On appeal from the Superior Court of New Jersey, Law Division, Mercer County, L-2900-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Before Judges Wefing, R. B. Coleman and Lyons.
Plaintiff, Salvatore Bucca (Bucca), appeals from a March 16, 2007 order of the Law Division, Mercer County, granting the motion of defendant, the Hartford Insurance Company (the Hartford), to dismiss the complaint in plaintiff's action for a declaratory judgment. In this action, plaintiff sought to enforce rights allegedly assigned to him by his former employer, TSD Advanced, Inc. (TSD), in connection with the settlement of a lawsuit brought by plaintiff against TSD. After reviewing the record in light of the contentions advanced on appeal, we affirm.
An employment relationship between TSD and plaintiff began on January 19, 1984 and continued until February 7, 2001 when plaintiff alleges he involuntarily resigned.*fn1 On April 24, 2001, plaintiff filed a four-count complaint against TSD alleging (1) intentional harassment and discrimination that subjected plaintiff to emotional and physical stress and aggravated his disability, Multiple Sclerosis (MS), in violation of the New Jersey Law Against Discrimination (NJLAD); (2) constructive discharge; (3) the need for injunctive and declaratory relief regarding the rights and responsibilities of the parties under documents creating a contractual relationship; and (4) entitlement to wages, commissions and expense reimbursement under common law and applicable statutes.
The Hartford had issued a workers' compensation and employers' liability policy to TSD for the policy periods between the dates of December 1, 1999 and December 1, 2001. In response to a demand by TSD that the Hartford take up the defense of plaintiff's lawsuit and indemnify TSD for all possible loss, the Hartford sent TSD a reservation of rights letter, dated June 4, 2001. Subject to its reservation of rights, the Hartford acknowledged that "[i]t would appear that counts one and two of the pleading make allegations which might be covered if there can be shown to be a qualifying bodily injury." It noted, however, that "counts three and four clearly make no allegations coming within the coverage." The Hartford advised that it would only provide a defense and pay damages for a qualifying bodily injury during the policy period, but in the meantime, it allowed TSD to choose its own counsel to defend the case. Thus, the Hartford agreed to reimburse TSD for counsel fees related to the defense, without waiving its right to an apportionment of defense fees and costs associated with potentially covered and uncovered counts.
Once plaintiff's case against TSD had proceeded through discovery, TSD filed a motion seeking to dismiss plaintiff's claims under count one. That count alleged, among other things, that the actions of TSD had aggravated, exacerbated or contributed to the aggravation or exacerbation of the plaintiff's MS. By order dated June 1, 2004, the Law Division granted that motion, and it also precluded plaintiff from offering any medical expert or other expert at trial to provide any medical liability or medical damage opinion that any medical/physical condition or disability of plaintiff, Salvatore Bucca, was caused, injured, damaged, aggravated or exacerbated as a result of the misconduct alleged against [TSD] in the within matter or the stress from [plaintiff's] work and/or employment at/with [TSD].
The June 1, 2004 order specified, however, that it would have no preclusive effect in plaintiff's pending workers' compensation action.
Thereafter, TSD again moved to dismiss all claims and, by an order dated April 15, 2005, the court granted partial summary judgment. That order dismissed plaintiff's claim of constructive discharge (count two), and his claim for economic damages relating to unpaid commissions and expenses (count four). TSD's motion to dismiss plaintiff's claim alleging a hostile work environment, the remaining claim in count one, was denied.
Based on the entry of those orders, the Hartford wrote to TSD on September 22, 2005, advising of its position that the complaint no longer contained any count directly relating to bodily injuries. It also communicated its view that the remaining discrimination claims contained in count one appeared to be framed by plaintiff as intentional acts, which would be subject to a policy exclusion. As a consequence, the Hartford asserted that its coverage obligations had been completely satisfied, that it was no longer obligated to fund the costs associated with defending TSD and that it could not be called upon to indemnify TSD under the policy.
Approximately eight months after that notification from the Hartford to TSD, the underlying action was called for trial, but in lieu of trial, plaintiff and TSD entered into a settlement agreement. Pursuant to their agreement, plaintiff agreed to release his claims for $125,000, and TSD agreed to assign to plaintiff any and all rights, interest, coverage or claims TSD might have against the Hartford under the terms of its insurance policy for payment of that settlement amount. The terms of the settlement agreement are more particularly set forth in the Release and the Assignment exchanged between plaintiff and TSD.
The Release, finalized on July 12, 2006 as part of the settlement, states:
1. Release. Releasor [plaintiff] hereby releases and gives up any and all claims and rights which Releasor may have against Releasee [TSD], its agents, servants, employees, predecessors, successors, officers and directors. This releases all past, present and future claims, causes of action, or demands for damages, monies, personal injuries (physical, mental, emotional or otherwise), medical costs and care, expenses, attorney fee earnings, compensation (compensatory and punitive) or any other thing whatsoever in any way arising out of the Superior Court of New Jersey, Law Division, Mercer County Complaint Salvatore Bucca v. TSD Advanced, Inc. also known as Tri-State Design Docket No. MER-L-000455-01 ("Bucca Complaint") as filed or which could have been filed. Except to the extent that the settlement consideration, described in Paragraph 2 Consideration herein, may be sought and collected by Releasor from the Hartford Insurance Company ("Hartford") in accordance with the Assignment attached hereto as Exhibit A, Releasee [sic] shall not and forever releases and gives up any claim or right to seek collection of such settlement consideration from Releasee, its agents, servants, employees, predecessors, successors, officers and directors.
2. Consideration. Releasor has received from Releasee a settlement of the Bucca Complaint for $125,000 in accordance with and as entered on the record before the Honorable Bill Mathesius, J.S.C. on March 30, 2006 ("Bucca Complaint Settlement"). A copy of such settlement as entered on the record before the Honorable Bill Mathesius, J.S.C. on March 30, 2006 is attached hereto as Exhibit B.*fn2
Although the Release recites the receipt of $125,000, TSD did not pay that settlement amount. Instead, TSD merely assigned to plaintiff its right of indemnity, if any, against the Hartford. Michael Nussbaum, President of TSD, executed an Assignment, dated June 19, 2006, which provides:
This Assignment is hereby given by TSD ADVANCED, INC., also known as TRI-STATE DESIGN (Assignor) to SALVATORE BUCCA (Assignee) in accordance with full and final Settlement of the Superior Court of New Jersey, Law Division, Mercer County Complaint Salvatore Bucca v. TSD Advanced, Inc. also known as Tri-State Design Docket No. MER-L-000455-01 ("Bucca Complaint") of $125,000 in accordance with and as entered on the record before the Honorable Bill Mathesius, J.S.C. on March 30, 2006 ("Bucca Complaint Settlement").
Assignor hereby assigns to the Assignee any and all rights, interest, coverage, claims, that Assignor has, if any, against the Hartford Insurance Company ("Hartford") in accordance with the Hartford Policy No. 13 WECBD 5392 issued to Assignor ("Hartford Policy") for payment of the Bucca Complaint Settlement. [(emphasis added).]
The Hartford was not a party to the settlement; it did not consent to the terms; it denies that it is bound by the settlement. It questions the good faith of the settlement and asserts that at the time of the settlement all covered claims for bodily injury had been dismissed and that TSD had no right to indemnification under the insurance policy.
In light of the disagreement between the parties regarding the Hartford's obligations under the policy, plaintiff filed, on November 3, 2006, his complaint in this action, seeking a declaratory judgment that plaintiff is entitled, as the assignee of TSD, to the rights that TSD had under its policy with the Hartford. Plaintiff's declaratory judgment complaint alleges that the Hartford declined coverage under the terms of its insurance policy with TSD Advanced, Inc. [and that] the Hartford refused to both provide a defense or indemnification to TSD Advanced, Inc., on the claims of Salvatore Bucca for emotional distress damages and attorney fees on the hostile work environment claim.
Plaintiff contends that pursuant to the terms of the insurance policy issued to TSD, the Hartford Insurance Company is liable to indemnify TSD on plaintiff's claims for ...