(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the
convenience of the reader. It has been neither reviewed nor approved by the Supreme Court. Please note that, in the
interests of brevity, portions of any opinion may not have been summarized).
Argued November 8, 2000 -- Decided July 18, 2000
ZAZZALI, J., writing for a majority of the Court.
The issue before the Court is whether a policyholder's failure to read his policy may be asserted as
comparative negligence in a professional malpractice action against an insurance broker.
In September 1994, Benjamin and Beatrice Aden purchased a $48,000 condominium in Sussex, New
Jersey. Prior to closing, Benjamin Aden (Aden) contacted Robert Fortsh to request insurance coverage for the new
condominium. Fortsh had been Aden's insurance broker since 1979.
The parties disagree as to the substance of their conversations regarding the purchase of the policy. Aden
testified that he asked for a policy that would cover any losses he may have in his condominium and told Fortsh that
he wanted the equivalent of a homeowners' policy for a condominium. Aden said that Fortsh asked him two
questions: 1) the price Aden paid for the condominium, to which he answered $48,000; and 2) the worth of Aden's
personal contents in the condominium, to which Aden answered $16,000.
Fortsh testified that Aden asked for the minimum policy requirements and that a policy with a premium of
$120 had been rejected by Aden as too expensive. Fortsh stated that he told Aden to check with his condominium
association to discover what coverage he had under the association's policy. Fortsh further testified that he sought a
less expensive policy from a different insurer, Hartford Insurance Company, through a different broker, Johl &
Company. Fortsh offered Aden the Hartford policy for a premium of $98. He again advised Aden to consult the
condominium association policy to make sure that anything not covered under the Hartford policy would be covered
under the association policy.
The Hartford policy issued to the Adens provided $1000 in coverage in the event of damage to their
dwelling. In June 1996, the Aden's condominium was damaged by fire. The damage to the exterior of the building
was covered under the condominium association insurance policy. Aden paid $20,000 in repairs for damage to the
interior of his unit because the Hartford policy only provided for $1000 in dwelling coverage. Aden testified that he
learned of the limited amount of coverage when he read the policy for the first time after the fire.
In October 1996, the Adens sued Fortsh and Johl & Company for negligently failing to procure adequate
insurance on the condominium. The Adens settled with Johl & Company. The matter was tried against Fortsh in
1998. At the conclusion of trial, the judge charged the jury on the law. Among other things, the judge defined the
broker's duty and instructed that Fortsh's negligence must have been a substantial factor in bringing about the harm
or loss. Fortsh's attorney recommended the judge also instruct the jury on a charge that was essentially a
comparative negligence instruction regarding Aden's failure to read the policy, which the judge declined to do. The
jury ultimately returned a unanimous verdict in favor of the Adens. The parties stipulated damages in the amount of
$18,566. After calculating prejudgment interest, the court entered judgment in the amount of $20,877.
On appeal, the Appellate Division reversed, holding that the trial court erred in refusing to instruct the jury
in respect of Aden's failure to read the policy.
The Supreme Court granted certification.
HELD: The comparative negligence defense is unavailable to a professional insurance broker who asserts that the
client failed to read a policy and failed to detect the broker's own negligence. It is the broker, not the
insured, who is the expert and the client is entitled to rely on that professional's expertise in faithfully
performing the very job he or she was hired to do.
1. The New Jersey Legislature abolished contributory negligence in favor of the doctrine of comparative fault by
adopting the Comparative Negligence Act (Act). Under the Act, jurors in negligence actions must determine the
percentage of each party's fault or negligence. However, the Legislature has allowed courts to retain the authority to
establish a “policy-based preclusion” of the factfinder's consideration of the fault of the plaintiff. Generally,
comparative or contributory negligence may not be charged when a professional breaches his or her duty to a client.
This policy reflects this State's heightened expectations of professional services. Of course, the client's conduct is
not irrelevant. If the conduct of the client, rather than that of the professional, was the sole proximate cause of the
alleged harm, a jury may conclude that the professional is not negligent. (Pp. 10-14)
2. If a client impedes the professional by, for example, withholding or failing to provide certain information, the
client's conduct may constitute comparative negligence unless the professional's scope of employment included an
obligation to prevent such conduct on the part of the client. A policy-based preclusion of the comparative-negligence
defense also may be unavailable depending on the level of knowledge of the client in the field of expertise of the
particular profession. Nevertheless, professionals may not diminish their liability under the Act when the alleged
negligence of the client relates to the task for which the professional was hired. (Pp. 14-16)
3. The fiduciary relationship between the broker and the client gives rise to a duty owed by the broker to the client
to exercise good faith and reasonable skill in advising insureds. There is case law establishing the sound policy that
an insured is entitled to assume that a broker has performed his or her fiduciary duty. That duty is not lessened when
a policyholder fails to detect the broker's breach of that duty. (Pp. 16-21)
4. In view of New Jersey's tradition of holding insurance professionals and other fiduciaries to higher standards,
Aden's failure to read the insurance policy cannot be asserted as comparative negligence in an action against the
broker for negligent failure to procure insurance. A comparative negligence charge would place undue emphasis on
the behavior of the client rather than on the negligence of the broker. Here, it is undisputed that Fortsh failed to
properly procure adequate insurance. (Pp. 21-23)
5. The Court's disposition does not prevent brokers from contending during trial that an insured's failure to read a
policy severed the causal link between the broker's fault and the insured's harm. That is what Fortsh attempted to
prove at trial; an argument the jury rejected. Furthermore, the Legislature has intended the Act to apply to the
conduct of victims of professional malpractice, but only to the extent that such conduct substantially contributed to
the professional's nonperformance. (Pp. 23-24)
6. The dissent argues that case law precluding comparative negligence in this type of professional malpractice action
is no longer valid. The Court disagrees. There is no indication that the Legislature intended to overrule the long line
of cases that have sanctioned the preclusion of the comparative negligence defense in professional malpractice
matters. (Pp. 24-30)
Judgment of the Appellate Division is REVERSED.
JUSTICE VERNIERO, dissenting, in which JUSTICES COLEMAN and LAVECCHIA join, is of the
view that the majority's holding relieves an insured from having to take the minimal step of reviewing a policy's one
or two-page declarations sheet to avoid the kinds of injuries that occurred here. That approach dilutes the
significance of the numerous cases in which courts have stressed the importance of having insurance policies written
in clear, straightforward terms to aid policyholders in reading and understanding them. Justice Verniero would hold
that in malpractice actions involving insurance agents, brokers, or similar parties, the trier of fact is generally
required to determine the degree of an insured's negligence or fault in failing to read a policy's declarations page.
CHIEF JUSTICE PORITZ and JUSTICES STEIN and LONG join in JUSTICE ZAZZALI'S
opinion. JUSTICE VERNIERO filed a separate dissenting opinion, in which JUSTICES COLEMAN and
LAVECCHIA join.
SUPREME COURT OF NEW JERSEY
A-
116 September Term 1999
BENJAMIN ADEN and BEATRICE
ADEN,
Plaintiffs-Appellants,
v.
ROBERT F. FORTSH,
Defendant-Respondent,
and
JOHL & COMPANY, INC.,
Defendant.
Argued November 8, 2000 -- Decided July 18, 2001
On certification to the Superior Court,
Appellate Division, whose opinion is
reported at
327 N.J. Super 360 (2000).
Louis Smith argued the cause for appellants
(LeBoeuf, Lamb, Greene & MacRae, attorneys).
Jared Stolz argued the cause for respondent
(Methfessel & Werbel, attorneys; Jeffrey M.
Patti, on the letter in lieu of brief).
The opinion of the Court was delivered by
ZAZZALI, J.
The question presented in this appeal is whether a
policyholder's failure to read his policy may be asserted as
comparative negligence in a professional malpractice action
against an insurance broker. In a published opinion, the
Appellate Division reversed a jury verdict in favor of the
insureds and held that the trial court should have instructed the
jury on comparative negligence for the failure to read the
policy. Aden v. Fortsh,
327 N.J. Super. 360 (App. Div. 2000).
We reverse. In New Jersey, the comparative fault defense
traditionally “will not apply in a plaintiff's suit alleging a
professional's malpractice, at least in those cases in which the
defendant argues that the plaintiff was at fault in failing to
understand or to perform the task for which the professional was
hired.” Brian E. Mahoney, New Jersey Comparative Fault and
Liability Apportionment § 6:2-10 at 119 (2001). We now hold that
the comparative negligence defense is unavailable to a
professional insurance broker who asserts that the client failed
to read the policy and failed to detect the broker's own
negligence. It is the broker, not the insured, who is the expert
and the client is entitled to rely on that professional's
expertise in faithfully performing the very job he or she was
hired to do.
Aden testified that he asked Fortsh for “a policy that would cover any losses I might have in my condo” and told Fortsh he wanted the equivalent of “a homeowners' policy which happened to be [for] a condo.” Aden further testified that Fortsh asked him two questions regarding the policy during their first conversation in the beginning of August 1994: first, the amount Aden paid for the condominium, which Aden told him was $48,000; and, second, the worth of his personal contents in the condominium, which Aden estimated at $16,000.
Aden testified that in their second conversation Fortsh offered him a policy with an annual premium of $98. Aden stated that Fortsh neither explained what the policy covered nor advised Aden to verify that his condominium association insurance policy provided coverage for losses that the policy issued by Fortsh did not. Aden accepted the policy but testified that he did not read it when he received it.
Fortsh's description of events was markedly different. He testified that when Aden first contacted him about insuring the new condominium, Aden asked for the “minimum policy requirements.” Fortsh also testified that he instructed Aden to contact his condominium association to discover what type of coverage the association provided because, in Fortsh's experience, some association policies cover damages to both the exterior of the condominium and the interior or “dwelling,” obviating the need for unit owners to purchase dwelling coverage.
He then offered Aden a policy with a $120 annual premium from Prudential. According to Fortsh, Aden rejected that policy as too expensive after he consulted with his neighbors in the condominium development. Because of his longtime business relationship with the Adens, Fortsh testified that he tried to obtain a cheaper policy from a different insurer, the Hartford Insurance Company, through a different broker, Johl & Company. Fortsh noted that ordinarily he would not have made additional efforts because the initial quote of $120 was relatively inexpensive. Fortsh also indicated that he would have received a slightly higher commission if he provided a Prudential policy rather than a Hartford policy.
Nevertheless, Fortsh contacted Aden and offered him the Hartford policy with the $98 annual premium. Fortsh testified that he then read a computer printout containing the policy limits and again advised Aden to consult the condominium association policy to ensure that anything not covered under the Hartford policy would be covered under the association policy. Although the Hartford policy was less expensive than the initial Prudential policy offered to Aden, Fortsh testified that the coverage was the same.
There is no dispute that in September 1994, Aden sent Fortsh a check for $98 for the Hartford premium, as well as written authorization for Fortsh to apply for the policy on behalf of Aden. Fortsh completed the application for the Hartford policy and signed it with Aden's permission. Aden was not sent a copy of the application. The policy issued to the Adens provided $1,000 in coverage in the event of damages to their dwelling.
On cross-examination, Fortsh conceded that he did not verbally review with Aden the specific amount of dwelling coverage. Rather, Fortsh testified that when he returned the application for the Hartford policy, he left the box for dwelling coverage blank. The record is unclear with respect to how the amount of dwelling coverage became $1,000 under the policy since Fortsh left that portion of the application blank and the application itself is not included in the parties' appendices. In any event, Fortsh's deposition testimony, read to the jury during trial, indicated that he believed that dwelling coverage under the Hartford policy would be unnecessary because there should have been adequate coverage through Aden's condominium association policy. Fortsh testified that he himself never reviewed the condominium association policy to verify that belief. Fortsh also testified that he “assumed” that Aden read his association policy. The policy was renewed after a year.
In June 1996, a fire damaged the Adens' condominium. The damage caused to the exterior of the building was covered by the insurance provided under the condominium association policy. Nevertheless, Aden paid about $20,000 in repairs for damage to the interior of the building because, as noted, the Hartford policy provided for only $1,000 in dwelling coverage. Aden testified that he discovered the limited amount of coverage after the fire occurred, when he read his policy for the first time.
In October 1996, the Adens filed a complaint in the Law Division against Fortsh and Johl & Company for negligently failing to procure adequate insurance on the condominium. Prior to trial, the Adens settled with Johl & Company.
A two-day trial commenced in August 1998. In addition to the testimony of Aden and Fortsh, the jury heard from two expert witnesses. Plaintiffs' expert, Debra Stanton, an insurance agent, testified that the generally-accepted procedure by which an insurance broker procures a condominium insurance policy for a client is to review the insured's condominium association policy beforehand to determine what “the condominium association is agreeing to cover versus what they're making the unit owner responsible to cover.” To that end, according to Stanton, a broker either should ask the client to obtain a copy of the condominium's master deed, or should directly contact the association to obtain the master deed which would indicate the coverage contained in the association policy.
Stanton testified that many, if not the majority of association policies will provide coverage for the exterior of the condominium but not the dwelling. If a copy of the association policy was not readily available, Stanton testified that her company would require the insured to purchase at least $10,000 worth of coverage. Because Fortsh did not review the Adens' master deed before procuring the policy, it was Stanton's opinion that he did not act in conformance with industry standards.
Defendant's expert, Armando Castellini, a licensed broker, testified that Fortsh acted in conformance with industry standards. Castellini testified that by advising Aden to review the master deed to find out whether there were any further insurance requirements, as Fortsh claimed to have done, Fortsh did what was expected of him. Furthermore, Castellini stated that it was not a prerequisite for a broker such as Fortsh to review the Adens' master deed prior to securing coverage for them. Had Fortsh failed to advise Aden to review the master deed, Castellini conceded that Fortsh would not have met industry standards. Conversely, if Fortsh attempted to review the master deed, Castellini claimed that would have been an inappropriate “attempt to interpret legal documents.” Castellini also testified that if the dwelling coverage limits of the Adens' policy were increased to $48,000, the annual premium would have risen to $296 per year.
At the conclusion of the trial, the court charged the jury in part that the law
imposes on the insurance broker the duty or obligation to have and to use that degree of skill and knowledge which insurance brokers of ordinary ability and skill possess and exercise in the representation of a client, such as the plaintiff Aden in this case. This is the standard by which to judge the defendant Fortsh in his placement and advice as to the insurance on this dwelling, condominium dwelling unit.
. . . .
. . . . Now, defendant has offered testimony that the plaintiff Aden's own actions or inactions were the sole proximate cause of having virtually no interior structural and fixture insurance coverage for the fire damage to his condominium. If you find that defendant has proven by a preponderance of evidence that plaintiff was the sole proximate cause of this lack of insurance coverage, you will find in favor of defendant and dismiss plaintiff's case.
On the other hand, if you find that the plaintiff has proven by a preponderance of evidence the negligence of the defendant in providing inadequate and incomplete advice and procurement of insurance coverage, and that that was a substantial factor in bringing about the losses that occurred, and that some harm to the plaintiff was foreseeable from the defendant Fortsh's negligence, then you will find in favor of plaintiff.
Defense counsel had requested the court to charge the jury that “an insured is chargeable with knowledge of the contents of a policy” and that “an insured is chargeable with knowledge of the contents of a policy in the absence of fraud or inequitable conduct on the part of the insurer.” The court, however, declined to accept that recommended charge. We accept, for purposes of this appeal, defense counsel's assertion that the recommended charge represented a request for an instruction in respect of comparative negligence.
During deliberations, the jury requested clarification on the meaning of proximate cause. In response, the court read back that portion of its instructions. The jury ultimately returned a unanimous 7-0 verdict in favor of the Adens. The parties had stipulated damages in the amount of $18,566. After calculating pre-judgment interest, the trial court entered judgment in the amount of $20,877. The Appellate Division reversed, holding that the trial court erred in refusing to instruct the jury with respect to Aden's failure to read the policy. This Court granted certification. 164 N.J. 561 (2000). We now reverse the judgment of the Appellate Division and reinstate the verdict.
In recent years, the application of that policy-based preclusion has been most apparent in professional malpractice cases. Actions involving a breach of professional duty are not everyday negligence claims -- they involve obligations arising from special relationships. Five years ago, a unanimous Court in Conklin v. Hannoch Weisman, 145 N.J. 395, 412 (1996), observed that, “when the duty of the professional encompasses the protection of the client or patient from self-inflicted harm, the infliction of that harm is not to be regarded as contributory negligence on the part of the client.” The view that comparative or contributory negligence generally may not be charged when a professional breaches his or her duty to a client reflects our heightened expectations of professional services in this State. See, e.g., Conklin, supra, 145 N.J. at 412 (holding injured party's negligence not relevant in attorney malpractice action); Tobia v. Cooper Med. Ctr., 136 N.J. 335, 341 (1994) (“[W]hen a tortfeasor's duty includes exercise of reasonable care to prevent a party from engaging in self-damaging conduct, contributory negligence is barred as a defense.”); Cowan v. Doering, 111 N.J. 451, 464-65 (1988) (holding that health-care professionals could not assert contributory negligence defense against suicidal patient); Mitchell v. Procini, 331 N.J. Super. 445, 457 (App. Div. 2000) (“Usually, comparative fault is not an issue in medical malpractice actions . . . .”); Hofstrom v. Share, 295 N.J. Super. 186, 193, (App. Div. 1996) (observing “particularly acute danger” in permitting jury to focus on plaintiff's alleged comparative negligence in professional negligence action), certif. denied, 148 N.J. 462 (1997); Bryant v. Calantone, 286 N.J. Super. 362, 371-72 (App. Div. 1996) (same); Conforti & Eisele v. John C. Morris Assocs., 199 N.J. Super. 498, 501 (App. Div. 1985) (noting that plaintiff's conduct did not constitute negligence in suit against design professionals); Pressler, Current N.J. Court Rules, comment 8.6 on R. 4:5-4 (commenting that comparative negligence defense “not so chargeable where the attorney's obligation was to protect the client from the self- inflicted harm that ensued”).
That is not to say that the conduct of the client in a professional malpractice action is irrelevant in other respects. Illustratively, Conklin noted that in an attorney malpractice action, “if a client or patient deliberately violates the professional's instructions with respect to self-care or heedlessly enters a transaction regardless of any instructions on the part of the professional, the trier of fact may find that there is no causal connection between the fault and the harm, Lamb v. Barbour, 188 N.J. Super. 6, 12-13 (App. Div. 1982) . . ., certif. denied, 93 N.J. 297 (1983), or that the plaintiff failed to mitigate her damages as she should have, e.g., Ostrowski v. Azzara, 111 N.J. 429, 445 (1988).” 145 N.J. at 413. See also McLister v. Epstein & Lawrence, P.C., 934 P.2d 844, 846-47 (Colo. App. 1996) (noting that client's alleged negligence in professional malpractice action “relevant to the issue of
causation, but would not present a proper basis for a comparative negligence instruction”). Thus, if the conduct of the client, rather than that of the professional, was the sole proximate cause of the alleged tort, a jury may conclude that the professional is not liable.
Similarly, comparative negligence principles may be applied in professional malpractice claims in which the client's alleged negligence, although not necessarily the sole proximate cause of the harm, nevertheless contributed to or affected the professional's failure to perform according to the standard of care of the profession. Steiner Corp. v. Johnson & Higgins, 996 P.2d 531, 532 (Utah 2000). See also Scioto Mem. Hosp. Ass'n. v. Price Waterhouse, 659 N.E.2d 1268, 1274 (Ohio 1996) (Cook, J. concurring) (noting that in accounting malpractice action “comparative negligence may be applied only to negligent acts of a client that contribute to the accountant's failure to perform according to the standards of the accounting profession. Other negligence by the client . . . is to be considered in the context of whether [the] damages proximately resulted from its own conduct . . . .”). Cf. Rosenblum v. Adler, 93 N.J. 324, 350-51 (1983) (observing in professional malpractice action that “[n]egligence of the injured party could bar or limit the amount of recovery under the Comparative Negligence Act”). Thus, if a client impedes the professional in his or her performance by, for example, withholding or failing to provide certain information to the professional concerning the matter for which the professional was hired that could have reduced a portion of the harm committed, the client's conduct may constitute comparative negligence unless the professionals' scope of employment included an obligation to prevent such conduct on the part of the client. See Hawkins, Professional Negligence Liability of Public Accountants, 12 Vand. L. Rev. 797, 811 (1959) (noting that in accountant malpractice actions “[t]here can be nothing unreasonable about plaintiff's conducting his affairs on the assumption that defendant is doing his job properly” but that plaintiff's conduct is relevant if it “goes beyond passive reliance and actually affects defendant's ability to do his job with reasonable care”) (footnote omitted). A policy-based preclusion of the comparative negligence defense also may be unavailable depending on the level of knowledge the client has in the field of expertise of the particular professional. Erlich v. First Nat'l Bank of Princeton, 208 N.J. Super. 264, 302 (Law Div. 1984). Moreover, the Comparative Negligence Act further serves to allocate fault among multiple defendants in professional malpractice cases. Johnson v. American Homestead Mortg., 306 N.J. Super. 429, 432 (App. Div. 1997).
Nevertheless, professionals may not diminish their liability under the Comparative Negligence Act when the alleged negligence of the client relates to the task for which the professional was hired. That rule is premised on the heightened responsibilities of professionals in this State. Otherwise, the fiduciary relationship between the professional and the client may be undermined and professionals may be allowed to escape liability for their malpractice. As one commentator has accurately summarized our law, “[i]n general, the comparative fault defense will not apply in a plaintiff's suit alleging a professional's malpractice, at least in those cases in which the defendant argues that the plaintiff was at fault in failing to understand or to perform the task for which the professional was hired.” Mahoney, supra, § 6:2-10 at 119.
Accordingly, an insurance broker who agrees to procure a specific insurance policy for another but fails to do so may be liable for damages resulting from such negligence. Rider v. Lynch, 42 N.J. 465, 476 (1964). Liability resulting from the negligent procurement of insurance is premised on the theory that a broker “ordinarily invites [clients] to rely upon his expertise in procuring insurance that best suits their requirements.” Id. at 477. The concept is essentially one of professional malpractice. A broker engaged to obtain insurance must exercise reasonable skill and “is expected to possess reasonable knowledge of the types of policies, their different terms, and the coverage available in the area in which his principal seeks to be protected.” Id. at 476. Furthermore, if a broker “neglects to procure the insurance or if the policy is void or materially deficient or does not provide the coverage he undertook to supply, because of his failure to exercise the requisite skill or diligence, he becomes liable to his principal for the loss sustained thereby.” Ibid.; see also Restatement (Second) of Agency, § 401 (1957) (“An agent is subject to liability for loss caused to the principal by any breach of duty.”).
Before the advent of comparative fault in New Jersey, this Court held that an insured's failure to read the policy did not constitute contributory negligence in an action seeking damages because of a broker's failure to procure appropriate insurance coverage. Rider v. Lynch, supra, 42 N.J. at 482. In Rider, an eighteen-year-old with a limited ability to read English told a broker that she needed auto insurance for a car owned by her fiancé who gave her permission to use the car while he was out of state. 42 N.J. at 470-71. The broker issued a nonowner's insurance policy to her but did not explain the limitations under such a policy, namely, that the policy covered only automobiles not regularly used by the insured or any relative. Id. at 473- 74. The coverage therefore was worthless to the woman and her family who planned to use the car on a regular basis, a fact the broker knew or should have known. Id. at 474. Neither the woman nor her step-father read the policy. Id. at 482. After her step-father was involved in an accident, the insurer denied coverage and the step-father brought suit on behalf of the daughter against the insurer and the broker. Id. at 468.
This Court reversed the dismissal of the plaintiff's claim against the broker, concluding that a factual question existed with regard to whether the broker breached his duty of care. The Court noted that because of the nature of the principal-agent relationship the broker was charged with the knowledge that the policy did not fit his client's need and, even if the broker was not aware of the limited policy coverage, he was under a duty to examine and reject the policy himself before delivering it to the woman. Id. at 481. The Court also observed:
In passing, it should be said that failure of [the daughter] or the plaintiff to read the policy will not estop either of them from prosecuting a cause of action in negligence against [the broker]. Nor will such failure support a defense of contributory negligence. In view of the relationship of principal and agent between [the daughter and the broker], she and her father were entitled to rely upon and believe that the broker had fulfilled his undertaking to provide the coverage impliedly agreed upon, and that the policy sent to them represented accomplishment of that undertaking.
[Id. at 482 (emphasis added).]
The Rider decision is based on the sound policy that an
insured in this State is entitled to assume that a broker has
performed his or her fiduciary duty. That duty is not diminished
when a policyholder fails to detect the broker's breach of that
duty. Ibid.; see also Winans-Carter Corp. v. Jay & Benisch,
107 N.J. Super. 268, 272 (App. Div. 1969) (holding that plaintiff's
failure to read fire insurance endorsement did not contribute to
defendant-broker's nonperformance). Authoritative commentators
on insurance law, leading jurisprudence encyclopedias, and other
jurisdictions are in accord with that view. 12 Holmes, Appleman
on Insurance 2d, § 87.3 (noting that allegations of failure to
read policy “not really appropriate to insurance agency and
brokerage liability where the question is fundamentally whether,
considering all the facts, did the insured have the right to rely
on the agent or broker?”); 3 Couch on Insurance § 46:69 (3d ed.)
(“The insured's failure to read the policy has traditionally been
held not to be a defense to an action against the agent for
failure to procure insurance, on the reasoning that the principal
is entitled to assume that the agent performed his or her duty .
. . .”);
43 Am. Jur 2d Insurance § 141 (“[I]f an insurance agent
or broker has failed to procure a policy which in terms and
coverage is of the type specified by the insured, and the insured
consequently suffers an uninsured loss, the agent or broker
cannot successfully contend that he is relieved of liability by
reason of any contributory negligence on the part of the insured
in not having read and familiarized himself with the contents of
the policy.”). See also Weinlood v. Fisher & Assocs., 975 P.2d
1226 (Kan. App. 1999) (observing that insured not negligent in
failing to examine application or policy and justified in
assuming that it had been written as contemplated); Grigsby v.
Mountain Valley Ins.,
795 S.W.2d 372, 373-74 (Ky. 1990) (noting
that insured cannot be contributorily negligent for failure to
read or understand fire insurance coverage); Stock v. Adco Gen.
Corp.,
632 P.2d 1182 (N.M. App.), cert. denied,
632 P.2d 1181
(N.M. 1981) (observing that trial court properly refused to adopt
requested findings that insured's failure to read policy
constituted contributory negligence); Israelson v. Williams,
151 N.Y.S. 679, appeal dismissed,
109 N.E. 1079 (N.Y. 1915) (holding
insured not negligent in failing to examine policy in negligence
action against broker); Robin Cheryl Miller, Annotation,
Liability of Insurance Agent or Broker on Ground of Inadequacy of
Liability-Insurance Coverage Procured,
60 A.L.R. 5th 165, 189-90
(1998) (discussing view that insured's failure to read policy
generally not a defense).
This case demonstrates why a comparative negligence charge places undue emphasis on Aden's behavior rather than on Fortsh's negligence. By contacting Fortsh, Aden elected to obtain the services of a professional licensed by this State. Aden could have purchased his policy directly from the insurer. Brokers such as Fortsh, however, hold themselves out as having more knowledge than members of the public with regard to the insurance policies and coverage they procure. A broker is not an “order taker” who is responsible only for completing forms and accepting commissions. The expert testimony at trial, for instance, indicated that an insurance broker who elects to procure policies relating to condominiums has a duty to be aware that there is a strong possibility that the insured's condominium association may not provide coverage for the interior of the condominium. Aden's expert testified that it was Fortsh's duty, not Aden's, to ensure that the policy he was procuring for Aden provided a sufficient amount of dwelling coverage for the condominium. It was undisputed that Fortsh failed to meet that standard.
Our disposition does not prevent brokers from contending during trial that an insured's failure to read the policy severed the causal connection between the broker's fault and the insured's harm. That is precisely the argument defense counsel made in this case. The trial court did not preclude Fortsh from presenting evidence to attempt to prove that Aden's admission that he did not read the policy until after the fire was the proximate cause of the harm. The jury, however, rejected defense counsel's argument, a rejection supported by the evidence. Aden, even had he read the policy, would have been entitled to assume that the $1,000 in dwelling coverage was sufficient coverage in light of Fortsh's professional obligation to ensure that the condominium association policy and the policy he was procuring for Aden, in the aggregate, provided adequate coverage. Aden's failure to read the policy could not logically have been termed the direct cause of the malpractice.
Furthermore, we are of the view that the Legislature has intended the Comparative Negligence Act to apply to the conduct of victims of professional malpractice, but only to the extent that such conduct substantially contributed to the defendant's nonperformance. Winans-Carter, supra, 107 N.J. Super. at 272. In this case, for instance, had Aden told Fortsh that his personal contents were worth less than they actually were, or had he provided wrong or inadequate information to Fortsh, a comparative negligence charge would have been appropriate to allow the jury to apportion fault or reduce the amount that Aden could recover as a result of such conduct. Here, however, Aden's conduct was sufficiently remote to preclude Fortsh from raising it as an affirmative defense. Further, there is no evidence that Aden possessed any specialized knowledge in the area of insurance.
Finally, it is “to the insured's advantage to read the policy and question the agent about its terms and conditions; the agent's reiteration that the requested risks are covered is strongly in the insured's favor in any later lawsuit.” Couch, supra, § 46:69. Efforts on behalf of insureds to understand their policy remain an effective means of resolving insurance disputes before they reach the litigation stage. An insured who does not review his or her policy will forego such an advantage.
When Rider was decided, however, the doctrine of contributory negligence was not as harsh as the dissent suggests. By that time, our courts were dissatisfied with the common-law view that recovery should be barred if a plaintiff's own conduct contributed to the harm “in any degree” or “in any way.” Instead, we adopted the more enlightened view that a plaintiff's conduct must be a significant factor in causing the harm to preclude recovery. See Kaufman v. Pennsylvania R.R. Co., 2 N.J. 318, 323-24 (1949) (“To preclude the plaintiff from maintaining the action his conduct must have been negligent, and his negligence must have contributed to the injury in such a way that if he had not been negligent he would have received no injury from the act of the defendant.”); Maccia v. Tynes, 39 N.J. Super 1, 6 (App. Div. 1956) (stating that “a plaintiff's contributory negligence will not operate as a bar to his claim unless there is a causal relationship between it and the accident”). Under that interpretation of the contributory negligence rule, the plaintiff in Rider would not have been precluded from recovering, as her conduct was not a significant factor in causing her injury. In this case, for instance, the jury concluded that it was Fortsh's negligent conduct that was a substantial factor in causing the harm committed and rejected defendant's argument that Aden's failure to have read the policy was the proximate cause of that harm. Even assuming that the Rider Court was concerned in part that the plaintiff's ability to recover might be endangered under the old contributory negligence scheme, that concern would be equally applicable today. The Comparative Negligence Act only partially abrogated the doctrine of contributory negligence. A plaintiff still cannot recover if his or her fault is found by the jury to be greater than that of the defendants. N.J.S.A. 2A:15-5.1.
There is a well-recognized presumption that the Legislature has not acted to adopt a statute that derogates from the common law. To so do, “the Legislature must speak plainly and clearly.” Campione v. Adamar of New Jersey, Inc., 155 N.J. 245, 265 (1998). The Legislature has not hesitated in the past to make such intentions evident. See Nobrega v. Edison Glen, 167 N.J. 520, 533 (2001) (discussing Legislature's explicit intent that New Residential Real Estate Off-Site Conditions Disclosure Act reverse Strawn v. Canuso, 140 N.J. 43 (1995)).
Although the Legislature has acted to partially abrogate the doctrine of contributory negligence, the Legislature has not interfered with the authority of the judiciary to ensure that jurors can hold negligent professionals liable for services that were not properly performed. There is not the slightest indication that the Legislature intended to overrule Rider, Cowan, Tobia, Conklin or the long line of cases that have sanctioned the preclusion of the comparative negligence defense in professional malpractice cases. Thus, in professional malpractice actions since 1973, our courts have recognized comparative negligence principles, Rosenblum v. Adler, supra, 93 N.J. at 350-51, and yet have continued to preclude that defense when it was alleged that the plaintiff failed to ensure the performance of the task for which the professional was hired. Cowan, supra, 111 N.J. at 466.
What the dissent does not acknowledge is that the forceful principles espoused by Justice Francis in Rider do not relate to the harsh doctrine of contributory negligence. Rider is not superfluous. The essence of Rider is as convincing now as it was over thirty-five years ago: professional brokers hold themselves out as experts and should not benefit from the insured's failure to detect negligence in the broker's field of expertise. The insured hires and pays the broker for exactly that service. Indeed, we hire professionals in this State with the confidence and expectation that they will successfully perform what they have promised to do in their area of expertise. To focus undue attention on the behavior of the victim of professional malpractice “can lead to the dilution or diminution of a duty of care” of professionals. Cowan, supra, 111 N.J. at 467. Removing the plaintiff's failure to detect the professional's negligence from the comparative negligence equation, in our view, is the most sensible solution to the question presented. Brokers still would be able to argue to the jury that the insured's failure to read the policy is relevant to the issues of proximate cause and damages.
In some actions against an insurance company, but not involving a broker, an insured may be charged with a responsibility to read the policy. Sears Mortgage Corp. v. Rose, 134 N.J. 326, 348 (1993); Bauman v. Royal Indem. Co., 36 N.J. 12, 25 (1961). When one contracts with another, the contracting parties may have an obligation to read the contract because if they assent without so doing, they cannot later assert that their agreement was different from that expressed in writing. Even in the contract-reformation context, there are exceptions to the rule, as when an insured “in all likelihood, will not read [the policy] over again and may not fairly be expected to do so.” Bauman, supra, 36 N.J. at 25. In any event, what distinguishes the situation in which an insured employs the assistance of a professional insurance intermediary is that the insured then has the right to rely on the skilled broker's presumed competence in executing the instructions given. Franklin v. Western Pacific Ins. Co., 414 P.2d 343 (Or. 1966). Unlike when an insured sues an insurer, in a malpractice suit a written contract is not being challenged. An insured who hires and pays a professional broker does so to reduce, if not eliminate, the risk that an inadequate policy will be procured.
[W]hen a broker of repute is employed to effect an insurance against certain risks, the client is entitled to rely upon his instructions being properly carried out. It is no answer for the broker to say: 'I handed you the policy and you should have examined it and seen whether it gave you the protection you required.' . . . . Business could not be carried on . . . if, when a person has been employed to use care and skill with regard to a matter, the [client] is bound to use his own care and skill to see whether the person employed has done what he was employed to do.
[Hampton Roads Carriers v. Boston Ins. Co., 150 F. Supp. 338, 343-44 (D.C.Md. 1957) (quoting Arnould on Marine Insurance 160 (13th ed., 1950).]
Insurance consumers who instruct their brokers to provide coverage are entitled to have those instructions followed without regard to the insured's failure to detect the broker's negligent conduct.
Reversed.
CHIEF JUSTICE PORITZ and JUSTICES STEIN and LONG join in JUSTICE ZAZZALI's opinion. JUSTICE VERNIERO filed a separate dissenting opinion, in which JUSTICES COLEMAN and LaVECCHIA join.
SUPREME COURT OF NEW JERSEY
A- 116 September Term 1999
BENJAMIN ADEN and BEATRICE
ADEN,
Plaintiffs-Appellants,
v.
ROBERT F. FORTSH,
Defendant-Respondent,
and
JOHL & COMPANY, INC.,
Defendant.
_____________________
VERNIERO, J., dissenting.
In this broker malpractice action, the Court holds that the
jury is forbidden as a matter of law from considering the
possible comparative negligence of plaintiffs in failing to read
the declarations page of their insurance policy. That holding
relieves an insured from having to take the minimal step of
reviewing a policy's one or two-page declarations sheet to avoid
the kinds of injuries that occurred here. The majority's
approach also dilutes the significance of a legion of cases in
which courts have stressed the importance of having insurance
policies written in clear, straightforward terms to aid
policyholders in reading and understanding them. See Harr v.
Allstate Ins. Co.,
54 N.J. 287, 304 (1969) (emphasizing insurer's
“obligation to make policy provisions, especially those relating
to coverage, . . . plain, clear and prominent to the layman”).
Because I do not subscribe to the Court's approach or the policy
rationale on which it is based, I respectfully dissent.
The harshness of the common-law doctrine of contributory negligence led this Court in Rider v. Lynch, 42 N.J. 465, 482 (1964), to express the view that an insured's failure to read an insurance policy should not bar recovery against a broker for negligent procurement. In Rider, the plaintiff engaged an insurance broker to obtain automobile insurance. He bought the policy procured by the broker, but did not read it until after he was involved in an automobile accident and learned that he was not covered under the policy. The Court observed: “In passing, it should be said that failure of . . . the plaintiff to read the policy will not estop [the insured] from prosecuting a cause of action in negligence against [the broker].” Ibid. Without elaboration, the Court also stated that “such failure [will not] support a defense of contributory negligence.” Ibid.
Plaintiffs' view, with which the Court is in substantial agreement, is that Rider continues to bar a trier of fact from considering an insured's degree of fault in the broker- malpractice context. I disagree. I have found no reported New Jersey case after 1973 that has cited Rider in support of plaintiffs' proposition. The lack of such case law convinces me that the Legislature's 1973 enactment of the comparative negligence statute rendered that aspect of Rider effectively void. Rider remains good law in respect of other propositions for which it is sometimes cited, namely, that insurance brokers are “required to have the degree of skill and knowledge requisite to the calling” and that brokers ordinarily invite their clients to rely on the brokers' expertise in procuring insurance that best suits their clients' needs. Id. at 476, 477. I intend no diminution of that standard. To the contrary, I share the sentiments expressed in Weinisch v. Sawyer, 123 N.J. 333, 340 (1991), in which the Court stated that “[a]gents, like brokers, are obligated to exercise good faith and reasonable skill in advising insureds.”
In arguing that the trial court properly denied the comparative-negligence charge, plaintiffs also rely on Conklin v. Hannoch Weisman, 145 N.J. 395 (1996). That reliance is misplaced. The facts in Conklin were complicated. The plaintiffs hired a law firm to help them with a land sale involving a purchase money mortgage, but when the other party to the contract went bankrupt, the plaintiffs lost their land and their money. Id. at 400-02. The plaintiffs sued the law firm for failing to inform them accurately in respect of the subordination clause contained in the mortgage. Id. at 402. The law firm contended that the plaintiffs had understood fully what it meant to be subordinated on the mortgage and had contributed to their own vulnerable position. Id. at 403. The Court held that the plaintiffs' possible negligence was not relevant in their malpractice action. Id. at 412.
I interpret Conklin's holding to be limited by its unique facts. Unlike the majority, I would not extend that holding to the present circumstance. In contrast to Conklin, the facts in this case are straightforward. There is no dispute that plaintiffs did not read their policy or the declarations page until after the fire occurred. That the declarations page plainly sets forth the $1,000 coverage limit in an easy-to-read fashion is also uncontested. Had plaintiffs reviewed that page of the policy, they would have readily seen the limits of coverage. Lehroff v. Aetna Cas. & Sur. Co., 271 N.J. Super. 340, 346 (App. Div. 1994) (deeming declarations page “as having signal importance” in defining insured's expectations of coverage). Hence, this case implicates whether plaintiffs bore any responsibility prior to the fire to examine at least the policy's declarations page to determine if its terms were as the parties intended. Cf. Martinez v. John Hancock Mut. Life Ins. Co., 145 N.J. Super. 301, 310 (App. Div. 1976) (describing extent of duty of insureds to read policies), certif. denied, 74 N.J. 253 (1977).
I also would reaffirm a trial court's ability to determine as a threshold matter whether the jury's involvement is warranted by the facts of a particular case. In that regard, when justified under the totality of the facts, a trial court is free to conclude in any action that no reasonable jury could find a policyholder to be at fault. If the court so concludes, it need not charge comparative negligence to the jury. Vega by Muniz v. Piedilato, 154 N.J. 496, 529 (1998) (Handler, J., concurring) (observing that trial courts retain discretion to determine fault issue because New Jersey's comparative negligence statute does not mandate that jury must evaluate plaintiff's alleged negligence in all instances). In short, I would leave undisturbed a court's inherent authority to determine the applicability of comparative negligence in a given case.
In carrying out its required tasks, the jury does not perform in a vacuum. Instead, it considers all relevant circumstances related to the broker-client relationship. In so doing, the jury may decide that the extent of the insured's fault in failing to read the policy's declarations page is relatively small as compared to the negligence of the broker, or that the insured is not at fault at all. Particular to this case, for example, the jury would consider whether the broker failed to advise his clients adequately by not reviewing their master deed or association policy before obtaining plaintiffs' policy. Consequently, I would not relieve the broker of any affirmative obligation to act in accordance with industry standards. In determining a party's degree of fault, jurors would be able to consider the disparity in sophistication between the insured and the broker, the failure of the broker to gather the facts necessary to assess the client's coverage needs, or any other relevant factor. The Supreme Court of Oregon has articulated a similar view:
Insureds and insurance policies are not all alike. Insureds range from unsophisticated individuals who know nothing about insurance, to experienced business persons knowledgeable about insurance, to large corporations with batteries of lawyers. The relevant provisions of the policy may be simple (