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Liberty Mutual Insurance Co. v. Land

March 27, 2009


On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2169-01.

Per curiam.


Argued March 5, 2009

Before Judges Carchman, R. B. Coleman and Sabatino.

This insurance fraud matter returns to this court a second time, following a retrial that we ordered in our February 2005 unpublished opinion, see Liberty Mut. Fire Ins. Co. v. Land, Docket No. A-5337/5690-02 (February 23, 2005), and the Supreme Court's ensuing opinion clarifying that plaintiff's burden of proof is by a standard of the preponderance of the evidence. Liberty Mut. Ins. Co. v. Land, 186 N.J. 163 (2006).

We need not recite at length the underlying facts, which are detailed in our prior decision and the Supreme Court's opinion. Briefly, this is an action by plaintiff, Liberty Mutual Insurance Company,*fn2 against defendant Steven Budge under the New Jersey Insurance Fraud Protection Act ("the IFPA" or "the Act"), N.J.S.A. 17:33A-1 to -30. The complaint also named as co-defendants Rose Land and Frank Land, who are Budge's aunt and uncle.*fn3 At the times relevant to this matter, Budge was a public adjuster.

After a neighbor's tree fell on the roof of their cabin in Highland Lake in December 2000, the Lands filed a property damage claim with plaintiff, their homeowners' insurer. The Lands hired Budge, their nephew, to assist them in presenting the insurance claim, agreeing to pay him ten percent of any recovery.

In investigating the claim, plaintiff discovered that Budge, Mr. Land, and another man had apparently gone on the roof after the tree fell and had attempted to increase the physical damage to the Lands' cabin. Among other things, the men had been observed slamming a portion of the fallen tree repeatedly on the roof, causing additional holes in the structure. They also shattered a skylight and bent a television antennae. These activities were videotaped by the neighbor, Joseph Rizzo, who had owned the tree. He supplied a copy of the videotape to plaintiff.

Meanwhile, the Lands had submitted four proofs of loss, which were on Budge's letterhead and also contained his signature. The claims totaled $69,338. As an additional part of the claims process, the Lands appeared for an oral examination, at which they both asserted under oath that the tree had fallen through the roof into the dwelling.

After completing its investigation, plaintiff concluded that the claims of loss had been fraudulently inflated. It accordingly denied coverage and withheld the payment of benefits. Plaintiff then brought an action against Budge and the Lands in the Law Division, alleging breach of contract and numerous violations of the IFPA. Among other things, plaintiff sought compensatory damages in the litigation, which it requested to have trebled under N.J.S.A. 17:33A-7(b) (authorizing treble damages "if the court has determined that the defendant has engaged in a pattern of violating [the] [A]ct").

The matter was initially tried before a jury in the fall of 2002. That trial resulted in a jury verdict in plaintiff's favor against all three defendants, finding that they each had violated the IFPA. The trial court then issued a corresponding judgment awarding compensatory and trebled damages. On the ensuing appeal, we set aside the initial judgment on three distinct grounds: (1) the appropriate standard of proof was by a heightened "clear and convincing" evidence, not the preponderance standard that had been charged to the jury; (2) plaintiff's counsel made improper comments in his summation which may have tainted the jurors; and (3) Budge, who represented himself, should have been permitted to testify at trial in narrative form. We thus remanded the case for a new trial.

In its own review of the case, the Supreme Court determined, as a matter of law, that the proper standard of proof in a civil action brought by an insurer under the IFPA is the preponderance standard. 186 N.J. at 170-79. Consequently, the Court reversed our opinion on that discrete legal issue. Ibid. The Court left the balance of our dispositions unaltered, and remanded the case to the Law Division for the new trial that we had previously directed. Id. at 180-81.

After motions on several pretrial issues, the case was tried a second time before a jury in November and December 2006. Defendant again appeared pro se, but this time was permitted to testify in narrative form. The second jury also returned a verdict in plaintiff's favor, finding that Budge and the Lands had each violated the Act. Consequently, the court entered an order for final judgment on April 19, 2007. The order first awarded plaintiff $5,157.41 in investigative costs, plus $52,576.78 in counsel fees. The court then trebled those amounts, yielding a total of $173,202.57. The court also specified that defendants are responsible ...

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