Title: Liberty Surplus Insurance Corporation, Inc. v. Nowell Amoroso, P.A., et al.

State: new-jersey

Issuer: New Jersey Supreme Court

Document:

One month later, in July 2002, Nowell Amoroso submitted a malpractice insurance application to Liberty for claims-made coverage. One of the questions on the application asked whether any lawyer to be insured under this policy had knowledge of any circumstance, act, error or omission that could result in a professional liability claim. Nowell Amoroso responded no to that question. Liberty issued a policy effective July 21, 2002, which covered prior acts, errors, or omissions, provided that the Insured had no reasonable basis to believe that the Insured had breached a professional duty or to foresee that a claim would be made against the Insured. If that condition was not satisfied, the policy did not provide coverage for any claims arising prior to the policy period. As noted, in June 2003, Matarese sued Nowell Amoroso for malpractice. Nowell Amoroso sought coverage under its policy with Liberty. Liberty disclaimed coverage and filed a declaratory judgment action against Nowell Amoroso, seeking a determination that Matarese s legal malpractice claim was not covered. Nowell Amoroso moved for summary judgment, seeking a declaration of coverage. Liberty then filed a cross-motion for summary judgment, asserting that at the time Nowell Amoroso completed the insurance application, it had a reasonable basis to believe that it had breached a professional duty or to foresee that a claim would be made against it. In opposition to Liberty s motion, the individual attorneys at Nowell Amoroso certified that at the time the application was submitted, they did not have knowledge of, or a reasonable basis to believe that, any circumstances, act, error or omission on the part of any past or present attorneys of the firm occurring in the course of the representation of Matarese could result in a professional liability claim against Nowell Amoroso, and that they did not have such knowledge until Matarese filed the legal malpractice complaint. The trial court granted summary judgment in favor of Liberty, reasoning that the February 1999 Appellate Division remand decision in Matarese s case against East Orange, together with the trial court s finding on remand that the action was time barred and the Appellate Division decision affirming that determination in June 2002, provided ample notice to Nowell Amoroso of a possible cause of action for malpractice arising out of its representation of Matarese. The trial court concluded that a reasonable person would have been expected to know a cause of action existed no later than June 2002. Nowell Amoroso appealed. It also sought to supplement the record on appeal with an expert s report opining that Nowell Amoroso did not commit malpractice. The Appellate Division denied the motion and upheld the grant of summary judgment in favor of Liberty. The panel determined that although a subjective analysis of Nowell Amoroso s knowledge at the time it completed the insurance application was required, under the unique circumstances of this case no reasonable fact-finder could conclude that Nowell Amoroso honestly conceived there was no reasonable basis to believe a professional duty had been breached. The panel concluded that summary judgment was appropriate because there was only one unavoidable resolution of the factual dispute. The Supreme Court granted Nowell Amoroso s petition for certification. 186 N.J. 255 (2006). HELD: The question whether an insured had knowledge of any circumstance, act, error or omission that could result in a professional liability claim is subjective in nature. Nevertheless, there was no genuine issue of material fact requiring submission of the issue to a fact-finder, and thus summary judgment denying insurance coverage was properly granted, because the insured knew at the time it completed the application for insurance that one trial court and two Appellate Division decisions indicated that it had missed the statute of limitations in filing a complaint. 1. In reviewing the disposition of the motions for summary judgment, the issue is whether the evidence viewed in a light most favorable to Nowell Amoroso, the non-prevailing party, presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that there is only one unavoidable resolution of the alleged issue of fact and one party must prevail as a matter of law. (pp. 11-12) 2. The Court applies a subjective standard concerning Nowell Amoroso s knowledge of any circumstance, act, error or omission that could result in a professional liability claim when it applied for malpractice insurance. (pp. 12-13) 3. It may be difficult to conclude from papers alone that there is no genuine issue of material fact when subjective elements of state of mind are material to a claim or defense. Nevertheless, the circumstances and very nature of an act may compel a conclusion about the actor s subjective intent or belief despite verbal protestations to the contrary. (pp. 13-17) 4. The trial court properly granted summary judgment in favor of Liberty. In light of the undisputed fact that Nowell Amoroso knew that Matarese s claim against East Orange was dismissed based on the failure to timely file the complaint, the attorneys certifications -- that they did not know at the time of the insurance application of any circumstance that could result in a professional liability claim -- were insufficient to create a genuine issue of material fact. The trial court would have had to ignore reality to conclude that Nowell Amoroso did not have such knowledge when faced with a trial court and two Appellate Division decisions indicating that Nowell Amoroso had missed the statute of limitations. (pp. 17-18) 5. A remand to allow Nowell Amoroso to conduct further discovery is not required in this case. Nowell Amoroso was the first party to file a motion for summary judgment; was not denied the opportunity to conduct discovery of information possessed by any party; and was essentially in control of any information it sought relating to the viability of the claim by Matarese against East Orange in the underlying litigation. (pp. 18-20) 6. The Appellate Division did not abuse its discretion in denying Nowell Amoroso s motion to supplement the record on appeal. (pp. 20-22) The judgment of the Appellate Division is AFFIRMED. JUSTICES LONG, ZAZZALI, ALBIN, and RIVERA-SOTO join in JUSTICE WALLACE s opinion. JUSTICE LaVECCHIA did not participate. SUPREME COURT OF NEW JERSEY A- 91 September Term 2005 LIBERTY SURPLUS INSURANCE CORPORATION, INC., Plaintiff-Respondent, v. NOWELL AMOROSO, P.A.; NOWELL AMOROSO & MATTIA, P.A.; NOWELL AMOROSO KLEIN BIERMAN, P.A.; HENRY J. AMOROSO; CHRISTOPHER W. MCGARRY; WILLIAM C. SOUKAS; DANIEL C. NOWELL, ESQ.; JEANNE M. DAMGEN, ESQ.; LINDA DUNNE, ESQ.; WILLIAM R. DELORENZO, JR., ESQ.; HERBERT C. KLEIN, ESQ.; WILLIAM D. BIERMAN, ESQ.; MARK MATTIA, ESQ.; and RICHARD J. KAPNER, ESQ., Defendants-Appellants, and THOMAS MATARESE; BACHELORS I TAVERN, INC., t/a SCANDALS and JOHN DOES ESQS. 1-10, a fictitious designation for presently unknown licensed attorneys, professional and/or unknown persons or entities, Defendants. Argued October 10, 2006 Decided February 28, 2007 On certification to the Superior Court, Appellate Division. Christopher J. Carey argued the cause for appellants (Graham, Curtin & Sheridan, attorneys; Mr. Carey, David M. Blackwell and Matthew P. McGovern, on the briefs). Elliott Abrutyn argued the cause for respondent (Morgan, Melhuish, Monaghan, Arvidson, Abrutyn & Lisowski, attorneys; Mr. Abrutyn and Shaji M. Eapen, on the brief). JUSTICE WALLACE, JR., delivered the opinion of the Court. In this declaratory judgment action, the trial court granted summary judgment in favor of the insurer, Liberty Surplus Insurance Corp., Inc. (Liberty). In an unpublished, per curiam decision, the Appellate Division affirmed. We granted certification, in part, to determine whether summary judgment may be granted in favor of an insurer when an application for insurance contains a subjective question whether the insured had knowledge of any circumstance, act, error or omission that could result in a legal malpractice claim against it and the insured answers no. We affirm the grant of summary judgment in favor of Liberty. A. I did not have knowledge of or a reasonable basis to believe that, any circumstances, act, error or omission on the part of any past or present attorneys of the firm occurring in the course of the firm s aforementioned representation could or would result in a professional liability claim against Nowell Amoroso, Klein, Bierman P.A., until after June 6, 2003[,] the date when the Complaint for legal malpractice was filed in the action entitled Thomas Matarese v. Nowell Amoroso Klein Bierman, P.A., et al., Docket No. ESX-4921-03. [(Formatting altered).] . . . The no cause of action entered by the trial court on remand coupled with the Appellate Division decision affirming that no cause in June of 2002 provided ample notice of a possible cause of action for malpractice. [Matarese] ha[d] retained [Nowell Amoroso] one year prior before the case was filed, a reasonable person would have expected to know a cause of action existed, at the very least, at the second Appellate Division decision on June 12th, 2002. By [its] own admission, [Nowell Amoroso] submitted [its] application to Liberty Surplus for professional liability insurance on July 15th, 2002, a little over a month after the second Appellate Division decision. The fact that [Nowell Amoroso was] pursuing another appeal to the [S]tate Supreme Court does not insulate [it] from the fact that [it] had a reasonable basis at that point to believe that there was a potential claim. Nowell Amoroso appealed. While the appeal was pending, Nowell Amoroso sought to supplement the record with information that had been disclosed during the course of discovery in the underlying malpractice action. Specifically, Nowell Amoroso sought to introduce an expert s report that provided an analysis of the underlying matter and opined that Nowell Amoroso did not commit malpractice. After denying the motion to supplement the record, the Appellate Division found that a subjective analysis of Nowell Amoroso s knowledge at the time it completed the insurance application was required. Nevertheless, the panel upheld the grant of summary judgment in favor of Liberty, explaining that [c]overage, under the policy, was conditioned not only on foreseeing a possible malpractice claim, but also on the insured having no reasonable basis to believe that any deviation from a pertinent standard of legal care had occurred. When a trial court and two appellate division decisions indicate that a statute of limitations has been missed, no reasonable fact-finder could conclude the firm honestly conceived there was no plausible basis to believe that [it] had breached a professional duty. . . . [W]e hold that, under the unique circumstances of this case, the law firm could not have conceived that there was no reasonable basis to believe a professional duty had been breached. When there is a single, unavoidable resolution of a factual dispute, summary judgment is appropriate. [(Citations omitted).] We granted Nowell Amoroso s petition for certification. 186 N.J. 255 (2006). [Id. at 330 (internal citations and quotations omitted).] The panel concluded that the trial court would have had to ignore[] reality to conclude that plaintiff s predecessors did not know that the mercury and its effluent w[ere] harmful to the land over which it coursed and the waters into which it fell. Id. at 334. In a case factually similar to the present case, the Appellate Division found that the evidence was so one-sided that the insurer must prevail as a matter of law. Liebling v. Garden State Indem., 337 N.J. Super. 447, 451 (App. Div.), certif. denied, 169 N.J. 606 (2001). There, Scott Liebling, an attorney, represented Anthony Barrett who suffered injuries when a United States Postal vehicle collided with Barrett s car. Id. at 450-51. Previous counsel had filed a complaint in the federal district court on behalf of Barrett, but improperly named the United States Postal Service as the defendant, as opposed to the United States Government. Id. at 451. After Liebling failed to amend the complaint in the prescribed period of time, the United States Postal Service moved to dismiss the complaint for lack of jurisdiction. Id. at 451-52. The district court denied Liebling s motion to amend the complaint to name the United States Government as the proper party and granted the defendant s motion to dismiss the complaint. Id. at 452. Following that action, Liebling applied for a claims-made malpractice insurance policy from Garden State Indemnity Company (Garden State). Id. at 450. The application asked, [i]s the firm aware of any circumstances, or any allegations or contentions as to any incident which may result in a claim being made against the firm . . .? Id. at 451. Liebling answered no to that question, and Garden State issued a claims-made malpractice insurance policy to [Liebling]. Id. at 450-51. The policy read in relevant part: We do not insure here any claim . . . of which: . . . . Any insured, at the inception date of this contract, knew or reasonably could have foreseen that any such act, error, or omission might be expected to give rise to a claim otherwise insured here. [Id. at 459.] Subsequently, Barrett sued Liebling for malpractice. Id. at 450. Liebling then sought coverage from Garden State, which Garden State denied. Ibid. Liebling commenced a declaratory judgment action against Garden State. Ibid. Both sides moved for summary judgment. Ibid. In opposition, Liebling certified that [a]t the time I completed the application for insurance with Garden State Indemnity Company, I had not received a copy of [the district court s] [o]rder [and opinion] despite my request for same. Id. at 452. Liebling acknowledged that he contacted the district court s chambers and was informed that the Postal Service s [m]otion had been granted and that [his] Motion to Amend the Complaint had been denied. Ibid. The trial court granted summary judgment in favor of Garden State. Id. at 463. On appeal, the Appellate Division affirmed the trial court s decision. Ibid. The panel explained that despite Leibling s certifications, Liebling could not have honestly believed that he was secure from a claim, and, therefore, Garden State was justified in denying coverage. Id. at 464-65. SUPREME COURT OF NEW JERSEY NO. A-91 SEPTEMBER TERM 2005 ON CERTIFICATION TO Appellate Division, Superior Court LIBERTY SURPLUS INSURANCE CORPORATION, INC., Plaintiff-Respondent, v. NOWELL AMOROSO, P.A.; NOWELL AMOROSO & MATTIA, P.A.; NOWELL AMOROSO KLEIN BIERMAN, P.A.; HENRY J. AMOROSO; CHRISTOPHER W. MCGARRY; WILLIAM C. SOUKAS; DANIEL C. NOWELL, ESQ.; JEANNE M. DAMGEN, ESQ.; LINDA DUNNE, ESQ.; WILLIAM R. DELORENZO, JR., ESQ.; HERBERT C. KLEIN, ESQ.; WILLIAM D. BIERMAN, ESQ.; MARK MATTIA, ESQ.; and RICHARD J. KAPNER, ESQ., Defendants-Appellants. DECIDED February 28, 2007 Justice Long PRESIDING OPINION BY Justice Wallace, Jr. CONCURRING/DISSENTING OPINIONS BY DISSENTING OPINION BY p