Estate of Jack D'Avila by Tiago D'avila, Administrator Ad

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-4439-11T2

A-4705-11T2

A-4713-11T2

ESTATE OF JACK D'AVILA,

by TIAGO D'AVILA,

APPROVED FOR PUBLICATION

Administrator ad Prosequendum;

and DENISE ROCHA, individually, August 10, 2015

Plaintiffs-Respondents/ APPELLATE DIVISION

Cross-Appellants,

v.

HUGO NEU SCHNITZER EAST; SIMS

HUGO NEU CORPORATION; HUGO NEU

CORPORATION; LYNCH, GIULIANO &

ASSOCIATES, P.A.; JERSEY CITY

MEDICAL CENTER, PATRICIA A.

SCHRADER, M.D.1; AMY R. CUTSHALL,

R.N.; CHRISTINE PANGILINAN, R.N.;

CONCHITA GARCIA, R.N.; and

LIBERTY SURGICAL ASSOCIATES,

Defendants-Respondents,

and

FEMCO MACHINE COMPANY,

Defendant-Appellant/

Cross-Respondent,

and

RIVERSIDE ENGINEERING,

Defendant,

1

Because all claims against Dr. Schrader have been satisfied, she

did not participate in these appeals.

and

HUGO NEU SCHNITZER EAST; SIMS

HUGO NEU CORPORATION; and HUGO

NEU CORPORATION,

Defendants/Third-Party

Plaintiffs-Respondents,

v.

SIMPSON & BROWN, INC.,

Third-Party Defendant/

Fourth-Party Plaintiff-

Respondent/Cross-Appellant,

v.

AMERICAN HOME ASSURANCE COMPANY,

Fourth-Party Defendant-

Respondent,

and

WILLIS NORTH AMERICA, INC.

(as successor-in-interest to

Fleet Insurance Services, Inc.),

Fourth-Party Defendant-

Respondent.

___________________________________

CONTINENTAL CASUALTY COMPANY,

Plaintiff-Respondent,

v.

AMERICAN HOME ASSURANCE COMPANY,

Defendant-Respondent,

and

2

A-4439-11T2

CRUM & FORSTER SPECIALTY INSURANCE

COMPANY,

Defendant-Appellant,

and

SIMPSON & BROWN, INC.,

Intervenor-Defendant/

Respondent.

___________________________________

CONTINENTAL CASUALTY COMPANY,

Plaintiff-Respondent,

v.

AMERICAN HOME ASSURANCE COMPANY,

Defendant-Appellant,

and

CRUM & FORSTER SPECIALTY INSURANCE

COMPANY,

Defendant-Respondent,

and

SIMPSON & BROWN, INC.,

Intervenor-Defendant/

Respondent.

____________________________________

Argued November 17, 2014 - Decided August 10, 2015

Before Judges Sabatino, Simonelli, and

Guadagno.

3

A-4439-11T2

On appeal from the Superior Court of New

Jersey, Law Division, Middlesex County, Docket

Nos. L-3208-07 and L-3380-09.

Joseph P. LaSala and Richard J. Williams, Jr.,

argued the cause for appellant Femco Machine

Company in A-4439-11 (McElroy, Deutsch,

Mulvaney & Carpenter, LLP, attorneys; Mr.

LaSala and Michael J. Marone, of counsel; Mr.

Williams and Mr. Marone, on the briefs).

Michael B. Zerres argued the cause for

respondents/cross-appellants Estate of Jack

D'Avila and Denise Rocha, individually, in A-

4439-11 (Blume, Donnelly, Fried, Forte, Zerres

& Molinari, PC, attorneys; Mr. Zerres, on the

briefs).

Scott C. Arnette and Ronald Betancourt argued

the cause for respondent/cross-appellant

Simpson & Brown in A-4439-11 (Betancourt, Van

Hemmen, Greco & Kenyon, LLC and Arnette Law

Firm, LLC, attorneys; Mr. Arnette, of counsel;

Mr. Betancourt and Virginia A. Harper, on the

briefs).

Gerard M. Green argued the cause for

respondents Hugo Neu Schnitzer East, Sims Hugo

Neu Corporation, and Hugo Neu Corporation in

A-4439-12 (Law Offices of Gerard M. Green,

attorneys; Mr. Green, on the briefs).

Catherine J. Flynn Tafaro argued the cause for

respondents Amy R. Cutshall, R.N. and Jersey

City Medical Center in A-4439-11 (Carroll,

McNulty & Kull, LLC, attorneys; Ms. Flynn

Tafaro, of counsel; Brad Baldwin, on the

brief).

Michael R. Ricciardulli argued the cause for

respondent Conchita Garcia, R.N. in A-4439-11

(Ruprecht Hart Weeks & Ricciardulli, LLP,

attorneys; Mr. Ricciardulli, of counsel and

on the brief; Sarah J. Gurka, on the brief).

4

A-4439-11T2

Abraham E. Havkins (Havkins Rosenfeld Ritzert

& Varriale, LLP) argued the cause for

appellant Crum & Forster Specialty Insurance

Company in A-4705-11 and as respondent in A-

4713-11.

Nancy Lem argued the cause for respondent

Continental Casualty Company in A-4705-11

(Colliau Elenius, attorneys; Ms. Lem, on the

brief).

Michael A. Spero argued the cause for

appellant American Home Insurance Company in

A-4713-11, and as respondent in A-4439-11 and

A-4705-11 (Eckert, Seamans, Cherin & Mellott,

LLC, attorneys; Mr. Spero, of counsel and on

the brief).

Margaret T. Korgul argued the cause for

respondent Willis North America, Inc. in A-

4713-11 (K&L Gates, LLP, attorneys; Anthony

P. La Rocco, of counsel; Ms. Korgul and

Matthew S. Sachs, on the brief).

Ryan Milun argued the cause for respondent

Simpson & Brown, Inc. in A-4713-11 (The

Killian Firm, P.C., attorneys; Mr. Milun, on

the brief).

The opinion of the court was delivered by

SABATINO, P.J.A.D.

This mammoth set of consolidated appeals and cross-appeals

involves over a dozen parties. The matter concerns both a wrongful

death case against multiple defendants tried over four months

before a jury, and a host of related insurance coverage issues

decided by the trial court.

The litigation stems from a workplace accident on a

construction site, in which a subcontractor's employee was struck

5

A-4439-11T2

on the head by an unsecured metal ladder and became paralyzed.

Following that traumatic injury, the worker received negligent

medical treatment, including the deprivation of sufficient oxygen,

causing him brain damage. He died three years later.

The worker's estate filed suit against the job site's owner

that served as the project's general contractor, several of the

worker's post-accident medical providers, and various other

parties. The owner filed separate claims for contractual

indemnification against both the worker's own employer and against

an installation subcontractor, alleging that each of them bore

responsibility for the hazard posed by the unsecured ladder.

Additionally, several insurers and an insurance broker whose

policies were implicated by the accident sought coverage rulings.

Because the exclusive remedy provision within the worker's

compensation statute, N.J.S.A. 34:15-8, does not preclude a

negligent employer's liability for contractual indemnification,

the trial court allowed counsel for decedent's employer to present

evidence and arguments at the jury trial. However, the court did

not allow the jury to consider allocating any percentage of fault

to the employer on the verdict form, despite the requests of

several parties, including the employer itself.

The jurors returned a multi-million-dollar verdict, which

they allocated in percentages among the owner, the installation

6

A-4439-11T2

subcontractor, and one of the defendant medical providers. The

trial court separately disposed of the related insurance coverage

issues without conducting any evidentiary proceedings.

Among the myriad issues presented to us, we have been asked

to consider questions relating to whether, and to what extent, an

injured worker's employer may participate in a jury trial of an

underlying tort action, in a situation where the factual

determinations could trigger the employer's duty to indemnify a

defendant in the tort case.

We hold that the trial court erred here in allowing the

decedent's employer to participate in the jury trial while

simultaneously disallowing the jury from ascertaining that

employer's percentage of fault, if any, on the verdict form. In

light of that error, we remand this matter to the trial court to

consider the need for further proceedings relating to such

potential allocation of fault to the decedent's employer.

The need for such further proceedings in this case will depend

upon whether the job site owner is continuing to press its claims

of contractual indemnification against both the decedent's

employer and the installation subcontractor. If so, additional

fact-finding might be required to sort out the priority or division

of the respective payment obligations of the two subcontractors

as co-indemnitors. Such supplemental fact-finding shall not,

7

A-4439-11T2

however, disturb the verdict already obtained by plaintiffs. We

reject the installation subcontractor's demand for a new jury

trial on all issues, particularly since that appellant failed to

object at trial to the employer's omission from the verdict form.

We also remand this matter for the trial court's further

consideration of certain discrete insurance coverage issues.

In all other respects, we affirm the trial court's rulings

and the final judgment predicated on the jury's verdict, thus

denying relief on the plethora of other issues raised on appeal

in the parties' twenty-three briefs.2

I.

We derive the following pertinent facts from the evidence

adduced during the lengthy jury trial. The trial spanned nearly

forty intermittent days between October 2011 and January 2012. We

describe the facts in considerable detail because those details

are legally significant to many of the assorted issues of

liability, indemnification, and insurance coverage raised on

appeal.

The Job Site and the Parties' Relationships

The decedent, Jack D'Avila, was a laborer employed by third-

party defendant Simpson & Brown, Inc. ("S&B"), a subcontractor on

2

We were informed several days ago that Femco recently reached a

settlement with plaintiffs, a development which resolves some of

the issues raised on appeal.

8

A-4439-11T2

a job site in Jersey City. The project involved the installation

of a 700-foot "mega shredder" at the facility of defendant, Hugo

Neu Corporation.3

Hugo Neu is a metal recycling company. At the Jersey City

location, Hugo Neu processed scrap metal and loaded it onto ships.

The mega shredder being installed on the site required a concrete

foundation, referred to in the record as the "mill base" or

"shredder base." The shredder's motor required a separate concrete

foundation, referred to in the record as the "motor base."

Although Hugo Neu disputed at trial its actual role concerning

the project, the proofs reflect that the company served as its own

general contractor. Hugo Neu obtained the necessary permits,

contracted with a variety of companies to perform the necessary

work, created a master schedule, and exercised "general

supervisory authority" over the project.

Hugo Neu contracted with decedent's employer, S&B, to serve

as a subcontractor for concrete foundations and structural work.

Hugo Neu separately arranged for another subcontractor, defendant

Femco Machine Company ("Femco"), to assemble and install the

shredder. Hugo Neu had worked with both S&B and Femco in the

3

The pleadings also identify affiliated companies of this

defendant, specifically Hugo Neu Schnitzer East and Sims Hugo Neu

Corporation. We shall refer to these entities collectively as

"Hugo Neu."

9

A-4439-11T2

past. Another subcontractor, defendant Lynch, Giulano &

Associates, P.A. ("LGA"), was hired to perform surveying work on

site.

[At the direction of the court, the published

version of this opinion omits this portion of

Part I, which describes the ladder safety

requirements and practices among the

construction defendants.]

The Decedent's Accident

The accident occurred on May 18, 2005. The trial testimony

centered around determining who had placed ladders against the

motor base in the days leading up to the accident, a time frame

when Femco was preparing for installation of the shredder.

[At the direction of the court, the published

version of this opinion omits Section 1 of

Part I, which describes the testimony

regarding the placement of the ladder in the

days leading up to and on the day of the

accident.]

2. The Ladder's Impact with Decedent

At approximately 3:45 p.m. on May 18, a ladder that had been

leaning against the motor base fell and hit decedent on the head.

Many of the witnesses agreed that the ladder most likely belonged

to S&B, because Femco did not have ladders that long, and Hugo Neu

did not provide ladders to the contractors.

Femco's employee John Padchin observed the accident while

climbing the ladder placed against the mill base. He testified

that he heard a "scraping" noise and observed the ladder on the

10

A-4439-11T2

motor base move as a strong "gust of wind" came through. Some

witnesses recalled that the weather had been nice that day, and

not particularly windy. However, others recalled it being a windy

day, and most agreed that the site tended to be windy due to its

location along the Hudson River.

S&B prepared an incident report, simply noting that the

accident had occurred and the nature of the accident. Nearly one

year later, an investigator for S&B prepared a somewhat more

detailed report indicating that decedent had been working in "a

shallow trench performing foundation work" at the time of the

accident. There was a "taller foundation next to the trench."

Leaning up against the foundation was a twenty-foot extension

ladder, which was not being used.

According to the report, the ladder belonged to S&B and had

been used by S&B personnel the previous day. The investigator

noted that "[t]he ladder was tied off at the bottom, but was not

tied off at the top, since the workers the previous day had

finished with the ladder and untied it before they came down."

The report reflects that S&B's project superintendent told the

investigator it was "not a particularly windy day, but for some

reason the ladder slipped from its position and came down on

[decedent]," and "[t]he ladder was still tied at the bottom when

it fell."

11

A-4439-11T2

[At the direction of the court, the published

version of this opinion omits this portion of

Part I, which describes the liability experts'

competing opinions at trial.]

Decedent's Injuries and Medical Treatment

After he was struck by the ladder, decedent fell down, and

various workers on the construction site told him to remain where

he was until medical help arrived. He was conscious and

communicating, and apologized for getting hurt. The remaining

workers returned to their work.

Decedent was transported to defendant Jersey City Medical

Center ("JCMC") for medical treatment. In the emergency room, he

was able to speak and to move his hands, feet, arms, and legs,

albeit with difficulty, and with some loss of feeling.

Decedent had suffered spinal fractures at disc levels C2 and

C7. At level C3-C4, he had suffered bruising and swelling of the

spinal cord and a bulging disc. These injuries were causing

neurological damage, including partial paralysis, with the right

side more affected than the left. By the time decedent was seen

by a neurosurgeon, he could not move his right hand or leg.

The neurosurgeon performed a discectomy, removing the bulging

disk at C3-C4 to prevent possible worsening of the cord

compression. He also put in a plate at C3-C4, to stabilize

decedent's spine at that level. The medical records show no

reported complications with the surgery.

12

A-4439-11T2

Post-surgery, decedent was sent to the surgical Intensive

Care Unit, where he was under the supervision of defendant Patricia

A. Schrader, M.D., a trauma surgeon who also was director of the

unit. Defendant Christine Pangilinan, R.N., was decedent's nurse

from 7:00 a.m. to 7:00 p.m. on May 19. Defendant Conchita Garcia,

R.N., was his nurse from 7:00 p.m. on May 19 to 7:00 a.m. on May

20. Defendant Amy R. Cutshall, R.N., was his nurse from 7:00 a.m.

to 7:00 p.m. on May 20.

At the start of Nurse Pangilinan's shift, the doctor's orders

were for decedent to receive nothing by mouth ("NPO"). However,

decedent was later allowed ice chips only. At 10:15 a.m. on May

19, Dr. Schrader evaluated decedent and ordered that he could have

clear liquids and one can of a nutritional supplement three times

per day. Dr. Schrader also ordered that decedent be advanced to

regular food "as tolerated."

As to the paralysis, Dr. Schrader's notes from the May 19

evaluation reflect that decedent was able to flex both elbows, as

well as his left foot and left hip. However, decedent was not

able to flex his right foot or right hip.

On the morning of May 20, Dr. Schrader visited with decedent

and spoke with Nurse Cutshall about his condition. Dr. Schrader

noted that decedent's spinal cord injury appeared to be progressing

to quadriplegia, albeit incomplete. She also noted that decedent

13

A-4439-11T2

had lost the ability to move his fingers in order to utilize the

patient-controlled analgesia device (the "PCA").

Dr. Schrader had concerns about decedent possibly

experiencing respiratory difficulty, so she ordered a baseline

measure of his arterial blood gas, and that he be observed for

"increased accessory muscle use" when breathing, which would be

an early sign of respiratory distress. She did not consider

intubating decedent at that time, however, because he was breathing

on his own and had a good cough.

Dr. Schrader stated that she would not intubate a patient

unless it was necessary for the patient to breathe, or to protect

an unconscious person's airway. She explained that there were

risks to intubation, including possibly worsening the spinal cord

injury with the movements necessary to achieve intubation, as well

as infection or pneumonia.

Nevertheless, to minimize the risk of aspiration, Dr.

Schrader declared decedent NPO based upon swallowing difficulties

reported and demonstrated by Nurse Cutshall. Dr. Schrader also

ordered a swallowing evaluation, and that a feeding tube be made

available for possible placement into the patient.

At 9:55 a.m., about forty minutes after Dr. Schrader had

completed rounds with decedent, he experienced respiratory

distress. Nurse Cutshall heard him coughing, so she went to check

14

A-4439-11T2

on him. Concerned that he may be choking, the nurse suctioned his

airway, but it did not help. She also called for the doctor, and

Dr. Schrader returned to decedent's room.

At approximately 10:00 a.m., decedent's oxygen saturation was

down to 31 percent, whereas most people are at 97 to 100 percent,

and he had a heart rate of 45 beats per minute, indicating sinus

bradycardia. Dr. Schrader ordered that a call be placed for

anesthesia service to intubate decedent, and also prepared to

intubate him herself if necessary.

At 10:05 a.m., a nurse anesthetist was able to intubate

decedent on an emergent basis. A note written by Dr. Schrader

indicated that "blood tinged, beige material" was suctioned from

decedent's airway at the time of intubation. Dr. Schrader

testified at her deposition that there were different possible

sources of the beige material, including mucous from the lung.

On manual ventilation, decedent's oxygen saturation was

brought up to 100 percent, and his heart rate brought up to 118

beats per minute. However, he had suffered five-to-seven minutes

of oxygen desaturation, resulting in "anoxic brain injury."

Decedent's Remaining Life and Demise

Decedent spent the rest of his life in various healthcare

facilities, and he remained on a ventilator except for one week.

15

A-4439-11T2

He died in July 2008, at age fifty-one, after he suffered a

downturn and his family decided to discontinue the ventilator.

In their testimony, decedent's wife and children described

their losses due to his passing. They presented expert testimony

on damages, which was rebutted by experts presented by S&B.

The medical experts disagreed as to whether decedent's

respiratory distress occurred due to damage to his phrenic nerves,

caused by his spinal cord injury, or due to aspiration. They also

disagreed as to whether the nurses should have advised Dr. Schrader

sooner about decedent's difficulties with swallowing and operating

the PCA, and whether Nurse Cutshall had erred by demonstrating

decedent's swallowing difficulties during Dr. Schrader's rounds,

thereby adding more fluids and increasing the risk of aspiration.

The experts further disagreed as to whether Dr. Schrader had acted

appropriately in not intubating decedent until he suffered the

respiratory event, or whether she should have electively intubated

him earlier, during rounds.

Finally, the medical experts contested whether the initial

injury or the period of oxygen desaturation had caused decedent's

complete quadriplegia. They specifically differed as to whether

the period of oxygen desaturation had caused decedent's permanent

brain damage, or whether that damage occurred during a later event,

16

A-4439-11T2

when decedent suffered an extremely high fever of over 105 degrees

as a result of damage to his central nervous system.

II.

The Tort Action

In March 2007, Tiago D'Avila ("Tiago"), then-guardian for his

father Jack D'Avila, and Denise Rocha, Jack D'Avila's wife, filed

a complaint in the Law Division in the underlying tort litigation.

Their complaint was amended multiple times. Ultimately, the tort

action named as defendants: Hugo Neu; Femco; Riverside Engineering

("Riverside"); LGA; JCMC; Dr. Schrader; Nurse Cutshall; Nurse

Pangilinan; Nurse Garcia; and Liberty Surgical Associates

("Liberty Surgical"), one of Dr. Schrader's employers.

Plaintiffs asserted claims of construction negligence and

medical malpractice, wrongful death, and a loss of consortium

claim for Rocha. Riverside was later dismissed from the case on

summary judgment, a dismissal that no one contests on appeal.

Defendant Hugo Neu filed a cross-claim against defendant

Femco arising out of their contractual relationship. Hugo Neu

also filed a third-party complaint against S&B for contribution

and indemnification, and for breach of contract.

S&B denied liability and asserted that all claims for

contribution were barred by the exclusive remedy provision of the

Workers' Compensation Act ("the WCA"), N.J.S.A. 34:15-8. S&B also

17

A-4439-11T2

asserted a counterclaim and cross-claims for contribution and

indemnification.

S&B filed a fourth-party complaint against its insurer,

American Home Assurance Company ("American Home") and Willis North

America, Inc., as successor in interest to Fleet Insurance

Services, LLC ("Willis"). S&B alleged breach of fiduciary duty

and negligence against Willis, its insurance broker, for failing

to obtain the coverage S&B had requested. S&B also asserted breach

of contract and declaratory judgment claims against American Home,

seeking primary and non-contributory insurance coverage for Hugo

Neu under its policy.

The Declaratory Judgment Coverage Actions

In a related action, Hugo Neu's insurer, Continental Casualty

Company ("Continental"), filed a complaint for declaratory

judgment against American Home and Femco's insurer, Crum & Forster

("C&F"), seeking a declaration that those two insurance companies

were responsible for providing coverage for defense and indemnity

to Hugo Neu in the underlying litigation.

Both American Home and C&F asserted cross-claims against each

other and counterclaims against Continental. S&B intervened as a

defendant in the coverage action and filed an answer with cross-

claims.

18

A-4439-11T2

Pretrial Motions and Proceedings

On February 5, 2010, the trial court ruled on a summary

judgment motion filed by Continental. The court issued an oral

opinion, ruling that Hugo Neu was an additional insured under both

the American Home and C&F policies. In that same ruling, the

court consolidated the underlying tort case with the declaratory

judgment action. Several days later, the court entered an order

granting summary judgment to Continental as to the discrete issue

of Hugo Neu's additional insured status, and consolidating the two

cases.

After Continental moved again for summary judgment on

different grounds, the court4 issued an oral opinion on June 9,

2010, ruling that both American Home and C&F were responsible for

providing primary, non-contributing insurance to Hugo Neu.

On July 23, 2010, the second judge ruled on several other

pretrial motions. As it relates to the present appeals, the court:

(1) issued orders consistent with the June 9, 2010 rulings granting

summary judgment to Continental against American Home and C&F,

requiring them to "provide primary and non-contributing insurance

coverage (both defense and indemnification) up to the full limits

of coverage called for" pursuant to the construction contracts

4

A different judge ("the second judge") heard this particular

motion.

19

A-4439-11T2

between Hugo Neu and, respectively, S&B and Femco; and (2)

dismissed claims against S&B, except that it required S&B to

provide "a complete defense and full indemnification" to Hugo Neu

pursuant to their contract, "so long as [Hugo Neu] was not found

to be solely responsible for Jack D'Avila's accident[,]" and

providing "that this contractual indemnification provision between

Hugo [Neu] and [S&B] shall not be triggered until the insurance

coverage provided by [S&B] has been exhausted." American Home and

C&F moved for reconsideration, which was denied.

In the meantime, Continental moved for the appointment of

defense counsel and to compel American Home and C&F to pay Hugo

Neu's defense fees and expenses. By order dated January 7, 2011,

the court denied that motion without prejudice.

After pretrial conferences, a third successive judge who was

assigned to this case ("the trial judge") heard and decided various

motions in limine. Among other things, the judge granted

plaintiffs' application to bar argument that decedent was

comparatively negligent and denied a motion to preclude S&B from

participating in the litigation. The judge reserved decision on

the question of whether the jury could consider S&B's negligence.

The Trial and The Verdict

Before the trial began, plaintiffs' counsel renewed his

objection to the court allowing the jury to consider the negligence

20

A-4439-11T2

of S&B. The court clarified that the parties could refer to S&B's

negligence in their opening statements to the jury, as it related

to the question of whether the negligence of the "construction

defendants" (i.e., Hugo Neu, Femco, and LGA) was a proximate cause

of decedent's injuries, but the jury would not be asked to assess

the comparative negligence of S&B on the verdict sheet.

Maintaining its prior ruling, the court denied a motion by Dr.

Schrader and JCMC to disallow S&B's participation at trial.

At the close of evidence, the parties made a variety of

motions, including motions for directed verdict, which the court

denied. The court also again considered whether S&B should be

placed on the verdict sheet, and determined that it should not.

S&B renewed its motion for a directed verdict, which the court

denied.

The jury found that Hugo Neu and Femco were each negligent,

and that their negligence was a proximate cause of decedent's

injury. The jury found no negligence on the part of LGA. With

respect to the job site accident, the jury allocated 75% liability

to Femco and 25% liability to Hugo Neu.

As for the medical defendants, the jury concluded that Dr.

Schrader, Nurse Cutshall, and Nurse Garcia were negligent.

However, the jury also found that only Dr. Schrader's negligence

had both increased the risk of harm posed by decedent's pre-

21

A-4439-11T2

existing condition, and had been a substantial factor in causing

his ultimate injury. The jury concluded that Nurse Cutshall's and

Nurse Garcia's negligence had increased the risk of harm, but had

not been a substantial factor in causing decedent's ultimate

injury. The jury found no negligence on the part of Nurse

Pangilinan.

Finally, the jury specifically found that 77% of decedent's

ultimate injury would have occurred even if the medical treatment

had been proper. Thus, it assessed Dr. Schrader as the cause of

23% of decedent's injury.

The net effect of these determinations, as molded by the

court, was to hold Femco 57.75% liable for the judgment, Hugo Neu

19.25% liable, and Dr. Schrader 23% liable.

As to damages, the jury awarded $2,249,668 in medical

expenses, $152,196 in lost income, and $3,800,000 in pain,

suffering, disability, impairment, and loss of enjoyment of life.

Decedent's wife (Rocha) was awarded: $50,000 for the loss of

consortium; $54,397 in past losses; and $334,150 in future losses.

Decedent's children (daughter Tienne and son Tiago) were each

awarded: $49,417 in past losses and $303,559 in future losses.

Finally, the jury concluded that Hugo Neu and Femco had not

proven that Dr. Schrader's negligence was an intervening,

superseding cause of decedent's ultimate harm.

22

A-4439-11T2

Post-Trial Motions

After several parties filed post-trial motions, the trial

judge issued a written letter opinion dated April 12, 2012. In

that decision, the judge reaffirmed the pretrial rulings that

obligated American Home and C&F to provide Hugo Neu with primary,

non-contributing insurance, and required those insurers to pay the

judgment against Hugo Neu. The judge also denied Femco's motions

to dismiss Hugo Neu's claim against it for contractual

indemnification, and further denied Femco's motion for judgment

notwithstanding the verdict or, alternatively, a new trial.

The judge further denied Dr. Schrader's motion to mold the

verdict so that only the so-called "construction defendants" the

jury had found to be at fault (i.e., Hugo Neu and Femco) were

liable. In addition, the judge required Femco to indemnify Hugo

Neu pursuant to their contract; and suspended prejudgment interest

on two-thirds of the award for medical expenses.

The Final Judgment, As Amended

The court entered an initial final judgment, in accordance

with the verdict and its post-trial rulings, and entered orders

on the post-trial motions, consistent with its written opinion.

Pursuant to the judgment, the total award, with prejudgment

interest, amounted to $8,534,726.27.

23

A-4439-11T2

Meanwhile, the court granted Continental's motion for payment

of interim defense fees and expenses, which was opposed by C&F and

American Home.

On June 11, 2012, the court entered an amended judgment,

adding modest taxed costs of $1,230, increasing the aggregate

judgment to $8,535,956.27, with $4,929,514.75 allocated to Femco,

$1,643,171.58 allocated to Hugo Neu, and $1,963,269.94 allocated

jointly to Dr. Schrader, Liberty Surgical, and JCMC.

The trial court thereafter entered a second amended judgment,

requiring American Home and C&F to provide primary and non-

contributory coverage for the judgment against Hugo Neu, and

requiring C&F to provide primary and non-contributory coverage for

the judgment against Femco.

The Myriad Appeals

The trial court stayed the judgment, conditioned upon the

posting of a supersedeas bond. Appeals were subsequently filed

by, respectively: plaintiffs, Femco, S&B, C&F, and American Home.

Plaintiffs subsequently settled with Dr. Schrader and her

employers, Liberty Surgical and JCMC.

III.

Femco, which bears the largest share of liability under the

jury's verdict, raises on appeal several interrelated issues of

negligence and contractual indemnification.

24

A-4439-11T2

Specifically, Femco argues that the trial court erred by:

(1) allowing decedent's employer, S&B, to participate in the trial

while disallowing the jury to consider S&B's alleged negligence;

(2) ruling that Femco was obligated to indemnify Hugo Neu for Hugo

Neu's own negligence. Femco further argues that the jury's

apportionment of fault against it was against the weight of the

evidence. The remaining issues raised on appeal by Femco were

resolved through its recent settlement with plaintiffs.

Meanwhile, the issues raised by S&B in its cross-appeal

include an argument that the trial court erred by denying S&B's

motion for partial summary judgment, and holding that S&B is liable

to Hugo Neu for contractual indemnification.

The first of these issues —— concerning the appropriate role

of decedent's employer in the jury trial —— raises important

questions of law and procedure about the employer's inclusion or

omission from the verdict form. We devote the following analysis

in this published portion of our opinion to that thorny issue.

Because these issues concerning the employer's role at trial

are closely intertwined with the issues of negligence liability

and contractual indemnification that also have been raised, we

include them within our analysis in this section of the opinion

as well.

25

A-4439-11T2

A.

The WCA, N.J.S.A. 34:15-1 to -142, "represents the bargain

that was struck between employers and employees concerning

workplace injuries, whereby employers shoulder the expense of

workers' injuries arising out of the performance of work duties."

Basil v. Wolf, 193 N.J. 38, 53 (2007). The WCA "provide[s] a

method of compensation for the injury or death of an employee,

irrespective of the fault of the employer or contributory

negligence and assumption of risk of the employee." Harris v.

Branin Transp., Inc., 312 N.J. Super. 38, 46 (App. Div.), certif.

denied, 156 N.J. 408 (1998).

As part of the bargain struck by the Legislature in the WCA,

N.J.S.A. 34:15-8 directs that an employer may not be sued by an

employee or an employee's surviving relatives for negligence that

caused injury or death to the employee. Instead, workers'

compensation is the exclusive remedy, absent proof of an

intentional wrong. Ramos v. Browning Ferris Indus. of S. Jersey,

Inc., 103 N.J. 177, 183 (1986); McDaniel v. Man Wai Lee, 419 N.J.

Super. 482, 489-90 (App. Div. 2011). Thus, plaintiffs in this

case could not proceed with a claim against S&B, decedent's

employer.

Case law establishes that the WCA does not, however, preclude

an injured employee from pursuing claims against third-party

26

A-4439-11T2

tortfeasors. Instead, "an employee retains the right to pursue

available common-law remedies for liability against third-parties,

so long as recoveries are not duplicated." McDaniel, supra, 419

N.J. Super. at 491 (citing Schweizer v. Elox Div. of Colt Indus.,

70 N.J. 280, 287-88 (1976)). Thus, plaintiffs could and did pursue

claims against alleged other tortfeasors, including Femco and Hugo

Neu.

Consistent with the WCA's exclusive remedy proviso,

defendants could not seek contribution from S&B under the Joint

Tortfeasors Contribution Law ("the JTCL"), N.J.S.A. 2A:53A-1 to -

5. "Because the employer cannot be a joint tortfeasor, it is not

subject to the provisions of the [JTCL], and a third-party

tortfeasor may not obtain contribution from an employer, no matter

what may be the comparative negligence of the third party and the

employer." Ramos, supra, 103 N.J. at 184; accord Stephenson v.

R.A. Jones & Co., 103 N.J. 194, 199 (1986); McDaniel, supra, 419

N.J. Super. at 492-93.

Hence, in the context of a plaintiff-employee's negligence

claims against other tortfeasors relating to workplace injuries,

the jury cannot be asked to apportion fault to the plaintiff's own

employer, even if that seems like "a more equitable manner of

presenting th[e] matter to the jury[.]" Jarrett v. Duncan Thecker

27

A-4439-11T2

Assocs., 175 N.J. Super. 109, 115 (Law Div. 1980); accord

Stephenson, supra, 103 N.J. at 199.

On the other hand, "indemnification of a third party by an

employer pursuant to an express contract does not disturb the

delicate balance struck by the Legislature in the WCA. Nothing

in the WCA precludes an employer from assuming a contractual duty

to indemnify a third party through an express agreement." Ramos,

supra, 103 N.J. at 191. Accord Mautz v. J.P. Patti Co., 298 N.J.

Super. 13, 19-21 (App. Div.), certif. denied, 151 N.J. 472 (1997);

Port Auth. of N.Y. & N.J. v. Honeywell Protective Serv., Honeywell,

Inc., 222 N.J. Super. 11, 19-20 (App. Div. 1987).

Thus, it was permissible here for Hugo Neu to seek

indemnification from S&B, pursuant to their contract, for any of

plaintiffs' damages caused by S&B or Hugo Neu. The only legal bar

to such a claim would be if Hugo Neu were found 100% liable,

because the Legislature has disallowed indemnification agreements

imposing liability where the damages in question were caused by

the indemnitee's "sole negligence." See N.J.S.A. 2A:40A-1.5

5

N.J.S.A. 2A:40A-1 states:

A covenant, promise, agreement or

understanding in, or in connection with or

collateral to a contract, agreement or

purchase order, relative to the construction,

alteration, repair, maintenance, servicing,

or security of a building, structure, highway,

28

A-4439-11T2

1.

Published cases in New Jersey have provided mixed signals

about how the court should treat an employer named as a third-

party defendant, for contractual indemnification purposes, in a

tort action brought by an injured employee who has demanded a

trial by jury. In particular, the published cases have not been

uniform concerning whether the employer should be permitted to

participate in the jury trial and, if so, whether and how the

employer's alleged negligence should be addressed in the jury

charge and in the verdict form.

In White v. Newark Morning Star Ledger, 245 N.J. Super. 606

(Law Div. 1990), the plaintiff, an employee of Colin Service

Systems, Inc. ("Colin"), was injured while working on the premises

of defendant Newark Morning Star Ledger ("Ledger"). Id. at 608.

railroad, appurtenance and appliance,

including moving, demolition, excavating,

grading, clearing, site preparation or

development of real property connected

therewith, purporting to indemnify or hold

harmless the promisee against liability for

damages arising out of bodily injury to

persons or damage to property caused by or

resulting from the sole negligence of the

promisee, his agents, or employees, is against

public policy and is void and unenforceable;

provided that this section shall not affect

the validity of any insurance contract,

workmen's compensation or agreement issued by

an authorized insurer.

[(Emphasis added).]

29

A-4439-11T2

Colin agreed in its contract with Ledger to indemnify Ledger for

any injury or death "in any way relating to the performance by

Colin . . . [of the contract] . . . except for such injury . . .

due to the affirmative negligent acts of Ledger[.]" Id. at 610.

The plaintiff sued only Ledger, alleging negligence, and Ledger

filed a third-party complaint against Colin for a defense and

indemnification. Id. at 609. Colin moved for summary judgment

to dismiss Ledger's third-party complaint, and the Law Division

judge denied that motion. Id. at 609, 613.

The Law Division judge in White recognized that if both Ledger

and Colin were found to be negligent and to have proximately caused

the accident, then "Ledger as the third-party tortfeasor [would]

be solely responsible" for the plaintiff's injuries. Id. at 611.

Hence, the case required an allocation of fault as between Ledger,

the defendant/indemnitee, and Colin, the third-party

defendant/indemnitor. Ibid. The judge further noted that there

was a genuine issue, at least on the facts presented in the summary

judgment record, as to "whether the cause of [the] plaintiff's

injury was solely caused by Ledger's negligence." Id. at 613.

The judge in White further concluded that, in deciding "how

best to allocate the liability as between Ledger, to the extent

that liability results from Ledger's affirmative negligent acts,

and Colin[,]"

30

A-4439-11T2

[t]he logical and most efficient means of

achieving that result will be by proceeding

as this case is presently structured, with

both Ledger and Colin as parties. That will

enable the same jury to fix the damages due

from Ledger to [the plaintiff], while also

fixing the amount due to Ledger pursuant to

the indemnification provisions of the

[contract].

[Id. at 611.]

The judge added that "[a]ny claimed confusion between [the

plaintiff's] right to recover from Ledger and Ledger's right to

recover from Colin can be avoided by instructions and

interrogatories to the jury." Id. at 613. The judge stopped

there, however. He did not indicate exactly how the jury should

be instructed, or how the special interrogatories on the verdict

form should be framed.

Our own court grappled with similar issues four years later

in Kane v. Hartz Mountain Industries, Inc., 278 N.J. Super. 129,

134 (App. Div. 1994), aff'd o.b., 143 N.J. 141 (1996). The

plaintiff in Kane was a construction worker who was injured on the

job, and he sued Hartz Mountain Industries, Inc. ("Hartz"), the

general contractor, and others, alleging negligence. Ibid. The

plaintiff's employer, Eastern Steel Erectors ("Eastern"), had

agreed to indemnify the steel fabricator with whom it had

contracted, Howell Steel, Inc. ("Howell"), "and the 'owner' of the

project from any losses or claims arising out of Eastern's work

31

A-4439-11T2

on the project." Id. at 135. Therefore, Howell joined Eastern

as a third-party defendant, seeking indemnification pursuant to

their contract. Ibid.

The trial judge in Kane allowed Eastern

to "participate" in the jury trial of

plaintiff's case [but not present closing

arguments], but he ruled that Eastern's

negligence would be submitted to the jury only

if the jury first returned a verdict finding

that neither the Hartz defendants nor [another

defendant] were negligent, and that Howell was

100% negligent. In that event, the court

would require the jury to decide whether any

negligence was attributable to Eastern, in

order to determine the enforceability of the

Eastern-Howell indemnification agreement.

[Id. at 146.]

Having been so instructed, the jury returned a no-cause verdict.

Id. at 136.

On the plaintiff's appeal in Kane, we concluded there had

been error in the jury charge on the effect of Occupational Health

and Safety Administration ("OSHA") regulations that warranted

reversal. Id. at 140-44. We also found reversible error in the

trial court's treatment of Eastern. Id. at 144-47.6 We observed

that "it was neither necessary nor appropriate to permit Eastern

to participate in the presentation of [the] plaintiff's case."

6

We rejected the plaintiff's separate contentions of error on an

evidentiary issue and regarding comparative negligence, see id.

at 147-51, which are not pertinent here.

32

A-4439-11T2

Id. at 146. Given that the nature of the allegations in the case

involved "industry-wide or regulatory safety standards," we

concluded that Eastern "would not be prejudiced by a separate

trial on the indemnification issue." Ibid.

Hence, we ordered in Kane that, on remand, "trial of the

third-party claim should be severed, as unquestionably any

liability of Howell is not so independent of the failure of Eastern

to abide by safety standards as to bring about the result that

Howell might be held liable without a similar finding of fault on

the part of Eastern." Ibid. We also observed that "[i]n any

event, Eastern, merely by reason of its status as indemnitor of

Howell, should not be accorded the advantage of participating at

trial. A bare agreement to indemnify does not carry with it the

obligation to defend, and it does not provide a right to control

the litigation." Id. at 146-47 (emphasis added). In making this

observation, we did not expressly repudiate White, a case which

we noted earlier in the opinion had been relied upon by the trial

court. Id. at 136.

Several defendants in Kane, including Hartz, Howell, and

Eastern, petitioned for and were granted certification by the

Supreme Court. The Court affirmed our disposition in Kane,

"substantially for the reasons expressed" in the published

opinion. Kane, supra, 143 N.J. at 142. In doing so, the Court

33

A-4439-11T2

provided no additional commentary and did not shed any further

light on the employer-participation question. Ibid.7

A year after Kane, we confronted similar issues of

indemnification in Bradford v. Kupper Associates, 283 N.J. Super.

556 (App. Div. 1995), certif. denied, 144 N.J. 586 (1996). In

that case, the plaintiffs were employed by Agate Construction

Company ("Agate"). Id. at 563. One plaintiff was killed, and

another injured on the job when both inhaled poisonous gas in the

Tuckerton sewer system. Ibid. They sued the Tuckerton Borough

Municipal Utilities Authority ("TMUA"), and Kupper Associates

("Kupper"), the project engineer, with Agate named a third-party

defendant based upon its contractual duty of indemnification.

Ibid. The jury returned a no-cause verdict, which we affirmed on

appeal. Id. at 563-64. However, we reversed the court's pretrial

ruling that Agate was not required to indemnify Kupper and the

TMUA. Id. at 564, 582-86.

Construing the indemnification provision within the

construction contract in Bradford, we held that the contract

"clearly did not require Agate to indemnify only for its own

negligence," but rather imposed a broader obligation. Id. at 584.

On the other hand, we recognized that the agreement did not require

7

The Court's very recent discussion of other aspects of Kane in

Fernandes v. DAR Development Corp., __ N.J. __ (2015), did not

address the employer-participation issue.

34

A-4439-11T2

Agate to indemnify either TMUA or Kupper "solely based upon their

exclusive negligence." Ibid. We also were persuaded that the

plaintiffs' claims in Bradford "arose or resulted from" the work,

as was required under the contract to trigger such a duty to

indemnify. Id. at 585.

Turning to the troublesome question of the appropriate role

of the plaintiffs' employer, Agate, in the fact-finding process,

we suggested in Bradford that Agate might be permitted to

participate in the trial. We ultimately did not reach that

question conclusively, however, because of the distinctive

procedural posture in which the case had been litigated and the

appeal had arisen. Instead, we enforced Agate's contractual duty

to indemnify TMUA, without requiring any further factual findings

on remand by a jury or otherwise:

The matter may be best resolved, as TMUA and

Kupper sought here, by keeping the indemnitor

in the case on the indemnification claim. But

we need not now decide what the judge should

have done had he denied Agate's motion.

Rather, we have to determine what we must do

in light of the fact that he granted the

motion, and we must do so in view of the

established record. Of particular importance

are the [jury's] determinations that neither

TMUA nor Kupper were found liable, although

Kupper was found to be negligent.

Here, Agate chose not to participate by

moving for a dismissal of the third-party

claims. Rather, it sought to be relieved of

an obligation to become involved in the trial

proceedings.

35

A-4439-11T2

In these circumstances, taking account of

the proofs that Agate violated OSHA

regulations, and given a jury verdict finding

neither defendant liable for plaintiffs' work-

related injuries, we are unprepared to permit

Agate to re-litigate the issue of negligence

or whether either TMUA or Kupper can be said

to be solely negligent.

[Id. at 586 (emphasis added).]

Thus, under the particular circumstances presented in Bradford,

we only remanded the case for "consideration of all the issues

regarding attorneys' fees and costs for which TMUA and Kupper are

entitled under the indemnification clause." Id. at 587. The

panel's comment in Bradford about how the participation question

"may be best resolved," id. at 586, although it is merely dicta,

arguably suggests a willingness to reconsider Kane's declared

prohibition on an employer/indemnitor's participation in the

negligence trial. We are mindful, however, that the panel's

comment in 1995 about that subject preceded the Supreme Court's

1996 unelaborated affirmance of Kane. We also are mindful that

our opinion in Bradford did not discuss Kane or, for that matter,

White, regarding the participation issue.

In a later tort case that we reviewed on appeal, Leitao v.

Damon G. Douglas, Company, 301 N.J. Super. 187 (App. Div.), certif.

denied, 151 N.J. 466 (1997), we noted there that the Law Division

had severed at trial a defendant general contractor's third-party

36

A-4439-11T2

complaint for contractual indemnification against the plaintiff's

employer. Id. at 190. After the jury found the contractor 51%

negligent and the employee 49% negligent, the trial court addressed

the indemnification questions. The court ruled that the

plaintiff's employer was obligated to fully indemnify the

defendant, despite the plaintiff's comparative fault. Id. at 190-

91. The court did so because the accident "arose out of" the

employer's subcontract and was not caused by the defendant

indemnitee's "sole negligence." Id. at 190, 195. Our appellate

opinion in Leitao did not consider, however, whether the employer

should have been permitted to participate in the jury trial, or

whether, in retrospect, the severance of the indemnification

issues was proper. Our opinion did not cite to Kane or White and

only cited Bradford with regard to a different issue. Id. at 192.

This line of published cases arguably leaves some residual

uncertainty about the proper way to proceed in these jury trial

situations where a tort defendant has a fact-dependent claim for

contractual indemnification against the plaintiff's employer, and

about the breadth of the approach we adopted in Kane. We are now

asked to consider in the present case —— one of truly massive

scope —— whether the impetus for a unitary proceeding here is

stronger than it was in Kane.

37

A-4439-11T2

The dimensions of Kane are distinguishable from the present

case, which is not just limited to construction accident defendants

and negligence claims but also includes medical malpractice

defendants and claims. Here, unlike in Kane, there was no

significant risk that the employer, S&B, would "control the

litigation." Kane, supra, 278 N.J. Super. at 147. In essence,

S&B was, metaphorically, another fish in a very large pond.

The sheer number of defendants and claims in this case compels

us to consider whether the approach adopted in Kane should be

inflexibly followed in large-scale cases, or whether, conversely,

the interests of judicial efficiency should take precedence and

warrant an exception to Kane.

2.

A few other state courts and treatise writers have grappled

with this perplexing issue. Our research has identified several

instances in which the plaintiff's employer took part in the jury

trial of the tort case, despite the workers' compensation laws of

the applicable state, in order to adjudicate third-party claims

brought by a tort defendant against that employer for

indemnification.8

8

See, e.g., Giguere v. Detroit Edison Co., 319 N.W.2d 334 (Mich.

Ct. App. 1982) (allowing such indemnification claims to be tried

before the jury along with the plaintiff employee's negligence

claims against the defendant indemnitee, affirming the trial

38

A-4439-11T2

On the other hand, some jurisdictions have ruled that, under

an express contract of indemnity running from a plaintiff's

employer to a third party, "the third party cannot insist that the

employer and the employer's insurer be joined in the plaintiff's

action for purposes of enforcement of the right of indemnity." 11

Arthur Larson & Lex K. Larson, Larson's Workers' Compensation Law

§ 121.04[5] (Matthew Bender, Rev. Ed. 2014) (emphasis added)

(citing Gibbs v. Carolina Power & Light Co., 144 S.E.2d 393 (N.C.

1965) and Baldwin Co. v. Ceco Corp., 659 S.W.2d 941 (Ark. 1983)).

The Larson treatise recommends that "[s]ince the indemnity

claim is by definition a separate legal cause, and, unlike the

employer's contributory negligence, is not intertwined with the

tortious incident itself, every precaution should be taken to see

court's denial of the employer's severance motion seeking a

separate trial on the indemnification issues); Frederickson v.

Alton M. Johnson Co., 402 N.W.2d 794 (Minn. 1987) (permitting the

negligence and the indemnification issues to be tried together,

but granting a directed verdict to the employer before submitting

the case to the jury); Severino v. Schuyler Meadows Club, 639

N.Y.S.2d 869 (N.Y. App. Div. 1996) (affirming a judgment following

a combined jury trial on negligence and indemnification issues,

in which the jury found the defendant/indemnitee general

contractor 20% at fault for the accident and the plaintiff's

employer 80% at fault); Berardi v. Getty Ref. & Mktg. Co., 435

N.Y.S.2d 212 (N.Y. Sup. Ct. 1980) (similarly involving a combined

jury trial). By contrast, in Levine v. Shell Oil Company, 321

N.Y.S.2d 81 (N.Y. 1971), the parties stipulated that the

plaintiffs' negligence claims against the defendant would be tried

before a jury, and that the defendant's claims for indemnification

against the plaintiffs' employer were to be separately resolved

by the trial judge alone. Id. at 84.

39

A-4439-11T2

that the employee's own . . . rights are not prejudiced by the

interjection of this [indemnity] factor into his or her case."

Ibid. "This kind of tangle is at least partly avoided by [an

approach] which sees to it that the first step in the process, the

action by the employee plaintiff, goes forward without the

complicating presence of the parties and issues involved in the

indemnity problem." Id. at § 121.04[7] (emphasis added).

That said, the Larson treatise further recognizes that the

problem cannot always be "easily sidestepped," and that there can

be circumstances in which the negligence and indemnity issues

might need to be tried together. Ibid. As an illustration, the

treatise referred to situations in which an insurer for the

employer/indemnitor would not provide coverage for that obligation

unless the employer's negligence is proven to have caused injury.

In that scenario, the employer's carrier "would have an interest

in proving that the employer had not in fact negligently

contributed to the employee's injuries." Ibid.

3.

The preferred solution to this quandary concerning the

employer/indemnitor's proper role at trial, at least in a case

with large dimensions like the present one, is by no means obvious.

There are competing policies to consider.

40

A-4439-11T2

On the one hand, we recognize the important workers'

compensation policies that underlie the exclusive remedy feature

of the WCA. We also are mindful of the related desire not to

entangle an injured worker's employer indiscriminately in

negligence actions that the employee brings against other

tortfeasors. Those concerns seemingly weigh in favor of holding

separate trials or hearings on indemnification issues.

On the other hand, our system of justice also favors

consistency of outcomes, efficiency, and the avoidance of the

needless consumption of time and resources to litigation. See,

e.g., Olivieri v. Y.M.F. Carpet, Inc., 186 N.J. 511, 522 (2006);

State v. Gonzalez, 75 N.J. 181, 190, 193 (1977). Those offsetting

considerations weigh in favor of attempting to resolve indemnity

issues, where possible, within the same trial or before the same

fact-finder.

We suspect that, in many instances, such as the present case,

a general contractor or project owner routinely will insist on its

subcontractors entering into broad indemnification agreements that

strive to insulate the owner or general contractor from liability

when one of the subcontractors' employees is injured on the job

site. Depending on the contractual language utilized, the proper

application of those indemnity agreements may require factual

findings as to: whether the employee's injury "arose out of" the

41

A-4439-11T2

work encompassed by the indemnity contract; whether the worker's

employer was at least in part at fault for the accident; and

whether the defendant indemnitee was not itself 100% at fault.

These factual issues can be very closely intertwined with the

liability proofs and the findings that a jury must make in the

underlying negligence case.

Where the parties in the negligence case have not agreed to

a bench trial, the jury's paramount function as fact-finder

generally ought to include those factual issues relative to

contractual indemnification. It could be exceedingly difficult

for a trial judge (who would not, of course, be privy to the jury's

deliberations) to attempt to adjudicate the proofs in an indemnity

proceeding in a manner that would respect the jury's findings but

still resolve the open factual questions.

For instance, what if the judge, upon hearing the evidence

in a "round two" indemnification trial or proceeding, perceives

from the testimony that the co-defendant seeking indemnity was not

negligent or only slightly negligent, despite the jury's earlier

finding imposing the greatest share of liability upon that

defendant? Or, what if the judge perceives that the defendant

seeking indemnification from the plaintiff's employer bears a much

higher percentage of fault in causing the accident than the level

42

A-4439-11T2

ascribed by the jurors? This predicament, and the risk of

inconsistent outcomes, is surely troublesome.

Moreover, a separate trial or proceeding on indemnification

will invariably consume lawyer time and expense, expert time and

expense, witness time, and other resources already expended in the

earlier negligence trial. Why should a plaintiff, having already

tried the tort case to verdict, need to become entangled in another

proceeding, one that only involves the business-driven contractual

agreements between his or her employer and another private party?

We have considered the possibility that the factual proofs

might be presented simultaneously before the jurors for purposes

of the negligence claims and defenses, and for the judge, for

purposes of the indemnity issues. Such a "split fact-finder"

approach still can pose several disadvantages, however. For one

thing, the indemnitor or the indemnitee might have demanded a jury

on the contractual issues. Even if no such jury demand were made,

the employer/indemnitor has an advocacy interest in presenting

evidence, cross-examining opposing witnesses, interposing

evidentiary objections, and making arguments during the course of

the trial. It might be difficult to explain to jurors what role

counsel for the employer is actually performing at such a trial

before "dual" decision-makers.

43

A-4439-11T2

In addition, the judge serving as the fact-finder on the

indemnity issues may have questions or need clarification about

testimony as the case unfolds. This will place the judge in the

difficult position of either letting those queries go unanswered,

or interfering —— perhaps too often —— with counsel's presentation

of the case to the jurors.

Taking all of these competing concerns into account, we hold

that the sounder practice —— in a context such as the present one

involving claims even more extensive than those in Kane and an

unusually lengthy trial —— is to try the negligence and contractual

indemnification issues simultaneously before the jury. After the

evidence has been presented at such a trial, the court should

issue carefully-crafted jury instructions, addressing the pivotal

factual issues that the jury must decide. The verdict form will

likewise need to be carefully designed, so as to only have the

jurors address the question of the employer's potential fault when

it is absolutely necessary to do so.

For example, the jury must be instructed that they should

only consider the employer's negligence if they first determine

that the conduct of the defendant seeking indemnity is not the

sole cause of the accident. Jurors will be presumed to follow

such instructions faithfully. See Belmont Condo. Ass'n, Inc. v.

Geibel, 432 N.J. Super. 52, 97 (App. Div.), certif. denied, 216

44

A-4439-11T2

N.J. 366 (2013). In this way, the unified trial process will not

subvert the policies and objectives underpinning the exclusive

remedy provision of the WCA. This unitary fact-finding model

avoids discordant results and may conserve the resources of the

parties and the court.

The jury should be given appropriate instructions about the

presence of the employer's counsel in the trial, explaining that

he or she is participating solely with respect to certain factual

issues that the jury might need to address. The jury should not

be given an "ultimate outcome" instruction divulging that the

plaintiff cannot recover any damages from the employer, for we

suspect such an instruction would likely engender confusion and

speculation.

The judge must mold the verdict after it is issued, so that

the plaintiff's damages are not reduced by the employer's

percentage share of fault, if any. Instead, the non-employer

defendants must fully bear any liability owed to the plaintiff.

Thus, for example, if the jury finds defendant "A" 60% at fault,

another defendant "B" 20% at fault, and the plaintiff's employer,

defendant "C," 20% at fault, with no comparative fault accorded

to plaintiff, the employer's 20% share must be divided among the

other defendants in a molded judgment that assigns a 75% share to

defendant "A" and 25% to defendant "B."

45

A-4439-11T2

We stop short, however, of prescribing that such a combined

jury trial on negligence/contractual indemnification issues also

address discrete factual issues bearing upon insurance coverage,

an option that was suggested to us at oral argument by one of the

insurance counsel. We also reject the related suggestion that the

jury should answer special interrogatories on the verdict form

resolving any additional factual disputes that relate to insurance

coverage.

In order to provide meaningful responses to such insurance-

related queries, the fact-finder presumably would want the benefit

of the advocacy of counsel who are respectively seeking or opposing

coverage. Such advocacy would call for insurance counsel to

participate in the trial itself, to present and contest evidence,

and to make closing arguments to the jury. The jury would

therefore need to understand coverage counsel's role in the case

and, presumably, the identities of their clients. That

participation would undoubtedly risk speculation by jurors about

the existence and levels of insurance coverage available to

defendants. It could easily taint the jury's findings on

negligence and the amount of any damages awarded. See N.J.R.E.

411 (generally excluding proof of liability insurance coverage in

cases involving negligence or other wrongful conduct). There is

also a real danger that the insurance coverage issues could

46

A-4439-11T2

dominate the jury trial, thereby misdirecting the focus of

plaintiff's negligence case.

We therefore limit our prescriptive holding to the

participation of counsel who represent the parties on the issues

of contractual indemnification (e.g., as between a general

contractor or owner and a subcontractor). We do not endorse

expanding the trial further to involve insurance issues or coverage

counsel. The coverage issues must instead be decided by the court

or, where a jury demand has been made by the insurers or the

insureds, by a separate jury.

We recognize that the procedural solution we have endorsed

is not perfect. Even so, we consider it the most superior of the

possible alternatives, at least for cases such as the present one,

involving a significantly greater scope than Kane. That said, the

parties are free to stipulate to a different process, provided

that the trial judge in his or her discretion finds such a proposed

alternative sensible.

We suspect that, as a result of settlements with some parties

and dispositive motion practice, the need for a combined

tort/contractual indemnification trial may prove to be infrequent.

In any event, we hope the direction that we have provided here

will be useful in those future situations when they do arise.

Although it is not our prerogative to do so, the Supreme Court may

47

A-4439-11T2

also wish to revisit whether the approach in Kane should be

followed in less complex settings.

B.

Before we apply these principles to the trial that occurred

here, certain threshold matters must be addressed to provide a

proper context. We first consider Hugo Neu's indemnification

agreements with, respectively, Femco and S&B, and the trial court's

interpretation of those agreements.

1.

In Femco's subcontract, it broadly agreed to indemnify Hugo

Neu for "any and all claims . . . arising, or allegedly arising,

from and out of (a) the work incident to or resulting from any and

all operations performed by [Femco] under or pursuant to any of

the provisions of [its subcontract]." Femco also agreed to

indemnify Hugo Neu for claims arising out of "(b) any injury to,

or death of, any person or persons . . . occurring wholly or in

part in connection with or resulting from the work or by reason

of any act, omission or negligence of [Femco][.]" Thirdly, Femco

agreed to indemnify Hugo Neu for claims arising out of "(c) any

breach or default hereunder by [Femco][.]" The subcontract

specified that all three of these indemnity triggers apply,

"whether or not any acts, errors, omission[s] or negligence of any

48

A-4439-11T2

of the [i]ndemnities [i.e., Hugo Neu] contributed thereto in whole

or in part[.]"

The trial court correctly held this indemnity language in the

Femco subcontract to be valid and enforceable. We further concur

with the court that this contract language was sufficiently plain

and unequivocal to require Femco to indemnify Hugo Neu for damages

caused by Hugo Neu's own negligence. See Ramos, supra, 103 N.J.

at 191-92 (requiring such provisions to be expressed in unequivocal

terms); see also Azurak v. Corporate Prop. Investors, 175 N.J.

110, 112-13 (2003) (same).

We reject Femco's argument that the "whether or not"

phraseology contained in the contract's indemnity provision

created a fatal ambiguity that limits its obligation to indemnify

Hugo Neu for its own negligence. Nor do we agree with Femco that

the indemnity language here is internally inconsistent. The only

limitation that applies stems from the statute, N.J.S.A. 2A:40A-

1, precluding an enforceable duty to indemnify a party that is

solely negligent, not applicable here.

In addition, we are unpersuaded by Femco's claim that the

"arising . . . out of" phrase in the contract's indemnity language

precludes Femco's duty to indemnify Hugo Neu for injuries that

were not shown to be proximately caused by Femco's conduct.

Applying a common and ordinary sense to that phrase, there only

49

A-4439-11T2

needs to be proof of "a substantial nexus" between the injury and

the activities encompassed in the contract. Vitty v. D.C.P. Corp.,

268 N.J. Super. 447, 452-53 (App. Div. 1993); see also Leitao,

supra, 301 N.J. Super. at 193.

For example, even if Hugo Neu were found partially negligent

for an accident resulting to some extent from its failure to

maintain the safety of a job site where Femco was working, the

indemnification agreement would apply. That is because of the

"substantial nexus" between the accident and the job site

activities encompassed by the contract, unless, as we have said,

Hugo Neu were found to be 100% responsible for the unsafe

conditions.

2.

Hugo Neu's subcontract with S&B likewise contains broad

indemnity language. Stripped to its essence, the indemnification

clause provides that "[t]o the fullest extent permitted by law,"

S&B shall indemnify Hugo Neu "against claims, damages, losses and

expenses, including but not limited to attorneys' fees, arising

out of or resulting from performance of [S&B's work under the

contract], including, without limitation, any such claim, damage,

loss or expense attributable to bodily injury, . . . caused by the

acts or omissions of [S&B], . . . or anyone for whose acts they

50

A-4439-11T2

may be liable, regardless of whether or not such claim, damage,

loss or expense is caused in part by [Hugo Neu]."

This language clearly expresses that S&B must indemnify Hugo

Neu against all claims "arising out of or resulting from

performance of" S&B's work. The obligation applies, "regardless

of whether or not such claim, damage, loss or expense is caused

in part by [Hugo Neu]." The contract expressly identifies one

subset of such claims for which S&B must indemnify Hugo Neu

"without limitation," that is, claims for bodily injury caused by

S&B's negligence, or the negligence of any party for which S&B is

responsible.

Hence, under the clear and unambiguous terms of the

indemnification clause, S&B must indemnify Hugo Neu for decedent's

damages caused by Hugo Neu or S&B. As we have already noted with

respect to Femco's similar provision, the phrase "arising out of"

does not require a finding of proximate cause between a plaintiff's

injury and S&B's work. Rather, it is sufficient that there is

proof of a substantial nexus between the injury and S&B's work.

Vitty, supra, 268 N.J. Super. at 452-53. So interpreted,

decedent's injury here clearly "arose out of" his employer S&B's

work under the contract, because it is undisputed that decedent

was injured while performing such work.

51

A-4439-11T2

The trial court therefore correctly granted partial summary

judgment to Hugo Neu in ruling that S&B was obligated to indemnify

Hugo Neu pursuant to their subcontract, so long as Hugo Neu was

not found to be solely liable for the accident. We therefore

reject S&B's cross-appeal of that determination.

3.

The indemnity issues are complicated here, however, by the

fact that Hugo Neu bargained for duplicative indemnity protection

from both Femco and S&B. Given that the accident had a substantial

nexus to the work of Hugo Neu, Femco, and S&B, and did not arise

wholly out of Hugo Neu's negligence, a question arises as to

whether Femco or S&B has a primary duty to indemnify Hugo Neu, or

whether those duties somehow should be equitably allocated,

assuming that Hugo Neu seeks to enforce its rights under both

indemnity agreements.9 See, e.g., Chamison v. Healthtrust, Inc.,

735 A.2d 912 (Del. Ch. 1999) (in which a corporation's director

had a right to be indemnified by two separate indemnitors, and in

which the court divided their indemnity obligations equally),

aff’d, 748 A.2d 407 (Del. 2000).

9

At oral argument on appeal, counsel for S&B asserted that Hugo

Neu has "waived" its rights to seek indemnity from S&B. We have

located no evidence of such a waiver in the parties' submissions.

Indeed, Hugo Neu filed a brief opposing S&B's cross-appeal of the

trial court's ruling obligating S&B to indemnify Hugo Neu.

52

A-4439-11T2

Although the parties have not briefed these precise issues

of overlap, it is conceivable that the relative shares of fault

of Femco and S&B may bear upon their resolution.10 No such

comparative findings were made by the jury here. As we have

already noted, the jury was not permitted to consider assigning a

percentage share of fault to S&B. We shall consider the

consequences of that omission, infra, in Part III(C).

C.

Given the circumstances, the trial court justifiably allowed

S&B's counsel to participate in this jury trial, despite the

objections posed at the time by plaintiffs' counsel. The issues

of contractual indemnification relating to Femco, S&B, and Hugo

Neu required several factual determinations, in which S&B surely

had an interest.

These issues included whether Hugo Neu was solely at fault

for the accident, in which case it would be entitled to no

indemnity from either Femco or S&B under N.J.S.A. 2A:40A-1. The

issues also included whether Femco and S&B were each at fault,

and, if so, to what extent, because those findings could bear upon

the relative potential indemnity obligations to Hugo Neu of both

10

We suspect that Femco and S&B have not squarely addressed this

priority issue because they both incorrectly presume that they

would need to be individually found at least partially at fault

in order to have any duty to indemnify Hugo Neu.

53

A-4439-11T2

S&B and Femco. If, for instance, the jury found S&B to be

faultless, or that S&B's share of fault were less than that of

Femco, then Femco arguably might have had the paramount obligation

to indemnify Hugo Neu.

The trial court declined, however, to include S&B on the

verdict form and thereby allow the jury to "weigh in" on S&B's

role, if any, in causing decedent's accident. Such potential

fault was not a fanciful possibility, as the evidence could have

been reasonably viewed (consistent with certain opinions presented

by some of the liability experts) to support a finding that S&B

was negligent in allowing decedent, as its employee, to work in

an area with an unsecured ladder it may have owned.

Citing our opinion in Kane, supra, the trial judge declined

to place S&B on the verdict form out of an apparent concern that

doing so would be inconsistent with the workers' compensation

laws, and could unfairly interfere with plaintiffs' prosecution

of their claims against the other defendants. In this regard, the

judge issued the following explanatory instruction to the jury:

The plaintiffs may at some point have

considered whether Simpson & Brown was

negligent. As to that issue, I have ruled,

as a matter of law, that the plaintiffs cannot

sue Simpson & Brown for negligence in this

case because it is unquestioned that Simpson

& Brown was Mr. D'Avila's employer and the law

does not permit that lawsuit to take place.

So you're not going to be asked to assess the

54

A-4439-11T2

responsibility of Simpson & Brown in this

case.

Simpson & Brown did participate in this

case, as you know, but they participated for

another issue which I, the Court, have to

address later. It relates to a contract claim

between Simpson & Brown and one or another of

the construction defendants, and that's not

for you to consider. Please don't speculate

as to what that issue is.

Only counsel for S&B, Dr. Schrader, and Nurse Garcia opposed the

omission of S&B from the verdict form.11

Notably, Femco itself never asserted a position to the trial

court about the propriety of S&B's participation at trial, nor

concerning S&B's inclusion or omission from the verdict form.

Femco presented no argument on these subjects at the October 11,

2011 pretrial hearing, in the colloquy with the court when the

issue arose again on October 19, 2011 before opening statements,

or during the January 3, 2012 charge conference. Femco, which is

now being represented by different counsel on appeal, does not

explain why it was silent on this controversial subject before the

trial judge, although we presume it had some strategic reason for

being non-committal.

11

Hugo Neu initially took the position before the trial began that

S&B should be on the form. However, after the proofs were

presented, Hugo Neu withdrew its objection at the charge

conference, because its counsel had "shifted [his] focus" during

the trial to the other defendants, given the court's previous

indication before opening statements that S&B would not be on the

verdict sheet.

55

A-4439-11T2

For the reasons we have already noted in Part III(A), supra,

the trial judge's reluctance to include S&B on the verdict form

stemmed from legitimate concerns and a reliance upon our prior

opinion in Kane. Moreover, as we have also shown, the state of

law on this particular subject was muddled. Nevertheless, we

conclude that the court erred in omitting S&B from the verdict

form, having allowed S&B otherwise to participate fully in the

trial and be represented by two separate counsel (one as to the

job site accident and another as to the medical negligence claims).

It was simply improper to allow S&B to participate in one manner

without the other, and counsel have cited no authority endorsing

such an arrangement.

That said, we now must consider what to do about the verdict

form omission. Femco is the only party that is pressing the point

on appeal, hypothesizing that its percentage share of liability

might have been less had S&B been on the verdict form. S&B

acknowledges the omission was error, but contends that it was

harmless. Dr. Schrader, who had opposed S&B's omission, has

settled with plaintiffs, and Nurse Garcia, who also opposed the

omission, was not found liable. Plaintiffs, who had previously

resisted S&B's participation, simply urge that we not upset the

verdict or require them to participate in any second trial. Hugo

56

A-4439-11T2

Neu also opposes a retrial, despite having initially favored S&B's

inclusion on the verdict form when the issue arose before trial.

Notably, no party on appeal is arguing that Kane required

S&B, as decedent's employer, to be excluded from this trial. In

fact, the sole appellant that criticizes what occurred in the

trial court, Femco, advocates just the opposite: that we repudiate

"[t]he Kane court's admonition that an employer/indemnitor should

not be permitted to participate in its employe[e]'s personal injury

trial[.]" Citing Rule 4:30A (the single controversy rule), Femco

further argues that Kane's approach "unnecessarily suppresses" the

important "public policy in favor of disposing of all claims

against all parties in one proceeding." Instead, Femco advocates

that we adopt a more efficient approach that allows the employer

to participate, but with appropriate "jury instructions that

explain the parties' specific claims and how the jury may apportion

fault." Hence, Femco urges that the unitary trial approach,

sanctioned in White and mentioned in Bradford, be applied to cases

such as the present one.

Given that Femco did not advocate —— either before or during

the trial —— for S&B's inclusion on the verdict form, we do not

perceive a manifest injustice to Femco that needs correction. We

do not countenance a retrial of the entire case, which consumed

almost forty days before a jury.

57

A-4439-11T2

The "plain error" standard of review may be inapplicable here

because the error of S&B's omission was "brought to the attention"

of the trial court, albeit by other parties, see Rule 2:10-2. Even

so, we are not convinced that Femco was sufficiently prejudiced

by that error to compel a retrial.

With respect to Femco's now-resolved direct liability to

plaintiffs, we discern no prejudice from S&B's omission from the

verdict form. Femco's counsel strenuously advanced an "empty

chair" theme against S&B at trial. That strategy apparently failed

to persuade the jurors that Femco was blameless in the events

leading up to the accident.

We are unpersuaded that the jury would have exonerated Femco,

or would have been likely to find Hugo Neu more liable than the

25% allotted by the jury, had S&B been listed on the verdict form.

There is no equitable or legally compelling reason here to require

the entire case to be retried before a different jury, despite the

improvident omission of S&B from the verdict form now belatedly

being complained of by Femco. In Addition, Femco's recent

settlement with plaintiffs, in which plaintiffs' judgment against

Hugo Neu has been assigned to Femco, only strengthens the reasons

for not burdening plaintiffs with additional proceedings.

A lesser remedy may, however, be appropriate, depending upon

what Hugo Neu now intends to do with respect to its overlapping

58

A-4439-11T2

rights of indemnification against Femco and S&B. If Hugo Neu

still intends to pursue indemnification from both subcontractors,

pursuant to the terms of their contracts, a fact-based

apportionment of fault between Femco and S&B might well be

necessary to resolve their respective duties to indemnify.12

The jury trial unfortunately provided no guidance to compare

Femco's and S&B's roles, respectively, in connection with the job

site accident. That comparison is not amenable to being resolved

by our appellate review of transcripts from the jury trial, or by

remanding the matter to the trial judge for a review of his trial

notes. Instead, the comparative relative percentages of fault of

Femco and S&B —— assuming, arguendo, that they are needed to sort

out the overlapping indemnity obligations of Femco and S&B ——

cannot be fairly decided without testimony and credibility

assessments.

12

We do not resolve here whether the exclusive remedy mandate of

N.J.S.A. 34:15-8, or related case law disallowing common-law

contribution claims against a negligent employer, see Ramos,

supra, 103 N.J. at 189, could affect the priority of duplicative

duties to indemnify owed to Hugo Neu by both Femco and S&B. We

also do not resolve whether those authorities could affect whether

Femco could obtain reimbursement from S&B of any sums it might pay

to indemnify Hugo Neu. These issues, conditional as they are in

nature, have not been briefed. If necessary, the trial court may

consider them on remand, in light of any arguments raised by

counsel.

59

A-4439-11T2

Should Hugo Neu, therefore, maintain its right to be

indemnified by both Femco and S&B, then another proceeding may be

required on remand to sort out the respective degrees of fault of

Femco and S&B, as between one another. The percentage shares of

Hugo Neu, Femco, and Dr. Schrader owed to plaintiffs shall remain

undisturbed. The sole focus of such remand proceedings on the

issues of contractual indemnity, if they are needed, shall be

confined to a comparison of the actions and inactions of Femco

with the actions and inactions of S&B.

Because Femco, S&B, and Hugo Neu each requested a jury trial

in their pleadings, the remand proceedings shall be tried, if

necessary, before a new jury, unless, of course, the parties

consent to a bench trial. To reduce the costs involved and the

burdens imposed on the other parties who are no longer involved

in the case, counsel are encouraged to stipulate as much as

possible to undisputed facts, and to consider agreeing to have

much of the transcribed testimony from the first trial read into

the record.

We emphasize that the scope of this second proceeding, if one

is required, should be narrow. The damages awarded to plaintiffs

shall remain unaltered, for the reasons noted, infra, in Part

IV(A).

60

A-4439-11T2

IV.

[At the direction of the court, the published

version of this opinion omits Part IV, which

addresses additional claims of error relating

to the jury trial raised by S&B and Femco.]

V.

[At the direction of the court, the published

version of this opinion omits Part V, which

addresses numerous issues raised on appeal by

two of the insurance carriers, specifically

C&F and American Home.]

VI.

We have considered all of the other points raised on appeal

by the various parties and conclude that they lack sufficient

merit to be discussed in this opinion. R. 2:11-3(e)(1)(E).

Affirmed in part, vacated in part, and remanded in part. We

do not retain jurisdiction.

61

A-4439-11T2