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S.N. Golden Estates Inc. v. Continental Casualty Co.

December 24, 1998

S.N. GOLDEN ESTATES, INC. AND STANLEY NEUMAN, PLAINTIFFS-RESPONDENTS,
v.
CONTINENTAL CASUALTY COMPANY, DEFENDANT-APPELLANT.



Before Judges Havey, Skillman and P.g. Levy.

The opinion of the court was delivered by: Skillman, J.A.D.

[9]    Argued November 30, 1998

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

This case is before us for the second time. On the first appeal, we affirmed an order of the trial court which declared that defendant Continental Casualty Company (Continental) had a duty to defend plaintiffs S.N. Golden Estates, Inc. (Golden), a developer of new homes, and Stanley Neuman, its principal (referred to collectively in this opinion as "Golden"), in an action brought by purchasers of new homes who alleged that Golden had installed defective septic systems on their properties. S.N. Golden Estates v. Continental Cas. Co., 293 N.J. Super. 395, 400-05 (App. Div. 1995). We also affirmed the part of another order which awarded Golden $66,376.09 for litigation expenses incurred in prosecuting the declaratory judgment action against Continental. Id. at 405-07. However, we vacated the part of that order which awarded an additional $267,704.13 for litigation expenses incurred by Golden in defending the underlying action, because the trial court had not made adequate findings as to the reasonableness of the legal services provided or the fees charged by Golden's counsel, and remanded for reconsideration of that award. Id. at 407-09. We also noted that the parties had not briefed the issue of whether this was "an appropriate case for the apportionment of defense costs between covered and non-covered claims," id. at 405 n.1, and that the trial court had failed to consider "Continental's argument that counsel fees incurred by Golden in pursuing cross-claims against the co-defendants in the underlying action are not subject to reimbursement." Id. at 409. In addition, we noted that the trial court had not made any ruling regarding Continental's duty to indemnify Golden for any judgment that might be entered in the underlying action. Id. at 399.

After the remand, most of the plaintiffs in the underlying action and Golden entered into a settlement under which Golden agreed to remove the plaintiffs' septic systems and to connect their residences to public sewers at an approximate cost of $800,000. *fn1 In addition, Golden agreed to pay each plaintiff homeowner $4,000 in satisfaction of their claims for compensatory and punitive damages. However, Golden is continuing to pursue its cross claims and third party claims against the engineer, soil scientist and contractors involved in the design and construction of the septic systems.

On the remand, the trial court refused to allow Continental to conduct any discovery with respect to Golden's counsel fee application. Without making the "specific findings" regarding the reasonableness of the legal services or the fees charged by Golden's counsel required by our prior opinion, id. at 408, the court reaffirmed its counsel fee award, except for items totaling $23,457.60 which it found to have been improperly included in the original award. Accordingly, the court entered an order on January 10, 1997, which required Continental to pay Golden $244,245.53 for litigation expenses incurred in defending the underlying action. The court also directed Continental to pay this amount "without unreasonable delay."

Continental filed a notice of appeal from this order. Golden filed a motion to dismiss the appeal on the ground that it was interlocutory. This court denied the motion; our order stated that "[t]o the extent the order appealed from may be technically interlocutory because not certified pursuant to R. 4:42-2, leave to appeal is granted nunc pro tunc."

Subsequently, Golden filed a motion for an order directing Continental to pay $162,379.65 for litigation expenses incurred in connection with this declaratory judgment action and the underlying property damage action during the period from May 1, 1994 to June 30, 1996 (the order that was the subject of our prior opinion and the remand to the trial court only involved litigation expenses incurred through April 30, 1994). The trial court conducted a two day hearing with respect to this motion, after which it issued a letter opinion which awarded Golden an additional $155,254.62. This decision was memorialized by an order entered on July 21, 1997, from which Continental filed a second notice of appeal. We then consolidated the appeals from the January 10, 1997 and July 21, 1997 orders.

We conclude that the January 10, 1997 order and the part of the July 21, 1997 order which awards counsel fees and costs incurred in the underlying action should be vacated, and that those awards should be reconsidered after the trial court has ruled upon Continental's duty to indemnify Golden for the amounts paid to resolve the claims in the underlying action. In addition, although we do not disturb the part of the July 21, 1997 order which awarded additional counsel fees and costs incurred in connection with this declaratory judgment action, we conclude that that award should not be reviewed until a final judgment is entered.

Initially, we note that the procedural route this case has been following is offensive to our strong judicial policy against piecemeal appellate review. Ordinarily, only a final judgment is appealable as of right. R. 2:2-3(a)(1); see Greco v. Zecchino, 285 N.J. Super. 418, 420-21 (App. Div. 1995). To be final, a judgment must dispose of all claims against all parties. Family First Fed. Sav. Bank v. DeVincentis, 284 N.J. Super. 503, 511 (App. Div. 1995). This rule, commonly referred to as the final judgment rule, reflects the view that "[p]iecemeal [appellate] reviews, ordinarily, are [an] anathema to our practice." Frantzen v. Howard, 132 N.J. Super. 226, 227-28 (App. Div. 1975).

An appeal as of right may be taken only from limited categories of interlocutory orders. R. 2:2-3(a)(3). One kind of interlocutory order which is appealable as of right is "an order [which] would be subject to process to enforce a judgment pursuant to R. 4:59 if it were final" where "the trial court certifies that there is no just reason for delay of ... enforcement." R. 4:42-2. *fn2 However, a trial court's certification of an order as final "is not binding upon us." Delbridge v. Jonn Holding Co., 164 N.J. Super. 506, 510 (App. Div. 1978); see Pressler, Current N.J. Court Rules, comment on R. 4:42-2 (1999). Consequently, we may vacate such a certification if an order does not fall within the terms of R. 4:42-2 or if the trial court erred in concluding that "there is no just reason for delay of ... enforcement." See Kurzman v. Appicie, 273 N.J. Super. 189 (App. Div. 1994).

If an order is not appealable as of right under R. 2:2-3(a), an appeal may be taken only by leave of this court, which may be granted "in the interest of Justice." R. 2:2-4. In recognition of the fact that "[i]nterlocutory appellate review runs counter to a judicial policy that favors an uninterrupted proceeding at the trial level with a single and complete review[,]" our courts exercise the authority to grant leave to appeal "only sparingly." State v. Reldan, 100 N.J. 187, 205 (1985) (quoting In re Pennsylvania R.R. Co., 20 N.J. 398, 404 (1956)); see generally, Robert L. Clifford, Civil Interlocutory Appellate Review in New Jersey, 47 Law & Contemp. Probs. 87, 93-97 (1984).

The order which was the subject of Golden's original appeal was certified as final by the trial court. We did not question that certification because it appeared that the interests of Justice would be served by early appellate review of the court's declaration that Continental was obligated to provide Golden with a defense in the underlying action. While the matter was before us, we also reviewed the awards of counsel fees to Golden.

The trial court did not certify the January 10, 1997, order entered on the remand as final. However, it may have assumed that the prior certification of finality remained in effect. In any event, this court ...


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