MICHAEL J. PAYNE v. NICHOLAS A. EDIE

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4930-12T2

MICHAEL J. PAYNE,

Plaintiff-Appellant,

v.

NICHOLAS A. EDIE, WILLIAM G.

EDIE, ANTHONY WAYNE POST 174,

AMERICAN LEGION RIDERS 174,

PSE&G, VERIZON, MELMAT REALTY,

LLC, FUHRO, HANLEY & BEUKAS, LLC,

TOWNSHIP OF WAYNE, and COUNTY OF

PASSAIC,

Defendants,

and

GARY LAGLIA,

Defendant-Respondent.

__________________________________

Argued April 30, 2014 Decided May 16, 2014

Before Judges Simonelli, Fasciale and Haas.

On appeal from Superior Court of New Jersey, Law Division, Passaic County, Docket No. L-1227-11.

Dennis G. Polizzi argued the cause for appellant (Weiner & Mazzei, attorneys; Mr. Polizzi, on the brief).

Thomas W. Matthews argued the cause for respondent (Soriano, Henkel, Biehl & Matthews, attorneys; Mr. Matthews, on the brief).

PER CURIAM

In this professional malpractice action, plaintiff Michael Payne alleged that defendant Gary Laglia, a licensed insurance agent for State Farm Fire and Casualty Company (State Farm), deviated from the standard of care owed to his clients, defendant William Edie and his wife, Doreen,1 by failing to advise them that they could procure a replacement personal liability "umbrella insurance policy"2 from another insurance company after State Farm terminated their coverage. As a result, plaintiff asserted that the policy was not available to compensate him for injuries he sustained when he was struck by a car driven by the Edies' son. After a three-day trial, the jury entered a verdict, finding that Doreen did not contact Laglia's office to inquire about obtaining a replacement policy and, on April 25, 2013, the trial judge entered an order dismissing plaintiff's claim. On May 24, 2013, the judge denied plaintiff's motion for a new trial. Plaintiff has now appealed and contends that the judge erred in denying his motion for a new trial. We disagree and affirm.

We discern the following facts from the trial record. Laglia had been an independent State Farm agent for thirty-seven years. Laglia was a "captive agent," which meant he could only sell State Farm insurance products. Laglia employed four insurance agents in his office, all of whom were women. William and Doreen owned several insurance policies they obtained through Laglia's agency. Doreen typically handled insurance matters for her family. She had only spoken to Laglia once during her family's relationship with the agency. Doreen testified she "usually talk[ed] to one of the ladies in the office" when she had questions.

In February 2001, the Edies obtained a State Farm umbrella insurance policy through Laglia's agency. They renewed the policy each year. Their final policy was due to expire on February 12, 2011. On December 29, 2010, however, State Farm sent the Edies a letter advising them that their umbrella policy would not be renewed because two family members had received traffic citations over the past two-years. The letter also stated: "For your protection, you are urged to obtain other insurance to prevent any lapse in coverage. Please contact your State Farm Agent, Gary Laglia, at [the telephone number provided] should you have any questions or need additional information."

The Edies did not obtain a new umbrella policy from another company and their existing policy expired on February 12, 2011. Eight days later, a car driven by the Edies' son struck plaintiff as he was walking across the street. Plaintiff filed a complaint against William, who owned the car; the Edies' son; Laglia; and several entities for their alleged negligence.3

With regard to his claims against Laglia, plaintiff alleged that, after receiving the letter from State Farm, Doreen called Laglia's office for information about a replacement policy. Plaintiff asserted that Laglia and his employees failed to advise Doreen that, although State Farm could no longer provide this coverage, she could obtain an umbrella policy from another insurance company. Plaintiff alleged that this constituted professional misconduct and he sought damages as a "third-party beneficiary" to the additional insurance coverage the Edies would have been able to obtain had Laglia met the standard of care required of him as an insurance agent.

Prior to trial, State Farm agreed to pay plaintiff $250,000, which was the amount of the underlying automobile insurance policy insuring William and Doreen's son. The parties also stipulated that, if plaintiff was successful on his claim against Laglia, State Farm would pay plaintiff an additional "$500,000 in resolution of all claims asserted against" Laglia and the Edies' son. However, if Laglia was "successful in defending the claims asserted against him, no additional payment [would] be due to" plaintiff from Laglia or the Edies' son.

After the jury was selected, the trial judge advised the parties that he intended to give the jury a "pre-[trial] charge" as a "preview" concerning the standard of care owed by an insurance agent to his or her client. He also wanted to explain to the jury why the parties would be calling expert witnesses to testify concerning this standard. Plaintiff objected to the proposed instruction, "[b]ased on the fact that [the charge] may in fact change based upon the evidence produced" at trial and that the instruction "may actually be more confusing than helpful at this particular point in time."

The judge overruled plaintiff's objection, explaining that he did not "anticipat[e] a suggested change is going to actually occur but regardless of that, I found it to be helpful to jurors to understand the framework that they're being asked to make a decision [about] beforehand." The judge then gave the routine charge on the standard of care and the use of experts as part of his preliminary instructions to the jury. As part of his comments, the judge stated:

Simply stated then, the obligation or duty which the law imposes on [an] insurance agent is to bring to his client that knowledge, skill and judgment ordinarily possessed and exercised in similar situations in the same or similar communities in his field at the time of the undertaking. If you find that [Laglia] has complied with this standard, he is not liable to the plaintiff regardless of the result of his work.

On the other hand, if you find that [Laglia] has departed from this standard of care and that such departure has resulted in injury or damage, then you should find . . . [Laglia] liable for his negligence.

Plaintiff called Doreen, William, and James Klagholz, "an expert in the area of the customary general accepted practices for the insurance industry and insurance agents," as witnesses. Doreen testified that, after the Edies received the letter from State Farm, she called Laglia's office "to see if we could get another policy." Doreen did not know the date the call was allegedly made and did not remember who she talked to, except that it was "[o]ne of the ladies." She was also not able to remember how long the call lasted, although she stated that it was "[n]ot very long."

Although she could not "recall the conversation exactly[,]" Doreen asserted that she asked "[i]f we could get another umbrella policy" and was told "[w]e couldn't get another one." She stated she was not advised that she "could have went to another agency to get [an] umbrella policy[.]" Doreen alleged she would have obtained a replacement policy from another company if she had been advised that this was possible. Doreen conceded that State Farm's December 29, 2010 letter "urged [her family] to obtain other insurance to prevent any lapse in coverage."

William testified Doreen told him that she called Laglia's office. Based on what she told him, William "just assumed that we couldn't get a policy" and he did not tell her to contact "another agency."

During his expert testimony, Klagholz stated that the decision not to renew the umbrella policy belonged to State Farm, rather than Laglia. Once State Farm made the decision not to renew the policy, Laglia would not be able to sell an umbrella policy to the Edies. However, such coverage would have been available through another insurance agency and, according to Klagholz, Laglia and his employees had a duty to advise Doreen of this fact during her phone call. Klagholz opined that the failure to do so "would be malpractice[.]"

Laglia and one of his employees, Catherine Lavarco, testified for the defense. Lavarco stated that when a client called about a non-renewal, the agency's policy was to respond that "State Farm cannot write it but you could look elsewhere[,]" meaning the customer could seek to continue the coverage through another company. Lavarco did not speak to Doreen about the expiration of the umbrella policy and she stated that her office did not keep any logs of calls received from customers.

With regard to customer inquiries concerning the non-renewal of policies, Laglia testified that "[o]ur office policy is simple. We advise [our clients] that we write only for State Farm and we strongly urge them to seek coverage with another carrier." Laglia stated that, "immediately following the accident[,]" he made "an inquiry with [his] staff as to whether or not anyone recalled having a conversation with Doreen Edie concerning the non-renewal of the umbrella policy, specifically with respect to the December 29, 2010 letter" from State Farm. As a result of that inquiry, he was not able "to identify anyone in [his] office who would be able to come to court and testify about a conversation with Ms. Edie[.]"

Laglia decided not to call an expert to dispute Klagholz's opinion that it would be malpractice for an insurance agent to fail to advise a client that he or she should seek coverage from another agency if the agent was unable to provide it. Because of this concession, the issue of the standard of care, that had been the subject of the judge's pre-trial charge, was no longer in dispute. The only matter left to be resolved was whether Doreen had called the agency to seek any advice after she received the December 29, 2010 letter advising her "to obtain other insurance to prevent any lapse in coverage." If the jury found that Doreen placed this call as she asserted she had, the judge stated that Laglia would be liable for professional malpractice.

Thus, in his final instructions to the jury, the judge did not discuss the standard of care for insurance agents and he did not direct the jury to render a verdict on the question of whether Laglia had breached the standard of care owed to the Edies. Instead, the jury was asked to resolve a single factual question: "Did Doreen Edie place the call to the Gary Laglia Agency after she received the letter from State Farm?"

About thirty minutes after it began deliberations, the jury returned with a note that asked: "If we said Yes that the phone call was placed, does that infer that the Laglia agency is responsible for professional malpractice?" After conferring with counsel, the judge advised the jurors "that they were to answer the factual question which was the only question that was before them for consideration." The judge also told the jurors that their "job [was] to decide the facts [and] the Court will decide the law[.]"4 After another thirty minutes of deliberations, the jury unanimously concluded that the call never occurred. On April 25, 2013, the judge entered judgment in favor of Laglia.

Plaintiff filed a motion for a new trial and argued that the judge erred in providing the jury with a pre-trial charge on the standard of care owed by an insurance agent to his or her clients. Plaintiff alleged that the jury's question indicated that it had improperly "made a predetermination that they did not want Mr. Laglia to be negligent . . . in this particular case, and because of that, they had to back into what they wanted to do instead of doing their job and determining whether in fact there was evidence [of] whether in fact the phone call was placed and let the Court then decide the legal issue." Plaintiff argued "that if the charge was not given about the standard of care, [the jury] never would have known about the standard of care. They just would have went in after the evidence was in . . . and answered the question." Asserting that the pre-trial charge must have therefore confused the jury, plaintiff asked for a new trial. He also contended the verdict was against the weight of the evidence.

The judge denied plaintiff's motion and, in a subsequent oral opinion, he stated:

Plaintiff's counsel argues that the jury in posing a question to the Court concerning the effect of their decision on the outcome of the case indicated that they were not actually answering the question they were being asked to answer on its merits but rather considering its ultimate outcome.

. . . .

. . . Counsel surmises from this and I cannot say that it's without reason that the jury first determined that the broker had not been negligent and they did not want their decision on the factual question to cause such a result and that's the reason that they answered the factual question as they did.

I can't say that that's an unreasonable analysis of the jury's thought process, but I must say it's merely speculation as to why they did what they did. There's no factual support that can be pointed to.

Finding that plaintiff had not made "a clear and convincing showing of a miscarriage of justice even if the motives attributable by plaintiff's counsel to the jury are correct[,]" the judge denied plaintiff's motion for a new trial. This appeal followed.

On appeal, plaintiff again argues that the judge erred in providing the jury with a pre-trial charge on the issue of standard of care and he again asserts that the jury's verdict was against the weight of the evidence. We disagree with both of these assertions.

We begin with a recognition of the fundamental principle that jury trials are a bedrock part of our system of civil justice and that the factfinding functions of a jury deserve a high degree of respect and judicial deference. See, e.g., Caldwell v. Haynes, 136 N.J. 422, 432 (1994). In terms of its assessment of the relative strength of the proofs, a jury verdict is "'impregnable unless so distorted and wrong, in the objective and articulated view of a judge, as to manifest with utmost certainty a plain miscarriage of justice.'" Doe v. Arts, 360 N.J. Super. 492, 502-03 (App. Div. 2003) (quoting Carrino v. Novotny, 78 N.J. 355, 360 (1979)).

Rule 4:49-1(a) provides that a trial judge shall grant 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." Jury verdicts are thus "entitled to considerable deference and 'should not be overthrown except upon the basis of a carefully reasoned and factually supported (and articulated) determination, after canvassing the record and weighing the evidence, that the continued viability of the judgment would constitute a manifest denial of justice.'" Risko v. Thompson Muller Auto. Grp., Inc., 206 N.J. 506, 521 (2011) (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 597-98 (1977)); see also Boryszewski v. Burke, 380 N.J. Super. 361, 391 (App. Div. 2005) ("Jury verdicts should be set aside in favor of new trials only with great reluctance, and only in cases of clear injustice."), certif. denied, 186 N.J. 242 (2006).

In reviewing a trial judge's decision on a motion for a new trial, we view the evidence in a light most favorable to the party opposing the new trial motion. Caldwell, supra, 136 N.J. at 432. Moreover, we give substantial deference to the trial judge, who observed the same witnesses as the jurors, and who developed a "feel of the case." See, e.g., Carrino, supra, 78 N.J. at 361; Baxter, supra, 74 N.J. at 600; Dolson v. Anastasia, 55 N.J. 2, 6 (1969). Applying these principles here, we discern no basis for disturbing the judge's decision.

Plaintiff does not argue that any portion of the pre-trial charge was inaccurate or failed to adequately convey the law to the jury. However, we believe it was premature for the judge to provide the jury with a charge on the law applicable to the case before any testimony was taken at the trial. Nevertheless, "'[c]ourts uphold even erroneous jury instructions when those instructions are incapable of producing an unjust result or prejudicing substantial rights.'" Sons of Thunder, Inc. v. Borden, Inc., 148 N.J. 396, 418 (1997) (quoting Fisch v. Bellshot, 135 N.J. 374, 392 (1994)). Here, any error in providing the pre-trial charge was harmless under the circumstances of this case.

At the beginning of the trial, the parties were still sharply contesting the standard of care applicable to licensed insurance agents and both planned to call expert witnesses to address this issue. The purpose of providing the jury with general instructions on the standard of care and expert testimony was to assist the jury in focusing on the issues that were important to the parties.

Although plaintiff asserts that the jury would have never known about the standard of care if the pre-trial charge was not given, his expert testified that an insurance agent is "expected to know generally the availability of coverage[,]" and that failing to advise a current client to purchase umbrella insurance from another carrier "would be malpractice[.]" Thus, the jury was obviously aware that plaintiff sought to hold Laglia liable for professional malpractice for not advising Doreen to seek umbrella coverage from another agency during her alleged telephone call. Because of this, the jury's question may have been prompted as much by Klagholz's testimony as by the pre-trial charge. Therefore, we do not perceive that the pre-trial charge was capable of "producing an unjust result or prejudicing substantial rights." Sons of Thunder, supra, 148 N.J. at 418.

As the trial judge found, plaintiff's contention that the pre-trial charge caused the jury to improperly address the legal issue of professional malpractice prior to addressing the factual issue presented to it for resolution was "merely speculation" and had "no factual support" in the record. Moreover, after the jury asked its question during deliberations, the judge instructed the jurors to only "answer the factual question" posed to them and that it was their "job to decide the facts [and] the Court will decide the law[.]" Plaintiff agrees that this charge was appropriate and "[w]e presume the jury followed the court's instructions." State v. Smith, 212 N.J. 365, 409 (2012) (citing State v. Loftin, 146 N.J. 295, 390 (1996)), cert. denied, __ U.S. __, 133 S. Ct. 1504, 185 L. Ed. 2d 558 (2013). Thus, we conclude that the judge's denial of plaintiff's motion for a new trial based on the pre-trial charge does not constitute a manifest denial of justice.

Plaintiff also argues that the jury's verdict was against the weight of the evidence because Laglia "produced absolutely no evidence that the phone call did not take place." We disagree. Although plaintiff contends that Doreen's testimony that she called Laglia's agency was unrefuted, "a jury need not always accept uncontested proofs. '[S]imply because proofs are undisputed is insufficient in and of itself to warrant the grant of a motion for judgment . . . in situations in which credibility is at issue, since the fact-finder is free to reject those uncontested proofs on credibility grounds.'" Bldg. Materials Corp. of Am. v. Allstate Ins. Co., 424 N.J. Super. 448, 488-89 (App. Div.) (alteration in original) (quoting Johnson v. Salem Corp., 97 N.J. 78, 92 (1984)), certif. denied, 212 N.J. 198 (2012).

Here, Doreen's account of the telephone call was not unrefuted. Laglia and Lavarco testified they did not speak with Doreen. Laglia also stated that he asked his entire staff about the alleged call and was not able "to identify anyone in [his] office who would be able to come to court and testify about a conversation with Ms. Edie." Doreen's recollection of the call was also attacked by the defense. Doreen was unable to remember when she allegedly placed the call, who she talked to, the length of the call, or the "exact" substance of the conversation. Thus, there was ample evidence in the record to support the jury's unanimous finding that the call never occurred. Therefore, we find no basis to disturb the judge's decision denying plaintiff's motion for a new trial.

Affirmed.

1 For ease of reference, we refer to Mr. and Mrs. Edie by their first names in this opinion.

2 An "umbrella insurance policy" is a liability insurance policy that adds, in increments of one million dollars, "an additional layer of coverage" over and above the policy limits of a pre-existing policy, such as homeowner, automobile, or boat insurance.

3 Plaintiff settled with everyone but Laglia and the Edies' son prior to trial.

4 The judge's discussion with the parties' attorneys and his specific response to the jury's question does not appear in any of the transcripts provided to us by the parties. However, the parties agree that the judge responded as set forth above.