Monthly Archives: April 2013

Discretionary Decisionmaking or Ministerial Act? NJ Weighs In on Municipal Liability.

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Under the New Jersey Tort Claims Act (the Act), N.J.S.A. 59:1-1 to 12-3, a public entity is entitled to sovereign immunity for discretionary activities unless the entity’s actions were palpably unreasonable. However, in respect of ministerial functions, ordinary negligence principles apply. Thus, the consistent NJ battle is between plaintiffs who seek to have a ministerial standard applied and the public entities that seek to have a discretionary function standard applied.

Such was the issue before the court in the case of Henebama v. SJTA, et al.. In this case, the plaintiff lost a leg when, as the result of numerous other car accidents, medical aid was not rendered to her when her car accident occurred. The trial court made the decision as to which standard applied and then charged the jury. An adverse verdict and appeal followed.

When confronted with the appeal, the Appellate Division stressed that the fundamental question before it was whether a judge or jury should make the discretionary or ministerial decision. The Court ruled that “when the evidence establishes a genuine issue of material fact regarding whether the alleged failures of a public entity were the result of discretionary decision making as to how to use its resources, or instead involved ministerial acts mandated by law or practice, then that fact issue must be submitted to the jury.” This is just one more thing to worry about when defending public entities as there now appears to be limited hope for a motion victory.

For more information about this post, please contact Bob Cosgrove at .

No End Run Around Workers Compensation Bar (NJ)

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In Fendt v. Abrahams et al, the Appellate Division re-affirmed the strength of the exclusivity section within  New Jersey’s Worker’s Compensation Act. In New Jersey, an employee can avoid the exclusive remedy provision in the Worker’s Compensation Act if: 1) the employer knowingly exposes the employee to a “substantial certainty of injury” and 2) and the injury sustained is not a “fact of life of industrial employment, ” which the New Jersey legislature intended the Worker’s Compensation Act to immunize. However, merely proving a high probability of injury or knowledge that injury or death could result is insufficient to avoid the exclusivity of the Worker’s Compensation Act.

In Fendt, plaintiff was working on a driveway paving job as a traffic flagger when he was struck by a vehicle. Plaintiff’s employer later plead guilty to violating traffic safety laws. In addition, the employer conceded it had traffic safety equipment available, but did not use it. Plaintiff’s expert opined that plaintiff’s employer “knowingly exposed plaintiff to a risk that was substantially or virtually certain to result in harm.” At the close of discovery, the defendant employer was granted summary judgment on the basis that while its conduct may have been negligent, itwas not an “intentional wrong.” The Appellate Division affirmed, noting that while the employer’s conduct may have been grossly negligent, there was no affirmative act taken by plaintiff’s employer that made the workplace significantly less safe for its employees.

The New Jersey appellate courts have consistently limited the “intentional act” exception to the Worker’s Compensation Act. These decisions should provide New Jersey employers with some assurance that they are immune from suit when their employees are injured in the scope of their employment and keep their workers compensation premiums within reason.

Thanks to Alison Weintraub for her contribution to this post. If you have any questions or comments, please email Paul at 

Court Sanctions Defense Attorney for Opposing Motion to Restore (NY)

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In Kings County, cases are often procedurally dismissed for failing to file a note of issue. However, this dismissal is not on the merits. To vacate the dismissal, a plaintiff simply files a motion to restore. Not only are these motions routinely granted, but as the case of Degtiarev v Delecia-Kenny demonstrates, a defendant should use caution when opposing the motion.

In Degtiarev, the defendant’s firm opposed a motion by the plaintiff to restore the action to active pre-note-of-issue status. However, the trial court found that opposition was without merit and was filed simply to delay restoration of the action. The court then awarded the plaintiff an attorney’s fee as a sanction pursuant to 22 NYCRR 130-1.1.The Appellate Division affirmed the holding, stating that defendant’s opposition arguments “were completely without merit in law, failed to address the applicable statutory and case law, and appear to have been advanced, once their lack of merit was apparent, for the purpose of delaying restoration of the action.”

In King’s County, there is a strong preference to decide cases on the merits. Thus, a defendant should not simply oppose motions to restore without an independent basis to dismiss the action (i.e., neglect to prosecute). In other words, a defendant should look for grounds to dismiss the action on the merits. At a minimum, a defendant should not oppose the restoration, but should file a motion to compel outstanding discovery from the plaintiff.

Thanks to Bill Kirrane for his contribution to this post. If you have any questions or comments, please email Paul Clark at

Court Examines Scope of Designated Premises (NY)

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The standard Commercial General Liability policy provides liability coverage for the “Designated Premises” set forth in the policy’s Declaration Page. Those premises are customarily identified in the application for insurance submitted by the insured as part of the underwriting process. Many CGL policies expressly limit coverage to liability arising out of the Designated Premises.

What happens when the insured contracts for a major expansion of those designated premises and a construction worker is injured while erecting the new, expanded space? More to the point, is that new space considered part of the Designated Premises covered by the owner’s CGL policy?
There is no liability coverage for the owner according to the Appellate Division, First Department in Seneca Insurance v. Cimran Co., Inc.  In Cimran, the owner submitted an application for insurance describing the premises as a one story building occupied by a billiard hall and health spa. After the policy became effective, the owner contracted to add three additional stories to the property and, according the plaintiff’s bill of particulars, a worker was injured on the fourth place at the construction site.

Reaffirming “an ancient principle of insurance law,” the First Department, in the closely decided 3-2 decision, held that the fourth floor was not part of the insured premises and therefore was not covered by the Seneca policy. The insurer reasonably relied on the description of the premises set forth in the application, so the court reasoned that there could be no real dispute or confusion that coverage was limited to the one story building and did not include the three additional stories under construction.

Given the two dissents, we expect the Court of Appeals, New York’s highest court, to review the Cimran decision in the future. Of note, it is unclear from the Appellate Division decision whether the Seneca policy expressly limited coverage to the premises designated in the policy’s declaration page.

If you have any questions or comments, please email Paul at

What Happens When Your Expert Goes “Missing”? (NJ)

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Experienced lawyers seek every advantage at trial. Your adversary fails to lay the proper foundation for a document’s admission into evidence? Object and seeks its preclusion. A witness is first disclosed on the evidence of trial? Move to bar the witness from testifying at trial.

The “adverse inference” or “missing witness” charge is another potent weapon at trial. Requested when an adversary fails to call a witness under his control, this charge advises the jury that it may infer that the testimony of the missing witness would have been adverse to that party’s interests. In a close case, it can be used to highlight your adversary’s failure to call a key witness under its control and drive home the point that the missing witness’ testimony would likely not have helped your opponent’s case.

Under what circumstances should an “adverse inference” charge be given when a party fails to call an expert witness at trial? Just how far may an attorney go in summation when urging the jury to consider the failure of an adversary to call an expert witness at trial?

In Washington v. Perez, the New Jersey Appellate Division gave some guidance on both questions. In Perez, the plaintiff was injured in a bus accident and there were questions about the impact of a prior injury on plaintiff’s present condition and just how badly she was hurt in the bus accident.  The defense identified two medical experts during discovery, presumably one who examined plaintiff and the other who read the scans and x rays.  For reasons never explained, the defense lawyer took an aggressive position in his opening, boldly declaring that the plaintiff was not injured in the bus accident.  However, he did not call either medical expert and offered no evidence on plaintiff’s alleged lack of injury.

The plaintiff’s attorney requested and the court gave an “adverse inference” charge based on the defense’s failure to call either of its medical experts.  Seizing the moment, plaintiff initially highlighted in his summation the defense’s failure to call either of its medical experts to dispute plaintiff’s medical evidence.  Not content with an adverse inference charge, plaintiff also challenged the “candor” of the defense and argued that it “hid evidence from [the jury]…”  This tactic was apparently effective because the jury awarded $500,00 for pain and suffering and $242,000 for economic damages in a case involving soft tissue injury.

The Appellate Division was critical of the trial court’s application of the “missing witness” charge and troubled about the content of plaintiff’s summation.  Given those cumulative errors, the Appellate Division reversed and remanded for a new trial.  Sometimes, attorneys are not content to accept their good fortune — in this case, that the court gave an “adverse inference” charge– and stretch the bounds of fair comment.  While it remains a powerful weapon, advocates must recognize the limitations of an “adverse witness” charge and avoid undermining their good work by going too far in their advocacy.

If you have any questions or comments, please email Paul at

 

 

 

This (Watered Down) Bud’s For You? (NJ)

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First, the self-proclaimed King of Beers suffered the indignity of being purchased by a Belgian-Brazilain brewing company, InBev, in 2008.  It now finds itself the target of a series of lawsuits filed throughout the country alleging that Anheuser-Busch cheated consumers by misrepresenting the alcohol content of its products.

One such suit was filed in New Jersey by plaintiff Brian Wilson. The complaint highlights the sophisticated equipment used by the brewing company that can precisely measure the alcohol content, and claims that the company saves money by watering down the beer during the fermentation process. Because it is alleged that the alcohol content is lower than the amount represented on the bottle labels, the claim is that this practice violates the New Jersey Consumer Fraud Act, as well as other statutes.

Frankly, with the incredible variety of specialty craft beers available in the marketplace, Bud drinkers do not strike me as discerning consumers. I think it is also doubtful that Bud buyers made their purchases aware of — and based on — the claimed alcohol content on the label, and that a potential 5% difference would have impacted their decision. But it will be interesting to see how this develops.

If you would like further information, please write to Mike Bono.

Arson By Principal Burns LLC (NY)

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When an insured intentionally damages or destroys insured property, there is little question that a claim made by that insured for such damage would not be covered.  But a more interesting question is created where there is an “innocent” co-insured or business partner who seeks coverage for the loss.

The issue recently surfaced in JMM Properties, LLC v. Erie Ins. Co.  The carrier insured a building owned by a limited liability company.   Jeffrey Truman, one of the LLC’s three principals, intentionally set the insured property on fire in order to recover the insurance proceeds.

After the insurance company denied coverage based on Truman’s arson, the insured’s other two partners sued for coverage, arguing that the criminal acts by Truman did not constitute acts by the insured-LLC because Truman’s acts were not authorized by the LLC.

But the court disagreed and ruled that the insurer properly denied coverage. First, the LLC’s operating agreement granted Truman the power to manage the LLC’s business, including the power to file insurance claims.  Therefore, Truman’s filing of a false insurance claim was deemed a false filing by the LLC which defeated coverage.  The court also ruled that Truman’s criminal conduct in setting fire to the building bound the LLC.   As is the case with corporations and partnerships, a principal’s criminal acts can bind the LLC which is a hybrid of a corporate entity and a partnership.

Thanks to Mendel Simon for his contribution to this post.  If you would like more information, please write to Mike Bono.


					

		
		
	


				
					
	

		

						
Art Foundation Prevails in Warhol Authentication Dispute (NY)

			
						

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We’ve previously posted about how litigation is causing art foundations to reconsider authenticating art.  Recently, a court provided support for these foundations by upholding the covenant not to sue clause found in the agreement signed by the art owner that was required by a foundation in support of the authentication services.


In Thompson v. Andy Warhol Foundation, on three different occasions, the plaintiff submitted a drawing to the Foundation that he claimed was an Andy Warhol self-portrait.   The Foundation each time sent plaintiff an opinion that the drawing was not made by Andy Warhol.  Plaintiff filed suit, but summary judgment was awarded in favor of the Foundation.


On appeal, the First Department found that the covenant not to sue barred most of plaintiff’s claims.  The Court also found that there was no special relationship between the parties that imposed any greater duty on the Foundation than those set forth in their written agreement.  The Court also notably again held that “the market place is the appropriate place to resolve authentication disputes”  and was not going to second-guess the decision made by the Foundation.


If you would like more information, please write to Mike Bono.


 


 


 

					

		
		
	


				
					
	

		

						
Facebook Status = Spoliation for Deleted Account (NJ)

			
						

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In a recent decision in New Jersey federal court, Gatto v. United Airlines, the Court ruled that the plaintiff’s deletion of his Facebook account during the course of the lawsuit constituted spoliation of evidence.  Plaintiff, a baggage handler for JFK Airport, was injured when a set of airplane stairs crashed into him.  During the course of discovery the defendants sought social media information, asking specifically for records of plaintiff’s Facebook activity.  Defendants requested that plaintiff sign authorizations allowing Facebook to release records of his personal activity but plaintiff refused.  Plaintiff was subsequently ordered by the Court to change his password to allow Facebook access to counsel.  Plaintiff deactivated and deleted his account before defense counsel was allowed access, claiming that he thought his account was being hacked, despite being aware that the defense was grated access.


Defendants moved for sanctions on the basis that the deletion was intentional and that the information contained in the account would have helped debunk plaintiff’s claim.  Judge Mannion rejected plaintiff’s argument that the deletion was accidental; reasoning that even if he did not intend to to deprive defendants of the Facebook data, he intentionally deactivated and deleted the account.  Judge Mannion sanctioned plaintiff for spoliation but did not grant defense attorney fees.


Prior cases have held that defendants may be entitled to social media access, and this case is notable because it takes things a step further by punishing a plaintiff for deleting such information.


Thanks to Remy Cahn for her contribution to this post.  If you would like further information, please write to Mike Bono.

					

		
		
	


				
					
	

		

						
Insured Loses the Name Game in Reformation Case (NY)

			
						

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Determining whether principals of a company sued in their individual capacity are covered under a commercial policy is often a tricky question, and a recent decision by the Appellate Division, First Department, brought this issue to the forefront.


In Kyong Jae Lee v. Lancer Ins. Co., Lancer Insurance Company issued a garage non-dealer insurance policy to Jay Family Parking, Inc.  The owners of the company were sued in their personal capacity for a personal injury that took place on the insured premises, but were never listed or otherwise qualified as insureds under the policy.  As such, Lancer disclaimed coverage for the lawsuit.


Accordingly, plaintiffs commenced a declaratory judgment action against Lancer seeking an order reforming the insurance policy to list them as named insureds.  The insureds claimed that they innocently misdescribed the identity of the owner of the insured premises.  Plaintiffs, as individuals, owned the property, not Jay Family Parking, Inc., and they therefore claimed they ought to be covered.


The trial court agreed with plaintiffs’ argument and issued an order reforming the policy to include plaintiffs as named insureds.  But the Appellate Division, First Department reversed the part of the trial court’s order that reformed the insurance policy.  The First Department placed particular emphasis on the fact that every application for insurance listed Jay Family Parking, Inc. as the only applicant.  The court recognized that reformation is warranted where the insured innocently misdescribes the owner of insured property.  Yet, the court found that here, the specific names of the owners was not the only issue.  Lancer submitted affidavits stating that it would not have issued the policy had it known that plaintiffs owned the premises in their individual capacities.  As such, the First Department held that reformation was not an appropriate remedy.


Thanks to Steve Kaye for his contribution to this post.  If you would like more information please write to Mike Bono.