were insufficient to constitute
“conclusive proof that the progressive injury had sufficiently ‘manifested’ by” the date of those
reports and an accompanying news article); see also May 10, 2018 Grand Slam Trial Tr. at 96:4-9
(Grand Slam’s economic expert testifying that 2014 partial roof collapse “was the cause, the
triggering event to cause the drop in . . . [Grand Slam’s] business”), ECF No. 56.4.
Moreover, even if the Court accepts that the 2009-2011 leaks were an occurrence that
started the continuous trigger, the analysis does not end there. “The next step [is] to determine
what damage occurred during each of the triggered policy periods in order to calculate the extent
of each policy’s exposure.” Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 179 N.J. 87, 98
(2004). The wholesale lack of any damages from the Travelers Policy Periods defeats Grand
Slam’s arguments for coverage. Said differently, the fact that no damages can even be allocated
to the Travelers Policy Periods demonstrates that there is no basis for coverage.

Indeed, Grand Slam even concedes that they are “not seek[ing] coverage for the damages arising from these leaks.”
GS SOMF ¶ 16. Instead, Grand Slam attempts to characterize the Jury Damages Verdict as “consequential economic
damages arising from Rigid’s failure to properly manufacture the Tennis Center’s steel structure.” Id.
10

10

Because any evidence of injury during the Travelers Policy Periods is “merely tentative,”
it cannot constitute an occurrence giving rise to a continuous trigger theory of coverage. See Air
Master, 452 N.J. Super. at 53. As such, Plaintiff is entitled to summary judgment.11
V.

CONCLUSION
For the reasons stated above, Plaintiff’s Motion for Summary Judgment is GRANTED.

An appropriate order follows.
Dated: 02/13/2020
/s Madeline Cox Arleo__________
HON. MADELINE COX ARLEO
UNITED STATES DISTRICT JUDGE

Because the Court finds that Rigid is not entitled to coverage under the definition of “occurrence” within the
Travelers Policies, it need not reach the parties’ arguments regarding the definition of “property damage” or exclusions
to the Travelers Policies.
11

11