By Jonathan H. Katz, Esq.

On October 29, 2015, the New Jersey Supreme Court granted certification (meaning that the Court will hear the appeal) of the Appellate Court’s decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC. Specifically, the question certified for review by the Supreme Court is: “In this dispute regarding insurance coverage under a general contractor’s commercial general liability policy, do these damages constitute ‘property damage’ and an ‘occurrence’ where subcontractors’ defective work caused consequential damages to the common areas of a condominium complex and to the unit owners’ property?”

As discussed in a previous blog post, the Appellate Division held that the Insurance Service Office (ISO) 1986 standard commercial general liability insurance policy does not bar coverage to developers in association construction defects cases alleging consequential damages based upon poor workmanship by subcontractors. The Court concluded that consequential damages caused by a subcontractor’s defective work, presumably unintended and unexpected, constitute “property damage” and “occurrence” under the ISO 1986 policy. Therefore, in a condominium association’s lawsuit against a developer for defective construction resulting in consequential damages, the developer’s insurer may have a duty to defend the developer and indemnify the developer against such claims.

As the Appellate Court’s decision provided potential additional sources of recovery for community associations involved in construction defect litigation against developers, as well as potential greater financial protection for such developers, it was widely expected to be appealed to the Supreme Court.

You can read the Appellate Division’s decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC by clicking here.

For more information on this case or any other issue concerning your community association, please contact one of our Community Associations attorneys. For breaking news or updates on new blog posts, follow us on Twitter at: @njcondolaw.