SOUTH BRUNSWICK FURNITURE, INC. VS. ACRISURE, LLC, ETC. VS. WILENTZ, GOLDMAN & SPITZER, PA (L-1090-15, MIDDLESEX COUNTY AND STATEWIDE)

• Court: New Jersey Superior Court Appellate Division
• Decided: March 4, 2020
• Docket: A-2981-17T1
• Status: Unpublished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NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION This opinion shall not "constitute precedent or be binding upon any court."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-2981-17T1

SOUTH BRUNSWICK FURNITURE, INC., LINDEN FURNITURE, INC., WOODBRIDGE FURNITURE, INC., and WILLIAM SCHAFER,

Plaintiffs,

v.

ACRISURE, LLC, d/b/a BECKERMAN & COMPANY,

Defendants,

and

LOUIS BECKERMAN & COMPANY, INC., d/b/a BECKERMAN & COMPANY, LBMCO CORP., d/b/a BECKERMAN & COMPANY, and MARK TORIELLO,

Defendants/Third-Party Plaintiffs-Appellants,

v. WILENTZ, GOLDMAN & SPITZER, PA, and GOLDSTEIN AND BACHMAN, PA,

Third-Party Defendants- Respondents. _______________________________

Argued January 24, 2019 – Decided March 4, 2020

Before Judges Fuentes, Vernoia and Moynihan.

On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-1090-15.

Kevin M. Eppinger argued the cause for appellants (Gold, Albanese, Barletti & Locascio, LLC, attorneys; Robert Francis Gold, of counsel and on the briefs; Kevin M. Eppinger, on the briefs).

Richard J. Byrnes argued the cause for pro se respondent Wilentz, Goldman & Spitzer, PA.

Eitan D. Blanc argued the cause for respondents Goldstein Bachman, PA (Zarwin Baum DeVito Kaplan Schaer Toddy PC, attorneys; Lisa Z. Slotkin, of counsel and on the brief; Eitan D. Blanc, on the brief).

The opinion of the court was delivered by

FUENTES, P.J.A.D.

Plaintiffs South Brunswick Furniture, Inc., Linden Furniture, Inc.,

Woodbridge Furniture, Inc., and William Schafer are business entities that sell

furniture to the public. When plaintiffs were named as defendants in a consumer

A-2981-17T1 2 fraud class action, they privately retained counsel and filed a separate

professional malpractice action against their insurance broker. In response, the

insurance broker filed a third-party legal malpractice action against the attorneys

who represented plaintiffs. The trial court granted the attorneys' motions to

dismiss the insurance broker's third-party complaint as a matter of law under

Rule 4:6-2(e).

In this appeal, the insurance broker argues the attorneys should have

advised plaintiffs they needed to report the consumer fraud lawsuit to their

insurance carrier in a timely fashion. Under these circumstances, the insurance

broker claims it is entitled to sue the attorneys for contribution under the Joint

Tortfeasors Contribution Law, N.J.S.A. 2A:53A-l to -5 (JTCL), and common

law indemnification. We disagree and affirm.

I

Defendants/third-party plaintiffs Louis Beckerman & Company, Inc.,

d/b/a Beckerman & Company, LBMCO Corp., d/b/a Beckerman & Company,

and Mark Toriello (Beckerman and/or Toriello) are plaintiffs' "long-time"

insurance brokers, who are responsible for determining and obtaining "the

proper insurance coverages" for plaintiffs' business operations.

A-2981-17T1 3 On February 24, 2015, plaintiffs filed a two-count civil complaint against

Beckerman alleging professional negligence and breach of contract. Plaintiffs

alleged Beckerman failed to timely notify plaintiffs' insurance carrier that issued

their Directors & Officers (D&O) policy of the pending claims and liability

exposure in the then ongoing consumer fraud suit. Plaintiffs first retained

Wilentz, Goldman & Spitzer, PA, (Wilentz firm) to represent them in the

consumer action. The Wilentz firm was later substituted by Goldstein and

Bachman, PA (Goldstein firm). Neither one of these firms advised plaintiffs to

investigate or otherwise determine whether the claims asserted against them in

the consumer fraud suit were covered under their D&O policy.

On April 1, 2015, Beckerman filed a responsive pleading to plaintiffs'

complaint that included a number of affirmative defenses. Sometime thereafter,

Beckerman discharged its original counsel and retained substitute counsel. On

December 2, 2016, the trial court granted Beckerman's motion to amend its

pleadings to file a third-party complaint against the Wilentz and Goldstein firms.

On January 13, 2017, the Wilentz firm filed a motion to dismiss the third-party

complaint as a matter of law pursuant to Rule 4:6-2(e). The Goldstein firm filed

its own motion to dismiss on January 17, 2017.

A-2981-17T1 4 After considering the arguments of counsel, the court granted Wilentz's

and Goldstein's motions to dismiss Beckerman's third-party complaint on

February 3, 2017. The judge found the law firms did not owe a duty of care to

Beckerman. The judge also concluded Beckerman did not have a legally

cognizable basis to assert a third-party claim for indemnification against the law

firms. Finally, the judge held Beckerman could not assert a claim for

contribution as joint tortfeasors against the law firms as a third-party plaintiff.

The judge denied Beckerman's motion for reconsideration on March 17, 2017.

Plaintiffs and Beckerman continued to litigate the professional negligence

and breach of contract claims. In a letter dated November 2, 2017, plaintiffs'

counsel advised the vicinage's Civil Division Manager that "the direct action

between [p]laintiffs and [d]efendants has been settled." The letter also indicated

that Beckerman intended to appeal the court's February 3, 2017 order dismissing

its third-party complaint against the law firms. In an order dated November 2,

2017, the trial court dismissed as "settled" the suit between plaintiffs and

Beckerman.

II

We review de novo a trial court's order dismissing a cause of action under

Rule 4:6-2(e) to determine whether the allegations in the complaint "suggest[]"

A-2981-17T1 5 a cause of action. See Printing Mart-Morristown v. Sharp Elecs. Corp., 116 N.J.

739, 746 (1989) (quoting Velantzas v. Colgate-Palmolive Co., 109 N.J. 189, 192

(1988)). Through this approach, we examine the complaint to ascertain whether

the basis of "a cause of action may be gleaned even from an obscure statement

of claim." Printing Mart, 116 N.J. at 746 (quoting Di Cristofaro v. Laurel Grove

Memorial Park, 43 N.J. Super. 244, 252 (App. Div. 1957)). Guided by this

standard of review, we describe the following salient facts.

In 2009, Beckerman recommended plaintiffs obtain a D&O insurance

policy from Twin City a/k/a The Hartford (Hartford). The policy at issue here

was renewed yearly until November 2013. The policy Hartford sold plaintiffs

was a "claims made" policy. Under such a policy, the insured is only covered

in the event a claim is made against them. The following section describes what

the insured needs to do to secure coverage:

(A) As a condition precedent to coverage under this Policy, the Insureds shall give the Insurer written notice of any Claim as soon as practicable after a Notice Manager becomes aware of such Claim, but in no event later than sixty (60) calendar days after the termination of the Policy Period, or any Extended Reporting Period as described in Section IX. Such notice shall specify the Coverage Part under which notice is being given.

On January 18, 2012, Christopher Wenger, the lead claimant in the

consumer fraud civil action against plaintiffs, alleged violations of the

A-2981-17T1 6 Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 to -206, and sought damages, civil

penalties, and other relief under the Truth in Consumer Contract, Warranty and

Notice Act (TCCWNA), N.J.S.A. 56:12-14 to -18. On June 8, 2012, before the

Wilentz firm filed a responsive pleading in this suit, plaintiffs' general manager

Michael Citron telephoned Beckerman's agent Mark Toriello to apprise him of

this pending litigation. Citron asked Toriello whether any of plaintiffs'

insurance policies covered the legal cost of defending against this lawsuit.

Toriello told Citron "he did not believe any of [p]laintiffs' insurance policies

would cover the Wenger lawsuit, however, Toriello requested Citron to forward

any legal documents and/or notices in Citron's possession to Toriello in order

for Toriello to file a claim with Hartford under the existing D&O policy."

At 10:08 a.m. later that same day, Toriello sent Citron an email

memorializing the request for legal documents he made during the telephone

conversation. Toriello told Citron that "[t]he policy was put into effect on

10/6/09 so it appears that the occurrence [of Wenger's lawsuit claims] falls

within the policy term." Toriello noted that upon receipt of any legal notice, it

was the duty of the insured to inform the insurer of any potential claims.

Toriello assured Citron that as Beckerman's agent, he would provide the

necessary documentation to Hartford "so that they can evaluate whether there is

A-2981-17T1 7 coverage should this claim accelerate." Seven minutes later, Will Schafer, the

president and owner of plaintiffs' business operations, emailed Toriello and told

him: "Mike call me on this before this gets reported." It is undisputed that: (1)

Citron did not send Toriello the legal documents he requested; and (2) Toriello

did not notify the insurer of the pending Wenger lawsuit.1

On July 5, 2012, the Goldstein firm replaced the Wilentz firm as plaintiffs'

counsel of record in Wenger's lawsuit. On August 2, 2012, Wenger filed a

second amended complaint to convert the lawsuit into a class action. Due to a

lack of insurance coverage, plaintiff used business funds to pay the cost of

defense and settlement. Against the factual backdrop, we will address the trial

court's legal analysis.

III

The motion judge found, and Beckerman does not dispute, that its

representatives were aware of Wenger's lawsuit "as early as June 2012." In this

light, we first address Beckerman's claims for indemnification against the two

1 The appellate record contains a copy of a letter sent by Hartford to Citron dated March 1, 2013, in which the carrier recites, in great detail, the history of plaintiffs' awareness of and involvement in Wenger's lawsuit. Hartford ultimately concludes that "there is no coverage under the [p]olicy" for the Wenger lawsuit and Hartford would not provide a defense or indemnity to plaintiffs. The denial of coverage was based on Beckerman's failure to file a timely claim on plaintiffs' behalf. A-2981-17T1 8 law firms. In our State, indemnity is available to a party when it is provided by

contract or awarded by a court as an equitable remedy. New Milford Bd. of

Educ. v. Juliano, 219 N.J. Super. 182, 185 (App. Div. 1987). When awarded by

the court, indemnity serves "to prevent a result which is regarded as unjust or

unsatisfactory." Ibid. Our Supreme Court addressed this issue sixty years ago:

The right of indemnity rests upon a difference between the primary and secondary liability of two persons each of whom is made responsible by the law to an injured party. It is a right which enures to a person who, without active fault on his own part, has been compelled, by reason of some legal obligation, to pay damages occasioned by the initial negligence of another, and for which he himself is only secondarily liable. The difference between primary and secondary liability is not based on a difference in degrees of negligence or on any doctrine of comparative negligence. It depends on a difference in the character or kind of wrongs which cause the injury and in the nature of the legal obligation owed by each of the wrongdoers to the injured person.

[T]he important point to be noted in all the cases is that secondary as distinguished from primary liability rests upon a fault that is imputed or constructive only, being based on some legal relation between the parties, or arising from some positive rule of common or statutory law or because of a failure to discover or correct a defect or remedy a dangerous condition caused by the act of the one primarily responsible.

[Adler's Quality Bakery, Inc. v. Gaseteria, Inc., 32 N.J. 55, 80 (1960) (quoting Builders Supply Co. v. McCabe, 366 Pa. 322, 325, 328 (1951)).]

A-2981-17T1 9 Beckerman argues the two law firms should be held primarily liable for

plaintiffs' damages. This argument absolves Beckerman from an insurance

broker's primary responsibilities: (1) to ascertain the insured's coverage needs;

(2) to procure policies that provide the necessary coverage; and (3) to take the

steps necessary to ensure coverage is available when the need arises. The

uncontested facts do not support this approach.

Indemnification is premised on a legal relationship between the parties,

under which a party who did not contribute to the injury is nevertheless legally

responsible to compensate the injured party. Plaintiffs do not claim they were

harmed by the law firms that represented them in the underlying case. Here,

plaintiffs claimed they were directly harmed by Beckerman's professional

negligence, as manifested by Toriello's failure to notify Hartford of the Wenger

suit in a timely fashion. The law firms did not represent Beckerman at any time

in these proceedings and Beckerman does not allege it relied on plaintiffs' legal

relationship with these firms.

IV

We next address the issue of contribution under the JTCL. The right of

contribution among joint tortfeasors is codified as follows:

Where injury or damage is suffered by any person as a result of the wrongful act, neglect or default of joint

A-2981-17T1 10 tortfeasors, and the person so suffering injury or damage recovers a money judgment or judgments for such injury or damage against one or more of the joint tortfeasors, either in one action or in separate actions, and any one of the joint tortfeasors pays such judgment in whole or in part, he shall be entitled to recover contribution from the other joint tortfeasor or joint tortfeasors for the excess so paid over his pro rata share; but no person shall be entitled to recover contribution under this act from any person entitled to be indemnified by him in respect to the liability for which the contribution is sought.

[N.J.S.A. 2A:53A-3.]

Contribution is available only when the parties meet the definition for

joint tortfeasors. Cherry Hill Manor Assocs. v. Faugno, 182 N.J. 64, 72 (2004).

Under the JTCL, joint tortfeasors are defined as "two or more persons jointly or

severally liable in tort for the same injury to person or property, whether or not

judgment has been recovered against all or some of them." N.J.S.A. 2A:53A-1.

In Cherry Hill Manor, the Supreme Court clarified the applicability of the

JTCL to attorney malpractice claims. 182 N.J. at 70. There, the plaintiff sued

its former attorney, Faugno, for legal malpractice. Id. at 69. The defendant-

attorney filed a third-party complaint against the plaintiff's prior attorneys

seeking indemnification and contribution under the JTCL. Id. at 69-71. The

previous attorneys moved to dismiss the third-party action as a matter of law,

arguing they could not be held liable for contribution because they did not meet

A-2981-17T1 11 the definition of joint tortfeasors under the JTCL. Id. at 69. The trial court

agreed and granted the prior attorneys' motions for summary judgment. Ibid.

When the underlying litigation between Cherry Hill and Faugno settled,

Faugno sought to resurrect his indemnification and contribution claims. Cherry

Hill Manor, 182 N.J. at 70-71. On appeal, this court reversed the trial court and

held that "as a matter of law, Faugno should be permitted to pursue his

contribution and indemnity claims under the Joint Tortfeasors Contribution Law

[against the former attorneys]." Ibid. The Supreme Court reversed this court's

ruling and reinstated the trial court's order granting summary judgment. Id. at

77. The Court found the JTCL was not applicable because there was no joint

liability between the parties and the injuries caused by the prior attorneys were

not the same as the injury caused by Faugno. Id. at 75-76.

The Court's holding in Cherry Hill Manor applies with equal force here.

Beckerman argues it and the law firms are jointly liable to plaintiffs because

they were both responsible to report the Wenger lawsuit to Hartford. This

argument is unavailing. Although Beckerman and the law firms may share some

responsibility for the failure to report the insurance claim, this does not answer

the question of whether there is joint liability under the JTCL. As the Court

noted in Cherry Hill Manor, "joint, common or concurrent negligence" does not

A-2981-17T1 12 provide for joint liability under the JTCL. Id. at 72. There must be common

liability when the plaintiff's cause of action accrues. Ibid.

Here, plaintiffs retained the Wilentz firm between January 18, 2012 and

April 20, 2012. The Wilentz firm's ostensible negligent failure to advise

plaintiffs to report the Wenger lawsuit to Hartford arose during that time period.

Beckerman's negligence occurred on or after June 8, 2012, when Toriello failed

to file a claim with Hartford, putting the insurer on notice of the existence of the

Wenger lawsuit, as required by plaintiffs' D&O policy. The Goldstein firm did

not substitute the Wilentz firm as attorney of record until July 5, 2012. The

basis for the malpractice action, the failure to advise plaintiffs of the need to

report the Wenger lawsuit to Hartford, arose after that date.

These uncontested facts do not show common liability among the parties

when plaintiffs' cause of action accrued. Each alleged negligent act was distinct

and occurred at separate times. The same factors that precluded Faugno from

satisfying the standard for joint liability in Cherry Hill Manor preclude

Beckerman from satisfying the standard for joint liability in this case. 182 N.J.

at 73.

Beckerman's remaining arguments lack sufficient merit to warrant

discussion in a written opinion. R. 2:11-3(e)(1)(E).

A-2981-17T1 13 Affirmed.

A-2981-17T1 14