January 30, 2008 : Insurer Granted Summary Judgment in Coverage Action
A Burlington County, New Jersey judge relieved a general liability insurer from any coverage obligations after concluding that the allegations against the company's insured, a gas station owner, were grounded in breach of contract and did not constitute an "occurrence" under the policy.
The owner-landlord was obligated under a lease to supply the station operator with fuel and to maintain the fuel pumps, among other requirements. The operator alleged that as a result of the owner's breach of the contractual obligation to maintain the pumps, the pumps failed and the dealer could not, therefore, sell gas. The inability to sell the gas led to a loss of revenue and the dealer ultimately was forced to close the business. The operator sued the owner for approximately $1,000,000 in lost profits and loss of business opportunity under breach of contract, negligence and constructive eviction theories.
After the insurer denied coverage, the insured joined the carrier as a third-party defendant demanding defense and indemnification. In response, the insurer filed a Motion for Summary Judgment on several bases, most significantly on the theory that there was no “occurrence” under the policy because the damages sought were foreseeable, having flowed from a breach of contract, not a fortuitous event. On January 18, 2008, the trial court heard argument and thereafter granted the insurer's motion. Partner Michael S. Savett represented the insurer in the litigation.
File Under: Results, Insurance, Michael S. Savett