In an odd case, a New York federal court recently dealt with the issue of potential insurance coverage when neither the policyholder nor the insurance carrier retained copies of the relevant insurance policies in Bianchi v. Florist Mutual.

Plaintiff’s parents were shareholders in a flower growing business. Plaintiff was informed by the State that the location where his parents did business was an inactive hazardous waste site, and that plaintiff needed to pay for remediation. Plaintiff placed Florist Mutual on notice of a potential claim, and the insurer disclaimed coverage on the basis that the florist wasn’t insured during the potential loss period (which potentially spanned decades).

Neither party could come forward with any insurance policies, although the defendant admitted it insured the florists at some point. The Court noted that a party could use secondary evidence to try to prove the existence of a lost insurance policy upon a showing that party made a “diligent but unsuccessful search.” The party is then required to establish the contents of the policy by at least a preponderance of the evidence.

Here, plaintiff based his claim on various discussions he had with his parents regarding the fact that Florist Mutual was their insurance carrier for decades until they switched to a different carrier around 1986. Defendant’s computer search revealed a record of the plaintiff, but no specifics as to dates of coverage or policy content. The florist’s insurance broker also testified that he knew they switched from Flowers Mutual to a new insurer in 1986 when he met them because he reviewed policies issued by the Defendant for the period 1984 though 1986, but he could not state with any certainty how far back other Flowers Mutual coverage dated.

The Court acknowledged the policy search had been diligent but unsuccessful, but that there was insufficient evidence to establish a policy written by the defendant existed to cover the claim for most years. But the Court did find an issue of fact existed for the years 1984 through 1986, and said a jury could consider potential coverage for the claims during that period.

It is often a very close factual question as to whether a party is deemed to “occupy” a vehicle for the purpose of establishing Uninsured Motorist coverage. Recently, the Appellate Division of New Jersey was called upon to render such a determination in Ortiz v. Zurich.

The claimant parked his work van, unloaded materials, and brought the materials to the job site across the street. Realizing he left something inside of the van, claimant began to re-cross the street to head back to the van when he was struck by an uninsured vehicle. Claimant filed for benefits under the van’s uninsured motorist provision, and when the claim was denied, he filed suit against the insurer. The trial court granted the insurer’s motion for summary judgment and held there was no coverage.

The Appellate Court found that in order to find a party was “occupying” an insured vehicle, as defined by the policy, a claimant needs to establish a “sufficient nexus” between the vehicle and the accident. The Court looked to comparable fact patterns, and held that there was a sufficient nexus in those situations where a claimant temporarily exited an insured vehicle to perform a quick act – and left the engine running. But here, where the claimants had already parked and exited the vehicle — and was not in close contact with the vehicle at the time of the accident — the connection between the accident and the vehicle was “merely coincidental” and was insufficient to constitute “occupying.” The Court affirmed the trial court’s decision of no coverage.

Plaintiff Ming Yu He was involved in an auto accident, and filed suit against the owner and operator of the other car in He v. Miller. An MRI of plaintiff revealed four herniated or ruptured discs, which caused ongoing pain. Plaintiff underwent the typical battery of physical therapy, including acupuncture. No surgery was performed, although epidural injections were administered.

Plaintiff’s physician testified she had “chronic and permanent pain” five years after the accident. Plaintiff testified she was unable to perform typical household duties and the like. The defendants’ IME physician opined much of plaintiff’s condition was likely degenerative and preexisting. But a Morris County jury returned an award that included $1 million for pain and suffering.

The trial judge found the award was “shocking to the conscience,” but did not mention similar verdicts in granting remittitur. The Supreme Court ultimately reversed and remanded to have the trial court explain how the award differed from other comparable awards. The trial court subsequently cited to two decisions relating to cases over which he presided, but those cases involved different injuries than those suffered by plaintiff He.

The Appellate Division found that the trial court’s discussion of comparable verdicts was insufficient and that they only provided “superficial support” for the remittitur. The appellate court also expressly rejected the judge’s “feel of the case,” emphasizing that the trial judge is not a “thirteenth and decisive juror.” Notably, the appellate court also stated that the judge was correct in finding the likely range of verdicts for similar injuries was between $40,000 and $200,000, but that in order to set aside the verdict it must be “adequately articulated” that permitting the award to stand would constitute a manifest miscarriage of justice. The verdict was reinstated.

http://pdfserver.amlaw.com/nj/He-a5685-07-remanded.pdf

Federal courts continue to require strict compliance with e-discovery, even in situations where the litigants have seemingly retained copies of all relevant data. This issue recently came to light in an art related lawsuit in Green v. McClendon, venued in the Southern District of New York. The McClendon’s found a nice work of art at the International Fine Art Fair and agreed to pay plaintiff — a London-based art dealer — $4.2 million. But the McClendon’s separated shortly thereafter, leaving a balance of $3.7 million.

During discovery, in response to a discovery demand, the defendants produced an Excel spreadsheet with information regarding other art purchases. Plaintiff served a demand for information about the spreadsheet, including dates of modification and the like. When the defendants could not produce this information, plaintiff moved for an order authorizing an inspection of Mrs. McClendon’s computer. It was then revealed that a few months after plaintiff filed suit, the content of Mrs. McClendon’s computer was transferred to a number of CD’s and her hard drive was then wiped clean in order to install a new operating system. Plaintiff then moved for sanctions due to spoliation of evidence.

The Court held that there was “no doubt” that the defendant was obligated to preserve all documents stored on her computer pertaining to plaintiff, and that she and her attorney clearly failed to implement a litigation hold, which constitutes grossly negligent behavior in respect of spoliation.

Because no prejudice was established — particularly because it appears all relevant information was copied — plaintiff was not entitled to an adverse inference against the defendant. But the Court agreed to allow plaintiff additional time to complete discovery, including a further deposition of the defendant, and awarded plaintiff costs, including attorney fees.

The New Orleans Saints are on a roll. The team is tied for the best record in US football. But does strength on the gridiron equate to strength in the courtroom? We’re about to find out. A major Chinese drywall class action — the complaint is 590 pages long — has just been commenced in New Orleans, against, among others, Knauf Plasterboard Tainjin Co. Ltd. The lead plaintiff in the class action is Sean Payton, the head coach of the New Orleans Saints.

http://www.nola.com/business/index.ssf/2009/12/saints_coach_sean_payton_to_be.html

Art Basel, arguably the most important art show in the United States, took place this past weekend in Miami Beach, but not without incident involving the world of fine art insurers. Prior to the opening of the art expo, a dozen U.S. Marshals and police officers arrived on the scene to seize paintings by Fernand Leger, Joan Miro, Edgar Degas and Yves Klein following an insurance dispute between two art dealers.

In July, Edelman Arts Inc., a New York gallery, as assignee of XL Specialty Insurance Corp., brought suit in New York Federal Court against Galerie Gmurzynska regarding a damaged Robert Ryman painting. The lawsuit alleges that Edelman consigned a Ryman painting to Gmurzynska for sale at Art Basel Miami Beach 2007, which was insured for $750,000. The plaintiff claims that the work was returned with considerable damage including “gouges” and that the defendant refused to pay the insured value of the work. While the suit resulted in a default judgment for Edelman of $765,000, due to Gmurzynska’s failure to answer the complaint, the seized paintings are estimated at ten times the value of the judgment, the standard amount usually confiscated for auction. An undisclosed settlement was reached between the dealers and the paintings were ultimately returned to the gallery’s exhibition space before the end of the expo.

Thanks to Chris O’Leary for his contribution to this post.

http://www.bloomberg.com/apps/news?pid=20601088&sid=aX82sXGnDW4Y

http://www.miamiherald.com/entertainment/arts/art-basel/story/1364846.html

In Ewen v. Maccherone, the plaintiff sued his neighbor claiming negligence and nuisance based on a claim that the cigarette smoke from the neighbor’s apartment had an objectionable odor that invaded his apartment and caused health problems for his infant daughter. The defendant filed a pre-answer motion to dismiss on the grounds that the plaintiff’s complaint failed to state a cause of action for nuisance or negligence. The court denied the defendant’s motion, holding that he failed to establish a conclusive defense as a matter of law. Specifically, the court found that the plaintiff’s allegation that the secondhand smoke interfered with his “rights, comforts and conveniences” as an apartment owner was enough to establish a claim of nuisance. Further, the court held that the plaintiff’s allegation that his daughter became ill and he was forced to evacuate his apartment several times as a result of the smoke was sufficient to establish a claim of negligence.

Thanks to Ed Lomena for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2009/2009_52428.htm

In Axelrod v. Magna Carta Companies, Axelrod sued its insurer for coverage in an underlying copyright infringement action. The plaintiff in the underlying action sued Axelrod for “reproducing, manufacturing and/or distributing” charms that the plaintiff had created. The underlying plaintiff attached a copy of Axelrod’s catalog as evidence that Axelrod had sold the infringing charms. The court found that because the underlying plaintiff did not allege harm based on the catalog itself, the claim was not an “advertising injury” under the policy.

Thanks to Cheryl Fuchs for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2009/2009_04352.htm

One of the few curbs on US lawsuits is the cost as, for all sides, a lawsuit is an expensive proposition. To date, US lawsuits have been limited by the absence of third-party litigation funding companies (as can be found in Australia or the UK). Apparently, that is about to change and a new $200 million dollar litigation fund has been established. Whether this is just the tip of the iceberg is a question that cannot yet be answered.

http://www.law.com/jsp/pa/PubArticlePA.jsp?id=1202436085724&src=EMC-Email&et=editorial&bu=The%20Legal%20Intelligencer&pt=TLI%20AM%20Legal%20Alert&cn=tli_am_alert_20091207&kw=Litigation%20Funding%20Beginning%20to%20Take%20Off

To successfully assert a cause of action under Labor Law §240, also known as “the scaffold statute,” a plaintiff must establish that he or she was injured during “the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure.” In Enos v Werlatone, Inc., the plaintiff was injured when a tree fell on his back while in the course of removing several trees from the defendant’s property. The Second Department held that the plaintiff’s injuries were not sustained while he was engaged in an activity enumerated in the statute. The plaintiff attempted to circumvent this requirement with an affidavit stating that the tree removal was performed as part of a larger construction/renovation project. The court rejected this argument.

Thanks to Bill Kirrane for his contribution to this post.

If you would like more information about this post, please contact Nicole Brown at .

http://www.nycourts.gov/reporter/3dseries/2009/2009_08993.htm