Subrogating insurers often address waiver of subrogation clauses in the form contracts drafted by the American Institute of Architects. In ACE Am. Ins. Co. v. Am. Med. Plumbing, No. A-5395-16T4, 2019 N.J. Super. LEXIS 45 (App. Div.), ACE American Insurance Company (ACE) argued that the waiver clause in the AIA General Conditions form A201-2007 did not extend to the post-construction loss at issue. Adopting what the court termed the “majority” position, the Appellate Division held that, by reading §§ 11.3.5 and 11.3.7 together, the waiver applied to bar the insurer’s subrogation claim. The Appellate Court’s ruling makes pursuing subrogation against New Jersey contractors using AIA contract forms more difficult. Continue reading
The Superior Court of New Jersey, Appellate Division, recently held, in N. J. Transit Corp v. Sanchez, No. A-0761-17T3, 2018 N.J. Super. LEXIS 168 (December 4, 2018), that pursuant to N.J.S.A. 34:15-40(f) (Section 40) of New Jersey’s Workers’ Compensation Act (WCA), workers’ compensation carriers have, without question, the independent right to seek reimbursement from negligent tortfeasors for economic damages. The court’s ruling cleared up years of confusion regarding the scope of recoverability of workers’ compensation subrogation liens. As noted by the court, a carrier’s workers’ compensation lien is NOT affected by New Jersey’s verbal threshold and no-fault statutes. Continue reading
In Palisades at Fort Lee Condominium Association v. 100 Old Palisade, LLC, et al., 2017 N.J. LEXIS 845 (Palisades), the Supreme Court of New Jersey addressed how the discovery rule – which tolls the statute of limitations – applies in construction defect cases. The court clarified that, when a building has multiple owners, the statute of limitations begins to run when the first owner – be it an original or subsequent owner – in the line of building owners reasonably knew or should have known of the basis for a cause of action.
In Franklin Mut. Ins. Co. v. Castle Restoration & Constr., Inc., 2016 N.J. Super. Unpub. LEXIS 2300 (App. Div. Oct. 20, 2016), the Appellate Division of the Superior Court affirmed the dismissal of a subrogating property insurer’s claim based on New Jersey’s entire controversy doctrine, a doctrine that requires a party to litigate all aspects of a controversy in a single legal proceeding. Although the decision is unpublished and based on the specific factual circumstances of the case, the decision sends a cautionary reminder to insurers involved in a declaratory judgment action that they should not wait for the declaratory judgment action to be decided before taking action to protect their subrogation rights.
In Mayer v. Once Upon a Rose, Inc., 58 A.3d 1221 (N.J. Super. App. Div. 2013), the Appellate Division of the New Jersey Superior Court addressed the question of whether, despite the fact that the plaintiff had invoked the res ipsa loquitur (res ipsa) doctrine, the trial court properly granted a directed verdict in the defendant’s favor because the plaintiff did not have a liability expert. The Appellate Division held that the plaintiff did not need a liability expert to pursue its case because the matters at issue did not require scientific, technical or specialized knowledge. More importantly, the court addressed the level of proof required when a defendant seeks to defeat a plaintiff’s res ipsa claim by filing a motion for a directed verdict. The Appellate Division held that, although there was a theoretical possibility that the product at issue, a glass vase, was defectively manufactured, the trial court erred when it granted the defendant’s motion for a directed verdict.
The Mayer action arose out of a personal injury claim by a caterer who sustained injuries when a glass vase shattered and his hands were struck and cut by glass fragments from the vase. When the vase shattered, it was being carried across the room by a florist who was working at the same catered event. The evidence at trial included evidence that the vase had previously been used on numerous occasions and that, on the occasion in question, the florist checked all of the vases for chips and cracks, but found none. There was also evidence that the florist, while carrying the vase, was applying pressure to both sides of the vase with the palms of his hands.
At trial, the plaintiff invoked the res ipsa doctrine. As is discussed in the Mayer decision, the term “res ipsa loquitur” means “the thing speaks for itself.” The doctrine creates an inference of negligence when: 1) the occurrence itself ordinarily bespeaks negligence; 2) the instrumentality causing the injury was within the defendant’s exclusive control; and 3) the circumstances of the case do not indicate that the injury was the result of the plaintiff’s own voluntary act or negligence. When the doctrine applies, the jury can reasonably infer that, if due care had been exercised by the defendant, the mishap would not have occurred. Because the doctrine allows an inference of negligence, it places the burden of producing evidence on the defendant, the party who has superior knowledge of the causative circumstances of the incident. Once the plaintiff presents evidence sufficient to establish the three elements noted above, the plaintiff’s case should go to the jury unless the defendant’s proof in opposition to the plaintiff’s claim is so strong as to admit “no reasonable doubt as to the absence of negligence.” Consequently, under New Jersey law, a court should only direct a verdict against the plaintiff if the defendant produces evidence “that will destroy any inference of negligence, or so completely contradict it that reasonable men could no longer accept it.”
At the close of the plaintiff’s case in Mayer, the defendant moved for a directed verdict, arguing that it was entitled to judgment as a matter of law. Although the plaintiff was proceeding under a res ipsa theory, the trial court granted the defendant’s motion for a directed verdict because the plaintiff did not have an expert to establish that the way the florist carried the vase, and the amount of pressure placed on the vase by the florist’s hands, caused the vase to collapse. In addition, the court held that, because there was a possibility that the vase’s collapse was caused by a manufacturing defect, the plaintiff could not rely on a res ipsa theory.
The trial court’s finding that the plaintiff needed an expert addressed the first res ipsa element: whether the incident bespeaks negligence. The Appellate Division found that expert testimony was not required because, although it is common knowledge that glass is fragile, jurors can conclude for themselves that glass does not typically shatter on its own and jurors do not need an expert to tell them that excessive pressure placed on glass can cause glass to shatter. Based on the evidence presented at trial, the plaintiff, arguably, had sufficient evidence for a jury to conclude that the shattering of a vase is an incident that bespeaks negligence.
With respect to the second and third elements of a res ipsa claim, the Appellate Division noted that the vase had been in the defendant’s exclusive control up until the moment it exploded and it was undisputed that the plaintiff, himself, did not cause the vase to shatter. Because the plaintiff presented sufficient evidence to satisfy all three res ipsa elements, the Appellate Division found that the jury could reasonably infer that the defendant was negligent.
As the Appellate Division observed, where, as here, the plaintiff presents evidence of facts that furnish reasonable grounds for a jury to infer that the defendant was negligent, the plaintiff’s case should go to the jury unless the defendant’s countervailing proof is “so strong as to admit no reasonable doubt as to the absence of negligence.” The defendant’s proof did not meet that standard. As the Appellate Division noted, there was evidence at trial that the vase had been used on multiple occasions before the incident occurred. This evidence made it “highly conjectural” that the vase was manufactured with a glass defect. Although the possibility of a product defect could not be ruled out entirely, the defendant’s evidence failed to support a countervailing theory for the occurrence of the incident that destroyed any reasonable inference of negligence or so completely contradicted it that a reasonable juror could no longer accept the inference. In light of the fact that there was only a “theoretical possibility” that the glass was defectively manufactured, the Appellate Division held that the trial court erred when it granted the defendant’s motion for a directed verdict.
Based on the Appellate Division’s analysis, a plaintiff seeking to pursue a res ipsa theory should not reject the use of the theory simply because there is another, alternative theory of liability. If the incident at issue is one that ordinarily bespeaks negligence, the product or instrumentality causing the injury was within the defendant’s exclusive control, and there is no indication in the circumstances of the case that the injury resulted from the plaintiff’s own voluntary or negligent act, a plaintiff should be able to get the question of whether the defendant was negligent to the jury. A plaintiff proceeding under a res ipsa theory should be able to get to the jury even if there is a possibility that the product at issue was defectively manufactured. It is only when the defendant’s proof of a possible defect “destroys” any reasonable inference of negligence or so completely contradicts an inference of negligence that a court should, by granting a defendant’s motion for a directed verdict, preclude a plaintiff from pursuing a res ipsa theory.
Although the Mayer case addressed the application of the res ipsa doctrine in the context of a personal injury claim, the analysis in Mayer should apply with equal force to property damage claims that are based on res ipsa. The analysis should apply with equal force to property damage claims because, regardless of whether a plaintiff is pursuing a personal injury claim or a property damage claim, the elements the plaintiff needs to establish to invoke the res ipsa doctrine are the same.
When pursing a res ipsa theory, it is important to keep in mind that although a jury presented with a res ipsa case is permitted to infer from the facts that the defendant was negligent, it is not required to do so. Thus, even if a plaintiff’s evidence is sufficient to allow the plaintiff to withstand a defense motion for a directed verdict, the plaintiff’s evidence may not be enough to convince a jury that the defendant was negligent.
For more information regarding this alert, please contact Ed Jaeger (215.864.6322 / email@example.com) or Bill Doerler (215.864.6383 / firstname.lastname@example.org).