SETTLEMENT MUST BE REDUCED TO A JUDGMENT FOR CONTRIBUTION - ABSENT A JURY ALLOCATION OF FAULT
Hoelz v. Bowers et al., ___ N.J. Super. ___ (App. Div. 2022).
The Appellate Division considered the applicability of the Joint Tortfeasors Contribution Law (“JTCL”), N.J.S.A. 2A:53A-1 to -5, in a case where a settling tortfeasor pursued a contribution claim against an alleged joint tortfeasor when the settlement with the plaintiff was never reduced to a judgment.
By the JTCL’s express terms, a joint tortfeasor may recover from another joint tortfeasor “only if (1) there was a money judgment in favor of the plaintiff, and (2) the initial tortfeasor paid more than his pro rata share of that judgment.”
In the Hoelz case plaintiff suffered an amputation of the left leg as well as surgery to her right foot. In the underlying action, plaintiff alleged medical negligence against an orthopedic physician and his employer. The defendants filed a third-party complaint demanding contribution and indemnification against the rehabilitation facility where plaintiff was treated.
After Hoelz passed away, the executor of the estate reached a settlement with the defendants. Counsel for third-party defendant sought dismissal arguing that only a payment of a judgment, not payment pursuant to a settlement agreement, gives rise to a claim for contribution from a joint tortfeasor. The trial disagreed and appeal followed.
The Appellate Division clarified that the statutory requirement of a judgment should not discourage settlements, as the defendant could still receive a credit under the Comparative Negligence Act (CNA) for any proportion of responsibility for the injuries that the jury attributes to another tortfeasor, even if that party was earlier dismissed from the case. In this case, however, defendants settled with plaintiff’s estate rather than going to trial, so the Court assumed it reflected only their portion of plaintiff’s full damages, and not those regarding another joint tortfeasor’s liability. Had a jury determined the fault of the parties and plaintiff recovered all its damages from defendants, then defendants would have a right to contribution under JTCL.
Since third-party defendant did not agree to the settlement, “fairness and due process demand he be permitted to contest the amount of the judgment as well as the parties’ comparative fault.” The Appellate Division reversed and remanded for entry of an order dismissing defendants’ third-party complaint for contribution.
NO COVERAGE FOR COVID-19 BUSINESS LOSSES
Mac Property Group LLC v. Selective Fire & Cas. Ins. Co., ___ N.J. Sup. ___ (App. Div. 2022)
In a precedential, consolidated opinion resolving six separate appeals, the New Jersey Appellate Division ruled that complaints filed by businesses seeking recovery from property insurers for losses resulting from the COVID-19 pandemic failed to state claims upon which relief could be granted.
The plaintiffs in the appeals operated a gym, restaurants, a day care center, and a bakery. The plaintiffs alleged that, as a result of executive orders issued by the Governor of New Jersey, their businesses were limited or closed, resulting in loss of income. The Appellate Division found that none of the complaints alleged “direct physical loss of or damage to” covered property for purposes of coverage. The Court reasoned that this coverage “extended only to instances where the insured property has suffered a detrimental physical alteration of some kind, or there was a physical loss of the insured property.” The Court found this interpretation consistent with the scope of business income coverage, which focuses on the period during which property is repaired, rebuilt, or replaced. Because the plaintiffs did not allege that their premises had lost their physical capacity to operate, coverage did not apply.
The Appellate Division further found that civil authority coverage was inapplicable. The Court found that the executive orders had limited the scope of permissible business activities, but had not prohibited access to the premises. The Court further found that the restrictions in the executive order were not on account of damage to nearby properties.
Although consideration of virus exclusions was not required, the Appellate Division further found that virus exclusions in the policies unambiguously barred coverage. While exclusions in certain of the policies did not contain anti-concurrent-causation language, the Court nonetheless concluded that COVID-19 was the efficient proximate cause of plaintiffs’ losses. The Appellate Division did not permit the plaintiffs to amend their complaints to assert that the insurers were estopped from denying coverage as a result of statements made by insurers or their agents to state regulators in connection with virus exclusions. The Court found that coverage would be inapplicable regardless of whether or not virus exclusions applied. The Court further concluded that positions taken by the insurers were not inconsistent with prior statements made to regulators.
In two subsequent unpublished opinions, the Appellate Division dismissed additional suits by businesses seeking coverage for COVID-19 losses from property insurers. Rockleigh Country Club, LLC v. Hartford Ins. Group, A-1826-21 (App. Div. June 21, 2022) and AC Ocean Walk, LLC v. American Guar. & Liab. Ins. Co., A-1826-21 (App. Div. June 22, 2022).
NON-DISPARAGEMENT AGREEMENTS HELD TO COMPORT WITH NJLAD
Savage v. Township of Neptune, ____ N.J. Super. ___ (App. Div. 2022).
The Appellate Division recently reversed a trial court’s order granting defendants’ motion to enforce a non-disparagement provision of a settlement agreement. While the Appellate Division found the non-disparagement provision was enforceable, the Court found the plaintiff did not violate the terms of the provision during a televised interview.
In an underlying employment discrimination case, plaintiff, a former Sergeant with defendant Township of Neptune Police Department, alleged defendants engaged in continuing sexual discrimination, harassment, and unlawful retaliation, in violation of New Jersey’s Law Against Discrimination (NJLAD) N.J.S.A. 10:5-1 to -50, the New Jersey Civil Rights Act, and the New Jersey Constitution. In 2020, the parties settled the employment discrimination action and entered into a Settlement Agreement that included a non-disparagement provision.
Months later, defendants filed a motion to enforce the Agreement, claiming that plaintiff violated the non-disparagement provision in an interview with NBC New York. Plaintiff argued the non-disparagement provision was against public policy and in violation of the NJLAD. The trial court held the non-disparagement provision enforceable under the NJLAD, as the statute only barred confidentiality or non-disclosure agreements and the court also found that the statements during the news interview were disparaging.
On appeal, the Appellate Division affirmed in part and held the non-disparagement clause was enforceable. However, the Appellate Division found that plaintiff’s public statements were about present or future behavior, not statements about the past behavior of the parties as the agreement plainly prohibited. Thus, the Appellate Division held the statements, whether or not disparaging, did not violate the terms of the agreement.
In response to the decision, state senators have introduced S2930, a bill intended to prohibit non-disparagement provisions in employment contracts. S2930 would make any non-disparagement or non-disclosure provision in an employment contract unenforceable if the provision waives certain rights or remedies, specifically relating to a claim of discrimination, retaliation, or harassment. The proposed legislation also removes a provision in the current law that allows for non-disclosure agreements as a term of collective bargaining between an employer and representative of the employees.
DISCRIMINATION CLAIMS INAPPLICABLE ABSENT EVIDENCE OF A PROTECTED GROUP
C.V., et al. v. Waterford Township Board of Education et al., ___N.J. Super. ___ (App. Div. 2022)
In an issue of first impression, the Appellate Division addressed whether the New Jersey Law Against Discrimination (LAD), N.J.S.A. 10:5-1 to -50, applies to claims arising from a sexual predator’s criminal assaults against a young schoolgirl, where those crimes were committed on a school bus. The Appellate Division held the while the LAD could apply to such a suit, it did not apply in this case. There was no evidence the predator’s behavior was the result of any proven intention to discriminate specifically against young women.
While riding on a school bus that transported students for defendant Waterford School District, plaintiff C.V. (pseudonym Claire), was sexually assaulted by A.D. (pseudonym Alan), a bus aide, when she was five years old. Claire’s parents filed an action asserting a claim for negligence and claims for relief under the LAD based on Alan’s alleged harassment and sexual abuse of their daughter. Plaintiffs’ negligence claims were resolved through a settlement agreement. Plaintiffs appealed from an order granting Waterford summary judgment as to the LAD claim.
The Appellate Division held the LAD has no application to a sexual predator's assault of a student on a school bus where there is no evidence his actions were based solely on the victim's status as a member of a protected group. The Appellate Division expressly clarified that their holding did not mean sexual assault on a school bus can never be an act that is subject to an LAD claim.
TORTS CLAIM ACT NOTICE PROVISION SATISFIED WHEN SENT TO COUNTY CLERK
Bryant v. County of Cumberland, ___N.J. Super. ___ (App. Div. 2022).
In a matter of first impression, the Appellate Division held that service of a Tort Claims Act Notice of Claim on a county is sufficient when sent to the County Clerk rather than the Board Of County Commissioners. The Tort Claims Act fails to identify who it is a claimant must serve with Notice of A Claim when suing a county, so the matter is best clarified by the Legislature.
In February 2020, plaintiffs filed a personal injury action after a slip-and-fall in the county courthouse parking lot alleging Cumberland County’s negligence. The County moved for summary judgment, asserting that plaintiffs failed to comply with the Tort Claims Act’s (N.J.S.A. 59:8-7 and -10) notice requirements, claiming that the notice was not properly served as plaintiffs sent it to the County Clerk instead of the Clerk of the Board of County Commissioners.
The Trial Court ultimately concluded that Cumberland’s Board of County Commissioners, and not its County Clerk, had to be served because of its role as the governing body that “oversee[r] [of] litigation against the County.” The Appellate Division agreed with part of the trial judge’s approach and logic but gave more weight to the fact that the Tort Claims Act fails to provide any guidance as to which clerk must be served. There was nothing in the Act’s provisions to “foreclose the possibility that the Legislature may have intended that more than one county office or officer could represent the county for purposes of receiving a notice of claim.” The Court also referenced Rule 4:4-4(a)(8), which allows for more than one person who may accept a service of a summons and complaint for a county and that one of those persons would be “the clerk . . . thereof”. Until the Legislature is able to provide clarity with respect to service, the Appellate Division held the question should be answered in a way that promotes fairness to all parties. Plaintiffs’ service of the notice of claim on the Cumberland’s County Clerk was sufficient.
