On appeal from the Superior Court, Law Division, Hudson County.
Morton I. Greenberg, J. H. Coleman and Havey. The opinion of the court was delivered by Greenberg, P.J.A.D.
[208 NJSuper Page 236] This case comes on before this court on appeal from an order entered in the Law Division following the remand of this case for trial by the Supreme Court in Wunschel v. City of Jersey City, 96 N.J. 651 (1984). Inasmuch as the background of the matter was fully set forth by the Supreme Court we will not repeat it. In fact there was no trial on the remand as plaintiffs' case was settled for $175,000 divided as follows: $75,000 paid directly by the City of Jersey City, $75,000 paid by Appalachian Insurance Company, the insurance carrier for the city for the tort claim, and $25,000 paid by Nationwide Insurance Company, the homeowner's insurance carrier for Arnold Sachs.*fn1 Following the settlement, Great American Insurance Company, the workers' compensation carrier for A.A.A. Uniforms, Inc., which had been held responsible under the compensation act as an employer of the decedent for survivorship benefits for the same events settled on the remand, asserted a lien under N.J.S.A.
34:15-40 on the proceeds of the settlement. N.J.S.A. 34:15-40 provides in general that the payment of workers' compensation will not preclude a third party tort action by or on behalf of the employee but that, subject to certain expense sharing provisions, an employer or its insurance carrier paying workers' compensation shall receive the benefit of the third party recovery to the extent of the workers' compensation paid or owing. See Rivera v. Metropolitan Maintenance Co., 197 N.J. Super. 629, 636 (App.Div.1984). Great American conceded, however, that it had no lien against the $75,000 paid by the City itself and thus limited its claim to the other two segments of the settlement, the payments made by Appalachian and Nationwide.
The matter was then brought on in the Law Division on plaintiffs' motion seeking an order that the entire settlement of $175,000 was free of Great American's lien claim. The motion judge considered the matter was controlled by The Travelers Insurance Company v. Collella, 169 N.J. Super. 412 (App.Div.1979). In Travelers we ruled that when a person receives workers' compensation benefits from his employer's insurance company for injuries from an accident and later recovers a tort judgment against a municipal entity and its employee for the injuries, the workers' compensation carrier may not assert a lien against the tort recovery under N.J.S.A. 34:15-40. We reached that result as the New Jersey Tort Claims Act, N.J.S.A. 59:1-1 et seq., in N.J.S.A. 59:9-2(e) requires that the municipality receive the benefit of the compensation payments. In light of Travelers the judge granted plaintiffs' motion and thus on March 13, 1985 he signed an order providing that Great American could assert no claim against the settlement. Great American in the name of A.A.A. has appealed from that order.
Following the filing of the notice of appeal we decided Kramer v. Sony Corp. of America, 201 N.J. Super. 314 (App.Div.1985), holding that in a settlement of a claim under the New Jersey Tort Claims Act an insurance carrier insuring a municipality and its employee could agree with the injured party that he would continue to receive workers' compensation
payments for the same injury from his employer's insurance carrier thus precluding the assertion of a lien under N.J.S.A. 34:15-40. Great American does not ask us to reconsider Kramer and thus it limits the appeal: "to the sole issue as to whether or not the Twenty Five Thousand ($25,000) Dollars that was contributed to the settlement on behalf of defendant, Arnold Sachs, by his homeowner's insurance company, Nationwide Insurance Co., is or should be free of any lien as established under N.J.S.A. 34:15-40."
The ultimate issue on this appeal is which of the loss-shifting provisions of N.J.S.A. 34:15-40 or N.J.S.A. 59:9-2(e) is paramount when a private insurance carrier for a tortfeasor who happens to be a public employee settles a tort claim. Ordinarily, of course, there is no doubt but that if the tortfeasor is not a public entity or employee, N.J.S.A. 34:15-40 would govern. Here we see no reason why this usual rule should not apply. It is true that Sachs was a public employee at the time of the accident. But recognition of that circumstance does not end our inquiry for the New Jersey Tort Claims Act does not purport to establish the liabilities and immunities of a public employee in all of his endeavors. Rather the act is clearly concerned with conduct relating at least in some way to his employment for the act does not exonerate a public employee from liability or damages applicable to a private person if the conduct in question is outside the scope of his employment. N.J.S.A. 59:3-14. Thus a public employee could not assert an immunity under the tort claims act against a claim that as a result of negligent maintenance of his personal residence a social guest visiting him was injured. Accordingly we resolve this appeal by determining whether at the time of the incident Sachs was acting inside or outside the scope of his employment. See Cucci v. Jaldini, 141 N.J. Super. 297, 299-300 (App.Div.1976).
Here it is quite clear from the Supreme Court opinion that Sachs was acting outside of his employment when the decedent was shot. The facts as set forth by the Supreme Court show
that on June 27, 1975 at about 5:00 p.m., Sachs left the police station in order to pick up decedent at A.A.A. to continue the police work. 96 N.J. at 656. When Sachs entered A.A.A.'s shop around 5:00 p.m., decedent was behind a sales counter and Michael Dudziak, a Garfield police officer and a potential buyer, was in front of it. Ibid. After decedent asked Dudziak if he ...