“Regular Use” Exclusion Upheld in Auto Policy (PA)

In the recent case of Adamitis v. Erie Insurance Exchange, the Pennsylvania Superior Court enforced an insurer’s “Regular Use” exclusion despite the plaintiff’s argument that the provision violates public policy.

In early October 2005, plaintiff Adamitis was involved in a serious motor vehicle accident with an underinsured motorist while in the course and scope of his employment as a bus driver for the Berks Area Reading Transit Authority. As a result, Adamitis sought UIM coverage from Erie, but his claim was ultimately denied on the basis of a “Regular Use” exclusion which bars coverage for “bodily injury arising from the use of a non-owned motor vehicle or a non-owned miscellaneous vehicle regularly used by the insured” though not specifically identified in the policy. Unsurprisingly, Adamitis disagreed with his insurer’s coverage decision and brought suit against Erie in the Philadelphia Court of Common Pleas. The lower court, however, affirmed Erie’s decision in a bench trial citing the exclusion’s clear and unambiguous language.

On appeal, Adamitis argued to the Superior Court that, among other things, the “Regular Use” exclusion violates public policy and conflicts with the Motor Vehicle Financial Responsibility Law of Pennsylvania.   However, the Superior Court was likewise unconvinced by Adamitis’ contention and instead explained that the public policy behind UIM benefits is driven by the correlation between premiums paid and the coverage the claimant should reasonably expect to receive— nothing more. Accordingly, the appellate court reasoned that failure to enforce the “Regular Use” exclusion would run afoul of Pennsylvania’s public policy by requiring insurers to underwrite unknown risks for which theyhave not been paid.

Thus, at least with respect to UIM insurance coverage, the Adamitis court reiterated that you get what you pay for in Pennsylvania.

Thanks to Adam Gomez for his contribution to this post.  If you have any questions, please email Paul at pclark@wcmlaw.com




High Tech Security System Shields Homeowner’s Association In Assault Case (NY)

In Diaz v Sea Gate Assn., Inc, the plaintiffs were attacked in their home located within a private, gated community that was managed, maintained and controlled by the defendant homeowner’s association. The plaintiffs alleged that inadequate security at the two entrance gates of the community allowed the assailant to enter property and commit his crime.  In dismissing the plaintiff’s complaint, the Appellate Division found defendant established its entitlement to summary judgment by providing a detailed description of its key card system with surveillance cameras. With this system in place, the Court inferred that the assailant did not access the building from these entrances.

Thanks to Bill Kirrane for his contribution to this post.  If you have any questions, please email Paul at pclark@wcmlaw.com

School Not Liable For Student on Student Abuse In Absence of Prior Notice (NY)

Nothing disturbs school administrators more than allegations concerning the sexual abuse of a student, whether it is perpetrated by a staff member or another student.  Such events are an assault on the entire educational community, upsetting the equilibrium of the institution and its desire to be a safe haven for its students.

What is the duty of care of a school when one student is sexually assaulted by another?  Can a school be held liable under the theory of negligent supervision even in the absence of notice of prior similar conduct by the perpetrator?

The Appellate Division, Third Department addressed such thorny issues in Geywits v. Charlotte Valley Central School District and exonerated a pre-kindergarten through 12th grade school located in upstate New York where a high school sophomore allegedly sexually assaulted four first grade students in one of its bathrooms.  The sophomore was a good student with no significant history of disciplinary problems or prior instances of inappropriate sexual or physical contact with others.  On the other hand, the school permitted the first graders to walk unattended from the cafeteria to their classrooms after breakfast,  a practice that was sharply criticized by plaintiff’s liability expert.

The Third Department noted that there was likely a question of fact regarding the level of supervision the school provided the victims.  Yet, it held that the school district was not liable “because [the school] had no notice that the illegal actions of a third party, i.e., [the perpetrator], could reasonably have been anticipated, rendering the abuse unforeseeable.”

Difficult cases frequently make bad law. Geywits supports a growing body of law that the duty of care owed by schools when a student is assaulted or injured through the acts of another student is not limitless.  In the absence of prior notice, a school is generally not liable for those unanticipated and unforeseeable acts.

If you have any questions about his post, please email Paul at pclark@wcmlaw.com.

Hotel Finds No Room In[n] Its Claims Made Policies (NY)

This case involves disputed claims for coverage under two successive professional liability policies issued by Executive Risk to Starwood Hotels.  Here, in Executive Risk v. Starwood Hotels & Resorts, the Appellate Division, First Department found Executive Risk had no duty to defend or indemnify Starwood in the underlying action based on a “prior pending” exclusion in the second policy.

In 2001, Starwood entered into a contract for the construction and management of a luxury hotel with Castillo.  The contract required Starwood to provide Castillo with a design guide for the hotel, as well as review and approve plans for the hotel and for the selection of its interior designer.  However, on October 25, 2005, Castillo wrote to Starwood, complaining that Starwood had caused delays and cost overruns by failing to meet its responsibilities in implementing the hotel’s design.  As such, Castillo demanded $18,294,500 in damages, stating that it was prepared to resort to arbitration, mediation or litigation if its differences with Starwood could not be resolved.  On July 21, 2006, Castillo brought the underlying action against Starwood in federal court.

Here, the relevant insurance policies were “claims made” or “claims made and reported” policies under which coverage was available only with respect to claims first made and reported in writing during the applicable policy period or extended reporting period.  The first policy covered April 10, 2005 to June 10, 2006, and the second policy covered June 10, 2006 to June 10, 2007.

As an aside, Executive’s 2005-2006 policy did not provide coverage to Starwood because Castillo’s letter did not allege a “Wrongful Act,” that is, an act, error or omission committed solely in the performance of or failure to perform Professional Services.  In this case, the acts alleged did not fall within the  limited definition of Professional Services of 2005-2006 policy.  Thus, Starwood had to look to the 2006-2007 policy for coverage.

The Appellate Division found that the second policy’s “prior pending” exclusion applied, by which no coverage under the policy was available “based upon, arising from, or in consequence of any written demand, suit, or other proceeding pending, or order, decree or judgment entered for or against any insured on or prior to the inception date of the policy or the same or substantially similar fact, circumstance or situation underlying or alleged therein.”  While the lower court concluded that the “prior pending” exclusion did not apply, the Appellate Division used common sense (and a thesaurus) to find that Castillo’s October 2005 demand letter was in fact “pending” when the second policy commenced on June 10, 2006 and, therefore, coverage was precluded under that exclusion for the Castillo litigation.

Thanks to Joe Fusco for his contribution to this post.  If you have any questions, please email Paul at pclark@wcmlaw.com

Janet’s Law Requires AEDs At School (NJ)

New Jersey Governor Chris Christie recently signed “Janet’s Law,” which requires New Jersey public and non-public schools to have an automated external defibrillator (AED), to train school officials and coaches on the use of AEDs, and to establish emergency action plans for responding to sudden cardiac events. The law also requires that the mandated AEDs be maintained in accordance with the previously passed law on AED acquisition and maintenance (section 3 of P.L. 1999, C.34 (C.2A:62A-25)). Janet’s Law will take effect on September 1, 2014 and effects schools that include grades kindergarten through 12.

We believe this law sets a new standard for schools, and will lead to additional claims against schools and school districts that are not in compliance with the law. We note that previous versions of the law were more detailed and expansive, and called for AEDs at youth recreational facilities and camps as well as the education of students on various health topics. The new legislation makes clear that the standard for AEDs is now different for youth recreational facilities and camps as opposed to public and non-public schools.

Janet’s Law imposes an additional burden on elementary, middle and high schools.  However, AEDs are already required in many large places of public accommodation, such as airports and healh clubs, and have been proven to be effective tool in saving lives during sudden cardiac events.   Prudent underwriters should inquire in  the application process and pre-risk surveys about the presence of AEDs at schools located in New Jersey that they insure.

Thanks to Alison Weintraub for her contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com

Representations from Probate Proceedings Doom Monroe Estate’s Efforts to Block Photo Sales

Milton Greene was a renowned photographed in the 1950 and 60’s that was particularly well known for his work with celebrities, especially Marilyn Monroe.  After Monroe’s death, Greene’s company continued to sell photographs of Monroe.

In March, 2005, Monroe’s estate filed suit, claiming that the sale of those photographs violated Monroe’s “publicity rights.”  Generally, publicity rights are the rights of an individual to control the commercial use of his or her name, image, or likeness.  In some states, like California, such rights exist beyond the person’s death and violations can be prosecuted by their estate.  In other states, like New York, publicity rights are extinguished upon death.

The defendants moved for summary judgment, alleging that New York does not recognize a posthumous, descendable right of publicity, and because Monroe was a resident of New York upon her death, her estate’s claims are now barred; the estate argued instead that she was a resident of California.

The Court looked to numerous filings that were made in connection with Monroe’s probate proceedings that established that she was a New York resident, and thus permitted her to avoid paying California inherited tax.  The Court then applied “judicial estoppel,” which is an equitable doctrine designed to prevent a party from gaining an advantage by taking inconsistent position with the court – or in other words, to prevent a litigation from “playing fast and loose” with the court.

Thus, the Court held that Monroe could not claim she was a New York resident on the one hand to avoid paying taxes, and now on the other hand claim she was a California resident to prevail in this matter.  As such, it ruled in favor of the defendants and dismissed the case.

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




US Government Sues Dinosaur; Court Says Fossil Skeleton is like Frankenstein

The US Attorney’s Office recently filed a complaint seeking the forfeiture of a Tyrannosaurus skeleton.  The skeleton was imported from Great Britain to Florida to a company called Florida Fossils and later auctioned in New York.

The Mongolian government obtained a temporary restraining order to prevent the sale from being finalized, alleging that the Tyrannosaurus was a “bataar,” a species native to Mongolia.  Pursuant to Mongolian law, fossils are considered property of the government and Mongolia is a signatory to the United Nations Convention that prohibits the smuggling of cultural property.  The US Attorney’s office thus filed this forfeiture action (against the name of the property to be seized) in an effort to have the skeleton returned to Mongolia.

Florida Fossils, however, moved to dismiss the complaint, alleging that a significant portion of the skeleton came from different bones already owned by the claimant that were not related to the bataar, and that the claimant had assembled different pieces into a larger skeleton.  The Court, who referred to the skeleton as a “kind of Frankenstein model,” gave the Government an opportunity to amend the complaint to clarify this point as well as other issues, including whether such a dinosaur could have come from a place other than Mongolia.

It will be interesting to see whether the “Frankenstein defense” works, either in this matter or in other cases involving disputes over cultural property, including art.  If you have any questions about this post, please write to mbono@wcmlaw.com

Weddings: Falling in Love and Falling Under the Labor Law (NY)

While many people have been known to fall in love at weddings, some just fall, and now the owner of the wedding facility may be on the hook. New York’s Appellate Division recently held that a wedding chupah (canopy) can qualify as a “structure” under New York State Labor Law.

In McCoy v. Abigail Kirsch at Tappan Hill, Inc., the defendants hosted a wedding ceremony at its facility, which included use of a chupah.  A chupah is a canopy under which a bride and groom are married as part of Jewish wedding tradition. The chupah was 10-feet high, and made of pipe and wood.  The defendant provided the plaintiff, a truck driver for a florist, with a six-foot high aluminum ladder, which he used to try and disassemble the chupah.  While plaintiff was standing on the ladder, which was being held by another employee, the ladder slipped and plaintiff fell.

The plaintiff brought an action for violations of the Labor Law.  New York’s Labor Law requires that all owners and general contractures provide safety devices to protect their employees from the inherent risks of working at elevated heights.  The statute expressly provides that safety devices are necessary “in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure.” Labor Law § 240(1).

The court noted that whether something is a “structure” depends on the specific facts of the case, and requires a balancing of numerous factors.  The court found a number of facts relevant to finding that the chupah was a “structure,” including that the chupah  “consisted of various interconnected pipes… secured to steel metal bases.… “  The court also found it significant that the assembly and disassembly of the chupah required a ladder, tools and “an experienced worker more than a few minutes to complete.”  Finally, the court stressed that its decision should not be interpreted as a finding that every chupah is a “structure” under the Labor Law.

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



Decision Stinks for Sanitation Worker (NY)

In Wagner v. Wody, the plaintiff was injured during his work as a sanitation worker when taking a 30 to 40 gallon garbage bag from the curb in front of the defendants’ home to the sanitation truck.  When the plaintiff was turning to throw the bag into the back of the truck, the bag made contact with his leg, and a piece of glass approximately one inch thick and approximately three inches long cut into the plaintiff.  Inside of the bag was mail addressed to the defendants, as well as other pieces of broken glass.

The defendants moved for summary judgment and the trial court granted the motion.  The Second Appellate Department affirmed, holding that “a small piece of glass constitutes ordinary garbage or a common item of trash, the disposal of which is a hazard inherent in the duty of a sanitation worker.”

The Court also noted that, although there are certain similar situations where a question of negligence might exist — such as where heavy construction debris is placed into an ordinary trash receptacle, the small piece of glass was clearly distinguishable.

The Court found that plaintiff was responsible for the manner in which he chose to dispose of the trash, throwin this large plastic bag into the sanitation truck. A worker who “confronts the ordinary and obvious hazards of his [or her] employment, and has at his [or her] disposal the time . . . to enable him [or her] to proceed safely . . . may not hold others responsible if he [or she] elects to perform his [or her] job so incautiously as to injure himself [or herself].”

Thanks to Jung Lee for his contribution to this post.  If you would like further information, please write to mbono@wcmlaw.com.

Guidance Provided for Choice of Law Analysis for Coverage Disputes in NJ

The outcome of a conflict of laws analysis is often difficult to predict.  But a recent Appellate Division decision may provide some guidance as to how allocation of coverage issues are decided in New Jersey where there is a conflict of laws.

In the consolidated appeals of In The Matter Of The Liquidation Of Integrity Insurance Company/Sepco Corporation and In The Matter Of The Liquidation Of Integrity Insurance Company/Mine Safety Appliances Company, the Appellate Division was faced with the issue of which state’s laws should apply when apportioning insurance coverage in the mass tort context.  Both Sepco Corporation, a California-based company, and Mine Safety Appliances Company, based in Pennsylvania, were insured under excess policies with Integrity, a New Jersey insurance company, in the mid-1980s.  After Integrity’s Liquidator filed its liquidation plan, both Sepco and Mine Safety filed proofs of claim with the Liquidator for coverage under the policies.

The Liquidator denied the claims based on the utilization of an “all-sums” (joint and several) allocation methodology.  Under that methodology, “the insured may recover in full under any triggered policy that it chooses and leave the selected insurer to pursue cross-claims against other triggered carriers whose policies are also available.”     While both California and Pennsylvania utilize this approach, New Jersey has rejected the joint and several allocation method for a pro-rata allocation method.

The denials were referred to a Special Master, who affirmed the Liquidator’s decisions in both matters, citing New Jersey’s compelling interest in having its own law applied to the claims because Integrity was being liquidated pursuant to New Jersey law, and because the pro-rata approach was more equitable as to other claims filed against Integrity than was the joint and several approach.  The Special Master’s determinations were affirmed by the trial court.

On review, the Appellate Division affirmed the trial court’s decision to apply New Jersey law.  While refusing to state a blanket rule that the law of the insurer’s home state would govern the analysis, the Appellate Division found that the balance of the equities favored applying New Jersey law to the claims against Integrity, who was in its twenty-fifth year in the liquidation process, even though the policy language confusingly seemed at times to favor an “all-sums” approach.

The best way to guard against uncertainty is to add a provision as to choice of law; otherwise, an unintended and unexpected interpretation of policy terms may result.

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