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New Jersey Insurance Underwriting Association v. Lawson

June 26, 2008

NEW JERSEY INSURANCE UNDERWRITING ASSOCIATION, AS SUBROGEE OF UPSCALE DEVELOPMENT, INC., PLAINTIFF-APPELLANT,
v.
ARWILL LAWSON A/K/A SELINE JAMAL, INDIVIDUALLY AND T/A BRICK CITY HOME IMPROVEMENT, DEFENDANT-RESPONDENT.



On appeal from Superior Court of New Jersey, Law Division, Essex County, Docket No. L-2295-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued February 13, 2008

Before Judges Coburn, Fuentes and Grall.

This appeals concerns a subrogation action in which plaintiff, New Jersey Insurance Underwriting Association ("NJIUA"), sought to recover proceeds paid under a fire insurance policy from defendant, Arwill Lawson, individually and trading as Brick City Home Improvement. NJIUA alleged that Lawson or his workers negligently used a torch to install plumbing pipes and fixtures, causing a fire that damaged the property in the insured's home. The jury found in favor of defendant by a vote of six to two.

Plaintiff now appeals seeking a new trial. It argues that the jury verdict was irreparably tainted by the trial judge's numerous erroneous evidentiary rulings. NJIUA also argues that the judge exhibited an unwarranted hostility and bias against its trial counsel. After carefully considering the record developed before the Law Division, we reverse.

Viewed in the context of this hotly contested trial, we are satisfied that the trial court committed reversible error when it: (1) precluded plaintiff from introducing evidence of defendant's prior inconsistent statements; and (2) improperly exhibited an unwarranted hostility and disapproval of plaintiff's counsel in the presence of the jury.

The trial judge's aggressive management style and demeanor improperly interfered with plaintiff's right to present its case to the jury. In particular, the judge's repeated admonitions to counsel, made in the presence of the jury, and threats to cut off his examination of a witness were unwarranted, and manifested an undue hostility against plaintiff. This persistent judicial disapprobation of counsel, exhibited in the presence of the jury, cast a shadow of illegitimacy over plaintiff's claims, and had the capacity to improperly divert the jury's focus away from its obligation to consider the evidence impartially, without prejudice.

I.

Leroy Williams is the president of Upscale Development, Inc. ("Upscale"). In this capacity, he purchases and renovates homes, for the purpose of reselling them to new homebuyers. Upscale acquired a three-family home located at 34 Elmwood Terrace, Irvington, New Jersey; it procured insurance coverage for the property, including fire insurance, from plaintiff NJIUA. Williams hired defendant, Arwill Lawson, trading as Brick City Home Improvement, to renovate the site. Although not friends, he had known Lawson for approximately fifteen years. At the time, Lawson had been a contractor for just a little over a year.

The renovation contract included that Lawson would "[f]ully remodel the bathroom, [install] new ceramic floor, tub, toilet and sink with vanity and paint [as needed]; [the] electrical & plumbing [systems would also be] brought up to code." According to Williams, the contract required that every inch of pipe and wire would be removed and replaced. In contrast, Lawson testified that the renovations did not include the plumbing and the electric. He believed he was hired to replace the roof, floors, windows and sheetrock and renovate the bathrooms and the kitchen.

On September 17, 2004, Lawson applied to the Township of Irvington for a construction permit. The contract price for the renovations was $48,500. However, when he submitted a permit application to the municipal construction official, Lawson represented that the cost of the renovations was $6000, thus reducing the amount of the application fee, which is calculated, in part, on the cost of the project. Lawson also misrepresented the extent of the work to be performed, stating that the job would be limited to painting, replacing windows, and installing sheetrock.

The renovations began near October 2004. Brick City personnel did not directly perform any of the physical labor; instead, Lawson, along with his partner Tim Winn, hired and supervised subcontractors, who performed the actual work. The property had two entry points, a front door and a back door. While the construction work was taking place, the back door was boarded up with plywood; the front door was secured with a padlock.

Williams had a limited role in the renovations. In fact, he testified that he did not even have a key to the home while the renovations were in progress. By contrast, Lawson, his partner Tim Winn, and the subcontractors all had keys. On October 20, 2004, materials for replacing sheetrock, including twenty buckets of compound, were delivered to the worksite. On the same date, the subcontractors began installing the sheetrock; although the tub, toilet, and sink had been previously removed, no one performed any plumbing work. The laborers left the worksite near 6 p.m. At 10:30 p.m. on October 20, 2004, the fire department received notice of a fire at the home.

II.

According to Irvington Fire Department Lieutenant John Durish, when the firefighters arrived at the scene, the front door of the house was locked, requiring a forced entry by the police. Durish did not know whether the backdoors were still secured with the plywood. Most of the fire damage occurred inside the second floor bathroom, at the floor level. The remainder of the home sustained minimal smoke and water damage.

The day after the fire, Lawson returned to the property to board up the windows. While there, he noticed that most of the twenty buckets of compound he had previously purchased were missing. According to Williams, the back doors were still in place, and there were no signs that anyone had tried to "hack at them or cut them or burn them or do anything to damage them."

On October 22, 2004, less than two days after the fire, John Decker, an insurance adjuster for NJIUA, inspected the site. On direct examination, Decker testified that he did not find any evidence of recent plumbing work. On cross examination, however, when shown a photograph of the second floor bathroom, Decker agreed that there appeared to be a piece of copper pipe on the floor. He also testified that Lawson told him that some of his buckets of joint compound were missing.

Under the property's fire insurance policy, NJIUA paid Upscale $117,239 representing the actual cash value of the fire loss. Based on his investigation, Decker wrote to Lawson explaining that NJIUA believed that his contracting company was responsible for inadvertently starting the fire. At trial, Decker testified that Lawson stated that he had not been at the worksite on the day of the fire; and he was not sure if his plumbers had been there that day. Later on, Lawson called Decker back to confirm that, to his knowledge, there had not been any plumbers present that day.

III.

At trial, the parties stipulated that the amount of damages was $117,239, the amount NJIUA paid to Upscale pursuant to its fire insurance policy. Therefore, the jury was only asked to determine the question of liability. Both sides also stipulated that the cause of the fire was the application of a heat source to piping. Therefore, the only disputed issue concerned who applied the heat source to the pipe.

Plaintiff's theory of liability emphasized that defendant and his employees were the only ones with access to the house. According to plaintiff, the fire was caused by these employees as they soldered a pipe. The lack of evidence showing a forceful entry into the property corroborated this claim. In response, defendant argued that his employees had not performed any soldering, because plumbing replacement was not a part of the contract. Thus, the lack of direct evidence showing who applied the heat source to the pipes, and the evidence of a possible intrusion, based on the missing constructions supplies and forceful removal of pipes from the wall, were sufficient to sustain a finding of vandalism, as the probable cause of the fire.

NJIUA called four witnesses at trial. Fire Department Lieutenant John Durish, insurance adjuster John Decker, and Upscale president Leroy Williams testified as fact witnesses. Jonathon LeBow, testified as an expert in determining the origin and cause of fire. Defendant called himself a fact witness and Darren Redsicker testified as an expert in determining the origin and cause of fire. We will limit the discussion of the testimony presented by these witnesses, in order to provide a concise factual basis from which to review the evidential rulings made by the trial judge which are one of the bases of plaintiff's appeal.

Defendant's Out-of-Court Statements

Plaintiff argues that the trial court improperly excluded several pieces of evidence impeaching Lawson's credibility. We will commence our discussion by identifying and examining two pieces of evidence: (1) the verbatim record of John Decker's telephone interview with the defendant; and (2) the verbatim record of Lawson's telephone conversation with a representative of his insurance carrier, Selective Insurance.

The Decker Interview

On November 17, 2004, NJIUA adjuster John Decker sent Lawson a letter notifying him that the carrier considered him responsible for the fire. This prompted Lawson to call Decker. While on the telephone, Decker explained to Lawson that NJIUA's investigation led them to believe that his contracting company was responsible for inadvertently starting the fire. On November 22, 2004, Decker interviewed Lawson over the telephone; with Lawson's permission, Decker recorded their conversation.

During Lawson's cross examination, plaintiff's counsel attempted to use the transcript of this telephone conversation to impeach his testimony. Specifically, in response to Lawson's statement that his partner's wife typed the contract for him, plaintiff's counsel sought to confront the witness, in the presence of the jury, with the following colloquy:

[Decker]: Did you prepare this [contract]?

[Lawson]: Oh yes.

[Decker]: Okay.

[Lawson]: I should say I have an outside person who does it.

[Decker]: An estimator?

[Lawson]: Yes, something like that, yes.

The trial judge limited counsel's use of this evidence, by directing the witness to read the transcript to himself as a tool in "assist[ing] him in his recollection." Lawson denied ever making the statements reflected in this transcript.

The Selective Insurance Interview

In response to plaintiff's interrogatories, Lawson had produced a transcript of a recorded interview of himself and his business partner, Tim Winn, conducted by a representative of Selective Insurance Company, the carrier insuring defendant's business. After a brief sidebar colloquy with counsel, the trial judge addressed plaintiff's counsel and made the following sua sponte ruling:

If you want to ask [Lawson] does it refresh your recollection? Did you ever tell anybody that you had used the torch or that your people had used the torch? Does this document -- don't tell him what it is -- help you refresh your recollection whether or not you ever said that to anybody? If [Lawson] says no, you're stuck with the answer. [(Emphasis added).]

Despite these restrictions, however, the judge permitted counsel to read aloud the part of the interview he believed contradicted Lawson's testimony concerning whether plumbing work was performed at the site of the fire. Specifically, plaintiff read the following exchange between the Selective Insurance representative and Lawson or Winn:

Question: [W]hat about the rough, the plumbing?

Answer: The plumbing was already there. A lot of plumbing was already there. We just was time stuck in. We did a little light plumbing. That was on the second -- that was only on the second floor.

Question: On the second floor where the fire started?

Answer: Yes. No, excuse me, on the first floor. I meant to say nothing on the second, on[ ] the first floor I meant to say.

Question: Okay, so on the first floor you did light plumbing. What does that mean?

Answer: Like all we did was put a diverter on for the shower. Yeah, a shower diverter in one shower divert. We didn't even do the second or the third.

Question: What is a shower diverter?

Answer: That is a pipe that comes from the tub all the way up where they cut the water on for the shower.

Question: Okay, and is that a ...


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