Soverign Immunity Remains Tough to Overcome in PA.

Recently, a three-judge panel of the Pennsylvania Commonwealth Court affirmed the South Eastern Pennsylvania Transportation Authority’s (SEPTA) claim of sovereign immunity in a stationary bus accident. In the case of Wright v. Denny, suit was brought against SEPTA to recover damages stemming from a June 30, 2007 accident where plaintiff was injured when an uninsured driver rear-ended the stopped SEPTA bus he was travelling on. Suing under Pennsylvania’s Motor Vehicle Financial Responsibility Law (MVFRL), the plaintiffs argued that SEPTA was obligated to pay benefits out of its uninsured-underinsured coverage for the June 30 incident. Further, the plaintiffs also claimed that SEPTA was exposed to liability given the motor vehicle exception to sovereign immunity.

Senior Judge James R. Kelley, writing for a unanimous court, rejected the plaintiff’s contentions, noting that actions brought pursuant to the MVFRL must comport with the narrowly interpreted provisions of the state’s immunity statues. In Pennsylvania, the motor vehicle exception is applicable only when the local agency’s vehicle is in “operation.” Citing the Pennsylvania Supreme Court’s decision in Love v. City of Philadelphia, Kelley applied a strict definition of “operation” requiring actual motion to trigger the exception. Kelley then went on to explain that stopped vehicles are protected by immunity because “[m]erely preparing to operate a vehicle, or acts taken at the cessation of operating a vehicle are not the same as actually operating that vehicle.” Given that the bus was stopped at the time it was struck, Kelley easily concluded that SEPTA was not subject to the exception thus barring the plaintiff from relief.

Special thanks to Adam Gomez for his contributions to this post.  For more information about it, or WCM’s Pennsylvania practice, please contact Bob Cosgrove at .

On the Road = Bad for Health = Claims?

When I think of truckers, I think of Smokey and the Bandit.  But, alas, the reality seems far different!  According to the NYT, truckers’ sedentary lifestyles is bad for their health.  This is bad news for Americans since it is estimated that truckers’ poor health is a contributing cause of many highway accidents. Something for insurers and self-insureds to be aware of, since, no doubt, plaintiffs’ counsel will seize on this problem in their attempts to establish negligent hiring or training against trucking companies.

For more information about this post or WCM’s trucking practice, please contact Bob Cosgrove at .

Oil Delivery Does Not Arise Out of Auto Use in NY

In the case of Progressive Northeastern v. Penn-Star, et al., the underlying plaintiff slipped on oil “in the basement boiler room of a residential building one day after the insured’s oil delivery truck delivered oil to the building.”  Progressive, which had issued an automobile policy to the insured delivery company, moved for summary judgment.  It argued that the accident did not arise out of the use of an auto and thus there was no coverage.  The trial court agreed and Penn Stat, which insured the delivery company under a CGL policy, appealed.  The First Department has now sided with the trial court and Progressive.  It held that an auto policy is not implicated “simply because the oil was transported in a covered vehicle” – especially when as here the accident occurred more than one day after the delivery and away from the auto.

For more information about this post or WCM’s coverage practice, please contact Bob Cosgrove at .

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_08220.htm

Insurance Claim for Seizure of Marijuana Plant Goes Up in Smoke

In Barnett v. State Farm, a California court recently dealt with an interesting issue:  whether property seized pursuant to a police search warrant constitutes a loss under an all-risk policy.  Adding to the intrigue was the fact that the property seized was a number of marijuana plants.  Although plaintiff was initially arrested, ultimately the prosecutor opted not to pursue criminal charges.  However, the prosecutor refused to return the plants, so plaintiff became embroiled in a further criminal proceeding seeking recovery of the plants.

At the same time, plaintiff filed a claim under his homeowner’s policy with State Farm that provided coverage for “direct physical loss of property” that included plants, but State Farm denied the claim and plaintiff filed suit.   State Farm prevailed in a motion for summary judgment, and the appellate court agreed, finding that the officers’ seizure of marijuana pursuant to a search warrant was not a “theft” because it was not criminal, nor was there any intent to “deprive plaintiff of his property permanently and in a criminal manner, rather than by due process of law.“

The Court also held that awaiting the outcome of the criminal proceeding before issuing a coverage opinion was irrelevant, because the coverage issue did not depend upon whether plaintiff was criminally culpable, but rather, the police’s conduct.

If you would like more information about this post, please contact

UN Report on Climate Change = Bad News for Property Insurers?

This will come as no surprise to those of us in the Northeast for whom Halloween was cancelled because of snow — http://www.nytimes.com/2011/10/30/us/northeast-snow-storm.html?pagewanted=all — but extreme weather is on the rise — http://www.washingtonpost.com/national/health-science/report-climate-change-means-more-frequent-droughts-floods-to-come/2011/11/15/gIQAfwqHXN_story.html?hpid=z1.  According to the United Nations Intergovernmental Panel on Climate Change — http://ipcc-wg2.gov/SREX/ — in a report that was just issued today, climate change will make drought, flooding and other extreme weather conditions more common in the years to come.  It is obviously a development that needs to be closely monitored by property insurers as current beachfront property may become the equivalent of Atlantis and inland property may become the next French Riviera! 

For more information about this post or WCM’s property practice, please contact Bob Cosgrove at .

NY: Providing Defective Equipment Does Not Constitute Control of Work

Although New York Labor Law imposes absolute liability upon owners and contractors on proof that a violation of the statute was a proximate cause of the injury sustained, there is a critical exception to the rule. Specifically, owners of one- and two-family dwellings who contract for, but do not direct or control the work, are exempt from Labor Law §§ 240(1) and 241(6).  The exception was enacted to protect the small building or unit owner that generally lacks business sophistication and would not know or anticipate the need to take such measures to cover them against such liability.

In Galinat v. Smith, et al., 2011 N.Y. Slip Op 51968, New York County Supreme Court Justice Judith Gische relied on this exception to shield unit owners from liability where plaintiff fell while using an allegedly defective ladder provided to her by the unit owners.  Sam Hines, who owned the unit with his wife, hired Smith to perform home decorating activities at the premises and furnished Smith with some of the materials to be used in the redecoration, including paint.  After Hines complained that the project was taking too long, Smith hired two painters, including the plaintiff to complete the work.  Hines met with plaintiff only once before the accident, as he gave her a tour of the apartment, told plaintiff she could use the ladder in the utility closet.  Later that evening, he received word that plaintiff had fallen off the ladder and sustained injuries.

In deciding the Hineses’ motion for summary judgment, the Court held that the Hineses did not supervise or control the work, and that they had no actual; or constructive notice that the ladder was defective or that it was being improperly used.  Simply providing the ladder to plaintiff, without any further instruction or supervisory role, did not constitute control of her work.  Therefore, pursuant to the exception the Hineses could not be held liable for Labor Law violations.

If you have any questions about this post, please email paul at   Special thanks to Chris O’Leary for his contribution

http://law.justia.com/cases/new-york/other-courts/2011/2011-ny-slip-op-51968-u-0.html

Millions Awarded To Plaintiff for Economic Loss Despite Increased Earnings – NJ

A plaintiff whose annual earnings actually increased by hundreds of thousands of dollars after an auto accident was awarded $3.6 million for economic losses. In a strange twist, this award for economic losses followed a summary judgment granted to the public entity defendant barring the plaintiff’s claim for non-economic losses/pain and suffering.

The case arose out of an auto accident on a New Jersey State highway. The plaintiff sued the driver who caused the collision as well as the State and its Department of Transportation employee. The trial proceeded against the State and its employee after the plaintiff settled with the defendant driver with a liability finding of 60% on that driver and 40% on the State. The molded verdict resulted in an award against the State of $1.44 million.

The plaintiff alleged that he sustained a traumatic brain injury in the accident. However, the Court found that he did not vault the bar of a permanent loss of a substantial bodily function as required by the New Jersey Tort Claim Act for a claim against a pubic entity. Indeed, the evidence showed that he was able to fully function at home and at work. While he claimed that he had some cognitive impairments, the Court expressly found that he was able to function very well in his chosen profession – securities trading.

Notwithstanding the fact that he was not able to pursue non-economic damages for his alleged brain injury, the court permitted the case to go forward on the issue of economic damages. The plaintiff had earned over $800,000 the year prior to the accident and over $500,000 in the five months just prior in structured finance. He had resigned from that post just days before the accident to work as a trader in asset-backed securities. In that position, his earnings increased to $1.4 million in the next three years.

With increased earnings and no significant injury, the plaintiff was nonetheless able to convince a jury that his earning potential was diminished as a result of his cognitive impairment. Over net opinion objections by the defendant, the plaintiff’s expert testified that worker’s of his age with a professional degree and cognitive impairment earn 6.1% less and retire 7.1 years earlier than their counterparts with no injury. He estimated the plaintiff’s loss at $6.4 million.

Despite the fact that this plaintiff’s income was in the top 99% of workers and he was earning more after an injury not significant enough to permit recovery for non-economic losses, the Appellate Division affirmed the award.

See Knitowski v. Gundy, http://www.judiciary.state.nj.us/opinions/a5945-09.pdf

For more information contact Denise Fontana Ricci at

Appellate Court Grants Product Recall Insurers Big Win.

There aren’t many product recall decisions out there, but every once in a while they come along. In the Fresh Express case in California, contaminated spinach was at issue. The trial court ruled for the insured and awarded policy limits of $12,000,000. The case went up on appeal and the California appellate division has now justweighed in. The appellate division reversed the trial court. Of significance, the appellate division held that not every contamination is an insured event, i.e. not every contamination is accidental thereby triggering coverage. This is good news for product recall insurers as insureds (and courts) have a tendency to equate the two.

For more information about this post or WCM’s product recall practice, please contact Bob Cosgrove at .

Late Third-Party Action Dismissed Where Action Prejudiced Plaintiff

In [i]Skolnick v. Max Connor, LLC[/i], the defendants delayed in bringing a third-party action until almost a year after the main action for personal injuries was commenced and months after the filing of the note of issue. As the court found the defendants knowingly and deliberately delayed the commencement of the third-party action, it opted to dismiss the action pursuant to CPLR 1010. The court noted the plaintiff was 79 years old and had a trial preference, which would be delayed if the third-party action proceeded to discovery.

Thanks to Bill Kirrane for his contribution to this post.

http://www.nycourts.gov/reporter/3dseries/2011/2011_07716.htm

Power To Stop Unsafe Work Practices Not Enough To Impose Liability

In [i]Martinez v. 342 Prop. LLC[/i], general contractor Flintlok retained Site Safety to provide site safety management services on the project where Martinez ultimately was hurt. Site Safety claimed entitlement to summary judgment arguing that it did not control, supervise or direct Martinez’ work. In opposition, Flintlok offered an affidavit stating that Site Safety had authority to stop unsafe work practices and had done so on prior occasions. The First Department held that even though Site Safety advised Flintlock on safety matters and had the authority to stop unsafe work practices, there was no evidence that Site Safety controlled, supervised, or directed Martinez’ work so as to impose liability under Labor Law 200. Indeed, the court emphasized that a subcontractor must control, supervise or direct the work in order to be held liable under Labor Law 200.

Thanks to Lora Gleicher for her contribution to this post.

http://www.courts.state.ny.us/reporter/3dseries/2011/2011_07738.htm1