NOT FOR PUBLICATION WITHOUT THE
APPROVAL OF THE APPELLATE DIVISION
This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.
SUPERIOR COURT OF NEW JERSEY
APPELLATE DIVISION
DOCKET NO. A-2991-17T4
ESTATE OF BORO M.
ATANASOSKI, LILLIAN E.
CARTER, his wife, individually,
and as Administrator and Administrator
Ad Prosequendum of the ESTATE OF
BORO M. ATANASOSKI,
Plaintiffs-Appellants,
v.
ARCURI AGENCY, INC., ARCURI
AGENCY, PETER M. ARCURI, JR.,
ARCHER A. ASSOCIATES, INC.,
and ROBERT LANCIOTTI,
Defendants-Respondents,
and
MARY E. ALLEN,
Defendant.
________________________________
Argued February 14, 2019 – Decided May 6, 2019
Before Judges Simonelli, O'Connor and Whipple.
On appeal from Superior Court of New Jersey, Law
Division, Bergen County, Docket No. L-4821-17.
Antonio D. Arthurs argued the cause for appellants
(Law Offices of Jeffrey S. Hasson, PC, attorneys;
Antonio D. Arthurs, on the brief).
Audrey L. Shields argued the cause for respondents
Arcuri Agency, Inc., Arcuri Agency, and Peter M.
Arcuri, Jr. (Golden, Rothschild, Spagnola, Lundell,
Boylan & Garubo, PC, attorneys; Audrey L. Shields, of
counsel and on the brief; Carolynn A. Mulder, on the
brief).
Debra M. Krebs argued the cause for respondents
Archer A. Associates Inc. and Robert Lanciotti (Keidel,
Weldon & Cunningham, LLP, attorneys; Debra M.
Krebs, on the brief).
PER CURIAM
In this insurance broker malpractice matter, plaintiffs Estate of Boro M.
Atanasoski (Estate) and Lillian E. Carter 1 appeal from the January 29, 2018 Law
Division orders granting the motions of defendants Arcuri Agency, Inc, Acuri
Agency, Peter M. Arcuri, Jr. (collectively Arcuri), and Archer A. Associates,
Inc. and Robert Lanciotti (collectively Archer), to dismiss the complaint with
prejudice pursuant to Rule 4:6-2(e). We affirm.
1
We shall sometimes collectively refer to the Estate and Carter as plaintiff.
A-2991-17T4
2
I.
European Bread, Inc., d/b/a Schripps European Bread (Schripps) is in the
bread delivery business. Arcuri procured a commercial vehicle liability
insurance policy for Schripps with Allstate New Jersey Insurance Company
(Allstate), which had a $1 million per accident limit. Archer procured a
commercial excess and umbrella liability policy for Schripps with
XL/Greenwich Insurance Company (XL) in the amount of $5 million. The XL
policy did not provide excess coverage for commercial vehicle liability.
On July 26, 2014, Boro M. Atanasoski (decedent) was struck and killed
by a vehicle owned by Schripps and operated by its employee, Joseph
Eizaguirre. On August 20, 2014, Carter, the decedent's wife, filed a complaint
individually and as administrator ad prosequendum of the Estate against
Schripps and Eizaguirre for wrongful death and survivorship.
On July 18, 2017, plaintiff filed a second complaint to include
professional negligence claims against Arcuri and Archer.2 Plaintiff alleged that
Arcuri failed to advise Schripps of the need for higher primary policy limits
and/or excess insurance above the $1 million Arcuri procured with Allstate.
2
Prior thereto, on July 5, 2016, Schripps filed a complaint against Archer for
insurance broker malpractice, and, thereafter, Archer filed a third-party
complaint against Arcuri for contribution and negligence.
A-2991-17T4
3
Plaintiff alleged that Archer procured a policy that specifically excluded
commercial vehicle liability coverage or any claims arising from the use of a
motor vehicle despite the fact that Schripps' bread delivery business involved
the substantial use of commercial vehicles. The court severed these claims,
dismissing the claims against Arcuri and Archer without prejudice and allowing
the underlying action to proceed against Schripps and Eizaguirre. The court
permitted plaintiff to proceed against the brokers under a separate docket
number.
The underlying action settled for $940,000, paid by Allstate. Pursuant to
a settlement agreement dated July 25, 2017, plaintiff released Schripps and
Eizaguirre from any further claims and specifically agreed not to seek any
contribution from them beyond the settlement amount. The settlement
agreement contained "[c]ooperation with [c]ontinued [l]itigation," which
required Schripps and Eizaguirre "to cooperate with the ongoing litigation, in
pursuing claims against the insurance agents or brokers . . . and by providing
documents and testifying at deposition or trial." Notably, the parties agreed that
the settlement "shall not be construed as an admission of liability on the part of
any party to this [a]greement." The settlement was not reduced to a judgment.
The court thereafter dismissed the underlying action with prejudice.
A-2991-17T4
4
On July 18, 2017, immediately prior to the execution of the settlement
agreement, plaintiff filed a new complaint asserting insurance broker
malpractice claims against Arcuri and Archer. Plaintiff did not join Schripps
and Eizaguirre as defendants. Thereafter, Arcuri and Archer each filed a motion
to dismiss pursuant to Rule 4:6-2(e).
In granting the motions, the motion judge cited Carter Lincoln-Mercury,
Inc., Leasing Div. v. EMAR Group, Inc., 135 N.J. 182 (1994), Werrmann v.
Aratusa, Ltd., 266 N.J. Super. 471 (App. Div. 1993), Manukas v. Am. Ins. Co.,
98 N.J. Super. 522 (App. Div. 1968), and Eschle v. Eastern Freight Ways, Inc.,
128 N.J. Super. 299 (Law Div. 1974), and determined there must be a judgment
against the underlying tortfeasors in order to determine if plaintiff's claim was
worth in excess of the available $1 million primary Allstate coverage. The judge
found there could be no judgment in this case against Schripps and Eizaguirre
because plaintiff did not name them as defendants in this matter and settled her
claims against them, relinquishing her right to sue them. The judge concluded:
Only if such . . . judgment is rendered can the [c]ourt
determine if Schripps/Eizaguirre sustained a loss.
Plaintiff's subjective belief that her claim exceeds
$1[million] is not sufficient. A jury may not believe
plaintiff's proffered damage experts as to the value of
the alleged loss suffered by the [p]laintiff.
[(Citation omitted).]
A-2991-17T4
5
The judge next distinguished Deblon v. Beaton, 103 N.J. Super. 345 (Law.
Div. 1968), on which plaintiff relied, noting that Schripps and Eizaguirre had no
obligation to help defend any valuation trial, but rather, were obligated to help
plaintiff pursue her claims against the brokers. The court further noted that
Schripps did not request more than $1 million in commercial auto liability
coverage and Arcuri had no duty to procure more than the amount requested.
Regarding Archer, the judge found that even if the XL policy applied to
Schripps's commercial vehicles, the excess coverage under the policy would not
have been exposed because plaintiff settled within Allstate's primary policy for
$1 million. The judge concluded that even if Archer was negligent in not
procuring commercial auto liability excess coverage, this caused no damage or
financial loss to Schripps related to plaintiff's wrongful death/survivorship
claims.
On appeal, plaintiff contends the judge erred in dismissing this matter with
prejudice because she asserted a valid cause of action against Arcuri and Archer.
Relying primarily on Werrmann and Deblon, plaintiff argues the brokers owed
a duty to third parties and she presented facts establishing a breach of duty,
A-2991-17T4
6
proximate causation, and damages. Plaintiff did not address Manukas and
Eschle.3
Our review of a dismissal for failure to state a claim pursuant to Rule 4:6-
2(e) is de novo, following the same standard as the trial court. Smerling v.
Harrah's Entm't, Inc., 389 N.J. Super. 181, 186 (App Div. 2006). Like the trial
court, we must search the complaint "in depth and with liberality to determine
if there is any 'cause of action [] "suggested" by the facts.'" State v. Cherry Hill
Mitsubishi, 439 N.J. Super. 462, 467 (App. Div. 2015) (alteration in original)
(quoting Printing-Mart Morristown v. Sharp Elecs. Corp., 116 N.J. 739, 746
(1989)). The inquiry is limited to "examining the legal sufficiency of the facts
alleged on the face of the complaint." Ibid. (quoting Printing-Mart Morristown,
116 N.J. at 746). "Dismissal is the appropriate remedy where the pleading does
not establish a colorable claim and discovery would not develop one" Ibid.
Applying these standards, we discern no reason to reverse.
An insurance broker owes a duty to the insured to act with reasonable skill
and diligence in performing the services of a broker. Carter Lincoln-Mercury,
3
Although Eschle is a trial court opinion that is not binding on us, S & R Assocs.
v. Lynn Realty, 338 N.J. Super. 350, 355 (App. Div. 2001), our Supreme Court
cited it with approval in Carter-Lincoln Mercury, 135 N.J. at 189, as did this
court in several published opinions, including Werrmann, 266 N.J. Super. at
474.
A-2991-17T4
7
135 N.J. at 189. An insured can establish a prima facie case of negligence
against an insurance broker if: (1) the broker neglects to procure the insurance;
(2) the broker secures a policy that is either void or materially deficient; or (3)
the policy does not provide the coverage the broker undertook to supply.
President v. Jenkins, 180 N.J. 550, 569 (2004). However, "an insurance agent
ha[s] no duty to advise an insured to consider higher amounts of . . . insurance."
Carter Lincoln-Mercury, 135 N.J. at 190. "To succeed in an action against an
insurance broker, the plaintiff must prove that in addition to being negligent, the
broker's negligence was a proximate cause of the loss." Harbor Commuter Serv.,
Inc. v. Frenkel & Co., 401 N.J. Super. 354, 368 (App. Div. 2008). The plaintiff
must also prove damages. Robinson v. Janay, 105 N.J. Super. 585, 591 (App.
Div. 1969).
Members of the general public who are injured as a result of an insured's
negligence may bring a direct action against the insured's insurance broker for
negligence. Werrmann, 266 N.J. Super. at 474. That extension
does little more than synthesize two established rules in
New Jersey law. First, that an insurance agent is liable
to the potential insured for the failure to obtain such
coverage, and second, that an injured party acquires an
interest in an insurance policy which may be available
to cover the accident. If the agent stands in the shoes
of the company which would have issued the policy
(had he not been negligent or breached his contract),
A-2991-17T4
8
there is no reason to deny the direct action against him,
combining these two lines of cases. To hold to the
contrary would be to insulate the agent from the
consequences of his acts, and leave the public without
adequate protection.
[Id. at 475 (quoting Eschle, 128 N.J. Super. at 306).]
However, it is foundational that "an injured person possesses no direct
cause of action against the insurer of the tortfeasor prior to recovery of judgment
against the latter . . . ." Manukas, 98 N.J. Super. at 524; see also Kabinski v.
Emp'rs' Liab. Assur. Corp., 123 N.J.L. 377, 379 (1939) ("injured parties have no
rights under the policy until there is an unsatisfied judgment against the
assured"). An injured person may not proceed directly against the underlying
tortfeasor's insurer
until [the injured person] first establishes the
[underlying tortfeasor's] negligence and the quantum of
damages in an action against the [underlying tortfeasor]
or to which the [underlying tortfeasor] is a party.
Plaintiff could have included a declaratory judgment
action against [the insurer] in the action against the
[underlying tortfeasor] or instituted a separate
declaratory judgment action joining the [underlying
tortfeasor] as a party, but [the injured person] cannot
maintain the present action [against the insurer].
[Manukas, 98 N.J. Super. at 525 (emphasis added).]
This principal applies equally to claims against an insurance agent or broker.
See Eschle, 128 N.J. Super. at 306 (holding that "defendant insurance agent will
A-2991-17T4
9
not be liable unless it is first shown that the claim has been proven against the
[underlying tortfeasor] and also that the policy obtained did not afford the
requested coverage").
Plaintiff essentially argues that Arcuri and Archer owed a duty to her as
an injured member of the public and breached that duty by not obtaining
appropriate coverage or advising Schripps of the need for excess commercial
vehicle liability coverage, leaving her with inadequate protection for the
damages resulting from the fatal accident. Plaintiff posits she had standing to
bring a direct action against the brokers absent both a judgment against the
underlying tortfeasors and proof of a sufficient quantum of damages, and the
settlement was not a waiver of her right to bring a direct action. These
arguments, however, are based on plaintiff's misinterpretation of case law and
failure to recognize critical distinctions.
For example, plaintiff relies on Werrmann for the principle that an injured
plaintiff is permitted to sustain a direct negligence action against the broker,
asserting the broker owed her a duty, and breached that duty. Werrmann, 266
N.J. Super. at 476. However, plaintiff ignores the fact that the direct action
against the broker, which the trial court dismissed, was reinstated on appeal after
the plaintiff obtained a default judgment in the amount of $85,000 against the
A-2991-17T4
10
underlying tortfeasor. Id. at 473. Thus, the default judgment she obtained
against the underlying tortfeasor was proof of the underlying tortfeasor's
negligence. We found that "after obtaining judgment against [the underlying
tortfeasor], plaintiff could have obtained an assignment from [the underlying
tortfeasor] of [the underlying tortfeasor's] broker's-negligence claim against [the
broker], and pursued that claim as an assignee." Id. at 476.
Moreover, the plaintiff in Werrmann alleged the broker was negligent in
failing to renew the underlying tortfeasor's general liability policy. Id. at 473.
Because there was no insurance policy and thus, no available coverage, the
damages the judgment established were necessarily greater than the available
coverage, thus proving the quantum of damages. Ibid. We never suggested that
the plaintiff could proceed with a direct action against the broker without first
proving the underlying tortfeasor's negligence and that the damages exceeded
the available insurance coverage. Nor does Werrmann support plaintiff's
attempt to establish those foundational proofs by asserting the negligence of the
non-party underlying tortfeasors in this action. 4
4
"Judgment or orders normally do not bind non-parties." N. Haledon Fire Co.
1 v. Borough of N. Haledon, 425 N.J. Super. 615, 628 (App. Div. 2012) (quoting
In re Application of Mallon, 232 N.J. Super. 249, 254 n.2 (App. Div. 1989)).
This action does not come within any of the limited exceptions to that principal.
A-2991-17T4
11
Our holding in Werrmann is rooted in the trial court's holding in Eschle
that a person injured in a motor vehicle accident may bring a direct action against
the insurance agent or broker. Id. at 474-75 (citing Eschle, 128 N.J. Super. at
306). However, the Eschle explicitlt stated that there must be a trial where
claims are brought against the alleged tortfeasor and insurance broker in the
same action, stating "it should be no problem for the court to insure that
defendant insurance agent will not be liable unless it is first shown that the claim
has been proven against the [underlying tortfeasor] and also that the policy
obtained did not afford the requested coverage." Eschle, 128 N.J. Super. at 306.
Here, the settlement agreement confirms that Schripps and Eizaguirre
never admitted liability, and there was no judgment entered against them. Thus,
plaintiff failed to establish the underlying tortfeasors' negligence and the
quantum of damages in the underlying action. Schriffs's bare assertion that
Arcuri and Archer were negligent in failing to obtain adequate commercial
vehicle liability primary and excess coverage for it is insufficient to overcome
these deficiencies. Without a judgment against the underlying tortfeasors
establishing their negligence and the quantum of damages, plaintiff cannot
See Morris Cty. Fair Hous. Council v. Boonton Twp., 197 N.J. Super. 359, 364-
65 (Law Div. 1984).
A-2991-17T4
12
pursue a direct action against Arcuri and Archer. Manukas, 98 N.J. Super. at
524.
Plaintiff's reliance on Deblon is also misplaced. There, the widow of a
man killed in an automobile accident brought a direct action against the driver's
automobile insurance carrier, Jersey Insurance Company of New York of the
Pacific of New York Group (Jersey), notwithstanding a settlement agreement
between the plaintiff, the driver, the vehicle owner, and the owner's insurance
carrier, Allstate.5 Deblon, 103 N.J. Super. at 347. However, unlike here, the
settlement agreement in Deblon did not release the owner and driver from all
liability; it released then only to the extent of their personal assets and their
Allstate insurance coverage. Id. at 439. The plaintiff expressly reserved the
right to proceed against Jersey and the owner and driver as named insureds under
the Jersey policy, and named the owner and driver as defendants in the plaintiff's
lawsuit against Jersey, thus exposing them to a judgment beyond the Allstate
coverage. Id. at 347-48. The court determined that a jury verdict of negligence
against the underlying tortfeasors and damages in excess of the primary
coverage was required in order to proceed against Jersey. Id. at 351.
5
The owner's Allstate policy provided insurance in the amount of $50,000 and
the driver's Jersey policy provided insurance in the amount of $10,000. The
matter settled within the Allstate policy limits for $46,500. Id. at 347.
A-2991-17T4
13
Even setting aside the fact that Deblon was an action against an insurance
carrier and not an insurance broker, there are other distinguishing facts. For
example, the court based its decision, in part, on Jersey's ability to rely on the
cooperation clause in its insurance policy to compel the owner and driver to
vigorously defend against the plaintiff's action. Id. at 352. Jersey had argued
that public policy militated against permitting a plaintiff to settle with the
tortfeasors and primary insurance carrier without releasing the excess carrier,
because same would encourage collusion between claimants and insureds. Ibid.
The settlement agreement here contains a cooperation clause, which requires
Schripps and Eizaguirre to assist plaintiff in prosecuting her lawsuit against the
brokers. Thus, the collusion protected against in Deblon is actualized here.
Regarding the claim against Archer, there are additional grounds
distinguishing Deblon. Although the plaintiff in Deblon received less than the
maximum available from the primary polict under the settlement agreement, she
was nevertheless able to proceed against Jersey because its policy was not a true
"excess" policy. Id. at 347-48. Rather, the policy was a primary policy that
became "excess insurance" because it contained an "other insurance" clause.
Ibid.; see also CNA Ins. Co. v. Selective Ins. Co., 354 N.J. Super. 369, 379-81
(App. Div. 2002) (explaining the difference "between a primary insurance policy
A-2991-17T4
14
containing an excess 'other insurance' clause, and a true excess policy"). Thus,
settling below the maximum available under the Allstate policy did not preclude
the plaintiff's direct claim against Jersey.
There was only one primary policy in this case, the Allstate policy. Even
if Archer had procured excess commercial vehicle liability coverage, that
coverage would be triggered only upon exhaustion of the primary Allstate
coverage. Because the matter settled within the primary policy limits, plaintiff
had no claim against Archer or XL.
The notion that a plaintiff could directly sue and recover from an insurer
or insurance broker without first demonstrating the insured's negligence and
quantum of damages would, as feared by Jersey in Deblon, create legal
circumstances ripe for abuse. As plaintiff here has not received and cannot
receive a judgment against Schripps and Eizaguirre, and has not demonstrated
and cannot demonstrate their negligence and a quantum of damages, plaintiff
has no right to bring a direct action against Arcuri and Archer.
We find no merit in plaintiff's third-party beneficiary argument. "To
determine whether a person qualifies as a third-party beneficiary, the test is
'whether the contracting parties intended that a third party should receive a
benefit which might be enforced in the courts . . . .'" Werrmann, 266 N.J. Super.
A-2991-17T4
15
at 476 (quoting Rieder Cmtys., Inc. v. N. Brunswick Twp., 227 N.J. Super. 214,
222 (App. Div. 1988)).
In Werrmann, 266 N.J. Super. at 476, we observed that in addition to a
theory based on duty, a plaintiff could similarly proceed against the insurance
broker under the theory that the injured party was a third-party beneficiary of
the broker's agreement, with the insured to procure insurance. However, unlike
here, the plaintiff in Werrmann was awarded beneficiary status because she
possessed an outstanding default judgment against the underlying tortfeasor and,
further, the underlying tortfeasor was insolvent. Id. at 475-76. As such, the
plaintiff was left without any recompense. Ibid. We recognized that "the policy
protects the assets of the insured; of equal importance, it is intended to provide
a source of recovery for an innocent injured party who, because of the
insolvency of the insured, would otherwise have no means of redress." Id. at
478. Thus, we permitted a direct action by the plaintiff against the allegedly
negligent insurance broker.
Then-Judge Stern, in his concurring opinion, expressly intended future
readers to recognize "what [he] believe[d] to be the limited holding based on the
facts and circumstances of the case. [He] d[id] not want the reader to conclude
[this court] ha[d] expanded New Jersey law to make the insurance broker of a
A-2991-17T4
16
business entity where an accident occurred responsible for injuries whenever
there is inadequate coverage." Id. at 478 (Stern, J., concurring).
For example, in Walker v. Atlantic Chrysler Plymouth, Inc., 216 N.J.
Super. 255, 261-62 (App. Div. 1987), we granted third-party beneficiary status
to an employee that was an intended beneficiary of his employer's automobile
insurance policy. In distinguishing other case law, we stated "[w]e are not
dealing with a situation where there is no relationship or privity between the
insured and the injured party seeking to recover. Plaintiff . . . was an employee
and an obvious intended beneficiary of the insurance coverage." Id. at 261-62.
In Carter Lincoln-Mercury, 135 N.J. at 187, the plaintiff was deemed a
third-party beneficiary because it was a loss-payee designated by a specific
endorsement on the insurance policy procured by the broker. Id. at 187. Further,
the plaintiff possessed a default judgment against the insured. Id. at 188.
Unlike in Walker and in Carter Lincoln-Mercury, plaintiff is not an
intended beneficiary of either insurance policy. She, thus, lacks standing to
assert a direct claim against Arcuri and Archer as a third-party beneficiary.
Further, as recognized in Hanover Ins. Co., plaintiff has not been left without
redress, and therefore the public policy concern that guided the decision in
Werrmann is not present here.
A-2991-17T4
17
Simply put, plaintiff has failed to substantiate any claim that she should
be afforded third-party beneficiary status sufficient to bring a direct claim
against either Arcuri or Archer. Plaintiff is not able to use the holding in
Werrmann, unique to the facts of that case, to circumvent the settlement of the
underlying claims.
We briefly address plaintiff's argument that the judge erred in dismissing
her breach of contract claim. Plaintiff has insufficiently alleged a breach of
contract claim; she did not demonstrate the existence of a valid contract, that the
non-breaching party adequately performed under the contract, and that
defendants' breach caused a loss. See Globe Motor Co. v. Igdalev, 225 N.J. 469,
482 (2016). Ignoring for a moment that plaintiff has not demonstrated and
cannot demonstrate that Schripps suffered a loss as a result of Archer's alleged
breach of the alleged contract, or that Arcuri failed to provide the requested level
of coverage, plaintiff has still failed to plead with specificity the existence of
any contract.
In fact, the only time plaintiff even mentions the existence of a contract
between Arcuri and Schripps and Archer and Schripps are in count six and count
seven of the complaint, where she states that the broker defendants are "liable
to [p]laintiffs as they . . . breached contract with [Schripps]." Plaintiff has failed
A-2991-17T4
18
to allege even "the basic elements of a contract – offer, acceptance, and
consideration . . . [,]" to substantiate the existence of any contract. Smith v.
SBC Commc'ns Inc., 178 N.J. 265, 283 (2004).
As such, dismissal of plaintiff's breach of contract claim with prejudice
was warranted. The complaint has simply not pled facts that even suggest the
existence of a contract, let alone a breach of contract claim. See Printing Mart-
Morristown, 116 N.J. at 746.
Lastly, plaintiff argues that the order severing the claims with leave to
refile against Arcuri and Archer under a separate docket number conferred
standing on her to pursue direct claims against the brokers. In making this
argument, plaintiff merely reiterates her contention that she does not need to
possess a judgment of negligence and a sufficient quantum of damages to
proceed against the brokers. She provides no authority that supports or lends
any credence to this misguided premise.
However, at oral argument on the motions to dismiss, plaintiff's counsel
admitted that in granting severance, the judge did not rule on the merits of the
claims against the brokers. In fact, per Archer's counsel, the judge "very
strenuously questioned [plaintiff's] standing to bring a clai m against the
brokers[,]" "refused to rule on it[,]" and ultimately "decided to sever it." The
A-2991-17T4
19
severance order thus cannot be viewed as an endorsement of plaintiff's claims
against the brokers, merely because the order included the phrase "and shall
proceed under a separate docket number." The fact is that plaintiff could have
proceeded against the brokers in a distinct action, had she not settled the claims
against the underlying tortfeasors in the manner that she did.
Affirmed.
A-2991-17T4
20