MEHERALY MERCHANT AND SHANSHAHI MERCHANT, Plaintiffs–Appellants, v. BRIAN J. VINDICK, individually, BRIAN J. VINDICK, as agent, servant and/or employee of Board of Chosen Freeholders; BOARD OF CHOSEN FREEHOLDERS, Defendants–Respondents,
LEWIS E. DAVIS, JR., Defendant. UNITED SERVICES AUTOMOBILE ASSOCIATION, individually and as subrogee of LEWIS DAVIS, Plaintiffs–Respondents, v. BRIAN J. VINDICK, CARING TRANSPORTATION AND BAYARD I, LP, individually and d/b/a CARING TRANSPORTATION, Defendants–Appellants, AMERICAN ALTERNATIVE INSURANCE CORPORATION, Defendant.
These related appeals, which we consolidate for purposes of this opinion, arise out of a multi-vehicle accident. On April 21, 2009, Brian Vindick, who was driving a school bus, struck a car driven by Lewis Davis, propelling Davis's car forward, striking another car driven by Meheraly Merchant. At the time of the accident, Vindick was an employee of Caring Transportation (Caring) and was operating a bus owned by Burlington County (Burlington) pursuant to Caring's contract with the Burlington County Board of Freeholders (Board).
The Merchant Action
On July 22, 2009, Merchant and his wife, Shanshahi Merchant, filed a notice of claim for damages against Burlington, pursuant to the New Jersey Tort Claims Act (TCA), N.J.S.A. 59:8–3. The notice was sent ninety-two days after the accident, two days beyond the ninety-day notice requirement under the TCA. See N.J.S.A. 59:8–8(a). The Merchants' attorney did not seek leave to file a late notice of claim within one year of the accident pursuant to N.J.S.A. 59:8–9.
On January 19, 2011, the Merchants filed a personal injury complaint and per quod claim naming Vindick, Davis, and the Board, but not Caring. As to Vindick, the complaint alleged “Brian J. Vindick, was acting as the agent, servant and/or employee of the defendant, Board of Chosen Freeholders” on the date of the accident.
Defendants filed an answer admitting the allegation that Vindick was acting as an agent, servant, and/or employee of Burlington at the time of the accident. Defendants then moved for summary judgment, arguing that the Merchants' claim was barred for failure to comply with the requirement of the TCA that notice of claim be filed within ninety days of the accrual of the cause of action against the public entity.
After oral argument, the Law Division dismissed the Merchants' complaint with prejudice, because the claim was untimely. The issue of whether Vindick was actually employed by Burlington at the time of the accident was not raised.
The USAA Action
As a result of injuries sustained in the accident, Lewis Davis applied for and received personal injury protection benefits (PIP) from his insurance company, United Services Automobile Association (USAA). USAA also paid for the loss of Davis's vehicle, which was totally destroyed in the accident. In total, USAA paid $30,789.32 in PIP benefits.
Subsequently, USAA sought reimbursement of its payments for the vehicle and its PIP payments from Caring's insurer, American Alternative Insurance Company (AAIC). AAIC paid the vehicle reimbursement claim but not the PIP reimbursement.
USAA filed a complaint alleging that AAIC was liable for the PIP reimbursements it had made to Davis. The complaint also requested that AAIC be compelled to arbitrate the request for PIP reimbursement.
Defendants moved for summary judgment, asserting that USAA's subrogation claims were barred by the TCA because both Vindick and Caring were agents or employees of Burlington. Defendants relied on the decision in the Merchant action. A different judge denied defendants' motion for summary judgment, finding that defendants had not shown that either Vindick or Caring were public entities or public employees and thus subject to the Act.
Defendants moved for reconsideration, alleging that the court had erred in denying their request for oral argument in violation of Rule 1:6–2(d) and disregarding the ruling of the judge in the Merchant case who found that Vindick and Caring were public employees or agents. Defendants argued that the ruling should have controlled under either the “law of the case” doctrine or collateral estoppel.
USAA opposed defendants' motion for reconsideration and filed a cross-motion to compel arbitration of the PIP reimbursement claim against AAIC. USAA claimed that, because both parties were signatories to Arbitration Forums Inc. (AFI), by which both agreed to resolve such PIP reimbursement disputes through arbitration, arbitration was the appropriate method of resolution.
The judge denied defendants' motion for reconsideration and granted USAA's cross-motion, referring the matter for arbitration and dismissing the complaint.
Motion for Reconsideration in the Merchant Matter
Several months later, the Merchant plaintiffs learned of USAA's subrogation complaint alleging that Vindick was an employee of Caring and defendants' response, admitting that Vindick was an employee of Caring at the time of the accident.
The Merchant plaintiffs filed a motion for reconsideration pursuant to Rule 4:50–1(b), based on newly discovered evidence and sought to reinstate their complaint. Defendants opposed the motion, arguing that the Merchants did not exercise due diligence and that Vindick was in fact employed by Burlington because he was acting under the complete control of the County.
After oral argument, the judge reinstated the matter, and allowed a limited period for discovery. Her decision was based on defendants' “answer that they filed in the subrogation matter, [where] they say that Mr. Vindick was an employee of Caring Transport but under the control of the County.” The judge observed that if the issue of Vindick's employment had been raised in April, she would have allowed discovery. As Vindick's employment was not at issue at the time she decided the motion in April, the judge determined
the bottom line is at this moment I can't say that the facts are so clear that I would preclude discovery on this issue. It's a critical issue. It's a critical issue because if he's an employee, agent, or servant, then that Tort Claims Act applies. If he's not, it doesn't. And that really makes a difference here as to whether or not plaintiff has a case or doesn't. I know what I would have done in April. I can tell you that ․ I will reinstate this matter. I will allow a limited period for discovery. I'll allow 60 days for discovery on this issue, what the real control is over Mr. Vindick and we may be back here.
The Merchant plaintiffs subpoenaed Caring to appear at a deposition on January 19, 2012, which Caring canceled. On February 1, 2012, they sent another subpoena to Caring to appear at a deposition; Caring again canceled. The deposition was rescheduled for May 17, 2012, but Caring failed to produce anyone.
The Merchants then sent a notice of deposition to Burlington to depose a County representative with knowledge of the contract. After three more depositions were canceled, William Stewart, a Burlington representative, was deposed on October 10, 2012.
Stewart explained that the County solicits proposals for transportation services. Stewart helped prepare the solicitation of bid between Burlington and Caring, and once the contract was awarded, he worked as the liaison between the Burlington Administrator and the Burlington County Transportation Office (BCTO), who worked with Caring.1 Once the contract was awarded, Stewart had “direct dealings” with Caring, such as going to the New Jersey Department of Transportation to sit in on discussions about how Burlington's monitoring services are provided to Caring.2
Stewart explained that Burlington retained Caring to provide services for individuals who reside in Burlington. Specifically, Caring provided services to Burlington's senior and disabled residents, as well as a route that is open to the general public. The bus operates on a loop and picks people up at bus stops. The bus would drop the riders at a stop or anywhere along the route. This project was funded by state, federal, and county resources.
Another service Caring provided to Burlington residents was Paratransit service, a curb-to-curb service, where a resident could call Caring to request a ride for things such as a medical appointment or shopping. Stewart explained that such a request
ha[d] to be put on a schedule for the bus
․ [A] route is planned on any individual day depending on what people have called for rides. And then the drivers are assigned to each bus and the buses are dispatched out into the community to pick up those riders that are scheduled for the day. And that's [Caring's] activity on a day-to-day basis that does not require the [BCTO], [or] County staff to be involved in that.
It was Caring's responsibility to plan the bus route.
Per their agreement, Burlington required Caring “to employ drivers who would drive the buses along the routes or pick the people up at their homes depending on the service.” Caring's employees were not employed by Burlington and Caring had complete discretion on hiring decisions. Burlington did not “vet” workers, and the employees were paid by Caring, not Burlington. Burlington paid Caring on a monthly or bi-weekly basis.
Pursuant to Federal Transit Administration (FTA) regulations, Burlington required Caring to keep documentation concerning employees, but Burlington kept no documentation. Burlington required Caring's employees to submit to mandatory drug and alcohol testing as per federal and state requirements for transportation. While Burlington required Caring's drivers to comply with federal and state law, it played no role in the hiring process.
Caring was responsible for training its drivers as required by the FTA. Representatives from Burlington would occasionally monitor the training classes but Burlington did not train the drivers.
Burlington required the drivers to “look professional” and wear uniforms. If Caring did not have uniforms, Burlington suggested the style and color of clothing the drivers should wear.
While Burlington provided Caring with the vehicles that Caring drivers operated, Caring was responsible for the care, maintenance, upkeep, and cleaning of those vehicles. The vehicles were stored on Caring's property when they were not being used, Caring was responsible for fueling the vehicles, Caring was required to have the vehicles inspected, and to pay for any repairs needed to pass inspection and for the vehicles' registration. Any mechanical issues were Caring's responsibility. The agreement further required both Caring, and Burlington, to have its “signage” or information on the vehicle, per federal law.
Stewart also explained that Caring was required to maintain a computer system to assist in the scheduling and routing of the buses, and was responsible for training its drivers on the computer system. Caring was also required to maintain two-way communication with the dispatcher, who was a Caring employee and was required to use a cellphone or radio to stay in touch with the bus drivers.
Caring was required to set up a toll-free number for Burlington residents who wished to use the transportation services to call. This service provided information regarding the scheduled route and fare. Any complaints regarding Caring's drivers would be handled by Caring, but Caring was required to provide copies of complaints or commendations to Burlington for its review.
In the event that there was an unexpected detour in a bus's regular route, Caring was required to advise the BCTO to get approval. In addition, Caring was responsible for handling all accidents and emergencies, and to notify Burlington and New Jersey Transit.
The agreement further provided that at the direction of BCTO, Caring would comply with and implement the goals and objectives of FTA training. Burlington would monitor such programs to see if “there are requirements for riders or ridership for locations of stops or changes in ․ where senior centers might be, [BCTO would then] provide assistance and direction to [Caring], on how to implement those changes.” Burlington would monitor Caring's services through Caring's monthly bills.
[The bills] ha[d] behind them reports that support the amount of riders on each of the buses on every individual day. They would be reviewed by [Burlington's] office staff.
Office staff would go to the location that Caring ․ operate[d] from. They would occasionally look at buses[,] ․ maintenance records [and] other pertinent administrative activities that were going on at the site. They would sometimes also follow a bus ․ just to see that it is moving along the route as prescribed in the agreement.
Finally, Stewart explained that Burlington could terminate the contract for nonperformance by Caring, or, if Burlington did not receive funding from government sources to provide the service. If Burlington wanted to terminate the contract for nonperformance reasons, it was required to give Caring a thirty-day written notice. Burlington could not terminate Caring's employees or instruct Caring to terminate an employee.
After Stewart's deposition, plaintiffs re-filed their motion for reconsideration. The judge who had previously handled the case had been reassigned and the case was transferred to a different judge. After hearing oral argument, the judge found that plaintiffs did not clear the “procedural hurdle,” stating,
[n]ewly discovered evidence [was] [evidence] which would probably alter the judgment or order and which by due diligence could not have been discovered in time to move for a new trial. I don't find any—I think with due diligence it could have been. The insurance company found it. And I suspect the reason they found it was [be]cause they knew they had no chance to file a subrogation action against the County and the reason the attorney for this plaintiff didn't find it because they hoped that [the prior judge] would save them.
The judge then determined that the motion also failed substantively:
I think that the driver is controlled by the County. There doesn't have to be personal contact between the County and the driver. The method of work is dictated by the County to Caring and Caring simply just rearticulates that to Vindick. Any complaints about Vindick would have to go to the County, all right? I think it would, it would strain credulity to think that if the County said to Caring this fellow's driving is scaring us, it may leave us open to liability, you better send him to school or you better fire him, that Caring wouldn't do that simply because the County could cancel the contract for any reason. So that I think that even if I allowed the procedural—if I overlooked the procedural errors or the procedural predicate, substantively, he would not—he would be an agent, servant or employee of the County pursuant to the test in Lowe.
The judge denied plaintiffs' motion on both procedural and substantive grounds.
On appeal, the Merchant plaintiffs raise the following arguments:
the information regarding defendant vindick's employer discovered subsequent to the april 1, 2011 order dismissing plaintiffs' complaint with prejudice as to all defendants is “newly discovered evidence” pursuant to r. 4:50–1(b).
a. [THE MOTION COURT's] holding that plaintiffs did not satisfy the pre-requisites of r. 4:50–1((b) was under the law of the case doctrine.
on april 21, 2009 defendant vindick was not a public employee of defendant Burlington thus the notice of claim requirement pursuant to N.J.S.A. 59:8–8(a) was not applicable to him.
The Merchant plaintiffs argue that the information revealed in the USAA matter, regarding Vindick's employment by Caring, constitutes newly discovered evidence pursuant to Rule 4:50–1(b). “To obtain relief from a judgment based on newly discovered evidence, the party seeking relief must demonstrate ‘that the evidence would probably have changed the result, that it was unobtainable by the exercise of due diligence for use at the trial, and that the evidence was not merely cumulative.’ ” DEG v. Twp. of Fairfield, 198 N.J. 242, 264 (2009) (quoting Quick Chek Food Stores v. Twp. of Springfield, 83 N.J. 438, 445 (1980)). “All three requirements must be met.” Ibid.
First, it is clear that the evidence of Vindick's employment by Caring would have changed the result in this case. Vindick's status as either a public or private employee is, as recognized by the first judge, a “critical issue.” If Vindick is employed by Caring, a private entity, then plaintiffs' untimely notice of claim would not bar their claim. However, if Vindick is employed by Burlington, a public entity, their claim would be barred by the TCA.
Second, in determining that plaintiffs failed to exercise due diligence, the motion judge failed to consider the inconsistent representations made by Vindick's counsel in the two actions. In defendants' answer to the Merchant complaint, counsel admitted that Vindick “was acting as the agent, servant and/or employee of the defendant, Board of Chosen Freeholders.” The same attorney, representing Vindick in the USAA matter, admitted USAA's allegations that “Mr. Vindick was the agent, workman, servant and/or employee of Caring and/or Bayard I, LP and acted in the course and scope of his employment and in furtherance of said relationship.” While we are not convinced that the identity of Vindick's employer was necessarily “unobtainable,” plaintiffs were entitled to rely on counsel's representations and cannot be accused of failing to exercise due diligence in doing so.
“[T]he Rules of Professional Conduct and the New Jersey Court Rules require what common courtesy and candor suggest, that pleadings and answers to interrogatories should not contain half-truths intended to mislead both adversaries and the court.” Kernan v. One Washington Park Urban Renewal Assocs., 154 N.J. 437, 464–65 (1998) (Pollack, J., concurring); see R.P.C. 3.3(a)(5) (“A lawyer shall not knowingly: ․ fail to disclose to the tribunal a material fact knowing that the omission is reasonably certain to mislead the tribunal[.]”); Rule 1:4–8(a) (“By signing, filing or advocating a pleading, ․ an attorney ․ certifies that to the best of his or her knowledge, information, and belief ․ (1) the paper is not being presented for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation ․ and (4) the denials of factual allegations are warranted on the evidence[.]”).
“Shenanigans have no place in a lawsuit.” Kernan, supra, 154 N.J. at 467 (Pollack, J., concurring). “[Discovery and] pretrial procedures make a trial less a game of blindman's buff and more a fair contest with the basic issues and facts disclosed to the fullest practicable extent.” United States v. Procter & Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986–87, 2 L. Ed.2d 1077, 1082 (1958).
The motion judge determined that because USAA found that Vindick was employed by Caring, plaintiffs' should have been able to obtain the same information and therefore failed to exercise due diligence. We note that the Merchant matter was summarily dismissed before any discovery. In her decision to grant plaintiffs' initial motion for relief, the first judge noted that, had the information that Vindick was employed by Caring been known to her at the time of the summary judgment motion, she would have allowed discovery.
Third, the evidence was not “cumulative.” Prior to discovering the evidence, plaintiffs had no information pertaining to Vindick's employment by Caring, or the contract between Caring and Burlington.
We are satisfied that the evidence discovered by plaintiffs satisfies the three-prong test established in DEG and the court erred in denying the Merchant plaintiffs' motion to reconsider.
As we are reversing the motion judge's March 12, 2013 denial of the Merchant plaintiffs' motion, we need not address plaintiffs' claim that the December 5, 2011 order represented a determination by the first judge that the information contained in the USAA complaint constituted newly discovered evidence.
Finally, plaintiffs argue that Vindick was not employed by Burlington on the date of the accident, and therefore, he is not protected by the “umbrella” of the TCA. We agree.
The two tests to determine whether an individual is an employee or independent contractor are set forth by the Court in Lowe, supra, 158 N.J. at 615–16. The first is the control test, which looks to the level of influence the alleged employer exercises over the worker, that is, whether the alleged employer has “ ‘the right to direct the manner in which the business or work shall be done, as well as the results to be accomplished.’ ” Sloan v. Luyando, 305 N.J.Super. 140, 148 (App.Div.1997) (quoting Kertesz v. Korsh, 296 N.J.Super. 146, 152–53 (App.Div.1996)). “[T]he control test assesses four factors in determining a worker's status: (1) the degree of control exercised by the employer over the means of completing the work; (2) the source of the worker's compensation; (3) the source of the worker's equipment and resources; and (4) the employer's termination rights.” Lowe, supra, 158 N.J. at 616. “The greater the degree of control exercised by the employer, the more likely a worker will be considered an employee.” Ibid. Moreover, the test is satisfied if “the employer has the right of control, even though the employer may not exercise actual control over the worker.” Sloan, supra, 305 N.J.Super. at 148.
The second test, the relative nature of the work test, looks to “ ‘the extent of the economic dependence of the worker upon the business he serves and the relationship of the nature of his work to the operation of that business.’ ” Lowe, supra, 158 N.J. at 616 (quoting Marcus v. E. Agric. Ass'n, 58 N.J.Super. 584, 603 (App.Div.1959) (Conford, J.A.D., dissenting), rev'd on dissent, 32 N.J. 460 (1960)).
The control test is the dominant test. The Lowe Court specifically noted that “[t]he relative nature of the work test supplements the control test in limited circumstances.” Id. at 618. For example, the Court noted that working relationships involving professional services might be analyzed under the relative nature test, as employers “cannot exercise control over the methods used to provide those services[.]” Ibid. Additionally, the Court noted the this test had been applied in cases where “a working relationship was created by social legislation under which public policy concerns dictate a more liberal standard[.]” Ibid.
The first factor of the control test, the degree of control exercised by the employer over the means of completing the work, weighs in favor of plaintiffs, given that Caring was solely responsible for hiring and firing the drivers, for assigning and dispatching the drivers to their routes, for maintaining the equipment, and insuring the vehicles. As to factor two, the source of the worker's compensation, Vindick was hired and paid directly by Caring, not by Burlington. As to factor three, the source of the worker's equipment and resources, although the County did provide the vehicles, Caring was responsible for cleaning and maintaining them, registering them with the State, paying for fuel, and insuring them against damage and accidents. As to factor four, the employer's termination rights, although the County could end the contract with Caring, Caring had sole responsibility for the hiring, training, and termination of employees like Vindick.
Additionally, under the relative nature of the work test, which may not be the appropriate test to use here due to the non-professional nature of Vindick's employment, there are also facts that favor plaintiffs. Caring is a separate entity from the County, formed independently, and Caring obtained the contract with the County through a bidding process. Caring was not a subsidiary or other entity formed by the County to handle the transportation. Moreover, the contract between Caring and the County requires Caring to indemnify and hold harmless the County from claims arising out of Caring's fulfillment of the contract and to provide its own insurance, further showing that it is a separate entity with its own economic situation divorced from that of the County.
Finally, although Vindick's operation of a bus in the transportation system does enable Caring to help fulfill its contract with the County, his work is hardly an integral part of the County's business, which is to run the County government and provide services to residents. The County contracted out the transportation work precisely because it is not in the business of performing such work.
The judge's reasoning that “[a]ny complaints about Vindick would have to go to the County,” is not supported by the record. While copies of complaints and commendations would be given to the County, any complaints initially went to Caring. Stewart's testimony supports this:
Q: And what I mean is, because the contractor's employees were the ones who were operating the buses, correct?
Q: So any complaints concerning the employee you wanted to go through them at least initially.
A: Absolutely, yes.
The judge's speculation that the County could pressure Caring into firing an employee “if the County said to Caring this fellow's driving is scaring us, it may leave us open to liability, you better send him to school or you better fire him,” underscores that the decision to terminate would ultimately be made by Caring, not Burlington.
Applying the Lowe factors, it is apparent that Vindick was an employee of Caring on the date of the collision and was not entitled to the protection afforded public employees under the TCA.
Defendants in the USAA matter provide the following points for our consideration:
the trial court clearly erred in failing to properly apply the law as expressed in the case of lowe v. zarghami, 158 n.j. 606 (1999) which compels the legal conclusion that the defendant vindick at the time of his accident was an agent/employee of the county of Burlington.
the trial court erred in disregarding and failing to follow the prior ruling of [THE JUDGE] in the merchant case on the identical legal issue as to the defendant vindick's being agent/employee of the county at the time of this accident.
the trial court clearly erred by compelling these defendants to submit to arbitration where the appellate division in coach usa, inc. v. allstate new jersey ins. co., 354 n.j. super. 277 (app.div.2002) held that legal issues, as is the case here, may not be decided by arbitrators but must be decided by courts.
Defendants claim the court erred in denying their motion for reconsideration of its decision denying summary judgment. We review the denial of a motion for reconsideration under an abuse of discretion standard. Cummings v. Bahr, 295 N.J.Super. 374, 389 (App.Div.1996). Generally, the trial court should only grant a motion for reconsideration
for those cases which fall into that narrow corridor in which either 1) the Court has expressed its decision based upon a palpably incorrect or irrational basis, or 2) it is obvious that the Court either did not consider, or failed to appreciate the significance of probative, competent evidence․
Alternatively, if a litigant wishes to bring new or additional information to the Court's attention which it could not have provided on the first application, the Court should, in the interest of justice (and in the exercise of sound discretion), consider the evidence․
[Id. at 384 (quoting D'Atria v. D'Atria, 242 N.J.Super. 392, 401–02 (Ch. Div.1990).]
“A litigant should not seek reconsideration merely because of dissatisfaction with a decision of the Court.” D'Atria, supra, 242 N.J.Super. at 401. To have a motion for reconsideration granted, the litigant must show either that (1) the trial court's initial decision was “palpably incorrect” or contrary to the “probative, competent evidence” or (2) new or additional information that was not available at the time of the first application warrants another look at the merits of its argument. Ibid. In this case, defendants did not argue that new or additional information became available after summary judgment was denied. Thus, they must show that the decision to deny summary judgment was “palpably incorrect” or not based on “probative, competent evidence.”
Defendants cannot meet this standard because the motion court applied the proper legal principles to the relevant facts in denying the motion for summary judgment. Thus, the motion court properly denied defendants' motion for reconsideration.
Defendants next argue that the motion court erred in finding that there was an outstanding issue of fact as to whether Vindick and Caring were employees or agents of Burlington. They maintain that it was a purely legal issue, based on undisputed facts, and thus it should have been decided on summary judgment based on the factors set forth in Lowe. They further contend that the undisputed facts support their position that Burlington controlled defendants as employees.
The motion court found that the facts “militate toward a finding that defendants Caring and Vindick were neither a public entity nor a public employee.” Even though the court acknowledged that the County held title to the vehicles, it found that it was “outweighed by the other facts in the aggregate.”
The motion court found that defendants had “not provided any facts that show the County controlled defendant Vindick's employment or compensation, nor that the nature of the defendants' work is that of a public entity.”
Under the standard for reconsideration, defendants had to demonstrate that the initial decision was “palpably incorrect” or contrary to the “probative, competent evidence.” They did neither. First, the trial court applied the proper law in determining Vindick's status, analyzing the issue under both the control group and relative nature of the work tests. Moreover, the court properly considered all of the competent and probative evidence. Defendants failed to establish that there was no issue of fact regarding the employment status.
We find no abuse of discretion in the denial of defendants' motion for reconsideration.
Defendants argue that the motion court erred in failing to apply collateral estoppel in this case. They maintain that the motion judge's decision in the Merchant case should control the disposition of this matter. They also assert that the judge erred in failing to apply the Merchant ruling as the law of the case. As we are reversing that decision, we see no need to address this issue.
Finally, defendants argue that the motion court erred in compelling them to submit to arbitration because the claims against them are barred by the TCA. They also argue that the issue of whether Vindick was an employee was “purely legal” and thus not subject to arbitration. We disagree.
The New Jersey Automobile Reparation Reform Act's reimbursement provision, N.J.S.A. 39:6A–9.1(b), provides that
[i]n the case of an accident occurring in this State involving an insured tortfeasor, the determination as to whether an insurer, health maintenance organization or governmental agency is legally entitled to recover the amount of payments and the amount of recovery, including the costs of processing benefit claims and enforcing rights granted under this section, shall be made against the insurer of the tortfeasor, and shall be by agreement of the involved parties or, upon failing to agree, by arbitration.
However, recovery under N.J.S.A. 39:6A–9.1 is limited by the restrictions of N.J.S.A. 59:9–2(e) if the tortfeasor is a public entity or public employee. See Hanover Ins. Co. v. Bor. of Atl. Highlands, 310 N.J.Super. 599, 607–08 (Law Div.1997), aff'd, 310 N.J.Super. 568 (App.Div.), certif. denied, 156 N.J. 383 (1998).
Generally, “purely legal” questions should not be resolved through arbitration. In AAA Mid–Atlantic Ins. of N.J. v. Prudential Prop. & Cas. Ins. Co., 336 N.J.Super. 71 (App.Div.2000), we addressed the issue of whether parents who served alcohol to their overage child, who subsequently was involved in a car accident, are “tortfeasors” under N.J.S.A. 39:6A–9.1. Id. at 73. Noting that the case involved “a question of a statutory defense [under the Social Host Liability Statute], a purely legal issue, much more within the expertise of the court rather than the arbitrators,” we held that it was “a legal issue which is within the jurisdiction of the courts.” Id. at 77–78.
Similarly, in Coach USA, Inc. v. Allstate N.J. Ins. Co., 354 N.J.Super. 277 (App.Div.), certif. denied, 175 N.J. 170 (2002), we addressed the issue of whether insurers could seek automobile PIP reimbursements from insurers whose policies covered bus PIP payments only. Id. at 279. We specifically rejected the idea that the issue could have been resolved in arbitration, declining to subject a decision of statutory interpretation “to the vagaries of separate and endlessly-initiated arbitration proceedings under authority granted by the arbitration provisions of N.J.S.A. 39:6A–9.1.” Id. at 282. We found that “[t]he issue presented, a purely legal one, is ‘much more within the expertise of the court’ than of arbitrators.” Ibid. (quoting AAA Mid–Atlantic, supra, 336 N.J.Super. at 77).
In its written opinion on the motion to compel arbitration, the motion judge noted
Plaintiff argues that both companies are AFI signatories such that they agreed to resolve their dispute through arbitration; and alternatively, N.J.S.A. 39:6A–9.1 requires the matter to be submitted to arbitration. While plaintiff has not submitted a copy of a signed arbitration agreement, defendants do not deny that plaintiff and AAIC are signatories of AFI. However, defendants argue whether defendant Vindick was acting as an agent or servant of the Burlington Board of Chosen Freeholders is an issue of law unsuitable for arbitration per the reasoning in Coach USA, Inc. There, the legal issue involved whether an auto carrier that paid PIP benefits to plaintiff injured in accidents with commercial [buses] could obtain reimbursement from insurance carrier pursuant to N.J.S.A. 39:6A–9.1 through arbitration even though the bus companies had obtained statutorily-mandated first-party medical expense benefit coverage pursuant to N.J.S.A. 17:28–1.6. See 354 N.J.Super. at 278. In Coach USA, Inc., the Court rejected the insurance company's argument that the dispute, which involved an issue of statutory interpretation, should have been subject to arbitration per N.J.S.A. 39:6A–9.1 since the issue presented was “purely legal.” Id. at 282 (citing AAA Mid–Atlantic, supra, 336 N.J.Super. at 77). In AAA Mid–Atlantic, an insurance company that paid out benefits to its insured sought reimbursement from AAA, the insured's parents who served him alcohol, under a social host liability theory. 336 N.J.Super. at 74. The question involved whether the parents were “tortfeasors” within the meaning of N.J.S.A. 39:6A–9.1. Id. at 75. The Court determined that the question was a purely legal issue since it was a question of a statutory defense that would not require a potentially duplicative arbitration proceeding. Id. at 77.
Here, the issue involves whether defendants Caring and Vindick should be shielded from liability under the Tort Claims Act. Unlike Coach and AAA Mid–Atlantic, it is not “purely legal” such that it is unsuitable for arbitration. As a result, the Court declines to extend the reasoning in Coach and AAA Mid–Atlantic to this case such that the case should be subject to arbitration pursuant to the parties' agreement and N.J.S.A. 39:6A–9.1.
The motion court granted plaintiff's motion to compel arbitration.
Unlike the facts in Coach USA, Inc., supra, 354 N.J.Super. 277, there is no question that both USAA and AAIC provided automobile PIP reimbursement such that, if Caring was a private company, arbitration would be allowed pursuant to N.J.S.A. 39:6A–9.1(b). Thus, this matter is appropriate for arbitration. The language of the statute itself allows the “determination as to whether an insurer, health maintenance organization or governmental agency is legally entitled to recover the amount of payments” to be made through arbitration and the question here is simply an aspect of this factual determination. See ibid. Thus, the court did not err in ordering arbitration pursuant to N.J.S.A. 39:6A–9.1.
Additionally, as the trial court pointed out, both parties are signatories to AFI, which allows for arbitration of PIP claims. Although no contract was provided, the motion court correctly found that defendants did not dispute this fact. Thus, the motion court did not err in finding that arbitration was allowed by the USAA and AAIC AFI agreements.
Because the statute allows for a determination of liability through arbitration, the motion court did not err in ordering arbitration.
In the USAA matter, the orders denying the USAA defendants' motion for reconsideration and granting USAA's motion to compel arbitration are affirmed. In the Merchant matter, the order denying reconsideration is reversed and the matter is remanded for proceedings consistent with this opinion.
FN1. Generally, a contract is awarded for a one, two, or three-year period, and Burlington had an option to extend those services for up to five years.. FN1. Generally, a contract is awarded for a one, two, or three-year period, and Burlington had an option to extend those services for up to five years.
FN2. Stewart explained that Burlington's “monitoring activities” are services pertaining to the methodologies Caring used for transportation routing, designing door-to-door services for Paratransit services, or recommendations from the New Jersey Transit or Department of Transportation on ways to perform such services.. FN2. Stewart explained that Burlington's “monitoring activities” are services pertaining to the methodologies Caring used for transportation routing, designing door-to-door services for Paratransit services, or recommendations from the New Jersey Transit or Department of Transportation on ways to perform such services.
FN3. Lowe v. Zarghami, 158 N.J. 606 (1999).. FN3. Lowe v. Zarghami, 158 N.J. 606 (1999).