Monthly Archives: May 2013

How Many Experts Are Too Many? (NJ)

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In most states, the trial judge has substantial discretion to control the presentation of evidence.  Some judges are notoriously strict task masters, pushing the litigants to complete their presentations as quickly as possible so that the jury may begin the difficult job of deciding who wins.

Just how far may a trial judge go in her quest to “keep things moving”?  Can the court restrict the number of witnesses, particularly experts, who will testify about a common issue?

In McLean v. Liberty Health System, the New Jersey Appellate Division upended what had been the prevailing view that trial judges could restrict the parties to one expert per issue.   Young Kevin McClean, aged 16, died after an infection went undetected at a local hospital.  The administratrix of his estate claimed that the hospital’s emergency room physician failed to meet the standard of care required under the circumstances. The case was expected to be long and complicated so the trial judge restricted each side to one expert per specialty, thus limiting the plaintiff to one expert on the issue of the standard of care expected of an emergency room doctor.

During opening statements, the attorney for the defendant doctor went on the offensive, advising the jury that “we will prove that no emergency room physician with the possible exception of [plaintiff’s expert] ….would ever have thought for a scintilla of a moment that this is a patient with an infection. None.”  The problem was that the plaintiff had already disclosed the reports of two expert witnesses who would both say that the defendant doctor botched the care provided the decedent by failing to identify the infection.  According to the Appellate Division, the defense attorney’s statement was false and the defense lawyer knew it.  Not surprisingly, the jury found in favor of the defense.

Employing sweeping language, the Appellate Division held that “Nothing in our rules of evidence, or other laws or rules, gives the trial court authority to balance the number of witnesses presented by each side at trial.”  The court further cautioned that a trial court may not bar the testimony of witnesses “merely on the ground that it duplicates another witness’s testimony.”

There are many lessons to be learned from McClean.  There seems to be no doubt that a party cannot be precluded from calling multiple witnesses, either fact or expert, on identical issues that are crucial to the case.  Judicial efficiency may be an important goal but it is trumped by a party’s right to put all relevant evidence, even if duplicative, before the jury on crucial issues.

If you have any questions or comments on this post, please email Paul at .

Cheerleader’s Suit Is Barred By Assumption Of Risk (NY)

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Under the doctrine of assumption of risk, a participant injured while engaged in a sport or recreational activity is deemed to have consented to those commonly appreciated risks, which are inherent in and arise out of the nature of the sport.

However, if the plaintiff is forced to perform the activity, the assumption of risk defense not available because of the doctrine of inherent compulsion.  Under this doctrine, when a student is compelled to participate in an activity and has no meaningful choice to decline, then the assumption of the risk doctrine does not apply.

Recently, in Stach v Warwick Val. Cent. Sch. Dist., the Appellate Division, Second Department examined whether the assumption of risk doctrine applied to a student injured while participating in cheerleading practice. The plaintiff, an experienced high school cheerleader, was injured when she fell while performing the “Pyramid” stunt on a bare lobby floor. The school district argued that the plaintiff voluntarily engaged in cheerleading and knew the risks inherent in the sport.

The plaintiff submitted opposition relying on the doctrine of inherent compulsion. However, the Second Department ruled in the school district’s favor, finding that the plaintiff’s voluntary participation in practice on the lobby floor did not implicate the doctrine.

Where an experienced student athlete is injured while practicing a recreational activity, the doctrine of assumption of risk eliminates any liability for a school district.  It is important for the defense to establish that the activity was voluntary, that is, the student’s participation was not forced in order to avoid the doctrine of inherent compulsion.

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

Expensive Vinegar: Jury Awards $12 Million to Collector in Bogus Wine Case (NY)

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Typically, when an auction buyer winds up with a fake item, they have little recourse under the “caveat emptor” principle.  Both the auction house and seller typically issue disclaimers that state they do not guarantee the authenticity of a particular item.

But recently, energy magnate Bill Koch scored a huge trial victory against fellow wine collector Eric Greenberg.  Koch claimed that 24 of the 17,000 bottles of  Greenberg’s wine that he purchased in an auction were not the valuable collectibles they purported to be but instead were fake.

Koch alleged that after he purchased the wine, he learned that Greenberg had previously been told by experts that some of the bottles had been identified as counterfeit.  Despite knowing this information, Greenberg placed them into auction without disclosing their questionable identity.

Greenberg claimed he did not know any wines sold were fake and that it was the responsibility of the auction house to determine whether there were any authenticity issues. But Koch presented witnesses that said Greenberg was aware since 2002 that his cellar contained counterfeit wines, and a former house manager testified that Greenberg told him he planned to resell them.

A jury found in Koch’s favor, awarding him $379,000 in compensatory damages and $1,000 per bottle.  Upon further deliberation, the jury awarded Koch $12 million in punitive damages.     Apparently, the litigation cost Koch $10 million, so it is not quite the windfall it appeared to be, but still a lot better outcome then being stuck with bogus wine.

For more information, please write to Mike Bono.

 

 

Premises Coverage Limited to Location, Not Operation (PA)

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Many commercial carriers seek to control their exposure by limiting coverage to a particular location or a particular business pursuit of the insured.  There have been some decisions that have expanded this coverage by finding that a seemingly non-covered loss was “incidental” to the business and therefore covered.

This issue recently arose in Am. W. Home Ins. Co. v. Donnelly Distribution, Inc., in which the insured ran a newspaper distribution business and obtained insurance for its distribution facility. The policy contained a “Premises Provision” that limited coverage to injuries arising out of the ownership, maintenance or use of the premises and “operations necessary or incidental to those premises.”

The insured was sued by a claimant who injured herself when she slipped on a plastic tie used to bind newspapers together. The injury occurred on a city street and not at the insured’s distribution facility. The insurance carrier denied coverage because the policy’s Premises Provision only provided coverage for operations that are necessary or incidental to the insured premises, not to the insured’s business operations. The Third Circuit court of Appeals upheld the denial because the use of the plastic tie was not necessary for the operation of the distribution center itself.  In sum, it found that the wording of the policy limited coverage to injuries arising out of a business location and not the insured’s business operations.

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

Violation of Policy Condition By Named Insured Reduces Coverage for Additional Insured (NY)

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While an insurance carrier must treat additional insureds and named insureds as if they are separately covered under the policy, it is important to keep in mind that in some instances one insured’s conduct can negatively impact coverage for other insureds.  The Appellate Division, First Department, recently addressed this issue in Citizens Ins. Co. of America v. Illinois Union Ins. Co.

Illinois Union Insurance Company issued a CGL policy to the “named insured,” who acted as a general contractor on a construction project performed on the property of an entity named as an “additional insured” under the Illinois policy.  The policy contained a sub-limit endorsement, which provided that coverage for any loss will be reduced to $100,000 in the event that the named insured breaches any conditions to coverage listed in the endorsement.  The sub-limit endorsement only imposed conditions on the named insured, and made no reference to any additional insured.

Here, the named insured violated a condition to coverage which required its subcontractor to have in force an insurance policy that afforded coverage to the named insured contractor as an additional insured.  Thus. Illinois Union argued that coverage was reduced to $100,000 for the additional insured.   Citizens Insurance Company, the primary carrier for the additional insured, rejected Illinois Union’s position, and commenced a declaratory judgment action.

The First Department affirmed the trial court’s decision that the sub-limit endorsement applied equally to the additional insured.  The court declared that although the sub-limit endorsement only placed conditions on the named insured, once the named insured breached a policy condition, coverage for the additional insured was also reduced.  According to the court, the “separation of insureds” doctrine did not alter the fact that the sub-limit endorsement applied to all insureds, named or otherwise.

Finally, the First Department also rejected Citizens’ contention that Illinois Union was estopped by Insurance Law § 3420(d) from relying on the sub-limit endorsement because it allegedly provided late notice of the sub-limit.  There was simply no evidence of any prejudice to the additional insured by any delay, as it received full payment of the sub-limit coverage, and there was no excess exposure because Citizens’ paid the balance of the settlement.

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

Jury’s Web Research Leads to Mistrial (NY)

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Speaking with the jury after a trial is always fraught with peril.  That issue recently came to light in Olshantesky v. NYCTA, where it was discovered after the trial that the jury consulted an on-line dictionary to help them define the term “substantial.”

The trial court found, and the appellate court agreed, that such research constituted juror misconduct, warranting a mistrial.  Interestingly, the appellate court allowed the damages award to stand, finding no evidence that the misconduct affected the jury’s determination on damages.  However, the parties will be required to retry the liability case.

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

Court Holds Renewal Requirement Does Not Apply to Surplus Lines Policy (NY)

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The IDW Group is a employment recruitment firm that obtained Errors and Omissions policies from Liberty Surplus Insurance Corporation through its insurance broker, Levine Insurance Risk Management.  Policies were issued for the periods of 2005/2006, 2006/2007, 2008/2009, and 2009/2010.

During 2007, there was some sort of mix-up involving the premium check, and no policy was issued for the 2007/2008 policy year.  During that time period, JP Morgan sued IDW, alleging that IDW violated a non-solicitation clause of a recruiting contract between the two companies.

When Liberty learned that there was no policy in place, it disclaimed coverage for the JP Morgan claim.  IDW then sued Levine for failing to obtain coverage and Liberty for, among other reasons, failing to provide IDW with the non-renewal notice required under the New York Insurance Law.

NY Insurance Law §3426 generally requires that a commercial insurer provide written notice to the insured of its intention not to renew a policy.  IDW alleged that because Liberty failed to provide such notice of non-renewal for the 2007/2008 policy year, that policy remained in effect and IDW was therefore entitled to coverage for the JP Morgan lawsuit.

But Liberty argued that its policy was exempt from the statute, because the statute states it does not apply to an “excess liability policy,” and here Liberty issued a surplus lines policy.  Although the statute seemingly applies to policies that provide excess coverage over primary policies, Liberty cited to an opinion from the New York Department of Insurance that said the term “surplus lines” is synonymous with “excess lines.”  Therefore, Liberty argued the statute did not apply to a surplus lines policy.

The Court found that the Department of Insurance opinion was persuasive (albeit not binding) and awarded Liberty summary judgment, dismissing IDW’s claims.  Frankly, while we think that credible arguments can be made that the certain requirements of the Insurance Law do not apply to excess/surplus lines carriers, here the Court may have conflated two similar terms and we are interested to see whether this decision holds up on appeal.

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