Court Opinion

ID: 8904494
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:41:10.190873+00
Date Added: 2024-06-11T17:08:04.499229
License: Public Domain

JAMES HUNTER, III, Circuit Judge,
dissenting:
I respectfully dissent. The majority has, in my view, formulated a new duty in the law of torts, which until now has not been part of the law of any jurisdiction in this country. As we see it, this concept imposes liability upon a contractor for selecting a subcontractor who, though mechanically competent, is not sufficiently responsible financially. The majority’s decision, in my belief, is not an apt prediction of what the New Jersey courts would hold had this case arisen within the state system.
The majority’s statement of the principles by which a federal court, sitting in diversity, must determine an issue of state law not yet decided by the courts of that state is, of course, entirely correct. A federal court must make an informed estimate of what is the applicable state law when state precedent is unclear or incomplete with respect to an issue litigated before the federal court.1
Nevertheless, the majority’s reliance on the obiter dicta in Majestic Realty Associates, Inc. v. Toti Contracting Co.2 and on its perception of the relevant policies considered by the New Jersey courts leads this court to impose a duty on those who engage independent contractors which I feel that New Jersey courts would be most reluctant to apply. The language in Majestic Realty, enshrouded in caveats and encircled with disclaimers of precedential value, must be viewed as a discussion of an issue neither decided by the trial court in the case nor briefed by the parties on appeal. Rather, the issue arose as “an emanation of the oral argument.” As the majority has pointed out, Justice Francis characterized the portion of this opinion dealing with financial irresponsibility of independent contractors as an “incidental comment” for which “no decision is rendered” and on which decision was “expressly reserved.”3
In the eighteen years since the Majestic Realty opinion was rendered, the New Jersey courts have not responded to Justice Francis’ query whether liability might be imposed on the landowner who hires a financially irresponsible independent contractor through whose negligence a third party is injured. As the majority acknowledges, other states have not taken this step and imposed liability on one so far removed, if not isolated, from the physical cause of the injury.
Certainly a federal court sitting in diversity should not mechanically follow precedent and blindly apply principles of stare *1216decisis when it appears that the corresponding state court would adjust its common law to meet changing conditions. At the same time, however, when no other court in this country has as yet broken from a traditional precept of the law, a federal court should proceed cautiously.
One important development in the law of New Jersey has been the advancements in the protection of the public from physical injuries by laws enacted by the legislature. In the construction industry, the state legislature has been active in defining standards of conduct by which construction sites can be made safer for employees on the site and the public. See New Jersey Stat.Ann. §§ 34:5-166 et seq.; New Jersey Admin. Code ch. 180.4 These statutes and regulations have not gone so far as to impose upon developers or general contractors a duty of ensuring that subcontractors on a site be able to respond financially to tort claims arising out of their work. Rather, the legislature has sought to implement a policy of financial protection of workers on a construction project through New Jersey Stat.Ann. § 34:15-79, which states:
Any contractor placing work with a subcontractor shall, in the event of the subcontractor’s failing to carry workmen’s compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor. The contractor shall then have a right of action against the subcontractor for reimbursement. .
Consequently, it appears that the legislature has provided a standard by which the duty of a developer-general contractor to require financial ability to respond to injuries suffered by an employee of an independent subcontractor or sub-subcontractor can be measured. Since the legislature has taken the initiative in formulating the duty of a general contractor to insure that injuries sustained on the job will be covered by workmen’s compensation, I am unwilling to predict that the New Jersey courts would add on the requirement that “adequate” insurance coverage or its equivalent (apparently beyond workmen’s compensation) be extended to all employees on a construction site.5
Further, I have difficulty with the majority’s formulation of the duty of a developer of land to take reasonable care that its independent subcontractors be able to respond financially, through insurance or otherwise, to claims for injuries suffered as a result of the contractor’s negligence. The inexactitude of the standard for imposing liability arises since the majority limits the scope of the duty to include only those whose financial capabilities and business acumen are more than “modest.”
To my knowledge, New Jersey courts have never defined the scope of a tort duty on the basis of an individual’s financial capabilities. The majority’s decision will, I think, cause uncertainty and doubt for every financial strata and every court, as well as hinder the employment opportunities of an independent contractor trying to enter the marketplace but lacking much in the way of start-up capital.
Behind this “duty” that the majority imposes lie significant policy questions relating to economic and social costs and bene*1217fits. It appears to me that the New Jersey courts would look to the legislature for the determination of whether to adopt this novel aspect of tort law.
Certainly, the facts in this case are most compelling. However, I do not reach the conclusion that the New Jersey courts would decide the case in the manner in which the majority has determined. Thus I am unable to join in the court’s opinion.

. See, e. g., Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 209, 76 S.Ct. 273, 100 L.Ed.2d 199 (1956) (Frankfurter, X, concurring).

. 30 N.X 425, 153 A.2d at 321 (1959).

. Id. at 433, 153 A.2d at 325.

. The Construction Safety Act, New Jersey Stat.Ann. §§ 34:5-166 et seq., was adopted after the New Jersey Supreme Court’s decision in Majestic Realty. 1962 N.J. Laws c. 45. Consequently, the legislature’s activity in this field seemingly would be considered by a reviewing New Jersey court as indicative of a desire by the legislature to regulate the duties of care imposed on those engaging in construction. The statute does note that the legislature did not intend to increase the burden of care required by the state’s common law. New Jersey StatAnn. § 34:5-177. However, the passage of the Act and promulgation of regulations pursuant to that statutory authority supports the contention that the legislature intended to become involved in determining the scope of duty of construction contractors.

. In this case, defendants I. P. Construction Corp. and Interstate Properties - have been treated as one entity. Consequently, New Jersey Stat.Ann. § 34:15-79 would apply to I. P. as general contractor. Thus it appears that the legislature has acted to define the scope of the duty of these defendants in this regard.