News NJ Federal Court Punishes Lack of Effort to Obtain Discovery January 18, 2017 < Back Share to: A recent New Jersey federal court ruling suggests that the next best thing to producing discovery your opponent requested from you, is being forthcoming about why you did not produce discovery. In Geico v. Zuberi, et al., Geico sued a group of outpatient care facilities and their ringleaders in an alleged kickback scheme, where Geico was billed about $800,000 for medically unnecessary radiology services provided to car accident victims Geico insured. In a related criminal proceeding against the defendants stemming from similar allegations with respect to Medicaid, the government confiscated the defendants’ electronic devices. The defendants claimed that the confiscated electronics contained all relevant discovery materials in the civil case brought by Geico, and for that reason, completely avoided producing any substantive discovery responses to Geico’s discovery demands. Even after Geico obtained court orders compelling the defendants to produce discovery, the defendants still did not comply, citing the same reason for noncompliance – the government took their materials. Geico sought relief from the court to enforce the prior discovery orders and the defendants’ position remained unchanged. The court was unpersuaded that the government took the only versions of relevant documents and that there was no other way to obtain these documents. The court suggested that in this circumstance, the defendants had a duty to make efforts to obtain relevant discovery documents from other sources, such as their banks or accountants. In ruling on Geico’s motion, the court then: (1) struck the defendant’s pleadings; and (2) required the defendants to provide affidavits from third parties explaining why each requested document was unavailable. This case demonstrates that, in the court’s eyes, good faith efforts to obtain discovery can be more important than the result. Thanks to Rachel Freedman for her contribution to this post.         Previous Next Contact

News Amazon Can Be Liable for Third-party Sellers' Defective Products in California-Will Other States Follow? (NY) August 25, 2020 < Back Share to: Amazon has traditionally been exempt from various states' product liability laws by successfully arguing that Amazon is not a "seller" when it comes to products sold by third-parties through Amazon's website. A California Appellate Court has overturned a lower court and ruled that Amazon.com played a pivotal role in every step of a plaintiff's purchase of a replacement laptop computer battery on the online shopping website, making it potentially liable for the personal injuries caused when the battery malfunctioned. Angela Bolger sued Amazon and the Chinese-based company, Lenoge Technology, that listed itself on the website as the seller, alleging strict/negligent products liability, breach of warranty and negligent undertaking. Although Lenoge was served, it did not appear and the court entered default judgment. Bolger alleged the battery exploded several months later, and she suffered severe burns as a result. Amazon then moved for summary judgment, arguing primarily that the doctrine of strict products liability, as well as any similar tort theory, did not apply to it because it did not distribute, manufacture, or sell the product in question. It claimed its website was an “online marketplace”, and that Lenoge was the product seller, not Amazon. The trial court agreed, granted Amazon’s motion, and entered judgment accordingly. Bolger appealed, resulting in the higher court's determination that Amazon's role was more than that of just marketplace. The facts relied upon by the court may apply to other products sold on Amazon by third-party sellers because the Court found it was important that Amazon charged Bolger for the purchase, retrieved the laptop battery from its location in an Amazon warehouse, prepared the battery for shipment in Amazon-branded packaging, and sent it to Bolger. In a very fact-specific inquiry, the Court of Appeal for the Fourth Appellate District in Bolger v. Amazon.com LLC determined that Amazon could be found strictly liable for defective products offered on its website by third-party sellers like Lenoge. In the circumstances of this case, the Court of Appeal agreed with Bolger and reversed a San Diego trial court stating that: "Amazon placed itself between Lenoge and Bolger in the chain of distribution of the product at issue here. ... Under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective. Strict liability here 'affords maximum protection to the injured plaintiff and works no injustice to the defendants, for they can adjust the costs of such protection between them in the course of their continuing business relationship.'" The Court declined to extend the protections of the Communications Decency Act to Amazon under these facts because Amazon's actions were at issue. The Court, in analyzing the fundamental goals of strict products liability legislation found that Amazon is a direct link in the chain of distribution, acting as a powerful intermediary between the third-party seller and the consumer. Amazon is the only member of the enterprise reasonably available to an injured consumer in some cases, it plays a substantial part in ensuring the products listed on its website are safe, it can and does exert pressure on upstream distributors (like Lenoge) to enhance safety, and it has the ability to adjust the cost of liability between itself and its third-party sellers. Under established principles of strict liability, Amazon should be held liable if a product sold through its website turns out to be defective. Online marketplaces such as Amazon may become much stricter in terms of who they allow to sell on their site, and greater product liability risks could drive up prices as they assume a greater role in the due diligence of investigating those sellers that increase risk of litigation and ultimately exposure in U.S. Courts. California's reasoning could be adopted by legislators and other state courts, such as New York, New Jersey and Pennsylvania. We will watch for future developments in strict products liability jurisprudence in our areas and keep you updated on any impact this case may have. If you have any questions, please contact Vincent Terrasi.     Previous Next Contact

News When Wrongful Death, Survival, and Sovereign Immunity Acts Collide (PA) October 27, 2017 < Back Share to: When a claim arises from the death of an individual, wrongful death and survival actions provide complementary damages. The wrongful death action compensates for losses sustained by living individuals as a result of the decedent’s death. A survival action allows for compensation as if the decedent had survived. Wrongful death damages include compensation for the amounts the decedent’s earnings would have contributed to his spouse, parents or child who are entitled to bring suit. A survival action allows the estate to recover the decedent’s loss of earnings during his life-span less the decedent’s personal expenses. In addition to these pecuniary losses, survival actions allow for pain and suffering, while wrongful death damages include loss of consortium such as loss of counseling and household services. These claims become more complex when the claim is against a public entity. Pennsylvania has legislation, the Sovereign Immunity Act, that defines when a public body may be sued. Although the sovereign may be sued for wrongful death and survival benefits, the type of recovery that is allowed is limited. In particular, the statute bars a parent or child of a decedent from recovering damages in a wrongful death action for the loss of the decedent’s future services and financial support. In Ewing v. Commonwealth of Pennsylvania Department of Transportation, the decedent was killed after an automobile accident in which another vehicle lost control on an icy road and collided with decedent’s automobile. The decedent’s estate brought wrongful death and survival actions against the Department of Transportation, alleging that the death was caused by the Department’s negligence in allowing water to accumulate and freeze on the road. The Court noted that the Sovereign Immunity Act applied to the wrongful death and survival actions against the Department of Transportation. Specifically, the Court stated that the damages sought must be authorized by both the Wrongful Death Act and by Section 8528(c) of the Sovereign Immunity Act. The same holds true for damages sought based upon the Survival Act. Significantly, the Sovereign Immunity Act more narrowly defines recoverable damages, in particular loss of consortium damages are not allowed. In analyzing whether the loss of services and support could be recovered from the sovereign , the Court looked to the Pennsylvania Supreme Court’s decision in Department of Public Welfare v. Schultz for guidance. In Schultz, the Pennsylvania Supreme Court held that loss of consortium damages could not be recovered by a parent or child of the decedent. The issue presented in Ewing, however, was whether the loss of a decedent’s services and financial contributions can be recovered as another “type of damages recoverable” under Section 8528(c) of the Sovereign Immunity Act. The analysis turned on the definition of “past and future earnings and earning capacity” as authorized by Section 8528(c) of the Sovereign Immunity Act. In agreeing with the Department of Transportation, the Court held that the services and financial support a decedent provided a child or parent did not constitute as “earnings” or “earning capacity” of the recipient. More appropriately, that loss would be characterized as a “loss of support,” which was not listed as one of the types of damages recoverable from a commonwealth agency. The Court emphasized that the Legislature could have listed “loss of support” as one of the types of damages recoverable from a commonwealth agency, but intentionally omitted such a recovery. Therefore, the Sovereign Immunity Act bars a parent or child of a decedent from recovering damages in a wrongful death action for the loss of the decedent’s future services and financial support. Thanks to Zhanna Dubinsky for this contribution. For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com .   Previous Next Contact

News Where Is The Restroom? (PA) May 16, 2019 < Back Share to: In AnnMarie Watson. v. Boston Market Corporation, the Eastern District Court of Pennsylvania analyzed the evidence needed to prove constructive notice in a public restroom. By way of background, Plaintiff went to the Defendant Boston Market to order food and used the bathroom at the establishment. Although Plaintiff did not notice any visible liquid on the ground, Plaintiff slipped on water while she was exiting the bathroom. While on the floor, Plaintiff noticed water dripping on the floor from the ceiling light and also saw water stains on the ceiling. The Court found there was no evidence that the Defendant created the harmful condition of water on the restroom floor or that there was actual notice. Plaintiff argued that the Defendant had constructive notice of the water because the water remained on the floor for a significant period of time. The restaurant manager testified that she inspected the restroom no more than forty-five minutes before the accident and did not see any water. Further, the Court found no evidence that the water had been on the floor for a significant period of time such as footprints or tracking, or the accumulation of dirt and debris in the water. Finally, the Court found that the stains on the ceiling did not necessarily indicate constructive notice of a water leak. Given that the setting of the fall was a bathroom where water commonly falls on the floor, the Court needed evidence to show that the water was present on the floor for a significant amount of time. The Court also found it important the frequent inspections were performed on the bathroom in which water was not observed on the ground. Consequently, this case illustrates the types of evidence a court may look to, in order to determine if a party had constructive notice of a harmful condition. Thank you to Malik Pickett for his contribution to this post. Please email Colleen E. Hayes with any questions. Previous Next Contact

News In PA, Delay Damage Is a Compensatory Damage to Be Paid by the Insurer. October 6, 2011 < Back Share to: In the case of [i]Heebner v. Nationwide Insurance[/i], the EDPA (Goldberg, J.) was faced with the question of whether an insurer’s obligation for compensatory damages includes an obligation to pay for delay damages. For those unfamiliar with Pennsylvania’s peculiarities (it is, after all, a Commonwealth), delay damages are a statutory addition (prime rate plus 1%) that is added to a plaintiff’s damages award if the award occurs more than one year after the lawsuit was commenced. Plaintiff argued that delay damages are a form of compensatory damages in that PA’s Supreme Court has defined their purpose as a form of indemnity to the plaintiff “for the money he would have earned on his award if he had promptly received it.” In contrast, Nationwide argued that because PA’s delay damages statute indicates that delay damages are “added to the amount of compensatory damages”, they cannot, by definition, be compensatory damages. The trial court sided with the plaintiff. It held that the Nationwide policy was ambiguous in that it did not specifically state that compensatory damages did not include delay damages, and that delay damages are, in fact, a form of compensation to the plaintiff. So, the moral of the story is that – in Pennsylvania, if you don’t want to be liable for delay damages, you need to specifically exclude them from coverage. If you have any questions about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com . Previous Next Contact

News Include It or Lose It: Insurance Policies v. Reservation of Rights and the Recovery of Defense Costs (NY) February 26, 2021 < Back Share to: Insurance policies act as binding contracts setting the scope of coverage and exclusions as the insurer sees fit, pursuant to the laws of the state. A recent court decision in New York has established that insurance policies must be confined to the four corners of its content. The recent Second Department decision in American W. Home Ins. Co. v Gjonaj Realty & Mgt. Co. held that upon determining a duty to defend does not exist, an insurer may not recover defense costs when the policy does not explicitly provide for such recovery, regardless of its reservation of right to do so. In this case, a personal injury action was brought against the insured for injuries sustained on the insured’s property. Consequently, the insured did not notify its insurance company until four years after the incident when a judgment was made against them. While the insurer denied coverage due to the late notice, it agreed to defend the insured after the judgment was vacated under a reservation of rights to deny coverage if the default judgment was reinstated. The insurer also reserved its right to recover from the insured any fees and costs incurred while defending them. However, such a provision was not expressly included in the insured’s policy. When the default judgment was reinstated, the insurer denied coverage and pursuant to its reservation of rights letter, sought to recoup fees and costs from the insured. The Appellate Division held that while the insurance company correctly had no obligation to indemnify or defend the insured, it was not entitled to recoup the defense costs because the insured’s policy did not expressly provide for such reimbursement. The court’s most notable reason for its conclusion was that insurance companies should include language in its policy permitting recovery of defense costs. Such language in a reservation of rights letter only does not create a new implied contract with the insured. This decision goes against prior New York state and federal cases which permitted recovery of defense costs. However, whether recovery is appropriate has never been explicitly addressed before. Moving forward, the outcome of this case will require insurance companies to re-examine their policies to include such specific language without relying solely on a reservation of rights to recover defense costs. Thank you to Gabriella Scarmato for her contribution to this post. Please email Georgia Coats with any questions. Previous Next Contact

News Harassment and Bias: Superior Court of New Jersey Defends Against Burdensome Subpoenas July 19, 2024 < Back Share to: On April 18, 2024, the Superior Court of New Jersey in DeVito v. 151 Route 72, LLC , No. A-1084-23, 2024 WL 1669567 (N.J. Super. Ct. App. Div. Apr. 18, 2024), reversed a trial court’s decision denying appellants’ motion to quash an aggressive subpoena. The reversal marks a clear protection against potentially burdensome discovery requests and a confrontation of possible biases in independent medical evaluations. The plaintiffs’ subpoena requested all reports, billing, and calendar information from over a year’s worth of independent medical evaluations conducted by the medical expert who evaluated one plaintiff in the underlying action. Id. at 1. This doctor also confirmed he had ownership interest in the IME entity, a non-party in the suit. Id. Refusing to comply, appellants claimed this amounted to 596 evaluations and would take a significant amount of time to complete at such a late stage in the litigation. Id. The Court recounted that during oral argument at the trial court, plaintiffs’ counsel took issue with the estimates, emphasizing that the expert’s evaluation rate would be roughly thirty-five evaluations per month. Id. at 2. Counsel also called his integrity into question and pushed on the validity of his findings. Id. The trial court interjected and brought an exacting focus to the nature of IMEs—why cap discovery further if the dishonesty of a “hired gun” threatens disputes? See id. It thus reserved the protective limiting of subpoenas in this context for financial information such as personal tax returns. On appeal, the Superior Court emphatically rejected this strict interpretation of precedent and held that the trial court failed to consider burdens, expenses, and New Jersey rules when denying the motion to quash. Id. at 3. Reversing, the Court stressed that discovery rights are not afforded to harass or burden litigants and experts. Id. at 4. It bolstered its decision by also explaining that this specific subpoena extended beyond the scope of permissible discovery and seemingly aimed to expose the operations of a non-party. Id. Moving forward, New Jersey litigants and experts should be mindful of a more defined interplay between “permissible discovery,” accusations of bias, and the realities of building a case. Thanks to Patrick McGovern for his contribution to this article. DeVito v. 151 Route 72 LLC .pdf Download PDF • 142KB Previous Next Contact

News First Department – Foolishness will not be Rewarded November 17, 2010 < Back Share to: America is often known as a country where you can sue anybody for anything. While this may be true, bringing suit against others for your own negligent and foolish behavior will not always bring a payday. While on a lunch break at a construction site, construction worker Donald Kolb watched his supervisor try to force open an elevator door by using a drop key designed to open the locks to elevators. This elevator had been not functioning for the past 2 weeks and the supervisor had no reason to open the door. Kolb took his chance at forcing open the door and was successful. As he turned to receive the praise of his fellow workers, he stepped into the dark elevator shaft, fell 10 feet to the bottom of the pit and suffered multiple injuries. Kolb filed a negligence claim against the building owner and elevator company that was servicing the elevator at the time. The testimony confirmed that plaintiff repeatedly admitted that he was an "idiot" and did not know what he was thinking when he attempted this maneuver. The First Department agreed and affirmed a Bronx trial court’s granting of summary judgment in favor of the defendants as Kolb had no reason to open the elevator door and no other party was at fault since his actions were independent and unforeseeable. Special thanks to Chris O’Leary for this post. If you have any questions or comments about this post, please email Paul at pclark@wcmlaw.com . http://www.nycourts.gov/reporter/3dseries/2010/2010_08357.htm Previous Next Contact

News Foreign Dumpster Means No Strict Liability (NY) January 29, 2021 < Back Share to: In Yong Qiao Zhao v. ATC Construction Group Corp., the Second Department held that if a plaintiff construction worker travels to use a public dumpster unaffiliated with the property on which the construction work is happening, then strict liability pursuant to Labor Law 240(1) cannot attach to the unaffiliated property owner. In this action, plaintiff had been hired by defendant A.T.C. Construction Group Corp. to perform renovation work in connection with a construction project located at 225 Rector Place in Manhattan. At some point, plaintiff traveled to the site of a separate and unrelated A.T.C. project taking place at 237 Henry Street, evidently to dump construction debris associated with the Rector Place project. Plaintiff used a ladder to access the dumpster to dispose of the debris, but fell and sustained injuries. He thereafter initiated the lawsuit against his employer A.T.C. as well as the owner of 237 Henry Street, alleging various causes of action including a violation of Labor Law 240(1). Defendant 237 Henry Street moved for summary judgment dismissing the 240(1) cause of action asserted against it, which was granted by the trial court. Plaintiff appealed, and the Second Department affirmed on the basis that Labor Law 240(1) strict liability requires some nexus between the owner and worker by which to establish liability. Plaintiff failed to establish this nexus between himself and the owner of 237 Henry Street, because he had been hired to work at the 225 Rector Place project, never worked at 237 Henry Street for any entity or was suffered to work at that location, and the construction debris he was dumping in front of 237 Henry Street was from the project at 225 Rector Place. Thanks to Shira Straus for her contribution to this post. Please email Georgia Coats with any questions. Previous Next Contact

News Indemnification Necessary Despite Procuring Insurance August 16, 2018 < Back Share to: A contractor providing insurance to an owner that includes a provision that the policy will be primary may think he has already prevented exposure from any indemnification clause in their contract with the owner as the owner has already been made whole from future liability. However, the underlying contract language may include additional clauses that render the procuring of liability insurance as a separate and unrelated obligation from the obligation to indemnify and hold harmless. Thus, owners, even with procured insurance from a contractor, may still seek indemnification, even from the party that provided the original insurance. According to New York State Department of Transportation v. North Star Painting Company, Inc., 2018 WL 3321495, 2018 N.Y. Slip Op. 05087 (4th Dep’t July 6, 2018) a contractor that procures a policy with a “policy as primary” clause was ruled to have not discharged its duty to provide indemnification, and thus, a conditional order for indemnification of an owner by the contractor who already provided an insuring policy was upheld. In North Star Painting, Inc., a contractor to the State of New York Department of Transportation agreed to indemnify and hold harmless the State of New York from claims resulting from the work stated in the contract. However, the contract further required the contractor to procure an owners and contractors protective liability (OPCL) policy to insure the State of New York. Within the policy procured by the contractor, the coverage under the OCPL policy was to be primary and, further, the insurer would not seek contribution from other insurance available to plaintiff. As the policy provides primary coverage, one would think that the procuring of insurance has already fulfilled the indemnification obligations of the contractor. However, such a policy does not prevent an owner from still seeking indemnification when the underlying contract specifically exempts the procuring of insurance from fulfilling or discharging the indemnification requirement. In North Star Painting, Inc., the underlying contract included a clause that the indemnification and hold harmless clauses shall not “be deemed limited or discharged by the enumeration or procurement of any insurance for liability for damages imposed by law” upon the contractor. When complete, clear and unambiguous, a contract must be enforced according to its plain meaning. The Court determined that the clause prevented the procurement of insurance by the contractor as a means to have already fulfilled or discharged their obligation to indemnify the owner. As such, the Court found that NYSDOT was entitled to the conditional order of contractual and common-law indemnification against the contractor. As this case demonstrates, there is nuance between the procurement of insurance and indemnification. Even when one procures insurance for the other party in the contract, and even as per the contract, one may still be potentially separately obligated for indemnification. Therefore, experienced counsel should be consulted regarding how to diminish or prevent an entity’s additional exposure through indemnification even when an insurance policy has already been procured for the other contracting party. Thanks to Jonathan J. Pincus for his contribution to this post. Previous Next Contact

News Change To New York’s Wrongful Death Statute Awaits Its Fate July 15, 2022 < Back Share to: With the passing of the Grieving Families Act by the New York State Senate and Assembly on June 7, 2022, the proposed legislation currently awaits its fate before Gov. Kathy Hochul. This legislation, if signed into law, would change the state’s 175-year-old wrongful death statute by permitting the families of wrongful death victims to recover compensation for emotional anguish. While the current New York wrongful death statute limits recovery in such cases to a decedent’s close family members, e.g., a spouse or child, and for pecuniary loss only, the pending legislation would expand the scope of recovery to allow for emotional damages including grief or anguish and loss of affection and companionship. It would also expand family members who could sue under the statute to include spouses, domestic partners, children, grandchildren, great-grandchildren, parents, grandparents, stepparents, and siblings. The law would also extend the time permitted to bring a wrongful death action from two years to three-and-a-half years. Such a change in the law would significantly increase liability insurance premiums for both public and private entities throughout the state. According to an actuarial analysis by Milliman, Inc., if the bill becomes law, medical professional liability costs would increase by nearly 40%, automobile and general liability insurance by as much as $2.2 billion, and annual premiums for residents and businesses across the board would increase 12.6%. Given the economic uncertainty presently looming in conjunction with an inflation rate not seen in forty years at more than 9%, such costs may wreak havoc on an already tenuous economic situation. Please contact John Diffley with any questions. Previous Next Contact

News Policyholders Inflate Estimates At Their Own Risk (PA) October 1, 2021 < Back Share to: A recent decision from the United States District Court for the Eastern District of Pennsylvania demonstrates the risks involved when an insurance policy holder inflates the replacement value of the property covered under their commercial insurance policy. See State Auto Prop. & Cas. Ins. Co. v. Sigismondi Foreign Car Specialists, Inc. No. CV 19-5578, 2021 WL 1343116 (E.D. Pa. Apr. 12, 2021). The insurance policy at the center of the case was executed between State Auto, a commercial insurer, and Sigismondi Foreign Car Specialists, an automobile sales and repair business in Philadelphia. In January 2019, the auto shop presented a claim under the policy for water damage to the building and the business’ automobile inventory. The auto shop hired a public adjuster and an appraiser to calculate the value and replacement cost of the automobiles it had in inventory that were damaged. However, the owner of the auto shop then allegedly substituted in his own replacement cost figures. As the court put it, “Many of those figures were substantially greater than the values determined by [the adjuster and appraiser].” To support these inflated values, the owner allegedly fraudulently altered vendor invoices and submitted them to State Auto. He allegedly later admitted in deposition testimony that he used computer software to alter these invoices. State Auto denied the auto shop’s claim under the insurance policy citing misrepresentation. Ultimately, State Auto was victorious on a Motion for Summary Judgment when the court held that the auto shop violated the “Concealment, Misrepresentation or Fraud” condition of the insurance policy and therefore State Auto was not obligated to provide coverage for the claim. This case shows that an insurer or its counsel should typically obtain a reliable valuation to ascertain whether the policyholders’ claims are within the realm of reason. Thanks to Jason Laicha for his contribution to this post. If you have any questions, please email Matthew Care. Previous Next Contact