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Broadly-Read Insurance Policy Exclusion Allows Insurer to Deny Coverage for Pharma Company Due to Chairman’s Alleged Self-Dealing Scheme by New Jersey Supreme Court

Mist Pharmaceuticals (Mist), sought coverage from Mist’s insurer, Berkley Insurance Company (Berkley) under a Directors and Officers (D&O) policy for the damages and costs of defense arising out of two lawsuits. Those lawsuits alleged Joseph Krivulka, Mist’s Chairman, engaged in self-dealing between Mist and other entities he controlled. Berkley denied coverage to Mist, stating that coverage was not available to Mist arising out of allegations in the suits due to Krivulka’s roles with other entities. The primary question in Mist Pharms., LLC v. Berkley Ins. Co.,  2026 N.J. LEXIS 397 (2026), before the New Jersey Supreme Court was whether Berkley properly denied coverage for losses “in any way involving” wrongful acts by Krivulka serving in a capacity for any other entity than Mist.

Mist entered a D&O policy with Berkley in 2014 that covered Mist, including Krivulka in his role as Chairman, for any claims made against them for any alleged “Wrongful Act.” A “Wrongful Act” to mean any allegations of a breach of duty or neglect against either Krivulka, in his capacity as Chairman, and Mist. The policy included coverage for damages and costs of suit, but not to any claim arising out of damages not covered, or excluded, by the policy. One such exclusion, the “Capacity Exclusion,” stated that Berkley would not have to make any payments for a claim against Mist or Krivulka based upon or arising out of “or in any way involving any Wrongful Act” by Mist or Krivulka (in his capacity as Chairman).

An outside LLC filed the two lawsuits in question against Mist and Krivulka alleging that Akrimax Pharmaceuticals (Akrimax), a pharmaceutical company Krivulka formed in 2007, which he operated, and of which the LLCs were members, engaged in a scheme to divert funds from Akrimax to Mist. Akrimax was not an insured under Mist’s policy with Berkley.

Shortly after receiving the suit in late 2015, which named Mist, Krivulka, and several other Mist-related entities Berkley did not insure (including Akrimax and other entities owned or controlled by Krivulka), Mist submitted the claim to Berkley. After initially providing partial coverage, an ultimate decision by Berkley disclaimed coverage entirely. Causing Mist to file suit.

Mist advanced several claims against Berkley, primary amongst them was that Berkley misinterpreted the Capacity Exclusion. Mist argued that the D&O policy should cover “dual capacity” situations where an officer acts on behalf of both an insured and an uninsured entity. Berkley countered, arguing the plain meaning of the Capacity Exclusion barred coverage to Mist because all of the underlying allegations arose out of Krivulka’s self-dealing and misconduct as a director of Akrimax, an uninsured entity, not Mist.

The Supreme Court agreed with Berkley, finding that the underlying lawsuits fell squarely within the Capacity Exclusion. It determined that the repeated “or” in the exclusion indicated the exclusion should be read in the disjunctive, meaning that each term separated by an “or” is, on its own, sufficient to trigger the exclusion and deny coverage. That meant the phrasing “based upon” or “arising out of” or “in any way involving any Wrongful Act” should be interpreted very broadly. Here, there are allegations against multiple Krivulka-controlled entities, all of which share one common feature – Krivulka’s role as a director of an entity not insured by Berkley. Each allegation against Mist, or Krivulka as an insured through Mist, was related to his capacity as a member of an uninsured entity. Therefore, each of the allegations asserted against Krivulka, and therefore against Mist, implicate conduct outside of the scope of his covered capacity as the Chair of Mist, and thus excluded from coverage. The Court further disagreed with the “dual capacity” claim, stating that even if Krivulka was acting on behalf of Mist, the “scheme” allegations arose out of his role at Akrimax – an entity Berkley did not insure, and all of the claims against Mist or Krivulka were related to his leadership of Akrimax.

New Jersey Supreme Court Unanimously Holds Future Medical Costs Still Payable by PIP are “Collectible” and Inadmissible at Trial

After she was injured in a car accident in 2016, Lakita Murray applied for Personal Injury Protection insurance benefits (PIP) that would pay her all of her post-accident medical bills up to $250,000. Her treatment after the accident did not hit that limit, nor did her medical expert’s opinion of what he anticipated to be her future medical expenses. After the trial court allowed a jury to hear the evidence of her future medical expenses, leading to a significant award in her favor, the appeals process led all the way to the New Jersey Supreme Court where, in Murray v. Punina, 2026 N.J. LEXIS 387 (2026), in an opinion handed down earlier this week, the issue was whether Murray’s evidence of future medical expenses is admissible at trial when those projected expenses would not exceed her PIP coverage limits.

Under New Jersey law, PIP benefits are intended to promptly pay the medical expenses of someone injured in a motor vehicle accident, regardless of whether the injured person was at fault (hence it’s official but less common name, “No-Fault” insurance). A caveat of PIP benefits under New Jersey law is that any amount “collectible” under PIP, that is any amount that falls within the limits of an injured person’s PIP coverage, may not be presented as evidence of damages when that plaintiff sues for their injuries at trial.

After her accident, the cost of Murray’s treatment before trial did not exceed her PIP limits of $250,000. In a deposition prior to trial, Murray’s expert opined that her future medical expenses – treatment Murray stated she would like to have but did not have prior to trial – would amount to between $42,000 and $160,000. Prior to trial the defendant filed a motion with the court to remove that testimony arguing that evidence of these expenses is inadmissible under the PIP law. The trial court denied the motion and admitted the expert’s opinion of how much her future medical treatment would cost. The jury found in Murray’s favor and awarded her $100,000 in future medical expenses. The defendant appealed on three basic facts: 1) Murray was eligible for $250,000 in PIP benefits, 2) those benefits had not been exhausted prior to trial, and 3) the expert’s projected future expenses would not exhaust the remainder of Murray’s PIP benefits. The Appellate Division reversed the trial court, finding that because PIP had not been exhausted, the expert’s proposed future medical expenses were still “collectible” under PIP and, thus, inadmissible at trial.

Murray asked the Supreme Court to review this opinion. She claimed future medical expenses are not “collectible” or “paid” as outlined in the law because they had not yet been incurred, and if they had not been incurred, they were not yet “collectible.” The defense argued  that any evidence of medical expenses, past or future, that do not exceed PIP limits are either “paid” or “collectible” under PIP and are thus inadmissible at trial.

The Supreme Court considered the arguments and agreed with the Appellate Division and defendant that future medical expenses that were “collectible” by PIP were inadmissible in a personal injury trial. The Court stated that this conclusion best reflects what the legislature clearly intended in passing the No Fault Act in that any amounts “collectible or paid” under PIP were inadmissible as evidence against the tortfeasor. Further, the Court disagreed with Murray’s position in that categorizing future expenses as “unpaid” and thus admissible as evidence, would allow a Plaintiff to defer treatment until after trial, and unfairly expose a defendant to greater exposure. Perhaps most importantly, the Court clearly voiced its distaste and rejection of a “double recovery,” or permitting a plaintiff to collect twice on future medical bills. It reasoned that if a plaintiff were allowed to show a jury future medical expenses that PIP could still pay, the Plaintiff would be able to recover those costs in the form of a jury verdict, and again from PIP. This, the Court determined, was not the purpose or intent of the PIP law.

Broken Glass on a School Playing Field Potentially a “Pollutant” for Insurance Claim

After discovering broken glass embedded in its grass athletic fields, Oak Knoll School made a claim to its insurer, Utica National, to pay for the clean up. In making its claim, Oak Knoll pointed to a specific pollution clean-up provision in its insurance policy in which Utica would pay expenses to extract “pollutants” from the insured’s land; “pollutants” was defined in the policy to include any solid irritant or contaminant, including waste. Utica denied the claim and Oak Knoll filed a declaratory judgment action in federal court asking the court to determine the issue. On Utica’s motion to dismiss arguing Oak Knoll failed to state any claim as to coverage, the question in Oak Knoll Sch. of the Holy Child. v. Utica Nat’l Ins. Grp., 2026 U.S. Dist. LEXIS 33875 (D.N.J. Feb. 19, 2026), was whether Oak Knoll’s policy’s language related to “pollutants,” included glass. 

The school’s position was that broken glass is a solid contaminant that made the field unsafe and unusable, arguing their claim fit squarely within the policy’s broad definition of “pollutants.” The insurer disagreed and took the position that broken glass is not a “pollutant” under New Jersey law and that pollution coverage in the policy applies only to traditional environmental hazards. 

After finding no New Jersey Supreme Court decision determined the issue of whether broken glass qualifies as a “pollutant,” the District Court had to predict how the state’s Supreme Court would rule. In doing so, they first reviewed New Jersey lower court decisions that rule solely on New Jersey law, then it looked at similar case law nationally, finally, they looked at how New Jersey and national case law handled analogous substances solid substances that materially alter land and limit its use (e.g., dirt, sediment, debris, scrap metal). Because the court found no New Jersey law or national law adjudicated whether glass was a pollutant under these circumstances, it relied on the third iteration of their analysis, analogous substances. In this analysis, the District Court found that most, but not all, of those cases involving similar solid substances held that those substances were considered “pollutants.” Due to the balance of the authorities tilting in favor of finding such solid substances to be pollutants, the District Court found this assessment supported coverage as their prediction as to how the New Jersey Supreme Court would rule. But they did not find this to be determinative.

The fourth and final stage of the District Court’s analysis focused on New Jersey’s general legal principles in determining how and whether insurance policies should provide coverage. Those principles required a broad, liberal reading of insurance policies to allow coverage and reliance on the plain, ordinary meaning of terms the policy left undefined, resorting to a dictionary if necessary, which the District Court did. The Court noted Merriam-Webster defined “contaminant” as “something that contaminates,” and then “contaminates” as “to make unfit for use by the introduction of unwholesome or undesirable elements.” As a result, the District Court determined that the broken glass was an “undesirable element” in the grass sports field where it was discovered and rendered the field “unfit for use.”  

However, the District Court’s role in ruling on Utica’s motion to dismiss was not to determine the final issue of whether coverage was appropriate, but only if Oak Knoll could move forward on their claim for coverage, the Court noted that this did not get Oak Knoll “over the finish line” on their pursuit of coverage for the remediation of the “polluted” field.

Coverage for Auto Accident Denied Because Driver Was Not Permissive User

This matter concerned a coverage dispute as to an automobile accident between plaintiff Carrie and Ka-Sandra Allen and defendant Christian Kirch.  While driving his sister-in-law’s vehicle, defendant Kirch rear ended the Allens’ vehicle.  The vehicle operated by Kirch had been insured by New Jersey Manufacturer’s Insurance Company (NJM).  The issue in Allen v. Kirch, 2026 N.J. Super. Unpub. LEXIS 578 (App. Div. Mar. 24, 2026) was whether NJM properly denied coverage for the automobile accident because Kirch lacked actual or implied permission to use his sister-in-law’s vehicle when the accident occurred.

On the day of the accident, the owner of the vehicle, Kaitlynn Doheny, drove to her then-estranged husband Sebastian Kirch’s home so their children could visit with him.  She parked in the street and, upon entering the house, she placed her keys, her phone, and her purse on the counter because that is where “everyone put their keys when they came in the house.”  Shortly after she arrived, she laid down with her son to take a nap.

Sebastian later woke her up and advised her that Christian, Sebastian’s brother who was living with him at the time, was involved in a collision while driving Kaitlynn’s car.  According to Christian, he was driving her car to buy some “stuff”, which apparently included diapers for the children, when he struck the rear of the Allens’ car, which was stopped at a yield sign.  The accident resulted in the Allens being injured.

Before taking her car, Christian stated that he called Kaitlynn but she did not answer her phone.  Christian, who was originally from Peru, explained that “in my country, if you borrow a car from a relative it won’t be an issue but since I didn’t know so I just took her car because I needed to buy some stuff.”

Kaitlynn testified in a deposition that she was “friendly” with Christian but not close and she never resided with him.  Further, Christian never drove her car previously.  She had previously driven Christian to work probably less than five times. 

After the Allens filed their personal injury lawsuit against Christian and Kaitlynn, NJM sent a letter declining coverage under Kaitlynn’s policy for Christian’s operation of Kaitlynn’s vehicle.  It cited to the exclusion for liability coverage which stated as follows:

We do not provide liability coverage for any insured:. . . using a vehicle without a reasonable belief that such insured is entitled to do so.  This Exclusion. . . does not apply to a family member using your covered auto which is owned by you.

The policy defined the term family member as “a person related to you by blood, marriage, civil union under New Jersey law or adoption who is a resident of your household.” 

Following this declination, St. Paul Protective Insurance Company (“St. Paul”), the insurer of the Allens’ vehicle, filed a declaratory judgment action against NJM, seeking a declaration that NJM was required to insure Christian in the negligence action and included the Allens, Christian, and Kaitlynn as interested party defendants.

After discovery was exchanged, both the Allens and St. Paul filed for summary judgment, arguing that Christian was a permissive user under Kaitlynn’s insurance policy and, therefore, NJM was required to defend and insure him.  NJM cross-moved for summary judgment.  It argued that it was not required to defend Christian or cover any loss resulting from his driving, relying upon the policy’s permissive use exclusion.

After hearing the arguments of counsel, the trial court denied the Allens and St. Paul’s motions and granted NJM summary judgment.  It found that NJM was not required to defend or insure for the damages resulting from the accident because Christian was not a covered user of Kaitlynn’s vehicle and “Christian had no reasonable belief Kaitlynn permitted his use of her car” on the date of the accident.

Further, the court found the “initial permission rule” inapplicable because there was no evidence that Kaitlynn had ever in the past granted Christian authorization to drive her car or established a regular arrangement by which Christian could infer standing permission.  It explained that there was no evidence to suggest that Christian could have reasonably believed he had permission and rejected his claim that Christian’s prior experience in Peru would create that reasonable impression in these circumstances.  Further, Christian did not qualify as a covered family member because he resided at a different address and was Kaitlynn’s brother-in-law.

Following this decision, the Allens appealed the summary judgment in favor of NJM, arguing that they had demonstrated that Christian had implied permission to drive the vehicle, mandating coverage under Kaitlynn’s policy.  Or, at the minimum, they argued that there were material issues of fact existing regarding the reasonableness of his belief that he was permitted to borrow her vehicle, which should have resulted in the denial of the summary judgment motion.

The Appellate Division cited to the Supreme Court’s clarification of the statutory “use” clause which requires coverage for only permissive use of an automobile.  It quoted the Supreme Court language that “if a person is given permission to use a motor vehicle in the first instance, any subsequent use short of theft or the like while it remains in his possession, though not within the contemplation of the parties is a permissive use within the terms of a standard omnibus clause in an automobile liability insurance policy.” 

Thus, the threshold permissive use inquiry evaluates whether the initial use of the vehicle was with the “consent, express or implied, of the insured.”  Permissive use may arise from “a course of conduct or relationship between the parties in which there is mutual acquiescence or lack of objection signifying consent.”  It can also be shown by “a pattern of permitted use of the vehicle, which may give rise to an inference that the owner gave his consent to use on a subsequent occasion.”

In applying this law, the Appellate Division reviewed the record and agreed with the trial court that any damage caused by Christian’s use of the vehicle was not covered under Kaitlynn’s policy.  After reviewing the record, the Court noted that there was no suggestion of Christian’s prior use of Kaitlynn’s vehicle, authorized or otherwise.  The evidence showed only that she drove him to work less than five times.  Thus, the Appellate Division found that “any argument Christian drove the vehicle subsequent to some prior expressed authorization or in continuation of initially authorized use belies the record and fails from the outset.”

Further, the Court considered the events of that day.  It concluded “no confluence of events on the day of the accident suggests Christian had implied permission to use the car.”  The Appellate Division noted the evidence that Christian took Kaitlynn’s keys from the counter without authorization.  There was no evidence that she consented or asked Christian to take her car. To the contrary, Christian admitted that he attempted to call her to ask permission to use her car, did not reach her, yet he took the car anyway.  Thus, the Court was satisfied that no jury could find these actions constituted implied permission.

Further, the Appellate Division rejected the Allens’ claim that Christian held a reasonable belief to drive the car, or, in the alternative, that he was a family member covered by the policy.  The term “family member” did not apply because Christian was not a “resident” of Kaitlynn’s household.  There was no evidence that their lives were interdependent or comingled in any significant manner.  Christian did not reside in the same household with Kaitlynn.  To the contrary, he resided with his brother, from whom Kaitlynn was separated and living apart on the day of the accident.  Therefore, the Appellate Division found that the “family member” exception did not apply.

Additionally, the Court rejected the reasonable belief argument.  It found that the record did not support a viable claim that Christian possessed the “reasonable belief” that he was free to take and operate Kaitlynn’s car that day.  The Appellate Division agreed with the trial court that Christian’s claim that in Peru, members of families freely use each other’s vehicles and that he was using the car to purchase diapers for her children, did not constitute a “reasonable belief” that he had permission to use Kaitlynn’s car.  Thus, the Court found that NJM “fairly denied coverage” for damages resulting from Christian’s driving and that summary judgment was properly entered in favor of NJM.  Hence, the Appellate Division affirmed the trial court’s decision, granting summary judgment to NJM. 

Appellate Division’s Strict Reading of Auto Policy Denies Injured Driver UIM Benefits

In June, 2023, Plaintiff Michael Scott was injured in a car accident. At the time, he was driving a Jeep owned by his live-in girlfriend, Katie Opfer. Opfer was the lone named insured, Scott was listed as a driver, but not as a named insured. The driver at fault for the accident had a liability insurance policy carrying limits of $50,000. Opfer’s policy included uninsured and underinsured motorists (UM and UIM) coverage which provided $100,000 for each person, but contained explicit policy language that advised policy holders that the coverages in the policy may be limited by other  provisions in the policy. One such provision in the UM endorsement of the policy applied a “step-down” for UM/UIM coverage that narrowed the higher $100,000 UIM limits applying to only the named insured, resident spouse/civil union partner, and resident relatives; all others, specifically “any other person,” were only entitled to receive statutory minimum limits; $25,000 in New Jersey.

After filing suit against the at-fault party for his injuries and against Allstate for UIM benefits arising for his injuries out of the policy, Scott settled with the at-fault party for her full $50,000 policy limits. Allstate, claiming Scott, a listed driver but not a named insured, spouse, or relative, was not entitled to UIM benefits under the policy and asked the court to dismiss the suit. The trial court agreed and dismissed the suit against Allstate, causing Scott to appeal. The issue before the Appellate Division in Scott v. Snyder, 2026 N.J. Super. Unpub. LEXIS 177 (App. Div. Feb. 3, 2026) was whether Scott was in fact entitled to UIM coverage for his damages.

The Appellate Division looked at the policy and agreed with the trial court, affirming its decision in Allstate’s favor. Despite applicable law that requires courts to look at insurance contracts with “special scrutiny” due to the imbalance between insurer and their insureds in their understanding of insurance policies, the Court determined that the clear and unambiguous language of the policy did not provide UIM coverage for Scott. The Court specifically pointed to the language identifying who was entitled to UIM insurance, finding that Scott was neither a named insured, spouse/partner, or resident relative. As a result, he fell into the “step-down” category of “any other person,” to whom New Jersey’s minimum UIM coverage of $25,000 applied. More importantly, because the policy was limited by New Jersey statute, Scott would only be able to recover UIM benefits from Allstate if the UIM limits were in excess of his liability recovery from the at-fault driver. As a result, because the Court determined his UIM limits were $25,000, which is less than his liability recovery of $50,000, he was not entitled to UIM benefits from Allstate. If the Court had found he was entitled to the $100,000 UIM limits as a named insured, he would have been entitled to up to $50,000 of UIM coverage.

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Defending Property Damage Claims Under the Continuous or Repeated Leakage Exclusion

Many homeowners’ insurance policies contain an exclusion for “continuous or repeated leakage or seepage of water.”  Some policies specify that “continuous or repeated leakage” is excluded where it occurs over a certain period of time (14 or more days, for example).  Other policies make no reference to a required timeframe or simply state that the leakage must occur “over a period of time.” The question is, when can this policy exclusion be utilized successfully to defend against a water damage claim? 

Unfortunately, there are no cases in New Jersey or Pennsylvania discussing this type of policy exclusion in any detail.  A look to other jurisdictions (here, Florida and California) is thus instructive.

In Hoey v. State Farm Fla. Ins. Co., 988 So. 2d 99 (Fla. 4th DCA 2008), the insureds’ home was damaged by water leakage from a toilet supply line.  The leak was discovered after the property had been vacant for several months, when a neighbor observed water flowing below a sliding glass door.

The policy at issue excluded losses “caused by or resulting from continuous or repeated  seepage or leakage of water or steam which occurs over a period of time and results in deterioration, corrosion, rust, mold, or wet or dry rot.”  The policy also provided that it did not insure for loss consisting of or caused by “continuous or repeated seepage or leakage of water from a…plumbing system.”

A review of water bills for the property revealed that in the absence of a leak, the water usage for the unoccupied property was 20 gallons per month.  Two months before the loss was discovered, the water usage increased to 760 gallons.  One month before the loss was discovered, the water usage increased to 7,280 gallons.  Finally, in the 18 days before the loss was discovered, the water usage was 8,600 gallons.

At trial, an expert testified on behalf of the insurer that the leakage resulted from the failure of a nylon fitting in a toilet supply line, and that the water bills demonstrated that water usage had increased gradually over three months from zero to 420 gallons a day. This was an ongoing increase from a drip to a major failure of the fitting.  The expert also noted rot in the wood near the fitting and mold in the nearby drywall, which he opined were consistent with leakage over a period longer than a few weeks.

The trial court found that the leak went undiscovered for a period of about three months and thus fell within the policy exclusion for “continuous or repeated  seepage or leakage of water…which occurs over a period of time.”  The appellate court affirmed, finding that the trial court’s decision was supported by the above-referenced evidence.  The appellate court also rejected, without discussion, the insured’s contention that the exclusion at issue was ambiguous.

In Brown v. Mid-Century Ins. Co., 215 Cal. App. 4th 841 (2013), the insureds began observing condensation and mildew on their windows and walls on February 18, 2009.  A week later, they noticed mold forming on all of their windows and some of the walls, which they described as “developing everywhere simultaneously.”  A month after the condensation was initially noticed, the insureds entered the crawlspace and observed moisture and damp soil.  They were unable to observe the source of the water, but shut off the water to the house anyway.  A plumber subsequently determined the leak was coming from a hole in a hot water pipe below the insureds’ laundry room.

The policy at issue explicitly stated that it did not cover “any water, or the presence of water, over a period of time from any constant or repeating gradual, intermittent or slow discharge, seepage, leakage, trickle, collecting infiltration, or overflow of water from any source…whether known or unknown to any insured.”

Following the reporting of the loss, the insurer’s claim representative inspected the property and observed (1) pervasive mold and moisture on the interior walls of the home; and (2) heavy corrosion on the leaking pipe.  In a recorded statement, the insureds indicated they began noticing evidence of a water leak approximately one month earlier.  They indicated the condensation stopped forming on the windows when they turned off the hot water approximately one month later.

The insurer retained a plumbing expert who inspected the relevant section of pipe and reviewed photographs previously taken by the insurer.  The plumbing expert opined that corrosive elements caused a “slow, gradual and incremental deterioration of the pipe’s outer wall,” resulting in a pinhole-sized opening through which hot water slowly leaked out.  Thereafter, the deterioration process accelerated, resulting in a larger opening and more significant leak.  The expert opined the leak lasted at least 5 months before it was discovered and the water shut off.  The expert also reviewed water bills for the home, which revealed increased water consumption during the period water was escaping from the pipe, which then decreased to normal levels after the repair.  The insureds’ retained their own expert, who opined that the pipe “failed suddenly.”

On appeal from the trial court’s grant of summary judgment in favor of the insurer, the insureds did not dispute the existence of the effects of the water for at least a month or two.  They argued, however, that their expert’s opinion that the breaching of the pipe occurred “suddenly” created a triable issue of fact.  The appellate court rejected this argument, noting that even if the breaching of the pipe occurred suddenly, the subsequent leakage of water continued for a month or two (according to the insureds) or 5 months (according to the insurer).  This water discharge over a period of months, which was the cause of the damage to the insureds’ home, did not qualify as “sudden” under the plain terms of the policy. 

The appellate court also rejected the insured’s argument that the policy’s reference to leakage which occurs “over a period of time” was ambiguous.  “The fact that the policy does not define ‘a period of time’ does not necessarily create ambiguity…[A]lthough there may be, at the quantum level, some ambiguity in the concept of ‘a period of time,’ an average layperson understands generally what ‘a period of time’ is, and understands that for water escaping from a pipe, ‘one to two months’ qualifies.”  The appellate court thus affirmed the grant of summary judgment in favor of the insurer.

The above-referenced cases demonstrate that “continuous or repeated leakage” exclusions can be utilized successfully where properly supported by competent evidence establishing the duration of the leak.  This may include evidence of rot, mold, increased water usage and admissions or expert testimony regarding the duration of the leak.  An insurer seeking to rely on this type of exclusion should thus be on the lookout for, and otherwise develop, as many of these types of evidence as possible.

Plaintiff’s Bodily Injury Claim Dismissed Due to Her Failure to Provide a Comparative Analysis With Her Pre-Existing Condition

Plaintiff Debbie Williams-Siraj claims to have been injured in an automobile accident on September 28, 2017, when the vehicle driven by defendant Lynne Schwartz collided with her.  Although plaintiff claimed to have suffered significant injuries to her lower back including spinal disc herniations and fractures, she had been previously diagnosed with chronic and progressive lumbar disc disorder with radiculopathy.  The issue in Williams-Siraj v. Schwartz, 2025 N.J. Super. Unpub. LEXIS 427 (App. Div. Mar. 19, 2025) was whether plaintiff’s bodily injury claim was subject to dismissal due to her failure to provide an expert report which included a comparative analysis of the plaintiff’s residuals prior to the accident with the injuries suffered in the automobile accident at issue.

Plaintiff alleged that she was injured when the defendant Schwartz operated her car in a reckless and negligent manner in changing lanes into the path of plaintiff’s vehicle, purportedly causing plaintiff to swerve onto the curb.  Although the cars never actually collided, plaintiff claimed that the incident caused significant injuries to her lower back including spinal disc herniations and fractures. 

However, two days before this incident, plaintiff’s pain management doctor told her that she was a likely candidate for spinal surgery because of her chronic and progressive lumbar disc disorder with radiculopathy. 

About one month after the automobile accident, plaintiff for the first time sought treatment at a hospital emergency room.  According to the records, plaintiff’s knee gave out, causing her to fall.  However, plaintiff reported a history of a herniated disc and lower back pain.  Although she was not admitted to the hospital, a few days later, she was admitted because her back condition had worsened.  Two days after that, she underwent a lumbar fusion surgery.

Almost two years later, plaintiff filed a lawsuit against the defendant, claiming that the accident aggravated her existing condition in her back.  Her automobile policy limited the coverage for which she could recover because she had elected the “verbal threshold” limitation.  Discovery ensued and, prior to the end of discovery, plaintiff still had not retained any expert witnesses nor served any expert reports to substantiate her injury. 

The defendant filed for summary judgment, arguing that plaintiff’s complaint should be dismissed because she alleged an aggravation of her pre-existing injury but had not provided expert testimony to compare plaintiff’s condition before the accident to the injuries suffered as a result of the accident.  Thus, the defendant asserted that she had not established that the accident caused an aggravation of her pre-existing condition.

In opposition, plaintiff now submitted two expert reports. Although she did not move to reopen discovery to permit the proper consideration of these reports, the trial court nevertheless considered the substance of each report.

In the first expert report, the doctor concluded that plaintiff had “significant pathology” in her lower back and suffered a “new neurologic injury with motor and sensory deficit[s]” that were “causally related to her motor vehicle accident.”  In the second expert report, that doctor noted that before the accident, plaintiff “had chronic back pain that was controlled with medications, [and] after the car accident she had  significant injuries that made her disabled [and required her to walk] with a walker . . .”  This expert also opined that her injuries were permanent and caused significant change in her life.

Nevertheless, the trial court granted summary judgment to defendant and concluded that plaintiff was obligated under the law to provide a Polk analysis of the medical records.  To satisfy the verbal threshold requirement, Polk (case of Polk v. Daconceicao) necessitates that a comparative analysis showing aggravation of the pre-existing injury must be provided by an expert.  Because plaintiff failed to do so, summary judgment was granted on behalf of the defendant.  This appeal ensued.

The Appellate Division noted that plaintiff had elected the verbal threshold option in her insurance policy.  Once that option is elected, the New Jersey law is triggered which provides that plaintiff may only recover for her pain and suffering if she suffers “a permanent injury with a reasonable degree of medical probability, other than scarring or disfigurement.”  Further, the statute finds an injury is permanent “when the body part or organ, or both has not healed to function normally and will not heal to function normally with further medical treatment.”  Plaintiff must also establish permanency with “objective clinical evidence.”

Because plaintiff was claiming an aggravation of a pre-existing condition, the Appellate Division noted that a diagnosis of aggravation of a pre-existing injury or condition “must be based upon a comparative analysis of the plaintiff’s residuals prior to the accident with the injuries suffered in the automobile accident at issue.”  This analysis “must encompass an evaluation of the medical records of the patient prior to the trauma with the objective medical evidence existent post-trauma.”  Further, the Court noted that without this comparative analysis, “the conclusion that the pre-accident condition has been aggravated must be deemed insufficient to overcome the threshold of N.J.S.A. 39:6(a)-8 (the verbal threshold).

The Appellate Division concluded that the trial court did correctly determine that plaintiff was required to provide this comparative analysis, i.e., a Polk analysis to defeat summary judgment.  She claimed that a pre-existing condition was aggravated by her injuries she purportedly suffered in this accident.  However, she did have a substantial prior history of issues concerning issues to her back which was so significant that two days before this accident, her doctor recommended that she have surgery to address it.  According to her MRI reports, plaintiff’s lower back was already compromised as early as 2013.  She did not seek any initial emergency treatment.  The only time she sought treatment following the accident was when she fell down one month later.

Additionally, the Appellate Division noted that plaintiff had failed to produce any expert reports before the close of discovery.  The court noted that the trial court’s inquiry could have ended there and arguably should have.

Nevertheless, the Court also considered those expert reports that were submitted outside of discovery.  In reviewing them, however, the Appellate Division agreed with the trial court that these reports did not meet the required Polk standard.  Specifically, one of the experts failed to do any kind of comparative analysis and the other expert only made vaguely conclusory statements about the ultimate impact of the purported injuries.

Thus, the Court agreed that the plaintiff was unable to establish that defendant proximally caused the permanent injuries for which she sought recovery.  Therefore, the Appellate Division did affirm the trial court’s decision to grant summary judgment and dismiss the lawsuit.

Appellate Division Upholds Summary Judgment Dismissal of Suit for Plaintiff’s Failure to Maintain New Jersey Automobile Insurance

Plaintiff Ramon Hernandez claimed to have suffered injuries when his car was struck in the rear on a New Jersey road by a car being driven by defendant Hannah Kurtz and owned by co-defendant Eric Kurtz. In Hernandez v. Kurtz, 2024 N.J. Super. Unpub. LEXIS 3049 (App. Div. Dec. 17, 2024), the issue was whether plaintiff Hernandez’s failure to obtain a New Jersey automobile insurance policy at the time of the accident barred him from recovering damages for his injuries. The trial court judge relied upon a New Jersey statute which disallowed a monetary recovery when a plaintiff lacked the required New Jersey auto insurance coverage.

In this case, the plaintiff was driving his car when he met with an accident with defendants’ vehicle in New Jersey.  However, at the time of the accident, plaintiff had a driver’s license issued by the state of Maryland, and his vehicle was insured and registered in Maryland. Plaintiff sued defendants for damages from injuries he suffered as a result of the accident. Thereafter, defendants filed for a summary judgment dismissal of the lawsuit on the ground that his claim was barred because his car was considered “principally garaged” in New Jersey at the time of the accident, yet it was not insured under a New Jersey auto policy.

The Court reflected upon the applicable statutes, noting that N.J.S.A. 39:6B-1(a) mandated that every owner or registered owner of a motor vehicle, “registered or principally garaged in this State shall maintain . . . motor vehicle liability insurance coverage.” The coverage must include, a $15,000 minimum level of coverage for PIP benefits. The Court observed that, the applicable statutes did not define “principally garaged,” but case law suggested that term signified the physical location where the vehicle was primarily kept most of the time.

Defendants claimed that plaintiff’s claim was barred under N.J.S.A. 36:6A-4.5(a), which provided that an individual who failed to maintain Personal Injury Protection (PIP) coverage at the time of the accident was barred from recovering economic or non-economic losses for injuries suffered in the accident

Further, the Court noted that although the insurance statute did not provide a time interval for when a vehicle would be deemed to be principally garaged in New Jersey, the state’s motor vehicle statutes required owners of motor vehicles to get the vehicle registered in 60 days after re-locating to New Jersey. The Court clarified that the 60-day grace period was triggered not when the vehicle was principally garaged in the state, but rather, when the vehicle owner becomes a resident of the state.

Following the analysis of the applicable law, the Appellate Division observed that, in support of the motion for summary judgment, defendants relied upon plaintiff’s deposition testimony which revealed that he had moved to Maryland in 2007-2008, lived there for a few years and then moved back to NJ in 2021. It was his testimony that, at the time of his deposition, he had been living in New Jersey for about two and a half years. However, at the time of the accident, he had been living in New Jersey for about three months and had owned the subject vehicle for either two or three years. It was undisputed that, as of the time of the accident, plaintiff had not registered his car in New Jersey, nor had he procured a New Jersey auto insurance policy.

Plaintiff’s Maryland policy provided him with basic PIP coverage, mandated under Maryland law, which was only $2,500. It was undisputed that this coverage was below the $15,000 minimum PIP coverage required under New Jersey law. Thus, this policy did not comply with the requirements of a New Jersey auto insurance policy.

The Court noted that the motion judge correctly focused on the sixty-day grace period for car registration, and plaintiff’s acknowledgment that at the time of the accident he had been living in New Jersey for a longer period of “about three months, more or less.” The Appellate Division stated that the “principally garaged” provision denoted that the car owner should act promptly within a reasonable time to acquire the mandatory minimum insurance coverages and that, in this case, plaintiff failed to do so. Further, the Court noted that plaintiff presented no evidence to show that he had been living in New Jersey for less than three months before the accident and that his vehicle was garaged elsewhere.

Therefore, the Appellate Division upheld the decision of the trial court, ruling that plaintiff lacked the required New Jersey auto coverage at the time of the accident and, hence, was prohibited from recovering personal injury damages from defendants. Thus, the Court affirmed the summary judgment dismissal in favor of defendants.

Appellate Division Finds Coverage Under Loading and Unloading Doctrine for Donut Shop Sued in Serving Customer Hot Tea Through Drive Through Window

By: Victoria M. Adeleke, Law Clerk
Edited by: Betsy G. Ramos, Esq.

Plaintiffs Bridgewater Donuts, LLC and Tamar, Inc. filed a lawsuit against defendant Geico Indemnity Co. seeking coverage under an automobile liability policy issued to Susan Mendelsohn-Hall. Mendelsohn-Hall alleged she suffered injuries when hot tea spilled on her at the Dunkin’ Donuts drive-through, leading to a lawsuit against Plaintiffs. Plaintiffs then sought coverage under Mendelsohn-Hall’s auto policy issued by Geico, invoking the “loading and unloading” doctrine. However, Geico denied coverage, prompting this legal dispute. The issue in Bridgewater Donuts, LLC v. Geico Indemnity Co., 2024 N.J. Super. Unpub. LEXIS 1505 (App. Div.  July 9, 2024) was whether Plaintiffs qualified as additional insured under Mendelsohn-Hall’s auto policy under the loading and unloading doctrine.

Mendelsohn-Hall had a New Jersey Family Automobile Insurance policy that provided coverage for bodily injury sustained by a person arising out of the ownership, maintenance or use of the automobile. The policy defined the persons insured to include Mendelsohn-Hall and any other person using the auto with her permission.

On the day of the accident, Mendelsohn alleged she was scalded by hot tea as it was delivered to her at the drive thru window by plaintiffs’ employees and that her injuries were proximately caused by plaintiffs’ negligence.  

Plaintiffs filed a complaint against Defendant Geico, seeking a declaratory judgment that they were additional insureds under Mendelsohn-Hall’s policy. Defendant moved for summary judgment, arguing plaintiffs had not been using Mendelsohn-Hall’s vehicle when she sustained her injuries and, therefore, were not additionally insured as users of the automobile. The trial court granted Geico’s motion for summary judgment and dismissed Plaintiffs’ complaint. The trial court determined that Plaintiffs did not qualify as additional insureds under Mendelsohn-Hall’s auto policy because her injuries were not directly attributable to the loading of the tea by plaintiffs into her vehicle.

The Appellate Division reversed. The appellate court first explained that N.J.S.A. 39:6A-3 requires that automobile owners have auto insurance that covers loss arising out of the ownership, maintenance, operation and use of an automobile. The Court then explained that unloading and loading had always been a verified use of the vehicle under the statute, and implicit in this requirement is the obligation to provide omnibus liability coverage to all persons who use the named insured vehicle by participating in its loading or unloading.

The Appellate Division relied on the N.J. Supreme Court case of Penn Nat’l Ins. Co. v. Costa, where the Court found that to determine whether an injury arises out of the use of a motor vehicle thereby triggering coverage, that there must be a substantial nexus between the injury suffered and the asserted negligent use of the motor vehicle. Use of a motor vehicle has been interpreted broadly to include the acts of loading and unloading the automobile.

The Appellate Division found that in Bridgewater Donuts, LLC, the record supported a finding of the requisite substantial nexus. The Appellate Division pointed to the undisputed fact that plaintiffs’ drive-up window was available to customers to purchase and pick up their items and load the items into their car. Plaintiffs’ employee loading the hot tea she had purchased into her vehicle was integral to the completion of the transaction between Mendelsohn-Hall and plaintiffs. Therefore, the Court determined her injuries bore a substantial and not incidental nexus to Plaintiffs’ alleged negligent use during the loading process under her automobile policy.

Thus, the Court reversed the trial court’s order granting summary judgment to defendant Geico and denying Plaintiffs’ motion for summary judgment and remanded the case back to the trial court for further proceedings.

The Enforcement and Application of Shortened Limitations Period Clauses in Insurance Policies

In the State of New Jersey, breach of contract claims are subject to a 6-year statute of limitations.  However, this often changes in the context of homeowners’ insurance policies.  Often, those policies contain provisions which provide that any suit against the insurer must be initiated within one year of the date of loss.  Other policies provide that any suit against the insurer must be initiated within one year of the insurer’s denial of the claim.  

The enforceability of shortened limitations clauses contained in insurance policies was first addressed in Weinroth v. N.J. Mfrs. Ass’n Fire Ins. Co., 117 N.J.L. 436 (E. & A. 1937).  In Weinroth, the Court upheld a provision in an automobile insurance policy which required that any suit against the insurer be brought within 90 days of the insurer’s denial of coverage.  Because the insured did not file suit until 106 days after the insurer denied coverage, his claim was dismissed. 

Thirty-one years later, the Appellate Division applied Weinroth’s holding in the context of a homeowners’ insurance policy.  In Staehle v. American Employers’ Ins. Co., 103 N.J. Super. 152 (App. Div. 1968), the homeowners’ insurance policy at issue provided that any suit against the insurer must be commenced within twelve months of the inception of the loss.  Because the insured did not initiate suit until 1 year and 6 days after the loss, the Court affirmed the grant of summary judgment in favor of the insurer.  In doing so, the Court noted that “the New Jersey rule [enforcing shortened limitations clauses] seems to be the one followed in the majority of the states.” 

Since Weinroth and Staehle, the courts of New Jersey have continued to enforce 1-year limitations provisions contained in insurance policies and other contracts.  See, e.g., Azze v. Hanover Ins. Co., 336 N.J. Super. 630, 636 (App. Div. 2001) (noting that the 6-year statute of limitations for contract actions “may be shortened by the terms of an insurance contract”); Peloso v. Hartford Fire Insurance Co., 56 N.J. 514 (1970) (enforcing a 1-year limitations period contained in a fire insurance policy); PPG Indus., Inc. v. American Home Assur. Co., 2007 N.J. Super. Unpub. LEXIS 1494 *27 (App. Div. 2007) (quoting Weinroth and noting “the validity of suit-limitation clauses in insurance policies has long been recognized in this state”).

In calculating the limitations period under an insurance policy, it is important to note that the shortened limitations period does not necessarily run uninterrupted from the date of loss.  This is particularly so where the insurer spends some time investigating the claim before issuing a denial.  This situation was addressed in Azze, citing the Supreme Court of New Jersey’s prior decision in Peloso.  There, the Azze court noted as follows:

In Peloso…the Court determined that contractual limitation provisions should not be read literally, with the one-year period running uninterrupted from the date of the loss.  According to the Court, such a reading of these provisions would be unfair, because it would allow, in effect, a ticking away of the limitations period while the insurance company investigated the loss.  Peloso stated that:

The fair resolution…is to allow the period of limitation to run from the date of the casualty but to toll it from the time an insured gives notice until liability is formally declined.  In this manner, the literal language of the limitation is given effect; the insured is not penalized for the time consumed by the company while it [investigates the loss]; and the central idea of the limitation provision is preserved since an insured will have only 12 months to institute suit.

The Azze court noted that “from the passage above, it becomes evident that between the time the insured gives notice of loss and the time that the insurance company formally denies coverage, the statutory period is tolled,” or paused.

A case I recently handled provides a good example of how this is applied in practice.  As in the above-referenced cases, the homeowners’ policy at issue required any lawsuit to be initiated within one year of the date of loss.  The loss at issue occurred on May 20, 2022.  However, the homeowners did not report the loss until March 22, 2023 (306 days later).  Our client, the insurer, investigated the loss and issued a partial denial letter on May 1, 2023 (40 days after the loss was reported).  Thereafter, the homeowners did not file a lawsuit until July 26, 2023 (432 days after the date of loss).

Utilizing the above-referenced timeline, we argued that even after accounting for the tolling of the limitations period during the 40 days the insurer investigated the claim, it still took the homeowners 392 days to file suit (432 total days – 40 days to investigate and issue a denial = 392 days).  Because that 392-day period exceeded the 1-year limitations period set forth in the policy, we argued that the homeowners’ lawsuit was barred.  The Court agreed and granted our Motion for Summary Judgment, dismissing the case. 

The above example demonstrates that the proper calculation of a limitations period requires strict identification of the date of loss; the date the loss is reported; the date a clear, formal denial is issued; and the date a lawsuit is ultimately filed.  Under appropriate circumstances, a policy’s shortened limitations period can be used to defeat an untimely filed lawsuit at the outset, saving time and resources.

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