Case Update: Fall 2011

Katzman Leads Defense In Challenge To First Party Auto Exclusions

Stephen Katzman, representing First Trenton Indemnity (Travelers), acted as lead defendant among many auto insurance carriers who were named in a consolidated class action suit brought by insureds who were seeking to recover for the diminished market value of the vehicles after their first party carrier paid for the costs to repair and after the vehicle was repaired to the insured’s satisfaction. Counsel for the policyholders argued that an insured who offers for sale a previously-damaged and repaired vehicle must disclose the accident at the time of sale, thereby causing a diminution in value. The plaintiff s in the putative class action suit sought enhanced compensation for this anticipated drop in fair market value on account of the accident. The plaintiff s further argued that the policy provisions limiting payment to the costs to repair the vehicle with parts of like kind and quality and the specific exclusions for diminished market value were ambiguous, that the claimants had a reasonable expectation of being made whole, that the exclusions were unconscionable and that the exclusions violated public policy.


The Appellate Division rejected these arguments and ruled in favor of the carriers, distinguishing between first and third party claims, noting that being made whole is a tort concept and not a contractual concept, upholding the limit of liability provision and the specific exclusion for diminished market value in the standard ISO form.



Meier v. D’Ambose

The Appellate Division, in a published opinion in a case handled by our office, has seen fit to change 230 years of common law in New Jersey. The historic relationship between landlords and tenants has been such that a landlord who leases an entire premise to a tenant is responsible to the tenant (or third-parties) only for latent hazardous conditions known to the landlord but not disclosed at the time the premises were let. In deciding Meier v. D’Ambose, the Appellate Division held that a landlord owed a duty to inspect at least potentially dangerous items such as furnaces and fl ue pipes during the term of the tenancy, despite the State Fire Code not mandating periodic inspections, and despite the clear language expressed in published cases for the last 60 years. The Court held that whether a duty exists (and therefore whether a duty can be breached) is up to a court to decide, in the absence of a clear lease provision to the contrary and despite a municipal inspection at the time the property was let.  The case could take on wide implications. For example, persons who rent their home out and then move away now would seem to have a duty to have someone come into the home and periodically inspect. Just how far a court would go in determining what essential elements should be inspected is an unanswered question. The appellate decision, overturning the grant of summary judgment in the Law Division, is the subject of a Petition for Certification taken by us to the New Jersey Supreme Court. We contend that the Appellate Division should have limited its review to deciding whether the motion judge was correct or not, and not make new law. [MORE]


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