Judgment Debtor Can Sue Indigent Defendant’s Insurer

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New Jersey Statute Allows Suit Against Insurer Who Advised its Insured No Coverage Years After Denial

Posted on May 23, 2022 by Barry Zalma

But, is this a Waste of Time & Money?

Steven D’Agostino appealed from trial court orders dismissing his complaint in Steven D’agostino v. Colony Insurance, No. A-5331-18, Superior Court of New Jersey, Appellate Division (May 17, 2022) dealt with the effect of a New Jersey Statute on a suit by a judgment debtor of an insured whose claim was rejected.

FACTS

In February 2002, plaintiff retained Laurence Hecker, a solo practitioner licensed in New Jersey, and Plaintiff’s employment matter went against him. Proceeding pro se, he sued lawyer Hecker and was awarded plaintiff $330,000 in damages, along with pre-judgment interest but could not collect.

Defendant Colony Insurance Company issued a $1,000,000 claims made professional liability policy to Hecker and declined Hecker’s request for defense and indemnification under the policy.

Plaintiff was unable to recover the $330,000 judgment from Hecker. In 2011, plaintiff filed a claim with the Lawyers’ Fund for Client Protection, that denied plaintiff’s claim.

ANALYSIS

As a general rule an individual or entity that is a stranger to an insurance policy has no right to recover the policy proceeds. But, the general rule does not apply in New Jersey. A statute provides an injured person may maintain an action against an insurer when his judgment against the insured tortfeasor remains unsatisfied due to insolvency.

Plaintiff has only stated a claim against Colony under N.J.S.A. 17:28-2, he has come nowhere near proving one.

Although it is certainly possible plaintiff will not be able to prove Poulton failed to secure the coverage Hecker asked for or expected, or that any such cause of action is timely, plaintiff has stated the claim and should thus be permitted the opportunity to try to prove it.

ZALMA OPINION

Trial and appellate courts tend to give a great deal of consideration to actions brought by pro se plaintiffs. He lost on a motion to dismiss only to have the appellate court send the case back down for gathering evidence which, very probably, will result in a judgment in favor of the insurer and broker defendants because the case is old and Hecker, now dead, has no assets. Very probably, the trial will result in a judgment in favor of the insurer and broker defendants because the case is old and Hecker, now dead, has no assets. A waste of court, lawyer, and defendant time.

(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, is available at http://www.zalma.com and [email protected].

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