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Alonso Valdivia v. K. Hovnanian

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


February 17, 2012

ALONSO VALDIVIA, PLAINTIFF,
v.
K. HOVNANIAN, C&C RIPOLL MASONRY, INC., B&B DRYWALL, ALL TECH CARPENTRY CONTRACTORS, LLC, DEFENDANTS,
AND B&B CUSTOM DRYWALL, DEFENDANT/THIRD-PARTY PLAINTIFF-RESPONDENT,
v.
C&R DRYWALL, LLC, THIRD-PARTY DEFENDANT, AND PREFERRED MUTUAL INSURANCE COMPANY, THIRD-PARTY DEFENDANT-APPELLANT.

On appeal from the Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-0973-07.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Submitted October 3, 2011

Before Judges Grall and Alvarez.

This matter is before us on leave granted third-party defendant Preferred Mutual Insurance Company (PMIC) to take an interlocutory appeal from a December 3, 2010 Rule 1:10-3 order enforcing litigant's rights. The order required PMIC to defend C&R Drywall, LLC (C&R), against a third-party complaint filed by B&B Drywall (B&B) seeking, among other things: contribution by C&R pursuant to N.J.S.A. 2A:15-5.1, common-law and contractual indemnification, and a defense and indemnification in accord with C&R's subcontractor agreement with B&B. B&B, an additional named insured on C&R's commercial general liability (CGL) policy issued by PMIC, also filed a third-party complaint against PMIC to compel coverage.

Upon closer consideration of the scant record provided to us, we decide that interlocutory appellate review was improvidently granted. See R. 2:5-6; S.N. Golden Estates, Inc. v. Cont'l Cas. Co., 317 N.J. Super. 82, 89-92 (App. Div. 1998). We discern no interest of justice to be served by the premature and piecemeal adjudication of the issues in this case. See R. 2:2-4; R. 2:2-3(b); CPC Int'l Inc. v. Hartford Accident & Indem. Co., 316 N.J. Super. 351, 365 (App. Div. 1998), certif. denied, 158 N.J. 73 (1999). Indeed, the interests of justice will best be served by an "uninterrupted proceeding at the trial level with a single and complete review . . . ." See S.N. Golden Estates, supra, 317 N.J. Super. at 88 (quoting State v. Reldan, 100 N.J. 187, 205 (1985)). We make the following brief comments only to address a substantive error in the December 3, 2010 enforcement order from which appeal was taken and to correct a misapprehension with regard to enforcement applications generally.

A short summary of the facts and procedural history is necessary. On August 23, 2006, plaintiff Alonso Valdivia, a C&R employee, was injured on a construction project when he fell through an opening on the first floor into a basement. He thereafter sued several parties for his injuries, including B&B, the company that had subcontracted aspects of the drywall installation to C&R on that particular job. Valdivia separately pursued his remedies against his employer C&R under the New Jersey Workers' Compensation Act (the Act), N.J.S.A. 34:15-1 to -128.

The agreement between B&B and C&R stated:

C&R Drywall [a]s a subcontractor of B&B Custom Painting agrees to indemnify and hold B&B harmless from any and all demands, claims, suits, causes of action, damages, losses, penalties, and or expenses, including attorney fees, arising out of [or] resulting from subcontractor's performance of the work required by the agreement.

C&R Drywall LLC [a]grees to assume its entire responsibility and liability for all damages or injury to all persons, whether its employees or otherwise, and all property arising out of or in any manner connected with the execution of the "work" performed under the agreement.

When Valdivia sued B&B, B&B in turn filed its third-party complaint against C&R and PMIC.

C&R eventually answered B&B's third-party complaint. C&R also filed a third-party complaint of its own against PMIC, alleging that the insurer's earlier declination of coverage to B&B's suit issued in bad faith and in breach of the insurance contract. PMIC's declination letter stated in pertinent part:

You will also note that the policy does not apply to contractual liability arising out of the assumption of liability in a contract or agreement, unless the contract is an insured contract. The endorsement CG 24 26 0704, which is attached to your policy, states that the bodily injury must be caused in whole or in part by you or those acting on your behalf in order for there to be a contract or agreement for which this insurance would respond. In this case, there is no indication that the fall occurred as a result of any negligence on your part.

PMIC moved for summary judgment seeking dismissal of B&B's complaint, and a judgment that PMIC had no duty to defend B&B. PMIC also sought a ruling that it had no duty to defend C&R on B&B's third-party complaint. We were not provided copies of any of these pleadings, but assume that C&R affirmatively cross-moved for an order compelling PMIC to provide a defense, as at oral argument, conducted on May 28, 2010, the focus was on PMIC's obligation to defend C&R. Although PMIC seemed to abandon the position that it owed no obligation whatsoever to B&B,*fn1 it vigorously argued that it had no obligation to defend C&R.

The Law Division judge ordered PMIC to provide C&R with a defense, opining: "[W]hen a third-party action is brought against nonemployers and the nonemployers perceive that the actual cause of action was a result of negligence by the employer, they have a right to bring them in. That's what they did here." After rendering his decision from the bench, the judge signed the form of order submitted by PMIC in which each typed paragraph setting forth the requested relief was stamped "denied." He handwrote at the bottom: "[It is] further ordered, [PMIC] is to defend their insured, [C&R], against [B&B's third-]party complaint."

The judge specifically said that he made no finding as to whether PMIC had a separate obligation to indemnify C&R, as the question was "premature." The court also indicated it would entertain an application by C&R's attorney for counsel fees if not "voluntarily paid" by PMIC.

The judge did not address whether the contract was an "insured contract," despite references by the attorneys to the issue during the course of oral argument. Nor did the judge mention, much less analyze, the CGL policy language with regard to insured contracts. Thus, he made no ruling on the subject.

On July 9, 2010, the judge heard PMIC's motion for reconsideration of, we assume, the order requiring it to defend C&R against B&B's third-party complaint. See R. 4:49-2. Those pleadings are not included in the appendix either. During the very brief oral argument on the motion, PMIC reiterated its position that it owed no duty to C&R either to defend or indemnify because the CGL policy language contained an employer liability exclusion.

At the beginning of oral argument on the reconsideration motion, the judge repeatedly said that when he decided the prior summary judgment application, he had found the agreement between B&B and C&R to be an insured contract. Contrary to his recollection, however, the record does not reflect that he made any such finding. The judge denied reconsideration and reiterated that he was not deciding if PMIC had any duty to indemnify C&R but would make the determination, if necessary, "some time down the line."

PMIC sought leave, pursuant to Rule 2:2-4, to take an interlocutory appeal from the denial of the reconsideration application. Leave was denied on August 20, 2010.

Thereafter, B&B filed a motion for enforcement of litigant's rights under Rule 1:10-3, presumably to compel PMIC to defend C&R. No copy of that application has been provided. See R. 2:6-1(a)(1). The motion was decided on December 3, 2010. Counsel for C&R did not participate in oral argument. At one point during the proceedings, in response to the judge's comment that C&R's attorney was no longer "in the case," B&B's counsel said that the individual was still the attorney of record as "there's never been a substitution of counsel."

The application for enforcement of litigant's rights was granted. The order states: "[PMIC] is compelled to provide a defense and indemnification to C&R . . . ." The judge denied B&B's request for counsel fees.

It is important to note that the December 3, 2010 order enforcing litigant's rights should not have included the preprinted provisions purporting to compel PMIC to indemnify C&R, as that issue had never been reached by the motion judge. To the contrary, the judge on two prior occasions explicitly ruled that PMIC only had an obligation to defend, not to indemnify. In fact, during the enforcement of litigant's rights motion, the judge reiterated his earlier comments that he was not addressing the question of whether PMIC was obliged to indemnify C&R.*fn2

PMIC sought leave to take an interlocutory appeal from this decision, which was granted, on February 15, 2011. PMIC raises as a point for our consideration, among others, that an application for enforcement of litigant's rights cannot be made before final judgment is entered.

There is no doubt that Rule 1:10-3 provides for the enforcement of interlocutory orders, not just final judgments. PMIC's reliance on Janicky v. Point Bay Fuel, Inc., 396 N.J. Super. 545 (App. Div. 2007), appeal dismissed, 410 N.J. Super. 203 (App. Div. 2009), and Hallowell v. American Honda Motor Company, 297 N.J. Super. 314 (App. Div. 1997), is misplaced. The cited cases concern the appealability of interlocutory orders, not their enforceability in the trial division.

In any event, no interest of justice is served by a premature and piecemeal adjudication of the issues in this case. See CPC Int'l Inc., supra, 316 N.J. Super. at 365. To interfere in the matter at this preliminary stage is to needlessly expend judicial resources in the absence of a complete record or adjudications as to the contractual or other obligations of the parties, or their conduct. See Grow Co. v. Chokski, 403 N.J. Super. 443, 461 (App. Div. 2008). We therefore vacate our prior order of February 15, 2011 granting PMIC leave to take an interlocutory appeal and remand the matter, except that the December 3, 2010 order is to be corrected to delete the language regarding PMIC's obligation to indemnify C&R on the third-party complaint filed by B&B. We do not retain jurisdiction.

Appeal dismissed.


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