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Stockton v. Rhulen

June 17, 1997

EDWARD STOCKTON; TRACKSIDE BROKERAGE, INC., TRADING AS JOHN BOND BROKERAGE; NIA, LTD., TRADING AS THE HARNESS BROKERAGE AND THE WINNER'S CIRCLE; STANLEY PANCO; CELESTE TRACY; ALBERT FLORIO, JR.; DAVID N. WILKINSON, DORIS J. WILKINSON AND DAVID TODD WILKINSON; ANTHONY P. NINI; JOANN NINI; NARROWBROOK FARM; WILLIAM A. PURDY; JERRY C. VITALO, SR.; SURE INSURANCE AGENCY; RUSSELL FORD; WALTER MEDIO; AND MARTIN L. FALLON, PLAINTIFFS-RESPONDENTS,
v.
PETER L. RHULEN; RHULEN AGENCY, AS A DIVISION OF MARKEL SERVICES, INC.; FRONTIER INSURANCE COMPANY; AND NEW JERSEY RACING COMMISSION, DEFENDANTS-APPELLANTS.



On appeal from the Superior Court of New Jersey, Chancery Division, Burlington County.

Approved for Publication June 17, 1997.

Before Judges Stern, Humphreys and Wecker. The opinion of the court was delivered by Stern, J.A.D.

The opinion of the court was delivered by: Stern

The opinion of the court was delivered by

STERN, J.A.D.

The New Jersey Racing Commission (Commission) appeals from an order entered on March 29, 1996, awarding plaintiffs' attorney $47,851.50 "for services rendered in this matter as against the Defendant Racing Commission" together with $27,136.18 in out-of-pocket costs. The appeal follows entry of final judgment premised on a settlement whereby defendants Rhulen Agency and Frontier Insurance Company agreed to pay the Class Action plaintiffs $37,190. The settlement order was stayed pending this appeal from the prior award of counsel fees.

Plaintiffs' complaint was filed in response to the Commission's adoption of a program requiring owners and trainers to purchase workers' compensation insurance from defendant Frontier through defendant Rhulen. Such coverage was a condition of licensure in New Jersey.

The Commission's plan was adopted in September 1989 and the coverage had to be in effect as a condition of licensure for the year 1990. The complaint was filed in April 1990. *fn1 It was initially dismissed in the Chancery Division, apparently because it related to State administration action, but on June 7, 1990, we granted emergent relief and transferred the matter to the Chancery Division for consideration of plaintiffs' application for restraints and other relief. On August 29, 1990, the Chancery Division certified the matter as a class action. The Class 1 claimants were owners and trainers who had already purchased other policies embodying workers' compensation coverage similar to Frontier's, and the Class 2 claimants were insurance agents "who lost customers as a direct result ... of the Commission's Workers' program."

The Commission subsequently amended the plan to permit coverage through any company authorized to do business in New Jersey. See N.J.A.C. 13:70-3.41; N.J.A.C. 13:71-6.1. The amendments became effective January 1, 1991, *fn2 and the only issue remaining in the litigation dealt with damages for the year 1990 during which the original program was in effect. As noted, the litigation was settled by a monetary payment from the defendants other than the Commission to plaintiffs.

The Commission contends that the order awarding fees and costs "should be reversed because the plaintiffs have failed to establish that the Commission's workers' compensation program was constitutionally defective and the Commission was denied the ability to defend the program" by virtue of plaintiffs' settlement with the other defendants.

The complaint alleged a number of violations of the federal constitution, and it is not disputed that the Chancery Division could grant counsel fees and costs to a "prevailing party" for violation of their civil rights by an agency acting under color of state law. Singer v. State, 95 N.J. 487, 491-92, 472 A.2d 138 (1984), cert. denied, 469 U.S. 832, 105 S. Ct. 121, 83 L. Ed. 2d 64 (1984); see also 42 U.S.C.A. § 1988; R. 4:42-9(a)(8).

In Singer, (supra) , 95 N.J. at 490-91, our Supreme Court adopted the test for determining if a party "prevailed" for purposes of fees under section 1988:

Nadeau [v. Helgemoe, 581 F.2d 275 (1st Cir. 1978)] furnishes a satisfactory and workable test for ascertaining whether a party has prevailed for purposes of determining eligibility for the award of attorney's fees under the Awards Act. The test ... first calls for a factual causal nexus between plaintiff's litigation and the relief ultimately achieved. ... Second, ...


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