LIBERTY INSURANCE CORP. VS. TECHDAN, LLC (L-1664-12, SOMERSET COUNTY AND STATEWIDE) (CONSOLIDATED)
A-3510-18/A-3524-18
| N.J. Super. Ct. App. Div. | Jul 21, 2021Background
- Plaintiffs Liberty Insurance Corp. and LM Insurance sued Techdan LLC, Exterior Erecting Services, and several individuals under the Insurance Fraud Prevention Act (IFPA) and related common‑law and contract theories, alleging under‑reported payrolls to obtain lower workers’ compensation premiums.
- Criminally, Techdan and Dunlap entered a plea with the Office of the Insurance Fraud Prosecutor admitting theft by deception and agreeing to $75,000 restitution; plaintiffs later discovered larger payroll discrepancies from audits.
- A jury after a 10‑day trial found Techdan and Exterior liable for $756,990 in compensatory damages (split between those two entities), found multiple defendants liable for common‑law fraud and aiding and abetting, and awarded punitive damages against three individuals.
- Post‑verdict the trial judge held all five defendants jointly and severally liable for 100% of the $756,990, trebled compensatory damages and attorneys’ fees under IFPA for certain defendants, vacated some punitive awards, and entered a judgment exceeding $2.7 million.
- Defendants appealed, arguing (inter alia) the trial court erred by failing to require the jury to apportion fault under the Comparative Negligence Act (CNA), by not giving an "ultimate outcome" IFPA charge, and by molding the verdict to impose joint and several liability and additur; the Appellate Division reversed and remanded for a new trial.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Comparative Negligence Act (CNA) required the jury to apportion fault among parties by percentage | CNA inapplicable because plaintiffs were blameless victims of a fraudulent scheme; judge permissibly treated liability as common scheme | CNA applies to intentional torts including fraud and breach; jury must calculate total damages then apportion fault in percentages | Court held trial judge erred: CNA should have applied and the jury should have allocated fault; failure to do so required new trial |
| Whether the jury should have received an "ultimate outcome" charge explaining IFPA trebling and fee consequences | Not required here (trial judge had previously indicated the jury would be advised but did not give the instruction) | Absent ultimate outcome charge, jurors may miscalculate compensatory awards or punitive damages given trebling/fee consequences | Court held trial judge erred by not giving the ultimate outcome charge; omission prejudicial and contributed to reversal |
| Whether the trial judge improperly molded the verdict by imposing 100% joint and several liability, trebled awards, and attorneys’ fees (additur/nullification) | Trebling and joint-and-several liability appropriate under IFPA and prior summary judgment findings | Judge substituted his view for the jury, effectively nullifying the jury’s allocation (zero compensatory award to individuals) and engaged in additur without following required procedures | Court found the judge substituted his judgment for the jury, equated liability with 100% fault without jury percentages, and erred; remanded for new trial |
| Whether defendants waived jury‑charge defects by failing to object pre‑verdict or whether plain error warranted relief | Plaintiffs argued failure to object foreclosed appellate relief | Defendants argued plain error because charge omissions (CNA apportionment and ultimate outcome) were fundamental and prejudicial | Court concluded plain‑error review applies; errors were sufficiently prejudicial to warrant reversal and new trial |
Key Cases Cited
- Blazovic v. Andrich, 124 N.J. 90 (discusses CNA application and apportionment of fault in non‑negligence contexts)
- Gennari v. Weichert Co. Realtors, 148 N.J. 582 (applies CNA to intentional torts and fraud claims)
- Wanetick v. Gateway Mitsubishi, 163 N.J. 484 (endorses giving an ultimate outcome charge where statutory trebling and fees affect jury deliberations)
- Roman v. Mitchell, 82 N.J. 336 (explains purpose of ultimate outcome charge to inform jurors of legal effect of their verdict)
- Fischer v. Canario, 143 N.J. 235 (discusses rationale for ultimate outcome charge in jury deliberations)
- Suter v. San Angelo Foundry & Machine Co., 81 N.J. 150 (extends CNA beyond negligence to strict liability contexts)
- Ryan v. KDI Sylvan Pools, Inc., 121 N.J. 276 (distinguishes liability from fault and explains verdict molding under CNA)
- Dolson v. Anastasia, 55 N.J. 2 (establishes principle that judge is not a thirteenth juror; deference owed to jury verdict)