April 2, 2009
KWABENA WADEER AND OFELIA WADEER, PLAINTIFFS-RESPONDENTS, CROSS-APPELLANTS,
NEW JERSEY MANUFACTURERS INSURANCE COMPANY, DEFENDANT-APPELLANT, CROSS-RESPONDENT. AND MELISSA M. HENDRICKS, DEFENDANT.
On appeal from the Superior Court of New Jersey, Law Division, Morris County, Docket No. L-1225-05.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued January 22, 2009
Before Judges Fisher, Baxter and King.
This is a first-party claim by an insured of New Jersey Manufacturers Insurance Company (NJM) under the uninsured motorists (UM) feature of his automobile policy for an alleged "excess verdict above the policy limit of $100,000 for injury to a single person." There is also a claim that the "offer of judgment" rule, Rule 4:58-2, applies and should trigger a counsel fee award. We resolve both issues against the plaintiffs and in favor of NJM. We reverse in part and affirm in part.
In this first-party action, plaintiff and his wife who sued derivately, sought damages under the UM coverage with a policy limit of $100,000. Before trial plaintiff submitted an offer to take judgment under Rule 4:58-2 of $95,000 in full settlement. NJM declined the offer and the case went to trial before a jury.
The jury found an alleged "phantom" vehicle 100% responsible for the occurrence of the accident and awarded damages of $255,175. After the jury verdict plaintiff moved to enter judgment for the amount of the entire verdict, notwithstanding the policy limit of $100,000. Plaintiffs also sought prejudgment interest on the verdict in the amount of $27,278.23.
A final order for judgment in favor of plaintiffs and against NJM was eventually entered on March 31, 2008 for these amounts:
ORDERED as follows that Judgment be and is hereby entered against NJM in the total amount of $209,238.55. This total amount is comprised of the following components:
a) $100,000 in compensatory damages;
b) $30,000.00 in attorneys' fees to Robert G. Goodman, Esq. of the firm of Palmisano & Goodman;
c) $57,075.00 in attorneys' fees to Gregory T. Severinsen, Esq.;
d) $6,511.51 in costs of suit and litigation expenses;
e) $15,652 in pre-judgment interest;
IT IS FURTHER ORDERED that as previously set forth in this Court's Order entered on September 14, 2007 and filed on September 17, 2007, and accompanying Statement of Reasons, Plaintiffs are not entitled to the full amount of the jury verdict. Instead, the verdict is molded to $100,000 in accordance with the uninsured motorist coverage limits contained in the policy issued to Plaintiffs by NJM.
IT IS FURTHER ORDERED that as previously set forth in this Court's Order entered on September 14, 2007 and filed on September 17, 2007, and accompanying Statement of Reasons, the amount of attorneys' fees sought by Plaintiffs and awarded by this Court is proper.
IT IS FURTHER ORDERED that as previously set forth in this Court's Order of October 23, 2007, NJM's motion for reconsideration is denied. The application of the Offer of Judgment Rule is triggered by measuring the amount of the Offer of Judgment filed by the plaintiffs against the amount of the jury verdict, not the amount of the eventual judgment for compensatory damages entered by the Court.
Although the judge molded and reduced the verdict to the $100,000 policy limit, he rejected NJM's argument that the language of the applicable rule, Rule 4:58-2, refers to the amount of the eventual judgment, not the amount of the verdict. The judge also added on interest and litigation costs, for a total of $193,586.51. The total amount plaintiffs had sought was $362,278.
By way of background, the case was first heard by the Uninsured Motorist arbitrators, pursuant to the policy language. The arbitrators found liability of 30% on the plaintiffs and 70% on the "phantom vehicle" with a gross award of $125,000 (net $87,500 for the plaintiffs). NJM rejected this award and opted for trial. After suit was commenced, the Rule 4:21A non-binding arbitration resulted in a 50/50 liability finding or a net $162,500 to plaintiffs on a gross award of $325,000. NJM again refused the award and opted for a jury trial. In the interim NJM settled with claimant Hendricks, the totally innocent operator of a third vehicle paying $225,000 out of plaintiffs' liability policy of $300,000.
We reject plaintiffs' argument that the judge erred in molding the jury verdict of $255,175 to conform to the UM policy limits of $100,000. We follow Taddei v. State Farm Indemnity Co., 401 N.J. Super. 449, 458 (App. Div. 2008), where we recently rejected an attempt to create a new "cause of action providing a remedy in the UM context similar to that provided on third-party claims in Rova Farms Resort, Inc. v. Investors Insurance Co. of America, 65 N.J. 474 (1974)." We there implied that such a revision in existing law should be addressed to the Supreme Court or the Legislature, not to an intermediate appellate panel. Taddei, supra, 401 N.J. Super. at 458-59.
The next question on this appeal is the impact of Rule 4:58-2 in view of the plaintiffs' offer to take a judgment in the amount of $95,000. Plaintiffs urge that because the verdict was $255,175, much more than 120% of the claimants' offer, the sanctions for refusal of the offer were triggered, which included an award of counsel fees. The $100,000 molded verdict was entered by the judge by order entered on September 14, 2007.
We agree with NJM that the judgment of $100,000 controls over the amount of the verdict. In this respect the trial judge erred in using the jury's verdict of $255,275 as the trigger for the sanctions and remedies under Rule 4:58-2. The rule clearly stated and still states: "If the offer of a claimant is not accepted and the claimant obtains a money judgment, in the amount that is 120% of the offer or more . . ." (emphasis supplied), the penalties result. Nothing in the rule relates to the amount of the jury verdict, which may not survive post-trial applications, as here, for various reasons. Indeed, the word "verdict" was present in prior versions of the Rule but was stricken in the 2007 version in favor of "money judgment." In this situation the plain language and ordinary meaning of the rule controls our decision in construing Rule 4:58-2. See State v. Smith, 197 N.J. 325, 332 (2009). We eschew the plaintiffs' invitation for "judicial tinkering."
The trial judge relied on the Supreme Court's decision in Gonzalez v. Safe & Sound Security Corp, 185 N.J. 100 (2005), to rule in favor of plaintiffs' right to the remedies under Rule 4:58-2 in this situation. Gonzalez referenced an earlier version of Rule 4:58-2 which expressly used the word "verdict" as one of the bases for comparison to the offer. Id. at 124. In the 2007 version, only "judgment" was used and "verdict" had been deleted.
The trial judge thus erred in including in its judgment the items of damages enumerated in Rule 4:58-2(1)(2) and (3). We reverse on the appeal and remand to the trial court to entertain an application for any interest and costs of suit allowed by law, aside from Rule 4:58-2 sanctions.
Reversed on the appeal, and remanded; affirmed on the cross-appeal.
© 1992-2009 VersusLaw Inc.