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Insurance Restoration Specialists, Inc., Alan Goeltz and New Jersey v. Toll Brothers


June 29, 2012


On appeal from the Superior Court of New Jersey, Law Division, Middlesex County, Docket No. L-5451-09.

The opinion of the court was delivered by: Per Curaim


Submitted June 20, 2012

Before Judges A. A. Rodriguez and Reisner.

In this automobile insurance litigation, defendant Toll Brothers, Inc. appeals from the following trial court orders: March 19, 2010 (reinstating plaintiff's complaint); July 9, 2010 (denying defendant's motion to dismiss the complaint); and May 26, 2011 (denying defendant's in limine motion concerning spoliation of evidence). We affirm.


The litigation concerns an automobile owned by Insurance Restoration Specialists, Inc. (Insurance Restoration), driven by its president Alan Goeltz, and insured by New Jersey Manufacturers Insurance Company (NJM). In the first lawsuit, filed on July 16, 2008, Goeltz, through his personal attorney, filed a Special Civil Part complaint in Middlesex County against Toll Brothers, seeking to recover about $3500 for his deductible and incidental expenses. That lawsuit alleged that on October 19, 2007, the car was damaged when he drove over a raised manhole cover on "an undedicated street, which was under repair." He alleged that Toll Brothers, the developer of the property, failed to warn drivers about "the hazardous condition of the raised manhole cover." Toll Brothers filed a third-party complaint against J. Lazewski Excavating Company (Lazewski), alleging that Lazewski was responsible for the defective manhole cover. Goeltz and Toll Brothers settled the litigation on March 25, 2009, for an undisclosed amount.

Paragraph 1 of the Settlement Agreement and Mutual General Release recited that it "fully, finally and forever settled" all claims relating to, or arising from, damages allegedly sustained as the result" of the October 19, 2007 incident. However, paragraph 6, the "Release" section of the document, specifically carved out an exception for NJM's subrogation lawsuit then pending in Monmouth County. In that suit, NJM was seeking to recover about $19,000 that it paid for the damage to the car:

This Release shall have no effect on claims currently pending in a matter known as Insurance Restoration Specialists, Inc./NJM v. J. Lazewski Excavating Company, Inc., Docket No. MON-L-3920-08, which involves a subrogation claim by the insurance carrier for Goeltz's employer against J. Lazewski Excavating Company.

As the March 2009 Release acknowledged, the Monmouth lawsuit was filed on or about August 6, 2008, by NJM against Lazewski and several fictitious defendants. That lawsuit alleged that Goeltz was driving a vehicle owned by Insurance Restoration and insured by NJM, when he drove over a raised manhole cover "which had been negligently repaired" by Lazewski.

NJM, "as subrogee of Alan Goeltz and Insurance Restoration," sought to recover from Lazewski the money it paid Insurance Restoration "for property damage, storage, and towing" and sought to recover Insurance Restoration's deductible under the NJM policy. The record reflects that NJM initially sued Lazewski rather than Toll Brothers because, when NJM put Toll Brothers on notice of its subrogation claim shortly after the 2007 accident, Toll Brothers asserted that Lazewski was responsible for the manhole cover and referred NJM's adjuster to Lazewski's insurer. After the Monmouth suit was filed, Lazewski's attorney provided NJM's counsel with exculpatory evidence and threatened to counterclaim for a frivolous pleading if the complaint was not withdrawn. NJM withdrew the lawsuit.

On July 26, 2009, the same attorney who had filed the Monmouth lawsuit on NJM's behalf filed essentially the same suit in Middlesex County, asserting the same subrogation claims. The only difference was that instead of naming Lazewski as a defendant, the Middlesex complaint named Toll Brothers. Toll Brothers filed a motion to dismiss that complaint, and on November 20, 2009, a Middlesex Law Division judge entered an order dismissing the complaint without prejudice, "for reasons set forth on the record on November 20, 2009." However, Toll Brothers has not provided us with a copy of its motion papers or with a transcript of that judge's statement of reasons. NJM's counsel filed a motion for reconsideration seeking to vacate the November 20 order, but on January 22, 2010, a second Middlesex judge denied that motion. We also have not been provided with any record concerning that motion, beyond a copy of the order.

NJM filed yet another motion seeking to reinstate the complaint, this time under the aegis of Rule 4:50, essentially contending that its attorney was lulled by his adversary into failing to file opposition to the original motion to dismiss. Toll Brothers' counsel filed a certification contradicting those assertions. By order dated March 19, 2010, a third judge, Judge Nicholas J. Stroumtsos, Jr., reinstated the NJM complaint, citing Rule 4:50-1 (a), (f).

Toll Brothers filed a motion to dismiss the now-reinstated complaint. In opposition, NJM filed certifications establishing that as early as November 2007, NJM had put Toll Brothers on notice of its subrogation claim, and that prior to the settlement with Goeltz, both Goeltz's counsel and Toll Brothers were aware of Lazewski's claim that it "had not yet entered the job site prior to the accident." Toll Brothers' counsel submitted a certification denying that he received proof exonerating Lazewski.

At the argument of the motion, Toll Brothers' attorney conceded that Toll Brothers had "third partied" Lazewski into the original Middlesex litigation, in which Goeltz was seeking about $3500 for his lost deductible and incidental expenses. He represented to the judge that "J. Lazewski and Toll brought together a small pot of money that made the case go away." The attorney further acknowledged that, "from the beginning" his client "blamed Lazewski" for the accident. He admitted that his client knew about the pending NJM lawsuit in Monmouth, and admitted that Goeltz's personal attorney told him that the purpose of the exception in the release clause of the Middlesex settlement was to avoid "stepping on anybody's toes" in the subrogation action. In other words, it was intended to avoid a waiver of NJM's subrogation rights.

Toll Brothers was not a party to the Monmouth lawsuit. However, all counsel agreed that before the first Middlesex litigation was settled, they were all aware of the Monmouth litigation and were aware of Lazewksi's claim that responsibility for the accident lay with Toll Brothers. According to NJM's attorney, he intended to file a motion to transfer the Monmouth suit to Middlesex and have it consolidated with the Goeltz lawsuit. But before he could do so, Toll Brothers settled the Goeltz lawsuit. He then dismissed the Monmouth suit against Lazewski and filed the second Middlesex lawsuit to collect from Toll Brothers the remaining approximately $19,000 that NJM had paid to its insured.

By order dated July 9, 2010, Judge Stroumtsos denied Toll Brothers' motion to dismiss the complaint, reasoning that Toll Brothers was well aware of the Monmouth litigation when it settled the Middlesex lawsuit and knew or should have known that paying Goeltz about $3500 to settle his Special Civil Part claim for incidentals was not going to resolve NJM's much larger subrogation claim for damage to the car. In his oral opinion issued July 9, he reasoned that:

[Goeltz's personal attorney] put in his release some language which would put you [Toll Brothers] on notice that he wasn't going to jeopardize his written contractual relationship that he had with his . . . insurer . . . NJM. And in addition to that, NJM, at least by copies of correspondence, made you aware of the fact of subrogation, and you're not going to get out of the subrogation situation by trying to say, well, it was settled. No. Your motion is denied.

Thereafter, by consent, Judge James F. Hyland conducted a bench trial of the subrogation action. The participating parties were Insurance Restoration, NJM as subrogee, defendant Toll Brothers, and third-party defendant Lazewski. Before the testimony commenced, Judge Hyland issued an oral opinion on May 26, 2011, denying Toll Brothers' motion in limine based on alleged spoliation of evidence. In its motion, Toll Brothers argued that although the accident occurred at about 5:50 a.m., Goeltz should not have immediately driven the car to a service station but instead should have pulled the car off the road and called Toll Brothers to report the accident, so Toll Brothers could immediately inspect the car and the accident site. Toll Brothers sought an inference that such an inspection would have revealed that the vehicle was not damaged by the manhole cover.

NJM's attorney argued that Goeltz acted reasonably by reporting the accident to the police later that same day, and notifying Toll Brothers of the accident within a day or two, before the car was repaired. He argued that Toll Brothers had a timely opportunity to inspect the manhole cover, and should have promptly sent a representative to the service station to inspect the car before it was repaired. Judge Hyland found that there was no spoliation of evidence. He agreed that Goeltz acted reasonably, that it was Toll Brothers' responsibility to "conduct . . . due diligence," and its failure to do so did not warrant a spoliation inference.

Following the bench trial, Judge Hyland credited NJM's proofs, which included testimony from Goeltz about the accident and from an auto repair expert concerning the damage to the car and the cost of repairs. He also found that Toll Brothers had no contract with Lazewski at the time of the accident and there was no basis to impose liability on any party other than Toll Brothers. On June 22, 2011, he entered judgment against Toll Brothers for $19,043.63, and dismissed all claims against Lazewski because the "third party plaintiff [Toll Brothers] failed to meet [its] burden" of proof.


On this appeal, we review Judge Stroumtsos's motion decisions for abuse of discretion. See Court Invest. Co. v. Perillo, 48 N.J. 334, 341 (1966).*fn1 We apply the same standard to Judge Hyland's evidentiary ruling concerning the alleged spoliation. Hisenaj v. Kuehner, 194 N.J. 6, 12 (2007); Cockerline v. Menendez, 411 N.J. Super. 596, 620-21 (App. Div.), certif. denied, 201 N.J. 499 (2010). In light of the record presented to us, we find no basis to disturb any of the rulings on appeal.

In its first point of argument, Toll Brothers contends that the trial court erred in reinstating plaintiffs' complaint on March 19, 2010 pursuant to Rule 4:50-1. Toll Brothers failed to properly perfect its appeal on this point by providing us with the complete motion record, including the notice of motion and supporting certifications. Instead, its appendix only contained a copy of a March 11, 2010 certification from its counsel submitted in opposition to the reinstatement motion. Therefore, we do not even know from appellant's submissions whether oral argument was requested on the motion, whether there was argument, or precisely what legal issues were raised.*fn2

However, respondent's appendix provided a certification submitted in support of its February 16, 2010 motion, and we have inferred from that certification, and the opposing certification, that NJM's attorney asserted that he failed to file opposition to the November motion because he reasonably believed it was being adjourned while Toll Brothers' attorney considered his proofs that Toll Brothers was responsible for the accident. The attorney's certification also set forth the meritorious basis for his client's claim. On this record, we find no abuse of Judge Stroumtsos's discretion in granting the reinstatement motion pursuant to Rule 4:50-1(a) ("mistake, inadvertence, surprise, or excusable neglect") and Rule 4:50-1(f) ("any other reason justifying relief from the operation of the judgment or order"). See DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 270 (2009) (Rule 4:50-1(f) applies in exceptional circumstances where required "'to achieve equity and justice'") (quoting Perillo, supra, 48 N.J. at 341).

We likewise find no abuse of discretion in Judge Stroumtsos's ruling denying the motion to dismiss the reinstated complaint. We agree with him that Toll Brothers' position was disingenuous and accepting its arguments would lead to an unjust result. Toll Brothers was clearly aware of NJM's subrogation claim and its pending lawsuit, when it settled Goeltz's Special Civil action, and it knew there was an issue as to whether Lazewski or Toll Brothers was responsible for the raised manhole. See Am. Reliance Ins. Co. v. K. Hovnanian at Mahwah IV, Inc., 337 N.J. Super. 67, 72-73 (App. Div. 2001). It knew the exception to the release language was aimed at preserving NJM's subrogation rights, and it could not reasonably have believed that it was resolving its entire liability for the damage to the car by settling the Goeltz lawsuit for the deductible and incidental expenses.

Toll Brothers' remaining appellate contentions, including its spoliation arguments, are without sufficient merit to warrant discussion in a written opinion. R. 2:11-3(e)(1)(E). We affirm substantially for the reasons stated by Judges Stroumtsos and Hyland in their respective oral opinions.


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