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Liberty Mutual Insurance Co. v. Land

January 14, 2010


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

Per curiam.


Argued December 9, 2009

Before Judges Stern, Lyons, and J. N. Harris.

This insurance coverage and insurance fraud dispute is well-documented in the New Jersey Supreme Court's opinion of Liberty Mut. Ins. Co. v. Land, 186 N.J. 163 (2006). This appeal reaches us after a second jury found that defendants Rose Land and Frank Land (collectively, the Lands) had engaged in statutory insurance fraud. The jury's verdict not only disenfranchised the Lands' entitlement to collect insurance proceeds for their putative property losses, but additionally exposed them to a judgment in favor of plaintiff Liberty Mutual Insurance Company (Liberty Mutual). The trial court ultimately determined the Lands' total monetary obligation to be in the amount of $175,302.88, largely due to a statutory trebling effect. After a thorough canvass of the facts and law, we are satisfied that the trial court's processes that resulted in the dismissal of the Lands' claims and the imposition of a judgment against them were unexceptionable.

We affirm.


On July 20, 2001, Liberty Mutual filed what it styled as a "Declaratory Judgment Complaint" against defendants Land and Steven Budge (Budge).*fn1 *fn2 That pleading demanded a judgment expressly pursuant to the New Jersey Insurance Fraud Prevention Act (IFPA), N.J.S.A. 17:33A-1 to -30, adjudicating that the defendants:

1. Have breached the terms and conditions of the policy of insurance issued by Liberty Mutual thereby causing the entire policy to be void;

2. Committed violations of the New Jersey Insurance Fraud Prevention Act, N.J.S.A. 17:33A-1 et. seq. thus entitling the plaintiff to damages pursuant to N.J.S.A. 17:33A-7;

3. A determination and adjudication that the claim as presented by the insureds constituted a violation of the policy, intentional concealment and/or misrepresentation by the insureds, fraud, actual or constructive and was otherwise made in violation of the policy;

4. A determination that the Liberty Mutual Fire Insurance Company does not owe coverage to the defendants for any losses arising out of the claims alleged to have occurred on or about December 10 [sic], 2000; and for attorneys' fees, cost and such other relief as the Court may deem just and proper.

The litigation sprang from the fallout of a seemingly innocuous property loss. After a neighbor's tree toppled onto the roof of the Lands' cabin in Highland Lakes in December 2000, defendants filed a property damage claim with plaintiff, their homeowners' insurance carrier. The Lands employed Budge to assist in the preparation and filing of the insurance claim by assessing the damage and securing the structure. In exchange for this assistance, Budge was to be paid ten percent of the insurance proceeds.

During its investigation of the Lands' claim, plaintiff uncovered a videotape that depicted Budge and several others working on the cabin's roof shortly after the tree fell onto the cabin. The videotape showed three men taking a heavy portion of the fallen tree--estimated to be 600 pounds--and slamming it against the roof, in an effort to create further damage and shatter a skylight. Although adamantly denied by defendants, they had apparently gone onto the roof after the tree fell and attempted to increase the physical damage to the Lands' cabin. Among other things, defendants argue that it was logically impossible to increase the physical damage to the cabin because it already was a total loss. Similarly stated, defendants claim that they could not do further damage or injury to a structure that was already damaged beyond repair, and which would need to be totally replaced.

In furtherance of their claim of property damage, the Lands submitted a "Sworn Statement In Proof of Loss," which was on Budge's letterhead. Their losses were claimed to total $69,338. As an additional part of the claims process, defendants appeared for an oral examination several months later, at which they testified under oath about the circumstances of the tree-falling incident without disclosing the damage-enhancement activities.

After its loss investigation was completed, plaintiff determined that the Lands' claims of loss had been inflated. Liberty Mutual accordingly denied coverage and withheld the payment of insurance benefits. It then commenced this declaratory judgment action for a determination of rights relating to the scope of its insurance policy's coverage and for treble damages pursuant to the IFPA.

The matter was initially tried to a jury in 2002. That trial resulted in a jury verdict in plaintiff's favor against the Lands and Budge, finding that each defendant had violated the IFPA. The trial court then issued a consequential judgment awarding compensatory damages. On the ensuing appeal, this court 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 that had the capacity to unduly influence the jurors; and (3) Budge, who represented himself, should have been permitted to testify at trial in narrative form. We remanded the case for a new trial.

In its own review, 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. Liberty Mutual, supra, 186 N.J. at 170-79. As a result, the Court reversed our opinion on that distinct legal issue. Id. at 180-81. The Court left the balance of our dispositions in place, and remanded the case to the Law Division for the new trial that we had previously directed. Ibid.

The matter was tried anew before a second jury in November and December 2006. Budge again appeared pro se, but this time was permitted to testify in narrative form. This jury also returned a verdict in plaintiff's favor, again finding that all defendants had violated the IFPA. The jury was neither presented with direct evidence of precise losses or damages suffered by plaintiff, nor did it render a verdict as to the exact amount of plaintiff's compensatory damages. All that it was asked to decide, as the Jury Verdict Sheet indicated, was the following:

1. Has the Plaintiff, Liberty Mutual Insurance Company, proven [] that defendant(s) Rose and/or Frank Land knowingly misrepresented, concealed or failed to disclose any material fact concerning the property loss of December 12, 2000 to the plaintiff?

The jury responded, "Yes," by a six to one tally.

As a result, the trial court entered an order for final judgment on April 19, 2007, in which it determined the amount of compensatory damages suffered by plaintiff, applied the trebling pursuant to the IFPA, and dismissed the Lands' counterclaim that had sought payment for their property losses in accordance with Liberty Mutual's policy. 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. Thereafter, the court further specified that defendants were responsible for reimbursing plaintiff for an ...

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