RSI Bank v. Providence Mut. Fire Ins. Co.
191 A.3d 629
| N.J. | 2018Background
- Dr. George Likakis was indicted for arson and insurance fraud after a fire destroyed mortgaged property; Providence paid RSI Bank $11,321.89 and denied coverage, exposing itself to further liability to RSI Bank.
- Likakis entered Pretrial Intervention (PTI) with prosecutor and court approval; PTI conditions included payment of $11,321.89, dismissal of Likakis’s suit against Providence, and a handwritten indemnify/hold-harmless clause requiring Likakis to indemnify Providence for any claims by RSI Bank.
- The PTI court imposed the indemnification language without quantifying future liability or holding an ability-to-pay hearing; Likakis paid the $11,321.89 and dismissed his suit but made no payments toward indemnification.
- The PTI court terminated supervision after one year with prosecutor consent and without discussing the indemnification clause; the PTI Guidelines then in effect prohibit admitting PTI restitution conditions as evidence in later civil or criminal proceedings.
- Providence settled RSI Bank’s civil claims for $353,536.90, sought recovery from Likakis under the PTI indemnification, and obtained judgment in trial court; the Appellate Division affirmed. The Supreme Court granted certification.
Issues
| Issue | Providence's Argument | Likakis's Argument | Held |
|---|---|---|---|
| Whether a civil court may enforce a PTI restitution/indemnification term | Civil court can enforce PTI agreement; Providence is third-party beneficiary entitled to recover under indemnification | Only the PTI/criminal court could enforce PTI terms; PTI condition is part of criminal process, not civil judgment | Civil enforcement was improper here because the challenged PTI term was invalid and inadmissible in civil litigation |
| Whether the PTI indemnification provision was a valid restitution condition | The PTI term reflected restitution/consideration for dismissal and thus enforceable | The indemnification was an invalid, open-ended restitution term lacking quantification or ability-to-pay assessment | Invalid: PTI restitution must be quantified and tied to defendant’s ability to pay; open-ended indemnification is not proper PTI restitution |
| Admissibility of PTI restitution/participation as evidence in later civil proceedings | PTI agreement should be admissible to prove obligation | PTI rules and guidelines bar admission of PTI restitution terms and participant disclosures | PTI restitution conditions and participant disclosures are inadmissible in subsequent civil proceedings; the indemnification should not have been used as dispositive evidence |
| Whether the PTI court satisfied ability-to-pay and restitution procedures | Providence relied on prosecutor’s and PTI court’s acceptance as sufficient | Likakis argued no ability-to-pay hearing occurred and no quantified restitution was set | Court held no meaningful ability-to-pay hearing occurred; restitution requirement must be judicially determined and quantified at enrollment |
Key Cases Cited
- State v. Newman, 132 N.J. 159 (1993) (restitution serves rehabilitative and compensatory purposes and must account for defendant’s ability to pay)
- State in Interest of D.G.W., 70 N.J. 488 (1976) (procedures for setting restitution at sentencing)
- In re Parole Application of Trantino, 89 N.J. 347 (1982) (compensatory payments can have correctional worth)
- State v. Jamiolkoski, 272 N.J. Super. 326 (App. Div. 1994) (PTI restitution must be subject to ability-to-pay assessment and judicial determination)
- State v. Paladino, 203 N.J. Super. 537 (App. Div. 1985) (courts must hold at least a summary hearing to determine ability to pay restitution)
- State v. Pessolano, 343 N.J. Super. 464 (App. Div. 2001) (vacating restitution where no ability-to-pay hearing occurred)