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Occhifinto v. Olivo Construction Co., LLC

Superior Court of New Jersey, Appellate Division

August 9, 2013

ROBERT OCCHIFINTO and NVE, INC., Plaintiff-Appellant,
v.
OLIVO CONSTRUCTION CO., LLC, MARTIN OLIVO, HOUGHTON, QUARTY & WARR, LLC, WW CONSTRUCTION AND MASONRY, STAR BUILDING SYSTEMS, ANDRES F. ANDERSEN ASSOCIATES, INC., DIAMOND SAND AND GRAVEL CO., INC., ANTUL N. SHAH, P.E., ANS CONSULTANTS, INC., BARDO, COX & MILLER, INC. Defendants, and ROBERT S. KEPPLER MASON CONTRACTORS, LLC, a/k/a ROBERT S. KEPPLER CONCRETE CONSTRUCTION, LLC, and MERCER MUTUAL INSURANCE CO., Defendants-Respondents.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Telephonically Argued May 2, 2013

On appeal from the Superior Court of New Jersey, Law Division, Sussex County, Docket No. 0070-07.

Dennis T. Smith argued the cause for appellant (Pashman Stein, P.C., attorneys;Samuel J. Samaro and Mr. Smith, on the brief).

Gregory J. Irwin argued the cause for respondent Robert S. Keppler Mason Contractors, LLC (Harwood Lloyd, LLC, attorneys; Mr. Irwin, of counsel and on the brief).

Renee Scrocca argued the cause for respondent Mercer Mutual Insurance Company (Testa, Heck, Scrocca & Testa, PA, attorneys; Justin R. White, on the brief).

Before Judges Messano and Ostrer.

PER CURIAM

Robert Occhifinto and NVE, Inc., (collectively, plaintiff), filed suit against numerous defendants claiming improper design and negligent construction of an addition to a warehouse Occhifinto owned in Andover. Mercer Mutual Insurance Company of New Jersey (Mercer), the insurer of the project's masonry contractor, defendant Robert S. Keppler Mason Contractors, LLC, a/k/a Robert S. Keppler Concrete Construction LLC (Keppler), provided Keppler with a defense to plaintiff's claims pursuant to a reservation of rights.

Mercer subsequently filed a declaratory judgment (DJ) action, asking the court to declare it had no duty to defend and indemnify Keppler with respect to plaintiff's claims. Plaintiff filed an answer and counter-claim seeking a declaration that Mercer was obligated to provide a defense and indemnification to Keppler under the policy. On cross-motions for summary judgment, the judge ordered that Mercer had "a duty to indemnify [Keppler] . . . to the extent that it is found liable for damages . . . caused . . . to the property of others." Mercer provided a defense to Keppler during the litigation.

A number of defendants settled with plaintiff immediately before trial, including defendants Houghton Quarty & Warr, LLC (HQW), the project architect; Bardo, Cox & Miller, Inc. (Bardo), the installer of the addition's steel deck; and Star Building Systems (Star), the manufacturer of the prefabricated steel addition. As a result, the case proceeded to trial against the project's general contractor, defendant Olivo Construction Co. LLC (Olivo), the successor general contractor, WW Construction and Masonry (WW), and Keppler.

At the conclusion of all evidence, Olivo and WW were dismissed from the litigation, leaving Keppler as the sole defendant. The case was submitted to the jury after the judge resolved disputes regarding which of the settling defendants would be placed on the jury verdict sheet for potential apportionment of liability. The jury ultimately found: Bardo not negligent; Keppler negligent, but its negligence was not a proximate cause of plaintiff's damages; and HQR, Star and plaintiff negligent, which negligence proximately caused plaintiff's damages. The jury apportioned the percentage of fault as follows: plaintiff – 50%; HQR – 25%; and Star – 25%. The jury awarded damages of $2, 827, 650. An order for judgment in favor of Keppler was entered on December 6, 2011.

Thereafter, plaintiff moved for an award of counsel fees against Mercer in the DJ action. By order dated May 3, 2012, the judge denied plaintiff's motion. This appeal ensued.

Before us, plaintiff asserts two essential points:

I. THE TRIAL COURT COMMITTED REVERSIBLE ERROR BY ALLOWING KEPPLER TO ASSERT AN EMPTY CHAIR DEFENSE AS TO STAR BUILDING SYSTEMS
II. THE TRIAL COURT ERRED IN DENYING OCCHIFINTO FEES PURSUANT TO R. 4:42-9(a)(6)

We have considered these arguments in light of the record and applicable legal standards. We affirm.

I.

Before trial commenced, the judge denied plaintiff's motion in limine to preclude Keppler from asserting a so-called "empty chair defense." See e.g., Brodsky v. Grinnell Haulers, Inc., 181 N.J. 102, 114 (2004) (describing the "'empty chair' defense" as one "in which a defendant shifts blame to a joint tortfeasor who is not in the courtroom"). We limit our recitation of the testimony at trial to permit consideration of the first point presented on appeal.

Plaintiff owned an old warehouse and subsequently renovated the building in 2001. Thereafter, it added a 14, 000 square foot addition (Phase I), utilizing Olivo as the general contractor and Keppler for the masonry work. A second addition (Phase II) was to be 90, 000 square feet, equally divided between two floors. Plaintiff chose to erect a pre-engineered steel building and again hired Olivo as the general contractor, who in turn hired Keppler to install the concrete. Plaintiff also hired HQW as the project architect based on Olivo's recommendation.

Plaintiff ordered the prefabricated steel structure from Star. The first floor consisted of a concrete slab on grade. The second floor, a mezzanine, consisted of an elevated slab constructed by using a steel form deck into which concrete was poured. Because of the topography of the land, the mezzanine was to connect directly to the ground floor of plaintiff's existing warehouse.

Unhappy with its performance, plaintiff terminated Olivo before the concrete was poured for the mezzanine floor; WW was hired as the new general contractor. In the winter of 2003, after construction was completed, plaintiff began to notice cracking and movement in the second floor of the building. Plaintiff's expert, Mark Berman of R.V. Buric Architecture, Engineering & Planning, LLC, opined the cost to correct the problem exceeded $4.9 million.

Berman opined that "the major cause" of the problem was "[t]he improper construction of the slab . . . ." He further stated that "the metal decking which supported the concrete was the wrong type, it was improperly installed[, ] . . . the reinforcement within the concrete was essentially absent . . . and the concrete itself had some problems in terms of its composition." Berman summarized the results of his investigations:

[T]here were numbers of mistakes made that created the problem and the damages to this building. Much of it was lack of information and lack of coordination on the part of professionals and additional coordination or lack of coordination on the part of some of the material suppliers, and ultimately the lack of coordination and the lack of information requested by the installers to understand what they were supposed to be doing with things like metal deck and concrete.

Berman explained that "a different type of metal deck" should have been used, which was corrugated all around and would "grab into the concrete and integrate and make it a composite structure, concrete and metal deck working together . . . ." Berman was then asked to "talk about the various contributors" to the problems.

As to Keppler, Berman opined that "when he came to the job site, the fact that the form deck was put in the wrong way, . . . that other components weren't there . . ., he should have reasonably known that there was something missing, and . . . those components . . . should have been put back in place before he continued with placing the concrete." He also concluded that Keppler added too much water to the concrete at the site.

Berman further opined that Bardo installed the deck upside down, however, he concluded that if properly reinforced, this would not have caused the concrete to fail. Berman noted that HQW included only "simple notes" on the drawing regarding the second floor. Berman opined that HQW, "and many others, the engineer for example[, ] . . . believed that all of this concrete work and everything related to that second floor would have been provided by Star . . . ." But, Berman explained, Star's drawings indicated "that the concrete slab was by others, not by the metal building manufacturer . . . ." On direct examination, Berman opined that "other than providing [the decking], [Star] had no direct action with the installation."

On cross-examination, however, Berman agreed that "there was no design for the second floor decking and slab system . . . ." He further acknowledged the following passage from one of his reports:

It is apparent from review of the documentation on the project that the responsibility for the design of the mezzanine concrete slab was initially overlooked by the architect, and both the structural engineers and the metal building fabricator believing that the concrete design was "by others."
[(Emphasis added).]

Berman acknowledged that his "report and testimony basically boil[ed] down to . . . there was improper design and improper installation."

During cross-examination, counsel for Keppler asked Berman if "at some point the architect did specify . . . composite decking . . . ." Plaintiff's counsel's objection resulted in a sidebar, during which counsel advised the judge that the question regarded "a fax cover sheet" "produced in this case at some point" "from [HQW] ostensibly to [Star] . . . purportedly answering a question posed by Star to the architect. And the question involved what kind of deck should they be using." The fax, which is in the appellate record, was appended to one of Berman's reports.[1] In pertinent part, it states: "Concrete slab as designed is 5 1/4" concrete on top of composite decking."

Plaintiff's counsel argued the document could not be authenticated and there was "no evidence . . . that it was ever sent." He contended Keppler's counsel could not refer to the fax because "[i]t's not evidence that can be used in the trial of the case, and so he can't ask my expert to opine on something I couldn't ask him to opine on. It's an inadmissible document . . . ."

Keppler's counsel countered, "I'm not even going to ask [Berman] about the document." Counsel stated, "This witness will agree with me that the architect in this case ordered composite decking and he didn't get it[, ]" noting Berman so stated in his deposition. The judge overruled the objection.

The following then occurred in front of the jury:

Keppler's counsel: Mr. Berman, you ultimately concluded based on your review of all this material in this case, your own investigation, you ultimately concluded that what the architect ultimately asked for . . . was a composite deck and he didn't get it. Correct?
Berman: The original construction drawings did not specify any deck. It said metal deck, but it didn't qualify which–
Q. But ultimately the architect asked for a composite deck, did he not?
A. Ultimately I am aware that one of the architect's staff sent a fax cover letter –
Q. Can you just answer my question with a yes or no? Did he ultimately to your satisfaction ask for a composite deck to be used in this case?
A. He asked somebody for a composite deck. He didn't specify what else was going on there.

The fax cover sheet was never admitted in evidence at the trial.

We need not recount the balance of plaintiff's case, or the testimony adduced in Keppler's defense, since the evidence is largely irrelevant to consideration of the issues on appeal. It suffices to say Keppler claimed that he knew the concrete needed reinforcement and brought this to the attention of Occhifinto. Nevertheless, Occhifinto and WW told him to go ahead and pour the concrete.

We also note that Keppler's expert structural engineer, Glen Paul Rentschler, acknowledged on cross-examination by plaintiff's counsel that "the . . . mezzanine slab[] was not effectively designed by anyone, there were no details of how it was to be constructed . . . . [T]here were no details as is normally provided by an architect or an engineer . . . or a building manufacturer, as to how the slab was to be constructed." (Emphasis added). Notably, although Keppler's counsel did not question Rentschler as to whether HQW ordered a composite deck, plaintiff's counsel specifically questioned Renschler about references in his report to the fax:

Q. And what you're saying here is that you can't derive . . . what the architect was thinking or what Star was thinking from [the fax], because you can't even tell if it was sent?
A. That's correct.

After Rentshcler's testimony, the judge addressed plaintiff's arguments regarding which, if any, of the settling defendants should be included on the verdict sheet. Plaintiff conceded that, based upon Berman's testimony, HQW should be placed on the verdict sheet, but it opposed the inclusion of any other defendant.

Keppler sought to include not only HQW, but also Bardo and Star, on the verdict sheet. The judge agreed, stating specifically as to Star, "I do think that there has been sufficient evidence produced to make Star an empty chair . . . through the testimony of all the witnesses about the decking and the type of decking that was called for and what was actually delivered."

In summations, Keppler's counsel focused upon the "inadequate design" of the mezzanine deck. Citing Berman's testimony, counsel noted "Star was asked and directed by the architect for composite decking . . . ." He further emphasized Berman's acknowledgment in his report that "the design of the mezzanine . . . slab was initially overlooked by the architect with both the structural engineers and the metal building fabricator believing the concrete design was by others."

In his summation, plaintiff's counsel argued that Star was not at fault. He told the jury, "The only thing you know is they built the building, and that somebody asked them to send composite deck and they sent form decking. Well, that's even less significant . . . because we know that if form deck is sent, and it's properly reinforced, it's perfect."

The jury returned the verdict noted above.

II.

Plaintiff contends it was reversible error to permit Star to be included on the verdict sheet. The argument is two-fold. First, plaintiff contends there was no expert testimony produced "implicating Star"; second, plaintiff argues Keppler was permitted to argue Star was negligent based solely upon a fax that was inadmissible hearsay. Keppler counters by contending the fax was never admitted in evidence, Star was properly placed on the verdict sheet, and, since the jury determined Keppler's negligence was not a proximate cause of plaintiff's damages, Star's inclusion on the verdict sheet did not matter.

As the Court most recently explained:

In practice, the Comparative Negligence Act requires the factfinder to assign to each party on the verdict sheet a percentage of fault, with the percentages assigned to each party adding up to 100%. N.J.S.A. 2A:15-5.2(a)(2). With the factfinder's task complete, "[t]he judge shall mold the judgment from the findings of fact made by the trier of fact."
[Town of Kearny v. Brandt, 214 N.J. 76, 97 (2013) (quoting N.J.S.A. 2A:15-5.2(d)).]

"The Joint Tortfeasors Contribution Law plays a complementary role in the statutory scheme. Under that statute, a party that is liable for more than the percentage share of the damage award that is assessed by the factfinder may have contribution rights against other parties." Ibid. (citing N.J.S.A. 2A:53A-3). "Thus, when a defendant ceases to participate in the case by virtue of a settlement, a non-settling defendant who meets the relevant requirements as to notice and proof may obtain an allocation of fault to the settling defendant." Id . at __ (slip op. at 29) (citing Young v. Latta, 123 N.J. 584, 596-97 (1991)). "The right of a non-settling defendant to have the jury apportion the liability of a settling defendant is dependent upon the non-settling defendant proving the liability of the settling defendant." Cockerline v. Menendez, 411 N.J.Super. 596, 618 (App. Div.) (citations omitted), certif. denied, 201 N.J. 499 (2010).

As noted, the fax cover sheet was never admitted into evidence. On cross-examination by Keppler's counsel, Berman simply reiterated a conclusion he apparently reached, correctly or incorrectly, in his report and again in his deposition, i.e., that HQW informed Star that the design anticipated composite decking not a form deck. Indeed, the jury knew nothing about the fax cover sheet until plaintiff's counsel questioned the defense expert about references to it in his report.

N.J.R.E. 703 provides,

The facts or data . . . upon which an expert bases an opinion or inference may be those perceived by or made known to the expert at or before the hearing. If of a type reasonably relied upon by experts in the particular field in forming opinions or inferences upon the subject, the facts or data need not be admissible in evidence.

"Although the rule permits a hearsay statement . . . to be referred to by a testifying expert for the purpose of apprising the jury of the basis for his opinion, it does not allow expert testimony to serve as a vehicle for the wholesale [introduction] of otherwise inadmissible evidence." Agha v. Feiner, 198 N.J. 50, 63 (2009) (citation omitted) (alteration in original).

In reality, plaintiff cannot complain about the admission of hearsay evidence because none was admitted. Rather, plaintiff objects to the basis for his own expert's factual conclusion that HQW requested composite decking but Star supplied something else. Under these circumstances, applying the deferential standard of review we accord the trial judge's evidentiary rulings, see Hisenaj v. Kuehner, 194 N.J. 6, 12 (2008), we find no basis to reverse the judge's evidentiary ruling. That ruling did not admit the document into evidence but only permitted Keppler's counsel to ask a question about the factual underpinnings of Berman's opinions.

We also reject plaintiff's larger argument, that there was insufficient evidence to submit the question of Star's negligence to the jury and, therefore, include Star on the verdict sheet. Berman opined that "the design of the mezzanine concrete slab was initially overlooked by the architect, and both the structural engineers and the metal building fabricator, " Star. (Emphasis Added). According to Berman, the mezzanine floor failed due to "improper design and improper installation." (Emphasis added). Keppler's expert, Rentschler, testified that "there were no details of how [the mezzanine slab] was to be constructed, " something "normally provided by an architect or an engineer . . . or a building manufacturer." (Emphasis added). Star was properly included on the verdict sheet.[2]

III.

As noted above, after trial, plaintiff moved for an award of counsel fees in the DJ action.[3] In his written decision that accompanied the May 3, 2012 order denying plaintiff's motion, the judge concluded:

Keppler secured coverage from Mercer in the underlying matter pursuant to the parties' Reservation of Rights. As stated, the issue in the instant matter was the extent of indemnity coverage to Occhifinto should Keppler be found liable to it. As the jury found that Keppler was not . . . liable, Occhifinto did not actually secure such coverage and cannot be successful under [Rule 4:42-9(a)(6)].

Plaintiff argues that it was a "successful claimant" in the DJ action because it "preserved Keppler's defense through trial." Mercer contends that plaintiff was not a "successful claimant" because: a) Mercer was already providing a defense to Keppler under a reservation of rights, and the DJ action only resolved the extent of coverage under the policy; and b) based upon the jury verdict, plaintiff did not obtain the benefits of indemnification under the policy.

Rule 4:42-9(a)(6) permits the award of counsel fees "[i]n an action upon a liability or indemnity policy of insurance, in favor of a successful claimant." The policy underlying the Rule is "to discourage groundless disclaimers and to provide more equitably to an insured the benefits of the insurance contract without the necessity of obtaining a judicial determination that the insured, in fact, is entitled to such protection." Sears Mortgage Corp. v. Rose, 134 N.J. 326, 356 (1993) (citation omitted). Thus, an insured may be entitled to an award of counsel fees if he secures a defense, even if he ultimately is not entitled to indemnification under the policy. Schmidt v. Smith, 294 N.J.Super. 569, 591 (App. Div. 1996), aff'd, 155 N.J. 44 (1998).

We acknowledge that plaintiff may be seen as a third-party beneficiary of the Mercer policy, since any judgment it may have obtained against Keppler would potentially be payable from the coverage provided. As we have noted, "[A]n insurer's refusal to provide liability coverage may also, as a practical matter, preclude an innocent injured party from being able to recover for the injury. Hence, third-party beneficiaries may also sue an insurer to establish coverage and may recover counsel fees if successful." Myron Corp. v. Atl. Mut. Ins. Corp., 407 N.J.Super. 302, 311 (App. Div. 2009) (citations omitted), aff'd o.b., 203 N.J. 537 (2010); see also Rose, supra, 134 N.J. at 352-56 (approving counsel fee award to third-party beneficiary where insurer was ordered to provide indemnification for defalcating attorney).

Whether or not a party is a "successful claimant, " the award of counsel fees under the Rule "is not mandatory, 'but rather the trial judge has broad discretion as to when, where, and under what circumstances counsel fees may be proper and the amount to be awarded.'" Passaic Valley Sewerage Comm'rs v. St. Paul Fire and Marine Ins. Co., 206 N.J. 596, 619 (2011) (quoting Iafelice ex rel. Wright v. Arpino, 319 N.J.Super. 581, 590 (App. Div. 1999)). "Since equitable principles govern the trial court's decision, the court should consider the totality of the circumstances in awarding counsel fees." Ibid. (quoting Iafelice, supra, 319 N.J.Super. at 591).

In this case, plaintiff never received the benefits of the policy provisions obligating Mercer to indemnify Keppler. We recognize, in Iafelice, supra, 319 N.J.Super. at 591, we affirmed an award of counsel fees to the plaintiff, a third- party beneficiary seeking to compel a defense under the tortfeasor's policy, without regard to the plaintiff's ultimate success.

However, unlike the circumstance in Iafelice, id. at 586, where the defendant insurer took the position that the policy had been cancelled for non-payment, in this case, Mercer was defending Keppler under a reservation of rights. The existence of the policy was not in dispute, and plaintiff was not a "successful claimant" in securing a defense for Keppler.

Instead, the DJ action focused solely upon the extent of the coverage provided by the policy. In that regard, the judge's order in the DJ action very specifically provided only that Mercer had to indemnify Keppler "to the extent that it is found liable for damages . . . to the extent that Keppler's work caused damage to the property of others . . . ." (Emphasis added).

Under the totality of the circumstances, we cannot conclude that the judge abused his discretion in refusing to award plaintiff counsel fees in the DJ action.

Affirmed.


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