In Kavesh v. Franklin Mutual Insurance, No. A-5210-13T1 (App. Div. June 10, 2015), the Appellate Division affirmed a trial court’s ruling that there was no coverage for mold damage under a homeowner’s insurance policy issued to Sheldon and Shirley Kavesh by Franklin Mutual Insurance. The policy contained a specific exclusion for loss or damage caused by mold. There was an exception to the mold exclusion, however, for mold damage that was a direct result of a covered cause of loss. Covered cause of loss was defined as fortuitous direct physical loss or damage not otherwise excluded. Thus, if, for example, a weather event led to the intrusion of water under the roof and the water intrusion, in turn, led to mold growth, coverage arguably would exist for the mold damage. If, on the other hand, the mold developed independent of a fortuitous event covered under the policy there would be no coverage.
The insureds claimed that the mold damage fell within the exception to the exclusion. The insurer contended, however, that there was no evidence that the mold resulted from a covered cause of loss.
At issue was mold damage to the interior of the roof on the insureds’ home. The roof had been replaced in October 2011 and the insureds noticed the presence of mold in June 2013. The insurer inspected the roof and found no evidence of a water leak or any damage to the roof. The insurer concluded that “[t]he fungus developed as a result of high humidity which ha[d] caused condensation in and on the plywood roof sheathing.” Decision at 2. A second inspection conducted by Andrew K. Sharick, P.E., an engineer retained by the insurer, confirmed those findings. The insureds, who appeared pro se in the litigation, did not retain their own expert to examine the roof.
The trial court granted summary judgment in favor of the insurer on the basis that there was no evidence that the mold was caused by a “fortuitous, direct physical loss.” The insureds appealed that decision, arguing “that the cause of the [mold] growth is a genuine issue of material fact that should have precluded the entry of summary judgment.” Id. 4. The Appellate Division disagreed:
Here, plaintiffs dispute that the cause of the mold is condensation as indicated in Sharick’s report but provide no other explanation. While they contend that this raises a genuine issue of material fact, plaintiffs have not provided any evidence that the mold condition is the direct result of any loss that would bring the claim within the basic terms of the Policy.
Id. at 5-6.
The court went on to note that the policy was not ambiguous. Thus, according to the court, it had to be interpreted in accordance with its plain and ordinary meaning. The court observed that “the plain language of the Policy states that mold is not covered, except for mold damage that is a direct result of a covered cause of loss (e.g., ‘fortuitous direct physical’ damage, destruction, or loss not otherwise excluded or limited by the Policy).” Id. at 8. Consequently, the court reasoned as follows:
We reject plaintiffs’ argument that mold growth by itself was a material intrusion into the home that meets the requirement of “physical” damage. The plain language and express purpose of the Policy is to generally deny coverage for mold damage, but provide limited coverage for mold damage when resulting from some other covered cause of loss. In the absence of a material dispute of fact that would bring the claim within the Policy, we see no reason to disturb the court’s determination.
Id. at 8-9.
At issue in Kavesh was an exception to a mold exclusion. As a general rule, an insured has the initial burden of proving that it sustained a loss covered under its policy. The burden then shifts to the insurer to establish that an exclusion applies. The burden then shifts back to the insured to establish that an exception to the exclusion applies. In Kavesh, the court did not directly address the burden of proof. However, both the trial court and the Appellate Division ruled against the insureds because they were not able to point to any triggering event that led to the mold growth. In other words, the insureds could not meet their burden of establishing that the exception to the exclusion applied.
A copy of the decision is available by clicking on the following link: a5210-13
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