In a recent unpublished decision, Ehrhardt v. Amguard Insurance Co., the Appellate Division affirmed the trial court’s grant of summary judgment to Defendant, Kapatoes Insurance Service, based on Plaintiff’s failure to serve an Affidavit of Merit (“AOM”) pursuant to N.J.S.A. 2A:53A-26 to -29. The Appellate Division determined that Plaintiff’s argument that an AOM was not needed to maintain their claim against Kapatoes Insurance Service, a licensed insurance producer, as the asserted claims involved matters of “common knowledge” within the purview of a jury was invalid in light of existing law.
In April, 2012, upon learning that his current insurance carrier would no longer continue coverage, Plaintiff, Ernest Ehrhardt, an owner and operator of a medical practice and nutritional health business, began the process of selecting new insurance coverage for his business and property. Plaintiff’s prior coverage included coverage for business interruption, “extra expense”, and personal property losses. Plaintiff retained Kapatoes Insurance Service (“Kapatoes”) to obtain replacement coverage. Kapatoes procured a commercial business insurance policy with co-defendant, Amguard Insurance Company. The Amguard policy was effective for a one-year period running from April 21, 2012 through April 21, 2013.
In October 2012, Superstorm Sandy struck New Jersey causing considerable damage to Plaintiff’s business and property, estimated to exceed $100,000. Plaintiff submitted a claim to Amguard for their losses. Amguard ultimately paid Plaintiffs only $8,911.10, asserting that the remaining damages were not covered under the terms of the policy. In denying full payment on the claim, Amguard determined that a portion of the claim: (1) excluded pre-existing damage, (2) did not cover losses resulting from off-site utility interruption, and (3) did not cover losses to inventory and business-related personal property.
Plaintiff filed a Complaint in the Law Division against Amguard and Kapatoes. Plaintiff asserted a negligence count and breach of contract count against Kapatoes. Plaintiff voluntarily dismissed the claims against Amguard as the litigation progressed. Moreover, although the Plaintiff acknowledged that the Kapatoes agency, and principal Mark Kapatoes, were within the ambit of the AOM Statute, he did not obtain and serve an AOM with respect to Kapatoes. Instead, Plaintiff maintained that the claims against Kapatoes involved matters of “common knowledge” within the grasp of a lay jury, and did not require the service of an AOM.
Under N.J.S.A. 2A53A-27, an AOM is required in any action for damages for personal injury, wrongful death, or property damage resulting from an alleged act of malpractice or negligence by a licensed person in his profession or occupation. The Plaintiff must serve the AOM within sixty (60) days following the date of filing of the Answer to the Complaint by the Defendant, and provide each Defendant with an Affidavit of an appropriate licensed person that there exists a reasonable probability that the care, skill or knowledge exercised or exhibited in the treatment, practice or work that is the subject of the complaint, fell outside acceptable professional or occupational standards or treatment practices.
In this matter, after Plaintiff failed to serve an AOM, Kapatoes moved for summary judgment and for dismissal of Plaintiff’s Complaint. After hearing oral argument, the trial court granted summary judgment based on the lack of an AOM. The trial court characterized the negligence claim of the Complaint as being a claim of “professional negligence” that fell within the scope of the AOM Statute. The trial court noted that Kapatoes, as an insurance broker and producer, is expressly deemed by the Legislature to be subject to the AOM requirement. See N.J.S.A. 2A:53A-26(o). The trial court opined that the “inclusion of insurance producers within the realm of protections of the AOM requirements [was] based upon the proposition that the intricacies of the insurance business are generally thought to be beyond the realm of understanding of the average juror.”
Additionally, the trial court dismissed the breach of contract claim, finding that upon examination, the claim involved professional standards of care within the insurance producer’s business and were “tantamount” to claims of negligence. The trial court further expounded that “the standard of care requires of a broker or agent in regard to determining how specific clauses contained in complex insurance policies relate to specific business needs is not a matter within the province of a layperson’s common knowledge”. Further, to “determine whether an insurance agent breached the standard of care in regard to his analysis and determination of whether a particular insurance policy’s complex provisions satisfied his client’s needs…is precisely the type of issue that requires an Affidavit of Merit and expert testimony.” The Plaintiff subsequently appealed the trial court’s decision.
In consideration of the appeal, the Appellate Division court reviewed the legal issues under the AOM statute de novo. The court acknowledged that not all lawsuits against licensed professionals require an AOM. The “common knowledge” exception to the AOM requirement has been applied in discrete situations where expert testimony is unnecessary to establish whether a defendant’s “care, skill or knowledge…fell outside acceptable professional or occupational standards or treatment practices.” Hubbard v. Reed, 168 N.J. 387, 390 (2001). However, these situations are limited to where a juror’s knowledge as a layperson suffices to enable them, with ordinary understanding and experience, to assess a defendant’s alleged negligence without the benefit of specialized knowledge of experts.” Id. at 394. A layperson does not have the requisite knowledge and experience to determine if, for example, a particular medical procedure has been performed with the proper skill and care and within acceptable professional or occupational standards or practices. However, specialized knowledge is not necessary for a layperson to determine if the professional performed the wrong procedure. One example of such an exception applied to a negligence claim against a dentist who had pulled the wrong tooth.” Id. at 396-97.
Here, the Appellate Division held that the trial court correctly found that the claims asserted against Kapatoes substantially encompassed professional standards of care within the insurance producer industry, and thus, not open to a fair evaluation by lay jurors using only their common knowledge. The Appellate court further expounded on this line of thought, noting that the insurance business is highly regulated by a complex and intricate scheme of statutes and regulations. See generally N.J.S.A. 17:1-1 to 17:52-27; N.J.A.C. 11:17-1.1 to -7.7. The propriety of an insurance producer’s conduct in selecting and obtaining appropriate coverage “manifestly calls for expert testimony.” See N.J.R.E. 702.
The importance of this decision cannot be understated. Ultimately, Plaintiffs have the responsibility to properly assess whether the asserted claims require expert testimony, and thus require an Affidavit of Merit. In professional malpractice cases, the failure to obtain an Affidavit of Merit can be fatal to a Plaintiff’s cause of action. As a result, when defending professional malpractice cases, often, the most obvious defense is the most powerful one. Accordingly, when Plaintiff fails to obtain an Affidavit of Merit, it is imperative to file a Motion for Summary Judgment to force the Court to make a determination as to whether expert testimony is required as a matter of law.
 Audrey Shields, Esq. is a Shareholder in GRSLB&G’s Litigation Department. She defends a wide variety of clients in various civil actions brought forth in New Jersey State and Federal Courts. Audrey can be reached at firstname.lastname@example.org.
 Christopher Scott, Esq. is an Associate in GRSLB&G’s Litigation Department. He defends a wide variety of clients in various civil actions brought forth in New Jersey State and Federal Courts. Christopher can be reached at email@example.com.