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Township of Irvington v. Coregis Insurance Co.

April 7, 2010

TOWNSHIP OF IRVINGTON, TOWNSHIP OF IRVINGTON FIRE DEPARTMENT, OFFICERS AND CREW OF ENGINE 43 OF THE TOWNSHIP OF IRVINGTON FIRE DEPARTMENT, PLAINTIFFS-APPELLANTS,
v.
COREGIS INSURANCE COMPANY, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Chancery Division, Essex County, Docket No. C-238-08.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued January 13, 2010

Before Judges Stern and Sabatino.

Plaintiffs, Township of Irvington, its Fire Department, and the officers and crew of Engine 43 of the Fire Department (collectively, "the Township"), appeal from a judgment of the Chancery Division, entered on December 8, 2008. The judgment confirms an arbitration award in favor of defendant, Coregis Insurance Company ("Coregis"), grants defendant's motion to dismiss the complaint, and denies plaintiffs' cross-motion to vacate the award. The arbitration related to liability coverage for the Township under primary and excess policies issued by Coregis. We affirm.

The parties' coverage dispute arose out of a personal injury that occurred when the Township firefighters responded to a report of a flooded basement. While the firefighters were on the scene, an individual in the basement, Chantel Porras, was exposed to a live electric current and she suffered serious injuries.

At the time of the Porras accident, the Township had a municipal liability insurance policy with Coregis, with a $1,000,000 coverage limit and a $50,000 self-insured retention. At the same time, Coregis also provided the Township with a $5 million commercial umbrella policy, which was excess to the $1 million municipal policy.

After the accident occurred, Porras sued the Township in the Law Division, seeking compensation for her injuries. The Township, without consulting Coregis, assigned an attorney ("the Township's defense counsel") to represent its interests in defending the case.

The record indicates that the Township's defense counsel made what Coregis contends to be various mistakes in handling the Porras litigation. Among other things: he did not retain a defense medical expert or have Porras examined; he failed to take the depositions of Porras and several of the firefighters who were on the scene; and he did not file opposition to Porras's motion for partial summary judgment on liability.

Before trial in the Porras matter, that case went to non-binding arbitration pursuant to Rule 4:21A-1. Porras was awarded $100,000, a sum that was twice the Township's $50,000 self-insured retention.

Porras then filed a de novo demand for a jury trial. At that time the Township's defense counsel recommended that the case was worth $65,000 in settlement value. He consequently obtained a slightly higher sum, $75,000, in settlement authority from Coregis. Porras rejected the $75,000 offer and demanded the $1 million municipal policy limit, a critical fact that was unfortunately not timely conveyed to Coregis.

After the trial court granted Porras partial summary judgment on liability, the matter went to trial. The jury awarded Porras $5 million in damages. Through remittitur, the trial judge reduced the award to $1 million. In an ensuing appeal and cross-appeal, a panel of our court reinstated the $5 million verdict in an unpublished opinion. See Porras v. Twp. of Irvington, Nos. A-0814-06 and A-0855-06 (App. Div. May 28, 2008). Following a petition for certification by the Township, the Supreme Court summarily remanded the matter to us for reconsideration in light of Jastrum v. Kruse, 197 N.J. 216 (2008), a then-recent opinion concerning remittiturs. Porras v. Twp. of Irvington, 197 N.J. 473 (2009). On remand, this court reaffirmed its prior determination to reinstate the $5 million verdict. See Porras v. Twp. of Irvington, Nos. A-0814-06 and A-0855-06 (App. Div. May 7), certif. denied, 200 N.J. 472 (2009).

As a result of these events in the Porras matter, the Township was exposed to the $5 million liability, as Coregis disclaimed coverage because of the Township's alleged lack of cooperation during the course of the litigation. The Township opposed Coregis's declination of coverage, arguing that it and its agents had sufficiently cooperated with Coregis.

Pursuant to a binding arbitration clause in its insurance policy with the Township, Coregis demanded arbitration to resolve the coverage dispute. The matter was referred to a three-member arbitration panel, consisting of two retired state court judges and a retired federal district court judge. The arbitrators took live ...


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