Court Opinion

ID: 4201044
Source: CourtListenerOpinion
Date Created: 2017-09-05 13:12:38.000547+00
Date Added: 2024-06-11T14:40:38.072884
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NOT FOR PUBLICATION WITHOUT THE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-2221-15T4

LOYLE, LLC and ELYOL, INC.,
t/a LOYLE LANES BOWLING CENTER,

        Plaintiffs-Respondents,

v.

GREATER NEW YORK MUTUAL
INSURANCE COMPANY,

        Defendant-Respondent,

and

BROUWER, HANSEN & IZDEBSKI
ASSOCIATES, and JOHN H. IZDEBSKI,
INC.,

        Defendants/Third-Party
        Plaintiffs-Appellants,

v.

GREATER NEW YORK MUTUAL
INSURANCE COMPANY,

        Third-Party Defendant-
        Respondent.

              Argued December 20, 2016 - Decided September 5, 2017

              Before Judges Ostrer, Leone and Vernoia.
         On appeal from the Superior Court of New
         Jersey, Law Division, Cumberland County,
         Docket No. L-0669-11.

         Patricia M. Henrich argued the cause for
         appellants  (Reilly,  Janiczek,  McDevitt,
         Henrich & Cholden, P.C., attorneys; Ms.
         Henrich and Michelle B. Cappuccio, on the
         briefs).

         Michael R. Perle and Raffi Momjian argued
         the cause for respondents Loyle, LLC and
         Elyol, Inc. (Raffi Momjian PC, attorneys;
         Mr. Perle, of counsel; Mr. Perle and Mr.
         Momjian, on the brief).

         Allan   Maitlin   argued   the   cause   for
         respondent Greater New York Mutual Insurance
         Company (Sachs, Maitlin, Fleming & Greene,
         attorneys; Mr. Maitlin, of counsel; Mr.
         Maitlin and Christopher Klabonski, on the
         brief).

PER CURIAM

    Following     a   2010   arson   fire   that   destroyed   the   bowling

alley they owned and operated, plaintiffs discovered they were

underinsured for the property and business interruption losses

they sustained.

    In this action, plaintiffs claimed their insurance broker,

defendant Brouwer, Hansen & Izdebski, Inc. (BHI), negligently

advised them concerning the insurance coverage limits required

to replace the bowling alley building and its contents in the

event of a total loss and to reimburse plaintiffs for losses due

to business interruption. The matter proceeded to trial and the

                                     2                               A-2221-15T4
jury agreed, resulting in the entry of a $1,998,808.77 judgment

against BHI.1

     On appeal, BHI claims the trial court erred by: permitting

plaintiffs    to   introduce   testimony   and   evidence   based    on   two

documents that were not produced during discovery, and denying

BHI's mistrial motion and motion for a new trial based on the

admission of such testimony and evidence; granting plaintiffs'

in limine motion to bar application of comparative negligence;

granting the insurance carrier's motion for summary judgment;

determining the judgment credits to which BHI was entitled; and

misinforming the jury about the burden of proof. Based on our

review of the record, we are not persuaded by BHI's contentions

and affirm.

                                    I.

     A.   Background

     On January 11, 2010, an arson fire destroyed Loyle Lanes

Bowling Center (the bowling center), resulting in a total loss

of the building and its contents. At the time of the fire, the

1
  The jury found plaintiffs' losses from the destruction of the
bowling alley were $6,840,000. The $1,998,808.77 damage award
against BHI represents plaintiffs' net loss after deducting
credits based on plaintiffs' receipt of payments from their
insurance carrier and monies from other parties. The calculation
of judgment credits is one of the issues on appeal discussed
later.

                                   3                                A-2221-15T4
bowling center was insured under a policy with Greater New York

Mutual Insurance Company (GNY) that became effective on April 1,

2009    (2009      policy).    The    policy         provided     replacement          cost

coverage     for     the    building       with       a   limit      of        $3,425,000,

replacement cost coverage for the building's contents with a

limit of $200,000, and business interruption coverage with a

limit of $400,000.

       An appraisal conducted after the fire, however, revealed

that the building's actual replacement cost was $6,395,247.32,

and the replacement costs of the contents exceeded the policy

limits. GNY paid plaintiffs the full payment of the coverage

limits under the policy, together with adjustments, for a total

of $4,070,000.

       Plaintiffs and GNY Enter Into a Litigation Agreement

       In   March    2011,     plaintiffs           entered   into        an     agreement

(litigation agreement) with GNY to pursue litigation related to

the losses resulting from the fire. The litigation agreement

states that "GNY [] paid [plaintiffs] the full amount of its

coverages" under plaintiffs' policy, which, after adjustments,

totaled $4,070,000, but that "losses in excess of the GNY policy

limits" remained. Plaintiffs and GNY agreed to sue "any and all

persons     or   entities     that   may       be   responsible    for         causing    or

contributing to the fire loss."

                                           4                                      A-2221-15T4
       The litigation agreement provided that GNY would "institute

suit   on   behalf    of    itself   by       way    of   subrogation,"      and   that

plaintiffs    would    institute      separate            litigation   "to    recover

monies for the damages sustained . . . in excess of the amounts

paid by GNY." GNY agreed to incur all litigation costs and that

any recoveries, "whether by way of settlement or judgment, with

respect to the lawsuit brought by GNY . . . [would] be shared

equally between [plaintiffs] and GNY." Plaintiffs and GNY agreed

that plaintiffs would retain all monies they recovered in their

malpractice action against BHI.

       The Lawsuits Filed by Plaintiffs and GNY, and BHI's Third-
       Party Complaint Against GNY

       In July 2011, GNY filed suit asserting subrogation rights

for plaintiffs' losses against the individuals alleged to have

set the fire and their employers,2 as well as Steven L. Holt,

Safe & Sound Security and Telecommunication (Safe & Sound), and

S.S.    Sprinkler     Co.    (S.S.   Sprinkler).3           The   former     provided

security    alarm    system    services        and    the    latter    provided     the

sprinkler system for the bowling center.

2
  It was determined the fire was set by individuals affiliated
with a competitor of the bowling center, and those individuals
were criminally prosecuted.
3
  The complaint was filed in the name of Strathmore Insurance
Company, an affiliate of GNY.

                                          5                                   A-2221-15T4
    Plaintiffs filed a separate complaint alleging insurance

broker malpractice against BHI, claiming BHI negligently advised

plaintiffs    concerning   the      amount     of    insurance    required         to

provide replacement cost coverage for a complete loss of the

bowling   center   building   and    its     contents    and,    as   a    result,

plaintiffs'     2009   policy    had       grossly      deficient     coverage.

Plaintiffs also asserted negligence claims against Safe & Sound

and S.S. Sprinkler.

    BHI answered plaintiffs' complaint, generally denying the

allegations and asserting affirmative defenses and cross-claims

against its codefendants for contribution and indemnification.

In March 2012, the court granted BHI's motion to consolidate

plaintiffs' and GNY's cases.

    A month later, plaintiffs and GNY released their respective

claims against Safe & Sound and S.S. Sprinkler. Plaintiffs and

GNY each received $500,000 from Safe & Sound and $450,000 from

S.S. Sprinkler. Safe & Sound and S.S. Sprinkler were dismissed

from the consolidated lawsuits.

    Two years later, in April 2014, BHI was granted leave to

file a third-party complaint against GNY for indemnification and

contribution.    BHI   alleged   GNY     was   obligated    under     an     agency

agreement to indemnify BHI from any civil liability arising out

of GNY's negligence "in processing or handling business placed

                                     6                                     A-2221-15T4
by   [BHI]       with   GNY."   BHI    also      alleged    GNY     conducted         annual

inspections        to   determine      the       appropriate       replacement           cost

coverage limits for the bowling center building, that GNY had a

duty to establish adequate annual policy limits, and that GNY

breached its duty by undervaluing the full replacement costs of

the building.

      On May 16, 2014, plaintiffs amended their complaint adding

negligence        claims   against     GNY       and     dismissing      their        claims

against all of the remaining defendants except BHI. Plaintiffs

subsequently dismissed their claims against GNY.

      The Court Grants Summary Judgment                      and    Dismisses          BHI's
      Third-Party Complaint Against GNY

      GNY filed a summary judgment motion seeking dismissal of

BHI's   third-party        complaint.       On    August    14,    2015,      the     motion

court issued a detailed written decision and entered an order

granting GNY's motion for summary judgment and dismissing BHI's

third-party complaint with prejudice. The court found GNY had

neither      a    contractual    nor    a       common    law     duty   to    establish

coverage limits sufficient for the full replacement costs for

the bowling center, or to indemnify BHI for its negligence.

      Plaintiffs' Negligence Claim Against BHI – Pretrial Rulings

      As a result of the court's dismissal of BHI's third-party

complaint against GNY, the only remaining claim for trial was

                                            7                                       A-2221-15T4
plaintiffs' insurance malpractice claim against BHI. In advance

of trial, plaintiffs moved to bar BHI from presenting evidence

of comparative negligence against plaintiffs, arguing BHI waived

the defense by failing to plead it in its answer. BHI admitted

it failed to plead comparative negligence but argued plaintiffs

were on notice it would pursue a comparative negligence defense

based on BHI's answers to interrogatories and expert reports.

    The trial court found BHI waived the right to pursue a

comparative negligence defense by failing to raise it in its

pleadings   in    accordance   with   Rule    4:5-4.   The    court   rejected

BHI's argument that plaintiffs were on notice that comparative

negligence would be at issue. However, the court ruled that BHI

could   present     evidence    showing      plaintiffs      had   "the    best

knowledge and ability to determine [policy] limits" as relevant

to proximate causation.

    BHI also moved in limine for an order permitting it to

introduce evidence showing plaintiffs received $4,070,000 from

GNY, and plaintiffs and GNY received a total of $1,900,000 from

Safe & Sound and S.S. Sprinkler. Plaintiffs were entitled to the

replacement costs under the policy only if they undertook to

                                      8                               A-2221-15T4
rebuild the bowling center.4 BHI sought to introduce evidence

showing plaintiffs received settlement funds and could afford to

rebuild the bowling center but opted not to do so. Plaintiffs

intended to introduce evidence showing that because of BHI's

negligence,      they   received       insurance     proceeds        that    were

insufficient to fund the rebuilding of the bowling center.

      The    court   granted   BHI's     motion    to    introduce     evidence

showing the funds plaintiffs received from GNY and the other

tortfeasors but denied BHI's request to inform the jury about

the   $950,000    GNY   received   from    by     Safe   &   Sound    and    S.S.

Sprinkler.

      B.    The Trial

      The record developed at trial showed that brothers Charles

and John Loyle opened the bowling center in 1970. Charles,5 John,

and the Loyle family, including Charles's son, Michael, operated

the bowling center thereafter.

4
  Under the GNY policy, plaintiffs were entitled to receive
replacement costs if they rebuilt the bowling center, and only
actual costs if they did not rebuild. Generally, the amount of
actual costs would be less than replacement costs because actual
costs are calculated based on the actual cost of the building
and contents less applicable amounts for depreciation.    On the
other hand, replacement costs are calculated on the cost of
replacing the building and its contents following a loss.
5
  Because this case involves multiple members of the Loyle
family, we use first names for ease of reference. We intend no
disrespect in doing so.

                                    9                                   A-2221-15T4
    A BHI employee, broker David Stanton, sold plaintiffs the

2009 policy. In their complaint, plaintiffs alleged that BHI,

through Stanton, negligently provided erroneous advice that the

2009 policy limits were sufficient to cover the full replacement

cost of the bowling center building and its contents in the

event of a total loss.

    Although   plaintiffs'     negligence     claim   is   founded    on   the

lack of sufficient insurance coverage under the 2009 policy, the

parties presented evidence at trial concerning the GNY policies

plaintiffs purchased through Stanton and BHI from 1998 to 2009.

Many of BHI's arguments on appeal are premised on the court's

rulings   concerning   evidence    about     the   1998    policy,   and     we

therefore summarize the testimony and evidence pertinent to the

judge's rulings concerning evidence of the 1998 policy that are

challenged on appeal.

    Charles's Testimony and the 1998 Notes

    Charles    was   the   first   witness   to    testify   at   trial.     He

explained his interactions with Stanton concerning plaintiffs'

first purchase of a GNY policy in 1998. The policy was effective

April 1, 1998 to April 1, 1999, and provided replacement cost

coverage for the building with a limit of $2,300,000, personal

property insurance that covered the building's contents with a

limit of $200,000, and business interruption insurance with a

                                   10                                A-2221-15T4
limit of $400,000.

       Charles testified that after purchasing the 1998 policy,

plaintiffs obtained an appraisal of the bowling center from the

Thompson-Loyle Company, Inc., a company owned in part by his

nephew.      The   appraisal    was    memorialized    in   a   report    that

estimated the bowling center's building and contents replacement

costs to be $3,650,000.

       Charles was asked if he provided Stanton with a copy of the

Thompson-Loyle appraisal report. Charles responded that based on

his "internal notes," he believed he gave Stanton a copy of the

report during a September 1998 meeting. Charles then said, "I

checked my notes this morning." BHI's counsel objected, arguing

plaintiffs had not produced any notes concerning the September

1998 meeting during discovery and that Charles should not be

permitted to rely upon whatever notes he reviewed to refresh his

recollection about the meeting.

       The court conducted an N.J.R.E. 104 hearing concerning the

late production of the 1998 notes. Charles, then eighty-eight

years old, testified that the 1998 notes were salvaged from the

fire and kept at his residence. He could not recall if he had

sent   the    1998   notes     to   BHI's   counsel.   Plaintiffs'   counsel

represented that the notes were not previously provided to him.

       Charles stated he had other records with him in court that

                                      11                             A-2221-15T4
he   reviewed      prior     to     his    testimony.        He     also   said    he    had

additional records at his home that he reviewed in anticipation

of testifying. The court adjourned the proceedings to permit

counsel's review of the records Charles had in court and to

permit Charles to retrieve and provide counsel with the other

records     from      his   home.    All    of       the    notes    and   records      were

provided to counsel that day.

      The next day, after reviewing the notes and records, BHI's

counsel requested that Charles be precluded from referring to or

testifying about two notes concerning his 1998 meetings with

Stanton. Counsel also requested that the jury be instructed to

disregard Charles's testimony from the previous day about the

notes.    BHI    argued     the     failure      to    produce       the   notes     during

discovery prejudiced BHI because their production during trial

constituted unfair surprise, impacted counsel's trial strategy

including       her    opening      statement,         and     improperly        bolstered

Charles's credibility.

      The     court    overruled      BHI's      objection        and   determined      that

based    on     Charles's     testimony         at    the    N.J.R.E.      104    hearing,

Charles did not intend "to deceive" anyone by failing to produce

the 1998 notes, and plaintiffs' reliance on the 1998 notes would

not "substantial[ly] change . . . the theory of the case." The

court concluded that any prejudice to BHI could be remedied by

                                           12                                      A-2221-15T4
permitting counsel to take Charles's deposition.

       The court rejected BHI's request to depose Michael Loyle,

but Michael was in court, and provided sworn testimony outside

the presence of the jury that he never saw the notes prior to

trial. There was no evidence Michael was present during the

September 1998 meeting between Charles and Stanton. The court

also   initially    denied   BHI's   request    to    re-depose   plaintiffs'

expert William C. Stewart, Jr. concerning the notes. The trial

was    paused     and   BHI's   counsel      took     Charles's    deposition

concerning the notes that day.

       The trial resumed and Charles testified that the 1998 notes

refreshed   his    recollection      about   conversations    he    had   with

Stanton concerning plaintiffs' first GNY policy. Based on the

information contained in the first note, Charles testified that

he met with Stanton in September 1998 and provided Stanton with

the    Thompson-Loyle     appraisal       report,    which   estimated     the

insurable value of the bowling center building was $2,160,415,

and the replacement cost of equipment                was $1,540,000, for a

total insurable value of $3,650,000 after adjustments.

       Charles testified that the note concerning the September

1998 meeting refreshed his recollection that he gave Stanton a

copy of the appraisal, but that Stanton calculated a replacement

cost for the building at $2,145,750, based on an estimated cost

                                     13                              A-2221-15T4
of $75 per square foot multiplied by the 28,610 square footage

of the center.6 Stanton also estimated the replacement value of

the equipment was $960,000, based on a calculation of $30,000

for each of the center's thirty-two bowling lanes. According to

Charles, the equipment valuation was rounded up to $1,000,000,

and therefore Stanton's total replacement cost valuation for the

building and its contents was $3,145,750. Stanton applied an

eighty-percent coinsurance factor7 to the total valuation, which

6
  The building valuation Charles attributes to Stanton was only
$15,000 less than the valuation of the building in the Thompson-
Loyle appraisal report. Approximately $485,000 of the $500,000
difference between the appraisal and Stanton's valuation is
attributable to the values assigned by each to replacement costs
for the building's contents.
7
  As later explained by plaintiffs' expert, William C. Stewart,
Jr., coinsurance rates require an insured to carry a policy
limit equal to or above a specified percentage of the total
replacement value of the property insured. A failure to carry a
policy limit at the required percentage results in a penalty to
an insured for a claim for less than a total loss. For example,
where an eighty-percent coinsurance rate applies and a property
is worth $200,000, the insurance policy must have a limit of at
least $160,000 for the insured to collect 100 percent of any
partial loss from the insurer. If the insured carries only a
$120,000 limit, and suffers a $10,000 loss, the insurance
company pays the insured only $7500 because $120,000 is only
three-quarters of $160,000. The remaining $2500 of the loss
would be borne by the insured because the policy limit was not
eighty percent of the property's replacement value. The amount
of the coinsurance percentage is not directly an issue in this
case because there was a total loss. However, an accurate
valuation of the replacement cost of the insured property is
essential to ensure that after the coinsurance rate is applied,
the insured can collect 100 percent for a partial loss claim.

                             14                         A-2221-15T4
resulted in an insurance requirement of $2,516,600, and Stanton

recommended that Charles purchase insurance with a $2,700,000

limit. Charles asked Stanton to forward a letter recommending an

increase in the coverage from plaintiffs' then-current coverage

of $2,300,000 to $2,700,000, but he never received the letter.

      Charles also testified concerning a second note he used to

refresh his recollection that on October 1, 1998, he received a

notice changing the policy limits to $2,800,000, instead of the

$2,700,000 he had discussed with Stanton. He called Stanton's

office and left a message requesting that Stanton send a letter

recommending    an    increase    in    the   coverage   to   the   $2,800,000

amount in the notice.

      Thus, the GNY policy plaintiffs first purchased through BHI

in April 1998 was amended effective November 1998 to increase

the building coverage from $2,300,000 to $2,800,000. The amended

policy did not, however, alter the $200,000 coverage limit for

the   building's     contents    and   the    $400,000   coverage   limit   for

business income.

      Charles testified to matters beyond those based on the 1998

notes.   He   explained   the    GNY    insurance   policy    was   thereafter

renewed annually through Stanton and BHI until the fire occurred

in 2010. According to Charles, each March plaintiffs and Stanton

discussed the annual policy renewal. Charles stated the initial

                                       15                             A-2221-15T4
"[$]2,800,000   [building]    coverage      existed   for    three      years,"

following   1998,   then   increased   to   $3,120,000      for   the     policy

period of April 1, 2002 to April 1, 2003.

    In March 2003, plaintiffs transferred $537,000 in bowling

equipment from Loyle, LLC, to Elyol, Inc.8 Charles drafted a

letter to Stanton dated March 20, 2003, explaining the equipment

transfer and asking if the contents coverage should be increased

from $200,000 to $600,000. Before Charles had a chance to mail

the letter, Stanton visited the bowling center and the parties

discussed the issue.

    During their March 2003 meeting, Charles again took notes

memorializing his conversation with Stanton.9 Charles testified

that according to his March 2003 notes, Stanton advised Charles

there was no need to increase the contents coverage based on the

equipment transfer. Stanton explained that all of the bowling

equipment was considered part of the building and therefore was

covered under the building coverage.

    Following the March 2003 meeting, plaintiffs renewed their

insurance coverage for the April 1, 2003 to April 1, 2004 policy

8
  Charles explained that Loyle, LLC owned the bowling center real
estate and Elyol, Inc. was the bowling center's operating
company.
9
  The March 2003 notes were produced in discovery and were not
the subject of any objections at trial.

                                 16                                     A-2221-15T4
period. The building coverage limit was increased to $3,425,000,

but the $200,000 coverage limit for the building's contents and

the $400,000 coverage limit for business income remained the

same. Following the changes to the 2003 policy, none of the

coverage    limits     were    adjusted   during    any    of     the   subsequent

annual policy renewals preceding the 2010 fire.

    In 2008, plaintiffs invested $431,000 in renovations to the

bowling center. Michael testified that in March 2009, he showed

Stanton the renovations and asked if they needed more insurance.

According to Michael, Stanton said no additional insurance was

required     because     the    renovations     simply     replaced       existing

fixtures in the bowling center. Michael explained that he relied

on Stanton's advice because Stanton was the insurance expert.

    Plaintiffs' Expert

    Plaintiffs presented the testimony of William C. Stewart,

Jr., an expert on insurance producer and broker conduct. During

voir dire, Stewart explained that he reviewed the transcript of

Charles's     mid-trial       deposition.   BHI's      counsel      objected      to

Stewart     testifying    concerning      the   1998      notes    or   Charles's

deposition testimony, arguing that the court did not allow her

to re-depose Stewart after Charles disclosed the existence of

the notes, and that any opinion Stewart might have about the

notes would constitute an unfair surprise. The court excused the

                                     17                                   A-2221-15T4
jury to conduct an N.J.R.E. 104 hearing.

       Stewart    testified       during        the    hearing     that        based      on   his

review     of    the    1998     notes,        he     believed     Stanton             wrongfully

discounted the Loyle-Thompson appraisal valuing the building at

"3.6    million"       in   favor      of      his    personal        appraisal          of    "2.7

million."       Stewart        noted    that         Stanton     is      not       a    licensed

appraiser. He opined:

            [I]t was incorrect advice for [] Stanton to
            recommend [$]2.7 million in coverage because
            if you accepted the $3.6 million appraisal,
            [eighty] percent . . . would have been
            [$]2.88   million.  .   .  .   Stanton  was,
            therefore, recommending underinsurance and a
            coinsurance penalty because the property
            would have not been insured to [eighty]
            percent of its value.

       The court ruled BHI's counsel could use Stewart's N.J.R.E.

104 hearing testimony during her cross-examination of Stewart.

The judge also offered BHI's counsel the opportunity to depose

Stewart at plaintiffs' cost. BHI chose not to depose Stewart,

and the trial resumed.

       Stewart's       trial    testimony        concerning        the      1998       notes   was

consistent with his N.J.R.E. 104 hearing testimony. He opined

that Stanton's recommendation that plaintiffs increase building

coverage    to    $2,700,000        was     at       odds   with      the    Thompson-Loyle

appraisal valuation of the building at $3,650,000, and resulted

in     coverage    insufficient           to     satisfy       GNY's        eighty       percent

                                            18                                           A-2221-15T4
coinsurance requirement. He stated that the 1998 amended policy

raising the insurance coverage from $2,300,000 to $2,800,000 did

not   satisfy     the     eighty    percent            coinsurance       requirement.         On

cross-examination, Stewart admitted that the 1998 notes did not

specify that Stanton actually "recommended" anything.

      Stewart testified concerning Stanton's advice to Charles

during the parties' March 2003 meeting. He opined that Stanton's

advice that plaintiffs did not need to increase their contents

coverage from $200,000 to $600,000, despite plaintiffs' $537,000

equipment     transfer,          was        "absolutely          incorrect."          Stewart

explained    that    Stanton       should         have    considered       how       long   the

$200,000 contents limit had been in effect, whether plaintiffs

purchased   any     new    equipment,            and    reassessed       the    replacement

value of the bowling center's contents.

      Stewart   also      opined       as   to     the       sufficiency       of   Stanton's

advice to plaintiffs in 2008 and 2009. He testified that Stanton

failed to properly advise plaintiffs in 2008, when GNY increased

its   coinsurance       requirement          from       eighty      to   ninety      percent.

Stewart believed Stanton should have recommended that plaintiffs

obtain an appraisal due to the coinsurance increase and because

the building coverage had been the same since 2004.

      Stewart also testified that Stanton erred in March 2009 by

advising    Michael       that   plaintiffs            did    not    require        additional

                                            19                                        A-2221-15T4
insurance coverage as a result of the 2008 renovations. Stewart

admitted it was not the job of a licensed insurance broker to

determine the replacement value of a building, but testified

that if a client asks a broker whether more insurance is needed,

the broker "has an obligation to give an accurate answer because

. . . he's inviting reliance on his answer." Here, however,

Stewart   observed      that    Stanton         did    not   ascertain     which   items

included in the 2008 renovations were permanently affixed to the

structure and thus considered part of the building, and which

were moveable and thus considered contents under the policy.

    Stewart also pointed to Stanton's failure to request the

costs of the renovations. Stewart testified that if Stanton was

unaware   of    the    costs,    he    could          have   recommended    plaintiffs

consult     with     "somebody     qualified           to    appraise"   the   bowling

equipment, and then evaluated their coverage needs. Stewart had

no evidence Stanton took such action.

    BHI's Mistrial Motion

    Following Stewart's testimony, BHI moved for a mistrial,

arguing BHI was prejudiced by the introduction of Charles's 1998

notes that were not provided during discovery, and that the

prejudice      was    compounded      by    the       fact   that   counsel    was   not

permitted to re-depose Michael or Stewart. The court denied the

motion, reiterating that Charles did not intentionally withhold

                                           20                                  A-2221-15T4
the 1998 notes, and that any potential prejudice was ameliorated

because counsel had been permitted to depose Charles about the

notes, question Michael and Stewart outside of the presence of

the jury, and because BHI was permitted to depose Stewart but

opted not to do so. The court also noted it had ruled that BHI's

expert would be permitted to offer opinions based on the 1998

notes, and Charles's and Stewart's testimony about them, during

the expert's testimony on BHI's behalf.

       Stanton's Deposition Testimony

       Plaintiffs read portions of Stanton's deposition transcript

to    the    jury    including    his       recollection           of    the   March       2009

discussion     with     Michael    about      the       2008       renovations.      Stanton

testified     the    renovations      consisted         of     replacements        of     "like

quality      equipment    with       like     quality          equipment,"         that     was

"already      covered    in    [plaintiffs'             policy]         building     limit."

Stanton informed Michael "it was not necessary to add to the

building coverage at that time."

       The    jury     also    heard        Stanton's          deposition          testimony

explaining his understanding of "replacement coverage." Stanton

was asked during his deposition "if one of your insured had

$100,000     coverage     on   the    building          and     the     loss   is    .     .   .

$150,000[,] and has a replacement coverage in the policy, does

the   insured       receive    $150,000       or    .    .     .    $100,000?"       Stanton

                                        21                                          A-2221-15T4
replied: "[T]hey would receive the $150,000." Other evidence at

trial showed Stanton's understanding was incorrect.

      Testimony of GNY's Underwriter, Phillip Wu

      Plaintiffs called Philip Wu, a GNY employee and underwriter

for plaintiffs' 2009 GNY policy to testify that GNY conducted an

annual physical inspection of the bowling center and, based on

the   inspection,       entered   data     into   a     computer    program     called

Marshall-Swift, which calculated the replacement value of the

bowling center building. GNY used the Marshall-Swift analysis to

determine      the   policy   limits      and    the    policy    premium    for    its

internal use. The report was not shared with brokers and the

reports for the bowling center were not provided to BHI.

      Wu   explained      that    GNY    would    not    permit     an    insured     to

purchase a policy with building replacement cost coverage limits

less than the amount calculated by the Marshall-Swift analysis.

However, if an insured showed that the replacement value was

more than the value generated by the Marshall-Swift analysis,

the insured could purchase insurance with a higher limit by

paying     a   higher    premium.       Based    on    the   2009   Marshall-Swift

analysis, Wu used a replacement cost of $3,306,000 to calculate

plaintiffs' insurance premium for the building coverage.

      Stanton's Trial Testimony

      Stanton testified as a defense witness. He                         has been an

                                         22                                   A-2221-15T4
insurance        broker       since      1993,      specializing            in     the     field    of

bowling alleys. He corrected his deposition testimony concerning

the    meaning        of     "replacement           cost,"      explaining          he     confused

"replacement cost" and "guaranteed replacement cost," and stated

he never told plaintiffs they could recover more from GNY than

their policy limit.

       Stanton        testified       that     over      the    course        of    his    business

relationship          with    plaintiffs,        they      never       wanted       the    building

coverage limit increased or expressed dissatisfaction with the

contents     coverage         limits.       Stanton       did    not        believe      plaintiffs

ever   wanted         additional         coverage        because      they       were      concerned

about the amount of their premiums.

       Stanton was questioned about the Thompson-Loyle appraisal

report. He denied that Charles provided him with the report in

1998   or    that      they       even   met     that     year     to       discuss      increasing

coverage.        He    also       denied    giving       Charles        a    replacement         cost

estimate of $2,700,000. On cross-examination, however, Stanton

stated      he   was       "sure"     and    "guess[ed]"         a    meeting        occurred       in

September        1998.       He    admitted         he    had    no     reason        to     believe

Charles's 1998 notes were inaccurate and stated that the second

note accurately documented that Charles received a November 4,

1998 endorsement increasing the policy limits to $2,800,000.

       Stanton was also questioned about his March 2003 meeting

                                               23                                           A-2221-15T4
with Charles. Stanton initially testified that he had no memory

of a March 2003 meeting or if Charles asked if the bowling

center should increase its business contents coverage based on

its $537,000 equipment transfer. However, Stanton admitted on

cross-examination that the March 2003 meeting occurred and that

he advised plaintiffs the equipment transfer did not constitute

a change in the building's contents necessitating an increase in

the policy limits.

    Stanton further testified that he could not recall if he

advised plaintiffs that between 2008 and 2009, GNY increased the

coinsurance    requirement   on     plaintiffs'    policy   from   eighty    to

ninety percent but stated that in any event, the change was

reflected     "in   the   document."      On   cross-examination,    Stanton

stated he did not discuss the significance of the increase with

plaintiffs.

    Stanton     testified    that    in   2009,   Michael   showed   him    the

renovations that were made to the bowling center, but he denied

that Michael asked about an increase in coverage and that he

advised Michael not to buy more insurance. On cross-examination,

however, Stanton admitted that Michael asked him whether the

renovations warranted an insurance increase, and that he told

Michael the renovations were merely replacement costs that were

already "figured into the building [coverage] rate."

                                     24                              A-2221-15T4
       Stanton also explained that he did not propose increasing

the building coverage for the April 1, 2009 to April 1, 2010,

policy   year        based   on     GNY's     analysis      and   valuation       of    the

building. When asked why he did not propose an increase when the

coinsurance rate increased from eighty to ninety percent, he

replied, "I just relied on [GNY's] value." Stanton acknowledged

that   the     GNY    policy       contained     a   provision      stating      that   its

reports and inspections were for GNY's internal purposes only.

He also acknowledged that GNY did not conduct an inspection of

the    building       for    the    2009     policy     until     May    2009,    yet     he

submitted that year's policy proposal to plaintiffs in March

2009 and the policy, with unchanged coverage limits, was renewed

and became effective in April 2009.

       BHI's Expert James R. Klagholz

       James    R.     Klagholz       testified       as    BHI's       expert    in    the

profession of insurance brokers and producers. He opined that in

BHI's dealing with plaintiffs, its actions were consistent with

the customary standards of care in the industry. He explained

that it is not the job of an insurance broker to calculate the

actual   replacement         value     of    buildings,      personal     property,       or

lost   income.       According       to     Klagholz,      brokers      are   simply    not

qualified to determine appropriate policy limits.

       Klagholz testified the 1998 Thompson-Loyle appraisal report

                                            25                                    A-2221-15T4
demonstrated plaintiffs were aware that a certified real estate

appraiser        had     inspected       their     building       and       estimated       its

replacement       cost      as   $3,650,000.       He    pointed      out    that     Charles

resisted     increasing          the    building    coverage      from      $3,120,155       to

$3,425,000 for the period April 1, 2003 to April 1, 2004. He

opined that Charles's 2003 notes demonstrated that Charles was

not willing to purchase additional insurance coverage even when

it was suggested.

       Klagholz testified that Stanton's advice to Michael during

their     2009     meeting        was    correct        because      plaintiffs       had     a

replacement       cost      policy;      that    coinsurance         had    absolutely       no

applicability          to   plaintiffs'      fire       losses    because      plaintiff's

suffered a total loss; and that it was reasonable for Stanton to

rely    on       GNY's      valuation       in      determining         the        building's

replacement cost value. Klagholz concluded that neither BHI nor

Stanton    did     anything       incorrect       in    the   sale    of    the     2009    GNY

policy to plaintiffs.

       On cross-examination, Klagholz agreed it would be improper

for an insurance broker to do an independent calculation of a

building     and        its      contents        replacement       cost       to     make     a

recommendation for insurance coverage limits. He explained that

if a client asks a broker if insurance coverage limits should be

raised, the broker should not advise the client the coverage is

                                            26                                       A-2221-15T4
adequate but should instead advise the client that the broker is

not qualified to calculate the value of a client's assets.

      The Verdict

      The jury returned a verdict finding BHI negligent, and that

BHI's    negligence        proximately       caused    plaintiffs'        damages.     The

jury found plaintiffs' total loss from the fire was $6,840,000,

representing       the     sum    of   its    findings      as    to     building     loss

($5,600,000),       business      interruption         ($750,000),        and    contents

loss ($490,000). The court molded the verdict by deducting the

sums paid by GNY under the policy ($4,070,000), and the amounts

recovered by plaintiffs from Safe & Sound and S.S. Sprinkler

($950,000)       from       the    amount      of      plaintiffs'         total      loss

($6,840,000) for a damage award of $1,820,000. The court also

awarded    $178,808.77       in    prejudgment        interest     and    costs     for   a

total judgment of $1,998,808.77.

      BHI's New Trial Motion

      BHI moved for a new trial, claiming the admission of the

1998 notes and Charles's corresponding testimony deprived BHI of

a fair trial. The court issued a detailed written opinion and

entered    an      order    denying     BHI's       motion,      finding      there    was

sufficient      evidence     to    support     the    jury's     determination,        and

that the jury "evidently resolved the conflicting accounts of

the     incident    between       Charles      []     and   Stanton      by     crediting

                                         27                                      A-2221-15T4
[p]laintiffs' version, which was corroborated by trial testimony

and other statements."

    The      court     acknowledged        that        Charles's        1998         notes

contradicted Stanton's trial testimony and likely affected his

credibility, but described the notes as "one of the numerous

evidential    considerations"      utilized       by   the      jury    to    determine

credibility. The court also found the notes "did not involve a

wholesale-change in the presentation of [p]laintiffs' version of

the incident," and "did not deviate significantly from pre-trial

deposition    testimony."      Moreover,     the    court       concluded      it     took

sufficient remedial measures in response to the late production

of the notes to ensure BHI received a fair trial.

                                      II.

    BHI      first    argues    the   court        erred     by    permitting          the

introduction of Charles's undisclosed 1998 notes memorializing

his September 1998 meeting with Stanton and allowing testimony

based on the notes. BHI contends the notes were integral and

material and, therefore, their late production caused prejudice

that could not be remedied. The notes, BHI argues, were the

"smoking     gun"    that   altered    the    entire       trial.       We     are     not

persuaded.

    BHI      challenged     the    admissibility           of     the        notes    and

corresponding testimony in different contexts during the trial.

                                      28                                        A-2221-15T4
First,      BHI    objected    to     both    Charles        and    Stewart's           testimony

concerning the notes.10 Second, BHI sought relief in the form of

a    mistrial      motion    and     motion       for   a    new    trial        based    on   the

admission         of     testimony     about        the      notes.        We     address      the

objections and motions in turn.

       A.        BHI's Objections to              Testimony         and     Evidence        About
                 Charles's 1998 Notes

       BHI argues the court erred by permitting Charles to refresh

his    recollection          based     on     the       1998       notes        and     testimony

concerning        the     notes.   BHI   contends           the    court    compounded         its

error by permitting Stewart to supplement the opinion contained

in his expert report by testifying about the notes and expanding

his opinion based on the notes.

       "When a party fails to comply with discovery, the trial

court,      in    its    discretion,     may      impose       appropriate            sanctions."

Allis-Chalmers Corp. Prop. Liab. Tr. v. Liberty Mut. Ins. Co.,

305 N.J. Super. 550, 557 (App. Div. 1997). "The application of

sanctions is consigned to the sound discretion of the court."

Brown v. Mortimer, 100 N.J. Super. 395, 401 (App. Div. 1968).

       We    have       recognized    that     "[p]reclusion          of        evidence     as   a

10
   BHI did not challenge the authenticity of the notes, the
admissibility of the notes had they been timely produced in
discovery, or Charles's right to testify about the 1998
conversations with Stanton without reference to the notes.

                                             29                                          A-2221-15T4
sanction       for     failure     to    provide     notice      or    make    required

disclosures is available 'in the limited circumstances where a

lesser sanction is not sufficient to remedy the problem caused

by an inexcusable delay . . . thereby resulting in substantial

prejudice to the non-disclosed party.'" Manorcare Health Servs.,

Inc. v. Osmose Wood Preserving, Inc., 336 N.J. Super. 218, 235

(App. Div. 2001) (emphasis added) (quoting Mitchell v. Procini,

331 N.J. Super. 445, 453-54 (App. Div. 2000)).

       In    exercising     its    discretion,       the    trial      court's       chosen

"sanction must be just and reasonable." Lindenmuth v. Holden,

296 N.J. Super. 42, 52 (App. Div. 1996), certif. denied, 149

N.J.    34     (1997).    The     court    can      suspend      the   imposition          of

sanctions "(1) where there is an absence of a design to mislead;

(2) where there is an absence of the element of surprise if the

evidence     is      admitted;    and    (3)   where     there    is   an    absence       of

prejudice       which     would     result     from      the     admission         of    the

evidence." Ibid.; see also Manorcare, supra, 336 N.J. Super. at

235    (suggesting       lesser    sanctions       may    be   adequate       to     remedy

surprise).

       These      standards      apply    whether    the    surprise        evidence       is

proffered through the form of lay or expert witness testimony.

See State v. Wolfe, 431 N.J. Super. 356, 363 (App. Div. 2013),

certif. denied, 217 N.J. 285 (2014). The trial court's decision

                                          30                                       A-2221-15T4
to exclude or admit expert testimony on a subject not covered in

the written report must "stand unless so wide of the mark that

it results in a manifest denial of justice." Bitsko v. Main

Pharmacy, Inc., 289 N.J. Super. 267, 284 (App. Div. 1996).

     Based on our careful review of the record, we discern no

basis to conclude the court abused its discretion in allowing

Charles and Stewart to testify concerning Charles's 1998 notes

and allowing introduction of the notes into evidence. Faced with

plaintiffs' failure to produce the notes during discovery, the

court immediately conducted an N.J.R.E. 104 hearing to determine

why the notes had not been produced during discovery and the

appropriate remedy for the failure.

     The record supports the court's determination following the

hearing   that   Charles's   failure   to   produce   the   notes     during

discovery was not the result of any design to mislead, and BHI

agreed.11 The court, however, recognized that the existence of

the notes and Charles's intended reliance on them constituted a

surprise for BHI. In order to ameliorate any prejudice from the

surprise, the court permitted BHI to take Charles's deposition.

11
   After hearing testimony from Charles, the court found there
was "probably . . . no intention to deceive," and offered BHI's
counsel the opportunity to cross-examine Charles on the issue.
BHI declined and stated, "I don't have any reason to believe
that [Charles] was intending to deceive anybody."

                                 31                                 A-2221-15T4
BHI was permitted to question Charles concerning the notes prior

to continuing Charles's direct testimony. Charles was the first

witness, his revelation concerning the notes came early in his

testimony, and his deposition afforded BHI ample time to address

the    testimony     and     the    notes      on    cross-examination.            BHI    was

thereafter well-positioned to address the testimony and evidence

with all subsequent witnesses at trial.

       BHI contends that the opportunity to depose Charles during

the    trial      could    not     remedy      the       prejudice      from    the      late

production of the notes because the notes changed plaintiffs'

theory of the case. BHI argues it was prejudiced because prior

to    the   discovery      of     the   notes,      plaintiffs'        theory      was   that

Stanton     and    BHI     were    negligent        by    never     recommending         that

plaintiffs        obtain     an     appraisal        report       to     determine        the

replacement value of the building and its contents. BHI asserts

that after the notes were discovered, plaintiffs' theory was

that Stanton was negligent by making his own calculation of the

value of the building and contents.

       As correctly determined by the trial court, the record does

not     support      BHI's        contentions.           Although      Charles's         1998

conversations       with     Stanton     provided         context      for   the    ensuing

annual renewals of the policy, the jury's verdict was based on a

determination that Stanton was negligent eleven years later in

                                          32                                        A-2221-15T4
2009. Plaintiffs' theory of negligence was that Stanton never

requested    an   appraisal    in     connection    with     the   2009        policy

renewal and that he was negligent in advising plaintiffs they

did not need increased coverage based on their improvements to

the bowling center. That theory never changed. Charles's notes

concerning the 1998 policy did not alter plaintiffs' theory of

BHI's negligence concerning the insurance coverage limits in the

2009 policy, which was the policy at issue in the litigation.

    Moreover, the evidence showed that the policy limits were

increased in 2003 based on conversations between Charles and

Stanton that were wholly unrelated to the 1998 notes. Charles's

notes   concerning      the   2003    conversations,        that   were        timely

produced     during   discovery,      supported     plaintiffs'         consistent

theory that Stanton was negligent in advising them there was no

need for changes in the policy limits. The evidence also showed,

without reference to the 1998 notes, that Stanton never advised

plaintiffs    about     the   2008    increase    in   the    coinsurance          and

otherwise provided erroneous advise about coverage limits at the

time the 2009 policy was purchased.

    Charles's testimony concerning the 1998 notes did not alter

plaintiffs'    theory    of   the    case   or   surprise    BHI   in    a     manner

requiring the exclusion of the evidence. This case does not

resemble the cases cited by BHI where exclusion was required.

                                      33                                     A-2221-15T4
See, e.g., McKenney v. Jersey City Med. Ctr., 167 N.J. 359, 369-

76 (2001) (finding the court abused its discretion in denying a

mistrial   motion   where      defense    counsel      withheld     disclosure     of

expert's   intention      to   deviate     from      his    earlier   opinion    and

elicited   the   testimony       after    the   plaintiff's        case-in-chief);

Wymbs v. Twp. of Wayne, 163 N.J. 523, 545-46 (2000) (reversing

the admission of defendant's surprise expert witness produced

twelve days into trial, who opined on a pivotal issue in the

case regarding the scene of an accident); Thomas v. Toys "R" Us,

Inc., 282 N.J. Super. 569, 580-82 (App. Div.) (concluding the

trial court properly excluded expert's references to x-ray films

plaintiff discovered on the day of trial in part because it left

defendant unable to rebut the evidence with his own expert),

certif. denied, 142 N.J. 574 (1995).

    We are therefore convinced that although BHI was surprised

by the production of the notes, it did not suffer any prejudice

that was not ameliorated by the court's curative measures of

requiring production of the notes and allowing BHI's counsel to

depose Charles.

    The     court   was    not    required      to    sanction      plaintiffs     by

barring    the   testimony     and   evidence,        and    did   not   abuse   its

discretion in permitting the testimony and evidence after BHI

deposed Charles. The court struck a balance and alleviated any

                                     34                                    A-2221-15T4
prejudice    to   BHI    by   allowing    its   counsel   to    depose   Charles

before resuming trial. See, e.g., Gaido v. Weiser, 227 N.J.

Super. 175, 192 (App. Div. 1998) (finding exclusion of expert

testimony not contained in the expert's report was not required

where the court permitted the expert's deposition at trial and

the testimony expanded upon the parties' defense, but did not

assert an unexpected defense), aff'd, 115 N.J. 310 (1989).

       For substantially the same reasons, we find the court took

sufficient measures to eliminate potential prejudice concerning

Stewart's expert testimony based on the 1998 notes. The court

again paused the trial in order to ascertain Stewart's intended

testimony outside the presence of the jury at an N.J.R.E. 104

hearing. At the hearing, Stewart explained that based upon the

1998 notes "as well as the [Thompson-Loyle] appraisal [report],"

Stanton incorrectly performed a valuation of the property and

its contents. Stewart further testified that Stanton was not a

licensed     appraiser    and   he   incorrectly    advised     plaintiffs       to

obtain $2,700,000 in building coverage, an amount that "did not

satisfy GNY's minimum [eighty percent coinsurance] requirement."

The court stated that BHI's counsel could cross-examine Stewart

with   his   N.J.R.E.     104   hearing    testimony,     and   offered     BHI's

counsel the opportunity to depose Stewart, which counsel elected

not to pursue. We discern no abuse of discretion in the trial

                                     35                                  A-2221-15T4
court's   chosen       remedial    measures     because        Stewart's       testimony

concerning the 1998 notes did not change his ultimate opinion

that   BHI    grossly     underinsured       the    bowling          center    based      on

Stanton's erroneous and careless advice about the 2009 policy.

See ibid.

       Stewart's    opinion        at   trial      was    primarily          based    upon

Stanton's failure to discuss with plaintiffs the impact of GNY's

increase of its coinsurance rate before renewing the policy in

2008, and his response to Michael's inquiries in 2009 about

whether the insurance limits should be increased. Stewart was

deposed on three occasions but was only asked about the parties'

1998 meeting at his first deposition, where he opined that BHI

should have advised plaintiffs to have the property appraised

before underwriting the 1998 policy.

       During his subsequent depositions, however, Stewart only

addressed Stanton's encounters with plaintiffs and the adequacy

of their insurance in 2003 and 2009. At trial, Stewart remained

largely      focused     on   those      encounters,           and     his     testimony

concerning the 1998 notes was brief and consistent with his

testimony during the N.J.R.E. 104 hearing. Stewart relied on the

1998 notes as additional support for the theory that Stanton was

negligent     by   failing    to    properly    advise         plaintiffs      of    their

insurance     coverage     requirements,        and      not    in     support       of   an

                                        36                                       A-2221-15T4
altered theory of negligence. See Gaido, supra, 227 N.J. Super.

at 192.

       We thus find no abuse in the court's discretion in allowing

Charles or Stewart to testify concerning the 1998 notes because

there was an absence of any design to mislead, and any prejudice

to BHI was cured by the court's remedial measures.

       B.     BHI's Motions for a Mistrial and New Trial

       Following Stewart's testimony, BHI moved for a mistrial,12

arguing again that BHI was prejudiced by the late production of

the notes, and that the prejudice was compounded by the fact

that counsel was not permitted to re-depose Michael or Stewart.13

       The court denied BHI's motion, reiterating that Charles did

not intentionally withhold the existence of the 1998 notes, and

that    the    court   took   sufficient   measures   to   eliminate   any

12
  BHI inaccurately asserts that it moved for a mistrial twice:
(1) during Charles's testimony on August 27, 2015, when the
existence of the 1998 notes first became apparent; and (2) after
Stewart's testimony. The record shows that BHI's counsel
indicated that she might move for a mistrial depending on the
court's remedial measures, but did not move for a mistrial until
Stewart's testimony concluded.
13
   As noted, BHI was offered the opportunity to depose Stewart
but opted not to do so. Michael was questioned briefly under
oath concerning the 1998 notes and testified he had never seen
them prior to the night before Charles's disclosure of them
during the trial. In addition, there is no evidence Michael was
present during the September 1998 meeting between Charles and
Stanton referred to in one of the 1998 notes.

                                   37                            A-2221-15T4
potential       prejudice.     The    court      noted   that     it       allowed   BHI's

counsel to depose Charles, permitted counsel to question Michael

on the record about his knowledge of the notes, conducted an

N.J.R.E.    104      hearing      regarding      Stewart's     testimony,         afforded

defense counsel the opportunity to depose Stewart, and allowed

BHI's    expert      to   opine    about    the    notes      without       amending     his

expert report.

    "The grant of a mistrial is an extraordinary remedy to be

exercised only when necessary 'to prevent an obvious failure of

justice.'" State v. Yough, 208 N.J. 385, 397 (2011) (quoting

State v. Harvey, 151 N.J. 117, 205 (1997), cert. denied, 528

U.S. 1085, 120 S. Ct. 811, 145 L. Ed. 2d 683 (2000)). "For that

reason, an appellate court should not reverse a trial court's

denial of a mistrial motion absent a 'clear showing' that 'the

defendant   suffered        actual       harm'    or   that    the    court      otherwise

'abused its discretion.'" Ibid. (quoting State v. Labrutto, 114

N.J. 187, 207 (1989)). "A decision by the trial court to deny a

motion    for    a   mistrial      'is    reviewable       only      for    an   abuse    of

discretion.'" Khan v. Singh, 397 N.J. Super. 184, 202 (App. Div.

2007) (quoting State v. Winter, 96 N.J. 640, 647 (1984)), aff'd,

200 N.J. 82 (2009).

    In exercising its discretion in deciding a mistrial motion,

a trial court must consider the unique circumstances of the

                                           38                                     A-2221-15T4
case, and whether an alternative course of action short of a

mistrial is appropriate. State v. Smith, 224 N.J. 36, 47 (2016).

"For example, a curative instruction, a short adjournment or

continuance,        or        some    other    remedy,   may   provide   a     viable

alternative to a mistrial depending on the facts of the case."

Ibid.

      On appeal, BHI asserts the prejudice it suffered from the

late production of the 1998 notes was not cured by the court's

remedial measures. BHI asserts that the late disclosure of the

notes prevented it from deposing John E. Loyle, who drafted the

Thompson-Loyle appraisal report, and from obtaining any related

documents pertinent to the report. BHI further asserts it would

have approached its depositions of Charles and Michael with a

focus on whether they relied on Stanton's advice over that of

the     appraiser        of    the     Thompson-Loyle    appraisal     report,     and

retained an expert to opine concerning their decision.

      As noted, we discern no prejudice to BHI in the admission

of the testimony and evidence concerning the notes that was not

directly addressed by the court's remedial actions during the

trial. The record supports the trial court's decision that it

undertook     sufficient             alternative   actions     to   ameliorate     any

surprise or alleged prejudice created by the late discovery of

the 1998 notes.

                                              39                             A-2221-15T4
     We are not persuaded by BHI's arguments that it would have

pursued a different course of discovery had it known about the

notes earlier. BHI obtained the Thompson-Loyle appraisal report

during discovery and knew it was prepared in part by Charles's

nephew,   John    E.   Loyle,   but   chose    not     to   depose   him     during

discovery.   In    addition,    BHI's      assertion    that   it    would      have

retained an expert to address plaintiffs' purported comparative

negligence is contradicted by BHI's own position because BHI did

not plead comparative negligence as an affirmative defense, and

its expert's report did not opine that plaintiffs' disregard of

the appraisal report constituted negligence.14

     Moreover, and as noted, the 1998 notes did not establish

BHI's negligence in 2009, when the policy at issue was sold by

BHI. Again, the undisputed evidence showed that Stanton did not

advise plaintiffs to obtain an appraisal at that time, there was

no evidence Stanton calculated the value of the building and its

contents at that time, and the jury was asked only to determine

if BHI was negligent in its actions concerning the 2009 policy.

     In sum, the court did not abuse its discretion in denying

BHI's motion for a mistrial. BHI fails to make a clear showing

that the court's denial of its mistrial motion constituted "an

14
   As explained infra, we affirm the trial court's decision
barring BHI from pursuing a comparative negligence defense.

                                      40                                   A-2221-15T4
abuse of discretion that result[ed] in a manifest injustice."

Harvey, supra, 151 N.J. at 205.

    For the same reasons, we reject BHI's claim that the court

erred in denying its request for a new trial. "A trial judge may

only grant a motion for a new trial 'if, having given due regard

to the opportunity of the jury to pass upon the credibility of

the witnesses, it clearly and convincingly appears that there

was a miscarriage of justice under the law.'" Hill v. N.J. Dep't

of Corr. Comm'r Fauver, 342 N.J. Super. 273, 302 (App. Div.

2001)   (quoting      R.    4:49-1(a)),       certif.   denied,       171   N.J.   338

(2002). A "miscarriage of justice" may occur where there is a

"manifest lack of inherently credible evidence to support the

[jury's] finding," or where it is obvious the jury overlooked or

undervalued crucial evidence. Lindenmuth, supra, 296 N.J. Super.

at 48 (quoting Baxter v. Fairmont Food Co., 74 N.J. 588, 598

(1977)).

    In     applying     this    standard,      the   judge     must   evaluate     the

evidence with an eye toward correcting "clear error or mistake

by the jury." Dolson v. Anastasia, 55 N.J. 2, 6 (1969). The

judge   is   to   "take      into   account,     not    only    tangible     factors

relative     to   the      proofs   as   shown    by    the    record,      but    also

appropriate matters of credibility, generally peculiarly within

the jury's domain, and the intangible 'feel of the case' which

                                         41                                  A-2221-15T4
it has gained by presiding over the trial." Kita v. Borough of

Lindenwold, 305 N.J. Super. 43, 49 (App. Div. 1997) (quoting

Dolson, supra, 55 N.J. at 6).

       The court addressed BHI's new trial motion in a detailed

and    well-reasoned      written     opinion.           For   the        reasons    already

noted, as well as those set forth by the trial judge, we find no

miscarriage of justice in the jury's verdict and no merit to

BHI's contention that the court erred in denying the mistrial

motion. Hill, supra, 342 N.J. Super. at 302.

                                          III.

       Next, we consider BHI's argument that the trial court erred

in molding the verdict without crediting BHI $950,000 against

the jury's damage award for the amount GNY received from Safe &

Sound and S.S. Sprinkler. BHI contends it is entitled to the

credit   because    GNY    did      not    have      a   right       to    subrogation      of

plaintiffs' claims against the tortfeasors.

       Subrogation is an equitable device designed "to compel the

ultimate   discharge      of   an    obligation          by    the    one    who    in   good

conscience ought to pay it [and] . . . to serve the interests of

essential justice between the parties." Culver v. Ins. Co. of N.

Am., 115 N.J. 451, 455-56 (1989) (quoting Std. Accident Ins. Co.

v.    Pellecchia,   15    N.J.      162,       171   (1954)).        "In     an    insurance

context, [subrogation] fulfills the dual purposes of avoiding

                                          42                                        A-2221-15T4
unjust enrichment to an insured who obtains recovery for the

same injury from both his insurer and the tortfeasor and, in the

absence of such double recovery, of precluding the tortfeasor

from escaping all liability for damages that the tortfeasor has

caused." McShane v. New Jersey Mfrs. Ins. Co., 375 N.J. Super.

305, 309-10 (App. Div. 2005).

    Relying on Culver, supra, BHI claims GNY was not entitled

to subrogation of plaintiffs' claims until plaintiffs were made

whole. 115 N.J. at 456. BHI argues plaintiffs had not been made

whole at the time GNY asserted claims against Safe & Sound and

S.S. Sprinkler and therefore GNY did not have a subrogation

right   to   assert    claims     on    plaintiffs'        behalf   against     the

tortfeasors.

    In Culver, the Court considered an insured's challenge to

an agreement it reached with the insurer to divide the sums

recovered by the insurer from the tortfeasors. Id. at 453. The

insured sought a declaration the agreement was unenforceable in

part based on the argument that BHI makes here: that the insurer

had no right to subrogation because the insured had not yet been

made whole. Id. at 452.

    The      Court     rejected        the     argument,      explaining       that

"[s]ubrogation rights are created in one of three ways: '(1) an

agreement    between   the   insurer         and   the   insured,   (2)   a   right

                                       43                                 A-2221-15T4
created   by    statute,      or   (3)    a    judicial   "device      of    equity    to

compel the ultimate discharge of an obligation by the one who in

good conscience ought to pay it."'" Id. at 456-59 (citations

omitted). The Court recognized subrogation rights existed under

the insurance policy, and that equitable principles generally

permitted      the   assertion      of   subrogation      rights      only    after    an

insured was made whole, but held that an insured and insurer

could enter into an enforceable agreement permitting the insurer

to assert subrogation rights prior to the insured being made

whole. Id. at 457. The Court expressly rejected a requirement

that "the insured be made whole first from the settlement of a

subrogation      action"      where      the    insured    and    insurer      had     "a

contractual agreement to the contrary." Id. at 459.

    We therefore reject BHI's assertion that it was entitled to

a credit for the $950,000 recovered by GNY from the tortfeasors

because   GNY    could     not     properly     assert    subrogation        rights    on

plaintiffs' behalf. Pursuant to the litigation agreement between

GNY and plaintiffs, GNY was authorized to assert subrogation

claims    on    plaintiffs'        behalf      without    any    requirement         that

plaintiffs      first    be   made       whole.   See     id.    at   458-59.     BHI's

                                          44                                   A-2221-15T4
contentions to the contrary lack merit.15

                                     IV.

      BHI also argues the court erred by granting GNY's motion

for   summary    judgment   on    BHI's    indemnification    claim    because

there were genuine issues of material fact concerning whether

GNY owed a duty to BHI and plaintiffs. BHI asserts that GNY

conducted annual inspections of the property and calculated a

replacement value for the building that was used to determine

the   policy    premiums,   and   therefore     GNY   owed   BHI   a   duty    to

accurately      calculate   the    building's    replacement       value.     BHI

contends GNY's actions in calculating a replacement value that

BHI relied upon created a special relationship between GNY and

BHI that imposed a duty on GNY to calculate the replacement

15
   Because we find no support in the law for BHI's contention
that it was entitled to the $950,000 credit because GNY could
not   be  properly   subrogated  to   plaintiffs'  rights   until
plaintiffs were made whole, we need not address plaintiffs'
assertion that no credit was required because their agreement
with GNY constituted a reasonable effort to mitigate their
damages. We note only that plaintiffs had an obligation to take
reasonable steps to mitigate their damages, Covino v. Peck, 233
N.J. Super. 612, 616 (App. Div. 1989), and that BHI does not
dispute on appeal that plaintiffs' entry into the agreement with
GNY constituted a reasonable effort to mitigate damages. BHI
offers no evidence that the agreement or the agreed upon sharing
of the proceeds was an unreasonable exercise of plaintiffs' duty
to mitigate damages. See Prospect Rehab. Servs., Inc. v.
Squitieri, 392 N.J. Super. 157, 164 (App. Div.), certif. denied,
192 N.J. 293 (2007); Covino, supra, 233 N.J. Super. at 619;
Spaulding v. Hussain, 229 N.J. Super. 430, 444 (App. Div. 1988).

                                    45                                 A-2221-15T4
value     accurately.       BHI   claims     GNY    breached        that   duty     by

understating       the   replacement     value     of   the    building,   and    the

court erred by granting summary judgment                      by finding no duty

existed.16

     When reviewing a grant of summary judgment, we employ the

same standard used by the motion judge under Rule 4:46. Henry v.

N.J. Dep't of Human Servs., 204 N.J. 320, 330 (2010). First, we

determine whether the moving party has demonstrated there were

no genuine disputes as to material facts, and then we decide

whether      the    motion     judge's      application        of   the    law    was

correct. Atl. Mut. Ins. Co. v. Hillside Bottling Co., 387 N.J.

Super.    224,     230-31    (App.   Div.), certif.      denied, 189       N.J.   104

(2006). In doing so, we view the evidence in the light most

favorable to the non-moving party. Brill v. Guardian Life Ins.

Co. of Am., 142 N.J. 520, 523 (1995). We accord no deference to

the motion judge's legal conclusions, which we review de novo.

Manalapan Realty, L.P. v. Twp. Comm. of Manalapan, 140 N.J. 366,

16
   BHI sought indemnification against GNY only for plaintiffs'
losses due to the underinsurance for the full replacement cost
for the building. There was no evidence GNY conducted
inspections or valuations of the contents of the bowling center
to determine their replacement costs, or of plaintiffs'
potential business interruption losses. Thus, BHI does not claim
the court erred in dismissing its indemnification claim based on
plaintiffs' underinsured losses for the replacement costs of the
building's contents or the interruption of plaintiffs' business.

                                       46                                   A-2221-15T4
378 (1995). Applying these standards, and based on the summary

judgment record provided by the parties on appeal,17 we affirm

the court's grant of GNY's summary judgment motion.

      Notably, BHI alleged before the motion court that it was

entitled to contractual indemnification from GNY in part because

BHI   was   GNY's   agent      pursuant       to   an    agreement       between       the

parties. See Johnson v. MacMillan, 233 N.J. Super. 56, 61 (App.

Div.) (holding that "[a]s a matter of elementary agency law, the

negligence of an employee-agent is imputable to the employer-

principal, who must answer for it"), remanded on other grounds,

118 N.J. 199 (1989); accord Mazur v. Selected Risks Ins. Co.,

233 N.J. Super. 219, 226 (App. Div. 1989); Avery v. Arthur E.

Armitage Agency, 242 N.J. Super. 293, 300-01 (App. Div. 1990).

The court dismissed the claim, finding BHI was not entitled to

indemnification     pursuant     to    the    agency       agreement     because       BHI

terminated the agreement on April 3, 2007, two years prior to

the 2009 policy was executed. The record supports the court's

finding,    BHI   does   not    point    to    any      evidence    in     the     record

showing     otherwise,   and     BHI    does       argue    the    court    erred        in

17
    We   rely   upon  the   documents,  affidavits,  deposition
transcripts, and other materials that were submitted in BHI's
appendix pursuant to Rule 2:6-1(a)(1)(I). BHI represents these
materials comprised the record before the motion court, and GNY
does not argue otherwise.

                                        47                                       A-2221-15T4
rejecting its agency theory on appeal. An issue not briefed on

appeal is deemed waived. Jefferson Loan Co. v. Session, 397 N.J.

Super. 520, 525 n.4 (App. Div. 2008); Zavodnick v. Leven, 340

N.J. Super. 94, 103 (App. Div. 2001).

    BHI challenges the court's dismissal of its indemnification

claim to the extent the claim is premised on basic negligence

principles.    In   order   to   prevail    on    a    negligence         claim,   the

plaintiff must prove: "(1) that the defendant owed a duty of

care; (2) that the defendant breached that duty; (3) actual and

proximate causation; and (4) damages." Fernandes v. DAR Dev.

Corp., 222 N.J. 390, 403-04 (2015). The motion court dismissed

BHI's    indemnification    claim    finding      there    was       no    competent

evidence supporting a finding that GNY assumed a duty of care to

provide BHI or Stanton with an accurate valuation of the total

replacement costs of the building. Based on our review of the

motion record, we agree.

    "The existence of a duty to exercise reasonable care to

avoid risk of harm to another is a question of law." Fackelman

v. Lac d'Amiante du Quebec, 398 N.J. Super. 474, 486 (App. Div.

2008).   The   existence    of   a   duty   "is       largely    a    question       of

fairness or policy," and the inquiry involves the weighing of

the relationship of the parties, the nature of the risk and the

public interest in the proposed solutions. Wang v. Allstate Ins.

                                     48                                      A-2221-15T4
Co., 125 N.J. 2, 15 (1991). "[T]he legal determination of the

existence of a duty may differ, depending on the facts of the

case." Ibid.

      An insurer and its agents have "no common law duty . . .

to advise an insured concerning the possible need for higher

policy limits upon renewal of the policy. If such a duty would

be   in   the       public     interest,        it     is   better      established        by

comprehensive legislation, rather than by judicial decision."

Wang, supra, 125 N.J. at 11-12. However, it has been held that

brokers are liable for the negligent procurement of insurance on

behalf    of   an       insured   where    the       "broker     agrees    to    procure    a

specific insurance policy for another but fails to do so." Aden

v. Fortsh, 169 N.J. 64, 78 (2001); accord Rider v. Lynch, 42

N.J. 465, 477 (1964).

      "Liability         resulting    from       the    negligent         procurement      of

insurance is premised on the theory that the broker 'ordinarily

invites [reliance] on his expertise in procuring insurance that

best suits their requirements.'" Aden, supra, 169 N.J. at 78

(quoting Rider, supra, 42 N.J. at 477). "Because of the . . .

complexity         of    the   insurance        industry         and   the      specialized

knowledge required to understand all of its intricacies, the

relationship between an insurance agent [or broker] and a client

is   often     a    fiduciary      one."    Sobotor         v.    Prudential       Prop.    &

                                           49                                      A-2221-15T4
Casualty Ins. Co., 200 N.J. Super. 333, 341 (App. Div. 1984).

The fiduciary duty exists in part because an agent or broker is

sophisticated in the field of insurance and the client is not.

Id.   at     341-42.       "Insurance        brokers    (and     agents)    have     a

responsibility in law to act toward their less expert clients in

a   way    that    is    responsible    in    fact."    Id.    at   343   (quotation

omitted).

      The undisputed evidence showed that at all times relevant

to the issuance of the 2009 policy, BHI and Stanton acted as

independent insurance brokers. Generally, "[s]o separate are the

broker and the insurer that when the insured recovers against

the broker, the broker may not obtain indemnification from the

insurer." Weinisch v. Sawyer, 123 N.J. 333, 341 (1991); accord

Avery, supra, 242 N.J. Super. at 310-11. However, where a broker

can establish that the insurer is negligent, the insurer owes a

duty of contribution to the broker. See Johnson, supra, 233 N.J.

Super.     at     64    (explaining    that     "if    [the    insurer]    had   been

negligent, it would have been a joint tortfeasor owing joint and

several liability to plaintiffs and a duty of contribution to

[the broker]"); see also Rider, supra, 42 N.J. at 475 (observing

that regardless of the insurance broker's negligence, an insurer

would be liable to the insured if it had been negligent in

issuing the insurance policy).

                                        50                                  A-2221-15T4
      Here, the motion court found GNY did not owe a duty to

provide BHI with an accurate statement of the full replacement

costs     of   plaintiffs'           building      because    "no    evidence      has     been

presented that GNY agreed to take on the duty of valuing the

insured's property." The undisputed facts support the court's

conclusion.

      The evidence showed that GNY only used the Marshall-Swift

analysis       internally,        the    valuation      reports       generated       by    the

analysis were not provided to BHI or Stanton prior to the fire

and subsequent lawsuits, and Stanton never communicated with GNY

or   Wu    concerning          the    valuations.      Moreover,         the    GNY     policy

Stanton        sold       to    plaintiffs         expressly        provided       that     any

inspections          or    reports      undertaken      by     GNY      related     only      to

insurability and the premiums to be charged.

      GNY never advised BHI that the 2009 policy limits were

based     on   a     dispositive        determination        of   the    building's        full

replacement costs. In addition, Stanton and BHI knew GNY would

insure    the      building      up     to   its    appraised       value    and   that     the

policy     limit      for      the    building's      replacement           cost   could      be

increased       to    its      appraised     value,    but     did    not      recommend      an

appraisal in connection with the 2009 policy renewal.

      As noted by the motion court, BHI produced no letters or

certifications supporting its claim that GNY invited reliance on

                                             51                                       A-2221-15T4
its internal valuations that it used to determine insurability

and premiums. BHI did not submit an expert report supporting its

claim that GNY owed a duty to supply an accurate valuation of

actual replacement costs. There is no evidence GNY made any

representations       that    the     policy    limits      it     set    based    on    its

inspection and valuation constituted an accurate and complete

statement      of    the     full     replacement          costs       for   plaintiffs'

building. Moreover, Doreen Dulowski, the only BHI employee who

interacted with Wu and whose testimony was considered by the

motion court, acknowledged in her deposition testimony that the

most important factor in determining full replacement cost value

was "an appraisal from [the] insured showing what their value is

on [the] building."

       Thus,   BHI's      reliance     on    GNY     was    not    a     matter    of    any

imbalance of sophistication in the insurance industry or any

information asymmetry between the parties. See Sobotor, supra,

200 N.J. Super. at 342-43 (considering that the insured was "not

a   sophisticated         insurance    consumer"       in    determining          that    an

insurer and its agent had an affirmative duty to advise the

insured that increased coverage was available, and breached that

duty   because      the    parties    were     not    equally      situated       to    make

policy    decisions).         Rather,        GNY,     BHI        and     Stanton        were

sophisticated parties with expertise in the insurance industry,

                                        52                                        A-2221-15T4
BHI was well aware of its own independent duty to its client,

see id. at 341-42, and of its own obligations under the renewal

process   to   obtain    the   requisite      information,     including        an

appraisal, in order to accurately assess the replacement costs

for plaintiffs' building.

      As the motion court correctly recognized, the record is

bereft of evidence that Stanton relied on any determination by

GNY concerning the replacement cost of the building when he

erroneously    advised     plaintiffs    in   2009   that    no    additional

coverage was needed. Stanton never spoke with GNY's underwriter,

Wu.   Thus,    Stanton's    deposition     testimony    concerning         GNY's

alleged   actions   constitutes    inadmissible      hearsay      and   is    not

competent evidence sufficient to defeat GNY's summary judgment

motion. R. 1:6-6; Chicago Title Ins. Co. v. Ellis, 409 N.J.

Super. 444, 457 (App. Div.) (explaining that hearsay statements

"cannot be considered evidence in the summary judgment record

showing a disputed issue of fact"), certif. denied, 200 N.J. 506

(2009).

      In addition, the evidence showed that Stanton could not

have relied upon any GNY valuation of plaintiffs' building at

the time plaintiffs purchased the 2009 policy from him. First,

the information submitted to BHI for the renewal of the policy

indicated only that the coverage limits were based on the prior

                                  53                                    A-2221-15T4
year's policy. Second, although GNY provided BHI with policy

renewal information in March 2009, and the policy was renewed in

April, GNY's inspection that year was not completed until late

May 2009. Therefore, neither BHI nor Stanton could have relied

on any Marshall-Swift or other valuation analysis conducted by

GNY when Stanton advised plaintiffs that no additional insurance

was    required   and    sold       them    the   deficient    2009   policy.   See

Johnson, supra, 233 N.J. Super. at 62-63 (finding absent special

circumstances, an insurance broker's negligence is not imputed

to    the   insurer,    and    no    special      circumstances   existed    where

broker was acting solely in insured's interests in evaluating

its insurance needs and making recommendations).

       In sum, we find no reason to disturb the motion court's

finding that the evidence presented was insufficient to support

BHI's claim that GNY acted in a manner that imposed a duty upon

GNY to provide an accurate value of the full replacement costs

of the building.

                                            V.

       BHI's remaining arguments lack sufficient merit to warrant

a written discussion in an opinion. R. 2:11-3(e)(1)(E). We offer

only the following comments.

       We   reject     BHI's    contention        that   the    court   erred     in

precluding BHI from asserting comparative negligence against the

                                           54                             A-2221-15T4
plaintiffs at trial. BHI did not plead comparative negligence as

an   affirmative         defense,      and    thus,    waived    its     right       to    the

defense. R. 4:5-4; see also Brown v. Brown, 208 N.J. Super. 372,

384 (App. Div. 1986) ("[A]n affirmative defense is waived if not

pleaded     or     otherwise      timely          raised.").    In     addition,          BHI's

argument     that        plaintiffs       were       aware     BHI     would      rely       on

comparative negligence is not supported by the record and is

contradicted       by    BHI's    counsel's         representation      to     the     court.

Following    the        close    of    discovery      and    denial     of   plaintiffs'

summary     judgment       motion,       BHI's      counsel     stated,      "I      am     not

claiming         comparative          negligence.       I'm      not      even         saying

[plaintiffs]        were    negligent."            Moreover,    and     as     the        court

correctly        recognized,      New     Jersey       courts    generally        preclude

comparative fault defenses in professional malpractice cases,

and confine allegations of a client's negligence to issues of

proximate causation. Aden, supra, 169 N.J. at 75-78.

      We also reject BHI's argument that the court incorrectly

instructed the jury that BHI had the burden of proving it relied

on GNY's Marshall-Swift analysis in its determination of the

replacement cost of the building. The instruction was proper

because    BHI     asserted      an    affirmative      defense       that   plaintiffs'

losses were caused by "third parties over whom" BHI exercised no

control, and BHI argued at trial that it relied on GNY. BHI had

                                             55                                      A-2221-15T4
the burden of proving its affirmative defense. Walker Rogge,

Inc. v. Chelsea Title & Guar. Co., 254 N.J. Super. 380, 387

(App.   Div.   1992).   In   addition,   BHI   did   not   object   to    the

proposed instruction, and we find no plain error in its use, R.

2:10-2, because the jury was properly instructed concerning what

plaintiffs were required to prove to sustain their cause of

action against BHI. We therefore discern no basis to conclude

the challenged instruction was clearly capable of producing an

unjust result. Bldg. Materials Corp. of Am. v. Allstate Ins.

Co., 424 N.J. Super. 448, 487 n.14 (App. Div.), certif. denied,

212 N.J. 198 (2012).

    Affirmed.

                                  56                                A-2221-15T4