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Business Computer Resources, Inc. v. Great Wall of Tinton Road


August 10, 2009


On appeal from the Superior Court of New Jersey, Law Division, Atlantic County, Docket No. L-380-07.

Per curiam.


Argued April 30, 2009

Before Judges Parrillo, Lihotz and Messano.

Plaintiff Business Computer Resources, Inc., a computer services and supply company, sued defendant, Great Wall of Tilton Road, Inc., i/p/a Great Wall Chinese Food, a neighboring business in the strip mall both shared, alleging it had sustained property damage as the result of defendant's negligently-caused fire. During trial, over defendant's objection, the judge admitted into evidence two documents--one a computer-generated spreadsheet, prepared by plaintiff's principals, of inventory, fixtures and other personal property lost or damaged in the fire; the other, a work estimate from a fire cleaning and restoration company, Servpro. Plaintiff, who retained a public adjuster to evaluate its loss and negotiate with its insurer, requested the judge to instruct the jury that the adjuster's commission was a recoverable element of its damages. The judge refused.

Defendant stipulated as to liability. The jury concluded that plaintiff had not failed to mitigate its damages, and awarded it $52,000 in damages, to which the judge added prejudgment interest and allowable costs. Final judgment was entered in the amount of $56,620 on June 10, 2008.

Defendant moved for a new trial or remittur. It argued that the spreadsheet was hearsay and not subject to any exception under our evidence rules. Defendant further contended that the values for the inventory, fixtures, and property contained on the spreadsheet were "replacement values" and not "actual cash values." As to the estimate from Servpro, defendant argued that it was also inadmissible hearsay because no witness from that company ever testified at trial.

At oral argument on the motion, regarding the Servpro document, the judge noted that plaintiff's "adjuster testified with respect to the estimate" which "he found to be reasonable . . . given the amount of damage that was done to the premises." In a short written opinion, the judge characterized the spreadsheet as a "summary of damages suffered by [p]laintiff," to which plaintiff's principals had also testified. He concluded the document was not hearsay. Although he did not directly address defendant's replacement value versus actual value argument, the judge nevertheless found the jury's verdict was supported by the evidence, and was far less than the "$79,000 in damages" that plaintiff had sought. The judge denied defendant's motion and this appeal followed.

Before us, defendant reiterates the arguments it raised below. Additionally, plaintiff cross-appeals, arguing that the judge erred in refusing to permit the jury to consider its adjuster's commission as an element of its damages. We have considered these points in light of the record and applicable legal standards. We affirm.


The testimony at trial revealed that plaintiff was formed by Cindy Rollins and her brother, Rick Sheehan. On April 5, 2006, a fire broke out at defendant's restaurant and spread to surrounding stores. When Rollins arrived at her store in the early morning hours, she found its doors opened, and soot and water everywhere.

Plaintiff retained Gregory Coe of Young Adjustment as its public adjuster. Coe requested Sheehan prepare a list of all inventory and equipment damaged in the fire, with the corresponding fair market value of each item. Rollins testified that "[d]ue to the nature of [her] business," she did not maintain a current inventory of every item in the store. She and her fellow workers prepared a spreadsheet containing hundreds of line items of inventory by going "through each and every box" in the store after the fire.

In order to assign "a fair market value" to each item, Rollins "went through the process of going to [her] distributors[] [and] hitting different internet sites." She testified that "[s]ome of the parts were obsolete," meaning they could no longer be purchased from her suppliers. But, she explained, "they're still valuable because the equipment is still out in the market and many of our customers rely on us keeping those kinds of parts to fix the older printers or older computers." In preparing the spreadsheet, Rollins included a column denoted "Value Source," which provided an internet link to the source she used for each item's price. Thus, by clicking on the link, one could see the purchase price for each item listed. She included the manufacturer and part number assigned to each item in separate columns on the spreadsheet. The spreadsheet ultimately comprised nineteen pages and totaled $160,608 in alleged losses and damages to inventory, fixtures, and personal property.

Defendant objected to the spreadsheet as hearsay for the first time as Rollins testified. Plaintiff's counsel countered that he intended to have Rollins identify how the spreadsheet was prepared, and then "offer the list into evidence." The judge overruled the objection for the moment, noting, "[w]hen you have inventory that's been damaged how else do you [prove it] except itemize it?"

Rollins explained that plaintiff did not submit an insurance claim for $160,608. Both she and Coe, who testified later, noted that the actual claim, $137,343, reflected a discount applied to 1) furniture and fixtures in the store that were used; and 2) items that were sealed in boxes and might not have been damaged by soot. In somewhat confusing testimony, Rollins testified that the prices on the spreadsheet reflected plaintiff's "cost to replace" the inventory. At other points, she described the "current value" of an item as "how much money [she could] get for it." During cross-examination, Rollins stated, "I can tell you that these prices [on the spreadsheet] are the price[s] that we would have to pay to replace what was sitting in my store."

Rollins also testified that plaintiff elected to accept $93,168 from its insurance company because it needed to continue its business operations and believed it could pursue defendant for the difference. She explained that Young Adjustment was paid a ten percent commission directly from the insurance proceeds.*fn1

Sheehan testified that ninety percent of plaintiff's total inventory was discarded after the fire. He contacted Servpro to obtain a proposal for rehabilitation and repair work, specifically the cleaning and replacement of the store's drop ceiling. Sheehan testified that Servpro performed some of the work for which plaintiff paid $3,052.67, and identified the company's written estimate for additional necessary work in the amount of $15,062.72. Sheehan further testified about the costs associated with plaintiff's replacement of its carpet, and other repair work that was performed by other contractors.

Coe testified regarding his efforts on plaintiff's behalf. He had worked as a public adjuster for decades, and was very familiar with the values and costs associated with rehabilitating fire-damaged property. Among other things, Coe reviewed the Servpro proposal, testified that reviewing such estimates were part and parcel of his work as an adjuster, and that based upon his familiarity with plaintiff's store and the fire damage, this particular proposal was reasonable for the work that was necessary.

At the conclusion of the testimony, plaintiff moved to admit the spreadsheet and the Servpro estimate into evidence. Referencing his earlier colloquy with counsel in which he had described the spreadsheet as a "recapitulation," "a summary," and a "digest" of Rollins' testimony, the judge noted "the document itself is not evidence, but . . . is [of] assistance to the jury in understanding the nature of the claim." Nevertheless, he admitted the spreadsheet into evidence as an exhibit, indicating he would give the jurors a limiting instruction. As to the Servpro estimate, the judge ruled

I'm going to permit the document to go to the jury, and the reason I'm doing it is several fold. First, [defense] counsel has had the document for a considerable length of time. Secondly, there was testimony . . . and having had it a considerable length of time [defendant was] certainly free to get an expert . . . [and] could have brought in the preparer of that estimate.

He admitted the estimate into evidence as an exhibit.

The judge gave the jury the following instruction regarding the spreadsheet:

[Y]ou've heard a great deal of discussion about this document . . . and let me explain to you how I view that document. It's not evidence of [plaintiff's] loss . . . but . . . is a compilation of all the items comprising the losses that they are claiming to their personal property. It's presented to you . . . partly as a . . . convenience, partly as a result of . . . counsel's respect for your time, also respect for your attention span. [T]he document is utilized instead of a line item-by-item[] presentation.

It was prepared as a summary of [plaintiff's] testimony . . . but it's not evidence of what she lost. The evidence is her testimony.

So what I want you to take away [] is [the spreadsheet is] not evidence, but a summary of the testimony, what [plaintiff's] testimony could have been item[-] by[-] item[], and that you are to give it the weight that you deem appropriate . . . .

The judge charged the jury regarding damages as follows:

Now the measure of damages for plaintiff's loss is the difference between the market value of the personal property before and the market value after the damage occurred. If the personal property has no market value in its damaged condition, the measure of the damage[s] is the difference between the market value of the personal property before the damage occurred and its salvage value in its damaged condition.

Then, addressing the issue of the values contained on the spreadsheet, the judge told the jury

Now another comment that I need to make concerning [the spreadsheet], because you've heard what I've said here concerning fair market value, and the items that are presented in [the spreadsheet] are replacement value, and so we have fair market value versus replacement value. I can't tell you that those two things are the same because they aren't. Fair market value is what . . . a thing is worth what someone [agrees] to pay for it. That's what fair market value is. Replacement value can be a different value. Sometimes they're the same thing. Very often they aren't.

Plaintiff's testimony was as to the replacement value, not the fair market value. I can't tell you that they're the same thing, but you must determine what plaintiffs did in preparing [the spreadsheet] and determine whether or not it was reasonable and how they arrived at . . . the numbers that they arrived at.

Finally, the judge addressed the issue of the adjuster's fees by telling the jury that "the commission paid to [] Coe's firm . . . [wa]s not compensable. It's not to be considered in calculating the damages. It was the cost of [plaintiff] processing [its] claim . . . . So it's not compensable as part of this claim."

Plaintiff submitted a claim of $79,366.79 in total damages to the jury.*fn2 Defendant did not produce any witnesses. The jury returned a verdict of $52,000 in plaintiff's favor.


Defendant challenges the admission of the spreadsheet and ServPro written estimate as exhibits in evidence. As to each, it alleges that the documents were hearsay and not the subject of any exception under our rules of evidence. Additionally, as to the spreadsheet, defendant contends the judge erred in admitting it because plaintiff acknowledged that some of the values contained therein were based upon replacement value, and not fair market value. As a result, defendant contends the spreadsheet was "irrelevant."

We agree that both documents were hearsay, and were not admissible under any exception. However, we conclude that in light of the entire record and the judge's limiting instructions, any error was harmless. We further conclude that any error occasioned by the admission of the spreadsheet as a measure of plaintiff's damages was also harmless considering the testimony in its entirety, together with the judge's comprehensive instructions on fair market value and damages.

"'Traditional rules of appellate review require substantial deference to a trial court's evidentiary rulings.'" Benevenga v. Digregorio, 325 N.J. Super. 27, 32 (App. Div. 1999) (quoting State v. Morton, 155 N.J. 383, 453 (1998)), certif. denied, 163 N.J. 79 (2000). "[I]n making relevance and admissibility determinations[,]" the trial judge's exercise of his "broad discretion" "will not [be] disturb[ed], absent a manifest denial of justice." Lancos v. Silverman, 400 N.J. Super. 258, 275 (App. Div.), certif. denied sub nom., Lydon v. Silverman, 196 N.J. 466 (2008). However, we accord no such discretion to a ruling that is "inconsistent with applicable law." Pressler, Current N.J. Court Rules, comment 4.6 on R. 2:10-2 (2009).

"'Hearsay' is a statement, other than one made by the declarant while testifying at the trial . . . , offered in evidence to prove the truth of the matter asserted." N.J.R.E. 801(c). Hearsay is not admissible evidence, except as otherwise provided for by our rules of evidence or by law. N.J.R.E. 802. It is clear that the spreadsheet was hearsay because plaintiff sought to admit it to prove the quantum of its damages.

The facts in Kazanjian v. Atlas Novelty Co., 34 N.J. Super. 362 (App. Div. 1955), are similar to those presented here. In Kazanjian, the plaintiff's inventory of rugs suffered water damage as a result of a fire caused by the defendant's negligence. Id. at 362. The plaintiff met with various appraisers and adjusters who examined the inventory and agreed upon the extent of damage to each rug. Id. at 366-67. Those amounts were set forth in written memoranda listing each piece of damaged inventory and the corresponding agreed upon amount of loss. Id. at 367. At trial, the judge refused to allow the plaintiff to use the memoranda in connection with his testimony regarding damages. Id. at 367-68. In reversing, we held

The refusal of the trial court to permit plaintiff to attempt a proffer of proof of damages with the aid of the written memoranda, for reasons we are holding legally unjustified, prevented the full exploitation at the trial of plaintiff's rightful opportunity to undertake proof . . . [through] the permissible use of written memoranda, either as instruments for revival of present recollection, or as repositories of the recorded past recollection of the witness. [Id. at 369.]

As we pointed out in Kazanjian, the use of a written document may serve two distinct purposes when shown to a testifying witness who prepared it. Id. at 369. On the one hand, the document may be used to refresh the memory of the witness. Ibid. Under those circumstances, the document does not become evidence, but rather serves only to "reviv[e]" the witness' "present recollection." Ibid. However, if the prerequisites of N.J.R.E. 803(c)(5) are met, the document may be "admitted into evidence" as the witness' "recollection recorded." Biunno, Current N.J. Rules of Evidence, comment on N.J.R.E. 803(c)(5) (2009) (citing State v. Hacker, 177 N.J. Super. 533 (App. Div.), certif. denied, 121 N.J. 615 (1990)); and see Kazanjian, supra, 34 N.J. Super. at 369-70. One prerequisite of the Rule is that the witness be "unable to testify fully and accurately because of insufficient present recollection[.]" N.J.R.E. 803(c)(5). Additionally, the proponent of the document must demonstrate it "was made at a time when the fact recorded actually occurred or was fresh in the memory of the witness, [] was made by the witness or under the witness' direction or by some other person for the purpose of recording the statement at the time it was made, and [] . . . concerns a matter of which the witness had knowledge when it was made[.]" Ibid. However, even if all prerequisites are met, the document itself cannot be "introduced as an exhibit in evidence over objection." Ibid.

Although Rollins was never asked whether she needed the spreadsheet to testify because she lacked "insufficient present recollection" of the damaged items and their worth, our review of the record convinces us that had the proper predicate questions been posed, in all likelihood the spreadsheet would have qualified as "recorded recollection" under N.J.R.E. 803(c)(5). It contained over 600 line items on nineteen pages, and thus it was unlikely that Rollins could have possessed a present memory of every item and its value. The spreadsheet was prepared by her and fellow employees, shortly after the fire, and it contained her opinion of the values of the various fixtures and inventory. As a result, the spreadsheet most likely could have been read line-by-line to the jury, a circumstance that the judge specifically referenced in his charge, and one which he noted was being avoided as a "convenience."

However, even if the spreadsheet met the prerequisites and qualified as a "recorded recollection," it should not have been admitted into evidence "over [defendant's] objection." Ibid. Furthermore, plaintiff has not directed our attention to any other exception to the hearsay rule that would apply to permit the spreadsheet's admission as an exhibit. See e.g., Needham v. N.J. Ins. Underwriting Ass'n., 230 N.J. Super. 358, 373 (App. Div. 1989) (holding a computer printout of plaintiff's alleged costs for repair was improperly admitted into evidence under the business record exception to the hearsay rule, N.J.R.E. 803(c)(6)).

We also agree with defendant that the Servpro estimate was hearsay and should not have been admitted in evidence as an exhibit. The judge's rationale for admission, i.e., that it was furnished to defendant in discovery and thereafter defendant never deposed the Servpro representative or called him as a witness, does not transform clearly inadmissible hearsay into admissible evidence. Plaintiff cites to no rule of evidence or precedent that would support the admissibility of the estimate as an exhibit.

However, we have noted, "[f]or an improvidently admitted hearsay statement to warrant reversal, [] the possibility of an unjust verdict must be real and sufficient to raise a reasonable doubt as to whether the error led the jury to a result it otherwise might not have reached." Beasley v. Passaic County, 377 N.J. Super. 585, 604 (App. Div. 2005) (citing Neno v. Clinton, 167 N.J. 573, 586 (2001)). In this case, for the reasons that follow, we are satisfied that the admission of both documents was not "clearly capable of producing an unjust result," R. 2:10-2, requiring our reversal of the jury's verdict.

First, as we already noted, Rollins' testimony regarding the spreadsheet was such that had the proper predicate questions been posed, she could have quite literally read all nineteen pages of the document to the jury. Second, the admission of the document did not in any way deny defendant the ability to vigorously cross-examine Rollins as to the items she claimed were damaged or lost, and their purported value. The trial transcript amply demonstrates that defendant was able to challenge her testimony before the jury as to many of the specific items she claimed were lost or damaged. Third, the jury did not award plaintiff the full amount of damages it sought, indicative that the jurors engaged in an independent assessment of all the evidence, as opposed to simply adopting the figures contained on the spreadsheet. Fourth, and perhaps most importantly, the judge in his final instructions told the jury repeatedly that the document, even though submitted as an exhibit, was only "a summary of [plaintiff's] testimony" but "not evidence of what [plaintiff] lost." The judge properly instructed the jury that Rollins' "testimony" was the evidence of her loss. The admission of the spreadsheet as an exhibit was harmless error. R. 2:10-2.

We reach the same conclusion regarding the Servpro estimate. Coe testified at length regarding the services he rendered to plaintiff, and was cross-examined about the value of plaintiff's claim. He had visited plaintiff's business and observed the smoke and water damage. Furthermore, he was familiar with restoration and rehabilitation costs in general, and with Servpro as a specific provider of those services. Although never specifically qualified as an expert, we have no doubt that based upon his years of experience, he could have been so qualified. We recognize, however, that even if Coe was qualified as an expert witness, the document itself should not have been admitted as an exhibit. See Agha v. Feiner, 198 N.J. 50, 63 (2009) (testifying expert's reliance upon hearsay report does not serve as "a conduit through which the jury may be provided the results of contested out-of-court expert reports").

Nevertheless, we view this error as harmless. Sheehan testified extensively about the nature of the damage and the fact that he had retained Servpro to perform some work, and he testified about the work that still needed to be done. Coe testified about his own observations of the scene, corroborating that future clean up and restoration was necessary. He opined about the reasonable and necessary costs of the work. As a result, the jury heard sufficient testimony, aside from the Servpro estimate itself, to permit the reasonable conclusion that plaintiff's damages included the necessary work itemized on the document, and that the costs itemized on the document were reasonable. Its admission as an exhibit in evidence clearly did not bring about an unjust result.

Lastly, we consider defendant's argument that the spreadsheet was "irrelevant" because some of the values on the document were "replacement costs" and not the "fair market value" of the items. In general, we agree with defendant that the typical measure of damages to personal property "is the difference between the market value of the personal property before and the market value after the damage occurred." Model Civil Jury Charge 8.44, "Personal Property"; and see Hyland v. Borras, 316 N.J. Super. 22, 24-25 (App. Div. 1998).

However, long ago, the Supreme Court recognized that "the sundry rules for measuring damages are subordinate to the ultimate aim of making good the injury done or loss suffered and hence '[t]he answer rests in good sense rather than in a mechanical application of a single formula.'" New Jersey Power & Light Co. v. Mabee, 41 N.J. 439, 441 (1964) (quoting 525 Main St. Corp. v. Eagle Roofing Co., 34 N.J. 251, 255 (1961)). In fact, the Mabee court permitted the plaintiff to use the replacement cost of its damaged utility pole as a measure of its damages, rejecting the defendant's argument that depreciation was a necessary variable to reduce any damage award. 41 N.J. at 442.

In this case, it is clear from Rollins' testimony that given the nature of the business, and the numerous items of inventory that were damaged or destroyed, it was difficult, if not impossible, to reconstruct their fair market value. As she noted, some items were out of stock, although they maintained a value for older computers and copiers. Rollins methodology in obtaining estimated values was painstaking, requiring her to examine literally every box in stock. Additionally, regarding some of the items, particularly the business fixtures, Rollins and Coe had discounted the value based upon depreciation.

In charging the jury, the judge preliminarily followed the model charge referenced above. However, he then drew the jury's attention to the difference between market and replacement values, and told them to decide if plaintiff's claim "was reasonable" based upon "the numbers that [it] arrived at." We have no reason to believe the jury did not follow those instructions, Verdicchio v. Ricca, 179 N.J. 1, 36 (2004), since it did not accept plaintiff's claim carte blanche, but rather significantly awarded it less than what it asked for. We find no basis to reverse the jury's award of damages.


In its cross-appeal, plaintiff contends that the judge should have instructed the jury that Coe's commission was an element of its compensable damages. Plaintiff argues that the adjuster fees are not akin to counsel fees, expert fees, or litigation costs, but rather are damages directly incurred as a result of defendant's negligence. It cites no authority for this proposition.

Alternatively, plaintiff argues that even if the adjuster's commission was similar to attorney's fees or litigation costs, it would still be recoverable as an exception to the "American Rule," because defendant's tortious conduct caused it to pursue a claim against a third-party, its own insurance company, in order to recover under its business insurance policy. We disagree.

A public adjuster is

[A]ny individual, firm, association or corporation who, or which, for money, commission or any other thing of value, acts or aids in any manner on behalf of an insured in negotiating for, or effecting, the settlement of claims for loss of damage caused by, or resulting from, any accident, incident, or occurrence covered under a property insurance policy . . . .

[N.J.S.A. 17:22B-2.]

Public adjusters are licensed by the Commissioner of Insurance, N.J.S.A. 17:22B-5, are prohibited from performing certain acts, N.J.S.A. 17:22B-13, and may have their licenses suspended or revoked, N.J.S.A. 17:22B-14, or have civil penalties imposed, N.J.S.A. 17:22B-17, if they violate the statute or the regulations adopted thereunder. While the use of a public adjuster is a frequent occurrence, it is in no way mandatory, and plaintiff does not dispute that it was not required to retain Coe in order to present its claim to its own insurer.

We think it clear that the costs plaintiff incurred in hiring Coe to adjust its claim with its own insurer are not damages recoverable as a result of defendant's negligence. "It is well-accepted that a defendant who negligently injures a plaintiff or his property may be liable for all proximately caused harm[.]" People Express Airlines, Inc. v. Consol. Rail Corp., 100 N.J. 246, 251 (1985). However, "courts have recognized that a tortfeasor is not necessarily liable for all consequences of his conduct." Id. at 252 (emphasis in original). In general, damages resulting from a defendant's tortious conduct are limited to those "so frequently resulting from the tort that is the basis of the action that the existence of the damages is normally to be anticipated[.]" Restatement (Second) of Torts § 904(1) (1979).

As we have noted, plaintiff was not required to hire Coe to present its claim to its own insurance company. Indeed, if plaintiff maintained no business insurance, it would have paid no commission. In our opinion, the defining element of whether plaintiff suffered legally compensable damages caused by defendant's negligence, and for which defendant is responsible, cannot turn simply on whether plaintiff maintained insurance in the first instance.

We hasten to add that even if Coe's services and testimony were viewed to be in the nature of a litigation expense, it would not be recoverable. "[T]he American Rule is based upon the notion that our judicial system is best served if parties are responsible for bearing their own counsel fees" and other litigation expenses. Di Misa v. Acquaviva, 198 N.J. 547, 553 (2009). Plaintiff argues that even if Coe's commission is likened to a cost of litigation, it is recoverable under an exception to the American Rule. Specifically,

One who through the tort of another has been required to act in the protection of his interests by bringing or defending an action against a third person is entitled to recover reasonable compensation for loss of time, attorney fees and other expenditures thereby suffered or incurred in the earlier action.

[Restatement (Second) of Torts § 914(2) (1979).]

"Th[is] exception reflects the principle that those fees incurred in an action against a third party are merely an additional element of damages flowing from the tort." Di Misa, supra, 198 N.J. at 554. (quotations and citations omitted). However,

[A] prerequisite to an award of counsel fees under the exception to the American Rule is litigation with a third party precipitated by another party's wrongful act. No matter how egregious that wrongful act, in the direct action between a plaintiff and a defendant, each party bears his or her own fees under the American Rule. It is only the requirement of litigation against a stranger that calls the exception into play. [Ibid. (emphasis added).]

In this case, plaintiff never litigated its claim under its own insurance policy, nor was the insurance company a "stranger" to plaintiff. The exception to the American Rule upon which plaintiff relies has no application to the facts of this case.*fn3

In sum, we conclude that plaintiff was not entitled to recover the commission it paid its public adjuster as an element of its compensable damages.


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