Robert Occhifinto v. Olivo Construction Co., LLC (073174)

SYLLABUS
(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interest of brevity, portions of any opinion may not have been summarized.)
Occhifinto v. Olivo Construction Company (A-77-13) (073174)
Argued January 21, 2015 -- Decided May 7, 2015
SOLOMON, J., writing for a unanimous Court.
In this appeal, the Court considers whether a party who prevailed against its carrier in a declaratory
judgment action seeking coverage and defense of the underlying liability action against it, but did not prevail in the
liability action, is a “prevailing party” entitled to recover counsel fees under Rule 4:42-9(a)(6).
Plaintiff Robert Occhifinto (Occhifinto) filed suit against defendant Robert S. Keppler Mason Contractors,
LLC (Keppler) and others seeking damages for alleged defective construction of an addition to his warehouse (the
liability action). In the liability action, Keppler was defended by its insurance carrier, Mercer Mutual Insurance
Company (Mercer), under a reservation-of-rights agreement. Before trial in the liability action, Mercer filed an
action for a declaratory judgment challenging its obligation to provide coverage and to defend Keppler in the
liability action. Occhifinto, on Keppler’s behalf, contested the claims raised by Mercer, and filed counterclaims
asserting that Mercer had a duty to defend and indemnify Keppler under the policy, and that Mercer was obligated
for the counsel fees incurred in defending the declaratory judgment action.
In the declaratory judgment action, the parties filed cross-motions for summary judgment on the insurance
coverage question. The trial court held that Mercer was required to indemnify Keppler for damages covered by the
insurance policy. The court therefore denied Mercer’s motion for summary judgment and granted partial summary
judgment to Occhifinto, reserving the claim for counsel fees until conclusion of the liability action.
The liability action proceeded, and Occhifinto did not prevail. After trial, Occhifinto sought to recover
counsel fees from Mercer pursuant to Rule 4:42-9(a)(6), which authorizes an award of counsel fees in “an action
upon a liability or indemnity policy of insurance in favor of a successful claimant.” The trial court denied
Occhifinto’s motion, holding that he was not a successful claimant in the liability action because he was not entitled
to indemnity coverage in the liability action. In an unpublished opinion, the Appellate Division affirmed that
determination.
The Court granted the petition for certification filed by Occhifinto limited to the issue of Occhifinto’s right
to counsel fees under Rule 4:42-9(a)(6). 217 N.J. 291 (2014).
HELD: Occhifinto was a successful claimant entitled to counsel fees under Rule 4:42-9(a)(6). In the declaratory
judgment action, the trial court properly concluded that Mercer would be required to indemnify Keppler in the event
Keppler was found liable, and therefore determined that the liability action alleged claims that, if proven, would fall
within the coverage of Keppler’s liability policy with Mercer. That determination had the practical effect of
enforcing Mercer’s duty to defend. By forcing Mercer to defend the liability action, Occhifinto obtained a favorable
adjudication on the merits on a coverage question as the result of the expenditure of counsel fees, rendering
Occhifinto a successful claimant under Rule 4:42-9(a)(6).
1. Notwithstanding the strong public policy in New Jersey against shifting of costs, counsel fees may be awarded in
certain circumstances, including those described in Rule 4:42-9(a)(6), authorizing fee shifting in “an action upon a
liability or indemnity policy of insurance, in favor of a successful claimant.” This provision discourages insurance
companies from attempting to avoid their contractual obligations and thereby forcing their insureds to expend
counsel fees to obtain coverage that they are entitled to receive. (pp. 7-8).
2. The term “successful claimant” is broadly defined as a party that succeeds on any significant issue in litigation
which achieves some benefit the parties sought in bringing suit. A party who obtains a favorable adjudication on the
merits on a coverage question as the result of the expenditure of counsel fees is a successful claimant under Rule
4:42-9(a)(6). A successful claimant under Rule 4:42-9(a)(6) may include a party in a negligence action who, like
plaintiff, is a third-party beneficiary of a liability insurance policy and litigates a coverage question against a
defendant’s insurance carrier. (pp. 9-10).
3. Having determined that a successful claimant under Rule 4:42-9(a)(6) is one who obtains a favorable
adjudication on the merits on a coverage question as the result of the expenditure of counsel fees, the Court next
considers whether the duty to defend is a coverage question. The duty to defend is a “coverage question” if the
complaint alleges claims that would, if proven, fall within the coverage of the policy. As the Court explained in
Schmidt v. Smith, 294 N.J. Super. 569, 591 (App. Div. 1996), aff’d 155 N.J. 44 (1998), a party who confirms an
insurance carrier’s duty to defend qualifies as a successful claimant even if there is no award of damages in the
liability action such as would trigger the carrier’s duty to indemnify. (pp. 10-13).
4. Although an award of counsel fees under Rule 4:42-9(a)(6) involves the exercise of sound discretion by the trial
court, the ruling by the trial court in this matter was based upon a mistaken interpretation of the meaning of
“successful claimant” under Rule 4:42-9(a)(6) rather than an exercise of discretion. As an interpretation of the law,
the trial court’s judgment is not entitled to deference. (p. 13).
5. In the declaratory action brought by Mercer seeking to disclaim coverage, the trial court granted Occhifinto’s
motion for summary judgment, holding that Mercer would be required to indemnify Keppler in the event Keppler
was found liable. Although not expressly referencing Mercer’s duty to defend Keppler, the trial court properly
concluded that the complaint in the liability action alleged claims that, if proven, would fall within the coverage of
the policy. The trial court’s determination that Mercer may have a duty to indemnify Keppler had the practical effect
of enforcing Mercer’s duty to defend. Consequently, Occhifinto succeeded in the declaratory judgment action by
forcing Mercer to continue to defend Keppler in the liability action. Based thereon, Occhifinto obtained a favorable
adjudication on the merits on a coverage question as the result of the expenditure of counsel fees, and was therefore
a successful claimant under Rule 4:42-9(a)(6). (pp. 14-16).
The judgment of the Appellate Division is REVERSED and the matter is REMANDED to the trial court
for determination of the amount of counsel fees which Occhifinto is entitled to recover as a successful claimant
under Rule 4:42-9(a)(6) consistent with this opinion.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, PATTERSON, and FERNANDEZ-
VINA; and JUDGE CUFF (temporarily assigned) join in JUSTICE SOLOMON’s opinion.
2
SUPREME COURT OF NEW JERSEY
A-77 September Term 2013
073174
ROBERT OCCHIFINTO and NVE,
INC.,
Plaintiffs-Appellants,
v.
OLIVO CONSTRUCTION CO., LLC,
MARTIN OLIVO, HOUGHTON,
QUARTY & WARR, LLC, WW
CONSTRUCTION AND MASONRY STAR
BUILDING SYSTEMS, ANDRES F.
ANDERSEN ASSOCIATES, INC.,
DIAMOND SAND AND GRAVEL CO.,
INC., ANTUL N. SHAH, P.E.,
ANS CONSULTANTS, INC., and
BARDO COX & MILLER, INC.,
Defendants,
and
ROBERT S. KEPPLER MASON
CONTRACTORS, LLC, a/k/a
ROBERT S. KEPPLER CONCRETE
CONSTRUCTION, LLC, and MERCER
MUTUAL INSURANCE CO.,
Defendants-Respondents.
Argued January 21, 2015 – Decided May 7, 2015
On certification to the Superior Court,
Appellate Division.
Dennis T. Smith argued the cause for
appellants (Pashman Stein, attorneys).
Michael L. Testa, Sr., argued the cause for
respondent Mercer Mutual Insurance Company
1
of New Jersey (Testa Heck Scrocca & Testa,
attorneys; Justin R. White, on the brief).
Gregory J. Irwin submitted a brief on behalf
of respondent Robert S. Keppler Mason
Contractors, LLC a/k/a Robert S. Keppler
Concrete Construction, LLC (Harwood Lloyd,
attorneys).
JUSTICE SOLOMON delivered the opinion of the Court.
Plaintiff Robert Occhifinto (Occhifinto) brought an action
for damages against defendant Robert S. Keppler Mason
Contractors, LLC (Keppler), and other entities responsible for
the construction of an addition to his manufacturing warehouse
(liability action). Occhifinto alleged that defendants’
negligence caused the addition’s concrete floor to fracture and
fail. In the liability action, Keppler was defended by its
insurance carrier, Mercer Mutual Insurance Company (Mercer),
under a reservation-of-rights agreement. Before trial in the
liability action, Mercer filed a complaint challenging its
obligation to provide coverage and to defend Keppler, which
Occhifinto opposed on Keppler’s behalf. The trial court found
that Mercer was required to indemnify Keppler for damages
assessed that were covered by the insurance policy.
The liability action proceeded to trial, and the jury found
that Keppler breached its duty of care but did not proximately
cause the failure of the warehouse floor and, therefore, awarded
no damages against Keppler. After trial, Occhifinto moved to
2
collect counsel fees from Mercer pursuant to Rule 4:42-9(a)(6),
which authorizes trial courts to award counsel fees in “an
action upon a liability or indemnity policy of insurance in
favor of a successful claimant.” The trial court denied
Occhifinto’s motion, holding that he was not a successful
claimant because Keppler was not found liable for damages in the
liability action.
We conclude that plaintiff was “a successful claimant”
entitled to counsel fees under Rule 4:42-9(a)(6), and therefore
reverse the judgment of the Appellate Division.
I.
The following facts are undisputed for the purpose of this
appeal. Occhifinto sought to expand the nutritional supplement
factory he owned and operated by constructing more manufacturing
and storage space. He hired Olivo Construction Co., LLC (Olivo)
as the general contractor for the expansion. Olivo hired
Keppler as the masonry subcontractor. Keppler’s primary
responsibility under the subcontract was to pour the
manufacturing building’s second-story concrete floor. Several
months after completion of the expansion, the second-story floor
began to fracture, rendering the building unsafe for occupancy.
Subsequently, Occhifinto filed a complaint alleging negligence,
3
among other things, against Keppler and the other entities
involved with the construction.1
Keppler held a general liability insurance policy issued by
Mercer, which covered property damage to third parties resulting
from an “occurrence” or accident. The policy excluded from
coverage damages resulting from “a failure to perform an
agreement or contract in accordance with its terms”; and
“property damage caused, to any extent, by [Keppler’s] products
or [Keppler’s] work or any part of such.” Mercer initially
agreed to provide Keppler with a legal defense but reserved the
right to disclaim coverage.
In an effort to disclaim coverage Mercer filed a
declaratory judgment action before the liability action
commenced. Mercer asserted that it had no duty to defend or
indemnify Keppler against Occhifinto’s claims because the
alleged damages fell outside of the policy’s coverage.
Occhifinto defended the declaratory judgment action on behalf of
Keppler and filed a counterclaim asserting that (1) Mercer had a
duty to defend and indemnify Keppler under the policy, and that
(2) Mercer was required to pay the counsel fees incurred
defending the declaratory judgment action.
1 Occhifinto’s complaint also alleged breach of contract, breach
of warranties, and other related claims which are not relevant
to this decision.
4
The parties filed cross motions for summary judgment on the
insurance coverage question. Mercer also requested an
adjournment of the liability action pending resolution of the
declaratory judgment action on coverage. The trial court denied
Mercer’s summary judgment motion and partially granted
Occhifinto’s, reserving the claim for counsel fees until the
conclusion of the liability action. In his decision the trial
judge stated, “I am satisfied that with regard to the proofs
that have been presented on this application, that there is
coverage under the policy.” The judge then determined “that
there is a duty to provide indemnification in the event that
there is a finding of liability at trial.” Finally, the judge
denied Mercer’s request for an adjournment, and consolidated
Occhifinto’s claim for counsel fees in the declaratory judgment
action with the liability action.
At the conclusion of the liability trial, the jury found
Keppler not liable, determining Keppler had breached its duty of
care to Occhifinto but the breach was not a proximate cause of
Occhifinto’s damages. Thereafter, Occhifinto moved pursuant to
Rule 4:42-9(a)(6) to recover counsel fees incurred defending
Keppler in Mercer’s declaratory judgment action. The court
denied the motion because the jury found Keppler was not liable.
The court reasoned that Occhifinto was not a “successful
5
claimant” because success under the rule “is contingent upon the
securing of indemnity coverage.”
The Appellate Division affirmed in an unpublished opinion.
We granted certification limited to the issue of Occhifinto’s
right to counsel fees under Rule 4:42-9(a)(6). Occhifinto v.
Olivo Constr. Co., LLC, 217 N.J. 291 (2014).
II.
Occhifinto contends he is a “successful claimant” under
Rule 4:42-9(a)(6) because the trial court required Mercer to
defend and, if necessary, indemnify Keppler. In addition, he
argues that no deference is owed to the trial court’s decision
because it was predicated upon a misconception of controlling
legal principles, not upon an exercise of its discretion.
Mercer counters that to be a “successful claimant” under
Rule 4:42-9(a)(6), Occhifinto was required to prevail in the
liability action. Thus, Mercer maintains that the trial court
applied the correct legal standard governing the award of
counsel fees under Rule 4:42-9(a)(6). Mercer also asserts that
it provided a defense to Keppler under a reservation of rights
agreement; thus, the only issue decided by the declaratory
judgment action was whether Mercer was contractually obligated
to indemnify Keppler against the types of claims alleged in
Occhifinto’s complaint. Accordingly, Mercer claims the duty to
6
defend was never at issue, and Occhifinto must show he succeeded
in securing indemnity coverage to be a “successful claimant.”
III.
A.
Resolution of the present issue requires an understanding
of New Jersey’s policy regarding fee shifting, which is the
award of counsel fees to a successful party. New Jersey courts
“have traditionally adhered to the American Rule as the
principle that governs the allocation of attorneys’ fees.”
Walker v. Giuffre, 209 N.J. 124, 127 (2012). The American Rule
“‘prohibits recovery of counsel fees by the prevailing party
against the losing party.’” In re Estate of Vayda, 184 N.J.
115, 120 (2005) (quoting In re Niles Trust, 176 N.J. 282, 294
(2003)). Thus, litigants typically bear the cost of their own
legal representation. Ibid. “The purposes behind the American
Rule are threefold: (1) unrestricted access to the courts for
all persons; (2) ensuring equity by not penalizing persons for
exercising their right to litigate a dispute, even if they lose;
and (3) administrative convenience.” Niles Trust, supra, 176
N.J. at 294.
Notwithstanding New Jersey’s “‘strong public policy against
the shifting of costs,’” counsel fees may be awarded in certain
7
circumstances.2 Litton Indus., Inc. v. IMO Indus., Inc., 200
N.J. 372, 404-05 (2009) (quoting Vayda, supra, 184 N.J. at 120).
A goal of fee shifting is to discourage parties from using the
costs of litigation to gain an advantage over their opponent.
See Niles Trust, supra, 176 N.J. at 299-300; In re Estate of
Lash, 169 N.J. 20, 26 (2001). Here, Occhifinto’s fee-shifting
claim is based on Rule 4:42-9(a), which authorizes fee shifting
in eight specific circumstances,3 including “an action upon a
liability or indemnity policy of insurance in favor of a
2 The award of counsel fees to the successful litigant is allowed
by statute, court rule, contract terms, and equitable
principles. With some variance, this approach is adopted by most
jurisdictions. See generally John F. Vargo, The American Rule
on Attorney Fee Allocation: The Injured Person’s Access to
Justice, 42 Am. L. Rev. 1567, 1578-88 (1993); see also Trope v.
Katz, 902 P.2d 259, 262-63 (Cal. 1995); Schoonmaker v. Lawrence
Brunoli, Inc., 828 A.2d 64, 94 (Conn. 2003); Goodrich v. E.F.
Hutton Grp., 681 A.2d 1039, 1043-44 (Del. 1996); Preferred Mut.
Ins. Co. v. Gamache, 686 N.E.2d 989, 991 (Mass. 1997); Baker v.
Health Mgmt. Sys., 772 N.E.2d 1099, 1104 (N.Y. 2002); State ex
rel. Doe v. Smith, 914 N.E.2d 159, 165, reconsideration denied,
914 N.E.2d 1256 (Ohio 2009); McMullen v. Kutz, 985 A.2d 769, 775
(Pa. 2009).
3 The eight circumstances are
family actions when permitted under Rule 5:3-
5(c); out of a fund in court; in certain
probate actions; in mortgage foreclosure
actions; in tax certificate foreclosure
actions; in actions upon a liability or
indemnity insurance policy; as otherwise
expressly allowed by the Rules of Court; and
in all cases where statutorily allowed.
[Litton, supra, 200 N.J. at 405 (citing R.
4:42-9(a)(1) to (8).]
8
successful claimant.” R. 4:42-9(a)(6). Fee shifting under Rule
4:42-9(a)(6) discourages insurance companies from attempting to
avoid their contractual obligations and force their insureds to
expend counsel fees to establish the coverage for which they
have already contracted. Sears Mortg. Corp. v. Rose, 134 N.J.
326, 356 (1993); Guarantee Ins. Co. v. Saltman, 217 N.J. Super.
604, 610 (App. Div.), certif. denied, 109 N.J. 484 (1987);
Kistler v. N.J. Mfrs. Ins. Co., 172 N.J. Super. 324, 329-30
(App. Div. 1980).
The term successful claimant is broadly defined as a party
that “‘succeed[s] on any significant issue in litigation which
achieves some benefit the parties sought in bringing suit.’”
R.M. v. Supreme Court of New Jersey, 190 N.J. 1, 10 (2007)
(quoting Hensley v. Eckerhart, 461 U.S. 424, 433, 103 S. Ct.
1933, 1939, 76 L. Ed. 40, 50 (1983)). A party who “obtain[s] a
favorable adjudication on the merits on a coverage question as
the result of the expenditure of [counsel] fees,” is a
successful claimant under Rule 4:42-9(a)(6). Transamerica Ins.
Co. v. Nat’l Roofing Inc., 108 N.J. 59, 63 (1987).
A successful claimant under Rule 4:42-9(a)(6) may include a
party in a negligence action who, like plaintiff, is a third-
party beneficiary of a liability insurance policy and litigates
a coverage question against a defendant’s insurance carrier.
See Sears, supra, 134 N.J. at 355; Myron Corp. v. Atl. Mut. Ins.
9
Corp., 407 N.J. Super. 302, 311 (App. Div. 2009), aff’d o.b.,
203 N.J. 537 (2010). We authorize trial courts to award counsel
fees in favor of third-party beneficiaries of insurance
contracts because “an insurer’s refusal to provide liability
coverage may also, as a practical matter, preclude an innocent
injured party from being able to recover for the injury.” Id.
at 311.
B.
Having determined that a successful claimant under Rule
4:42-9(a)(6) is one who “obtain[s] a favorable adjudication on
the merits on a coverage question as the result of the
expenditure of [counsel] fees,” Transamerica, supra, 108 N.J. at
63, we must next determine whether the duty to defend is a
coverage question. We have held that the duty to defend is a
“coverage question” if the complaint alleges claims that would,
if proven, fall under the policy. Voorhees v. Preferred Mut.
Ins. Co., 128 N.J. 165, 173-74 (1992).
In Schmidt v. Smith, 294 N.J. Super. 569, 591 (App. Div.
1996), aff’d, 155 N.J. 44 (1998), the Appellate Division
considered the meaning of “success” in a declaratory judgment
action and concluded that a party who confirms an insurance
carrier’s duty to defend qualifies as a successful claimant even
if there is no award of damages requiring indemnification. The
plaintiff in Schmidt filed a complaint against her manager and
10
his employer, alleging sexual harassment, hostile work
environment, assault, assault and battery, intentional
infliction of emotional distress, and negligent infliction of
emotional distress. Schmidt, supra, 294 N.J. Super. at 574.
The employer’s liability insurance carrier refused to defend
either the employer or the manager, asserting that the claims
against them resulted from intentional conduct, which was
excluded under the policy. Ibid. The employer filed a
declaratory judgment action against its liability insurance
carrier seeking reimbursement for the counsel fees and costs
incurred defending the liability action on its own behalf and on
behalf of its manager. Ibid.The trial court stayed the declaratory judgment action
pending completion of the liability trial, after which the jury
found for the plaintiff. Id. at 574-75. In answers to special
interrogatories, the jury found that both the employer and the
manager were liable for claims of sexual harassment and hostile
work environment, and that the manager was individually liable
for assault, assault and battery, and intentional infliction of
emotional distress. Ibid.In the declaratory judgment action, the trial court held
that the employer was entitled to indemnification on the claims
of sexual harassment and hostile work environment because the
plaintiff did not show that the employer’s actions were
11
intentional. Id. at 584. However, the court determined that
the manager was not entitled to indemnification because the acts
for which he was found liable resulted from intentional conduct.
Id. at 588. Nevertheless, the trial court found the insurance
carrier had a duty to defend the employer and the manager, and
both were entitled to reimbursement for counsel fees and costs
incurred defending the action. Id. at 589.
On appeal, the Appellate Division correctly applied this
Court’s holding in Voorhees, supra, 128 N.J. at 173, that an
insurer’s duty to defend is determined by the nature of the
claims alleged in the complaint and not the merits of those
claims. The appellate court held that, where an insured or a
third-party beneficiary of an insurance policy has established
the carrier’s duty to defend, counsel fees are recoverable
regardless of the liability determination in the underlying
case. Schmidt, supra, 294 N.J. Super. at 591; accord Pressler &
Verniero, Current N.J. Court Rules, comment 2.6 on R. 4:42-9 at
1807 (2015) (“[A]n insured entitled to a defense under the
policy is entitled to an award of attorney’s fees for the
defense even if he is later determined not to be entitled to
indemnification.”).
In affirming the Appellate Division, we explicitly adopted
the approach taken in Schmidt, supra, 294 N.J. Super. at 591,
that a party to a declaratory judgment action qualifies as a
12
successful claimant when the insurance carrier’s duty to defend
is proven, even if there is no duty to indemnify. Schmidt v.
Smith, 155 N.J. 44, 53 (1998) (“We affirm the conclusions of the
Appellate Division relating to [the insurance carrier’s]
liability for the defense costs incurred by [the claimants].”).
C.
We acknowledge that the award of counsel fees under Rule
4:42-9(a)(6) involves the exercise of sound discretion by the
trial court. Passaic Valley Sewerage Comm’rs v. St. Paul Fire &
Marine Ins. Co., 206 N.J. 596, 619 (2011) (holding trial courts
have “broad discretion as to when, where, and under what
circumstances counsel fees may be proper and the amount to be
awarded”). However, the trial court in this instance denied
Occhifinto’s motion based upon the assumption that success under
Rule 4:42-9(a)(6) “is contingent upon the securing of indemnity
coverage.” The court’s ruling was therefore based upon its
mistaken interpretation of the meaning of “successful claimant”
under Rule 4:42-9(a)(6) rather than an exercise of its
discretion. As an interpretation of law the trial court’s
judgment is not entitled to deference; we review legal
determinations based on an interpretation of our court rules de
novo. State ex rel. A.B., 219 N.J. 542, 554-55 (2014); Myron,
supra, 407 N.J. Super. at 309.
IV.
13
With those principles in mind, we consider the declaratory
judgment action filed by Mercer. Mercer’s complaint explicitly
denied “a duty to defend and/or indemnify [Keppler] for any and
all acts complained of by [plaintiff],” and asked the trial
court to “declare that plaintiff Mercer does not owe a duty to
defend and/or indemnify” Keppler. Mercer also sought to have
the trial date adjourned in the event its motion for summary
judgment was successful.4
Mercer’s attempt to disclaim coverage by filing a
declaratory judgment action forced Occhifinto -- a third-party
beneficiary of Keppler’s liability insurance policy -- to defend
so that, if successful in the underlying liability action, he
would be able to recover damages awarded against Keppler.
The trial court granted Occhifinto’s summary judgment
motion without mentioning Mercer’s duty to defend Keppler.
However, the court held that Mercer would be required to
indemnify Keppler in the event Keppler was found liable. The
trial court thus concluded that the complaint alleged claims
that would, if proven, fall under Keppler’s policy with Mercer.
See Voorhees, supra, 128 N.J. at 173. That conclusion finds
4 Mercer’s contention that it did not contest its duty to
defend Keppler is inconsistent with Mercer’s request for an
adjournment of the trial contained in its motion for summary
judgment; the adjournment request’s obvious design was to
provide Keppler with an opportunity to obtain substitute counsel
in the event that Mercer’s motion was granted.
14
support in this record based upon our independent review of the
pleadings and we see no basis for its disturbance. The trial
court’s additional determination that Mercer may have a duty to
indemnify Keppler had the practical result of enforcing Mercer’s
duty to defend. Occhifinto thus succeeded in the declaratory
judgment action by forcing Mercer to continue to defend Keppler
in the liability action.
By forcing Mercer to defend Keppler in the liability action
Occhifinto “obtain[ed] a favorable adjudication on the merits on
a coverage question as the result of the expenditure of
[counsel] fees.” Transamerica, supra, 108 N.J. at 63. Thus,
Occhifinto was a successful claimant under Rule 4:42-9(a)(6).
See ibid. This conclusion is consistent with the policy goals
we articulated in Sears, supra, that Rule 4:42-9(a)(6) seeks to
discourage insurance companies from filing declaratory judgment
actions to avoid their contractual obligations to provide the
coverage for which their insureds have contracted. 134 N.J. at
356; see also Guarantee Ins., supra, 217 N.J. Super. at 610.
V.
Because the trial court concluded in the declaratory
judgment action that the complaint filed in the liability action
alleged claims that would, if proven, fall under Keppler’s
liability insurance policy with Mercer, thereby enforcing
Mercer’s duty to defend, Occhifinto was a successful claimant
15
entitled to counsel fees pursuant to Rule 4:42-9(a)(6).5 We
therefore reverse the judgment of the Appellate Division and
remand the matter to the trial court for a determination of the
amount of counsel fees to be awarded to Occhifinto.
CHIEF JUSTICE RABNER; JUSTICES LaVECCHIA, ALBIN, PATTERSON,
and FERNANDEZ-VINA; and JUDGE CUFF (temporarily assigned) join
in JUSTICE SOLOMON’s opinion.
5 Although we held in Passaic Valley, supra, 206 N.J. at 619,
that the award of counsel fees under Rule 4:42-9(a)(6) “is not
mandatory” and that trial courts should award counsel fees based
on the “totality of the circumstances,” the decision not to
award counsel fees here was based on a misapprehension of the
law. Further, none of the factors militating against the award
of counsel fees in Passaic Valley are present here.
16
SUPREME COURT OF NEW JERSEY
NO. A-77 SEPTEMBER TERM 2013
ON CERTIFICATION TO Appellate Division, Superior Court
ROBERT OCCHIFINTO and NVE INC.,
Plaintiffs-Appellants,
v.
OLIVO CONSTRUCTION CO., LLC,
MARTIN OLIVO, HOUGHTON, QUARTY
& WARR, LLC, WW CONSTRUCTION AND
MASONRY STAR BUILDING SYSTEMS,
ANDRES F. ANDERSON ASSOCIATES, INC.,
DIAMOND SAND AND GRAVEL CO., INC.,
ANTUL N. SHAH, P.E., ANS CONSULTANTS, INC.,
and BARDO COX & MILLER, INC.,
Defendants,
and
ROBERT S. KEPPLER MASON CONTRACTORS, LLC,
a/k/a ROBERT S. KEPPLER CONCRETE CONSTRUCTION, LLC,
and MERCER MUTUAL INSURANCE CO.,
Defendants-Respondents.
DECIDED May 7, 2015
Chief Justice Rabner PRESIDING
OPINION BY Justice Solomon
CONCURRING/DISSENTING OPINIONS BY
DISSENTING OPINION BY
REVERSE AND
CHECKLIST
REMAND
CHIEF JUSTICE RABNER X
JUSTICE LaVECCHIA X
JUSTICE ALBIN X
JUSTICE PATTERSON X
JUSTICE FERNANDEZ-VINA X
JUSTICE SOLOMON X
JUDGE CUFF (t/a) X
TOTALS 7