Lack of contractual responsibility for maintenance of property does not relieve commercial unit owner from duty of care to plaintiff

February 20, 2013

Despite a developer’s contractual responsibility for maintenance and repair of an area outside a commercial condominium unit, the owner of that unit owes a duty of care to the employee of an independent contractor with regard to a hazardous condition in that same location, according to the Appellate Division’s published decision in Nielsen v. Wal-Mart Store #2171 (A-2790-11T1). The Court balanced  a number of factors in concluding that the lack of ownership or control of the area did not absolve Wal-Mart of liability, including the relationship of the parties, the attendant risks, the nature of the risks and ultimately, fairness to the innocent plaintiff.

The plaintiff, William Nielsen, was injured when he slipped and fell in a shopping plaza in Princeton while in the course of his employment with Ecolab, Inc., which had been hired by Wal-Mart to exterminate pests. He had been instructed by the store to access various entrances from the exterior of the unit owned by Wal-Mart. The perimeter of the store, where plaintiff fell, was owned by the developer, who, pursuant to the master deed, agreed to “supervise, administer, operate, manage, insure, repair, replace and maintain” the common elements. The plaintiff subsequently filed suit against Wal-Mart, and unsuccessfully attempted to amend the complaint to name the developer as a defendant more than two years after the action’s accrual, at which point the statute of limitations had run. At trial, a jury found Wal-Mart 80 percent negligent and awarded plaintiff damages of $400,000. Wal-Mart’s motion for a new trial was denied.

On appeal, Wal-Mart argued that the trial court erred in failing to distinguish between the duty owed by a business owner on and off its premises. The Appellate Division stated that case law supports the imposition of liability beyond the boundaries of a commercial land occupier’s property (i.e. to abutting sidewalks and adjacent public roadways). Likewise, while a lack of ownership or control of an area has relevance in determining the existence of a duty of care, the Court noted it is not dispositive. The Court also indicated that the private contractual arrangement of duties between a commercial unit owner and developer is simply another factor to be considered in the analysis.

 

Ultimately, the Court affirmed the trial judge’s decision based on foreseeability and fairness grounds. Wal-Mart directed the plaintiff to use the unit’s perimeter to perform extermination work, and as such, was aware that its invitees and passersby might foreseeably traverse the area outside the unit. The Court also suggested that, despite no contractual obligation to maintain an area, a business owner, such as Wal-Mart, would be encouraged to alert the responsible entity of a hazardous condition if a duty of care was imposed on that unit owner.


Failure By Auto Dealership To Disclose that Car Being Sold Had Been Used As A Loaner Violates The Consumer Fraud Act

February 13, 2013

A Law Division Judge has held that a New Jersey car dealer’s failure to advise a purchaser of a car that it had previously been used as a loaner constitutes a violation of the Consumer Fraud Act.  In this case, the purchaser bought a 2008 Mercedes Benz ML350 from the defendant for $42,815.  Soon after, the purchaser’s wife noticed sticker residue spelling “Courtesy Car” in the rear window.  The purchaser complained to the dealership and the dealership agreed to take back the car for $10,000 less than that which the purchaser had paid.  The purchaser did not accept the offer.  The purchaser then sued the dealership claiming that it “misrepresented, deceived and committed an unconscionable commercial practice through fraud and falsity by advising [the purchaser] that the automobile was a lease car traded in by its owner.”  The purchaser claimed that he would not have bought the car if he had known it was a loaner car.

The dealership argued that it was technically correct to say that the vehicle in question was a leased car traded in by its owner because the dealership had bought the car from the manufacturer and then sold it to its leasing subsidiary.  This in turn allowed the dealership to use it as a loaner.

The court permitted the purchaser to prosecute a Consumer Fraud Act claim against the dealership.  After a jury trial, the purchaser was awarded treble damages in the amount of $30,000 and attorney’s fees and expenses in the amount of $45,202.

As an aside, the court found plaintiff’s counsel’s hourly rate of $400 an hour to be reasonable.  Additionally, the judge enhanced the fees by 10% because plaintiff’s attorney did not require payment up front and agreed not to bill the client if he lost.

This is a case of first impression in New Jersey.  Montgomery v. Millennium Auto Group, MRS-L-2839-10.


Proposed Legislation Would Create Statutory Right For Insured To File A “Bad Faith” Claim Against Their Insurance Company And Recover Attorney Fees

February 6, 2013

The New Jersey Senate has reintroduced the “Consumer Protection Act,” which would establish a private cause of action which would allow insureds (or their assignees) to allege “bad faith” against their insurance company.  Currently, a cause of action for “bad faith” is not grounded in statute, but through the New Jersey Supreme Court’s ruling in Rova Farms Resorts Inc. v. Investors Insurance Company.

The proposed legislation provides that in addition to the enforcement authority provided to the Commissioner of Banking and Insurance (“Commissioner”), a claimant may, regardless of any action which has been filed by the Commissioner, file a civil action in court of competent jurisdiction against its insurer for any violation which could be deemed an unfair claims/settlement practice.  What constitutes an “unfair practice” is defined in the New Jersey statute, but may only be pursued by the Commissioner.  The unfair claims settlement practices are defined in N.J.S.A. 17:29B-4(9) as follows:

 Misrepresenting pertinent facts or insurance policy provisions relating to coverage at issue;

Failing to acknowledge and act reasonably and promptly upon communications with respect to claims arising under insurance policies;

Failing to adopt and implement reasonable standards for prompt investigation of claims arising under insurance policies;

Refusing to pay claims without conducting a reasonable investigation based upon all available information;

Failing to affirm or deny coverage of claims within a reasonable time after proof of loss statements have been completed;

Not attempting in good faith to effectuate prompt, fair and equitable settlements of claims in which liability has become reasonably clear;

Compelling insureds to institute litigation to recover amounts due under an insurance policy by offering substantially less than the amounts ultimately covered in actions brought by such insureds;

Attempting to settle a claim for less than the amount of which a reasonable man would have believed he was entitled by reference to written or printed advertising material accompanying or made part of an application;

Attempting to settle claims on the basis of an application that was altered without notice to, or knowledge, or consent to the insured;

Making claims payments to insureds or beneficiaries not accompanied by a statement setting forth the coverage under which the payments are being made;

Making known to insureds or claimant the policy of appealing from arbitration awards in favor of insureds or claimants for the purpose of compelling them to accept settlements or compromises less than the amount awarded in arbitration;

Delaying the investigation or payment of claims by requiring the insured, claimant or physician to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;

Failing to promptly settle claims where liability has become reasonably clear, under one portion of the insurance policy coverage in order to influence settlements under other portions of the insurance policy coverage;

Failing to promptly provide a reasonable explanation of the basis of the insurance policy in relation to the facts for applicable law for denial of claim or for the offer of a compromised settlement;

Requiring insureds or claimants to institute or prosecute complaints regarding motor vehicle violations in the municipal court as a condition of paying private passenger automobile insurance claims.

 

Under this bill, if an insured can establish that an insurance company engaged in an unfair practice, they would be entitled to: (1) their monetary damages; (2) attorney fees; and (3) punitive damages if malice or a wanton/willful disregard for the insured’s rights are proven by clear and convincing evidence.

A similar version of this bill has previously been introduced.  However, it did not clear a committee.  The current version is co-sponsored by Senator Nicholas Scutari (Democrat) and Senator Jennifer Beck (Republican).

In light of Super Storm Sandy, there is the possibility that this legislation will gain support by the legislature.  At this time, no hearing has been scheduled for this bill at the committee level.