Wade Clark Mulcahy LLP

News Pennsylvania Federal Court Holds the Line on Kvaerner February 18, 2022 < Back Share to: The District Court for the Eastern District of Pennsylvania recently opined on a liability insurer’s duty to defend and/or indemnify its named insured and additional insured in a lawsuit arising out of alleged construction defects in a new housing development. This decision reinforces that Kvaerner – while nibbled at the edges – still arguably remains good law in Pennsylvania. The case, captioned Main Street America Assurance Co. v. Howard Lynch Plastering, Inc., follows a familiar factual pattern: a builder contracted with a subcontractor, who was required to acquire liability insurance for itself and the builder. The insurance policy issued to the subcontractor contained common policy language and defined “occurrence” as “an accident, including continuous or repeated exposure to substantially the same general harmful conditions.” In the course of the project, the builder and/or the subcontractor allegedly constructed the homes in a defective manner, requiring the homeowners to obtain extensive repairs to their homes. Thus, the question before the court was whether defective construction constituted an “occurrence” under the usual policy definition. The insurer therefore argued that “the effects of faulty construction” are not “occurrences.” The Eastern District agreed with the insurer, tracing the history of Pennsylvania courts’ case law on the subject. The court concluded that commercial general liability policies do not cover defective construction or damages to the property caused by defective construction. Based on this, the court entered summary judgment declaring the insurer has no obligation to defend or indemnity any party for the alleged construction defects. Thanks to Jason Laicha for his contribution to this article. If you have any questions, contact Matthew Care. Previous Next Contact

News Art Scholars Fear Liability for their Opinions on Authenticity July 26, 2012 < Back Share to: According to a recent article in the New York Times, one of the downsides of the booming art market is that many art scholars no longer feel they have the right to be wrong when opining on the authenticity of works. Because there can be so much money at stake, some experts have found themselves the target of lawsuits due to unfavorable opinions. In fact, the Andy Warhol Foundation for the Visual Arts, the Roy Lichtenstein Foundation, as well as other museums and institutes have stopped authenticating works in order to avoid litigation. Although art experts have been sued for years over their opinions, the amount of exposure due to the value of many works has created the current problem. And whether insurance responds to such lawsuits is, in some cases, unclear. Whether this leads to the sale of more fakes, or causes experts to sit idly by when a known forgery is being sold remains to be seen. But we will continue to follow this development. Please write to Mike Bono at mbono@wcmlaw.com if you would like further information. Previous Next Contact

News Baseball Player-Plaintiff called Out at Second Base (NY) May 2, 2019 < Back Share to: A 16-year old decides to play baseball, slips while running to second base, and hurts himself while sliding into second base. The plaintiff filed suit against the owner of the field, Baseball Heaven in Yaphank. According to the plaintiff, the defendant was to blame for his injuries because just a few years ago, it had installed artificial turf and anchored, stationary bases instead of breakaway bases. But in its summary judgment motion in Gonch v Baseball Heaven, Inc. (2019 NY Slip Op 03030), the defendant submitted evidence that the plaintiff was actually an experienced baseball player who knew that the bases were anchored in place. Relying on the well-established assumption of risk doctrine, the court granted the defendant’s motion. In doing so, the court reasoned that the plaintiff’s injuries were inherent in the game of baseball and that the plaintiff was aware of that risk. As an aside, in my experience, Baseball Heaven in Yaphank is a well-maintained facility, meaning, this decision reaches the right outcome. Although, having grown up playing baseball in New York City, where removing broken glass and syringes from the baselines was a common occurrence, a stationary second base bag doesn't seem all that hazardous. But I digress... Gonch is the latest in a recent line of decisions applying the common sense assumption of risk doctrine to shield those who operate sporting events from lawsuits brought by people in the ordinary course of sporting activity. While the use of artificial turf may be an ongoing crime against the American pastime, property owners and insurers can take some comfort that the assumption of risk doctrine remains anchored in New York law. Thanks to Mike Gauvin for his contribution to this post. Please email Brian Gibbons with any questions.       Previous Next Contact

News Soccer Player Denied Recovery in "out of bounds" Injury (NY) July 18, 2018 < Back Share to: Now that the World Cup is over, the in the U.S. focus shifts from football back to American football. But soccer / football still finds its way into the news every now and again. In O'Toole v Long Island Jr. Soccer, plaintiff alleged he was injured while retrieving a soccer ball that went out of bounds as his cleat got caught on a drainage grate near the field where he was playing. The Supreme Court granted the defendant’s motion for summary judgment under the theory of assumption of risk. Plaintiff appealed. The Appellate Division, Second Department found that pursuant to the doctrine of primary assumption of risk, a voluntary participant in a sporting or recreational activity ‘consents to those commonly appreciated risks which are inherent in and arise out of the nature of the sport generally and flow from such participation.’ Although the grate was not part of the field of play, the plaintiff admitted in his deposition testimony that in order to gain access to the field, he had to walk on the grate, and so, was aware of its presence. The Court held defendant demonstrated that it did not violate its duty to exercise ordinary reasonable care to protect the plaintiff from concealed, or unreasonably increased risks, and that the plaintiff assumed the risk of injury by voluntarily participating in a soccer game despite his knowledge that doing so could bring him into contact with an open and obvious grate near the field of play. The Appellate Division also determined the grate was NOT concealed or defective in any manner. In opposition to the defendant's motion, the plaintiffs merely offered speculative expert opinions and failed to raise a triable issue of fact. The Second Department agreed with the lower Court’s decision and found defendant’s argument persuasive and affirmed summary judgment. When you call the sport soccer or football, well, let's say the plaintiff and counsel called it a day after the Second Department's ruling. Thanks to Paul Vitale for his contribution to this post. Please email Vincent Terrasi with any questions. Previous Next Contact

News Time Barred Assault Case Can't Be Revived By New Theory (NY) March 31, 2017 < Back Share to: In Johnson v. City of New York, the Second Department Appellate Division analyzed and applied the longstanding legal doctrine of res judicata to a personal injury case. This doctrine stands for the principle that once a matter has been adjudicated by a competent court it may not be pursued further by the same parties. The plaintiff claimed he was physically injured by a security guard while at a cooperative board meeting in a housing complex in Queens, NY. He filed a lawsuit under the legal theories of assault and battery in Queens County Supreme Court. The Court dismissed the plaintiff’s case because the lawsuit was filed more than one year after the incident, violating the statute of limitations period. In response, the plaintiff filed a new lawsuit claiming a negligence cause of action which has a three year statute of limitations. The defendants moved to dismiss this second lawsuit under the doctrine of res judicata. The trial court granted the motion and dismissed the case. On appeal, the Appellate Division affirmed the Supreme Court’s decision, and explained that under the doctrine of res judicata under New York law, “once a claim is brought to a final conclusion, all other claims arising out of the same transaction or series of transactions are barred, even if based upon different theories or if seeking a different remedy.” The Court further explained that the negligence cause of action asserted in the plaintiff's second action arose from the same operative facts in the first dismissed assault and battery claims, and could have been raised in the first action. Thanks to George Parpas for his contribution to this post and please write to Mike Bono for more information. Previous Next Contact

News Stunted Growth of Chickens Covered Under CGL Policy (NJ) July 22, 2016 < Back Share to: In Phibro Animal Health Corp., v. National Union Fire Ins. Co., a New Jersey appellate court recently considered the "impaired property exclusion" in the commercial general liability policy of a poultry food additive maker. Phirbo, an animal health products manufacturer, sold a poultry feed additive intended to prevent a parasitic disease. Phibro customers reported that while the additive protected chickens from disease, its use ultimately lead to stunted chicken growth. The customers reported that as a result of the undersized chickens, they experienced lower meat production and increased costs. Phibro sought coverage for its customers’ claims for economic losses from its insurer, National Union, ultimately filing suit after its claim was denied. The trial court granted National Union’s motion for summary judgment, concluding the alleged economic losses did not constitute property damage caused by an occurrence under the policy. The court further ruled that even if coverage existed, the impaired property exclusion would bar coverage. But the Appellate Division disagreed, concluding that this was not a "faulty work" type of case and that adverse effects constituted an accidental occurrence and property damage under the CGL policy. The panel explained that the chickens that consumed the additive suffered harm to their physical condition, which met the policy’s definition of property damage. The panel also explained that the policy term “physical injury” does not require that the chickens were incapable of being sold and that this partial loss of their use independently qualifies as property damage. The panel remanded the case to the lower court to further assess whether the policy’s impaired property exclusion precludes coverage. National Union argued that this exclusion applied because the customers' chickens were damaged by a defect in Phibro's product (and were thus "impaired"), but could be "restored to use" by removing the drug from their diets. The panel stated that the exclusion would apply only if the chickens reasonably and feasibly could be restored to their normal size and weight within a commercially viable time frame at a commercially reasonable cost after removal of the additive, and more time and evidence was needed to make this factual determination. Thanks to Chelsea Rendelman for her contribution to this post and please write to Mike Bono for more information. Previous Next Contact

News Repairs vs. Maintenance Under New York's Labor Law January 22, 2009 < Back Share to: In Pakenham v. Westmere Realty, a New York appellate court recently addressed the difference between “repairs” and “routine maintenance” in the application of Labor Law §240. Pakenham, a service technician, responded to a call regarding a lack of heat at the Westmere Realty office after hours in the winter. While working, Pakenham fell from a ladder. The lower court found that the plaintiff’s work was “routine maintenance” and dismissed his labor law claim. The Appellate Division reversed and determined that the plaintiff’s work on a snow covered roof after normal business hours in the dark was a “repair,” and a protected activity under Labor Law §240. http://decisions.courts.state.ny.us/ad3/Decisions/2009/504889.pdf Previous Next Contact

News Show Me the Money!! Court Unseals Settlement In Wrongful Death Actions (NY) May 15, 2013 < Back Share to: 22 NYCRR 2.1.1(a) provides that courts shall not seal court records except upon a written finding of good cause. The rule also requires courts to consider the interest of the public as well as the parties in determination whether good cause has been shown. In this regard, the presumption of public access to court proceedings takes precedence, and the sealing of court papers is permitted only to serve compelling objectives. In Matter of East 51st Street Crane Collapse Litig., the Supreme Court sealed a settlement in one of many wrongful death actions arising out of a crane collapse until all of the wrongful death actions were settled. With one wrongful death action still pending, the Supreme Court sealed the documents. On appeal, the defendants argued that sealing the records prevents the risk that the parties will attempt to use prior settlement information as an artificial threshold in valuing their own cases. In response, the plaintiffs contended that unsealing the settlement documents were necessary to enable them to ascertain the available insurance coverage and thus make informed decisions as to the benefits and drawbacks of settling their own claims. The First Department agreed with the plaintiffs and affirmed. Special thanks to Gabriel Darwick for his contribution. For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com   Previous Next Contact

News Subway False Advertising Suit Against Quiznos: Amateur Ad (Cold) Cuts Deep January 29, 2008 < Back Share to: Doctor's Associates, the owners of Subway, have commenced a lawsuit .against its competitor Quiznos based upon television commercials created by Quiznos as well as by amateurs in a 2006 ad campaign entitled "Quiznos vs. Subway TV Ad Challenge." Plaintiff charges defendants QIP Holder, a Quiznos subsidiary, and iFilm with making false claims and derogatory depictions of Subway sandwiches. The case is venued in the Federal District Court of Connecticut and will hinge upon the interpretation of the Lanham Act which prescribes trademark rights and the Communication Decency Act which safeguards the internet (commercials were posted on YouTube). http://www.nytimes.com/2008/01/29/business/media/29adco.html?_r=1&ref=business&oref=slogin Previous Next Contact

News WCM Wins Appellate Victory in $25 Million Art Loss February 1, 2013 < Back Share to: In March 2010, the now infamous art dealer Larry Salander pleaded guilty to a $120 million fraud scheme, admitting to stealing numerous works of art. Renaissance Art Investors LLC claimed that it was entitled to coverage for Salander’s theft of approximately $25 million in artwork under insurance policies issued by AXA Art Insurance Corporation. Wade Clark Mulcahy successfully obtained affirmance of the trial court’s decision that RAI is not entitled to coverage under the policies. RAI consigned its artwork to Salander, a principal of RAI, and the Salander O’Reilly Galleries LLC, a member of RAI. Ultimately, Salander and the Gallery betrayed RAI, stealing artwork valued at over $42 million. RAI made a claim to AXA under its commercial inland marine insurance policies, seeking indemnity for the theft. Litigation followed and the trial court awarded summary judgment in AXA’s favor, finding that there was no coverage for the loss under AXA’s policies. In a unanimous decision, the Appellate Division, First Department, recently ruled that the AXA policies contained an unambiguous dishonesty exclusion. The exclusion precludes coverage for losses arising from the dishonesty of an insured, anyone with an interest in the property, or anyone to whom the covered property is entrusted. The Court held that this policy exclusion applied to both Salander and the Gallery, who were entrusted with the artwork. In the decision -- which is sure to add another arrow to an insurance carrier’s quiver -- the First Department held that as a matter of law, insurance coverage only extends to fortuitous losses, even under all-risk policies. The Court further held that whether there was a fortuitous loss is a legal question to be resolved by a court. Applying this standard, the Court held that the fraud perpetrated by Salander and the Gallery, which resulted in the loss, was not fortuitous. In context, the Court suggests that even in the absence of an unambiguous exclusion, where the insured’s principal steals from the insured entity, the loss is not fortuitous and therefore not covered. Also of note, the Court held that RAI’s claim that AXA breached the implied covenant of good faith and fair dealing was duplicative of its breach of contract claim. Previous Next Contact

News COVID-19 Pandemic Claim For Damages Dismissed With Prejudice As Plaintiff Attempts To Flee To State Court (PA) October 1, 2021 < Back Share to: In the Eastern District of Pennsylvania case, Round Guys Brewing Company v. Cincinnati Insurance Company, Round Guys sought coverage for losses stemming from the omnipresent COVID-19 pandemic. Additionally, Round Guys attempted to remand the case back to Montgomery County, Pennsylvania, by arguing the case concerned matters of state law yet to be settled. In the next round, Chief Judge Sánchez addressed the merits of Plaintiff’s claims as compared to Defendant’s Motion to Dismiss. The court stated that the insurance policy was unambiguous in that it only covered valid claims with respect to “loss” as defined by the policy. Under Round Guys’ policy, a covered loss required an element of physical damage or loss. As numerous courts have held, government orders do not create a sufficient event that bypasses what is first necessary, nor does an order from the Governor suffice as physical damage. Chief Judge Sánchez also observed that the commonly absent “virus exclusion” in business interruption insurance contracts was an equally unappealing argument as it too would require a showing of direct physical loss to Plaintiff’s property. In the end, Defendant’s Motion to Dismiss was granted with prejudice, reinforcing the Eastern District as a favorable space for insurance companies to litigate when compared to the Pennsylvania Court of Common Pleas. Thanks to Richard Dunne for his contribution to this post. If you have any questions, please email Matthew Care. Previous Next Contact

News NY: A&B Sub-Limit Applies To Primary But Not Excess Policy November 30, 2011 < Back Share to: It is a harsh reality that courts will give policyholders every benefit of the doubt in interpreting the terms, conditions and limits of policies of insurance. Insurers must be careful to place their insureds on notice of significant exclusions and limitations through the use of clear, concise and plain language in their policy forms. Even trickier, most states require that insurers timely advise their insureds and claimants if they conclude that the policy does not cover a particular claim or loss. What obligation does an insurer have if it does not deny coverage outright but seeks to enforce a significant sub-limit of liability? Is the insurer bound by the same rules that control when the insurer seeks to disclaim liability? Recently, in Santa v. Capitol Specialty Insurance, LTD., et al., plaintiffs filed suit against a Manhattan night club arising out of an alleged assault on plaintiffs. The third party administrator for the primary insurer became aware of the claim after it received the summons and complaint, which contained a specific count based on assault. Nine months later during discovery, the attorneys for the policyholder disclosed, for the first time, that the primary policy was subject to an assault and battery sub-limit of $50,000. The insurance disclosure also identified an excess policy with limits of $4,000,000 but made no reference to the sub-limit contained in the primary policy. The claimants protested that the primary insurer must provide its full policy limits because it failed to provide timely notice of the assault and battery sub-limit. Further, they argued that the excess insurer must make its full policy limits available because its policy did not contain any explicit exclusion or sub-limit for claims based on assault and battery. Of significance, the court held that the primary insurer was not subject to the normal rules requiring timely notice of disclaimer because it was not disclaiming or otherwise denying coverage. Rather, it was providing “the full measure of coverage available for the incident,” just with a reduced sub-limit of liability. On the other hand, the excess insurer did not fare as well. The court cited a number of problems with the excess insurer’s stance including its failure to exclude or specifically minimize its limits of liability for claims based on assault and battery. Further, the court was troubled by the excess insurer’s failure to put the claimant on notice of the sublimit when the insurance disclosure was furnished to the claimant’s attorney during discovery. The lesson of Santa is clear: while Santa may overlook minor errors in conduct and still arrive bearing gifts, insurers can expect no such generosity from the courts. Be clear, accurate and specific in the language contained in your policies and the disclosures made to your insureds and claimants. http://pdf.wcmlaw.com/pdf/santa.pdf If you have any questions or comments about this post, please contact Paul at pclark@wcmlaw.com Previous Next Contact