News Western District of PA Grants Motion Dismissing Claim for COVID-19 Losses December 10, 2021 < Back Share to: This month the U.S. District Court for Pennsylvania in the Western District granted a Defendant-Insurer’s motion to dismiss a plaintiff-dentist’s claim for lost business income stemming from COVID-19. The dentist had an insurance policy with the defendant that included coverage for lost business income stemming from physical loss or damage to its property and civil authority coverage. The court found there was no cognizable claim alleged under the policy, and that the triggering event under the coverage of “direct physical damage to the building or blanket dental practice personal property” did not apply because the dentistry failed to allege any damage to “practice personal property.” The court narrowed in on the plain language of the policy which tied the coverage to actual physical damage to the dentistry, however; the court acknowledged that some courts have permitted claims for coverage relating to COVID-19 business interruption but the facts in the instant matter were distinguishable. Moving forward, it is important to note how the plain language of insurance policies are a vital consideration for courts moving forward for claims asserting COVID-19 losses. Thanks to Alexander Dimeo for his contribution to this post. Please contact Heather Aquino with any questions. Previous Next Contact

News Proof Items Destroyed Were "Key Evidence" Required For Spoliation Sanctions March 4, 2009 < Back Share to: The First Department’s recent decision in Kugel v. City of New York, et al., highlights the strict spoliation standard that must be met before the court will strike a party’s pleading. Namely, a pleading may be stricken due to the intentional destruction of key evidence. In Kugel, the named defendant, A. Jetta Towing, discarded documentary evidence, including tow truck invoices, because its president believed the corporation had been dissolved. A. Jetta, represented by this office, argued that the documentary evidence was not key evidence, as it was not the actual product, part, or component involved in the accident. Rather, it was argued that the key evidence was the motor vehicle that was allegedly involved in the accident. The First Department agreed and held that the documents were not key evidence warranting such a harsh sanction, thus reinstating the defendant’s answer. Thanks to Lora Gleicher for her contribution to this post. http://www.courts.state.ny.us/reporter/3dseries/2009/2009_01521.htm Previous Next Contact

News WCM Partners to Speak at IFASIC Conference October 14, 2016 < Back Share to: Dennis Wade and Michael Bono will be presenters at the International Fine Art and Specie Conference in Athens, Greece, on Thursday, October 20, 2016. “Guilt, Innocence, and Coverage Under Jewelers Block Policies” will deal with issues such as the rights of innocent stakeholders during a fraudulent claim, the impact of policy rescission, and the interpretation of specialized JB exclusions. If you are not attending the conference but are interested in learning more about this subject, please write to Dennis or Mike. Previous Next Contact

News NY Appellate Division Denies Insurer's Claim For Rescission September 22, 2009 < Back Share to: There is an old saying that "tough cases make bad law." In the insurance litgation context, this truism is reflected in the reluctance of courts to deny liability coverage where they believe it would be unfair or inequitable. In Barkan v. New York School Ins. Reciprocal, the Appellate Division, Second Department, denied the insurer's cross motion for summary judgment seeking to void its two policies ab initio based on an alleged misrepresentation in an earlier renewal application. The action underlying Barkan was notorious on Long Island because it involved the alleged misappropriation of $11,000,000 from a wealthy school district by several of its employees. In response, the school district sued several former board members for negligence and breach of their fiduciary duties. The district's insurer denied coverage to the former board members based on, among other reasons, the failure of the district to disclose in an earlier renewal application the misappropriations by a former employee in the district's business office. Several board members sued the insurer for coverage. The insurer responded by counterclaiming for rescission based on the district's failure to disclose the earlier theft and commenced a third party action against other board members seeking a declaration that it had no duty to defend or indemnify them either. Motions for summary judgment were filed by the parties and the lower court found in favor of the board members. The Appellate Division affirmed, holding that the insurer failed to meet its evidentiary burden on the issue of rescission. In order to rescind a liability policy, the insurer must demonstrate that the insured made a "material" misrepresentation. If proven, the policy is considered void ab initio. To meet its burden the insurer must present documentary evidence concerning its underwriting practices such as manuals, bulletins and rules relating to similar risks, which show that the policy would not have been underwritten in the same manner if the true facts were known. In this case, the insurer apparently relied exclusively on the affidavit from one of its underwriters without any documentary support whatsoever. The court rejected this proof and upheld the ruling that the insurer had, at a minimum, a duty to defend the board members against the claims made by the school district itself. In our experience, courts are very reluctant to rescind a policy based on an alleged misrepresentation. In evaluating the strength of such a policy defense, an insurer and its counsel must support their claims with compelling documentary proof. The naked affidavit of an underwriter will generally not win this battle, particularly where the individuals seeking coverage may not have been directly involved in submitting the allegedly false information. If you would like more information on this post, please contact Paul at pclark@wcmlaw.com . http://www.courts.state.ny.us/reporter/3dseries/2009/2009_06494.htm Previous Next Contact

News Spinning Your Wheels: NJ Upholds Pre-Injury Sports Waiver August 8, 2010 < Back Share to: The recreational industry has boomed in the last decade. The local gym is a place where people work out, socialize and try to keep father time at bay. Given the exploding number gym memberships and the inherent risk of injury when using treadmills, ellliptical, cybex and other machines, it is no wonder that the industry has attempted to limit its liability when a member is injured during a club sponsored activity. Just how far can a gym or athletic club go in limiting its liability? Will courts enforce a pre-injury waiver exculpating the gym from the gym's ordinary negligence? The New Jersey Supreme Court upheld the terms of a waiver and release in Stelluti v. Casapenn Enterprises, LLC, d/b/a Powerhouse Gym. Gina Stelluti joined a local gym and signed a comprehensive "Waiver & Release" form. She was later injured during a spinning class where the participants use stationary bicycles to simulate an actual ride on a variety of terrains. The court upheld the validity of the waiver and release and dismissed plaintiff's complaint in its entirety. In a broadly written opinion, the New Jersey Supreme Court permitted the gym to protect itself from claims of ordinary neglgience -- but not willful conduct or gross negligence -- because of its comprehensively worded release. When attempting to limit their liability, gyms and other sports venues should draft comprehensive forms that make clear that members assume all risks of injury when working out at the club's facilities. The release and wavier form should make clear that the risks assumed not only include those inherent in the activity but also the alleged negligence of the club itself. If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.com http://www.judiciary.state.nj.us/opinions/supreme/A4309StellutivCasapennEnterprises.pdf Previous Next Contact

News Appellate Division Infers Judge's Intent Regarding Personal Jurisdiction August 19, 2011 < Back Share to: In McConnell v. Santana, a wrongful death action, the defendant failed to answer the complaint and the plaintiff was granted a default judgment. When the defendant moved to vacate he also argued that the court lacked personal jurisdiction because he was never properly served. After a Traverse hearing, the court granted his motion stating in sum, the motion "to vacate a default is granted." The court never stated whether or not the complaint was properly served. After trial, judgment was entered in favor of the plaintiff. The defendant then moved to vacate the judgment on the grounds that the court lacked jurisdiction because he was never properly served. The Appellate Division denied the motion. The court did not address the merits of the moving papers, rather the court reasoned that if the trial court had found that the defendant had not been properly served at the Traverse hearing, it would have had no authority to take any action other than to dismiss the complaint. Since the court did not dismiss the complaint, in effect, the Supreme Court found that service was properly effected. Thanks to Bill Kirrane for his contribution to this post. http://www.nycourts.gov/reporter/3dseries/2011/2011_06251.htm Previous Next Contact

News WCM Successful In Appeal As To Whether A Court-Appointed Expert’s Work Is Protected By The NJ Litigation Privilege September 8, 2023 < Back Share to: WCM recently achieved a significant appellate victory in Satz v. Siragusa, a New Jersey professional negligence case involving a client who served as a court-appointed expert. The expert conducted an evaluation of a party in a family court action and provided the Court with certain recommendations. The party disputed the expert’s methodology and findings, focusing on an inadvertent and insignificant factual error in his report, and sued him for allegedly failing to adhere to the “standards of his profession.” WCM moved to dismiss on several grounds, including that the expert was protected by New Jersey’s judicial/litigation privilege. The trial court agreed and dismissed the case. The Appellate Division affirmed, holding that the litigation privilege applied, despite plaintiff’s complaints regarding the expert’s report and methodology, because the expert was assisting the family court in rendering a decision and satisfied the elements for the privilege to apply. In so holding, the Appellate Division recognized the important reasons for the privilege, which WCM had stressed at oral argument, including that experts and witnesses should have the freedom "to speak and write freely" without fear of liability. The Appellate Division rejected plaintiff’s other arguments in the case. The decision is noteworthy in that the Appellate Division preserved a privilege which is critically important to the litigation process and refused to adopt a rule that could allow unhappy or unsuccessful litigants to sue court-appointed experts for any perceived errors in their methodology or findings. The Court correctly focused on the expert’s role in assisting the family court and found that the privilege applied to shield the expert from liability. Partner Andrew Gibbs argued the case in the Appellate Division while Associate Brendan Gilmartin was successful in obtaining the dismissal in the trial court. Please contact Andrew Gibbs with any questions about the case or the firm’s professional liability practice. Previous Next Contact

News Reassertion of Importance: Extending Time to Answer (NY) January 25, 2019 < Back Share to: In Lev Aminov, M.D., as Assignee of April Cuffy v. Allstate Ins. Co., the 2nd Department, Appellate Term held that a defendant’s attempt at vacating a default judgement and compelling plaintiff to accept its answer fell short. This action was commenced on September 16, 2014 by service of the Summons and Complaint on an Allstate employee. A default judgement was entered on October 31, 2014, due to Allstate’s failure to appear or answer. Almost exactly one year later, Allstate moved pursuant to CPLR 5015(a)(1) and (4) to vacate the default judgement and compel plaintiff to accept defendant’s answer. The court indicated that the law was clear on this issue. Allstate needed to “demonstrate both a reasonable excuse for the default and the existence of a potentially meritorious defense to the action.” Allstate offered an affidavit from a claims adjuster, but not from the individual who was served with the Summons and Complaint. The court also pointed out that it took Allstate eleven (11) months to move to vacate the default judgment. Taking these factors into consideration, the court concluded that Allstate did not provide a reasonable excuse for the default. Therefore, Allstate’s motion seeking to vacate the default judgement and compel plaintiff to accept its answer was denied. Thus, this case illustrates the importance of timely filings, as well as the factual support likely needed to prevail in having a default judgment vacated. Thanks to Marc Schauer for his contribution to this post. Please email Colleen E. Hayes with any questions. Previous Next Contact

News Is the California Resale Royalty Act for Art Alive or Dead? June 29, 2012 < Back Share to: The California Resale Royalty Act is a lightening rod for controversy in the art world. It provides that a living artist (or his or her estate or heirs) is entitled to 5% of the resale of the artist’s work. There are a number of conditions that apply, including the fact that either the artist or owner of the work lives in California, or that the sale takes place in California, and the sale must occur during the artist’s life or within 20 years of the artist’s death. Although the Act is well-intentioned, it can be difficult to ascertain and enforce rights, and creates headaches for art dealers, galleries, and collectors. Recently, a number of California artists sued Christie’s and Sotheby’s for millions of dollars, alleging that the auction houses had conspired to conceal California ties to art transactions in order to avoid paying royalties to artists. In May of 2012, California District Court Judge Jacqueline Nguyen ruled that the Act violated the United States Constitution’s Commerce Clause, which affords the federal government with the power to regulate economic activity between states. On its face, the ruling, which dismissed the lawsuits with prejudice, appeared to be a victory for galleries everywhere and a defeat for artists. But Judge Nguyen was subsequently transferred to the appellate court, and the case was reassigned to Judge Michael Fitzgerald to oversee post-appellate issues. The artists filed a motion to stay the application of the original order pending an appeal in order to allow continued enforcement of the Act. In an interesting decision, Judge Fitzgerald found that there was nothing to stay, because although Judge Nguyen’s decision dismissed the case between those litigants, she did not have the power to bind any other parties to the district court level decision that found that the Act is invalid. As such, the Act remains in place and must be followed until an appellate court finds otherwise. So the battle continues, and we will continue to follow this interesting litigation. If you would like further information, please write to Mike Bono at mbono@wcmlaw.com .     Previous Next Contact

News Theft of Human Hair Weaves Legal Analysis August 16, 2018 < Back Share to: Recently, in an unpublished opinion, a New Jersey appellate court in the case of Beauty Plus Trading Co. Inc. v. National Union Fire Insurance Co. of Pittsburgh, considered whether an insurance policy’s “loading and unloading” provision precluded coverage to an insured for damages arising out of a theft of a shipment of human hair weaves. The insured received its goods on a Friday evening, but decided not to unload the container of goods until the following Monday. Instead of unloading, the insured’s staff Beauty Plus Trading Co. Inc. v. National Union Fire Insurance Co. of Pittsburgh cut the container’s seal and left it on the loading bay outside of the warehouse. The following night, an individual stole the container housing over $283,000 worth of human hair weaves. The policy contained a “loading and unloading” section which provided coverage for the insured’s goods for 24-hours after the company received a shipment. In this case, the insured received a shipment at 5:00 p.m. on a Friday evening and the theft took place at 9:00 p.m. the following Saturday night. According to the policy, the goods were insured until 5:00 p.m. on Saturday. The insured tried to argue that coverage under the loading and unloading provision should have been extended through the following Monday under the so-called “business day” rule. This rule states that where a party’s time to perform its obligations under an insurance policy expires on a weekend or holiday, it is entitled to push the deadline to fulfill those obligations to the next business day. Here, the policyholder argued that the rule should have applied because it did not receive the goods for unloading until the end of the day on Friday. The judge, however, found that the rule was inapplicable. The loading and unloading provision did not require the insured to unload the goods or perform any obligation during the 24-hours of coverage and the insured could leave the goods in the container as it chose to do. The court found that the plain terms of the policy precluded coverage for this loss. Thanks to Chelsea Rendelman for her contribution to this post Previous Next Contact

News The New Jersey Supreme Court Considers the Practices of Additur and Remittitur (NJ) October 4, 2019 < Back Share to: In Orientale v. Jennings, the Supreme Court of New Jersey took the occasion to reexamine the current practices of additur and remittitur. By way of background, additur references when a jury's award is so grossly inadequate that its shocks the judicial conscience, and the trial judge increases the award to an amount, in the judge's view, that could be sustained by the evidence. Conversely, remittitur references when a jury's damages award is so grossly excessive that it shocks the judicial conscience, and the trial judge lowers the award to the highest amount, in the judge's view, could be sustained by the evidence. In Orientale, plaintiff brought a personal-injury action against defendant. The parties settled for the $100,000 policy limit and plaintiff brought an underinsured motorist claim against her auto insurer. The case went to trial against the insurer whereupon the jury awarded only $200. Because the jury award did not exceed the $100,000 settlement with defendant, the insurer’s underinsured motorist coverage policy was not triggered. Thus, the judge entered a no cause of action and dismissed the suit. Plaintiff moved for an additur. The judge vacated the damages award, finding that it constituted a miscarriage of justice, and granted an additur in the amount of $47,500. This amount likewise did not exceed $100,000 so the judge again no caused the case. Ultimately, the New Jersey Supreme Court established new rules on remittitur and additur to bring these practices in line with “basic notions of fair play and equity.” It is now the law that when a judge deems an award a miscarriage of justice, both parties must consent to the additur or remittitur. If both parties do not consent, then, upon a finding that a jury award is a miscarriage of justice, a new jury trial must be conducted. However, if the parties consent, then the matter is listed as settled. These new rules will have a significant effect on trial defense counsel who is faced with a decision on whether or not to accept a higher award than the jury awarded, as failure to consent to the additur will necessitate a another lengthy, and costly, trial. Thank you to Michael Noblett for his contribution to this post. Please email Colleen E. Hayes with any questions. Previous Next Contact

News Defrauded Insurer Allowed to Keep Premium in Rescission Action May 31, 2013 < Back Share to: Typically, an insurance company that rescinds a policy must return the premium to policyholder. Indeed, a number of courts have found that insurers waived the rights to rescission when premium was not returned. Recently, however, a federal court in Rhode Island held that no premium return was owed where the insured’s false representations caused damage to the insurer that could not be satisfied simply by rescission. In PHL Variable Ins. Co. v. P. Bowie 2008 Irrevocable Trust, an insurance broker submitted an application from Peter Bowie to PHL for a life insurance policy on Bowie's life. Bowie's application represented that he was a self-employed real estate investor with a net worth of $7.5 million and an earned income of $250,000 per year, and he applied for a policy with $5 million limits policy. A letter from Bowie's lawyer accompanying the application stated the policy would be placed into a trust. It was later revealed that Bowie was not a wealthy investor, but a retired city employee, used car dealer, and blackjack dealer. In order to pay the premium, Bowie’s broker and attorney secured a deal with a financing company in exchange for a security interest in the policy. This plan was directly contrary to the multiple representations in the application documents that Bowie himself would pay the premiums and that there was no plan for any third party to obtain an interest in the Policy. When PHI discovered it was the victim of this elaborate fraud, it filed a declaratory judgment action, seeking rescission. It also sought to retain the premium paid by the Trust as an "offset" against the damages it had suffered in connection with the policy, including the costs of underwriting, issuance, investigation of the fraud, and the like. It also stated it stood ready and willing to return the premium, which it tendered to the court. In fact, during discovery, the defendants agreed to rescind the policy, but demanded the premium be returned. Briefly, both the lower and appellate court found that there was compelling evidence that the defendants committed fraud in applying for coverage. Recognizing that rescission is an equitable remedy, the court found that insurer could keep the premium because, for among other reasons, the defendants had unclean hands. It will be interesting to see whether other jurisdictions also adopt the same reasoning. But it seems like in cases of clear fraud, an insurer ought to consider seeking the same relief granted here. If you would like more information, please write to Mike Bono.     Previous Next Contact