The New Jersey Appellate Division recently issued an opinion reinforcing an insurer’s duty to defend and indemnify an insured under a liability policy. In its decision, the Appellate Division ruled that an insurer was required to reimburse the expenses incurred by its insured in defending itself against cross-claims for defense and indemnification.
In this matter, plaintiff filed a complaint alleging that she was injured when she slipped and fell on ice in a parking lot. Company A, which owned the parking lot, entered into a contract with Company B, wherein Company B agreed to plow and salt the subject parking lot. Company B plowed and salted the subject parking lot one day prior to the plaintiff’s alleged slip and fall. The services agreement provided that Company B would indemnify and hold Company A harmless for any injuries sustained arising out of or relating to Company B’s performance of its services.
In the course of the underlying litigation, Company A filed cross-claims for defense and indemnification against Company B. Company B’s insurer denied coverage to Company B as to the cross-claims for defense and indemnification, and recommended Company B secure personal counsel at its own expense to defend against the cross-claims. At trial, the jury found that Company B bore no liability for plaintiff’s accident.
On appeal, the Appellate Division affirmed that Company B’s insurer was required to defend Company B against Company A’s cross-claims and reimburse Company B its defense expenses. The Appellate Division reasoned that Company B agreed to indemnify and defend Company A for injuries sustained by any third person arising out of or relating to Company B’s services, regardless of whether Company A was negligent. The Appellate Division also provided that the insurer’s policy provided Company B with coverage in the event Company B had to indemnify Company A. Due to the jury’s determination that plaintiff’s injuries did not arise out of nor relate to the services provided by Company B, Company A was not entitled to a defense and indemnification. However, the Appellate Division noted that, during the pendency of the underlying litigation, the question of B’s liability was unresolved. As a result, A’s cross-claims against B were viable, and B’s insurer was obligated to provide B with a defense in connection to the cross-claims against it. The Appellate Division explained that, under New Jersey law, an insurer is contractually obliged to provide the insured with a defense against all actions covered by the insurance policy, and that the duty to defend is triggered by the filing of a complaint alleging a covered claim. As a result, B’s insurer was required by its policy to defend B against A’s cross-claims.
The Appellate Division’s decision in this matter enforces New Jersey’s jurisprudence providing that an insurer is obligated to provide its insured with a defense to a complaint which merely alleges facts within the policy’s coverage. As a result, New Jersey insurers are exposed to potential liability for its insured’s legal expenses where a complaint merely alleges facts that fall within the policy’s coverage, even if the allegations are meritless or frivolous.
Florida Reverting To Frye?
On February 16, 2017, the Florida Supreme Court issued a decision rejecting the Daubert standard for introduction of expert testimony, to the extent it is “procedural.” For years, Florida Courts followed the Frye standard for the admission of expert testimony. Under the Frye standard, the proponent of expert testimony need only establish that the theory was “generally accepted within the expert’s field.”
Back in 2013, the legislature passed HB 7015, effectively codifying the Daubert standard by amending Florida Statute 90.702, titled “Testimony by Experts.” The Daubert standard, intends to ensure reliability of expert testimony by placing the burden on the offering party to meet the following requirements: A witness who is qualified as an expert by knowledge, skill, experience, training, or education may testify in the form of an opinion or otherwise if (a) the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue; (b) the testimony is based on sufficient facts or data; (c) the testimony is the product of reliable principles and methods; and (d) the expert has reliably applied the principles and methods to the facts of the case.
As stated above, the Frye standard permits expert opinion as long as the testimony is generally accepted in the particular field. Daubert requires the trial judge to act as a “gatekeeper” by ruling on the “reliability” of expert testimony before it can be presented to the jury. This process often requires a “trial within a trial” before a jury is ever impaneled. The Court “decline[d] to adoptDaubert to the extent that it is procedural, due to the constitutional concerns raised,” which include “undermining the right to a jury trial and denying access to courts.”
The Florida Supreme Court left open the question of constitutionality of Daubert until a “proper case and controversy” is before it, as well as the question of whether the application of Frye orDaubert is substantive or procedural in nature. Until such a question is before the Court, it is unclear the effect this decision will have on Florida attorneys and their clients.
No Recovery For Worker Injured While Remedying Dangerous Condition, Says New York’s First Department
Should a maintenance worker hired to clean a dangerous condition be able to recover for injuries suffered while cleaning or removing that dangerous condition? The answer is no, according to New York’s First Department.
In Black v. Wallace Church Association, plaintiff Calvin Black had been hired as a janitor for the defendant. As a janitor, plaintiff’s duties included cleaning the building, which included the bathrooms. Plaintiff alleged that he was injured when he slipped and fell on pebbles while cleaning the bathroom floor. However, plaintiff testified that while cleaning the bathroom previously, he often removed pebbles from the bathroom floor.
In upholding the trial court’s order granting defendant summary judgment, the First Department held, “It is well established that a maintenance or cleaning worker has no claim at law for injury suffered from a dangerous condition that he was hired to remedy”. In reaching their decision, the Court cited Jackson v. Board of Education of the City of New York.
In Jackson, plaintiff alleged injuries following a slip and fall on a piece of lettuce. At the time of the accident, plaintiff Roosevelt Jackson was employed by Aramark and worked in the school in which he fell; his duties included sweeping the area of his alleged accident. The Court in Jackson upheld the dismissal of plaintiff’s Complaint, and reasoned: “Given that there is no evidence even remotely suggesting that anyone connected with defendants created the condition complained of, the lack of actual or constructive notice of its existence on the part of any of the defendants serves to relieve all of them of any liability for plaintiff's accident. Moreover, since it was plaintiff's job to clean the floor of the type of foreign substance (vegetable matter) that he slipped on, FIT [the school] owed him no duty to keep the floor clean of such material. FIT “could not have provided plaintiff with a work place that was safe from the defect that his employer was engaged to eliminate.”
As such, a plaintiff hired to clean, or remedy, some type of dangerous condition cannot recover for injuries suffered due to that specific dangerous condition. Therefore, in premises liability cases brought by maintenance and cleaning workers of the premises, it should always be investigated whether the plaintiff’s injuries were caused by a dangerous condition for which they were hired to remedy.
New Jersey Appellate Division Rules that the Right to Attorneys’ Fees Can Be Waived High-Low Agreement
A high-low agreement can protect defendants from excessive attorneys’ fees otherwise recoverable under the Offer of Judgment Rule. In Serico v. Rothberg, M.D., the New Jersey Appellate Division ruled that, absent an express reservation of rights, a party abandons its claim for attorneys' fees after entering a high-low agreement.
Pursuant to New Jersey Court Rule 4:58, a plaintiff-offeror is entitled to attorneys’ fees after obtaining a verdict that is 120% or greater than a prior offer that was not accepted; a defendant-offeror is entitled to attorneys’ fees on a verdict that is 80% or less than a prior offer that was not accepted. A high-low agreement is a commonly used method for the parties to control damages in negligence cases. The defendant agrees to pay the plaintiff a minimum sum in exchange for the plaintiff’s agreement to accept a maximum sum, regardless of the verdict.
In Serico, the plaintiff made a pre-trial offer to the defendant seeking $750,000.00 to settle the matter. The offer was never accepted and the case proceeded to trial. During jury deliberations, the parties entered into a high-low agreement, setting the “low” at $300,000.00 and the “high” at $1,000,000.00. The jury returned a $6,000,000.00 verdict in favor of plaintiff. Pursuant to Rule4:58, the plaintiff contended that she was entitled to attorneys’ fees because the verdict was more than 120% in excess of her previous unaccepted offer. The trial court denied the plaintiff’s application, ruling that the custom and usage of high-low agreements in New Jersey required plaintiffs to reserve their right to recover attorneys' fees or they would be waived.
On appeal, the plaintiff argued that attorneys’ fees were mandatory under Rule 4:58 and that, absent an express waiver, a high-low agreement is a contract that does not extinguish this right. The Appellate Division disagreed. While the Appellate Division agreed that a high-low agreement is a contract, it held that the contract must be enforced as written. As such, the Appellate Division reasoned that the high-low agreement contracts for a maximum recovery to plaintiff that cannot be exceeded absent an express provision to the contrary.
The Appellate Division’s ruling in Serico highlights one available defense to defendants against excessive attorneys’ fees. By contracting for a fixed ceiling on judgments, defendants can save some money by contractually bypassing the Offer of Judgment Rule and other fee-shifting provisions.
Appellate Division Approves Equitable Relief to Plaintiff Seeking Contribution under the New Jersey Spill Compensation and Control Act
In Matejek v. Gilmore, et al., Superior Court of New Jersey, Appellate Division, Docket No. A-4683-14T1, the Appellate Division affirmed the Trial Court’s ruling which ordered defendants to share in costs for investigating and possibly remediating an alleged oil contamination. Approximately ten years ago, oil was found on the surface of a tributary in Hillsborough, New Jersey. Thereafter, the New Jersey Department of Environmental Protection (NJDEP) removed five underground storage tanks, one from each of five adjoining condominium units. However, the NJDEP took no further action, other than a site visit to confirm the absence of oil in the tributary several months later. In fact, the NJDEP’s file remained open, which constituted a cloud on the title to all five condominium units.
Plaintiffs, owners of one of the condominium units, sued the owners of the other four units, seeking a judgment to compel the other owners to participate in, and equally share in, an investigation, and, if necessary, remediation of the property. After a bench trial, the Trial Court granted plaintiffs’ demand for relief and ordered all the unit owners to equally share in the investigation and possible remediation, finding that the fact that the NJDEP had removed all five tanks was sufficient to impose an obligation on the impacted parties to participate.
Defendants-Appellants argued that plaintiff lacked standing to bring suit to compel investigation and cleanup under the Spill Act, the Trial Court lacked jurisdiction to enter the judgment, and the Spill Act does not permit and the facts did not warrant the relief granted. The Appellate Division, however, affirmed, holding that the circumstances did not preclude the imposition of an equitable remedy because, if appellants’ arguments were sustained, plaintiffs would have no way to remove the encumbrance from their title other than to solely bear the expense of investigation and remediation. Additionally, the Appellate Division found that the equitable relief granted furthered the best interests of the public in compelling a further investigation into a public health, safety and welfare issue, i.e. a potential ongoing oil contamination.
This decision reflects an important balance between the goals and purposes of the Spill Act and the problems it can create for private parties. As the burden for completing a cleanup has been shifted to private parties through legislative reform, the judiciary has recognized that this can lead to an inequitable outcome for private parties, and, therefore, inventive, equitable remedies may become necessary in circumstances such as those present in this case.
Pain from New Job Duties Insufficient to Warrant Extension for Doctor’s Report
The Appellate Division recently upheld a Law Division decision granting summary judgment for an auto insurance company in New Jersey in which plaintiff failed to submit her certification of permanency within the statutory sixty days as required by N.J.S.A. 39:6a-8(a) and a doctor’s report was not issued until after the discovery end date. In Llanes v. Allstate New Jersey Insurance Co. et al, plaintiff filed a personal injury lawsuit, as result of an October, 2011 auto accident in which her vehicle was rear-ended, against the uninsured driver, and Allstate based on her uninsured motorist coverage. After Allstate filed for summary judgment on July 17, 2014, alleging the limitation-on-lawsuit threshold was not satisfied, plaintiff alleged she was experiencing “further and greater pain.” Furthermore, plaintiff served a new doctor’s report dated July 11, 2014 in support of her argument, which for the first time gave the opinion plaintiff suffered a “permanent partial disability” that was causally related to the accident of October 10, 2011.
The issue on appeal was whether summary judgment was properly granted in favor of defendant, Allstate, after the trial court found defendant would be prejudiced in its defense of the case at such a late juncture if it permitted the late certification of permanency based on the July 11, 2014 doctor’s report. The trial court granted defendant’s motion for summary judgment because, without an expert opinion on permanency, plaintiff did not meet the limitation-on-lawsuit threshold.
In order to satisfy the limitation-on-lawsuit or “verbal threshold” of the Automobile Insurance Cost Reduction Act (AIRCA), plaintiff must submit a physician’s certified statement that “the automobile accident victim suffered from a statutorily enumerated injury.” Davidson v. Slater, 189 N.J. 166, 181 (2007). A doctor’s certification attesting to a permanent injury within a reasonable degree of medical probability satisfies the aforementioned “verbal threshold.” However, the doctor’s certification is to be served within sixty days from the defendant’s answer or, if an extension is granted for good cause, within sixty days thereafter. N.J.S.A. 39:6A-8. Late amendments to plaintiff’s interrogatories that are incomplete or inaccurate may be allowed no later than twenty days prior to the end of the discovery period. Rule 4:17-7. Amendments may be allowed thereafter “only if the party seeking to amend certifies therein that the information requiring the amendment was not reasonably available or discoverable by the exercise of due diligence prior to the discovery end date.” Id.
In affirming the trial court’s decision granting summary judgment in favor defendant, the Appellate Court reasoned that the plaintiff’s complaints of pain arising from her job did not demonstrate due diligence in explaining why there was a three-year delay in obtaining the doctor’s report on permanency. In addition, the Appellate Court found that the court did not abuse its discretion in prohibiting an amendment of interrogatories pursuant to Rule 4:17-7 based on the facts as presented.