When Donald Hoiland stepped on a fist-sized rock at a Jersey City construction site in November 2017, he couldn't have known his injury would spawn three consolidated appeals that would clarify critical questions about contractor liability, indemnification, and workers' compensation protections in New Jersey.
The Accident and the Litigation
Hoiland, a project superintendent for Men of Steel (MOS), was walking along an unpaved access road with a delivery driver to determine where to offload rebar. He stepped on a rock, fell, and suffered severe back injuries requiring multiple surgeries. The access road was the primary route for all delivery vehicles and had become "pretty chewed up" from heavy use, causing rocks to work their way to the surface.
Hoiland and his wife sued multiple parties: the property owners (Grand LHN), the general contractor (AJD Construction), and various subcontractors, including Esposito Construction (which built and maintained the road) and Men of Steel (Hoiland's employer).
The case ultimately went to trial with only AJD as the defendant, resulting in a $5.3 million jury verdict, with liability split 80% against AJD and 20% against Hoiland.
Three Appeals, Three Questions
The New Jersey Appellate Division consolidated three appeals arising from this single incident:
A-3553-23: Plaintiffs appealed summary judgment dismissing their claims against Grand LHN (owners) and Esposito (subcontractor)
A-3782-23: MOS appealed the trial court's ruling that it must contractually indemnify AJD for the jury award
A-2753-23: AJD appealed the denial of indemnification from MOS for penalties related to rejecting plaintiffs' offer of judgment
Workers' Compensation: The Shield That Changed Everything
A critical turning point occurred in June and September 2020, when the trial court dismissed all claims against MOS on the grounds of the workers' compensation bar. This legal doctrine prevents employees from suing their employers in civil court for workplace injuries—instead, they're limited to workers' compensation benefits.
Because Hoiland was MOS's employee, he couldn't sue MOS directly for negligence. This seemingly protective rule, however, didn't end MOS's involvement. AJD had included a cross-claim for contractual indemnification against MOS, meaning even though MOS couldn't be sued by Hoiland, it could still be required to reimburse AJD for any damages AJD was forced to pay.
Independent Contractors vs. Employees: Why Status Matters
The case highlighted the complex web of relationships at construction sites:
- Grand LHN (owner) hired AJD (general contractor)
- AJD subcontracted with MOS (rebar installation) and Esposito (demolition, excavation, road construction)
- Hoiland was an employee of MOS, not an independent contractor
This distinction was crucial. Had Hoiland been an independent contractor rather than an employee, the workers' compensation bar wouldn't have applied, and he could have sued MOS directly. But as an employee, his remedy against his employer was limited to workers' compensation benefits.
The independent contractor versus employee status also affected duty allocation. The court noted that property owners can generally assume that independent contractors and their employees "possess the skills to recognize the dangers associated with their work and calibrate their methods to ensure their safety."
The Court's Rationale: Duty, Nexus, and Contract Language
Why Grand LHN and Esposito Were Dismissed
The Appellate Division affirmed summary judgment for both Grand LHN and Esposito, applying the "operational hazard" exception to landowner liability. The court found:
- Prominent and Visible Hazard: The rocks on the access road were visible and evident to Hoiland upon ordinary observation
- Incidental to the Work: Using the access road to coordinate deliveries was incidental to the very work MOS was hired to perform
- No Non-Delegable Duty: The landowner's duty "does not entail the elimination of operational hazards which are obvious and visible to the invitee upon ordinary observation and which are part of or incidental to the very work the contractor was hired to perform."
The court rejected plaintiffs' arguments that OSHA violations or local Jersey City ordinances created liability, noting that OSHA "views regulatory enforcement, and not independent civil remedial action, as the central means to achieve workplace safety." OSHA violations are merely evidence of negligence, not negligence per se.
For Esposito specifically, the court found no duty to maintain the road because: (1) AJD admitted Esposito was only required to perform maintenance if AJD expressly requested it, (2) AJD was ultimately responsible for site safety, and (3) there was no evidence the road was unsafe immediately after Esposito's work.
Why MOS Had to Indemnify AJD
The court's analysis of the indemnification provision was meticulous. The contract stated MOS would indemnify AJD for claims that "arise from, relate to or otherwise are connected with or incidental to the Work, whether or not caused or alleged to be caused in part by Owner or Contractor."
MOS argued this language was ambiguous and didn't clearly state it would indemnify AJD for AJD's own negligence. The court disagreed, finding:
- Unambiguous Language: The phrase "whether or not caused in part by... Contractor" clearly contemplated indemnification for AJD's partial negligence
- Sufficient Nexus: Hoiland's accident occurred while he was performing his job duties in furtherance of MOS's work at the site—facilitating a rebar delivery
- Comparative Negligence Triggered Indemnification: Because the jury found Hoiland 20% at fault (and thus AJD was not solely negligent), the indemnification clause was activated
The court distinguished Esposito's situation, noting Esposito was dismissed because it owed no duty to Hoiland and bore no responsibility for the accident, so there was nothing to indemnify.
The Offer of Judgment Reversal
AJD's most significant victory arose from the offer-of-judgment issue. Plaintiffs had offered to settle for $2.75 million in December 2021. AJD rejected the offer without consulting MOS. When the jury later awarded $5.3 million, Rule 4:58-2 required AJD to pay plaintiffs' additional litigation expenses, prejudgment interest, and attorney's fees totaling over $1.8 million.
The trial court initially ruled MOS didn't have to indemnify AJD for these penalties because: (1) the indemnification contract didn't specifically mention offers of judgment, (2) AJD never consulted MOS about whether to accept the offer, and (3) the consequences of rejecting an offer of judgment couldn't have been contemplated when the parties signed their contract.
The Appellate Division reversed, finding the indemnification language requiring MOS to cover "any and all... penalties,... costs and expenses, including... attorney's fees" was broad enough to encompass offer of judgment penalties. The court emphasized that the phrase "any and all" allows for no exception with respect to those types of things thereafter mentioned.
This ruling has significant implications: subcontractors with broad indemnification clauses may be required to pay penalties arising from settlement decisions they had no part in making.
Key Takeaways for Construction Industry Participants
For Property Owners: The operational hazard doctrine provides significant protection when injuries occur from conditions that are obvious, visible, and incidental to the work being performed. However, this protection has limits—it doesn't apply to hidden dangers or conditions unrelated to the contractor's scope of work.
For General Contractors: Broad indemnification clauses can provide substantial protection, but they must be clearly drafted. Language stating indemnification applies to claims "whether or not caused in part by" the indemnitee has been repeatedly upheld as sufficient to include the indemnitee's own negligence.
For Subcontractors: Carefully review indemnification provisions before signing. Broad language about "any and all" claims, penalties, and expenses can create liability far beyond direct negligence claims—including settlement-related penalties you had no role in creating. Consider negotiating for:
- Limitations on indemnification to claims arising solely from the subcontractor's negligence
- Requirements that the general contractor consult with you before rejecting settlement offers
- Carve-outs for penalties arising from the general contractor's unilateral decisions
For Employees vs. Independent Contractors: Employment status determines available remedies. Employees injured at work generally cannot sue their employers beyond workers' compensation, but this doesn't prevent their employers from being drawn into litigation through indemnification claims.
For Everyone: OSHA violations and local safety ordinances are relevant evidence of negligence but don't create independent causes of action or impose liability on parties who otherwise owe no duty of care.
The Broader Implications
This case illustrates the modern construction site as a complex web of contractual relationships where liability can flow in unexpected directions. An employee injured by an obvious hazard cannot sue his employer (due to workers' compensation), or the property owner (due to the operational hazard doctrine), yet his employer may end up bearing substantial financial responsibility through indemnification obligations.
The case also highlights the tension between encouraging settlement through mechanisms like offers of judgment and the realities of multi-party litigation, where some defendants have indemnification rights against dismissed parties. AJD faced a complex calculus: whether to accept a $2.75 million settlement offer when it believed MOS would indemnify it if it prevailed at trial. The jury's verdict exceeded the offer by nearly double, but AJD ultimately may not bear that cost.
The February 2026 ruling provides clarity on several fronts while raising questions about fairness. Should a subcontractor bear penalties for a settlement decision it didn't make and perhaps wouldn't have made the same way? The Appellate Division answered based on contract language: if the parties agreed to "any and all penalties," that's what they get.
For practitioners, this case is a master class in construction site liability, contractual indemnification, and the interplay between workers' compensation protections and third-party litigation. For those in the construction industry, it's a reminder that the contracts signed at a project's beginning can have consequences far beyond what anyone envisioned when putting pen to paper.
*Jon L. Gelman of Wayne, NJ, is the author of NJ Workers' Compensation Law (West-Thomson-Reuters) and co-author of the national treatise Modern Workers' Compensation Law (West-Thomson-Reuters).
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