New Jersey Lawyer & Attorney : Stark & Stark Law Firm : New Jersey Law Blog

According to the New Jersey Department of Banking and Insurance, as of March 1, 2013, approximately 40% of flood-related Sandy claims are still unresolved. Many claims involve legal issues associated with the following circumstances, many of which we have seen in cases we are currently handling on behalf of insured policy – holders in the tri-state area: 

1. Reconstructing the cause of loss – whether the damages were caused by wind (typically covered under homeowners policies) or flood (covered under Federal flood policies); 
2. Whether there were concurrent causes of the loss (for example, caused partially by wind driven rain and partially by flood waters) requiring an analysis of insurance policies which may have clauses barring or supporting coverage under those circumstances;
3. Whether the damages to a building occurred below the lowest elevated floor in designated flood zones, or in a basement. Under Federal flood policies, coverage for damage in these areas is significantly more limited than when damages occur above the lowest elevated floor; 
4. Whether adequate steps were taken by the insured to prevent mold from forming (impacted significantly by whether the insured had access to the structure – given widespread governmental restrictions on access for weeks following the storm); 
5. Reconstructing damages in those instances where homes were completely washed away and the cause of the loss is debatable or difficult to re-create, requiring the involvement of engineering professionals or other forensic analysis;
6. Disputes over the rates of labor and materials utilized in adjuster appraisals, given the wide variation in experience levels of adjusters brought in from all parts of the country, and fluctuation in labor and material rates by location and in relation to when the loss was adjusted;
7. Practical concerns regarding obtaining good faith estimates and contractors available to provide required services to rebuild structures to avoid further damage;
8. The interplay of flood policies issued to individual condominium unit owners, vs. the coverage available to Condominium Associations for damages to the common elements of the condominium buildings;
9. Issues concerning extensive debris removal costs where the debris comes from neighboring properties and ends up on the insured property, but not on or in an insured building; and
10. Practical decisions concerning whether or when to rebuild, given uncertainty surrounding finalizing the Federal Flood maps and inconsistent municipal actions regarding property rights, dune reconstruction, access for contractors, permits, height restrictions and other considerations.

This represents a sampling of issues we are encountering, as we assist policyholders in these matters, although there are numerous additional issues faced by insureds as they seek to rebuild their lives and property. Policyholders are encouraged to seek legal advice, given that policy language can vary significantly from one policy to another and the rights defined in the policies can vary widely. While some of the areas in question have been the subject of opinions by reviewing courts, some of the issues arising out of Sandy are novel, and are likely to spawn both litigation against insurance carriers and, eventually, legal opinions defining the rights of policyholders under these unique circumstances.

Thomas J. Pryor works in Stark & Stark's Lawrenceville, New Jersey office concentrating his practice in Insurance Coverage & Liability issues. For questions, or additional information, please contact Mr. Pryor.

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The bad news is that costs increased when taxes rose in January.  Interest rates may also rise.  The good news is that for savvy landlords, there are some proactive strategies to improve the bottom line now with the help of sound legal counsel.  Following are Stark & Stark’s top 10 tips for landlords to consider:

1.    Refinance.  With interest rates low, now is the time to act to refinance and cut costs before interest rates rise.  Have you reviewed your properties with counsel to ascertain what you need to refinance?  Are your estoppel certificates in order?  Any outstanding litigation cases that need to be resolved, in case your lender asks?  Stark & Stark’s Real Estate Group can manage these issues.  

2.   Reduce Taxes.  Have you considered filing a real estate tax appeal before the deadline?  April 1st is almost here.  Have you considered 1031 exchanges to provide tax benefits?  Stark & Stark’s Business & Corporate Group can help guide you through these tax issues.

3.   Plan.  Have you consulted with counsel lately to discuss and update your plans and options, including estate planning and business succession planning?  An experienced trusts and estates counsel can ensure that the maximum amount of your money stays where you want it, instead of going to Uncle Sam.  Stark & Stark’s Trusts & Estates Group can assist in planning for your future.

4.  Reduce Responsibilities.  Have you updated all your documents and procedures to reduce your responsibilities?  Have you minimized your repair and construction costs?  Have you reduced your utility and compliance costs?  Stark & Stark’s Real Estate and Construction Groups have the expertise you need.

5.   Improve Insurance.  When was the last time you reviewed and updated your insurance coverage?  Have you looked at your coverage in the wake of Hurricane Sandy?  Do you know what risks are not covered?  Are you relying on certificates of insurance that may not protect you?  Stark & Stark’s Insurance Group is here for you.

6.   Manage Risks.  Have you updated your compliance procedures, employee handbooks, and other documents and procedures to prevent problems?  Have you considered all available dispute resolution options?  Stark & Stark’s Employment Group can provide you with solutions to these issues.

7.   Improve Properties.  Have you recently developed or remodeled your real estate to attract and retain the best tenants and increase rents?  Stark & Stark’s Land Use Group can help you assess the legal issues with your property improvements.

8.  Increase Collections.  Are you collecting your unpaid debts while complying with the Fair Debt Collection Practices Act and other applicable laws?  Will your strategies and procedures reduce future debt collection problems?  Are you enforcing all your bankruptcy and other rights?  Stark & Stark’s Bankruptcy & Creditor’s Rights Group is here for you.

9.   Improve Your Deals.Do your documents maximize recovery of operating expenses and unpaid rent?  Have you included all the language you need in different jurisdictions, such as "additional rent" language to capture all rent in New Jersey evictions and Confession of Judgment language to expedite rent recovery in Pennsylvania?  Stark & Stark is a regional firm with offices in New Jersey, New York, and Pennsylvania.

10.   Get Deals Done Faster.  Do your negotiations take too long?  Are you expediting the negotiation and drafting of letters of intent, leases, amendments, contracts, and other documents? Stark & Stark’s Real Estate Group understands the immediacy of “now” and can help you with your needs.

These are just a few examples of how landlords can, with the help of good legal counsel, improve the bottom line now.  Evaluating these questions requires careful review on an individual basis with experienced counsel.  Having an attorney familiar with these issues is critical.  The attorneys at Stark & Stark understand the real estate community and can provide you the insight you need to address these and other questions for your real estate and business needs.

Feel free to contact Jerry Nelson at 609.945.7635 or jnelson@stark-stark.com for a review of your real estate and business issues.

Jerry A. Nelson, Esq. is a Shareholder and member of Stark & Stark's Business & Corporate and Real Estate, Zoning & Land Use Groups.  He writes regularly on issues for commercial landlords and brokers.  He is a member of the International Council of Shopping Centers and a regular speaker on commercial landlord issues.

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While the State of New Jersey is reporting some impressive statistics regarding the number of  non-flood related Sandy claims which have been closed (87% overall),  the statistics likely provide little comfort for the unfortunate 13% with open Sandy claims who are still battling with their insurance companies. However, a new State mediation program may provide policy holders (“insureds”)  with an expedited and cost efficient way to settle their disputes with their insurance companies.
           
The program, established through the New Jersey Department of Banking and Insurance, will be open to insureds who have a disputed claim greater than $1,000.00. To be eligible, no fraud on the insured’s part can be suspected. The program will be voluntary for insureds but standard insurance companies will be required to participate if their insureds elect to avail themselves of the mediation.   Surplus lines carriers (insurers who typically insure high risk properties or items) will not be required to participate but can elect to do so on a case by case basis. The insurers  will be required to notify their insureds of the availability of the mediation program and will be required to pay the mediation fee if their insureds choose to participate. Mediations are expected to begin sometime in April.

This is a step in the right direction for aggrieved insureds because a neutral third party will be available, at no cost to them, to encourage their insurers to settle their claims fairly.  If nothing else, this process should at least make strides in keeping the insurance companies honest. Nonetheless, it is advisable that insureds consult counsel and have them available at the mediation.  Although participating in mediation is more informal than filing a lawsuit, many, if not most, of the insurance companies will likely have an attorney present on their behalf at mediation.  To stay on equal footing, it would be wise for the insured to do the same.  Ideally, the legal costs associated with this will still be far less than if the insured has to resort to filing a lawsuit against their carrier.

It is important to note that the State’s mediation program, for the time being, will expressly exclude flood claims.  Since the National Flood Insurance Program issues most flood insurance policies, those claims are outside of State jurisdiction.  Although the individual NFIP policies are serviced by private insurance companies, the program is run by the federal government and is subject to federal regulations to which the private insurance companies are bound.  The State has indicated that it is in talks with the NFIP to possibly include flood claims in the program in the future. This would be a welcome development for insured with unresolved flood claims.

Tara A. Speer  works in Stark & Stark's Lawrenceville, New Jersey office concentrating her practice in Insurance Coverage & Liability issues. For questions, or additional information, please contact Ms. Speer.

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One of the often hidden dangers of flood damage to a structure is mold. Moisture gets into unseen portions of a structure and if not dried out quickly enough causes mold, which can affect health. The longer the moisture exists unabated, the more likely for a problem to occur, which is why fast action after flood or other water infiltration into a home or business is critical. Click here for additional information from our friends at LEW Corporation on the subject of mold after Sandy. 

Gary Forshner is a Shareholder in Stark & Stark’s Real Estate, Zoning & Land Use Group in the  Lawrenceville, New Jersey office. For questions, please contact Mr. Forshner.

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The following post was co-authored by Thomas J. Pryor and Tara A. Speer.

In a recent published opinion, State v. Perini Corporation, et al., the New Jersey Appellate Division addressed the ten-year Statute of Repose, N.J.S.A. 2A:14-1.1, which bars claims for damages for any “...deficiency in the design, planning, surveying, supervision or construction of an improvement to real property … arising out of the defective and unsafe condition of an improvement to real property ... more than 10 years after the furnishing of such services and construction.” The Statue of Repose has essentially acted as a roadblock to recovery for Plaintiffs seeking damages for faulty work that did not become evident until years after the construction took place.  This issue often arises in common interest communities (i.e. town homes or condominiums) where construction defects often do not reveal themselves until many years after construction is completed.  The Statue of Repose can render developers and their contractors immune from suit, leaving the unit owners and/or Association with no recourse.
                                               

The Perini opinion offers a glimmer of hope to individuals and/or entities who otherwise may have thought all was lost due to the harsh realities of the State of Repose.  In Perini, the State asserted claims against four contractors who built a state prison in multiple phases.  The suit was filed more than ten-years after most of the prison facilities were completed and more than ten-years after prisoners were housed in the facility.
 

The Court held that the State was permitted to pursue claims against three of the four contractors because their work was not “substantially completed” until actual certificates of substantial completion were issued for the phase of the project on which they were still involved.  The State’s case was filed more than ten-years after most of the prison facilities were put to use, but not more than ten-years after the issuance of the certificates of substantial completion for the final phase of the project still under construction, which included the hot water system that was connected to all phases of the project.
 

The defective condition involved the hot water system, which the Court found was not a separate “improvement” but rather a component of the overall “improvement” being constructed.  Regardless of the fact that the hot water system had been put to use in two of the phases of the project, it was connected to and ran throughout all phases.  Since it was not delineated as being part of any one phase in particular, the Court found that the use of the system in the other phases and the occupancy of a majority of the buildings was irrelevant.
 

This case is significant because it allows for claims to be pursued against contractors whose work is not yet substantially completed on a multi-phase project, despite the fact that the project itself is mostly completed.   Further, in the context of a common interest community, the case implies that the fact that owners may be residing in units during multi-phase construction has little bearing on whether “substantial completion” of a component of the project has occurred. Although the Court did not completely overhaul the Statute of Repose through this opinion, the refinement of this issue provides ammunition for attorneys representing common interest associations, seeking the broadest recovery sources.

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Suffering a first party insurance loss or facing a lawsuit from a third party can be two of the most difficult and unsettling experiences for an individual or business. To add to the turmoil, being told by the insurance company that there is no coverage for the claim can be enough to turn that bad situation into an unbearable one. The daunting prospect of being forced to navigate the financial or legal landscape alone is overwhelming. On top of that, finding out that the money you spent on insurance premiums does not provide the necessary coverage when it is needed most is like adding insult to injury. Rest assured, there may still be hope.
 

Insurance is a business, and like any business, the ultimate goal of the insurance companies is to make money, not to spend it. This automatically places an insured in an adversarial position to an insurance company when a claim is made. Given this dynamic, it is not surprising that the insurance company is going to use any avenue to avoid having to pay money. The most likely scenario is that an insurance company will interpret policy language or exclusions in a way that turns an otherwise covered claim into one that is not. However, contrary to what many insured's may think, this does not mean the insurance company's interpretation is the only one, or even the right one.
 

In essence, an insurance company is gambling when it issues a coverage denial letter. It is betting that the insured will take its policy interpretation and carefully crafted denial letter at face value and will fold his or her hand. Luckily, however, the law in New Jersey allows insureds to call the insurance company's bluff. Through a Declaratory Judgment action, an insured can make an application to the Court to have a judge review the contract of insurance, in light of the facts of the case, and make a judicial determination as to whether coverage exists.  Better yet, New Jersey Courts have held that any policy provision which is found to be "ambiguous" is to be resolved in favor of the insured.
 

The Declaratory Judgment action may be just what an insured needs to resolve a coverage dispute with an insurance company. This is especially true if the implications of the coverage denial could have drastic financial effects for the insured in the long term. Declaratory Judgment actions can be useful in establishing an indemnification obligation in a first party insurance claim and may be useful in establishing a defense and/or indemnification obligation in a third party insurance claim. Further, in a third party claim it is not necessary for the insured to wait until after it receives a judgment against it to file a Declaratory Judgment action. Therefore, a favorable determination could potentially save the insured from having to pay tens of thousands of dollars in defense costs out of pocket to fight the underlying lawsuit. In addition, a successful insured in a Declaratory Judgment action based on a third party lawsuit can recover the costs of instituting the Declaratory Judgment action from the insurance company.
 

While some insurance companies will take it upon themselves to file Declaratory Judgment actions where they feel their rights and obligations to an insured are questionable, in the event that they issue a coverage denial letter without taking this prudent step, it can be a powerful mechanism for insureds to utilize as well. Although an insured may be wary of taking on the task of getting the Courts involved, when the alternative is having no coverage available for a claim, it may be the best option available.  Before taking this step, it is important to have a qualified coverage attorney review your insurance policy and evaluate the strength of your coverage claims so you can make the most informed decision possible.  Know your rights and take steps to avail yourself of the all that is available to you.

Tara Speer is a member of  Stark & Stark’s Insurance Coverage & Liability Group in the Lawrenceville, New Jersey office. For questions, please contact Ms. Speer. 

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In the context of insurance, “subrogation” is when an insurance company files a claim to recover from a party causing a loss, after the insurance company has paid the policyholder for the covered loss.  The insurance company steps into the shoes of the insured policyholder and gets the benefit of whatever rights the policyholder may have had against the third-party causing the covered loss. For example, a fire loss occurs, resulting in a payment by the homeowners’ insurance company. After payment, the insurance company brings an action against the party deemed responsible for causing the fire.
 

Some insurance companies bring the subrogation action in the name of the insurance company, identifying in the filed pleading that the insurance company is asserting the claim as the subrogee of the insured, policyholder. This is the more straightforward way of proceeding and best alerts the parties involved to the “real party in interest.”
 

However, under certain circumstances, some insurance companies choose to bring the action in the name of the insured policyholder, thus creating confusion regarding the nature of the claim and the identity of the “real party in interest.” While this ordinarily may not present a problem, there are circumstances under which it can.
 

For example, assume the following facts: the policyholder is a common interest condominium or homeowners association and a covered loss occurs involving the roof on the association’s high-rise condominium building.  The first party insurance company pays out $100,000 to the Association to repair the roof after a windstorm.  The insurance company then files a subrogation action against the roofer and original developer for bad workmanship contributing to the loss, arising from the windstorm.
 

Assume the Association has other claims against the developer or roofer, unrelated to the storm related roof repair. If the insurance company files the subrogation action in the name of the Association, rather than in its own name, as subrogee, the Association may not even be aware of the filing of the lawsuit.  If the lawsuit continues and is ultimately resolved, resulting in a release to the roofer and developer, questions arise regarding whether this release, given in the name of the Association, can serve as an impediment to claims later brought by the Association in its own name, and as the real party in interest. 
 

While most courts can be relied upon to examine the situation on its facts and make a fair ruling that the equities would not bar a subsequent action by the Association, it is best if the Association is aware of the ongoing action, and can make its presence known to the court, securing necessary protections to toll any statute of limitations or guard against any waiver as result of the entire controversy doctrine.  This doctrine requires parties to assert, in one action, all known claims, to avoid multiple litigation filed regarding the same factual circumstances.

 

Parties receiving a settlement from their insurance carrier are advised to notify the insurance carrier in writing, upon payment, demanding notice of any future subrogation action.  This is intended to preserve the insured’s rights.  This way, the insured has the option of moving to intervene in the subrogation action.  Ideally, the insurance company, by providing notice of its intent to file a subrogation action, before actually filing the complaint, can negotiate with the insured’s general counsel regarding how best to protect both the rights of the insurance carrier and its insured.  For example, tolling agreements can be entered into, with consent, preserving future claims.  An important goal is to identify and protect the insured’s rights to monetary damages above and beyond the proceeds received through payment under its insurance policy. 
 

Questions arise where the damages suffered by the policyholder go beyond the amount paid by the insurance carrier to the policyholder.  Most courts hold that the insured, policyholder, should control the claim, where the policyholder’s actual loss exceeds the amount paid by the subrogee, insurance carrier.
 

Many of these issues are determined by the policy language, any agreements entered into between the policyholder in the insurance company surrounding a loss and subsequent payment under the policy, and by applicable case law.
 

Of course, every case is distinguishable by its facts and no conclusions should be drawn from this brief article.  The reader is cautioned to consult with an attorney under any circumstances which may involve the issues discussed above.  This article is not intended to be relied upon for any purpose, but is merely illustrative of certain problems that may arise where the interests of the doctrine of subrogation and entire controversy, may be in conflict.
 

Stark & Stark can provide valuable assistance in these situations, counseling the policyholder and taking necessary measures to ensure that the policyholder’s rights are fully preserved and protected.  
 

Thomas Pryor is a Shareholder in Stark & Stark's Lawrenceville, New Jersey office concentrating his practice in Insurance Coverage & Liability issues. For questions, or additional information, please contact Mr. Pryor: tpryor@stark-stark.com.

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If you are like most people in the Northeast, you experienced wind, rain and flooding right out of a disaster movie. Now that the storm has passed, it’s time to begin to look at the next stage of recovery and the most important document you should be reviewing is your insurance policy. Commercial landlords and tenants spend a great deal of time and money obtaining property insurance coverage for their businesses. However, not everyone knows the intricacies of insurance coverage following a natural disaster, nor do they have a full understanding of their rights to recover their losses.  

Following are some quick tips for dealing with insurance issues:

• Review Your Policy. Before you do anything else, make sure you have a complete, current copy of your policy(s) and review them to get an understanding of what insurance coverage you have. For example, what are the policy limits? Are their endorsements pertaining to a “hurricane” loss? What are your deductible limits?
• Review and Categorize Your Loss. The differences in loss and coverage for commercial landlords and tenants can vary greatly. For instance, you may not have suffered any flooding or damages due to the wind and rain, yet you may have had a shutdown in your business due to protracted power outages. It is important to review your policy and characterize your total loss. A restaurant’s loss could include spoiled food or perishable inventory, for example. A clothing retailer’s loss may be the number of days the store remained closed due to power loss or other localized damage.
• How Does Your Insurance Policy Characterize the Loss? The precise language of your policy will determine whether you can recover for your losses, and in what amount. In a very recent development following the hurricane, the New Jersey Commissioner of Banking and Insurance has ruled that hurricane Irene did not generate sustained hurricane – force winds of above 74 mph as it hit New Jersey, (apparently the wind was measured at a peak velocity of 71 mph) and, accordingly, losses should not be characterized by insurance adjusters as having been caused by a “hurricane.” This has tremendous significance in connection with how losses are adjusted in New Jersey since many policies have very high deductibles for losses caused by wind and other damage associated with a hurricane.

This is good news for policyholders and should result in many more claims falling within coverage, within otherwise applicable policies. You should be aware, however, that many policies may not cover losses attributable to “flood” or related water damage driven claims. 

This is all the more reason you need to examine your policy carefully, in consultation with your insurance agent or broker, and to seek legal assistance if the insurance carrier is not recognizing your claim in full, or is citing exclusions or other policy language inconsistent with your good-faith reading of the policy. These issues can be tricky, especially for most people who are unfamiliar with the nuances of insurance coverage, and examine their policies carefully only after a significant loss. 

These are just a few of the issues commercial landlords and tenants will be dealing with over the next few months due to Hurricane Irene. Regardless of what insurance or other legal issues you face, Stark & Stark’s Commercial Landlord & Tenant, and Insurance Coverage Groups are available to assist you. Feel free to contact Tom Onder, Tom Pryor or Tara Speer in our Lawrenceville, New Jersey office, regarding these issues. 

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