eNotes: Liability – March 2023 – New Jersey

SIGNIFICANT CASE SUMMARIES

New Jersey Case Summaries

Statewide Ins. Fund v. Star Ins. Co.
New Jersey Supreme Court
No. A-62 Sept. Term 2021, 086440

Decided: February 16, 2023

The New Jersey Supreme Court held that a joint insurance fund among public entities constituted “self-insurance,” not insurance, such that governmental entity’s membership in fund did not trigger the “other insurance” clause in Defendant’s policy, leaving Defendant Star Ins. Co.’s coverage primary.

Background

This coverage dispute arose from the death of a twelve-year-old boy who was visiting the beach with his family in the city of Long Branch. The boy dug a tunnel in the sand near a lifeguard stand. The sand collapsed on the boy, and he died the next day. The boy’s parents filed a negligence action against Long Branch, among others. The parents sought damages under Portee v. Jaffee, 84 N.J. 88 (1980), the Wrongful Death Act, N.J.S.A. 2A:31-1-6, and the Survival Act, N.J.S.A. 2A:15-3. The parties settled the underlying negligence action, but payment required review of the three steps Long Branch took to protect itself from liability claims.

Long Branch joined the Plaintiff Statewide Insurance Fund (“Fund”) and also purchased a commercial general liability insurance policy from Defendant Star Insurance Company (“Star”). As a member of Plaintiff’s fund, Long Branch was entitled to $10 million of liability coverage per occurrence. However, the fund’s governing documents limited recovery to liability in excess of other “insurance or self-insurance.” Under the policy issued by Star, Long Branch had $10 million in coverage in excess to a $1 million self-insured retention and “other insurance.” The parties disputed which of them had primary responsibility to cover Long Branch’s settlement of the underlying wrongful death claim.

Holding

The New Jersey Supreme Court noted that N.J.S.A. 40A:10- 48 “states that ‘[a] [JIF] established pursuant to the provisions of this act is not an insurance company or an insurer under the laws of this State, and the authorized activities of the fund do not constitute the transaction of insurance nor doing an insurance business. . . .’ The JIF Act thus expressly distinguishes JIFs from insurance companies and exempts them from regulatory provisions in Code sections devoted to insurance.”

The Supreme Court went on to find that because “self-insurance” is not the same as “insurance” under the law, and because membership in the Fund protects against liability claims through self-insurance rather than by insurance through an authorized carrier, Star’s “other insurance” clause was not triggered. Unlike the Fund’s contracting document, which provided that the Fund’s obligations were excess over “insurance or self-insurance,” Star’s other insurance clause stated only that insurance coverage available under the Star policy was to be considered “excess over . . . any of the other insurance.” Since the Court found that Star’s clause did not encompass the self-insurance available to members through the Fund, Star’s insurance policy was held to be primary in covering the underlying Plaintiffs’ settlement of the negligence action against Long Branch.

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

Liberty Ins. Corp. v. Techdan, LLC
New Jersey Supreme Court
No. A-52 September Term 2021, 086219

Decided: February 15, 2023

In this case involving both the Insurance Fraud Protection Act (“IFPA”) and the Workers Compensation Act (“WCA”), the New Jersey Supreme Court, broadened the applicability of the Comparative Negligence Act (“CNA”), holding that the trial court must charge the jury to allocate percentages of fault, even where only breach of contract, fraud and certain statutory claims are alleged, not just in negligence, products liability or malpractice cases, which are causes of action specifically named in the CNA. Furthermore, this Court held that it is within the trial court’s discretion to decline to give the jury an ultimate outcome charge, particularly in complex litigation.

Background

Liberty Insurance Corp. and LM Insurance Corp. (“Liberty”) issued workers’ compensation policies to Techdan from March 2004 to March 2007. Liberty contended that the Defendants – Techdan, LLC (“Techdan”), Exterior Erecting Services, Inc. (“Exterior”), Daniel Fisher, Robert Dunlap, and Carol Junz – misrepresented the relationship between Techdan and Exterior and the ownership structure of the two entities and provided fraudulent payroll records to reduce the premiums for workers’ compensation insurance. Techdan was indicted for second-degree theft by deception, and Dunlap entered a guilty plea to that charge on Techdan’s behalf. Thereafter, Liberty filed suit asserting fraud under the IFPA, workers’ compensation premium fraud under N.J.S.A. 34:15-57.4, and common law fraud. Liberty also pled claims for breach of contract and civil conspiracy. It asked the Court to impose joint and several liability on all Defendants for any damages, costs, or fees awarded, rather than applying the CNA to apportion fault.

The jury found Techdan liable for $454,660 in compensatory damages and found Exterior liable for $227,330 in compensatory damages, but awarded no compensatory damages against Dunlap, Fisher or Junz. It awarded punitive damages in the amount of $200,000 against Dunlap, $10,000 against Fisher, and $45,000 against Junz, but awarded no punitive damages against Techdan or Exterior. The Trial Court determined that all Defendants should be jointly and severally liable for the total of $756,990 awarded as compensatory damages.

The Appellate Division held that the Trial Court erred when it imposed joint and several liability on Defendants, rather than directing the jury to allocate percentages of fault to Defendants in accordance with the CNA. The Appellate Division also held that the Trial Court should have given the jury an ultimate outcome charge that damages awarded for violation of the IFPA would be trebled as to any Defendant found to have engaged in a pattern of fraudulent conduct.

Holding

The New Jersey Supreme Court held that pursuant to the CNA, the Trial Court should have charged the jury to allocate percentages of fault; should have molded the judgment based on the jury’s findings; and was required to do so, even where no party has requested application of the CNA. In determining whether Liberty’s IFPA and WCA workers’ compensation fraud claims are subject to the CNA’s apportionment procedure, the Court focused on the “substance of the action and not the conclusory terms used by the parties,” as the Legislature prescribed.

After reviewing both claims in detail, the Court concluded that they are among the types of cases to which the CNA applies and that there is no reason to exclude Liberty’s IFPA or WCA claims from the allocation-of-fault scheme prescribed by the Legislature in the CNA. Further, Liberty’s assertion of a claim for civil conspiracy as one of its common law causes of action did not change the analysis. The Court further found no plain error in the Trial Court’s failure to give the jury an ultimate outcome charge in this complex matter.

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

Adams v. Yang
New Jersey Superior Court, Appellate Division
No. A-0052-22

Decided: February 22, 2023

The New Jersey Superior Court, Appellate Division, determined that judicial estoppel, as applied in Glassman v. Friedel, 249 N.J. 199 (2021), does not also apply to prevent a plaintiff from reversing position as to the negligence of a settling joint tortfeasor at trial.

Background

Plaintiff Scott W. Adams’ decedent, Nancy Adams (“Decedent”), was admitted to the hospital with complaints of abdominal pain, vomiting and diarrhea. Decedent underwent a CT scan that had no acute findings. Decedent’s care team included Defendants Hamilton Gastroenterology P.C. and Herve Boucard, M.D. (“Hamilton Defendants”), who recommended Decedent follow up with an outpatient endoscopy and colonoscopy. The Hamilton Defendants later performed the colonoscopy and found an entirely normal colon. Over a year later, the Hamilton Defendants performed an endoscopy that was aborted due to the large amount of food in Decedent’s stomach. Despite Decedent’s worsening complaints, the Hamilton Defendants never attempted another endoscopy. At the end of the year, Decedent underwent a gastric biopsy and CT scan that found a gastric mass diagnosed as a stage IV adenocarcinoma.

Plaintiff filed the present suit, providing an expert report opining that Decedent’s radiologist failed to observe a suspicious gastric mass on Decedent’s initial CT scan, which the expert opined was a stage I tumor. The radiologist Defendant’s expert countered that gastric thickening would be a normal finding and that endoscopy was the preferred method to diagnose early-stage gastric cancer. Plaintiff later settled with the radiologist. Prior to trial, Plaintiff identified the Defendant radiologist’s expert as a witness to be called at trial. Defendants moved to bar the expert pursuant to Glassman v. Friedel, 249 N.J. 199 (2021). The Trial Court denied the Motion.

Holding

On appeal to the Appellate Division, the Hamilton Defendants argued that Glassman, which barred plaintiffs from disavowing the negligence of an initial tortfeasor after settling in a later action against a successor tortfeasor, should be extended to cases involving settlements with joint tortfeasors. The Appellate Division found that Glassman does not extend its application of judicial estoppel to cases involving only joint tortfeasors. The Court made explicit that the Glassman two-step apportionment procedure only applies in “successive-tortfeasor cases” in which the plaintiff “has settled with the initial tortfeasor prior to trial.” Here, Plaintiff initially alleged that two physicians failed to diagnose Decedent’s cancer – an indivisible injury – thus making both tortfeasors “jointly or severally liable in tort for the same injury to person or property . . .” N.J.S.A. 2A:53A-1. The Court further found that Plaintiff was not judicially estopped from reversing position with respect to the negligence of a settling joint tortfeasor at trial because, unlike claims against successive tortfeasors, damages are not divisible between multiple tortious events.

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

C.W. v. Roselle Bd. of Educ.
New Jersey Superior Court, Appellate Division
No. A-3187-21

Decided: February 22, 2023

The New Jersey Superior Court, Appellate Division, determined that Plaintiff, an alleged victim of sexual abuse by a teacher, was barred from seeking pain and suffering damages under the Tort Claims Act (“TCA”), N.J.S.A. 59:1-1-12.3, because he had not incurred the requisite amount of medical expenses ($3,600).

Background

Plaintiff C.W. alleged he was sexually abused in 2004 and 2005 by a school teacher employed by Defendants, N.J. Board of Education and the Roselle Board of Education, during which time Plaintiff was 16 years old. He was not treated by any healthcare professional and did not incur any medical expenses. Plaintiff presented a 2021 psychological report, which opined that Plaintiff was “permanently harmed and changed” by the abuse and would likely need future treatment.

The Trial Court granted the Defendants’ Motion for summary judgment as to Plaintiff’s intentional infliction of emotional distress claim and found Plaintiff was barred under the TCA from seeking pain and suffering damages, his medical bills never having reached $3,600. Plaintiff appealed Trial Court’s ruling.

Holding

The Appellate Division held that, despite the Legislature’s recent amendments to the TCA regarding child sexual abuse claims, it did not eliminate the statutory $3,600 threshold regarding medical expenses. Therefore, the Appellate Division affirmed the Trial Court’s Order barring Plaintiff from seeking damages for pain and suffering.

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

Hyman v. Rosenbaum Yeshiva of New Jersey
New Jersey Superior Court, Appellate Division
No. A-2650-20

Decided: February 8, 2023

The Appellate Division considered the application of the ministerial and ecclesiastic abstention doctrines and, applying the ministerial exception, dismissed all of Plaintiff’s defamation and wrongful termination claims against his former employer, the Jewish temple at which he had been employed as a teacher since 1988.

Background

In 1988, Plaintiff Shlomo Hyman was hired by Defendants as a Judaic studies teacher. Plaintiff, an ordained rabbi, received an annual parsonage allowance from Defendants. However, Plaintiff was required to sign a new employment agreement each school year because Defendants did not grant tenure status. Under the terms of his contract, Plaintiff agreed to abide by Orthodox Jewish religious standards, including refraining from touching students of the opposite gender who were in the third grade or higher.

In 2019, Defendants received allegations of inappropriate interactions between Plaintiff and female students. Plaintiff was placed on administrative leave while Defendants investigated the allegations. After an independent law firm investigation substantiated the allegations, Defendants terminated Plaintiff’s employment. Defendants also chose to send a letter to parents informing them of the reason for Plaintiff’s termination. Plaintiff alleged that this letter resulted in him being branded as a pedophile in the Jewish community, affecting his ability to obtain employment as a rabbi or Jewish education teacher. Plaintiff filed the present defamation lawsuit. Defendants successfully moved for summary judgment pursuant to the ministerial and ecclesiastic abstention doctrines, with the Trial Court noting that Plaintiff was an ordained minister and religious teacher who was fired for failure to comply with religious tenets. Plaintiff appealed.

Holding

The Superior Court of New Jersey, Appellate Division, considered Plaintiff’s arguments that: (1) the Trial Court erred in dismissing his defamation claim because the ministerial exception applies only to employment discrimination claims; and (2) further discovery was required to determine whether the motivation behind the dissemination of a letter concerning the termination was ecclesiastic in nature. The Appellate Division found that “the ministerial exception operates to bar any tort claim provided (1) the injured party is a minister formerly employed by a religious institution and (2) the claims are related to the religious institution’s employment decision.” The Appellate Division rejected Plaintiff’s arguments, ruling that the ministerial abstention doctrine would bar any tort filed by a religious minister previously employed by a religious institution arising from that institution’s employment decision. The Court reasoned that Plaintiff’s status as a minister barred his defamation claims under the ministerial exception because to allow the suit to continue would force the Court to question the Defendants’ employment decision and thereby violate the First Amendment. The application of the ministerial exception to Plaintiff’s defamation claims would preserve the meaning of the exception, which exists to protect religious institutions’ right to internal governance and “to select and control who will minister to the faithful.” Hosanna-Tabor Evangelical Lutheran Church & Sch. v. EEOC, 565 U.S. 171, 188-89 (2012). The Appellate Division found it unnecessary to address whether the ecclesiastic abstention doctrine was an independent basis to dismiss the action because the ministerial exception alone barred Plaintiff’s defamation claim.

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

Fei v. Amadeo
New Jersey Superior Court, Law Division
No. MON-L-002844-21

Decided: February 3, 2023

New Jersey Superior Court, Law Division, dismisses Plaintiff-passenger’s UM claim based on policy’s non-duplication provision and Plaintiff’s prior recovery from the host driver’s liability coverage.

Background

Plaintiff, Laura Fei, sustained serious bodily injuries as a passenger in a two-vehicle automobile accident. The host vehicle’s policy, issued by USAA, provided liability coverage, as well as UM coverage, both in the amount of $100,000/$300,000. The other vehicle was uninsured.

Following the accident, USAA settled Plaintiff’s personal injury claims against the host driver, paying the full $100,000 liability limit to Plaintiff. Thereafter, Plaintiff brought an action seeking recovery under the UM provisions of the USAA policy. USAA moved for summary judgment.

Holding

USAA sought summary judgment based upon a non-duplication of payment provision contained in its policy. Noting that the Plaintiff had already recovered the maximum amount of liability coverage available to her under the policy, USAA argued that the policy’s non-duplication of coverage provision barred her UM claim. The argument was opposed based upon a 1979 New Jersey Supreme Court decision, Ciecka v. Transamerica Ins. Group, which did invalidate the host driver’s insurance policy’s non-duplication provision, and made available to that plaintiff both the host driver’s liability coverage and the host driver’s UM coverage. The Fei Court, however, agreed with USAA that Ciecka did not control the issue before it, as that case was decided before various legislative amendments made in 1984, which served to eliminate stacking of UM benefits, while also allowing certain other limitations on UM coverage, including the non-duplication of coverage, as expressly provided at 17:28-1.1(d). Addressing what appears to have been an issue of first impression, the Court found that, pursuant to a non-duplication provision, a plaintiff’s UM recovery could properly be reduced or denied due to a prior payment under the policy’s liability coverage.

TT&H Attorney Mark Sander represented USAA in the Fie case. Questions about this case can be directed to Mark Sander at (856) 334-0415 ext. 8915 or msander@tthlaw.com.