STATE OF NEW JERSEY VS. COUNTY OF OCEAN (L-0527-20, OCEAN COUNTY AND STATEWIDE) ( 2021 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-3665-19
STATE OF NEW JERSEY,
Plaintiff-Appellant, APPROVED FOR PUBLICATION
November 4, 2021
v.
APPELLATE DIVISION
COUNTY OF OCEAN,
Defendant-Respondent.
Argued October 14, 2021 — Decided November 4, 2021
Before Judges Haas, 1 Mawla, and Mitterhoff.
On appeal from the Superior Court of New Jersey,
Law Division, Ocean County, Docket No. L-0527-20.
Brett J. Haroldson, Deputy Attorney General, argued
the cause for appellant (Andrew J. Bruck, Acting
Attorney General, attorney; Melissa H. Raksa,
Assistant Attorney General, of counsel; Brett J.
Haroldson, on the briefs).
Mathew B. Thompson argued the cause for respondent
(Berry, Sahradnik, Kotzas & Benson, attorneys;
Mathew B. Thompson, on the brief).
1
Judge Haas did not participate in oral argument. He joins the opinion with
counsel's consent for the purpose of disposition. See R. 2:13-2(b).
The opinion of the court was delivered by
MAWLA, J.A.D.
Plaintiff State of New Jersey appeals from an April 17, 2020 order
dismissing its complaint seeking declaratory judgment against defendant
County of Ocean. We affirm.
At the outset, we note the statutory provisions in dispute. Under the
New Jersey Tort Claims Act (TCA),2 specifically N.J.S.A. 59:10A-5, "[t]he
Attorney General may provide for a defense pursuant to this act by an attorney
from his own staff or by employing other counsel for this purpose or by
asserting the State's right under any appropriate insurance policy which
requires the insurer to provide the defense." Per N.J.S.A. 40A:10-3, counties
must maintain insurance:
Every local unit . . . shall provide insurance coverage
under this article for the operators of all motor
vehicles, equipment and apparatus owned by or under
its control, or owned by or under the control of any of
its departments, boards, agencies or commissions,
against liability for damages to property, in any one
accident, in an amount of not less than $5,000[], and
against liability for injuries or death of one person, in
any one accident, in an amount of not less than
$50,000[], and against liability for injuries or
death . . . in any one accident, in an amount of not less
than $100,000[].
2
N.J.S.A. 59:1-1 to 12-3.
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The facts are undisputed. In May 2016, an Ocean County Prosecutor's
Office (OCPO) detective operating a County vehicle rear-ended a van carrying
passengers, including Keith McQuade-Sabat. McQuade-Sabat was allegedly
injured. At the time of the accident, the detective was acting in her capacity as
part of the OCPO homicide squad. McQuade-Sabat sued the detective, the
OCPO, and the County, among others, for negligence.
The County answered for itself, the OCPO, and the detective. Its
answers to interrogatories inquiring about insurance coverage stated: "The
County . . . is self-insured for the first $250,000[] and an excess policy covers
additional exposure."
On May 18, 2018, County counsel wrote to the Attorney General
requesting the State defend and indemnify the OCPO and the detective. 3 A
Deputy Attorney General (DAG) responded the same day: "The [Attorney
General] will take over defense and indemnification of [the] OCPO and [the
detective] in this matter. A DAG will be assigned and contact you to arrange
for transfer of the file." In June 2018, a DAG filed a substitution of attor ney
on behalf of the OCPO and the detective.
On December 5, 2019, a DAG advised County counsel the State's
obligations to defend and indemnify the OCPO and the detective are secondary
3
All claims against the County were later dismissed on summary judgment.
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to defendant's mandatory insurance obligation pursuant to N.J.S.A. 40 A:10-3.
In support of that position, the DAG relied upon an unpublished opinion of this
court, Whittaker v. Rua, No. A-0735-13 (App. Div. June 20, 2014) (slip op. at
18), which stated:
If the Attorney General is obliged to defend, then the
State is obliged to indemnify. The duty to indemnify
follows, whether the defense is provided directly by
the State, or through outside counsel, or insurer's
counsel. Nonetheless, reading N.J.S.A. 59:10-1 in
harmony with N.J.S.A. 40A:10-3 and -4, we conclude
that the State's duty to indemnify must be secondary to
that of mandated insurance coverage.
[(citations omitted).]
County counsel did not respond.
On January 30, 2020, the DAG called County counsel reiterating
"current case law indicates that [defendant's] mandatory insurance coverage
could be utilized for any portion of a judgment or settlement . . . ." The DAG
sent a follow-up letter on February 8, 2020, reiterating that "pursuant to
N.J.S.A. 40A:10-3, which mandates that the County obtain insurance or self-
insure vehicles it owns, including the vehicle involved in the underlying
accident . . . the County owes coverage on a primary basis for the incident
underlying this case . . . ." County counsel did not respond to the letter.
The State filed a verified complaint and an order to show cause for a
declaratory judgment. It argued pursuant to N.J.S.A. 59:10A-5, it was entitled
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to use "any appropriate insurance policy" to defend and indemnify the County.
It claimed because the County was required to have insurance pursuant to
N.J.S.A. 40A:10-3, the County's self-insurance and excess insurance policies
were primarily responsible for any judgment or settlement in the underlying
tort suit.
Following oral argument, the motion judge issued a written order
denying the application and dismissing the State's complaint, finding:
N.J.S.A. 59:10A-5 "Methods of providing defense"
does not address "indemnity." The terms have
separate distinct plain meanings. A duty to defend
does not necessarily give rise to a duty to indemnify
. . . . There is no insurance policy. The County . . . is
self-insured for the first $250,000. There is no insurer
required to provide the defense. An excess insurer has
no duty to defend. There is no linkage between
N.J.S.A. 40A:10-3 and N.J.S.A. 59:10A-5.
The State raises the following points on appeal:
POINT I: THE TRIAL COURT'S JUDGMENT
SHOULD BE REVERSED BECAUSE IT
INCORRECTLY FOUND THAT THERE WAS NO
POLICY OF INSURANCE FOR THE ATTORNEY
GENERAL TO UTILIZE, DESPITE A STATUTE
MANDATING SUCH A POLICY.
POINT II: THE TRIAL COURT IMPROPERLY
DIVORCED THE CONCEPTS OF DEFENSE AND
INDEMNIFICATION—AN INTERPRETATION
BELIED BY BINDING PRECEDENT AND
COMMON SENSE.
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POINT III: THE TWO STATUTES, AND
[4]
WRIGHT , CAN AND SHOULD BE
HARMONIZED, WHICH THE TRIAL COURT DID
NOT DO.
The central issue concerns statutory interpretation, a question of law.
State v. S.B., 230 N.J. 62, 67 (2017). Our review is de novo. Ibid.In Wright, our Supreme Court explained the fundamental principles
governing the State's duty to defend and indemnify state employees pursuant to
the TCA. In that case, the plaintiff sued Somerset County Prosecutor's Office
(SCPO) employees, alleging various torts incident to his arrest and
prosecution. 169 N.J. at 430-31. Somerset County demanded the State
provide a defense and indemnification. Id. at 432. The Court held in favor of
the county with one member dissenting. Id. at 457.
The majority rejected the dissent's assertion the State did not have to
defend and indemnify county employees because a separate statute required
the county to bear "[a]ll necessary expenses incurred by the prosecutor for
each county in the detection, arrest, indictment and conviction of offenders
against the laws . . . ." Id. at 443 (quoting N.J.S.A. 2A:158-7) (alteration in
original). The Court concluded the issue of defense and indemnification was
therefore not controlled by Title 2A, because
4
Wright v. State, 169 N.J. 422 (2001).
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the "TCA was [] intended to supersede the patchwork
of statutory provisions providing for the defense and
indemnification of state employees." Chasin v.
Montclair State Univ., 159 N.J. 418, 425 (1999).
. . . [T]he Legislature would not have enacted such
detailed provisions dealing with the State's liability for
defense and indemnification in the TCA if the
provisions of N.J.S.A. 2A:158-7 resolved the issue.
Thus, we rely exclusively on the provisions of the
TCA, as well as related case law, to resolve the
defense and indemnification issue because "the TCA,
. . . provides the unified scheme under which the
Attorney General's duty to defend and indemnify
employees must be evaluated." Ibid.[Id. at 443-44 (second alteration in original).]
Regarding the State's duty to defend and indemnify, the Court ruled:
"N.J.S.A. 59:10-1 requires the State to indemnify
employees for whom a defense is provided." Chasin,
159 N.J. at 426. The purpose of furnishing a State
employee with a legal defense "is to avoid the entry of
a damages award in the first instance." Michaels [v.
State of N.J., 968 F. Supp. 230, 234 n.4 (D.N.J.
1997)]. "Thus, . . . at least for purposes of the State's
obligation under the [TCA], the concepts of
indemnification and the provision of defense costs are
'wedded together.'" Id. at 236 n.8.
[Id. at 444-45.]
The Court held that when the conduct of county prosecutors and their
subordinates qualifies them as State employees under the TCA, "the State
should be made 'to respond in damages' based 'on general principles of
[r]espondeat superior.'" Id. at 452 (alteration in original) (quoting McAndrew
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v. Mularchuk, 33 N.J. 172, 193 (1960)). "[T]he State should be obligated to
pay the county prosecutors and their subordinates' defense costs and to
indemnify them if their alleged misconduct involved the State function of
investigation and enforcement of the criminal laws." Id. at 455 (citation
omitted).
The Court concluded:
To vindicate the legislative purpose of providing
defense and indemnification to public employees
performing an essential State function, we interpret
the defense and indemnification provisions of the
TCA to apply to county prosecutorial employees sued
on the basis of actions taken in the discharge of their
law enforcement duties. That interpretation will
resolve the anomaly acknowledged in [Michaels5]
"whereby the State could be held vicariously liable for
the actions of an individual . . . whom the county must
indemnify," by making the state fully liable for such
defense and indemnification costs and providing the
State full and complete control of the defense.
[Id. at 456 (emphasis added).]
The State argues Wright did not address N.J.S.A. 59:10A-5, which
permits the State to fulfill its duty to indemnify the OCPO and the detective
5
Michaels, 968 F. Supp. at 237-38, held the TCA did not include prosecutorial
defendants as State employees and therefore "the State was not required to
defend and indemnify Somerset County and the SCPO employees." Wright,
169 N.J. at 433.
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using the insurance the OCPO is required to maintain pursuant to N.J.S.A.
40A:10-3. We disagree.
"Where the plain language of a statute is clear, we enforce the statute as
written." Correa v. Grossi, 458 N.J. Super. 571, 579 (App. Div. 2019) (citing
DiProspero v. Penn, 183 N.J. 477, 492 (2005)). "However, our basic rules of
statutory interpretation recognize that not every statute is clear, and in case of
ambiguity, our guiding light is the Legislature's intent." Ibid. "In order to
ascertain legislative intent, the Court may look to extrinsic evidence, including
legislative history, committee reports, and contemporaneous construction."
Burns v. Belafsky, 166 N.J. 466, 473 (2001) (citing State v. Hoffman, 149 N.J.
564, 578 (1997)).
"'Punctuation is part of an act and may be considered in its
interpretation.'" In re Est. of Fisher, 443 N.J. Super. 180, 192 (App. Div.
2015) (quoting Com. Bancorp, Inc. v. InterArch, Inc., 417 N.J. Super. 329, 336
(App. Div. 2010)). "[T]he word 'or' in a statute is to be considered a
disjunctive particle indicating an alternative." Ibid. (alteration in original)
(quoting State v. Kress, 105 N.J. Super. 514, 520 (Law Div. 1969)).
Applying these principles, we do not read N.J.S.A. 59:10A-5 as
addressing indemnification. The plain language of N.J.S.A. 59:10A-5 reveals
its purpose is to memorialize the Attorney General's ability to designate who
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shall undertake a defense. The statute permits the Attorney General to
designate "an attorney from his own staff or by employing other counsel for
this purpose or by asserting the State's right under any appropriate insurance
policy which requires the insurer to provide the defense." N.J.S.A. 59:10A-5.
It is clear N.J.S.A. 59:10A-5 provides a list of alternatives as to who the
Attorney General may designate to take up the defense in a case. The statute's
plain language does not mean that the ability to designate also permits the
State to designate who shall bear the costs of indemnity. Pursuant to Wright,
if the State is obligated to defend, regardless of who the State then designates
to defend, the State bears the corresponding cost of indemnification. 169 N.J.
at 444-45.
Extrinsic evidence confirms the statute's aim is to provide the Attorney
General the ability to control the litigation. At the time of the TCA's
enactment, a task force convened by the Attorney General stated:
The above authority [N.J.S.A. 59:10A-5 and 6]
is provided primarily for the purpose of satisfying the
needs for representation of State employees resulting
from the passage of the [TCA]. Although this
authority is undoubtedly possessed by the Attorney
General under his existing powers, this amendment is
intended to explicitly establish that authority and the
circumstances under which it will be exercised.
In addition this amendment makes clear that the
Attorney General shall have exclusive control of the
litigation and State employees must cooperate with
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him fully or lose their right to indemnification
provided in chapter 10 of the [TCA].
[Off. of the Att'y Gen, Report of the Attorney
General's Task Force on Sovereign Immunity 249
Cmt. (1972).]
For these reasons, the State was obligated to defend and indemnify the
OCPO and its detective without the ability to resort to the County's insurance.
In our view, this interpretation of N.J.S.A. 59:10A-5 "vindicate[s] the
legislative purpose of providing defense and indemnification to public
employees performing an essential State function[.]" Wright, 169 N.J. at 456.
Affirmed.
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