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New Jersey Eye Center, P.A. v. Princeton Insurance Co.

July 13, 2007

NEW JERSEY EYE CENTER, P.A., PLAINTIFF-RESPONDENT,
v.
PRINCETON INSURANCE COMPANY, DEFENDANT-APPELLANT, AND DEBRA CUCOPOLOUS, GREG CUCOPOLOUS, DONNA DEANGELIS, JAMES DEANGELIS, JAMES DELL'ERMO, LISA DELL'ERMO, DANIEL J. DESILVESTRO, PATRICIA DODGE, THOMAS DONNELLY, PATRICIA KUSHNER, STEVEN KUSHNER, TONY DEL PRESTO, RICHARD PEIRANO, JOSEPH BRANCIFORTE, CATHERINE BRANCIFORTE, GLORIA SEWALL, YURI MYKOLAYEVYCH, BENJAMIN GIARDINA AND JOANNE GIARDINA, ADDITIONAL PARTIES IN INTEREST-RESPONDENTS, AND EMRETTA HINMAN, WILLIAM HINMAN, JIM MCLOUGHLIN, CYNTHIA MCLOUGHLIN, PAUL P. PAIRO, ROSEMARY LESKY, BARBARA VEY AND JAMES H. VEY, ADDITIONAL PARTIES IN INTEREST.



On appeal from Superior Court of New Jersey, Law Division, Bergen County, No. BER-L-299-04.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued February 7, 2007

Before Judges Wefing, C.S. Fisher and Messano.

Princeton Insurance Co. ("Princeton") appeals from an order for judgment entered by the trial court in a declaratory judgment action. After reviewing the record in light of the contentions advanced on appeal, we reverse.

That declaratory judgment action was filed in connection with a coverage dispute relating to a series of medical malpractice actions pending against Joseph Dello Russo, M.D., a physician licensed to practice medicine in New Jersey who specializes in ophthalmology. Dr. Dello Russo was insured under a professional liability policy issued by Interstate Insurance Co. with a coverage limit of three million dollars. Dr. Dello Russo was also the principal of New Jersey Eye Center, P.A. ("Eye Center"), which was insured under a policy issued by Princeton. The Princeton policy provided coverage of six million dollars per incident, with an aggregate coverage of eight million dollars. The Princeton policy contained the following endorsement:

Your employees, students, authorized volunteer workers, members of the Board of Trustees and executive officers are insureds while acting within the scope of their duties. We won't cover physicians and surgeons, physician assistants, surgical assistants, dentists, residents in postgraduate year 2 or higher, nurse anesthetists, perfusionists, nurse midwives, nurse practitioners, clinical nurse specialists, nurse surgical assistants, podiatrists, chiropractors or psychologists, unless otherwise scheduled.

Dr. Dello Russo developed an extensive practice performing lasik surgery.*fn1 In this procedure, the surgeon, using an excimer laser, lifts up the top layer of a patient's cornea, makes a flap and then reshapes the cornea underneath. The aim of the procedure is to provide better visual acuity for the patient, in many cases making the use of glasses or contact lenses unnecessary. In his deposition, Dr. Dello Russo testified that in the period 1999-2000 he charged approximately fifteen hundred dollars per eye and was seeing approximately one hundred patients a week.

Eventually, Dr. Dello Russo became the subject of a number of medical malpractice actions brought by patients who alleged that he and Eye Center personnel had been negligent in the performance of this surgery. The appeal before us implicates thirteen of these suits. Princeton, relying on the language we set forth earlier, declined coverage in these malpractice actions to individual physician defendants although it did agree to provide a defense to the Eye Center in each of these actions under a reservation of rights.

There is no doubt that the progress of these malpractice suits was acrimonious, hindering both attempts to resolve the matters and to conclude the discovery necessary to make them ready for trial. At one point, Dr. Dello Russo sued one of the plaintiffs' attorneys for that attorney's conduct with respect to this litigation. Dello Russo v. Nagel, 358 N.J. Super. 254 (App. Div. 2003). Indeed, we are informed that at another point certain participants in a deposition session had to be physically restrained from attacking each other. Later, during the trial that led to the judgment on appeal, the attorney representing Dr. Dello Russo's personal interests refused to participate in any proceedings at which a particular plaintiff's counsel was present.

With trial dates looming on the horizon for a number of these cases, the trial court, at the request of counsel, held a series of conferences in an attempt to resolve all these matters. Those attempts, however, were unsuccessful, and in January 2004, Eye Center filed a declaratory judgment action against Princeton, seeking a judgment that Princeton was obligated to defend and indemnify it in these malpractice actions for the actions of its physicians, surgeons and technicians. Eye Center named as "parties in interest" to this declaratory judgment action the attorneys representing the various plaintiffs who had asserted claims against Dr. Dello Russo.

The coverage issue in the declaratory judgment action was presented to the trial court by way of motions for summary judgment returnable before a trial judge other than the judge who had been involved in attempting to resolve the cases. Faced with the prospect of a judicial ruling on the coverage issue, and uncertain as to what the ruling would be, the attorneys involved in the malpractice litigation accelerated settlement discussions.

From the record before us, we can conclude that extensive settlement discussions took place during most of the day on March 11, 2004, the day before the summary judgment motions were returnable. During the course of these discussions, the trial judge who had initially been involved in attempting to resolve the lawsuits provided assistance, but at some point during the afternoon, it appeared that the discussions had come to a dead end and would not be ...


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