THE CUMBERLAND MUTUAL FIRE INSURANCE COMPANY v. NATIONWIDE E&S SPECIALTY

Not for Publication

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

THE CUMBERLAND MUTUAL FIRE

INSURANCE COMPANY,

Civil Action No.: 24-5900 (ES) (JRA)

Plaintiff,

v. OPINION

NATIONWIDE E&S SPECIALTY and

AMGUARD INSURANCE COMPANY,

Defendants.

SALAS, DISTRICT JUDGE

Before the Court is defendants Nationwide E&S Specialty, also known as Scottsdale

Insurance Company (“Scottsdale”), and AmGuard Insurance Company’s (“AmGuard,” together

with Scottsdale (“Defendants”)) motion to dismiss plaintiff The Cumberland Mutual Fire

Insurance Company’s (“Plaintiff” or “Cumberland”) complaint (D.E. No. 1 (“Complaint” or

“Compl.”)) pursuant to Federal Rule of Civil Procedure 12(b)(6). (D.E. No. 34 (“Motion” or

“Mot.”)). Defendants’ Motion is fully briefed. (D.E. No. 35 (“Mov. Br.”); D.E. No. 38 (“Opp.

Br.”); D.E. No. 44 (“Reply Br.”)). Having carefully considered the parties’ submissions, and

deciding this matter without oral argument, see Fed. R. Civ. P. 78(b); L. Civ. R. 78.1(b), and for

the reasons set forth below, Defendants’ Motion is GRANTED in-part and DENIED in-part.

I. BACKGROUND1

This declaratory judgment action stems from a fire that occurred on or about November 9,

2021, in a building located at 25 Weldon Road, Lake Hopatcong, New Jersey (the “Property”).

(See Compl. ¶ 10). At the time of the fire, RLM Corporation (“RLM”) owned the Property (id. ¶

16; see id. ¶ 11), and Stones by Vincenzo, Inc. (“Stones”) occupied the building on the Property

as a tenant (id. ¶ 16). Following the fire, AmGuard—the insurance carrier for RLM—brought a

subrogation claim in separate action before the Undersigned. (Id. ¶ 10); AmGuard Ins. Co. v.

Stones by Vincenzo, Inc., No. 22-5519 (ES) (JRA) (“Subrogation Action”).2 Plaintiff alleges that

the fire resulted in total damages of $766,203.40 on a “Replace Cost Value” basis and $610,296.96

on an “Actual Cash Value” basis. (Compl. ¶ 17 nn. 4–5).

AmGuard “insured RLM for the building on the Property with a limit of $1,081,200.” (Id.

¶ 11 (citing D.E. No. 1-2 (Ex. B to Compl. (“AmGuard Policy” or “AP”)))). Plaintiff asserts that

the AmGuard Policy “is a primary property policy.” (Id. ¶ 12). When the fire occurred, Scottsdale

insured Stones with “primary property coverage” containing “an $800,000 limit for the building

on the Property.” (Id. ¶ 13 (citing D.E. No. 1-3 (Ex. C to Compl.)).3 In addition, Plaintiff insured

Stones with “a casualty coverage limit of $100,000 for Fire.” (Id. ¶ 15 (citing D.E. No. 1-4 (Ex.

D to Compl. (“Cumberland Policy” or “CP”)))).

1 The factual background is taken from the allegations in the Complaint. For purposes of the instant Motion,

the Court accepts the factual allegations as true and draws all inferences in the light most favorable to Plaintiff. See

Phillips v. Cnty. of Allegheny, 515 F.3d 224, 228 (3d Cir. 2008).

2 On May 27, 2025, at the parties’ joint request and in light of both their progress with discovery and the

“likelihood that a decision on the [M]otion will either dispose of the [Subrogation Action] or streamline the remainder

of discovery,” the Honorable José R. Almonte, U.S.M.J., stayed the Subrogation Action pending the outcome of

Defendants’ Motion in the instant case. AmGuard Ins. Co. v. Stones by Vincenzo, Inc., No. 22-5519 (ES) (JRA), D.E.

No. 86 (May 27, 2025).

3 Because Defendants attached a complete copy of the Scottsdale Policy to their moving brief, and because

Plaintiff does not dispute the authenticity of the same, the Court will cite to Defendants’ exhibit when referring to the

Scottsdale Policy. (See D.E. No. 36-3, Ex. 4 to D.E. No. 36 (Declaration of Marci G. Kokalas (“Kokalas Decl.”))

(“Scottsdale Policy” or “SP”)). For ease of reference, all pin citations to the relevant policies discussed herein are to

the page numbers automatically generated by this Court’s CM/ECF Case Management System.

On May 7, 2024, Plaintiff filed the Complaint on the basis of diversity jurisdiction seeking

three Counts of declaratory relief. (See generally Compl.). In Count I, Plaintiff alleges that the

Scottsdale Policy “insures Stones on a primary basis with a limit of $800,000 for damages incurred

by the fire.” (Id. ¶ 20). Pursuant to the Cumberland Policy—specifically, “Section IV –

Commercial General Liability Conditions, Paragraph 4.b.(1)”—Plaintiff asserts that its policy “is

excess to the Scottsdale Policy.” (Id. ¶ 21). Plaintiff further maintains that pursuant to the

Cumberland Policy, specifically “Paragraph 6 of Section III – Limits of Insurance[,] . . . the most

[Plaintiff] is obligated to pay on behalf of Stones is $100,000 once the Scottsdale Policy is

exhausted.” (Id. ¶ 22). Accordingly, under Count I, Plaintiff seeks a declaration that states the

following: (i) the “Cumberland Policy is excess to the Scottsdale Policy”; (ii) Plaintiff “has no

duty to defend Stones because it is excess to the Scottsdale Policy”; (iii) the most Plaintiff “will

pay once the Scottsdale Policy is exhausted is $100,000”; (iv) Plaintiff “is entitled to attorneys’

fees and costs”; and (v) any “[s]uch other relief this Court deems just and proper.” (Id.).

In Count II, Plaintiff alleges that under the Scottsdale Policy—specifically the “Building

and Personal Property Coverage Form” section and subsection E.4.f (entitled “Loss Conditions,”

“Loss Payment”)—Scottsdale “has an obligation to provide Stones a defense to the [Subrogation]

Action.” (Id. ¶ 24). Despite this provision, Plaintiff has been providing Stones a defense to the

Subrogation Action rather than Scottsdale. (Id. ¶¶ 25–26). Under the Cumberland Policy—

specifically, “Section IV – Commercial General Liability Conditions,” and subsection 4 (entitled

“Other Insurance”)—Plaintiff asserts that it “is entitled to reimbursement by Scottsdale of all fees

and costs [Plaintiff] had incurred and will incur in defending Stones in the [Subrogation] Action.”

(Id. ¶¶ 27–28). Accordingly, under Count II, Plaintiff seeks a declaration that states the following:

(i) “Scottsdale shall reimburse Cumberland for the fees and costs that it has incurred in defending

Stones in the [Subrogation] Action, along with associated interest”; (ii) “Scottsdale shall replace

Cumberland in the defense of Stones in the [Subrogation] Action”; and (iii) any “[s]uch other relief

this Court deems just and proper.” (Id. ¶ 29).

In Count III, Plaintiff asserts that the November 9, 2021 fire in the building on the Property

“is a covered cause of loss” under the AmGuard Policy as “a primary property policy for RLM.”

(Id. ¶ 32; see also id. ¶ 31 (citing to Section I.A.1 of the AmGuard Policy)). Pursuant to the

Cumberland Policy—specifically, “Section IV – Commercial General Liability Conditions,

Paragraph 4.b.(1)”—Plaintiff asserts that its policy “is excess to the AmGuard Policy.” (Id. ¶ 33).

Plaintiff further maintains that pursuant to the Cumberland Policy—specifically “Paragraph 6 of

Section III – Limits of Insurance”—“the most [Plaintiff] is obligated to pay on behalf of Stones is

$100,000, once the Scottsdale Policy is exhausted.” (Id. ¶ 35).4 Accordingly, under Count III,

Plaintiff seeks a declaration that states the following: (i) the AmGuard Policy “is primary in this

matter, along with the Scottsdale Policy”; (ii) the Cumberland Policy “does not have to respond to

the loss until the Scottsdale Policy is exhausted”; (iii) the most Plaintiff “will pay once the

Scottsdale Policy is exhausted is $100,000”; (iv) Plaintiff “is entitled to attorneys’ fees and costs”;

and (v) any “[s]uch other relief this Court deems just and proper.” (Id.).

II. LEGAL STANDARD

In assessing whether a complaint states a cause of action sufficient to survive dismissal

under Rule 12(b)(6), the Court accepts “all well-pleaded allegations as true and draw[s] all

reasonable inferences in favor of the plaintiff.” Cambridge Ret. Sys. v. Altisource Asset Mgmt.

Corp., 908 F.3d 872, 878 (3d Cir. 2018). However, the Court “disregard[s] threadbare recitals of

the elements of a cause of action, legal conclusions, and conclusory statements.” Id. at 878–79

4 The Complaint skips Paragraph 34. (See Compl. ¶¶ 33 & 35).

(quoting James v. City of Wilkes-Barre, 700 F.3d 675, 681 (3d Cir. 2012)). The complaint must

“contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its

face,” and a claim is facially plausible “when the plaintiff pleads factual content that allows the

court to draw the reasonable inference that the defendant is liable for the misconduct alleged.”

Zuber v. Boscov’s, 871 F.3d 255, 258 (3d Cir. 2017) (first quoting Santiago v. Warminster Twp.,

629 F.3d 121, 128 (3d Cir. 2010); and then quoting Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)).

While the Court generally “may not consider matters extraneous to the pleadings” when

deciding a Rule 12(b)(6) motion, In re Burlington Coat Factory Sec. Litig., 114 F.3d 1410, 1426

(3d Cir. 1997), an exception to this general rule provides that the court may also consider “exhibits

attached to the complaint, matters of public record, as well as undisputedly authentic documents

if the complainant’s claims are based upon these documents.” Mayer v. Belichick, 605 F.3d 223,

230 (3d Cir. 2010); see also Buck v. Hampton Twp. Sch. Dist., 452 F.3d 256, 260 (3d Cir. 2006)

(noting that, pursuant to Rule 12(b)(6), the Court “may consider documents that are attached to or

submitted with the complaint, and any ‘matters incorporated by reference or integral to the claim,

items subject to judicial notice, matters of public record, orders, [and] items appearing in the record

of the case’” (alteration in original) (first citing Pryor v. Nat’l Collegiate Athletic Ass’n, 288 F.3d

548, 560 (3d Cir. 2002); and then quoting 5B Charles A. Wright & Arthur R. Miller, Federal

Practice & Procedure § 1357 (3d ed. 2004))). Thus, “a court may consider ‘an undisputedly

authentic document that a defendant attaches as an exhibit to a motion to dismiss if the plaintiff’s

claims are based on the document.’” Fuller v. Rozlin Fin. Grp., Inc., No. 19-20608, 2020 WL

5036215, at *2 (D.N.J. Aug. 26, 2020) (quoting Clemons v. Midland Credit Mgmt., Inc., No. 18-

16883, 2019 WL 3336421, at *2 (D.N.J. July 25, 2019)).

Here, Plaintiff attached the AmGuard Policy, Scottsdale Policy, and the Cumberland Policy

to its Complaint (see Exs. B, C, and D to Compl.) and, as noted above, Defendants attached a full

version of the Scottsdale Policy to its motion to dismiss (see Ex. 4 to Kokalas Decl.). The parties

do not dispute those documents’ authenticity or the Court’s consideration of the same. (See

generally Mov. Br. & Reply Br.). Thus, the Court will consider each of the relevant policies.

III. DISCUSSION

“Where parties’ briefs assume that a particular forum’s law controls, such implied consent

. . . is sufficient to establish choice of law.” Navigators Specialty Ins. Co. v. Citizens Ins. Co. of

Am., 739 F. Supp. 3d 259, 263 (D.N.J. 2024) (quoting Marino v. Brighton Gardens of

Mountainside, 697 F. Supp. 3d 224, 229, 2023 WL 6366013, at *2 (D.N.J. Sept. 29, 2023) (citation

modified) (collecting cases). Here, the parties brief the issues under New Jersey law. (See

generally Mov. Br., Opp. Br. & Reply Br.). Thus, the Court will apply New Jersey law to the

parties’ dispute.

Under New Jersey law, the Court must interpret an insurance policy, as a matter of law,

“according to its plain and ordinary meaning.” Voorhees v. Preferred Mut. Ins. Co., 607 A.2d

1255, 1260 (N.J. 1992); Selective Ins. Co. of Am. v. Hudson E. Pain Mgmt. Osteopathic Med., 46

A.3d 1272, 1276 (N.J. 2012). Where an ambiguity in the terms of the policy creates doubt

regarding the existence of coverage, the ambiguity is ordinarily resolved in favor of the insured.

See Benjamin Moore & Co. v. Aetna Cas. & Sur. Co., 843 A.2d 1094, 1103 (N.J. 2004). However,

where the language of the policy is clear and unambiguous, “the court is bound to enforce the

policy as it is written.” Royal Ins. Co. v. Rutgers Cas. Ins. Co., 638 A.2d 924, 927 (N.J. Super. Ct.

App. Div. 1994). The court “should not write for the insured a better policy of insurance than the

one purchased.” Buczek v. Continental Cas. Ins. Co., 378 F.3d 284, 288 (3d Cir. 2004) (citing

Vassiliu v. Daimler Chrysler Corp., 839 A.2d 863, 867 (N.J. 2004)).

A. Count I – Priority of Coverage (Scottsdale)

As it pertains to Count I, Defendants ask the Court to reject Cumberland’s priority of

coverage argument because the relevant insurance policies insure different interests. (Mov. Br. at

11–15). Specifically, Defendants assert that “the Cumberland Policy extends liability coverage to

Stones for the Loss” while “the Scottsdale Policy is a first-party property policy and provides no

liability coverage.” (Id. at 12 (emphasis in original)). Stated differently, “the Cumberland Policy

provides third-party liability coverage, i.e., defense and indemnification for Stones’ alleged

liability for the fire at issue in the Subrogation Action, while the Scottsdale Policy is intended to

pay directly for damage to [the] insured (or covered) property, e.g., the Premises, resulting from a

covered loss, e.g., a fire.” (Id. at 14–15). For these reasons, Defendants argue that “the

Cumberland Policy’s [o]ther [i]nsurance provision is not triggered and the ‘excess’ provision upon

which Cumberland relies does not apply.” (Id. at 13).

In opposition, Plaintiff contends that “[b]oth the Scottsdale Policy and Cumberland Policy

provide insurance to cover the same interest – i.e., Stones – and the same risk – i.e., physical loss

or damage, which here, includes damage by fire to the Subject Premises.” (Opp. Br. at 8).

Furthermore, Plaintiff argues that Defendants’ cited cases fail to support their proposition that “the

policies insure different interests just because the Scottsdale Policy provides property coverage

and the Cumberland Policy provides liability coverage.” (Id.; see also id. at 9–11). Plaintiff also

maintains that nothing in the Cumberland Policy’s “[o]ther [i]nsurance” provision “confines its

operation strictly to other liability policies.” (Id. at 9).

Defendants maintain their position in reply with few citations to additional case law. (See

Reply at 2–8). Although Defendants consider Plaintiff’s priority of coverage claim “irrelevant”

such that it “fails as a matter of law” (id. at 3), they effectively concede the possibility that the

policies at issue can be read together under both applicable “other insurance” provisions,

particularly if Stones is found liable in the Subrogation Action (id. at 8 n.6). Indeed, Defendants

state that under both policies’ “other insurance” provisions, “the Cumberland and Scottsdale

Policies would be deemed co-primary.” (Id.). As such, Defendants reserve the right to make this

argument in the future should their Motion be denied. (Id.).

The parties agree that both the Cumberland Policy and the Scottsdale Policy provide

insurance coverage for damage to the Property—including damage to the building premises owned

by RLM and damage to Stones’s business property—that resulted from the underlying fire. (See

generally Mov. Br., Opp. Br. & Reply Br.).5 The parties further agree that Cumberland issued

Stones a “Commercial General Liability Policy” (see CP at 11), while Scottsdale issued Stones a

“Commercial Property Policy” (see SP at 10 & 22–23). The difference, however, is that the

Cumberland Policy covers Stones in the event Stones—as the insured—“becomes legally

obligated to pay . . . damages because of . . . [said] ‘property damage.’”6 (CP at 11, § I.1(a)

“Section I – Coverages” – “Coverage A – Bodily Injury and Property Damage Liability” (emphasis

added)). Furthermore, the Cumberland Policy provides that Plaintiff “will have the right and duty

to defend the insured [Stones] against any ‘suit’ seeking those damages.” (Id.). By contrast, the

Scottsdale Policy insures Stones for building coverage (with an $800,000 limit) and business

personal property coverage (with a $110,000 limit) when “direct physical loss of or damage to the

Covered Property” is “caused by or resulting from a Covered Cause of Loss [i.e., a fire].” (SP at

5 Although irrelevant to the pending Motion, the Court observes that Cumberland also issued Stones what

appears to be limited commercial property coverage for “Business Income & EE,” “Personal Property,” and

“Equipment Breakdown Enhancement” expenses. (CP at 2 & 6–7).

6 The insurance in the Cumberland policy “applies to . . . ‘property damage’ . . . caused by an ‘occurrence’ that

takes place in the ‘coverage territory.’” (CP at 11, § I.1(a)). The parties do not dispute that the November 9, 2021

fire on the Property is an “occurrence” in a “coverage territory” under the Cumberland Policy. (See, e.g., Compl. ¶¶

10 & 19; Mov. Br. at 12; Opp. Br. at 7–8).

24 § A “Coverage”).

The Court reads these policies as protecting the same covered loss—that is property

damage to the building Stones occupied as tenant on the Property owned by RLM. Although

Defendants discuss the relevant policies as falling within two separate and distinct categories—a

first-party property policy (the Scottsdale Policy) and a third-party property policy (the

Cumberland Policy) (see generally Mov. Br.)—it appears that the Scottsdale Policy acts as both a

first-party policy that covers Stones’s own business personal property and a third-party policy that

covers property damage to RLM’s building premises. Cf. Righi Pallet Co. v. Maxum Indem. Co.,

No. 18-0922, 2020 WL 13169576, at *6 (M.D. Pa. Nov. 5, 2020) (noting that “[f]irst-party

coverage[] . . . protects against loss caused by injury to the insured’s own property” (emphasis

added)), report and recommendation adopted, No. 18-00922, 2021 WL 7967650 (M.D. Pa. Feb.

23, 2021). Indeed, based on this Court’s review of the pleadings in the Subrogation Action, it

appears that Scottsdale seeks a 50% contribution from AmGuard (as equal co-insurers of the loss

under those policies’ “other insurance” provisions) for payments Scottsdale made to Stones for

damage to RLM’s building premises—i.e., for damage to plumbing, electrical, building heaters,

etc.7 See AmGuard Ins. Co. v. Stones by Vincenzo, Inc., No. 22-5519 (ES) (JRA), D.E. No. 76

(Nov. 20, 2024) (Scottsdale’s Answer to Third-Party Complaint and Third Party Complaint at ¶¶

15–29). Moreover, although both policies insure Stones for the same loss (i.e., property damage),

the insured interest for coverage to the building premises is arguably held by RLM as the owner

of the building premises. (Compare CP at 2, with SP at 10). Thus, while the Court acknowledges

7 The Court may take judicial notice of filings in the Subrogation Action before the Undersigned and the parties

do not argue against the Court’s consideration of the same. See Guidotti v. Legal Helpers Debt Resol., 716 F.3d 764,

772 (3d Cir. 2013) (noting that the Court may “consider only the complaint, exhibits attached to the complaint, [and]

matters of public record, as well as undisputedly authentic documents if the complainant’s claims are based upon these

documents” (quoting Mayer v. Belichick, 605 F.3d 223, 230 (3d Cir. 2010))).

that the Cumberland Policy protects Stones against the risk of liability it may incur to a third party

for property damage that it may have caused, this distinction alone does not persuade the Court

that Count I should be dismissed.

Even if Defendants are correct in that the policies protect different interests, a plain reading

of the policies’ respective “other insurance” provisions reflects that the policies contemplate co-

existence with one another in the event Stones is found liable for property damage under the

Cumberland Policy. This reading of the Cumberland Policy and Scottsdale Policy is bolstered by

the argument Defendants reserve in reply—that is, when both policies’ “other insurance”

provisions are read together, Defendants maintain that “the Cumberland and Scottsdale Policies

would be deemed co-primary.” (Reply Br. at 8 n.6). Although the Court makes no determination

as to whether the Cumberland Policy and Scottdale Policy are co-primary with one another—as

this issue is not yet ripe—it appears Defendants intend to argue that the policies are co-primary if

Stones is found liable for negligence in the Subrogation Action (and following the denial of

Defendants’ motion to dismiss Count I of the instant Complaint).

Both the Cumberland Policy and the Scottsdale Policy have “other insurance” provisions.

The Cumberland Policy’s “other insurance” provision provides, in relevant part:

SECTION IV – COMMERCIAL GENERAL LIABILITY

CONDITIONS

. . .

4. Other Insurance

If other valid and collectible insurance is available to the insured for

a loss [Plaintiff] cover[s] under Coverages A or B of this Coverage

Part, [its] obligations are limited as follows:

a. Primary Insurance

This insurance is primary except when Paragraph b. below

applies. If this insurance is primary, our obligations are not

affected unless any of the other insurance is also primary. Then,

we will share with all that other insurance by the method

described in Paragraph c. below.

b. Excess Insurance

(1) This insurance is excess over:

(a) Any of the other insurance, whether primary,

excess, contingent or on any other basis:

(i) That is Fire, Extended Coverage,

Builder’s Risk, Installation Risk or

similar coverage for “your work”;

(ii) That is Fire insurance for premises

rented to you or temporarily occupied

by you with permission of the owner;

(iii) That is insurance purchased by you to

cover your liability as a tenant for

“property damage” to premises rented

to you or temporarily occupied by

you with permission of the owner . . .

(CP at 21–22, § IV.4(a)–(b) (emphasis added)). The Scottsdale Policy’s “other insurance”

provision states:

G. OTHER INSURANCE

1. You may have other insurance subject to the same plan, terms,

conditions and provisions as the insurance under this Coverage

Part. If you do, we will pay our share of the covered loss or

damage. Our share is the proportion that the applicable Limit of

Insurance under this Coverage Part bears to the Limits of

Insurance of all insurance covering on the same basis.

2. If there is other insurance covering the same loss or damage,

other than that described in 1. above, we will pay only for the

amount of covered loss or damage in excess of the amount due

from that other insurance, whether you can collect on it or not.

But we will not pay more than the applicable Limit of Insurance.

(SP at 40 § G (emphasis added)).

Indeed, the “other insurance” provisions recited above account for instances in which the

same loss or damage—i.e., property damage—is covered by the same type of policy—whether

commercial liability policies or commercial property policies. (Compare CP at 22, §

IV.4(b)(1)(a)(iii) (providing for priority of coverage when other insurance “is purchased by

[Stones] to cover [its] liability as a tenant for ‘property damage’ to premises rented to [Stones]

(emphasis added)), with SP at 40 § G.1 (providing for priority of coverage when other insurance

is “subject to the same plan, terms, conditions, and provisions as the insurance in [the Scottsdale

Policy]” (emphasis added))). However, the “other insurance” provisions also plainly provide for

priority of coverage when different types of insurance policies cover the same loss or damage.

(Compare CP at 22, § IV.4(b)(1)(a)(ii) (providing for priority of coverage when other insurance

“is Fire insurance for premises rented to [Stones] or temporarily occupied by [Stones] with

permission of the owner”), with SP at 40 § G.2 (providing for priority of coverage when other

insurance “cover[s] the same loss or damage, other than that described in 1. above” (emphasis

added))).8

Relatedly, although not addressed by any party, the Cumberland Policy’s “other insurance”

provision states, at the outset, that Plaintiff’s “obligations are limited” “[if] other valid and

collectible insurance is available to the insured for a loss [Plaintiff] covers under Coverages A or

B.” (CP at 22, § IV.4 (emphasis added)). Consistent with the Court’s interpretation above,

Defendants do not characterize the “loss” as Stones’s liability expenses. (See generally Mov. Br.).

Rather, Defendants appear to concede that “the Cumberland Policy extends liability coverage to

8 The Court observes that when Defendants initially quoted the Scottsdale Policy’s “other insurance” provision

in their moving brief, they argued that “the Scottsdale Policy is not to be compared to the Cumberland Policy, which

. . . , is not a policy with the ‘same plan, terms, conditions, and provisions’ as the Scottsdale Policy.” (Mov. Br. at

14–15 n.4). This argument, however, is limited to Section G.1 of the Scottsdale Policy. By contrast, the argument

Defendants reserve in reply accounts for Section G.2 of the Scottsdale Policy. (Compare id., with Reply at 8 n.6).

Stones for the Loss [i.e., the fire].” (Id. at 12 (emphasis added)). At this juncture, and without a

case “on all fours” at the motion to dismiss stage,9 the Court declines to read the Cumberland

Policy’s “other insurance” provision as applicable only to other liability policies.

Accordingly, because the Cumberland Policy and Scottsdale Policy seemingly may co-

exist to insure Stones for the same loss—i.e., property damage to the building premises occupied

by Stones as tenant—Defendants’ motion to dismiss Count I is DENIED.

B. Count II – Scottsdale’s Duty to Defend

In its motion to dismiss Count II, Defendants argue that Scottsdale has no duty to defend

Stones because the Scottsdale Policy contains language that renders Scottdale’s election to defend

Stones optional, not mandatory. (Mov. Br. at 15–16). Instead, Defendants point to language in

the Cumberland Policy that imposes an obligation on Plaintiff to defend Stones in the Subrogation

Action by way of an explicit “duty to defend.” (Id. (collecting cases from other jurisdictions

analyzing the same contractual language)). Defendants assert that “to the extent Cumberland’s

claim relies on its argument that the Cumberland Policy provides excess coverage, it likewise fails”

for the same reasons Defendants argued above in Count I. (Id. at 16).

Plaintiff opposes, primarily arguing that Defendants’ authorities from other jurisdictions

are not persuasive under principles of New Jersey law. (Opp. Br. at 11–12). Plaintiff maintains—

without quoting the relevant language from the Scottdale Policy—that Scottsdale’s promise to

9 Although Defendants cite to various cases in support of its position, many are procedurally inapposite, non-

binding, interpret other states’ laws, and/or do not deal with the exact declaratory judgment claim, facts, and arguments

before this Court. See, e.g., St. Paul Fire & Marine Ins. Co. v. Prot. Mut. Ins. Co., 607 F. Supp. 388, 390–91 (S.D.N.Y.

1985) (noting that “the St. Paul policy named only Trust as the insured and the Protection policy named only Pellon

as its insured” and finding that “the two policies covered different insureds, moreover the insurable interests are clearly

different” where “Pellon’s interest was a leasehold while Trust’s was in fee”), on reargument, 644 F. Supp. 38

(S.D.N.Y. 1986). Indeed, although not cited by the parties, the Tenth Circuit recently disagreed with St. Paul when it

rejected a party’s attempt to invoke applicable “other insurance” provisions where “[b]oth policies protected the

Barnard building against the risk of fire damage.” Philadelphia Indem. Ins. Co. v. Lexington Ins. Co., 845 F.3d 1330,

1340–41 (10th Cir. 2017).

defend Stones is illusory. (Id. at 12). Plaintiff considers its current defense of Stones in the

Subrogation Action as arising under “paragraph 4.b.(2) of the Cumberland Policy,” which sets

forth Plaintiff’s obligation to defend when its policy is “excess.” (Id. at 13). Pursuant to this

provision, Plaintiff believes it is entitled to recover fees and expenses from its defense of Stones.

In reply, Defendants stand by the plain reading of the policies’ language. (Reply Br. at 9).

In doing so, they argue that Scottsdale could not have made an illusory promise to defend Stones

because it has no explicit “‘duty’ to defend” its insured. (Id. at 9 n.7). As a third-party liability

policy, Defendants argue that Cumberland has a duty to defend Stones whereas Scottsdale’s first-

party property policy is “not intended to provide liability coverage for [Stones as its] insured.” (Id.

at 10). To the extent Plaintiff suggests that Scottsdale is in breach of its duty of good faith “in

processing Stones’[s] first-party claim” it “has no basis in fact” and is irrelevant to Plaintiff’s

declaratory judgment action. (Id.).

To determine whether an insurance company has a duty to defend under New Jersey Law,

the court must “compar[e] the allegations in the complaint with the language of the policy.”

Voorhees, 607 A.2d at 1259. “To make that determination, the complaint is placed alongside the

policy and the test is whether the allegations of that complaint, upon its face, fall within the risk

insured against.” W9/PHC Real Estate LP v. Farm Family Cas. Ins. Co., 970 A.2d 382, 391 (N.J.

App. Div. 2009). In comparing those documents, “it is the nature of the claim asserted, rather than

the specific details of the incident or the litigation’s possible outcome, that governs the insurer’s

obligation.” Flomerfelt v. Cardiello, 997 A.2d 991, 998 (N.J. 2010). “When the two correspond,

the duty to defend arises[.]” Voorhees, 607 A.2d at 1259.

Here, the Cumberland Policy states, in relevant part, that

[Plaintiff] will pay those sums that [Stones] becomes legally

obligated to pay as damages because of ‘bodily injury’ or ‘property

damage’ to which this insurance applies. [Plaintiff] will have the

right and duty to defend [Stones] against any ‘suit’ seeking those

damages. However, [Plaintiff] will have no duty to defend [Stones]

against any ‘suit’ seeking damages for ‘bodily injury’ or ‘property

damage’ to which this insurance does not apply.

(CP at 11 § I.1(a) – “Section I – Coverages” – “Coverage A – Bodily Injury and Property Damage

Liability” (emphasis added)). On the other hand, the Scottsdale Policy provides that “[Scottsdale]

may elect to defend [Stones] against suits arising from claims of owners of property. [Scottsdale]

will do this at [its] expense.” (SP at 34 § E(4)(f) – “Loss Conditions . . . Loss Payment” (emphasis

added)).

Even a cursory review of the negligence allegations in the Subrogation Action’s amended

complaint against Stones suggests that they “fall within the risk insured against” in the Cumberland

Policy. See Voorhees, 607 A.2d at 1255; see also AmGuard Ins. Co. v. Stones by Vincenzo, Inc.,

No. 22-5519 (ES) (JRA), D.E. No. 63 ¶¶ 8, 17–21 (Sept. 27, 2024) (alleging that Stones negligently

placed “combustible materials in, on and/or near the wood-burning stove at the subject property”

and left the stove “in an active and operating condition while unattended overnight”). Moreover,

the Court agrees that a plain reading of the above-quoted language from the Cumberland Policy

imposes an express duty on Plaintiff to defend Stones under the circumstances set forth in Section

I.1(a). (See CP at 11 § I.1(a) (“[Plaintiff] will have the right and duty to defend [Stones] against

any ‘suit’ seeking those damages.” (emphasis added)); see also Mov. Br. at 15–16). By contrast,

the plain and unambiguous language in Section E(4)(f) of the Scottsdale Policy provides Scottsdale

with the option to defend Stones. (SP at 34 § E(4)(f) (“[Scottsdale] may elect to defend [Stones]

against suits arising from claims of owners of property.” (emphasis added)).10

10 The absence of case law interpreting identical language under New Jersey law is of no moment. Indeed, the

Court’s independent research did not reveal a case that assessed the same language in a dispute governed by New

Jersey law. Thus, Defendants’ reliance on authorities from other jurisdictions is persuasive, particularly when there

is one plain, ordinary, and unambiguous reading of provisions at issue. (See Mov. Br. at 15–16). Moreover, Plaintiff

However, as the parties acknowledge, the Cumberland Policy contains additional language

regarding Plaintiff’s duty to defend when its coverage is excess to another insurance policy. (Mov.

Br. at 16; Opp. Br. at 13). Specifically, the Cumberland Policy’s “other insurance” provision

provides, in relevant part:

SECTION IV – COMMERCIAL GENERAL LIABILITY

CONDITIONS

. . .

4. Other Insurance

If other valid and collectible insurance is available to the insured for

a loss [Plaintiff] cover[s] under Coverages A or B of this Coverage

Part, [its] obligations are limited as follows:

. . .

c. Excess Insurance

. . .

(2) When this insurance is excess, [Plaintiff] will

have no duty under Coverages A or B to defend

the insured against any ‘suit’ if any other

insurer has a duty to defend the insured against

that ‘suit.’ If no other insurer defends, [Plaintiff]

will undertake to do so, but [Plaintiff] will be

entitled to the insured’s rights against all those

other insureds.

(CP at 21–22, § IV.4(b)(2) (emphasis added)). Accordingly, under this provision, even if the

Cumberland Policy is excess to the Scottsdale Policy, Plaintiff cannot relinquish its duty to defend

as set forth above unless Scottsdale also has a clear “duty to defend” Stones in the Subrogation

Action under the Scottsdale Policy. (See id.). As noted above, the Scottsdale Policy provides that

it “may elect” to defend Stones in the Subrogation Action. (SP at 34 § E(4)(f)). This language

does not proffer an alternative interpretation that is “objectively reasonable,” nor does it sufficiently explain how—in

its view—Scottsdale’s alleged promise to defend is “illusory.” (See Opp. Br. at 11–12).

does not impose a mandatory duty to defend on Scottsdale, but rather provides Scottsdale with the

option to defend Stones—a decision that is within Scottsdale’s discretion.

For these reasons, the relevant policy language does not impose on Scottsdale a duty to

defend Stones in the Subrogation Action. Thus, Defendants’ motion to dismiss Count II is

GRANTED and Count II of Plaintiff’s Complaint is DISMISSED without prejudice.

C. Count III – Priority of Coverage (AmGuard)

In moving to dismiss Count III, Defendants make essentially the same arguments recounted

above in connection with Count I. (See Mov. Br. at 16–18; see also Reply Br. at 13–17). Akin to

Count I, Plaintiff maintains that the “other insurance” provision in the Cumberland Policy renders

it excess to the AmGuard Policy, “which is the same policy form as the Scottsdale Policy.” (Opp.

Br. at 13–14). However, unlike the Cumberland Policy and Scottsdale Policy, the parties

acknowledge that the AmGuard Policy insures RLM as property owner—not Stones. (Mov. Br.

at 18; Opp. Br. at 13; see also AP at 2).

As noted above, the Cumberland Policy’s “other insurance” provision applies “[if] other

valid and collectible insurance is available to the insured [i.e., Stones] for a loss [Plaintiff] covers

under Coverages A or B.” (CP at 22, § IV.4 (emphasis added)). Thus, to work in Plaintiff’s favor,

Stones must be an insured under the AmGuard Policy or RLM must be an insured under the

Cumberland Policy.

As conceded by the parties, the record before this Court reflects that RLM is the insured

under the AmGuard Policy. (AP at 2; Mov. Br. at 18 (“AmGuard insures RLM for first-party

property damage benefits.”); Opp. Br. at 13 (“AmGuard insures RLM, the landlord of the Subject

Property and the building, under the AmGuard Policy.”); Compl. ¶ 11 (“Amguard insured RLM

for the building on the Property.”)). The Court’s review of the record reflects that Stones is not a

covered insured under the AmGuard Policy. (See generally AP). Neither the Complaint nor the

parties’ briefs suggest otherwise. (See generally Compl.; Mov. Br.; Opp. Br.; Reply Br.).

Furthermore, Stones is the only clear insured under the Cumberland Policy. (See generally

CP). The Cumberland Policy defines “insured” to mean “any person or organization qualifying as

such under Section II – Who is An Insured.” (CP at 11 (preamble)). Under Section II of the

Cumberland Policy entitled “Who is An Insured” only those persons specifically “designated in

the Declarations as” one of five categories qualifies as an insured. (Id. at 19 § II.1(a)–(e)).

Specifically, those categories include: (i) individuals and spouses; (ii) partnerships or joint

ventures; (iii) limited liability companies; (iv) organizations other than a partnership, joint venture,

or limited liability company; and (v) trusts. (Id.). Indeed, the declaration pages before the Court

state that the name of the insured is “Stones by Vincenzo Inc.” (Id. at 2). After its careful review

of the motion record, the Court has not identified anything to suggest that RLM is not an insured

under the Cumberland Policy; nor do the parties argue as much. (See generally id.; see also

Compl.; Mov. Br.; Opp. Br.; Reply Br.).

Accordingly, because the Cumberland Policy’s “other insurance” provision appears limited

to other policies issued to Stones as the insured, Defendants’ motion to dismiss Count III is

GRANTED and Count III of Plaintiff’s Complaint is DISMISSED without prejudice.

IV. CONCLUSION

For the foregoing reasons, Defendants’ motion to dismiss is GRANTED in-part and

DENIED in-part. An appropriate Order accompanies this Opinion.

Dated: October 3, 2025 s/ Esther Salas

Esther Salas, U.S.D.J.