Motion for Reconsideration Denied in NJ Hurricane Sandy Case

Judge Travis L. Francis of the Superior Court of New Jersey, Middlesex County, denied a motion for reconsideration filed by Wakefern Food Corporation in a Hurricane Sandy insurance case.  The court had previously granted summary judgment in favor of Lexington Insurance Company and Wakefern asked the court to reconsider its prior decision.

The primary issue was whether a Named Storm deductible applied to Wakefern’s Sandy-related losses.  The Named Storm deductible applied to all losses “arising out of” a Named Storm.  Wakefern argued that the court erred in applying the Named Storm deductible because there was no proof that a Named Storm caused Wakefern’s losses in light of the fact that Sandy was declared a post-tropical cyclone before it made landfall in New Jersey.  The court rejected that argument, noting that “[i]t was unnecessary for the Court to find Plaintiffs’ losses were ‘caused by a Named Strom’ based on the polic[y’s] ‘arising out of’ language . . . .”  Decision at 3.  The court observed that it previously concluded “that as a matter of law, the losses sustained as a result of the storm on October 29, 2012 have a substantial nexus with the Named Storm and are therefore subject to said named storm deductible.”  Id.  According to the court, “[t]he ‘arising out of language’ was dispositive in deciding the extent of the connection required.”  Id.

The court also declined to apply the Appleman Rule to application of the Named Storm deductible.  The Appleman Rule, which applies to the application of policy exclusions, provides that “recovery may be allowed where the insured risk was the last step in the chain of causation set in motion by an uninsured peril, or [w]here the insured risk itself set into operation a chain of causation in which the last step may have been an excepted risk.”  Id. at 4 (citation omitted).  Wakefern argued that the deductible acted like a policy exclusions and, therefore, the Appleman Rule should apply.  The court rejected that argument

Finally, the court upheld a ruling in Lexington’s favor regarding the calculation of the Named Storm deductible.  The court explained that the Named Storm deductible was to be calculated by subtracting from the total loss two percent of the total insurable values at each loss location, not two percent of a sublimit, as Wakefern had argued.

A link to the decision is below:

Wakefern Food Corp. v. Lexington Ins. Co., No. L-6483-13 (Jan. 23, 2015) (MEMORANDUM ONLY)

By William D Wilson

I am a partner in Mound, Cotton, Wollan & Greengrass, which is headquartered in New York City. I am in charge of running the firm's New Jersey office, which is in Florham Park. I have been practicing law for approximately 23 years and focus primarily on insurance related matters