KEELEN et al v. QBE INSURANCE CORPORATION
MEMORANDUM OPINION. Signed by Judge Michael A. Shipp on 4/27/2016. (km)
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
JEROME KEELEN, et al.,
Civil Action No. 13-6941(MAS) (TJB)
QBE INSURANCE CORPORATION,
SHIPP, District Judge
This matter arises from an insurance claim for property damage caused by Superstorm
Sandy. (See generally Compl., ECF No. 1.) Plaintiffs Jerome Keelen ("Mr. Keelen") and Carol
Kienbaum (collectively, "Plaintiffs") submitted an insurance claim (the "Claim") to Defendant
QBE Insurance Corporation ("QBE" or "Defendant") for damage to their residential property,
located at 8 Ninth Avenue, Ortley Beach, New Jersey (the "Premises"). (Id.
6, 9.) Defendant
denied coverage on the Claim, and thereafter, Plaintiffs filed a Complaint against Defendant
alleging claims for breach of contract and breach of the covenant of good faith and fair dealing.
This matter comes before the Court on Defendant's Motion for Summary
Judgment. (ECF No. 19.) Plaintiffs filed opposition (ECF No. 23), and Defendant replied (ECF
No. 24). The Court, having considered the parties' submissions, decides the matter without oral
argument pursuant to Local Civil Rule 78.1. Defendant's Motion for Summary Judgment is
At some point before Superstorm Sandy, Plaintiffs obtained an insurance policy (the
"Policy") from Defendant to cover losses to the dwelling and personal property on the Premises.
(Def.'s Statement of Undisputed Fact ("SOF")
Def.'s SOF ("Pis.' SOF
1, 46-48, ECF No. 19-2; Pis.' Response to
1, 11, ECF No. 23.) The Policy did not cover property
damage from floods. (Def.'s SOF ~ 50; Pis.' SOF Response ~ 11.) In addition, the Policy
included an "exclusion for damage arising out of 'Water'," and "Water" was defined under the
policy to include, inter alia, "[w]aterbome material carried or otherwise moved by any of the
water [from flood, surface water, waves, including tidal wave[s] ... tidal water, overflow of any
body of water ... all whether or not driven by wind, including storm surge]." (Def.'s SOF ~ 49;
11.) Furthermore, the Policy provided that the Defendant does not insure
for "loss caused directly or indirectly" by any of the excluded causes, and that "[s]uch loss is
excluded regardless of any other cause or event contributing concurrently or in any sequence to
the loss." (Def.'s SOF ~ 49; Pis.' SOF Response~ 11.)
On October 29, 2012, Superstorm Sandy caused substantial damage to the dwelling on
the Premises. (Def.'s SOF
7, Pis.' SOF Response
3.) On November 6, 2012, Plaintiffs
submitted a claim for wind damage to the dwelling (the "Claim") to Defendant. (Def. 's SOF ~ 9;
Pis.' SOF Response~ 3.) Thereafter Defendant investigated the Claim and determined that wind
damage accounted for only $526.18 of the damages to the dwelling. (Def.'s SOF ~ 12; Pis.' SOF
3.) Defendant asserted that "[i]n addition to wind damage, [the dwelling] also
suffered damages as a result of flood" and "[t]his portion of your damage is not covered under
the [P]olicy." (Def.'s SOF, Ex. G at 1, ECF No. 19-8.) As Defendant found that the amount of
wind damage was below the Policy's $3,510.00 deductible, Defendant denied Plaintiffs' Claim.
Thereafter, Mr. Keelen submitted correspondence requesting that Defendant reconsider
its coverage position. (Def.'s SOF, Ex. H, ECF No. 19-8.) Specifically, Mr. Keelen refuted
Defendant's conclusion that the damage to the dwelling was caused by "water damage" and
asserted that "the damage to [the dwelling], which was built in 2005 to FEMA elevation and
modem foundation code requirements, was caused by [the] massive impact of the house next
door." (Id. at 1.) In response to this correspondence, Defendant retained Rimkus Consulting
Group, Inc. ("Rimkus"), an engineering company, to determine the cause of the damage to the
dwelling on the Premises. (Def.'s SOF if 17; Pls.' SOF Response if 4.) After its inspection of the
dwelling, Rimkus concluded, inter alia, that "[t]he [dwelling's] foundation had fallen to the
northwest. ... The cause of the foundation failure was due to buoyant forces uplifting the house
combined with lateral forces including hydrodynamic wave forces and impact force of the
displaced adjacent house." (Def.'s SOF, Ex. J at 2, ECF No. 19-8.) Furthermore, Rimkus found
that' "[t]he [dwelling] presented none of [the] precursors to structural wind damage.
[dwelling]· had only one small area of observable wind related damage. A portion of the fascia
along the front of the house was missing. No other wind damage was found." (Id at 7.) Based
on this report, QBE maintained its position denying coverage on Plaintiffs' Claim. (Def.'s SOF
if 24; Pls.' SOF Response if 6.)
Thereafter, Plaintiffs retained Structural Workshop LLC to "investigate the conditions"
of the Premises and to opine as to cause of the damage to the dwelling. (Def.' s SOF, Ex. M,
ECF No. 19-9.) Following its investigation of the Premises, Structural Workshop LLC issued a
report stating, inter'alia, that "[t]here is no question that there was a significant impact [from the
house next door to the dwelling]. This impact is clearly responsible for a significant portion of
the damage, movement and dislodgement of [the dwelling]." (Id.) The report did not, however,
opine as to "how the neighbor's residence (Number 6) was caused to impact the [the dwelling]
if 30; Pls.' SOF Response if 7.) Plaintiffs sent this report to
Defendant. (Def.'s SOF if 36; Pls.' SOF Response if 9.)
In correspondence dated April 30, 2013, Defendant stated:
We have reviewed the materials you provided ... including but not
limited to the report from Structural Workshop LLC dated
February 13, 2013. We are writing to advise, based upon a review
of these materials as well as the terms of the [P]olicy, that QBE ...
maintains its prior denial of coverage for any and all losses
sustained by you at the [Premises] as a result of Superstorm Sandy
. . . As indicated previously, the damages sustained by your client
in the course of the storm as a result of "flood" as defined by the
[P]olicy are excluded from coverage.
(Def.'s SOF, Ex. P, ECF No. 19-9.)
In particular, Defendant asserted that "the exclusion
speCifically denies coverage for damages attributable to water-home material which would
encompass· dam~ge caused by the neighboring structure striking your home."
(Id. at 2.)
Thereafter, Plaintiffs filed a Complaint alleging that Defendant's denial of coverage constituted a
breach of the Policy and a breach of the covenant of good faith and fair dealing. (See generally
Compl.) Defendant now moves for summary judgment on these claims .
Standard of Review
Federal Rule of Civil Procedure 56(a) provides that a "court shall grant summary
judgment if the movant shows that there is no genuine dispute as to any material fact and the
movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The substantive law
identifies which.facts are material. "Only disputes over facts that might affect the outcome of
the suit under the governing law will properly preclude the entry of summary judgment."
Anderson v., Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A material fact raises a "genuine"
dispute "if the evidence is such that a reasonable jury could return a verdict" for the non-moving
party. Williams v. Borough of W Chester, 891 F.2d 458, 459 (3d Cir. 1989) (quoting Anderson,
47.7 u.s~ at 248).
The Court must consider all facts and their logical inferences in the light most favorable
to the non-moving party. Pollock v. Am. Tel. & Tel. Long Lines, 794 F.2d 860, 864 (3d Cir.
1986). The Court will not "weigh the evidence and determine the truth of the matter" but will
determine whether a genuine dispute necessitates a trial. Anderson, 477 U.S. at 249. While the
moving party bears the initial burden of showing the absence of a genuine dispute of material
fact, meeting this obligation shifts the burden to the non-moving party to "set forth specific facts
showing that there is a genuine [dispute] for trial." Id. at 250. If the nonmoving party has failed
"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 . . . there can be no genuine
[dispute] of material fact, since a complete failure of proof concerning an essential element of the
nonmoving party's case necessarily renders all other facts immaterial." Katz v. Aetna Cas. &
Sur:"co., 972 F.2d 53, 55 n.5 (3d Cir. 1992) (quoting Celotex Corp. v. Catrett, 477 U.S. 317,
322-23 (1986)) (internal quotation marks omitted). If the non-moving party fails to demonstrate
proof beyond a "mere scintilla" of evidence that a genuine dispute of material fact exists, then
the court must grant summary judgment. Big Apple BMW v. BMW of N. Am., 974 F.2d 1358,
1363 (3d Cir. 1992):.
In its motion, Defendant argues that summary judgment in favor of QBE is warranted
because it is undisputed that storm surge caused damage to the dwelling and "the [Policy]
excludes coverage for damages 'caused directly or indirectly' by storm surge, 'regardless of any
other cause or event contributing concurrently or in any sequence to the loss." (Def.'s Moving
Br. 2, 4-5, ECF No. 19-3.) In opposition, Plaintiffs neither dispute nor concede that damage was
caused by storm surge.
Rather, Plaintiffs argue that the Policy's exclusion provision is
ambiguous.,. (Pls.' Opp'n Br. 5, ECF No. 23.) In particular, Plaintiffs argue that it is unclear
whether the term
in the exclusion for damage caused by "waterborne material"
includes the "intact entirety of the Keelen's neighbor's structure." (Id. at 5-7.) In its reply,
Defendant, howeve~, argues that the meaning of "waterborne material" is "completely irrelevant"
because the "[w ]ater exclusion [in the Policy] applies to any one of four types of occurrences,
only one of which implicates anything that has to do with the waterborne material." (Def.'s
Reply Br. 3-4, ECF No. 24.) Importantly, even leaving aside the exclusion for waterborne
material, the Policy excludes from coverage damage caused by, inter alia, "[f]lood, surface
water, waves, iriclUding tidal wave ... overflow of any body of water ... all whether or not
driven by wind,· inc'iuding storm surge." (Id. at 3.) Thus, noting that Plaintiffs have not refuted
the evidence that Defendant presented to show that storm surge contributed to the damage to the
dwelling,: ·Defend~t argues, that the "anti-concurrent causation clause" in the Policy bars
coverage on Plaintiffs' Claim. (Id. at 4.) The Court agrees.
As Plaintiff~ ·concede, anti-concurrent causation clauses have been upheld in New Jersey
by both federal and state courts. (Pls.' Opp'n Br. 10); see Assurance Co. ofAm., Inc. v. Jay-Mar,
Inc.·, 38 F. Supp. 2d 349, 354 (D.N.J. 1999); Petrick v. State Farm Fire & Cas. Co., L-43-07,
3257894~ at *7 (N.J. App. Div. Aug. 13, 2010). Pursuant to the "anti-concurrent
causation clause'' in the Policy, the Policy does not cover "loss caused directly or indirectly by
[storm surge]." (Certification of Richard J. Ahn ("Ahn Cert."), Ex. Rat 11, ECF No. 19-11.)
Furthermore, "[s]uch loss is excluded regardless of any other cause or event contributing
concurreiiil~ "orlkany···sequence to the loss." (Id.) Relying on the anff-concurrent causation
clause in the Policy, Defendant argues that there is no genuine dispute for trial, because it has
"proven that the loss was caused by flood/storm surge." (Def.'s Moving Br. 4.) In support of its
motion for· summary judgment, Defendant presented a report from its causation expert,
Engineering Design & Testing Corporation, which concluded that "[t]he cause of damage to
[Plaintiffs' dwelling], including the removal and relocation of the dwelling from the foundation,
was impact, hydrostatic, and buoyant forces, including impact forces generated from waterborne
debris such as the neighboring dwelling(s), due to tidal wave storm surge from the Atlantic
Ocean, during Hurricane Sandy." (Ahn Cert., Ex. Q at 18, ECF No. 19-10). Defendant also
submitted a report from Rimkus, which similarly concluded that "[t]he cause of the [Plaintiffs'
dwelling] foundation failure was due to buoyant forces uplifting the house combined with forces
incltidhlg hydrodynamic wave forces and impact force of the adjacent house." (Ahn Cert., Ex. J
at 2, ECF No. 19-8.) Based on this evidence, the Court finds that Defendant has satisfied its
initial burden of showing the absence of a genuine dispute of material fact. See Celotex Corp.,
477 U.S. at 323. Thus, the burden shifts to Plaintiffs to "set forth specific facts showing that
genuiri~ [dispute] for trial." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp.,
there 'is a
475 U.S. 574, 586 n.11 (1986) (quoting Fed. R. Civ. P. 56(e)). Plaintiffs have not satisfied this
In' ·opposition to the motion for summary judgment, Plaintiffs have not offered any
evidence showing that storm surge did not, at least indirectly, cause the losses at issue. Indeed,
Mr. Keelen's deposition testimony is consistent with the theory that storm surge indirectly
caused the loss. (Ahn Cert., Ex. B 124:1-23, ECF No. 19-5.) In particular, in response to the
question "what did'. you believe happened to your neighbor's house that caused it to crash into
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yours," Mr. Keelen responded that the house could have been pushed by water. (Id. at 124:513.) Thus, Plaintiffs have not offered even a scintilla of evidence showing that there is any
dispute as to whether storm surge, at least indirectly, caused the subject losses. See Woloszyn v.
· Cty:· of Lawrence, 396 F .3d 314, 319 (3d Cir. 2005) (stating that to defeat a motion for summary
party must introduce more than a scintilla of evidence showing that
there is a genuine dispute for trial); see also Matsushita Elec. Indus., 475 U.S. at 586 ("When the
moving party has carried its burden under Rule 56(c), its opponent must do more than simply
show that there is some metaphysical doubt as to the material facts."). Therefore, pursuant to the
anti-concurrent causation clause in the Policy, the Policy does not cover Plaintiffs' Claim for
property damage. Accordingly, Defendant's denial of coverage does not constitute a breach of
contract or a breach ofthe covenant of good faith and fair dealing.
For the reasons set forth above, and for other good cause shown, Defendant's Motion for
Summary Judgment is granted.
s/Michael A. Shipp
MICHAEL A. SHIPP
UNITED STATES DISTRICT JUDGE
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