You Make the Call: Legal Ethics in PA.

In the case of Sutch v. Roxborough Memorial, the plaintiff claimed that a doctor’s failure to obtain diagnostic testing resulted in an untimely diagnosis of lung cancer.  To prove the case, the plaintiff retained Dr. Porges, an expert from the University of Pennsylvania’s Hospital.  Before the trial and after Dr. Porges had issued his report, the defendant’s lawyer wrote a letter to the University of Pennsylvania and said:

Dr. Porges has clearly overlooked the well-established concept of hand-off to an accepting inpatient team and I thought you might want to know that, if this is her position and plaintiff’s attorneys become aware of it, it could expose the Hospital of the University of Pennsylvania to significant liability.

For obvious reasons, this letter outraged plaintiff’s counsel who filed a motion for sanctions against the defense lawyer.  Judge Allen, the trial court judge agreed that the behavior was improper, and disqualified the defense attorney from continuing to represent her client.  She also ordered the defense counsel to pay $44,693 in fees and fines.  True Philadelphia lawyering or improper interference?  You make the call.  From my perspective, this was a bridge too far that should not have been crossed.

For more information about this post, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

NJ: No Indemnification for Homeowners’ Association from Snow-Removal Contractor.

In the case of Franchini v. Beverly Hills Terrace Condominium Association, et al., the Appellate Division was faced with the question of whether a snow-removal contractor was responsible for indemnifying a homeowners’ association for the costs of defending a slip and call case instituted by a unit owner.  The relevant facts are as follows.

Franchini testified at trial that she was crossing a sidewalk at the homeowners’ association when she fell on an icy sidewalk. She claimed that defendant Greenview, the snow-removal contractor, was negligent in failing to inspect or maintain the sidewalk.  She also claimed that the Association was negligent in its conduct of the ownership and operation of the property.  After hearing all the evidence, the jury rendered a defense verdict in favor of both the Association and Greenview.  The Association then moved for  contractual indemnification from Greenview and sought reimbursement for all litigation costs incurred in defending plaintiff’s suit.

The indemnification clause that Greenview sought to enforce required Greenveiw to indemnify the Association for any damage or loss arising out of Greenview’s work. The trial court agreed that Franchini’s accident arose out of Greenview’s work and thus it awarded the Association defense costs.  Greenview appealed.

The Appellate Division first noted that the first step in interpreting a contractual indemnity provision is to determine the intent of the parties. The court noted that absent explicit contractual language, an indemnitee such as the Association may not recover for claims arising out of its own independent fault absent specific language to the contrary. The indemnification provision in this case stated that:

“It is the intent of the parties that the contractor’s indemnification and save harmless obligations hereunder are not contingent upon contractor’s fault.”

The Appellate Division found that this language could not be construed as an unequivocal statement by Greenview assuming indemnification for the Association’s own independent acts of negligence. It therefore reversed the trial court.

Special thanks to Andrew Marra for his contributions to this post.  For more information, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

It’s Alive! Adverse Possession Lives in NY.

In Tolake Corp. v. Altobello, the Second Department reaffirmed that the doctrine of adverse possession is alive and well in New York.  In Tolake, the defendants had been using a piece of plaintiff’s land in Rockland County as a driveway.  From time to time, defendants  added gravel to the driveway .   In 1982 they erected a shed on the land and pursuant to a lawfully obtained permit, later installed electrical wiring in the shed.   Eventually, the plaintiff grew tired of the intrusions and commenced an action for a declaration that it was the owner of the driveway that the defendants had been using.

Defendants claimed, however, that the driveway was theirs under the doctrine of adverse possession.   In order to own land by adverse possession the defendant needed to prove that their possession of the land was (1) hostile and under a claim of right; (2) actual; (3) open and notorious; (4) exclusive; and (5) continuous for the required ten year period.   Moreover, the defendants had to demonstrate that they either “usually cultivated or improved” the land or that they “protected it by a substantial enclosure.”

The Supreme Court (i.e. NY’s trial court) determined and the Second Department agreed that defendant’s possession met all of the requirements for ownership by adverse possession. The Second Department rejected the plaintiff’s  theory that such possession was not hostile because one of the defendants served on the board of the plaintiff corporation. The court found that such service on the board occurred after the 10-year statutory period had already run.   It further found that the defendants satisfied the requirement of usual cultivation or improvement. Finally, defendants offer to purchase the land did not defeat their claim because the offer was not made during the statutory period.  The courts therefore declared that defendants were the owners of plaintiff’s land by adverse possession.

Special thanks to Allison Weintraub for her contributions to this post.  For more information, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

Supreme Court, Kings County: A Disposed Case is Not a Dismissed Case

In Kings County, when a plaintiff misses a court appearance, the court typically marks the case off the calendar as “disposed.” Contrary to popular belief, this is not a dismissal. The recent decision of Rakha v Pinnacle Bus Servs illustrates this point. There, the plaintiff failed to appear for a compliance conference and the case was marked “other final disp[osition],” and removed from active status. Although the trial court denied the plaintiff’s motion to restore the action, the Appellate Division held that the action was never formally dismissed and thus allowed it be reinstated.

Thus, when a plaintiff fails to appear in court (not that this ever happens in NY) and the matter is marked disposed, all a plaintiff has to do is file a motion to restore the action to “active status.”  Some orders are just not worth the paper they’re printed on.

Special thanks to Bill Kirrane for his contributions to this post.  For more information, please contact Bob Cosgrove at rcosgrove@wcmlaw.com.

IRS Wants $29 Million for Artwork That Can’t Be Sold

The heirs of New York art dealer Ileana Sonnabend have been placed in quite the quandary.  They have inherited a work of art that cannot legally be sold — but the IRS claims that they owe $29 million in taxes based on their appraised value of the work.

Robert Rauschenberg was an American artist known for his unique  “combines,” in which he put together various objects, often to accompany paintings.  The work at issue here, Canyon, included a stuffed bald eagle.  Sale of a bald eagle is illegal under federal law.  Indeed, possession of a bald eagle, alive or dead, is a violation of the Bald and Golden Eagle Protection Act, but a waiver was obtained for this work years ago because it was shown that the eagle was killed before the law went into effect.

Because of that law, it would be illegal for the heirs to sell the work.  But the IRS’s Advisory Law Panel put a valuation of $65 million on the work, allegedly because it could, in theory, be sold on the black market.  That appraised value created a tax bill of more than $29 million.

The ruling has been challenged in tax court, and we will continue to follow this matter.

If you would like more information, please write to Mike Bono at mbono@wcmlaw.com

 

 

 

Fraud Claims Against Art Gallery Dismissed (NY)

Maintaining an action against the seller of art the stems from the sale of a forgery is not an easy task.  Recently, an interesting suit was filed in federal court in New York, in which an art purchaser sued a gallery for fraud when paintings sold by the gallery were discovered to not be authentic.

In Arthur Properties v. ABA Gallery, Inc., the purchaser alleged that the gallery’s principal was an expert in Russian art, that he sought to dissuade the purchaser from conducting his own expert evaluation, and that an expert retained by the buyer after the sale was easily able to determine that the paintings were forgeries.

The gallery moved to dismiss the complaint, and the Court reiterated the longstanding requirements for fraud claims:  the circumstances constituting fraud must be plead with particularity; must allege a misrepresentation or a material omission of fact that was false and known to be false and made with the purpose of inducing the other party to rely on it; and must also allege facts giving rise to a strong inference of scienter.

Scienter generally means intent or knowledge of wrongdoing.  In this context, a party must allege facts to show a defendant had both motive and opportunity to commit fraud, or allege facts that constitute strong circumstantial evidence of conscious misbehavior or recklessness.

Here, the Court found that the allegations were lacking, as they simply claimed, in essence, that the galleries principal was an expert, so he should have known the paintings were forged.  Thus, they failed to support a strong inference of scienter. 

Further, the Court held that the allegations lacked specificity.  The general allegations that gallery’s principal spoke about “the painters who he claimed had authored the paintings” were insufficient to establish fraud.  As such, the Court dismissed the fraud claims.

Please write to Mike Bono at mbono@wcmlaw.com if you would like more information about this case.

 

 

Court Cleans Up Definition of Employee Under Worker’s Comp Law (NJ)

One of the key issues in dealing with workers’ compensation benefits is who is considered to be an “employee” under the law.  Recently, the Appellate Division determined that an employee is not necessarily someone who comes to clean your home.

In Lukasik v. Holloway, the Appellate Division reversed the judgment of the workers’ compensation judge who found that a cleaning woman was an employee of the owners of the home where she was injured.  The cleaning woman, Luz Lukasik, had contracted with the homeowners to clean their home once per week for the sum of $100.  On the first day of her scheduled cleaning she was injured, sustaining a fractured hand and wrist.  Thereafter, she returned to work, but had others do the cleaning at her direction.

The workers’ compensation court found that Lukasik was an employee under the statute, and that she was entitled to more than 110 weeks of benefits due to her injuries.  The Appellate Division reversed, holding that Lukasik was an independent contractor because she retained primary control over what work she would do, when she would do it, and how the work would be performed.  Additionally, Lukasik was not substantially financially dependent upon the homeowners for her income, nor were her services somehow integral to the homeowners’ regular business.  Lukasik was merely cleaning their home.

While the Appellate Division specifically stated that it did not find that cleaning people are always independent contractors, this opinion does clarify where the line will be drawn.

Thanks to Christina Fullam-Emerson for her contribution to this post.  If you would like further information, please write to mbono@wcmlaw.com

 

 

 

School Not Liable for Unanticipated Acts of Student (NY)

The Appellate Division, Third Department, has recently reaffirmed the Court of Appeals 2010 decision in Brandy B. v Eden Cent. School Dist., which itself “reaffirmed the principle that a school will generally not be held liable for the unanticipated acts of a third party toward a student” even when those acts may have been planned by the third party.

In Geywits v Charlotte Val. Cent. Sch. Dist., the plaintiffs commenced separate actions against the Charlotte Valley Central School District, alleging that they were sexually abused as a result of the school’s negligent supervision.  The plaintiffs were first-grade students attending the school, which housed students from pre-kindergarten through twelfth grade.   Plaintiffs alleged that the school negligently supervised the students, allowing them to walk unattended from the cafeteria to the bathroom. James Quigley, a high school sophomore, allegedly abused the plaintiffs on multiple occasions in bathroom stalls while the plaintiffs walked unattended.

While recognizing the unfortunate nature of the case, the court ruled that the school was entitled to summary judgment because it had no prior notice of similar conduct on the part of Quigley or any other third party.  There was no prior notice or indication that Quigley would commit this type of act.  It was demonstrated that Quigley “was a good student, had no significant or recent disciplinary history, and had no prior instances of sexually inappropriate or physical contact.”  The Court also noted that the school was not on notice simply because the plaintiffs returned late to class on a few occasions, “especially when they explained their lateness by saying that the group of them stopped at the bathroom.”

Finally, the court held that the general rule that schools are not liable for unanticipated acts of a third party toward a student was not limited to “circumstances where the injury-producing conduct was impulsive, such as fellow students knocking into one another or throwing objects.”  The court found that even planned conduct could be unanticipated from the viewpoint of a school.

Thanks to Steve Kaye for his contribution to this post.  If you would like more information, please write to mbono@wcmlaw.com.

 

Yet Another Twist in Pennsylvania Products Law

In the never ending saga of Pennsylvania products liability law, two district courts recently found themselves at odds once again.  As we previously posted, in July Judge John E. Jones III of the Middle District of Pennsylvania ruled that since the Pennsylvania Supreme Court declined to adopt the Restatement (Third) of Torts in March in Beard v. Johnson & Johnson, the Middle District must follow precedent and apply the Restatement (Second).

However, in the latest twist another twist, Judge Mark Hornak of the Western District of Pennsylvania chose to follow the dictates of the Third Circuit, set forth in Covell v. Bell Sports, which urges the Pennsylvania district courts to apply Sections One and Two of the Restatement (Third) of Torts.  In Lynn v. Yamaha, Judge Hornak reached the exact opposite conclusion of Judge Jones, reasoning that decisions and predictions made by the Third Circuit are binding on Pennsylvania courts unless the Pennsylvania Supreme Court rules expressly to the contrary.  Given that the Pennsylvania Supreme Court did not specifically overthrow the reasoning in Covell to rely on Restatement (Third), Judge Hornak concluded that the district court was required to apply the principles in the Restatement (Third).

It unfortunately appears that the state of Pennsylvania products liability law will remain in flux until the state Supreme Court decides to rule on the issue.

Thanks to Remy Cahn for her contribution to this post.  If you would like further information, please write to mbono@wcmlaw.com