Wright subsequently made the recommended payment of $21,264.47 to Trinova, but did not make the $3,672.19 payment.

Independent adjuster, engineer findings

It also denied requests by Trinova and Mr. Marshalek for additional insurance benefits under the policy, based on the findings of both the independent adjuster and an engineer retained by Wright that Mr. Marshalek's unit was a “basement” as that term was defined in the policy, which limited the benefits payable to Mr. Marshalek under the flood insurance policy.

Trinova and Mr. Marshalek disputed the determination that Mr. Marshalek's unit was a basement and they sued Wright. In their complaint, Trinova and Mr. Marshalek sought a declaratory judgment regarding Wright's obligations under the policy, as well as damages for its alleged breach of contract.

Argument: Part of unit was not below ground

At trial, Trinova and Mr. Marshalek contended that Mr. Marshalek's unit was not a “basement” as defined under the policy because one side of his unit was not below ground level.

Mr. Marshalek submitted measurements he had made. In addition, Trinova and Mr. Marshalek hired Andre Schan “to determine the relative elevation of the floor inside Mr. Marshalek's condominium and the outside ground. And to . . . determine whether or not there's outside ground that is lower than the floor and where it is.”

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The court accepted Mr. Schan as an expert in the field of land surveying. He opined that the floor in the second bedroom of Mr. Marshalek's residence was above grade, and that Mr. Marhalek's residence, therefore, was not below grade on all sides (as required for it to be deemed a basement).

Engineer's expert testimony

The court also accepted John Garner, licensed as an engineer in New Jersey and 45 other states, as an expert in the field of civil engineering.

Mr. Garner prepared a diagram of Mr. Marshalek's unit, measured to scale, using AutoCAD software. He used a rotary laser device to take measurements at Mr. Marshalek's property. He took multiple elevation measurements in connection with Mr. Marshalek's property, including measurements at the street, sidewalk, and patio in front of Mr. Marshalek's residence; multiple points inside the residence; the rear patio and backyard of Mr. Marshalek's unit; and the backyard of the property located at 205 8th Street and the property located at 738 Garden Street.

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One exhibit Wright submitted to the court was a table of the elevation measurements that Mr. Garner had made at the site, and another was a reproduction of the AutoCAD diagram that Mr. Garner had prepared, with the elevation measurements for various points listed.

Mr. Garner determined that the relative elevation of the floor of the second bedroom in Mr. Marshalek's residence was 97.1 feet. He entered the backyard of the property located at 205 8th Street and determined that the relative elevation of the ground in the middle of the yard was 97.30 feet, while the relative elevation of the yard at the right rear corner of Mr. Marshalek's building — the approximate spot that Mr. Schan and Mr. Marshalek had measured — was 97.34 feet.

Extensive measurements

Mr. Garner calculated the elevation of the yard at the right rear corner of Mr. Marshalek's building by measuring the height of the fence from both sides with an electronic tape measure and then using the top of the fence as the “tie point” to the measurements he had taken with his rotary laser device.

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Mr. Garner determined that the elevation of the ground at the right rear corner of Mr. Marshalek's building was .24 feet (or 2.88 inches) higher than the floor in Mr. Marshalek's second bedroom.

Mr. Garner opined that, taking all of his measurements into consideration, he did not find any portion of Mr. Marshalek's unit that was above grade.

Mr. Garner testified that his rotary laser device had a margin of error of a quarter of an inch over “a long distance” (i.e. 40 feet), but that, with the short distances involved in the measurements he took in this case, the potential margin of error would be “almost negligible.”

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Mr. Garner also testified that there could have theoretically been a margin of error of a quarter of an inch in connection with his measurements of the height of the fence between Mr. Marshalek's property and the backyard of 205 8th Street, given the roughness of the top of the fence.

The flood insurance policy

The flood insurance policy issued by Wright provided coverage for, among other things:

direct physical loss by or from flood to [t]he residential condominium building described on the Declarations Page at the described location, including all units within the building and the improvements within the units

, subject to the policy's terms, conditions, and exclusions.

It defined: basement as:

Any area of the building, including any sunken room or sunken portion of a room, having its floor below ground level (subgrade) on all sides.

Court's reasoning

The court ordered judgment in favor of Wright.

In its decision, the court ruled that, considering “the equipment and methodologies that Messrs. Marshalek, Schan and Garner employed,” of the three sets of measurements concerning the relative elevation of the floor in the second bedroom of the residence and the ground outside of the rear right corner of the residence, those of Mr. Garner were “the most persuasive and credible.”

The court noted that Mr. Garner had testified that the measurements underlying his determination involved a certain margin of error — specifically, he admitted that although the measurements he took with his rotary laser might have a margin of error of a quarter of an inch each over long distances (i.e., 40 feet), the margin of error would be “almost negligible” in this case, given the short distances involved. The court said that nothing in the record contradicted Mr. Garner's testimony regarding the “almost negligible” margin of error associated with his rotary laser measurements in this case.

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It then pointed out that Mr. Garner also admitted that there theoretically could have been a margin of error of up to a quarter of an inch inherent in his measurements of the height of the fence between Mr. Marshalek's property and the backyard of 205 8th Street, given the roughness of the top of the fence. The court, therefore, assumed without finding, that Mr. Garner's ultimate measurement was off by .25 inches.

Decision of inches

The court then reasoned that although Mr. Garner found that the elevation of the ground at the right rear (northwest) corner of Mr. Marshalek's residence was 2.88 inches higher than the floor in Mr. Marshalek's second bedroom, that measurement did not account for the fact that the hardwood floor in place at the time of Superstorm Sandy was higher than the tile floor that replaced it. The court said that, assuming that the hardwood floor was 2.5 inches higher than the tile floor that replaced it, the hardwood floor “would still have been .38 inches lower than the adjacent ground.”

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Accounting for the margin of error of .25 inches (which, the court observed, could have affected Mr. Garner's measurement in either direction), the court concluded that the hardwood floor in Mr. Marshalek's second bedroom still would have been at least .13 inches lower than the adjacent ground at the time of Superstorm Sandy, and his unit was a “basement” for purposes of his flood insurance policy.

The case is Trinova Garden Street Condominium Ass'n v. Wright National Flood Ins. Co., No. 2:15-4195 (JAD) (D.N.J. Aug. 30, 2017).

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].