Renee Krampetz v. C&R Insurance Services LLC

• Court: New Jersey Superior Court Appellate Division
• Decided: November 14, 2024
• Docket: A-2909-23
• Status: Unpublished

Opinion

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION DOCKET NO. A-2909-23

RENEE KRAMPETZ AND SCOTT KRAMPETZ,

Plaintiffs-Respondents,

v.

C&R INSURANCE SERVICES, LLC, PATRICK ROSS, PATRICK O'BRIEN,

Defendants-Appellants. _________________________

Submitted November 7, 2024 – Decided November 14, 2024

Before Judges Mawla and Vinci.

On appeal from an interlocutory order of the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-2343-18.

Gordon Rees Scully Mansukhani, LLP, attorneys for appellants (Melissa J. Brown and Kevin M. Buttery, on the briefs).

Britcher, Leone & Sergio, LLC, attorneys for respondents (E. Drew Britcher, of counsel; Jessica E. Choper, on the brief). PER CURIAM

On leave to appeal granted by us, defendants C&R Insurance Services,

LLC, Patrick Ross, and Patrick O'Brien contest an April 26, 2024 order denying

their motion for summary judgment. We reverse for the reasons expressed in

this opinion.

In 2018, plaintiffs Renee and Scott Krampetz filed a medical malpractice

action against Brick Women's Physicians, P.C., and one of its doctors (the

medical defendants), "alleging deviations from accepted standards of obstetrical

care in connection with treatment rendered . . . ." In May 2020, plaintiffs

amended the complaint to include negligence claims against defendants for

failing to advise and provide the medical defendants with insurance coverage

"to safeguard them in the event of any claims." Plaintiffs alleged defendants

"were liable for the damages arising from [p]laintiffs['] claims against the

[m]edical [d]efendants due to [their] failure to advise the [m]edical

[d]efendants" on all viable insurance coverage options, resulting "in a lack of

insurance coverage for [p]laintiff[s'] claim." The medical defendants' answers

asserted cross claims against defendants for contribution, indemnity, and

settlement credit.

A-2909-23 2 In December 2023, the trial court granted in part plaintiffs' motion in

limine to bar defendants from introducing evidence regarding the liability of the

medical defendants. The court held "the sole issue to be determined at trial [is]

whether . . . [d]efendants deviated from the standard of care" and it preserved

defendants' ability to challenge plaintiffs' damages.

In January 2024, the medical defendants entered a "[s]ettlement

[a]greement and [j]udgment" with plaintiffs. It recited that the medical

defendants relied upon defendants "to advise them of the options for insuring

their risk for claims of medical malpractice of themselves and any employees

and physicians." And that the medical defendants "were not properly advised

and assert that [defendants] . . . had a duty required [as insurance brokers] . . .

to advise them, which" they breached. "As a result . . . [the medical defendants

were] without coverage to compensate for [plaintiffs'] . . . claims . . . ."

The settlement agreement allowed plaintiffs to take a judgment against the

medical defendants totaling $750,000. Plaintiffs would then "proceed against

. . . defendants . . . to establish liability on [defendants'] part . . . to enforce the

agreed [upon] damage claim herein against these defendants." The medical

defendants also agreed "to allow th[e j]udgment to be entered against them to be

enforced against defendants . . . ." Notably, the agreement contained a provision

A-2909-23 3 stating it constituted the entirety of the agreement between plaintiffs and

defendants, yet defendants never negotiated or signed the agreement.

Defendants moved for summary judgment dismissal of plaintiffs' broker

malpractice claim. They argued plaintiffs could not pursue their claims against

them because they lacked "liability and damages by the underlying tortfeasor

. . . ." Moreover, the medical defendants could not assign their professional

negligence claim against defendants to plaintiffs.

The trial court found defendants' contention there was no liability or

damages was "moot because [the settlement agreement had been filed as] an

order for judgment . . . with the [c]ourt, and . . . plaintiffs had properly been

assigned their rights from [the medical defendants] . . . ." Pursuant to N.J.S.A.

2A:25-1, "the person sued shall be allowed, not only all set-offs, discounts and

defenses [they] ha[ve] against the assignee, but also all set-offs, discounts and

defenses [they] had against the assignor before notice of such assignment was

given to [them]." The court found the medical defendants agreed they were

liable, and "as a result of their deviation there w[ere] injuries that were

proximately caused by their deviation to plaintiffs." Thus, "plaintiff[s] would

then have the right to demonstrate the deviations from the standard of care

w[ere] carried out by the broker defendants, resulting in the medical malpractice

A-2909-23 4 [for] defendants not having insurance coverage regarding the malpractice

claims."

Pursuant to Griggs v. Bertram, 88 N.J. 347, 364 (1982), the court

concluded "the only matter left before [it] stems from allegations set forth

against . . . [defendants], and whether the consented to damages are, in fact,

reasonable." Defendants retained the right to argue the damages were

unreasonable and "were not made in good faith, that it was some type of

collusion on the part of the [medical] defendants with . . . plaintiff in order to

come up with this $750,000." Damages would be addressed after the court

conducted a jury trial on liability.

I.

We review decisions granting summary judgment de novo. Samolyk v.

Berthe, 251 N.J. 73, 78 (2022). "[Q]uestions of law and the legal consequences

that flow from the established facts are reviewed de novo." Granata v.

Broderick, 446 N.J. Super. 449, 467 (App. Div. 2016) (citing Manalapan Realty,

L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).

Defendants claim the trial court erred in applying Griggs because that case

involved the duty owed by an insurer to defend an insured. 88 N.J. at 355. Here,

defendants were the medical defendants' insurance broker, not their insurer.

A-2909-23 5 Moreover, the trial court violated public policy because it improperly expanded

the duty of good faith imposed on the insurer in Griggs to include all claims for

breach of fiduciary duty or negligence.

Defendants also assert the trial court misapplied the law when it found the

settlement agreement sufficient to establish the damages needed to proceed with

the broker malpractice claim. The agreement concerned plaintiffs' damages due

to the medical defendants' conduct, not defendants' acts or omissions. Instead,

the court should have determined whether the medical defendants sustained

damages caused by defendants' breach of duty, not whether plaintiffs sustained

damages. The settlement agreement did not contain an assertion that medical

defendants suffered any damages, which is essential to establishing the broker

malpractice claim.

Defendants claim the medical defendants colluded with plaintiffs to avoid

exposure. However, by doing so, they violated defendants' due process rights

because they avoided establishing the medical defendants' liability, which is a

prerequisite to proving the broker malpractice claim against defendants. The

settlement agreement violated the Comparative Negligence Act, N.J.S.A.

2A:15-5.2, and the Joint Tortfeasors Contribution Law, N.J.S.A. 2A:53A-3,

which were "enacted to promote the fair sharing of the burden of judgment by

A-2909-23 6 joint tortfeasors and to prevent a plaintiff from arbitrarily selecting [their]

victim." Holloway v. State, 125 N.J. 386, 400-01 (1991).

II.

N.J.S.A. 2A:25-1 permits the assignment of tort claims arising out of

contracts. However, the assignment of other forms of tort claims prior to a

judgment, including professional malpractice claims, has historically been

considered invalid under New Jersey law. Conopco, Inc. v. McCreadie, 826

F.Supp. 855, 867 (D.N.J. 1993); see also DiTolvo v. DiTolvo, 131 N.J. Super.

72, 79 (App. Div. 1974) (noting the absence of a statute permitting the

assignment of a tort claim); Costanzo v. Costanzo, 248 N.J. Super. 116, 121

(Law Div. 1991) (holding "in New Jersey, as a matter of public policy, a tort

claim cannot be assigned").

Defendants were not party to the settlement agreement. The fact that the

settlement agreement was entered as a judgment by the court did not overcome

that defendants did not agree to the settlement. The trial court misapplied the

law because the medical defendants could not assign their professional

negligence claim to plaintiffs.

The trial court also erred when it analogized this matter to Griggs. As

defendants aptly point out, Griggs has nothing to do with the facts of this case,

A-2909-23 7 and its legal principles are inapplicable. There, the issue was whether an insurer,

which failed to notify its insured of the possibility of noncoverage, was estopped

from denying coverage of a claim against its insured. Griggs, 88 N.J. at 355.

Our Supreme Court held an insurer could be estopped from denying coverage,

despite clear contractual language excluding the claim from coverage, where the

insurer undertakes a defense knowing there is a basis for noncoverage without

reserving its rights to deny coverage later. Id. at 355-56. The Court held an

insurer has an obligation to deal in good faith with its insured both by

investigating a claim within a reasonable time, and through its duty of fair and

full disclosure between it and the insured. Id. at 360-61.

Defendants' relationship, and in turn their obligations to the medical

defendants, was entirely different. An insurance broker acts as a fiduciary to

the client. Holm v. Purdy, 252 N.J. 384, 404 (2022). The broker has "a duty to

advise insureds of their coverage needs where the insurer is aware of a particular

peril." Sears Mortg. Corp. v. Rose, 134 N.J. 326, 348 (1993). A "broker's duties

are . . . '(1) to procure the insurance; (2) to secure a policy that is neither void

nor materially deficient; and (3) to provide the coverage [they] undertook to

supply.'" Holm, 252 N.J. at 405 (quoting President v. Jenkins, 180 N.J. 550,

569 (2004)).

A-2909-23 8 Brokers "have a limited duty to a third party who is not the insured, but

who has nonetheless suffered harm by virtue of the broker's act or omission. "

Ibid. "If an agent or broker fails to exercise the requisite skill and diligence

when fulfilling those obligations, then there is a breach in the duty of care, and

liability arises." Ibid. "[T]he plaintiff must prove that in addition to being

negligent, the broker's negligence was a proximate cause of the loss." Harbor

Commuter Serv., Inc. v. Frenkel & Co., 401 N.J. Super. 354, 368 (App. Div.

2008); Regino v. Aetna Cas. & Sur. Co., 200 N.J. Super. 94, 99 (App. Div.

1985). There must also be "actual damages." Polzo v. Cnty. of Essex, 196 N.J.

569, 584 (2008).

The facts in the summary judgment record showed none of these legal

precepts were met. Rather, the medical defendants assigned their rights to

pursue a broker malpractice claim against defendants to plaintiffs without any

evidence the medical defendants suffered a loss or had actual damages due to

defendants' acts or omissions. This critical, missing component was fatal to

plaintiffs' claims against defendant and should have resulted in summary

judgment in defendants' favor and dismissal of the case.

Reversed. We do not retain jurisdiction.

A-2909-23 9