Morris Cnty. Mun. Joint Ins. Fund v. Watersedge Design Grp., LLC

• Decision Date: 12 January 2018
• Docket Number: DOCKET NO. A-5559-15T4
• Parties: MORRIS COUNTY MUNICIPAL JOINT INSURANCE FUND, AS SUBROGEE FOR THE BOROUGH OF MOUNT ARLINGTON, Plaintiff-Appellant, v. WATERSEDGE DESIGN GROUP, LLC, Defendant-Respondent.
• Court: New Jersey Superior Court — Appellate Division

MORRIS COUNTY MUNICIPAL JOINT INSURANCEFUND, AS SUBROGEE FOR THE BOROUGH OFMOUNT ARLINGTON, Plaintiff-Appellant, v. WATERSEDGE DESIGN GROUP, LLC, Defendant-Respondent.

DOCKET NO. A-5559-15T4

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION

Argued December 21, 2017

January 12, 2018

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

Before Judges Simonelli, Haas and Gooden Brown.

On appeal from Superior Court of New Jersey, Law Division, Morris County, Docket No. L-2293-15.

Dawn M. Sullivan argued the cause for appellant (Dorsey & Semrau, LLC, attorneys; Fred M. Samrau and Dawn M. Sullivan, on the briefs).

Stuart M. Lederman argued the cause for respondent (Riker Danzig Scherer Hyland & Perretti LLP, attorneys; John M. Pellecchia, of counsel and on the brief; Cristin M. Boyle, on the brief).

PER CURIAM

Plaintiff Morris County Municipal Joint Insurance Fund (JIF) appeals from the June 20, 2016 Law Division order, granting the motion of defendant Watersedge Design Group, LLC's (Watersedge) motion to dismiss the complaint with prejudice pursuant to Rule 4:6-2(e), and denying JIF's cross-motion to amend the complaint. We affirm.

On September 30, 2013, Michael Blewett, a firefighter employed by the Borough of Mount Arlington (Borough), was injured while assisting in extinguishing a house fire on Watersedge's property. Blewett filed a workers' compensation claim through the Borough. JIF,¹ the Borough's insurance carrier, paid over $44,000 in workers' compensation benefits to Blewett.

On September 28, 2015, JIF, as subrogee for the Borough, filed a subrogation complaint against Watersedge for damages. In lieu of filing an answer, Watersedge filed a motion to dismiss pursuant to Rule 4:6-2(e) based on JIF's failure to comply with N.J.S.A. 34:15-40(f), which provides as follows, in pertinent part:

Where a third person is liable to the employee or his dependents for an injury or death, the existence of a right of compensation from the employer or insurance carrier under thisstatute shall not operate as a bar to the action of the employee or his dependents, nor be regarded as establishing a measure of damage therein.

. . . .

(f) When an injured employee or his dependents fail within 1 year of the accident to either effect a settlement with the third person or his insurance carrier or institute proceedings for recovery of damages for his injuries and loss against the third person, the employer or his insurance carrier, 10 days after a written demand on the injured employee or his dependents, can either effect a settlement with the third person or his insurance carrier or institute proceedings against the third person for the recovery of damages for the injuries and loss sustained by such injured employee or his dependents and any settlement made with the third person or his insurance carrier or proceedings had and taken by such employer or his insurance carrier against such third person, and such right of action shall be only for such right of action that the injured employee or his dependents would have had against the third person, and shall constitute a bar to any further claim or action by the injured employee or his dependents against the third person. . . . The legal action contemplated hereinabove shall be a civil action at law in the name of the injured employee or by the employer or insurance carrier in the name of the employee[.]

[(Emphasis added).]

Specifically, Watersedge argued that JIF failed to serve the ten-day written demand on Blewett prior to filing the complaint and did not file the action in Blewett's name.

JIF filed a cross-motion to amend the complaint to name itself as subrogee for Blewett and add Watersedge's principals and owners as defendants. JIF submitted Blewett's certification, dated April 18, 2016, wherein he stated he "waiv[ed his] right to file any claim or litigation against Watersedge" and "consent[ed] to [JIF] litigating this matter, through the subrogation process, in [his] name." Blewett did not state, and JIF provided no proof, that prior to the filing of the complaint and expiration of the two-year statute of limitations (SOL),² he was aware of his right to commence an action against Watersedge for damages and could waive that right and consent to JIF prosecuting an action in his name, and that such waiver would bar his personal injury claim against Watersedge. JIF conceded it did not contact Blewett prior to filing the complaint and did not serve the ten-day written demand.

In a written opinion, Judge Stuart A. Minkowitz noted that N.J.S.A. 34:15-40 specifically created the right of subrogation, and the statute must be strictly enforced because it is a statutory right contrary to the common law and in derogation of the injured employee's rights. The judge found there was no dispute that JIF failed to serve the ten-day written demand on Blewett prior to filing the complaint, or that Blewett indicated he wished to waivehis right to commence his own action against Watersedge and consented to JIF's prosecution of the action on his behalf after the filing of the complaint and expiration of the SOL.

Judge Minkowitz acknowledged that Blewett could waive the ten-day written demand requirement, but concluded JIF had to procure the waiver prior to instituting suit. The judge determined the deficiency could not be cured by procuring Blewett's waiver after the filing of the complaint and expiration of the SOL. The judge reasoned as follows:

[Blewett] had an expressed statutory right to "commence[] [an action at law] within [two] years next after the cause of such action shall have accrued. . . ." [N.J.S.A.] 2A:14-2. Upon expiration of that period, [Blewett's] right to commence an action ceased to exist (subject to limited tolling exceptions that are not applicable nor raised here). [Ibid.] Thus, because a waiver is valid only when a party knowingly, intelligently and voluntarily foregoes an existing right, [McCue v. Silcox, 122 N.J.L. 12, 13-14 (E. & A. 1939)], here, by the time [Blewett] attempted to waive his right to commence an action on his own behalf, his right no longer existed. Without an existing right to relinquish, [JIF] could not have procured a valid waiver from [Blewett] after the expiration of the statute of limitations. Accordingly, [JIF] cannot now cure the ten-day written demand deficiency and Watersedge's motion to dismiss must be granted.

The judge entered an order on June 20, 2016, granting Watersedge's motion and denying JIF's cross-motion.³

On appeal, JIF contends Judge Minkowitz erred in ruling that Blewett could not waive the ten-day written notice requirement after the filing of the complaint and expiration of the SOL. We disagree.

"Motions to dismiss for failure to state a claim require the complaint be searched in depth and with liberality to determine if there is any 'cause of action [] suggested" by the facts.'" State v. Cherry Hill Mitsubishi, 439 N.J. Super. 462, 467 (App. Div. 2015) (quoting Printing-Mart Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746 (1989)). "The inquiry is limited to 'examining the legal sufficiency of the facts alleged on the face of the complaint.'" Ibid. "On appeal, review is plenary and we owe no deference to the trial judge's conclusions." Ibid. (citingRezem Family Assocs., LP v. Borough of Millstone, 423 N.J. Super. 103, 114 (App. Div. 2011). "Dismissal is the appropriate remedy where, [such as here,] the pleading does not establish a colorable claim and discovery would not develop one." Cherry Hill Mitsubishi, 439 N.J. Super. at 467 (citation omitted).

N.J.S.A. 34:15-40(f) creates a right of subrogation that "does not arise and cannot be exercised by . . . [the] workers' compensation insurance carrier until [ten] days after a written demand is made upon either the injured employee or his dependents to either effect a settlement or institute a proceeding against the third-party wrongdoer." Errickson v. Supermarkets Gen. Corp., 246 N.J. Super. 457, 464 (App. Div. 1991). Since "[t]his statutory right is contrary to the common law and in derogation of the employee's rights . . . it must be strictly enforced." Ibid. (emphasis added). "In the absence of the requisite written demand served upon either the injured employee or his dependents, neither the employer nor his insurance carrier has the right or power to institute proceedings against the third-party wrongdoer for either the injured employee's or his dependents' injuries and loss." Ibid. Because JIF did not serve the ten-day written demand on Blewett, it had no right to institute suit against Watersedge for Blewett's injuries and loss. Ibid. However, that does not end our inquiry.

An injured employee can waive the ten-day written demand requirement. Id. at 465. For the waiver to be valid, there must be evidence that prior to instituting suit, the insurance carrier apprised the injured employee of his right to institute his own...