Mar 3, 2021

March 2021 Client Litigation Alert

By Brian R. Lehrer, Esq.

Insurance Coverage – Supreme Court Holds that Plain Language Validates Insured’s Claim

In a case involving insurance coverage, the Supreme Court recently affirmed an Appellate Division decision in favor of the plaintiff holding that the plain language of its insurance policy provided that water damage to the insured’s properties that occurred during Superstorm Sandy was not subject to a $100 million flood sublimit. NJ Transit Corp. v. Certain Underwriters at Lloyds, - N.J. – (2021).

Superstorm Sandy struck New Jersey in October 2012. NJ Transit carried a $400 million multi-layered property insurance policy and sought coverage for the water damage to its properties brought about by the storm. Some of NJ Transit’s carriers declined to provide coverage up to the policy limit because the policies contained a $100 million flood sublimit.

The policies defined “flood” as either the “overflow, release, rising, backup, runoff or surge of surface water,” or “the unusual or rapid accumulation or runoff of surface water from any source”. In affirming the Law Division’s finding of coverage, the Appellate Division noted that the policies at issue contained separate definitions for a “named windstorm” and did not define “flood” to include “storm surge” and “wind driven water” associated with such a “named windstorm”. The Appellate Division noted that if the insurers had intended that damage from a “storm surge” would be subject to the flood limit, the policies should have so stated in plain language.

The insurance carriers appealed to the New Jersey Supreme Court. In a one paragraph per curiam decision, the Court affirmed the Appellate Division relying principally on the Appellate Division’s analysis of the plain language of the relevant policies.

The Court did take the time to point in a separate sentence that it was not relying upon the doctrine of contra proferentem or New Jersey’s efficient proximate cause test (sometimes referred to as Appleman’s Rule) which was were also cited by the Appellate Division in support of its decision in favor of coverage. 

B.                 Medical Negligence – No Affidavit of Merit Needed

In a case involving a claim of medical negligence against an unlicensed employee of a licensed healthcare facility, the Appellate Division recently held that no Affidavit of Merit is required to prosecute a claim against the employee and the facility. Haviland v. Lourdes Medical Center, - N.J. Super. – (App. Div. 2021).

Plaintiff, Troy Haviland, filed a Complaint against Lourdes Medical Center Burlington County alleging that he was injured during a radiological examination of a shoulder when an unidentified technician asked him to hold weights contrary to the ordering physician’s instructions thus causing injuries to his shoulder. Plaintiff’s Complaint alleged John Doe and Lourdes failed to properly perform imaging and otherwise deviated from accepted standards of medical care. 

Plaintiff failed to file an Affidavit of Merit pursuant to N.J.S.A. 2A:53A-27, arguing that a radiology technician is not a licensed person under the Act and, therefore, no Affidavit of Merit was necessary. The trial Court dismissed his Complaint but the Appellate Division reversed.

The Appellate Division noted that it was undisputed that a radiology technician is a healthcare professional who does not fall within the definition of a licensed person under the Affidavit of Merit Statute. Lourdes is a licensed healthcare facility within the definition of a licensed person under the Act. Plaintiff argued that an Affidavit of Merit was not required because his claims against Lourdes were based on vicarious liability against the unlicensed technician.

The Appellate Division thus held that an Affidavit of Merit is not required for a healthcare facility when the plaintiff’s claims and the medical negligence action is limited to vicarious liability for the alleged negligence of its employee, who does not meet the definition of a licensed person under the statute. Interestingly, the Court offered no opinion as to whether plaintiff would need to present expert testimony on radiology standards of care to meet his burden of proof at the time of trial. Thus, the clear implication from the Court was that while an Affidavit of Merit is not required to move forward in the case, an expert may be required to establish a prima facie negligence case at the time of trial. 

C.                 Worker’s Compensation – No Coverage After Clocking Out

In a case involving the issue as to whether an accident arose out of and in the course of plaintiff’s employment, the Appellate Division recently held that plaintiff was not entitled to worker’s compensation coverage after being struck by a snowplow in an adjacent parking lot owned by her employer after she clocked out from her job at the township library. Lapsley v. Township of Sparta, et al., - N.J. Super. – (App. Div. 2021). 

Diane Lapsley was injured when she was struck by a snowplow in an adjacent parking lot that was owned by Sparta Township after she clocked out from her job as the Sparta Township Librarian. The worker’s compensation judge concluded that her injuries were compensable pursuant to the premises rule at N.J.S.A. 34:15-36 which provides that employment commences when an employee arrives at the employer’s place of employment and terminates when the employee leaves the employer’s place of employment, excluding areas not under the control of the employer. The Appellate Division reversed.

The Court noted that the Township owned and maintained multiple properties and roadways within its geographical boundaries, including the library premises and the adjacent parking lot. Library employees were neither encouraged nor discouraged from utilizing the subject common use lot. The Court held that to conclude that plaintiff’s injuries would be compensable on any town-owned lot or roadway after leaving the library premises would be an unwarranted and overbroad expansion of public entity exposure for worker’s compensation claims. Thus, the Court barred plaintiff’s compensation claim. 

D.                Worker’s Compensation – Injury at “Family Fun Day” Compensable

In a case involving the issue of whether an employee injured during a social or recreational activity for an employer is compensable, the Supreme Court recently held that plaintiff’s injuries sustained at a “family fun day” were compensable under the Act.  Goulding v. NJ Friendship House, Inc., - N.J. – (2021).

Kim Goulding was employed by the North Jersey Friendship House, Inc. She worked Monday through Friday as a chef/cook. In September 2017, Friendship House hosted its first ever “family fun day,” and employees were asked to volunteer to work at the event. 

Goulding volunteered to work. While preparing for lunch, she stepped in a pothole and fell down injuring her ankle. She filed a worker’s compensation claim for benefits and Friendship House maintained that she was not entitled to relief because she was not working when the injury occurred. 

The trial Court dismissed her claim. The Appellate Division affirmed. However, the Supreme Court reversed.

Generally, under New Jersey Worker’s Compensation Act, an employee injured during a social or recreational activity cannot receive compensation for those injuries. The Act does provide an exception when the social or recreational activities are a regular incident of employment and produce a benefit to the employer beyond improvement in employee health and morale. See generally, N.J.S.A. 34:15-7.

The Court pointed out that plaintiff satisfied the first prong because the employer intended the “family fun day” to be a regular event going forward. The Court pointed out that defendant needed volunteers for the event and given the Act’s liberal construction in favor of compensation, it is difficult to imagine that the legislature intended to preclude compensation for injuries sustained by an employee who was volunteering at an employer’s behest to assist an event designed to celebrate the employer’s client. 

The Court then held that plaintiff also satisfied the second prong of the exception. The Court pointed out that there was little evidence to suggest that the event improved employee health and morale, especially considering there was nothing suggesting employees were invited to attend as guests. The employer received a benefit from the event because a side effect of the event would be the impression that Friendship House is doing good work and that the event attendees would be more inclined to help out in whatever way they could in the future.

The Court concluded that plaintiff’s injury was compensable because her injury fell within the exception to N.J.S.A. 34:15-7.

E.                 Torts – Public Entities and Allocation of Fault

In a case involving an assault on a New Jersey Transit but, the Supreme Court recently held that New Jersey Transit and its bus drivers are held to the same negligence standard as other common carriers – to exercise the utmost caution to protect their passengers as would a very careful and prudent person under similar circumstances, and that NJ Transit is not shielded from liability by various statutory immunities for failure to provide police protection, failure to enforce a law and good faith enforcement of the law; and finally, that allocation of fault between a negligent public entity and its employee and an intentional tortfeasor is mandated. Maison v. NJ Transit, et al. – N.J. – (2021).

Plaintiff, Anasia Maison, was assaulted while on a New Jersey Transit bus. The young men who assaulted her were never located. She filed a Complaint against New Jersey Transit and ultimately a jury awarded her $1.8 million in damages for her injuries.

Appeals were filed and ultimately the case reached the Supreme Court. The issues before the Court were whether New Jersey Transit buses and drivers are subject to the common carrier standard of negligence and whether New Jersey Transit had immunity under the Tort Claims Act under N.J.S.A. 59:1-1 et. seq.

The Court first held that New Jersey Transit is a common carrier for hire and thus subject to the heightened standard of care imposed upon common carriers – requiring it to exercise great caution to protect passengers from the wrongful acts of co-passengers if the utmost care could have prevented those acts from injuring a passenger.

The Court then dismissed the defendant’s argument that they were entitled to various immunities under the Tort Claims Act. The Court held that defendants could not prevail in their invocation of the failure to provide police protection immunity under N.J.S.A. 59:5-4; immunity from liability on the basis that it failed to enforce a law pursuant to N.J.S.A. 59:2-4 and 59:3-5; and that they were shielded from liability because of their good faith enforcement of a law under N.J.S.A. 59:3-3.

Arguably, most significantly, the Court then held that the Tort Claims Act required an allocation of fault between the public defendants and the unidentified tortfeasor. The Court noted that the Tort Claims Act established a comparative fault scheme strictly limiting the liability of public entities and public employees to the percentage of fault directly attributable to them. The Court refused to adopt plaintiff’s argument that comparative fault is not appropriate where a tortfeasor’s negligence arises from the breach of a specific duty to guard against the wrongful conduct of another, as suggested in Supreme Court dictum in the case of Blazovic v. Andrich, 124 N.J. 90 (1991).


DISCLAIMER: This Alert is designed to keep you aware of recent developments in the law. It is not intended to be legal advice, which can only be given after the attorney understands the facts of a particular matter and the goals of the client.


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