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New Jersey Property-Liability Insurance Guaranty Association v. State

Decided: January 4, 1982.

NEW JERSEY PROPERTY-LIABILITY INSURANCE GUARANTY ASSOCIATION ET ALS., PLAINTIFFS,
v.
STATE OF NEW JERSEY ET ALS., DEFENDANTS



Gibson, J.s.c.

Gibson

This is a declaratory judgment action in which the central issue is whether foster parents are considered employees of the State for purposes of the New Jersey Tort Claims Act, N.J.S.A. 59:1-3. Based on common-law principles as well as statutorily based public policy, it is the conclusion of this court that they are. The issue comes before the court as a result of plaintiffs' motion for summary judgment. R. 4:46-2. The facts which are material to that motion are not in dispute and are summarized below.

Between 1971 and 1978 Elwood and Lillian Bell acted as approved foster parents for the State of New Jersey. In July 1978 their names appeared on a list of qualified persons willing to accept foster children on an emergency basis. On or about July 22, 1978 Atlantic City police found two juveniles, Nathaniel Murray and his sibling, apparently abandoned. The children were turned over to the Division of Youth and Family Services (hereinafter DYFS), which, in turn, placed the children with the Bells on a temporary basis. A complaint was then filed with the Juvenile and Domestic Relations Court of Atlantic County seeking

the appointment of DYFS as guardian for the children. The application was approved. Pursuant to that court order and the prior placement, the children remained with the Bells until the natural parents were located.

On July 30, 1978, while still with the Bells, Nathaniel was injured when a bucket of hot water accidentally spilled on him. When he was returned to his natural parents they instituted suit in the Law Division of the Superior Court seeking damages against both the State and the Bells. A defense was entered in behalf of the Bells through the New Jersey Property-Liability Insurance Guaranty Association, predecessor to the Bells' carrier under a homeowners' policy. The State was represented by a carrier under a policy covering "Foster Parents Personal Liability," but refused to defend the Bells. As a consequence, the Guaranty Association instituted a separate suit in the Chancery Division seeking to compel the State to assume the defense of the Bells and to indemnify them for any loss. Those two cases were later consolidated. The Guaranty Association and the Bells now move for summary judgment.

Under the terms of the New Jersey Tort Claims Act the Attorney General is required to defend any state employee who is sued as a result of an act or omission which occurred while the employee was within the course of employment. N.J.S.A. 59:10A-1. If wrongfully refused, the employee is entitled to indemnification for defense costs plus reimbursement for any judgment or settlement. N.J.S.A. 59:10-2. The State contends that the Bells may not benefit from these provisions because they were not employees, but rather independent contractors. Under the definition section of the statute "employee" is defined as follows:

"Employee" includes an officer, employee, or servant, whether or not compensated or part-time, who is authorized to perform any act or service; provided, however, that the term does not include an independent contractor. [ N.J.S.A. 59:1-3]

Although this definition is quite broad, it does not, by itself, answer the question posed here. An examination of common-law principles is necessary.

In order to ascertain the status of an individual worker for purposes of determining vicarious liability or the availability of statutory benefits, one most normally look to a combination of factors. 1 Restatement, Agency 2d, § 220 (1958). The number and variety of such factors may be considerable, and a great deal of litigation has resulted from their application. In fact, it has been said that disputes over classification have "probably produced more reported cases than any definition of status in the modern history of law." Larson, The Law of Workmen's Compensation , § 43.10 at 81 (1980). Nevertheless, there do not appear to be any reported cases which deal with the status of foster parents. The only reported decision dealing with status under the Tort Claims Act involves a municipal attorney. He was held to be an employee, but no reasons were given. Martin v. Rochelle Park Tp. , 144 N.J. Super. 216 (App.Div.1976).

Under common law, one of the most critical and frequently cited guidelines in the area of worker classification is that of "control." 41 Am.Jur. 2d, Independent Contractors , § 5 (1968). The decisive question in that regard is who has the right to direct what shall be done, and when and how it shall be done. Id. at 744. In the case at bar there was a written agreement between DYFS and the Bells which purports to reflect their relative responsibilities. An examination of that agreement reveals the fact that the control maintained by DYFS was considerable. Although the Bells were responsible for providing the child with a normal, wholesome home life, DYFS retained the ability to remove the child without the foster parents' consent at any time; to approve vacation and visiting schedules; to approve important medical decisions; to provide the child with a clothing allowance; to pay for medical and dental care, and to control the incurring of any expenses for which the foster parents would seek reimbursement. Despite the ...


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