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Granata v. Broderick

Superior Court of New Jersey, Appellate Division

July 8, 2013

JOHN GIOVANNI GRANATA, Plaintiff-Respondent/ Cross-Appellant,
EDWARD F. BRODERICK, JR., ESQ., an Attorney at Law of the State of New Jersey, BRODERICK, NEWMARK & GRATHER, Defendants-Appellants/ Cross-Respondents.


Submitted December 18, 2012

On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-3278-07.

Graham Curtin, attorneys for appellants/ cross-respondents (Christopher J. Carey, of counsel and on the brief; Patrick J. Galligan, Joseph C. Brennan and Jared J. Limbach, on the brief).

Roper & Twardowsky LLC, attorneys for respondents/cross-appellants (Ms. Acciavatti, of counsel and on the brief).

Before Judges Fisher, Waugh and St. John.


Defendants Edward F. Broderick, Jr. and Broderick, Newmark & Grather, appeal the jury verdict entered for plaintiff John Giovanni Granata in this legal malpractice action. We reverse and remand for a new trial.


We briefly summarize the relevant procedural history and the facts based on the record before us.

In 1986, plaintiff began to work as a captive insurance agent for Prudential Insurance Company of America, selling property, casualty, life, fire and automobile insurance. As a "captive" agent, he could only write insurance for Prudential. Plaintiff's income was based solely on commissions, calculated on a percentage of the premium for a new policy and a percentage of the premium every year that the policy was renewed. Plaintiff was a successful agent, obtaining bonuses and awards for his performance over the years. In 1987, plaintiff obtained his securities license and began selling securities for Pruco Securities, LLC, as well (Prudential Insurance Company of America and Pruco Securities, LLC, collectively "Prudential").

At a January 1995 meeting, plaintiff complained to high-level management that Prudential was improperly discriminating against agents who served areas with large minority populations. Plaintiff was such an agent. In April 1996, plaintiff was terminated from Prudential for, according to the company, violating rules when he impersonated a client in order to transfer money between securities accounts.[1] Although plaintiff admitted impersonating the client, he maintained that Prudential used the incident as a pretext to fire him based on his complaints about the discriminatory effect of its policies.

In May 1996, plaintiff consulted defendant Broderick. Plaintiff's primary goal was to be reinstated by Prudential. Broderick filed a complaint on behalf of plaintiff against Prudential and Joseph Gebbia, a regional vice-president at Prudential, [2] seeking compensatory damages due to lost wages and benefits, reinstatement to his former position, and an injunction against continued violations of the Conscientious Employee Protection Act (CEPA), N.J.S.A. 34:19-1 to -8. The complaint had two counts, one grounded in wrongful termination and retaliation under CEPA, and the other grounded in defamation.[3]

Arguing that plaintiff's termination from Prudential was based on his violation of the rules regarding securities accounts, Prudential moved to compel arbitration before the National Association of Securities Dealers (NASD). The trial judge denied the request, but we reversed, holding that the claims had to be heard by NASD because the dispute did not fall into the "insurance business exception" of the NASD Code. Granata v. Prudential Ins. Co. of Am., Docket No. A-7052-97, (App. Div. Dec. 28, 1998).

Defendants represented plaintiff in the arbitration action against Prudential before a NASD panel. The matter was arbitrated for nine days in April and June 2001. Plaintiff requested three million dollars in compensatory and punitive damages. Prudential argued that if plaintiff had been improperly terminated, which it denied, he failed to mitigate his losses; if he had, his damages would have been $85, 000.

As part of plaintiff's claim against Prudential, defendants hired economic damages expert Frank Tinari and an insurance expert who had worked with Tinari, Armando Castellini. Part of Castellini's role was to supply Tinari with information on the industry to help Tinari determine plaintiff's losses. Based on statistical evidence provided by Castellini, the average life of an automobile insurance policy was seven years, and thus, had plaintiff not been terminated, he would have received commissions on his renewal policies for seven years. Castellini determined that plaintiff's post-termination losses for commissions and bonuses lost on new policies and renewals over a seven-year period was $1, 958, 536. He calculated plaintiff's pre-termination losses stemming from Prudential's alleged violation of the Fair Automobile Insurance Reform Act of 1990 (FAIRA), N.J.S.A. 17:33B-1 to -64, to be $1, 359, 981.

Tinari relied on Castellini's opinions in determining the amount of commissions, the residual commissions, and the rate of renewals. Tinari submitted a report dated March 14, 2000, to defendants. The report calculated damages for the combined pre-termination and post-termination losses at between $1.7 and $2.1 million.

Just prior to the NASD arbitration, Broderick asked Tinari to prepare a revised report that did not take into account pre-termination losses sustained as a result of Prudential's tiering and non-renewal practices which purportedly violated FAIRA. The resulting April 4, 2001 report did not include pre-termination losses, and found a loss range of $664, 420 to $1, 087, 572.

Broderick explained that he asked for the revised report because he understood that pre-termination damages were not recoverable under CEPA. He also knew that he would get a "strong objection" from Prudential if he attempted to recover those damages at arbitration because Prudential claimed that as a prerequisite to the pre-termination claim, a determination had to be ...

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