Renee Krampetz v. C&R Insurance Services LLC ( 2024 )

NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court ." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2909-23
RENEE KRAMPETZ AND
SCOTT KRAMPETZ,
Plaintiffs-Respondents,
v.
C&R INSURANCE
SERVICES, LLC, PATRICK
ROSS, PATRICK O'BRIEN,
Defendants-Appellants.
_________________________
Submitted November 7, 2024 – Decided November 14, 2024
Before Judges Mawla and Vinci.
On appeal from an interlocutory order of the Superior
Court of New Jersey, Law Division, Monmouth
County, Docket No. L-2343-18.
Gordon Rees Scully Mansukhani, LLP, attorneys for
appellants (Melissa J. Brown and Kevin M. Buttery, on
the briefs).
Britcher, Leone & Sergio, LLC, attorneys for
respondents (E. Drew Britcher, of counsel; Jessica E.
Choper, on the brief).
PER CURIAM
On leave to appeal granted by us, defendants C&R Insurance Services,
LLC, Patrick Ross, and Patrick O'Brien contest an April 26, 2024 order denying
their motion for summary judgment. We reverse for the reasons expressed in
this opinion.
In 2018, plaintiffs Renee and Scott Krampetz filed a medical malpractice
action against Brick Women's Physicians, P.C., and one of its doctors (the
medical defendants), "alleging deviations from accepted standards of obstetrical
care in connection with treatment rendered . . . ." In May 2020, plaintiffs
amended the complaint to include negligence claims against defendants for
failing to advise and provide the medical defendants with insurance coverage
"to safeguard them in the event of any claims." Plaintiffs alleged defendants
"were liable for the damages arising from [p]laintiffs['] claims against the
[m]edical [d]efendants due to [their] failure to advise the [m]edical
[d]efendants" on all viable insurance coverage options, resulting "in a lack of
insurance coverage for [p]laintiff[s'] claim." The medical defendants' answers
asserted cross claims against defendants for contribution, indemnity, and
settlement credit.
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In December 2023, the trial court granted in part plaintiffs' motion in
limine to bar defendants from introducing evidence regarding the liability of the
medical defendants. The court held "the sole issue to be determined at trial [is]
whether . . . [d]efendants deviated from the standard of care" and it preserved
defendants' ability to challenge plaintiffs' damages.
In January 2024, the medical defendants entered a "[s]ettlement
[a]greement and [j]udgment" with plaintiffs. It recited that the medical
defendants relied upon defendants "to advise them of the options for insuring
their risk for claims of medical malpractice of themselves and any employees
and physicians." And that the medical defendants "were not properly advised
and assert that [defendants] . . . had a duty required [as insurance brokers] . . .
to advise them, which" they breached. "As a result . . . [the medical defendants
were] without coverage to compensate for [plaintiffs'] . . . claims . . . ."
The settlement agreement allowed plaintiffs to take a judgment against the
medical defendants totaling $750,000. Plaintiffs would then "proceed against
. . . defendants . . . to establish liability on [defendants'] part . . . to enforce the
agreed [upon] damage claim herein against these defendants." The medical
defendants also agreed "to allow th[e j]udgment to be entered against them to be
enforced against defendants . . . ." Notably, the agreement contained a provision
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stating it constituted the entirety of the agreement between plaintiffs and
defendants, yet defendants never negotiated or signed the agreement.
Defendants moved for summary judgment dismissal of plaintiffs' broker
malpractice claim. They argued plaintiffs could not pursue their claims against
them because they lacked "liability and damages by the underlying tortfeasor
. . . ." Moreover, the medical defendants could not assign their professional
negligence claim against defendants to plaintiffs.
The trial court found defendants' contention there was no liability or
damages was "moot because [the settlement agreement had been filed as] an
order for judgment . . . with the [c]ourt, and . . . plaintiffs had properly been
assigned their rights from [the medical defendants] . . . ." Pursuant to N.J.S.A.
2A:25-1, "the person sued shall be allowed, not only all set-offs, discounts and
defenses [they] ha[ve] against the assignee, but also all set-offs, discounts and
defenses [they] had against the assignor before notice of such assignment was
given to [them]." The court found the medical defendants agreed they were
liable, and "as a result of their deviation there w[ere] injuries that were
proximately caused by their deviation to plaintiffs." Thus, "plaintiff[s] would
then have the right to demonstrate the deviations from the standard of care
w[ere] carried out by the broker defendants, resulting in the medical malpractice
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[for] defendants not having insurance coverage regarding the malpractice
claims."
Pursuant to Griggs v. Bertram, 88 N.J. 347, 364 (1982), the court
concluded "the only matter left before [it] stems from allegations set forth
against . . . [defendants], and whether the consented to damages are, in fact,
reasonable." Defendants retained the right to argue the damages were
unreasonable and "were not made in good faith, that it was some type of
collusion on the part of the [medical] defendants with . . . plaintiff in order to
come up with this $750,000." Damages would be addressed after the court
conducted a jury trial on liability.
I.
We review decisions granting summary judgment de novo. Samolyk v.
Berthe, 251 N.J. 73, 78 (2022). "[Q]uestions of law and the legal consequences
that flow from the established facts are reviewed de novo." Granata v.
Broderick, 446 N.J. Super. 449, 467 (App. Div. 2016) (citing Manalapan Realty,
L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366, 378 (1995)).
Defendants claim the trial court erred in applying Griggs because that case
involved the duty owed by an insurer to defend an insured. 88 N.J. at 355. Here,
defendants were the medical defendants' insurance broker, not their insurer.
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Moreover, the trial court violated public policy because it improperly expanded
the duty of good faith imposed on the insurer in Griggs to include all claims for
breach of fiduciary duty or negligence.
Defendants also assert the trial court misapplied the law when it found the
settlement agreement sufficient to establish the damages needed to proceed with
the broker malpractice claim. The agreement concerned plaintiffs' damages due
to the medical defendants' conduct, not defendants' acts or omissions. Instead,
the court should have determined whether the medical defendants sustained
damages caused by defendants' breach of duty, not whether plaintiffs sustained
damages. The settlement agreement did not contain an assertion that medical
defendants suffered any damages, which is essential to establishing the broker
malpractice claim.
Defendants claim the medical defendants colluded with plaintiffs to avoid
exposure. However, by doing so, they violated defendants' due process rights
because they avoided establishing the medical defendants' liability, which is a
prerequisite to proving the broker malpractice claim against defendants. The
settlement agreement violated the Comparative Negligence Act, N.J.S.A.
2A:15-5.2, and the Joint Tortfeasors Contribution Law, N.J.S.A. 2A:53A-3,
which were "enacted to promote the fair sharing of the burden of judgment by
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joint tortfeasors and to prevent a plaintiff from arbitrarily selecting [their]
victim." Holloway v. State, 125 N.J. 386, 400-01 (1991).
II.
N.J.S.A. 2A:25-1 permits the assignment of tort claims arising out of
contracts. However, the assignment of other forms of tort claims prior to a
judgment, including professional malpractice claims, has historically been
considered invalid under New Jersey law. Conopco, Inc. v. McCreadie, 826
F.Supp. 855, 867 (D.N.J. 1993); see also DiTolvo v. DiTolvo, 131 N.J. Super.
72, 79 (App. Div. 1974) (noting the absence of a statute permitting the
assignment of a tort claim); Costanzo v. Costanzo, 248 N.J. Super. 116, 121
(Law Div. 1991) (holding "in New Jersey, as a matter of public policy, a tort
claim cannot be assigned").
Defendants were not party to the settlement agreement. The fact that the
settlement agreement was entered as a judgment by the court did not overcome
that defendants did not agree to the settlement. The trial court misapplied the
law because the medical defendants could not assign their professional
negligence claim to plaintiffs.
The trial court also erred when it analogized this matter to Griggs. As
defendants aptly point out, Griggs has nothing to do with the facts of this case,
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and its legal principles are inapplicable. There, the issue was whether an insurer,
which failed to notify its insured of the possibility of noncoverage, was estopped
from denying coverage of a claim against its insured. Griggs, 88 N.J. at 355.
Our Supreme Court held an insurer could be estopped from denying coverage,
despite clear contractual language excluding the claim from coverage, where the
insurer undertakes a defense knowing there is a basis for noncoverage without
reserving its rights to deny coverage later. Id. at 355-56. The Court held an
insurer has an obligation to deal in good faith with its insured both by
investigating a claim within a reasonable time, and through its duty of fair and
full disclosure between it and the insured. Id. at 360-61.
Defendants' relationship, and in turn their obligations to the medical
defendants, was entirely different. An insurance broker acts as a fiduciary to
the client. Holm v. Purdy, 252 N.J. 384, 404 (2022). The broker has "a duty to
advise insureds of their coverage needs where the insurer is aware of a particular
peril." Sears Mortg. Corp. v. Rose, 134 N.J. 326, 348 (1993). A "broker's duties
are . . . '(1) to procure the insurance; (2) to secure a policy that is neither void
nor materially deficient; and (3) to provide the coverage [they] undertook to
supply.'" Holm, 252 N.J. at 405 (quoting President v. Jenkins, 180 N.J. 550,
569 (2004)).
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Brokers "have a limited duty to a third party who is not the insured, but
who has nonetheless suffered harm by virtue of the broker's act or omission. "
Ibid. "If an agent or broker fails to exercise the requisite skill and diligence
when fulfilling those obligations, then there is a breach in the duty of care, and
liability arises." Ibid. "[T]he plaintiff must prove that in addition to being
negligent, the broker's negligence was a proximate cause of the loss." Harbor
Commuter Serv., Inc. v. Frenkel & Co., 401 N.J. Super. 354, 368 (App. Div.
2008); Regino v. Aetna Cas. & Sur. Co., 200 N.J. Super. 94, 99 (App. Div.
1985). There must also be "actual damages." Polzo v. Cnty. of Essex, 196 N.J.
569, 584 (2008).
The facts in the summary judgment record showed none of these legal
precepts were met. Rather, the medical defendants assigned their rights to
pursue a broker malpractice claim against defendants to plaintiffs without any
evidence the medical defendants suffered a loss or had actual damages due to
defendants' acts or omissions. This critical, missing component was fatal to
plaintiffs' claims against defendant and should have resulted in summary
judgment in defendants' favor and dismissal of the case.
Reversed. We do not retain jurisdiction.
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