Jesse Endler (Of Counsel-Philadelphia, PA) and Christopher Flanagan (Partner-Boston, MA) prevailed on summary judgment in the New Jersey Superior Court, Atlantic County, on behalf of Wilson Elser’s insurance company client in a first-party coverage action. The insured sought damages estimated at more than $100,000 for alleged breach of contract and bad faith arising from the client’s denial of coverage for the sudden collapse of the rear wall of its residential property. The collapse caused the rear wall to shift downward 12 to 18 inches, requiring the wall and several stories of decks to be removed and rebuilt. An investigation determined that the residence’s sill plate and framing had sustained prolonged, hidden water intrusion and trapped moisture, resulting in extensive rot, decay, disintegration, and deterioration. The insured admitted, as corroborated by experts for both sides, that the water infiltration had been ongoing for several years ‒ predating both the policy’s inception and the insured’s purchase of the property. Our client denied coverage under policy exclusions for collapse caused by decay and rot and for pre-existing damage.

Following discovery, Wilson Elser moved for summary judgment, arguing that the policy language was clear and unambiguous and that under the normal usage of its terms, the policy did not provide coverage for the loss. Chris and Jesse further argued that the client could not have acted in bad faith because its denial was based on the policy’s clear language. The insured countered that the policy language was confusing, provided illusory coverage, and required coverage for the loss, and further alleged that the insurer had acted in bad faith.

Following oral argument, the court agreed that the policy language was clear and unambiguous and that the loss was not covered. Because there was no coverage, the court concluded that the bad faith claim could not succeed and granted summary judgment in favor of Wilson Elser’s client, dismissing the case.