A New Jersey Appellate Division Court holds that the plaintiffs were precluded from utilizing a Social Security Administration disability determination in a personal injury action

November 6, 2013

On October 28, 2005, the plaintiff was involved in a rear-end motor vehicle accident.  The defendant Zimmer was stopped behind the plaintiff.  The defendant DeRosa, driving a van, struck the rear of the Zimmer, pushing Zimmer’s vehicle into the rear of the plaintiff’s vehicle.  The police responded and the plaintiff advised that she was OK and drove away from the scene.  Later, the plaintiff felt sore and went to the emergency room.

 About four months after the accident, the plaintiff began treatment with a chiropractor for back and neck pain.  The plaintiff was referred to Dr. Kaul, a specialist in interventional pain and minimally invasive spine surgery.  Dr. Kaul found the plaintiff had bilateral L5-S1 radiculopathy and tears in discs at L4-5 and L5-S1.  The plaintiff underwent lumbar steroid injections. Eventually, Dr. Kaul recommended spinal fusion therapy; however, the plaintiff declined.

  At trial, the plaintiff testified that she did not return to work as a seamstress because of pain and inability to perform her job functions.

 The defense produced an orthopedic surgeon who testified that the plaintiff was 5’5” and weighed over 300 lbs.  He found no objective evidence of injuries from the accident and that the plaintiff’s back problems were common in overweight individuals.  A radiologist testified that he had reviewed the MRI films and found they showed no evidence of herniated discs or annular tears, but did show age related disc degeneration.

 On June 24, 2007, the Social Security Administration (SSA) issued a four-page Notice of Award finding that the plaintiff became disabled on October 28, 2005.  Prior to trial, defense counsel filed an in limine motion seeking to preclude the plaintiff from introducing any evidence or testimony pertaining to the SSA disability determination.  The plaintiff argued that the determination creates a rebuttable presumption that the plaintiff was disabled and unable to work as a consequence of the accident.  The plaintiff also argued they should be able to cross-examine the defendant’s orthopedic expert with the SSA findings.  The trial court precluded the use of the SSA determination.

 It should be noted that during closing arguments, defense counsel stressed that there was no medical testimony that the plaintiff was unable to work.  Plaintiff’s counsel objected and the court found the defense counsel had “opened the door.”  The jury was then advised that the plaintiff was determined to be disabled by SSA.  The jury returned a unanimous verdict finding the plaintiff did not sustain an injury as a proximate result of the accident of October 28, 2005.

 On appeal, the court first observed that they were not faced with the concepts of res judicata or collateral estoppel since the defendant was neither a party nor in privity with a party to the proceedings before the SSA.

 The Appellate Court also noted that the SSA determination was hearsay.  The court found that the only hearsay exception that may apply to the case was the public records exception under NJRE 803(c)(8).  This evidentiary rule notes, “ (A) that a statement contained in a writing made by a public official of an act done by the official or an act, condition or event observed by the official if it was within the scope of the official’s duty either to perform the act reported or to observe the act, condition or event reported and to make the written statement.”

In rendering its decision, the court looked to Phillips v. Erie Lackawanna RR Co., 107 N.J. Super. 590 (App. Div. 1969), wherein the Appellate Division held the factual conclusions of the hearing examiner of the Public Utility Commission respecting the hazards posed by a particular grade crossing and the Board’s decision directing installation of protective lights and bells was hearsay and not admissible.  The Phillips’ court noted that it is “clearly the intent of the drafters not to allow in evidence conclusionary material resulting from official investigations embodied in statements or reports of the official or agency involved.”  The court also noted that under various Federal Districts and Circuits, the consensus is to favor the view that legal conclusions are not admissible as findings of fact under the Rule.

 The Appellate Court also noted that the cornerstone of the public records exception is trustworthiness.  In this case, a court must be cautious about the use of an administrative determination that may be predicated upon a different, more lenient standard.  Thus the court found that NJRE 803(c)(8) does not authorize the admission of an SSA Determination of Disability as a hearsay exception.

 Lastly, the court highlighted that the SSA Disability Determination is of dubious probative value in a personal injury action.  The lack of a meaningful adversarial process with respect to the cause, existence and extent of the plaintiff’s alleged disability renders the SSA conclusions on that issue unreliable.  Conversely, the court noted that the defendant may suffer real and significant prejudice from the admission of the SSA Disability Determination.  The jury may inappropriately give weight, based on the fact that SSA is a government agency, to its conclusions that the plaintiff suffered a disability.


Appellate Division Holds That Expert Is Not Permitted To Provide Opinion With Regard To Proximate Cause

November 1, 2013

            The Appellate Division has held that an expert witness cannot provide an opinion with regard to proximate cause.  In rendering its decision, the Court noted that “proximate cause is a factual issue, to be resolved by the jury after appropriate instruction by the trial court.”

            At issue in Wilkey v. Mayer was a motor vehicle accident involving the defendant striking the plaintiff as she was crossing a street with her car.  In order to prove her case, plaintiff retained the services of an accident reconstruction expert.  At the time of trial, plaintiff sought to offer this expert to explain to the jury how the accident happened.  In his report, and in his testimony, the expert opined that the defendant had an unobstructed view of the plaintiff for 300 feet before impact.  He further opined that if the defendant had seen the plaintiff at a distance of 300 feet, she would have had sufficient time to apply her brakes and avoid striking the plaintiff.

            Prior to offering this testimony to the jury, a Rule 104 hearing was held.  The defendant objected to the expert’s conclusions on the basis of them being net opinions.  Specifically, the defendant contended that the expert had not considered all evidence produced in discovery which would challenge his ultimate opinions.

            The trial court ruled that the expert could not testify that the defendant failed to use due caution.  However, over the defendant’s objection, the court ruled that the expert could give an opinion on proximate causation and the defendant could challenge the opinion on cross examination.  Accordingly, the expert was allowed to testify that “the defendant’s actions by failing to make observations of plaintiff crossing the roadway during clear daylight conditions, was the proximate cause of the accident.”  The expert then repeated on cross examination on two occasions that the defendant’s failure to observe the plaintiff was the proximate cause of the accident.  In an attempt to rebut this testimony, the defendant than attempted to question the expert on whether there could be more than one proximate cause of an accident.  Despite the trial court’s ruling that the defendant could challenge the expert’s ultimate opinions, the court would not allow that line of questioning, ruling “that’s a question of law for the Court.  I’ll define proximate cause to the jury at a later time.  The expert’s definition of proximate cause will not help this jury.”

            During jury deliberations a question regarding proximate cause arose.  The parties agreed to give the jury the Model Charge for proximate cause.  Subsequently, the jury returned a unanimous verdict that the defendant was negligent and awarded $600,000 in damages.  The defendant than appealed.

            In reviewing this case, the Court noted that “it is the court’s function, not that of an expert, to interpret the law” and the concept of proximate cause is of “legal significance.”  It is the responsibility of the trial judge, “where the question of ‘proximate cause’ is involved, to explain to the jury in simple terms what the law means by that expression and to illustrate the application of its legal principles to the facts to the particular case which he is trying.”

            The court found that in this case, plaintiff’s expert usurped the function of both the court and the jury when he repeatedly testified that the defendant’s conduct was the proximate cause of the accident.  While the expert was qualified to reconstruct things such as the defendant’s rate of speed, plaintiff pace and path of travel across the roadway and sight lines, “nothing in his background gave him any special ability to apply legal concepts of proximate cause and comparative negligence to the facts that he had reconstructed.”

            In vacating the liability finding, the court found that the trial court committed error by permitting the expert to express an opinion with regard to proximate cause.  This was further exacerbated by the court refusing to allow the defendant to cross examine the expert on whether the plaintiff’s actions could be a proximate cause of the accident.

            Due to this error, the Appellate Division reserved and remanded the matter for a new trial on liability.  The damage award was not disturbed as the defendant did not challenge same in its appeal.

NJ Court Holds that Mediator Cannot Also Serve As An Arbitrator

October 23, 2013


Minkowitz v. Israeli (A-2335-11T2)


The New Jersey Appellate Division has held that an individual retained to serve as an arbitrator cannot act as a mediator and then return to the role of arbitrator.

The Appellate Division has held that when parties to a dispute elect to submit a matter to binding arbitration, an arbitrator may not initially act as a mediator and then return to the role of an arbitrator unless the parties agree in writing to allow that individual to serve in that dual role.  In this case, the court held:

 mediation, although a form of Alternative Dispute Resolution, differs from binding arbitration…We conclude the differences in the roles of these two types of dispute resolution professionals necessitate that a mediator, who may become privy to party confidence in guiding disputants to a mediated resolution, cannot thereafter retain the appearance of a neutral fact finder necessary to conduct a binding arbitration proceeding.  Consequently, absent the parties’ agreement, an arbitrator appointed under the [Uniform Arbitration Act] may not assume the role of mediator and, thereafter, resume the role of arbitrator.

 In Minkowitz v. Israeli, the plaintiff filed for divorce from her husband of 14 years.  Following the filing of the divorce proceedings, the parties agreed to decide financial issues via binding arbitration and agreed that all custody and parenting plan issues would be reviewed in nonbinding arbitration.  The parties agreed to engage a single arbitrator and a jointly chosen forensic accountant.  To memorialize this understanding, the parties entered into a written arbitration agreement setting forth the issues to be presented to the arbitrator, which decisions of the arbitrator would be binding, which decisions would be non-binding and the scope of the arbitrator’s powers.  Further, the arbitration agreement noted that any person participating in the arbitration would “have the right to be provided copies of all documents presented to the arbitrator.”

 Initially, the arbitrator met with both parties prior to the commencement of arbitration hearings. The parties at that point decided to engage in settlement discussions and mediation in an attempt to narrow issues for final determination.  During the mediation process, the parties relied on the jointly chosen forensic accountant to offer recommendations regarding resolution of certain financial issues.  If the parties accepted the recommendation, a written agreement would be prepared regarding specific issues.

 Through this process, the parties were successful in resolving a number of issues.  The resolution of these issues resulted in four separate “settlement” agreements which were entered into during 2009 and memorialized in writing.  Once of these agreements noted that its contents had been reached “between the parties…after mediation with the assistance of the arbitrator and financial adviser.”  In these agreements, the parties agreed to such issues as waiving the rights to one another’s medical practice and respective claims for equitable distribution.  After the four agreements were reached by the parties, but before specific terms were formalized, plaintiff hired co-counsel to assist in finalizing a Property Settlement Agreement.  In doing so, co-counsel requested a meeting with the forensic accountant to review his findings which served as the underpinnings of the parties’ previous agreements relating to the property settlement.  The defendant objected, claiming that all of these matters were settled and disclosure was not necessary.  This in turn resulted in a flurry of letters to the accountant and arbitrator.

 The arbitrator denied plaintiff’s request to meet with the forensic accountant and/or review his records.  At this point, plaintiff’s original counsel filed an application with the Family Part to be relieved and substitute co-counsel as plaintiff’s attorney of record.  Plaintiff’s new counsel then moved before the family part for an Order requiring the forensic accountant to produce all evaluations of the parties’ finances.  The Family Part denied this motion stating that the parties had agreed that all financial aspects would be subject to binding arbitration.  Plaintiff then filed a motion with the arbitrator seeking his recusal or alternatively requesting the production of the forensic accountant’s financial documents.  In that motion, plaintiff’s counsel inferred bias by noting that the arbitrator had served both as a mediator and arbitrator throughout the proceeding.  Defendant opposed plaintiff’s request and sought attorney’s fees.  In rendering his decision, the arbitrator noted that “my role was to make recommendations, when requested, on the various financial issues…at no time did I assume the role of mediator.  I did not participate in the discussions of the financial information.”  The arbitrator subsequently rejected plaintiff’s request for releasing the financial documents she sought.  Plaintiff then returned to the Family Part seeking to reverse the arbitrator’s refusal to disclose the records sought.  This motion was denied by the trial court.

 The parties then returned to arbitration hearings.  During these proceedings, the defendant requested certain relief from child support which plaintiff objected to.  The arbitration hearing was conducted and was adjourned pending additional submissions by the parties.  The arbitrator rendered an award with regard to outstanding issues pertaining to the parties and on March 17, 2011, issued and order incorporating the parties’ 2009 settlement agreements, forensic accountant’s spreadsheets calculating debts and credits, the income schedules the forensic account prepared supporting the calculation of child support, and his decisions following the hearing.

 Plaintiff continued to seek to have the 2009 agreements vacated along with the other arbitration orders.  To do so, Plaintiff submitted to the arbitrator a certification of the defendant’s ex-fiancée which stated that the forensic accountant was biased against the plaintiff.  In the certification, the ex-fiancée claimed that she had been told by the defendant that the accountant “was going to make sure that everything was taken care of…a little birdie told me [the forensic accountant] got it covered.”  Additionally, the certification provided that the defendant had significantly underreported his income.  The defendant opposed the application and cross-moved for attorney’s fees.  The arbitrator found that the ex-fiancée was not “completely objective” and that the forensic accountant had acted in a neutral capacity throughout the proceedings.  The arbitrator rejected plaintiff’s request for vacating the 2009 orders and other arbitration decisions and reserved on defendant’s fee requests.  Ultimately, the arbitrator issued an award finding that the plaintiff was responsible for certain attorney fees incurred by the defendant following the last 2009 agreement.

 The defendant then moved in the Family Part to confirm the arbitration award.  Plaintiff cross-moved to vacate the award and all underlying agreements that were incorporated therein.  The plaintiff further sought to terminate the services of the arbitrator and forensic accountant, to reopen discovery and to select a new arbitrator and expert.  The trial court granted defendant’s motion to confirm the award and denied the plaintiff’s cross-motion.  The court did however deny defendant’s request for enforcing the arbitrator’s award allocating attorney’s fees.  Plaintiff then appealed the trial court’s decision.

 In rendering its decision, the Appellate Division noted that neither party to the action contested the consensual agreement to submit all financial disputes to binding arbitration.  In fact, the court found that as arbitration is a “creature of contract”, it is permissible for parties to an action to select which aspects of the action shall be arbitrated.  The court further noted that the Uniform Arbitration Act allows parties to define arbitration proceedings and the methods in which they are to be conducted.

 The court emphasized that,  “when binding arbitration is contracted for by litigants, the judiciary’s role to determine the substantive matter subject to the arbitration ends.  Arbitration should spell litigation’s conclusion, rather than it’s beginning.”  Once binding arbitration is selected, the court’s powers are generally limited to:  enforcing orders or subpoenas issued by the arbitrator, confirming an arbitration award, correcting or modifying an award  and in very limited circumstances, vacating an award.    Further, the court noted that an arbitration award can only be vacated upon proof that the award was procured through corruption, fraud or undue means, partiality of the arbitrator which results in prejudicing the rights of a party to the arbitration proceedings, the arbitrator refusing to postpone a hearing or refusing to consider evidence of material to the controversy which prejudices the rights of the party, and the arbitrator exceeding his powers.

 Importantly, the court recognized that while the scope of review of an arbitration award is limited by the Arbitration Act, the parties can contractually agree to expand judicial review.  The court noted that:  “for those who think the parties are entitled to a greater share of justice, and that such justice exists only in the care of the court…the parties are free to expand the scope of judicial review by providing for such expansion in their contract; that they may, for example, specifically provide that…awards may be reversed either for mere errors of New Jersey law, substantial errors, or gross errors of New Jersey law and define therein what they mean by that.”

 In this case, plaintiff alleged that due to the arbitrator acting as a mediator, all of the “settlement” agreements reached by the parties and subsequent arbitration decisions should be vacated.  With regard to the instant case, the court found that, “this case unraveled because the parties agreed to arbitration, then chose to do something else.”  While it is not improper to engage in settlement discussions when agreeing to arbitration, the potential problem arises when the arbitrator acts as a mediator.  In rendering its decision, the court focuses on the difference between a mediator and an arbitrator.  Specifically, the court notes that a mediator, in order to attempt to facilitate a resolution to a case, will seek confidential information from the parties and attempt to use that information to “push” the parties towards settlement.  Once a mediator undertakes this role, it is impossible for that individual to be a neutral fact finder which is essential to conducting a binding arbitration.  Accordingly, the court found that an individual serving in both capacities create inherent problems.  Regardless, the court held that parties may enter into an agreement whereby an arbitrator may assume the role of a mediator and thereafter resume the role of an arbitrator.  However, absent such agreement, “an arbitrator under the act may not assume the role of mediator and, thereafter, resume the role of arbitrator.”

 Ultimately, in this case, the court found that the arbitrator engaged in mediation in seeking to obtain settlement agreements reached in 2009.  Further, the court found that parties entered into subsequent agreements between arbitration hearings.  Ultimately, the court found those “settlement” agreements entered into by the parties enforceable.  However, those orders/decisions entered by the arbitrator after he engaged the parties as a mediator were not enforceable.

 The court reflected that arbitration, particularly binding arbitration, must be purposefully chosen, and the parameters must be designated in a contract between the parties.  “If binding arbitration is selected as the forum for resolution disputes, a litigant cannot jump back and forth between the court and the arbitral forum.  By its very nature, arbitration does not permit such a hybrid system…the parties held in mistaken belief that court intervention was permitted to check the decisions of the arbitrator.  This is untenable.”  The court continued “The Act’s provisions are unmistakable:  once binding arbitration is chosen and the arbitrator is named, the court is no longer involved in reviewing or determining the substantive issues.”

 Accordingly, the court found that the 2009 agreements and other agreements reached thereafter by the parties were enforceable.  However, the court found that decisions rendered by the arbitrator after he assumed the role of the mediator were not enforceable and were vacated.  Additionally, the court ordered the new arbitrator to request for documents in light of the agreement to arbitrate.  The court, in turn, vacated those orders of the arbitrator and remanded the case for new arbitration proceedings before a new arbitrator.

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


US Chamber of Commerce Releases List of 2011’s Ridiculous Lawsuits

January 4, 2012

The US Chamber of Commerce has released its list of 2011’s questionable lawsuits.  The article follows:

Kidnapper Who Sued His Victims Tops U.S. Chamber’s Annual List of 2011 Most Ridiculous Lawsuits

WASHINGTON, D.C.—A lawsuit by a kidnapper against his victims for not helping him evade police tops the U.S. Chamber Institute for Legal Reform’s (ILR) survey of the Top Ten Most Ridiculous Lawsuits of 2011, released today.

“While these lawsuits vary from the outrageous to the humorous, abusive litigation is hardly a laughing matter,” said ILR President Lisa Rickard.  “ILR’s annual poll of ridiculous lawsuits helps to remind us that abusive lawsuits affect real people and real businesses, and can have harmful results to lives, jobs, and even our economic growth.”

ILR announced the top ten vote-getters from among those chosen throughout the year by visitors to the FacesOfLawsuitAbuse.org website.  The lawsuits were selected from those featured in the website’s monthly polls for 2011.  The Faces of Lawsuit Abuse campaign is ILR’s public awareness effort created to highlight the impact of abusive lawsuits on small businesses, communities, and individuals.

The top ten Most Ridiculous Lawsuits of 2011 are:

• Convict sues couple he kidnapped for not helping him evade police
• Man illegally brings gun into bar, gets injured in a fight, then sues bar for not searching him for a weapon
• Young adults sue mother for sending cards without gifts and playing favorites
• Woman disagrees with store over 80¢ refund, sues for $5 million
• Mom files suit against exclusive preschool over child’s college prospects
• Man suing for age discrimination says judge in his case is too old
• Obese man sues burger joint over tight squeeze in booths
• Woman sues over movie trailer; says not enough driving in ‘Drive’
• Passenger’s lawsuit says cruise ship went too fast and swayed from side to side
• Mother sues Chuck E. Cheese – says games encourage gambling in children

Links to the full news stories from which these were drawn and the complete results of the poll can be found at http://facesoflawsuitabuse.org/polls-archive.

The New Jersey Supreme Court holds that the right to trial by jury attaches to a Rova Farms bad faith claim.

August 12, 2011


The NJ Supreme Court recognized in Rova Farms Resort, Inc. v. Investors Insurance Co. of America, 65 N.J. 474 (1974) a “bad faith” cause of action against an insurer.  In that decision, the Court noted where:  “there is a settlement demand within the policy limits, the insurer in bad faith refuses to settle the claim, and a verdict above the policy limits is returned…the carrier’s bad faith failure to settle the claim within the policy limits may render the carrier liable for the entire judgment, including the excess above the policy limits.”

Personal Injury Claim—- Wood v. Caruso

On March 1, 2001, the plaintiff, Karen Wood was delivering mail at a condominium complex when she was attacked by a dog owned by John Critelli and kept by Alfonzia Caruso, Critelli’s grandmother.  The plaintiff sustained injuries requiring two separate spinal surgeries.  Karen Wood filed suit against Critelli, Caruso and the condo association where Caruso’s unit was located.  Caruso, maintained a $500,000 liability policy with defendant New Jersey Manufacturers Insurance Company (NJM).  NJM provided a defense to Caruso and her grandson.

The parties submitted the matter to nonbinding arbitration.  The arbitrator found gross damages of $600,000 and apportioned liability as 90% ($540,000) to Caruso and 10% ($60,000) to the condo association. The defendants filed a trial de novo.  Prior to the jury trial, NJM conducted an internal evaluation of the plaintiff’s claims.  Counsel representing Caruso recommended that NJM authorize him to settle the case for the full $500,000 policy limit.  NJM’s claims adjuster advised that the value of the plaintiff’s claim would be near the policy limits.  NJM’s Major Claims Committee concluded the claim would not exceed the value of the policy and authorized a $300,000 settlement offer.  Before the jury began its deliberations, the plaintiff’s advised that they would settle for $450,000. This demand was rejected.  The jury returned a verdict allocating fault as: 51% to Caruso, 49% to the condo association.  The jury awarded gross damages of $2,422,000.  The court molded the verdict to enter judgment against Caruso in the amount of $1,408,320.03.  Caruso filed a motion for new trial which was denied.  NJM then tendered the full policy to the plaintiff.

Declaratory Judgment Action—–Wood v. New Jersey Manufacturers Insurance

The plaintiff entered into an assignment with Caruso for his Rova Farms claim against NJM.  Plaintiff then commenced a declaratory judgment action against NJM alleging that NJM failed to settle plaintiff’s claim within the policy limit thereby wrongfully exposing its insured to an excess verdict. Plaintiff demanded a jury trial.  However, NJM did not demand a jury trial. Before discovery was completed, the plaintiff filed for summary judgment against NJM.  The court granted the plaintiff’s motion.  The court found that NJM’s actions were cavalier and that “in the final analysis, [NJM] gambled on a trial contrary to the interest of its insured.”  NJM appealed.  The Appellate Division reversed the entry of summary judgment and remanded.  The Appellate Division noted that there were fact sensitive determinations that needed to be made about NJM’s reasonableness in handling settlement negotiations.  The court noted, “prudence dictates that these pivotal questions of reasonableness and bad faith be decided in this case after a full blown evidentiary presentation before the factfinder.”  The Appellate panel let the trial court determine whether the proceeding should be before a jury or the court.

The plaintiff sought certification as to the limited issue of whether the insured’s claims of bad faith against its insurer under Rova Farms are to be decided by a judge or jury.  The plaintiff asserted that the right to a trial by jury does not attach to a Rova Farms claim (despite having demanded a jury trial).  The plaintiff argued that the claim against NJM concerned the fiduciary obligation imposed by an insurer to negotiate a settlement within the policy limits.  Accordingly, the fiduciary duty is primarily equitable in nature and that there is no right to a trial by jury on equitable claims.  The plaintiff also cautioned that submitting a Rova Farms bad faith claim for determination by a jury would “essentially require a second full trial.”

NJM asserted that the relationship between an insurer and its insured is one based in contract and an insured’s bad faith claim under an insurance policy is nothing more than a species of contract claim arising under the implied covenant of good faith and fair dealing.  NJM argued that disputes between insurers and insureds concerning their respective rights and obligations under the insurance policy are commonlaw, breach of contract actions for which legal remedies provide the primary form of relief into which the right of a jury trial attaches.

The NJ Supreme Court noted that declaratory judgment actions were unknown in common law and that in NJ, the Uniform Declaratory Judgments Act, N.J.S.A. 2A:16-50 to -62 governs the right to declaratory relief.  The court stated that the Act provides that factual issues “may be tried and determined in the same manner as issues of facts are tried and determined in other civil actions.  Thus, depending on the issue, a declaratory judgment can be either legal or equitable, and thus, the filing of a declaratory judgment action for insurance coverage, does not necessarily engender the right to a jury trial.  In sum, in a declaratory judgment action, the right to a jury trial depends on whether the action is the counterpart to one in equity or in law.”

In reviewing bad faith claims, the Court must looked at the basis for the cause of action and the requested relief.  In the plaintiff’s complaint, as assignee of Caruso’s rights under Caruso’s insurance policy, she alleged that NJM violated its fiduciary duty by failing to negotiate the claim in good faith.  Further, that NJM refused to pay the excess judgment of $1,408,320.23.  Thus, the plaintiff sought both a degree of specific performance, ordering the defendant to pay the total judgment , as well as a declaration to the effect that the defendant was responsible therefor.  The Court wrote, “No matter how plaintiff has couched her claim against NJM, it is undisputed that her Rova Farms bad faith claim is a garden variety action at law that requires that she prove that defendants breached its insurance contract by its failure in bad faith to settle plaintiff’s original personal injury suit against NJM’s insured.”  The court continued, “It is beyond question that a breach of contract claim was at common law and remains today an action triable to a jury.”   Finally, the Court stated that “Determining that the right to trial by jury attaching to a Rova Farms bad faith claim does not mean that every Rova Farms bad faith suit may only be tried through a jury.  As with all other civil cases, any party to a civil action at law may demand trial by jury.  Likewise, even if a jury trial is allowable as of right and, in fact, has been demanded, the parties nevertheless retain the right to consent to trial by the court without a jury.”