Author: Mike Gauvin

Plaintiff’s Case Melts Away on Constructive Notice Against Wholesale Club (NJ)

In the winter climes of New Jersey, we never trust the weather forecaster, and always prepare for precipitation.  In the case of Cortes v. BJs Wholesale Club, the commercial retailer successfully made it through the snow and summary judgment on the issue of constructive notice.

The plaintiff, who had been shopping in the store for thirty minutes, slipped and fell on a two foot wide puddle of water within the BJ’s store, which allegedly stemmed from melted snow from an abandoned shopping cart in an aisle.  The existence of the puddle was not disputed.  However, the plaintiff was unable to establish how long the puddle existed, what caused it, or whether or not anyone else had encountered the puddle prior to her fall, such that the store may have been provided notice of the condition.

BJ’s successfully demonstrated that it had maintained a routine inspection schedule, which included monitoring of hazards on the store’s floor.  The District Court noted that regardless of the presence of the melted water, there was no evidence put forth by the plaintiff to support the theory that the store should have known that the puddle existed, and the plaintiff’s theory of constructive notice melted away.

Thanks to Emily Kidder for her contribution to this post.  Please email Mike Gauvin with any questions.

Pennsylvania Court Overturns “Grossly Excessive” Verdict (PA)

No defense attorney or insurance professional wants to be in a position where they have to challenge the size of a verdict, but one recent decision from the Superior Court of Pennsylvania shows why trying to do so is sometimes worth the proverbial shot.

In Guirlene v. Ryan, the plaintiff had been injured in a motor vehicle accident.  She alleged that she was driving in Philadelphia when she was rear-ended by a vehicle operated by the defendant.  Her injuries included neck, shoulder, and back pain and she was treated with physical therapy, ibuprofen, two injections, and MRIs and EMGs.  The plaintiff’s expert testified that she may have possible future medical care costs nearing $600,000, however, her expert did not opine that she would incur those costs.

Following trial the jury returned a verdict awarding Guirlene with $600,000 in future economic damages for future medical expenses. The jury did not award Guirlene any non-economic damages. The jury found that Guirlene did not suffer a serious impairment of bodily function.  However, because Guirlene was a limited-tort plaintiff, under 75 Pa.C.S. § 1705(a)(1) she “may seek recovery for all medical and other out-of-pocket expenses, but not for pain and suffering or other nonmonetary damages unless the injuries suffered fall within the definition of ‘serious injury’ . . .”

As such, on May 10, 2018, counsel for Jaremijczuk filed a post-trial motion to set aside the verdict, and to order a new trial on all issues. The Court of Common Pleas of Philadelphia County granted Appellee’s motion finding that the jury’s $600,000 verdict was “against the weight of the evidence and so grossly excessive as to shock its sense of justice; and, second, it stated that the verdict slip incorrectly permitted the jury to consider the question of future economic damages before determining whether Ms. Jean-Baptiste had suffered a serious injury.” See TCO at 6, 10-11. The Superior Court of Pennsylvania stated that Guirlene’s expert testified that she had experienced some improvement of her pain through use of ibuprofen and therapy, and that her social activities were not affected, and she only missed three days of work because of the accident and continues to work full time. The Court therefore found that the evidence outlined does not suggest that her future medical expenses will amount to $600,000. The Court upheld the trial court’s order, finding that because the jury found that Guirlene did not suffer a serious impairment of a body function, the jury’s verdict awarding $600,000 was against the weight of evidence and so grossly excessive as to shock the court’s sense of justice.

Thanks to Emily Finnegan for her contribution to this post.  Please email Mike Gauvin with any questions.

Courts are Reluctant to Dismiss a Case at the Pleadings Stage–Especially on “Negligent Failure to Market” Grounds (PA)

On February 24, 2020, Judge Kim R. Gibson of the United States District Court for the Western District of Pennsylvania denied a defendant truck leasing company’s motion to dismiss the plaintiff’s complaint because she determined that the plaintiff’s allegations gave sufficient notice of strict liability claims, and were not negligent failure to market claims, which are not recognized by Pennsylvania Law.

In Shimmel v. Navistar International Corp., plaintiff John Paul Shimmel and his mother and duly appointed guardian (collectively, the “Shimmels”), brought a personal injury action against Navistar International Corporation, Rush Truck Leasing and Rush Truck Centers of Virginia, Inc. (collectively, “Rush”), alleging negligence and strict liability.  The case stems from a motor vehicle accident. A truck leased by Rush, and driven by co-defendant Wei Jang (“Jang”), was traveling on State Route 322 in Pennsylvania when Jang could not stop and swerved into the adjacent lane. John Paul Shimmel was on his motorcycle on the same Route 322 when Jang’s truck swerved into his lane. He “ditched” the motorcycle to avoid the collision, and as a result, he slid into a nearby guardrail and suffered severe injuries. The Shimmels claimed that the truck’s lack of warning equipment or automatic braking equipment evidenced a defective design. The Shimmels also claimed that Rush was strictly liable for failing to market the truck with a forward collision warning system.

Rush moved to dismiss the Shimmels’ complaint, arguing that the defective design claims were actually negligent failure to market claims, which Pennsylvania law does not recognize except for pharmaceuticals. According to Rush, it has no duty to educate customers with respect to the product’s safety features, or to market their products with certain safety features. The court, however, disagreed.

The court reasoned that the Shimmels sufficiently plausibly pled a strict liability defective product claim against Rush because the complaint adequately pled that Rush was in the business of leasing vehicles like the truck, and a lessor is strictly liable for defects in products it leases. The Shimmels pled facts sufficient to give notice that the truck was defective. Although part of the Shimmels claim alluded to negligent failure to market, the claim alleged facts sufficient to plead strict liability.

The court’s denial of Rush’s motion in Shimmel reaffirms that courts are reluctant to dismiss a case at the pleadings stage.  If a plaintiff plausibly pleads the elements of a cause of action, the complaint will not be dismissed out of the box.

Thanks to John Lang for his contribution to this post.  Please email Mike Gauvin with any questions.

Court Takes a Limited-Brush Approach to Application of “Named Perils” Coverage (NJ)

In coverage disputes, courts and counsel for the insured often lose sight of the type of policy at issue and the triggering language in a coverage grant.  But as one recent New Jersey decision demonstrates, most courts are still faithful to clear policy language.

In Cusamano v. NJ Insurance Underwriting Ass’n, the insureds sought coverage under their homeowner’s insurance policy after the New Jersey duplex they owned sustained damage from a leaking pipe. The insurers argued that no coverage existed because the particular water damage is not a “named peril.”  The trial court had disagreed, and held that because the couple’s policy didn’t specifically exclude water damage from leaky pipes, there was enough ambiguity to resolve the dispute in their favor. But on appeal, the Appellate Division reversed, and held that there was no coverage in the first instance.

In doing so, the court reasoned that the policy was a named perils policy, meaning that it provided for loss caused by particular perils included in the policy.  Because the policy did not list water damage from leaking pipes as a covered peril, no coverage existed in the first instance.  For that reason, the absence of an exclusion did not revive coverage.

Cusamano is a decision that should provide some comfort to insurers.  Not only does it highlight the distinction between “Open” and “Named” perils coverage, it also reaffirms principle that all coverage analysis begins with the initial coverage grant of coverage.  It was also significant for reaffirming that courts need not consider an insured’s reasonable expectations when the policy language is clear.

Thanks to James Papadakis for his contribution to this post.  Please email Mike Gauvin with any questions.

Progressive Facing Class-Action Lawsuit for Stiffing Thousands on Totaled Cars (NJ)

As we’ve recently seen, some courts have seen the wisdom in treating insurance policies as individual contracts.  But that may or may not be the case for Progressive Insurance, which faces a class action lawsuit in New Jersey Federal Court for allegations that it stiffed thousands of customers on fees such as title transfer and registration transfer fees when covering insureds’ claims for cars that were deemed totaled.

The lawsuit sounds in breach of contract as plaintiff’s are alleging that Progressive and New Jersey Insurance Co. violated their policies by failing to pay the costs of those fees as part of the actual cash value of their vehicles. Plaintiff’s argued that an ACV policy indemnifies insureds such that the payment for the loss of a legally titled and registered vehicle legally operable in New Jersey necessarily includes, at minimum, an amount sufficient to legally operate a vehicle in New Jersey, just as the insureds did prior to the loss.

Plaintiff’s attorneys are currently arguing that the case meets the requirements for Rule 23 certification, including that a class action is a superior means of resolving the claims.

We will continue to monitor this case, Ferrara et al. v. Progressive Garden State Ins. Co., C.A. No. 2:20-cv-01183 (SRC)(CLW).

Thanks to Jonathan Avolio for his contribution to this post.  Please email Mike Gauvin with any questions.

Dead Man’s Act Kills Plaintiff’s Recovery (PA)

Pennsylvania is a jurisdiction with a Dead Man’s Act, which provides that “where any party to a thing … is dead … and his right thereto or therein has passed … to a party … who represents his interest … any surviving or remaining party to such thing … shall [not] be a competent witness to any matter occurring before the death of said party.” 42 Pa.C.S.A. § 5930. Under this Act, “surviving parties who have an interest which is adverse to [the] decedent’s estate are disqualified from testifying as to any transaction or event which occurred before [the] decedent’s death.” Hera v. McCormick, 425 Pa.Super. 432, 625 A.2d 682, 688 (1993).

In one recent decision, Jones v. Plumer, the Superior Court of Pennsylvania applied that statute to award summary judgment to the estate of a deceased, alleged tortfeasor.  In Jones, the plaintiff, was a tenant in an apartment building owned by the defendant’s decedent.  According to the plaintiff, she tripped on the premise’s steps and sustained injuries to her wrist.  Before suit was filed, the landlord passed away.  In the ensuing litigation, the plaintiff alleged that the landlord knew the front steps were unsafe and neglected to repair them in a reasonable and timely matter.

However, the landlord’s estate moved for summary judgement, arguing that Jones’ lacked evidence of causation, as the Dead Man’s Act left Jones unable to prove that the allegedly negligently maintained stairs caused her to fall.  In opposition, the plaintiff argued that the Dead Man’s Act was not intended to apply to her situation because the landlord’s estate admitted the landlord did not witness her fall, so he would not have been able to testify as to causation if he were alive. Thus, the plaintiff argued the landlord’s death did not weaken the defense of this case.  The plaintiff also argued that her medical reports outlined the cause of her injuries by stating that she fell on stairs that had no railing.

The trial court granted Plumer’s motion for summary judgement and found that the Dead Man’s Act prohibited Jones from testifying about the cause of her fall, and as the only witness to her fall, Jones had no other means to establish the element of causation.   The Court reasoned that the although the legislature may not have intended the statute to apply in this situation, the plain text of the statute controlled.

Whatever one’s view of Pennsylvania’s Dead Man’s Act, Jones is a reminder that many courts are inclined to defer to the legislature when it comes to legislating.

Thanks to Emily Finnegan for her contribution to this post.  Please email Mike Gauvin with any questions.

Court Denies Class Certification; Rules Each Insurance Policy Must Be Considered as an Individual Contract

Insurance policies are contracts.  For that reason and others, insurers benefit when courts approach their policies from a contract perspective rather than a public policy perspective.  Related to this point, a Tennessee federal judge recently denied class certification to a group of policyholders who brought suit against North Carolina Mutual Life Insurance Company. The underlying complaint alleges breach of contract and claiming problems with policy loans and rider benefits affecting thousands of other policies. In order for a group of plaintiffs with an array of claims to even be considered for class certification, a court must first determine whether the particular class action is the best option to manage the multiple claims.

In McClendon v. North Carolina Mutual Life Insurance Company, Marietta McClendon of Brentwood, Tennessee sued North Carolina Mutual, alleging breach of contract, alleging problems with policy loans and rider benefits affected thousands of other policyholders. The complaint alleges that her mother had taken out a life insurance policy of $10,000 on her son in the 1980s in Alabama. McClendon then took a $1,500 loan out against the policy in 1995, agreeing to a 5% interest rate, and when she died in 2005 her son took over payments.

In 2009, when North Carolina Mutual assumed more than 52,000 insurance policies from several Alabama companies, that particular portfolio also included McDaniel’s policy.  After taking over the policy, the company then charged a higher 6% rate on the loan. Plaintiff’s Complaint further asserts that the payments made on the loan amount by McDaniel’s son after her death, during the period of 2009 to 2016, was snaffled by the company. Moreover, plaintiff claims that the life insurance payment McClendon received after her brother died last year was then reduced. 

A motion for class certification under Rule 23 requires class members to satisfy all four of the Rule 23(a) prerequisites: numerosity, commonality, typicality, and adequate representation. The four requirements serve to limit class claims to those that are fairly encompassed within the claims of the named Plaintiffs, because class representatives must share the same interests and injury as the class members. Failure to meet any of these elements will result in the denial of class certification. In addition to the four prong criteria, Courts must also take into account a second part to the overall analysis whereby a class must fall within one of the three typed of actions listed in Rule 23(b). Most importantly, the party seeking class certification has the burden to prove the Rule 23 certification requirements.

Following a rigorous analysis of the aforementioned criteria by the Court, Judge Campbell eventually disagreed with Plaintiff’s contention that the loan class members shared the same injury. The court determined that the interest rate on each loan being identical does not in itself establish breach of contract, and that each individual contract’s terms would have to examined to determine whether there was a breach of contract. Moreover, the issue as to whether the loan payments were improperly applied to each loan balance, would require a case by case examination of each loan.  In other words, each contract would be treated as an individual contract.  And that benefits insurers.

Thanks to James Papadakis for his contribution to this post.  Please email Mike Gauvin with any questions.

Pennsylvania Court Applies Regular Use Exclusion (PA)

It’s remarkable how often even the clearest of insurance policy language is placed before the court.  But it’s also satisfying when a court applies a policy exclusion as worded and as intended.  In one recent decision, Eckert v. Unitrin Auto Home Ins. Co. the Pennsylvania Superior Court did just that.

In Eckert, the plaintiff, acting in the scope of her employment, was driving a school bus and was involved in an accident with an uninsured driver.  After the accident, she sought UIM coverage by filing a claim with her automobile insurance carrier.  However, the insurer denied coverage based on the policy’s regular use exclusion, which barred coverage for “bodily injury…sustained…by you while occupying…any motor vehicle you own or any motor vehicle which is furnished or available for your regular use.”

In her declaratory judgment action, the plaintiff argued that the exclusion did not apply to her situation because she drove several buses in the employer’s fleet, her employer precluded her personal use of school buses, and that she only drove a bus for 5-6 hours per day.  But the court disagreed, and held that the exclusion applied.  In doing so, the court, relying on precedent, reasoned that at the time of the accident, she was driving a school bus about 80 percent of the time and that she regular access to all school buses in her employer’s fleet.

Courts are unpredictable, even when interpreting policy language that is clear on its face.  But Eckert should provide comfort to insurers because it is another example of a court honoring the intent of a policy exclusion.

Thanks to Garrett Gittler for his contribution to this post.  Please email Mike Gauvin with any questions.

NJ Appellate Court Determines that “Ambulatory Surgical Center” Not Entitled to Reimbursement from Insurer (NJ)

After a 2014 automobile accident, Claire Fiore underwent a lower back surgery at the Ambulatory Surgical Center (“ASC”) operated by Specialty Surgical Center of North Brunswick. Following the procedure, ASC sought reimbursement from Fiore’s automobile insurer, New Jersey Manufacturer’s Insurance Company (“NJM”). NJM denied payment. The dispute then went to arbitration, where a panel awarded ASC its $32,500 in reimbursement.  But NJM filed suit to vacate that award and the trial court did so.

In New Jersey Manufacturers Ins Co. v. Specialty Surgery Center of North Brunswick, NJM argued that it was not required to reimburse the insurer because the New Jersey personal injury protection (“PIP”) fee schedule did not specifically provide for a reimbursement value for ASCs.  The ASC disagreed, and argued it was entitled to reimbursement because lower back surgery (the procedure ASC performed) was listed as a reimbursable procedure.  The Court ruled that NJM was not entitled to reimbursement.  In doing so, the court reasoned that the plain language of the fee schedule applied.  The court also reasoned that the fee schedule provided for reimbursement only to “physicians.”

The New Jersey Appellate Court’s decision is important because it lends support to a strict construction of regulatory language.

Thanks to John Lang for his contribution to this post.  Please email Mike Gauvin with any questions.

Clear Language of Liquor Exclusion Trumps Insured’s Claimed Expectation (PA)

When faced with clear policy language barring coverage under a liability policy, insureds often come up with creative arguments that their expectations can trump clear policy language.  But as one recent Pennsylvania decision makes clear, that does not always work.

In Transportation Ins. Co. v Heathland Hospitality Group LLC, the wife of a man killed in a car accident by a drunk driver sued the country club that allegedly over-served the driver.  The country club sought defense and indemnification under a commercial general liability policy with Transportation Insurance Company and an umbrella policy with Continental Casualty (carriers collectively referred to as “T&C”). Both policies included liquor liability exclusions. Transportation’s exclusion stated “This insurance does not apply to bodily injury for which any insured may be held liable by reason of: (1) causing or contributing to the intoxication of any person; (2) the furnishing of alcoholic beverages to a person under the legal drinking age or under the influence of alcohol; or (3) any statute, ordinance, or regulation relating to the sale, gift, distribution or use of alcoholic beverages.” That exclusion contained an exception stating that the liquor liability exclusion “applies only if you are in the business of manufacturing, distributing, selling, serving, or furnishing alcoholic beverages.”

In arguing the exclusion did not apply, the country club argued that it was not in the business of distributing or selling alcohol.  On a surface level, this argument was fairly creative.  After all, the country club was not primarily in the business of selling alcohol; and, when one thinks of a business in the business of distributing or selling alcohol, what comes to mind is a bar, a place where there is often beer, wine, or liquor; someone serving drinks; and likely a place to set down that drink.

Nonetheless, the Third Circuit ruled that the exception to the exclusion did not apply because because the underlying complaint alleged that Heathland was in the business of selling or furnishing alcohol.  It was also alleged that Heathland managed the country club’s beverage sales, supervised employees in their sale of beverages, and trained employees in beverage sales. Ultimately, the court determined that for purposes of the applicability—or lack thereof—of the above referenced insurance policies, Heathland was in the business of furnishing alcohol. Therefore, the court concluded that Heathland was not covered under the T&C policies.

Heathland is an important decision because it was a victory for those who emphasize the necessity of courts applying clear policy language over an insured’s claimed expectations.

Thanks to John Lang for his contribution to this post.  Please email Michael Gauvin with any questions.