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Insurance Covers Costs
by Ron Davis

An unusual court case in New Jersey has features a shopping center owner attempting to force a tenant to reimburse the center for legal costs.

That attempt follows a dispute between the two individuals who eventually ended up in court, with the Plaintiff, Excelsior Insurance and the shopping center, Granite State.

The underlying issues are based on an injury to a worker while he was an employee of Community Care Services, (CCS), a tenant of the shopping center. That led to a lawsuit against Eastern Shopping Center (ESC) and Littman and Pakenham (L&P), the alleged co-landlord of the shopping center.

If that isn’t confusing, enough consider the next dispute. That involved Granite State sustaining various costs in connection with defending both L&P in the underlying lawsuit.

Eventually, the court followed precedent, noting that the underlying state court action was ultimately settled by the various parties. Notable, Granite State did not contribute to the settlement payment, nor did any other entity contribute on behalf of Granite State.

Of note was the reminder by the judge of the primary goal of contract interpretation in such a situation: “In some instances,” he explained, “a court may reform the terms of a written instrument on a claim of mutual mistake, without regard to whether the writing is in fact ambiguous.”

Continued the judge, “In New Jersey, even an unambiguous contract may be reformed when there is a mutual mistake and the contract does match what the parties intended. To that end a finding of mutual mistake is appropriate when the parties have met and reached a prior existing document.

In fact, the plaintiff (in this dispute) maintained that CCS and Granite State were both operating under a mistake of fact when the parties enter into the insurance agreement. That’s because, according to the plaintiff, CCS informed Granite State to only provide coverage for ESC. The plaintiffs argue that, therefor, Granite State issued a policy under which ESC was the sole insured.

However, the judge determined that such an approach is not sufficient to establish a mutual mistake. That’s because Granite State and CCS were both “laboring under the same apprehension as to an essential fact.“

The defendant’s motion to dismiss was granted and Plaintiff’s cross motion to file an amended complaint was denied.

(Civ. Action No.16-4911 (flw ))

Decision: August 2017
Published: August 2017



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