Articles Posted in Supreme Court of New Jersey

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This appeal stemmed from plaintiff Lucia Serico’s motion for attorney’s fees and other litigation expenses pursuant to Rule 4:58 after a jury trial on medical malpractice claims against Robert Rothberg, M.D. At issue was whether Serico could collect attorney’s fees from Rothberg despite entering into a “high-low agreement” that limited the amount she could recover at trial to $1,000,000. Based on the expressed intent of the parties and the context of the agreement, the New Jersey Supreme Court found the agreement set $1,000,000 as the maximum recovery. Therefore, Serico could not seek additional litigation expenses allowed by Rule 4:58. View "Serico v. Rothberg" on Justia Law

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Third-party defendant Dr. George Likakis was charged with aggravated arson and insurance fraud after a fire destroyed a building he owned (the Property). Plaintiff RSI Bank held a first-priority mortgage on the Property, and defendant/third-party plaintiff The Providence Mutual Fire Insurance Company (Providence) issued a commercial liability policy that covered the Property. Following the fire, Likakis and RSI Bank submitted insurance claims. Providence denied both sets of claims. Providence’s denial of coverage prompted the filing of two actions in the Law Division: (1) filed by Likakis against Providence; and (2) an action gave rise to this appeal: RSI Bank’s claims against Providence for breach of contract, fraudulent misrepresentation, violations of the Consumer Fraud Act, and bad faith. Providence filed a third-party complaint against Likakis, alleging claims for indemnification. Both civil lawsuits were pending when criminal proceedings commenced against Likakis. Likakis was indicted; Providence did not object to Likakis’ admission to the PTI program, provided he paid restitution, committed to protect/compensate Providence from all claims that might be brought by RSI, and dismissal of Likakis’ suit against Providence. With Likakis’s consent - but no assessment of his ability to pay - the court also imposed the three conditions that Providence had requested. During his PTI term, Likakis paid Providence the specific restitution amount and dismissed with prejudice his lawsuit. Likakis did not make any payment related to the separate indemnification provision. With the prosecutor’s consent, the PTI court terminated Likakis’s PTI supervision and dismissed his indictment. RSI Bank and Providence settled their coverage dispute. Providence agreed to pay RSI Bank to settle all of the bank’s claims based on the insurance policy and moved for summary judgment against Likakis based on the provision of the PTI agreement. The court held that the indemnification provision of the PTI agreement was enforceable against Likakis and ordered Likakis to pay Providence the portion of the settlement funds Providence attributed to fire damage, less the amount Likakis had paid during his PTI supervisory period. Likakis appealed, and an Appellate Division panel affirmed. The New Jersey Supreme Court reversed, finding an open-ended agreement to indemnify the victim of the participant’s alleged offense for unspecified future losses was not an appropriate condition of PTI. Moreover, a restitution condition of PTI was inadmissible as evidence in a subsequent civil proceeding against the PTI participant. The indemnification provision of the PTI agreement at issue should have played no role in this civil litigation. View "RSI Bank v. The Providence Mutual Fire Insurance Company" on Justia Law

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This appeal involved questions about the insurance coverage available to defendant Honeywell International, Inc. (Honeywell) for thousands of bodily-injury claims premised on exposure to brake and clutch pads (friction products) containing asbestos. The New Jersey Supreme Court granted certification to address two issues: (1) whether the law of New Jersey or Michigan (the headquarters location of Honeywell’s predecessor when the disputed excess insurance policies were issued) should control in the allocation of insurance liability among insurers for nationwide products-liability claims; and (2) whether it was error not to require the policyholder, Honeywell, to contribute in the allocation of insurance liability based on the time after which the relevant coverage became unavailable in the marketplace (that is, since 1987). The Supreme Court determined New Jersey law on the allocation of liability among insurers applied in this matter, and the Court set forth the pertinent choice-of-law principles to resolve this dispute over insurance coverage for numerous products-liability claims. Concerning the second question, on these facts, the Court also affirmed the determination to follow the unavailability exception to the continuous-trigger method of allocation set forth in Owens-Illinois, Inc. v. United Ins. Co., 138 N.J. 437 (1994). View "Continental Insurance Company v. Honeywell International, Inc." on Justia Law

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The United States Court of Appeals for the Third Circuit certified two questions of New Jersey law to the New Jersey Supreme Court arising from two putative class actions brought under the New Jersey Truth-in-Consumer Contract, Warranty and Notice Act (TCCWNA). Plaintiffs David and Katina Spade claimed that on or about April 25, 2013, they purchased furniture from a retail store owned and operated by defendant Select Comfort Corporation. They alleged that Select Comfort’s sales contract included the language prohibited by N.J.A.C. 13:45A-5.3(c). The Spades also alleged the sales contract that Select Comfort provided to them did not include language mandated by N.J.A.C. 13:45A-5.2(a) and N.J.A.C. 13:45A-5.3(a). The Third Circuit asked: (1) whether a violation of the Furniture Delivery Regulations alone constituted a violation of a clearly established right or responsibility of the seller under the TCCWNA and thus provided a basis for relief under the TCCWNA; and (2) whether a consumer who receives a contract that does not comply with the Furniture Delivery Regulations, but has not suffered any adverse consequences from the noncompliance, an “aggrieved consumer” under the TCCWNA? The New Jersey Supreme Court answered the first certified question in the affirmative and the second certified question in the negative. View "Spade v. Select Comfort Corp." on Justia Law

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Defendant Horizon Healthcare Services, Inc., New Jersey’s largest health insurer, maintained a two-tiered provider-hospital system. Plaintiff Saint Peter’s University Hospital, Inc., and plaintiff Capital Health System, Inc. and others, commenced separate lawsuits claiming Horizon treated them unfairly and in a manner that contravened their agreements when they were placed in the less advantageous Tier 2. Plaintiffs assert Horizon’s tiering procedures were pre-fitted or wrongfully adjusted to guarantee selection of certain larger hospitals for the preferential Tier 1. The New Jersey Supreme Court was asked, by way of interlocutory appeal, to settle multiple discovery disputes that arose in the course of the litigation. The Supreme Court concluded the Appellate Division exceeded the limits imposed by the standard of appellate review both by assessing the disputed information’s relevance against the panel’s own disapproving view of the merits and by giving no apparent weight or consideration to the protections afforded by confidentiality orders. Having closely examined the record, the Supreme Court rejected the Appellate Division’s determination that the chancery judges encharged with these matters abused their discretion. It was not an abuse of discretion for the chancery judges to find the information sought was relevant to plaintiffs’ claims that Horizon violated either the network hospital agreements’ contractual terms, or the overarching implied covenant of good faith and fair dealing, when they were relegated to the less desirable Tier 2. View "Capital Health System, Inc. v. Horizon Healthcare Services, Inc." on Justia Law

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In 1983, the New Jersey Supreme Court affirmed a final consent judgment for a settlement agreement between the New Jersey State Bar Association and the New Jersey Association of Realtor Boards. The terms of the settlement provided that real estate brokers and salespersons may prepare contracts to sell or lease real property, so long as a standard form is used that includes a three-day period for attorney review. Plaintiffs Michael Conley, Jr., and Katie M. Maurer (Buyers) made an offer to purchase a condominium from defendant Mona Guerrero (Seller), and, a few days later, Seller signed and executed the contract. Before the three-day attorney-review period expired, Seller s attorney sent Buyers attorney and their realtor notice of disapproval by e-mail and fax, rather than by the methods approved under the 1983 holding and prescribed in the parties' contract (certified mail, telegram, or personal service). Buyers sued for specific performance, claiming the contract was enforceable because Seller s notification of disapproval was sent improperly. At issue before the Supreme Court was whether the attorney-review provision of a standard form real estate contract had to be strictly enforced, thereby nullifying Seller's notice of disapproval and requiring enforcement of the real estate contract. The Court concluded that, because Buyers received actual notice of disapproval within the three-day attorney-review period by a method of communication commonly used in the industry, the notice of disapproval was valid. The Court also exercised its constitutional authority over the practice of law and found that an attorney's notice of disapproval of a real estate contract could be transmitted by fax, e-mail, personal delivery, or overnight mail with proof of delivery. Notice by overnight mail will be effective upon mailing. The attorney-review period within which this notice must be sent remained three business days. View "Conley v. Guerrero" on Justia Law

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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

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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

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In 1995, Jazz Photo Corp., one of several commercial entities (collectively referred to as the Jazz Entities), entered into a factoring agreement with Rosenthal & Rosenthal, Inc. Jazz Photo sold Rosenthal its accounts receivable in return for cash. Five years later, Vanessa Benun, the daughter of Jack Benun, a principal of the Jazz Entities, guaranteed Jazz Photo's obligations under that agreement. At that time, Benun also executed a mortgage on real property she owned in Monmouth County as security for her personal guaranty. In March 2005, another of the Jazz Entities, Ribi Tech Products, LLC entered into a factoring agreement with Rosenthal. Benun personally guaranteed Ribi Tech's obligations to Rosenthal. In March 2007, Riker, Danzig, Scherer, Hyland & Perretti, L.L.P. (Riker), a law firm providing legal services to Jack Benun and the Jazz Entities, obtained a third mortgage from Benun on the same real property. This mortgage was executed in favor of Riker to secure Jack Benun's personal debt under a letter agreement. When Benun executed the mortgage, Jack Benun owed Riker $1,679,701.33 in unpaid legal fees, and the letter agreement reflected his obligations to Riker and Riker's promise to provide continuing legal representation. Riker's mortgage was recorded on April 13, 2007. Rosenthal received actual notice of the Riker mortgage in August 2007. Despite notice of the Riker mortgage, Rosenthal continued to make advances to the Jazz Entities that totaled millions of dollars. In September 2009, Jazz Products filed for bankruptcy. The Jazz Entities defaulted on their obligations to Rosenthal, owing Rosenthal close to $4 million. Benun, in turn, defaulted on her personal guaranty to secure the debt. After Riker recorded its mortgage on the Monmouth County property, it continued to perform legal services for Jack Benun, and his unpaid legal fees ballooned to over $3 million. Jack Benun, and the Jazz Entities defaulted on their obligation to Riker and Benun defaulted on her guaranty. Rosenthal filed a foreclosure complaint against Benun, her husband, and Riker. Benun and her husband did not respond, and Rosenthal requested that a default judgment be entered against them. Riker answered, disputing the priority of Rosenthal's mortgages. Later, both Rosenthal and Riker filed cross-motions for summary judgment regarding the priority of their respective mortgages. The trial court granted Rosenthal's motion, determining that the dragnet clauses in the Rosenthal mortgages were fully enforceable. With regard to priority, the trial court held that Riker's argument that its mortgage displaced the two Rosenthal mortgages was legally flawed because the firm accepted a mortgage on the property with knowledge of two prior mortgages, each securing an obligation of up to $1 million, and with knowledge of the anti-subordination clauses. The court concluded that there was no convincing justification for rewarding Riker a superior priority. Riker appealed, and the Appellate Division reversed. The Supreme Court affirmed the Appellate Division, finding that Rosenthal had advance notice of the law firm's intervening lien but nonetheless proceeded to make optional advances to the commercial entities. "Having done so, its mortgages securing those optional future advances were subordinated to the law firm's intervening lien." View "Rosenthal & Rosenthal, Inc. v. Benun" on Justia Law

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In May 2013, plaintiffs Annemarie Morgan and Tiffany Dever filed suit against defendants Sanford Brown Institute, its parent company, Career Education Corporation, and Sanford Brown's chief executive officer, admission and financial aid officers, and clinical director. Sanford Brown was a private, for-profit educational institution with a campus in Trevose, Pennsylvania, that offered medical-related training programs. In the complaint, plaintiffs claimed that defendants misrepresented the value of the school's ultrasound technician program and the quality of its instructors, instructed students on outdated equipment and with inadequate teaching materials, provided insufficient career-service counseling, and conveyed inaccurate information about Sanford Brown's accreditation status. The complaint further alleged that Sanford Brown employed high-pressure and deceptive business tactics that resulted in plaintiffs financing their education with high-interest loans, passing up the study of ultrasound at a reputable college, and losing career advancement opportunities. The Sanford Brown enrollment agreement included payment terms for tuition and fees, disclaimers, and an arbitration provision. Without answering the complaint, defendants filed a motion to compel arbitration and to dismiss plaintiffs' claims. The Appellate Division found the parties clearly and unmistakably agreed an arbitrator would determine issues of arbitrability and that plaintiffs failed to specifically attack the delegation clause. The panel therefore determined that arbitrability [was] for the arbitrator to decide. The Supreme Court reversed, finding that the Appellate Division and trial court did not have the benefit of "Atalese v. U.S. Legal Servs. Grp.," (219 N.J. 430, 436 (2014), cert. denied, __ U.S. __, 135 S. Ct. 2804, 192 L. Ed.2d 847 (2015)) at the time they rendered their decisions. The New Jersey Court held in "Atalese" that an arbitration provision in a consumer contract that fails to explain in some minimal way that arbitration is a substitute for a consumer s right to pursue relief in a court of law was unenforceable. This case was therefore remanded for further proceedings in light of Atalese. View "Morgan v. Sanford Brown Institute" on Justia Law