TRUSTED TRANSPORTATION SOLUTIONS, LLC. v. GUARANTEE INSURANCE COMPANY et al

Filing 158

OPINION. Signed by Judge Noel L. Hillman on 9/27/2019. (rss, )

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

TRUSTED TRANSPORTATION
SOLUTIONS, LLC,

1:16-cv-7094-NLH-JS
OPINION

Plaintiff,
v.
GUARANTEE INSURANCE COMPANY,
et al.,
Defendants.

APPEARANCES:
WILLIAM B. IGOE
CASEY GENE WATKINS
WILLIAM J. DESANTIS
BALLARD SPAHR LLP
210 LAKE DRIVE EAST
SUITE 200
CHERRY HILL, NJ 08002
On behalf of Plaintiff
CHRISTINA M. RIEKER
LARRY C. GREEN, JR.
ANDREW N. JANOF
WINGET, SPADAFORA & SCHWARTZENBERG LLP
2500 PLAZA 5
HARBORSIDE FINANCIAL CENTER
JERSEY CITY, NEW JERSEY 07311
On behalf of Defendants

HILLMAN, District Judge,
In this matter that concerns claims of broker malpractice,
pending before the Court are Defendants’ Motion for Summary
Judgment (Docket Item 138) and Plaintiff’s Cross-Motion for

Summary Judgment (Docket Item 147).

For the reasons expressed

below, both parties’ motions will be denied because genuine
issues of material facts exist.
BACKGROUND 1
In this action, Plaintiff Trusted Transportation Solutions
(“Plaintiff”) alleges that Defendants Brown & Brown of New
Jersey (“Brown & Brown”) and John F. Corbett (“Corbett” and
collectively “Defendants”) misrepresented the terms of a
workers’ compensation insurance policy that Plaintiff purchased
through Defendants.

(See generally Docket Item 38. 2)

Plaintiff is a temporary staffing service solely owned by
Brian Davis that provides truck drivers and warehouse personnel

1

The Court distills this undisputed version of events from the
parties’ statements of material facts, affidavits, and exhibits,
and recounts them in the manner most favorable to the party
opposing summary judgment in each respective cross motion. The
Court disregards, as it must, those portions of the parties’
statements of material facts that lack citation to relevant
record evidence (unless admitted by the opponent), contain
improper legal argument or conclusions, or recite factual
irrelevancies. See generally L. CIV. R. 56.1(a); see also Kemly
v. Werner Co., 151 F. Supp. 3d. 496, 499 n.2 (D.N.J. 2015)
(disregarding portions of the parties’ statements of material
facts on these grounds); Jones v. Sanko Steamship Co., Ltd., 148
F. Supp. 3d 374, 379 n.9 (D.N.J. 2015) (same).
2

The Court notes that there are two separate docket items that
appear to be the operative Amended Complaint. (See Docket Item
35; Docket Item 38.) The Court further notes that those two
Amended Complaints appear to be identical. In the interest of
clarity, the Court will cite only to Docket Item 38 when
referring to the operative Amended Complaint.

2

to its clients.

Defendant Corbett is a licensed insurance

producer who works for Defendant Brown & Brown.

Defendant

Corbett began serving as one of Plaintiff’s insurance brokers in
2010.

Guarantee Insurance Company (“Guarantee”), another

defendant in this case, was the insurance company that issued
the workers’ compensation policy in question to Plaintiff in
2015.

Patriot Underwriters Inc. (“Patriot”), another defendant

in this case, had a contract with Guarantee to market and
underwrite policies issued by Guarantee.

Douglas Cook, the

final defendant in this case, was an employee of Patriot in
2015.
From 2010 to 2014, Defendant Brown & Brown procured
guaranteed cost workers’ compensation insurance from the
commercial market for Plaintiff.

However, Plaintiff’s business

is considered “high risk” and “difficult to place” for workers’
compensation insurance purposes.

As a result, in 2014,

Plaintiff’s commercial insurer refused to renew Plaintiff’s
coverage.

Therefore, Plaintiff was forced to get insurance from

the state-run assigned risk pool, which requires higher premiums
than the commercial market.

A year later, in 2015, Plaintiff

notified Defendants that it did not want to obtain insurance
through the pool anymore.

Plaintiff’s goal in finding a new

policy was “[t]o find the best insurance that makes the most

3

sense for” Plaintiff.

(See Docket Item 153-1 ¶ 19.)

The

parties disagree over whether Plaintiff required getting a
policy outside of the pool or merely preferred as much.

(See

Docket Item 147-4 ¶ 19; Docket Item 153-1 ¶ 19.)
In searching for a new policy, Plaintiff, via Defendants
and another broker, was unable to obtain from the commercial
market a guaranteed cost policy, which tends to be less
expensive than other policies.

Defendants were only able to

secure a proposal from Guarantee for a large deductible workers’
compensation policy, which Defendants provided to Plaintiff on
March 31, 2015.

Defendant Corbett also met in person with Davis

on March 31, 2015.

The parties dispute what occurred at this

meeting.
The first dispute relates to the how Plaintiff’s premium
would be calculated under Guarantee’s policy.

Davis testified

that Defendant Corbett repeatedly stated that Guarantee’s
policy’s premium would be based on a “universal rate” of $5.32
per $100 of payroll, regardless of how employees were
classified.

(Docket Item 153-9 at 132:11-134:8.)

Defendant

Corbett testified that he did not make any such promise, but
rather that there would be different rates based on how
different employees were classified.
87:14-90:20.)

(See Docket Item 138-7 at

Defendant Corbett merely meant for the “universal

4

rate” to be a reflection of the average rate of all of
Plaintiff’s employees, based on previous years’ payrolls.
id.)

(See

Plaintiff’s payroll for the policy period totaled

$5,292,427.00, while the proposal had projected a payroll of
$5,700,000.

Had the “universal rate” applied, Plaintiff would

have paid $281,557.12 in premiums during the policy period.
Instead, Plaintiff paid $343,224.00 in premiums, or $61,666.88
more than it would have had the “universal rate” applied.
Another aspect of the policy that was discussed at the
March 31, 2015 meeting was the Loss Fund.

Unlike some policies,

Guarantee’s policy required Plaintiff to have a deductible of
$250,000 per claim.

To ensure the ability to do this, Guarantee

required Plaintiff to establish a Loss Fund in the amount of
$650,000.

Patriot would administer and use the Loss Fund to pay

claims up to the deductible amount.

At the meeting, Davis asked

Defendant Corbett what fees would come out of the Loss Fund.
The parties disagree over how that question was answered.

Davis

testified that Defendant Corbett called Douglas Cook, a Patriot
employee, to help answer the question.
67.)

(Docket Item 153-1 ¶

Both Defendant Corbett and Cook denied recalling such a

call taking place.

(Docket Item 153-3 at 101:6-11; Docket Item

147-8 at 94:24-95:9.)

Davis alleges that Cook him, while

Defendant Corbett was listening, that the Loss Fund would be

5

used to pay only indemnity costs, medical expenses, and
attorneys’ fees.

(Docket Item 153-1 ¶ 68.)

Cook told Davis

that the premium, and not the Loss Fund, would cover
“commissions and administrative fees and things,” according to
Davis.

(Id.)

In addition to denying that the phone call ever

took place, Defendant Corbett alleges that he informed Davis
that claim payments would come out of the Loss Fund.
Item 147-9 at 117:8-11.)

(Docket

As it turned out, the Loss Fund was

used to pay “Allocated Loss Adjustment Expense” (“ALAE”) under
the policy, which included numerous administrative costs — such
as the costs of bill review services 3 — beyond indemnity costs,
medical expenses, and attorneys’ fees.

During the Guarantee

policy period, Patriot paid $123,329.90 from the Loss Fund for
costs beyond indemnity costs, medical expenses, and attorneys’
fees.
Additionally, Plaintiff alleges that Defendant Corbett
expressed to it that any unused portion of the Loss Fund would
roll over to the next year if Plaintiff chose to renew its
policy with Guarantee, which Plaintiff viewed as “a huge selling
point.”

(Docket Item 153-1 ¶¶ 77-78.)

3

Defendant Corbett

The policy provided a service wherein the insurer would review
Plaintiff’s medical bills to look for savings. Any savings that
the insurer found would be returned to Plaintiff, less a 40% fee
for the “bill review service.”

6

disputes this, stating that he was merely referring to how
Guarantee typically did business and that Plaintiff was aware
that Guarantee could roll over the Loss Fund at its sole
discretion.

(Id.)

Plaintiff also claims that, in the above-mentioned phone
call, Davis asked whether the Loss Fund would be kept in a selfsecured (or segregated) fund and was assured that it would be.
(Id. ¶¶ 80-81.)

Defendants, in addition to denying that the

phone call ever happened, characterize things differently.
Defendant Corbett testified that Davis asked him whether he knew
if the Loss Fund was held in a separate account, not if it was
required to be so held.
not segregated.
Loss Fund.

(Id. ¶ 81.)

In reality, the fund was

On November 1, 2017, $45,231.39 remained in the

On November 27, 2017, Guarantee entered into a

receivership for purposes of liquidation.
Patriot filed for bankruptcy.

In January 2018,

Plaintiff has not recovered the

remaining funds, despite the policy stating that they would be
incrementally repaid beginning 18 months after the policy became
effective.
Ultimately, Plaintiff agreed in writing to purchase the
Guarantee policy at the March 31, 2015 meeting.
became effective on April 3, 2015.

The Policy

Plaintiff claims that it was

only after this time that it became aware of the various

7

discrepancies outlined above.

Defendant contends that Plaintiff

was aware of all of the actual terms of the policy based on
various documents, including a written proposal and three term
sheets from Guarantee.

(Docket Item 147-4 ¶¶ 28-66.)

Plaintiff

points out that, while it did have some of those documents
before signing up for the policy, it only signed up after
Defendants representations at the March 31, 2015 meeting.

(See

id. ¶ 28.)
As has been outlined above, Plaintiff alleges that the
policy wound up being different in certain key aspects than what
Defendants had described.

As a result, they filed this action,

initially in state court.

It was removed to federal court on

October 13, 2016.

Defendants were not initially included in the

suit, but were added in Plaintiff’s Amended Complaint, which was
filed in early May 2017.

The Amended Complaint originally

contained ten claims against Defendants.

(Docket Item 38.)

However, on June 8, 2018, the late Honorable Jerome B. Simandle
dismissed nine of those counts — seven with prejudice and two
(Counts IX and X) without prejudice.

(Docket Item 85.)

Defendants did not seek the dismissal of Count VII.

(See id.)

Plaintiff filed a Motion for Leave to File a Second Amended
Complaint on July 11, 2018, to redress the deficiencies with
Counts IX and X.

(See Docket Item 88.)

8

Magistrate Judge Joel

Schneider denied that Motion on September 7, 2018.
107.)

(Docket Item

Plaintiff filed a Motion for Reconsideration (Docket Item

111) on September 21, 2018, which Judge Schneider denied on
January 14, 2019, (Docket Item 134).
Plaintiff filed an Appeal of the Magistrate Judge’s denial
on January 28, 2019.

(Docket Item 137.)

Appeal on September 25, 2019.

This Court denied that

(Docket Item 157.)

As a result

of the above procedural history, the only remaining claim
against Defendants Brown & Brown and Corbett in this action is
Count VII, which alleges “Negligence/Broker Malpractice.”

(See

Docket Item 38.)
Currently before the Court are Defendants’ Motion for
Summary Judgment (Docket Item 138) and Plaintiff’s Cross-Motion
for Summary Judgment (Docket Item 147).
Reply Brief on April 29, 2019.

Defendant filed its

(Docket Item 153.)

filed its Reply Brief on May 13, 2019.

Plaintiff

(Docket Item 154.)

Having considered the parties’ filings and arguments, the Court
will deny both Defendants’ Motion for Summary Judgment and
Plaintiff’s Cross-Motion for Summary Judgment for the reasons
expressed herein.
DISCUSSION
A.

Subject Matter Jurisdiction

The Court has jurisdiction over Plaintiff’s claims under 18

9

U.S.C. § 1332, as the requirements of diversity are met. 4
B.

Standard for Motion for Summary Judgment

Summary judgment is appropriate where the Court is
satisfied that “‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits if any,’ . . . demonstrate the absence of a genuine
issue of material fact” and that the moving party is entitled to
judgment as a matter of law.

Celotex Corp. v. Catrett, 477 U.S.

317, 322-23 (1986) (quoting FED. R. CIV. P. 56).
An issue is “genuine” if it is supported by evidence such
that a reasonable jury could return a verdict in the nonmoving
party’s favor.
248 (1986).

Anderson v. Liberty Lobby, Inc., 477 U.S. 242,

A fact is “material” if, under the governing

substantive law, a dispute about the fact might affect the
outcome of the suit.

Id.

“In considering a motion for summary

judgment, a district court may not make credibility

4

Plaintiff Trusted Transportation Solutions, LLC is a limited
liability company whose sole member is a citizen of New Jersey.
Defendant Guarantee Insurance Company is a corporation
incorporated in and with its principal place of business in
Florida. Defendant Patriot Underwriters, Inc., is a corporation
incorporated in Delaware with its principal place of business in
Florida. Defendant Douglas Cook is a citizen of Pennsylvania.
Defendant Brown & Brown of New Jersey, LLC is a limited
liability company whose sole member is a corporation
incorporated in and with its principal place of business in
Florida. Defendant John F. Corbett is a citizen of Delaware.

10

determinations or engage in any weighing of the evidence;
instead, the non-moving party’s evidence ‘is to be believed and
all justifiable inferences are to be drawn in his favor.’”
Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004)
(quoting Anderson, 477 U.S. at 255).
Initially, the moving party bears the burden of
demonstrating the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323 (“[A] party seeking summary judgment
always bears the initial responsibility of informing the
district court of the basis for its motion, and identifying
those portions of ‘the pleadings, depositions, answers to
interrogatories, and admissions on file, together with the
affidavits, if any,’ which it believes demonstrate the absence
of a genuine issue of material fact.”); see Singletary v. Pa.
Dep’t of Corr., 266 F.3d 186, 192 n.2 (3d Cir. 2001) (“Although
the initial burden is on the summary judgment movant to show the
absence of a genuine issue of material fact, ‘the burden on the
moving party may be discharged by “showing”—that is, pointing
out to the district court—that there is an absence of evidence
to support the nonmoving party’s case’ when the nonmoving party
bears the ultimate burden of proof.” (quoting Celotex, 477 U.S.
at 325)).
Once the moving party has met this burden, the nonmoving

11

party must identify, by affidavits or otherwise, specific facts
showing that there is a genuine issue for trial.
U.S. at 324.

Celotex, 477

A “party opposing summary judgment ‘may not rest

upon the mere allegations or denials of the . . . pleading[s].’”
Saldana v. Kmart Corp., 260 F.3d 228, 232 (3d Cir. 2001).

For

“the non-moving party[] to prevail, [that party] must ‘make a
showing sufficient to establish the existence of [every] element
essential to that party’s case, and on which that party will
bear the burden of proof at trial.’”

Cooper v. Sniezek, 418 F.

App’x 56, 58 (3d Cir. 2011) (quoting Celotex, 477 U.S. at 322).
Thus, to withstand a properly supported motion for summary
judgment, the nonmoving party must identify specific facts and
affirmative evidence that contradict those offered by the moving
party.
C.

Anderson, 477 U.S. at 257.
The Parties’ Motions for Summary Judgment

There are two key issues in the parties’ motions.

First,

both parties argue that they are entitled to summary judgment on
the issue of liability.

Second, Defendants argue that, even

assuming Defendants were negligent, they are entitled to summary
judgment because Plaintiff has no cognizable damages.

The Court

will address these arguments in turn.
1.

Were Defendants Negligent?

“Without question, insurance brokers and agents owe a

12

fiduciary duty of care to insureds” under New Jersey law.
President v. Jenkins, 814 A.2d 1173, 1185 (N.J. Super. Ct. App.
Div. 2003), aff’d in part and rev’d in part, 180 N.J. 550
(2004).

The New Jersey Supreme Court has held:

One who holds himself out to the public as an
insurance broker is required to have the degree of
skill and knowledge requisite to the calling. When
engaged by a member of the public to obtain insurance,
the law holds him to the exercise of good faith and
reasonable skill, care and diligence in the execution
of the commission. He 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. If
he 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.
Rider v. Lynch, 42 N.J. 465, 476 (1964).

In other words, there

are two requirements for a finding of broker negligence in New
Jersey.

First, the broker must have “fail[ed] to exercise the

requisite skill or diligence” in obtaining coverage for the
client.

See id.

Second, because of that failure, one of the

following conditions must exist: (1) the broker “neglect[ed] to
procure the insurance,” (2) “the policy is void,” (3) “the
policy is ‘materially deficient,’ or (4) the policy ‘does not
provide the coverage [the broker] undertook to supply.’”
President, 814 A.2d at 1185 (quoting Rider, 42 N.J. at 476).
There is a genuine issue of material fact as to the first
13

requirement.

Plaintiff claims that Defendants failed to

exercise the requisite skill or diligence in obtaining coverage
for Plaintiff for various reasons.

Plaintiff, properly citing

to the relevant evidentiary documents, alleges in support of
this point that:
•

Defendant Corbett stated that the Guarantee policy would
utilize a “universal rate” to determine the premiums, when
in fact it did not;

•

Defendant Corbett assured Plaintiff that the Loss Fund
would roll over, when in fact it did not;

•

Defendant Corbett assured Plaintiff that only costs related
to indemnity costs, medical expenses, and attorneys’ fees
would come out of the Loss Fund, when in fact other
expenses came out of the Loss Fund as well; and

•

Defendant Corbett assured Plaintiff that the Loss Fund
would be segregated from Guarantee’s and Patriot’s other
funds, when in fact it was not.
Plaintiff asserts that the above discrepancies indicated

Defendants’ failure to adequately exercise the requisite skill
and diligence in procuring the policy because they illustrate
that Defendants at best had inadequate knowledge about the
policy and at worst actively mischaracterized the policy to
Plaintiff.

14

Defendants contest each of the above allegations.

Also

properly citing to the relevant evidentiary documents, they
contend that:
•

Defendants only utilized the “universal rate” as an
estimation tool and never expressed to Plaintiff that the
rate would in fact be universal;

•

Defendants did not tell Plaintiff that the Loss Fund would
roll over;

•

Defendants made clear to Plaintiff that more than just
indemnity costs, medical expenses, and attorneys’ fees
would be paid out of the Loss Fund;

•

Defendants did not specify that the Loss Fund would be
segregated; and

•

Defendants provided to Plaintiff all the necessary
paperwork, which adequately described the policy’s actual
terms.
In short, the above illustrates the fact that genuine

issues of material fact exist with respect to whether Plaintiff
can make out the first element of a broker negligence claim.
fact their factual positions seem diametrically opposed.

In

As to

Defendants’ Motion for Summary Judgment, considering the
evidence in the light most favorable to nonmoving Plaintiff, a
reasonable jury could find that Defendants failed to exercise

15

the requisite skill or diligence in procuring Plaintiff’s
insurance policy.

That would mean that Plaintiff satisfied the

first element of broker negligence and that Defendants could not
be entitled to summary judgment on that basis.

Conversely, with

respect to Plaintiff’s Cross-Motion for Summary Judgment,
considering the evidence in the light most favorable to
nonmoving Defendants, a reasonable jury could find that
Defendants did exercise the requisite skill or diligence in
procuring Plaintiff’s insurance policy.

That would mean that

Plaintiff failed to satisfy the first element of broker
negligence and that Plaintiff could not be entitled to summary
judgment on that basis.

In other words, both Plaintiff and

Defendants have presented sufficient evidence to allow a
reasonable jury to find in their favor as to whether the first
requirement for broker negligence has been met in this case.

As

such, summary judgment is not appropriate as to either party on
that basis.
The next potential basis for summary judgment is the second
element for broker negligence: whether one of the four abovementioned circumstances existed as a result of Defendants’
failure to exercise the requisite skill or diligence in
procuring Plaintiff’s insurance policy.

Defendants argue that

only the fourth option could potentially apply to this case,

16

while Plaintiff does not specifically address which, if any,
applies. 5

The Court agrees with Defendants: it is indisputable

that Defendants procured the insurance for Plaintiff, the policy
was not void, and the policy was not materially deficient.
Therefore, the remaining issue is whether the policy provides
the coverage that Defendant undertook to supply.
Here, there is also a genuine issue of material fact.

In

essence, the dispute is over what instructions Plaintiff gave
Defendants.

Defendants argue that Plaintiff’s instructions were

simple: Plaintiff wanted to get out of the state-run assigned
risk pool.

All parties agree that Defendants delivered on that

instruction with the policy they provided, which was outside of
the pool.
Plaintiff argues that its instructions were more nuanced
and that Defendants failed to satisfy them.

Plaintiff claims to

have asked for “the best deal [it] could get,” with the goal of
“find[ing] the best insurance that makes the most sense for
[Plaintiff].”

(Docket Item 147-1 at 5.)

In its brief,

Plaintiff argues the interactions between the parties made it
clear that low costs were “paramount” to its goals.

(Id.)

It

is undisputed that the policy was not the least expensive option

5

The Court notes, however, that Plaintiff’s arguments are most
naturally applicable to the fourth option.

17

available, as remaining in the pool would have been less
expensive.
Moreover, a reasonable jury could find that Plaintiff
provided even more specific instructions during the March 31,
2015 meeting discussed above.

Plaintiff contends that it asked

pointed questions about various elements of the Guarantee
policy, at least one of which Plaintiff claims was a “huge
selling point.”

Plaintiff alleges that Defendants answers to

those questions did not accurately describe the Guarantee
policy.
Defendants deny that certain aspects of that conversation
even occurred, and further deny that Defendants made any
promises that did not turn out to accurately reflect the policy.
Based on what the jury believes, it could find that Plaintiff’s
questions amounted to a request for the policy that it alleges
it thought it was getting.

If the jury believes Plaintiff’s

evidence, then it could find that Defendants failed to procure
the policy it set out to procure based on the March 31, 2015
meeting.

But if a jury believes Defendants’ evidence, then it

could reasonably find that Defendant did in fact deliver on what
it was supposed to deliver.
The above arguments illustrate different possible scenarios
with respect to the instructions given to Defendants.

18

A

reasonable jury could interpret the above evidence in any number
of ways, some of which would lead to Plaintiff’s success and
some of which to Defendants’ success.

With respect to

Defendants’ Motion for Summary Judgment, a reasonable jury,
making all reasonable inferences in favor of nonmoving
Plaintiff, could find that Defendant did not provide the
coverage they undertook to supply.

This would mean that

Plaintiff satisfied the second element for broker negligence and
that Defendants would not be entitled to summary judgment on
that basis.
Conversely, with respect to Plaintiff’s Cross-Motion for
Summary Judgment, a reasonable jury, making all reasonable
inferences in favor of nonmoving Defendant, could find that
Defendant did provide the coverage they undertook to supply.
This would mean that Plaintiff failed to satisfy the second
element for broker negligence and that Plaintiff would not be
entitled to summary judgment on that basis.
In short, as with the first element for broker negligence,
both Plaintiff and Defendants have presented sufficient evidence
to allow a reasonable jury to find in their favor as to whether
the second requirement for broker negligence has been met in
this case.

As such, summary judgment is not appropriate as to

either party on that basis.

19

2.
Assuming Defendants Were Negligent, Is Plaintiff
Entitled to Damages?
Defendants also argue that they are entitled to summary
judgment because, even assuming that Defendants were negligent,
Plaintiff cannot recover damages.

Plaintiffs disagree, arguing

that Defendants caused hundreds of thousands of dollars in
damages by breaching their duty to Plaintiff.

In particular,

Plaintiff seeks the following damages: (1) $123,329.90 for the
costs paid from the Loss Fund beyond indemnity, medical, and
legal fees—the only fees that were supposed to come out of the
Loss Fund, according to Defendants’ alleged assurances; (2)
$45,231.39 for the outstanding amount in the Loss Fund, which
was not segregated as Plaintiff alleges Defendants said it would
be; (3) $61,666.88 for the difference between what Plaintiff
paid in premiums and what it would have paid had the “universal
rate” applied; (4) $45,465.00 for the commissions that were paid
to Defendants; and (5) punitive damages.

(See Docket Item 147-1

at 26-29; Docket Item 138-1 at 14-15.)
As Rider held, a negligent broker is “liable to his
principal for the loss sustained thereby.”
476.

Rider, 42 N.J. at

If a jury finds that Defendants were negligent because of

their alleged misrepresentations or misunderstandings about the
policy in question, and specifically because of the alleged
misrepresentations about the Loss Fund and the “universal rate,”
20

then each of the first three figures demanded above could be
deemed damages under Rider.

In other words, if a jury finds

Defendants were negligent, the “loss sustained thereby” could
include (1) $123,329.90 for the costs paid from the Loss Fund
beyond indemnity, medical, and legal fees—the only fees that
were supposed to come out of the Loss Fund, according to
Defendants’ alleged assurances; (2) $45,231.39 for the
outstanding amount in the Loss Fund, which was not segregated as
Plaintiff alleges Defendants said it would be; and (3)
$61,666.88 for the difference between what Plaintiff paid in
premiums and what it would have paid had the “universal rate”
applied.
Defendants arguments on those three sums are unavailing.
First, as to the allegedly excess costs paid from the Loss Fund,
Defendants argue that Plaintiff actually saved money because of
the “bill review services,” which saved Plaintiff from
overpaying on certain bills, even though the insurer kept 40% of
those savings.

Defendants further argue that Plaintiff cannot

quantify its alleged damages related to that service.

Plaintiff

rebuts that Defendants’ argument mistakenly relies on the
assumption that Plaintiff is only complaining about the “bill
review services,” when in fact it claims damages resulting from
all expenses beyond indemnity, medical, and attorneys’ fees.

21

Plaintiff bases this argument on its allegation that Defendants
misrepresented what expenses would come out of the Loss Fund,
outlined above.

If a jury finds that Defendants were negligent,

then these expenses out of the Loss Fund could be damages.
Defendants next argue that Plaintiff cannot recover from
them the $45,231.39 that remains in the Loss Fund.

Again, if a

jury finds that Defendants were negligent in stating that the
Loss Fund would be segregated — in which case Plaintiffs may
have already been able to recover the funds — then the remaining
amount could be damages as well.
Finally, Defendants argue that, because no policy with a
“universal rate” exists, Plaintiff could not suffer damages for
receiving a policy without such a rate.

Whether that type of

policy actually exists is immaterial if a jury finds that
Defendants negligently led Plaintiff to believe that one did
exist in the form of the Guarantee policy.

Defendants also

argue that Plaintiff fails to calculate the damages resulting
from the “universal rate” issue.

But, again, if a jury believes

Plaintiff’s version of events, then the difference between the
actual cost of the premiums and what the premiums would have
been based on a $5.32 per $100 of payroll rate is an appropriate
calculation.

Therefore, given that this aspect of Defendants’

Motion for Summary Judgment operates on the assumption that a

22

jury would find them to have been negligent and the first three
damages Plaintiff claims all stem from that negligence, summary
judgment based on lack of damages is inappropriate in this case. 6
CONCLUSION
For the reasons expressed above, the Court will deny both
Defendants’ Motion for Summary Judgment (Docket Item 138) and
Plaintiff’s Cross-Motion for Summary Judgment (Docket Item 147).
An appropriate Order will be entered.

Date: September 27th, 2019
At Camden, New Jersey

s/Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.

6

Defendants also raise arguments that Plaintiff is not entitled
to disgorgement and punitive damages here. Having found that
Plaintiff could recover damages on other grounds, the Court need
not, and does not, consider Defendants’ arguments about
disgorgement and punitive damages for the purposes of summary
judgment.

23