Opinion
DOCKET NO. A-0750-13T1
03-30-2015
KIRSTEN JENNINGS, an infant, by her G/A/L KEVIN JENNINGS, individually, and CAROL JENNINGS, Plaintiffs-Appellants, v. CAROL COLLINS, Defendant-Respondent.
Kimberly L. Gozsa argued the cause for appellant (Levinson Axelrod, P.A., attorneys; Ms. Gozsa, on the brief). Paul J. Endler, Jr., argued the cause for Bay State Insurance Company (Methfessel & Werbel, attorneys; Mr. Endler, of counsel and on the brief; Edward D. Dembling, on the brief).
NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION Before Judges Yannotti and Hoffman. On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. L-5337-06. Kimberly L. Gozsa argued the cause for appellant (Levinson Axelrod, P.A., attorneys; Ms. Gozsa, on the brief). Paul J. Endler, Jr., argued the cause for Bay State Insurance Company (Methfessel & Werbel, attorneys; Mr. Endler, of counsel and on the brief; Edward D. Dembling, on the brief). PER CURIAM
Plaintiffs appeal from the Law Division order entered on August 30, 2013, which denied their application for counsel fees after they prevailed on an appeal challenging a disclaimer of coverage by Bay State Insurance Company ("Bay State") under a homeowner's policy. We affirm.
This case arises out of an October 3, 2006 accident when then three-year-old Kirsten Jennings suffered serious injuries while in the care of defendant Carol Collins, a close family friend. Kirsten was sitting in a shopping cart that Collins was pushing at a jogging pace. Collins lost her balance and pulled the cart down, causing serious injuries to Kirsten.
On November 22, 2006, Kirsten's father, Kevin Jennings, filed suit as guardian ad litem for his daughter, seeking damages. Upon receipt of the lawsuit, Collins submitted the claim to her homeowner's insurance company, Bay State, for defense and indemnification.
At a deposition, Collins stated that she typically (but not always) received thirty-five dollars per day for babysitting Kirsten. Bay State then filed a separate action seeking a declaratory judgment that it had no obligation to defend or indemnify Collins for Kirsten's injuries. Specifically, Bay State claimed that its coverage did not apply because Collins was operating a business at the time of the accident. Collins disputed the characterization by Bay State that her babysitting activities constituted a business.
The parties eventually entered into a $225,000/$75,000 high-low settlement agreement, which was memorialized in an order prepared by plaintiff's counsel and signed by the judge on August 12, 2009. Under the settlement terms, Bay State reserved the right to appeal the adverse ruling it received from the Law Division on its complaint to disclaim coverage. If Bay State succeeded on its appeal, plaintiffs would receive $75,000; if Bay State did not succeed, plaintiffs would receive $225,000. Bay State was eventually unsuccessful on its appeal of the coverage issue, thus triggering the "high" settlement amount requiring Bay State to pay $225,000.
Thereafter, plaintiffs filed a motion seeking an award of counsel fees, pursuant to Rule 4:42-9(a)(6), for successfully prosecuting the coverage case. The trial court denied the motion, and plaintiffs filed this appeal.
Plaintiffs argue that the high-low settlement applied only to the negligence action, and that the settlement did not preclude plaintiffs from seeking counsel fees for the successful prosecution of the coverage action. We disagree.
Rule 4:42-9(a)(6) permits the award of counsel fees in actions upon liability or indemnity policies of insurance, in favor of successful claimants. "The rule is intended 'to discourage groundless disclaimers and to provide more equitably to an insured the benefits of the insurance contract without the necessity of obtaining a judicial determination that the insured, in fact, is entitled to such protection.'" Passaic Valley Sewerage Comm'rs v. St. Paul Fire & Marine Ins. Co., 206 N.J. 596, 618-19 (2011) (quoting Sears Mortg. Corp. v. Rose, 134 N.J. 326, 356 (1993)). "The award of counsel fees, however, is not mandatory, 'but rather the trial judge has broad discretion as to when, where, and under what circumstances counsel fees may be proper and the amount to be awarded.'" Id. at 619 (quoting Iafelice ex. rel. Wright v. Arpino, 319 N.J. Super. 581, 590 (App. Div. 1999)). "'Since equitable principles govern the trial court's decision, the court should consider the totality of the circumstances . . . .'" Ibid. (quoting Iafelice, supra, 319 N.J. Super. at 591).
We conclude that the motion judge correctly determined that the high-low settlement established a cap on the amount that Bay State would be required to pay at the conclusion of both the bodily injury claim and the coverage dispute. The settlement agreement established that plaintiffs' counsel fees would be deducted from the gross amount paid. The settlement agreement did not provide that plaintiffs could seek additional fees for a successful outcome in the coverage case.
The order memorializing the parties' settlement states, "Plaintiff's attorneys fees will be based on the amount of costs associated with these matters and the gross amount awarded based on the coverage appeal." This provision indicates that the settlement covers both the negligence case and the coverage case. Moreover, if plaintiffs' counsel wanted to reserve the right to present a claim for counsel fees regarding coverage issues, that right should have been expressly reserved.
We conclude that the motion judge correctly found that the parties' settlement agreement was intended to resolve both the negligence and the coverage cases. We discern no indication that the motion judge mistakenly exercised her discretion in denying plaintiff's motion.
Affirmed. I hereby certify that the foregoing is a true copy of the original on file in my office.
CLERK OF THE APPELLATE DIVISION
Bay State Ins. Co. v. Jennings, No. A-4915-11 (App. Div. May 16, 2013).