Apr 3, 2018

Firm Obtains $1 Million Victory in NJ Construction Case

Mt. Hawley Ins. Co. v. Swift Construction, 2018 U.S. Dist. LEXIS 55026 (D.N.J. March 29, 2018).

On March 29, 2018, U.S. Dist. Judge Michael Shipp granted Mt. Hawley’s motion for summary judgment in part, and held that defendant Swift Construction (insured by The Hartford) must reimburse Mt. Hawley for the $1M paid by Mt. Hawley toward the settlement of an underlying NJ personal injury action. This long-running litigation first spawned a reported decision in the NJ Appellate Division regarding an insurer’s subrogation rights. See Andalora v. R.D. Mechanical Corp., 448 N.J. Super. 229 (App. Div. 2017). In that earlier case, the NJ Appellate Division held that Mt. Hawley could pursue a contractual indemnification claim as the subrogee of its policyholder, the general contractor ICS Construction, against the subcontractor, Swift, whose employee was injured during the construction project.

After the NJ Appellate Division affirmed Mt. Hawley’s subrogation rights, Mt. Hawley then proceeded with its subrogation action in federal court directly against Swift to recover the $1M that it paid on behalf of ICS toward the underlying settlement based on the contractual indemnity agreement between ICS and Swift. In the federal action, Swift argued that the indemnity agreement was unenforceable because the contract between Swift and ICS was signed three weeks after the underlying accident. We argued that the contract’s effective date pre-dated the accident, and therefore it was effective as of that earlier date, even though it was not signed by the parties until after the accident. We further argued that because the state court had already ruled that the indemnification agreement was Azurak-compliant, and that therefore ICS could be indemnified unless ICS were determined to be the sole proximate cause of the accident to the Swift worker, the only issue left to be decided in the federal action was whether ICS was the sole proximate cause of the accident. Judge Shipp rejected Swift’s argument about the enforceability of the indemnity provision, and held that ICS was not the sole proximate cause of the accident in the underlying action. Judge Shipp therefore granted Mt. Hawley’s motion for summary judgment for reimbursement of the $1M paid by Mt. Hawley toward the underlying settlement.

Partners Joseph D’Ambrosio and Alfred D’Isernia and Associate Caroline McKenna worked on this matter.

By, Joseph D’Ambrosio