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News Commercial Landlord Protected by Indemnification and Risk Transfer Clause in Lease (NY) March 25, 2022 < Back Share to: New York General Obligations Law Section 5-321 provides that every agreement in connection with the lease of real property exempting the lessor from liability for damages for injuries to person or property caused by or resulting from the negligence of the lessor in the operation or maintenance of the real property shall be deemed void as against public policy. In other words, a tenant cannot agree to indemnify his or her landlord for the landlord’s own negligence in a lease in New York. There is an exception, however, allowing for the indemnification of a lessor’s negligence where the lease involves sophisticated commercial parties, negotiating at arm’s length, who agree to allocate the risk of liability between themselves, typically through insurance. The Supreme Court of New York, Bronx County, recently addressed these issues in a case involving a commercial tenant. In Titumir v. Barker Ave Estates LLC, plaintiff leased the first floor of the subject premises and sold discount hardware supplies. The lease agreement provided that plaintiff was responsible to maintain and repair the premises, fixtures, and appurtenances. In July 2017, water began to leak from the apartments above the store and the ceiling eventually collapsed, causing damage to the store, plaintiff’s goods, and an alleged loss of business. Plaintiff sued the landlord, claiming that it failed to comply with its nondelegable duty to maintain the premises and make repairs. The court disagreed and granted defendant’s motion for summary judgment based on the lease provision requiring plaintiff to maintain and repair the premises. The court held that this provision exempts defendants from any liability arising from the water leak and that since this claim involved a commercial tenancy, the lease falls within the exception to General Obligations Law Section 5-321. The court also noted that a rider to the lease required plaintiff to purchase insurance for property damage, making it clear that the parties intended to allocate risk to a third party, the insurance company. The Titumir case reiterates the law in New York that landlords and tenants are free to allocate the risks associated with commercial tenancy, including passing the risk on to the parties’ insurers. Indemnification and insurance language in such leases is important and usually dictates who bears the exposure for property damage or premises liability in the commercial setting. Thank you to Gabriella Scarmato for her contribution to this post. Please contact Andrew Gibbs with any questions. Previous Next Contact

News Federal Judges Consider Consolidation of Business Interruption Coverage Litigation May 21, 2020 < Back Share to: In addition to disrupting the lives and livelihoods of millions of people across the country and worldwide, the Covid-19 has sparked a torrent of lawsuits by businesses alleging they are owed business interruption coverage based the income they lost during Covid-19 related shutdowns. In response to this massive wave of litigation, the Judicial Panel on Multidistrict Litigation, is now considering whether these cases should be consolidated in a multidistrict litigation (MDL) proceeding. MDL refers to a special procedure in federal cases where the issues have significant overlap. The idea is that by combining the cases, they can address the claims efficiently and with less strain on the court system. Typical uses for MDL include products liability cases, where a single product causes a multitude of injuries, or in mass torts cases such as asbestos related cases. So far in response to Covid-19, multiple businesses have filed nationwide class actions seeking to represent a class of all insureds whose business interruption claims were denied by a particular insurer. Some of these insureds have gone even further, seeking to consolidate all pending business interruption litigation in federal court against every insurer that is or will be named in the future as a defendant into a single MDL. One of the proposed venues for such an MDL is the U.S. District Court for the Eastern District of Pennsylvania. As we wrote about last week, a similar effort at consolidation also is underway in Pennsylvania state court. The most recent development is that insurers are now asking for more time to slow the consolidation process. In a motion filed May 6, insurers requested a three-week extension to file briefs responding to consolidation requests by lawyers for policyholders. In re COVID-19 Bus. Interruption Prot. Ins. Litig., No. 20-md-2942, motion for extension filed (J.P.M.L. May 6, 2020). While insureds argue that consolidation is needed for efficiency given the amount of lawsuits, insurers and critics are likely to argue that these cases cannot effectively be combined since they are inherently fact specific and rely on different policy wording. Whether the JMPL grants MDL consolidation would have a significant impact on the resolution of these claims. many insureds are feeling the economic sting from the mandated closures and are asking the Court to get in front of a potential logjam of cases. A ruling is not expected for a few weeks. We will continue to keep you posted as new developments arise. Thanks to Andrew Debter for his contribution to this post. Please email Georgia Coats with any questions. Previous Next Contact

News Plaintiffs May Name Insurance Carriers as Defendants in UIM Cases (PA) October 24, 2013 < Back Share to: The Pennsylvania Superior Court recently held in Stepanovich v. McGraw that co-defendants in underinsured motorist cases are not prejudiced under the Rules of Civil Procedure where the plaintiff names his own insurance carrier as a defendant. In Stepanovich, the underlying action arose out of motor vehicle accident wherein defendant McGraw allegedly ran a red light and struck the plaintiff while he was crossing the street. In addition to suing McGraw, the plaintiff also named State Farm as a defendant for failure to pay underinsured motorist benefits. Despite the plaintiff’s foresight, however, the trial court sustained McGraw’s preliminary objections to the suit and bifurcated the claims so as to insulate the individual defendant from inadmissible evidence of (inadequate) insurance under Pa.R.C.P. 411. Still, the trial court allowed State Farm to participate in the case on the condition that it did not allude to insurance coverage or payments. Ultimately, an Allegheny County jury returned a complete defense verdict in McGraw’s favor and denied the plaintiff recovery for his injuries. Dissatisfied with the outcome below, the plaintiff appealed to the Pennsylvania Superior Court where he argued that the trial court unnecessarily confused the jury by refusing to identify State Farm as a defendant in the case. Moreover, the plaintiff contended that he was unfairly prejudiced by having both defendants contest liability while only one remained available on the verdict sheet. Interestingly, the Superior Court agreed with the plaintiff’s articulation of the law but nonetheless denied his request for a new trial. Specifically, the Superior Court explained that while Pa.R.C.P. 411 generally prohibits the introduction of liability insurance into evidence because it invites the jury to overvalue damages, allusions to underinsured motorist coverage are unlikely to prejudice the defendant where such benefits do not by their nature indemnify third-party tortfeasors. Nevertheless, the plaintiff in Stepanovich failed to demonstrate actual prejudice insofar as State Farm’s absence from the verdict sheet did not bear directly on the question of McGraw’s negligence. As a result, the plaintiff could not demonstrate reversible error and the trial verdict was affirmed in favor of the defense. Given the nature of the Superior Court’s decision, Stepanovich serves as a reminder that the prohibition against evidence of insurance is not absolute, but rather depends on the specific relationship between the type of insurance and the defendants in the case. Thank to law clerk Adam Gomez for his contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com Previous Next Contact

News Insurers May be Liable for Foreseeable Consequences if there is a Breach of the Covenant of Good Faith and Fair Dealing. October 31, 2016 < Back Share to: In Mano Enterprises, Inc. v. Metropolitan Life Insurance Company, plaintiff attempted to assign its policy to a third-party. The insurance company then placed a hold on the policy that resulted in a lapse of the policy due to non-payment of premium. The Court held that there were issues of fact as to whether the insurance company appropriately refused to process the assignment of the policy by the plaintiff, and any damages for the foreseeable consequences. Insurers should remain cognizant of potential liability incurred in the event that policy determinations effect contractual obligations. Thanks to Valerie Prizimenter for her contribution to this post.           Previous Next Contact

News Failing To Prepare Is Preparing To Fail In NJ Courts October 8, 2012 < Back Share to: In the recent decision of Werthmann v. New Jersey Manufacturers Insurance Company, the Appellate Court upheld the dismissal of plaintiff’s complaint with prejudice based upon plaintiff’s failure to secure a medical expert for trial. Werthmann was injured in a motor vehicle accident and filed an uninsured motorist claim against her insurer, New Jersey Manufacturers Insurance Company. The matter was listed for trial on six different occasions before finally being rescheduled for October 17, 2011. On that date, the judge ordered the parties to return the following day to begin trial. On October 18, 2011, the plaintiff’s counsel informed the judge for the first time that he was not prepared to proceed due to his expert witness' unavailability. Particularly, counsel advised that the physiatrist's testimony regarding the results of an independent EMG was necessary to meet plaintiff’s burden of proof regarding objective evidence of a permanent injury. The judge in turn dismissed the plaintiff’s complaint with prejudice on the grounds that the plaintiff was not prepared to proceed at trial. The Appellate Court upheld the trial judge’s decision, noting that any lesser sanction in this case would circumvent the purposes of the "Best Practices" rule amendments in New Jersey. Thanks to Heather Aquino for her contribution to this post. http://www.judiciary.state.nj.us/opinions/a1444-11.pdf Previous Next Contact

News New York Court Permits Insurer To Rely On Flood Exclusion Omitted From Disclaimer April 8, 2016 < Back Share to: It is never a good practice for an insurer to omit applicable exclusions in a disclaimer, but according to a New York Second Department decision issued this week, that mistake is not always fatal. In Provencal, LLC v. Tower Ins. Co. of New York, the insured’s premises suffered water damage as a result of rain storms and the collapse of a retaining wall. The insurer disclaimed coverage based on an exclusion for damage caused by water migrating from under the ground. After the insured filed suit, the insurer relied on an exclusion barring coverage for damage caused by flood and/or surface water. The insured countered that the policy exclusion did not bar coverage because the insurer failed to specifically identify the exclusion in its disclaimer. The Second Department disagreed, and held that the exclusion barred coverage despite the fact that it was not identified in the disclaimer. In reaching that decision, the court reasoned that the line of New York cases addressing an insurer’s obligation to disclaim coverage with specificity was grounded in New York Insurance Law §3420(d)(2), and that statute applies only to accidents arising out of bodily injury or death. Because the damages in Provencal were property damage, the statute did not apply. With the statute inapplicable, the court analyzed the disclaimer by analyzing the issue through the prism of estoppel. Because the insured did not show that it was prejudiced by the insurer’s piecemeal disclaimer, the court held that the insurer was entitled to rely on the exclusion. All disclaimers should be thorough. They should all cite every ground upon which they are based. That is especially true in the context of bodily injury claims. But the Second Department’s decision in Provencal shows that, at least in the context of property damage claims, not all piecemeal disclaimers are fatal. Why risk it though? Insurers should cite all applicable exclusions in their disclaimers. Thanks to Mike Gauvin for his contribution to this post. For more information, please email Dennis M. Wade at dwade@wcmlaw.com . Previous Next Contact

News Ignoring School Harassment May Be “Intentional” Conduct With Unintended Consequences March 20, 2018 < Back Share to: The Second Department recently held that there was a question of fact regarding whether a school district’s conduct in ignoring complaints of anti-Semitic harassment was a covered “occurrence” under the insurance policy. In Graphic Arts Mutual Insurance Co. v. Pine Bush Central School District, plaintiffs in an underlying action alleged the Pine Bush Central School District violated their civil rights by being deliberately indifferent to anti-Semitic harassment. The School District tendered their defense in the underlying action to Graphic Arts Mutual Insurance Company. Graphic Arts Mutual initially defended the School District in the underlying action, but later disclaimed any duty to indemnify. The School District ultimately settled for $3 million in compensatory damages and $1.48 million in attorneys’ fees. Graphic Arts Mutual did not contribute to the settlement, and commenced a declaratory judgment action. Graphic Arts claimed it was not obligated to indemnify the School District because the District’s conduct constituted intentional discriminatory conduct, and the claims did not constitute a covered “occurrence” or “loss.” The Second Department found that for the claim to have been an “accident,” it would have to be unexpected, unusual, or unforeseen from the point of view of the insured. The underlying plaintiffs alleged that the repeated nature of harassment gave rise to an inference that the District “intended for the harassment to occur” based on the District’s policies in dealing with reports of discrimination. Ultimately, the court held that whether the incidents giving rise to the underlying complaint were “accidents” were questions of fact that could not be decided on a motion to dismiss. Insurers should be mindful of the court’s discussion of “accidental results flowing from intentional causes.” Specifically, the court held that “an act that is intentionally committed or performed may still be considered an accident within the meaning of an insurance policy, as long as the insured did not expect or intend the harm caused.” Thus, even though the District’s conduct may be intentional, it would nonetheless be covered conduct because the consequences from that conduct were unexpected. The outcome of this case remains unclear, but a decision on the underlying facts may shed light on how New York courts approach “accidental results flowing from intentional causes.” Thanks to Douglas Giombarrese for his contribution to this post.       Previous Next Contact

News A Missed Opportunity by Defense Counsel in PA May 29, 2020 < Back Share to: In Shiflet v. Lehigh Valley Health Network, Inc., the Pennsylvania Supreme Court affirmed the trial court’s $2,391,620 verdict in favor of the plaintiff under the “general-verdict rule,” which states that “when a jury returns a general verdict involving two or more issues, and the verdict is supported as to at least one issue, the verdict will not be reversed on appeal.” The plaintiff in Shiflett underwent knee surgery at Lehigh Valley Hospital. While recovering from her surgery in the hospital, she fell out of her hospital bed and fractured her left tibia, which went undiagnosed by the nursing staff. She was then transferred to a rehabilitation unit. While undergoing rehabilitation therapy, the tibia fracture displaced. She then underwent two additional surgeries and suffered permanent left leg injuries. The plaintiff subsequently sued the hospital for negligence. At the close of trial, the jury awarded the plaintiff $2,391,620 in damages. There was no breakdown of damages on the verdict sheet, and counsel for the hospital did not object or seek apportionment of the verdict amount. The Superior Court ruled that one of the claims upon which the plaintiff prevailed at trial was time-barred and should not have been submitted to the jury. Finding that some portion of the jury’s damage award may have been based upon the time-barred claim, the intermediate appellate court remanded the case for a new trial on damages. After its review, the Pennsylvania Supreme Court concluded the Superior Court erred in this regard, as pursuant to the “general-verdict rule” adopted by Halper v. Jewish Family & Children’s Services, 963 A.2d 1282 (Pa. 2009), the Hospital waived any entitlement to a new trial on damages when it failed to request a special interrogatory on the verdict sheet that would have permitted the jury to allocate the damages awarded on each claim Shiflett demonstrates the need for counsel to be aware of the timeliness of requesting an allocation of damages. Thanks to John Lang for his contribution to this post. Please email Heather Aquino with any questions. Previous Next Contact

News NY High Court Upholds “Best Interest” Standard of Care for Insurance Producers October 21, 2022 < Back Share to: Finally, some clarity. A unanimous New York high court decided this week to uphold the Suitability and Best Interests in Life Insurance and Annuity Transactions Amendment to Insurance Regulation 187. The Department of Financial Services (DFS) in 2018 added this amendment because of concerns that the increasing complexity involved in purchasing annuities and life insurance made consumers more reliant on the advice of agents and brokers, who were incentivized to recommend transactions that prioritized their own compensation over the consumer’s best interest. The Amendment set forth a uniform standard of care for all insurance agents and brokers (i.e. producers) that provide retirement planning or investment advice: producers must act in the best interests of their clients by making reasonable efforts to obtain client suitability information and based any recommendation on that suitability information (i.e. age, annual income, and financial situation, needs, objectives, and experience, among other categories) and not on any compensation or other incentives. The Amendment requires producers to recommend only suitable transactions and have a reasonable basis to believe that the consumer has been reasonably informed of the consequences of the purchase and ultimately benefits from such a purchase. Such a standard of care had previously only applied to annuity contracts. The Amendment was challenged as arbitrary and capricious and unconstitutionally vague. In 2020, a Justice of the Supreme Court upheld the Amendment, but the Appellate Division, Third Department, reversed and held that the Amendment was unconstitutionally vague because it failed to provide concrete, practical guidance to insurance producers. On October 20, 2022, the New York Court of Appeals, reversed yet again, holding that DFS “appropriately exercised its authority to create a carefully considered and clear regulation” in concluding that the duty to act in the “best interest” of the consumer was a necessary standard of care “to protect consumers.” Thanks to Abed Bhuyan for his contribution to this post. Please contact Abed Bhuyan with any questions. Previous Next Contact

News NY's General Obligations Law § 9-103: A Continued Thorn For Plaintiff's In Personal Injury Cases Against Landowners April 23, 2013 < Back Share to: In Ferland v. GMO Renewable Resources, LLC, the estate of Rene L. Ferland, Jr. filed suit against Fund 6 Domestic, LLC after the decedent died when his snowmobile struck the side of a tractor-trailer that was carrying a load of logs on a private logging road. This road was also used as a snowmobile trail on Fund 6’s property. Fund 6 moved for summary judgment on the grounds that General Obligations Law § 9-103 entitled it to immunity and that the consideration exception to this provision’s grant of immunity did not apply. General Obligations Law § 9-103(1) provides that “an owner…of premises…owes no duty to keep the premises safe for entry or use by others for…snowmobile operation…or to give warning of any hazardous condition…on such premises.” An exception to this exists under G.O.L. § 9-103(2)(b) when consideration is given in exchange for permission to pursue any of the activities enumerated in the section. The plaintiff contended that the consideration exception applied to this case because Fund 6 entered into recreation leases with various non-party fish and game clubs whereby Fund 6 accepted rent in consideration for the clubs to post the leased premises and use them for limited purposes. The key language in the lease agreements was the term “other recreational activities” and the plaintiff argued that this term contemplated snowmobiling, thereby allowing the action to proceed against Fund 6. The Appellate Division disagreed, finding that snowmobile clubs actually maintained the snowmobile trails through volunteer efforts of their members. Further, the court cited to the lease agreement between Fund 6 and the St. Lawrence County Snowmobiling Association that granted the Association permission to use the property for snowmobiling “without charge”. From reviewing the record, the court held that the evidence established that the snowmobile trails were open to the public without charge. Finally, the court gave no credibility to the plaintiff’s attempt to argue that the Association’s use agreement that required it to name Fund 6 as an additional insured on its trail insurance policy, acted as consideration sufficient to trigger the exception. G.O.L. § 9-103 encompasses fourteen different outdoor recreational activities. Whenever a suit is brought against a landowner who has permitted recreational use on its property, it is important to remember G.O.L. § 9-103 as a potential shield to liability – and a continued thorn – in plaintiffs’ personal injury cases against landowners. Special thanks to Michael Nunley for his contributions to this post. For more information, please contact Nicole Brown at nbrown@wcmlaw.com . Previous Next Contact

News 33 Seconds Is Not Sufficient Notice For NJ App. Div. January 19, 2011 < Back Share to: In Capano v. Moral Foods , Inc, the Appellate Division affirmed the summary judgment dismissal of plaintiff's personal injury complaint for a slip and fall accident in defendant's supermarket. Plaintiff slipped and fell in defendant's store while shopping. A store surveillance video confirmed that a male customer dropped a container of cottage cheese on the floor at 3:02:40 and that plaintiff fell at 3:03:15, 33 seconds later. Plainitff argued that the store was small and the spill was in the front of the store , therefore that a fact question existed as to whether a store employee should have observed the spill. The Appellate Division affirmed summary judgment finding that 33 seconds was not sufficient notice and that plaintiff's fall was " relatively instantaneous" providing no time for the store to react. The Court also found that the facts did not establish a " dangerous mode of operation " case which would have eliminated the requirement of proving notice. The Court found the dangerous condition caused by spillage from a packaged container of cottage cheese was not a foreseeable risk posed by the store's mode of operation. Please contact Robert Ball with any questions regarding this post. http://www.judiciary.state.nj.us/opinions/a3218-09.pdf Previous Next Contact

News How Far Is Too Far in Summation? November 5, 2010 < Back Share to: Every jurisdiction has its own set of rules as to how far an attorney can go in a personal injury case in arguing the pain and suffering value of the injuries. New York, for example, allows an attorney to suggest specific numbers to a jury. Pennsylvania, in contrast, does not. In New Jersey, court rule R. 1:7-1 specifically prohibits counsel from arguing a specific pain and suffering value. But, as you might expect, attorneys, particularly plaintiff’s attorneys, often try to take liberties with the rule. So it is that the case of Riski v. Thompson Muller, is headed to the New Jersey Supreme Court -- http://www.law.com/jsp/nj/PubArticleNJ.jsp?id=1202474023552&slreturn=1&hbxlogin=1. In Riski, plaintiff’s counsel told the jury that they would be “ignoring the law if they had an issue with a million dollar case.” After this argument, a $1,700,000 verdict was awarded -- a verdict that was set aside by the trial court -- and an appeal resulted. The Supreme Court will now decide whether the arguments violated R. 1:7-1 and otherwise went beyond the bounds of proper advocacy. We will keep you posted as to what happens next! If you would like more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com . Previous Next Contact