Justia New Jersey Supreme Court Opinion Summaries

Plaintiff Givaudan Fragrances Corporation (Fragrances) faced liability as a result of environmental contamination from a manufacturing site that a related corporate entity operated in a facility in Clifton. The issue this case presented for review involved Fragrances' effort to obtain insurance coverage for environmental claims brought by governmental entities in response to discharges of hazardous substances that occurred during the pertinent policy periods running through January 1, 1986. Fragrances claimed that the defendant insurance companies (defendants) wrote liability policies for Givaudan Corporation during those relevant years. Fragrances argued that it was entitled, either as an affiliate of Givaudan Corporation or by operation of an assignment of rights, to have the insurers provide it with coverage for that environmental liability. Defendants claimed that they insured Givaudan Corporation as their named insured, not Fragrances, and that any assignment to Fragrances was invalid because defendants did not consent to the assignment, as was required for a valid assignment according to the language of the insurance policies. Therefore, collectively, defendants refused to honor Fragrances' right to bring insurance contract claims against them. Fragrances filed its complaint in February 2009 seeking a declaratory judgment that it was entitled to coverage under the policies. In February 2010, while the declaratory judgment action was pending, Fragrances notified defendants that Givaudan Roure Flavors Corporation (corporate successor-in-interest to Givaudan Corporation) planned to assign its post-loss rights under the insurance policies to Fragrances. Defendants refused to consent to the assignment. Nevertheless, Flavors executed the assignment to Fragrances. Both sides moved for summary judgment. Because Fragrances was not acquired by Givaudan Corporation during the policy period, the trial court determined that it could not be an affiliated corporation covered under the policies. The court also determined that the assignment in this case was an assignment of policies, which could not be assigned. The court denied Fragrances' motion and granted defendants' cross-motion for summary judgment. The Appellate Division reversed and remanded, explaining that although the anti-assignment clauses in the occurrence policies at issue would prevent an insured from transferring a policy without the consent of the insurer, once a loss occurs, an insured s claim under a policy may be assigned without the insurer s consent.The Supreme Court affirmed, concluding that, once an insured loss has occurred, an anti-assignment clause in an occurrence policy may not provide a basis for an insurer s declination of coverage based on the insured's assignment of the right to invoke policy coverage for that loss. The assignment at issue in this case was a post-loss claim assignment and therefore the rule voiding application of anti-assignment clauses to such assignments applied. View "Givaudan Fragrances Corp. v. Aetna Casualty & Surety Co." on Justia Law

This dispute arose from the construction of Cypress Point, a luxury condominium complex in Hoboken. Co-defendants Adria Towers, LLC, Metro Homes, LLC, and Commerce Construction Management, LLC (collectively, the developer) served as the project's developer and general contractor, and subcontractors carried out most of the work. During construction, the developer obtained four CGL policies from Evanston Insurance Company, covering a four-year period, and three from Crum & Forster Specialty Insurance Company, covering a subsequent three-year period (collectively, the policies). In this appeal, issue before the Supreme Court was whether rain water damage caused by a subcontractor's faulty workmanship constituted property damage and an occurrence under the developer's commercial general liability (CGL) insurance policy. In a published decision, the Appellate Division reversed, holding that, under the plain language of the CGL policies, the unintended and unexpected consequential damages caused by the subcontractors faulty workmanship constituted property damage and an occurrence. The Supreme Court agreed and affirmed, finding that the consequential damages caused by the subcontractors faulty workmanship constituted property damage, and the event resulting in that damage water from rain flowing into the interior of the property due to the subcontractors faulty workmanship was an occurrence under the plain language of the CGL policies at issue here. View "CypressPoint Condominium Association, Inc. v. Adria Towers, L.L.C., et al." on Justia Law

The insured, who had been sued for damages by plaintiffs, entered into a settlement whereby it agreed to assign its rights and interests under the insurance policy to plaintiffs. However, when plaintiffs sought to recover under the policy, the insurer denied coverage because the insured breached the policy's notice conditions. The trial court granted summary judgment to the insurance company, finding that notice was not given as soon as practicable, and that the insurance company need not show appreciable prejudice as a result of the delay in notice in order to refuse coverage. Plaintiffs appealed, and the Appellate Division affirmed substantially for the reasons given by the trial court. After its review, the New Jersey Supreme Court held that because this Directors and Officers claims made policy was not a contract of adhesion but was agreed to by sophisticated parties, the insurance company was not required to show that it suffered prejudice before disclaiming coverage on the basis of the insured's failure to give timely notice of the claim. View "Templo Fuente De Vida Corp., et al. v. National Union Fire Insurance Co." on Justia Law

Plaintiff Robert Occhifinto filed suit against defendant Robert S. Keppler Mason Contractors, LLC (Keppler) and others seeking damages for alleged defective construction of an addition to his warehouse. In the liability action, Keppler was defended by its insurance carrier, Mercer Mutual Insurance Company, under a reservation-of-rights agreement. Before trial in the liability action, Mercer filed an action for a declaratory judgment challenging its obligation to provide coverage and to defend Keppler in the liability action. Occhifinto, on Keppler s behalf, contested the claims raised by Mercer, and filed counterclaims asserting that Mercer had a duty to defend and indemnify Keppler under the policy, and that Mercer was obligated for the counsel fees incurred in defending the declaratory judgment action. In the declaratory judgment action, the parties filed cross-motions for summary judgment on the insurance coverage question. The trial court held that Mercer was required to indemnify Keppler for damages covered by the insurance policy. The court therefore denied Mercer's motion for summary judgment and granted partial summary judgment to Occhifinto, reserving the claim for counsel fees until conclusion of the liability action. The liability action proceeded, and Occhifinto lost. After trial, Occhifinto sought to recover counsel fees from Mercer pursuant to Rule 4:42-9(a)(6), which authorized an award of counsel fees in an action upon a liability or indemnity policy of insurance in favor of a successful claimant. The trial court denied Occhifinto's motion, holding that he was not a successful claimant in the liability action because he was not entitled to indemnity coverage in the liability action. In an unpublished opinion, the Appellate Division affirmed that determination. The Supreme Court reversed, finding Occhifinto was a successful claimant and therefore was entitled to attorneys' fees. View "Occhifinto v. Olivo Construction Company" on Justia Law

Defendant "L.A." was employed by the Trenton Board of Education as an elementary school security guard. While at work, L.A. allegedly had unlawful sexual contact with two minor students, N.F. and K.O. The allegations were referred to the Institutional Abuse Investigation Unit (IAIU) of the Department of Children and Families (DCF) and defendant was subsequently indicted. In the N.F. indictment, L.A. was charged with third-degree aggravated criminal sexual contact and second-degree endangering the welfare of a minor. In the K.O. indictment, L.A. was charged with two counts of second-degree sexual assault and one count of second-degree endangering the welfare of a minor. L.A. pled guilty to one count of second-degree endangering the welfare of a minor (N.F.) in exchange for dismissal of the remaining charges regarding N.F. and complete dismissal of the K.O. indictment. K.O. s guardian ad litem subsequently filed a civil complaint alleging that L.A. sexually assaulted K.O. and that the Board negligently hired L.A. The Board answered the complaint, taking no position with regard to the allegations against L.A. However, L.A. was assigned counsel by the Horace Mann Insurance Agency, pursuant to a private insurance policy maintained by the New Jersey Education Association. Ultimately, K.O.'s civil action was settled without any admission of wrongdoing by L.A. or the Board. After the settlement, L.A., through counsel provided by Horace Mann, filed a verified petition against the Commissioner of Education seeking reimbursement for the attorney's fees and costs incurred in defending against K.O.'s civil action. The matter was transferred to the Office of Administrative Law and L.A.'s counsel and the Board filed cross motions for summary judgment. The Administrative Law Judge (ALJ) granted L.A.'s motion, denied the Board's, and awarded L.A. attorney's fees and costs pursuant to N.J.S.A.18A:16-6, the statute that addressed the right to indemnification for officers and employees of boards of education in civil actions. The issue this case presented for the Supreme Court's review centered on whether N.J.S.A. 18A:16-6 entitled a school board employee to indemnification for attorney's fees and costs spent in defense of a civil action arising from the same allegations contained in a dismissed criminal indictment. The Court concluded that in such circumstances N.J.S.A. 18A:16-6 requires indemnification unless there was proof by a preponderance of the evidence that the employee's conduct fell outside the course of performance of his or her employment duties. Here, rather than conducting an evidentiary hearing, the ALJ disposed of the matter by way of summary judgment. Because there are disputed issues of material fact regarding whether L.A. was acting within the scope of the responsibilities of his employment, the judgment of the Appellate Division was reversed. The matter was remanded to the Commissioner of Education for a hearing to determine whether L.A.'s conduct fell outside the course of performance of his employment duties. View "L.A. v. Board of Education of the City of Trenton" on Justia Law

Plaintiff Augustine Badiali was injured when his motor vehicle was rear-ended by an uninsured motorist. Plaintiff filed a UM claim, which proceeded to arbitration and resulted in an award in plaintiff s favor. Plaintiff filed suit against his insurer, defendant New Jersey Manufacturers Insurance Group ( NJM ), after NJM rejected the arbitration award and refused to pay its share. The trial court confirmed the arbitration award in a summary action and found NJM liable for its share of the award. In a subsequent action, plaintiff asserted that NJM litigated in bad faith by advocating that its policy language allowed for a rejection of the arbitration award at issue. The trial court granted summary judgment in favor of NJM. The court agreed that the case was ripe for summary judgment although discovery had not been completed. The court was further persuaded that NJM s position was fairly debatable based on its policy language and on the existence of an unpublished Appellate Division decision involving nearly identical facts, in which NJM was also a party. The Appellate Division affirmed, holding that NJM s position was fairly debatable because it was supported by a prior, unpublished opinion of the court. Plaintiff was thereby barred from recovering counsel fees or any other consequential damages. Finding no reversible error in the appellate court's judgment, the Supreme Court affirmed. View "Badiali v. N.J. Mfg. Ins. Grp." on Justia Law

Plaintiff Kwabena Wadeer suffered injuries in a motor vehicle accident that occurred while he was attempting to avoid an unidentified vehicle. Plaintiff filed a UM claim against New Jersey Manufacturers Insurance Company (NJM), his insurer. The insurance policy provided $100,000 in UM and UIM coverage. NJM made no offers to attempt to settle plaintiff's UM claim and the parties proceeded to private arbitration pursuant to the terms of the policy. The panel determined that plaintiff was 30% liable for the accident, the phantom vehicle was 70% liable, and plaintiff was entitled to a net award of $87,500. NJM rejected the $87,500 arbitration award and demanded a trial. By letter, plaintiff's attorney acknowledged NJM s rejection of the arbitration award and notified NJM that he believed it was acting in bad faith by rejecting that award. Plaintiff submitted an Offer of Judgment to NJM in the amount of $95,000 and reiterated his belief that defendant's conduct was in bad faith. NJM rejected the offer and the case proceeded to trial. The jury determined that the phantom vehicle was 100% liable for the underlying accident and awarded plaintiff $210,000 for pain and suffering and $12,175 in lost wages. Plaintiff thereafter moved to enter judgment for the full amount of the verdict, notwithstanding the $100,000 policy limit, as well as for prejudgment interest on the verdict and attorneys fees. During argument on the motion, plaintiff's counsel raised the issue of bad faith, contending that defendant was on notice of the claim. In response, NJM argued that plaintiff failed to plead bad faith in his complaint. The trial judge entered an order reducing and molding the jury verdict to conform to the insurance policy limit of $100,000 and awarding plaintiff attorneys fees and prejudgment interest. In his accompanying statement of reasons, the trial judge found that NJM s actions did not constitute bad faith because NJM had fairly debatable reasons for denying the benefits of the policy. Plaintiff and NJM filed cross-appeals. Plaintiff contended the trial court should not have molded the verdict to the policy limits because NJM acted in bad faith. The Appellate Division affirmed the trial judge's modified jury verdict, but reversed the award of attorneys fees and expenses. Plaintiff then filed a separate complaint alleging that NJM breached its duty of good faith and fair dealing by failing to make a settlement offer to plaintiff and by failing to settle the claim in a timely manner. NJM moved for summary judgment, arguing that plaintiff's complaint was barred by the entire controversy doctrine, res judicata, and/or collateral estoppel. After review, the Supreme Court agreed that plaintiff's bad faith claim was barred in this action under the principle of res judicata because it was raised, fairly litigated, and determined by the trial court in the first litigation. View "Wadeer v. N.J. Mfrs. Ins. Co." on Justia Law

Plaintiff Wade Stancil was injured in 1995 while employed by Orient Originals. He received workers' compensation benefits from his employer's compensation carrier, defendant ACE USA (ACE). In 2006, following a trial, the court of compensation determined that Stancil was totally disabled. In 2007, Stancil filed a motion in the compensation court seeking an order compelling ACE to pay outstanding medical bills. During a hearing on the motion, the compensation judge commented that ACE had a history of failing to make payments when ordered to do so. The compensation judge granted Stancil's motion, warned ACE against any further violation of the order to pay, and awarded Stancil counsel fees. The parties returned to the compensation court for a further proceeding relating to the disputed bills. After finding that the bills identified in the earlier order remained unpaid and that ACE's failure to make payment was a willful and intentional violation of the order, the court issued another order compelling ACE to make immediate payment and again awarding counsel fees. In 2008, Stancil underwent additional surgery and psychiatric treatment. Stancil's physician attributed the need for additional treatment to an earlier treatment delay caused by the carrier's delay in paying medical providers. N.J.S.A. 34:15-1 to -142 (the Act), is the exclusive remedy for the claims pled in the complaint and therefore no damages could be awarded. The trial court granted ACE's motion effectively denying payments for Stancil's 2008 treatment. The Appellate Division affirmed. The issue on appeal to the Supreme Court was whether the employee could sue the carrier for pain and suffering caused by the carrier's delay in paying for medical treatment, prescriptions, and other services. Upon review, the Court concluded that an injured employee does not have a common law right of action against a workers' compensation carrier for pain and suffering caused by the carrier's delay because: (1) the workers' compensation system was designed to provide injured workers with a remedy outside of the ordinary tort or contract remedies cognizable in the Superior Court; (2) in amending the Workers' Compensation Act in 2008, the Legislature rejected a provision that would have given the compensation courts broader permission to authorize a resort to the Superior Court and adopted a remedy that permits compensation courts to act through a contempt power; and (3) allowing a direct common-law cause of action against a carrier would undermine the workers' compensation system by substituting a cause of action that would become the preferred manner of securing relief. View "Stancil v. ACE USA" on Justia Law

A "discrete, narrow legal question" came before the Supreme Court: is a health care provider who has received an assignment of personal injury protection (PIP) benefits from an insured obligated upon request to furnish to the insurer broad information with respect to the provider’s ownership structure, billing practices, and regulatory compliance? Plaintiffs in this matter consist of six “Selective Insurance Company” entities. Individuals insured by Selective sought medical treatment from defendants for injuries received in automobile accidents. Those insureds assigned to defendants the benefits to which they were entitled under their PIP coverage, giving defendants the contractual right to seek PIP reimbursement under those policies. In reviewing claims submitted for payment, Selective detected what it considered to be suspicious patterns in both the treatments defendants had provided and the corporate links among the treating entities. Selective requested that defendant supply to it a variety of data with respect to their ownership, structure, billing practices, and compliance with certain regulations. In support of its request, Selective cited the provision within the insureds’ insurance policies requiring the insureds to cooperate with Selective in the investigation of any claim under the policy. When defendants refused to supply the material Selective sought, Selective sued, alleging that defendants' failure to supply the information was a breach of they duty to cooperate and a violation of the PIP discovery statute. After hearing oral argument, the trial court denied defendants’ motion to dismiss and granted Selective the relief it had requested by directing defendants to respond to Selective’s discovery requests. Defendants thereafter moved for reconsideration, but the trial court denied that motion, together with defendants’ request for a stay. Upon review of the matter, the Supreme Court held that an insured had no duty to provide information to plaintiff with respect to the ownership structure, billing practices, or referral methods of the medical providers from whom he or she sought treatment for his or her injuries. Because an insured had no obligation to supply that information to plaintiff, the assignment of benefits executed by an insured could not serve to impose that duty on the providers. View "Selective Insurance Company of America v. Hudson East Pain Management" on Justia Law

Plaintiffs Memorial Properties, LLC (Memorial) and Mount Hebron Cemetery Association (Mt. Hebron) are respectively the manager and owner of Liberty Grove Memorial Gardens. Mt. Hebron was sued in 2007 and 2008 in seven lawsuits in the Superior Court of New Jersey and the Supreme Court of New York by family members of decedents whose remains were sent by funeral directors to Liberty Grove for cremation in 2003, 2004 and 2005. The New Jersey and New York plaintiffs alleged that prior to being sent to Liberty Grove, the decedents’ bodies were unlawfully dissected, and that tissue, bone and organs were removed for commercial sale. The families contended that they did not discover the illegal harvesting scheme until 2006, when law enforcement officials who investigated and prosecuted the perpetrators advised them that their relatives’ body parts had been illegally harvested. Memorial and Mt. Hebron contended that they received the decedents’ remains in closed containers and were unaware that the remains had been tampered with before being turned over to the crematory. Memorial and Mt. Hebron were not prosecuted as a result of the criminal investigation of the illegal harvesting. This appeal arose from Memorial’s and Mt. Hebron’s pursuit of a defense and indemnification with respect to the New Jersey and New York litigation, under two insurance policies. The first policy, issued by Assurance Company of America (Assurance), provided coverage for the year 2003 for claims arising from damage to human remains and bodily injury, including mental anguish. The second, issued by Maryland Casualty Company (Maryland), provided analogous coverage for the year 2006, but contained an "improper handling" exclusionary clause, barring coverage for bodily injury or property damage arising from specified acts and omissions including "[f]ailure to bury, cremate or properly dispose of a 'deceased body.'" In 2008, Memorial and Mt. Hebron demanded that Assurance and Maryland defend and indemnify them. Assurance declined coverage on the ground that the occurrences were outside of the policy period, invoking plaintiffs' claims that they learned of the harvesting scheme in 2006. Maryland declined coverage, citing the "improper handling" exclusionary clause in its 2006 policy. Memorial and Mt. Hebron filed a declaratory judgment action on May 14, 2008, naming as defendants Assurance, Maryland and Zurich North American Insurance Company (Zurich), and demanding defense and indemnification. Assurance and Maryland cross-moved for summary judgment. The trial court denied the summary judgment motion filed by Memorial and Mt. Hebron, but granted defendant insurers' cross-motion for summary judgment, identifying the year 2006 as the time frame of the "occurrence" in the two cases for which the insureds sought coverage. The Appellate Division affirmed both of the trial court’s orders granting the summary judgment motions filed by Assurance and Maryland. After its review, the New Jersey Supreme Court concluded that neither the Assurance policy nor the Maryland policy required the insurer to defend or indemnify Memorial and Mt. Hebron for claims asserted in the New Jersey and New York litigation. The Court affirmed the Appellate Division's ruling. View "Memorial Properties, LLC v. Zurich American Insurance Co." on Justia Law