A state appeals court on Monday vacated a $7.4 million judgment for a pedestrian hit by a driver who had been drinking at a pool party at an apartment complex.

The judges, in Lau v. Seabring Associates, A-3864-10, found the trial court had given erroneous charges to the jury on social host liability and respondeat superior.

Henry Lau, now 69, was walking his dog in the early morning on Dec. 27, 2006, when hit by drunken driver David Figueroa, who had been drinking during an after-hours pool party at the Excelsior, a Hackensack apartment complex owned by Seabring.

Figueroa’s blood-alcohol concentration was .192 percent, far in excess of the legal limit of .08. He pleaded guilty to third-degree assault by auto and fourth-degree leaving the scene of an accident, and was sentenced to five years’ probation and 180 hours of community service.

Lau, a cardiologist at Hackensack University Medical Center, broke both legs, his pelvis, back and several ribs. He was unable to return to work.

A Bergen County jury awarded Lau $5 million and his wife $350,000 per quod. It also awarded Lau $1.73 million, under a stipulation by the parties, for lost future wages, and the verdict was molded to include $365,000 for past and future medical expenses.

The jury apportioned 55 percent of liability to Seabring, 25 percent to Figueroa and 20 percent to Gabriel Ortiz, an Excelsior front-desk concierge who let the party-goers enter the building, left the door to the pool unlocked and permitted consumption of alcohol despite a no-drinking policy at the pool.

Figueroa settled for $15,000 before trial and Ortiz defaulted.

A judgment for the entire $7.4 million in damages, minus the $15,000 settlement paid by Figueroa, plus $1.2 million in prejudgment interest, was entered against Seabring under the joint and several liability statute.

Seabring’s 55 percent share, and its respondeat superior liability for Ortiz’s 20 percent share, placed it over the 60 percent threshold for full liability under the statute, according to Lau’s attorney.

On appeal, Seabring argued that Superior Court Judge Alexander Carver III wrongly submitted the questions of respondeat superior liability and social host liability to the jury and gave erroneous instructions on the issues.

In their per curiam decision, Appellate Division Judges Susan Reisner, Jonathan Harris and Margaret Hayden said the factual picture was "insufficient to present the jury with a viable dispute regarding vicarious liability based on respondeat superior."

The decision by Ortiz, a member of the security staff, to admit trespassers was clearly outside the scope of his employment as it "directly undermined the security of the building that Ortiz was hired to provide," the panel said.

The judges further held the "record does not warrant the inclusion of a stand-alone charge on a social host theory of liability because Seabring was not a social host. It was an employer."

Figueroa was only 20 at the time of the party and liability for providing alcohol for people under 21 is governed by traditional negligence principles under common law, not social host liability, the panel said.

In addition, the pool party was not sponsored or condoned by Seabring, and there was no evidence it provided the alcohol, the panel said.

Seabring asked the appeals court to find that an accumulation of errors required a new trial on liability and allocation of fault.

Again the panel sided with the company, finding that Carver "improperly fused" respondeat superior and social host liability, and jurors were never asked to consider the differences between vicarious and primary liability.

The panel said it had "no confidence" that the jury properly evaluated the actors’ liability and assigned appropriate percentages of fault.

"When viewed under the totality of the circumstances, the material surplusage of issues presented, the trial court’s overlapping instructions, and the unnecessarily narrow-focused verdict summary form combined to create a misleading deliberative environment, fully capable of engendering an unjust result," it said.

The appeals court ordered a new trial on liability and apportionment of blame. But that is now moot as the plaintiff will receive $5 million under a high-low agreement with defendant Seabring Associates negotiated while the appeal was pending, according to his lawyer, Rosemarie Arnold, who heads a firm in Fort Lee.

Arnold says she disagrees with the ruling but her client would have prevailed if the case had been retried solely on a negligent supervision theory of liability against Seabring. "The evidence was in abundance that they negligently supervised" Ortiz, she says.

As for the high-low settlement, "no one likes to lose, but when the booby prize is north of $5 million, it’s not that bad," she says.

Richard Williams of McElroy, Deutsch, Mulvaney & Carpenter in Morristown, representing Seabring, says the case points up that the model jury charge on respondeat superior, on which Carver relied, needs modification because it fails to explain that the employee’s action must be performed with the intent to serve his employer.