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.


Governor Christie Names 14 to Fill New Jersey Court Vacancies

January 30, 2013

On Monday, Governor Christie named 14 individuals to fill vacancies on the New Jersey Superior Court.  Seven are being renominated, seven are new nominees.  Here is the list:

Judge of SUPERIOR COURT
Nominate for appointment J. Randall Corman (Sayreville, Middlesex)
Nominate for appointment Arnold L. Natali Jr. (Little Silver, Monmouth)
Nominate for appointment Joseph W. Oxley (Red Bank, Monmouth)
Nominate for appointment Katie A. Gummer (Rumson, Monmouth)
Nominate for appointment Angela White Dalton (Howell, Monmouth)
Nominate for appointment Peter A. Bogaard (Chester, Morris)
Nominate for appointment Daniel R. Lindemann (Wayne, Passaic)

Nominate for reappointment Sherry A. Hutchins-Henderson (West Orange, Essex)
Nominate for reappointment Arthur Bergman (East Brunswick, Middlesex)
Nominate for reappointment Robert J. Mega (Clark, Union)
Nominate for reappointment Bonnie J. Mizdol (Paramus, Bergen)
Nominate for reappointment Kenneth J. Slomienski (Wallington, Bergen)
Nominate for appointment Mara E. Zazzali-Hogan (Shrewsbury, Monmouth)
Nominate for appointment Bradford M. Bury (Watchung, Somerset)
Nominate for appointment Donald J. Stein (Haddon Heights, Camden)
Nominate for appointment Nesle A. Rodriguez (Jersey City, Hudson)
Nominate for appointment Christopher D. Rafano (South River, Middlesex)
Nominate for appointment Linda E. Mallozzi (Union, Union)
Nominate for appointment James P. Wilson (Roselle, Union)


NJ Court Rules Defendant Must Produce Video of Accident Before Taking Deposition of Plaintiff in Personal Injury Action

January 29, 2013

A New Jersey Law Division Court addressed the issue “Whether or not a defendant, in the context of a personal injury action, must produce a copy of video surveillance of the accident at issue in the lawsuit prior to the deposition of the plaintiff.”

On May 6, 2009, the plaintiffs Valerie and James Herrick were allegedly struck by a motor vehicle and injured while walking across a valet service road adjacent to the Trump Taj Mahal Casino in Atlantic City, NJ.  At the time of the incident, the motor vehicle, owned by Thomas Megonigle, was being operated by the defendant Adrian Wilson, an employee at defendant Trump Taj Mahal Casino.  The event was captured on security cameras owned by the Taj Mahal.

The plaintiff served supplemental interrogatories and a Notice to Produce requesting that the videotape of the incident be produced.  The defendants refused to produce the videotape.  The plaintiffs filed a motion to strike the answer and suppress the defenses of the defendant for failing to provide the video footage.  In opposition to the motion, the defendants asserted that the plaintiffs’ review of the videotape prior to the taking of their depositions would preclude the defendants from obtaining the plaintiffs’ independent recollection of the accident.

The plaintiffs countered that New Jersey Form C Uniform Interrogatories requires each defendant in a personal injury case to attach copies of any photographs and videotapes relative to the subject matter of the complaint.  Further, the Court Rules require that “every question propounded by a uniform interrogatory must be answered unless the court has otherwise ordered.”  The court found that the videotape was clearly discoverable pursuant to R. 4:10-2.  The defendants did not dispute the videotape was relevant but sought to postpone production of the tape based on the case of Jenkins v. Rainner, 69 N.J. 50 (1976).  Jenkins concerned a case of post-accident surveillance of the plaintiff taken two years after the incident and after the plaintiff was deposed.  The New Jersey Supreme Court held that video surveillance had to be produced by the defendant but only after the plaintiff was deposed again.

In Herrick, the court found that holding in Jenkins was not controlling.  The court noted a fundamental difference between video surveillance prepared during the course of litigation for the purpose of impeachment and routine surveillance conducted in the normal course of business.  The court also noted that if the defendant were permitted to withhold the video, it would open up a floodgate of motion practice as parties would routinely refuse to produce all evidence that would be more beneficial to produce after depositions are conducted.

Lastly, the court did find some merit to the defendant’s argument that if the video was produced prior to plaintiff’s deposition, then the plaintiff’s unfettered independent recollection would be forever tainted.  However, the court noted the same argument could be advanced with respect to a limitless list of frequently produced discovery including police reports, witness statements, party admissions, e-mails, etc.  The court then ordered that the videotape be produced prior to the deposition.


NJ Appellate Division Holds Commercial Tenant In Shopping Center Is Not Responsible To Maintain An Area In the Parking Lot In Which the Landlord Is Contractually Obligated To Maintain.

January 24, 2013

The Appellate Division has held in Kandrac v. Marrazzo’s Market at Robbinsville (A-6081-10T3) that a commercial tenant in a multi-tenant shopping center does not owe a duty to its patrons to maintain an area of the parking lot that the landlord is contractually obligated to maintain. The Court found that while the determination as to whether a duty exists remains a fact-sensitive inquiry, commercial tenants not in exclusive occupancy of a shopping center have no common law duty to maintain a parking lot shared with other tenants.

In this case, the plaintiff, Arlene Kandrac, tripped and fell in the parking lot at The Shoppes at Foxmoor, a 36-store shopping center owned by Foxmoor Associates. The fall occurred after she left defendant Marrazzo’s store and walked across the roadway separating the shops from the parking area. She subsequently filed suit against the landowner and the store, alleging their negligence resulted in her injuries.

Marrazzo’s lease provides “the [landlord] covenants and agrees that it shall maintain the common areas of the shopping center in good operating condition and repair . . . “

The Site Manager for the landlord testified that his responsibilities included “overseeing the maintenance of the shopping center, cleaning and maintenance.”  It was his understanding that the tenant did not have any responsibility to maintain the parking lot.  A shopping center maintenance worker, who worked at the shop five days a week, testified that he inspected the parking lot each day to search for potholes.  The owner of Marrazzo’s testified that his store manager’s duties included inspecting the parking area for safety issues.  If an issue was discovered, they were to notify the landlord.

Marrazzo’s motion for summary judgment was granted by the trial court, which found that as a commercial tenant in a multi-tenant facility, the store owed no duty of care to its invitee for an injury that occurred in the shopping center’s common area. On appeal, the plaintiff argued that Marrazzo’s had a duty to provide safe passage to and from its store.

The Court acknowledged the expansion of a duty on commercial landowners to provide patrons with safe ingress and egress, which includes maintaining the condition of a parking lot and the area between an owned establishment and a parking area. The Appellate Division also noted that case law extended this duty to commercial lessees who were exclusive occupants of a facility. However, in affirming the trial court’s grant of summary judgment to Marrazzo’s, the court refused to extend liability to commercial tenants in a multi-tenant shopping center when those tenants do not have control over common areas, or an obligation, contractual or otherwise, to maintain such areas.

According to the Court, the policy reasons for expanding the duty of a commercial landowner set forth in Stewart v. 104 Wallace St., Inc., 87 N.J. 146 (1981), when applied in this case, did not warrant further expansion to commercial tenants. Likewise, while stating that contractual provisions in a lease requiring a landlord to maintain common areas will not necessarily relieve a commercial tenant of all duties to its customers regarding ingress and egress, the assignment of maintenance responsibilities significantly impact the ability of a tenant, such as Marrazzo’s, to address conditions in common areas. Finally, the Court explained that innocent victims would not be left without redress, as it was clear in this case that the commercial landowner was liable for any negligence in maintaining the parking lot where the plaintiff fell.

– Thomas M. Reardon III

 


NJ Supreme Court Holds that Employee Cannot Maintain Suit Against Workers Compensation Carrier for Pain and Suffering due to Delay in Treatment

August 22, 2012

An injured employee does not possess a common-law right of action against a workers’ compensation carrier, even if the employee’s pain and suffering is caused by the carrier’s failure to timely pay for treatment, according to the New Jersey Supreme Court’s decision in Stancil v. ACE USA, No. A-1112-10.  The Court found that permitting such tort recovery would undermine, and even potentially replace, the state’s carefully crafted workers’ compensation system.

Plaintiff, Wade Stancil, received workers’ compensation benefits from his employer’s compensation carrier, defendant ACE USA, after suffering a workplace injury in 1995. In 2006, the compensation court found that Stancil was totally disabled, and in September 2007, he filed a motion to compel the defendant to pay outstanding medical bills. The court granted plaintiff’s motion and awarded counsel fees. As the bills remained unpaid through October 2007, the plaintiff sought further enforcement of the order through the compensation court. Another order compelling the defendant to remit immediate payment for the outstanding bills was issued, and counsel fees again awarded. However, plaintiff underwent additional treatment in 2008, which his physician directly attributed to delays in earlier treatment caused by ACE USA’s failure to pay providers. Subsequently, all of Stancil’s medical bills through 2008 were paid in their entirety.

However, in April 2009, the plaintiff filed a complaint in Superior Court, alleging that as a result of the insurance carrier’s delinquency, he endured additional and unnecessary pain and suffering. The trial court granted the defendant’s motion to dismiss the complaint for failure to state a claim, finding that the Workers’ Compensation Act precluded the type of tort-based relief sought by the plaintiff. The Appellate Division affirmed the trial court’s decision, noting that in recently amending the Act, the Legislature had contemplated claims similar to plaintiff’s and prohibited them.

The Supreme Court granted certification to address the limited question of whether an employee who suffered a work-related injury has a common-law cause of action against a workers’ compensation carrier for willful failure to comply with court orders compelling it to remit payment for treatment that results in the worsening of the employee’s condition.  The Court stated three reasons for affirming the decisions of the lower courts: 1) the workers’ compensation system was purposely designed to provide injured workers a remedy outside the realm of tort and contract law; 2) recent amendments to the Act gave compensation courts greater contempt power to use as an enforcement mechanism; and 3) plaintiff’s proposed remedy would threaten to engulf the workers’ compensation system by in essence allowing the exception to swallow the rule.  The Court also emphasized that in enacting amendments to the Act, the Legislature addressed the issue of resistant carriers by removing language allowing compensation courts to refer matters for civil or other proceedings from the original bill, codified in N.J.S.A. 34:15-28.2.

In dissent, Justice Albin stated that the Court’s decision permits insurance carriers who fail to honor their covenant of good faith and fair dealing with injured workers to use the Workers’ Compensation Act as a shield from tort liability.

– Allison Krilla


NJ Supreme Court Does Not Allow Emotional Distress Claim for Witnessing Death of Pet

August 9, 2012

While acknowledging that people may form close bonds with their pets, the New Jersey Supreme Court refused to permit recovery for emotional distress damages stemming from the death of a pet in McDougall v. Lamm, No. A-99-10.  The Court declined to expand the grounds for relief set forth in Portee v. Jaffee, 84 N.J. 88 (1980), the seminal case regarding emotional distress claims arising out of witnessing a traumatic death.

In McDougall, the plaintiff was walking along the street with her nine-year old dog, a maltipoo, when the defendant’s dog, a much larger breed, ran toward plaintiff’s dog, grabbed it by the neck and shook it several times before dropping the maltipoo and running away. Plaintiff’s dog ultimately died. Prior to trial, plaintiff’s emotional distress claim was dismissed via a motion for partial summary judgment, and the trial court limited plaintiff’s claim for damages to the dog’s intrinsic value. Plaintiff appealed the dismissal of her emotional distress claim, and the Appellate Division affirmed the decision of the trial court.

The Supreme Court granted certification to address the question of whether pert owners should be entitled to recover for emotional distress caused by witnessing the traumatic death of a pet. The Court’s analysis focused on the second of the four elements a plaintiff must prove to establish a claim for bystander recovery outlined in Portee: 1) death or serious physical injury of another caused by a defendant’s negligence; 2) a marital or intimate, familial relationship between the injured party and the plaintiff; 3) observation of the death or injury at the scene; 4) resulting emotional distress.  The Court found that despite strong, emotional ties between owners and their companion pets, these bonds do not fall within the limited kinds of relationships permitted to recover Portee damages. In fact, the Court stated that because case law restricts recovery for witnessing the death of most humans, it would make little sense to allow plaintiff to pursue a claim for emotional distress over the loss of her dog.

Additionally, the Court noted that expanding Portee to include emotional distress claims based on the death of a pet would contradict existing statutes regulating dog owners and dangerous dogs, and the Wrongful Death Act, which limits recovery for wrongful death to money damages. Finally, the Court explained that an alternate ruling would create a class of pet owners, companion pets and analogous human relationships both unforeseeable and not readily identifiable.

–Allison Krilla, Esq.


Delivery Person Owes No Duty to Business Owners and Employees When Placing Items in a Designated Delivery Area

July 11, 2012

A delivery person has no duty to warn business owners and employees when making a delivery and placing items in the general area designated for such deliveries, according to an unpublished decision by the Appellate Division in Fry v. Pepsi Bottling Group, et als., A-5775-10T3. The Court found the hazards at issue, sixteen canisters of soda and C02 delivered to a tavern and placed near the kitchen, were both expected and obvious, and therefore, no duty to warn existed.

The plaintiff, who was employed as a cook, struck her leg on one of the canisters placed in a narrow passage near the tavern’s kitchen. However, she had walked through the area about twenty minutes before the incident without a problem. According to the tavern owner, the delivery company was instructed to the put the canisters in that location to keep them “out of the way.”

The Court rejected the argument that the placement of the canisters was similar to the five-foot wide puddle on which an employee slipped at issue in LaRussa v. Four Points at Sheraton Hotel, 360 N.J. Super. 156 (App. Div. 2003) which was caused by a significant amount of melting snow tracked into a hotel kitchen by a delivery person. In LaRussa, the Court determined that in analyzing the totality of the circumstances, the delivery person did owe a duty to notify hotel personnel of the hazard created by the melting snow. The large puddle created a risk of harm that was obvious and easily foreseeable to the delivery person, whose actions created the dangerous condition. Yet the water was both unexpected and difficult for an employee walking through the hotel kitchen to see. Therefore, the Court in Fry concluded that since the general placement of the canisters was expected and posed no hidden danger, no duty may be imposed on the delivery person to notify the tavern owner or employees that such a delivery had been made.

— Allison Krilla, Esq.