The opinion
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
GEA MECHANICAL EQUIPMENT US,
INC.,
Plaintiff,
v. Case No. 2:20-cv-09741 (BRM) (SDA)
FIRST STATE INSURANCE COMPANY, OPINION
HARTFORD ACCIDENT AND
INDEMNITY COMPANY, HARTFORD
FIRE INSURANCE COMPANY,
Defendants.
MARTINOTTI, DISTRICT JUDGE
Before the Court is Plaintiff GEA Mechanical Equipment US, Inc.’s (“GEA
Mechanical”) Motion for Summary Judgment (“GEA Mechanical Motion”) pursuant to Federal
Rule of Civil Procedure 56. (ECF No. 57.) Defendants Hartford Accident and Indemnity
Company, Hartford Fire Insurance Company, and First State Insurance Company (collectively,
“Hartford”)1 filed a joint Opposition and Cross-Motion for Summary Judgment (the “Hartford
Cross-Motion”) pursuant to Federal Rule of Civil Procedure 56. (ECF No. 58). 2 GEA
Mechanical filed a responsive brief to Defendants’ submission on October 21, 2022. (ECF No.
59.) Hartford filed a reply in further support of their Motion on October 21, 2022. (ECF No. 60.)
1 Two entities—the Continental Insurance Company (“Continental”) and Wellfleet New York
Insurance Company, as successor to Atlanta International Insurance Company’s (“AIIC”)—were
previously co-defendants in this action but were subsequently dismissed on remand (see ECF
No. 83) following an appeal by GEA Mechanical to the Third Circuit, see infra Section I.
2 When they were participating in this case as co-defendants prior to being dismissed on remand,
Continental and AIIC joined in this opposition and cross-motion for summary judgment.
GEA Mechanical later filed a supplemental brief in further support of its Motion and in
opposition to Hartford’s Cross-Motion (ECF No. 88), and Hartford filed its supplemental brief in
further support of its Cross-Motion (ECF No. 87). Having reviewed and considered the
submissions filed in connection with the Motions3 and having declined to hold oral argument
pursuant to Federal Rule of Civil Procedure 78(b), for the reasons set forth below and for good
cause having been shown, GEA Mechanical’s Motion for Summary Judgment (ECF No. 57) is
DENIED and Hartford’s Cross-Motion for Summary Judgment (ECF No. 58) is GRANTED.
I. BACKGROUND
The factual background and procedural history of this matter are known to the parties and
were previously recounted by the Court in its prior opinions: (1) denying Defendants’ appeal of
Magistrate Judge Edward S. Kiel’s (“Judge Kiel”) October 8, 2020, Order denying Defendants’
request to compel production of certain information and documents protected by attorney-client
privilege and/or work-product doctrine and affirming Judge Kiel’s Order (ECF No. 32); and (2)
denying GEA Mechanical’s Motion for Summary Judgment and granting Defendants’ Motion
for Summary Judgment (ECF Nos. 73, 77)4. Accordingly, the Court will recount only the
background associated with the Motions at this juncture.
GEA Mechanical seeks indemnification from Hartford for liability GEA Mechanical
incurred in connection with an underlying lawsuit, Thornton v. Alfa Laval, Inc., et al., No. 17-
6018, 2019 WL 6437261 (Fla. Cir. Ct. June 24, 2019) (the “Thornton Action”). Hartford issued
certain primary and excess general liability policies (the “Policies”) to GEA Mechanical’s
3 The Court also considered the parties’ submissions (ECF Nos. 71, 72) on the purported
supplemental authority, 31-01 Broadway Assocs., LLC v. Travelers Cas. & Sur. Co., Dkt. No. A-
1850-20, 2023 WL 2518779 (N.J. App. Div. Mar. 15, 2023).
4 The Court’s Opinion was posted under two ECF document numbers. It was originally posted in
a sealed, unredacted form (ECF No. 73) and later uploaded unsealed and redacted (ECF No. 77).
predecessor, Centrico, Inc. (“Centrico”),5 covering various periods from May 15, 1979, to
December 31, 1995, which are relevant to this action. (ECF No. 57-2 ¶ 1.) Hartford’s Primary
Policies require written notice of any “occurrence”6 to be provided “as soon as practicable” and
that “the Insured shall cooperate with the Company” with respect to “making settlements, in the
conduct of suits and in enforcing any right of contribution or indemnity against any person or
organization[.]” (Id. ¶ 31(a).) The Primary Policies include a $1 million limit of liability. (ECF
No. 57-39, Ex. 31 (Deposition of Bernd G. Heinze7), at 35:22, 219:21–22.) Additionally,
Hartford’s Excess Policies require written notice be made “as soon as practicable” “upon the
happening of an occurrence reasonably likely to involve the Company[,]” with the added
requirement that “such notice shall contain particulars sufficient to identify the Insured and the
fullest information obtainable at the time.” (ECF No. 57-2 ¶ 31(b) (emphasis added).)
In March 2017, Charles and Constance Thornton filed the Thornton Action, alleging
bodily harm because of an alleged exposure to asbestos-containing brakes and clutches contained
in centrifuges or separators used to separate plasma from blood, which were sold by Centrico to
Charles Thornton’s employer. (Id. ¶¶ 7, 10.)
Ahead of trial, GEA Mechanical alleges it made numerous attempts to settle the Thornton
Action, which Hartford disputes, suggesting
5 The parties do not dispute that GEA Mechanical is a successor to Centrico, and therefore
entitled to the same rights and obligations under the Policies as Centrico. (ECF No. 57-2 ¶ 4;
ECF No. 58-3 ¶ 4.)
6 There is no dispute that the circumstances of the underlying action qualified as an “occurrence”
under the provisions of the relevant policies.
7 Bernd G. Heinze is President of the Heinze Group, an organization specializing in claim
litigation audits and risk management surveys. (ECF No. 57-39, Ex. 31, at 6:2, 6:6–10.) Heinze
was retained by Hartford as an expert witness in this matter. (Id. at 8:25–9:5, 9:7–9.)
(Id. ¶ 12; ECF No. 58-3 ¶ 12.) Between 2018 and 2019, during a court-
ordered mediation, the parties exchanged settlement demands and offers, with the Thorntons
making an initial settlement demand and GEA Mechanical immediately countering
with a offer on or about December 4, 2018, and eventually with GEA Mechanical
making its final offer of on or about June 14, 2019—all of which the Thorntons
refused. (Id. ¶ 13; ECF No. 58-3 ¶¶ 12–13, 16.) GEA Mechanical alleges it “broached the topic
of resuming settlement discussions during the discovery phase[,]” which Hartford disputes and
instead points to evidence that on one occasion, on May 21, 2019, attorneys for GEA Mechanical
and the Thorntons “broached generally the subject of engaging in further settlement discussions,
but neither side then made any demands or offers.” (Id. ¶ 14; ECF No. 58-3 ¶ 14 (quoting ECF
No. 57-5, Ex. 2 (“GEA Mechanical’s Interrog. Resp.”), at 8).) The Thornton Action went to trial
in June 2019. (ECF No. 57-2 ¶ 17.) On June 17, 2019, the jury returned a verdict against GEA
Mechanical in the amount of $70.1 million in compensatory damages. (Id. ¶ 17.) A final
judgment for that amount was entered against GEA Mechanical on June 19, 2019. (Id.) On
September 24, 2019, while post-trial motions in the Thornton Action were pending, the
Thorntons and GEA Mechanical entered into a settlement agreement wherein GEA Mechanical
agreed to pay in exchange for a release of all claims associated with the Thornton
Action. (Id. ¶¶ 18–19.)
On August 5 and 6, 2019, contemporaneous with the filing of this coverage action, GEA
Mechanical notified Hartford and AIIC of the Thornton Action. (Id. ¶ 22; ECF No. 58-3 ¶ 22.)
After entry of judgment but before the post-trial settlement, GEA Mechanical provided Hartford
and AIIC with information about the proceedings and invited their participation in post-trial
motions, appeals, and settlements, in which neither participated nor objected. (Id. ¶¶ 23–24.)
However, during the same period, Hartford and Resolute Management Inc. (“Resolute”), on
behalf of AIIC, denied coverage under their Policies, citing, in part, that GEA Mechanical
breached the notice and cooperation provisions under their Policies. (Id. ¶ 25; ECF No. 58-3
¶ 25.) GEA Mechanical did not provide notice of settlement of the Thornton Action to
Continental8 until January 7, 2020, after the settlement occurred. (ECF No. 57-2 ¶ 26.)
Continental similarly denied coverage based on the late notice. (Id.)
GEA Mechanical initiated this coverage action in the Superior Court of New Jersey, Law
Division, on August 6, 2019 (ECF No. 1), and it was removed to this Court on July 31, 2020.
During the discovery process, GEA Mechanical alleges “[Hartford’s] witnesses were unable to
provide proof of any specific actions they claim they would have taken that would have resulted
in a better outcome in the Thornton Action had notice been provided earlier.” (ECF No. 57-2
¶ 41.) Hartford disputes this and points to examples of specific actions provided, including
“utilizing . . . databases
” (ECF No. 58-3 ¶ 41.)
GEA Mechanical filed its Motion for Summary Judgment (ECF No. 57), seeking
indemnification from Defendants for liability incurred in connection with the Thornton Action
(ECF No. 57), and Hartford filed their Opposition to the GEA Mechanical Motion and cross-
moved for summary judgment based, in part, on a late-notice defense (ECF No. 58). On October
21, 2022, GEA Mechanical filed a responsive brief to Hartford’s submission. (ECF No. 59.) On
May 11, 2023, this Court issued a sealed Opinion and Order denying GEA Mechanical’s Motion
and granting Hartford’s Cross-Motion, and closed the case. (ECF Nos. 73, 74, 77.) On June 9,
2023, GEA Mechanical filed an appeal of the Order to the Third Circuit (ECF No. 75), which
8 Resolute is also the claims-handling agent for Continental. (Id. ¶ 27.)
issued an opinion on August 9, 2024, vacating this Court’s Order and remanding the action for
further proceedings, see GEA Mech. Equip. US, Inc. v. First State Ins. Co., No. 23-2062, 2024
WL 3738639 (3d Cir. Aug. 9, 2024).
On September 27, 2024, Magistrate Judge Stacey D. Adams (“Judge Adams”) signed the
parties’ amended scheduling order in which the parties agreed to submit supplemental briefing
on October 30, 2024, and appear for a settlement conference on January 6, 2025. On October 30,
2024, GEA Mechanical filed its supplemental brief in further support of its Motion and in
opposition to Hartford’s Cross-Motion (ECF Nos. 88, 90)9, and Hartford filed its supplemental
brief in further support of its Cross-Motion (ECF Nos. 87, 91)10. After rescheduling the
settlement conference due to the last-minute unavailability of a client (ECF No. 95), the parties
held a settlement conference before Judge Adams on February 19, 2025 (ECF No. 96).
A. The Third Circuit Opinion
In an unpublished opinion, the Third Circuit found this Court erred in its application of
the two-prong test for appreciable prejudice under New Jersey law as articulated in Morales v.
Nat’l Grange Mut. Ins. Co., 423 A.2d 325, 329–30 (N.J. Super. Ct. Law Div. 1980). As a general
matter, an insurer seeking to disclaim coverage under New Jersey law based on late notice—as
Hartford seeks here—must prove both breach of a notice provision and a likelihood of
appreciable prejudice, with the latter in turn “requir[ing] both (1) the irretrievable loss of
substantial rights, and (2) a likelihood of success in the underlying defense.” GEA Mech. Equip.,
2024 WL 3738639 at *2 (citing Morales, 423 A.2d at 239–30). The Third Circuit determined this
9 GEA Mechanical’s Supplemental Brief was posted under two docket numbers. It was originally
posted in a sealed, unredacted form (ECF No. 88) and later uploaded unsealed and redacted
(ECF No. 90).
10 Hartford’s Supplemental Brief, like GEA Mechanical’s, was also originally posted in a sealed,
unredacted form (ECF No. 87) and later uploaded unsealed and redacted (ECF No. 91).
Court “may have conflated the two prongs of Morales” in finding appreciable prejudice based on
GEA’s post-verdict notice to its insurers without “assess[ing] whether the insurers would have
been successful ‘in defending against the [Thorntons’] claim.’” Id. (quoting Morales, 423 A.2d
at 330.) According to the Circuit Court, this Court committed reversible error in finding
appreciable prejudice based solely on an assessment of the first Morales prong. Id. at *2, *4.
Additionally, the Third Circuit invited the Court to consider addressing the following
four issues: (1) whether, drawing all inferences in GEA Mechanical’s favor and with the burden
of persuasion squarely on Hartford, the late-notice analysis requires breach and, if so, whether a
breach occurred in this case, id. at *2 n.6; (2) whether witnesses for trial are still available or “the
circumstances surrounding the accident can be reconstructed” as this determination may affect
the irretrievable loss assessment for an appreciable prejudice finding, id. at *3 n.9; (3) whether
Hartford would have achieved a settlement prior to trial with respect to the likelihood of success
prong for appreciable prejudice, viewed in the light most favorable to GEA Mechanical, id. at *3
n.11; and (4) whether Hartford could have achieved a better result at trial, id. at *3 n.12.
II. LEGAL STANDARD
Summary judgment is appropriate “if the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the affidavits, if any, show that there is no
genuine issue as to any material fact and that the moving party is entitled to a judgment as a
matter of law.” Fed. R. Civ. P. 56(c). A factual dispute is genuine only if there is “a sufficient
evidentiary basis on which a reasonable jury could find for the non-moving party,” and it is
material only if it has the ability to “affect the outcome of the suit under governing law.”
Kaucher v. Cty. of Bucks, 455 F.3d 418, 423 (3d Cir. 2006); see also Anderson v. Liberty Lobby,
Inc., 477 U.S. 242, 248 (1986). Disputes over irrelevant or unnecessary facts will not preclude a
grant of summary judgment. Anderson, 477 U.S. at 248. “In considering a motion for summary
judgment, a district court may not make credibility determinations or engage in any weighing of
the evidence; instead, the non-moving party’s evidence ‘is to be believed and all justifiable
inferences are to be drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d
Cir. 2004) (quoting Anderson, 477 U.S. at 255)); see also Matsushita Elec. Indus. Co. v. Zenith
Radio Corp., 475 U.S. 574, 587, (1986); Curley v. Klem, 298 F.3d 271, 276-77 (3d Cir. 2002).
“Summary judgment may not be granted . . . if there is a disagreement over what inferences can
be reasonably drawn from the facts even if the facts are undisputed.” Nathanson v. Med. Coll. of
Pa., 926 F.2d 1368, 1380 (3rd Cir. 1991) (citing Gans v. Mundy, 762 F.2d 338, 340 (3d Cir.),
cert. denied, 474 U.S. 1010 (1985)); Ideal Dairy Farms, Inc. v. John Labatt, Ltd., 90 F.3d 737,
744 (3d Cir. 1996).
The party moving for summary judgment has the initial burden of showing the basis for
its motion. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the moving party bears the
burden of persuasion at trial, summary judgment is appropriate only if the evidence is not
susceptible to different interpretations or inferences by the trier of fact. Hunt v. Cromartie, 526
U.S. 541, 553 (1999). On the other hand, if the burden of persuasion at trial would be on the
nonmoving party, the party moving for summary judgment may satisfy Rule 56’s burden of
production by either (1) “submit[ting] affirmative evidence that negates an essential element of
the nonmoving party’s claim” or (2) demonstrating “that the nonmoving party’s evidence is
insufficient to establish an essential element of the nonmoving party’s claim.” Celotex, 477 U.S.
at 330 (Brennan, J., dissenting). Once the movant adequately supports its motion pursuant to
Rule 56(c), the burden shifts to the nonmoving party to “go beyond the pleadings and by her own
affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate
specific facts showing that there is a genuine issue for trial.” Id. at 324; see also Matsushita, 475
U.S. at 586; Ridgewood Bd. of Ed. v. Stokley, 172 F.3d 238, 252 (3d Cir. 1999). In deciding the
merits of a party’s motion for summary judgment, the court’s role is not to evaluate the evidence
and decide the truth of the matter, but to determine whether there is a genuine issue for trial.
Anderson, 477 U.S. at 249. Credibility determinations are the province of the factfinder. Big
Apple BMW, Inc. v. BMW of N. Am., Inc., 974 F.2d 1358, 1363 (3d Cir. 1992).
There can be “no genuine issue as to any material fact,” however, if a party fails “to make
a showing sufficient to establish the existence of an element essential to that party’s case, and on
which that party will bear the burden of proof at trial.” Celotex, 477 U.S. at 322–23. “[A]
complete failure of proof concerning an essential element of the nonmoving party’s case
necessarily renders all other facts immaterial.” Id. at 323; Katz v. Aetna Cas. & Sur. Co., 972
F.2d 53, 55 (3d Cir. 1992). A “court shall grant summary judgment if the movant shows that
there is no genuine dispute as to any material fact and the movant is entitled to judgment as a
matter of law.” Fed. R. Civ. P. 56(a). “Only disputes over facts that might affect the outcome of
the suit under the governing law will properly preclude the entry of summary judgment.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A material fact raises a “genuine”
dispute “if the evidence is such that a reasonable jury could return a verdict for the nonmoving
party.” Williams v. Borough of W. Chester, 891 F.2d 458, 459 (3d Cir. 1989) (quoting Anderson,
477 U.S. at 248).
“In evaluating the evidence, the Court must consider all facts and their logical inferences
in the light most favorable to the non-moving party.” Rhodes v. Marix Servicing, LLC, 302 F.
Supp. 3d 656, 661 (D.N.J. 2018) (citing Curley v. Klem, 298 F.3d 271, 276–77 (3d Cir. 2002)).
“While the moving party bears the initial burden of proving an absence of a genuine dispute of
material fact, meeting this obligation shifts the burden to the non-moving party to ‘set forth
specific facts showing that there is a genuine [dispute] for trial.’” Id. (quoting Anderson, 477
U.S. at 250).
“Unsupported allegations, subjective beliefs, or argument alone . . . cannot forestall
summary judgment.” Read v. Profeta, 397 F. Supp. 3d 597, 625 (D.N.J. 2019). “Thus, if the
nonmoving party fails ‘to make a showing sufficient to establish the existence of an element
essential to that party’s case, . . . there can be no genuine issue of material fact.’” Id. (quoting
Katz v. Aetna Cas. & Sur. Co., 972 F.2d 53, 55 (3d Cir. 1992) (quotation marks omitted)). “In
considering the motion, the Court ‘does not resolve factual disputes or make credibility
determinations.’” Rhodes, 302 F. Supp. 3d at 661 (quoting Siegel Transfer, Inc. v. Carrier
Express, Inc., 54 F.3d 1125, 1127 (3d Cir. 1995)).
III. DECISION
This Court, in its opinion denying GEA Mechanical’s Motion and granting Hartford’s
Cross-Motion, presented a thorough and largely undisturbed analysis of the parties’ positions,
finding: (1) GEA Mechanical’s prima facie case was not in genuine dispute and the “central
focus of the parties’ motions . . . is whether Defendants’ late-notice defense is meritorious as a
matter of law” (ECF No. 73 at 8); (2) GEA Mechanical breached the notice provisions in the
Policies because it only provided notice after the jury verdict and thereby “denied [primary
insurers] a meaningful opportunity to participate” or “provide a competent defense on behalf of
the excess insurers” (id. at 13); and (3) Hartford suffered “irretrievable loss” as they “were
irreversibly deprived of any meaningful participation in this case” and thereby satisfied the first
Morales prong (id. at 16 (citing Morales, 423 A.2d at 330).)
Given the Third Circuit opinion focused almost exclusively on correcting a
misapplication of the appreciable prejudice test under Morales (namely, instructing that
consideration of the second prong is required), the Court will primarily focus on the same here
and also assess the parties’ arguments regarding late notice under the Excess Policies. See GEA
Mech. Equip., 2024 WL 3738639 at *2–4.
A. Second Prong under Morales: Likelihood of Success
GEA Mechanical argues Hartford must make the very precise and narrow showing that
“had it received earlier notice, it would have achieved a pre-trial settlement,” given Hartford
does not contend it could have achieved a better result at trial. (ECF No. 88 at 5–6.) It claims
Hartford fails to make this showing for the following three reasons: (1) Hartford provides no
evidence demonstrating what “specific proactive steps” it would have taken that “would have
changed the pre-trial settlement negotiations” (id. at 6–7); (2) Hartford cannot show it would
have achieved a better settlement because “settlement[s are] bilateral” and Hartford cannot show
“that the Thorntons would have accepted” (id. at 8–10); and (3) Hartford’s suggestions better
outcomes were possible are speculative, and “speculation cannot establish appreciable prejudice”
(id. at 10–11).
Hartford contends a showing of appreciable prejudice is not required here because GEA
Mechanical did not act in good faith when it failed “to locate its policies and cooperate with
Hartford” in a timely manner regarding the Thornton Action. (ECF No. 87 at 8.) Hartford claims
“compliance with the cooperation clause of an insurance policy is a condition precedent to
coverage,” and therefore that breach of a cooperation clause is enough to deny coverage without
a finding of appreciable prejudice. (Id. at 6.) Even if appreciable prejudice is required, Hartford
argues it “has sufficiently demonstrated that it was appreciably prejudiced by both GEA
Mechanical’s egregiously late notice and failure to cooperate.” (Id. at 8.) Hartford contends it
provided evidence, including sworn testimony from its corporate representative (concerning, for
example, using databases showing it could have achieved
a better result defending the Thornton Action, and notes the Third Circuit’s emphasis on “could”
rather than “would” demonstrates it is not “obligated to prove with certainty what would have
occurred if it had received timely notice or cooperation from its insured.” (Id. at 10.) Hartford
summarizes its argument as follows:
Hartford has presented evidence of what it could have, and as a
matter of course, would have done to achieve a better result. It has
presented evidence that the plaintiffs were open to settlement
below their initial demand – well below the $70.1
million verdict later rendered at trial. The record-setting nature of
that verdict alone demonstrates the likelihood that Hartford could
have achieved a better result. See Morales, 423 A.2d at 329–30.
Combined with the other evidence in the record, it is indisputable
that Hartford not only could have achieved a better result, but
would have done so, had GEA [Mechanical] not deprived it of all
opportunity to participate in the Thornton Action.
(Id. at 13.)
In resolving whether “appreciable prejudice” exists, the insurer must prove: (1)
“substantial rights have been irretrievably lost” by virtue of the insured’s failure to notify the
carrier in a timely fashion and (2) the insurer would have had a “likelihood of success . . .
defending against the accident victim’s claim” had there been no breach. Hager v. Gonsalves,
942 A.2d 160, 163 (N.J. Super. Ct. App. Div. 2008) (quoting Sagendorf, 679 A.2d at 715);
KnightBrook, 275 A.3d at 480. The Third Circuit “ha[s] long held that the ‘right to associate in
the defense of [a] claim is too amorphous and cannot . . . constitute [appreciable] prejudice’
without a simultaneous showing that ‘earlier notice would probably have led to a more
advantageous [substantive] result.’” GEA Mech. Equip., 2024 WL 3738639 at *2 (quoting Trs. of
the Univ. of Pa. v. Lexington Ins. Co., 815 F.2d 880, 898–99 (3d Cir. 1987)). Moreover, an
insurer need not show with certainty what would have occurred had events transpired differently,
but instead may point to evidence “that [it] could have settled the underlying case for a small
sum or smaller sum than that for which the insured ultimately settled the claim” to satisfy its
burden. Id. at *3 (internal citation omitted) (emphasis added).
As recounted in this Court’s prior opinion (see ECF No. 73 at 14), the burden of proof for
demonstrating prejudice is on the insurer, and the prejudice must be “actual,” rather than
speculative. Morales, 423 A.2d at 329. It would be “unfair” for an insured to lose insurance
coverage “where there is no likelihood the insurer was prejudiced by the policy breach.”
KnightBrook Ins. Co. v. Tandazo-Calopina, 275 A.3d 474, 480 (N.J. Super. Ct. App. Div. 2022).
Here, again, this Court has previously found the irretrievable loss prong under Morales
has been satisfied, and the Third Circuit’s opinion did not disturb that finding. See supra Section
II.A. Acknowledging the Third Circuit’s guidance in this respect and viewed in the light most
favorable to GEA Mechanical, this Court finds Hartford has carried its burden of showing “a
likelihood of success in the underlying defense.” GEA Mech. Equip., 2024 WL 3738639 at *2
(citing Morales, 423 A.2d at 239–30). While the Third Circuit pointed out GEA Mechanical’s
position that a higher initial counteroffer to the Thornton’s settlement demand of
“would not have changed the outcome,” id. at *3 n.11, this Court finds Hartford’s argument that
they could have used their collective databases at the pre-
trial settlement negotiations phase and in defending the Thornton Action convincing. (ECF No.
87 at 10 (citing ECF No. 58-3 ¶ 41).) Had they been used in guiding settlement negotiations or
defense at trial, such databases
would surely and inevitably increase the likelihood of success in
achieving a more favorable result, including in securing a settlement agreement before trial.
Hartford is tasked with providing evidence of what it could have done in defending the Thornton
Action, and that evidence must demonstrate “some likelihood that [the insurance carrier] would
have prevailed at trial had it been noticed properly,” and the Court finds it has carried its burden.
Morales, 423 A.2d at 356.
Additionally, although the Third Circuit noted this Court did not consider the possibility
the insurers could have achieved a better trial result or a finding of no liability, the parties
themselves do not discuss this issue and the Court respectfully declines to address it. See GEA
Mech. Equip., 2024 WL 3738639 at *3 n.12.
Accordingly, Hartford satisfies both the irretrievable loss and likelihood of success
elements of the appreciable prejudice test under Morales.11
B. Late Notice under Hartford’s Excess Policies
GEA Mechanical argues the Excess Policies are not implicated until and unless the
Thornton Action is “reasonably likely” to implicate the Policies. GEA Mechanical claims not
11 In its Opinion, the Third Circuit suggested the Court consider several additional issues which
are enumerated in the background section of this Opinion. See supra Section I.A; GEA Mech.
Equip., 2024 WL 3738639 at *3 nn.9, 11–12. Two of these topics, concerning whether Hartford
would have achieved a settlement prior to trial and whether Hartford could have achieved a
better trial result, are built into the analysis of the second prong under Morales, see supra Section
III.A, and another concerning late notice under the Excess Policies is addressed more fully in the
section that follows as considerable attention was paid to the subject in both parties’
supplemental briefs, see infra Section III.B.
With regard to the question of whether witnesses may still be available or accident circumstances
can be reconstructed, see GEA Mech. Equip., 2024 WL 3738639 at *3 n.9, because the relevant
period for the accident in the underlying Thornton Action was from May 15, 1979, to December
31, 1995, it is quite possible that many actual or potential trial witnesses are now unavailable
because of death, incapacity, memory loss, or other related reason, and it is even less likely that
accident circumstances can be reconstructed for similar reasons. Moreover, even assuming
arguendo such things could be revived and reconstructed, it would not change the Court’s
conclusion, contained in its prior opinion, that substantial rights have been irretrievably lost due
to GEA Mechanical’s failure to give timely notice. (See ECF No. 73 at 14–17.)
only that Hartford do not provide any evidence backing up their position that notice was late
under the terms of the Policies, but that the evidence suggests the opposite. (ECF No. 88 at 12
(citing ECF No. 73 at 12 n.7).) GEA Mechanical contends the Court was mistaken when it
imputed its assessment that the excess insurance carriers were deprived of the protection of the
primary carriers’ involvement in the Thornton Action to a determination of when notice was due
rather than a finding of appreciable prejudice. (Id. at 13.) Based on these arguments, GEA
Mechanical contends the Court should find the record does not show that liability for the
Thornton Action was reasonably likely to implicate the Excess Policies, or, alternatively, deny
Hartford summary judgment on this issue. (Id. at 14.) Hartford, in turn, argues the Court “should
again hold that GEA Mechanical’s post-verdict notice to First State was late” because of the
ample evidence, including the initial demand, the failed pre-trial settlement
negotiations, and the pending trial, the Excess Policies “were ‘reasonably likely’ to be
implicated.” (ECF No. 87 at 13–15.)
An insurance carrier may not forfeit its coverage obligations without: (1) evidence of
breach of a notice provision, and (2) a likelihood of appreciable prejudice. (ECF No. 73 at 9
(citing Cooper v. Gov’t Emps. Ins. Co., 237 A.2d 870, 874 (N.J. 1968); Morales, 423 A.2d at
327).) Failure to comply with the terms of a notice provision may constitute a breach of the
overall policy. See, e.g., Templo Fuente De Vida Corp. v. Nat’l Union Fire Ins. Co. of
Pittsburgh, 129 A.3d 1069, 1081 (N.J. 2016). Notice provisions provide carriers an “adequate
opportunity to investigate claims,” Morales, 423 A.2d at 329, including the chance to “form an
intelligent estimate of its rights and liabilities, to afford it an opportunity for investigation, and to
prevent fraud and imposition upon it,” Trico Mortg. Co. v. Penn Title Ins. Co., 657 A.2d 890,
894 (N.J. Super. Ct. App. Div. 1995).
In the prior opinion, this Court found GEA Mechanical breached the notice provisions of
both Hartford’s Primary and Excess Policies, and the Third Circuit’s opinion on appeal did not
upend that finding. (See ECF No. 73 at 9–14); see generally GEA Mech. Equip., 2024 WL
3738639. Nevertheless, because the Third Circuit suggested this Court consider revisiting its
findings in this regard with the benefit of the correct appreciable prejudice standard, the Court
will examine whether the late-notice defense requires a breach and, importantly, whether such a
breach occurred here. See GEA Mech. Equip., 2024 WL 3738639 at *2 n.6.
It is undisputed that GEA Mechanical provided notice to Hartford in August 2019, only
after pre-trial settlement negotiations collapsed and the trial ended in a record-setting $70.1
million verdict. In particular, it is undisputed that on or about December 4, 2018, the Thorntons
made an initial settlement demand of which exceeded the $1 million limit of the
Primary Policies. Moreover, Cooper explicitly requires a showing of breach of a notice provision
as one half of the late-notice defense, with the other half being appreciable prejudice. See
Cooper, 237 A.2d at 874. Given GEA Mechanical does not dispute the Thornton’s opening
settlement demand was of the Primary Policies’ limit of liability, and drawing all
inferences in GEA Mechanical’s favor, the Court finds this event should have been the moment
requiring notice under the Excess Policies because it can easily be construed to constitute “an
occurrence reasonably likely to involve” Hartford. (ECF No. 57-2 ¶ 31(b) (emphasis added).)
The Court is persuaded by Hartford’s central argument that the confluence of the undisputed
facts clearly shows GEA Mechanical’s notice in August 2019 was late under the ordinary and
plain meaning of the Excess Policies requiring written notice of an event “reasonably likely to
involve” Hartford “as soon as practicable.” The Court construes GEA Mechanical’s failure to
comply with the Excess Policies as a breach of those policies. See Templo Fuente, 129 A.3d at
1081.
Accordingly, the Court finds GEA Mechanical breached the notice provisions set forth in
the Excess Policies. The Court therefore will not consider GEA Mechanical’s arguments
concerning the remaining affirmative defenses raised by Hartford, and GEA Mechanical’s
motion to strike fourteen of Hartford’s sixteen defenses is DENIED as moot.
IV. CONCLUSION
For the reasons set forth above, and for good cause having been shown, GEA
Mechanical’s Motion for Summary Judgment (ECF No. 57) is DENIED and Hartford’s Cross-
Motion (ECF No. 58) is GRANTED. An appropriate order follows.
Dated: June 30, 2025 /s/ Brian R. Martinotti
HON. BRIAN R. MARTINOTTI
UNITED STATES DISTRICT JUDGE