GANGULY'S TAEKWONDO ACADEMY, INC., ETC., VS. JAL INSURANCE SERVICES (L-1979-18, MONMOUTH COUNTY AND STATEWIDE)

NOT FOR PUBLICATION WITHOUT THE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-4469-18T3
GANGULY'S TAEKWONDO
ACADEMY, INC., d/b/a
GANGULY'S MIXED
MARTIAL ARTS,
Plaintiff-Appellant,
v.
JAL INSURANCE SERVICES,
Defendant-Respondent,
and
JOHN A. LOMBARDO,
Defendant.
___________________________
Submitted June 2, 2020 – Decided July 10, 2020
Before Judges Yannotti and Hoffman.
On appeal from the Superior Court of New Jersey, Law
Division, Monmouth County, Docket No. L-1979-18.
Stuart P. Schlem, attorney for appellant.
Lydecker Diaz, attorneys for respondent (Robert J.
Pariser, of counsel and on the brief; Michael Ian
Goldman, on the brief).
PER CURIAM
Plaintiff appeals from an order entered by the trial court on May 10, 2019,
which dismissed its complaint for failure to comply with the Affidavit of Merit
(AOM) statute, N.J.S.A. 2A:53A-26 to -29. We affirm.
I.
In June 2018, plaintiff filed a complaint against JAL Insurance Services,
Inc. (JAL).1 According to the complaint, plaintiff operates a martial arts
academy in Ocean Township, New Jersey. Plaintiff alleges that under the terms
of its lease, it is responsible for maintaining the interior plumbing of the
premises. In May 2010, plaintiff applied for insurance through defendant, which
is a risk management firm.
Plaintiff claims that when it applied for the insurance, its President, B.J.
Ganguly, was aware that plaintiff had to obtain insurance covering the contents
of its premises because friends and acquaintances suffered damage to their
1
Plaintiff also named John A. Lombardo, President and principal shareholder
of JAL, as a defendant. Plaintiff later dismissed all claims against Lombardo.
Therefore, in this opinion, any reference to defendant is a reference to JAL.
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businesses due to Hurricane Katrina. Mr. Ganguly allegedly made these
concerns known to defendant's representatives.
On June 24, 2010, General Insurance Company of America (GICA) issued
an insurance policy to plaintiff. Plaintiff claims that Mr. Ganguly believed the
policy provided coverage for damage to the premises and business property. The
GICA policy was renewed each year thereafter. On October 29, 2012,
Superstorm Sandy struck New Jersey, including the area along the New Jersey
shore where plaintiff's business is located. Plaintiff claims that after the storm,
Mr. Ganguly again informed defendant's representatives that plaintiff needed
coverage for property damage.
Plaintiff alleges that on May 10, 2017, it renewed the GICA policy
through JAL. Plaintiff further alleges that on December 30, 2018, a pipe burst
in the bathroom of its leased premises, which caused damage to the premises
and business personal property. Plaintiff submitted a claim to GICA; however,
GICA informed plaintiff that the policy did not cover plaintiff's business
property.
Plaintiff alleges that defendant owed it a duty to provide accurate advice
and information regarding the available insurance, and to procure policies with
the coverages that plaintiff had requested. Plaintiff claims defendant breached
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that duty by failing to obtain for plaintiff a policy containing insurance coverage
for its business personal property. It also claims defendant breached that duty
by failing to review the GICA policy to ensure the policy included the coverages
it requested.
Plaintiff further alleges defendant owed it a duty to provide it with options
for suitable insurance coverage for its premises and business personal property.
It claims defendant knew or should have known that such coverage was available
in the insurance marketplace. Plaintiff claims defendant breached this duty by
failing to provide options for suitable coverage and advising plaintiff to seek
such coverage.
In addition, plaintiff claims defendant knew or should have known the
GICA policy did not provide insurance coverage for plaintiff's premises and
business personal property. It alleges defendant had a duty to inform plaintiff
that its policy did not contain such coverage, which Mr. Ganguly told
defendant's representatives he needed. Plaintiff alleges that, as a result of
defendant's breach of this duty, the GICA policy did not provide insurance
coverage for damage to its premises and business personal property.
With its complaint, plaintiff served defendant with an AOM executed by
David H. Paige. In the AOM, Paige stated he was a licensed insurance broker
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in the States of New York and New Jersey. He said he previously "operated
regional and national insurance brokerages with offices in New York and New
Jersey . . . ." He stated that he was "familiar" with the placement of the type of
insurance relevant to this action. He also stated he was licensed to practice law
in the State of New York.
Paige further stated he was "familiar with the placement of insurance, the
reasonable provision of advice and counseling to clients (including [advice]
concerning the type of insurance at issue in this case), and brokers' roles
regarding the placement of insurance for businesses in New York and in New
Jersey . . . ." He asserted that his familiarity with the placement of insurance
was based on his personal experience as an executive officer of several insurance
brokerage firms.
Paige also stated that he had obtained experience and knowledge relevant
to plaintiff's claims as a result of his work "by and for" insurance brokerages as
an attorney and a member of the board of an entity called Professional Insurance
Agents of New York and New Jersey. He said he wrote numerous articles about
errors and omission issues that appeared in a publication called Professional
Insurance Agency.
Paige also said he had reviewed the complaint. He asserted that
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[b]ased on [his] understanding of the facts alleged in
the [c]omplaint, and assuming that the allegations of
the [c]omplaint are accurate and true, and based upon
[his] knowledge and expertise in the field of insurance,
there exists a reasonable probability that the care, skill
or knowledge exercised or exhibited by [d]efendant[] in
the practice of insurance brokerage that is the subject
of the complaint fell outside of the acceptable
professional or occupational standards or practices for
professional insurance brokers in the State of New
Jersey.
Defendant filed its answer on August 22, 2018, and thereafter served
plaintiff with a demand for answers to interrogatories and a notice to produce
documents. On January 21, 2019, plaintiff produced an email from an employee
of defendant, who stated that defendant had always offered plaintiff the option
to add coverage for property to its policy. However, plaintiff denies defendant
ever said it did not have such coverage or offered such coverage.
On October 23, 2018, an employee of the court conducted a case
management conference, pursuant to Ferreira v. Rancocas Orthopedic
Associates, 178 N.J. 144, 154-55 (2003). During the conference, defendant's
attorney objected to Paige's AOM on the ground that Paige was not a licensed
insurance producer. Counsel asserted that records obtained from state agencies
in New Jersey and New York indicated that Paige's licenses had expired several
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years earlier. Plaintiff's attorney maintained that Paige's AOM met the
requirements of the AOM statute.
The court employee adjourned the case management conference to afford
the parties an opportunity to resolve the dispute concerning the AOM. The
parties thereafter informed the court employee they were not able to resolve the
dispute. The court employee told the parties he would inform the judge assigned
to the case of the dispute concerning the validity of the AOM. The court did not
schedule another case management conference to address the issue, and plaintiff
did not serve another AOM.
In April 2015, defendant filed a motion to dismiss the complaint, arguing
that plaintiff had not complied with the AOM statute. Plaintiff opposed the
motion. After hearing oral argument, the judge granted defendant's motion and
dismissed the complaint with prejudice. The judge memorialized his decision
in an order dated May 10, 2019. This appeal followed.
II.
On appeal, plaintiff argues that the Law Division judge erred by
dismissing its complaint. Plaintiff contends Paige's AOM met the requirements
of the statute. He also contends dismissal of the complaint was not warranted
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because the judge did not conduct the case management conference required by
Ferreira.
The AOM statute provides in pertinent part that, in an action for
malpractice by a licensed person in his profession or occupation, the plaintiff
must provide the defendant with "an affidavit of an appropriate licensed person"
stating that "there exists a reasonable probability that the care, skill, or
knowledge exercised or exhibited in the treatment, practice or work that is the
subject of the complaint, fell outside acceptable professional or occupational
standards or treatment practices." N.J.S.A. 2A:53A-27. Under N.J.S.A.
2A:53A-26, a "licensed person" includes a person who is licensed as an
insurance producer.
The AOM is due within sixty days after defendant files its answer but may
be filed within 120 days "upon a finding of good cause." N.J.S.A. 2A:53A-27;
Burns v. Belafsky, 166 N.J. 466, 475-77 (2001) (noting that motion to extend
the deadline may be made at any point in the 120-day period). Failure to serve
the required AOM is deemed to be a "failure to state a cause of action." N.J.S.A.
2A:53A-29. A party's lack of compliance with the AOM statute ordinarily
results in the dismissal of the complaint with prejudice. Meehan v. Antonellis,
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226 N.J. 216, 228 (2016) (citing Alan J. Cornblatt, P.A. v. Barow, 153 N.J. 218,
243 (1998)).
In this case, plaintiff has asserted claims of professional negligence,
alleging defendant breached duties owed by failing to: provide accurate
information concerning possible insurance coverage, obtain the insurance
coverage requested, and inform plaintiff that its policy did not provide insurance
coverage for damage to its business property. These are claims of professional
negligence for which an AOM is required. See Triarsi v. BSC Group Servs.,
LLC, 422 N.J. Super. 104, 115-16 (App. Div. 2011) (holding that an AOM was
required for claims that insurance broker and agent breached duties to inform
the insured of impending cancellation of policy and advise how to maintain or
reinstate the policy).
As we noted previously, N.J.S.A. 2A:53A-27 requires a plaintiff asserting
a claim of professional malpractice to provide an AOM from "an appropriate
licensed person." Here, it is undisputed that at the time Paige provided the
AOM, he was not licensed in New Jersey or New York as an insurance producer
or broker. Plaintiff argues that Paige has the necessary experience in the field
of insurance brokerage and such experience satisfies the requirements of the
AOM statute. We disagree.
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N.J.S.A. 2A:53A-27 states that in medical malpractice actions, the person
executing the AOM must meet the requirements set forth in N.J.S.A. 2A:53-41.
The statute also states that:
In all other cases, the person executing the affidavit
shall be licensed in this or any other state; have
particular experience in the general area or specialty
involved in the action, as evidenced by board
certification or by devotion of the person's practice
substantially to the general area or specialty involved
in the action for a period of at least five years. The
person shall have no financial interest in the outcome
of the case under review, but this prohibition shall not
exclude the person from being an expert witness in the
case.
[N.J.S.A. 2A:53A-27.]
We have held that the person providing the AOM must possess the same
category of professional license as the defendant and satisfy the additional
criteria of having "particular expertise in the general area or specialty involved
in the action . . . ." Hill Int'l, Inc. v. Atlantic City Bd. of Ed., 438 N.J. Super.
562, 588 (App. Div. 2014) (quoting N.J.S.A. 2A:53A-27). We have observed
that "[t]he 'particular expertise' requirement is an additional, not an alternative,
essential qualification." Ibid.Plaintiff further argues that the Legislature never intended that the AOM
statute would result in the dismissal of a complaint under the circumstances
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presented in this case. In support of this contention, plaintiff notes that in
Ferreira, the Court commented that the AOM "statute was not intended to
encourage gamesmanship or a slavish adherence to form over substance."
Ferreira, 178 N.J. at 154.
However, requiring an AOM from a person who has a current, effective
license in the same profession as the defendant does not constitute a "slavish
adherence to form over substance." Ibid. The AOM statute expressly requires
the claimant to furnish an AOM from an "appropriate licensed person." N.J.S.A.
2A:53A-27. A person, like Paige, whose license as an insurance producer has
lapsed, is not an "appropriate licensed person" under the statute.
Plaintiff also contends that the trial court did not conduct the case
management conference required by Ferreira because a court employee
conducted the conference. Plaintiff notes that, at the conference, defendant's
attorney argued that Paige's AOM did not satisfy the statutory requirements. As
we have explained, the court's employee adjourned the conference to give the
parties time to resolve the dispute as to the validity of the AOM, but they were
unable to do so.
Plaintiff notes the judge did not schedule another case management
conference to address the issue, and plaintiff did not serve a new AOM from "an
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appropriate licensed person." Plaintiff contends defendant waited until the time
for filing an AOM had expired before filing their motion to dismiss. Pl aintiff
asserts this is the sort of "gamesmanship" the Ferreira Court intended to avoid.
Plaintiff's argument lacks merit. The purpose of the Ferreira conference
is for the court and the parties to raise and address issues pertaining to the
sufficiency of an AOM. A.T. v. Cohen, 231 N.J. 337, 346 (2017); Ferreira, 178
N.J. at 155. Here, the court's employee conducted the Ferreira conference on
October 23, 2018, and defendant's attorney asserted that the AOM was deficient
because Paige was not an "appropriate licensed person," as required by N.J.S.A.
2A:53A-27.
The record shows that plaintiff had until December 20, 2018, to provide
an AOM that complied with the statute but did not do so. Defendant waited
until the time for serving the AOM expired before filing its motion to dismiss.
By doing so, defendant was not engaging in the sort of "gamesmanship" the
Court in Ferreira intended to avoid.
Here, defendant gave plaintiff time in which to serve an AOM that
complied with the statute. Defendant never indicated it no longer objected to
Paige's AOM, and it never led plaintiff to believe it would not seek dismissal of
the complaint for failure to comply with the AOM statute.
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III.
Plaintiff argues that dismissal of its complaint was not warranted because
it substantially complied with N.J.S.A. 2A:53A-27. "A complaint will not be
dismissed if the plaintiff can show that he . . . substantially complied with the
statute." Ferreira, 178 N.J. at 151 (citations omitted).
The doctrine of substantial compliance applies when a party establishes
the following:
(1) the lack of prejudice to the defending party; (2) a
series of steps taken to comply with the statute
involved; (3) a general compliance with the purpose of
the statute; (4) a reasonable notice of [the plaintiff's]
claim; and (5) a reasonable explanation why there was
not strict compliance with the statute.
[Ibid. (quoting Galik v. Clara Maass Med. Ctr., 167 N.J.
341, 353, 347-48 (2001)).]
Here, the motion judge determined that plaintiff did not establish the
criteria for substantial compliance with the AOM statute. The judge stated that
defendant was prejudiced by plaintiff's failure to serve an AOM that complied
with the statute. The judge correctly noted that defendant would be prejudiced
because plaintiff did not have an "appropriate licensed person" attest to the
"reasonable probability" of professional negligence on the part of defendant, as
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alleged in the complaint. Id. at 150 (citing N.J.S.A. 2A:53A-27; Palanque v.
Lambert-Woolley, 168 N.J. 398, 404 (2001)).
Moreover, plaintiff did not establish that it took steps required to comply
with the statute, even after defendant objected to the AOM it had furnished on
the ground that Paige was not an "appropriate licensed person." As noted
previously, after the October 23, 2018 conference, plaintiff had sufficient time
to provide an AOM that met the statutory requirements but failed to do so.
The judge found that plaintiff also did not show that providing an AOM
from a person who did not have the "appropriate" license would constitute
general compliance with the purpose of N.J.S.A. 2A:53A-27. In addition, the
judge found that plaintiff did not provide a reasonable explanation for its failure
to provide an AOM that complied with the statute.
We are convinced the record supports the findings of the motion judge.
The judge correctly found that plaintiff failed to show that it substantially
complied with the AOM statute.
IV.
Plaintiff also argues that an AOM is not required because an expert would
not be required to support its negligence claims at trial. Plaintiff contends the
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common-knowledge doctrine applies and relieves it of any obligation to comply
with the AOM statute.
In Hubbard v. Reed, 168 N.J. 387, 394 (2001), the Court held that an AOM
is not required in so-called common-knowledge cases. In such matters, an
expert is not required to establish the duty of care or the breach of that duty.
Ibid. The common-knowledge doctrine applies when jurors can determine a
defendant's negligence based on their common knowledge, using their "ordinary
understanding and experience . . . ." Ibid.As stated previously, in its complaint, plaintiff has asserted claims of
professional negligence. Plaintiff alleges that defendant was negligent because
it failed to procure a policy covering damage to its business personal property,
which plaintiff allegedly requested, and failed to review the policy to ensure that
it contained the requested coverage for property damage.
Plaintiff claims defendant was negligent because it failed to provide
plaintiff with options for suitable coverage for its business personal property
and did not advise plaintiff to seek such coverage. Plaintiff further alleges
defendant failed to advise it that its policy did not provide coverage for its
premises and business personal property.
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We are convinced that expert testimony is required for such claims. Jurors
would not be able to resolve the claims asserted in the complaint "without the
benefit of the specialized knowledge of experts." Ibid. (quoting Estate of Chin
v. Saint Barnabas Med. Ctr., 160 N.J. 454, 469 (1999)).
Based on their "ordinary understanding and experience," jurors would not
be able to determine the duties owed by an insurance broker to its client and
whether defendant breached such duties. Hubbard, 168 N.J. at 394; Triarsi, 422
N.J. Super. at 115-16 (holding that expert testimony is required to establish the
duties an insurance broker owes a client with regard to payment of renewal
premiums, avoidance of cancellation, and reinstatement of policy in the event
of cancellation).
We therefore reject plaintiff's contention that the common knowledge
doctrine applies to its claims. We conclude N.J.S.A. 2A:53A-27 applies and
required plaintiff to serve an AOM from an "appropriate licensed person."
V.
In addition, plaintiff contends the trial court erred by dismissing its
complaint with prejudice. As noted previously, a party's failure to comply with
the AOM statute is deemed to be a failure to state a cause of action which
ordinarily results in the dismissal of the complaint with prejudice. Meehan, 226
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N.J. at 228; Barow, 153 N.J. at 243. To avoid dismissal with prejudice, a
plaintiff must establish extraordinary circumstances. A.T., 231 N.J. at 346
(citing Ferreira, 178 N.J. at 151, 154-55).
Plaintiff contends dismissal of the complaint with prejudice was not
warranted because its deviation from the requirements of N.J.S.A. 2A:53A-27
did not reflect negatively on the merits of its claims. It argues dismissal would
not advance the statutory goal of eliminating frivolous cases. Plaintiff further
argues that, because the trial court never rescheduled and completed the Ferreira
conference, it should have been provided an opportunity to obtain a new AOM
or Paige should have been given time to renew his licenses.
We are convinced, however, that plaintiff's failure to provide an AOM
from an "appropriate licensed person" was not a technical defect but a failure to
comply with a clear and unambiguous substantive requirement of the statute.
Plaintiff's failure to provide an AOM that complied with N.J.S.A. 2A:53A-27
was tantamount to providing no AOM at all.
Furthermore, as we have explained, a court employee conducted the case
management conference as required by Ferreira. At the Ferreira conference, a
"defendant will be obliged to bring to the plaintiff's attention any deficiency in
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an [AOM] already served in order to give the plaintiff the opportunity to cure
the defect within the 120-day period." Knorr v. Smeal, 178 N.J. 169, 182 (2003).
It is undisputed that at the conference, defendant's counsel asserted that
Paige's AOM was deficient. Plaintiff had ample time in which to furnish an
AOM that complied with the statute but failed to do so. We are convinced that
under the circumstances, the judge did not err by dismissing the complaint with
prejudice.
Affirmed.
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