Court watchers looking for a hint of the new Chief Justice’s judicial philosophy on tort were disappointed. Justice Raber did not authorany of the decisions.
This was not a banner year for tort law. The New Jersey Supreme Court sailed on a sea of tranquility this term, issuing only 13 major decisions. A moderate court did not render any blockbuster decisions, instead concentrating on issues with limited impact concerning the verbal threshold, scientific evidence, punitive damages and products liability.
Court watchers looking for a hint of the new Chief Justice’s judicial philosophy on tort were disappointed. Justice Rabner did not author any of the decisions and voted with the majority in every case. In the first year of his reign, the Chief Justice allowed his colleagues to take the lead and develop the law. This is consistent with the practice of prior Chief Justices during the Wilentz and Poritz eras.
The court’s moderation was also reflected in its decisions to limit the reach of products liability law in pharmaceutical cases The trend of tacking away from the court’s liberal tradition was brought into focus by vigorous dissents filed by the court’s outspoken progressive, Justice Long. Justice Long protested the majority’s decisions to limit the remedy of medical surveillance in products liability cases, broaden immunity for spectator sport’s claims and restrict the obligation of a homeowner’s insurance carrier to defend claims for an insured’s intentional act. The Supreme Court went about its business in an efficient, workmanlike approach, resolving each case in a logical, dispassionate manner.
Battle of the Titans
Portee v. Jaffee, 84 N.J. 88 (1980), provided a right of recovery for negligent infliction of emotional distress for individuals observing close family members suffer injury and/or death in an accident, if the claim met all of the following criteria: (1)The defendant’s negligence caused the death of, or serious physical injury to another; (2) The plaintiff shared a marital or intimate, familial relationship with the injured person; (3) The plaintiff made sensory and contemporaneous observations of the death or injury at the scene of the accident; an d (4)The plaintiff suffered severe emotional distress. A Portee claim is derivative, as it rises or falls based upon the viability of the cause of action of the seriously or fatally injured family member.
Plaintiff was driving her mother to visit a family member in Jablonowska v. Suther, 195 N.J. 91 (2008), when their car was rear-ended by defendant’s vehicle. After impact, the daughter observed her mother die from the injuries sustained in the accident and the daughter subsequently received treatment and medication for Post Traumatic Stress Syndrome (hereafter PTSD). The daughter’s soft tissue injuries healed. The estate prevailed in a wrongful death and survival actions against the responsible driver. In the same lawsuit, the daughter also sought compensation for her own negligently inflicted emotional distress under Portee.
The daughter had the verbal threshold and did not obtain a timely certification from the treating therapist affirming that the PTSD was a permanent injury based on objective medical findings. Defendant moved to dismiss plaintiff’s claim for failing to comply with the requirements of the limitation on lawsuit option procedures. Plaintiff pointed out that AICRA did not specifically address Portee claims and urged that they remained independent from the requirements of the statute. Defendants argued that the threshold governs all claims for emotional distress arising from motor vehicle accidents and a plaintiff cannot proceed without a medical certification averring that there is an objective basis for the diagnosis and that the injury is permanent.
The key statutory language in AICRA provides that:
Every owner, . . . operator or occupant of an automobile . . is hereby exempted from tort liability for non-economic loss to a person . . . as a result of bodily injury, arising out of the ownership, operation, maintenance or use of such automobile . . unless that person has sustained a bodily injury which results in death; . . .or a permanent injury within a reasonable degree of medical probability . . . N.J.S.A. 39:6A-8 (2003)
The trial court applied the threshold and dismissed plaintiff’s case for failing to supply a physician’s certification. Plaintiff later obtained a certification from the treating psychiatrist and sought reinstatement of the claim, but the trial judge ruled it was too late and that the certifications did not contain objective evidence to support the diagnosis.
The Appellate Division concurred with the trial court that the threshold applied and affirmed the dismissal of plaintiff’s claim. The Supreme Court granted certification to determine if the limitation on lawsuit threshold applied to Portee claims.
The High Court ruled 4-3 that the threshold did not apply to Portee claims and reversed the courts below. The opinions feature a classic intellectual battle between Justice LaVecchia, writing for the majority, and Justice Albin in dissent. The issue was narrowly focused and the debate was sharp and animated. Justice LaVecchia, a student of the common law, analyzed the problem in a classic judicial style by examining a century of precedent and applying it to the problem at hand. Justice Albin perceived the answer to lie in established rules of statutory construction focusing on the language of AICRA. Justice LaVecchia responded to the dissenter’s jabs with footnoted counterpunches.
Justice LaVecchia carefully examined the history of the tort of negligent infliction of emotional distress from the genesis of the physical impact test in
Ward v. W. Jersey & S. R. Co., 65 N.J.L. 383 (Sup.Ct. 1900)
- to the zone of danger rule,
Falzone v. Busch, 45 N.J. 559 (1965),
Portee and its progeny. A century of jurisprudence generally gives rise to two situations where plaintiffs can pursue negligent infliction of emotional distress claims. The first scenario is proving that defendant placed plaintiff directly in fear of immediate physical injury leading to emotional distress that results in substantial bodily injury or sickness.
Falzone, supra. The other approach is a family member witnessing the injury or death of a family member. Portee, supra.
The majority’s interpretation of AICRA revealed a regulation of injuries only directly suffered by “that person,” N.J.S.A. 39:6A-8(a ), and not those that arise derivatively from the injury or death of another. The majority was heavily influenced by the argument made by amicus New Jersey State Bar Association that if the legislature intended to subject Portee claims to the threshold, it would have included it as a category of injury in the text of AICRA. In the eyes of four Justices, Portee was so imbedded in our jurisprudence, that the failure to place it in the statute was fatal to the contention that it was intended to be impacted by the verbal threshold. Justice LaVecchia’s gave the following summation:
Here, [the] mother suffered injuries arising directly out of the use of [defendant's] vehicle and [the daughter's] emotional distress from witnessing her mother’s injuries and death is derivative of the tort suffered by her mother. Merely because [defendant's] negligent operation of a vehicle is the root cause of [the mother's] fatal physical injuries provides no convincing basis for finding that [the daughter's] separate and derivative cause of action for the pain and suffering of witnessing her mother’s excruciating last moments should be made subject to the verbal threshold’s limitation on suit. [The daughter's] emotional distress was not caused from the fright of being located within the zone of danger created by [defendant's] negligent use of his motor vehicle. Rather, her emotional distress was caused entirely from her presence at the tragic scene of her mother’s injuries and death. Based on those circumstances, we conclude that plaintiff’s Portee claim is not subject to the verbal threshold.
Justice Albin believed the resolution of this case required a straightforward reading of AICRA and a simple exercise of logic. AICRA applied to injuries “arising out of the ownership operation, maintenance or use of an automobile.” An automobile accident passenger’s emotional distress caused by a crash is governed by the requirements of the threshold, regardless of whether or not it is a direct result of the plaintiff’s own experience in the accident or a reaction to the injury or death of a family member. In support of this position, the dissenters referred to the language of N.J.S.A. 39:6A-8(a) setting forth that a tortfeasor is not liable “for non-economic loss to a person . . . unless that person has sustained a bodily injury which results in death . . . or a permanent injury.” “Thus, [plaintiff] only vaults the threshold if she suffered a permanent injury herself; she does not vault the threshold because of her mother’s death.”
Justice Albin gave the following hypothetical to illustrate why the Legislature did not intend to confer “exalted status” on Portee claims:
Under the majority’s paradigm, a driver whose car is broadsided and who observes a close relative suffer serious bodily injury can recover for pain and suffering resulting from a nonpermanent post-traumatic stress disorder. However, if a sixteen wheeler crashed into a car, which explodes in flames, and the sole occupant suffers nonpermanent physical injuries and nonpermanent post-traumatic stress disorder, no recover for pain and suffering is allowed.
Justice Albin pointed out that there is an objective criterion for diagnosing psychiatric illness defined by the DSM and that the medical certification submitted by plaintiff was adequate for this purpose. The three dissenters would have remanded the case for trial.
A fascinating subplot in the dueling opinions is the dissent’s's embrace of the idea that permanent psychological injuries can vault the threshold as long as the diagnosis was based upon objective criteria recognized by mental health professionals. Justice LaVecchia pointedly rejected this conclusion in footnote #9 in her opinion, chiding the dissent for expanding the category of “threshold selectors” and wandering beyond the narrow issue before the court. It appears that a resolution of the circumstances under which a permanent psychological claim can meet the threshold will have to be resolved in the future.
There is not a large volume of Portee claims. Most victims involved in horrific crashes will probably clear the threshold on a physical injury. The net impact of this case on the day to day caseload in Superior Court will be minimal. It is a classic of the genre because of the sharp, principled debate between two keen judicial minds. Tort law remains the vehicle for the High Court’s most captivating and entertaining discussions of the law.
Challenging the admissibility of expert testimony that relies heavily on scientific studies is a difficult, time-consuming and expensive undertaking. The attorneys have to research and review the pertinent studies, obtain expert reports to present the position, depose the opposing experts and file motions to bar the expert’s testimony. This may be followed by a full-fledged hearing. A party offering expert testimony has the burden of meeting the following conditions of admissibility under N.J.R. Evid. 702 : (1) The intended testimony must concern a subject matter that is beyond the ken of the average juror; (2) The field testified to must be at a state of the art such that an expert’s testimony could be sufficiently reliable; and (3) The witness must have sufficient expertise to offer the intended testimony
New Jersey courts rely heavily on the parties to produce the evidence and testimony required to resolve the question of admissibility. Trial judges may be gatekeepers, but they are not interlopers. They are not authorized to conduct their own investigations into whether or not the scientific community recognizes the validity of a party’s position. Rubanick v. Witco Chemical Corp., 125 N.J. 421, 451 (1991 ). A trial court is vested with wide discretion for its decision making, and an abuse of discretion standard applies to an appellate review of a lower court’s determination. A decision cannot be overturned on appeal “unless it can be shown that the trial court palpably abused its discretion” and “that its finding was so wide off the mark that a manifest denial of justice resulted.” Brenman v. Demello, 191 N.J. 18, 31 (2007).
The New Jersey Supreme Court was the leader in developing the adversarial standard of admissibility of expert testimony in Rubanick, and it has continued to embrace this restrained approach over the years. This stands in stark contrast to Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993), which empowered federal judges to aggressively meddle in the determinations of admissibility of expert testimony. Our High Court has always resisted efforts to move in this direction. Landrigan v. Celotex Corp, 127 N.J. 404 (1992 ); Kemp ex rel. Wright v. State, 174 N.J. 412, 430 (2002); Clark v. Safety-Kleen Corp, 179 N.J. 318, 337 (2004 ). Our case law stands as a bright beacon guiding trial judges to their appropriate role in resolving the admissibility of scientific evidence.
Mounting a challenge to scientific testimony is a herculean effort that is not practical in a routine, run-of-the-mill personal injury case. It is far more complex than taking a run at barring an expert’s testimony as a “net opinion.”
Rubanick was the textbook case and the Law Division opinion remains the classic description of how to handle the problem. Plaintiffs alleged that their late husbands’ deaths were caused by exposure to defendant’s chemical. Defendant challenged the admissibility of plaintiffs’ expert testimony by airlifting their moving papers to the clerk’s office. The trial court held a hearing where plaintiffs’ expert testified, followed by three medical and scientific experts that testified on behalf of the defense It was a full-blown trial on the scientific merits of the case. The trial court barred the testimony and the plaintiffs obtained a reversal in the Appellate Division. Defendant obtained certification to the Supreme Court which reversed the Appellate Division and restored plaintiffs’ complaint. While this pioneering case was an extreme example, you cannot undertake the challenge without being prepared for a protracted struggle.
A popular trend by defendants in automobile litigation was the use of biomechanics to offer opinions that low-impact automobile crashes could not cause a plaintiff’s injuries. The appellant in Suarez v. England, 353 N.J. Super. 191 (App. Div. 2002), was able to persuade the Appellate Division to take away a defense verdict in an automobile case because a defense biomechanical expert offered an opinion that the crash did not cause plaintiff’s injuries without offering any scientific support for his opinion. The appellate opinion, written by the highly regarded Judge Skillman, noted that “decisions brought to our attention have concluded that there is no reliable scientific foundation in bio-mechanical studies for an expert opinion that a low-impact automobile accident cannot cause a herniated lumbar disc or other serious injury.” Plaintiffs thought this opinion sounded the death knell of low-impact expert testimony, but they were wrong.
Defense counsel studied the decision and made sure their experts did not repeat past mistakes. The plaintiff in Hisenaj v. Kuehner, 194 N.J. 6 (2008), claimed that she suffered herniated discs in a low-impact rear-end crash. This 2000 accident was tried under the old verbal threshold. Defendant retained a biomechanical engineer who prepared a report concluding that the “minimal velocity of defendant’s vehicle at impact, coupled with the minor change in the velocity of plaintiff’s car resulting from the crash, made it highly improbable that the rear-end collision caused the herniations in plaintiff’s cervical and lumbar spine.” Attached to the report were 17 scientific studies that the expert relied on to reach his opinions.
There was no dispute about the expert’s qualifications or that the subject fmatter was beyond the basic knowledge of the average juror. Plaintiff did not mount a challenge to the general admissibility of biomechanical engineering testimony in low-impact cases. Plaintiff challenged the testimony solely on grounds that there was no reliable scientific foundation for the expert’s opinions. Plaintiff argued that the seventeen studies did not provide support for the expert’s opinion. Reliability of expert testimony may be established by reference to scientific literature that offers support for the soundness of the expert’s methodology.
The trial court diligently followed the Rubanick blueprint and conducted a N.J.R. Evid. 104 hearing. The defense expert testified that the studies were performed over 34 years on over two hundred subjects. The expert recognized each of the authors of the studies as authorities in the field. Some of the subjects were similar in age, gender and physical size to the plaintiff. All were subjected to low-impact collisions and none of them showed serious spine injuries. Plaintiff’s counsel did very little to challenge the legitimacy or relevance of the studies on cross-examination of the expert. The single concession that plaintiff’s counsel extracted was that none of the studies involved a plaintiff of exactly the same age with the same degenerative changes in her spine. Plaintiff did not produce an expert to rebut the defense expert’s testimony. None of the studies was admitted into evidence. The trial court found that the testimony was admissible.
Plaintiff also argued that the expert’s testimony was a “net opinion” because he relied on the change in velocity to plaintiff’s vehicle caused by the collision and ignored other relevant physical factors. The trial court also denied this motion.
The case was only tried on damages. Plaintiff produced expert medical testimony causally relating the injuries, treatment and back surgery to the accident. Defendant presented medical testimony that pinpointed pre-existing degenerative disease as the cause of plaintiff’s symptoms and treatment. A defense accident reconstructionist likened the plaintiff’s low-impact collision to an impact by bumper cars at the amusement park. The biomechanic testified that the impact could not produce these injuries. Defense counsel put this expert’s testimony to good use in summation, arguing that the scientific evidence demonstrated that it is “impossible to herniate three discs in your neck, and one disc in your back, as a result of a minor, low-impact collision.” The jury found that plaintiff did not sustain her burden of proof under the verbal threshold that she had a permanent injury caused by the accident.
The jury did find that she suffered a significant limitation of use of a bodily function or system caused by the accident and awarded her $50,000. The jury basically decided that the injury had aggravated a pre-existing condition, but had not been the cause of the plaintiff’s herniated discs.
Plaintiff appealed, arguing that the trial court’s decision to admit the expert biomechanic’s testimony was an abuse of discretion. The Appellate Division ordered the parties to produce the studies and the judges reviewed and evaluated them. This appellate court decided to “scrutinize the record and independently review the relevant authorities, including judicial opinions and scientific literature, ” 387 N.J. Super 262, 272. After conducting this review, the appellate judges found a number of flaws in the expert’s methodology, including the fact that none of the test subjects had pre-existing degenerative changes to the spine and that most of the individuals studied were younger and healthier. There were far more males than females. The judges also noted that the positions of the drivers in their seats at the time of impact differed from that of the plaintiff at the time of the accident. However, the problem with these observations is that they were not gleaned from the record below but woven by judicial hands out of whole cloth from materials garnered on appeal.
Relying heavily on Suarez, the Appellate Division found that the expert’s testimony was not reasonably and reliably supported by the studies and it reversed the trial court. It held that a biomechanical engineer could testify about the general effects of a low-impact collision, but he could not offer opinions that the collision did not cause the plaintiff’s injuries. Defendant’s petition for certification was granted.
The crux of defendant’s argument to the Supreme Court was that the Appellate Division had overstepped its bounds by conducting its own investigation of the expert’s testimony and substituting its own judgment for the trial court. The plaintiff was joined by amicus ATLA, who attempted to persuade the justices that biomechanical engineering testimony was not scientifically reliable in low-impact collision cases. Defendant was joined by New Jersey Defense Association to support its argument that the original trial court decision should be reinstated.
The Supreme Court reviewed the trial court record and unanimously concluded that the trial judge did not abuse his discretion in allowing the expert to testify. The expert’s methodology of extrapolating from authoritative studies to reach a well-reasoned conclusion was sufficient to allow the expert to testify.
Justice LaVecchia’s opinion focused exclusively on the trial court’s N.J.R. Ev.104 hearing. She concluded that the only point established by plaintiff’s counsel in the entire hearing was that none of the studies cited by the expert utilized a subject just like the plaintiff. It is not a requirement of expert testimony that an expert rely only on studies that are identical to the situation at hand. Clark v. Safety Kleen Corp., 179 N.J. 318, 338 (2004). The record was bare of any challenge to how the studies were conducted or to the accuracy of their conclusions. There was no contrary testimony. It was the Justice’s view that the “attack on the [expert's] testimony during the R. 104 hearing fizzled.” Hisenaj, 194 N.J. at 23. The court also found no basis for the argument that the testimony was a “net opinion.”
The Justices did not question the accuracy of the Appellate Division’s conclusions about the dubious nature of the studies that the expert relied on. Justice LaVecchia noted that one could conclude that the relationship between the studies and the expert’s opinions “could be attacked as tenuous.” However, our court of last resort was extremely critical of the process the appellate judges went through by collecting the studies, evaluating them and reaching their own conclusions. In the view of Justice LaVecchia, the Appellate Division “engaged in an unconstrained review that included material not part of the evidential record and argument that went beyond that which was advanced before the trial court.” The Justice cautioned that it is not the function of appellate courts to “rehabilitate the record.”
This opinion reaffirms the Supreme Court’s restrained view of the trial court’s gate-keeping role in evaluating the admissibility of expert testimony relying on scientific studies. The inquiry is simply whether or not the “scientific knowledge is sufficiently founded or based on a sound methodology.” It is a philosophy that respects the values of the adversarial system and relies on the parties to create the record the decision is based on. Rubanick, supra at p.438. The New Jersey Supreme Court has never embraced the activist judicial approach that Daubert unleashed and was followed by the Appellate Division in this case. Ironically, the decision undermines the approach trumpeted by defendants in toxic tort and prescription drug cases to persuade New Jersey courts to adopt a more aggressive gate-keeping approach to scientific evidence.
The actual impact of the decision on automobile cases is hard to gauge. Brenman v. Demello, 191 N.J. 18 (2007), affords wide latitude to lawyers to argue causation issues based on impact and property damage to vehicles without expert testimony. The dispute in Hisenaj began when defendants believed you needed an expert to make these points. The enormity of the effort by the parties in Suarez and Hisenaj makes another rematch unlikely. Plaintiffs cannot afford it and penurious carriers are not likely to finance expensive experts and underwrite large counsel fees for appellate practice.
The traditional view of chiropractic is the treatment of the spine. Today’s practitioners treat the “whole person” – from head to foot. Chiropractic is defined by statute only as “A system of adjusting the articulations of the spinal column by manipulation thereof.” N.J.S.A. 45:9-14.5 (1953). The applicable regulation, N.J.A.C. 13:44E-1.1(2007), promulgated by the Board of Medical Examiners 30 years after the enabling statute became law, goes further and outlines the scope of practice as the “adjustment and of the articulations of the spine and related structures.” This term “related structures” is not defined and in practice has come to mean virtually any joint in the body.
Are there boundaries that a chiropractor cannot transgress? If so, what are the limitations? This is the problem the courts dealt with in Bedford v. Riello, 195 N.J. 210 (2008), a malpractice case against two chiropractors who allegedly deviated from generally accepted standards of care by manipulating and injuring plaintiff’s knee. Plaintiff treated with a chiropractor and his office mate approximately 180-190 times over 10 years for a variety of maladies including lower-back and hip complaints. On one fateful day, the patient told the second chiropractor that she had a painful left knee. The first step in the treatment plan was an adjustment of the spine and then, an adjustment of the knee. Plaintiff described the chiropractor as “draping [her] left leg over his forearm and pushing down like a lever.” According to the plaintiff, she “heard a pop and felt a burning immediately.” The chiropractor recommended an application of ice. The chiropractor subsequently testified that the knee manipulation corrected a “posterior tibial subluxation” caused by plaintiff’s knee pain and that the maneuver did not involve the application of pressure or pose a risk to the structures of the knee.
Plaintiff testified that she subsequently returned to her regular chiropractor and recounted what happened. According to the patient, the chiropractor told her he would have done the same thing and then promptly manipulated the knee a second time. The regular chiropractor denied that he manipulated the knee. Plaintiff later underwent arthroscopic surgery to repair a torn meniscus she claimed was caused by the manipulations of the knee and sued the two chiropractors for malpractice.
In limine motions rigidly defined the parameters of the plaintiff’s proofs at trial. The trial judge barred plaintiff from attempting to prove that the chiropractors’ care was outside the scope of their statutory authority because the contention was not included in answers to interrogatories. Plaintiff was also prohibited from arguing that the treatment was beyond the scope of the regulation because the trial judge ruled that the knee was a “related structure” as a matter of law.
Plaintiff’s expert chiropractor was limited to expressing an opinion that the defendants deviated from generally accepted standards of care by failing to properly examine the plaintiff to identify a “subluxation” before performing the manipulation. An orthopedic surgeon testifying for plaintiff opined that plaintiff’s cartilage in her knee had been “vigorously” and “significantly torn” by the defendants’ adjustments. The defense expert testified that chiropractors routinely adjust extremities and these are appropriate because there is a “kinetic linkage” between the extremities and the spine. The expert testified that the manipulation described by defendants was benign and that the popping sounds plaintiff described were caused by “gas bubbles breaking when the joint is pulled back.” A jury returned a verdict in defendants’ favor.
Plaintiff appealed and attacked the in limine rulings that prohibited her from attacking the defendants’ care as exceeding the statutorily defined boundaries. The Appellate Division refused to countenance what happened below and ordered a new trial where the jury would be instructed that “regardless of how the knee adjustment was performed, any such adjustment was outside the scope of chiropractic practice in New Jersey, and that defendants’ violation of the code could be considered evidence of negligence.” The appellate court also noted that the plaintiff’s expert testimony at the new trial could include opinions that defendants had transgressed the boundaries of permissible practice.
The defendants’ petition for certification was granted. The Association of New Jersey Chiropractors participated as amicus. Justice Long, along with three of her colleagues in the majority, took a different track and refused to embrace the trial court’s view that a knee is always a “related structure” or the appellate court’s opinion that it never is. Justice Long’s opinion staked out a middle ground, requiring a case-by-case determination of whether or not a manipulated extremity “is logically connected by cause or effect, to a spinal condition.”
Justice Long believed that the clear meaning of “related structures” in the regulation clearly contemplated treatment beyond the spine. The problem with this conclusion is that the term “related structures” was not defined in the regulation. To resolve this problem, the High Court looked to interpretations of the term rendered by the Board of Chiropractic Examiners, which was later authorized to promulgate regulations under the act. The Board’s opinions had sanctioned treatment of “related structures” “to the extent that a condition of the structure adjusted impacts on, contributes to, or has a nexus to a spinal condition or vice versa.”
The appellee also argued that the regulation allowing treatment of “related structures” exceeded the scope of the statute and was invalid. Justice Long resolved this question by referring to other sections of the statute that permitted “caring for chiropractic subluxation as determined by chiropractic analytical procedures,” N.J.S.A. 45:9-41.27(1989), and incorporating laws of the state, 45:9-41.26, to support her conclusion that the regulation was consistent with the statute. Justice Long conducted a lengthy historical review of the statute and regulations, and noted that after the adoption of the regulation in 1984, subsequent amendments to the statute did not overturn the regulation.
The case was remanded for a new trial for a jury to decide whether or not the defendants’ treatment of the knee had a relationship to a spinal condition. The majority opinion expressly rejected the defendants’ expert testimony that there is a relationship because of a “kinetic linkage” between all extremities and the spine. The defendants’ expert was required to specifically describe what the relationship was between the knee problem and the condition of the spine. Documentation of this relationship in the patient record is an important consideration. The next jury was to be instructed that “if it concludes that no condition of the adjusted structure was properly related to a spinal condition, the adjustment would fall outside the scope of chiropractic practice in New Jersey as defined in the statutes and regulations, and that such violation may be considered evidence that defendants were negligent.” Bedford, 195 N.J. at 227.
Justice Albin did not agree with his colleagues’ construct of the statute and filed a dissent joined by Justice Soto. The High Court’s literal constructionist observed that the simple language of the statute said spinal column and “this clearly restricts the scope of chiropractic care in New Jersey.” According to the dissenters, the terminology, “related structures” in the regulation, went beyond the statute and was invalid. According to precedent, an agency may not expand the scope of a statute. Cooper Univ. Hosp. v. Jacobs, 191 N.J. 125, 141 (2007). In Justice Albin’s view, the board “manipulated the words of the statute to allow chiropractors to manipulate every joint throughout the body,” The dissent would have invalidated the regulation prospectively and stayed the ruling for six months to give the Legislature time to act.
Our courts have recognized that plaintiffs directly exposed to toxic chemicals, with an increased risk for developing disease in the future, may be entitled to damages for medical surveillance. Dreier and Keefe, New Jersey Products Liability & Toxic Torts Law, 35:3 (2008). The Supreme Court first approved the remedy in a Title 59 case brought by plaintiffs who had ingested water from wells contaminated by defendant’s landfill. Ayers v. Jackson Tp., 106 N.J. 557 (1987).
Damages for medical monitoring were also permitted in a products liability case for a maintenance worker with scarring of the lining of the lungs who was at an increased risk of developing asbestos-related cancer. Mauro v. Raymark Industries, Inc., 116 N.J. 126 (1989).
This precedent for medical monitoring remained viable after the passage of the Products Liability Act (hereinafter PLA) in toxic tort cases because the statute did not apply to “environmental torts.” The exception for toxic tort cases, however, did not include “actions involving drugs or products intended for personal consumption or use.” N.J.S.A. 2A: 58 C-5 (1995).
Legal actions against manufacturers of other products for medical monitoring would have to clear the hurdle posed by the PLA which limited recovery to “harm caused by products,” defined as “personal physical illness, injury or death.” These definitional obstacles were formidable because a legislative purpose of the PLA was “to limit the liability of manufacturers so as to balance the interests of the public and individual with a view toward economic reality.” Zaza v. Marquess & Nell, Inc., 144 N.J. 34, 47-48 (1996).
A class action complaint was filed in Sinclair v. Merck& Co., 195 N.J. 51 (2008), by plaintiffs averring that ingestion of Vioxx had caused silent or latent cardiac injury which required medical monitoring. None of these plaintiffs sought compensatory damages for a physical injury. Separate counts of the complaint sought relief under products liability theories and violations of the Consumer Fraud Act.
Merck brought a motion to dismiss the case for failure to state a cognizable claim under New Jersey law. The pharmaceutical company took the position that the PLA was the only legal option to seek relief against a product manufacturer for personal injury and the statute limited claims to plaintiffs with an actual injury. Plaintiffs pointed out that the definition of “harm” in the statute required a “physical illness,” but the adjective “physical” did not also modify the word “injury.” Plaintiff argued that the definition of “harm” included the concept of increased risk of disease caused by a product based upon legal precedent at the time the act was passed, and if it did not, then the Consumer Fraud Act provided a vehicle for plaintiffs’ claims.
The trial court concluded that “the PLA applies to Vioxx and limits compensation to harm as defined by statute.” While recognizing the courts have “indicated that medical monitoring may be necessary in asbestos products-liability actions, it has yet to apply a medical monitoring remedy to a pure products liability action where the PLA applies.” The trial court also dismissed the plaintiff’s claim under the CFA because it “only allows for recovery of economic damages” and not medical monitoring. Plaintiffs’ entire complaint was dismissed with prejudice.
The Appellate Division did not rule on the legal merits of the trial court’s decision and remanded the case for discovery and a hearing to explore the scientific and medical evidence about the claims.
Merck’s petition for certification was granted, as were amicus petitions by the Pharmaceutical Research and Manufacturers of America, Pacific Legal Foundation, Product Liability Advisory Council, Inc., ATLA-NJ and AARP.
In a 5-1 decision written by Justice Wallace, the Supreme Court reinstated the trial court decision and dismissed plaintiff’s entire complaint with prejudice. The court held that the class action had to be brought under the PLA because it specifically provided that claims for “harm caused by a product” are controlled by the PLA “irrespective of the theory underlying the claim.” N.J.S.A. 2A:58C-1(b) (3). Thus, a claim under the CFA could not be pursued by plaintiffs.
The fact that the word “physical” in the statute’s definition of “harm” only modified the term “illness” and not “injury,” did not concern the Justices, as they felt the entire phrase was meant to communicate that a plaintiff needed a real injury or illness to obtain compensation for a defective product.
Justice Long filed a dissenting opinion. She believed that the term “harm” in the PLA was an expansive term meant to include all of the “various conceptions of harm already recognized in the common law.” This included enhanced risk of injury cases with requests for medical monitoring. The dissenter opined that a limitation against medical monitoring claims should have been spelled out explicitly in the statute before a court could conclude that there was a legislative intent to prohibit such claims against conventional manufacturers.
Justice Long also chided her colleagues about placing the plaintiffs in a “Catch-22 situation,” i.e., you cannot file a claim under the PLA because your claim does not qualify, but you cannot pursue your remedy under other statutes because you can only proceed under the PLA. This Justice believed the logical consequence of the court’s interpretation of the statute would be to allow the plaintiffs to pursue other avenues provided by the law, not dismiss the case.
It is no secret that our appellate courts have not been enamored with New Jersey’s status as a host to nationwide litigation against drug manufacturers. Now that the Vioxx cases are disappearing from the docket, it is likely that the courts will be less receptive to interpreting New Jersey law to enable the national class action bar to establish beachheads here in the future.
The war over abortion has raged over the American political and legal landscape for generations. Tort law became a battleground for this divisive issue in Acuna v. Turkish, 192 N.J. 399 (2007).
A 29-year-old married mother of two obtained an abortion from the defendant OB\GYN, terminating a pregnancy of approximately six to eight weeks. The patient subsequently filed a lawsuit against the physician, alleging that she had not received the appropriate informed consent because she had not been advised that the fetus “was a complete, separate, unique and irreplaceable human being” and that an abortion would result in “killing an existing human being.” The complaint also included counts for survivorship and wrongful death.
The defendant had been the plaintiff’s regular OBGYN for five years and had delivered one of his patient’s two children. Plaintiff was afflicted with a kidney disorder. The plaintiff stated that the defendant advised her that she required an abortion because pregnancy would cause life-threatening complications due to the problem with the kidney. The physician adamantly denied giving this advice. Plaintiff also stated that she asked defendant “if it was the baby in there” and defendant told her “don’t be stupid, its only blood.” Defendant also denied making this statement. The defendant maintained that plaintiff had voluntarily sought an elective abortion. It was undisputed that plaintiff, after consulting with her husband, executed a consent form for the termination of the pregnancy acknowledging that defendant, “explained all of the risks and complications to her.”
A few weeks after the procedure, plaintiff was hospitalized with vaginal bleeding. After diagnosis of an incomplete abortion, a dilation and curettage was performed. According to the plaintiff, she asked the nurse what happened and the reply was “that the doctor had left parts of the baby inside of you.” According to the plaintiff, she had a revelation that “there was a baby and not just blood” inside her. Plaintiff conducted further research that led her to conclude that the abortion had “killed a human being.” This led to mental health problems allegedly caused by post-traumatic stress disorder.
The plaintiff was prepared to present expert testimony that her fetus was an existing human being. All claims were dismissed on summary judgment. The Appellate Division affirmed the dismissal of the wrongful death claims based on the Supreme Court holding in Giardina v. Bennett, 111 N.J. 412 (1988), that the Wrongful Death Act does not allow a claim for the death of an infant before birth. The appellate judges allowed the claim for the mother’s emotional distress to proceed because it constituted a direct tort against plaintiff. The appellate opinion did not deal with the weighty issues of what information the physician’s disclosure should have contained because the parties agreed that the record was not complete. Acuna v. Turkish, 354 N.J. Super. 500, 505 (App. Div. 2002).
After discovery concluded, Judge Amy Chambers dismissed the informed consent and emotional distress claims on grounds that requiring the physician to advise the patient that the fetus “is in all material respects equivalent to a person born and alive” would require the physician to communicate “a value judgment, not a medical fact.” The Appellate Division reversed, finding that summary judgment was inappropriate because a reasonable patient might not consider the information defendant imparted to plaintiff to be sufficient to allow an informed decision.
The Supreme Court granted certification, unanimously reversed and reinstated the trial court’s dismissal of all claims. Arguments presented by amicus New Jersey Obstetric and Gynecology Society was critical to the High Court’s resolution of the case. Physicians argued that requiring them to communicate the moral, philosophical viewpoints in the abortion debate to patients would be putting them in the crossfire of partisans in a highly charged political debate. The physicians also emphasized that the informed consent proposed by plaintiff was not the standard of care in New Jersey. These arguments won the day. Judge Albin’s opinion stated that there was no common-law precedent requiring a physician to communicate the instructions proposed by plaintiff. According to Justice Albin, doctors are required “to provide their pregnant patients seeking an abortion only with material medical information, including gestational stage and medical risks involved in the procedure.” The Justices declined to join the fray on the debate of when life begins. The court decided the case strictly on common-law grounds and did not deal with the constitutional issues raised by the parties.
Prima Facie Tort
The prima facie tort doctrine provides a remedy for parties injured by intentional misconduct for which a conventional cause of action does not exist.
The tort was tacitly recognized in an old Appellate Division case, Trautwein v. Harbourt, 40 N.J. Super. 247 (1956), but has never gained traction in this jurisdiction where there is a cause of action for every occasion. Our Supreme Court refused to embrace the novel tort in a case involving racial epithets in the workplace, due to the existence of a remedy under the Law Against Discrimination. Taylor v. Metzger, 152 N.J. 490,522 (1998).
The plaintiff in Richard A. Pulaski Construction Co., Inc. v. Air Frame Hangars, Inc., (2008 WL 2572162, N.J. 2008), pulled the tort off the shelf to go after the owner of a business personally for failing to pay a six-figure invoice for site work on a construction project. The plaintiff won an arbitration award against the defendant’s company but was unable to collect it because it had no assets. The plaintiff failed to perfect his construction liens on the improved property because he described the wrong location on the paper work. When the properties were conveyed, the defendant represented to the purchasers that the conveyance was lien-free. In the Order to Show Cause to confirm the arbitration award against the company, plaintiff also filed a claim for fraud against the defendant individually for misrepresenting the status of liens to the purchasers. This claim was dismissed because plaintiff did not detrimentally rely on the defendant’s misrepresentations.
In the subsequent appeal, the plaintiff raised, for the first time, the idea that he should be permitted to proceed against the defendant under the prima facie tort. The Appellate Division agreed and remanded the case for an assessment as to whether or not the facts alleged could meet the requirements of the doctrine.
The case was tried without a jury. It appears that plaintiff proved that defendant transferred title to the purchasers with an affidavit stating that he was “not aware that anyone has filed or intended to file a mechanic’s lien . . . and that no one has notified the company that money is due and owing for construction work on this property.” The trial judge was incensed and found there “was a deliberate effort made to get those closings done without having to pay plaintiff.” The trial court also found that defendant had been untruthful in the affidavit and tried to get away with it. The conclusion of law was that defendant had violated the prima facie tort doctrine.
Defendant lost his appeal to the Appellate Division and obtained certification to explore whether the tort is available as a remedy for a construction lien claimant who failed to perfect his claim under the statute.
The white-hot fury that had propelled the lower court decisions dissipated on the journey to Trenton and a unanimous Supreme Court vacated the judgment. Justice Soto’s opinion refused to endorse or reject the tort. The rationale for the decision was that plaintiff had adequate alternative remedies which had failed due to the defendant corporation’s insolvency and the plaintiff’s failure to perfect his lien.
Justice Rivera-Soto’s primary concern was plaintiff’s attempt to use the “exotic claim” to circumvent the established principle of law that a corporation is a separate entity from its shareholders. Plaintiff did not attempt to pierce the corporate veil in a traditional fashion by demonstrating that the company was a fraud or a sham. Justice Rivera-Soto believed the plaintiff impermissibly thrust the tort as a dagger to the shareholder’s heart because his other legitimate efforts had been frustrated. Justice Rivera-Soto dispatched the prima facie tort back to the dust bin.
Hockey teams have only a limited duty to safeguard their fans in the arena from errant pucks by providing seats in a protected area for spectators who desire such seating and to screen any area that is subject to high risk. This responsibility is normally met by providing screened seats behind the goals. Schneider v. Am. Hockey & Ice Skating Ctr. Inc, 342 N.J. Super. 527 (App. Div.2001); Maisonave v. Newark Bears Prof’l Baseball Club, Inc., 185 N.J. 70 (2005). The bottom line is if you are hit by a puck in an arena or a foul ball in a stadium, you are simply out of luck. It’s the reincarnation of the discredited “Assumption of the Risk Doctrine.” Meistrich v. Casino Arena Attractions, Inc., 31 N.J. 44 (1959).
The plaintiff in Sciarrotta v. Global Spectrum, 194 N.J. 345 (2008), went to a minor league hockey game to watch her daughter sing the national anthem. Plaintiff was seated in the stands approximately six or seven rows up from the ice when she got clobbered by a puck, launched by a player during practice that bounced off the goal post. During warm-ups, each team is passing and shooting as many as 25 pucks.
Plaintiff attempted to circumvent the limited duty rule by arguing that it applied only to games, not warm ups, and that defendant had a duty to warn about the risk and the availability of protected seats.
Defendant filed a motion for summary judgment supported by facts demonstrating that the arena had a plexiglass screen on a wall surrounding the arena, protected seats that plaintiff had not requested, and additional screens in the area behind the goals. The trial court dismissed the plaintiff’s claim on summary judgment based on the limited duty rule. Plaintiff appealed and the Appellate Division reversed because it believed a full factual record developed below might demonstrate that there was a duty to provide more protective steps during pregame drills. The defendant’s petition for certification was granted.
In a 4-3 decision, the High Court reversed the Appellate Division, holding that the limited duty rule applied. Justice Rivera-Soto did not believe there was any meaningful distinction between pucks launched in practice or in games in regards to the defendant’s duty. The limited duty was aimed at providing immunity from errant pucks, and warm ups are an integral part of the entertainment in hockey. Plaintiff did not apparently help herself when she suggested in oral argument that the fix was to keep fans out of the stands during pregame warm ups. The majority approached the plaintiff’s argument about warning spectators “of a self-evident risk with skepticism.” The four-judge majority did not believe the imposition of additional responsibilities was consistent with the purpose of the limited duty rule.
Justice Long wrote a dissent joined by two other Justices that would have imposed a duty to warn of the danger and advise of the existence of protected seats.
In 2004, New Jersey passed a Civil Rights Act, N.J.S.A. 10:6-1 and 2, (hereinafter CRA), that provides a broad private remedy for “any person who had been deprived of any substantive due process or equal protection rights, privileges or immunities secured by the Constitution or laws of the United States, or any substantive rights, privileges or immunities secured by the Constitution or laws of this state,” including counsel fees to the prevailing party. The CRA was specifically adopted to ensure a state law cause of action for violations of state and federal constitutional rights and to fill any gaps in state statutory antidiscrimination protection. The law has not been widely utilized by litigants, but it will most certainly be a remedy deployed frequently in the future.
The plaintiff in Owens v. Feigin, 194 N.J. 607 (2008), filed a CRA claim against a medical examiner and others for “deliberately violating plaintiff’s civil rights in violation of the Civil Rights Act of 2004.” Plaintiff did file a notice of claim against many of the public entities in the case, but failed to do so against the doctor. The coroner persuaded the trial court to dismiss the complaint against him on grounds that plaintiff had failed to file a notice of claim under Title 59, N.J. S.A 59:8-8. Plaintiff filed a motion for leave to appeal to the Appellate Division that was denied, but the Supreme Court granted the motion and remanded the case to the Appellate Division for action. The Appellate Court reversed, finding that the Tort Claims Act requirements to file a notice of claim did not apply to a CRA claim. Owens v. Feigin, 394 N.J. Super. 85 (2007). The Supreme Court granted certification.
The Justices unanimously upheld the appellate decision after reviewing the legislative history of the CRA and finding that the legislature intended to create a new cause of action whose only procedure requirements were that the lawsuits may be filed in Superior Court and that a jury may be requested. N.J.S.A. 10:6-1 (d)(2004). There was nothing in the text of the CRA or its legislative history to suggest that a Title 59 Notice of Claim was required. The ruling was not a surprise since the High Court had already held that Title 59 notice requirements did not apply to the Law Against Discrimination. Fuchilla v. Layman, 109 N.J. 319, 337-38 (1988).
In order to recover damages for pain and suffering against a public entity, a plaintiff must demonstrate (1) an objective permanent injury and (2) a permanent loss of a bodily function that is substantial. N.J.S.A. 59:9-2 (d); Brooks v. Odom, 150 N.J. 395 (1997). An injured plaintiff does not have to meet the threshold if the public employee’s “conduct was outside the scope of his employment or constituted a crime, actual fraud, actual malice or willful misconduct.” N.J.S. A. 59:3-14 (b).
In Toto v. Ensuar et. al (WL 2961896 2008 ), an expert witness and two sheriff’s officers had a confrontation in a courthouse resulting in the arrest of the witness. The plaintiff in the subsequent lawsuit alleged that the defendants had engaged in willful misconduct causing plaintiff to suffer soft-tissue injuries and emotional distress. It appears that plaintiff sought damages under the tort of false imprisonment/false arrest. At trial, plaintiff contended that he should not have to meet the Title 59 threshold against the defendants if the jury found that defendants engaged in willful misconduct, but the trial judge did not agree and charged that plaintiff would have to meet the threshold to recover. While the jury found that one defendant engaged in willful misconduct, it concluded that plaintiff did not meet the threshold. The Appellate Division upheld the trial court’s ruling. The Supreme Court granted certification.
On its face, the holdings of the lower courts do not comport with the clear language of the statute. The problem was created by DelaCruz v. Borough of Hillsdale, 183 N.J. 149 (2005), which held that the Title 59 Threshold did apply to a plaintiff’s claims for false arrest and false imprisonment. The lower courts in Toto correctly perceived that DelaCruz was an obstacle to dispensing with the threshold.
In an opinion authored by Justice Hoens, the High Court held the threshold did not apply to the plaintiff’s claim because it was exempted by the clear language of the statute. DelaCruz was distinguished because willful misconduct was not the issue decided in the case. According to the Supreme Court, it did not “intend to imply that the verbal threshold must be satisfied for a false arrest/false imprisonment claim when the jury finds that the public employee committed willful misconduct.” This is a tough sell since false arrest and false imprisonment are intentional torts. One may only conclude that DelaCruz remains good law only in those cases where false imprisonment was not the consequence of willful misconduct. While Justice Hoens and her colleagues did not overtly overrule DelaCruz, they disassembled it, boxed it and shipped it to storage.
The Supreme Court also held that “the objective good faith defense contained in N.J.S.A. 59:3-3 do not apply to claims for false imprisonment and false arrest.”
Uninsured and Underinsured Motorist Coverage is a vital component of an automobile insurance policy because it provides financial protection against serious injuries caused by drivers without any coverage or with lower policy limits. Many drivers with high liability limits understand that this protects their assets but fail to secure the same limits for UM/UIM because they do not understand and appreciate the importance of this first-party protection. Trial lawyers frequently see cases of devastating harm caused by underinsured and uninsured drivers where the injured parties do not have the same limits for UM/UIM that they have for liability coverage in their automobile policies.
A significant cause of this problem is that the insurance industry does not want to provide high limits of UM/UIM coverage because it insures against the negligence of high-risk drivers. There is no effort made by carriers, brokers or agents to educate their customers about the importance of this first-party coverage because it is not profitable to do so. You will never see the GEICO gecko hawking higher UM/UIM limits.
The common industry practice of selling automobile policies to customers with higher liability limits than the UM/UIM limits led to litigation holding carriers, agents and brokers legally responsible for the possible consequences. Carriers believed that the litigation was driven by policy holders with buyer’s remorse who had simply been unwilling to pay higher premiums but wanted the best benefits after an accident.
Insurance industry lobbyists ran to the legislature and secured the passage of a law providing immunity against claims for failing to provide adequate information about the election of different levels of coverage in automobile policies, N.J.S.A. 17:28-1.9(a). In order to qualify for immunity, carriers, agents and brokers were only required to provide the required minimum coverage and obtain properly executed coverage selection forms from the consumer. Immunity would not apply only in the event of willful, wanton or grossly negligent conduct, N.J.S.A. 17:28-1.9 (b). The information about the coverage was provided in Buyer’s Guides supplied by carriers. N.J.S. A. 39:6A-23. The courts described this as “blanket immunity.” Strube v. Travelers Indem. Co. of Ill., 277 N.J. Super 236, 242 (App. Div. 1994). In one false swoop, the industry was able to continue its business practice of selling automobile policies with lower UM/UIM limits than the liability limits without any legal accountability for providing inadequate information about the consequences of these choices.
The plaintiff in Pizzullo v. N.J. Mfrs., Insurance Co, was a long-time NJM insured who had historically obtained policies with $500,000 in liability and UM/UIM. In 1988, after the insured’s wife purchased a new car, the plaintiff called NJM and told the customer service representative that he wanted to purchase a separate policy in his wife’s name so she would have the same protection he did. The representative advised the plaintiff that it was not NJM’s practice to issue separate policies for a husband and wife but “he could accomplish the same exact coverage for her simply by adding her new car to the existing policy.” The information relayed by the sales representative was not factually accurate. After plaintiff added his wife’s car to his policy, the two insured’s were limited to a total of $500,000 per accident in UM/UIM benefits. If the husband and wife were injured in the same accident, they would not each be entitled to $500,000 in UM/UIM benefits.
The two plaintiffs paid separate premiums for the policy that approximately doubled what was previously paid for the single policy. The sale’s representative’s erroneous explanation was not cleared up by the insurance documents. The face sheet simply noted $500,000 in UM/UIM without the notation “per accident.” The liability limits designation in the face sheet did state “per accident.” The Buyer’s Guide and the Coverage Selection Forms provided each year did not specifically explain the limitation. The actual text of the policy did provide an explanation of the “per accident” limitation on the benefit.
According to the record below, the defendant’s sales representative had been trained by her managers to relay the information just as she did. The defendant’s corporate representative conceded in his trial testimony that the service representative’s inaccurate explanation could be seen as “a disservice to the customer.”
In 1998, the husband and wife were seriously injured in a motor vehicle accident and obtained the liability limits of the tortfeasor’s policy. When the two insureds sought additional UIM coverage up to an individual limit of $500,000, NJM advised them they were subject to a single limit of $500,000. Plaintiffs filed a declaratory judgment action seeking $1,000,000 in total UIM coverage. NJM conceded that their service representative provided inaccurate information to the plaintiff but claimed immunity under N.J.S.A. 17:28-1.9(a).
The trial judge held that NJM was not entitled to immunity because the case did not involve the defendant’s failure to inform the insured of his coverage options. The case dealt with a misrepresentation about the option plaintiff actually selected. While the trial court refused to reform the policy, it held that defendant was equitably estopped from denying coverage because plaintiff had justifiably relied on the defendant’s misrepresentations of fact.
The Appellate Division reversed holding that defendant was entitled to immunity because it satisfied the statute’s requirements. The coverage was in excess of the required minimum, the defendant had complied with the notice requirements and the defendant had not engaged in willful wanton misconduct. The Supreme Court granted the plaintiff’s petition for certification.
A unanimous Supreme Court reversed. Justice Hoens noted in the opinion that the purpose of N.J.S.A. 17:28-1.9 (a) was to extinguish liability for failing to advise customers of the availability of additional UM/UIM coverage. Justice Hoehns concluded that this is not what happened in this case. Plaintiff knew what his option was; he was simply trying to enforce what he was told he had purchased. Therefore, the immunity did not apply.
The High Court also believed that the record below established that the insureds had a reasonable expectation that a total of $1,000,000 in UIM coverage was provided based on the statements of the service representative. The consumer’s expectations were not informed to the contrary by the declaration page, the Buyer’s Guide and the coverage selection form which failed to contain a clear unambiguous explanation of the single limit per accident scenario. The plaintiffs were entitled to the benefit of the coverage they believed they had obtained.
The Supreme Court decided not to reach the issue of whether or not the carrier was equitably estopped from avoiding coverage based on its affirmative misrepresentations.
In Villa v. Short, 195 N.J. 15 (2008), a mildly retarded man, residing with his parents, sexually abused his niece on different occasions between 1983 and 1988. A single event occurred on a vacation and the other acts occurred in the parents’ New Jersey home. The victim filed a law suit against the perpetrator and included the parents as defendants on a theory of negligent supervision. The parents requested their homeowner’s carrier, Allstate, to defend and indemnify. Allstate disclaimed on grounds that the policies had exclusion for intentional and criminal acts. The parents filed a third-party complaint against Allstate seeking a declaratory judgment action that coverage should apply.
There were two policy forms in effect for the years in question. Each had the same exclusionary clause for “bodily injury expected to result from the intentional or criminal acts of “an” insured person. The first policy had a severability clause providing that the “insurance applies separately to each insured person.” The second policy eliminated the severability language and substituted a “joint obligations clause.”
The problem was a simple one. The parents had not engaged in any intentional misconduct and wanted the homeowner’s carrier to defend and indemnify them against the allegations of negligence in the complaint. The parents argued that the terminology “an” insured in the exclusion clause was ambiguous because a reasonable policyholder would interpret this to mean “each” insured, eliminating coverage only for the person committing the intentional act. The father believed that the severability clause in the first policy led any reasonable insured to believe that the exclusion would only apply to the insured committing the intentional act. The carrier argued that “an” insured was synonymous with “any” insured. Allstate sought an expansive interpretation of the exclusion clause that eliminated the rights of any insured under the policy if any one insured engaged in an intentional or criminal act.
The trial court dismissed the parents’ declaratory judgment action on summary judgment on grounds that the policies did not provide coverage. The Appellate Division affirmed, holding that the son was “an insured person” under the policy and the losses that flowed from these intentional acts excluded coverage for all insureds, including the parents. The courts below did not believe the severability clause in the earlier policy had any impact on the application of the exclusionary clause. The Supreme Court granted the parents’ petition for certification.
The Supreme Court affirmed by a vote of 4-2 in an opinion written by Justice Wallace. The majority believed that the exclusionary clause was clear and unambiguous, eliminating all insureds from coverage for intentional acts committed by another insured. The court did not find that the severability clause had any direct bearing on the exclusions in the policy. This clause only made coverage available to every insured up to the limits delineated on the declaration page.
The appellants had also argued that their son’s disability rendered him incapable of appreciating the nature of his actions. There was no testimony produced at the hearing below to support this allegation. The courts below noted that in assault cases, intent is inferred from the action. In a supplemental brief submitted to the Supreme Court, the parents attempted to argue that their son could not have intended his acts to be intentional due to his mental disability. The court refused to consider the issue because it had not been raised in the petition for certification.
Two dissenters, Justices Long and Hoens, opined that that the language of the exclusionary clause had only one reasonable interpretation, “that coverage is precluded in respect of an insured only when that insured commits an intentional act.” In support of this conclusion, the Justices referenced the language in the first policy’s severability clause that supported the plaintiffs’ claim that their right to coverage should be evaluated separately from the intentional actor.
The rule of exclusion in homeowner’s policies is, intentional as to one, intentional as to all.
Our courts have been strict about voiding insurance policies obtained with applications containing material misrepresentations. Our Supreme Court has stated categorically that “[a]n insurer is entitled to relief when it relies on incorrect information provided by an insured in an insurance application if the information was material either to the insurer’s decision to insure or to the terms of the contract.” Mass. Mut. Life. Ins. Co. v. Manso, 122 N.J. 104 (1991).
This principle has also been applied to the rescission of automobile insurance policies, even when an injured member of the insured’s household did not participate in the transmission of false information in the application process. Palisades Safety & Ins. Ass’n v. Bastien, 175 N.J. 144 (2003). The consumer in Palisades lied on his insurance application, stating he was single and the only driver of his motor vehicle in his household, when he was married and his wife used the automobile on a regular basis. The omission resulted in a much lower premium. There was no evidence presented in the record that the wife knew of the misrepresentation. During the policy period, defendant’s wife was injured in an accident while driving her husband’s car and filed a claim for PIP benefits under her husband’s policy. Pallisades filed a successful declaratory judgment action voiding the husband’s policy because the material misrepresentation terminated any right that the wife as a first-party insured had under the policy. Both the Appellate Division and the Supreme Court affirmed.
In Rutgers Casualty Ins. Co. v. Robert Lacroix and Chrissy Lacroix, 194 N.J. 515 (2008), the carrier had solid precedent on its side when it sought to rescind an automobile policy issued to defendant Robert Lacroix, who deliberately failed to reveal that his eighteen-year-old daughter, Chrissy, lived in his household and drove his car. After the daughter was seriously injured driving her father’s car, resulting in hospitalization and surgery, she sought PIP benefits from the carrier. The father candidly told the carrier’s investigator that the motive for the nondisclosure was a $500 saving in the premium. Plaintiff filed a declaratory judgment action and defendants counterclaimed for benefits.
During the trial of the declaratory judgment action, the father did not dispute the fact that he had deliberately misled the carrier in the application. The daughter testified that she had little knowledge about automobile insurance and was totally unaware of what her father did in the application. The trial judge held that the policy was void ab initio and that coverage was not available to any other resident members of the household. Defendants appealed.
The Appellate Division fixed its sights on different precedent and reversed. In Fisher v. N.J. Auto. Full Ins. Underwriting Ass’n., 224 N.J. Super. 552 (App. Div. 1988), the consumer misrepresented on his application that his car was registered when it was not. Plaintiff, who was not a member of the insured’s household, was injured in an accident while riding in this vehicle as a passenger. The carrier advised the owner of the vehicle that the policy was void and refused to provide the passenger with PIP benefits. The injured passenger brought an action against the carrier to recover her medical expenses which was dismissed by the trial court on the carrier’s summary judgment motion. The Appellate Division reversed, holding that even though the policy was void due to the insured’s misrepresentations, the carrier could not avoid liability to plaintiff for PIP by declaring the policy void after the accident. The appellate court held that voiding the policy because of the misdeeds of the insured could not be a basis for denying PIP benefits to an innocent third party.
The appellate court in Rutgers Cas. Ins. Co. v. LaCroix, concluded the daughter, who had no knowledge or understanding about the policy or its application, was an innocent party entitled to the “minimum benefits” afforded by PIP.
The Supreme Court granted the carrier’s petition for certification and affirmed the appellate court decision. In a unanimous decision authored by Justice LaVecchia, the Justices refused to visit the sins of the father on the daughter, rationalizing its departure from prior precedent because “we have never turned a deaf ear to the equities when plainly innocent parties cry out for relief.” It distinguished Pallisades due to the daughter’s “subordinate status in her family’s hierarchy” which “would have inhibited her ability to cure her father’s insurance-related misdeeds.”
The Supreme Court remanded the case so that the trial court could determine if the minimum benefit of $15,000 should be provided or the higher limit of $250,000 in the event that the plaintiff had been treated for permanent or significant injuries at a trauma center after the accident. N.J.S.A. 39:6A-4.3.
However, there were no victory dances in the LaCroix household. The Appellate Division opinion had delivered a cautionary note to consumers by noting that the father was potentially liable to the carrier under the New Jersey Fraud Prevention Act, N.J.S.A. 17:33A-1-30, for compensatory damages, reimbursement of the medical expenses and additional premiums. ¦
Grayzel is a certified civil trial attorney and a partner with Levinson Axelrod of Edison.