On August 4, 2016, the New Jersey Supreme Court issued its decision in Cypress Point Condominium Association, Inc. v. Adria Towers, LLC, et al., which held that faulty workmanship by a subcontractor that causes property damage is a covered loss under the developer’s/general contractor’s commercial general liability (CGL) insurance policy. The ruling holds that this consequential damage constitutes an “occurrence” under the CGL policy and, as such, may allow community associations to recover for water infiltration and other defective construction.

In this case, Cypress Point Condominium Association instituted transition litigation against the project’s developer/general contractor for water leaks and other construction defects, which caused damage to the units and common property. The developer’s insurance company argued that the Association’s claims were not covered under the various CGL policies obtained by the developer because the alleged faulty workmanship by the developer’s subcontractors did not amount to an “occurrence” and that the resulting damages did not constitute “property damage” under the policies.

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.

By Jonathan H. Katz, Esq.

On March 16, 2015, the New Jersey Supreme Court will hear argument on Qian v. Toll Brothers Inc. to answer the question of whether a community association can be found liable for the failure to adequately clear snow and ice from its common sidewalks.

By Ronald L. Perl, Esq.

In an unpublished opinion decided February 7, 2014, New Jersey’s intermediate appellate court has held that an association’s duty to maintain common areas of a common interest community, created by statute and by its governing documents, does not “equate to a civil tort duty and liability to an injured party.” The case, Qian v. Toll Brothers Inc., et al., involved a slip and fall injury to a resident in an adult residential community, who fell on ice following a winter storm. The resident sued the association, its developer (who controlled the board), its managing agent and the contractor responsible for snow and ice removal. The trial court dismissed the claims against the association, developer and managing agent (“the Association defendants”) based on a long line of New Jersey cases holding that private residential property owners are immune from liability for injuries to a pedestrian resulting from a failure to maintain adjacent public sidewalks. In 2011, the New Jersey Supreme Court held that such immunity was applicable to a residential condominium association with respect to an adjacent public sidewalk in the City of Hoboken. In that case, Luchejko v. The City of Hoboken, the Supreme Court found that an association of homeowners was residential in nature and therefore would not apply the same tort duty or liability as a commercial owner owes to the general public.

In the Qian case, however, the fall occurred on an interior sidewalk within the community rather than on an adjacent public sidewalk. The resident argued that this distinction, plus the specific maintenance responsibilities spelled out by statute and governing documents, required the imposition of tort liability. The Appellate Division rejected this reasoning, pointing out the difference between a legal responsibility to act and the imposition of tort liability: “The common law, however, does not impose a duty that makes the association answerable in tort for negligent performance of its statutory and contractual duty.”

You can read the Court’s decision in Qian v.Toll Brothers Inc., et al. 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.

Hill Wallack LLP Partner Gerard H. Hanson, Esq. will be speaking during a seminar titled “Superstorm Sandy: Protecting Your Community by Pursuing Your Claim” at the 2013 New Jersey Cooperator’s Condo, HOA and Co-op Expo, on Wednesday, May 1, 2013, at the Meadowlands Exposition Center in Secaucus, New Jersey. This seminar, which will be held at 1:00pm – 2:00pm, in Seminar Room 1, will discuss how to protect your association by avoiding common pitfalls in pursuing damage claims. Learn to navigate the complicated claims process in order to maximize recovery in the least  amount of time. A question and answer portion will follow the presentation.

Presenting with Jerry Hanson will be Alan Garfinkel, Esq. of Katzman Garfinkel & Berger, who is one of the nation’s leading authorities on Natural Disaster law.

For more information or to register to attend, click here!