On appeal from the Superior Court of New Jersey, Law Division, Hudson County, L-3611-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges R. B. Coleman and Sapp-Peterson.
Plaintiff Preserver Group (Preserver) appeals from that portion of the May 19, 2006 order entered by the Law Division granting summary judgment to defendants Al Bragin and RAM Holding Corp. (RAM) that awarded RAM $4,054 in direct damages and $9,047 in counsel fees. We affirm.
This matter arises out of property damage caused to plaintiff's insured, Blimpie, a tenant in a building owned by RAM. A pipe located above the area leased to Blimpie that was connected and appurtenant to the building's sprinkler system froze and ruptured, causing water to flow down into the area leased by Blimpie. RAM paid $4,054 to a contractor hired to repair the pipe. As a result of the water damage to its area, Blimpie filed a claim with Preserver, which paid more than $21,000 to repair and restore the Blimpie space.
On July 5, 2005, Preserver, exercising its subrogation rights under the policy it issued to Blimpie, filed a complaint in the Law Division against defendants and Stevens Institute of Technology (Stevens), the tenant in control of the area where the pipe ruptured. Preserver settled its claim with Stevens.
Defendants, in addition to answering the complaint, filed a counterclaim against Preserver seeking to recover their direct repair costs for the pipe and counsel fees. According to the counterclaim, RAM was named as an additional insured on the Preserver policy issued to Blimpie. RAM claimed that the damage caused by the sprinkler system was expressly covered under the policy.
More than a year prior to Preserver filing the complaint, defendants, through their then counsel, notified Preserver that they disagreed with Preserver's contention that they were liable for the damages Preserver incurred as a result of the incident. In letters dated March 2, May 7, September 7, 2004, and January 18, 2005, defendants' attorney referred to RAM's lease with Blimpie and their position that Blimpie bore responsibility "for the sprinkler system located in Blimpie's property." In a letter dated June 22, 2005, defendants' attorney stated, "I believe your client's lease with the Landlord has a no subrogation clause in it. You might also want to consider that." Preserver filed its complaint against defendants less than one month later.
In a letter dated September 7, 2005, defendants' new counsel placed Blimpie on notice of their position that the action against them lacked merit:
This office represents defendants, Al Bragin and Ram Holding Corp. in the above referenced matter. Pursuant to R. 1:4-8, the within letter is to serve as defendants' notice and demand requesting that your client, Preserver Group, withdraw its Complaint as to defendants, Al Bragin and Ram Holding Corp., as the claims in the Complaint are in violation of R. 1:4-8(a).
The Complaint is specifically in violation of R. 1:4-8(1) through (3), as the claims asserted in the Complaint only serve to increase the cost of litigation, are frivolous in nature and have no factual support. As you are aware, as the subrogee of Blimpie, your client, Preserver Group, stands in the shoes of Blimpie and has no rights beyond those which Blimpie would possess as against the defendants. The lease entered between Blimpie and Ram Holding Corp. specifically waives the right of subrogation on behalf of Blimpie and on behalf of all its insurance carriers. Additionally, the lease requires Blimpie to name Ram Holding Corp. as an additional insured on all its insurance policies, including those policies for which payment was already made by your client.
Additionally, there is no basis to sue Al Bragin personally in this matter, as he is not the owner of the building and has no contractual relationship with Blimpie. For these reasons, as well as the additional obligations and waivers of liability set forth in the lease, the claims asserted by Preserve[r] Group are clearly frivolous and should be withdrawn at this juncture.
Pursuant to N.J.S.A. 2A:15-59.1, we also place your client on notice that the Complaint is frivolous for the ...