Cypress Point Condominium Association v. Adria Towers, LLC (New Jersey)
The Cypress Point Condominium Association v. Adria Towers, LLC, et al. is a construction defect
case that was filed by the Cypress Point Condominium Association following transition of control of the common elements from the Sponsor to the independent unit owners. The case involves typical water intrusion claims that caused damage to common elements and unit interiors. The insurance carriers for the Sponsor filed a declaratory judgment seeking a determination that the commercial general liability insurance policies they issued to the Sponsor did not cover the claims of defective workmanship made against the Sponsor and the subcontractors it hired.
The trial court granted the insurance carriers' motion for summary judgment, finding that the alleged property damage to the condominium did not meet the requirement of an "occurrence" in order to trigger coverage under the Sponsor's commercial general liability insurance policy. The Appellate Division disagreed and reversed the trial court's ruling, finding that under the language of the Sponsor's insurance policy, the defective work by the Sponsor's subcontractors that caused damage to parts of the building other than their specific work, amounted to an occurrence under the Sponsor's policies. This was the first time an appellate court in New Jersey held that defective workmanship by a general contractor's subcontractors that causes damage to the building in question meets the definition of an "occurrence" under commercial general liability insurance policies issued after 1986.
The New Jersey Supreme Court granted certification. The issue to be heard by the Court is framed as follows: 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?"
The outcome of the Cypress Point appeal has the potential to significantly impact all condominium associations in New Jersey who have common elements with construction defects. If the carriers win the day, there will be no insurance proceeds available to condominium associations for funds to repair the defects.
Amicus Brief
Prior Ruling: Appellate Division
Status: Supreme Court Ruling for CAI’s Position
Amicus Review Committee: Bob Diamond, Esq. (VA), Jennifer Loheac, Esq. (NJ), David Ramsey, Esq. (NJ)
Brief Author: Gene Markin, Esq.