The matter of Eugene Grebowicz v. All American Roofing as been bifurcated to determine a choice of laws issue – i.e. should the laws of New Jersey or Delaware pertain regarding the responsibility of a general contractor when a subcontractor is uninsured.  The New Jersey Statute requires a general contractor to have insurance and obligates them to pay if the subcontractor is uninsured.  The Delaware Statute has no similar provision.

On April 23, 1998, the general contractor, All American Company, Inc. contracted with subcontractor, Darius Jakowiak to do a roofing job at site located in Wilmington, Delaware.  All American Roofing Company, Inc. is a Delaware business.  Darius Jakowiak is a New Jersey resident and his business and employees reside in New Jersey.  All American Roofing contracted with Darius Jakowiak to provide a crew to handle the roofing at the construction site.

All American Roofing Company, Inc. advised Darius Jakowiak that he must have Workers’ Compensation coverage before beginning the work.  All American Roofing was aware that the insurance coverage was required.  Nevertheless on April 25, 1998, Darius Jakowiak appeared at the site with a crew of men all of which were New Jersey residents.  The crew was allowed to commence working without showing proof of Workers’ Compensation coverage.  Eugene Grebowicz who was hired by the subcontractor, Darius Jakowiak, fell ofF the roof and sustained multiple injuries.  The petitioner, Eugene Grebowicz incurred approximately $75,000.00 in unpaid medical bills and approximately two months of unpaid compensable lost time from work.  Neither the general contractor nor the subcontractor had Workers’ Compensation Insurance.  The general contractor permitted the subcontractor Darius Jakowiak to hire a New Jersey crew to do work in Delaware.

Since the general contractor and subcontractor did not have Workers’ Compensation coverage, the petitioner applied to the New Jersey Uninsured Employer’s Fund.  The Uninsured Employer’s Fund is a trust fund that serves as a source of last resort where there are no other sources to compensate the injured worker in cases where the employer failed to maintain Workers’ Compensation coverage.

N.J.S.A. 34:15-79 provides in part that, “any contractor placing work with a subcontractor shall, in the event of the subcontractor’s failing to carry Workers’ Compensation insurance as required by this article, become liable for any compensation which may be due an employee or the dependents of a deceased employee of a subcontractor.  The general contractor shall then have a right of action against the subcontractor for reimbursement.

In this case, we have a general contractor which admits that it hired a subcontractor from New Jersey to do roofing work for him although the subcontractor never presented proof of Workers’ Compensation Insurance.  One of the public policies behind N.J.S.A. 34:15-79 is to place the responsibility on the general contractor to make sure that the subcontractor it uses maintains Workers’ Compensation Insurance pursuant to N.J.S.A. 34:15-71.

Although All American Roofing Company, Inc. is a Delaware company it still availed itself to New Jersey laws by contracting with a New Jersey subcontractor which hires New Jersey employees.  Here, there is minimum contacts for the New Jersey Workers’ Compensation Laws to exercise personal jurisdiction over All American Roofing Company, Inc.    International Shoe Co., vs. Washington, 326 U.S. 310 at 316.  The case at hand provides that personal jurisdiction is met if the court finds 1.) minimum contacts and 2.) traditional notions of fair play and substantial justice.  The general contractor hired the New Jersey subcontractor to do work.  The general contractor could have hired a Delaware subcontractor to do the work.

New Jersey employs a governmental-interest analysis with respect to choice of law matters.  The first step of this analysis entails an inquiry into whether there is an actual conflict between the laws of the respective states.  Gantes v. Kason Corporation, 145 N.J. 478, 484 (1996).  This first prong is satisfied by the fact that New Jersey law requires a general contractor to carry Workers’ Compensation Insurance, whereas Delaware law does not.

The second prong of the governmental interest analysis seeks to determine the interest that each state has in resolving the specific issue in dispute.  Such analysis requires the court to “identify the governmental policies underlying the law of each state and how those policies are affected by each state’s contacts to the parties.”  Id at 485. 

“Whether the policy that underlies the law of a state gives rise to a governmental interest calling for the application of that state’s law depends on the nature of the contacts that the state has to the litigation and to the parties.”  Gantes at 487.  The types of contacts that the court will look to in a personal injury situation include the place of injury, the place of contracting, where the parties maintained their businesses, etc.  See Eger v. E.I. DuPont DeNemours Company, 110 N.J. 133(1988).

The respondent relies on Eger v. E.I. DuPont DeNemours Company, 110 N.J. 133 (1988) in support of its position.  There is a significant fact that distinguishes the present care from Eger.   In Eger, the plaintiff could recover through the South Carolina company’s Workers’ Compensation Insurance.  The plaintiff was seeking additional recovery through a tort claim, trying to bring such claim in New Jersey.  In the case at bar, unless New Jersey law applies, the petitioner will be denied compensation benefits.  In Melik v. Sarahson, 49 N.J. 226, at 233, and Mullane v. Stavola, 101 N.J. Super. 184, auto accident cases occurring in foreign states, the New Jersey courts disregarded the immunity recognized by the foreign states since there was no real interest in having their law applied to New Jersey residents; whereas New Jersey had a great concern in seeing that its injured residents received compensation.

It is clear that New Jersey has a greater interest in this case, since one of its citizens would be deprived of benefits after a very serious work-related accident.

To allow respondent to avoid its responsibility would place an undo burden on the Uninsured Employer’s Fund which is funded by a surcharge on insurance premiums paid by law abiding employers.  This is of paramount importance to the State of New Jersey.

The only concern that Delaware may have is to lessen the overhead cost of an employer.

When one compares the equities in this case, it is obvious that rights of an injured worker are paramount to an employer who does not purchase its own insurance and allows uninsured subcontactors to work on its site.

Therefore, I find that the law of the State of New Jersey prevails.

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                                                                        Renee Ricciardelli
                                                                        Judge of Compensation