NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION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.

PER CURIAM.

We granted leave to three insurers — American Guarantee and Liability Insurance Company, Clarendon America Insurance Company, and Imperium Insurance Company f/k/a Sirius America Insurance Company (collectively, the insurers) — to appeal interlocutory orders which implicitly required adjudication of plaintiff's claim that the insurers are obligated to indemnify the alleged tortfeasors prior to an adjudication of plaintiff's damages claim against the alleged tortfeasors. Finding, in these circumstances, no principled reason for creating an exception to the time-honored common law rules that "a stranger to an insurance policy has no right to recover the policy proceeds," Ross v. Lowitz, 222 N.J. 494, 512 (2015), and that plaintiffs in tort actions may not directly sue a tortfeasor's insurer, Cruz-Mendez v. ISU/Ins. Serv., 156 N.J. 556, 566-67 (1999), we reverse.

We briefly describe the events that brought this issue to our attention. In 2010, plaintiff Larry Chenault commenced this action against defendants Victory Highlands Condominium Association, Inc., and Marshall & Moran, LLC, alleging personal injuries and property damage because of a mold condition in plaintiff's unit of a condominium owned and operated by Victory and managed by Marshall. In 2012, plaintiff, Victory, and Marshall reached a settlement and executed an agreement, which: (a) acknowledged plaintiff's right "to retain an expert in the field of Insurance Archeology and Reconstruction to determine coverage [for Victory and Marshall]"; (b) provided plaintiff with "the right to maintain his claim against the parties for the sole purpose of attempting to recover under such insurance polic(ies) for damages in excess of" $110,000 (the settlement proceeds); and (c) allowed plaintiff to "retain all rights to any applicable insurance coverage that has yet to be identified or has previously disclaimed coverage and related claims." No rights possessed by Victory or Marshall were assigned to plaintiff, no judgment was entered against either Victory or Marshall, and the settlement agreement was executed without notice to or the consent of the insurers.

Upon later discovering the insurers' policies, and in light of his belief those policies obligated the insurers to indemnify Victory or Marshall, plaintiff moved to reopen his suit against Victory and Marshall. The trial judge granted plaintiff leave to file an amended complaint which would include his claim for damages against Victory and Marshall as well as his claim for a declaratory judgment against the insurers. The judge, however, rejected plaintiff's argument that, in light of the "no action" clauses in the policies in question and the common law prohibition against an injured party's suit against tortfeasors' insurers prior to entry of a judgment against the tortfeasors, plaintiff first be permitted to litigate his claim against Victory and Marshall before proceeding against the insurers. Plaintiff also forcefully argued in the trial court that the factual issues relevant to the insurers' duty to indemnify were significantly "intertwined" with factual issues relevant to his claims against Victory and Marshall. The trial judge rejected plaintiff's contentions and ordered that plaintiff pursue in this same lawsuit, by way of amended complaint, the claims against the insurers. We also discern from the orders under review that the trial judge intended that the coverage disputes be adjudicated prior to the adjudication of the damage claims against Victory and Marshall.

We start our examination of the trial judge's ruling with an understanding — as conceded by insurers' counsel during oral argument — that no particular harm or prejudice arises from the mere pleading of the declaratory judgment actions within the same suit against Victory and Marshall. Any cognizable harm or prejudice to the insurers, and any frustration of the common law rule prohibiting an injured party's suit against a tortfeasor's insurer prior to entry of judgment against the tortfeasor, would result only by proceeding further with the declaratory judgment action without first a disposition of the claims against Victory and Marshall. This, in fact, seems to be the course fixed by the trial judge.

This ordering of the claims seems based on the settlement agreement's condition for reopening the claim against Victory and Marshall — a condition dependent upon plaintiff "identif[ying]" "applicable insurance coverage," which the judge seems to have interpreted as first requiring a final adjudication of the coverage disputes. We think it more likely the condition for reopening the case against Victory and Marshall was contingent upon identifying one or more potential fonts of coverage, not a final adjudication of their actual existence. But, even if we were to concur with the idea that the settling parties envisioned plaintiff would be required to first establish the obligation of an insurer to indemnify either Victory or Marshall, or both, in order to reopen the suit against Victory and Marshall,1 we reject the notion that the parties could arrogate unto themselves in this manner the right to bypass the common law prohibition on such an action absent a determination of liability on the damage claims against an insured.

Accordingly, we reverse to the extent the orders under review compel adjudication of the claims against the insurers prior to adjudication of plaintiff's claims against Victory and Marshall. We do not, however, in the particular circumstances of this case, find fault with the order insofar as it required the assertion of plaintiff's causes of action against the insurers. As we have observed, the insurers have not been prejudiced or harmed by appearing in the action and pleading in response to the amended complaint. Any harm or prejudice would arise from their further participation in an adjudication of plaintiff's declaratory judgment claims; this is not likely an inexpensive undertaking if there is truth to plaintiff's claim that the coverage disputes are factually intertwined with the underlying cause of action against Victory and Marshall. The adjudication of the coverage claims must await the disposition of the claims against Victory and Marshall. Our disposition is further propelled by a concern that the coverage disputes, if decided in plaintiff's favor, could conceivably lead to an award of fees in plaintiff's favor, while the possibility would exist that a disposition of the claims against Victory and Marshall might render academic the results of the coverage dispute. These circumstances compel our mandate that the claims against Victory and Marshall be adjudicated prior to any further consideration of the coverage disputes with the insurers.

In short, requiring first the adjudication of the coverage action puts the cart before the horse. The common law rule upon which the insurers rely, which has stood in good stead in our jurisprudence for many years, and common sense as well, dictate that the claims against Victory and Marshall proceed to a conclusion before the insurers are put to the task of defending against the declaratory judgment claims.2

Reversed in part and remanded for further proceedings in conformity with this opinion. We do not retain jurisdiction.