ARTHUR L. HARRIATT v. CYNTHIA A. SCOTT, et al.

 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4847-05T14847-05T1

ARTHUR L. HARRIATT,

Plaintiff-Respondent,

v.

CYNTHIA A. SCOTT,

Defendant-Respondent,

and

SIMON P. WILSON,

Defendant-Appellant.

__________________________________

 

Argued March 19, 2007 - Decided April 23, 2007.

Before Judges Lintner and Seltzer.

On appeal from the Superior Court of

New Jersey, Law Division, Union County,

L-3463-03.

William V. Kennedy argued the cause for appellant (McDermott & McGee, attorneys; Mr. Kennedy, on the brief).

Anthony J. Vinhal argued the cause for respondent Arthur L. Harriatt (Javerbaum Wurgaft Hicks Kahn Wikstrom & Sinins, attorneys; Mr. Vinhal, on the brief).

Litvak & Trifiolis, attorneys for respondent Cynthia A. Scott, rely on the brief of appellant.

PER CURIAM

Plaintiff, Arthur Harriatt, brought a personal injury action as a result of an automobile collision involving his vehicle and vehicles driven by defendants, Cynthia Scott and Simon Wilson. The vehicle driven by plaintiff was owned by Merchants of the World, Inc. (Merchants), and covered with an insurance policy issued by New Hampshire Insurance Company. Merchants was the named insured in the New Hampshire policy, which provided coverage under the verbal tort threshold election. Prior to trial, Wilson filed a motion seeking to bind plaintiff to the verbal threshold. Relying on N.J.S.A. 39:6A-8.1 and noting that a person cannot be the spouse or child of a corporation, the motion judge denied Wilson's motion.

A damages-only jury trial was presided over by another judge. Both defendants participated in the trial. The jury awarded plaintiff $44,000. The trial judge denied Wilson's post-trial motion for a new trial, concluding that Wilson had not clearly and convincingly demonstrated that the jury's verdict represented a manifest denial of justice. On appeal, Wilson asserts that the motion judge erred in denying his motion to bind plaintiff to the verbal threshold option and in denying his motion for a new trial. We reject both arguments and affirm.

We focus first on Wilson's contention that plaintiff should be bound by the corporation's election of the verbal threshold. Because the coverage issue involves a question of law, the motion judge's determination is not entitled to special deference on appeal. Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995); Illva Saronno Corp. v. Liberty Hill Realty Inc., 344 N.J. Super. 443, 450 (App. Div. 2001).

N.J.S.A. 39:6A-8 provides New Jersey residents with two insurance options: (1) a limited verbal threshold option under subsection a; and (2) a zero limit threshold under subsection b. The policyholder has the choice between the limited verbal threshold and a zero threshold with no restriction on non-economic loss. The latter may be purchased by paying an increased premium. See DiProspero v. Penn, 183 N.J. 477, 486 (2005). N.J.S.A. 39:6A-8.1a provides in pertinent part that the election of a tort option

shall apply to the named insured and any immediate family member residing in the named insured's household. 'Immediate family member' means the spouse of the named insured and any child of the named insured or spouse residing in the named insured's household, who is not a named insured under another automobile insurance policy.

N.J.S.A. 39:6A-2g defines "[n]amed insured" as

the person or persons identified as the insured in the policy and, if an individual, his or her spouse, if the spouse is named as a resident of the same household, except that if the spouse ceases to be a resident of the household of the named insured, coverage shall be extended to the spouse for the full term of any policy period in effect at the time of the cessation of residency.

N.J.S.A. 39:6A-8.1d provides that "in the case where more than one policy is applicable to the named insured or immediate family member, and the policies have different tort options, the tort option elected by the injured named insured shall apply."

In support of his argument, Wilson relies on Stricklen v. Ferruggia, 379 N.J. Super. 296 (App. Div. 2005). Toshiba Stricklen was involved in an automobile accident while driving a Ford Explorer that she co-owned with her uncle, with whom she resided. Id. at 297-98. The uncle obtained the automobile insurance policy for the Explorer. Although the declaration page was addressed to the uncle, the policy listed both Toshiba and her uncle as "Driver[s] in [the] Household." Id. at 298. Toshiba filed a personal injury action and the defendant asserted that she was subject to the limitations of the policy's verbal threshold election. Id. at 299. The trial court granted the defendant's motion and the plaintiff appealed, arguing that she was not bound by her uncle's election of the verbal threshold because she was not a "named insured" under N.J.S.A. 39:6A-2g or "an immediate family member" under N.J.S.A. 39:6A-8.1. Id. at 299-300. The appellate panel noted that as co-owner of the vehicle, Toshiba was obligated to maintain liability coverage on it. Id. at 303. It held that the fact that Toshiba was not a named insured under the policy should not preclude a determination that she was bound by her uncle's election where her uncle acted as her agent in insuring, in accordance with the compulsory insurance law, a vehicle that they both owned. Id. at 305. The panel concluded that Toshiba "should not be entitled to any greater rights than were paid for by the co-owner of her vehicle, who opted for a verbal tort threshold at a reduced premium." Ibid.

Wilson argues that the circumstances here are similar to those in Stricklen because plaintiff was the CEO and a stockholder of Merchants, an agency relationship existed, and plaintiff "had the legal authority to bind the corporation." We disagree. First and foremost, unlike the facts in Stricklen, plaintiff was not a co-owner of the vehicle with Merchants; hence, he was not "required to maintain personal injury protection coverage pursuant to [N.J.S.A. 39:6A-4]." N.J.S.A. 39:6A-8. Moreover, the record does not establish that plaintiff personally owned a vehicle or that it was covered with the limited threshold, thus relegating plaintiff to the tort option elected by him under N.J.S.A. 39:6A-8.1d. Further, there was no evidence that the corporation purchased the vehicle as the agent of plaintiff. Any agency relationship would necessarily be the opposite of that in Stricklen because, as the CEO, plaintiff would be the agent of the named insured corporate owner, not vice-versa. See N.J.S.A. 14A:6-15(4).

Finally, there is no proof that plaintiff, as the CEO, actually purchased or authorized the purchase of the vehicle or the insurance. Even if plaintiff purchased the policy on behalf of the corporate entity as an agent, he would not be personally obligated or accountable for the contract he entered into on behalf of his principal, absent fraud or an allegation that he acted outside the scope of his authority. See Frank Rizzo, Inc. v. Alatsas, 27 N.J. 400, 402 (1958). Wilson does not argue, nor did he present proof of, fraud for the type of injustice that would warrant piercing the corporate veil "to prevent an independent corporation from being used to defeat the ends of justice." State v. Ventron Corp., 94 N.J. 473, 500 (1983); see also Lyon v. Barrett, 89 N.J. 294, 300 (1982). A court will generally "refuse[] to pierce the corporate veil in the absence of any proof that that form of automobile ownership was not a matter of legitimate business and tax considerations." Vamvakidis v. Peters, 327 N.J. Super. 287, 292 (App. Div. 2000). Indeed,"'[t]he mere fact that [a] corporation [is] closely held by members of a family is not a sufficient reason standing alone to ignore the corporate form.'" Ibid. (quoting Giambri v. Gov't Employees Ins. Co., 170 N.J. Super. 140, 142 (Law Div. 1979), aff'd o.b., 174 N.J. Super. 162 (App. Div. 1980)); see also Pinto v. N.J. Mfrs. Ins. Co., 183 N.J. 405, 417 (2005); Murawski v. CNA Ins. Co., 183 N.J. 423, 426 (2005) (holding that employee is not bound to underinsured motorist (UIM) step-down clause in corporate employer's business automobile policy where policy only lists corporation as named insured and employee was not otherwise identified anywhere in the policy).

The circumstances here are more akin to the facts in Vamvakidis. In Vamvakidis, the plaintiff was driving a vehicle owned by E.T. Maintenance, a corporation wholly owned by the plaintiff's daughter, when she was struck in the rear by the defendant's vehicle. Vamvakidis, supra, 327 N.J. Super. at 289. The plaintiff was employed by the corporation as a bookkeeper. At the time of the accident, neither the plaintiff, her husband, nor the plaintiff's daughter owned an automobile. The corporation's vehicle was insured under a business automobile liability policy, which "provide[d] that the policy limit for personal injury protection is the 'verbal tort threshold.' The policy also lists each of the three, plaintiff, her husband and her daughter, as drivers of the corporation's vehicles." Id. at 290. The panel noted in its recitation of the facts that the plaintiff was "an employee of [the corporation] but neither a stockholder nor director." Id. at 291.

Concluding that the corporation's election of the verbal threshold did not bind the plaintiff, the panel in Vamvakidis pointed out that the plaintiff satisfied the condition for applicability of the unlimited tort option because she was (1) "a person using the automobile of the named insured with the named insured's permission"; (2) "not required herself to maintain PIP coverage since she was not the owner of a private passenger automobile"; and (3) "not an immediate family member of a named insured who was either required to maintain PIP coverage or who had elected the verbal threshold option." Id. at 291-92. The panel also reasoned that "a person can be neither the spouse nor the child of a corporation, and it was the corporation here that was the only named insured. Hence, plaintiff was not a family member of the named insured." Id. at 292. The panel recognized that the term "family member" does not include "the members of a family which owns a family-held corporation that is the named insured." Ibid. (citing Giambri, supra, 170 N.J. Super. at 143). However, in reaching its conclusion, the panel noted that an anomaly existed in the statute, which the Legislature may wish to address:

We are aware that there is something of an anomaly here. N.J.S.A. 39:6A-4 obviously requires a corporation owning a passenger vehicle, as defined thereby, to purchase PIP protection. There are obviously any number of classes of persons who would be entitled to the benefit thereof irrespective of family status, including, for example, employees, pedestrians, passengers, and all permissive users. N.J.S.A. 39:6A-8 requires every named insured covered by N.J.S.A. 39:6A-8 to make the verbal threshold/tort election. But that election binds only the named insured and members of the named insured's immediate family, i.e., spouse and children. Since a corporation has no immediate family members and is itself hardly likely to sue for non-economic losses, there seems little point in requiring it to make the election and thereby, if electing the verbal threshold, to obtain insurance at lower cost. We regard this anomaly, however, as one the Legislature must address.

[Id. at 294.]

Wilson asserts that any reliance on the opinion in Vamvakidis is misplaced because the panel based its holding on the fact that the plaintiff was neither a stockholder nor a director of the corporation. Contrary to Wilson's contention, the panel in Vamvakidis did not base its holding on the status of the plaintiff as an employee rather than a director or stockholder. The reference made in Vamvakidis to the plaintiff not being a stockholder or director was related to the factual circumstances, not the holding. Similar to the status of the plaintiff in Vamvakidis, plaintiff here was driving with the permission of the named insured, the evidence did not establish that he owned a vehicle, thus qualifying as a person required to maintain PIP coverage, and he was not an immediate family member of the named insured. We, therefore, conclude that the motion judge correctly determined that plaintiff was not bound to the verbal threshold option elected by Merchants.

We next address the trial judge's denial of Wilson's motion for a new trial. Wilson argues on appeal that the judge should have granted a new trial because the verdict was excessive. The following facts were presented at trial. Plaintiff was treated at the scene of the accident and transported to Muhlenberg Hospital where he received an injection, underwent x-rays, and was released. The next day, plaintiff came under the care of Dr. Johnson, a chiropractor, who treated him approximately three times a week for more than seven months. Additionally, plaintiff underwent an MRI, which showed disc bulging and degeneration at L2/3, L3/4, and L4/5.

Dr. Howard Blank, a board-certified orthopedic surgeon, examined plaintiff on November 23, 2005. Blank concluded that plaintiff sustained a cervical, thoracic, and lumbar sprain, lumbar radiculopathy on the right side, and a contusion to the left lower extremity. After reviewing plaintiff's medical records and documentation, Blank found that plaintiff's subjective complaints were consistent with his findings. He also testified that, as a result of the accident, plaintiff's lumbar radicular symptoms were permanent and plaintiff sustained a permanent aggravation of the degenerative condition in his lumbar spine. On cross-examination, defendant asked Blank, "But basically we're dealing with a pretty mild situation here. Correct?" Blank answered:

Well, as I said, he had symptoms, as I described, with the lateral bending and they were consistent with a chronic low grade aggravation of the degenerative condition of lumbar spine. Correct.

Wilson's expert, Dr. Michael James Bercik, a board-certified orthopedic surgeon, testified that he examined plaintiff on March 19, 2004, and concluded within a reasonable degree of medical probability that he had a "post cervical sprain and post lumbar sacral sprain." Bercik opined that plaintiff did not suffer permanent injury to his neck or lower back.

At trial, plaintiff testified that he continued to suffer pain in his upper and lower back as a result of the accident. He stated that, before the accident, he had custody of his thirteen-year-old grandson and would play basketball with him and his friends but, due to his injuries, he now had difficulty lifting, jumping, and doing other physical activities. Aside from playing basketball with his grandson, plaintiff testified that he could no longer do construction work. Plaintiff also stated that while he used to enjoy dancing, his injuries had forced him to sacrifice that activity. Additionally, plaintiff had to limit or eliminate the long drives he used to take to Washington D.C., Maryland, Delaware, upstate New York, and Pennsylvania. Plaintiff's life expectancy at the time of the trial was eighteen years and the trial took place almost four years after the accident.

Denying defendant's motion for a new trial, the trial judge recounted the testimony and found that the verdict did not shock his conscience, given the evidence of pain and suffering. He considered the treatment plaintiff underwent with the chiropractor, as well as the testimony of Dr. Blank bearing upon the permanent aggravation of plaintiff's degenerative disc condition, which manifested itself in foot and toe numbness. Noting that the verdict was unanimous, the judge found that Wilson had not established clear and convincing proof of a miscarriage of justice.

On appeal, defendant places heavy emphasis on Dr. Blank's testimony on cross-examination, particularly the use of the word "mild." The guiding principles are well settled. R. 4:49-1(a) provides that a party is entitled to a new trial "if, having given due regard to the opportunity of the jury to pass upon the credibility of the witnesses, it clearly and convincingly appears that there was a miscarriage of justice under the law." We are obliged to give deference to the trial court's "feel of the case" as to matters such as the demeanor or credibility of the witnesses. Carrino v. Novotny, 78 N.J. 355, 361 (1979); Baxter v. Fairmont Food Co., 74 N.J. 588, 597-600 (1977). An appellate court must adhere to essentially the same standard when reviewing a trial judge's action on a new trial motion. Dolson v. Anastasia, 55 N.J. 2, 7 (1969); R. 2:10-1.

Likewise, the scope of review of jury damage awards for alleged excessiveness is generally the same for the trial and appellate court. Baxter, supra, 74 N.J. at 600; Fritsche v. Westinghouse Elec. Corp., 55 N.J. 322, 330 (1970). The jury verdict "is entitled to very considerable respect." Baxter, supra, 74 N.J. at 597. "[A] trial judge should not interfere with the quantum of damages assessed by a jury unless it is so disproportionate to the injury . . . as to shock [the court's] conscience and to convince [the court] that to sustain the award would be manifestly unjust." Id. at 596.

Applying those principles, we are satisfied that the judge's denial of defendant's motion for a new trial was justified. Here, plaintiff presented evidence of permanent suffering, which will continue over an eighteen-year life expectancy, as a result of defendants' negligence. Although hotly contested, there was ample evidence to support the jury's verdict. We see no reason to intervene.

 
Affirmed.

Defendants stipulated liability, eighty-percent for Wilson and twenty-percent for Scott.

(continued)

(continued)

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A-4847-05T1

April 23, 2007