The Supreme Court of New Jersey partially overturned a state appellate court on Monday, holding that a condominium can pursue a claim against an insurer by alleged insolvent policyholders, but they must be brought.
Richmond, Virginia-based insurance company Kinsale Insurance Co. has issued insurance policies for architects and engineers valid from July 2016 to July 2018 to Elizabeth, New Jersey-based Nacamuli Associates LLC., a design engineering firm, and to Elizabeth-based Hawke Engineers and Testing LLC, a construction inspection firm, according to the New Jersey Supreme Court in Trenton’s unanimous Crystal Point Condominium Association, Inc. v. Kinsale Insurance Co.
In a construction defect case, Crystal Point, which manages a high-rise building in Jersey City, New Jersey, received a $ 1.7 million lawsuit against the two units.
It requested payment from Kinsale under the State’s “direct action”, which provides that an injured plaintiff with an unsatisfactory judgment against an insolvent or bankrupt can bring a direct action against an insurer in certain contexts, according to the judgment.
The district court ruled that the charter was not applicable. It granted Kinsale’s claim for enforcement and dismissed Crystal Point’s complaint. An appellate court amended the lower court and authorized Crystal Point to assert claims against Kinsale under the statute, but ruled that the dispute was inadmissible.
The Supreme Court agreed with the Court of Appeal that Crystal Point can claim Kinsale, but ruled that the claims must be brought.
Based on the clear language of the Direct Action Act, “Crystal Point’s claims against Kinsale are derived claims and are thus subject to the terms of the insurance policies in question, including the provisions of any insurance that requires binding arbitration in disputes between Kinsale and its insured,”. it said in the verdict.
“Crystal Point’s claim against Kinsale is therefore the subject of arbitration,” it said, by partially reversing the Court of Appeal and reinstating the Court’s decision on mandatory arbitration.
Lawyers in the case did not respond to a request for comment.