eNotes: Liability – January 2023 – New Jersey

SIGNIFICANT CASE SUMMARIES

New Jersey Case Summaries

Holm v. Purdy
New Jersey Supreme Court
No. A-39-21, 086229

Decided: December 13, 2022

The New Jersey Supreme Court held that an insurance agent/broker had a non-waivable duty to advise new LLC members of their right to elect coverage, but could only be liable in the event of willful, wanton or grossly negligent conduct.

Background

Defendant, Daniel L. Purdy (“Purdy”), was the insurance broker for Holmdel Nurseries, a business owned by the Friedauer family. A year after workers’ compensation coverage became available for LLC members, Holmdel elected to obtain coverage for the Plaintiffs, who were members of the LLC. However, Robert and Walter Friedauer, who were the owners of the business, later informed Purdy that they did not wish to obtain workers’ compensation coverage for themselves after determining that it was cost-prohibitive. Christopher and Michael Friedauer, who had remained covered employees of the business, eventually purchased their uncle Walter’s interest in the business and therefore became members of the LLC. Thereafter, when Purdy had his annual meeting with Holmdel Nurseries LLC, he learned of the transfer of ownership interest, but did not inform the Friedauers of the need to elect workers’ compensation coverage for Christopher and Michael, if they wished for these two sons of Robert Friedauer to remain insured.

Christopher Friedauer ultimately suffered a fatal work accident, but his family was denied workers’ compensation death benefits. Plaintiff, Christopher’s widow, filed suit against Purdy for negligence in failing to inform the Friedauers of the loss of workers’ compensation coverage upon the transfer of interests. The Superior Court of New Jersey, Law Division (the Trial Court), granted judgment for Defendant, rejecting Plaintiff’s argument that an insurance broker had a duty to inform individual LLC members of their right to elect workers’ compensation coverage, and finding that Plaintiff had failed to establish proximate cause. The Appellate Division reversed, ruling that a broker had a non-waivable duty to advise new LLC members of their right to elect coverage.

Holding

After extensive review and consideration of the fiduciary duty of insurance agents and brokers, generally, the Supreme Court agreed that Defendant Purdy had a non-waivable duty to advise the new LLC members, pursuant to N.J.S.A. 34:15-36. However, under that same statute’s provisions, Purdy would not be liable for breach of that non-waivable duty unless he engaged in willful, wanton or grossly negligent conduct. The Court therefore remanded to the Trial Court, finding that Plaintiff had presented sufficient evidence to create a triable issue as to proximate cause.

Questions about this case can be directed to Mark Sander at (856) 334-0415 ext. 8915 or msander@tthlaw.com.

Rivera v. Cherry Hill Towers, LLC
No. A-2394-21, ___ N.J. Super. ___
Decided: December 12, 2022

The New Jersey Superior Court, Appellate Division, found that Defendant apartment complex management company could not be held negligent for failing to provide adequate security, since it did not have a duty to do so at the time of the alleged shooting.

Background

Plaintiff, Fritzy Rivera (“Plaintiff”), alleged that Defendant, Vikco, Inc. (“Vikco”), was negligent in failing to provide a safe environment as property manager of the Cherry Hill Towers apartment complex. It was further alleged that Vikco’s negligence was a proximate cause of her being shot by her estranged husband, Brian Walker, as she left her friend’s apartment. Vikco was not the property manager when Walker accessed Cherry Hill Towers through an open security gate. Vikco’s contract with the apartment complex had terminated seventeen days earlier. Rivera contended that leaving the security gate open was a practice established by Vikco and continued by the new property management company, Defendant AION Managements LLC.

The Superior Court of New Jersey, Law Division (the Trial Court), denied Defendant’s Motion for summary judgment, ruling that there was a jury question as to whether Vikco owed Plaintiff a duty of care. The Trial Court noted that, during its time as property manager, Vikco knew of significant criminal activity occurring in and around the apartment complex.

Holding

On appeal, the Superior Court, Appellate Division, reversed and remanded for entry of judgment in favor of Vikco. The Court first ruled that the question of whether or not Vikco owed Plaintiff a duty was a legal question that should have been resolved by the Trial Court, rather than being left for the jury. Then, after reviewing the applicable case law standards in some detail, the Appellate Division rejected Plaintiff’s assertion that even after Vikco ceased serving as the complex’s property manager, it continued to owe Plaintiff a duty to provide adequate security for the apartment complex.

Questions about this case can be directed to Mark Sander at (856) 334-0415 ext. 8915 or msander@tthlaw.com.

Am. Zurich Ins. Co. v. Meridia Downtown Urban Renewal
No. A-1868-21, ___ N.J. Super. ___
Decided: December 7, 2022

The New Jersey Superior Court, Appellate Division, establishes a high bar for civil litigants seeking to obtain investigation material from the government’s ongoing criminal investigations.

Background

In this case, the Somerset County Prosecutor’s Office (“SCPO”) appealed the Order of the Superior Court of New Jersey, Law Division – Civil, which required the SCPO to turn over evidence from its criminal investigation of a property fire. A construction site owned by Meridia Downtown Urban Renewal Bound Brook, LLC (“Defendant Meridia”) caught on fire. The fire spread and caused significant damage to a separate construction site across the street, which was insured by American Zurich Insurance Company (“Plaintiff”). An alleged arsonist was arrested for starting the fire and charged with aggravated arson and hindering apprehension. To recover the insurance benefits it paid, Plaintiff filed a subrogation claim against Defendant Meridia, Meridia Construction Management, LLC, and Capodagli Property Company (“Defendants”). Plaintiff alleged that the Defendants were negligent for failing to properly secure their construction site, which allowed the alleged arsonist to access the site and start the fire. To obtain information relating to the cause and origin of the fire, the parties served a subpoena duces tecum on the SCPO and moved to compel production of its investigative file. The SCPO resisted the subpoena, arguing that the investigative materials were confidential and privileged.

The Trial Judge heard oral argument on all three Motions — the SCPO’s Motion to quash Defendants’ subpoena, Defendants’ Cross-Motion to enforce the subpoena, and Zurich’s Motion to compel production of the SCPO’s file. Following oral argument, the Trial Court found in favor of the parties to the civil action. The Court ordered the SCPO to turn over videos and photos depicting the events giving rise to the alleged arsonist’s criminal prosecution, the alleged arsonist’s statement to investigators, and any witness statements or contact information.

Holding

The Superior Court, Appellate Division, reversed these rulings, and held that the Trial Court failed to properly balance the state’s interest in the ongoing criminal prosecution against the parties’ discovery interests. The Appellate Division observed that “while the materials may well enhance the preparation of the civil case, they are by no means the sine qua non to the perfection of [the civil] cause of action needed to establish the ‘essentiality’ requirement. Disclosure of information in the possession of law enforcement officials concerning criminal activities, the court noted, will not be allowed unless the need from the standpoint of essentiality is supported by detailed findings.” Furthermore, although the Judge repeatedly referred to the millions of dollars involved in the civil case, the Appellate Division found that “the presence of damages does not of itself demonstrate a need to invade a confidential public record.” Additionally, in ordering the disclosure of witness information, the Trial Judge “failed to weigh the imperative of the interests of the State in protecting and maintaining the confidentiality of witnesses who gave statements to the SCPO in connection with [the alleged arsonist’s] arson prosecution. Rather, the judge merely concluded that it [was] fair and appropriate and equitable that the [SCPO] . . . provide the information for the witness[es], [and] any contact information for the witness[es] so the civil [action parties] can perform [their] own investigation.” The Court further found that the Defendants had failed to prove that at least some of the materials could not be obtained through other means. The Court’s decision has been approved for publication.

Questions about this case can be directed to Mark Sander at (856) 334-0415 ext. 8915 or msander@tthlaw.com.

Lansigan v. Trino
Nos. A-2248-21, A-2249-21, ___ N.J. Super. ___
Decided: December 6, 2022

The New Jersey Superior Court, Appellate Division, found Defendant homeowners not liable under the Social Host Liability Act (“SHLA”) for an accidental pool drowning because Plaintiffs’ claims were not based on a motor vehicle accident caused by a driver who became intoxicated due to the Trinos’ service of alcohol, and because there was no common law duty to protect Plaintiff from drowning due to his voluntary intoxication.

Background

While intoxicated, the 26-year-old Raniel Hernandez (“Raniel”) drowned in a swimming pool while attending a party hosted by Defendant, Airel Trino, at the home of his parents, Defendants, Henry and Charlene Trino (“the Trinos”). Raniel’s parents (“Plaintiffs”) filed suit against the Trinos and other partygoers, asserting a claim under Portee v. Jafee (negligent infliction of emotional distress – by injury to close family member), as well as claims of negligence and intentional infliction of emotional distress. At the close of discovery, all Defendants moved for summary judgment.

The Superior Court of New Jersey, Law Division (the Trial Court), denied summary judgment for party attendee/Defendant, Kevin Garcia (“Garcia”), and for the Trinos. As to Garcia, the Trial Court found that there were material issues of fact concerning his role in Raniel’s drowning. As to the Trinos, the Trial Court found genuine issues of material fact concerning their duty to Raniel due to his intoxication and the reasonableness of the pool safety protections implemented at their property.

Holding

On appeal to the Superior Court, Appellate Division, Garcia argued that there were no facts showing that he caused Raniel to enter the pool, or that he was liable for attempting to rescue Raniel when he noticed that Raniel had not resurfaced. The Trinos argued that they were not liable under the SHLA because the Act applied only to claims where a third-party was injured in a motor vehicle accident caused by an intoxicated driver. The Trinos further argued that they had no common law duty to protect Raniel from drowning due to his voluntary intoxication. The Court reversed the denial of summary judgment to the Trinos and Garcia. The Court first ruled that Garcia was entitled to summary judgment because the undisputed facts showed he had no role in Raniel’s decision to jump into the pool, and because there was no failure on his part to exercise good faith in trying to rescue Raniel. The Court further agreed with the Trinos that the SHLA did not govern Plaintiffs’ claim and that they owed no duty to prevent Raniel from swimming while intoxicated.

Questions about this case can be directed to Mark Sander at (856) 334-0415 ext. 8915 or msander@tthlaw.com.