The Appellate Division recently upheld a Law Division decision granting summary judgment to a New Jersey municipality, as well as its engineers and general contractor, based on plan or design immunity under the New Jersey Tort Claims Act (“TCA”). In Yulis v. Twp. of Teaneck, No. A-4016-13T4, 2016 N.J. Super. Unpub. LEXIS 1807 (App. Div. Aug. 1, 2016), plaintiff alleged that he sustained personal injuries when he tripped and fell on a mountable curb at a pedestrian plaza in Teaneck. Plaintiff further alleged that defendants were negligent in the plan or design of the mountable curb.
The issue on appeal was whether summary judgment was properly granted in favor of the defendants under the TCA. Plaintiff contended that defendants failed to meet their burden of proof that the degree of the sloped mountable curb was specifically considered and sufficiently addressed in the design plans approved by Teaneck. His expert opined that the degree of the slope was a “palpably unreasonable” dangerous condition.
Under the TCA, a public entity is insulated from liability related to the design of public property, “where such plan or design has been approved in advance of the construction or improvement by the Legislature or governing body of a public entity.” Significantly, “plan or design immunity does not depend upon any showing of the reasonableness of the design, nor can it be lost by changed circumstances.” Birchwood Lakes Colony Club v. Medford Lakes, 90 N.J. 582 (1982). Additionally, if plan or design immunity attaches to the public work, then the immunity is extended to private contractors through derivative immunity. See Rodriguez v. N.J. Sports & Exposition Authority, 193 N.J. Super. 39 (App. Div. 1983).
The Appellate Division held that summary judgment was properly granted. Discovery revealed that the mountable curb was set forth in several plans, diagrams, correspondence and hand-outs reviewed by Teaneck when it approved the project. Additionally, the Court found that there was no heightened degree of detail required of the plans to show the Teaneck contemplated, considered and approved the specific slope degree of the curb. Accordingly, Teaneck demonstrated an entitlement to summary judgment, as a matter of law, based on plan or design immunity established under the TCA; and, its engineers and general contractors were likewise entitled to summary judgment through derivative immunity.
Importantly, this decision highlights the protections afforded to public entities, and their private contractors, under the TCA. A public entity merely has to show that it approved the plan or design of the feature that is causally-related to the accident, in order for immunity to attach to the public entity and its contractors that carried out the plan or design. Additionally, the Court rejected plaintiff’s contention that immunity under the TCA was inapplicable because the public entity did not contemplate the specific slope degree of the curb, which demonstrated the broad immunity afforded to public entities under the TCA.
New Jersey Appellate Division Enforces “Additional Insured” Status
In this case, the Appellate Division provided that the patron’s use of the passageway at issue arose out of the restaurant’s use of the leased premises. In order to protect the interests of all parties, their identities will not be disclosed. In its holding, the Appellate Division affirmed the trial court’s finding that Company A’s insured, a landlord and owner of commercial property, was entitled to coverage as an “additional insured” under Company B’s policy, entitling Company A to a judgment comprised of its settlement payment and attorney’s fees and costs.
The controversy arose from a trip and fall accident by a patron of a restaurant insured by Company B. The restaurant leased the space from Company A’s insured. On the date of loss, after having dinner at the restaurant, a patron stepped into a hole depression in the passageway leading from the restaurant to its nearby parking lot. The patron subsequently instituted a personal injury action. Company A and Company B each paid the patron in settlement of the personal injury action. Company A then filed a declaratory judgment action seeking reimbursement of its portion of the settlement and for its attorney’s fees and costs from Company B. The Lease Agreement entered into between the restaurant and the landlord provided that the restaurant was required to “obtain, pay for, and keep in effect for the benefit of the landlord and the tenant public liability insurance on the [r]ental [s]pace.” Further, an Addendum to the Lease Agreement provided that the tenant “shall defend, indemnify and hold [l]andlord harmless, to the fullest extent permitted by law, for any actual or threatended occurrence arising out of the [t]enant’s operations, maintenance or use of that part of the premises leased to Tenant.” In order to satisfy those provisions, the restaurant procured insurance from Company B that named the landlord as an additional insured.
In affirming the trial court, the Appellate Division reasoned that additional insured coverage for a landlord is not contingent upon a finding of the tenant’s liability. Rather, there need be shown only a substantial nexus between the occurrence and the use of the leased premises in order for the coverage to attach. Where the nexus is present, an insurer would expect to provide coverage to a landlord, whether or not the occurrence takes place within the leased premises. That is so because in negotiating for such an endorsement in a lease, the landlord is attempting to insure against the risk of liability generated by the business about to be conducted by the tenant, and place the cost of insuring that risk on the tenant.
In this case, the Appellate Division provided that the use of walking through the passageway at issue was a use arising out of the use of the leased premises. As a result, because the patron’s trip and fall arose out of the operation of the leased premises, the occurrence fell under the language of the additional insured endorsement of Company B’s policy, whether or not the tripping hazard was located physically on the leased property. As a result of the foregoing, the Appellate Division found that Company A’s insured was an additional insured under Company B’s policy, and that Company A was entitled to reimbursement of the portion of the settlement proceeds it paid out, and its attorney’s fees and costs.
New Jersey Supreme Court Expands Scope of Liability for “Take-home” Torts
The New Jersey Supreme Court’s recent unanimous decision in Schwartz v. Accuratus Corp.expanded the scope of “take-home” tort liability, potentially exposing employers and premises owners to a large number of lawsuits. “Take-home” tort liability is where employers or premises owners are held liable for an employee or visitor being exposed to alleged toxins (such as asbestos or pesticides), then bringing the toxins home, exposing additional persons. In Schwartz, the plaintiffs, Brenda Ann and Paul Schwartz, alleged that Ms. Schwartz was exposed to asbestos fibers which her boyfriend, and eventual husband, Mr. Schwartz, brought home in his work clothes. Mr. Schwartz was employed by Accuratus Corporation, which manufactures ceramics in New Jersey. Moreover, another employee of Accuratus also shared an apartment with Mr. Schwartz for a period of time. While Ms. Schwartz did not live in the apartment, she frequently visited the apartment, and often laundered her boyfriend’s contaminated clothing and cleaned the apartment. Therefore, Ms. Schwartz was exposed to the asbestos fibers brought home from both Mr. Schwartz and his roommate. Due to her exposure to the asbestos fibers, Ms. Schwartz eventually contracted chronic beryllium disease, an untreatable disease affecting lung tissue, and filed suit against the defendants.
Plaintiff’s lawsuit was originally filed in Pennsylvania state court, and was then removed by the defendants to federal court. Defendant Accuratus’s motion to dismiss the complaint was granted by the trial court, which held that Accuratus did not owe a duty of care to Ms. Schwartz. In turn, the plaintiffs appealed the matter to the United States Court of Appeals for the Third Circuit. The question certified to the New Jersey Supreme Court by the Court of Appeals for the Third Circuit was: “[d]oes the premises liability rule set forth in Olivo extend beyond providing a duty of care to the spouse of a person exposed to toxic substances on the landowner’s premises, and, if so, what are the limits on that liability and the associated scope of duty.”
The New Jersey Supreme Court answered the question posed by the United States Court of Appeals for the Third Circuit in the affirmative. In reaching its decision, the New Jersey Supreme Court looked to the Court’s ruling in Olivo v. Owens-Illinois, Inc., 186 N.J. 394 (2006), where the Court imposed liability upon the defendant not mainly because plaintiff’s wife “was married to a worker a at Exxon who brought asbestos-contaminated clothing home from work but that it was foreseeable that she would be handling and laundering the soiled, asbestos-exposed clothes, which Exxon failed to protect at work and allowed to be taken home by workers.” While the New Jersey Supreme Court declined to “define the contours of the duty owed to others in a take-home toxic-tort action through a certified question of law,” the Court held that the duty owed to others in a take-home toxic-tort action “may extend, in appropriate circumstances, to a plaintiff who is not a spouse.” The Court reasoned that it is not put forth anywhere in Olivo “explicitly or implicitly, that a duty of care for “take-home” toxic-tort liability cannot extend beyond a spouse. Nor does it base liability on some definition of ‘household’ member, or even on the basis of biological or familial relationships.” As such, the Supreme Court in Schwartz established that there is no bright-line rules such as familial relationships, residence, or marital status for “take-home” toxic tort liability, but rather, it must be determined on a case to case basis whether the exposure was foreseeable based upon the facts of the matter.
The New Jersey Supreme Court’s decision in Schwartz thus strengthens the right of members of households, as well as potential guests, to file “take-home” tort liability claims. In light in this expansion in the scope of liability for “take-home” liability cases, employers and premises owners must assess their potential exposure pertaining to their coverage policies for general liability, premises liability, and pollution liability coverage.
New Jersey Appellate Division Reaffirms Favorable Interpretation of Insurance Contracts for Insureds
On June 13, 2016, the Appellate Division issued its unpublished decision in Comer v. Pacheco, affirming the trial court’s grant of the plaintiff’s cross-motion for summary judgment, requiring the insurer to provide coverage under the subject policy. In this case, an employee of Pat’s Housekeeping Service, Figueroa, died as a result of a motor vehicle accident that occurred on April 4, 2006. At that time, Pacheco, the owner of Pat’s Housekeeping Service, was driving Figueroa in Pacheco’s personal vehicle, rather than the vehicle registered to Pat’s Housekeeping Service. Proformance Insurance Company (“Proformance”), issued a commercial automobile policy to Pat’s Housekeeping Service. Proformance, upon being provided with a statement of loss, denied coverage, reasoning that the accident involved Pacheco’s personal vehicle, which was not scheduled.
In affirming the trial court’s grant of summary judgment to plaintiff, the Appellate Division reasoned that insurance policies are adhesion contracts, as the insurance company is the expert and unilaterally prepares the policy, whereas the insured is unversed in insurance provisions. As a result, courts are required to read coverage provisions broadly and to strictly construe exclusionary clauses. Where the subject claim involves the compensation of an innocent third party, the protection of the innocent third party is a primary concern. The language of the policy is to be given its plain, ordinary meaning, and if the policy terms are clear, courts interpret the policy as written. However, if the policy language fairly supports two meanings, the policy is construed to sustain coverage in order to comport with the reasonable expectations of the insured. Further, the declarations page has “signal importance” in defining the insured’s reasonable expectations of coverage.
In this case, the named insured on the declarations page of the Proformance policy was Pat’s Housekeeping t/a Patricia Pacheco. Under the policy terms, coverage was afforded to a Ford minivan, the sole scheduled vehicle, and also to “those autos you do not own…that are used in connection with your business.” The policy defined “you” as the named insured on the declarations page. Proformance’s denial of coverage was premised on the contention that Pacheco and Pat’s Housekeeping Service were one in the same, i.e., that Pacheco was also a named insured under the policy. As a result, Proformance argued that the Pacheco vehicle was owned by the named insured and not covered under the policy.
In contrast, the Appellate Division described that the declarations page provided that the named insured was Pat’s Housekeeping Service. Therefore, the Appellate Division provided that it was reasonable for Pacheco to assume that the references to “you” in the policy referred to Pat’s Housekeeping Service alone. Thus, the Appellate Division held that it was reasonable for Pacheco to believe that coverage under the Proformance policy existed for the vehicle owned by Pat’s Housekeeping Service, and vehicles not owned by Pat’s Housekeeping Service but used in connection with its business. Consequently, the Appellate Division provided that the language of the policy fairly supported two meanings; Proformance’s interpretation which would deny coverage, and Pacheco’s interpretation that would provide coverage. As a result, the Appellate Division concluded that the policy must be construed to sustain coverage in order to comport with the reasonable expectations of the insured, and that Pacheco’s personal vehicle was covered under the policy because it was not owned by Pat’s Housekeeping Service.
Testimony Re: Consistency of Testifying Expert Opinions with Non-Testifying Experts Barred in New Jersey
The New Jersey Supreme Court recently unanimously held in Bardis v. Stinson, 2016 WL 1650509 (N.J. April 27, 2016) that the collapse of an insureds’ basement wall was not covered under a homeowner’s insurance policy as the policy did not afford coverage for collapses caused by “hidden construction defects.”
In Bardis, the insureds’ basement wall, which was built as part of an addition of their single-family home twenty years earlier, collapsed in December of 2009. The insured’s general liability and commercial dwelling policy provided limited coverage for “direct physical” losses, including collapse losses, stating “the collapse of a building or any structural part of a building that ensues” due to “[h]idden decay, unless such decay is known to an insured prior to the collapse.”
As the insureds’ expert, Michael Pierce, opined that a lateral bending failure due to excessive horizontal loads caused the collapse, and that the manner of construction in building the wall “certainly would not be the proper way of constructing a basement foundation wall system.” He further opined, “this foundation wall had hidden defects that would not have been immediately obvious to somebody doing an inspection inside the basement prior to the collapse.” As such, the insureds argued that loss was a “hidden decay” unknown to the insureds prior to the collapse. Both parties filed Motions for Summary Judgment in trial court, and the trial judge granted summary judgment to the insurer, holding that the insured failed to establish that the loss was caused by a hidden decay.
The Appellate Division in Bardis, relying heavily upon the reasonable expectations doctrine, reversed the trial court’s decision, concluding that the insureds “could have reasonably expected that their homeowner’s insurance policy would cover a gradual decline in strength of their basement wall, followed by its sudden collapse, after it stood for over twenty years.” Further, the Court found that the term “decay” is ambiguous and therefore could cover gradual declines in the strength of the wall. Accordingly, the Appellate Division held that a question of fact existed as to whether the wall collapsed over time as it weakened, constituting a collapse due to a hidden decay. The Honorable Paulette Sapp-Peterson, P.J.A.D. dissented, asserting that the trial court was correct in declaring that the term “decay” is not the same as the term “defect”, holding that “a ‘defect’ connotes imperfection from the outset, while ‘decay’ connotes a decline from a condition that was originally sound. One cannot force a square into a round hole.”
The Supreme Court did not issue its own opinion in reversing the Appellate Division’s decision, instead electing to rely upon the Honorable Paulette Sapp-Peterson, P.J.A.D.’s dissent. In doing so, the Supreme Court reinforced the importance of courts applying unambiguous policy language rather than relying on the reasonable expectations doctrine as a justification for adopting their own interpretations of unambiguous policy language.
Appellate Division Affirms Ruling that Plaintiffs' Claims Are Not Time Barred in Applying "The Discovery Rule"
In Kuczynski v. Pomponi, No. A-0316-15T3, 2016 N.J. Super. Unpub. LEXIS 1225 (App. Div. May 27, 2016), the Appellate Division affirmed the lower court’s denial of defendant-appellant Town of Kearny’s motion to dismiss, holding that plaintiffs’ Notice of Claim was timely under the Tort Claims Act (TCA) and the “discovery rule.”
In 2013, there were three separate instances in which the toilet in the basement of plaintiffs’ home overflowed and expelled sewage. After each occurrence, the plaintiffs consulted with defendant Pomponi, a plumber, who advised plaintiffs that the sewer line was broken and needed to be replaced from the house to the curb, and, later, that there was a blockage in plaintiffs’ sewer pipe somewhere between the house and the point where the pipe connected to the town’s sewer system. Importantly, Pomponi told plaintiffs that they were responsible for the entirety of that pipe to the point where it connects to the Town’s system.
On March 25, 2014, after consulting with a second plumber who concluded that there was a blockage in the pipe between the sidewalk and the middle of the street, the area was excavated for repairs, at which time it was discovered that boulders used to fill a sink hole in the street had crushed and disconnected one of the plaintiffs’ pipes near the area where it connected with the Town’s sewer main. The Town’s plumbing inspector, who was overseeing the excavation, stated “this is our fault.” Having realized that the Town was at fault for their plumbing problems, plaintiffs served a Notice of Claim upon the Town on May 20, 2014 (56 days after first learning that the boulders used to fill sink holes had caused the plumbing issues).
The Town moved to dismiss arguing that plaintiffs’ cause of action accrued in December 2013, when Pomponi indicated to plaintiffs that there was a blockage in plaintiffs’ sewer pipes somewhere between their house and the Town’s sewer main. Accordingly, the Town argued that the May 20, 2014 Notice of Claim was untimely, having not been brought within 90 days of the accrual date.
The Appellate Division, however, was not persuaded by the Town’s arguments, instead holding that the first time plaintiffs knew or should have known the Town might be at fault for their plumbing issues was on March 25, 2014, when plaintiffs discovered that boulders the Town had used to fill a sink hole had crushed one of the plaintiffs’ pipes. Before that date, none of the experts (i.e. the plumbers retained by plaintiffs to fix the plumbing) had suggested that the Town was at fault, and there were no other facts that should have alerted plaintiffs that the Town was at fault.
Under New Jersey law, “the date of accrual will be the date of the incident on which the negligent act or omission took place.” Beauchamp v. Amedio, 164 N.J. 111 (2000). However, it is well-settled that the “discovery rule” applies to claims brought under TCA. See McDade v. Siazon, 208 N.J. 463 (2011). Under the “discovery rule”, a cause of action does not accrue until “the facts presented would alert a reasonable person, exercising ordinary diligence, that he or she was injured due to the fault of another.” Caravaggio v. D’Agostini, 166 N.J. 237 (2001). Significantly, because the cause of an injury or damages is not ascertainable by a lay person, a party may not know a third party is at fault for damages until informed by an expert. See Guichardo v. Rubinfeld, 177 N.J. 45 (2003).
Here, the Appellate Division emphasized the plaintiffs’ reliance on the opinions of the expert plumbers that advised plaintiffs they were responsible for the pipes up to the point where they connect to the Town’s main sewer lines. This decision serves as a key reminder of the judiciary’s recognition not all injuries are immediately discoverable, and that plaintiffs should not be barred from making claims where an expert is necessary to ascertain the cause of injury.