Score One for the Insurers In Chinese Drywall.

We have previously reported on Chinese drywall claims and some of the consolidated lawsuits pending in New Orleans. One of these lawsuits, a coverage lawsuit, has been decided in the insurers’ favor —

In this case, the court was faced with the issue of whether homeowner’s policies excluded coverage because of the faulty materials exclusion By way of background, the homeowners had argued that the faulty material exclusion did not apply because “the drywall was not faulty because it functioned properly as drywall.”

The trial court disagreed. It held that “although [the] drywall serves its intended purpose as a room divider, wall anchor and insulator, the allegations in the complaints provide that the drywall emits foul-smelling odors and releases gases which damage silver and copper components in the home, including electrical devices, appliances and wiring.” Therefore, the court concluded, “the drywall sheets are faulty because the materials of which they are composed.”

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NJ Supreme Court Tackles Scope of Product Liability Act.

In the case of Dean, et al. v. Barrett Homes — New Jersey’s Supreme Court was faced with the question of whether New Jersey’s Products Liability Act, N.J.S.A. 2A:58C, allowed purchases of a residential home to sue the manufacturer of an allegedly defective exterior finishing system. In reaching its decision, the Court wrote that the Product Liability Act “is not concerned with providing a consumer with a remedy for a defective product per se; it is concerned with providing a remedy for the harm or the damage that a defective product causes to people or to property.” As such, the Court ruled that the Act precluded plaintiffs from “recovering any damages for harm that the EIFS caused to itself.” However, the Court went on to note that the Act only applied to integrated products. Here, the Court concluded that the EIFS was not fully integrated into the structure of the house, such that the Products Liability Act would apply. Rather, it was a stand alone product such that the plaintiffs retained a cause of action pursuant to which they may proceed against the product’s manufacturer.”

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EDPA Addresses Expert Opinion Standard.

In the case of Ellison v. United States, the plaintiff suffered a stroke after receiving dental care at a VA hospital. The instant medical malpractice case resulted. At the heart of the case was whether plaintiff’s expert, a 37 year dental veteran, could testify since he: (a) did not know what other dentists were doing when the plaintiff’s accident occurred; and (b) came to a different conclusion than one of the major dental teaching texts —

The trial court in the EDPA allowed the expert to testify. The court ruled that a trial court’s rule is not determine whether the expert’s opinion is correct, but rather whether “the opinion is based on reliable methodology and reliably flows from that methodology and the facts at hand.” In making this decision, the court needs to look at such factors as : “(1) whether a method consists of a testable hypothesis; (2) whether the method has been subject to peer review; (3) the known or potential rate of error; (4) the existence and maintenance of standards controlling the technique’s operation; (5) whether the method is generally accepted; (6) the relationship of the technique to methods which have been established to be reliable; (7) the qualifications of the expert witness testifying based on the methodology; and (8) the non-judicial uses to which the method has been put.” However, the court stressed that not all factors needed to be met to satisfy the expert test and no one factor is dispositive. Here, in light of the evidence, the court ruled that the plaintiff’s expert opinion was based on scientifically valid principles and thus allowed the expert to testify.

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Does Texting Result in Punitive Damages?

The dangers of texting while driving are a fruitful source and typical topic of discovery in all motor vehicle cases. After all, if texting or cell-phone usage can be proven, the odds of proving distracted driving (and thus a better negligence case) also increase. One issue that has recently arisen is whether proof of texting opens the texter to a punitive damages claim. In Pennsylvania, the answer might be “yes.” In the case of Deringer v. Li, an Allegheny trial court judge has recently suggested, in an unpublished decision, that texting might rise to the level of recklessness (as opposed to mere negligence) and thus open the texter to a punitive damages claim. We shall have to see if this decision is followed or endorsed by other Pennsylvania courts.

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Third Circuit Strikes Down Local NJ Wineries Right To Sell Directly To Consumers

In Freeman v. Corzine, the Third U.S. Circuit Court of Appeals held that a portion of New Jersey’s alcoholic beverage control law violated the Commerce Clause by requiring out of state wineries to sell through wholesalers and retailers while allowing local NJ wineries to open shops at their farms to sell directly to consumers. The plaintiff’s included wine connoisseurs, a couple seeking more access to Kosher wines and a California winery who had sued NJ for the right to order wine by telephone or online and have it shipped directly to individuals homes. The Court found the bulk of the beverage control statute constitutional except the portion covering local wineries direct sales.

NY Court of Appeals Lets Bad Golfer off of the Hook

We previously posted on this amusing case:

Now, New York’s highest court has made the course safer — from a legal standpoint — for bad golfers throughout the state.

In Anand v. Kapoor, the foursome got off to a rough start, when, on the very first hole, Kapoor found himself in the rough. After retrieving his ball, but without calling “fore,” he shanked a shot in the wrong direction. Unfortunately, Anand was struck in the eye, sustained a detached retina and suffered permanent loss of vision.

Anand was granted summary judgment at the trial court level, and the Appellate Division upheld the decision. The Court of Appeals recently affirmed, finding that the plaintiff assumed certain risks that are inherent to the sport. One such risk was being hit with a shanked shot.

It seems that the Court found that Kapoor’s failure to warn plaintiff of his shot wasn’t intentional or reckless, because he didn’t expect that his shot would go in the direction of the plaintiff. Ironically, from a legal standpoint, his lousy shot worked to his benefit.

As a beginning golfer, I appreciate the Court’s decision. Otherwise, I’d need to yell fore before I lined up for everything other than a putt.

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NY Municipalities Slip Closer to Insolvency With Court Assistance

Dale San Marco was walking through a Village of Mt. Kisco-owned parking lot on her way to work in broad daylight one wintry Saturday morning in 2005, when she slipped on black ice. The source of the ice seemed to be a pile of snow that the village had created when plowing the parking lot several days earlier. The claim is that the snow melted, causing water to run-off and then re-freeze, as it is wont to do in February. The village had salted the lot one day before San Marco’s accident, but “did not employ a work crew on Saturdays and Sundays to monitor the parking lot….”

The State of New York, like all states, was cloaked with sovereign immunity at common law and could not be sued. New York now permits citizens to bring actions against municipalities, but such lawsuits are usually limited to cases where the municipality has received prior written notice of the hazard. Mt. Kisco has such a law and it says that the notice requirement applies to claims based upon the “accumulation of snow and ice.”

But the NY Court of Appeals (our highest court) has ruled in San Marco v. Village/Town of Mount Kisco (NY Court of Appeals, slip opinion No. 223, Dec. 16, 2010) that the plaintiff may continue with her lawsuit even though the municipality did not have prior written notice of the black ice that Saturday morning. Chief Judge Lippman, writing for the court, protests that “We do not hereby create a new burden on municipalities to remove all snow off-premises in order to avoid liability…” But short of having a work crew on duty 24/7 or, in fact, carting the snow off site, isn’t that just what this ruling imposes on the municipalities of NY that are already careening toward bankruptcy under the burden of the benefit packages already paid to the work crews that now need to work overtime and sit and watch ice form on the ground 24/7.

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New York Federal Court Holds Corporate Employees Covered By Attorney-Client Privilege

In Winans v. Starbucks, a class action suit was commenced by assistant managers seeking their share of tips. Starbucks argued that the assistant managers are management employees, and thus not entitled to tips. In response to the complaint, Starbucks produced declarations from 16 assistant managers describing their duties and responsibilities. The plaintiffs wanted to question those assistant managers regarding their conversations with Starbucks’ attorneys.

Plaintiffs argued that the assistant managers were not covered by the attorney-client privilege because the attorneys did not represent the assistant managers that provided the declarations, or that the privilege was waived. These arguments were rejected by the court.

The court noted that the privilege belonged to Starbucks, and only Starbucks could waive the privilege. The court continued by noting that Starbucks, and its attorneys, had a right to question its employees, and thus any contact was protected by the attorney-client privilege.

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Education Doesn’t End with High School At Group Home for Charitable Immunity Act in NJ

“A rose by any other name would smell as sweet.” Yet, when it comes to application of the Charitable Immunity Act every effort is made to re-label and rename the essential nature of an eligible organization to avoid the immunity offered. In a tragic case involving the death of a developmentally disabled young resident of a community group home, his estate tried to portray the home as other than an educational organization.

The decedent had been a resident from age eight to twenty-one. He had attended elementary and secondary education with the program. Even after attaining the age of eighteen, he was still subject to an Individual Habilitation Plan that addressed his continuing life skills development. This Plan included a goal with respect to small convenience store purchases. It was during an outing to a convenience store that the decedent choked on a bagel, which ultimately resulted in his death.

Despite arguments that the educational scope of the organization should be limited in time to when the decedent attended school, the Court found as a matter of law that his continued participation in life skills training fell within the home’s educational mission.

However, since the organization’s by-laws listed its organizational purpose as exclusively “charitable,” the Court also looked at the home’s entitlement to immunity under this more generic qualifier. While an exclusively “educational” organization need not prove its “charitable” status through funding information, this is not so for a more broadly defined charitable organization. Although the organization raised less than 2% of its revenue from charitable donations (about $1.1 million), the court disagreed that a pre-set revenue percentage factor would be determinative of the charitable status of the organization.

The Court concluded that the combination of educational and charitable elements for the group home clearly placed it within the ambit of the Act.

See Komninos v. Bancroft Neurohealth, Inc.,

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