Plaintiff James Stackhouse went for a swim in the defendant homeowner’s pool upon the invite of the defendant’s son. He slipped on an oily substance on the diving board and hurt his knee. In Stackhouse v. Bryant, 2014 N.J. Super. Unpub. LEXIS 1189 (App.Div. May 23, 2014), he sued the defendant for his injury, claiming that the diving board was a dangerous condition. The trial court granted summary judgment, dismissing the complaint as to the defendant, and this appeal ensued.

Others used the diving board prior to the plaintiff with no problem with the surface. No one was eating or drinking near the board. The plaintiff had used diving boards before and knew of the need to exercise caution. There had never been any prior incidents with the diving board.

 The trial judge found that the plaintiff was a social guest in the defendant’s home, notwithstanding the defendant’s lack of knowledge of his presence. Given the defendant had no reason to know of any dangerous condition of the diving board, he had no duty to rectify the condition or warn plaintiff of its presence.

On appeal, the plaintiff argued that the court should have analyzed this premises liability suit by applying the more flexible approach of Hopkins v. Fox & Lazo Realtors, 132 N.J. 426 (1993) and, as a result, the dismissal should be reversed. The Appellate Division disagreed.

It found that the plaintiff easily fit into one of the traditional status categories as a social guest. However, even analyzing liability based upon the Hopkins test, when one considered the relationship of the parties to determine if it is fair and just to impose a duty upon the landowner, the court found that it would be neither fair, nor just to impose a duty.

The plaintiff was unable to point to any evidence that defendant knew or had reason to know of an oily substance on the diving board. A homeowner has no duty to warn a social guest of a dangerous condition that the homeowner does not know, or should not know, exists. It would be unfair to impose a duty to warn on a homeowner to warn or remediate a transient condition of which he was unaware. Thus, under either the traditional analysis or the Hopkins test, the result would be the same. Hence, the Appellate Division upheld the dismissal of the complaint.

In Petersen v. New Jersey Mfrs. Ins. Co., 2014 N.J. Super. Unpub. LEXIS 995 (App. Div. May 2, 2014), the Appellate Division considered whether NJM adequately reserved its rights so as to permit it to later disclaim coverage. In Petersen, Lonnie and Kathleen Petersen’s son, Brandon, stabbed and robbed a neighbor. He was charged with attempted murder.

The neighbor, Doris Zayacz, sued Brandon and his parents in a civil suit. She alleged negligent, willful and wanton, and intentional acts. NJM decided to appoint counsel to represent the parents on the negligent and willful and wanton counts subject to a reservation of rights letter. It disclaimed as to the intentional act or punitive damages claims and advised that the insureds may want to retain counsel at their expense to cooperate with NJM’s counsel as to those claims.

NJM sought the Petersens’ consent to the representation by asking them to sign a copy of the letter, acknowledging their approval to the terms of the defense. However, the insureds never signed the letter. But, they did accept the services of the defense counsel chosen by NJM.

Discovery commenced but then was stayed pending a resolution of the criminal proceedings. Brandon pled guilty to the charges.

After the Supreme Court rendered its decision of Villa v. Short, 195 N.J. 15 (2008), ruling that a criminal acts clause such as the one in NJM’s policy barred coverage for all insureds under the policy, NJM disclaimed coverage as to the parents. Accordingly, it directed its assigned counsel to withdraw as their attorney.

A  judgment was entered and the Petersens assigned their rights against NJM to the plaintiff to pursue it’s the amount of the judgment. Thereafter, this matter ensued whereby the plaintiff attempted to collect on the judgment against the Petersens from NJM.

However, the Appellate Division found that NJM had properly reserved its rights and was able to disclaim coverage. NJM had informed the Petersens that it was investigating the matter and that its assigned defense counsel was directed to defend the insureds “until such time as any coverage issues have been resolved.”

Further, although the Petersens did not sign the reservation of rights letter to indicate their approval of NJM’s terms, they did accept the services of NJM’s defense counsel. By accepting this representation, the court found that they had accepted NJM’s terms.

This case bears out the importance of a properly worded reservation of rights letter. Although this case found that acceptance of the chosen defense counsel constituted an acceptance of the terms of the carrier’s offer to defend, language can be placed directly into the reservation of rights letter, stating that whether or not it is signed, acceptance of the services of the chosen defense counsel would be considered an acceptance of the terms of the defense.

In Lincoln Benefit Life Co. v. AEI Life, 2014 U.S. Dist. LEXIS 46726 (April 4, 2014), the plaintiff life insurance company sued in the District Court of New Jersey to void out two life insurance policies on the life of Gabrielle Fischer due to material misrepresentations made in the insurance application and/or due to the lack of an insurable interest at the time of the policy’s inception. The complaint claimed that the defendants engaged in a stranger originated life insurance or “STOLI” scheme in which they submitted false or deceptive applications on her life to obtain two $6.65 million life insurance policies. The issue in this case was whether diversity jurisdiction existed over the two LLC defendants.

To obtain jurisdiction on a diversity basis in federal court, the plaintiff and the defendants must be citizens of different states. In this case, the plaintiff, Lincoln Benefit, was a citizen of Nebraska. Defendant, Innovative Brokers, was a NY corporation. Defendant, AEI Life, LLC, was identified as a citizen of NY, and ALS Capital Ventures, LLC was identified as a citizen of Delaware.

The defendants moved to dismiss the complaint on the basis of the lack of contacts with NJ and also argued that the complaint, on its face, did not allege the citizenship of the LLCs. The defendants argued that because they were LLCs, the plaintiff was required to plead the citizenship of each member of the LLC to meet its burden of establishing the court’s subject matter jurisdiction.

The complaint clearly did not plead the citizenship of each member of the LLC. Thus, the court considered the plaintiff’s alternate argument that it should be granted jurisdictional discovery as an alternative to dismissal.

This issue had not yet been decided by the Third Circuit, which is the court of appeals for the District of New Jersey. While jurisdictional discovery has been permitted to establish personal jurisdiction, the appeals court has not decided whether discovery should be permitted to resolve uncertainties as to diversity jurisdiction.

After considering other cases in the circuit that have refused to permit this type of discovery, the court denied the request. The judge noted that it was the plaintiff’s burden to plead the basis for subject matter jurisdiction. Hence, the judge dismissed the complaint.

This case demonstrates how difficult it is to sue a limited liability company in federal court. Unless it is a one member LLC and the plaintiff knows in which state that member resides, it will remain very challenging to establish diversity jurisdiction against an LLC. Based upon this case, the court will not permit the plaintiff to find out through discovery the identity and citizenship of the LLC members in an attempt to establish that diversity of citizenship exists. 

Plaintiff Thomas Hackett suffered injuries when he hit his head on the ceiling when climbing a ladder to a water tower on the roof of a commercial building to repair an air conditioner. He was a technician working for Statewide Conditioning Inc., which had a contract with the defendants to perform the HVAC repair work. In Hackett v. Somerset Executive Square, 2014 N.J. Super. Unpub. LEXIS 678 (App. Div. March 27, 2014), the plaintiff sued the defendants, claiming that the small pass-through opening in the ceiling was a dangerous condition.

To access the roof, the plaintiff had to climb a fixed ladder and pass through the small opening in the ceiling. The fixed ladder’s clearance was about 19 inches between the edge of the ceiling opening and the ladder rungs. While he struggled through the pass-through earlier in the day, the third time that he went through, he hit his head on the ceiling, causing his injuries.

The plaintiff was aware of the obvious hazard and testified that it was a very restricted space. The trial judge found that the dangerous condition, the small cut-out in the ceiling allowing access to the roof, was open and obvious. Hence, the defendants had no duty to warn their business invitee of the condition. They were only required to protect the plaintiff from conditions that were not obvious or visible upon ordinary observation. The trial judge granted summary judgment, dismissing the case.

The plaintiff appealed to the Appellate Division. The appeals court noted that summary judgment is appropriate when the hazardous condition is obvious. Given that the evidence showed that the dangerous condition was apparent to the plaintiff, the Appellate Division agreed with the trial court judge and affirmed the dismissal of the case.

In upholding the decision, the court cited to several cases, which were not the traditional invitee cases. The court referred back to the Hopkins v. Fox & Lazo Realtors case and stated that “[o]ur courts have reduced the emphasis on the nature of the relationship between the parties, focusing also on other factors.”

This case exemplifies the blurring of the traditional categories (invitee, licensee, or trespasser) used to determine liability in a landowner premises case. Our NJ courts continue to focus on other factors such as the forseeability of the harm and the overall fairness in considering whether to impose a duty on a landowner for an injury caused by a condition of its property. The Hackett case is one case in which a NJ court refused to impose that duty.

Irena Pronina (“Pronina”), while operating a Hummer at 4:30 in the morning, drove down a hill, spun out on ice, and ended up on the grassy median on Route 78 in Somerset County. George Howell (“Howell”) was injured after trying to help her and signal motorists coming down the hill as to the ice. Whether the skidding of her automobile gives rise to an inference of negligence was an issue considered by the Appellate Division in Howell v. Cross-Burgos, 2014 N.J. Super. Unpub. LEXIS 105 (App.Div. 2014).

Howell saw Pronina’s Hummer in the median and pulled his pick up truck off the highway onto the right shoulder and activated his hazards. He crossed the highway to see if she was hurt. Pronina was not injured and he drove her in her car across the highway and parked the Hummer behind his truck. After telling her to sit in his truck, he walked out to signal cars coming down the hill. A tractor-trailer spun out on the ice and struck the Hummer and Howell.

Howell sued Pronina and the driver of the tractor trailer. Pronina filed for summary judgment, claiming that Howell had produced no proof of her negligence. The trial court judge granted the motion, ruling that even if Pronina was negligent in operating her vehicle or not moving it from the median, such conduct was not the proximate cause of plaintiff’s injuries.

The Appellate Division affirmed, but not for the reasons cited by the trial court. The appeals court found that there was no evidence that Pronina was negligent. The court held that “the skidding of an automobile on an icy roadway does not give rise to the inference of negligence on the part of a driver.” If the rule were otherwise, the court noted that every driver would be compelled to stay off the roads when weather conditions rendered them slippery.

Skidding can be evidence of negligence if it appears that it was caused by the failure of the driver to take reasonable precautions to avoid it, when conditions of which he knew or should have known made such a result probable in the absence of such precautions. Here, there was no evidence that Pronina’s car spun out because she knew or should have known the road was icy and failed to take reasonable precautions to prevent her car from skidding.

Pronina testified that she was driving carefully in the middle lane. There was no expert report that she was speeding. Thus, the Appellate Division found that there was simply no evidence that she was negligent. Hence, it affirmed the order dismissing the lawsuit as to Pronina.

Too often we assume that if a vehicle slides on ice that the driver must have been negligent. This case points out that NJ law does not automatically infer negligence in such a situation.

Plaintiff Shaun Armstrong was injured while on a Disney cruise. He fell from his wheelchair while on a ramp leaving the ship, struck the hot deck, and suffered burns and fractured both femurs. At the time, he was operating a wheelchair manufactured by Pride Mobility Products (“Pride”). He filed a negligence lawsuit in federal court in Florida against Walt Disney Company and other cruise related companies. About 3 months after filing the lawsuit, he settled with these defendants and dismissed that suit. The issue on this appeal was whether he was now barred from suing the manufacturer of the wheelchair in a subsequent NJ lawsuit.

About one year after settling with the Disney defendants, the plaintiff filed a second lawsuit in New Jersey, Armstrong v. Monmouth Equipment & Service Co.,  2014 N.J. Super. Unpub. LEXIS 776  (App.Div. 2014), against Pride and other entities involved in the sale of the wheelchair. The plaintiff disclosed in discovery that there was a settlement reached in the Florida lawsuit. After receiving a copy of the Florida complaint and settlement agreement, Pride filed a motion to dismiss the complaint based upon the entire controversy doctrine.

The trial court judge granted Pride’s motion, finding that plaintiff knew that Pride was the manufacturer and should have named Pride in that first suit. However, the Appellate Division reached a different result.

The entire controversy doctrine requires a party to litigate all aspects of a controversy in one legal proceeding. However, while all claims arising from the same matter must be joined in the same lawsuit or be precluded if filed in a later lawsuit, this doctrine requires only mandatory joinder of claims, not parties. Claims against a subsequent party in a successive action, not a party to the first lawsuit, will only be barred in special situations involving inexcusable conduct and substantial prejudice to the non-party resulting from omission from the first suit.

Here, the Appellate Division found that there was no calculated claim splitting. The suit in Florida was based upon the condition of the ramp and the deck. The New Jersey suit was a products liability suit based upon the design of the wheelchair. There was no extended discovery in the Florida suit and, thus, Pride was not prejudiced. Further, even though the ramp had been replaced, the ship’s specifications should be available to establish the design of the ramp and the composition of the deck, to the extent they were relevant to the Pride suit.

Accordingly, the NJ appeals court found that Pride was not substantially prejudiced by not being included in the first lawsuit. Thus, the court ordered that the plaintiff could proceed with its lawsuit and reinstated the complaint. 

In Turkowski v. Management Resources Systems, Inc., 2014 N.J. Super. Unpub. LEXIS 705  (App.Div. 2014), the plaintiff sued Rack Room Shoes, Inc. for personal injuries resulting from a fall at Rack Room, a retail shoe store. The trial court found that the plaintiff was unable to establish the defendant’s negligence without a liability expert and dismissed her case. This dismissal was upheld on appeal.

The plaintiff, age 77, accompanied her daughter shopping at the shoe store. After entering the store, she asked if she could use the restroom and was directed to the back stockroom where the restroom was located. While walking through the storage area, the plaintiff tripped on or near a metal drain cleanout cover in the floor, causing her to be injured. There was a 3/16^th height differential between the cover and the floor, which plaintiff claimed was a dangerous or unsafe condition.

When the store was originally built, Rack Room hired a contractor to build the store. The plaintiff claimed that the area where she fell was not properly constructed.

The plaintiff did retain a liability expert, Wayne F. Nolte, Ph.D, P.E., as her expert. He prepared an expert report and was deposed. Mr. Nolte contended that the drain cover was improperly installed because, based on the architectural plans that show the flooring, it was to be level with the drain. However, in his deposition, he admitted that this variation did not violate any known construction code, regulation, or the Uniform Construction Code. He also conceded that during construction, there are certain deviations from design plans that are permitted.

Following his deposition, the defendant sought a dismissal through summary judgment and asked the court to bar his report and testimony as a net opinion. Because Mr. Nolte did not cite to any industry standards, codes, or regulations that require warning for a 3/16^th inch depression in the floor and that his opinion rested solely on the deviation from the architect’s plan, the trial court judge found that this basis was insufficient to establish negligence, was a net opinion, and barred his report.

Without an expert, the trial court found that the plaintiff would be unable to prove her negligence claim against Rack Room. The mere fact that the plaintiff fell is not alone sufficient for an inference of negligence. An expert would be needed to give testimony to jurors as to whether this height differential created a hazard sufficient to constitute an unreasonably dangerous condition.

The Appellate Division upheld the trial judge’s ruling barring Mr. Nolte’s report and testimony. Further, it agreed with the trial judge, that, without expert proof, no reasonable jury could find negligence as to the defendant.

This case demonstrates the need for a plaintiff to produce an expert in a personal injury claim involving a minor defect in flooring, allegedly causing the slip and fall. It also points out that an expert must have an objective basis for an opinion as to the alleged hazard created by that defect and, that even an experienced engineer’s opinion, if only based upon personal experience, may be insufficient to survive a motion to bar the expert’s report and dismiss the lawsuit.   

A company responsible for maintaining cargo lifts found out in Cherilus v. Federal Express, 2014 N.J. Super. LEXIS 47 (App. Div. 2013) that after it settled with plaintiff, it would not be able to pursue the co-defendant manufacturer for contribution. In Cherilus, the plaintiff, Joseph Cherilus, was injured on a cargo lift at a Federal Express facility where he worked. He sued Linc Facilities Services (LFS) who, in turn, sued American Lifts, the manufacturer of the lift, in a third party claim.

American Lifts was granted summary judgment, based upon the 10 year statute of repose applicable to construction defects. (It was covered as a designer of an improvement to real property.) Subsequently, LFS settled with plaintiff on his personal injury claims. Thereafter, LFS appealed the summary judgment dismissal as to American Lifts so that it could pursue its claim for contribution for the settlement amount it paid to plaintiff. However, the Appellate Division found that it had no viable claim of contribution for its voluntary payment of settlement to plaintiff and affirmed the dismissal.

Based upon the 10 year statute of repose , the trial court had granted summary judgment to American Lifts as to both the plaintiff’s direct claim, as well as the third party contribution claim of LFS. Following this dismissal, LFS settled with plaintiff and filed a stipulation of dismissal as to plaintiff’s claim. Subsequently, the plaintiff executed an assignment of his claim against American Lifts for purpose of permitting LFS to pursue its appeal.

Initially, the court found that this assignment had no effect on the appeal. Plaintiff did not have a judgment against American Lifts. The court noted that a tort claim is not subject to assignment prior to judgment.

Next, the court focused on the Joint Tortfeasors Contribution Act. This Act permits contribution when a person suffering injury recovers a money judgment against one or more joint tortfeasors and a joint tortfeasor pays such judgment in excess of his pro rata share.

In a prior case, the New Jersey Supreme Court held that a settling defendant could make a claim for contribution if (1) the suit for contribution based upon the settlement had been elevated to the status of a judgment by a formal court proceeding and (2) the settlement discharged the injured party’s claim against a non-settling joint tortfeasor.

The Appellate Division found in Cherilus that the contribution statute does not apply to a contribution where the payment is a voluntary settlement of a claim for damages attributed to a joint tortfeasor. While a consent judgment would satisfy the “judgment” requirement of the statute, a stipulation of dismissal would not be sufficient.

The court explained that a defendant is not required to pay another tortfeasor’s share of the damages. It could proceed to trial on the plaintiff’s claims and receive a credit under the Comparative Negligence Act for any proportion of responsibility for the injuries that the jury attributes to another tortfeasor, even if the tortfeasor was earlier dismissed out based upon the statute of repose. Thus, the court noted that the amount a defendant pays to settle need not cover the liability of a co-defendant who has been dismissed out of the case.

The court further stated that “if a defendant nevertheless settles and pays more than its fair share for the injuries, it can preserve its claim for contribution from a potentially liable joint tortfeasor through appropriate judicial proceedings and a judgment order.” Thus, the import of this case is a settling defendant must preserve through a consent judgment any contribution claim it has against a joint tortfeasor or, by entering into a stipulation of dismissal, it will be precluded from pursuing a contribution claim. 

Plaintiff Merri Chapin, while on her way home from work on a rainy and very windy day, was struck by a tree limb that came through her windshield and pierced her left arm and abdomen. The tree limb was alleged to be from one of two trees on Defendant Kathleen Samaras’s property. In Chapin v. Samaras, 2014 N.J. Super. Unpub. LEXIS 620 (App. Div. 2014), a negligence lawsuit filed by Chapin against Samaras, the plaintiff argued that Samaras’s answer should be suppressed due to the defendant trimming her trees after the accident and, thus, spoliating the evidence.

While the trial court denied the plaintiff’s motion to suppress her answer, the Appellate Division reversed and remanded. The appeals court found that a number of questions needed to be answered before a decision could be made whether there was actual spoliation and, if so, what remedy would apply.

In this case, the plaintiff’s attorney put the defendant’s homeowner’s carrier on notice 3 months after the accident that he was continuing his investigation to confirm that the tree that fell was located on its insured’s property. Further, he notified the carrier that the plaintiff’s PIP carrier would be making a subrogation claim to recover its PIP payments for this accident. The defendant’s carrier denied liability for the claim.

About one year post accident, the plaintiff filed this personal injury action, alleging that the tree limb came from a tree located in front of Samaras’s residence. Thereafter, about 18 months post accident, after the defendant was served with suit, the plaintiff’s attorney noticed that the trees on Samaras’s property were being trimmed. He immediately faxed a letter to the defendant’s attorney, demanding that the work be stopped.

Under New Jersey law, spoliation of evidence is the concealment or destruction of evidence relevant to litigation. The Appellate Division determined that, the defendant, as a potential tortfeasor who was put on notice of the claim within 3 months after it occurred, may have a duty to preserve evidence when (1) litigation is pending or likely; (2) the alleged spoliator has knowledge of such litigation; (3) the evidence is relevant; and (4) the non-spoliating party is prejudiced.

The Appellate Division remanded the matter back to the trial court to decide a number of factual issues to determine whether there was actual spoliation in this case. The trial court would need to determine: (1) when the duty to preserve the trees arose and whether the trees were significantly altered before that time; (2) whether a third party performed tree work that significantly altered the trees before the defendant trimmed them; (3) whether, absent spoliation, the plaintiff would have been able to prove the trees were negligently maintained without an expert; (4) whether the plaintiff waited an unreasonably long time to obtain evidence of the negligence and have an expert examine the trees; (5) whether the plaintiff should have had the tree stumps and any remaining portion of the trees examined by her expert; and (6) whether there was a sufficient factual basis to conclude that the trees were the cause of the plaintiff’s injury. After the trial court made these factual determinations, then it would need to consider what if any sanctions should be applied.

This case bears out the importance in preserving evidence when one is put on notice of a pending claim. When a potential claim arises and, certainly, when suit is filed, carriers and defense counsel should be diligent in reminding their insureds to preserve any pertinent evidence, which could range from hard evidence, such as a tree in this case, to digital evidence in the form of emails or other computer data.

T. Glennon, Inc. (“TGI”) sued its excess insurance carrier, the Hartford Casualty Insurance Company (“Hartford”), for attorneys fees incurred in its lawsuit brought to determine coverage for an intentional wrong employee workplace personal injury suit filed against TGI. In Johnson v. Plasser American Corp., 2014 N.J. Super. Unpub. LEXIS 372 (App.Div. 2014), TGI argued that, as a result of Hartford’s contribution to the settlement, it was a “successful claimant” in a lawsuit on an indemnity policy and, hence, entitled to fees under New Jersey Court Rule 4:42-9(a)(6).

In this unpublished Appellate Division decision, the court held that Hartford’s contribution to the settlement to the underlying tort action, standing alone, did not render TGI a “successful” claimant. Instead, the court needed to determine whether TGI was entitled to coverage under the policy. After examining the terms of Hartford’s policy, the court decided that Hartford had no duty to defend or indemnify. Thus, it found that TGI was not entitled to fees.

The underlying action involved a significant personal injury when TGI’s employee, Charles Johnson, was working and the hydraulic line of a nearby tamping machine burst, disabling the machine’s brakes, which then struck him and crushed his legs. Johnson claimed that his employer TGI knew that the machine was in disrepair and refused to repair it. Johnson claimed that TGI’s actions met the standard for an intentional wrong under the Workers Compensation Act.

TGI had a $1 million underlying policy with NJM and a $4 million umbrella policy with Hartford. TGI was defended by NJM in the underlying matter. Ultimately, Hartford agreed to contribute its $4 million policy, presuming that NJM agreed to contribute its $1 million policy, for a total settlement of $5 million. As soon as the settlement was agreed upon, TGI then claimed that it should be entitled to its attorneys fees of $71,000 spent in the coverage action against Hartford.

The Appellate Division rejected this claim. First, it found that TGI was not entitled to a defense under the Hartford policy because its underlying policy was never exhausted through payment of its policy limits. The obligation to provide a defense for an excess carrier is predicated on the exhaustion of underlying coverage and, therefore, the termination of the duty to defend by the underlying carrier.

The court also rejected TGI’s arguments that Hartford’s duty to defend was triggered when NJM’s limits were functionally exhausted when NJM expressed a willingness to pay its policy limits.

Last, the court analyzed Hartford’s duty to indemnify. It found that the Hartford policy would have excluded coverage in any event under its expected or intended exclusion. Thus, on this basis as well, TGI was not entitled to fees.