NJ Supreme Courts Rules — Put Your Settlement Agreements in Writing

October 18, 2013

 

  WILLINGBORO MALL, LTD. v. 240/242 FRANKLIN AVENUE LLC (A-62-11) (069082)

The New Jersey Supreme Court has held that “if the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be reduced to writing and signed by the parties before the mediation comes to a close.”

This case involves Willingboro Mall, Ltd. (Willingboro), the owner of the Willingboro Mall, selling its property to 240/242 Franklin Avenue LLC (Franklin) in February 2005.  To secure part of Franklin’s obligations, the parties executed a promissory note and mortgage on the property.  Willingboro subsequently filed a mortgage foreclosure action.  Franklin denied that it defaulted on the note.  The court subsequently referred this matter to nonbinding mediation.

 On November 6, 2007, a retired Superior Court Judge conducted the mediation.  Willingboro’s manager and attorney appeared on behalf of the Willingboro.  The mediation was held at the offices of Franklin’s attorney.  The mediator met privately with each side.  At some point, Franklin offered $100,000 to Willingboro in exchange for settlement of all claims and for a discharge of the mortgage.  On behalf of Willingboro, the manager orally accepted the offer in the presence of the mediator who presented the terms of the proposed settlement.  The Manager also affirmed that he gave his attorney authority to enter into the settlement.  The terms of the settlement were not reduced to writing before the conclusion of the mediation.

 On November 9th, Franklin forwarded to the court and Willingboro a letter announcing that the case had been “successfully settled.”  The letter also set forth the terms of the settlement.  On November 20th, Franklin’s attorney sent a separate letter to Willingboro stating he held the $100,000 in his attorney trust account to fund the settlement.  On November 30th, Willingboro’s attorney told Franklin’s attorney that Willingboro rejected the settlement terms.

 In December, Franklin filed a motion to enforce the settlement agreement.  Franklin attached certifications from its attorney and the mediator that revealed communications made between the parties during the mediation.  The mediator averred in his Certification that the parties voluntarily entered into a binding settlement agreement and that the settlement terms were accurately memorialized in Franklin’s letter to the court.

 Willingboro did not give its consent to the filing of either Certification; however, Willingboro did not move to dismiss the motion based on violations of the mediation communication privilege.  Instead, in opposition to the motion, Willingboro requested an evidentiary hearing and the taking of discovery and filed a Certification of its manager who averred that he reluctantly agreed to take part in the mediation and that he was told it was “nonbinding.”

 During discovery taken in connection with the motion to enforce, five witnesses were deposed including the mediator, Willingboro’s manager and Willingboro’s attorney.  After the close of discovery, the Honorable Michael J. Hogan conducted a four day evidentiary hearing.  Judge Hogan found that a binding settlement agreement was reached as a result of the court directed mediation.  The Appellate Division affirmed the trial court’s enforcement of the settlement agreement.

 The New Jersey Supreme Court granted Willingboro’s petition for certification.  Willingboro raised two issues:  1)  Whether R.1:40-4 (i) requires a settlement agreement reached at mediation to be reduced to writing and signed at the time of mediation and 2) whether Willingboro waived the mediation communication privilege.

 R. 1:40-4(i) states “a settlement reached at mediation is not enforceable unless it is reduced to writing at the time of the mediation signed by the parties.”  In this case, the writing memorializing the terms of the settlement was forwarded by Franklin after the mediation and never signed by Willingboro.  Accordingly, Willingboro argued that the purported settlement should not be enforced.  Franklin countered by noting that nothing in R. 1:40-4(i) requires the written settlement agreement resulting from the mediation be created or tendered on the actual day of the mediation.  Willingboro also argued that it did not waive the mediation communication privilege by presenting evidence in opposition to the motion to enforce the oral agreement.  Willingboro noted that the mediation communication privilege had “already been destroyed by Franklin’s disclosures to the court through the mediator certification.”  Thus, Willingboro’s response was simply a defensive measure and should not have been taken as a waiver.

 The Supreme Court noted that R. 1:40-4(d) provides:  “Unless the participants in a mediation agree otherwise or to the extent disclosure is permitted by this rule, no party, mediator or other participant in the mediation may disclose any mediation communication to anyone who is not a participant in the mediation.”  The purpose of the rule is that without assurance of confidentiality, participants will be unwilling to enter into candid and unrestrained communication.  In addition, the New Jersey Mediation Act (N.J.S.A. 2A:23C-1 et. seq.) and the Rules of Evidence (N.J.R.E. 519) confer a privilege on mediation communications.

 The Court noted that there are limited exceptions to the privilege which include a signed writing exception which allows a settlement agreement reduced to writing and adopted by the parties to be admitted into evidence to prove the validity of the agreement.  R.1:40-4(i) provides that “if there is an agreement, it shall be reduced to writing and a copy thereof furnished to each party.”

 The Court noted that the second exception to the mediation communication privilege is waiver.  Pursuant to statute and case law, the waiver must be express.  The Court concluded that the Certifications filed by Franklin’s attorney and the mediator in support of Franklin’s motion to enforce the oral agreement disclosed privilege mediation communications.  Despite the fact that Franklin violated the mediation communication privilege, Willingboro did not timely move to strike or suppress the disclosure of the mediation communications.  Instead, Willingboro proceeded to litigate whether it had in fact entered into a binding oral settlement agreement.  Willingboro breached the mediation communication privilege by appending to its opposition papers the manager’s Certification.  Thus, Willingboro expressly waived the mediation communication privilege in responding to the motion.

 Ultimately, the Court held that settlement agreement was enforceable.  However, in order to avoid these issues in the future, the Court concluded:   “if the parties to mediation reach an agreement to resolve their dispute, the terms of that settlement must be reduced to writing and signed by the parties before the mediation comes to a close.”


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


Supreme Court Overturns Decision in Kieffer — Invalidates Ruling That Party Owes all Defense Costs in Connection with Slip and Fall Accident

May 17, 2011

The New Jersey Supreme Court has overturned the Appellate Division’s decision announced in Kieffer v. Best Buy, et. al.. In Kiefer, the Appellate Division found that despite all defendants being dismissed via summary judgment in connection with a slip and fall accident, the defendant responsible for onsite cleaning was required to pay all defense costs incurred by the two co-defendants under indemnity agreements contained in cleaning contracts.

As way of background, on June 19, 2004, plaintiff slipped and fell inside a Best Buy store. Plaintiff contended that the aisle where she fell was very slippery. Accordingly, plaintiff sued Best Buy, who in turn filed a third party complaint against AIC, its cleaning contractor. In its third party complaint, Best Buy demanded that AIC provide a defense and indemnification. This demand was made under the Hold Harmless Clause of the contract which provided that AIC agreed to:

Indemnify, defend and hold harmless, Best Buy…from and against any and all losses, costs, obligations, liabilities, damages, actions, suits, causes of action, claims, demands, settlements, judgments, and other expenses, (including but not limited to cost of defense, settlement and reasonable attorney’s fees) of whatever type or nature, including, but not limited to, damage or destruction to property, injury to any person or persons, which are asserted against, incurred, imposed upon or suffered by Best Buy by reason of, or arising from ….the acts or omissions of Contractor (its officers, directors, employees or agents).

Additionally, the contract provided that Best Buy was to be named as an insured under the AIC policy.

AIC had hired All Cleaning to perform the cleaning services at the Best Buy store in question. Accordingly, AIC filed suit against All Cleaning demanding a defense and indemnification pursuant to their contract. Under that agreement, All Cleaning agreed to:

hold harmless and indemnify [AIC], [their] officers, shareholders, directors, agents, attorneys, employees[,] and each of [their] customers from any connection with any act of negligence, omission, or conduct arising out of the operation of [their] performance or non-performances of the Services.

In the trial court, Best Buy moved for summary judgment against the plaintiff on liability and against AIC on its contractual indemnification claim. AIC opposed Best Buy’s motion seeking contractual indemnification, but also cross-moved for summary judgment against plaintiff on the issue of liability and All Cleaning as to its contractual indemnification claim. The court granted summary judgment in favor of all three defendants with regard to liability. Further, the court granted summary judgment in favor of Best Buy and AIC regarding their respective contractual indemnification claims. The court awarded Best Buy $25,790.09 in counsel fees and costs. Likewise, the court awarded AIC $11,763.75 in counsel fees from All Cleaning. Ultimately, All Cleaning was found responsible for paying all attorney’s fees.

The Appellate Division found that under the terms of All Cleaning’s indemnity agreement, it was obligated “among other conditions to indemnify them for all claims, demands, or assertions, arising out of or arising from the performance of its cleaning services at the Best Buy stores on AIC’s behalf and on behalf of AIC’s customers, which would include Best Buy.” The court further noted that “the language contained in both indemnity agreements does not require a finding of negligence on the part of All Cleaning as a condition precedent to trigger the indemnity provisions…rather all that is required is the plaintiff’s claim relate to the subject matter of the service agreement.” Accordingly, the Appellate Division upheld the trial court’s decision.

In reviewing the Appellate Division’s decision, the Supreme Court found that under the contract between All Cleaning and AIC, there was no legal obligation for All Cleaning to reimburse attorney fees when no negligence was found. Specifically, the Supreme Court noted that the indemnity requirements under the Best Buy/AIC contract and the AIC/All Cleaning contract were very different. Under the Best Buy/AIC contract, the duty to defend and indemnify arose in connection with any and all “actions, suits, causes of action, claims [and] demands.” Under the AIC/All Cleaning contract, the duty to defend and indemnify arose in “connection with any act of negligence, omission, or conduct arising out of the operation of [All Cleaning’s] business and [its] performance or non-performance of the service.”

AIC argued that the language “connection with” and “arising out of” should be given the same meaning as the terms “claims” and “demands” set forth in the Best Buy/AIC contract. The Court did not accept this argument and found that “we cannot write a better contract for AIC than the one it drafted for All Cleaning’s signature.” Further “conspicuously absent from the language of this indemnification provision is the explicit obligation to reimburse the legal costs for the defense of suits, causes of actions, and claims that a court later determines to be unfounded.” The key difference between the two contracts was that the AIC/All Cleaning contract was not broad enough to be triggered upon only a claim being made.

Under the general principals of contract interpretation and interpreting indemnity agreements, any ambiguity will be construed against the prospective indemnitee (the party who drafted the agreement). Accordingly, the Court found that AIC was not responsible for reimbursing attorney fees for Best Buy and AIC.

This case is another example of an indemnity provision not being drafted in a manner consistent with holdings announced in prior court cases. Specifically, if a party seeks to have another party indemnify them for not only the negligence of the other party, but their own negligence (or alleged negligence), it must be explicitly stated in the indemnity provision. Additionally, the provision must set forth that the duty to defend and indemnify arises not only upon a finding of negligence, but upon any claim being made our suit being filed alleging negligence.

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


NJ Supreme Court Vacancies to Get Filled

May 6, 2011

Governor Chris Christie and Senate President Stephen Sweeney have resolved their year-long dispute regarding filling vacancies on the State Supreme Court. As previously discussed here and here and here, the Governor and the Democratically controlled Senate have been at an impasse to fill the vacancy created by the Governor’s refusal to reappoint Justice Wallace to the Court. In May 2010, Governor Christie refused to reappoint Wallace to a full term to the Court. He in turn nominated Anne Patterson to fill Wallace’s seat. The Senate refused to conduct hearings on the Patterson nomination until the full Wallace term would have expired in 2012. This position was taken by the Senate, as no other governor had refused to reappoint a sitting justice.

During this impasse, the Chief Justice elevated the senior most Appellate Judge to temporarily fill the Wallace vacancy. This resulted in Justice Rivera-Soto proclaiming that he felt the Chief Justice acted unconstitutionally in elevating the Appellate Judge to the Supreme Court and refused to participate in any case in which that judge also participated. Justice Rivera-Soto subsequently tempered his position and said that he would not participate in cases in which the Appellate Judge cast a deciding vote. Due to this position, lawmakers called for Rivera-Soto to immediately resign or be impeached. In January, Rivera-Soto informed the Governor that he would not seek reappointment to the high court. His term will end on August 31st.

In the compromise reached by the Governor and Sweeney, Christie will withdraw the Patterson nomination for Wallace’s seat and resubmit that nomination for Rivera-Soto’s seat. The Wallace seat will remain “open”, with an Appellate Judge assigned, until March. At that time, the Governor will make his nomination for that seat. At that time, Justice Virginia Long’s seat will also become “open” due to the justice reaching the mandatory retirement age of 70.

Erik Anderson

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


NJ Senate Urges Justice Rivera-Soto to Resign

February 21, 2011

The New Jersey Senate has passed a non-binding resolution urging Supreme Court Justice Rivera-Soto to resign if the Assembly does not begin impeachment proceedings.  As previously reported in this blog here and here, Justice Rivera-Soto has created controversy by refusing to participate in cases in which a temporarily appointed judge casts the deciding vote.  This stems from Governor Christie’s refusal to renominate former Justice John Wallace.  The resolution provides that “it is the sense of the Senate that the actions of Justice Rivera-Soto are prejudical to the administration of justice and constitute a serious violation of the public trust.”

The resolution is only symbolic as the Assembly has indicated that they have no plans of starting impeachment proceedings against Justice Rivera-Soto.

— Erik Anderson, Esq.

Reardon Anderson is a Tinton Falls, New Jersey based law firm which represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


Justice Rivera-Soto Will Not Seek Reappointment to the Court

January 4, 2011

On January 3, 2011, New Jersey Supreme Court Justice Roberto Rivera-Soto advised Governor Chris Christie that he would not seek reappointment to the Court when his term expired on September 1, 2011. This announcement is the latest event arising from Governor Christie’s refusal to renominate Justice John Wallace for tenure to the Court when his term ended in May 20, 2010. Breaking from tradition, Governor Christie was the first New Jersey Governor in 63 years to refuse to renominate a sitting Justice. This position was consistent with Governor Christie’s campaign pledge to “reshape” the Supreme Court.

After refusing to renominate Justice Wallace, Governor Christie nominated Anne Patterson to fill the vacant seat. The Senate President has refused to entertain Ms. Patterson’s nomination until May 2012, the date Justice Wallace would have reached the mandatory retirement age if he had been reappointed to the Court. Due to the vacancy caused by Justice Wallace not being reappointed, Chief Justice Stuart Rabner temporarily appointed Judge Edwin Stern (the senior most Appellate Division Judge) to fill the vacancy. Despite previously participating in cases with Judge Stern, Justice Rivera-Soto announced on December 10, 2010, that he would abstain from future participation in cases before the Court while Judge Stern sat on the bench. It is Justice Rivera-Soto’s position that the appointment of Judge Stern to the Court violates the State Constitution.

After Justice Rivera-Soto’s announcement there were calls from the state legislature that he either resign or be impeached. In response to Justice Rivera-Soto’s announcement, Governor Christie issued a statement advising that he will not name an appointee to fill Justice Rivera-Soto’s seat until the nomination of Ms. Patterson is entertained.

— Erik Anderson, Esq.

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.


Justice Rivera-Soto Will Not Participate in Cases Before the Court

December 16, 2010

On December 10, 2010, New Jersey Supreme Court Justice Roberto Rivera-Soto (Republican) issued two opinions in which he advised that he will not participate in the Court’s proceedings while a temporarily assigned Appellate Division Judge sits on the Court. The controversy stems from Governor Chris Christie’s (Republican) refusal to renominate Justice John Wallace (Democrat) to the Court. Under the New Jersey Constitution, Supreme Court Justices initially serve a seven-year term. After that term expires, the Governor may then renominate the Justice for tenure, allowing the Justice to serve until the mandatory retirement age of 70.

Justice Wallace’s seven-year term was to end on May 20, 2010. However, May 3, 2010, Governor Christie announced that he would not renominate Justice Wallace. This position was consistent with Governor Christie’s campaign pledge to “reshape” the Supreme Court. In not renominating Justice Wallace, it was the first time in the history of New Jersey’s modern constitution (63 years) that a governor refused to renominate a sitting Justice. Normally, as a matter of course, governors would renominate a sitting Justice even if that Justice was from an opposing political party.

After announcing that Justice Wallace would not be renominated, Governor Christie nominated Anne Patterson (democrat) fill the seat being vacated by Wallace. The democratically controlled Senate in turn blocked the nomination of Ms. Patterson. This in turn created a vacancy on the court. Accordingly, Chief Justice Stuart Rabner temporarily appointed Judge Edwin Stern (the senior most Appellate Division Judge) to fill the vacancy.

Despite previously participating in cases with Judge Stern, Justice Rivera-Soto announced on December 10th that he was abstaining from future participation in cases before the Court while Judge Stern sat on the bench. In his abstaining opinion, Justice Rivera-Soto maintained that it is a violation of the State Constitution to temporarily appoint a judge to the Court simply to fill a vacant seat instead of doing so to maintain a quorum (which is 5 Justices). Chief Justice Rabner responded to Justice Rivera-Soto’s opinion by asserting that it is constitutionally permissible to temporarily appoint Judge Stern to the Court. He further added that Justice Rivera-Soto has no basis for refusing to participate in voting and writing decisions and is failing to fulfill his obligation as a Justice of the Supreme Court.

In the coming weeks, it will be interesting to see how the Executive and Legislative Branch respond to Justice Rivera-Soto’s decision to abstain from future court proceedings. Within the Legislative Branch, there has been discussions concerning whether Justice Rivera-Soto should be impeached for refusing to participate.

— Erik Anderson, Esq.

Reardon Anderson represents the interests of businesses, insurance companies and individuals throughout New Jersey and the metropolitan New York City area. Please visit our website at http://reardonanderson.com to learn more about our firm.