New Jersey Supreme Court Finds Worker's Compensation Compensability in Parking Lot Accident

The New Jersey Supreme Court recently awarded workers compensation benefits to an employee injured in an accident arising in the course of employment, overturning an earlier ruling by an Appellate Court. See Lapsley v. Township of Sparta, 2022 N.J. LEXIS 61 (Jan. 18, 2022). In this case, Plaintiff alleged that she was struck by a snowplow owned by the Township while walking in the parking lot also owned and maintained by the Township, Plaintiff’s employer.

Defendants filed a motion to dismiss arguing that Plaintiff’s claim was barred by the exclusive remedy provision of the Workers’ Compensation Act which was denied by the Law Division. Plaintiff then filed a summary judgment motion arguing that her injuries were not compensable under the Act. Defendants then filed a cross-motion for a stay and transfer of the matter to the Workers’ Compensation Division for a finding as to the compensability under the Act. Plaintiff then filed a claim for workers’ compensation benefits against the Township in the Workers’ Compensation Division. The Division found that the injuries “arose out of and in the course” of Plaintiff’s employment and were compensable under the Workers’ Compensation Act, N.J.S.A. § 34:15-36 and awarded benefits to Plaintiff. Id. at 9.

Plaintiff appealed and the Appellate Division found that Plaintiff’s injuries did not arise “out of and in the course of” employment because the Township exercised no control over Plaintiff’s use of the parking lot. Id. at 6. The Appellate Division relied in part on the Supreme Court’s decision in Novis v. Rosenbluth Travel, 138 N.J. 92 (1994) in considering the degree of control the employer exercised over the employee’s use of the lot. Id. at 9. The Appellate Court found that the Township did not exercise control over the parking lot because Township employees were never instructed on where to park or where to enter/exit the municipal complex. The Appellate Court concluded that a finding of compensability “would be an unwarranted and overbroad expansion” of liability for public employees. Id. at 10.

At the Supreme Court, Defendants challenged the denial of workers’ compensation benefits to Plaintiff and argued that the premises rule looks to the site of the accident and employer’s right to control the parking lot, not the degree of control it actually exercises for purposes of determining compensability. As such, Defendants argued that the Appellate Division’s decision would improperly expand public employers’ exposure to tort liability and employees’ eligibility for workers’ compensation benefits. Id. at 11. Of course, Plaintiff argued that the Township exercised no control of the parking lot and no control over her route to or from the municipal complex. Id.

In determining whether an accident arises “out of and in the course of employment,” the Supreme Court relied on Kriastiansen v. Morgan, 153 N.J. 298, 316 (citing N.J.S.A. 34:15-36) which states, that an injury that occurs “going to or coming from work arises out of and in the course of employment if injury takes place on the employer’s premises.” Id. at 4. Therefore, the fact that an employee finished work and is no longer on the clock does not preclude compensability.

The Supreme Court found that Plaintiff is, entitled to compensation under the Act. The site of the accident was the parking lot adjacent to the library where Plaintiff was employed as Plaintiff stepped off the curb directly into the parking lot. The Township controlled the parking lot through ownership and maintenance and the parties do not dispute the Township’s ownership and maintenance. Furthermore, the Township’s plowing of the lot further demonstrates the Township’s exercise of control over the lot. Id. at 5. The court affirmed the Division of Workers Compensation judgment awarding Plaintiff benefits. 

Clearly, Plaintiff’s goal was to avoid the more limited benefits under the workers’ compensation statute and to pursue a third-party claim against the co-employee operating the snowplow. However, the employer’s ownership and maintenance of the premises resulted in the unavoidable conclusion that this was indeed a work-related event.

New Jersey Supreme Court Addresses Belated Changes to Fundamental Theory of a Case

The Supreme Court of New Jersey recently addressed whether a premises liability claim under N.J.S.A. 59:4-2 of the New Jersey Tort Claims Act should survive summary judgment after the plaintiffs belatedly altered their factual theory of liability. See Top of Form

Stewart v. N.J. Tpk. Auth., 2022 N.J. LEXIS 117 (Feb. 9, 2022). In Stewart, plaintiffs had been injured when they lost control of their motorcycle while riding over an overpass.

Plaintiffs alleged they lost control of the motorcycle “when they struck a piece of metal in the bridge's expansion joint that jutted out of the roadway (the joint theory).” Id. at *26. Bottom of FormPlaintiffs filed a complaint against defendants, the New Jersey Turnpike Authority and Earle Asphalt, one of the Authority's paving and roadwork contractors. The parties engaged in two years of discovery, including plaintiffs requesting extensions seven times. During oral argument before the trial court on defendants’ joint motion for summary judgment, plaintiffs changed their theory of liability. For the first time, plaintiffs argued that defendants failed to properly pave a portion of roadway on the overpass, leaving a height differential in the pavement which caused them to lose control of the motorcycle (the asphalt theory).  The trial court declined to consider the new asphalt theory and granted summary judgment to defendants. The Appellate Division reversed, finding there existed a genuine issue of material fact based on a motorcyclist who had been riding alongside the plaintiffs and claims to have seen a piece of metal in the roadway.

The Supreme Court of New Jersey reversed the Appellate Division’s judgment and agreed with the trial court that plaintiffs’ new theory should not have been considered given how late it was presented. The Court found that the defendants could not reasonably anticipate that plaintiffs were going to change their theory of liability, since plaintiffs had not mentioned anything regarding the pavement in their complaint or throughout the 757 days of discovery. The Court found that, although parties could revise their theories throughout the litigation process, a change in theory as fundamental and as belated as the one in this case, would have been prejudicial to the defendants.

For the sake of completeness, the Court addressed whether there was a triable issue of material fact with respect to the asphalt theory, finding that there was not. The Court found that the motorcyclist’s testimony that he saw a piece of metal on the roadway may have supported the joint theory, but plaintiffs abandoned that theory and the testimony did not support the new asphalt theory. Furthermore, all of plaintiffs’ discovery disclosures refer “to some sort of metal protrusion rather than anything having to do with how the roadway was paved.” Id. at *23. The Court also found that plaintiffs failed to present any competent evidence showing the photographs show a height differential in the roadway. Accordingly, the Court found that plaintiffs failed to establish the first element of their Tort Claims Act premises liability claim, that the overpass was a dangerous condition.

Stewart teaches us that, although parties could revise their theories of liability, a change in the fundamental theory of the case is prejudicial to defendants. This is especially the case when discovery has been ongoing for a substantial amount of time and discovery has been geared towards a different theory.

Community Association Tort Immunity Saves the Day Again

Recently, our firm successfully obtained a dismissal for a community association in New Jersey by arguing that the association’s tort immunity provision in their bylaws applied to plaintiff’s claims and as such plaintiff’s complaint was barred as a matter of law.

New Jersey law (2A:61A-13) affords community associations the ability to amend their bylaws to provide for tort immunity against claims brought by unit owners that allege bodily injury caused by the association’s negligence. Despite this powerful tool, judges are often reluctant to dismiss a claim prior to any discovery. Even if a judge dismisses the negligence claims, they will often allow the gross negligence claim to survive which would still force the parties to engage in time consuming discovery only for the community association to seek dismissal again once discovery is complete as the burden to prove gross negligence is difficult to meet.

In the matter recently handled by our firm, plaintiff allegedly tripped and fell on a sidewalk that was maintained by the association. Plaintiff’s complaint alleged that the association was negligent, and plaintiff suffered great bodily harm as a result of their fall. Because the association had the appropriate tort immunity language in their bylaws, and plaintiff was a unit owner, the judge dismissed plaintiff’s complaint in its entirety prior to any discovery. Here, having an experienced community association attorney able to navigate the claim, interpret the relevant governing documents and prepare a motion that left no doubt that plaintiff’s allegations are barred provided a win for our firm, the community association and the association’s insurance carrier.

First-Party Property Concealment or Fraud

There are several forms of insurance fraud that can rescind insurance coverage for insureds’ claims. Generally, we witness such fraud contained in applications for insurance policies, staged accidents, and claims to health care providers rendering treatment to injured policy holders. To combat the rise in insurance fraud cases, insurers’ have implemented concealment or fraud provisions that authorize the insurer to deny coverage for a insurance claims by the insured if the insured intentionally concealed or misrepresented any material fact or circumstances or engaged in fraudulent conduct before or after a claimed loss.

In Yolanda Vargas v. SafePoint Insurance Company, 47 Fla. L. Weekly D171a (Fla. 3rd DCA 2022), Florida’s Third District Court of appeal recently addressed the interpretation of Homeowners’ insurance policy’s containing “Concealment or Fraud” provisions providing for forfeiture of coverage when an insured makes “false statements relating to this insurance.” The insured, YolandaVargas, reported a loss to her First-Party Insurance Carrier, SafePoint Insurance Company, resulting from water damage due to a plumbing leak. Safepoint’s corporate representative testified that SafePoint immediately requested repair invoices from any prior claims and photographs of the pre-loss condition of the property. Vargas failed to provide this information and, instead, submitted a sworn proof of loss with an itemized estimate of her property damage prepared by a public adjuster.

After conducting its own investigation, SafePoint denied coverage and Vargas commenced suit. Safepoint served Vargas with its first set of interrogatories asking Vargas to disclose any previous claim made on the property. Vargas responded by recalling a roof claim made ten years prior. Vargas did not disclose any prior claims involving water damage. In her deposition, Vargas stated that she had not made any prior insurance claims involving a plumbing leak on the property. After receiving these answers, Safepoint added an affirmative defense based on the “Concealment or Fraud” provision of the insurance policy. To support this affirmative defense, Safepoint deposed Christina Crossway, the corporate representative of Citizens Property Insurance Company. Crossway testified that Vargas made a prior claim on the property in 2013 for “a broken water pipe under the kitchen sink” resulting in “water damage to the kitchen cabinets.” The damaged areas listed under this prior claim included many of the same areas in the claim Vargas had submitted to Safepoint.

Safepoint moved for summary judgment based on the “Concealment or Fraud” affirmative defense. The motion asserted that Vargas had violated the concealment or fraud provision in the contract by failing to disclose the previous water leak in her deposition and interrogatory answers and by including damages from the previous claim in her sworn proof of loss. Vargas argued that while Safepoint had submitted evidence of a prior claim, it had submitted no evidence to counter Vargas's statement under oath that she did not recall the prior claim when giving her interrogatory answers and deposition testimony. The trial court granted Safepoint's motion for summary judgment.

The legal question addressed by the Third District Court of Appeal was whether the term “false statement” in this post-loss context means (1) incorrect statement or (2) intentionally incorrect statement as the insurance policy in question failed to define this term. The term “false statement” holds two distinct meanings, the first being “contrary to fact or truth” and latter being “deliberately untrue.” However, while “false” is included in both meanings, the more common usage of the word, certainly in the legal context, carries the connotation of an intentionally deceptive statement. The District Court of Appeal concluded that the term “false statement” in this post-loss context, includes an element of intent to mislead, which, in the case at hand, involves a genuine issue of material fact. The Third District Court of Appeal reversed and remanded trial court’s ruling. 

Policy provisions should be considered in direct and assignee claims when analyzing potential Motions for Summary Judgement, like the Concealment and Fraud provision involved in SafePoint Insurance Company.  Callahan and Fusco will continue to monitor court decisions on this issue.

New Jersey Contemplating New Legistlation to Force Insurers Into Quicker Settlements

The New Jersey legislature introduced late last year a potential bill that could affect both insurers and their customers. Senate Bill 1559 (where it has passed) and its companion Assembly Bill 1659 (undergoing a second reading in committee), named the “New Jersey Insurance Fair Conduct Act,” will establish a private cause of action for first-party claimants regarding certain unfair or unreasonable practices by their insurer.

Specifically, the bill defines “insurer” to mean any individual, corporation, association, partnership or other legal entity which issues, executes, renews or delivers an insurance policy in this State, or which is responsible for determining claims made under the policy. Further, the bill defines as “first-party claimants” as individuals injured in a motor vehicle accident and entitled to the uninsured or underinsured motorist coverage of an insurance policy asserting an entitlement to benefits owed directly to or on behalf of an insured under that policy.

According to the bill, a claimant may file a civil action in a court of competent jurisdiction against its automobile insurer for: (1) an unreasonable delay or unreasonable denial of a claim for payment of benefits under an insurance policy; or (2) any violation of New Jersey law preventing unfair or deceptive practices. For example, a claimant may file a cause of action for activities as unfair methods of competition and unfair and deceptive acts or practices in the business of insurance, including, but not limited to, unfair claim settlement practices and failure to maintain competent handling procedures. Moreover, upon establishing that a violation of the provisions of the bill has occurred, the claimant shall as a matter of law be entitled to: (1) actual damages caused by the violation including but not limited to, actual trial verdicts; and (2) prejudgment interest, reasonable attorney’s fees, and all reasonable litigation expenses.

If the bill becomes law this could greatly impact policies that have already been written by insurers as it provides yet another tool for plaintiff’s attorneys to leverage insurers and their defense counsel into settling earlier and at higher than usual rates because of the threat of a pending trial. Further, it creates a bigger rift between the insured and the insurer as insurance companies now have to underwrite their policies with the expectation that every insured is a potential claimant. This new concern will bear a higher cost to the consumer who is legally obligated to purchase insurance, leading to higher premiums.

All indications are that the Assembly will be voting to pass the law and it will be signed by Governor Murphy later this year. Given, the infancy of the law, it will now be in the hands of the courts to interpret the language laid out by the New Jersey Legislature. At this moment, it is unclear what would be considered “unreasonable delay” or “unreasonable denial”, nor is it certain what would be considered “unfair or deceptive practices” under the Act. As such, we must await the judiciary taking up these matters and setting the precedent for future practice.

The Limit Does Exist: Reinstating Complaints Have Deadlines

The New Jersey Appellate Division affirmed the lower court’s decision denying a plaintiff’s ability to reinstate her case against a defendant, as well as the subsequent Motion for Reconsideration, due to the exorbitant delay in seeking to prosecute the action for plaintiff’s alleged personal injuries.  See Valentin v. Pinckney, No. A-3678-19, 2021 N.J. Super. Unpub. LEXIS (App. Div. Dec. 15, 2021).  Specifically, the Appellate Court found that the plaintiff failed to demonstrate “good cause” for the lengthy delay for reinstatement for failing to prosecute the action within a reasonable amount of time.

In Valentin, the plaintiff filed suit against a defendant in August of 2012 for a motor vehicle accident that occurred in October of 2011; the defendant was allegedly the driver of the second vehicle which rear-ended plaintiff.  Following the filing of the complaint, plaintiff attempted to serve her complaint by process serve, but it was unsuccessful because the process server could not locate the defendant’s specific apartment; plaintiff failed to further investigate the defendant’s location in 2012.

Plaintiff’s case was dismissed, without prejudice, by the lower court for lack of prosecution on March 15, 2013. When the court dismissed the action, an internet search revealed several Newark addresses for the defendant and in April of 2016, plaintiff contacted the Newark Postmaster with the several Newark addresses for the defendant without any success.  Plaintiff started to serve all of the potential Newark addresses for the defendant and it was not until March 15, 2020—seven years after the dismissal—that defendant was successfully served at the address defendant listed on the October 2011 police report; plaintiff’s attorney promptly filed a Motion to Reinstate the Case.

The lower court denied plaintiff’s Motion to Reinstate the Case without oral argument emphasizing that plaintiff “did not ‘articulate[] a reason for the inordinate delay in moving to restore the matter’ and there was ‘no showing of good cause or exceptional circumstances to explain the gaps in activity to restore this [seven-plus] year[-]old matter.”  See Valentin, No. A-3678-19, 2021 N.J. Super. Unpub. LEXIS at *3.  The lower court subsequently denied the plaintiff’s Motion for Reconsideration as the plaintiff failed to meet the Reconsideration Standard.  This appeal ensued. 

The Appellate Division affirmed the lower court’s denial of both of plaintiff’s motions, without oral argument, finding the lower court did not abuse its discretion.  While New Jersey Courts have liberally indulged motions to reinstate complaints dismissed for lack of prosecution, if a defendant would be prejudiced by the reinstatement, it should be denied by the courts as in the Valentin action.  The Appellate Division agreed that the defendant would suffer prejudice by plaintiff’s exorbitant delay in serving and seeking reinstatement of the action as many medical records, witnesses, and other relevant evidence is lost in the more than seven years since the accident and chose to affirm the denial of reinstating the complaint. 

From a defense perspective, Valentin teaches us that matters dismissed for lack of prosecution are not always reinstated when a defendant can clearly articulate prejudice from the inordinate delay and when a plaintiff fails to utilize available alternatives for service of the complaint, reinstatement is not proper. Therefore, during a litigation, establishing that a defendant would be prejudiced by reinstating an old complaint when there is a lack of investigative material and evidence available for defendant to adequately defend against a plaintiff’s stale claims for personal injuries.