.

What's Hot in Workers' Comp

TOP 10 DEVELOPMENTS IN NEW JERSEY WORKERS’ COMPENSATION IN 2023

What’s Hot in Workers’ Comp, Vol. 27, No. 12, December 2023

December 1, 2023

by Kiara K. Hartwell

1.    The Appellate Division addresses the abuse of workers’ compensation judges’ discretion in awarding fees, costs and penalties.
Garzon v. Morris Cnty. Golf Club, No. A-1100-21 (App. Div. Dec. 23, 2022)

The Appellate Division addressed three cases regarding a judge’s abuse of discretion in 2022, including Garzon. In Garzon, the Appellate Division appeared to be so appalled by the abuse of discretion and the lack of any analysis in support of the fees, costs and penalties that it directed the case to be sent to a different workers’ compensation judge on remand. The Division’s decision pointed out that having the discretion to award fees up to a 20%, whether it be on medical and temporary benefits or permanency benefits, that authority “is not unbridled” and “cautioned against a reflexive application of a twenty percent award without a full analysis.” The Appellate Division conceded that “the amount of the award is a factor to be considered,” and it went on to explain that it has “limited significance in comparison to the more important factors including the nature and extent of the services and the responsibility involved.”

2.    The New Jersey Supreme Court finds insurance broker has duty to provide notice to LLC members of workers’ compensation coverage options.
Holm v. Purdy, 268 A.3d 1017 (2022)

The New Jersey Supreme Court found that an insurance broker has a non-waivable duty to an LLC to provide notice that workers’ compensation coverage is available to members of the LLC who can actively perform services on behalf of the LLC, but only if the coverage is elected when the policy is purchased or renewed. A member of the LLC died as a result of a work-related incident, and his widow filed a dependency claim in the workers’ compensation court. However, it was denied by the carrier, who argued the LLC had not elected coverage for its members. The widow then filed a civil suit against the insurance broker, alleging they were unaware they were not covered by workers’ compensation insurance and that, had they been aware, they would have elected to be covered. The Trial Court found the broker did not have a duty to inform the LLC members regarding their right to elect coverage. The Appellate Division reversed, and the Supreme Court upheld that decision.

3.    The Appellate Division affirms denial of motion for medical and/or temporary disability benefits based upon petitioner’s credibility issues and failure to establish objective evidence.
Richard Farhat v. Joe Leone’s, No. A-1311-21 (App. Div. Mar. 9, 2023)

The petitioner sustained a slip and fall while working for the respondent in December 2017. While the incident was reported, there was no injury identified. The petitioner treated three months later for his neck. He filed a Claim Petition and a Motion for Medical and/or Temporary Disability Benefits, requesting treatment to the low back based upon his expert’s recommendation. Testimony was taken, and the judge denied the Motion for Medical and/or Temporary Disability Benefits, noting that the petitioner recounted different versions of the accident throughout the medical records. The court further pointed to the credibility issues of not only the petitioner but also his expert. The Appellate Court affirmed the denial of the motion, indicating there were no errors in the findings of the workers’ compensation judge. 

4.    Bill S3095 was introduced in the Senate.

Bill S3905 concerns reduction of statute of limitations from six years to two years in medical fee disputes in workers’ compensation matters. On June 1, 2023, it was introduced in the Senate and referred to the Senate Labor Committee. Currently, case law indicates these types of claims are governed by the general six-year statute of limitations.

5.    The New Jersey Supreme Court affirmed the Appellate Division decision to reverse the trial court and reinstate the jury verdict in plaintiff’s favor.
Pantano v. N.Y. Shipping Assoc., et. al, No. A-19-22 (June 5, 2023)

The Supreme Court affirmed the Appellate Division’s decision to reverse the Trial Judge’s decision to vacate the jury verdict and award judgment to Marine Transport, Inc. In doing so, the court considered the application of the multi-factor test in Galvao v. G.R. Robert Construction Co., 179 N.J. 462, 471-73 (2004), to determine if a worker who negligently caused a plaintiff’s work injury is a “borrowed employee” of the plaintiff’s employer. The court then applied these principles to this case. In viewing the trial record in the light most favorable to the plaintiff as the non-moving party, the court found the trial judge erred in granting Marine Transport’s motion. While this would generally mean the case would be remanded for a jury to resolve the borrowed employee issue, due to the parties’ agreement, as the Rule 4:40-1 motion was denied, the court affirmed the Appellate Division’s decision to reinstate the jury verdict. This decision was authored by Judge Sabatino and joined by Chief Justice Rabner and Justices Patterson, Solomon, Pierre-Louis and Wainer Apter. Justice Fasciale did not participate. 

6.    On July 20, 2023, the Governor signed Bill A4832/S3309 into law, raising the maximum workers' compensation fees for evaluating physicians.

Bill A4832 was introduced on October 27, 2022, and referred to the Assembly Labor Committee. On February 13, 2023, it was report out of the Assembly Committee with Amendments for a second reading. S3309 was introduced on November 3, 2022, in the Senate and referred to the Senate Labor Committee. On February 9, 2023, it was report from the Senate Committee for a second reading. On March 20, 2023, it passed by the Senate (25-11) and was received in the Assembly.

This law raises the maximum workers’ compensation fees for evaluating physicians and expands circumstances for which physician legal fees are permitted. N.J.S.A 34:15-64 was amended the statutory language permits application effective immediately. The maximum fee was increased from $600 to $1,000 for expert reports. It also allows a psychologist, nurse practitioner, or licensed clinical social worker to be paid a fee for a report or testimony concerning course of treatment.

7.    The Appellate Division affirms interlocutory workers’ compensation order denying proposed section 20 settlement.
Gonzalez v. N.J. Transit Corp., No. A-1408-22 (Aug. 21, 2023)

The Appellate Division affirmed the interlocutory workers’ compensation order denying a proposed N.J.S.A 34:15-20 settlement. When the judge was presented with a proposed Section 20 settlement, before approving, the petitioner’s testimony was requested. In addition, the judge pointed out the defense permanency expert had provided permanency ratings on both the neck and back. The respondent appealed, which the Appellate Division granted, as well as amicus participation by the New Jersey Department of Labor and Workforce, Division of Workers’ Compensation. The Appellate Division noted the judge properly exercised her discretion to approve a Section 20 settlement based solely on an affidavit or to request testimony.

8.    The Appellate Division affirms workers’ compensation order denying petitioner’s motion for benefits.
Sykes v. George Harms Constr. Co. Inc., No. A-3320-20 (Sep. 28, 2023)

The Appellate Division affirmed the workers’ compensation judge order denying a petitioner’s Application for Medical and Temporary Benefits. The petitioner was working for the respondent when he suffered a work injury on April 30, 2019. After taking testimony, based on the fact that the petitioner lost consciousness and all witnesses testified that he was in a normal position in the seat, the judge found there was no evidence that his head hit any part of the cab. Rather, the judge found no evidence that the petitioner suffered the impact to his body and head and, rather, the evidence controverted it. He concluded the petitioner did not carry his burden of proof. The petitioner appealed. In applying the deferential standard of review to findings of fact, the Appellate Division affirmed for reasons expressed by the workers’ compensation judge, finding no reason to disturb the judge’s findings and decision.

9.    The Appellate Division affirms workers’ compensation orders, denying insurance carrier’s motion to dismiss for lack of coverage and finding petitioner was in course and scope of employment.
Pozadas v. Capital Iron Assocs., LLC and Hartford Underwriters Ins. Co., No. A-0162-22 (Oct. 30, 2023)

The Appellate Division affirmed two workers’ compensation orders. The petitioner was the owner and employee of the respondent, a structural steel company. An insurance policy, including workers’ compensation coverage for the petitioner, was obtained from Hartford, covering October 13, 2015, to October 13, 2016. The day after the policy expired, the petitioner was involved in a car accident while taking a longer route to enjoy the weather. He filed a workers’ compensation claim. Hartford filed an answer, denying coverage. Hartford was unable to produce any specific witnesses about the nonrenewal. As such, the judge denied Hartford’s original motion to dismiss with prejudice, holding coverage to be in effect, and rejected Hartford’s attempt to withdraw the coverage motion. Subsequently, another judge found the petitioner was in the course of his employment. Hartford appealed, but the Appellate Division declined to consider the due process argument as it was not raised below and rejected Hartford’s argument about course and scope of employment, noting the record supported the judge’s findings.

10.    The Appellate Division affirms summary judgment against employer due to the exclusive remedy provision of the Workers’ Compensation Act and summary judgment, in part, to an insurance carrier in excluding coverage for intentional wrong claims.
Cannon v. Bravo Pack, Inc. and Kraft Machines Inc. v. Employers Preferred Ins., No. A-1702-21 (Oct. 31, 2023) and Cannon v. Bravo Pack, Inc. and Bravo Pack, Inc. v. Employers Preferred Ins., No. A-1731-21 (Oct. 31, 2023)

In the first Cannon case, the Appellate Division affirmed an order granting summary judgment to the employer and dismissing all claims, cross claims and third party claims. The plaintiff sustained a left-hand injury the first day at work when attempting to remove a jam in a machine. He filed suit against his employer, who moved for summary judgment, arguing the exclusive remedy provision of the Workers’ Compensation Act barred the plaintiff’s claims. The judge determined the plaintiff did not have evidence to support a finding of substantial certainty of injury nor that this accident would fall into the narrow exception for injuries caused by an employer’s intentional wrong. The plaintiff appealed, but the Appellate Division found the employer’s conduct did not rise to the standard of an intentional wrong or substantial certainty of an injury.

In the second Cannon case, the Appellate Division affirmed the portion of an August 12, 2021, order granting partial summary judgment to the carrier as the insurance policy was clear in excluding coverage for intentional wrong claims. The relevant portion of the insurance policy was quoted, noting there was a specific exclusion for intentional wrongs. The trial court found the carrier did not have to provide coverage for the intentional wrong claims, but did have to for the negligence, gross negligence or reckless conduct claims. The employer appealed, arguing the exclusion was ambiguous and, even if it was not, it ran contrary to the public policy of the Workers’ Compensation Act. The Appellate Division rejected these arguments, noting the exclusion was clear and that the Workers’ Compensation Act was not inconsistent with an employer’s liability policy that excluded coverage for intentional wrongs.


 

What’s Hot in Workers’ Comp, Vol. 27, No. 12, December 2023 is prepared by Marshall Dennehey to provide information on recent legal developments of interest to our readers. This publication is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. We would be pleased to provide such legal assistance as you require on these and other subjects when called upon. ATTORNEY ADVERTISING pursuant to New York RPC 7.1 Copyright © 2023 Marshall Dennehey, all rights reserved. No part of this publication may be reprinted without the express written permission of our firm. For reprints or inquiries, or if you wish to be removed from this mailing list, contact tamontemuro@mdwcg.com.

Firm Highlights

Thought Leadership

Appeals Court Reverses Trial Court Order Awarding Attorney’s Fees Due to Lack of Evidence to Support Fee Awarded

The Fourth District Court of Appeal reversed the trial court’s order awarding appellate fees to People’s Trust Insurance Company based upon a lack of evidence to support the attorney’s fee award in RM & Assocs. Consulting, Inc. v. People's Trust Ins. Co., 2026 Fla. App. LEXIS 4654 (Fla. 4th DCA 2026). People’s Trust was the insurer of a residential property that had sustained water damage. RM & Associates Consulting was hired by the homeowner to perform mitigation services at the property. The homeowner assigned post-loss benefits to RM and RM subsequently filed suit against People’s Trust alleging that it had not been paid the money it was owed for the mitigation services. People’s Trust defended the lawsuit on the ground that the policy required the insured to notify the insurer before authorizing repairs so People's Trust could elect to use its preferred contractor. Because the owner did not comply with that provision, People's Trust asserted its liability was limited to the amount that its preferred contractor would have charged for the work, which People's Trust contended was $2,000. People's Trust paid that amount to RM before RM filed suit. People’s Trust filed a motion for summary judgment which was granted. RM appealed the summary judgment ruling and the ruling was upheld by the Fourth District Court of Appeal. The appellate court also granted People’s Trust’s entitlement to appellate attorney’s fees, subject to the trial court’s determination of the amount of fees, based upon an offer of judgment made by People's Trust. On remand, the trial court held an evidentiary hearing to determine the amount of attorney’s fees People’s Trust was entitled to. At the hearing, People’s Trust presented testimony from it’s fee expert, supervising trial counsel and appellate counsel. People’s Trust sought recovery of $24,866.17 for work performed by appellate counsel. The request primarily consisted of work performed in preparation of the answer brief. The fee expert testified that more than ninety hours spent preparing the answer brief was reasonable given the complexity and significance of the underlying issue. The appellate court found that the fee expert’s testimony fell short of meeting the necessary standard of demonstrating that the hours expended were necessary. The appellate court found that the billing records did not serve to cure the deficient testimony, as the billing records did not contain adequate details regarding the specific tasks performed. Rather the records contained entries such as “answer brief” which the appellate court found to be insufficient. The appellate court noted that neither the fee expert or counsel addressed how the prior research and briefing in the parallel litigation informed the work in the instant matter. The appellate court noted this was significant in that a court's attorney's fees award must exclude excessive, redundant, or otherwise unnecessary hours, citing Florida Patient's Compensation Fund v. Rowe, 472 So. 2d 1145 (Fla. 1985). Based upon the record failing to support the finding of the trial court, the 4th DCA remanded the case to the trial court for a reconsideration and redetermination of reasonable appellate attorney’s fees supported by competent substantial evidence. The 4th DCA reiterated that the fee expert’s focus on the quality of the work and the importance of the work to People’s Trust did not make up for the perceived deficiencies in the position that spending over ninety hours on a single answer brief was reasonable. Whether moving for attorney’s fees or challenging the amount of fees being sought by an opposing party, practitioners should be mindful of the evidence being used to support the claims being made. Parties should pay close attention to whether the hours being sought may be impacted by prior litigation either party may have engaged in. A party must be prepared to address how prior litigation efforts did or did not impact the amount of hours being claimed in current litigation. Lastly, billing records must be sufficiently detailed so as to support any potential future fee claim.

Thought Leadership

United State District Court for the Middle District of Florida finds Evidence of Replacement Cost Value is Admissible and Recoverable Even When Repairs Have Not Been Made

The plaintiff filed a claim for damage as a result of Hurricane Ian. It claimed damages were over $24 million, but the carrier accepted partial coverage and paid $8,307.49 for secondary components. The carrier found hurricane damage to the building, but it was below the insurance policy’s $3.6 million deductible. The plaintiff sued for breach of the insurance policy. The carrier argued in a motion for summary judgment that plaintiff could not recover replacement cost value (RCV) because the property repairs had not been effectuated. The policy provided for RCV, but only after the repairs were completed. The carrier argued that because the repairs were not completed, the plaintiff was not entitled to RCV damages. The plaintiff argued the carrier could not withhold the actual cost value (ACV) due, which was the main allegation of the lawsuit, then fault it for not making the repairs to unlock the RCV. The United States District Court for the Middle District of Florida rejected the carrier’s argument, finding that when an insurer allegedly breached the policy by withholding coverage, it could not hide behind a repair-contingent provision to block the insured from RCV damages at trial. The court found the issue to be whether the contractual language designed to preclude certain coverage until after repairs are completed barred an insured from seeking those damages at trial when repairs were not complete. The court noted the Eleventh Circuit had not resolved this issue and neither side pointed to a definitive answer from the Florida Supreme Court. The court reasoned that it must look to the Sixth District Court of Appeal (6th DCA), which is the court which would have heard this case if it was in state court. The court noted the 6th DCA recently addressed this issue in Universal Prop. & Cas. Ins. Co. v. Rodriguez, 427 So. 3d 676 (Fla. 6th DCA 2026). The Rodriguez Court found that a breach of contract action is designed to adjudicate not only whether the contract was breached, but also evaluate the damages incurred had the breach not occurred, which the Rodriguez court found to be recovery of the RCV. This court also noted basic Florida contract principles compelled the same result, as a material breach frees the nonbreaching party to suspend its own performance and can demand the full benefit of its bargain, including RCV damages. Finally, the court found the distinction between a full denial and partial denial did not compel a different result. It found the policy required the carrier to acknowledge coverage and pay ACV for all covered damages, and the failure to do that is a material breach, entitling the insured to all of the damages available under the contract, which included the RCV.

News

106 Marshall Dennehey Attorneys Recognized in the 2027 Editions of The Best Lawyers in America® and the Best Lawyers: Ones to Watch® in America

Marshall Dennehey is proud to highlight the firm’s 106 attorneys who have been recognized in the 2027 editions of The Best Lawyers in America® and the Best Lawyers: Ones to Watch® in America. Less than 6% of all practicing lawyers in the U.S. were selected by their peers for this recognition. Additionally, four of the firm’s attorneys received the Best Lawyers® 2027 “Lawyer of the Year” awards in their respective practice areas and demographic regions. Since it was first published in 1983, Best Lawyers® has become universally regarded as the definitive guide to legal excellence. Best Lawyers lists are compiled based on an exhaustive peer-review evaluation. For more information, please visit https://www.bestlawyers.com/. OUR 2027 LAWYERS OF THE YEAR Harrisburg, PA Christopher Reeser, Personal Injury Litigation - Defendants Kacey Wiedt, Workers Compensation Law - Employers Roseland, NJ Justin F. Johnson, Medical Malpractice Law - Defendants Leonard Leicht, Personal Injury Litigation - Defendants   OUR 2026 BEST LAWYERS IN AMERICA Philadelphia, PA Nicholas D. Bowers, Personal Injury Litigation - Defendants Josh J. T. Byrne, Professional Malpractice Law - Defendants Jefferey J. Chomko, Insurance Law James H. Cole, Insurance Law John J. Delany III, Personal Injury Litigation - Defendants Laurianne Falcone, Personal Injury Litigation - Defendants John P. Gonzales, Employment Law - Management John Hare, Appellate Practice Daniel D. Krebbs, Personal Injury Litigation - Defendants Michele Punturi, Workers' Compensation Law - Employers Bradley D. Remick, Product Liability Litigation - Defendants Andrea Cicero Rock, Workers' Compensation Law - Employers Robin M. Romano, Workers' Compensation Law - Employers Daniel J. Ryan, Jr., Personal Injury Litigation - Defendants Gary M. Samms, Professional Malpractice Law - Defendants Christopher N. Santoro, Personal Injury Litigation – Defendants; Product Liability Litigation -Defendants Josh D. Scheets, Personal Injury Litigation - Defendants Robert P. Schenk, Workers' Compensation Law - Employers Robert E. Smith, Insurance Law Robin Snyder, Litigation - Health Care Michael L. Turner, Commercial Litigation; Criminal Defense: White-Collar; Mass Tort Litigation / Class Actions - Defendants Claire Breaux Ventola, Product Liability Litigation - Defendants Pittsburgh, PA Melissa Devich Cochran, Commercial Litigation; Mass Tort Litigation / Class Actions – Defendants; Product Liability Litigation - Defendants  John F. Deasy, Personal Injury Litigation – Defendants; Product Liability Litigation - Defendants Daniel W. Deitrick, Workers' Compensation Law - Employers Douglas C. LaSota, Litigation - Construction; Mass Tort Litigation / Class Actions - Defendants Joseph V. Lesinski, Product Liability Litigation – Defendants   Christian D. Marquis, Personal Injury Litigation - Defendants Patricia A. Monahan, Insurance Law; Litigation - Insurance Patrick T. Reilly, Commercial Litigation; Mass Tort Litigation / Class Actions – Defendants; Product Liability Litigation - Defendants Brett C. Shear, Medical Malpractice Law - Defendants Teresa O. Sirianni, Education Law; Employment Law – Management; Litigation - Labor and Employment Stuart Sostmann, Product Liability Litigation – Defendants Danielle M. Vugrinovich, Mass Tort Litigation / Class Actions - Defendants Scranton, PA Sarah E. Argo, Litigation - Insurance Michael J. Connolly, Personal Injury Litigation – Defendants; Professional Malpractice Law - Defendants Matthew Keris, Litigation - Health Care; Medical Malpractice Law - Defendants John T. McGrath, Jr., Insurance Law; Medical Malpractice Law – Defendants; Product Liability Litigation - Defendants William J. McPartland, Insurance Law John R. Nealon, Product Liability Litigation - Defendants Victoria Scanlon, Health Care Law; Litigation - Health Care; Medical Malpractice Law - Defendants Michael A. Sebastian, Workers' Compensation Law - Employers Thomas A. Specht, Insurance Law; Litigation - Insurance Suzanne Tighe, Litigation Insurance Harrisburg , PA Casey Alan Coyle, Administrative/Regulatory Law; Appellate Practice; Commercial Litigation Brittany E. Bakshi, Personal Injury Litigation - Defendants Shannon P. Fellin, Workers' Compensation Law - Employers Allison Krupp, Insurance Law John R. Ninosky, Litigation – Insurance; Personal Injury Litigation - Defendants Christopher Reeser, Personal Injury Litigation - Defendants Kacey Wiedt, Workers' Compensation Law – Employers King of Prussia, PA  Michael L. Detweiler, Construction Law Joseph L. Hoynoski III, Medical Malpractice Law - Defendants Gregory J. Kelley, Construction Law, Litigation - Construction Anthony Natale III, Workers' Compensation Law - Employers Francis X. Wickersham, Workers' Compensation Law - Employers A. Judd Woytek, Workers' Compensation Law – Employers Erie, PA Patrick M. Carey, Personal Injury Litigation - Defendants Joel M. Snavely, Health Care Law; Insurance Law New Haven, CT Michael Wrona, Commercial Litigation, Litigation - Bankruptcy  Mount Laurel, NJ David D. Blake, Litigation - Insurance Barbara Davis, Personal Injury Litigation - Defendants Lynne Nahmani, Litigation - Health Care John H. Osorio, Personal Injury Litigation - Defendants John L. Slimm, Legal Malpractice Law – Defendants; Professional Malpractice Law – Defendants Roseland, NJ Robert T. Evers, Medical Malpractice Law - Defendants Justin F. Johnson, Medical Malpractice Law - Defendants Julia Klubenspies, Medical Malpractice Law - Defendants Leonard C. Leicht, Personal Injury Litigation - Defendants Patricia M. McDonagh, Appellate Practice Sunny Sparano, Litigation - Construction Randall S. Watts, Health Care Law New York, NY Tonya M. Lindsey, Medical Malpractice Law - Defendants Tampa, FL Michael Archibald, Personal Injury Litigation - Defendants Lindsay G. McCormick, Litigation – Construction Orlando, FL Thomas F. Brown, Personal Injury Litigation - Defendants Dante C. Rohr, Commercial Litigation Fort Lauderdale, FL Kimberly Kanoff Berman, Appellate Practice Patrick M. Delong, Personal Injury Litigation – Defendants Jacksonville, FL  Heather Byrer Carbone, Workers' Compensation Law - Employers Linda Wagner Farrell, Workers' Compensation Law - Employers Elizabeth B. Ferguson, Litigation - Construction James P. Hanratty, Personal Injury Litigation – Defendants Wilmington, DE Sarah B. Cole, Litigation - Insurance Benjamin K. Durstein, Workers' Compensation Law - Employers Maria R. Granaudo, Medical Malpractice Law - Defendants  Keri L. Morris-Johnston, Workers' Compensation Law - Employers Cincinnati, OH Timothy B. Schenkel, Personal Injury Litigation - Defendants David E. Williamson, Personal Injury Litigation - Defendants Cleveland, OH Vincent E. Cononico, Litigation – Insurance, Personal Injury Litigation - Defendants Jillian L. Dinehart, Personal Injury Litigation - Defendants David J. Fagnilli, Insurance Law Jason P. Ferrante, Health Care Law, Litigation - Health Care Andrew H. Isakoff, Transportation Law Leslie M. Jenny, Litigation - Health Care; Medical Malpractice Law – Defendant OUR 2026 BEST LAWYERS: ONES TO WATCH Jacksonville, FL Sean J. Reeves, Personal Injury Litigation – Defendants; Product Liability Litigation - Defendants Orlando, FL Carolin A. Pacheco, Insurance Law Mount Laurel Stacey Gorin, Insurance Law Melville, NY Kimberly Gitlin, Personal Injury Litigation – Defendants Matthew A. Gray, Insurance Law; Personal Injury Litigation - Defendants Philadelphia, PA Holli K. Archer, Health Care Law; Medical Malpractice Law – Defendants; Professional Malpractice Law Emily Pritchyk, Commercial Litigation; Product Liability Litigation – Defendants Pittsburgh, PA Taylor E. Kosko, Mass Tort Litigation / Class Actions – Defendants; Personal Injury Litigation - Defendants Alana Staniszewski, Workers' Compensation Law - Employers Michael D. Winsko, Product Liability Litigation – Defendants; Transportation Law King of Prussia, PA Richard Lechette, Commercial Litigation; Insurance Law, Personal Injury Litigation – Defendants

Thought Leadership

First DCA Reverses Excessive Jury Award Unsupported by the Evidence

In December 2019, the plaintiffs filed a claim with Universal for damages caused by a water and sewage back up through the plumbing system and existing through multiple fixtures including the washing machine drain, kitchen sink, dishwasher, bathtub and toilet. Universal investigated the claim, issued payment for resulting water damage totaling $7,000.00 in actual cash value ($12,000.00 in replacement cost value). The plaintiffs sought additional benefits for work needed to access the below-slab cast iron plumbing system due to the failure of the system from rust, deterioration, corrosion and breaks in the line. Universal denied any additional benefits for access. In 2021, the plaintiffs filed suit. During litigation, Universal sent a plumber to inspect the home and the plumber concluded the pipes were clogged but could be cleaned. The plaintiffs’ plumber testified that the plumbing system needed to be replaced due to holes and openings in the pipes. The plaintiffs introduced two estimates prepared by Triad Restoration services totaling $79,680.22 in replacement cost value and $50,219.97 in actual cash value and an executed contract with another company for repairs with the amounts of repair redacted. Since the insurance policy did not provide coverage for repair or replacement of the plumbing system, the jury only had to decide whether the plumbing system needed to be replaced, and if it did, Universal would owe for the access costs; the jury verdict form required the jury to determine both the replacement cost value and actual cash value amounts. The jury asked if it had to rely on the Triad estimates for their amounts. The trial court advised the amount awarded had to be based on the evidence presented at trial and the law given by the trial court. The jury awarded $335,000.00 in replacement cost value or $305,000.00 in actual cash value. Universal motioned for a new trial arguing the amount awarded was unsupported by the evidence and then moved for remittitur. The trial court denied both motions and this appeal followed. The court found that while a jury’s verdict should only be disturbed with caution and discretion, the trial court must give the properly challenged award close scrutiny and determine whether it bears a reasonable relation to the damaged provided, is supported by the evidence, and could have been reached in a logical manner by reasonable means §768.74(3), (5)(d)-(e), Fla. Stat. The court found the trial court did consider the statutory requirements at the hearing on Universal’s remittitur motion and was concerned about a reasonable relation to the amount of damages proved and injury suffered and whether the award was supported by the evidence, but ultimately denied the motion, reasoning that the jury had been properly instructed to fairly and adequately compensate the plaintiffs. The court noted the only evidence providing the basis for the jury verdict was Triad’s estimates and those valued the plaintiffs' claimed loss at $79,680.22 in replacement cost value and $50,219.97 in actual cash value; no valuation evidence reasonably supported the jury verdict. The plaintiffs argued that the jury was entitled to consider more than the estimates, but the court conveyed the evidence provided did not give the jury a way to reach the amounts they awarded. The court was also not swayed by the plaintiffs’ argument regarding inflation and later price increases, but the court noted that no evidence via the contract, nor testimony regarding increase in labor, material, fuel or construction costs were entered into the record.  The court concluded the jury may draw reasonable inferences from the evidence, but it may not supply a damages number by speculation. The court did not find any of the plaintiffs’ remaining argument persuasive either. The court reversed the denial of Universal’s remittitur motion and motion for new trial as to damaged and remanded the case. The court ended its opinion with advising the trial court must determine whether replacement cost value or actual cash value is the property measure of damages under the policy and order remittitur in an amount consistent with that determination and the evidence.