Credit: Cinematic Boy/

A New Jersey appeals court has upheld a $2 million malpractice verdict against an insurance broker for underestimating the replacement cost of a bowling alley.

The appeals court rejected a challenge to the verdict by Brouwer Hansen and Izdebski Insurance Associates of Toms River. BHI’s claims on appeal were without merit, the panel said in Loyle Lanes Bowling Center v. Greater New York Mutual.

The plaintiffs owned a bowling alley in Vineland that was destroyed by fire in 2010. The owner of a competing bowling alley pleaded guilty to setting the Loyle Lanes building on fire. The bowling alley was not rebuilt because the cost of constructing a new facility was estimated at $6.4 million but the owners’s policy with Greater New York Mutual Insurance Co. provided $3.425 million for replacing the building, $200,000 for building contents and $400,000 in business interruption coverage, for a total of just over $4 million.

The plaintiffs claimed that a BHI employee, David Stanton, who sold them their policy in 1998, negligently provided erroneous advice that their policy limits were sufficient to cover the full replacement cost of the bowling center, even after extensive renovations and replacement of equipment. After purchasing the policy, the bowling alley owners obtained an appraisal that estimated the replacement cost of the building and equipment at $3.65 million.

At trial, a co-owner of the bowling alley, Charles Loyle, said he had given Stanton a copy of the appraiser report, citing his notes from the meeting. BHI’s lawyer objected, arguing that no such notes were produced by plaintiffs in discovery. Loyle said he had two notes concerning his meetings with Stanton in 1998. Superior Court Judge Darrell Fineman, in Cumberland County, conducted a Rule 104 hearing about the late production of the notes, and concluded that Loyle did not intend to deceive anyone by withholding the notes and that they did not substantially change the theory of the case.

Loyle testified that the first note refreshed his memory about his interactions with Stanton, and that he gave Stanton the appraisal report. He also testified that the second note refreshed his recollection that Stanton calculated the replacement value of the building and equipment at $3.1 million.

A jury awarded Loyle Lanes $1,998,808 on malpractice claims against BHI. On appeal, BHI claimed the trial court erred by permitting the plaintiff to introduce testimony and evidence based on the two notes not produced in discovery.

On appeal, Judges Mitchel Ostrer, George Leone and Francis Vernoia concluded there was no basis to conclude that Fineman abused his discretion by allowing testimony concerning the 1998 notes and introduction of the notes into evidence.

“The record supports the court’s determination following the hearing that Charles’s failure to produce the notes during discovery was not the result of any design to mislead,” the panel said in an unsigned opinion. “Charles’s testimony concerning the 1998 notes did not alter plaintiffs’ theory of the case or surprise BHI in a manner requiring the exclusion of the evidence. This case does not resemble the cases cited by BHI where exclusion was required.”

The New York solo practitioner who represented the bowling alley owners, Raffi Momjian, declined to comment on the ruling. The lawyer who represented BHI, Patricia Henrich of Reilly, Janiczek, McDevitt, Henrich & Cholden in Merchantville, did not return a call.