May 16, 2006
NANCY A. PALMER, PLAINTIFF-RESPONDENT,
KALEENA KOVACS AND STEVEN KOVACS, DEFENDANTS-APPELLANTS.
NANCY A. PALMER, PLAINTIFF-APPELLANT,
KALEENA KOVACS AND STEVEN KOVACS, DEFENDANTS-RESPONDENTS.
On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, MONL-5544-01.
The opinion of the court was delivered by: Sabatino, J.S.C.,
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 18, 2006
Remanded February 6, 2006
Resubmitted March 9, 2006
Before Judges Skillman, Axelrad and Sabatino.
As we noted in our opinion dated February 6, 2006, the present appeal and cross-appeal raise multiple issues arising out of a final judgment entered in favor of plaintiff following a four-day jury trial of this automobile accident case in August 2004. In our first opinion we affirmed the trial court's denial of summary judgment to defendants under the Automobile Insurance Cost Reduction Act of 1998 ("AICRA"), N.J.S.A. 39:6A-8, given the sufficiency of plaintiff's injuries and corresponding medical proofs to surmount the AICRA verbal threshold. We also remanded the case to the trial judge for an amplified statement of reasons pursuant to R. 1:7-4(a), more fully expressing his rationale for denying defendants' motion for a new trial or, alternatively, for the remittitur of the jury's $460,000 damages award.
We have since received and reviewed a transcript of the trial judge's amplified statement of reasons, in which he reaffirmed his original denial of defendants' post-trial motion and further explained his basis for that disposition. With the benefit of that submission, we now address defendants' appeal on that particular issue. We also resolve the remaining appellate issues, which concern the trial court's award of counsel fees and other sanctions pursuant to the offer-of-judgment rule, R. 4:58, and its calculation of the supersedeas bond defendants were required to post on appeal pursuant to R. 2:9-6.
Briefly, this case involves an intersection accident on April 10, 2000 in which an automobile driven by plaintiff Nancy Palmer, who was then age twenty-three, was struck by a vehicle operated by defendant Kaleena Kovacs. The force of the collision caused plaintiff's airbag to deploy. Plaintiff sustained neck and back injuries, as reflected by MRI studies and medical examinations, which persisted for more than two years following the accident. Summary judgment on liability was granted in favor of plaintiff.*fn1 The ensuing trial solely addressed damages, and plaintiff's proofs included no claims for economic loss. The jury awarded her $460,000 for past and prospective pain and suffering.
We now affirm the denial of the defendants' motion to set aside or remit the verdict, modify the trigger dates used by the trial court in shifting fees and other allowances to plaintiff under R. 4:58, and affirm the trial court's calculation of the requisite supersedeas bond pending further proceedings.
It is well established that post-trial relief to a defendant from an allegedly excessive verdict should only be granted when the trial judge, "having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, [determines that] it clearly and convincingly appears that there was a miscarriage of justice under the law." R. 4:49-1. In making an assessment of a verdict's excessiveness or insufficiency, the trial judge must consider the evidence in a light most favorable to the prevailing parties in the verdict. Caldwell v. Haynes, 136 N.J. 422, 432 (1994). To be dislodged, the verdict must constitute "a manifest injustice that shocks the judicial conscience." Carey v. Lovett, 132 N.J. 44, 66 (1993).
Our scope of review of such post-trial determinations is narrow. An appellate court shall not reverse a trial court's ruling on a motion for a new trial "unless it clearly appears that there was a miscarriage of justice under the law." R. 2:10-1. The appellate standard of review is "substantially the same as that controlling the trial court except that due deference should be made to its 'feel of the case,' including credibility." Feldman v. Lederle Lab., 97 N.J. 429, 463 (1984).
Guided by these deferential standards, we thus consider the trial judge's determination, and his redetermination upon remand, that the verdict in this case did not "shock the judicial conscience" or "clearly and convincingly" impose a "miscarriage of justice." Our analysis requires a further explanation of the facts.
Plaintiff is a college graduate and a civil engineer. As noted above, she was twenty-three years of age at the time of this motor vehicle accident. She was then living in a third floor apartment, which she gained access to by walking up three flights of stairs. She was employed as a project engineer, frequently working out in the field at various job sites. Prior to the collision, she had been living independently, supporting herself, cleaning her own quarters, and doing her own laundry and other daily tasks.
Following the neck and back injuries that she sustained from the accident, plaintiff missed only two days of work. However, she testified at trial that her post-accident persisting pain limited her activities at work, causing her to go out in the field less frequently, to refrain from lifting objects, and to minimize bending over.
As her injuries and physical limitations continued, plaintiff moved out of her three-story walk-up unit and into her mother's residence about five months after the accident. Plaintiff testified that she did so because she could no longer maintain her own residence, as she found herself unable to perform daily chores such as laundry, cleaning the tub, scrubbing floors, vacuuming, sweeping and mopping. This relocation to her mother's residence caused plaintiff to experience a diminution of her independence and her day-to-day well being. As plaintiff testified on direct examination:
I just did not like living at home. I didn't get along with my mom's husband at the time. I didn't like having to move back into a very small bedroom from a one bedroom apartment to myself, [where I had] my own independence.
Plaintiff remained in her mother's residence for nearly two years until the summer of 2002 when she moved into a first-floor studio apartment. At the time of trial, plaintiff continued to receive assistance in maintaining that apartment.
Plaintiff also described in detail at trial numerous adverse impacts of her injuries upon her lifestyle, particularly jogging and attending sporting events:
Q: Are there . .. any recreational activities that you enjoyed before this motor vehicle accident?
Q: And what were they?
A: I loved to go jogging, I loved it.
Q: How long did you jo[g] before the accident?
A: At a minimum four times a week. I would go as much as I could though. Sometimes I would go five, six days a week, but a minimum of four.
Q: And how long had you been doing that?
A: For as long as I can remember, I mean like all through high school, and all through college.
Q: How much free time did you have after you got your job?
A: After I got my job --
Q: Civil engineering job.
A: Well I had only nights and weekends.
Q: And during those times did you have a favorite activity that you took part in?
A: My favorite thing was jogging, but I also went to like sporting events with my boyfriend and stuff. And we went to like professional hockey games, professional football games, and I went to my brother's high school events.
Q: Okay. Did you give up any of those activities because of the pain in your neck and your back?
A: Yes, I gave up going to sporting events all together because I could not sit there.
Those chairs are completely uncomfortable. I can't sit for that long a period of time. When I get up I'm miserable because I have the pain, and sometimes, not all the time, but the shooting pains down the back of [my] leg. And I would just get all cramped up and stiff sitting in those chairs.
Q: Is that in both your neck and your back?
Q: How about jogging?
A: Jogging I can't at all, it hurts.
Plaintiff further recounted the impact of her injuries on her social life as a young woman:
A: I haven't totally given up, but going to movies like sitting in the movie I cannot do. I used to love to do it. It was like what I would do on the weekends when it was raining, when any weekend that I wasn't going out dancing with the girlfriends I was going to the movies with my boyfriend. And I gave up going to the movies.
Q: Do you go dancing anymore?
With respect to plaintiff's medical diagnoses and her subjective pain and suffering, the jury heard detailed testimony on those subjects from both plaintiff and her treating doctors, Richard Sanford, D.C., and Robert Dennis, M.D., an orthopedist. Dr. Sanford confirmed that plaintiff had bulging disks at C4-5 and C5-6, showing "a dysfunction in the neck that will never become normal again." He attributed those pathologies to the April 2000 motor vehicle accident. The chiropractor indicated that he eventually stopped treatment of plaintiff because she had reached a plateau in her improvement:
And I explained to her that the condition itself wasn't progressing any further than where we were at . . . that time. And she was still experiencing restriction of motion, muscle spasms, pain throughout the neck and the back. And we came to the point where I'd say, you know, how much more further treatment is this going to help to get this to its further restoration an full improvement? I said, you're going to have to live with this the rest of your life, the limitations that we have.
Normally a five, six month program of treatment such as she had is sufficient for the ability of the joints to come back to normal.
Dr. Sanford also opined that plaintiff's inability to perform household chores was consistent with his medical findings, and, quite bluntly, that plaintiff "was as good as she was going to get." Dr. Dennis' testimony expressed comparable opinions of causation and permanency.
Plaintiff herself explained the nature and extent of her ongoing pain and limitations in quite extensive and compelling terms:
[T]he doctor at the hospital had told me that I was pretty much going to be okay; that I would be stiff and sore for a while.
And I didn't know how long a while was. I was thinking that it's going [to] clear up, it's going to clear up.
And every day I'd go to work and I'd say, my neck hurts and my back hurts, . . . I'd be complaining and I'd be fussing around in my chair. And some people at work came up to me and would say, why don't you go see another doctor, you were just in an accident. And I said, like well they told me I was okay, I went to the hospital.
And it basically after a while, the pain was just getting worse and worse. I would go home at night after work, just get in bed. Some nights I would just lay down and cry for hours because it was just ridiculous.
Q: During the two month between the accident and your first treatment with the doctor, tell me what your day was like?
A: Between the accident and the first treatment I was basically going to work, coming home, and just laying on the couch or going to bed. I was miserable.
A: When I went to Dr. Sanford obviously I told him the same thing that I told Dr. DeAndrea when I went to him, was that I was having really bad neck pain. It was stiff and sore. I was having spasms. I was waking up in the middle of the night with these headaches that felt like my head would explode. My head was numb. I would wake up in the morning sometimes like my head felt like it was just numb. And I had never experienced something like that.
These problems, according to plaintiff, continued despite five months of treatment with Dr. Sanford:
A: I was still complaining about my neck, and still complaining about my back that it was sore and stiff, not that I was having, you know, the shooting pains up and down. However I was still having shooting pains that would go down my back into my butt, into my thigh. And it was like all the times when I would come from a sitting to standing position like that. And sometimes I would just get like a pulsating in my thigh.
Q: Tell me about your neck.
A: My neck, I was still having stiffness, soreness, the headaches, and spasms.
Q: Did you have any limits in your ability to move your neck?
A: Yes. I couldn't, at that time, move it all the way to the right, all the way to the left, all the way up and down.
Plaintiff recounted that these maladies continued to plague her up until the time of trial, more than two years after the accident, attesting that she had "continuous" pain since the accident, along with headaches and muscle spasms. In particular, plaintiff related how her injuries have substantially and regularly interfered with her sleep:
A: [S]leeping is very uncomfortable. I can never find a comfortable position. I'm constantly tossing and turning. My head gets stuck sometimes at night, and like I actually have to turn it, like help myself turn it. And just I wake up in the morning in those headaches.
Q: How long do you sleep without interruption?
A: Sometimes a couple of hours, but most of the time I'm up about every two hours.
Q: Is that on a nightly basis?
Q: Has that been continuous since the accident?
The defense's orthopedic expert at trial, J. Bruce Bosniak, M.D., acknowledged that plaintiff's MRI studies revealed a disk bulge at L4-5, but he characterized that bulge as insignificant and not indicative of herniation. Dr. Bosniak also noted that plaintiff had reported persistent complaints such as numbing or shooting pain in her lower back, and periodic radiating pain into her posterior thighs, and that plaintiff also reported taking over-the-counter pain medications daily. However, on his physical examination of plaintiff in April 2002, Dr. Bosniak found no limitations on plaintiff's motion in the lumbar area, although he did observe limitations on plaintiff's lateral flexion and rotation in the cervical area.
On the whole, Dr. Bosniak opined that plaintiff had not sustained "significant" soft-tissue, muscular or neurologic abnormalities from the motor vehicle accident. In his view, nothing precluded plaintiff from the "normal performance of her daily occupation," or the pursuit of "a variety" of recreational activities.
In summation, plaintiff's counsel stressed the persisting nature of plaintiff's complaints, and her future life expectancy of forty-eight years under Appendix I to the Court Rules. Defense counsel, meanwhile, emphasized in summation that plaintiff had ceased active treatment, had returned to living on her own, and had only missed two days of work, in a job that requires her to spend considerable time out on construction sites.
The trial judge charged the jury with the standard civil instruction on damages, Model Jury Charge (Civil), § 6.11(F), and also properly charged the jury on the appropriate uses of life expectancy tables.
During the course of deliberations, the jury posed the following written question to the court concerning damages:
Could we possibly get a guideline on the monetary award in Question 3 if we decide to answer yes to Question 1 and 2? [the verbal threshold questions].
The trial court conferred with counsel about this query outside the jury's presence. In that colloquy, defense counsel asserted that he "had the feeling that they're looking at is really giving them [the jury] some sort of guideline as to [an] amount of money." Defense counsel suggested that the court "say if they're looking for that sort of thing [the court] cannot do it but if they would like [the court] will recharge them on the damages end." Plaintiff's counsel did not object to this suggestion. The trial judge called in the jury, repeated their question, and stated:
The easy answer is no but I've never taken the easy way out. More specifically what I mean is I can't give you a guideline other than what I told you before about pain and suffering and loss of enjoyment of life. . .
[i]f you want me to recharge you on that I will but that is not what you asked me to do.*fn2
The jury subsequently returned a verdict in favor of plaintiff of $460,000.00.
As we have already noted, the trial judge denied defendants' motion to set aside the $460,000 award as excessive. In his initial oral opinion on that subject prior to this appeal, the trial judge stated that he was "not convinced that it clearly and convincingly appears that [the verdict] was a miscarriage of justice." On remand from this court, after reviewing his trial notes, the trial judge reaffirmed his determination and amplified his perceptions in several important respects.
Initially, the trial judge acknowledged that the sum of the verdict was "higher than usual" for a case of this nature. In part, he attributed the substantial award to the quality of advocacy of plaintiff's counsel, particularly through the use of demonstrative aids such as enlargements, and in the amount of preparation he exhibited. We note that if those lawyer-effectiveness considerations were the sole basis for the amount of the award we would be hesitant to affirm it. However, the trial judge cited far more than sheer advocacy in his analysis. In particular, he identified several pivotal factors.
First, the judge noted that plaintiff's mother testified at trial, providing a source of corroboration of plaintiff's injuries and limitations. This testimony meshed with plaintiff's testimony about her relocation to her mother's residence after several months of painfully attempting to maintain her own third-story walk-up apartment.
Next, the trial judge observed that Dr. Bosniak, the defense expert, was not especially persuasive in his testimony, and that, from a credibility perspective, "he could have been better." Among other things, the judge noted that the defense doctor acknowledged that on cross examination that he was earning over $200,000 per year as an expert witness, and that the expert also omitted stating that his trial opinions had been expressed within a "reasonable degree of medical probability." By contrast, the trial judge noted that the plaintiff's own testifying medical experts, Dr. Sanford and Dr. Dennis, had tied plaintiff's subjective complaints to their objective findings, and that, in particular, the testimony of Dr. Dennis, the orthopedic surgeon, was "strong" and "quite credible."
The trial judge also distinguished the proofs here from "the usual type of bulge case," which he indicated that he had tried frequently. He noted that the case was "much different and more significant" because this plaintiff was young and independent and had been forced to move back in with her mother. The judge also noted that plaintiff did not get along with her stepfather, and had to move into a very small bedroom from a more spacious one-bedroom apartment.
The judge also underscored his perception that this plaintiff, unlike some others that he had seen testify, "didn't exaggerate," "didn't malinger," and was "credible." As one illustration of her credibility, the judge pointed out that plaintiff freely admitted that an injury to her left hand from the accident had cleared up within a short period of time.
The trial judge also found significant the numerous adverse lifestyle impacts described by plaintiff in her testimony, including the inability to clean her residence, to do laundry, to continue jogging, and to attend sporting events. The judge also observed that plaintiff had resorted to having others at work move boxes and files for her and otherwise perform routine physical tasks that she used to perform herself. The judge further was impressed by plaintiff's uncontradicted testimony regarding her difficulty sleeping, and her awakening every two hours at night, despite her youth.
On the whole, based upon these facts and "intangibles," and comparing the proofs here with others drawn from his own experience, see Fertile v. St. Michael's Med. Ctr., 169 N.J. 481, 501 (2001) (a trial court properly can rely upon "the evidence that it saw and heard. . . [and] on its own common knowledge, as well as its experience with other injury verdicts[.]"), the trial judge reaffirmed his conclusion that the verdict did not result in a manifest injustice.
We have thoroughly reviewed and considered the trial record. Although we concur with defense counsel that a $460,000 damages award in a personal injury case involving no disc herniation, no surgery, and no significant loss of employment is above what would be routinely awarded in such matters, we cannot conclude that the verdict, while large, shocks our conscience or that it imposes a manifest injustice.
Notwithstanding his comments about the advocacy of trial counsel upon which we do not rely, the numerous intangibles identified by the trial judge, who had a "feel for the case" and a baseline for comparison from other trials, rationally distinguish the proofs here from a run-of-the-mill soft tissue injury lawsuit. From a time-unit perspective,*fn3 plaintiff's post-trial future life expectancy of forty-eight years is considerable. The gross verdict for pain and suffering represents less than $10,000 per year for plaintiff's expected remaining life span. The jury apparently concluded that plaintiff's two treating experts, who vouched for the permanency and severity of her injuries, were more credible than the defense's medical expert who had examined her on one occasion.
We also would be loathe to minimize or second-guess on this copious record the jury's assessment of the value of the loss of enjoyment of life plaintiff experienced in moving back in with her mother, in ceasing her jogging routine, in becoming reliant upon others at work and at home to perform physical tasks for her, and in suffering regular interruptions in her sleep, potentially indefinitely. The jury rationally could have found this particular young woman's narrative sufficiently compelling to justify the sums it awarded her, in light of their own common reason and experience.
By no means do we declare than $460,000 is "the norm" for a case of this nature, or that a young injured plaintiff who has to move back in with her mother commonly should be expected to recover a verdict of this magnitude. We also are well aware of the substantially lower figures proposed in settlement and awarded at the non-binding arbitration before trial, but none of those figures properly should inform our assessment of whether the verdict here is so excessive that it "shocks the conscience." See Brown v. Pica, 360 N.J. Super. 565, 574 (Law Div. 2001) (consistent with the policies of N.J.R.E. 408, pre-verdict settlement proposals are irrelevant to post-verdict evaluations of a verdict's excessiveness or insufficiency), appeal dism'd, 360 N.J. Super. 490 (App. Div. 2003).
Accordingly, we affirm the trial court's denial of defendants' motion for new trial and remittitur.
We next address plaintiff's cross-appeal seeking to modify the trial court's calculation of fees, costs and prejudgment interest pursuant to the offer of judgment rule, R. 4:58-1.
The pertinent chronology is as follows. On March 6, 2002, plaintiff filed and served upon defendants an initial offer of judgment for the sum of $20,000. The defendants did not accept that offer within the ninety-day period for acceptance. After discovery was completed, the case went to arbitration in January 2003, and the arbitrator made a net award to plaintiff of $22,500. Defendants timely rejected the arbitration award in February 2003 and requested a trial de novo. In March 2003, the trial court granted plaintiff summary judgment on liability issues, and in October 2003, the trial court denied defendants' motion for summary judgment under the AICRA verbal threshold. On July 8, 2004, plaintiff filed and served a second offer of judgment in the reduced sum of $10,000. Defendants likewise failed to accept that offer, and the case went to trial on August 3, 2004.
Following the jury's damages verdict, the trial judge determined that plaintiff had obtained a verdict that was 120% or more of her pre-trial offers. See R. 4:58-2. The judge then had to determine whether plaintiff's right to an allowance of counsel fees, costs of suit and enhanced interest under the Rule had been created by plaintiff's original offer in March 2002 or, alternatively, by plaintiff's second offer in July 2004. Plaintiff argued that the date of the first offer controlled the calculation; defendants argued that the date of the second offer governed.
After considering the arguments of counsel on this issue, the trial judge concluded that the second offer of judgment tendered on July 8, 2004 triggered the calculation of sums to be shifted to defendants under the Rule. Using that July 8, 2004 trigger date, the trial court awarded plaintiff $10,813.00 in attorneys fees and $4,175.00 in litigation costs. The trial court also calculated prejudgment interest on the verdict at $74,707.46. The interest was computed based upon a combination of the enhanced eight percent (8%) interest rate prescribed by R. 4:58-2 for the limited period from July 8, 2004 through the date of entry of the judgment, and the ordinary prejudgment interest rate under R. 4:42-11(b) applied to the period before July 8, 2004.
Although the offer of judgment rule was modified effective September 1, 2004, counsel agreed at oral argument before us that the terms of the Rule which had been in effect in August 2004 control this appeal. Specifically, R. 4:58-1 then provided as follows:
Except in a matrimonial action, any party may, at any time more than 20 days before the actual trial date, serve upon any adverse party, without prejudice, and file with the court, an offer to take judgment in the offeror's favor, or as the case may be, to allow judgment to be taken against the offeror, for a sum stated therein or for property or to the effect specified in the offer (including costs). If at any time on or prior to the 10th day before the actual trial date the offer is accepted, the offeree shall serve upon the offeror and file a notice of acceptance with the court.
The making of a further offer shall constitute a withdrawal of all previous offers made by that party. An offer shall not, however, be deemed withdrawn upon the making of a counter-offer by an adverse party but shall remain open until accepted or withdrawn as is herein provided. If the offer is not accepted on or prior to the 10th day before the actual trial date or within 90 days of its service, whichever period first expires, it shall be deemed withdrawn and evidence thereof shall not be admissible except in a proceeding after the trial to fix costs, interest and attorney's fee. The fact that an offer is not accepted does not preclude a further offer within the time herein prescribed in the same or another amount or as specified therein. [Emphasis added.]
Additionally, R. 4:58-2, regarding the consequences of a defendant's non-acceptance of a claimant's offer, prescribed:
If the offer of a claimant is not accepted and the claimant obtains a verdict or determination at least as favorable as the rejected offer, the claimant shall be allowed, in addition to costs of suit, (a) all reasonable litigation expenses incurred following non-acceptance; (b) eight per cent interest on the amount of any money recovery from the date of the offer or the date of completion of discovery, whichever is later; and (c) a reasonable attorney's fee, which shall belong to the client, for such subsequent services as are compelled by the non-acceptance. In an action for unliquidated damages, however, no allowances under this rule shall be granted to the offeror unless the amount of the recovery is in excess of 120 percent of the offer.*fn4 A claimant entitled to interest under R. 4:42-11(b) shall be allowed interest under this rule only to the extent it may exceed the interest allowed under R.4:42-11(b).
Defendants persuaded the trial judge that these provisions, when read in combination, required plaintiff's allowance to counsel fees, litigation expenses and enhanced prejudgment interest under R. 4:58 to be measured from the date that plaintiff's second and final offer of judgment was served. We disagree, as such an interpretation of the trigger date is inconsistent with both the terms of the Rule and the policies that it is crafted to serve.
The offer of judgment rule is designed to promote early settlement, by creating disincentives for litigants to reject reasonable offers of compromise tendered under the Rule. See Schettino v. Roizman Dev., Inc., 158 N.J. 476, 482 (1999); Sovereign Bank v. United Nat'l Bank, 359 N.J. Super. 534, 542 (App. Div.), certif. denied, 177 N.J. 489 (2003). To advance those policies, the Rule requires the recipient of an offer of judgment to react to it in a prompt fashion. Specifically, the offeree can only accept the proposed terms within ninety (90) days of its service, or prior to ten (10) days before the actual trial date, whichever is sooner. If the offeree does nothing within these time constraints, the offer automatically expires.
Applying these principles here, plaintiff's first offer of judgment of March 6, 2002 lapsed ninety days later on June 4, 2002. Once that date passed, defendants forfeited the opportunity to settle the case for $20,000 without bearing the fee-shifting consequences of the Rule. Plaintiff could have refused to settle the case for $20,000, or, for that matter, for any other sum, once the ninety-day acceptance period had terminated.
We next consider whether plaintiff's voluntary decision to tender a second offer of judgment more than two years later in July 2004 eliminates the fee-shifting consequences of the defendants' failure to accept plaintiff's first offer. The final sentence of R. 4:58-1 authorizes such a follow-up offer, explaining that "[t]he fact that an offer is not accepted does not preclude a further offer within the time herein prescribed in the same or another amount . . .[.]" R. 4:58-1. As set forth in the first sentence of that provision, "the time herein prescribed" refers to "any time more than twenty days before the actual trial date." R. 4:58-1.
Accordingly, plaintiff had the right under the Rule to tender additional offers of judgment upon defendants up until July 14, 2004, twenty days before the trial which commenced on August 3, 2004. That right to present subsequent offers of judgment promotes the goals of settlement. As a case progresses, a litigant presumably will become better informed --through discovery, motion practice, and arbitration or other alternative dispute resolution events -- of the merits and weaknesses of his or her case or defenses. Hence, the Rule sensibly allows a litigant to recalibrate his or her original settlement position with the insights gained through that pretrial phase. Thus, if a plaintiff were too rosy-eyed in his or her original assessment of the case (or if, conversely, a defendant were too pessimistic), the Rule provides subsequent opportunities for that plaintiff to reduce his or her settlement demands (or for a defendant to raise his or her settlement offers), as expressed in prior offers of judgment, up to the twentieth day preceding trial.
Recognizing these inherently dynamic characteristics of litigation and also the settlement-minded objectives of the Rule, the service of a subsequent offer of judgment logically should not be deemed to extinguish the fee-shifting consequences of prior offers served under the Rule and rejected. A contrary interpretation would discourage litigants from making new offers of judgment as a case progressed. We do not believe that the drafters intended the Rule to be interpreted to create such disincentives, particularly in a scenario where, as here, a plaintiff offeror reduces her settlement demand in a later offer of judgment. If plaintiff Nancy Palmer simply had done nothing after her original offer was implicitly rejected by the defense, the fee-shifting clock would have started on June 4, 2002, the date by which defendants' opportunity to accept her offer expired. Plaintiff should be no worse off under the Rule for offering defendants a second chance to settle the case in 2004 with a renewed and revised offer of judgment.
We thus hold that plaintiff's service of a second, lesser offer of judgment in July 2004 did not negate the fee-shifting consequences created by defendants' failure to accept plaintiff's first offer from March 2002. Rather, after the second offer of judgment for $10,000 was tendered and refused, defendants thereafter faced two independent fee-shifting risks at trial. First, if the jury's verdict was more than $24,000 (i.e., 120% of $20,000), then defendants would be liable for plaintiff's reasonable counsel fees and costs accruing from June 4, 2002, ninety days after service of the first offer of judgment for $20,000. Second, if the verdict exceeded $12,000 (i.e., 120% of $10,000) but was less than $24,000, then defendants were liable for plaintiff's reasonable fees and costs accruing from July 24, 2004, ten days before the actual trial date. R. 4:58-1.
For these reasons, the trial court erred in utilizing the plaintiff's second offer of judgment as the triggering event for fee-shifting under the Rule. Because the jury's verdict was well in excess of $24,000, plaintiff is entitled to an allowance of her reasonable counsel fees and litigation expenses accruing from June 4, 2002, ninety days after the first offer of judgment was served on March 6, 2002. Additionally, plaintiff is entitled to enhanced prejudgment interest of eight percent calculated from the date of the completion of discovery, i.e., November 21, 2002, rather than the date of the second offer. See R. 4:58-2 (prescribing that the enhanced eight percent interest rate applies "from the date of the offer or the date of the completion of discovery, whichever is later").
We therefore vacate the R. 4:58 allowances computed by the trial judge, and remand for a recalculation of fees, costs and prejudgment interest under the Rule consistent with our analysis herein, using June 4, 2002 as the proper trigger date for the fees and costs and November 21, 2002 as the proper trigger date for the enhanced prejudgment interest.
We next address the amount of the supersedeas bond fixed by the trial court pursuant to R. 2:9-6(a)*fn5 pending this appeal.
The full amount of the judgment below was $549,695.46, consisting of the compensatory damages award of $460,000.00, plus prejudgment interest of $74,707.46, counsel fees of $10,813.00 and costs of $4,175.00 awarded under the offer judgment rule. By the time the bond was fixed by the court on December 3, 2004, post-judgment interest had accrued in the sum of $22,089.36.
This is an excess verdict scenario. Defendants Kaleena and Steven Kovacs had $300,000 in liability coverage with their automobile insurer, New Jersey Manufacturers ("NJM"). A modest amount of the NJM policy, $9,061.65, had been drawn down from the $300,000 before trial to pay for property damage, yielding a net policy balance of $290,938.35 at the time the bond was fixed by the trial court on December 3, 2004.
Defense counsel applied to the trial judge for a stay of execution on the judgment pending appeal, proposing to post a supersedeas bond for $290,938.35, the amount of NJM's remaining policy limits.*fn6 Plaintiff opposed the application, contending that the bond amount should not be capped by NJM's policy.
The trial court fixed the bond at an intermediate sum of $402,723.20, calculated as $290,938.35 representing the remaining balance of the insurer's policy limits, prejudgment interest of $74,707.46, post-judgment interest of $22,089.36, counsel fees of $10,813.00 and costs of $4,175.00. The court also imposed a full stay of execution of the judgment pending appeal, conditioned upon the posting of the bond. The court simultaneously vacated the judgment only against co-defendant Steven Kovacs without objection by plaintiff. Defense counsel now requests a further reduction in the bond amount, arguing that it should exclude the prejudgment interest portion of $74,707.46 because NJM's policy does not cover such interest.*fn7
Preliminarily, we address the somewhat unorthodox manner in which the bond calculation issue is presented to us.
Ordinarily, an insured defendant and its insurance carrier have divergent interests when there is an excess verdict and the carrier wishes to post a supersedeas bond that is less than the full amount of the judgment. That is so because such a partial bond, and a corresponding partial stay of execution in that amount, exposes the insured's own assets to potential efforts by the judgment creditor to collect the remainder. See Courvoisier v. Harley Davidson, 162 N.J. 153, 162 (1999). "Plainly the insurer's interest is in obtaining a stay of execution on the portion of the judgment for which it could be liable. The insured[,] however[,] seeks a stay of the entire judgment." Ibid.; see also Rosato v. Penton, 182 N.J. Super. 493, 495-96 (Law Div. 1981)(observing that "when a judgment exceeds liability insurance limits, the plaintiff, the insured, and the insurer have differing interests worthy of protection"). At times this divergence of interests has been accommodated by the intervention of the insurer as a party in the trial court proceedings concerning the bond, with the insured's own interests being represented by separate counsel. See, e.g., Courvoisier, supra, 162 N.J. at 156 (an insurer intervened with coverage counsel and its insured retained a private attorney to represent their respective interests on issues arising from excess verdict); Rosato, supra, 182 N.J. Super. at 495-96 (insured was separately represented by personal counsel in proceedings to fix amount of supersedeas bond pending appeal of excess verdict).
Here, personal counsel for defendant Kaleena Kovacs has not entered an appearance on the bond and corresponding stay-of-execution issues, either at the trial level or on this appeal. The defense counsel who was assigned by NJM to represent the Kovacs' interests at trial now asks us to fix NJM's liability under its insurance policy at a figure less than the judgment amount, and also to reduce the amount of the corresponding supersedeas bond.
NJM, however, is not a party to this appeal. We question the wisdom of granting such a non-party any relief. Additionally, we generally perceive it inappropriate for an insurance defense lawyer who is assigned to represent the insured at trial in a personal injury case to advance post-verdict arguments for the carrier's benefit that are in potential conflict with the insured's own pecuniary interests, at least without the informed consent of the affected clients. See R.P.C. 1.7.
Despite our reservations about these issues of procedure and legal representation, we nonetheless address the bond and stay issues here on their merits. We do so because plaintiff's counsel represented to us at oral argument that plaintiff would not apply to have the existing complete stay of execution modified, even if we were to accede to NJM's request to have the bond amount reduced. With a full stay in place, the interests of the insurer and the insured continue, at least for the time being, to "coalesce." See Courvoisier, supra, 162 N.J. at 163. In addition, we accept defense counsel's representation that Kovacs' personal counsel has been given notice of these proceedings and also note that such counsel has not independently appeared or filed papers. Thus, Kovacs should be aware of NJM's effort to reduce the bond and fix its exposure under the insurance policy, but they have elected not to participate or raise a conflict of interest objection.
We begin our brief substantive analysis of this issue by noting that the portions of plaintiff's $460,000 damages award above the policy limits is subject to a potential claim of bad faith under Rova Farms Resort, Inc. v. Investors Ins. Co., 65 N.J. 474, 487 (1974), because the defendants' insurer declined at least two offers to settle the case well within the $300,000 policy limits. Because the record before us is inadequate to assess NJM's good faith or bad faith under Rova Farms, and, more importantly, because no finding has been made in the Law Division on that issue, we decline NJM's application on appeal to "fix" its ultimate exposure under the insurance policy. The only question properly before us is the calculation of the bond.
Courvoisier holds that "in a case in which an excess judgment is appealed, the insurer will qualify under the good cause exception to Rule 2:9-6 to post a bond up to the limit of its liability in exchange for a partial stay of the judgment to that extent." Courvoisier, supra, 162 N.J. at 163. Courvoisier further instructs that, given the practical difficulties of gauging the merits of a Rova Farms claim in advance, an insurer's potential exposure to a Rova Farms claim is not to be factored into the amount of the supersedeas bond. Id. at 166-67. Thus, the gap of over $160,000 between the jury's baseline verdict of $460,000 and the remaining amount of NJM's $300,000 policy did not have to be bonded here.
Defense counsel also acknowledged to us at oral argument*fn8 that any reasonable counsel fees and litigation expenses properly awarded to plaintiff pursuant to R. 4:58 are potentially within NJM's coverage and thus properly included with the supersedeas bond. See McMahon, supra, 364 N.J. Super. at 190. But McMahon goes even further than defense counsel's concession, in that we specifically included an insurer's obligation to pay "interest" awarded pursuant to the offer of judgment rule, along with counsel fees and costs. Ibid. ("a carrier is subject to the consequences of the [offer-of- judgment] rule, namely, exposure to reasonable litigation expenses, reasonable attorneys' fees, and interest, even though the cost of those consequences . . . subjects the carrier to a judgment in excess of the liability limits of the policy.") (emphasis added.)
What remains for us to decide is whether the discrete portion of the trial court's total prejudgment interest award of $74,707.46 reflecting interest computed pursuant to the ordinary prejudgment interest rule, R. 4:42-11(b), must be subtracted from the defendants' supersedeas bond. Courvoisier specifically addressed this issue, holding that a insurer need not include prejudgment interest in its supersedeas bond unless its insurance policy covers such interest. Courvoisier, supra, 162 N.J. at 163; see also Kotzian v. Barr, 81 N.J. 360, 366-67 (1979). We have accordingly reviewed NJM's policy insuring the defendants and conclude that the language within it does not afford such coverage for ordinary prejudgment interest. The NJM policy in the "Supplementary Payments" section under "Part A-Liability Coverage," only covers "[i]nterest accruing after a judgment is entered in any suit we defend." (emphasis added).
Thus, defendants' supersedeas bond should be reduced by that portion of the prejudgment interest award imposed pursuant to R. 4:41-11 rather than the portions imposed under the offer- of-judgment provisions of R. 4:58-2. However, because the latter interest sum must be recalculated and enhanced on remand, as the result of our modification in Part II of this opinion of the relevant R. 4:58 trigger date, we decline to attempt to recalculate the pertinent interest sums, and leave that exercise to counsel and the trial court.
The remand will involve applying the enhanced eight percent prejudgment interest rate for an additional period (November 2002 to July 2004) and thus produce an increase in the gross prejudgment interest award. In addition, plaintiff's counsel fees and litigation costs also will be enhanced because of the clarified June 4, 2002 trigger date for such fee-shifting. This too may require additional bonding. Accordingly, we shall leave the existing $402,723.20 bond undisturbed, pending remand and any petition for certification by defendants to the Supreme Court.
In conclusion, the trial court's denial of defendants' motion for a new trial and remittitur is affirmed; its calculation of counsel fees, litigation costs and enhanced prejudgment interest under R. 4:58 is vacated and the case is remanded to the trial court to recalculate those amounts consistent with the respective June 2002 and November 2002 trigger dates; and the present amount fixed for the supersedeas bond is affirmed, subject to potential future modification of that bond as may be necessary consistent with Part III of this opinion. We do not retain jurisdiction.