November 10, 2010
JOHN SISOLAK, PLAINTIFF,
BRIARWOOD SPORTSMAN'S CLUB, BOB HOUSEDORF AND TIMBERJACK FORESTRY GROUP, DEFENDANTS, AND ROBERT G. HOUSEDORF, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
NORTHLAND INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.
On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-2702-06.
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION
Argued October 4, 2010
Before Judges Lisa, Sabatino, and Alvarez.
Northland Insurance Company ("Northland") appeals the Law Division's award to Robert G. Housedorf ("Housedorf") of $47,546.24 in counsel fees and costs that were incurred in the defense of a now-settled personal injury action brought by John Sisolak against Housedorf and other defendants. Northland argues that Housedorf lacked standing to sue it for fees, that the counsel fee application was untimely, that its insurance policy did not cover the underlying incident, and that the award is otherwise improper and excessive. We affirm.
The pertinent chronology is as follows. On April 18, 2004, Sisolak was injured while he was performing chores on a sixty-five-acre farm in Asbury. The farm was owned by Housedorf and subject to the terms of a lease arrangement between Housedorf and Briarwood Sportsmen's Club ("Briarwood"). Pursuant to that arrangement, Housedorf permitted Briarwood's members, including Sisolak, to hunt game on the property, in exchange for chores performed on site periodically by Briarwood's members at Housedorf's direction.
The arrangement for Briarwood's use of the farm was memorialized in a one-page lease agreement in April 1994, which was signed by Housedorf and by Briarwood's president. Among other things, the agreement specified that "[Briarwood] will provide proof of liability insurance coverage in the amount of $300,000.00." In addition, Briarwood's members' permitted use of Housedorf's property was "expressly for the purpose of pursuing and taking of game, except as may be mutually agreed upon by both parties to this contract." The specified lease term was "[f]rom Apr[il] 1, 1994 to Apr[il] 1, 1995." Thereafter, the lease was not formally renewed in writing, but Briarwood's members continued to use the property on the same terms and conditions through the time of Sisolak's accident.
In accordance with the agreement, Briarwood maintained a commercial general liability ("CGL") policy issued by Northland. The CGL policy provided liability coverage for claims seeking the recovery of damages arising out of bodily injury during the applicable period of coverage. The policy in force at the time of Sisolak's accident was effective August 7, 2003 through August 7, 2004 and named Housedorf as an additional insured.
On the day of the accident, Sisolak and other members of Briarwood were working at Housedorf's farm, splitting and stacking firewood. According to his complaint, Sisolak injured his right hand and index finger while he was using a log-splitting machine provided by Housedorf.
In March 2006, Sisolak filed a complaint in the Law Division, seeking recovery of damages for the bodily injuries that he sustained in the log-splitting accident. The complaint named as defendants Briarwood, Housedorf,*fn1 and the manufacturer of the log-splitter. Briarwood filed an answer denying liability for Sisolak's injuries. Housedorf, who was initially represented in the lawsuit by counsel retained through his homeowners' insurance company, Countryway Insurance Company ("Countryway"), likewise filed an answer denying liability.
By letter dated February 15, 2007, counsel for Housedorf requested Northland to "take over the defense and indemnify [Housedorf] in connection with the claims filed in this matter." When Northland failed to do so, Housedorf filed a third-party complaint for defense and indemnification against Briarwood and Northland in December 2007. Northland, in turn, filed an answer and a counterclaim for declaratory judgment.
In May 2008, Housedorf filed a motion for summary judgment, seeking an order directing Northland to assume Housedorf's defense and indemnification. Northland opposed the motion and filed a cross-motion for summary judgment, seeking dismissal of the third-party complaint.
The summary judgment motion was argued before Judge Mathias
E. Rodriguez. In an oral ruling on June 6, 2008, Judge Rodriguez granted summary judgment in favor of Housedorf and denied Northland's counterclaim. The ruling was memorialized in a corresponding order entered that same day. The order specifically provided that Northland "shall assume the defense and indemnify defendant Housedorf in accordance with the terms of the [Northland] [i]nsurance policy[.]" The order further specified that "Robert Housedorf shall be entitled to reimbursement of all fees incurred as a result of Northland's refusal to provide a defense[.]"
About a month later, on July 7, 2008, pursuant to the court's order, counsel retained by Northland to represent Housedorf filed a substitution of attorney, and took over Housedorf's defense.
Ultimately, the underlying Sisolak litigation was settled, and the parties entered a stipulation of dismissal on April 3, 2009. After the litigation had concluded, on June 10, 2009, Housedorf's original counsel submitted to Northland a request for reimbursement of counsel fees. A second request for reimbursement was submitted to Northland on August 13, 2009.
When Northland had not responded to either payment request, on September 4, 2009, Housedorf's original counsel filed a motion to enforce the summary judgment order. Northland opposed the motion. Initially, the court denied the motion, without prejudice, because the affidavit of services was insufficient.
Housedorf's original counsel re-filed the motion to enforce on November 17, 2009. Again, Northland opposed the motion. The motion was heard on December 11, 2009. Judge Joseph L. Rea*fn2
awarded counsel fees and costs in the amount of $47,546.24, a sum slightly less than the $48,120.24 that was sought in the motion. Northland then filed the instant appeal. We address its various arguments in turn.
First, Northland contends that once the underlying Sisolak litigation had settled, Housedorf was divested of standing to recover counsel fees that were previously incurred in his defense. In making this argument, Northland relies upon Marshall v. Raritan Valley Disposal, 398 N.J. Super. 168, 176-79 (App. Div.), certif. denied, 196 N.J. 592 (2008). We do not read Marshall to preclude Housedorf's standing under the particular circumstances of this case.
As a general matter, a party asserting entitlement to coverage under an insurance policy has standing to pursue declaratory relief against that insurer, regardless of whether or not the party maintains other insurance coverage. "A party who claims to be an insured has a sufficient financial interest to seek a declaration of such coverage even though that party also has other insurance coverage and the other insurer has already undertaken its defense." Marshall, supra, 398 N.J. Super. at 176. In addition, the other insurer providing representation coextensively has standing to pursue such declaratory relief, because it has a sufficient financial interest to seek "contribution to the costs of defense and indemnification of their common insured." Id. at 177.
If, however, at the time such declaratory relief is sought, all claims have been settled within the limits of another policy, the party claiming coverage no longer maintains a sufficient financial interest to bring a third-party declaratory judgment against an additional insurer. At that point, once the claims have been settled, "[i]f the [insurer] has paid an entire loss suffered by the insured, it is the only real party in interest and must sue in its own name." Id. at 178 (quoting United States v. Aetna Cas. & Surety Co., 338 U.S. 366, 380-81, 70 S.Ct. 207, 215, 94 L.Ed. 171, 185 (1949)). In the interests of judicial efficiency, the declaratory action for coverage may be continued by the other insurer in the name of the insured. Id. at 181; see also R. 4:34-3. However, that aspect of Marshall does not apply to the chronology of this case.
At the time Housedorf filed his third-party complaint in February 2008, as well as at the time he filed his ensuing motion for summary judgment against Northfield in May 2008, the settlement resolving Sisolak's personal injury claims had not yet been attained. Hence, Housedorf's financial interests were still very much at stake when he sought relief against Northland. Although Housedorf's previously-incurred counsel fees were not quantified and presented to the court until after the Sisolak matter had settled, that endeavor to enforce the summary judgment order was appropriate. It was unnecessary to require that the fee application be presented in the name of Countrywide, Housedorf's homeowners insurance carrier, rather than Housedorf himself. The court had already ruled that coverage was owed and that fees were to be reimbursed by Northland; the only open question was one of quantification. There is no suggestion that Northland would be subject to a duplicative demand by Countrywide if the awarded fees are paid to Housedorf. For these various reasons, we reject Northland's standing argument and its misapplication of Marshall.
Northland further maintains that Housedorf's fee application was untimely. It asserts on appeal*fn3 that Housedorf was obligated to file the application within twenty days of the dismissal of the Sisolak litigation on April 3, 2009. In support, Northland invokes Rule 4:49-2, the general provision governing motions to amend or alter a judgment or order. It asserts that the trial court had no discretion or authority to consider Housedorf's fee application, which was initially filed on September 4, 2009, and which was thereafter resubmitted with a supporting affidavit of services. We disagree.
Although it is generally preferable to have counsel fee applications filed contemporaneously with, or shortly after, the entry of a final order disposing of litigation, see Czura v. Siegel, 296 N.J. Super. 187, 190 (App. Div. 1997), that objective is still subject to the residual discretion of the trial court. Extenuating circumstances sometimes justify a modest delay in the presentation of a fee application, such as, for example, where the billings and disbursements take considerable time to assemble, where the attorney who is to review the bills and sign the affidavit of services is temporarily unavailable, or where the movant is awaiting review of the bills by the insurer or is in negotiations that might resolve the fee dispute without motion practice.
In the present case, some of the initial delay in the submission of the fee application after entry of the summary judgment order is attributable to the fact that Housedorf and Countrywide were concerned that the trial court might not accept the substitution of attorney if it would delay the trial date. After the substitution was indeed accepted, the litigation continued for less than nine months before it was settled in April 2009. Two months later, the invoices of Housedorf's prior counsel were tendered to Northland with a request for reimbursement, followed by a second request for reimbursement several weeks thereafter. Three weeks after that second request, when it finally became apparent that Northland was not going to pay--despite its obligations under the summary judgment order--the fee application was submitted to the court.
We discern no abuse of discretion in the trial court's treatment of the fee application as timely. No deadline for the submission of invoices was specified in the June 2008 summary judgment order. We reject Northland's argument that the trial court lacked jurisdiction under Rule 4:49-2 to consider the fee application on its merits when it was presented. The fee application was not a motion to "alter or amend" an order brought under Rule 4:49-2; rather, it was, in both form and substance, a motion to enforce the court's summary judgment order directing Northland to reimburse Housedorf for the fees and costs of his original counsel. Moreover, Northland has not demonstrated any prejudice flowing from the delay. The deficiencies in the initial fee application were rectified by an ensuing affidavit of services, and Northland has been permitted on this appeal to assert its full panoply of objections.
Northland also argues that summary judgment was erroneously granted against it on the issue of coverage, arguing that Sisolak's injury did not arise out of Briarwood's use of Housedorf's premises. Northland asserts in its brief that the injury "did not occur within the spatial or temporal confines" of Briarwood's right to use the property because the agreement contemplated that Briarwood's members would use the property for hunting. It points out that Sisolak was not injured while hunting but instead he was injured while using a log-splitter. It also points out that the accident occurred on a Sunday when hunting is disallowed by law, see N.J.S.A. 23:4-24, and Northland further notes that the accident occurred within 450 feet of Housedorf's residence, where hunting is proscribed. See N.J.S.A. 23:4-16d.
These arguments against coverage are unavailing. Northland misconceives the reciprocal nature of the arrangement*fn4 between Briarwood and Housedorf for the use of the property. Briarwood's members were authorized to hunt on the farm, but in exchange for the services of its members in performing chores on the premises as requested by Housedorf. This was a quid pro quo arrangement, in which Housedorf was compensated with the labor of Briarwood's members rather than with money. As a member of Briarwood performing such services on site, Sisolak was engaged in activity contemplated under the agreement. The coverage in question, issued for the protection of Housedorf as an additional insured, logically covered not only the hunting activities of Briarwood's members but also their presence on the farm in performing chores, such as the log-splitting attempted by Sisolak. We affirm the trial court's interpretation of the insurance contract and its finding of coverage, substantially for the detailed reasons expressed on the record by Judge Rodriguez in his June 6, 2008 bench ruling.
We need not comment at length with respect to Northland's argument that the fees and costs awarded by Judge Rea were inadequately supported and excessive. Fee determinations by trial courts should be disturbed "only on the rarest occasions, and then only because of a clear abuse of discretion." Rendine v. Pantzer, 141 N.J. 292, 317 (1995); see also Packard-Bamberger & Co. v. Collier, 167 N.J. 427, 443 (2001) (citing the "deferential standard of review" mandated by Rendine). The trial judge appropriately recognized that, even after the summary judgment order was entered, Housedorf's original attorney needed to continue his own preparation and work on the case, until the substitution of counsel was accepted and it was clear that new counsel would be allowed to take over. The judge conscientiously disallowed the time billed by the original attorney after the substitution was effectuated. We are satisfied that the fee award is reasonably supported by the record, that it is not patently exorbitant or unreasonable given the nature of the underlying litigation, and that the trial court did not abuse its discretion.
The remaining arguments raised on appeal lack sufficient merit to warrant discussion. R. 2:11-3(e)(1)(E).