GREGORY JOHN GALFO v. THE CUMBERLAND MUTUAL FIRE INSURANCE COMPANY

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

GREGORY JOHN GALFO and

PATRICIA ANN GALFO,

Plaintiffs-Appellants,

v.

THE CUMBERLAND MUTUAL FIRE

INSURANCE COMPANY and

BOWLING GREEN AGENCY,

Defendants-Respondents.

____________________________________________

August 29, 2014

Argued January 29, 2014 Decided

Before Judges Fuentes, Fasciale and Haas.

On appeal from Superior Court of New

Jersey, Law Division, Morris County, Docket

No. L-1123-11.

Lewis Stein argued the cause for appellants

(Nusbaum, Stein, Goldstein, Bronstein & Kron,

attorneys; Mr. Stein, on the briefs).

Amanda K. Coats argued the cause for respondents

(Coughlin Duffy, attorneys; Vincent E. Reilly,

of counsel and on the brief; Ms. Coats, on the

brief).

PER CURIAM

As framed in their Notice of Appeal filed pursuant to Rule 2:5-1, plaintiffs Gregory John and Patricia Ann Galfo appeal from the order of the Law Division dated September 21, 2012, denying their motion for reconsideration of the court's June 28, 2012 order dismissing their complaint against defendant Bowling Green Agency (Bowling Green) with prejudice, for failure to provide an affidavit of merit, as required under N.J.S.A. 2A:53A-27. Plaintiffs alleged that Bowling Green "was an insurance broker licensed to do business in the State of New Jersey, which held itself out as an expert in providing advice to homeowners as to appropriate forms of fire insurance with respect to [plaintiffs'] interest in the premises owned by them."

Plaintiffs' theory of liability against Bowling Green was based on professional negligence. They alleged Bowling Green failed to recommend the procurement of a policy that would provide complete insurance coverage of all the contents they kept in an attached garage that was destroyed by fire in 2007. Plaintiffs argue the trial court erred in holding that the affidavit of merit statute applied to its negligence claims against Bowling Green. As a fallback provision, plaintiffs also claim that even if the affidavit of merit statute applies, Bowling Green should be estopped from raising this statutory deficiency as a defense.

Bowling Green argues the trial court correctly found the affidavit of merit statute applies to plaintiffs cause of action, and that their failure to comply with the statute's requirements warranted the dismissal of their complaint. According to Bowling Green, none of the judicially recognized exceptions to the affidavit of merit statute apply here. Finally, Bowling Green argues there are no grounds to invoke the doctrines of estoppel or laches to preclude it from raising as a defense plaintiffs' failure to comply with the requirements of the affidavit of merit statute.

We agree with Bowling Green's arguments and affirm substantially for the reasons expressed by the motion judge. Because the court dismissed plaintiffs' cause of action against Bowling Green as a matter of law, we will recite the relevant facts in the light most favorable to plaintiffs. We will also take notice, however, of any uncontested facts that relate to the legal issues raised by the parties.

I

As plaintiffs themselves described in their pleading, they sought out and consulted with representatives of Bowling Green to solicit their advice regarding the type of insurance policy plaintiffs needed to procure to provide coverage for their residence in Oak Ridge. Following Bowling Green's advice, plaintiffs purchased a policy issued by Cumberland Mutual Fire Insurance Company (Cumberland), which was later amended on February 7, 2007. The amended policy included coverage for a two-car garage attached to the main dwelling on plaintiffs' property, including any personal property stored therein. According to plaintiffs, representatives of Bowling Green did not advise them that the policy did not provide coverage for equipment used for agricultural purposes.

On July 19, 2007, an accidental fire destroyed plaintiffs garage, including its contents. Plaintiffs submitted a proof of loss to Cumberland, claiming the cost to replace the items stored in the garage amounted to $108,000. On October 24, 2007, Cumberland issued a check to plaintiffs in the amount of $26,214.10 in full satisfaction of the structural damage to the garage property; and a second check on July 14, 2008, in the amount of $33,306.31, in full satisfaction of the damage to the garage s contents; these two checks totaled $59,520.41.

Plaintiffs' first complaint only named Cumberland as a defendant, claiming the $33,306.31 tendered as complete satisfaction for the destruction of the garage's contents violated the carrier's obligation under the policy to indemnify plaintiffs for the cost of replacing all of the items stored in the garage. In a certification submitted to the Law Division, plaintiffs' counsel indicated this particular cause of action against Cumberland was voluntarily dismissed

following a disclaimer by the Cumberland Insurance Company asserting that there were no coverages for off-road vehicles owned by the Plaintiffs as well as machinery and equipment used to assist the Plaintiffs in gardening and farming activities in connection with their property on which they maintained an unmanned self-service "honor pay" roadside stand.

According to plaintiffs' counsel, after the dismissal of this case against Cumberland, plaintiffs filed this two-count professional negligence action, naming Cumberland and Bowling Green as defendants. Plaintiffs allege in this second suit that Bowling Green negligently "failed to provide . . . appropriate coverages for motor vehicles and pertinent parts as well as for equipment used in connection with Plaintiffs agricultural activities at their residential premises." Plaintiffs allege Bowling Green negligently failed to secure coverage for a tractor battery, a mini-bike motor, car rims, an air-powered greaser gun, hydraulic and car oils, antiques, various farming tools, an all-terrain vehicle, and a motorcycle.1

Bowling Green filed its responsive pleading asserting a number of affirmative defenses, including plaintiffs' failure to provide an affidavit of merit. As provided for in Rule 4:5A-2b, within thirty days after receiving notice from the court that the case had been assigned as a Track I case (Other Insurance Claim), Bowling Green's counsel filed a Certification of Good Cause for a Track Assignment Change, claiming the case should be filed as a Track III, (Professional Malpractice) action. The court responded affirmatively to Bowling Green's counsel's application and reassigned the case to Track III. R. 4:5A-1.

II

The following chronology of events provides the factual basis for the central issue in this appeal, plaintiffs' failure to serve Bowling Green with the affidavit of merit required under N.J.S.A. 2A:53A-27.

As acknowledged by plaintiffs' counsel in a May 9, 2012 certification submitted to the trial court, by letter dated September 20, 2011, Bowling Green's counsel requested that plaintiffs provide answers to interrogatories and forward the documents identified in a previous formal production of documents request. On February 9, 2012, plaintiffs' counsel served notice to take the deposition of a representative of Bowling Green named Dawn Scanlon, on February 24, 2012.

On February 13, 2012, Bowling Green's attorney advised plaintiffs' counsel that he would agree to a date certain for plaintiffs to take Scanlon's deposition, only after he received plaintiffs' answer to the written discovery request. Bowling Green's attorney ended his letter with this admonition: "if we do not receive your clients answers and responses to written discovery, we will have no choice but to seek appropriate relief from the court." Plaintiffs' counsel acknowledged receiving this letter.2

On March 27, 2012, more than a month after its correspondence concerning the outstanding discovery issues, Bowling Green moved to dismiss plaintiffs complaint with prejudice for failure to provide an affidavit of merit as required under N.J.S.A. 2A:53A-27. Although unrelated to the affidavit of merit motion, we note that on March 29, 2012, plaintiffs' counsel finally sent Bowling Green plaintiffs' answers to the request for discovery. Unfortunately, however, plaintiffs counsel did not oppose defendant s motion to dismiss plaintiffs' complaint based on their failure to submit the affidavit of merit.

As explanation for this critical oversight, plaintiffs' counsel certified to the trial court that he mistakenly believed the motion to dismiss was related to the outstanding discovery issues. According to plaintiffs counsel, on Friday, April 27, 2012, he realized the actual nature of the motion. Despite this, counsel conceded he did not take "further action . . . to alert the Court [because] . . . on that date both [the] secretary and paralegal were absent from the office." Plaintiffs' counsel certified that he drafted a letter to the court on Monday April 30, 2012, opposing the motion. He never sent the letter, however, because "upon calling [the trial judge s chambers], I learned that the order [to dismiss] had already been entered."

According to plaintiffs counsel, this failure to respond to a key dispositive motion was an aberrational oversight, caused by a confluence of professionally and personally disruptive events.3 In his own words: "This is the first time within memory over decades that I failed to respond either affirmatively or consensually to a pending dispositive motion." At this time, we pause to note the trial court's failure to conduct a timely Ferreira4 conference. Despite the Supreme Court's repeated and clear admonitions concerning the need to conduct such a case management conference, the trial court dismissed plaintiffs complaint without first conducting the required case management conference.

On May 9, 2012, plaintiffs moved to vacate the court s April 30, 2012 order dismissing their complaint with prejudice, and requested the court to accept an untimely response opposing Bowling Green's original motion. Bowling Green filed a timely response opposing plaintiffs' motion. The trial court denied plaintiffs motion in an order dated June 28, 2012, supported by an attached statement of reasons. The judge framed the matter before him as a motion by plaintiffs to vacate a final judgment under Rule 4:50-1.

In the trial judge's view, the first question he needed to answer was whether plaintiffs were entitled to the relief requested, based on their attorney's "mistake or excusable neglect" in failing to respond to Bowling Green's dispositive motion? The second question, according to the trial judge, concerned the underlying legal basis for granting Bowling Green's motion. That is, did plaintiffs' cause of action trigger the applicability of the affidavit of merit statute?

As to the first question, the judge found that plaintiffs counsel's reasons for his failure to respond to Bowling Green's motion to dismiss did not fall into the "mistake" or "excusable neglect" category as discussed in DEG, LLC v. Twp. of Fairfield, 198 N.J. 242, 263 (2009) and Baumann v. Marinaro, 95 N.J. 380, 394 (1984). The judge noted that the Court in Baumann specifically rejected the notion "that trial counsel's errors constitute 'excusable neglect' under [Rule] 4:50-1(a)." 95 N.J. at 394.

With respect to the second question, the judge concluded that none of the equitable doctrines argued by plaintiffs (estoppel, the doctrine of laches, or the common knowledge exception) applied under the facts of this case. Citing Knorr v. Smeal, 178 N.J. 169, 180 (2003), the judge found "plaintiffs [did] not show that they relied to their detriment that [Bowling Green] was no longer requiring an affidavit." The judge found the fact that Bowling Green filed its motion 246 days after filing their responsive pleading was not a basis to invoke the doctrine of estoppel. The same reasoning precluded the application of the doctrine of laches. Id. at 181.

Finally, the judge found the common knowledge exception did not apply because insurance coverage issues were not within the common experience of a lay individual. Specifically, it was not reasonable to expect the average lay juror to know what type of homeowner's policy and level of coverage plaintiffs needed to procure in order to provide replacement cost coverage in the event the agricultural and recreational property stored in their garage was destroyed or damaged beyond repair in an accidental fire. The judge found plaintiffs were thus obligated to provide an affidavit of merit because "the allegations against [Bowling Green] concern the professional judgment as to whether coverage should have been sought for the off-road vehicles and farm equipment."

On July 18, 2012, plaintiffs moved for reconsideration of the court s June 28, 2012 order. After considering the arguments presented, the trial judge denied plaintiffs motion, reaffirming his earlier reasons for denying plaintiffs' application for relief. Plaintiffs thereafter settled their claims against Cumberland and appealed the court's judgment with respect to Bowling Green.

III

As an appellate court, we review the denial of a motion for reconsideration to determine whether the trial court abused its discretionary authority. Cummings v. Bahr, 295 N.J. Super. 374, 389 (App. Div. 1996). Reconsideration should only be used "for those cases which fall into that narrow corridor in which either 1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence . . . . Id. at 384 (quoting D Atria v. D Atria, 242 N.J. Super. 392, 401-02 (Ch. Div. 1990)). Additionally, the decision to deny a motion for reconsideration falls 'within the sound discretion of the [trial court], to be exercised in the interests of justice.' Ibid. (quoting D Atria, supra, 242 N.J. Super. at 401).

The "abuse of discretion" standard "arises when a decision is 'made without a rational explanation, inexplicably departed from established policies, or rested on an impermissible basis.'" Flagg v. Essex Cnty. Prosecutor, 171 N.J. 561, 571 (2002) (quoting Achacoso-Sanchez v. Immigration & Naturalization Serv., 779 F.2d 1260, 1265 (7th Cir. 1985)). The standard analyzes "whether there are good reasons for an appellate court to defer to the particular decision at issue." Ibid. The appellate court should ask whether the trial court's decision was "'arbitrary, capricious, whimsical, or manifestly unreasonable . . . .'" Ibid. (quoting Coletti v. Cudd Pressure Control, 165 F.3d 767, 777 (10th Cir. 1999)).

As indicated earlier in this opinion, we discern no legal reasons to reverse the court's ruling. The affidavit of merit statute, codified at N.J.S.A. 2A:53A-27, provides:

In any action for damages for personal injuries, wrongful death or property damage resulting from an alleged act of malpractice or negligence by a licensed person in his profession or occupation, the plaintiff shall, within 60 days following the date of filing of the answer to the complaint by the defendant, provide each defendant with an affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices. The court may grant no more than one additional period, not to exceed 60 days, to file the affidavit pursuant to this section, upon a finding of good cause.

N.J.S.A. 2A:53A-26(o) lists "insurance provider" under the definition of "licensed professional." An insurance provider "means a person required to be licensed under the laws of this State to sell, solicit or negotiate insurance." N.J.S.A. 17:22A-28. If a plaintiff does not serve the affidavit of merit within sixty days of defendant s answer, the statute grants the court discretion to extend the period to serve for an additional sixty days upon a showing of good cause. N.J.S.A. 2A:53A-27. After 120 days, the court must dismiss the complaint for failure to provide an affidavit of merit, unless there were extraordinary circumstances or plaintiff substantially complied with the statute. N.J.S.A. 2A:53A-29.

Plaintiffs' cause of action against Bowling Green was predicated on the expectation that the professional licensed insurance brokers at Bowling Green were there to provide them with the benefit of their training and experience as to what type of homeowner's insurance policy best served their unique use of this property as both a personal residence and a part-time farmer's market. These matters are complex and the people authorized to dispense this form of professional advice are licensed and regulated by the State Department of Banking and Insurance. Aden v. Fortsh, 169 N.J. 64, 78-79 (2001). We cannot expect the average person and prospective juror to be familiar with these matters. Triarsi v. BSC Group Servs., 422 N.J. Super. 104, 115-16 (App. Div. 2011).

We affirm substantially for the reasons expressed by the Law Division.

1 As part of the appellate record, plaintiffs included two pages from the transcript of Gregory Galfo's deposition, in which he describes the various types of items and equipment he stored in the garage before the fire. Some of these items or tools could be used for both personal and farming purposes; other items, like a "Lincoln air-powered greaser gun," was used exclusively to lubricate farming equipment.

2 Although plaintiffs eventually dismissed their complaint against Cumberland, on October 7, 2011, the trial court dismissed plaintiffs' complaint against Cumberland without prejudice pursuant to Rule 4:23-5(a)(1), for failure to respond to a demand for production of documents. By order dated February 7, 2012, the court vacated its October 7, 2011 order, and reinstated plaintiffs' complaint against Cumberland. We include this information in the interest of completeness.

3 In the certification he provided to the trial judge, counsel described a number of professional obligations he had in other courts in different parts of the State, as well as personal events involving his family that required him to travel to Florida. We discern no reason to describe the details of these events here.

4 In Ferreira v. Rancocas Orthopedic Assocs., 178 N.J. 144 (2003), the Court directed judges assigned to manage professional malpractice cases to conduct a case management conference within ninety days of the answer filed by the defendant to resolve any questions about the affidavit of merit. Id. at 154-55. In Buck v. Henry, 207 N.J. 377 (2011), the Court emphasized it "implemented [this] simple remedy" in order "[t]o staunch the flow of dismissal motions based on claims of non-compliance with the statute, . . . ." Id. at 382. Inexplicably, eleven years after Ferreira, the Court's directive is still not consistently followed.