Court Opinion

ID: 5123395
Source: CourtListenerOpinion
Date Created: 2021-11-04 15:10:07.419437+00
Date Added: 2024-06-11T08:22:33.656085
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE
              APPROVAL OF THE APPELLATE DIVISION

                                   SUPERIOR COURT OF NEW JERSEY
                                   APPELLATE DIVISION
                                   DOCKET NO. A-3665-19

STATE OF NEW JERSEY,

     Plaintiff-Appellant,            APPROVED FOR PUBLICATION
                                            November 4, 2021
v.
                                         APPELLATE DIVISION

COUNTY OF OCEAN,

     Defendant-Respondent.

           Argued October 14, 2021 — Decided November 4, 2021

           Before Judges Haas, 1 Mawla, and Mitterhoff.

           On appeal from the Superior Court of New Jersey,
           Law Division, Ocean County, Docket No. L-0527-20.

           Brett J. Haroldson, Deputy Attorney General, argued
           the cause for appellant (Andrew J. Bruck, Acting
           Attorney General, attorney; Melissa H. Raksa,
           Assistant Attorney General, of counsel; Brett J.
           Haroldson, on the briefs).

           Mathew B. Thompson argued the cause for respondent
           (Berry, Sahradnik, Kotzas & Benson, attorneys;
           Mathew B. Thompson, on the brief).

1
  Judge Haas did not participate in oral argument. He joins the opinion with
counsel's consent for the purpose of disposition. See R. 2:13-2(b).
        The opinion of the court was delivered by

MAWLA, J.A.D.

        Plaintiff State of New Jersey appeals from an April 17, 2020 order

dismissing its complaint seeking declaratory judgment against defendant

County of Ocean. We affirm.

        At the outset, we note the statutory provisions in dispute. Under the

New Jersey Tort Claims Act (TCA),2 specifically N.J.S.A. 59:10A-5, "[t]he

Attorney General may provide for a defense pursuant to this act by an attorney

from his own staff or by employing other counsel for this purpose or by

asserting the State's right under any appropriate insurance policy which

requires the insurer to provide the defense." Per N.J.S.A. 40A:10-3, counties

must maintain insurance:

              Every local unit . . . shall provide insurance coverage
              under this article for the operators of all motor
              vehicles, equipment and apparatus owned by or under
              its control, or owned by or under the control of any of
              its departments, boards, agencies or commissions,
              against liability for damages to property, in any one
              accident, in an amount of not less than $5,000[], and
              against liability for injuries or death of one person, in
              any one accident, in an amount of not less than
              $50,000[], and against liability for injuries or
              death . . . in any one accident, in an amount of not less
              than $100,000[].

2
    N.J.S.A. 59:1-1 to 12-3.

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       The facts are undisputed. In May 2016, an Ocean County Prosecutor's

Office (OCPO) detective operating a County vehicle rear-ended a van carrying

passengers, including Keith McQuade-Sabat. McQuade-Sabat was allegedly

injured. At the time of the accident, the detective was acting in her capacity as

part of the OCPO homicide squad. McQuade-Sabat sued the detective, the

OCPO, and the County, among others, for negligence.

       The County answered for itself, the OCPO, and the detective.            Its

answers to interrogatories inquiring about insurance coverage stated:       "The

County . . . is self-insured for the first $250,000[] and an excess policy covers

additional exposure."

       On May 18, 2018, County counsel wrote to the Attorney General

requesting the State defend and indemnify the OCPO and the detective. 3 A

Deputy Attorney General (DAG) responded the same day: "The [Attorney

General] will take over defense and indemnification of [the] OCPO and [the

detective] in this matter. A DAG will be assigned and contact you to arrange

for transfer of the file." In June 2018, a DAG filed a substitution of attor ney

on behalf of the OCPO and the detective.

       On December 5, 2019, a DAG advised County counsel the State's

obligations to defend and indemnify the OCPO and the detective are secondary

3
    All claims against the County were later dismissed on summary judgment.

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to defendant's mandatory insurance obligation pursuant to N.J.S.A. 40 A:10-3.

In support of that position, the DAG relied upon an unpublished opinion of this

court, Whittaker v. Rua, No. A-0735-13 (App. Div. June 20, 2014) (slip op. at

18), which stated:

            If the Attorney General is obliged to defend, then the
            State is obliged to indemnify. The duty to indemnify
            follows, whether the defense is provided directly by
            the State, or through outside counsel, or insurer's
            counsel. Nonetheless, reading N.J.S.A. 59:10-1 in
            harmony with N.J.S.A. 40A:10-3 and -4, we conclude
            that the State's duty to indemnify must be secondary to
            that of mandated insurance coverage.

            [(citations omitted).]

County counsel did not respond.

      On January 30, 2020, the DAG called County counsel reiterating

"current case law indicates that [defendant's] mandatory insurance coverage

could be utilized for any portion of a judgment or settlement . . . ." The DAG

sent a follow-up letter on February 8, 2020, reiterating that "pursuant to

N.J.S.A. 40A:10-3, which mandates that the County obtain insurance or self-

insure vehicles it owns, including the vehicle involved in the underlying

accident . . . the County owes coverage on a primary basis for the incident

underlying this case . . . ." County counsel did not respond to the letter.

      The State filed a verified complaint and an order to show cause for a

declaratory judgment. It argued pursuant to N.J.S.A. 59:10A-5, it was entitled
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to use "any appropriate insurance policy" to defend and indemnify the County.

It claimed because the County was required to have insurance pursuant to

N.J.S.A. 40A:10-3, the County's self-insurance and excess insurance policies

were primarily responsible for any judgment or settlement in the underlying

tort suit.

       Following oral argument, the motion judge issued a written order

denying the application and dismissing the State's complaint, finding:

             N.J.S.A. 59:10A-5 "Methods of providing defense"
             does not address "indemnity."         The terms have
             separate distinct plain meanings. A duty to defend
             does not necessarily give rise to a duty to indemnify
             . . . . There is no insurance policy. The County . . . is
             self-insured for the first $250,000. There is no insurer
             required to provide the defense. An excess insurer has
             no duty to defend. There is no linkage between
             N.J.S.A. 40A:10-3 and N.J.S.A. 59:10A-5.

       The State raises the following points on appeal:

             POINT I:  THE TRIAL COURT'S JUDGMENT
             SHOULD    BE  REVERSED    BECAUSE  IT
             INCORRECTLY FOUND THAT THERE WAS NO
             POLICY OF INSURANCE FOR THE ATTORNEY
             GENERAL TO UTILIZE, DESPITE A STATUTE
             MANDATING SUCH A POLICY.

             POINT II: THE TRIAL COURT IMPROPERLY
             DIVORCED THE CONCEPTS OF DEFENSE AND
             INDEMNIFICATION—AN     INTERPRETATION
             BELIED BY BINDING PRECEDENT AND
             COMMON SENSE.

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              POINT III:   THE TWO STATUTES, AND
                      [4]
              WRIGHT ,    CAN   AND    SHOULD    BE
              HARMONIZED, WHICH THE TRIAL COURT DID
              NOT DO.

        The central issue concerns statutory interpretation, a question of law.

State v. S.B., 230 N.J. 62, 67 (2017). Our review is de novo. Ibid.

        In Wright, our Supreme Court explained the fundamental principles

governing the State's duty to defend and indemnify state employees pursuant to

the TCA. In that case, the plaintiff sued Somerset County Prosecutor's Office

(SCPO) employees, alleging various torts incident to his arrest and

prosecution.    169 N.J. at 430-31.         Somerset County demanded the State

provide a defense and indemnification. Id. at 432. The Court held in favor of

the county with one member dissenting. Id. at 457.

        The majority rejected the dissent's assertion the State did not have to

defend and indemnify county employees because a separate statute required

the county to bear "[a]ll necessary expenses incurred by the prosecutor for

each county in the detection, arrest, indictment and conviction of offenders

against the laws . . . ." Id. at 443 (quoting N.J.S.A. 2A:158-7) (alteration in

original). The Court concluded the issue of defense and indemnification was

therefore not controlled by Title 2A, because

4
    Wright v. State, 169 N.J. 422 (2001).

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            the "TCA was [] intended to supersede the patchwork
            of statutory provisions providing for the defense and
            indemnification of state employees."          Chasin v.
            Montclair State Univ., 159 N.J. 418, 425 (1999).
            . . . [T]he Legislature would not have enacted such
            detailed provisions dealing with the State's liability for
            defense and indemnification in the TCA if the
            provisions of N.J.S.A. 2A:158-7 resolved the issue.
            Thus, we rely exclusively on the provisions of the
            TCA, as well as related case law, to resolve the
            defense and indemnification issue because "the TCA,
            . . . provides the unified scheme under which the
            Attorney General's duty to defend and indemnify
            employees must be evaluated." Ibid.

            [Id. at 443-44 (second alteration in original).]

      Regarding the State's duty to defend and indemnify, the Court ruled:

            "N.J.S.A. 59:10-1 requires the State to indemnify
            employees for whom a defense is provided." Chasin,
            159 N.J. at 426. The purpose of furnishing a State
            employee with a legal defense "is to avoid the entry of
            a damages award in the first instance." Michaels [v.
            State of N.J., 968 F. Supp. 230, 234 n.4 (D.N.J.
            1997)]. "Thus, . . . at least for purposes of the State's
            obligation under the [TCA], the concepts of
            indemnification and the provision of defense costs are
            'wedded together.'" Id. at 236 n.8.

            [Id. at 444-45.]

      The Court held that when the conduct of county prosecutors and their

subordinates qualifies them as State employees under the TCA, "the State

should be made 'to respond in damages' based 'on general principles of

[r]espondeat superior.'" Id. at 452 (alteration in original) (quoting McAndrew

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v. Mularchuk, 33 N.J. 172, 193 (1960)). "[T]he State should be obligated to

pay the county prosecutors and their subordinates' defense costs and to

indemnify them if their alleged misconduct involved the State function of

investigation and enforcement of the criminal laws."      Id. at 455 (citation

omitted).

      The Court concluded:

            To vindicate the legislative purpose of providing
            defense and indemnification to public employees
            performing an essential State function, we interpret
            the defense and indemnification provisions of the
            TCA to apply to county prosecutorial employees sued
            on the basis of actions taken in the discharge of their
            law enforcement duties. That interpretation will
            resolve the anomaly acknowledged in [Michaels5]
            "whereby the State could be held vicariously liable for
            the actions of an individual . . . whom the county must
            indemnify," by making the state fully liable for such
            defense and indemnification costs and providing the
            State full and complete control of the defense.

            [Id. at 456 (emphasis added).]

      The State argues Wright did not address N.J.S.A. 59:10A-5, which

permits the State to fulfill its duty to indemnify the OCPO and the detective

5
 Michaels, 968 F. Supp. at 237-38, held the TCA did not include prosecutorial
defendants as State employees and therefore "the State was not required to
defend and indemnify Somerset County and the SCPO employees." Wright,
169 N.J. at 433.

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using the insurance the OCPO is required to maintain pursuant to N.J.S.A.

40A:10-3. We disagree.

      "Where the plain language of a statute is clear, we enforce the statute as

written." Correa v. Grossi, 458 N.J. Super. 571, 579 (App. Div. 2019) (citing

DiProspero v. Penn, 183 N.J. 477, 492 (2005)). "However, our basic rules of

statutory interpretation recognize that not every statute is clear, and in case of

ambiguity, our guiding light is the Legislature's intent." Ibid. "In order to

ascertain legislative intent, the Court may look to extrinsic evidence, including

legislative history, committee reports, and contemporaneous construction."

Burns v. Belafsky, 166 N.J. 466, 473 (2001) (citing State v. Hoffman, 149 N.J.

564, 578 (1997)).

      "'Punctuation is part of an act and may be considered in its

interpretation.'" In re Est. of Fisher, 443 N.J. Super. 180, 192 (App. Div.

2015) (quoting Com. Bancorp, Inc. v. InterArch, Inc., 417 N.J. Super. 329, 336

(App. Div. 2010)). "[T]he word 'or' in a statute is to be considered a

disjunctive particle indicating an alternative."    Ibid. (alteration in original)

(quoting State v. Kress, 105 N.J. Super. 514, 520 (Law Div. 1969)).

      Applying these principles, we do not read N.J.S.A. 59:10A-5 as

addressing indemnification. The plain language of N.J.S.A. 59:10A-5 reveals

its purpose is to memorialize the Attorney General's ability to designate who

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shall undertake a defense.     The statute permits the Attorney General to

designate "an attorney from his own staff or by employing other counsel for

this purpose or by asserting the State's right under any appropriate insurance

policy which requires the insurer to provide the defense." N.J.S.A. 59:10A-5.

      It is clear N.J.S.A. 59:10A-5 provides a list of alternatives as to who the

Attorney General may designate to take up the defense in a case. The statute's

plain language does not mean that the ability to designate also permits the

State to designate who shall bear the costs of indemnity. Pursuant to Wright,

if the State is obligated to defend, regardless of who the State then designates

to defend, the State bears the corresponding cost of indemnification. 169 N.J.

at 444-45.

      Extrinsic evidence confirms the statute's aim is to provide the Attorney

General the ability to control the litigation.     At the time of the TCA's

enactment, a task force convened by the Attorney General stated:

                   The above authority [N.J.S.A. 59:10A-5 and 6]
             is provided primarily for the purpose of satisfying the
             needs for representation of State employees resulting
             from the passage of the [TCA]. Although this
             authority is undoubtedly possessed by the Attorney
             General under his existing powers, this amendment is
             intended to explicitly establish that authority and the
             circumstances under which it will be exercised.

                    In addition this amendment makes clear that the
             Attorney General shall have exclusive control of the
             litigation and State employees must cooperate with
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            him fully or lose their right to indemnification
            provided in chapter 10 of the [TCA].

            [Off. of the Att'y Gen, Report of the Attorney
            General's Task Force on Sovereign Immunity 249
            Cmt. (1972).]

      For these reasons, the State was obligated to defend and indemnify the

OCPO and its detective without the ability to resort to the County's insurance.

In our view, this interpretation of N.J.S.A. 59:10A-5 "vindicate[s] the

legislative purpose of providing defense and indemnification to public

employees performing an essential State function[.]" Wright, 169 N.J. at 456.

      Affirmed.

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