Court Opinion

ID: 4428143
Source: CourtListenerOpinion
Date Created: 2019-08-20 19:01:27.347028+00
Date Added: 2024-06-11T14:49:33.173062
License: Public Domain

NOT FOR PUBLICATION WITHOUT THE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-4676-17T3

STATE OF NEW JERSEY,

          Plaintiff,

v.

BEDNAR LANDSCAPE
SERVICES, INC.,

     Defendant-Respondent.
_________________________________

ESTATE OF OSCAR PORTILLO,
by the Administrator Ad Prosequendum,
JUAN CARLOS MONTOYA,

     Intervenor-Appellant.
_________________________________

                    Argued May 9, 2019 – Decided July 3, 2019

                    Before Judges Simonelli, Whipple and Firko.

                    On appeal from the Superior Court of New Jersey, Law
                    Division, Morris County, Accusation No. 18-01-0064.

                    Bernard J. Recenello argued the cause for appellant
                    (Bernard J. Recenello and Nicholas John Du Bois,
                    attorneys; Nicholas John Du Bois, on the briefs).
               John J. O'Reilly argued the cause for respondent (Mc
               Elroy Deutsch Mulvaney & Carpenter, LLP, attorneys;
               John J. O'Reilly, on the brief).

PER CURIAM

        Intervenor-Appellant, the Estate of Oscar Portillo (Intervenor), appeals

from a May 3, 2018 order for civil reservation. For the reasons that follow, we

affirm.

        This matter arose from a fatal workplace accident that tragically resulted

in the deaths of Oscar Portillo and Selvin Zalaya. Both men worked as laborers

for defendant Bednar Landscape Services, Inc. (Bednar) and were killed when a

thirteen-foot-deep trench collapsed on them. The trench was constructed in

violation of Occupational Safety and Health Administration (OSHA)

regulations.

        Both OSHA and the Morris County Prosecutor's Office conducted an

investigation. The OSHA matter was resolved subject to a civil reservation o f

rights.1 Two wrongful death and survivorship actions were filed against Bednar

and two of its corporate principals, Keith Bednar and Christopher Liberatore.

The two civil actions were consolidated and later dismissed without prejudice.

The Intervenor refiled its claim.

1
    The exact terms of the OSHA settlement are not a part of the record.
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                                         2
       The State and Bednar reached an agreement. The two corporate principals

were diverted to pre-trial intervention (PTI). Bednar, as a corporate entity,

waived indictment and pled guilty under an accusation charging one count of

fourth-degree causing or risking widespread injury or damage, N.J.S.A. 2C:17-

2(d)(1). The factual basis for the corporate plea was provided by resolution

signed by Keith Bednar pursuant to Rule 3:7-10(c). The court accepted the plea,

and on March 9, 2018, sentenced Bednar to two years probation and ordered

$50,000 in restitution to the families. 2 As part of the plea negotiation, the State

offered no objection to Bednar seeking a civil reservation, however, the

Intervenor objected. The trial judge reserved decision on the civil reservation

issue and asked the parties to return on May 3, 2018, for oral argument.

       At the hearing, Bednar argued a civil reservation was necessary to protect

the corporation from financial ruin.         Bednar's counsel represented that in

connection with the civil suits, the Bednar principals had sued their insurance

carriers for coverage. Bednar argued a civil reservation would convince its

carriers to provide coverage because the guilty plea to reckless acts would not

be introduced in a civil suit. If coverage was disclaimed, and a civil judgment

was entered against it, Bednar assuredly faced bankruptcy.

2
    Bednar also agreed to pay $77,000 pursuant to the OSHA settlement.
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                                         3
      The Intervenor argued a civil reservation would essentially preclude

holding Bednar civilly liable. Considering the OSHA settlement was subject to

a civil reservation and both corporate principals retained their Fifth Amendment

privilege while enrolled in PTI, the Intervenor asserted it was unable to conduct

meaningful discovery. Moreover, the Intervenor argued Bednar was not entitled

to a civil reservation because financial havoc alone is not sufficient to show

good cause.

      The trial judge found Bednar demonstrated good cause and entered a civil

reservation order accordingly. The judge accepted Bednar's contention that its

insurance carriers would be more likely to provide coverage if they knew the

guilty plea would not be introduced in a civil proceeding. The court rejected the

Intervenor's Fifth Amendment concerns because the corporation waived the

privilege by entering into a guilty plea. Once the corporate principals concluded

PTI, they could no longer assert the privilege. Moreover, the judge explained

Bednar did not have to demonstrate actual financial havoc to satisfy the good

cause standard but merely its potential. This appeal followed.

      We defer to "factual findings underlying the trial court's decision so long

as those findings are supported by sufficient credible evidence in the record."

State v. Gamble, 218 N.J. 412, 424 (2014). Whether a civil reservation is

                                                                         A-4676-17T3
                                       4
supported by good cause is a legal question subject to de novo review. State v.

McIntyre-Caulfield, 455 N.J. Super. 1, 5 (App. Div. 2018).

      Guilty pleas in criminal proceedings are admissible in related civil cases

as statements of a party opponent under Rule 803(b)(1). Maida v. Kuskin, 221

N.J. 112, 125 (2015). However, "[f]or good cause shown the court may, in

accepting a plea of guilty, order that such plea not be evidential in any civil

proceeding." R. 3:9-2. "The purpose of [Rule 3:9-2] is to avoid an unnecessary

criminal trial of a defendant who fears that a civil claimant will later use [its]

plea of guilty as a devastating admission of civil liability." McIntyre-Caulfield,

455 N.J. Super. at 8 (first alteration in original) (quoting Stone v. Police Dep't

of Keyport, 191 N.J. Super. 554, 558 (App. Div. 1983)).

      After the trial court entered the May 3, 2018 civil reservation order, we

decided McIntyre-Caulfield, which clarified the meaning of "good cause." Id.

at 8-9. "First, '"good cause" exists for a no-civil-use agreement when such an

agreement is necessary to remove an obstacle to a defendant's pleading guilty to

a criminal charge.'" Ibid. (quoting State v. Haulaway, Inc., 257 N.J. Super. 506,

508 (App. Div. 1992)).      "Second, good cause may 'be shown to grant a

reservation where the civil consequences of a plea may wreak devastating

financial havoc on a defendant.'" Id. at 9 (quoting State v. Tsilimidos, 364 N.J.

                                                                          A-4676-17T3
                                        5
Super. 454, 459 (App. Div. 2003)). Here, the trial court found the threat posed

by Bednar's insurance carriers' potential disclaimer, but for a civil reservation,

constituted "financial havoc."

      We reject the Intervenor's arguments that Bednar needed to demonstrate

actual financial harm, not merely its potential, and that good cause refers to

personal, not corporate financial havoc. In McIntyre-Caulfield, we explained

that a defendant seeking a civil reservation need only show the existence of a

good faith fear of financial havoc, not its actuality. Id. at 9-10. This may be

demonstrated, as was the case here, by an insurance carrier disclaiming

coverage. See ibid.

      Here, we discern no error by the judge crediting and relying on Bednar's

representation its insurance carriers would be more likely to indemnify if Bednar

obtained a civil reservation. The purpose of the rule would be defeated if, as the

Intervenor suggests, Bednar needed to show more concrete evidence of financial

harm. If Bednar was forced to wait until a civil judgment is entered against it

to seek a civil reservation order, it would already be too late.

      We have carefully reviewed the Intervenor's remaining arguments and

have determined they are without sufficient merit to warrant discussion in a

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

                                                                          A-4676-17T3
                                         6
Affirmed.

                A-4676-17T3
            7