Court Opinion

ID: 8406438
Source: CourtListenerOpinion
Date Created: 2022-10-28 14:06:03.262764+00
Date Added: 2024-06-11T16:47:13.472623
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
              APPROVAL OF THE APPELLATE DIVISION

                                  SUPERIOR COURT OF NEW JERSEY
                                  APPELLATE DIVISION
                                  DOCKET NO. A-2114-21

ROBERT ALAM,
                                     APPROVED FOR PUBLICATION
     Petitioner-Respondent,
                                              October 28, 2022

v.                                       APPELLATE DIVISION

AMERIBUILT CONTRACTORS,

     Respondent-Appellant.
____________________________

          Argued October 13, 2022 – Decided October 28, 2022

          Before Judges Gooden Brown, DeAlmeida and
          Mitterhoff.

          On appeal from an interlocutory order of the Division of
          Workers' Compensation, Department of Labor and
          Workforce Development, Claim Petition No. 2018-12976.

          Travis K. Jablonski argued the cause for appellant
          (Brown & Connery, LLP, attorneys; Travis K.
          Jablonski, on the brief).

          Respondent has not filed a brief.

     The opinion of the court was delivered by

MITTERHOFF, J.A.D.
      Ameribuilt Contractors appeals the workers' compensation judge's

February 1, 2022 order disqualifying its assigned insurance counsel on the

basis of a perceived conflict between Ameribuilt's workers' compensation

carrier, Travelers Property Casualty Insurance Co. (Travelers), and Travelers'

ostensible insured, respondent Robert Alam.      Based on our review of the

record and the governing legal principles, we conclude the court erred in

finding that a conflict existed, and thus there was no basis for the

disqualification. Accordingly, we are constrained to reverse.

      On March 27, 2018, respondent was involved in a motor vehicle accident

in which he sustained injuries.       Respondent retained attorney Michael

Pescatore of Weiner Mazzei, LLC to file a workers' compensation claim

against appellant, who is his employer.        Travelers, appellant's workers'

compensation carrier, assigned defense of the claim to Brown & Connery, LLP

(B&C). Pertinent to the issue on appeal, although Alam is the acting president

and fifty percent owner of Ameribuilt, the company's policy with Travelers

does not provide any type of coverage to Ameribuilt's employees or

shareholders. Rather, Ameribuilt NJ Inc. 1 is the sole named insured.

1
  Although designated in the caption as Ameribuilt Contractors, the corporate
name in the declarations page is Ameribuilt NJ Inc.
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                                       2
        B&C filed an answer to respondent's claim, in which it confirmed

coverage and admitted that Alam was an employee of its insured. The answer

indicated whether the accident happened in the course of Alam's employment,

a prerequisite to recovery, remained under investigation.        In that regard,

respondent claimed that he was traveling from a project at 7 Stillman Avenue

in Bergenfield, NJ to his office in Westwood, NJ. The accident, however, was

at the intersection of Soldier Hill Road and Pascack Road in Paramus, NJ.

Because the accident's location involves a detour from the route between

Bergenfield and Westwood, the carrier questioned whether respondent's

accident occurred in the course of employment.         See generally Mahon v.

Reilly's Radio Cabs, Inc., 212 N.J. Super. 28, 34 (App. Div. 1986) (discussing

the "going and coming rule" and compensability of claims occurring in

transit).

        Thereafter, appellant and respondent engaged in settlement negotiations,

which included a discussion about whether respondent's claim would survive

Ameribuilt's motion to dismiss on the issue of compensability. Because of the

disputed liability, the parties agreed that a lump sum settlement for a dollar

figure under N.J.S.A. 34:15-20 (Section 20) was appropriate. 2

2
    N.J.S.A. 34:15-20 provides, in relevant part:

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      "For a Section 20 lump-sum settlement to be effective, the only statutory

requirements are that [(1)] the settlement be approved by the judge of

compensation as 'fair and just under all the circumstances,' and [(2)] that the

settling petitioner be represented by counsel." Kibble v. Weeks Dredging &

Const. Co., 161 N.J. 178, 188 (1999) (quoting N.J.S.A. 34:15-20).             In

accordance with the statute, after agreeing to a lump-sum settlement, B&C sent

the judge a request for approval, accompanied by a signed settlement affidavit

(Section 20 Order), and a copy of the employee's injury permanency exam. In

response to B&C's email, the judge wrote:

            You have a conflict. [Employee] owns [Ameribuilt]
            and you are taking a position adverse to [employee].

            Dispute; submission to division; order approving
            settlement.
            … After a petition for compensation … has been filed,
            seeking compensation by reason of accident…and
            when the petitioner is represented by an attorney of
            the State of New Jersey, and when it shall appear that
            the issue or issues involve the question of jurisdiction,
            liability, causal relationship … and the petitioner and
            the respondent are desirous of entering into a lump-
            sum settlement of the controversy, a judge of
            compensation may with the consent of the parties,
            after considering the testimony of the petitioner and
            other witnesses, together with any stipulation of the
            parties, and after such judge of compensation has
            determined that such settlement is fair and just under
            all the circumstances, enter "an order approving
            settlement."

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            If [employee] as the owner of the company is stating
            [that] he was in [the] course of employment[,] you are
            in direct conflict with [your] client. The carrier must
            assign someone to represent the [employee] and
            someone to represent [Ameribuilt].

      On February 1, 2022, the judge formally rejected the proposed

settlement and entered the order, which is the subject of this appeal. The order

directed:

            Brown and Connery is removed as counsel on this
            case because it has an inherent conflict between
            Ameribuilt Contractors and Ameribuilt Contractors'
            Insurer Travelers Property Casualty Co. Ameribuilt
            Contractors is owned 50% by petitioner Alam.
            Travelers is denying the compensability of the
            accident which is against the interest of its insured.
            Travelers shall assign counsel for itself and for
            Ameribuilt on or before March 14, 2022.

      On March 17, 2022, we granted Ameribuilt's motion for leave to appeal.

      Thereafter, the judge issued an amplification of reasons for her decision,

in which she explained:

            The insurer Travelers is not a party to this suit even
            though it retained B&C to defend the claim. In this
            case,     assigned    insurance     counsel--B&C--is
            challenging the validity of the claim filed by the
            petitioner who is the president/owner of the
            respondent/insured.

            The Court also asked B&C who it represented[,] and
            counsel advised he represented both Travelers and
            Ameribuilt. The Court advised counsel that was
            incorrect. The attorney assigned by an insurance
            carrier to provide a defense to the insured does not and
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                                        5
            cannot represent the interests of the insurance carrier.
            See, N.J. RPC 1.7 (the ethics rule prohibiting
            concurrent conflicts of interests). . . . It is obvious that
            B&C is taking its direction from the insurer Travelers
            and not from the insured Ameribuilt.

      Appellant presents the following arguments for our consideration:

            POINT I

            THE [JUDGE'S] ORDER MUST BE REVERSED
            BECAUSE     THE   ORDER    IMPROPERLY
            INTERFERES WITH APPELLANT’S CHOICE OF
            COUNSEL

            POINT II

            THE [JUDGE'S] ORDER MUST BE REVERSED
            BECAUSE THE ORDER IMPROPERLY REJECTS A
            PROPOSED SETTLEMENT DESIRED BY ALL
            PARTIES

            POINT III

            THE [JUDGE'S] ORDER MUST BE REVERSED
            BECAUSE CORPORATIONS ARE SEPARATE
            LEGAL     ENTIT[I]ES   FROM    THEIR
            SHAREHOLDERS

      On appeals from the Division of Workers' Compensation, "[c]ourts

generally give 'substantial deference' to administrative determinations." Earl

v. Johnson & Johnson, 158 N.J. 155, 161 (1999) (quoting R & R Mktg., L.L.C.

v. Brown-Forman Corp., 158 N.J. 170, 175 (1999)).                "In the workers'

compensation context, the scope of appellate review is limited to a

determination of 'whether the findings made could reasonably have been
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                                    6
reached on sufficient credible evidence presented in the record,' considering

'the proofs as a whole.'" Id. at 161 (quoting Dietrich v. Toms River Bd. of

Educ., 294 N.J. Super. 252, 260-61 (App. Div. 1996), 148 N.J. 459 (1997)).

Appellate courts are "in no way bound by an agency's interpretation of a

statute or its determination of a strictly legal issue." Mayflower Sec. Co. v.

Bureau of Sec., 64 N.J. 85, 93 (1973).

      "[A] determination of whether counsel should be disqualified is, as an

issue of law, subject to de novo plenary appellate review." City of Atl. City v.

Trupos, 201 N.J. 447, 463 (2010).        Where "the trial judge had no factual

disputes to resolve on credibility grounds and only legal conclusions to draw,

we are not required to defer to the trial judge's findings" or ultimate decision.

State v. Bruno, 323 N.J. Super. 322, 331 (App. Div. 1999).          "[A]lthough

persons are entitled to retain qualified counsel of their own choice, there is no

right to demand to be represented by an attorney disqualified because of an

ethical requirement." Reardon v. Marlayne, Inc., 83 N.J. 460, 477 (1980).

      The judge may order the removal of counsel where there is a violation of

the Rules of Professional Conduct. Here, the judge disqualified B&C based on

a violation of R.P.C. 1.7, which states, in pertinent part, that "a lawyer shall

not represent a client if the representation involves a concurrent conflict of

interest." In evaluating whether a conflict exists, however, we are mindful that

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                                         7
"[a] corporation is regarded as an entity separate and distinct from its

shareholders."     Tully v. Mirz, 457 N.J. Super. 114, 123 (App. Div. 2018)

(quoting Strasenburgh v. Straubmuller, 146 N.J. 527, 549 (1996)).

Additionally, "a corporation is regarded in law as an entity distinct from its

individual officers, directors, and agents." Printing Mart-Morristown v. Sharp

Elecs. Corp., 116 N.J. 739, 761 (1989) (citation omitted).

       Guided by these well-established legal principles, we conclude the judge

erred in finding a conflict between Travelers and Alam.                 In reaching that

conclusion, the judge failed to distinguish Ameribuilt, the corporation, from

Alam, an owner and shareholder. The judge correctly relied upon Montanez v.

Irizarry-Rodriguez for the proposition that "it is clear that insurance counsel is

required to represent the insured's interest as if the insured hired counsel

directly." 273 N.J. Super. 276, 286 (App. Div. 1994). In this case, however,

the sole named insured is Ameribuilt, and neither Travelers nor B&C have

taken any position adverse to the company. 3 To the contrary, the successful

pursuit of a viable liability defense clearly inured to the company's benefit.

3
   Nor has Travelers' litigation position impeached the credibility of the company. Cf.
Montanez, 273 N.J. Super. at 286 ("Permitting insurance counsel to impeach the
credibility of an insured places counsel in a position of representing conflicting
interests, and actually permits counsel to elevate the insurer's interest over the insureds.
Such practice cannot be condoned.").

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Moreover, if unsuccessful, it is indisputable that Travelers would cover the

loss. Cf. Bartels v. Romano, 171 N.J. Super. 23, 26-29 (App. Div. 1979)

(stating, in dicta, that auto insurance carrier's disclaimer of coverage on certain

counts of the complaint on the basis they were solely recoverable on a separate

$25,000 homeowner's policy created a conflict between carrier and insureds, in

that its coverage position exposed the insureds to an underinsured loss).

      The judge's concern about the control of the defense is misplaced. B&C

confirmed that they were "retained" by Travelers but "would need to have an

attorney client relationship with the named insured." The pursuit of a viable

defense to the company's liability is not only permitted, but required, under

Ameribuilt's insurance contract with Travelers, providing that: "[Insurer] ha[s]

the right and duty to defend, at [insurer’s] expense, any claim, proceeding or

suit against [Ameribuilt] for damages payable by this insurance. [Insurer]

ha[s] the right to investigate and settle these claims, proceedings and suit."

      We appreciate the judge's attentiveness to what she genuinely but

mistakenly believed to be an ethical transgression.           That said, we are

constrained to reverse and remand to a different judge for the limited purpose

of determining whether the settlement terms are fair and reasonable in

accordance with the statute.

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      To the extent that we have not addressed appellant's remaining

arguments, we find that they lack sufficient merit to warrant discussion in a

written opinion. R. 2:11-3(e)(1)(E).

      Reversed and remanded for further proceedings consistent with this

opinion. We do not retain jurisdiction.

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