Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: May 4, 2015
The Firm
201-896-4100 info@sh-law.comThe issue in Public Service Enterprise Group v. Ace Insurance was one of first impression in New Jersey.
Hurricane Sandy’s storm surge significantly damaged PSEG’s property throughout New Jersey, resulting in a $500 million insurance claim under its first party property policies. The applicable policies did not contain sublimits for “named windstorms,” other than those in Florida. There was, however, a $250 million submit for losses caused by “flood,” and a $50 million limit for losses to property “located in Flood Zones A & V.”
The Hurricane Sandy insurance coverage dispute centered on whether the storm surge constituted a “flood” under the applicable insurance policies. As detailed in the court’s opinion, PSEG maintained that coverage for losses caused by Sandy was available up to the full $1 billion limit of the policies, as a “storm surge” was included in the definition of “named windstorm” and was not subject to the flood sublimits. Meanwhile, the insurers contended that a storm surge rather was a type of “flood” under the policy because the policy language defined flood as “the overflowing or breaking of boundaries of natural or man-made bodies of waters.”
Essex County Superior Court Judge Thomas Vena granted summary judgment in PSEG’s favor, finding that the flood sublimits did not apply.
After stating that there were no reported cases in New Jersey that have considered whether a storm surge was included in the flood definition of an insurance policy, the court looked to two out-of-state cases that interpreted similar policies. Both cases held that losses caused by storm surge were not subject to the flood sublimits.
“The reasoning employed by these courts are sound, and both are consistent with New Jersey’s rules of contract construction that ‘when two provisions dealing with the same subject matter are present, the more specific provision controls over the more general,’” the court ruled.
Judge Vena also considered several other factors, including the parties’ past practices and New Jersey’s efficient proximate cause doctrine, which states that if there are multiple causes of a loss, a restriction in an insurance policy does not apply so long as the efficient proximate cause of the loss is not subject to that restriction. He concluded both supported PSEG’s proffered interpretation of the policies.
“In sum, the applicable language of PSEG’s policy, canons of contract interpretation, the extrinsic evidence proffered by both parties, as well as the relevant case law, all point to the conclusion that storm surge losses are not subject to the flood sublimits,” he stated.
Given the nature of the action and the considerable financial interests at stake, this ruling is likely not the last we will hear about this case. Please stay tuned for updates.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!