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Third Party Beneficiary of Insurance Policy Who Prevailed in Declaratory Judgment Action Against Insurance Carrier is Entitled to Award of Attorneys Fees

By on May 21, 2015 in Blog with 0 Comments

In Occhifinto v. Olivo Construction Co., decided by the New Jersey Supreme Court on May 7, 2015, the Court was asked to decide whether a third party beneficiary to an insurance policy could be considered a “prevailing party” entitled to recover attorneys fees under Rule 4:42-9(a)(6), when it prevailed against the carrier in the declaratory judgment action but did not prevail in the liability action. Robert Occhifinto sued Robert S. Keppler Mason Contractors LLC (“Keppler”) and others, seeking damages for the alleged defective construction of an addition to his warehouse. Keppler was defended by its insurance carrier, Mercer Mutual Insurance Company (“Mercer”). However, before the trial of the liability matter, Mercer filed a declaratory judgment action, challenging its obligation to provide coverage and defend Keppler in the liability action.

Occhifinto, on behalf of Keppler, contested the claims raised by Mercer and filed a counterclaim, asserting that Mercer had a duty to defend and indemnify Keppler under the policy and that Mercer was obligated for the counsel fees he incurred in defending the declaratory judgment action. The trial court found that Mercer was required to defend and indemnify Keppler under the policy but reserved judgment as to Occhifinto’s claim for attorneys fees until the conclusion of the liability action.

The liability action proceeded and Occhifinto did not prevail against Keppler. The jury found that Keppler did not proximately cause the failure of the warehouse floor and awarded no damages. After trial, Occhifinto tried to recover counsel fees from Mercer pursuant to Rule 4:42-9(a)(6), which permits an award of attoneys fees in “an action upon a liability or indemnity policy of insurance in favor of a successful claimant.” The trial court denied Occhifinto’s motion, holding that he was not a successful claimant in the liabilty action because he was not entitled to indemnity coverage in the liability action – due to his failure to obtain an award against Keppler.

The Appellate Division affirmed. The Supreme Court granted certification on the limited issue of Occhifinto’s right to counsel fees.

The Supreme Court held that Occhifinto was a successful claimant entitled to counsel fees under this court rule. The trial court had determined that Mercer would have been required to indemnify Keppler in the event Keppler was found liable. By forcing Mercer to defend the liability action, Occhifinto obtained a favorable adjudication on the merits of a coverage question, rendering Occhifinto a successful claimant under Rule 4:42-9(a)(6).

The Court found that the term “successful claimant” is broadly defined as a party that succeeds on any significant issue in litigation which achieves some benefit to the parties bringing the suit. This term also includes a third party beneficiary of a liability insurance policy who litigates a coverage question against a defendant’s insurance carrier.

Here, a coverage question includes the duty to defend question. Even though, there was ultimately no indemnification because Keppler was found not liable to Occhifinto, regardless, Occhifinto had been successful in persuading the trial court that indemnification would have been owed, had there been an adjudication against Keppler in the underlying liability action. Hence, the Supreme Court held that Occhifinto was a successful claimant and was entitled to an award of attorneys fees under this court rule.


About the Author

About the Author:

Ms. Ramos is an Executive Committee Member and Co-Chair of the Litigation Department at Capehart Scatchard, P.A. located in Mount Laurel, New Jersey. She is an experienced litigator with over 30 years experience handling diverse matters. Practice areas include tort defense, business litigation, estate litigation, tort claims and civil rights defense, construction litigation, insurance coverage, employment litigation, shareholder disputes, and general litigation.

For the years 2020-2023, Ms. Ramos was selected for inclusion in The Best Lawyers in America© in the practice area of Litigation - Insurance. The attorneys on this list are selected based upon the consensus opinion of leading lawyers about the professional abilities of their colleagues within the same geographical area and legal practice area. A complete description of The Best Lawyers in America© methodology can be viewed via their website at: https://www.bestlawyers.com/methodology.

In 2021, Capehart Scatchard and Ms. Ramos received the “Best Law Firm” ranking in the area of Litigation – Insurance (Metro, Tier 3) published by U.S. News & World Report and Best Lawyers®. Law firms included on the list are recognized for professional excellence with consistently impressive ratings from clients and peers. To be eligible for a ranking, a firm must have at least one attorney who has been included in the current edition of Best Lawyers in America, which recognizes the top five percent of practicing lawyers in the United States. Betsy Ramos (Litigation – Insurance) was recognized for this prestigious award in the 2021 edition. For a description of the “Best Law Firm” selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

“Best Law Firms” is published by Best Lawyers in partnership with U.S. News & World Report. For a description of the selection methodology please visit: https://bestlawfirms.usnews.com/methodology.aspx.

*No aspect of this advertisement has been submitted to or approved by the Supreme Court of New Jersey.


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