THE STATE-OPERATED SCHOOL DISTRICT OF THE CITY OF PATERSON v. AMERICAN ALTERNATIVE INSURANCE CORPORATION
Annotate this CaseNOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
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SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-5089-16T2
THE STATE-OPERATED SCHOOL
DISTRICT OF THE CITY OF
PATERSON,
Plaintiff-Appellant,
and
DONNIE W. EVANS, ED.D.,
in his official capacity as
Superintendent of the Paterson
Public Schools, and JENNIE RIVERA,
Plaintiffs,
v.
AMERICAN ALTERNATIVE INSURANCE
CORPORATION, and ESSEX INSURANCE
COMPANY,
Defendants,
and
CLAY THOMAS & ASSOCIATES, LLC,
Defendant-Respondent.
Argued September 26, 2018 – Decided October 22, 2018
Before Judges Koblitz, Ostrer, and Currier.
On appeal from Superior Court of New Jersey, Law
Division, Passaic County, Docket No. L-3133-15.
Charles A. Yuen argued the cause for appellant
(Scarinci & Hollenbeck, LLC, attorneys; Charles A.
Yuen, of counsel and on the briefs).
Marshall D. Bilder argued the cause for respondent
(Eckert Seamans Cherin & Mellott, LLC, attorneys;
Jason S. Feinstein and Marshall D. Bilder, of counsel
and on the brief).
PER CURIAM
In this insurance coverage dispute, we address whether the certificate of
insurance issued by defendant Clay Thomas & Associates, LLC (defendant or
Clay) misrepresented the insurance coverage afforded plaintiff under the
respective policies listed on the certificate. After a review of the contentions in
light of the record and applicable principles of law, we affirm the trial court's
grant of summary judgment to defendant. 1
1
The other defendants named in the complaint either were dismissed by
summary judgment or resolved their differences with plaintiff.
A-5089-16T2
2
In 2012, plaintiff, the State-Operated School District of the City of
Paterson,2 conducted a public bidding process for the transportation contract for
its public school students. The specifications for the contract required that the
chosen contractor maintain automobile liability coverage, comprehensive
commercial general liability (CGL) coverage, and workers' compensation
coverage in specified minimum amounts. In addition, upon signing the contract,
the successful bidder was required to provide a "certificate of insurance for the
duration of the contract." The bid specifications further stated: "The certificate
of insurance shall name the Paterson Public School District as 'an additional
insured' party of the policy."
As the successful bidder, K&M Transportation, Inc. (K&M) was awarded
the transportation contract. Paragraph seven of the contract required K&M to
obtain automobile liability insurance in a specified amount. Although the
contract obligated the automobile insurer to name plaintiff as an "additional
insured," it was silent as to whether the coverage afforded to plaintiff was to be
primary or excess.
In compliance with the bid specifications, K&M procured a Certificate of
Liability Insurance (Certificate) from defendant, a licensed insurance producer,
2
We refer to plaintiffs collectively as "plaintiff."
A-5089-16T2
3
for the applicable period of the contract. The Certificate listed a CGL policy
issued by Essex Insurance Company, an automobile liability policy issued by
American Alternative Insurance Company (AAIC), and a workers'
compensation policy. The Certificate stated: "Paterson Public School District is
an additional insured party to the policy."
Following a tragic incident in which a Paterson student suffered fatal
injuries while being transported by K&M, and the ensuing litigation, plaintiff
sought coverage under the policy issued by AAIC. In denying coverage,3 AAIC
informed that its coverage was excess to any other insurance coverage
maintained by plaintiff.4
In the complaint filed in this matter, plaintiff alleged defendant
misrepresented the "level" of insurance coverage afforded under the AAIC
policy. Plaintiff argued that defendant failed to inform plaintiff that the
3
Although not pertinent to the issues in this appeal, AAIC initially also denied
coverage on other grounds.
4
The policy stated: "Any coverage provided hereunder shall be excess over any
other valid and collectible insurance available to the additional insured whether
primary, excess, contingent or on any other basis unless a written contract or
agreement specifically requires that this insurance be primary in which case any
other insurance available to the additional insured shall be considered excess
and non-contributing."
A-5089-16T2
4
coverage provided by AAIC was excess to any other coverage plaintiff might
have, despite its additional insured status on the AAIC policy.
During the discovery period, there were several extensions of discovery
and a robust motion practice. When plaintiff failed to produce its expert within
the court-ordered time frame, a trial judge granted defendant's motion to bar the
expert. On June 6, 2017, a different trial judge granted summary judgment to
defendant. Plaintiff appeals from both orders.
We review orders granting summary judgment de novo, applying the same
standard as the trial court. Templo Fuente De Vida Corp. v. Nat'l Union Fire
Ins. Co. of Pittsburgh, 224 N.J. 189, 199 (2016). Summary judgment must be
granted "if the pleadings, depositions, answers to interrogatories and admissions
on file, together with the affidavits, if any, show that there is no genuine issue
as to any material fact challenged and that the moving party is entitled to a
judgment or order as a matter of law." R. 4:46-2(c); see also Brill v. Guardian
Life Ins. Co. of Am., 142 N.J. 520, 528-29 (1995). To defeat summary
judgment, the non-moving party must bring forth "evidence that creates a
'genuine issue as to any material fact challenged.'" Brill, 142 N.J. at 529
(quoting R. 4:46-2).
A-5089-16T2
5
Plaintiff asserts the trial court erred in finding plaintiff could not support
its claim for negligent misrepresentation against defendant. To demonstrate a
claim for negligent misrepresentation, plaintiff must show "[a]n incorrect
statement, negligently made and justifiably relied upon, [which] may be the
basis for recovery of damages for economic loss or injury sustained as a
consequence of that reliance." H. Rosenblum, Inc. v. Adler, 93 N.J. 324, 334
(1983). Plaintiff must prove, by a preponderance of the evidence, that plaintiff
"received . . . the statements . . . relied on the statements, and that the
misstatements therein . . . were a proximate cause of the . . . damage." Kaufman
v. I-Stat Corp., 165 N.J. 94, 109 (2000) (quoting Adler, 93 N.J. at 350).
Plaintiff contends defendant "indisputably [mis]represented" that the
AAIC policy was a primary policy under which plaintiff was an additional
insured. We disagree.
As noted by the second trial judge, the bid specifications did not require
the bidder to provide automobile liability insurance to plaintiff on a primary
coverage basis. Similarly, the contract between K&M and plaintiff did not
require coverage to plaintiff as a primary insured. Both documents were silent
as to whether AAIC's policy covered plaintiff on a primary basis with its other
insurance coverage or whether it was excess to any other insurance coverage.
A-5089-16T2
6
The bid specifications and contract, however, did require the automobile
liability insurer of K&M to name plaintiff as an additional insured. The
Certificate issued by defendant complied with those directives, and plaintiff was
named as an additional insured on the AAIC policy. Therefore, as the second
trial judge concluded, there was no incorrect information or misstatement on the
Certificate pertaining to the AAIC policy.
Moreover, a claim of negligent misrepresentation requires plaintiff to
show a reliance on the incorrect statement caused it to sustain damages. "The
actual . . . consideration of any misstatement remains central to the case of any
plaintiff seeking to prove that he or she was deceived by the misstatement or
omission." Kaufman, 165 N.J. at 109. A review of the record confirms
plaintiff's inability to prove it considered or relied upon any language in the
Certificate prior to the personal injury litigation.
In response to defendant's request for a corporate designee, plaintiff
presented three witnesses for deposition. The Supervisor of Purchasing, Neville
Williams, testified he was the person most knowledgeable about plaintiff's
"receipt and review of any insurance policies, declaration pages, and certificates
of insurance" pertaining to the K&M contract. He stated:
A-5089-16T2
7
Q. Do you know if anyone reviewed . . . the certificate
of liability insurance, from the time it was issued until
the death of [the student]?
A. No
Q. As far as you know, as the corporate designee on
the certificate of insurance, Paterson had no dealings
whatsoever with [defendant] prior to the death of [the
student]?
A. To my knowledge, no.
Williams also conceded that K&M satisfied the insurance requirements imposed
by plaintiff in its bid documents and contract.
Plaintiff also produced its Risk Manager, Laureen Moloney, as another
corporate designee. She testified:
Q. When was the first time you ever saw . . . the
certificate of liability insurance?
A. Certainly after [the student's] death. I can't be more
specific than that.
Q. Do you know if anyone in Paterson saw . . . the
certificate of liability insurance, before [the student's]
death?
A. I have no personal knowledge of somebody seeing
the certificate. The certificate was in a file. So my
assumption is that somebody saw it before they put it in
the file.
Q. But you can't testify to that?
A-5089-16T2
8
A. I can't . . . testify [to that]. I can't testify as to who
might have handled it.
....
Q. Wouldn't it be accurate for me to say [] that Paterson
has no knowledge if anyone within Paterson did
anything with the Clay certificate other than stick it in
a file?
A. I have no knowledge of anybody doing anything
other than that.
The third designee was plaintiff's Business Administrator, Daisy Ayala.
Her testimony on this issue was:
Q. Do you know if you've ever seen the certificate of
[i]nsurance that I have in my hand . . . before today?
A. I can't recall.
Q. To your knowledge, did K&M fail to comply with
any of the insurance requirements [i]mposed upon it by
Paterson?
....
A. I can't recall.
Q. You've been designated as the corporate designee
on any and all communications between Paterson on the
one hand and K&M and [Clay] on the other hand
regarding the contract's insurance requirements and
certificate of insurance. As you sit here today, you
don't know who [Clay] is, do you?
A. I'm not exactly sure.
A-5089-16T2
9
Q. You had no communication with them?
A. No.
Q. To your knowledge, Paterson had no
communications with them, right?
A. To the best of my ability, no.
Plaintiff's own witnesses confirm its inability to demonstrate anyone within the
District relied on or even considered the Certificate prior to these events.
Viewing the record in a light most favorable to plaintiff, we are satisfied
the trial judge's grant of summary judgment to defendant was supported by the
evidence before it and the applicable law, as plaintiff failed to support its claim
of negligent misrepresentation. We, therefore, need not reach the issue of
whether the court abused its discretion in barring plaintiff's expert. Plaintiff did
not contend that expert testimony was necessary for it to demonstrate a prima
facie case of negligent misrepresentation. To the contrary, plaintiff stated in his
brief, "There is . . . no formal or implied requirement for expert testimony," and
"[T]here is nothing . . . here that requires expert testimony."
Affirmed.
A-5089-16T2
10
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