Sentinel Insurance Company, Ltd. v. Earthworks Landscape Construction, L.L.C., A-0748-10T1; Appellate Division; opinion by Waugh, J.A.D.; decided and approved for publication August 16, 2011. Before Judges Carchman, Waugh and St. John. On appeal from the Law Division, Ocean County, L-3104-08, and New Jersey Department of Labor and Workforce Development, Division of Workers’ Compensation, CP 2008-23277. [Sat below: Judges Nemeth in the Law Division and Judge Berich in the Workers' Compensation Court.] DDS No. 39-2-3329 [13 pp.]

This appeal requires a determination whether the Law Division or the Division of Workers’ Compensation in the Department of Labor and Workforce Development is the appropriate forum for determination of a workers’ compensation insurer’s declaratory judgment action seeking rescission of a workers’ compensation policy on the grounds of misrepresentation.

Defendant Earthworks Landscape Construction is a limited liability company engaging in the business of landscape construction. Defendant Robert Tutela is a member of the limited liability company and also one of its employees. In 2008, Earthworks, acting through Tutela, filed an application with Sentinel Insurance Company for workers’ compensation insurance coverage. Included in the application were representations that Earthworks hired independent contractors to perform all “concrete, mason, and tree work” and that all of Earthworks employees performed their work at ground level. Pursuant to a subsequent written request by Sentinel, Tutela confirmed that all tree work, masonry work, and concrete work is subcontracted out to other companies. Sentinel issued the policy to Earthworks.

In June 2008, pursuant to a contract with Daystar-USM Exterior Services, Earthworks agreed to remove and dispose of six 50 feet dead oak trees from a building site. Tutela was injured while working on the tree removal. At the time, he was situated approximately 35 feet above the ground in a lift vehicle or bucket truck while pruning tree branches.

Earthworks notified Sentinel of the accident. Tutela filed an employee claim petition for temporary disability and medical benefits with the Compensation Division. Sentinel informed Earthworks that it disclaimed coverage “due to material misrepresentations made by the claimant himself as a member of the insured entity.”

Sentinel filed a complaint for declaratory judgment against Earthworks and Tutela in the Law Division. Sentinel sought rescission of the policy and a declaration that the policy was “null and void as it pertains to the claim of Robert Tutela.” Sentinel subsequently amended the complaint to add Daystar and the Uninsured Employers’ Fund (UEF) as defendants. The motion judge dismissed the complaint without prejudice and transferred it to the Compensation Division.

The judge of compensation found that the policy was valid under the workers’ compensation statute, but declined jurisdiction to void the policy.

Held: The Law Division judge did not err in dismissing the complaint without prejudice and transferring the issue to the Division of Workers’ Compensation for determination by it in connection with the adjudication of the compensation claim. The Compensation Division is an appropriate forum.

On appeal, Sentinel argues that the Law Division should have heard and determined its declaratory judgment action because it is a court of general jurisdiction, whereas the Compensation Division is an administrative agency of limited jurisdiction focused on the adjudication of claims for workers’ compensation benefits. Daystar argues that the Compensation Division had jurisdiction to determine coverage. It further argues that the Compensation Division actually determined that the Sentinel policy covered Tutela’s claim. Tutela argues that the Law Division correctly referred the issue of rescission to the Compensation Division.

The New Jersey Workers’ Compensation Act, N.J.S.A. 34:15-1 to -128, explicitly states that the Compensation Division “shall have the exclusive original jurisdiction of all claims for workers’ compensation benefits.” Since the statute permits a direct proceeding in the division against the carrier, it reasonably imports authority in the agency to decide whether the carrier covers the claim.

The appellate panel finds no error in the motion judge’s decision to transfer the rescission issue to the Compensation Division so that both matters could be decided in one proceeding. Although not prepared to hold that the Law Division did not have concurrent jurisdiction on the rescission issue, the appellate panel finds the judge’s order of transfer to consolidate the two related actions in an appropriate single forum was not an abuse of his discretion. The Compensation Division was the only such forum, inasmuch as the Law Division did not have jurisdiction over the compensation claim.

— By Debra McLoughlin

For appellant — Susan A. Lawless (Purcell, Mulcahy, O’Neill & Hawkins; Lawless and Alyssa K. Weinstein on the briefs). For respondents: Robert Tutela — Dawn Van Keuren (Goldenberg, Mackler, Sayegh, Mintz, Pfeffer, Bonchi & Gill; Van Keuren and Kenneth D. Mackler on the brief); Daystar-USM Exterior Services — Linda B. Celauro (McElroy, Deutsch, Mulvaney & Carpenter; Celauro and Michael J. Greenwood on the brief); Uninsured Employers’ Fund — Paula T. Dow, Attorney General (Ellen A. Reichart, Deputy Attorney General, on the statement in lieu of brief).