Opinion
Civil Action No. 03-1511.
March 3, 2004
MEMORANDUM
The issue presented by cross Motions for Summary Judgment is whether Defendant, National Fire Insurance of Hartford, must provide coverage to Plaintiffs, Jeffrey and Gail Alexander, under an insurance policy issued to Plaintiffs' condominium association. Plaintiffs filed a Complaint for a declaratory judgment that Defendant is obligated to provide them insurance coverage, including legal defense and indemnification for damages, arising out of an accident that occurred on August 26, 2001 when the deck attached to their condominium unit collapsed while several people stood upon it. Currently, Plaintiffs are defending a cause of action for negligence related to this accident, referred to as "the underlying litigation."
Presently, before the Court are cross motions for summary judgment. Plaintiffs assert that they are entitled to coverage, as a matter or law, because their deck collapsed due to a defect in a "common element" of the condominium association — namely, a defect in the deck's support structure. Defendant contests this assertion, maintaining that Plaintiffs' deck does not constitute a common element because only Plaintiffs may use and occupy it. Defendant, therefore, argues that the deck is excluded from coverage pursuant to the terms of the insurance policy. Defendant also argues that the insurance policy, issued to the condominium association, does not extend to Plaintiffs because the claim against them alleges that they acted negligently and that, by law, such claims are not insurable. Finally, Defendant argues, as a defense to Plaintiffs' Motion for Summary Judgment, that the policy it issued constitutes "excess insurance," and that another liability insurance policy held by Plaintiffs is primarily liable for defending Plaintiffs in the underlying litigation. Oral argument was heard on this matter on January 26, 2004. Partial summary judgment will be entered in favor of Plaintiffs on the issue of liability. The Court reserves judgment on the extent of Defendant's obligation to insure Plaintiffs.
The parties do not contest that New Jersey law applies in this case. The insurance policy at issue in this case was made in New Jersey and covers property located in New Jersey.
I. Legal Standard
The standards by which a court decides a summary judgment motion do not change when the parties file cross-motions.Southeastern Pa. Transit Auth. v. Pennsylvania Pub. Util. Comm'n, 826 F. Supp. 1506, 1512 (E.D. Pa. 1993). Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." FED. R. CIV. P. 56(c). An issue is "genuine" if the evidence is such that a reasonable jury could return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505 (1986). A factual dispute is "material" if it might affect the outcome of the case under governing law. Id. A party seeking summary judgment always bears the initial responsibility for informing the district court of the basis for its motion and identifying those portions of the record that it believes demonstrate the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548 (1986). Where the non-moving party bears the burden of proof on a particular issue at trial, the moving party's initial burden can be met simply by "pointing out to the district court that there is an absence of evidence to support the non-moving party's case." Id. at 325. After the moving party has met its initial burden, "the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial." FED. R. CIV. P. 56(e). Summary judgment is appropriate if the non-moving party fails to rebut by making a factual showing "sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex, 477 U.S. at 322. Under Rule 56, the Court must view the evidence presented on the motion in the light most favorable to the opposing party. Anderson, 477 U.S. at 255.
II. Factual Background
The relevant facts are not disputed. The Plaintiffs own a second story condominium unit located at the Sunnyside Up Condominium Association in Ocean City, New Jersey. Interestingly, the Sunny Side Up Condominium Association consists of only two condominium units — Plaintiffs' unit and a unit located directly below it. Both units have decks, supported by the same structural support elements.
Pursuant to Plaintiffs' deed, their deck constituted a "common element subject to an exclusive easement." As such, only Plaintiffs had the right to access and use their deck. The deed states in pertinent part:
F. Common Elements:
1. Common Elements subject to Exclusive Easements:
a. Any deck or patio to which there is a direct access from the interior of a unit shall constitute a common element subject to the exclusive easement for the exclusive use of the owner of such unit. The unit owner shall be responsible for the removal of snow from any such deck or patio and for the maintenance and repair of the same which shall not be a common expense.
(Def. Ex. F.)
In 2001, Plaintiffs leased this unit to Agnes Cunningham, and on August 26, 2001, the deck collapsed with eleven people standing on it. Following this accident, in the underlying litigation, a negligence cause of action was filed against Plaintiffs in the New Jersey Superior Court in Cape May, alleging that the Plaintiffs negligently and/or carelessly managed, supervised, cared for, inspected, controlled and/or maintained their deck so that the deck was in an unreasonably dangerous condition. The complaint avers:
Count I
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11. On or about the aforesaid date, and for a period of time prior thereto, the Defendants, or any of them, either directly or through their agents, servants and or employees negligently and/or carelessly managed, supervised, cared for, inspected, controlled and/or maintained the premises so that the premises was in an unreasonably dangerous condition. Said unreasonably dangerous condition resulted in the deck of the premises collapsing on or about August 26, 2001.
* * *
Count II
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3. On or before August 26, 2001, the Defendants, Richard Roes 1-10 (fictitious names), either directly or though their agents, servants and/or employees negligently and/or carelessly installed, constructed, maintained and/or repaired the deck of the premises causing an unreasonably dangerous condition to exist. Said unreasonably dangerous condition resulted in the deck of the premises collapsing on or about August 26, 2001.
Count III
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2. On or about August 26, 2001, and for a period of time prior thereto, the Defendants, or any of them, either directly or through their agents, servants and/or employees negligently and/or carelessly failed to warn the Plaintiffs that an unreasonably dangerous condition existed on the premises. Said unreasonably dangerous condition resulted in the deck of the premises collapsing on or about August 26, 2001.
(Def.'s Ex. B.)
Just prior to the filing of the underlying litigation, Plaintiffs hired a contractor, Dennis Funk, to examine the damage done to their deck and opine as to the cause of its collapse. Funk stated his opinion that the deck collapsed due to the deterioration of nails used to support the outbound ends of the deck joists — the longitudinal supports which keep the deck from falling. (Pl's Ex. A3.) The parties do not contest that the "deck joists" supported both the Plaintiffs' deck and the deck belonging to the condominium unit located directly below their unit. In reliance upon this fact and several provisions of the New Jersey Condominium Act defining "common elements" (discussed below), Plaintiffs filed this action, seeking a declaration that the insurance policy issued to their condominium association covered the negligence claim pending against them because of the collapse of their deck.
Plaintiffs present Mr. Funk's opinion by way of letter, rather than by a sworn affidavit as required by Rule 56. How ever, at oral argument counsel for Defendant stated that he does not contest Funk's conclusion, as he does not believe it alters the fact that Plaintiffs' deck did not constitute a portion of the premises not reserved for Plaintiffs' exclusive use or occupancy. As such, because the parties do not dispute Mr. Funk's conclusions, the Court will consider his letter as stating uncontested facts in deciding the parties' cross motions for summary judgment.
The insurance policy issued by Defendant covers Plaintiffs as "additional insureds." However, the policy only provides Plaintiffs with limited liability coverage, extending only to injuries that occur in those areas not reserved for the Plaintiffs' exclusive use and occupancy. The policy states in pertinent part:
WHO IS AN INSURED Section II [defining who is an insured] is amended to include as an insured each individual unit owner of the insured condominium, but only with respect to liability arising out of the ownership, maintenance or repair of that portion of the premises which is not reserved for that unit owner's exclusive use or occupancy.
(Pls' Ex. B.)
Plaintiffs desire to shift the Court's focus away from the deck itself and place it on the structural elements that supported the deck and the deck below it. In this way, Plaintiffs contend that the collapse of their deck is covered by the insurance policy issued by Defendant, as they assert that the shared "deck joists" do not constitute a portion of the premises reserved for their exclusive use or occupancy.
The Defendant disputes this. To the Defendant, the plain and simple terms of the deed preclude coverage in this case. Under the deed, the deck constitutes a "common element subject to an exclusive easement." As such, Defendant argues that the Court must find that any liability arising out of the collapse of Plaintiffs' deck does not fall under the terms of its insurance policy.
III. Discussion
A. Defendant Must Insure Plaintiffs in the Negligence Cause of Action Pending Against Them
Insurance policies constitute contracts. As such, "[i]n the absence of ambiguity, insurance policies should be given their plain, ordinary meaning, and courts should not write a better policy for the insured than the one purchased." Mastroianni v. Unum Provident Corp., 286 F. Supp.2d 425, 427 (D.N.J. 2003) (citing Zacarias v. Allstate Ins. Co., 775 A.2d 1262, 1264 (N.J. 2001)). However, under New Jersey law, insurance policies also receive special treatment. "New Jersey courts have consistently recognized that insurance policies are contracts of adhesion and are subject to special rules of interpretation."Christafano v. N.J. Mfrs. Ins. Co., 824 A.2d 1126, 1130 (N.J.Super.Ct. App. Div. 2003) (citing Longobardi v. Chubb Ins. Co., 582 A.2d 1257 (N.J. 1990)). This requires that courts construe the terms of the policy "liberally in the insured's favor to the end that coverage is afforded to the fullest extent that any fair interpretation will allow." Id. To achieve this end, where a policy appears ambiguous, it should be interpreted "to comport with the insured's objectively reasonable expectations of coverage." Id.; Mastroianni, 286 F. Supp.2d at 427.
The first issue in need of resolution is whether or not Defendant's insurance policy with Plaintiffs' condominium association requires it to defend Plaintiffs' in the underlying litigation, which alleges that the Plaintiffs acted negligently. The second issue requires the court to interpret the insurance policy and determine whether or not the allegations in the underlying litigation concerning the collapse of Plaintiffs' deck require coverage under the terms of the insurance policy issued by Defendant. In consideration of these issues, the Court holds that Defendant must insure Plaintiffs in the underlying litigation.
1. The Insurance Policy Issued by Defendant Does Not Limit Defendant's Duty to Insure Plaintiffs by Excluding Negligence Claims
The insurance policy issued to Plaintiffs' condominium association does not specifically exclude causes of action alleging negligence from coverage. Defendant does not argue that it does. Instead, Defendant argues that because the New Jersey Condominium Act does not require condominium associations to provide their unit owners with such coverage that coverage for negligence claims is, therefore, precluded. In pertinent part, the New Jersey Condominium Act provides that:
The association, acting through its officers or governing board, shall be responsible for the performance of the following duties, the costs of which shall be common expenses:
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(e) The maintenance of insurance against liability for personal injury and death for accidents occurring within the common elements whether limited or general and the defense of any actions brought by reason of injury or death to person, or damage to property occurring within such common elements and not arising by reason of any act or negligence of any individual unit owner.
N.J. Stat. Ann. § 46:8B-14 (emphasis added).
However, as stated above, insurance policies must be treated as contracts, and although the New Jersey Condominium Act sets forth the responsibility of the "association" to maintain a certain level of insurance coverage, it does not aid the court in interpreting the insurance policy issued by Defendant. Both Plaintiffs' condominium association and Defendant were free to contract for greater insurance coverage than what the law requires.
The insurance policy in question contains no language that expressly excludes negligence claims from coverage. The pertinent provision provides only that insurance extends to "each individual unit owner . . . but only with respect to liability arising out of the ownership, maintenance or repair of that portion of the premises which is not reserved for that unit owner's exclusive use or occupancy." (Pl's Ex. B.) Consequently, the Court cannot conclude, based on the plain language of the insurance policy, that it excludes from coverage negligence claims against individual unit owners. Defendant's Motion for Summary Judgment, therefore, will be denied as to this issue.
2. According to the Allegations in the Underlying Litigation, Including the Undisputed Report of Dennis Funk, The Deck Collapsed Because of a Failure in a Portion of the Premises not Reserved for Plaintiffs' Exclusive Use or Occupancy, Thereby Requiring Defendant to Insure Plaintiffs in the Negligence Cause of Action Pending Against Them
Currently pending against Plaintiffs is a cause of action seeking damages for bodily injury on three separate legal theories — negligent construction, negligent repair and negligent failure to warn. To determine whether or not Defendant must insure Plaintiffs regarding their legal defense in this cause of action and in terms of indemnification, if necessary, the Court must look at the terms of the insurance policy.
Subject to various exclusions, not applicable to the case at hand, the insurance policy Defendant issued states that Defendant:
[W]ill 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. We will have the right and duty to defend the insured against any "suit" seeking those damages.
(Pls' Ex. B.)
The only discernible restriction on Defendant's obligation to insure Plaintiffs — and the restriction both parties recognize as relevant to resolving the ultimate issue in this case — relates to whether or not the deck collapsed due to a defect in an area of the premises not reserved for the Plaintiffs exclusive use or occupancy.
Defendant's argument primarily rests on the Deed's characterization of Plaintiffs' deck as a "common element subject to an exclusive easement." Defendant additionally points to the New Jersey Condominium Act for support. See Ellenheath Condo. Assoc. v. Pearlman, 683 A.2d 582, 583 (N.J.Super.Ct. App. Div. 1996) (citing N.J. Stat. Ann. § 46:8B-7 for the proposition that where the Condominium Act and the deed differ, the terms of the Condominium Act control). The New Jersey Condominium Act explicitly excludes from the definition of common elements areas reserved for an individual unit owner's exclusive use or occupancy. If the deck does not constitute a common area, Defendant argues, it cannot be covered as a portion of the premises not reserved for Plaintiffs' exclusive use or occupancy. The Act states that "common elements" include:
(ii) the foundations, structural and bearing parts, supports, main walls, roofs, basements, halls, corridors, lobbies, stairways, elevators, entrances, exits and other means of access, excluding any specifically reserved or limited to a particular unit or group of units;
N.J. Stat. Ann. § 46:8B-3(d) (emphasis added).
Defendant accurately cites the law. However, the Court holds that Defendant's focus is not where it belongs, and agrees with Plaintiffs that the undisputed facts in the underlying litigation assert that the deck collapsed because of a defect in the support elements holding it up, which constituted common elements not reserved for Plaintiffs' exclusive use or occupancy. Plaintiffs concede, and the Court agrees, that had an injury been suffered because of a condition on the surface of the deck, Defendant would not be obligated to insure Plaintiffs regarding a subsequent lawsuit. Under the deed only the plaintiffs have access to this area of the deck and only the plaintiffs are responsible for repairing and maintaining this portion of the deck. Hence, if the deck was icy and that condition caused someone to fall, Defendant would not be responsible for insuring Plaintiffs in a lawsuit seeking damages for that person's injuries.
In holding for Plaintiffs, the Court notes that this appears to be a case of first impression. For the most part, the cases cited by Plaintiffs do not accurately fit the facts of this case. The case that comes closest is Davis v. Metuchen Gardens Condominium Assoc., 790 A.2d 184 (N.J.Super.Ct. App. Div. 2002). There, the New Jersey Superior Court found that the structural supports holding up the decks of certain condominium units constituted common elements. However, in reaching this conclusion, the Court focused primarily on the language contained in the deeds issued to the unit owners. Hence, while the holding in Davis does not mandate the Court's holding in the present matter, it does support it.
The Court is bound by the guiding principle of New Jersey law that courts must construe the terms of insurance policies "liberally in the insured's favor to the end that coverage is afforded to the fullest extent that any fair interpretation will allow." Christafano, 824 A.2d at 1130. As such, the Court notes that the injuries suffered because of the collapse of Plaintiffs' deck did not arise because of a condition on Plaintiffs' deck. Instead, the injuries allegedly occurred because of a failure in a common element — the "deck joists" — which are not reserved for Plaintiffs' exclusive use and occupancy. The Court's determination in this regard is supported by the uncontested fact that the defective joists were a shared element. They supported both the Plaintiffs' deck and the deck immediately beneath it. As such, it cannot be contested that the "deck joists" were not reserved for Plaintiffs' exclusive use or occupancy.
The New Jersey Condominium Act also supports the Court's holding. The Act states that common elements include "structural and bearing parts . . . [and] supports" so long as they are not "specifically reserved or limited to a particular unit or group of units." N.J. Stat. Ann. § 46:8B-3(d). Here the "deck joists" constitute structural and bearing parts or supports, and although they appear to be reserved or limited to a particular group of units, in actuality they are not. It must be recalled that Plaintiffs' condominium association consists of only two units. Because of this, the "deck joists" do not benefit only a particular group of units, they benefit all of the units in the condominium association. The Court, therefore, finds that the "deck joists" constitute a common element not reserved for the Plaintiffs' exclusive use or occupancy.
Plaintiffs also seek insurance coverage under an estoppel theory, arguing that because Defendant has already paid the condominium association for the property dam age related to the collapse of their deck, Defendant must now insure them in the negligence claim pending against them. The Court need not reach this issue. However, it notes that Plaintiffs' argument is unpersuasive. The condominium association received paym ent under the insurance policy's property damage provision. In contrast, Plaintiffs seek insurance coverage under an unrelated provision dealing with bodily injury. As such, the Court finds Plaintiffs' estoppel argument to be weak.
The cases cited by Defendant do not persuade the Court that it has reached an erroneous conclusion in this regard. In Society Hill Condominium Assoc. v. Society Hill Assoc.s, 789 A.2d 138 (N.J.Super.Ct. App. Div. 2002), the New Jersey Superior Court found that the term "common elements" did not include window frames, door frames and dry wall, finding that these elements all relate to the interior of a condominium unit. The court noted that "`the condominium unit is generally seen by owners as the inside of their structure while the shell and outside of the building is a common element.'" Id. at 172 (quoting Powell on Property § 54A.01[2] 11-13 (2001)). The facts of Society Hill clearly differ from those in the present matter. Whereas the elements at issue in Society Hill were a part of the interior of the unit, the elements at issue in the present matter — the "deck joists" — are externally attached to Plaintiffs' unit. As such, the Court finds the holding in Society Hill to be inapplicable to the present case.
Similarly, the Court finds the holding of Ellenheath Condominium Assoc. v. Pearlman, 683 A.2d 582 (N.J.Super.Ct. App. Div. 1996) to be inapposite to the case at hand InEllenheath, the New Jersey Superior Court held that an underground storage tank, used to store heating oil, did not qualify as a common element. Id. at 584-85. In so holding, the court noted that each unit possessed its own storage tank. As such, the underground storage tanks did not meet the definition of "common element" under the Condominium Act, which excludes any improvement "`specifically reserved or limited to a particular unit.'" Id. at 584 (quoting N.J. Stat. Ann § 46:8B-7). Unlike the storage tanks in Ellenheath, the "deck joists" in the present case are not unique to only one condominium unit. They support the Plaintiffs' deck as well as the deck of the unit below Plaintiffs' deck. As such, the holding in Ellenheath does not aid the Court in its determination of whether or not the Plaintiffs' deck collapsed because of a defect in a portion of the premises not reserved exclusively for Plaintiffs' use or occupancy.
Therefore, the Court holds that Defendant is required to insure Plaintiffs regarding the negligence claim pending against them. As Defendant correctly points out in its Response to Plaintiffs' Motion for Summary Judgment, an insurance policy constitutes a contract, and the duty to defend thereunder can be as limited or as broad as the parties see fit. Hartford Accident Indemnity Co. v. Aetna Life Cas. Ins. Co., 483 A.2d 402, 405 (N.J. 1984). In evaluating whether or not a duty to defend arises, the language of the insurance policy must be compared with the language of the underlying complaint. "`When the two correspond, the duty to defend arises, irrespective of the claim's actual merit.'" Robert W. Hayman, Inc. v. Acme Carriers, 696 A.2d 1125, 1127 (N.J.Super.Ct. App. Div. 1997) (quoting Voorhees v. Preferred Mut. Ins. Co., 607 A.2d 1255 (N.J. 1992)). Here, the insurance policy states that Defendant must defend Plaintiffs against any suit seeking damages for bodily injury and must indemnify Plaintiffs, if necessary, from liability because of those damages. The policy limits this obligation by excluding those areas not reserved for Plaintiffs' exclusive use or occupancy. As the complaint alleges that the collapse of the deck caused bodily injuries, and the undisputed report of Dennis Funk asserts that the collapse was due to a defect in a portion of the premises not reserved for Plaintiffs' exclusive use or occupancy, the allegations in the complaint parallel precisely the circumstances under which Defendant is obligated to insure Plaintiffs. Summary judgment will, therefore, be entered in favor of Plaintiffs on this issue.
Although the underlying complaint alleges negligence generally, as explained in footnote 2 supra, the parties do not dispute that the specifics of the negligence claim relate to the "deck joists," which support Plaintiffs' deck and the deck immediately beneath it. Defendant argues only that Plaintiffs' claim that the deck collapsed due to a failure in the "deck joists" does not constitute an "allegation raised in the complaint against the Alexanders, but rather [a defense] raised by the Alexanders in the underlying dispute." (Def.'s Mot. for Summ. Judgment at 3.) This statement, by Defendant, does not suffice to rebut Plaintiffs' uncontested factual assertion that resolution of the underlying complaint — whether pleaded generally or specifically — will focus exclusively on a failure in the "deck joists." Likewise, Defendant's Response fails to take issue with Plaintiffs' contention that the specifics of the underlying complaint relate to the "deck joists." Instead, Defendant's Response focuses solely on the fact that the underlying complaint alleges negligence generally, in relation to Plaintiffs' deck, and that only Plaintiffs possessed the right to use and possess the deck. (Def.'s Resp. to Pls' Mot. for Summ. Judgment at 11.) However, Defendant does not address the issue of the "deck joists," thereby leaving Plaintiffs' assertion uncontested.
B. Excess Insurance
Because the Court has ordered Defendant to insure Plaintiffs, it now must address the issue regarding the extent of Defendant's insurance liability to Plaintiffs.
The Court is of the opinion that the insurance policy issued to the condominium association by Defendant constitutes an "excess insurance" policy. That is, Defendant must pay only those insurance proceeds in excess of what is paid under the terms of any other insurance policy held by the plaintiffs. However, the Court also believes that Plaintiffs' own insurance policy, issued directly to Plaintiffs by the Shelby Insurance Company ("Shelby"), also constitutes an "excess insurance" policy. As such, New Jersey law would deem both insurance policies to be primary and would require each insurer to share the costs associated with defending Plaintiffs in the negligence claim pending against them.Universal Underwriters Ins. Co. v. CNA Ins. Co., 706 A.2d 217, 219 (N.J.Super.Ct. App. Div. 1998) (quoting Cosmopolitan Mut. Ins. Co., 147 A.2d at 534); Harrison v. Ford Motor Credit Co., 655 A.2d 931 (N.J.Super.Ct. App. Div. 1995) (quotingCosmopolitan Mut. Ins. Co. v. Continental Cas. Co., 147 A.2d 529 (N.J. 1959)).
However, the Court declines to make a final holding on this point. Although Defendant did raise the issue of "other insurance," as an affirmative defense, the Court does not believe that it can properly define the scope of Defendant and Shelby's insurance obligation in the absence of Shelby. In this respect, the Court finds Shelby to constitute an indispensable party.
Pursuant to Rule 19(a) of the Federal Rules of Civil Procedure, a party is indispensable and shall be joined where that party does not destroy subject matter jurisdiction and:
(1) in the person's absence complete relief cannot be accorded among those already parties, or
(2) the person claims an interest relating to the subject of the action and is so situated that the disposition of the action in the person's absence may
(i) as a practical matter impair or impede the person's ability to protect that interest or
(ii) leave any of the persons already parties subject to a substantial risk of incurring double, multiple, or otherwise inconsistent obligations by reason of the claimed interest.
Here, Shelby constitutes an indispensable party insofar as it claims an interest relating to the extent of its obligation to insure Plaintiffs. Because Shelby is not a party to this litigation, its ability to protect that interest is seriously impeded. The plaintiffs' interests are not exactly aligned with Shelby's. Whereas Plaintiffs seek to maximize their insurance coverage, Shelby would seek to minimize its exposure. Hence, while the plaintiffs do not necessarily care which insurer covers the costs of their litigation, the insurers care a great deal.
However, the Court cannot just dismiss Defendant's "excess insurance" affirmative defense because it failed to join Shelby as an indispensable party. If joinder of such a party does not divest the Court of subject matter jurisdiction, the Court must order that party joined. Fed.R.Civ.P. 19(a). A Court may only dismiss a claim for failure to name an indispensable party where joinder of that party is infeasible. Hence, because courts must treat motions for summary judgment for failure to join an indispensable party as motions to dismiss, Martucci v. Mayer, 210 F.2d 259, 260 (3d Cir. 1954), the Court reserves decision on this issue.
The Court also, at this point, declines to join Shelby. At argument, the parties could not answer whether or not joinder of Shelby would destroy diversity jurisdiction in this matter. As such, if Defendant wishes to pursue this matter, the Court invites Defendant to file further memoranda as to this issue, or to move for the joinder of Shelby, within fourteen (14) days of the issuance of this memorandum opinion. However, failure to so file or move may result in a dismissal of Defendant's "other insurance" affirmative defense for failure to prosecute.
C. Attorney's Fees
As a final matter, the Court must resolve Plaintiff's request for attorney fees. Because equitable factors weigh against the award of attorney fees, the Court holds that attorney fees are not appropriate in this case.
As a general matter, New Jersey law disfavors the award of attorneys fees. Vanhorn v. City of Trenton, 404 A.2d 615, 620 (1979). However, fees are recoverable where a specific statute or rule of court permits such recovery. Id. In the instant matter, New Jersey Court Rule 4:42-9(a)(6) permits the recovery of attorney fees in any action upon a liability or indemnity policy of insurance. The Rule states:
(a) Actions in Which Fee Is Allowable. No fee for legal services shall be allowed in the taxed costs or otherwise, except
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(6) In an action upon a liability or indemnity policy of insurance, in favor of a successful claimant.
As an additional matter, a successful claimant must satisfy several equitable considerations before being entitled to attorney fees. See Enright v. Lubow, 521 A.2d 1300, 1304 (N.J.Super.Ct. App. Div. 1987) (noting that equitable considerations must guide a court's decision regarding whether or not to award attorney fees pursuant to N.J. Ct. R. 4:42-9(a)(6)). Factors that the Court should consider include:
(1) the insurer's good faith in refusing to pay the demands;
(2) excessiveness of plaintiff's demands;
(3) bona fides of one or both of the parties;
(4) the insurer's justification in litigating the issue;
(5) the insured's conduct in contributing substantially to the necessity for the litigation on the policies;
(6) the general conduct of the parties; and
(7) the totality of the circumstances.
Id. (internal citations omitted).
In consideration of these factors the Court holds that attorneys fees are not appropriate. First, although the Court held that the facts of this case weighed in favor of a verdict for the Plaintiff, the case was nonetheless close. As such, the Court finds that the insurer refused, in good faith, to make payment on Plaintiffs' demands. The insurer, therefore, also possessed a valid justification in litigating whether the Court's focus belonged on the deck itself — an area of the premises reserved exclusively for Plaintiffs' use and occupancy — or on the defective "deck joists" — an area of the premises the Court concluded was not reserved exclusively for Plaintiffs' use and occupancy. The Court, therefore, does not question the bona fides of the insurer or consider it detrimental to the insurer that the insurer's refusal to insure Plaintiffs substantially contributed to the necessity of litigation. Finally, the Court finds no fault with the general conduct of the insurer and that the totality of the circumstances do not weigh in favor of an award of attorney fees. As such, the Court will enter summary judgment against Plaintiffs' request for attorney fees.
IV. Conclusion
The Court holds that Defendant's obligation to insure Plaintiffs extends to the costs associated with the underlying litigation Plaintiffs currently face in state court. The Court further holds that Plaintiffs' request for attorney fees is not appropriate in this case. Finally, the Court reserves decision on the issue of whether or not Defendant's insurance policy constitutes "excess" or "primary" insurance.
An appropriate Order follows.
ORDER
AND NOW this 3rd day of March, 2004, upon consideration of Plaintiffs' and Defendant's cross motions for summary judgment (Docket No.s 5 6), it is hereby ORDERED that Plaintiffs' and Defendant's motions for summary judgment are GRANTED in part and DENIED in part in that:
(1) Defendant is ORDERED to insure Plaintiffs in the underlying litigation pending against them in state court;
(2) Plaintiffs' demand for attorney fees is DENIED; and
(3) Resolution of Defendant's "excess insurance" claim is reserved pending the filing of additional memoranda on this issue by Defendant or the motion by Defendant to join the Shelby Insurance Co. to this cause of action within fourteen (14) days of the issuance of this Order.