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Serpa v. New Jersey Transit

July 11, 2008

CARLOS SERPA, A/K/A FILOMON TORRES AND MARIA ELENA CRESPO, HIS WIFE, PLAINTIFFS,
v.
NEW JERSEY TRANSIT, NEW JERSEY TRANSIT RAIL OPERATIONS, NEW JERSEY TRANSIT CORPORATION, STATE OF NEW JERSEY, DEFENDANTS.
QUINCY MUTUAL FIRE INSURANCE COMPANY, PLAINTIFF-RESPONDENT,
v.
DAN-ZA GENERAL CONTRACTORS, INC., DEFENDANT-APPELLANT/ CROSS-RESPONDENT, AND CARLOS SERPA, DEFENDANT, AND NEW JERSEY TRANSIT RAIL OPERATIONS, DEFENDANT-RESPONDENT/CROSS-APPELLANT.



On appeal from the Superior Court of New Jersey, Law Division, Essex County, Docket No. L-11413-99.

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

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued May 13, 2008

Before Judges Coburn, Fuentes and Chambers.

This lawsuit arises out of a construction accident that took place during renovations of the Newark Broad Street Train Station on property owned by defendant New Jersey Transit. At the time of the accident, plaintiff Carlos Serpa was working within the scope of his employment for third-party defendant Dan-Za General Contractors Inc. ("Dan-Za"), the general contractor for the renovations. Plaintiff sued defendant New Jersey Transit, as well as other parties, for negligence. He brought no direct claim against his employer Dan-Za, but he did receive workers' compensation benefits totaling $900,000 from his employer. New Jersey Transit brought a third-party complaint against Dan-Za that included a claim for express indemnification pursuant to its contract with Dan-Za.

New Jersey Transit eventually settled plaintiff's claim for $1.5 million, and at the time of the settlement, Dan-Za agreed that the sum was reasonable. New Jersey Transit's claim for express indemnification was then submitted to the jury for an allocation of fault. The jury found New Jersey Transit fifteen percent responsible for the happening of the accident, and DanZa eighty-five percent responsible for the happening of the accident. Under the terms of the indemnification provision, Dan-Za was responsible only for its own negligence and not that of New Jersey Transit. As a result, the trial court found that Dan-Za was responsible for eighty-five percent of the $1.5 million settlement, plus prejudgment interest. The trial court denied New Jersey Transit's request for attorneys fees.

On appeal, Dan-Za contends that it should receive a credit for the $900,000 paid in workers' compensation benefits. It argues that New Jersey Transit should not have paid the full $1.5 million, but should have deducted $900,000 from the sum it paid plaintiff. It also argues that New Jersey Transit should have paid only fifteen percent of the $1.5 million, since a public entity is responsible only for its own negligence. DanZa also disputes the award of prejudgment interest. In its cross-appeal, New Jersey Transit contends that it is entitled to attorneys fees under its contract with Dan-Za.

We affirm the entry of judgment against Dan-Za, since the contract entitled New Jersey Transit to indemnification for DanZa's negligence, and Dan-Za's percentage of negligence was correctly applied to the settlement figure. Because New Jersey Transit is a public entity, it had no statutory obligation to reimburse Dan-Za for the workers' compensation benefits paid to plaintiff. See N.J.S.A. 59:9-2(e). We find no abuse of discretion in the award of prejudgment interest. Since the indemnification agreement expressly allowed New Jersey Transit to recover attorneys fees, we reverse the denial of attorneys fees and remand in order that the proper amount of fees, incurred in pursuit of indemnification and after the settlement was made, may be fixed.

I.

The facts relevant to this appeal are not in dispute. New Jersey Transit, the owner of the Newark Broad Street Train Station, hired Dan-Za as its general contractor for renovation work to be done at the station. Under the terms of the contract, Dan-Za was responsible for workplace safety. In addition, the contract contained an express indemnification clause requiring Dan-Za to indemnify New Jersey Transit for DanZa's negligence.

On November 17, 1997, plaintiff, an employee of Dan-Za, was working on the renovation project when he fell from scaffolding suffering severe injuries. He sued New Jersey Transit among others. He did not file a direct claim against his employer, Dan-Za. He did, however, receive the sum of $900,000 in workers' compensation payments from his employer. New Jersey Transit filed a third-party complaint against Dan-Za, asserting claims for contribution and indemnification.

This case has a complex procedural history which we will not review, but rather we will focus only on those aspects relevant to this appeal. Plaintiff's claims against the other direct defendants had resolved by the time he reached a settlement with New Jersey Transit for $1.5 million. The settlement was placed on the record on October 15, 2003. While the settlement resolved all of plaintiff's claims, the record makes clear that the litigation would proceed on New Jersey Transit's third-party complaint against Dan-Za and on various cross-claims and third-party claims not relevant here. Counsel for Dan-Za agreed to the reasonableness of the settlement, stating on the record at the time of the settlement: "I was asked to agree that the $1.5 million was a reasonable sum under the circumstances without any admission of any liability on anybody's part, and I agree to that. And it was also asked that I agree or stipulate that the injuries occurred as a result of a fall from scaffolding, and I agree with that."

The dispute between New Jersey Transit and Dan-Za eventually went to trial. The sole issue submitted to the jury concerned New Jersey Transit's express indemnification claim against Dan-Za. The jury verdict entered on October 18, 2006, held Dan-Za eighty-five percent responsible for the accident and New Jersey Transit fifteen percent responsible. Under the indemnification agreement, New Jersey Transit was entitled to indemnification for Dan-Za's negligence, but not its own negligence. As a result, the judge molded the verdict and entered a judgment in the amount of $1,426,463.01. This figure was reached by ...


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