GOSSELIN et al v. PASSAIC VALLEY SEWERAGE COMMISSION et al

Filing 98

OPINION. Signed by Judge Susan D. Wigenton on 3/26/2020. (ld, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

CHAMBERS OF

MARTIN LUTHER KING COURTHOUSE
50 WALNUT ST.
NEWARK, NJ 07101
973-645-5903

SUSAN D. WIGENTON
UNITED STATES DISTRICT JUDGE

March 26, 2020
Stephen T. Sullivan, Jr., Esq.
Keefe Law Firm
125 Half Mile Road, Suite 100
Red Bank, NJ 07701
Attorney for Plaintiff Ronald R. Gosselin
James F. Dronzek, Esq.
Chasan Leyner & Lamparello, PC
300 Lighting Way
Secaucus, NJ 07094
Attorney for Defendant Passaic Valley Sewerage Commission
Joseph Dirienzo, Esq.
Dirienzo & Dirienzo, PA
116 St. Paul Street
Westfield, NJ 07090
Attorney for Third-Party Defendant High Voltage Maintenance Corp.

LETTER OPINION FILED WITH THE CLERK OF THE COURT
Re:

Gosselin v. Passaic Valley Sewerage Commission et al.
Civil Action No. 15-6528 (SDW) (JAD)

Counsel:
Before this Court is Third-Party Defendant High Voltage Maintenance Corp.’s (“HVM”)
Motion to Bar Evidence of Plaintiff Ronald R. Gosselin’s (“Plaintiff”) Settlement with
Defendant/Third-Party Plaintiff Passaic Valley Sewerage Commission (“PVSC”) From Trial. For
the reasons discussed below, HVM’s motion is DENIED.

I.

FACTUAL AND PROCEDURAL BACKGROUND

This Court, writing for the parties, summarizes only those facts that are relevant to the
instant motion. On May 2, 2014, PVSC and HVM executed a contract for HVM to perform
preventative maintenance and repairs of various high voltage systems at a PVSC facility located
in Newark, NJ. (See D.E. 95-2 at 6–43.) The contract included the following indemnity provision
inserted by HVM:
[HVM] agrees to only indemnify, hold harmless and defend [PVSC] against any
third party claims for personal injury, death, or tangible property damage, resulting
from [HVM]’s negligence, reduced to the extent of any other party’s negligence,
provided [HVM] is provided reasonable notice regarding such claim and has the
sole right to select and direct counsel and settle the claim. THIS
INDEMNIFICATION OBLIGATION IS NOT SUBJECT TO THE LIMIT OF
LIABILITY DESCRIBED BELOW.
(Id. at 43.)
On May 5, 2014, while performing the maintenance and repairs, Plaintiff, an HVM
employee, suffered severe burn injuries when he approached an energized high voltage line that
he thought was de-energized. (See D.E. 95-10 at 9.) Plaintiff filed suit against PVSC on July 1,
2015, in the Superior Court of New Jersey, Essex County, alleging negligence and violations of
various statutes and regulations. (See D.E. 1.) PVSC removed the suit to this Court on August
31, 2015 and filed a third-party complaint against HVM seeking indemnification, thereby
providing notice to HVM of Plaintiff’s claim. (D.E. 1–2.) Following discovery, PVSC and
Plaintiff entered mediation and PVSC subsequently settled with Plaintiff for $2,275,000 without
admitting liability or negligence. (D.E. 92-25.) HVM declined to participate in the mediation or
settlement, (D.E. 95-10 at 19), and instead filed the instant motion to bar evidence of the settlement
from trial. (D.E. 91–92.) PVSC timely opposed. (D.E. 95–96.) 1
II.

DISCUSSION

The indemnification clause in the PVSC/HVM contract requires HVM to indemnify PVSC
for HVM’s own negligence, reduced to the extent of any other party’s negligence. (D.E. 95-2 at
43.) Here, PVSC seeks indemnification for a settlement it reached with Plaintiff, rather than for a
judgment. In New Jersey, “[a] party may be indemnified for settlement payments it makes
provided that the following three criteria are met: ‘(a) the indemnitee’s claims are based on a valid,
pre-existing indemnitor/indemnitee relationship; (b) the indemnitee faced potential liability for the
claims underlying the settlement; and (c) the settlement amount was reasonable.’” Serpa v. New
Jersey Transit, 951 A.2d 208, 213 (N.J. Super. Ct. App. Div. 2008) (quoting Chem. Bank of N.J.
Nat’l Ass’n v. Bailey, 687 A.2d 316, 320–21 (N.J. Super. Ct. App. Div. 1997)).
There is no question that PVSC’s indemnification claim is based on a valid pre-existing
indemnitor/indemnitee relationship or that PVSC faced potential liability for the claims underlying
the settlement. Therefore, PVSC requests a jury trial to determine (1) whether its settlement with
Plaintiff was reasonable and (2) the extent (i.e., relative percentage) to which HVM and other
1

PVSC requested oral argument in a letter filed February 3, 2020. (D.E. 97.) The request is denied.

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parties were negligible for Plaintiff’s injuries. To this end, PVSC seeks to present its settlement
before a jury solely as evidence that a settlement was reached, and not as evidence of the liability
of any party. (D.E. 96 at 2.)
HVM seeks to bar evidence of PVSC’s settlement with Plaintiff on the grounds that (1) it
is prohibited by Federal Rule of Evidence (“FRE”) 408; (2) the settlement cannot determine the
value of Plaintiff’s claim because it does not extinguish Plaintiff’s claim against HVM; and (3)
allowing the settlement to trigger HVM’s indemnity obligations unconstitutionally alters the
state’s workers’ compensation scheme. (D.E. 91-1 at 12–25.) If the settlement is admitted into
evidence, HVM further argues that proof of its reasonableness cannot be established using expert
opinion. (Id. at 26–27.) This Court addresses each of these arguments in turn.
A.

FRE 408 Prohibition

FRE 408 prohibits the Court from admitting into evidence any offer or acceptance of a
settlement to “prove or disprove the validity or amount of a disputed claim.” FRE 408(a)(1). HVM
argues that FRE 408 prohibits the use of PVSC’s settlement with Plaintiff to establish any party’s
negligence or the value of Plaintiff’s negligence claim against PVSC. (D.E. 91-1 at 12–17.)
However, FRE 408 provides no such bar: the “disputed claim” here is the validity and amount of
PVSC’s indemnification claim against HVM, not Plaintiff’s negligence claim against PVSC (that
claim has already settled). Regardless, PVSC did not admit liability when it settled with Plaintiff
and it does not seek to use the settlement to establish the negligence of any party. (D.E. 92-25, 96
at 2.) The jury will be required to determine, independent of the settlement, the proportional
liability of each party for Plaintiff’s injuries, and the jury will not be asked to determine the value
of Plaintiff’s negligence claim against any party.
To the extent that PVSC does seek to present its settlement with Plaintiff to the jury, it is
only to establish that its indemnification claim against HVM has accrued, and not the claim’s
validity or amount. (Id.) If the jury finds HVM at least partially liable for Plaintiff’s injuries, the
jury will then be asked whether the value of PVSC’s settlement with Plaintiff was “reasonable.”
(Id.) HVM argues that FRE 408 bars use of the settlement for this purpose, too, and that the jury
must instead independently determine the value of Plaintiff’s claim against PVSC. (D.E. 91-1 at
15–16.) However, the “reasonableness” determination is part of the test laid out in Serpa and other
New Jersey cases for determining the value of PVSC’s indemnification claim against HVM. 951
A.2d at 213 (citations omitted). HVM cannot avoid the rule of Serpa and related cases by
improperly wielding FRE 408. The matter before this Court is PVSC’s contract claim against
HVM; Plaintiff’s tort claim against PVSC has settled and this Court will not ask the jury to
determine what damages another jury would have awarded Plaintiff in a hypothetical tort case.
See id. (“The allocation that the jury made in this case between [the third-party and plaintiff’s
employer] was for the purpose of determining liability under the indemnification agreement; it was
not for the purpose of determining liability to plaintiff.”).
B.

Elimination of HVM’s Separate Liability to Plaintiff

HVM next argues that it cannot be required to indemnify PVSC where such payments
would not extinguish any separate claims that Plaintiff may bring against HVM under the Worker’s
Compensation Act (“WCA”). (D.E. 91-1 at 18–22.) In New Jersey, the WCA is “the exclusive
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remedy against the employer for a work-related injury sustained by an employee.” Ramos v.
Browning Ferris Indus. of S. Jersey, Inc., 510 A.2d 1152, 1155 (N.J. 1986) (citing N.J.S.A. 34:15–
8) (other citation omitted). Notably, an employer cannot be a joint tortfeasor under the WCA, and,
therefore, “a third-party tortfeasor may not obtain contribution from an employer, no matter what
may be the comparative negligence of the third party and the employer.” Id. (citations omitted).
However, the WCA does not “preclude[] an employer from assuming a contractual duty to
indemnify a third party through an express agreement.” Id. at 1159 (citations omitted). Such
contract provisions are interpreted according to the general rules of contract construction. Id.
(citations omitted).
Here, HVM freely contracted to indemnify PVSC for HVM’s own negligence. In fact,
HVM proposed the final language of the provision and insisted on PVSC’s signature before
moving forward with performance. (See D.E. 95-2 at 36–41.) Under the plain and unambiguous
language, HVM has a contractual duty to indemnify PVSC for its own negligence, reduced to the
extent of any other party’s negligence. (D.E. 95-2 at 43.) This Court will not read an ambiguity
into the plain language of the contract. See Dayekh ex rel. Dayekh v. Thyssen Krupp Elevator
Corp., Civ. No. 10-5109, 2013 WL 3285020, at *4 (D.N.J. June 25, 2013) (noting that “the
language of a contract must be given its ‘plain and ordinary meaning’ when determining
ambiguity” and that “terms in a contract cannot be ‘tortured’ to create ambiguity”) (citations
omitted).
Furthermore, HVM’s contractual duty to PVSC is separate from any other obligation it
may have to Plaintiff under the WCA. 2 HVM’s cited cases do not hold otherwise, as they both
involved claims for common law indemnification based on the relationship between the parties.
See Cent. Motor Parts Corp. v. E.I. duPont deNemours & Co., 596 A.2d 773 (N.J. Super. Ct. Law.
Div. 1989), aff’d in part and remanded in part, 596 A.2d 759 (N.J. Super. Ct. App. Div. 1991);
Popkin Bros. v. Volk’s Tire Co., 23 A.2d 162 (N.J. Sup. Ct. 1941). In contrast, PVSC’s
indemnification claim is contractual in nature and does not depend on any relationship between
the parties except the indemnitor/indemnitee relationship set forth in the contract.
C.

Incorporation of Comparative/Contributory Negligence Statutes

HVM’s attempts to avoid its indemnification obligations by attempting to graft the
provisions of comparative negligence and contributory negligence statutes into the contract
language are also unavailing. HVM argues that it only agreed to indemnify PVSC for any damages
Plaintiff would be legally entitled to if he prevailed at trial, and, thus, HVM owes PVSC nothing
if a jury finds Plaintiff to be more than 50% at fault for his injuries. (D.E. 91-1 at 22 (citing
N.J.S.A. 2A:15-5.1).) Such a qualification is found nowhere in the plain language of the contract.
The plain language of the contract requires HVM to indemnify PVSC for personal injury damages
resulting from HVM’s negligence—there is no incorporation of the provisions of New Jersey’s
comparative negligence or contributory negligence statutes. The conclusion that the statutes do
not apply is further supported by the fact that HVM and PVSC are not joint tortfeasors. See Ramos,
510 A.2d at 1155; see also Serpa, 951 A.2d at 213–14 (distinguishing between allocation of fault
2
Because HVM is not a joint tortfeasor under the WCA, PVSC’s payment to Plaintiff cannot extinguish or reduce
Plaintiff’s tort-based claim against HVM. See Ramos, 510 A.2d at 1155.

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under comparative negligence and joint contribution laws and contractual allocation of fault for
determination of indemnification).
HVM further argues that not incorporating New Jersey’s comparative negligence and
contributory negligence statutes into the contract provision somehow violates the separation of
powers clause of the New Jersey Constitution by altering the Legislature’s workers’ compensation
scheme. (D.E. 91-1 at 23–25.) However, as discussed above, the WCA does not “preclude[] an
employer from assuming a contractual duty to indemnify a third party through an express
agreement.” Ramos, 510 A.2d at 1159 (citations omitted). Such contract provisions are interpreted
according to the general rules of contract construction. Id. (citations omitted). Following those
rules, this Court will not read the contract language, which HVM drafted and insisted on, to require
anything more than what its plain language states: that HVM “indemnify. . . [PVSC] against any
third party claims . . . resulting from [HVM]’s negligence, reduced to the extent of any other party’s
negligence.” (D.E. 95-2 at 43); see Dayekh, 2013 WL 3285020, at *4.
D.

Use of Expert Opinion

Finally, citing to FRE 704(a), HVM argues that if the settlement is admitted into evidence,
PVSC should not be permitted to establish proof of its reasonableness using expert opinion.
However, FRE 704(a) expressly states that an expert “opinion is not objectionable just because it
embraces an ultimate issue.” Thus, the rule allows an expert to opine on the ultimate issue
presented in a case so long as the expert does not merely tell the jury what result it should reach.
See Krys v. Aaron, 112 F. Supp. 3d 181, 193 (D.N.J. 2015).
Such opinion will be helpful to the jury here, where the question before the jury is the
reasonableness of PVSC’s business decision, not what damages another jury deciding Plaintiff’s
tort claim would have determined. See Jiffy Foods Corp. v. Hartford Acc. & Indem., 331 F. Supp.
159, 160 (W.D. Pa. 1971). As another district court in this Circuit previously observed:
[Litigators] must determine the reasonable value of the case in view of the risks of
litigation. An attorney may decide to settle a case that could have been won, but the
fact that it might have been won does not automatically make his settlement
unreasonable. Litigation is a complex business requiring the attention of specialists.
The reasonableness of what such specialists do in a given case is the type of
technical matter in which the lay jury can be helped by the opinions of experts, for
we are dealing with a question not of what a reasonably prudent man would do, but
what a reasonable prudent attorney would do.
Id.; see also Kelly v. Berlin, 692 A.2d 552, 558–59 (N.J. Super. Ct. App. Div. 1997) (observing
that “[t]he many factors that go into a settlement are not within the knowledge of the average
juror,” and that “[a]n expert in the settlement of claims, such as an experienced torts attorney . . .
is necessary”). This Court will therefore permit expert testimony as to the reasonableness of
PVSC’s settlement with Plaintiff.
III.

CONCLUSION
For the reasons set forth above, HVM’s motion is DENIED. An appropriate order follows.

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/s/ Susan D. Wigenton
SUSAN D. WIGENTON, U.S.D.J.
Orig: Clerk
cc:
Parties
Joseph A. Dickson, U.S.M.J.

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