AN HKMP APPELLATE WIN AND OTHER RECENT DECISIONS
AND ISSUES OF DISTINCTION IN NJ AND NY
While the first quarter of 2022 has been busy, we want to pause and report on several decisions in this issue of HKMP’s Case Alerts.
We are pleased to report, following in-person oral argument no less, that the New Jersey Appellate Division has affirmed the dismissal of a case in favor of arbitration, which HKMP obtained for a client in a matter involving a home inspector.
There have also been 2022 notable decisions from: the District of New Jersey on state law failure-to-warn claims being preempted by federal law; the New Jersey Supreme Court addressing the "Mode of Operation Rule" and the Tort Claims Act in two different premises liability cases; a New Jersey Appellate Division decision addressing immunity under the Landowner’s Liability Act and another Appellate Division decision concerning UM/UIM coverage for accidents involving owned vehicles insured under other policies.
In New York, an amendment to CPLR § 4549 expands the “speaking authority” hearsay exception for employee-agent statements.
As always, we welcome your thoughts and are available to discuss any of the below matters. Please enjoy this issue of HKMP’s Case Alerts.
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HKMP OBTAINS APPELLATE DIVISION AFFIRMANCE
OF DISMISSAL OF CLAIM AGAINST HOME INSPECTOR
Bilotti v. New Jersey Property Inspections, LLC, et. al., Docket A-3658-20 (N.J. Super. Ct. App. Div. Mar. 14, 2022)
HKMP attorneys Jenna Clemente and Patrick McCormick recently secured a victory on behalf of a home inspector in the Appellate Division. The underlying action arose out of an alleged negligent home inspection. HKMP moved to dismiss the complaint and compel arbitration pursuant to a mandatory arbitration provision in the pre-inspection agreement. The plaintiff was living in Belgium at the time of the inspection and flew in on a transatlantic flight the morning of the inspection. Plaintiff alleged that she did not have an opportunity to review the pre-inspection agreement prior to executing. Nevertheless, she signed the agreement and paid for the services rendered. After conducting a plenary hearing, the trial court determined that the arbitration provision was not substantively or procedurally unconscionable and the arbitration clause was clear and unambiguous. Accordingly, the trial court dismissed the case and compelled plaintiff to proceed with her claims in arbitration.
On appeal, the Appellate Division, largely relying upon the opinion of the trial court, affirmed. The court found that arbitration provision was prominently displayed for plaintiff to read and was written in straightforward language. Plaintiff was a well-educated and accomplished businesswoman. Plaintiff argued that the arbitration provision should be voided as the home inspector had taken preliminary steps to inspect the home prior to the agreement being signed. The court concluded that it was plaintiff’s decision to schedule the inspection on the same morning of her transatlantic flight and it would have been unreasonable for the defendant to wait around until she could arrive. Plaintiff had also arranged for her realtor to be present until she could get to the inspection. The court further noted that there was sufficient evidence that the pre-inspection agreement had been emailed to the plaintiff several days prior to the inspection.
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STATE LAW FAILURE-TO-WARN CLAIMS PREEMPTED BY FEDERAL LAW
In re Fosamax Products Liability Litigation, __ F. Supp. 3d __ (D.N.J. 2022)
On remand from the U.S. Supreme Court, Chief Judge Wolfson issued a published opinion granting summary judgment in favor of Defendant Merck Sharp & Dohme finding plaintiffs’ state law failure-to-warn claims were preempted by federal law. Plaintiffs alleged state law failure-to-warn claims concerning the risk of atypical femoral fractures from taking the medication Fosamax. The District Court considered whether a Complete Response Letter (“CRL”) from the Food & Drug Administration (“FDA”) to Merck “prohibited [the manufacturer] from adding any and all warnings to its drug label that would satisfy state law.” The court found the FDA was fully informed by Merck of justifications for a proposed warning concerning atypical femoral fractures which FDA rejected in the CRL. Finding the “FDA’s rejection was predicated on insufficient evidence of a causal link between Fosamax and atypical femoral fractures,” the District Court found the FDA would not have approved any alternatively worded warning proposed by Merck. Thus, the state law failure-to-warn claims were preempted.
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PREMISES LIABILITY – MODE OF OPERATION RULE DEEMED INAPPLICABLE
Jeter v. Sam's Club, __ N.J. __ (2022)
The Supreme Court recently found the “mode of operation” rule inapplicable where plaintiff filed a negligence claim alleging injuries from slipping on one or more grapes at a Sam’s Club. On the eve of trial, Sam’s Club filed a motion in limine to bar plaintiff from requesting a mode of operation jury instruction arguing that, because the store sold grapes in closed, clamshell containers, any unsafe conditions caused by customers negligently opening the packages required actual or constructive notice of the condition and could not be imputed via the mode of operation rule. The trial court conducted a hearing and found in favor of Sam’s Club. The court then dismissed the case with prejudice because there was no evidence of actual or constructive notice. The Appellate Division affirmed.
The Court found that the mode of operation rule inapplicable reasoning the rule applies only where “there is a nexus between self-service components of the defendant’s business and a risk of injury in the area where the accident occurred [. . .].” Since the product was contained in closed clamshell containers, there was no foreseeable risk of spillage sufficient to establish the requisite nexus unlike a case where a defendant supermarket packaged grapes in “open-top, vented plastic bags that permitted spillage.” Moreover, Sam’s Club’s knowledge of occasional tampering with the closed containers did not create a question of fact for a jury to consider. The fact that Sam’s Club elected to sell its product in sealed containers with a locking mechanism was sufficient to preclude application of the mode of operation rule.
Procedurally, the Supreme Court chastised the converting of an untimely motion in limine into a motion for summary judgement. It stated rather than granting a motion that had dispositive effect immediately before trial, the trial court should have postponed the trial date to afford both parties adequate time to file briefs with supporting affidavits.
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PREMISES LIABILITY – APPLICATION OF TORT CLAIMS ACT
AND DERIVATIVE IMMUNITY
Stewart v. New Jersey Turnpike Authority, __ N.J. __ (2022)
The New Jersey Supreme Court in recently reversed an Appellate Division decision, finding plaintiffs’ premises liability claim under N.J.S.A. 59:4-2 of the New Jersey Tort Claims Act (“TCA”) could not survive summary judgment, and a belated factual theory of liability did not warrant consideration.
Plaintiffs were injured when they lost control of their motorcycle while riding over a Garden State Parkway overpass. They sued the New Jersey Turnpike Authority and Earle Asphalt, among others, alleging that they lost control of the motorcycle when they struck a piece of metal in the bridge’s expansion joint that jutted out of the roadway (joint theory). The parties engaged in over two years of discovery, with plaintiffs requesting seven extensions. During argument before the trial court on defendants’ joint motion for summary judgment, plaintiffs changed their theory of liability arguing, for the first time, that defendants failed to properly pave a portion of roadway on the overpass, leaving a height differential in the pavement (the asphalt theory).
Given the late presentation of the asphalt theory, the trial court only considered the joint theory and found plaintiffs failed to establish the required elements for negligence under the TCA. The Appellate Division reversed, finding disputed issues of fact as to whether the alleged height differential created a dangerous condition under the TCA. The court also concluded that Earle had not demonstrated that it was entitled to claim derivative immunity. The Supreme Court disagreed.
The Court disregarded plaintiffs’ belated asphalt theory because, even if it did warrant consideration, the argument did not raise an issue of material fact. The Court next found that plaintiffs offered insufficient evidence to establish an issue of material fact. A friend’s testimony that he observed something metal appearing in the roadway may have supported the original joint theory, but it did not substantiate the asphalt theory. Plaintiffs also failed to offer anything to rebut defendants’ evidence that there was no height differential in the roadway. Accordingly, since plaintiffs failed to raise an issue of material fact as to whether a dangerous condition existed on the overpass—a necessary element to prove negligence under the TCA—their claim failed.
The Court next analyzed the theory of derivative liability with respect to Earle. Considering the Authority’s regular supervision of Earle’s work in combination with Earle’s corresponding progress reports submitted in the motion record, the Court determined derivative immunity was appropriate because it was uncontroverted that Earle performed in accordance with the Authority’s plans and specifications. Therefore, the trial court’s order dismissing plaintiffs’ complaint was reinstated.
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NEW JERSEY APPELLATE DIVISION |
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GOVERNMENT IMMUNITY/LANDOWNER’S LIABILITY ACT
Russi v. City of Newark, A-1064-20 (N.J. Super Ct. App. Div. Feb. 17, 2022)
The Appellate Division recently affirmed an order finding no evidence to attach liability to the County under the Tort Claims Act, and because plaintiff failed to meet his burden to exclude the City from immunity under the Landowner’s Liability Act (“LLA”).
Plaintiff was injured while driving on a road when a tree branch crashed through his windshield. The tree that the branch came from was in a natural resource area owned by the City of Newark (“City”), while the road was owned and maintained by the County of Passaic (“County”). The County also owned a right of way that extended 25 feet on both sides from the centerline of the road. The trial court granted summary judgment in favor of the County, finding the record demonstrated that the area in which the tree branch originated was neither maintained nor controlled by the County. The court subsequently granted summary judgment in favor of the City finding that it was entitled to immunity under LLA, as well as unimproved property immunity and common law immunity.
On appeal, plaintiff asserted that defendants are subject to liability under the Tort Claims Act. However, there was scant evidence establishing the County’s ownership or control of the property where the tree came from, so the Appellate Division rejected this argument. The appellate court further determined that the City was immune under the LLA because, while it did own and maintain the area where the tree branch originated, the road where plaintiff had been injured clearly qualified as a "public pathway."
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UM/UIM COVERAGE – RESTRICTIONS FOR ACCIDENTS INVOLVING
OWNED VEHICLES INSURED UNDER OTHER POLICIES
Brown v. New Jersey Mfrs. Ins. Co., No. A-0842-20 (N.J. Super. Ct. App. Div. Mar. 8, 2022)
In Brown v. New Jersey Mfrs. Ins. Co., the court enforced policy provisions limiting uninsured motorist (UM) and underinsured motorist (UIM) coverage in several claims involving use of vehicles owned by the injured party but insured under another policy.
Claimant Brown was involved in an accident with a phantom vehicle. He was operating a motorcycle that he insured under one policy with $15,000/$30,000 of UM coverage. He also brought a UM coverage claim under a policy issued by another insurer covering automobiles, with $300,000 UM limits. That policy stated that it did not provide UM coverage for bodily injury while occupying any vehicle insured by another motor vehicle policy in which he was a named insured, except for any minimum UM coverage required by New Jersey statute.
Claimant Lovering was involved in an accident with a vehicle while operating his motorcycle. The insurer of the vehicle paid to Lovering its $15,000 liability limit. Lovering had obtained UIM coverage for the motorcycle through one insurer with $15,000/$30,000 limits. He also brought a UIM coverage claim under two automobile policies issued to him and his daughter, each with a UIM limit of $100,000. The automobile policy issued to him stated that it did not afford UIM coverage for bodily injury while occupying a motor vehicle owned by him and not described in the declarations and not covered by the liability coverages of the policy. The automobile policy issued to his daughter stated that it did not afford UIM coverage for bodily injury while occupying any vehicle insured by another motor vehicle policy in which he was a named insured, and also did not afford UIM coverage for a family member of the daughter who was the named insured under his own policy.
Claimant Rolick’s decedent was involved in an accident with a vehicle while operating his motorcycle. The insurer of the vehicle paid to Rolick its $15,000 liability limit. The decedent had obtained UIM coverage for the motorcycle through one insurer with $15,000/$30,000 limits. The decedent also had obtained an automobile policy with a UIM limit of $100,000. That policy stated that it did not provide UIM coverage for bodily injury while occupying any vehicle insured by another motor vehicle policy in which the decedent was a named insured.
The Appellate Division upheld trial court rulings dismissing the UM and UIM coverages under the automobile policies, except for pro rata coverage for the statutory minimum of $15,000 of UM coverage for the Brown claim. The court held that the automobile policy issued to Lovering unambiguously barred UIM coverage for claims involving operation of a motorcycle not identified on the declarations page. The court held the other automobile policies at issue unambiguously limited UM/UIM coverage for vehicles owned by the claimant but insured under another policy. Finally, the court rejected arguments that the claimants had not been given appropriate notice of these coverage restrictions.
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EXPANSION OF THE SCOPE OF ADMISSIBLE
EMPLOYEE-AGENT STATEMENTS
The New York State Legislature recently enacted a new provision to the Civil Practice Law and Rules (“CPLR”) which significantly expands the “speaking authority” exception to the rule against hearsay. CPLR § 4549 permits into evidence an employee’s out-of-court statement if the statement is: 1) made about a matter within the scope of the employee’s employment; and 2) made during the existence of the employment relationship.
The new provision represents a departure from the common-law rule which required an agent to have “speaking authority” before his or her statement was considered an admission by the principal. Previously, an employee’s statement could only be offered against an employer if it was made by a person authorized to speak on the subject. This narrow approach only permitted statements made by agents and employees in high levels of management. The Bill’s sponsor memo notes that such “a strict requirement to demonstrate [] authority. . .may exclude reliable proof of an event.”
The new CPLR § 4549 adopts Federal Rule of Evidence 801(d)(2)(D) by lessening the extent of authority a proponent must show to introduce an employee’s out-of-court statement. Post-incident statements by low-level employees are now more likely to be admissible as party-opponent admissions. However, the new exception does not apply to statements regarding matters outside the scope of an employment relationship or to statements made beyond the existence of the employment relationship.
CPLR § 4549 took effect on December 31, 2021 and applies to all cases pending in New York state court on or after its effective date.
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As always, if you have any questions regarding any of the cases in this issue of Case Alerts, or if HKMP can be of service to you, then please contact us at info@hkmpp.com or 973-912-5222.
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Attorney Advertising Disclaimer: This publication is designed for general information only. The information presented should not be construed to be formal legal advice nor the formation of a lawyer/client relationship in a particular matter. |
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