News Criminal Double Faults; John McEnroe Nets Gorky’s Pirate II August 30, 2013 < Back Share to: When John McEnroe partnered with Lawrence Salander to purchase Arshile Gorky’s Pirate II back in 2004, he could not have imagined that he would eventually have to step into a different kind of court just to get back what was rightfully his. But that is exactly what he did in The Dorothy G. Bender Foundation, Inc. and John McEnroe v. Carroll, after Salander, his partner in the joint venture, traded the painting away without his knowledge. When McEnroe agreed to purchase the painting with Salander, the now infamous fraudster committed his first fault by entering into a similar arrangement with Morton Bender to purchase the same painting. After taking money from McEnroe and Bender, Salander purchased the painting in 2004 and led both men to believe that Pirate II belonged to them. Two years later, he committed his second fault when, unbeknownst to McEnroe and Bender, and using the name of a fictional entity, he swapped Pirate II for two lesser valued works from Joseph Carroll in 2006. After learning that Carroll was in possession of their painting, McEnroe and Bender filed suit to recover it. Article 2 of the Uniform Commercial Code usually protects purchasers of fine art when the work was entrusted to a merchant who deals in goods of the kind. The test is whether the buyer, without knowledge that the purchase violates the rights of another, bought the work in the ordinary course of business. But like many rules in the legal world, this one has exceptions; and Judge Kornreich found that one of them applied. Because art dealers have knowledge of their trade, a heightened standard of commercial reasonableness applies to their transactions. This includes a duty to investigate when “red flags” are raised about a potential sale. In this case, the court found it significant that Carroll obtained Pirate II by trading two works significantly lower in value, failed to inquire into the existence of Salander’s fictional entity that originally aroused his suspicions, and ignored a provenance statement that did not list a current owner of the work. According to the court, acquiring Pirate II under these circumstances did not meet the UCC’s standard of commercial reasonableness. Accordingly, the court ruled that McEnroe was entitled to have his property returned. McEnroe could not have known he was dealing with a fraudster when he purchased Pirate II in 2004. Fortunately for him, the result he obtained in the New York Supreme Court was just as favorable as those he routinely earned on the tennis court. Despite the protections afforded to bona fide purchasers by the UCC, McEnroe was undoubtedly happy to learn that when fairness dictates a result, courts of law can indeed be serious. Special thanks to Michael Gauvin for his contribution to this post. For more information, please contact Dennis M. Wade at dwade@wcmlaw.com . Previous Next Contact

News First Department Holds Insurer May Disclaim Under Construction Classification Codes June 7, 2024 < Back Share to: In Wesco Ins. Co. v. SR Delco C.S.M. Inc., 226 A.D.3d 630 (N.Y. App. Div. 2024), the New York Appellate Division, First Department was faced with a familiar insurance coverage fact pattern: an insurance carrier issued a policy to a general contractor, which hired an interior carpentry subcontractor and, during the subcontractor’s work, an employee of the subcontractor was injured and sued the subcontractor and general contractor. The general contractor sought insurance coverage from its insurance company in the form of a defense against the injured employee’s claim. In Wesco v. Delco, the insurer initially provided the insured with a defense. However, several months into the defense, the insurer disclaimed coverage based on the insurance policy’s classification codes. The policy included language limiting its coverage to specified types of construction work. Although the covered classification codes included interior carpentry, the insurer argued that the insured general contractor was not itself performing interior carpentry work, and therefore the general contractor was not entitled to coverage. The court agreed and affirmed the trial court’s grant of summary judgment in favor of the insurer because the claim for coverage fell outside the scope of the policy. The First Department also noted that a disclaimer of coverage under a policy classification code is not an exclusion and is therefore not subject to the timeliness requirements of New York Insurance Law § 3420(d)(2). Wesco Insurance Company v. SR Delco CSM Inc .pdf Download PDF • 138KB Previous Next Jason Laicha Jason Laicha Counsel +1 267 239 5526 jlaicha@wcmlaw.com Contact

News Museum Fails To Prove Latent Defect (NJ) August 18, 2023 < Back Share to: In Agosto v. Museum of Modern Art, 2023 Slip. Op. 04292 (2d Dep’t Aug 16, 2023), the Appellate Division, Second Department, affirmed a lower court decision denying the defendant museum’s motion for summary judgment on plaintiff’s common law negligence and Labor Law § 200 claims. Plaintiff, an HVAC technician, was conducting routine preventative maintenance when a hot water pipe burst and she fell from her ladder. Plaintiff brought common law and Labor Law §§ 200, 240(1), and 241(6) claims against the museum. The parties cross-moved for summary judgment. The lower court denied plaintiff’s motion for summary judgment on her §§ 240(1) and 200 and common law claims, but partially granted defendant’s motion in dismissing plaintiff’s §§ 240(1) and 241(6) claims. The lower court found that plaintiff failed to allege that she was engaged at the time of her accident in a Labor Law-protected activity and that did not allege any Industrial Code violation. Notably, although plaintiff moved for summary judgment on her common law and § 200 claims in the lower court, plaintiff at the appellate stage abandoned that argument and instead argued that the lower court got it right that there remain questions of fact whether the museum created or had notice of the of the defective pipes. The parties at oral argument contested whether any defect that led to plaintiff’s injuries was latent. The Second Department held, consistent with its previous holding in Alexandridis v. Van Gogh Contr. Co., 180 A.D.3d 969 (2d Dep’t 2020), that the defendant-museum failed to establish the defect was latent because the museum could not show that “had it conducted a reasonable inspection, the alleged condition would not have been discoverable.” Thanks to Abed Bhuyan for this post. Please contact Abed with any questions. Previous Next Contact

News Employee Thefts Constitute Single Occurrence Under Policy Language (PA) April 12, 2018 < Back Share to: The Eastern District of Pennsylvania recently ruled that an insurer did not need to pay more than its single occurrence policy limit in connection with a $3 million employee theft claim. In Wescott Electric Company v. Cincinnati Insurance Company, the Court granted Cincinnati Insurance Company’s (“Cincinnati”) motion to dismiss the claims brought against it for its failure to provide additional coverage. This lawsuit was initiated by Wescott Electric Company (“Wescott”) after a Wescott employee stole almost $3 million from the company between 2003 and 2013. During the relevant period, Wescott had four consecutive insurance policies from Cincinnati. Each policy lasted for three years with the fourth policy beginning in 2013. Importantly, the employee’s theft was discovered during the policy period of the fourth policy. As a result, Cincinnati paid Wescott the policy limit of $100,000 for a single “occurrence” of employee theft. Wescott’s breach of contract claim against Cincinnati was two-fold. First, Wescott argued that it was entitled to coverage under the 2013 policy as well as under the 2010 policy. Second, Wescott argued that the employee’s theft constituted more than one “occurrence” under either the 2010 or 2013 policy. In response, Cincinnati filed a motion to dismiss. The Court ruled in Cincinnati’s favor, stating that Wescott was only entitled to coverage for a single “occurrence” of employee theft under the 2013 insurance policy. The Court reached its conclusion in two separate steps. First, the Court determined that only the 2013 policy provided coverage to Wescott because the theft was not discovered until after the 2010 policy ended. In reaching its decision, the Court flatly disagreed with Wescott’s request to rewrite its 2010 policy to expand the period of coverage. By way of background, the four consecutive insurance policies did not contain uniform language. Specifically, the policies issued in 2004 and 2007 stated that Cincinnati “will pay only for covered loss discovered no later than one year from the end of the policy period.” These policies ended in 2007 and 2010, respectively, and the employee’s theft was not discovered until 2013. Thus, neither the 2004 or 2007 policies provided Wescott with coverage. Significantly, the 2010 and 2013 policies contained more limited discovery language. These policies stated that Cincinnati’s coverage only applied to losses which were discovered by Wescott during the policy period, rather than one year from the end of the policy period as in the 2004 and 2007 policies. Essentially, Wescott requested that the Court rewrite the 2010 policy to include the larger, one-year discovery window found in its 2004 and 2007 policies. Wescott argued that it reasonably expected the 2010 policy to contain the same one-year discovery window as the former policies and was not put on notice of the change. The Court disagreed with Wescott’s position, finding that its contention was insufficient to rewrite the 2010 policy. In so finding, the Court emphasized a “Notice to Policyholders” issued by Cincinnati in 2008 that announced the change in discovery-based coverage. Furthermore, the Court referenced Standard Venetian Blind Company v. American Empire Insurance Company when explaining that because the exclusions in the policy were clearly worded and conspicuously displayed, the insured could not avoid their enforcement simply by arguing that he failed to read or did not understand them. Applying the case to the instant matter, the Court determined that the Cincinnati discovery period language was far more “conspicuously displayed” than even the language in Standard Venetian. The Court also pointed out that the discovery period language was the very first paragraph of the “Commercial Crime Coverage Form.” Second, the Court determined that only one “occurrence” of employee theft had transpired under the 2013 policy. In reaching its conclusion, the Court mainly relied on the plain meaning of “occurrence” found in the definition section of the “Commercial Crime Coverage Form.” Specifically, the Court found the language in the definition to be unambiguous and stated that the employee’s “series of acts” in stealing from Wescott qualified as a single “occurrence” because they were “committed” by a single employee both before and during the relevant policy period. Therefore, the Court concluded that the definition limits the amount of coverage for all thefts occurring during the 2013 policy period to $100,000. Thanks to Zhanna Dubinsky for her contribution for this post. Please write to Vito A. Pinto for further information. Previous Next Contact

News Plaintiff Fails to Connect Jurisdictional Dots, Prompting Dismissal of Products Case (PA) October 11, 2017 < Back Share to: On October 10, 2017, the Superior Court of Pennsylvania handed down a decision affirming the dismissal of a case in Lawrence v. Robland International B.V. et al. The case arises from a workplace injury on May 3, 2013 when plaintiff, Henry Lawrence, injured his hand while using a Robland table saw. On October 28, 2015, Lawrence and his wife filed a complaint naming fifteen defendants, alleging strict liability, negligence, and breaches of warranty. Several of the defendants are located in Belgium and the Netherlands. These foreign defendants filed preliminary objections arguing that the suit should be dismissed for lack of personal jurisdiction. The court granted their objections the Lawrence's appealed, raising the issue of whether Pennsylvania courts could exercise jurisdiction over the foreign saw manufacturers. When looking at personal jurisdiction, one must do so under the due process clause of the Fourteenth Amendment and see whether a defendant has maintained meaningful contacts with the forum. This jurisdiction comes in the form of either specific or general. Specific jurisdiction arises when a certain activity, action, or event gives rise to the exact cause of action. For example, purposefully selling an item in a state which then causes an injury is an event that gives rise to specific jurisdiction. General jurisdiction arises when either a corporation has its headquarters and/or principal place of business in a forum state or maintains connections with the state that are “so continuous and systematic as to render them essentially at home”. An example would be that a company sells so many products in a single state that it is essentially at home there, even if none of those products caused an injury. Upon review, the Superior Court found that the appellants had waived any argument as to general jurisdiction as they conceded that certain defendants did not have “constant and pervasive contacts with Pennsylvania” in their appeal brief. The court then looked at whether there was specific jurisdiction. In Pennsylvania, to prove specific jurisdiction one must show that a company’s specifically identified activities are covered under Pennsylvania’s Long-Arm Statute, which grants specific jurisdiction in certain situations. Once this is shown, once must then prove that jurisdiction is proper under the Constitution’s due process clause by showing it does not offend “traditional notions of fair play and substantial justice”. Once again, the court found that the appellants had waived their argument because they had skipped the step of showing that specific jurisdiction was proper under Pennsylvania’s Long-Arm Statute and had skipped ahead to the due process analysis. Because of this, the court stated the record and appellate brief submitted were insufficient and failed to meet the burden of showing jurisdiction. Plaintiff failed to set up his chess pieces properly, and ended up facing "checkmate." Thanks to Peter Cardwell for his contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact

News Chinese Drywall -- A Big Source of Personal Injury Claims. October 8, 2009 < Back Share to: A new home. The dream of a lifetime. Unfortunately, for many, it is becoming more of a nightmare. Although CPC studies are not due out until later this month, for the moment, courts -- particularly in the south and west where new home construction is most common -- are being flooded with claims that homeowners have developed injuries from houses built with Chinese drywall. Complicating matters is that many of the construction companies that built the houses have limited assets and the Chinese companies are resisting service in the US. In such circumstances, the "logical" target of plaintiffs? Insurance companies. http://www.nytimes.com/2009/10/08/business/08drywall.html?_r=1&scp=1&sq=chinese%20drywall&st=cse http://www.nytimes.com/aponline/2009/09/28/business/AP-US-Chinese-Drywall.html?scp=3&sq=chinese%20drywall&st=cse Previous Next Contact

News Res Ispa Loquitur Inapplicable to Falling Trees / Poles (NY) April 10, 2019 < Back Share to: In Berliner v. Con Ed, Inc., Inc. the Appellate Division, First Department affirmed the trial court’s Order granting the motion of defendant Con Ed for summary judgment, declaring no liability for plaintiff’s injuries in connection with its fallen utility pole. During Superstorm Sandy, plaintiffs ventured outside to see whether fallen trees in their neighborhood could be cleared when another tree fell onto a series of utility wires causing a utility pole to snap and fall over striking plaintiffs. Con Ed was responsible for installing and maintaining the pole. Con Ed established entitlement to judgment as a matter of law by showing that it neither created nor had actual or constructive notice of a dangerous or defective condition in the utility pole. They submitted a variety of affidavits indicating that the pole complied with all applicable government and industry standards for that location and anticipated forces, but that the extreme forces created by the falling tree were excessive with respect to industry standards. To oppose Con Ed’s motion, plaintiffs also submitted affidavits with respect to the circumference of the pole and the pending superstorm, but failed to raise a triable issue. The court held that such an incident may occur absent negligence, and noted that the pole was on a public highway and not within the exclusive control of Con Ed when subjected to hurricane conditions. Additionally, they held that plaintiffs could not rely on the doctrine of res ipsa loquitur to raise an issue of fact as to negligence. This case demonstrates that despite a well-known “superstorm” and constant warnings with respect to its potential impact, success on summary judgment motion is still possible, when arguing a lack of actual or constructive notice of dangerous or defective conditions. Thanks to Nicole Lyalin for her contribution to this post. Please email Brian Gibbons with any questions. Previous Next Contact

News Will Sequester Mean No More Meat? February 11, 2013 < Back Share to: The US political community remains fixated on the potential sequester that would result in across the board budget cuts. If those budget cuts actually occur, the US meat industry might be unable to sell meat. Why? Because if the USDA loses funding, it will not be able to inspect meat. If the meat can't be inspected, it can't be sold. Of course, if uninspected meat were sold, the potential for product recall claims would be significant. For more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com . Previous Next Contact

News Investigator’s Materials: Not As Safe As You Thought (NY) April 17, 2013 < Back Share to: In New York City Schools Insurance Reciprocal v. Milburn Sales Co., Inc., the Second Department weighed in on the discoverability of party’s investigator’s materials. Typically, materials prepared in anticipation of litigation or for trial may be obtained only upon a showing that the party seeking discovery has "substantial need" for the materials and is unable to obtain the information without "undue hardship." The party asserting the privilege that material sought through discovery was prepared exclusively in anticipation of litigation bears the burden of demonstrating that the material it seeks to withhold is immune from discovery by identifying the particular material with respect to which the privilege is asserted and establishing with specificity that the material was prepared exclusively in anticipation of litigation.” In Milburn, a fire occurred at the plaintiff’s premises. On the day of and day after the accident, plaintiff’s investigator, Russo Consultants, was present at the scene. Coincidentally, the fire marshal was also conducting his investigation at that time. Six days after the accident, plaintiff wrote to Milburn and its insurer informing them that, based on the fire marshal’s findings, the negligence of Milburn’s employees may have contributed to the accident. After plaintiff commenced the action, Milburn served subpoenas on Russo for documents and depositions of the Russo employees present on the scene. Plaintiff moved to quash the subpoenas, claiming that the materials were prepared solely in anticipation of litigation. Milburn cross-moved to compel production of the requested materials and for the depositions. The Supreme Court granted plaintiff’s motion and quashed the subpoenas. The Second Department modified the decision to compel Russo to comply with the subpoena for documents, holding that plaintiff failed to demonstrate that the materials were prepared in anticipation of litigation. One of the reasons for the court’s decision is that plaintiff apparently proffered only an attorney affirmation containing conclusory assertions. This, it found, was insufficient to meet demonstrate that the documents were immune. The second reason was that plaintiff could not demonstrate that, at the time the documents were prepared, it was contemplating a subrogation action. There are a couple important takeaways from this decision. First, if you are going to assert that documents are immune because they were prepared in anticipation of litigation, you better be able to provide a specific reason why they are immune. Second, if you can support your arguments with more than an attorney affirmation, do so. Special thanks to Gabe Darwick for his contribution. For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com   Previous Next Contact

News Move It Or Lose It - Timeliness When Making A Claim March 8, 2024 < Back Share to: Prompt notice of loss or damage to an insurer by an insured is key to first-party insurance coverage. In cases where an insured lets a problem develop for months or even years, insurer’s must confront issues such as what loss exactly is covered during the term of the policy or may be prejudiced in their ability to timely investigate a claim. Therefore, most policies include time bars to both claims and suits against them in order to justifiably protect against these concerns. The Supreme Court of New York recently confronted such an issue in the matter of Bronstein Properties LLC v. Wesco Ins. Co. See Bronstein Properties LLC v. Wesco Ins. Co., No. 155806/2018, 2024 WL 839419 (N.Y. Sup. Ct. Feb. 27, 2024). In this declaratory judgement action, plaintiffs sought coverage for damage to the walls of a building due to water flow from beneath. Plaintiff’s believed the cause was from short-term increased water flow from a sewer pipe, while Defendant’s engineer saw the issue as one indicating long-term settlement. Wesco disclaimed coverage, in part because of the long amount of time the insured took to actually report the issue. As the court order reveals, Bronstein became aware of water damage cracks in the building as early as 2014, four years prior to commencing the suit. The court further noted that the policy clearly limited suits to two years in which the direct physical loss or damage occurred. Such policy terms were “clear and unambiguous” and that even “[g]iving plaintiffs the benefit of the most generous interpretation of when their loss occurred” (2016), any causes of action against defendant insurer had to be time barred. The claim was dismissed, and Wesco was not required to provide coverage. While the court in this case declined to comment extensively on prejudice, this case highlights the importance of prompt notice by insureds to get the claims process moving along smoothly. Just as important is for insurer’s to question when exactly losses occur and to inquire about how long their insured’s sit on a problem before deciding to address it. Bronstein Properties LLC v. Wesco Ins Co .pdf Download PDF • 147KB Previous Next Contact

News Water Water Everywhere, But Not A Drop For Georgia February 6, 2008 < Back Share to: In a victory for Alabama and Florida, the United States Court of Appeals - District of Columbia Circuit held that Georgia's agreement with the Army Corps of Engineers to siphon nearly a quarter of the water of Lake Sidney Lanier reservoir was void since the plan was not approved by Congress. Under Federal Law, Congressional approval is needed for “major structural or operational” changes to the management of its federal reservoirs. http://www.nytimes.com/2008/02/06/us/06water.html Previous Next Contact