NY: A&B Sub-Limit Applies To Primary But Not Excess Policy
It is a harsh reality that courts will give policyholders every benefit of the doubt in interpreting the terms, conditions and limits of policies of insurance. Insurers must be careful to place their insureds on notice of significant exclusions and limitations through the use of clear, concise and plain language in their policy forms. Even trickier, most states require that insurers timely advise their insureds and claimants if they conclude that the policy does not cover a particular claim or loss. What obligation does an insurer have if it does not deny coverage outright but seeks to enforce a significant sub-limit of liability? Is the insurer bound by the same rules that control when the insurer seeks to disclaim liability? Recently, in Santa v. Capitol Specialty Insurance, LTD., et al., plaintiffs filed suit against a Manhattan night club arising out of an alleged assault on plaintiffs. The third party administrator for the primary insurer became aware of the claim after it received the summons and complaint, which contained a specific count based on assault. Nine months later during discovery, the attorneys for the policyholder disclosed, for the first time, that the primary policy was subject to an assault and battery sub-limit of $50,000. The insurance disclosure also identified an excess policy with limits of $4,000,000 but made no reference to the sub-limit contained in the primary policy. The claimants protested that the primary insurer must provide its full policy limits because it failed to provide timely notice of the assault and battery sub-limit. Further, they argued that the excess insurer must make its full policy limits available because its policy did not contain any explicit exclusion or sub-limit for claims based on assault and battery. Of significance, the court held that the primary insurer was not subject to the normal rules requiring timely notice of disclaimer because it was not disclaiming or otherwise denying coverage. Rather, it was providing “the full measure of coverage available for the incident,” just with a reduced sub-limit of liability. On the other hand, the excess insurer did not fare as well. The court cited a number of problems with the excess insurer’s stance including its failure to exclude or specifically minimize its limits of liability for claims based on assault and battery. Further, the court was troubled by the excess insurer’s failure to put the claimant on notice of the sublimit when the insurance disclosure was furnished to the claimant’s attorney during discovery. The lesson of Santa is clear: while Santa may overlook minor errors in conduct and still arrive bearing gifts, insurers can expect no such generosity from the courts. Be clear, accurate and specific in the language contained in your policies and the disclosures made to your insureds and claimants. http://pdf.wcmlaw.com/pdf/santa.pdf If you have any questions or comments about this post, please contact Paul at pclark@wcmlaw.comRead More
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App. Div: School’s are Not Insurers of Student’s Safety During Recess
In Benavides v Uniondale Union Free School Dist., the infant-plaintiff – a second-grade student – commenced an action against his school for inadequate supervision after he was pushed down a slide by a fellow student during recess. The school established its entitlement to summary judgment by showing the playground was adequately supervised and that the level of supervision was not a proximate cause of the subject accident. In affirming the decision, the Appellate Division stated schools cannot reasonably be expected to continuously supervise and control all movements and activities of its students and cannot be held liable for every thoughtless or careless act by which one pupil may injure another. Notably, the Second Department considered the plaintiff’s 50-h hearing testimony. Typically, trial courts have required a hearing to determine if an infant is swearable (understands the obligation to testify truthfully) before considering any testimony. Here, the plaintiff’s attorney claimed that the testimony was inadmissible because of his client’s age. However, the court refused to consider the plaintiff’s argument stating it was improperly raised for the first time on appeal. Thus, as the swearability of an infant plaintiff does not present a pure question of law appearing on the face of the record, the Courts have the discretion to consider an infant’s testimony at face value without such a hearing. Thanks to Bill Kirrane for this post. If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.comRead More
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NJ Supreme Court Rejects Employee’s Direct Action Against WC Carrier For Pain and Suffering
No one seems happy with the workers compensation system. Employers and their insurers complain that the system is biased in favor of employees, awarding compensation even in the face of fraud, malingering or worse. On the other hand, employees kvetch that workers compensation insurers are slow to process and pay claims, leading to delays in treatment, needless anxiety and unhappy medical providers.
With this background in mind, may an injured employee seek damages directly from his employer’s workers compensation insurer for pain and suffering allegedly due to the insurer’s delay in making required payments?
The New Jersey Supreme Court tackled this issued in Stancil v. ACE USA, ruling in favor of the workers compensation insurer. In Stancil, the employee alleged that the insurer routinely delayed medical payments and ignored a directive from the workers compensation court to rectify this situation by a date certain. In response, the employee filed suit against the insurer in the local Superior Court seeking damages for pain, suffering and physical injury allegedly caused by the insurer’s delay. The Superior Court and Appellate Division dismissed plaintiff’s complaint on the pleadings but, ever the persistent fellow, plaintiff was granted permission to appeal to the New Jersey Supreme Court. A good omen indeed.
Displaying unusual deference to the worker compensation system, the Supreme Court ruled that the employee’s complaint could not stand for three reasons. First, the legislature constructed the workers compensation system that eliminated the worker’s right to file suit in the Superior Court. The employee’s suit was inconsistent with that scheme. Second, the legislature had already enacted remedies to deter the occasional recalcitrant insurer. Neither the courts nor an injured employee should interfere with or expand those remedial measures. Finally, the Supreme Court found that the present system worked fairly well for several decades and the legislature had moved quickly and decisively when problems became apparent. In other word, no need to tinker with a system that, albeit not perfect, was working fairly well.
Stancil settles the question of whether an employee can seek damages for pain and suffering from a workers compensation insurer for alleged delays in making required payments. The Supreme Court firmly declined to recognize a remedy beyond that authorized by the Workers Compensation Act.
If you have any questions or comments, please email Paul at pclark@wcmlaw.com
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Janet’s Law Requires AEDs At School (NJ)
New Jersey Governor Chris Christie recently signed “Janet’s Law,” which requires New Jersey public and non-public schools to have an automated external defibrillator (AED), to train school officials and coaches on the use of AEDs, and to establish emergency action plans for responding to sudden cardiac events. The law also requires that the mandated AEDs be maintained in accordance with the previously passed law on AED acquisition and maintenance (section 3 of P.L. 1999, C.34 (C.2A:62A-25)). Janet’s Law will take effect on September 1, 2014 and effects schools that include grades kindergarten through 12. We believe this law sets a new standard for schools, and will lead to additional claims against schools and school districts that are not in compliance with the law. We note that previous versions of the law were more detailed and expansive, and called for AEDs at youth recreational facilities and camps as well as the education of students on various health topics. The new legislation makes clear that the standard for AEDs is now different for youth recreational facilities and camps as opposed to public and non-public schools. Janet’s Law imposes an additional burden on elementary, middle and high schools. However, AEDs are already required in many large places of public accommodation, such as airports and healh clubs, and have been proven to be effective tool in saving lives during sudden cardiac events. Prudent underwriters should inquire in the application process and pre-risk surveys about the presence of AEDs at schools located in New Jersey that they insure. Thanks to Alison Weintraub for her contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.comRead More
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High Tech Security System Shields Homeowner’s Association In Assault Case (NY)
In Diaz v Sea Gate Assn., Inc, the plaintiffs were attacked in their home located within a private, gated community that was managed, maintained and controlled by the defendant homeowner’s association. The plaintiffs alleged that inadequate security at the two entrance gates of the community allowed the assailant to enter property and commit his crime. In dismissing the plaintiff’s complaint, the Appellate Division found defendant established its entitlement to summary judgment by providing a detailed description of its key card system with surveillance cameras. With this system in place, the Court inferred that the assailant did not access the building from these entrances.
Thanks to Bill Kirrane for his contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com
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“Regular Use” Exclusion Upheld in Auto Policy (PA)
In the recent case of Adamitis v. Erie Insurance Exchange, the Pennsylvania Superior Court enforced an insurer’s “Regular Use” exclusion despite the plaintiff’s argument that the provision violates public policy. In early October 2005, plaintiff Adamitis was involved in a serious motor vehicle accident with an underinsured motorist while in the course and scope of his employment as a bus driver for the Berks Area Reading Transit Authority. As a result, Adamitis sought UIM coverage from Erie, but his claim was ultimately denied on the basis of a “Regular Use” exclusion which bars coverage for “bodily injury arising from the use of a non-owned motor vehicle or a non-owned miscellaneous vehicle regularly used by the insured” though not specifically identified in the policy. Unsurprisingly, Adamitis disagreed with his insurer’s coverage decision and brought suit against Erie in the Philadelphia Court of Common Pleas. The lower court, however, affirmed Erie’s decision in a bench trial citing the exclusion’s clear and unambiguous language. On appeal, Adamitis argued to the Superior Court that, among other things, the “Regular Use” exclusion violates public policy and conflicts with the Motor Vehicle Financial Responsibility Law of Pennsylvania. However, the Superior Court was likewise unconvinced by Adamitis’ contention and instead explained that the public policy behind UIM benefits is driven by the correlation between premiums paid and the coverage the claimant should reasonably expect to receive— nothing more. Accordingly, the appellate court reasoned that failure to enforce the “Regular Use” exclusion would run afoul of Pennsylvania’s public policy by requiring insurers to underwrite unknown risks for which theyhave not been paid. Thus, at least with respect to UIM insurance coverage, the Adamitis court reiterated that you get what you pay for in Pennsylvania.Thanks to Adam Gomez for his contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com
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Owner has “Grace Period” to Clear Snow After Early Morning Storm (NY)
Although no court has yet to specify the exact amount of time an owner has to remove snow after a storm, the Appellate Division, First Department in Robinson v 156 Broadway Assoc., LLC sheds light on the issue. There, the plaintiff slipped on ice located on the top step of an exterior staircase at 6:30 a.m. The storm had ended sometime in the “early morning hours.” The First Department upheld the grant of summary judgment to the landowner. The court stated that an unreasonable amount of time had not elapsed from the end of the storm to when the landowner began its snow removal efforts. Although not specifying the specific amount of time, the court acknowledged that the owner was entitled to a “grace period” before clearing snow. Thus, where a storm ends overnight, it appears the owner is allotted additional time to remove snow. The Robinson decision is also noteworthy because the court dismissed the plaintiff’s claims that short handrails contributed to the accident. It was undisputed that these handrails violated the local building code. However, since the accident happened at the top of the stairs, the plaintiff never attempted to use the them. Thus, the court reasoned that they were not a cause of the accident. Thanks to Bill Kirrane for his contribution to this post. If you have any questions or comments, please email Paul at pclark@wcmlaw.comRead More
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Third Party Action Dismissed For Failing to Prove “Acquired Brain Injury” (NY)
In Anton v. West Manor Construction Corp et al., the First Department highlighted the difficulty in proving that a plaintiff suffered a “grave injury” when he is claiming a brain injury. By way of background, New York only permits a third party claim against an employer when its employee has sustained a “grave injury.” One category of “grave injury” is “an acquired injury to the brain.” In Anton, a construction worker was injured when a cinder block was dropped from a height and hit the plaintiff. Plaintiff claimed he was permanently disabled and could no longer work. Relying on Rubeis v. Aqua Club, Inc. 3 N.Y.3d 408 (2004), the Appellate Division agreed that plaintiff’s inability to work was caused by injuries to his neck and shoulder, not by an acquired injury to the brain. In addition, plaintiff’s daily headaches and inability to focus were not sufficient to satisfy the acquired brain injury standard. As a result, all common law negligence claims against plaintiff’s employer were dismissed because plaintiff did not sustain a “grave injury” within the meaning of Workers’ Compensation Law §11. Thus, when litigating employee/employer “brain injury” cases, a thorough evaluation of the injuries must be conducted to determine whether or not the injury meets the Rubeis standard, i.e. whether the injuries are directly related to the brain. Thanks to Alison Weintraub for her contribution to this post. If you have any questions or comments, please email Paul at pclark@wcmlaw.com.Read More
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What Happens When Your Expert Goes “Missing”? (NJ)
Experienced lawyers seek every advantage at trial. Your adversary fails to lay the proper foundation for a document’s admission into evidence? Object and seeks its preclusion. A witness is first disclosed on the evidence of trial? Move to bar the witness from testifying at trial. The “adverse inference” or “missing witness” charge is another potent weapon at trial. Requested when an adversary fails to call a witness under his control, this charge advises the jury that it may infer that the testimony of the missing witness would have been adverse to that party’s interests. In a close case, it can be used to highlight your adversary’s failure to call a key witness under its control and drive home the point that the missing witness’ testimony would likely not have helped your opponent’s case. Under what circumstances should an “adverse inference” charge be given when a party fails to call an expert witness at trial? Just how far may an attorney go in summation when urging the jury to consider the failure of an adversary to call an expert witness at trial? In Washington v. Perez, the New Jersey Appellate Division gave some guidance on both questions. In Perez, the plaintiff was injured in a bus accident and there were questions about the impact of a prior injury on plaintiff’s present condition and just how badly she was hurt in the bus accident. The defense identified two medical experts during discovery, presumably one who examined plaintiff and the other who read the scans and x rays. For reasons never explained, the defense lawyer took an aggressive position in his opening, boldly declaring that the plaintiff was not injured in the bus accident. However, he did not call either medical expert and offered no evidence on plaintiff’s alleged lack of injury. The plaintiff’s attorney requested and the court gave an “adverse inference” charge based on the defense’s failure to call either of its medical experts. Seizing the moment, plaintiff initially highlighted in his summation the defense’s failure to call either of its medical experts to dispute plaintiff’s medical evidence. Not content with an adverse inference charge, plaintiff also challenged the “candor” of the defense and argued that it “hid evidence from [the jury]…” This tactic was apparently effective because the jury awarded $500,00 for pain and suffering and $242,000 for economic damages in a case involving soft tissue injury. The Appellate Division was critical of the trial court’s application of the “missing witness” charge and troubled about the content of plaintiff’s summation. Given those cumulative errors, the Appellate Division reversed and remanded for a new trial. Sometimes, attorneys are not content to accept their good fortune — in this case, that the court gave an “adverse inference” charge– and stretch the bounds of fair comment. While it remains a powerful weapon, advocates must recognize the limitations of an “adverse witness” charge and avoid undermining their good work by going too far in their advocacy. If you have any questions or comments, please email Paul at pclark@wcmlaw.com Read More
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Policy Excludes Coverage For Injuries To Subcontractor’s Employees (NJ)
The New Jersey Appellate Division in Essex v. Pine Towers Group, recently analyzed whether a CGL policy of insurance issued to a general contractor provided coverage for an action seeking damages for bodily injuries to an employee of a subcontractor. Pine Towers (“Pine”) was the general contractor for a construction project in Newark and was issued a policy of general liability insurance underwritten by Essex Insurance Company (“Essex”). Pine hired FM Home Improvement, Inc. (“FM”) who, in turn, hired Brothers Home Construction (“Brothers”) to install siding. One of Brothers’ employees was injured when he fell through an opening in a scaffold, which he alleged was hazardous and dangerous. Pine sought coverage for these claims from Essex. Essex denied the claim for coverage. The trial court found that Pine was entitled to coverage as an additional insured under the policy of insurance issued to FM. However, it also found that the Essex policy excluded coverage because of an endorsement barred coverage for bodily injury sustained by any contractor, subcontractor or their employees. The Appellate Division upheld the trial court’s denial of coverage under the Essex policy. The Essex policy contained an “Additional Conditions Endorsement,” which required Pine’s contractors and subcontractors to maintain minimum commercial general liability coverage. While failure to comply with this provision would not void coverage, it did reduce the limits of liability. These two paragraphs were interpreted by the Court to apply to contractors that were in privity with Pine. The third paragraph of the endorsement stated that there would be no coverage for “bodily injury” sustained by any contractor, subcontractor or their employees. Pine argued that the subject provision was ambiguous, and should only apply to exclude coverage for claims of bodily injury by contractors that were in privity with Pine, that is, those that Pine contracted with as opposed to the subcontractors of Pine’s subcontractors. Pine also argued that the condition barring coverage for subcontractors did not apply as it was intended only to protect Essex from covering workers compensation claims. The Appellate Division disagreed finding that the clear intent of the third-paragraph was to limit the insurer’s exposure to all claims for “bodily injury” asserted by any contractors and subcontractors. Therefore, the lower court properly denied coverage under the Essex policy. Thanks to Andrew Marra for his contribution to this post. If you have any questions or comments, please email Paul at pclark@wcmlaw.comRead More
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