While Jousting With Its Insurer, County Settles Road-Hazard Case For $15M (New Jersey Law Journal)
June 28, 2010

Mary Pat Gallagher
New Jersey Law Journal

Camden County has agreed to pay $15 million to settle a suit by a motorist who lost his leg in a crash, allegedly because of defects on a county roadway.

The settlement, approved by the freeholders on June 17, disposes of a $19.3 million judgment against the county entered last year.

It will be paid by the county because its primary carrier has denied coverage. A separate action to decide the coverage issue is pending, and the settlement provides that if the county prevails, the injured man will receive 20 percent of the recovery up to $15 million and 25 percent of any recovery beyond that.

Camden's lawyer, William Tambussi, says the county settled to mitigate its losses by stanching almost $3,000 per day in post-judgment interest. Between the jury verdict of Oct. 17, 2008, and the settlement agreement that was struck June 3, interest of $1,745,290 had accrued, bringing the total to $21,119,714.

The suit is the aftermath of an accident that occurred Dec. 23, 2004, when Nicholas Anderson, then 18, was driving in Atco on Raritan Avenue, a county road. He claimed an oncoming vehicle swerved into his lane, causing him to veer to the right, lose control and hit a guardrail, which penetrated his door and injured his left leg so badly it had to be amputated. The other driver was never identified.

The county blamed the accident on Anderson, claiming he was speeding or otherwise at fault, but Anderson's lawyer, John Dodig, convinced a Camden County jury that the crash was caused by a roughly six-inch drop between the roadway and shoulder and by a guard rail that was not designed to absorb the impact.

The jury awarded $31.295 million, including $15 million for pain and suffering. Superior Court Judge John Fratto denied Camden's request for a new trial but remitted the damages to $19,374,424.

Both sides appealed and the case was days away from a June 7 oral argument when it resolved.

The county, which is self-insured for $300,000, has $15 million in coverage under a $10 million primary policy with State National Ins. Co. and a $5 million excess policy with the Insurance Company of the State of Pennsylvania (ICSOP).

State National filed the coverage action in federal court in Trenton on Oct. 20, 2008, three days after the jury verdict, asking for a declaration that it did not have to cover the loss because Camden, which handled the case in- house, allegedly delayed telling State National about the claim, did a poor job investigating and defending it, and kept telling State National the claim was within the $300,000 self-insurance until four days into trial when it upped the estimated exposure into the millions.

ICSOP intervened in the coverage action, alleging it was not notified about Anderson's tort claim action until seven weeks after the verdict.

Camden counterclaimed for breach of contract, alleging that the policy gave State National an independent duty to evaluate the claim and the power to commit county funds to a settlement within the policy limits. Camden also filed a third-party complaint against its claims administrator, Scibal Associates.

Scibal, in turn, brought Assistant County Counsel Donna Whiteside into the case as a third-party defendant over her alleged mistakes in defending the automobile action, which included failing to hire outside counsel and missing the expert-report deadline, leaving her unable to present expert testimony at trial. In addition, she did not examine Anderson's car until shortly before trial and did not adequately investigate its accelerometer, which might have provided evidence Anderson was speeding, State National claimed.

District Judge Noel Hillman let Whiteside out on March 17, saying that no matter what she did, her conduct could not have caused State National and Scibal any injury. If they proved she was negligent in defending Anderson's claim and thus breached the insurance contract, there would be no liability under the policy while, if the policy had to be honored, it would be because Whiteside's actions did not result in a breach, reasoned Hillman.

Discovery in the case, State National Insurance Co. v. County of Camden, 08-cv- 5128, is ongoing. A pending motion asks the court to compel State National to turn over internal reports behind its decision not to settle within policy limits, says Tambussi, of Brown & Connery in Westmont.

The settlement with Anderson leaves Camden free to focus on recouping the $15 million settlement from State National and Scibal, says Tambussi, adding that Camden is also seeking bad faith damages and legal fees. Camden "gave State National every opportunity to participate in the settlement of this claim," asking it before the verdict to settle within policy limits and afterward to participate in settling the case, he says. Scibal did not put ICSOP on notice until after the verdict, he adds.

Dodig, of Feldman, Shepherd, Wohlgelernter, Tanner, Weinstock & Dodig in Philadelphia, says his client has undergone 34 surgeries and uses a prosthetic leg. Part of the settlement will pay for additional surgery on Anderson's right leg and left arm, which was nearly severed in the crash and which he might otherwise lose.

Frederick Marczak, of Drinker Biddle & Reath in Philadelphia, who represents ICSOP, declines to comment. State National's attorney, Peter Mueller of Harwood & Lloyd in Hackensack, did not return a call. Alan Baratz of Weiner Lesniak in Parsippany, for Scibal, was out of the office and could not be reached.