HKMP E-Letter

September 2019
We are pleased to advise that on September 17, 2019 HKMP obtained a defense verdict for their client in the Superior Court, Hudson County after a jury trial. Janet Poletto and Bob Blanton presented the case before the Hon. Joseph V. Isabella, J.S.C. and a full jury.
Plaintiff alleged that she tripped and fell on a blue Ethernet cord connected to a telephone at a reception desk while working as an extern at HKMP’s client’s facility. Plaintiff alleged that she sustained a broken nose, torn rotator cuff, and injury to her jaw from her fall. HKMP’s client did not dispute the injuries to plaintiff’s nose and rotator cuff, but aggressively disputed liability asserting the condition alleged was more than reasonably safe, open and obvious, and plaintiff was aware of same prior to her fall. 

Five months after her fall, plaintiff was a restrained passenger in a medical transport van which spun out and repeatedly struck a guardrail while plaintiff was being driven home from a follow-up visit with the doctor who had surgically repaired her rotator cuff. The case was unique in that plaintiffs argued the fall and the motor vehicle accident were successive accidents and attempted to extend the principles of Campione v. Soden , 150 N.J. 163 (1997) in an attempt to hold HKMP's client at least partially, if not wholly, responsible for injuries from the motor vehicle accident though plaintiffs had settled with the company that owned and operated the medical transport van. Thus, plaintiffs argued to the jury that HKMP’s client was not only responsible for the rotator cuff, broken nose, and alleged jaw injury from the fall but also liable for the injuries to her neck, back, elbow, wrists, and a serious deltoid avulsion to her surgically repaired shoulder sustained in the motor vehicle accident. The premise for the argument was “but for” her injury from the fall she never would have been traveling to/from her surgeon and been involved in the motor vehicle accident. HKMP argued that the second accident was a separate, unforeseeable event and an intervening and superseding cause with totally distinct injuries for which HKMP's client could not be held liable.

Following a trial covering parts of two weeks, the jury decided that HKMP’s client was not negligent for the fall, disposing of the entire case. Accordingly, the unique arguments relating to the motor vehicle accident were not reached by the jury.
HKMP Partner Patrick McCormick won an affirmance in the Third Circuit Court of Appeals dismissing a legal malpractice case. At issue was whether the spouse of an attorney, who herself was an attorney, could be held vicariously liable for the actions of her husband when the two attorneys held themselves out to be practicing in a partnership. Plaintiff retained the attorney-husband to prosecute an employment discrimination claim. The retainer agreement plaintiff signed indicated that the attorney-husband was not a sole practitioner but in partnership with his wife. When a summary judgment motion in the employment discrimination suit filed by the defendant-employer went unopposed by the attorney-husband resulting in the dismissal of plaintiff’s claim, plaintiff filed a legal malpractice suit against the attorney-husband. Plaintiff later amended her malpractice complaint to include the attorney-wife as a defendant on the basis that she purportedly relied on the existence of a partnership in retaining the attorney-husband.

The United States District Court for the District of New Jersey granted summary judgment in favor of the attorney-wife on the basis that no actual partnership existed between the husband and wife and despite the retainer agreement which indicated that a partnership existed, plaintiff could not show that she relied on that apparent representation. On appeal, plaintiff contended that a “partnership-by-representation” existed by way of the apparent representation on the retainer.  
The New Jersey Legislature recently addressed the admissibility of unreimbursed medical bills at trials arising from automobile accidents.  The Legislature’s interest in the issue was in direct response to the New Jersey Supreme Court decision of Haines v. Taft , decided in March 2019. In Haines, the Supreme Court reversed prior Appellate Division rulings which found that the Automobile Insurance Cost Reduction Act (AICRA) and legislative intent under the No-Fault system precluded plaintiffs from entering into evidence medical expenses that exceeded voluntarily selected limited PIP benefits, but fell below the $250,000.00 ‘standard’ PIP benefit. This was of significant importance as prior to Haines, attorneys for plaintiffs universally admitted into evidence at trial the amount of outstanding medical bills above the plaintiff’s selected PIP limit. This led to significant discord when a plaintiff selected a limited ($15,000) PIP policy, but admitted at trial all medical bills in excess of said $15,000.00. It also left the issue essentially to the trial judge as to whether the amount admissible was the billed amount or the New Jersey fee schedule amount, with trial judges having differing opinions on the issue. In recently taking up this issue, the Legislature has effectively overruled the Haines decision. 
On September 23, 2019, the New Jersey Supreme Court issued an opinion in the case of Orientale v. Jennings , A-43-17 on the issues of additur (when the court adds to a jury’s damage award thought unreasonably low) and remittitur (when the court lowers a damage award thought unreasonably high).  Prior to this decision, if a damage award was so grossly excessive that it shocked the judicial conscience, the trial judge, with the consent of the plaintiff, could have granted a remittitur (the highest award that in the judge’s view could be sustained by the evidence); if the award was grossly inadequate, the judge, with the consent of the defendant, could have granted an additur (an increased award which in the judge’s view can be sustained by the evidence).  In Orientale , the Court revisited the history of additur and remittitur, as well as what the courts have historically done regarding verdicts that “shock the judicial conscious.” In this case, the Court decided that when a trial judge is faced with a verdict that shocks the judicial conscious, the trial judge now has the option of setting a remittitur or an additur at an amount a reasonable jury would award given the evidence in that particular case. If both parties accept the judge’s determination, the matter is settled. If the parties do not accept the “settlement” figure, then a new trial on damages must occur. The Court’s intent is to give both sides an incentive to settle. However, the figure provided by the trial judge must be one that is reasonable enough for both sides to agree.

HKMP partner John Favate obtained a favorable ruling from a bankruptcy court in Delaware that struck prejudicial language from a previously entered order that purportedly impaired insurer defenses in state court coverage litigation.  An insured facing liability for environmental contamination at the site was ultimately liquidated under Chapter 7. During the pendency of the bankruptcy proceeding, a third-party who also faced liability for contamination at the same site filed a motion seeking relief from the automatic stay so that it could pursue a claim against the insured, obtain a judgment and then seek coverage under the insured’s policies to satisfy the judgment.
The motion was accompanied by a proposed form of order that purported to preclude any insurer from asserting conditions precedent to coverage as a defense to the claim. The motion was not served on any insurers, and no insurers were given any notice of the motion or the language in the order purporting to impair their coverage defenses. No opposition was filed and the claimant submitted a certificate of no opposition and the proposed order was entered. In subsequent state court litigation against the insured and insurers, the claimant relied on the language in the relief from stay order to argue that certain coverage defenses were precluded by the order. The insurers filed a motion in the bankruptcy court to reopen the bankruptcy case and to strike the offending language from the order. The claimant opposed the insurers’ motion. Following a hearing, the Court agreed that the offending language should not have been included in the order and could not be used against the insurers since they had no notice or opportunity to be heard regarding the order on the relief from stay motion. This enabled the insurers to press their defenses in the state court coverage litigation unencumbered by the language in the relief from stay order. 
HKMP partner John Favate obtained a favorable ruling from the United States Court of Appeals for the Third Circuit in an environmental coverage case. A primary insurer filed the suit alleging that its previous settlement of certain environmental claims exhausted an aggregate limit such that the defendant umbrella insurer was obligated to reimburse it for certain defense and indemnity amounts. The case involved an insured engaged in the hauling and disposal of waste at three different landfills over a period of years. In 1998 the primary and umbrella insurer jointly funded settlement of claims arising from one landfill, with no reservations of claims between them. The primary insurer defended and settled claims arising from the remaining two landfills and contended that all three landfills should be treated as a single occurrence
for purposes of determining the applicable limits of liability.  The District Court rejected this argument finding that
each landfill was a separate occurrence and the Third Circuit affirmed. The primary insurer’s claim for contribution toward the initial jointly funded settlement was deemed to be time-barred by the District Court and the Third Circuit affirmed. The primary insurer also argued that one of its primary policies included a single aggregate limit that applied to all three landfills and that the settlements should be re-allocated pursuant to Carter-Wallace (New Jersey case law regarding allocation among multiple policies in long-tail damage cases). The Third Circuit found a fact question as to whether there was such an applicable aggregate and remanded that issue and the question of allocation to the District Court. The decision has the favorable effect of significantly reducing any possible exposure to the umbrella policy while subjecting the primary insurer to a difficult burden of proving the existence and applicability of an aggregate limit.   

In the recent case of J.H. v. R & M Tagliareni, LLC, et. al. , decided on July 31, 2019, the New Jersey Supreme Court confronted the questions of whether liability must be imposed on a landlord based on a theory of regulatory responsibility over an apartment building’s heating system or based on a proposed common law duty requiring landlords to cover an apartment unit’s radiator with insulating material. The Court answered no to both questions. The case arose out of a 2010 incident where J.H., a nine-month-old infant, was placed by his father in a twin bed with no side rails next to an uncovered cast iron radiator in an apartment owned and managed by the landlord-defendants. The next morning J.H. was discovered lying on the floor with his head pressed against the hot radiator. Subsequent investigation revealed that J.H. was on the radiator for a considerable period of time and he sustained permanent scarring. J.H.’s father pled guilty to fourth degree child abuse and neglect. 

Discovery revealed that there was no requirement under the Hotel and Multiple Dwelling Law and regulations adopted thereto in the New Jersey Administrative Code (the “Code”) that radiators be covered. The trial court subsequently granted defendants’ motion for summary judgment, holding that regulations in the Code governing “heating systems” did not require the defendants to cover the radiator with insulating material and that the defendants did not owe a common law duty of care to place a cover on the apartment’s radiator.

The Appellate Division reversed the trial court, concluding that plaintiffs should be allowed to argue at trial that the Code imposed a duty upon defendants to cover the radiator and that said duty was breached. The Appellate Division further ruled that under the common law (independent of any obligations under the Code) the defendants maintained sufficient control over the heat emanating from the radiator such that a duty of care was owed to J.H.
In New Jersey, it is illegal for anyone to procure an insurance policy on a stranger’s life for the sole purpose of reaping the benefits therefrom.  Such policies are referred to as Stranger-Originated Life Insurance (STOLI). State law allows a life insurance policy to be obtained only if the benefits are payable to someone with an “insurable interest” in the person whose life is insured. In the recent case of Sun Life Assurance Company of Canada v. Wells Fargo Bank, the New Jersey Supreme Court addressed how that prohibition applies when a subsequent purchaser of a STOLI policy, not involved in the policy’s origination, seeks to recover under the policy. 

The matter arose in April 2007 when the insurer received an application for a $5 million insurance policy on the life of Nancy Bergman. The application listed a trust as the sole owner and beneficiary of the policy. Ms. Bergman’s grandson signed as trustee. The other members of the trust were investors and strangers to Ms. Bergman. The grandson resigned as trustee shortly after the policy’s issuance and appointed the investors as successor co-trustees who then sold the policy in 2009. Ultimately, the policy came into the hands of the final policy holder through a bankruptcy settlement and that policy holder continued to pay the premiums. 
In the unpublished decision Fishbain v. Colgate-Palmolive Co. , No. A-1786-15T2, 2019 N.J. Super. Unpub. LEXIS 1839 (Super. Ct. App. Div. Aug. 29, 2019), the New Jersey Appellate Division held that the trial court's granting of defendant's motion to exclude evidence concerning vintage samples of talc product purchased on eBay was not in error.
As part of defendants’ motion to preclude plaintiff’s liability geology/ microscopy/asbestos expert Sean Fitzgerald, from testifying, defendants challenged, among other things , vintage samples of talc products purchased on eBay, approximately 40 years after having been manufactured.  After a rule NJRE 104 (a) hearing, the court barred the admission of the talc vintage samples a s not having been properly authenticated under NJRE 901 during the over 40-year period between the production of the talc products in the 1960 s and their 2012 eBay  purchase. It was noted by the trial court that "the prejudicial effect of these questionable samples far outweighed their minimal probative value." Accordingly the trial court barred

admission of the vintage talc samples at trial and barred the testimony of plaintiff's expert regarding the testing of the samples.  The jury returned a defense verdict finding, among other things, that plaintiff failed to prove that defendant sold or distributed a talc product not reasonably fit, suitable and safe for intended and foreseeable use. Plaintiff appealed.

The Appellate Division acknowledged that a trial court’s evidentiary rulings are entitled to deference absent a showing of an abuse of discretion such as clear error of judgment or a palpable abuse of discretion. Further, a party introducing tangible evidence has the burden of laying a proper foundation including the showing of an un-corrupted chain of custody. The final determination of whether the proponent has sufficiently established the chain of custody is therefore within the discretion of the trial court and that determination will not be overturned in the absence of a clearly mistaken exercise of judgment. In this matter, there was no abuse of discretion with the trial court barring the admission of the three talc samples.
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