We hope all of you had a wonderful summer! While you may have been enjoying some sun, sand and surf, New Jersey courts have been busy working and delivering some interesting opinions that may be relevant to you as a Public Adjuster.
PUBLIC ADJUSTER AS BUILDER
In North Jersey Public Adjusters, Inc. v. Philadelphia Insurance Company, a panel of the Appellate Division decided a public adjuster's claim against its Errors & Omissions carrier in a case in which the adjuster subsequently acted as more than an adjuster.
The adjuster represented homeowners whose home sustained substantial fire damage. They successfully settled the claim with the insurer and then undertook to be the "project manager" for the repairs. In that capacity, they hired the general contractor and subcontractors, oversaw the construction work and paid these companies when the work was completed. Unhappily, the general contractor abandoned the project before completion. The homeowners sued the project manager for the cost of having to hire another contractor to correct improper work and complete the construction of their home, and also sought consequential damages for delay and emotional distress damages.
The public adjuster sought a defense and indemnity under its E&O policy. The E&O carrier refused to defend or indemnify. The trial court granted summary judgment to the carrier. The Appellate Division affirmed, finding that the definition of public adjuster did not include work as a project manager. The court referred to the statutory definition of "public adjuster" found in the licensing act, N.J.S.A. 17:22B-1 to 20, and also the subject policy which covered claims for wrongful acts arising out of the rendering of professional services. The policy defined "professional services" as "services rendered to others for a fee solely in the conduct of your profession as stated in..." the declarations. The declarations described the profession as "claim adjuster/consultant" defined as "a professional engaged for the purpose of appraising, processing, settling, investigating losses, prospective losses or loss damages which are pertinent to any insurance arrangement." The Court found no substantial nexus between the allegations set forth in the Complaint and the professional services rendered as a public adjuster and upheld the grant of summary judgment. Somewhat curiously, the Court did not mention anything about the insured's "reasonable expectations" of coverage, apparently concluding that the definitions clearly and unambiguously limited the coverage to adjusting services, not construction management.
The takeaway from this opinion is very simple. If a public adjuster acts as a project manager following the payment of the insurance claim, he does so without the benefit of coverage under an E&O policy covering his actions as a public adjuster. The remedy is either to include "project management" or some similar description within the definition of "professional services" covered under the E&O policy or to obtain a separate liability policy covering work as a project manager. Once again, the issue comes back to reading the policy of insurance. As an insured, you want to be sure that the policy provides the coverage you need for the work that you intend to do.
IFPA RIGHT TO JURY TRIAL
The New Jersey Supreme Court issued an opinion in July upholding the right to a jury trial in a private claim brought under the Insurance Fraud Prevention Act, N.J.S.A.17:33A-1 to 30. The case is Allstate New Jersey Insurance Company et al. v. Lajara et al. This action is a massive claim by several insurers against 63 defendants including physicians and chiropractors; medical, imaging and pain-management practices; medical equipment and billing companies; their owners and others for violation of the IFPA relating to claims for personal injury protection benefits under the automobile insurance law.
The plaintiffs originally demanded trial by jury, but then moved to withdraw the demand. Several defendants opposed that application and demanded a jury trial. The Plaintiffs then opposed that application. The trial court and the Appellate Division found controlling precedent in a case brought by the State of New Jersey under the IFPA seeking restitution from an individual who provided false information to an insurance carrier regarding an automobile accident. In that case, since the relief sought was equitable, not money damages, and the court did not find anything in the IFPA granting a right to a jury trial, the individual was denied a jury trial.
The Supreme Court examined the history of the right to a jury trial and the distinction drawn in the law between legal relief (i.e. money damages), which allows for a jury trial, and equitable relief which historically has been a matter for judicial resolution. The IFPA provides for an injured insurance company to recover compensatory and punitive damages, as well as expenses of investigation, attorneys' fees and costs of suit. This is legal relief.
The Court also examined whether the cause of action authorized by the IFPA is comparable to a common law cause of action. The Court found that the conduct proscribed by the IFPA is similar to common-law fraud and thus supported a right to a jury trial.
The Court concluded that the right to a jury trial in a private action under the IFPA is mandated by the New Jersey Constitution, Article I, Paragraph 9 and is implied by the Legislature in the IFPA by reason of the type of damages allowed (money) and the similarities to common-law fraud.
This decision may be of assistance if you encounter an insurance company or adjuster threatening to claim fraud by an insured as a club to avoid or underpay a claim. Unless the case is obvious, the insured can easily reply that he is comfortable with a jury of his peers deciding such an issue. Insurance companies by and large prefer to avoid juries, especially where they are not simply arguing the meaning of the language of the insurance contract.
ASCERTAINABLE LOSS
The New Jersey Consumer Fraud Act (CFA), N.J.S.A. 56:8-1 et seq. requires that a consumer fraud victim sustain an "ascertainable loss" in order to pursue a claim under the CFA. In Abbas v. Pennymac Corp., a panel of the Appellate Division was asked to address this question in a mortgagee situation.
In that case, a homeowner sustained damages from Superstorm Sandy and recovered a small payment from his insurance company. The carrier issued the check to the mortgagee named in the policy and the mortgagee retained the money, despite the homeowner's repeated requests for payment and compliance with the mortgagee's requests for information and documents. The homeowner then had to spend his own money to repair his house. After the mortgagee still refused to turn over the insurance proceeds, the homeowner sued the mortgagee and included a count for damages under the CFA.
Thereafter, the mortgagee tendered payment. The homeowner rejected the tender. The mortgagee moved to dismiss the complaint alleging that the homeowner suffered no ascertainable loss because it sent him the insurance proceeds. The trial court agreed, but the appellate panel reversed. The Court found that the homeowner suffered an ascertainable loss as soon as the mortgagee did not timely turn over the insurance money. The court made short shrift of the mortgagee's argument, finding that a violation of the CFA cannot be undone by a later tendered payment. Once the consumer suffers an ascertainable loss prior to filing a complaint, that element of the cause of action is complete.
This case was decided on a motion at the outset of the case. There is no discussion in the opinion of what the quantum of damages would be and what set-off, if any, the mortgagee would be allowed to claim based upon the tender of the insurance proceeds. Assumedly, whatever damages the consumer suffered in paying for the repairs on his own, and the loss of use of the money represented by the insurance proceeds, could be elements of his damages. At the very least, the consumer would be entitled to his counsel fees and costs of suit.
If you encounter situations where the mortgagee gives the homeowner a hard time in turning over the insurance proceeds, or the applicable part of them, to allow for repairs, you may suggest that the insured has a cause of action under the CFA and cite this case. If the homeowner has complied with the mortgagee's requests for information and documents, and if the consumer is not in default on the mortgage, the mortgagee would be foolish to risk a CFA suit.
As always, if you or your insureds encounter any similar situations or have any questions, please feel free to contact us at tmaloney@thomasmaloneylaw.com or by telephone at 973-538-4100. We are here to help!
