In the case of Metalios v. Tower Insurance Co. et al., Metalios was a Pluck U (a NYC fast food buffalo wing restaurant) restaurant owner. Metalios held a party to which Pluck U employees, guests and friends were invited. A verbal altercation occurred at the party. After the altercation a Pluck U employee fatally stabbed a guest and injured another person. Unsurprisingly, a lawsuit resulted and Pluck U sought coverage for the claim/suit. Tower Insurance Company, the CGL carrier, disclaimed based on the “assault and battery exclusion.” Automobile Insurance Company of Hartford, the homeowner’s carrier, disclaimed based on the “business pursuits exclusion.” The case went to up to New York’s First Department — http://www.loislaw.com/advsrny/flwhitview.htp?lwhitid=9929607

The First Department upheld Tower’s disclaimer – notwithstanding the fact that the lawsuit also alleged negligence. The First Department reasoned that “because the complaint’s negligence allegations could not survive except for the assault, those claims are deemed to have arisen from the assault and are thus subject to the assault and battery exclusion.”

AIC, however, was not so lucky. Its “business pursuits exclusion” barred coverage for activities in furtherance of “business pursuits.” The exclusion, however, had an exception that stated that the exclusion did not apply to activities which are “ordinarily incident to non-business pursuits.” AIC argued that the Pluck U party was a business pursuit since it was for Pluck U employees to improve morale (which Metalios conceded was a purpose of the party). The First Department disagreed. It construed the exclusion strictly against AIC and held that a social gathering is ordinarily incident to a non-business pursuit even when that gathering might also serve a business purpose. Pluck U indeed.

If you have any questions about this post, please contact Bob Cosgrove at .

We have posted on a number of recent cases involving Nazi-stolen art and have noted that U.S. courts are generally sympathetic to claims by heirs of the original owners of the artworks. Nevertheless, in a recent decision by the First Circuit Court of Appeals, the heir of a Viennese Jewish doctor was deemed to have no right to an Oskar Kokoschka painting because she failed to submit a claim within the three-year statute of limitation under Massachusetts law.

In Museum Of Fine Arts, Boston v. Seger-Thomschitz, the claimant is the sole surviving heir of Dr. Oskar Reichel, a patron of the arts in early twentieth century Vienna. In 1914, Reichel purchased the painting, Two Nudes (Lovers), which is a self-portrait of the artist in an embrace with Alma Mahler (the widow of composer Gustav Mahler). In 1938, after the German annexation of Austria, Reichel was forced to sell the work, and it is not clear whether Reichel ever received payment for the sale. The painting ended up in the collection of the MFA which has displayed the painting for many years. The claimant did not make a formal claim to the MFA until 2007.

The court ruled that the claim to the painting was without merit because the claimant had not brought a claim within three years of discovery of the existence of the painting. The MFA had publicized the existence of the painting for many years, and the claimant had known by 2003, at the latest, that the painting had originally been owned by Dr. Reichel and had she conducted a minimum amount of research she would have learned that the painting was possessed by the MFA. The court dismissed the claimant’s argument that federal policy favoring the return of Nazi-stolen art overrode Massachusetts statute of limitations because the federal policy was general and did not conflict with clear state law.

Thanks to Mendel Simon for his contribution to this post.

If you have any questions regarding this case or WCM’s Fine Art practice, please e-mail Mike Bono at

In Lizardo v. Board of Educ. of the City of N.Y., the First Department granted the defendants summary judgment on the basis that schools and teachers cannot be held liable for the thoughtless or careless acts through which one pupil injures another. Lizardo, a fourth grader, was injured during a kickball game in physical education class when another student collided with him. Allegations of negligence in failing to properly supervise the game and failing to instruct the children on the rules of the game were asserted. In granting the defendants’ summary judgment motion, the court held that there was no evidence that the collision was anything other than “a sudden, impulsive act that could not reasonably have been foreseen or prevented.” In fact, nothing had occurred before the incident to suggest heightened supervision or a need to remind the students of the rules of the game of kickball.

Thanks to Lora Gleicher for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2010/2010_07228.htm

In Ferguson v. The New York City Housing Authority, the plaintiff lost consciousness while sitting on the toilet and suffered burns when her forehead hit the steam riser pipe in the bathroom. The plaintiff alleged that the Housing Authority was required to insulate pipes that exceeded 165 degrees Fahrenheit, but failed to do so in violation of the Administrative Code.

The Housing Authority moved for summary judgment on the grounds that the Administrative Code did not apply to it because the building had been constructed before the provision went into effect and the pipe had been properly maintained. The lower court granted the Housing Authority’s motion. The Appellate Division, Second Department, affirmed holding that it was not foreseeable that the plaintiff would have been in contact with the steam riser for any sustained period of time. Further, the plaintiff failed to show that the Housing Authority had actual or constructive notice of a dangerous condition.

Thanks to Ed Lomena for his contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2010/2010_07309.htm

In Roimesher v. Colgate Scaffolding & Equip. Corp., the plaintiff tripped and fell on an uneven sidewalk. The defendant had erected a sidewalk bridge in front of a commercial building adjacent to where the plaintiff fell. Neither plaintiff’s verified complaint nor her bill of particulars alleged that the sidewalk bridge narrowed her pathway, thereby directing her towards a defective area of the sidewalk. During her deposition, the plaintiff testified that nothing blocked the sidewalk at the time of the accident. Nonetheless, she submitted an expert’s affidavit to establish a prima facie case against the defendant. The court granted the defendant’s motion to dismiss because the pleadings and discovery were bereft of any allegation that the sidewalk bridge directed plaintiff to the hazardous area. The court disregarded the expert affidavit because it contradicted the plaintiff’s sworn testimony and consisted of conjecture and speculation.

Thanks to Bill Kirrane for his contribution to this post.

http://www.nycourts.gov/reporter/3dseries/2010/2010_07121.htm

New York’s state and federal courts impose sanctions for failure to preserve Electronically Stored Information (“ESI”). The state and federal courts, however, apply different standards for the sanctions imposed. By and large federal courts have hard and fast rules masked as “guidance that should not be ignored.” See Of Interest (Wade Clark Mulcahy), “Scheindlin Affirms Onerous E-Discovery Standards Applicable to Federal Litigation,” Feb. 3, 2010 (summarizing Pension Committee of the University of Montreal Pension Plan v. Banc of America Securities, LLC, No. 05 Civ. 9016 (SAS), 2010 WL 184312 (S.D.N.Y. Jan. 15, 2010)) — http://www.wcmlaw.com/blog/Default.aspx?g=posts&t=498 State courts, on the other hand, typically apply a “reasonableness standard,” and impose sanctions on a “case-by-case” basis. This discrepancy, and potential for litigants to forum shop, was the basis of the September 2010 Advisory Group to the New York State-Federal Judicial Council’s analysis and report on “Harmonizing the Pre-Litigation Obligation to Preserve Electronically Stored Information in New York State and Federal Courts.” In its report, the advisory group makes the following recommendations to New York’s state and federal courts:

1. Courts should be made aware of the actual and potential inconsistencies between state and federal law addressing the pre-litigation duty to preserve ESI;

2. Courts should be reminded to effectuate consistency for attorneys and potential litigants in New York state;

3. Federal courts should consider designating the ESI sanction issue as “substantive,” giving priority to state law;

4. The Judiciary Council should disseminate the panel’s report to New York state and federal judges, the Federal Rules Committee, the New York State Office of Court Administration, and the New York State Legislature in an attempt to reconcile discrepancies.

Thanks to Cheryl Fuchs for her contribution to this post.

http://www.nylj.com/nylawyer/adgifs/decisions/101210ediscoveryreport.pdf

Technology almost always advances quicker than the law can keep up with it. However, attorneys may now have some guidance to an unanswered question – is Facebook fair game for investigation? Last week the New York State Bar Association and the New York City Bar Association both issued ethics opinions addressing when lawyers may use Facebook or other social networking sites to aid in litigation.

The NYSBA addressed the question of whether an attorney, during a pending action, may view the profile page of a party that is not their client in order to obtain information, including impeachment material. The Association answered that this was an ethical practice, so long as the page was open for “public” viewing. The NYSBA contrasted this with a 2009 Philadelphia Bar Association opinion in which it was deemed fraudulent, deceitful, and against the ethics code for an attorney to have a third-party make a “friend request” to a non-represented witness in order to view that party’s private profile. The NYSBA opinion follows the logic that public information is available for anyone to view, while private information is not.

In a very technical and detailed opinion, the NYCBA opined that attorneys or third-parties acting on the attorney’s behalf may send “friend” requests to individuals not represented by an attorney, provided that they identify who they are and why they are making a friend request. Similar to the Philadelphia Bar Association opinion, the NYCBA believes that the ethics code would prohibit attorneys from obtaining private information through deceitful means.

While not specifically noted in either opinion, it seems to follow that the ethics code would prohibit sending a “friend request” to an individual represented by counsel. Of course if the party is represented by counsel, but has a public profile, then it would not violate any ethics codes if an attorney were to view the profile.

Thanks to Alex Niederman for his contribution to this post.

http://cityroom.blogs.nytimes.com/2010/10/01/when-lawyers-can-peek-at-facebook/
NYSBA opinion: http://www.nysba.org/AM/Template.cfm?Section=Home&CONTENTID=43208&TEMPLATE=/CM/ContentDisplay.cfm
NYCBA opinion: http://www.nycbar.org/pdf/report/uploads/20071997-FormalOpinion2010-2.pdf

In the case of RLI Insurance Company v. Leslie Smiedala, et al., RLI, an excess insurance carrier, commenced a declaratory judgment action in New York which it sought a declaration that, in the event that the primary insurer’s policy limits were exhausted (an event that had not yet come to pass), it would not be obligated to defend or indemnify various parties. This endeavor proved unsuccessful. As a result, the defendants sought to recover the fees they had accrued in the declaratory judgment action against the “losing” carrier. The trial court agreed and granted fees.

An appeal to the 4th Department resulted. In the appeal, RLI argued that, since it had not yet paid any defense or indemnity monies in the underlying action, it could not be said to have “lost” the declaratory judgment action and thus was not obligated to reimburse the defendants. The 4th Department disagreed – http://www.loislaw.com/advsrny/flwhitview.htp?lwhitid=9886142. It held that “although plaintiff’s duty to defend Regional may not have been triggered in the underlying action because the primary coverage has not been exhausted, Regional may nevertheless recover its attorneys’ fees from plaintiff incurred in the declaratory judgment action inasmuch as Regional was “cast in a defensive posture by the legal steps [plaintiff took] in an effort to free itself from its policy obligations.”

If you would like more information about this post, please contact Bob Cosgrove at .

It seems self evident (although maybe not in Florida — http://abovethelaw.com/2010/08/will-footsies-during-a-deposition-lead-to-sanctions/) that some types of behavior at a deposition are not acceptable. However, a question that constantly comes up is whether the lawyer can talk to her client during a break in the questioning. In the case of Chassen v. Fidelity National Title, a New Jersey federal court has just weighed in — http://pdf.wcmlaw.com/pdf/Chassen.pdf In Chassen, during a break in questioning, Fidelity’s lawyer answered various questions that her client had. When questioning resumed, the plaintiff’s counsel sought to question the witness about conversations she had with her attorney. The lawyer refused and the matter went to the judge. The trial judge held that under “Fed. R. Civ. P. 30(c), examination at a deposition is to proceed as it does at trial. In fact, “[d]uring a civil trial, a witness and his . . . lawyer are not permitted to confer at their pleasure during the witness’s testimony. . . The same is true at a deposition.” Hall v. Clifton Precision, 150 F.R.D. 525, 528 (E.D. Pa. 1993). Moreover, counsel and witness are prohibited from engaging in private, off-the-record conferences during any breaks in a deposition, except for the purpose of deciding whether to assert a privilege.” Questioning about the lawyer’s conversation with her client were thus allowed. Keep this in mind next time a federal depositon comes round.

If you would like more information about this post, please contact Bob Cosgrove at .

In the case of Telecommunications Network Design and Paradise Distributing, Inc. v. The Brethren Mutual Insurance Company, Paradise was insured by Brethren. Between July 8, 2001 and July 8, 2003 (when Brethren was on risk), Paradise transmitted over 1,000,000 unsolicited advertising faxes – including one to Telecommunications Network Design. TND commenced a class action lawsuit under the Telephone Consumer Protection Act. TND argued that the unsolicited faxes imposed costs on TND and the other class members without authorization and thus demanded compensation. TND did not plead a violation of privacy claim and coverage was disclaimed as not constituting “advertising damages”.

A declaratory judgment action ensued. In the action, Paradise argued that directly pleading a violation of privacy claim was unnecessary (to guarantee coverage) because the TCPA was enacted, in part, to protect privacy. In opposition, Brethren argued that the coverage trigger was, indeed, the pleading of a violation of privacy claim. The trial court ruled for Brethren and an appeal resulted.

In the appeal, the PA Superior Court was confronted with the question of whether faxes, a written publication, “violated a person’s right of privacy” and thus triggered coverage. The Superior Court ruled — http://www.superior.court.state.pa.us/opin.htm — that sending of faxes in and of itself did not trigger coverage, but rather the “message in the materials” was central. It therefore upheld the trial court’s decision. Notably, in reaching its decision, the Superior Court specifically allowed the carrier to look outside the four corners of the complaint in making its coverage decision.

If you would like more information about this post, please contact Bob Cosgrove at .