Author: Michael A. Bono

Court Rejects Jeweler’s Fragile Argument Against Brinks

Anyone dealing in the world of jewelry, fine art, or specie is all too aware of the limitation of liability clauses that appear in shipping contracts.  That issue was front and center in a recent appellate court decision in New York, Maxine v. Brinks. Plaintiff, a jewelry retailer, used Brinks to ship 157 “ornate pieces of handmade jewelry” from plaintiff’s New York City facility to a department store in Virginia. The items were contained in a soft-sided rolling suitcase, and the airbill listed a declared value of $2 million. The retail value, according to invoices, was more than $6,000,000, with a wholesale value about half that amount. While in transport, the shipment was damaged, and plaintiff’s claim was over $600,000.  In the trial court, Brinks was awarded summary judgment and the complaint was dismissed. The airbill contained a provision limiting Brink’s liability to lost shipments, unless specific items were identified and their values declared – which would have required plaintiff to pay additional charges for the shipment.  On appeal, plaintiff claimed that the limitation of liability was ambiguous, because it required identification of a “fragile” item — a term not defined anywhere in the Brink’s airbill. But in its decision, the appellate court pointed out that plaintiff was unable to overcome the other provision in the airbill that excluded breakage for jewelry.  Specifically, the provision excluded “BREAKAGE of statuary, marble, glassware, bric-a-brac,’ porcelain, decorative items including jewelry and similar fragile articles…” Plaintiff tried to claim that provision was buried in small print and was also ambiguous because it lumped together a number of items in an unclear manner, and appeared to only apply to breakage of “fragile jewelry” or certain decorative items.   But the Court rejected plaintiff’s claims, finding that the list clearly excluded the enumerated items, including jewelry, and that a definition for fragile only needed to be applied if an item was not specifically listed.  Thus, the trial court’s decision to dismiss the complaint was upheld. If you would like more information about this case, please write to mbono@wcmlaw.com.    Read More

“Employee Exclusion” Gains Further National Support

The “Employee Exclusion” found in many CGL policies has been upheld for some time in New York.  Originally, it only applied to losses involving an employee of the named (or additional) insured, and over time the language was modified to extend the exclusion to claims involving anyone working on behalf or retained by the insured. This modified language has also been upheld in New York, and recently, an Illinois federal court has recently followed New York courts in interpreting an Employee Exclusion in favor of the insurer. In Nautilus Ins. Co. v. Jona Enterprises, Inc., the insured, Jona, was a general contractor at a job site. Jona retained a subcontractor which in turn hired the injured worker. The policy contained an Employee Exclusion that bars coverage for injuries to the insured’s employee, defined as “any person . . . hired by, loaned to, leased to, contracted for, or volunteering services to the insured, whether or not paid by the insured.” The court followed New York’s Appellate Division and ruled that the injured worker was the insured’s employee because he was “contracted for” the insured to work at the job site even though he was not paid by the insured. Read More

Court’s Decision Shows “LOVE” to Sculptor (NY)

Robert Indiana’s “LOVE” sculpture is very well known.  It is displayed in parks and museums throughout the world, and its image has been reproduced on postage stamps and the like. Over the years, Indiana entered into a series of production agreements with John Gilbert, including a 2007 deal for the creation and production of a sculpture in Hindi script of the word love, which in Hindi, is “Prem.”  Three versions of the sculpture were depicted in the contact, and contract also included “derivate works” of those three versions.  The contract did not contain, however, any provision for a version with the English letters P,R,E and M, which a partner of Gilbert later designed. Gilbert claims that he showed an English Prem version to Indiana, and that Indiana approved the design.  He also alleged that Indiana signed  — on a blank space on a page, and not the signature line — a certificate of authenticity to accompany the sale of such a version.  However, Indiana later disputed that he approved the design, calling it a “monstrosity.” Further, within a few days of signing the certificate, he denied that he was the creator of that piece.  Gilbert then filed suit, with the causes of action sounding in breach of contract, as he wanted to be able to sell the English Prem version as an authentic Indiana design. Indiana eventually moved for summary judgment.  The Court found that there was no dispute about the fact that the English Prem version was not included in terms of the contract.  The Court also found that the Hindi version was completely different than the English version, could not be a derivative work, and therefore did not fit within the contract’s definition of  “Licensed Works.” The Court also rejected claims that Indiana’s actions modified the Contract, particularly because the contract had a “merger clause” that provided “The Agreement contains the entire understanding between the parties.”   Neither an oral approval of the design or a signature of the Certificate of Authenticity, even if not in dispute, would serve to modify the written agreement. The Court therefore dismissed the complaint — and thus the sculptures cannot be considered authentic Indiana works. If you would like more information about this post, please write to Mike Bono at mbono@wcmlaw.com  Read More

Court Sees Through Plaintiff’s Claim of Optical Confusion (NY)

In Hanger v. 116 Lexington Ave., Inc., plaintiff fell on a five-inch single step transition at the entrance to a second-floor banquet room at a restaurant in midtown Manhattan.  Plaintiffs’ engineering expert opined that the similarity in the flooring of the hallway and the banquet room obscured the step.  However, defendants moved for, and were granted summary judgment, arguing that the step was not a latent dangerous condition, and even if it was, adequate warnings of the step were provided. Plaintiff appealed, arguing that the motion court erred in dismissing their complaint because the conditions of the step area created “optical confusion,” rendering the step dangerous.  Although a step may be dangerous where the conditions create optical confusion,  certain factors need to be considered.  Specifically, courts will look to the similarity in surface colors, and whether the edge of the step created the illusion of a level surface and if there were any signs warning of the step. The Appellate Division found no “optical confusion” existed and affirmed the lower court’s ruling, as the step in question had four reflective strips positioned parallel to the step and a sign, which read “Step Down” with an arrow pointing diagonally downward toward the step. Thanks to Joe Fusco for his contribution to this post. If you would like further information, please write to mbono@wcmlaw.com    Read More

Controversy Surrounds Art Hunter’s Quest for Nazi Seized Art

Baron Ferenc Hatvany, a member of Hungary’s richest families, was a noted art collector who, like many others, was forced to relinquish his collection to the Nazi’s during World War II. Most of the collection remains missing, but an interesting story has emerged involving a Viennese art historian, Burkhart List, who is going to lead an expedition into an old silver mine in the Erzgebirge Mountains, near the Czech-German border, where he believes over 150 works from the collection have been stashed — which could be worth in the neighborhood of $800 million. But according to ARTINFO, controversy has emerged because List is not acting for the Hatvany family or its foundation.  List claims he is not in it for the money, but skeptics claim he is acting with the son of a former lawyer for the Hatvanys, who believes he has a claim on any newly-discovered art. It will be interesting to see how this tale plays out.  If you would like more information, please write to Mike Bono at mbono@wcmlaw.com.Read More

“Any” Means “Any,” even in New Jersey

The “employee exclusion” of the CGL policy has been upheld by courts throughout the country, and the trend continued in New Jersey in the recent case of Gabriele v. Lyndhurst Residential Community, L.L.C. There, a construction management company hired a subcontractor to install a sprinkler system in a new construction project.  The foreman of the subcontractor was killed when he was struck by a pallet that fell from the sixth floor of the building project.  The construction management company filed a third party suit against the subcontractor’s insurance company, seeking a declaration that the insurer was required to defend and indemnify the management company as an additional insured under the policy. The insurer argued that two exclusions in its policy applied to this accident: exclusions of claims 1) for personal injuries to “an employee of any insured”; and 2) for any liability for personal injuries that do not arise solely out of the named insured’s work.  The trial court decided, on cross-motions for summary judgment, that neither of the exclusions applied, and thus that the insurer was required to provide the coverage sought. On review, the Appellate Division reversed the trial court’s declaratory judgment, citing the first exclusion as the basis for its decision.  The court held that an endorsement to the policy clearly stated that the coverage did not apply to personal injury to an employee of any insured arising out of or in course of, or as a consequence of, employment by any insured.  Furthermore, the language in the endorsement clearly superseded the original policy language that merely excluded from coverage those claims for personal injury made by “an employee of the insured,” because the endorsement itself stated that it changed the policy. Thanks to Christina Emerson for her contribution to this post. If you would like further information, please write to mbono@wcmlaw.com.Read More

Court Cleans Up Definition of Employee Under Worker’s Comp Law (NJ)

One of the key issues in dealing with workers’ compensation benefits is who is considered to be an “employee” under the law.  Recently, the Appellate Division determined that an employee is not necessarily someone who comes to clean your home. In Lukasik v. Holloway, the Appellate Division reversed the judgment of the workers’ compensation judge who found that a cleaning woman was an employee of the owners of the home where she was injured.  The cleaning woman, Luz Lukasik, had contracted with the homeowners to clean their home once per week for the sum of $100.  On the first day of her scheduled cleaning she was injured, sustaining a fractured hand and wrist.  Thereafter, she returned to work, but had others do the cleaning at her direction. The workers’ compensation court found that Lukasik was an employee under the statute, and that she was entitled to more than 110 weeks of benefits due to her injuries.  The Appellate Division reversed, holding that Lukasik was an independent contractor because she retained primary control over what work she would do, when she would do it, and how the work would be performed.  Additionally, Lukasik was not substantially financially dependent upon the homeowners for her income, nor were her services somehow integral to the homeowners’ regular business.  Lukasik was merely cleaning their home. While the Appellate Division specifically stated that it did not find that cleaning people are always independent contractors, this opinion does clarify where the line will be drawn. Thanks to Christina Fullam-Emerson for her contribution to this post.  If you would like further information, please write to mbono@wcmlaw.com      Read More

IRS Wants $29 Million for Artwork That Can’t Be Sold

The heirs of New York art dealer Ileana Sonnabend have been placed in quite the quandary.  They have inherited a work of art that cannot legally be sold — but the IRS claims that they owe $29 million in taxes based on their appraised value of the work. Robert Rauschenberg was an American artist known for his unique  “combines,” in which he put together various objects, often to accompany paintings.  The work at issue here, Canyon, included a stuffed bald eagle.  Sale of a bald eagle is illegal under federal law.  Indeed, possession of a bald eagle, alive or dead, is a violation of the Bald and Golden Eagle Protection Act, but a waiver was obtained for this work years ago because it was shown that the eagle was killed before the law went into effect. Because of that law, it would be illegal for the heirs to sell the work.  But the IRS’s Advisory Law Panel put a valuation of $65 million on the work, allegedly because it could, in theory, be sold on the black market.  That appraised value created a tax bill of more than $29 million. The ruling has been challenged in tax court, and we will continue to follow this matter. If you would like more information, please write to Mike Bono at mbono@wcmlaw.com      Read More

Statute of Limitations Sours Wine Collector’s Lawsuit (NY)

In 1988, wine collector William Koch purchased $400K of wine under the guise that it was from Thomas Jefferson’s personal collection.  Long after learning that was not true, in 2010, he filed suit, alleging civil RICO conspiracy and common law fraud claims. The Second Circuit ruled that the statute of limitations had passed, and thus affirmed the trial court’s dismissal of the suit. The lynchpin of the Court’s decision was that the standard for both claims hinged on “inquiry notice,” as opposed to actual notice. In November and December of 1988, Koch purchased the bottles through wine selling intermediaries. Christie’s advertised bottles from the same cache as “assumed to have been the property of Thomas Jefferson,” thus bolstering Koch’s belief that the wine was authentic. It was the early 1990’s when Koch first read articles casting doubt on the authenticity of the Thomas Jefferson wine. The reports were enough to incite Koch to hire a group of attorneys in 1993 to investigate these rumors. He sought further legal advice in 1993 and 1995, and by 2005, Koch had seen an official report from Monticello declaring that it was doubtful the wine actually belonged to Jefferson. Despite years of warning signs, Koch did not file suit against Christie’s until March 30, 2010. The District Court ruled that the statute of limitations for RICO cases begins to run as soon as there are warnings that should have prompted inquiry into a potential injury. A similar rule applies to New York common law fraud claims. The appellate court affirmed the trial court’s decision in respect of both claims, holding that Koch had reasonable inquiry notice at least 10 years prior to filing suit.  Finally, the Court ruled that Koch could not argue fraudulent concealment by Christie’s because Koch did not use reasonable diligence in pursuing discovery of his legal injury, a key element of this claim. Thanks to Thalia Staikos for her contribution to this post. If you would like further information, please write to Mike Bono at mbono@wcmlaw.com      Read More

Uniquely Dangerous Condition at Water Park Can’t be Assumed (NY)

Anyone who has ever been to a water park appreciates there are a lot of different ways to get hurt.  But recently, in Mussara v. Mega Funworks, a New York appellate court held that because the type of dangerous condition was “unique,” plaintiff’s lawsuit was not barred by the assumption of risk doctrine and could proceed. As the plaintiff exited the water slide, he was thrown across a 50-foot pool and hit the cement on the other side. The water park argued that the plaintiff had assumed the risk of injury when he rode the slide. The park posted a warning sign and the plaintiff admitted that he checked the sign but did not read the warning.  Nevertheless, the court ruled against the water park and held that the assumption of risk doctrine does not apply where the dangerous condition posed by the ride is unique and is “over and above the usual dangers that are inherent in riding down a water slide.”   In this case, the court ruled, the plaintiff  had not assumed the risk of being thrown across a pool because there was no evidence that he was aware of that possibility.   Indeed, the Court list a number of potential ways that a person might expect to get hurt at a water park, but this wasn’t one of them.  Rather, the plaintiff only assumed the risk that he would be injured despite the slide working as intended. Thanks to Mendel Simon for his contribution to this post.  If you would like further information, please write to mbono@wcmlaw.com    Read More