New Jersey

Is Cyberattack Considered Hostile/Warlike Action (NY)

In Merck & Co., Inc. et al. v. Ace American Ins. Co. et al, the New Jersey appeals court ruled in favor of Merck & Co. in its $1.4 billion insurance claim over the 2017 NotPetya cyberattack. The court found that the “Hostile/Warlike Action” exclusion in Merck’s all-risks property insurance policies did not apply to the cyberattack, despite Russia’s attribution. In 2017, Merck & Co., Inc. fell prey to a crippling cyberattack that compromised its computer and network systems. The attack was traced back to the Ukrainian accounting software, M.E. Doc, previously accessed by an unknown entity. Over 40,000 machines within Merck’s network were infected, causing substantial disruptions globally and spreading to at least sixty-four countries, including Russia. Merck sought coverage for its losses through its “all risks” property insurance policies, However, their insurer, ACE American Insurance Company, invoked the “Hostile/Warlike Action” exclusion contained within their policies, triggering a legal dispute. Although Merck conceded the word “warlike” might not be applicable, they asserted the word “hostile” should be read in the broadest possible sense, as meaning “adverse,” “showing ill will or a desire to harm,” “antagonistic,” or “unfriendly.” The court analyzed the exclusion clause and found it did not align with ACE’s broad interpretation since the exclusion explicitly referred to damages caused by hostile or warlike actions by a government, which required the involvement of military action. Crucially, the policy did not state that damages resulting from government actions driven by ill will alone were excluded. The court also considered the history of the war exclusion, which has been included in policies for over a century.  It noted that these exclusions had consistently been applied solely within the context of explicit war or organized military actions. The court’s decision has significant implications for the insurance landscape, emphasizing the need for precise policy language and historical context in interpreting insurance exclusions. It reaffirmed that the “Hostile/Warlike Action” exclusion did not encompass a cyberattack on a non-military company providing commercial accounting software. Regardless of whether the attack was instigated by a private actor, government, or sovereign power, the exclusion was not applicable to deny coverage for Merck’s losses. Thanks to Aron Goldberger for his contribution to this article.  Should you have any questions, contact James Scott.Read More

The Eternal Dispute of the Status of Additional Insured

An insurance broker and a building management company (Dovan) were sued by a property named Parkview that suffered a fire loss, for inadequate insurance for the fire loss.  Parkview alleged gross negligence in Dovan’s alleged failure to review the relevant policy. Dovan Management Group LLC v. AmGuard Insurance Company, 2023 WL 5216635 (N.J. Super. Ct. App. Div. Aug. 15, 2023).  Dovan in turn filed a separate claim against Parkview’s insurance company AmGuard, attempting to claim that in one provision of the management agreement, Parkview was required to name Dovan as an additional insured.  AmGuard refused to accept Dovan’s tender by denying Dovan’s additional insured status under the policy. AmGuard relied on the exclusionary language in the policy endorsement that expressly excluded the underlying claims and claimed that Dovan even lacked standing in bringing the action.  In general, policy exclusions have to clear, specific and unambiguous in order to be enforceable.  And this is one of the cases where the policy language was not subject to multiple interpretations.  The appellate court ruled that even if Dovan was considered an additional insured under the policy, the business liability section of the exclusion applies.  The business liability exclusion excluded Dovan’s costs incurred in defending the underlying action since the claim was related to the property damage arising from Dovan’s contractual obligation with Parkview to review and recommend the appropriate amount of insurance.  AmGuard successfully defended itself by implementing specific and unambiguous language into the policy. Thanks to Yifan Lin for her contribution to this article.Read More

New York’s Anti-SLAPP Law & New Jersey’s Entire Controversy Doctrine Result In Pre-Answer Dismissal

The Appellate Division, First Department, recently affirmed a trial court’s pre-answer dismissal of a complaint alleging defamation and breach of contract. In Gillespie v, Kling, plaintiff was an actor and formerly married to defendant, the host of a podcast that was streamed on Apple Music. The couple resided in New Jersey and filed divorce proceedings in that state after their marriage failed. Defendant subsequently published a podcast alluding to suffering abuse from plaintiff during their marriage. This allegedly caused plaintiff to request a mutual non-disparagement clause in their marital separation agreement which was entered into after the podcast was published. The podcast remained online, and plaintiff alleged that it caused him to lose acting opportunities. Plaintiff sued defendant in New York Supreme Court alleging defamation and breach of contract based on the non-disparagement clause in the agreement. Defendant moved to dismiss the defamation action in lieu of filing an Answer based on New York’s recently amended Anti-SLAPP statute, claiming that the podcast was speech touching on a matter of public concern directed at a public forum. Defendant also moved to dismiss the breach of contract claim based on New Jersey’s entire controversy action, asserting plaintiff should have raised the issue during the divorce proceedings. The trial court granted the motion on both grounds and plaintiff appealed. The First Department affirmed, holding that statements describing domestic violence during a marriage made on a podcast fell within the protection of the anti-SLAPP law. The First Department found that since the anti-SLAPP law applied, it was Plaintiff’s burden to show, by clear and convincing evidence, that Defendant’s statements were false and made with knowledge of their falsity. Plaintiff only submitted a conclusory and self-serving affidavit and therefore did not meet this burden. The First Department also held that New Jersey’s entire controversy doctrine barred the breach of contract cause of action. Because plaintiff had knowledge of defendant’s statements before entering into the marital separation agreement, he was required to bring his breach of contract claim during the divorce proceedings. The Court also held that based on the merger doctrine, the marital separation agreement was merged into the judgment of divorce, and thus ceased to exist as a separately enforceable contract. This decision shows the utility of the newly amended Anti-SLAPP statute in obtaining favorable defense decisions on dispositive motions. It also highlights the importance of considering all potential defenses, even those arising from the law of other jurisdictions, in defending cases. Thank you to Brendan Gilmartin for his contribution to this post. Please contact Andrew Gibbs with any questions.Read More

WCM Successful In Appeal As To Whether A Court-Appointed Expert’s Work Is Protected By The NJ Litigation Privilege

WCM recently achieved a significant appellate victory in Satz v. Siragusa, a New Jersey professional negligence case involving a client who served as a court-appointed expert. The expert conducted an evaluation of a party in a family court action and provided the Court with certain recommendations. The party disputed the expert’s methodology and findings, focusing on an inadvertent and insignificant factual error in his report, and sued him for allegedly failing to adhere to the “standards of his profession.” WCM moved to dismiss on several grounds, including that the expert was protected by New Jersey’s judicial/litigation privilege. The trial court agreed and dismissed the case. The Appellate Division affirmed, holding that the litigation privilege applied, despite plaintiff’s complaints regarding the expert’s report and methodology, because the expert was assisting the family court in rendering a decision and satisfied the elements for the privilege to apply. In so holding, the Appellate Division recognized the important reasons for the privilege, which WCM had stressed at oral argument, including that experts and witnesses should have the freedom “to speak and write freely” without fear of liability. The Appellate Division rejected plaintiff’s other arguments in the case. The decision is noteworthy in that the Appellate Division preserved a privilege which is critically important to the litigation process and refused to adopt a rule that could allow unhappy or unsuccessful litigants to sue court-appointed experts for any perceived errors in their methodology or findings. The Court correctly focused on the expert’s role in assisting the family court and found that the privilege applied to shield the expert from liability. Partner Andrew Gibbs argued the case in the Appellate Division while Associate Brendan Gilmartin was successful in obtaining the dismissal in the trial court. Please contact Andrew Gibbs with any questions about the case or the firm’s professional liability practice.Read More

Step Risers Into Showers Are Not Open And Obvious (NY)

New York Courts recently held that a step riser in a shower stall in a gym locker room is not obvious and not dangerous. In Lore v. Fitness International LLC , plaintiff tripped and fell on a tiled single-step riser while entering a shower stall in the locker room at defendant’s gym. The single-step riser was approximately 4.5 inches high but was tiled in the same color and pattern as the floor tiles. In New York, the possessor has a duty to maintain the property in a reasonably safe condition. However, there is no duty to protect against an open and obvious condition that is not inherently dangerous. The Supreme Court granted the defendant gym’s motion for summary judgment on the grounds that the single-step riser was open and obvious and not inherently dangerous. On appeal, the Second Department reversed and concluded that defendant gym did not establish that the step riser was not inherently dangerous under the surrounding circumstances, including the lighting conditions at the time of the accident. This decision will raise the bar on summary judgment when arguing open and obvious conditions. Circumstances surrounding the condition will need to be addressed in summary judgment arguments. Thanks to Jennifer Tuz for her contribution to this post. Please contact Heather Aquino with any questions.Read More

Marinara Sauce Too Hot to Handle? (NJ)

Pizza, Spaghetti, and Mozzarella Sticks.  What these three commonly enjoyed food items have in common is that they are regularly eaten with tomato or marinara sauce.  The flavor combination of flour, wheat, bread, cheese, and tomato sauce is something that virtually everyone enjoys. But what happens when the sauce is capable of inflicting second or third degree burns?

The matter of Valdez v. Brooklyn’s Coal Burning Brick Oven Pizzeria is a case that involves this very issue.  In that matter, the plaintiff and her husband ordered a pizza and mozzarella sticks from Brooklyn’s.  When brought back to their car, the pizza was placed on the floor while the plaintiff carried the container of mozzarella sticks and container of sauce (which were both in a bag) on her lap.  Plaintiff testified that she knew from previous trips to the pizzeria that the container which held the sauce was hot enough that she had to put the container down when holding it.

On their way home, plaintiff started to “feel the burn.”  She looked down and saw marinara sauce on her jeans.  Feeling the sauce burning her thigh, plaintiff threw the bag containing the mozzarella sticks and sauce out of her car.  Plaintiff later went to the hospital.  Her medical expert opined that she sustained a third to second degree burn on her thigh.  Six months later, an investigator retained by plaintiff purchased some mozzarella sticks from Brooklyn’s and found that the marinara sauce was 178 degrees Fahrenheit.  According to plaintiff’s medical expert, a hot liquid at 162 degrees can cause second or third degree burns to human skin.

After being sued, Brooklyn’s moved for summary judgment, arguing that plaintiff spoliated the most relevant piece of evidence.  Plaintiff had alleged two theories of liability: (1) negligent packaging; and (2) negligent sale of flaming hot sauce.  The trial court granted the motion and dismissed the complaint, reasoning that lesser discovery sanctions would not contribute to plaintiff being able to prove her claim nor provide an avenue for Brooklyn’s to defend itself.

The appellate division reversed.  It reasoned that plaintiff should only be barred from pursuing a claim of negligent packaging since the actual packaging had been spoliated by plaintiff who, the court felt, should have been aware that a lawsuit was probable at the time she sustained the burn in her car.  However, the loss of the container did not irreparably prejudice Brooklyn’s ability to defend itself against the claim that the sauce was too hot when sold.

This lawsuit is reminiscent of the famous McDonalds “hot coffee” case, which took years of litigation and appellate practice to finally result in a nominal settlement after appellate practice found that the jury award was extremely excessive (recall that the jury awarded millions of dollars to the injured plaintiff in the McDonalds case).  However, this case is a reminder to restaurants (and their insurers) that these types of claims continue to be brought and steps should be taken to ensure that the food items they serve are as safe as possible.

Thanks to Mike Noblett for his contribution.  Please email Colleen Hayes with any questions.

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Friends Keep Their Promises & Don’t Let Friends Drive Drunk (NJ)

Is an individual who volunteers and assures police officers during a car stop of an alleged drunk driver that he will take the drunk driver and his car safety home – but instead relinquishes the car back to the drunk driver before reaching that destination – civilly liable if the drunk driver then collides with and injures another motorist?

In this case, Diaz v. Reynoso, police stopped a motorist traveling in the wrong direction on a one-way street. After investigating, police concluded that the driver was too intoxicated to drive and allowed him to contact a friend to come to take possession of the vehicle. The defendant (friend) eventually arrived on the scene and assured officers that he would drive the vehicle along with the intoxicated motorist to a safe location. Police issued the motorist a traffic citation for driving in the wrong direction on a one-way street and allowed the defendant to take possession of the vehicle and drive the motorist.

However, shortly after that defendant returned the vehicle to the motorist at a railroad crossing and went his separate way. The motorist resumed driving, ultimately crashing into the plaintiff’s vehicle, causing the plaintiff to sustain injuries. The accident took place approximately thirty-three minutes after the officers had issued the traffic ticket to the motorist. Both the plaintiff and motorist were taken to the hospital for treatment. Several hours after the accident, the motorist gave consent to hospital staff to draw his blood for toxicological testing, which showed the motorist’s Blood Alcohol Concentration (“BAC”) was over New Jersey’s legal limit.

In December of 2019, the plaintiff filed negligence cause of action against the intoxicated motorist, the friend, the two police officers who allowed the friend to take possession of the motorist’s vehicle at the initial scene, and the City of Englewood. Police co-defendants asserted cross-claims against the motorist’s friends for contribution and indemnity.

The motorist’s friend moved to dismiss the plaintiff’s claims against him, arguing that he owed no legal duty to the plaintiff and is not liable for the accident. The trial court ruled in the friend’s favor and dismissed the plaintiff’s claim against the friend and the cross-claims against him by the police defendants. On appeal, the court reversed, stating “a volunteer who fails to discharge his commitment to the police that he or she will take charge of a person who appears to be unfit to drive and who after that willingly allows that visibly intoxicated motorist to resume driving can bear a portion of the civil liability for an ensuing motor vehicle accident caused by that drunk driver.” However, the court ruled that such a duty was contingent on the volunteer being advised by police or otherwise having reason to know that failing to carry out their promise to transport the intoxicated motorist safely and their vehicle could result in civil liability.

The case was remanded back to the trial court for further discovery and development of the record.

Thanks to Irving Fayman for his contribution to this post.  Should you have any questions, please contact Tom Bracken.

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NJ Court Addresses The Impact Of Plaintiff Failing To Provide Expert Report (NJ)

The case Benjamim v. Wegmans Food Markets, Inc. arose from plaintiff’s fall at a Wegman’s grocery store. He alleged that the fall exacerbated his pre-existing epilepsy condition.

The complaint was filed on February 6, 2018.  Discovery was ultimately extended to April 30, 2019.  Plaintiff was required to serve his medical expert report by April 1, 2019.  Arbitration was eventually conducted without service of expert reports.

Plaintiff did not explain the reasons for his continued delay in producing a medical expert report.  Further, as defendant’s expert could not timely complete a report until plaintiff provided medical records, defendant attempted to extend discovery, which was ultimately denied by the judge.  Consequently, defendant filed for summary judgment arguing that plaintiff could not prove that the accident caused an exacerbation of plaintiff’s epilepsy.

The motion judge found that without any competent medical testimony to provide a causal link between the fall and plaintiff’s epilepsy, plaintiff could not prove his prima facie case.  In response to the motion, plaintiff’s counsel pleaded for more time to produce a report.  The judge disagreed; finding that plaintiff’s counsel had everything he needed to retain an expert to provide the required causation opinion.  The Appellate Division upheld the grant of summary judgment in favor of defendant.

In cases where medical expert testimony is required to provide a causal link between an accident and plaintiff’s medical condition, defense counsel should not be afraid to file for summary judgment when plaintiff fails to provide such a report — especially where plaintiff’s counsel has no valid explanation for the delay in providing same.

Thanks to Mike Noblett for his contribution to this post.  If you have any questions or comments, please contact Colleen Hayes.

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Late Notice of Tort Claim Approved? Not So Fast (NJ)

In New Jersey, a plaintiff sought to file a late notice of tort claim identifying a police officer that she claimed was responsible for her injuries. The plaintiff in Pagan v. Rivera sought help from the police department when she was threatened by a former boyfriend in violation of an Order of protection. Despite plaintiff’s concerns that the former boyfriend could be hiding in her apartment, the responding officer instructed her to go into the building to retrieve her identification and a copy of the Order. The plaintiff’s fears proved accurate, and she was assaulted inside the building.

In New Jersey, the Torts Claims Act requires that persons who have claims against public entities or their employees provide a notice of the claim within ninety (90) days. While the plaintiff filed a timely notice, she failed to properly name the responding officer. Although her complaint was filed in Federal Court, the plaintiff filed motion for leave to file a late notice of tort claim in New Jersey Superior Court. The motion was granted.

On appeal, the Appellate Court concluded that the Superior Court lacked jurisdiction to hear the motion, and that the motion should have been filed in Federal Court. The court also determined that the defendant was entitled to oral argument on the motion, and that the trial court improperly decided the motion on the papers.

This matter confirms that a defendant should always ensure that a court has jurisdiction for all pleadings and motions. Additionally, a defendant should always push for, and insist on, oral argument for important decisions.

Please contact Heather Aquino with any questions.

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NJ Supreme Court Holds that NJ Transit is held to Heightened Duty of Care to its Passengers

On February 17, 2021, the New Jersey Supreme Court in Maison v. New Jersey Transit Corporation held that NJ Transit, which is a public common carrier of passengers, is held to the same heightened duty of care regulating private carriers.

By way of background, the case involved a young woman whose forehead was severely injured after teenage passengers threw a bottle at her face. The teenagers were never arrested and the NJ Transit bus operator never told the teenagers to stop harassing plaintiff.

Plaintiff ultimately sued NJ Transit which resulted in a trial verdict of $1,800,000. The trial court determined that the common-carrier standard applied to NJ Transit, and that Tort Claims Act immunities did not shield NJ Transit from liability. The trial court also held that the jury could not allocate fault to the unidentified bottle thrower.

The Appellate Division affirmed, except that it found the trial court erred when it instructed the jury to not allocate fault on the intentional tortfeasor. The case was remanded to the jury to determine what percentage of fault should be allocated to the bottle thrower.

The New Jersey Supreme Court agreed with the lower courts and held that NJ Transit and its bus drivers are held to the same duty of care governing private common carriers. That duty required NJ Transit “to exercise the utmost caution to protect their passengers as would a very careful and prudent person under similar circumstances.” Tort Claims Act immunities that may be available do not impact this duty of care. Finally, the Tort Claims Act required the jury to consider allocating fault not only between NJ Transit and the bus driver, but also the bottle thrower.

Thanks to Mike Noblett for his contribution to this post. If you have any questions or comments, please contact Colleen Hayes.

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