Monthly Archives: August 2013

Mediation Settlement Agreements: Sign Now or Pay Later (NJ)

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We previously posted about Willingboro Mall LTD v. 240/242 Franklin Ave, and now the Supreme Court of New Jersey has weighed in with the final word.

In many jurisdictions, the majority of cases in civil litigation proceed at some point to mediation, whether mandated by the court or agreed by the parties in an attempt to resolve matters more efficiently in terms of both time and money.  With the assistance of an experienced non-party neutral, many cases are successfully resolved without the time and expense of a jury trial.

While generally less contentious than a courtroom trial, mediation is not without its formalities.  In Willingboro Mall LTD v. 240/242 Franklin Ave. LLC, the parties resolved a real estate dispute at mediation with the assistance of a retired judge. The settlement terms were negotiated and agreed upon, but not put to writing.  Shortly after reaching the oral agreement, the plaintiff rejected the settlement, giving rise to the defendant’s motion to enforce the settlement and related litigation. Although the New Jersey Supreme Court agreed to enforce this specific agreement, it upheld the Appellate Division ruling that — going forward — matters resolved at mediation will not be enforced absent a written agreement setting forth the terms of the resolution, signed by all parties, prior to the conclusion of the mediation.

In addition to this new bright line rule, the Supreme Court also took the opportunity to further refine issues of confidentiality during the mediation process.  An essential tenet in the mediation process is the (statutorily required) assurance that all discussions during the mediation will remain confidential and not subject to exposure during court proceedings.  In attempting to enforce the settlement, the court found that the defendant violated this privilege by disclosing the terms of the settlement.  However, instead of addressing this violation, the plaintiff responded to the defendant’s revelations with additional confidential details.  This, the court held, amounted to a mutual waiver of the privilege.

Taken with the conduct of the parties during the mediation process, the court determined that the mutual disclosure of material discussed during the confidential mediation was not fatal to enforcement of the oral agreement.  While the primary take-away from this decision is the requirement that settlements reached during mediation must be signed at the time that the agreement is reached, it is also important to bear in mind that the better response to disclosure of confidential information is a motion to strike/preclude rather than an attack with contrary confidential information.

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

Plaintiff Skates Past Assumption of Risk Defense (NY)

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Most people understand that when you participate in sports, you might get hurt.  So in New York, the general law is that “a voluntarily participant in a recreational sporting event has no legal recourse for injuries caused by an occurrence or condition that was a known, apparent, or reasonably foreseeable consequence of such participation.”

But the U.S. District Court for the Northern District recently issued a questionable decision in connection with a roller skating accident.  In Diaz v. High Rollers Recreational Center, Inc., the plaintiff, while skating, noticed a young man with long hair “skating aggressively and at a higher rate of speed than the other skaters.”  The man skated fast while cutting in and out of the path of other skaters, but his conduct was not reported to High Rollers’ staff.  Eventually, this unidentified skater struck plaintiff from behind, causing her to fall and injure her ankle.

Plaintiff sued High Rollers, claiming that High Rollers failed to properly supervise the skaters and allowed reckless skating.  High Rollers argued that plaintiff assumed the risk of skating, and that in any event it provided adequate supervision and was not the proximate cause of plaintiff’s injuries.

The judge found that the skater’s conduct was obvious to all at the skating rink, including High Rollers employees, and that a sudden collision is the type of risk typically assumed by skating participants.  But the court found that a skater does not assume the risk of another skater’s reckless conduct and that the collision was not sudden but a foreseeable occurrence that could have been avoided with better supervision.  Whether the defendant’s supervision was negligent was found to be an issue of fact to be determined by the jury.

This type of incident strikes us as a risk typically assumed by skating participants and it seems that the court placed too great an emphasis on the “sudden” nature of the incident.  We will continue to monitor this case to see if there is an appeal and if the outcome is any different.

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

Late Notice (Without Prejudice) Lives In Many Pollution Cases

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When the New York State legislature abolished the no-prejudice rule in 2009, it greatly increased the burden on insurers to establish prejudice as an element of the late notice defense.  But a recent decision in the Supreme Court, New York County, serves as an important reminder to insurers that, in pollution cases, New York’s no-prejudice rule often still applies when the insured gives late notice.

For policies issued before January 17, 2009, a failure to satisfy the notice requirement of an insurance policy vitiates the policy, and the insurer is not required to demonstrate that they were prejudiced by the late notice.  Whether late notice was provided to an insurer is of particular relevance in pollution cases, because claimants often commence lawsuits with actual or constructive knowledge of the problem.

In Travelers Indemnity v. Orange and Rockland Utilities, Index No. 603601/02, the insured sought coverage for the investigation and remediation of pollution and contaminates at gas plants owned or previously owned by the insured from 1852 through 1965.  Travelers or its predecessors afforded coverage to the insured under policies issued between 1955 through 1978.  The Travelers policies required that notice be provided “as soon as practicable.”  Although the insured was aware of its potential liability as far back as 1981, it did not provide notice to Travelers until 1995.

Justice Eileen Bransten — applying the no-prejudice rule — held that notice is a condition precedent to coverage, and therefore Travelers properly disclaimed coverage based on receiving late notice of the underlying pollution and contamination.  The breach of the condition vitiated coverage, relieving Travelers of any duty to defend the insured.

As such, in pollution cases, an insurer should always consider whether late notice is a viable defense to coverage, and, if so, immediately disclaim coverage.

http://www.courts.state.ny.us/Reporter/pdfs/2013/2013_31585.pdf

Preexisting Conditions Discoverable When Medical Condition Placed in Controversy (NY)

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In Walters v. Sallah, the First Department recognized the significance of obtaining a plaintiff’s pre-accident medical records when a plaintiff places his or her medical condition in controversy.  

Walters sustained injuries in a car accident and claimed that he was unable to perform substantially all of his usual daily functions for at least 90 out of the first 180 days following the accident.  The defendants moved to compel Walters to provide authorizations to obtain his medical records pertaining to a pre-existing arthritic condition, as well as disability records from the Social Security Administration.  The defendants argued that these pre-existing conditions could be the cause of Walter’s inability to perform his usual daily activities.  In reversing the lower court’s decision, the First Department ruled that the defendants met their burden of showing that the requested records were relevant to a physical condition that Walters placed in controversy.  It was left, however, to the lower court’s discretion to limit the discovery to reasonable parameters, including time frame and relevant body parts.  Thus, while such discovery is clearly relevant and discoverable, defendants are not generally entitled to an unfiltered fishing expedition.

Special thanks to Lora Gleicher for her contributions to this post.  For more information, please contact Nicole Y. Brown at .

Summary Judgment Denied Because Of Employer’s Contradicting Reasons For Termination (PA)

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In Eastman v. ReSearch Pharmaceuticals, the plaintiff’s employer gave conflicting reasons for firing her.  Although both reasons offered were legitimate bases for termination, the court denied the defendant’s motion for summary judgment because of the contradictions. 

Eastman was a clinical researcher for ReSearch Pharmaceuticals and part of her responsibilities included traveling to various locations to monitor drug trials.  Prior to one of her scheduled visits to a doctor’s office, Eastman was experiencing back pain.  She called her manager and asked for permission to reschedule the visit; however, the manager stated that the visit could not be rescheduled, but offered instead to send another employee.  Eastman declined and agreed to go herself.  When she arrived at the doctor’s office, he observed that Eastman seemed to be suffering from a physical ailment.  The doctor offered to examine her and eventually gave Eastman Valium without a prescription.  Later that evening, Eastman took the Valium and called her manager to discuss the visit, including the fact that she had taken the Valium that the doctor offered. 

Following the call, Eastman’s manager discussed the incident with human resources.  Subsequently, the executive director of human resources spoke with Eastman and ultimately fired her for violating the company’s drug policy, by taking a controlled substance without a prescription.  In response, Eastman filed suit for wrongful termination. 

During the course of discovery, it was revealed that ReSearch offered inconsistent reasons for firing Eastman.  The vice president of human resources stated that Eastman was not fired for violating the company’s drug policy but for unprofessional behavior.  Additionally, the executive director of human resources, who previously stated that Eastman was fired because of the company’s drug policy, now claimed that she was fired because of unprofessional behavior.  However, during his deposition, the executive director testified that Eastman was fired because she violated the company’s drug policy.   

Subsequently, ReSearch moved for summary judgment and ultimately, the court denied the motion.  Although ReSearch could have terminated Eastman for either her violation of the company’s drug policy or unprofessional behavior and likely both would have constituted legitimate reasons for termination (and would have been sufficient to grant summary judgment), since ReSearch was never clear as to why Eastman was fired and continually vacillated between the two reasons, the court determined that there was a genuine issue of fact and, thus, denied the motion.

Special thanks to Colleen Hayes for her contributions to this post.  For more information, please contact Nicole Y. Brown at .

Insurer Denies Law Firm’s Hurricane Sandy Claim for Loss of Business Income (NY)

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In the aftermath of Hurricane Sandy, many businesses in Manhattan’s Financial District suffered business losses due to flooding that made their buildings inaccessible because of lack of basic services such as electricity and heat.  One such company was the law firm of Lester Schwab Katz & Dwyer, who filed a claim against its policy with Great Northern Insurance Co. for $490,000 in loss of business income incurred from October 29, 2012 and the days following the storm.  Lester Schwab’s policy insured against loss of business income and expenses as a result of a covered peril and specifically contained a flood endorsement with $1,000,000 in coverage.

However, Great Northern denied coverage, and in its coverage opinion cited to the fact that the loss of power and communications suffered by Lester Schwab was due to damage to the underground utility electrical infrastructure caused by flood damage, which was not a covered peril.  Furthermore, Great Northern cited to the fact that the City of New York ordered an evacuation of Flood Zone A only, and since Lester Schwab’s office was located outside of Flood Zone A, there was no order of evacuation which prohibited access to its premises.

Lester Schwab’s complaint notes that an explosion at Consolidated Edison’s facility – which is a covered peril – caused the “Loss of Utilities.”  Moreover, Lester Schwab cites to the Flood Endorsement schedule in its policy, which did not delete coverage for the “Business Income with Extra Expense” coverage form that contained “Additional Coverage” for a loss sustained by “Loss of Utilities.”

This lawsuit was filed after an unsuccessful attempt at mediation.  It will be interesting to see how the court rules on interpretation of this policy, as it is arguable that there are other businesses with similar policies that could also bring suit.

Special thanks to Michael Nunley for his contributions to this post.  For more information, please contact Nicole Y. Brown at .

All Bark, No Bite (NJ)

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In Christen v. Wyka, New Jersey’s Appellate Court recently dealt with the issue of whether the owner of a barking dog that startles a passerby can be held liable for any resulting injury.  Christen was walking past Wyka’s house when his barking dogs startled her.  In response, she veered to her right and fell in a grassy area next to the sidewalk.  Christen acknowledged that there was no defect in the sidewalk that contributed to her fall.  Although Wyka’s dogs were kept in a fenced in yard with a “Beware of Dog” sign on the fence, Christen argued that Wyka was liable for her injuries because he failed to control his dogs and allowed them to jump on the fence and bark.  The court disagreed, noting that the dogs did not have a violent propensity and did not make contact with Christen.  The court further noted that a barking dog is one of many varieties of events that could startle a passerby, such as a shrieking toddler or sudden loud music from a home. Ultimately, the Appellate Court upheld the lower court’s decision to dismiss Christen’s complaint.

Special thanks to Heather Aquino-Obregon for her contributions to this post.  For more information, please contact Nicole Y. Brown at .

Even Trivial Defects are Hazardous When They are “Trap-Like.”

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In Shane v. Supernova New York Realty LLC, plaintiff tripped and fell on a step when his boot got caught in a space where two pieces of granite joined to form the step.  The two pieces of granite had a height differential of approximately one-half inch.  Defendant moved for summary judgment arguing that the defect was trivial.  In opposition, plaintiff submitted an affidavit from a human factors expert that stated that the defect was the type that could cause a person to catch his shoe.  That coupled with the fact that it was located in a heavily trafficked area that was not well-lit, caused the defect to become a “trap.”  The court held that the half inch height differential was “trivial” as a matter of law, however since the defect had characteristics rendering it “trap-like,” summary judgment was denied.

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Popped Lock or Not…Landlord Not Liable (NY)

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In Batista v. City of New York¸ the plaintiff testified that the lobby door leading to her apartment building could open with force and did not require the use of keys.  Nevertheless, the plaintiff testified that she used her keys on the day of the accident to enter the building.  She also observed two other tenants use their keys to enter the building.  After entering her building, two unknown assailants “popped” the door open, entered the lobby, and assaulted the plaintiff.

The First Department reversed the lower court’s decision and granted the Housing Authority’s motion for summary judgment.  The First Department held that the Housing Authority had inspected the door on the morning of the accident and found no defects with the lock.  The Court further held that the plaintiff failed to show that the Housing Authority had actual or constructive notice that the door/lock was broken between the morning hours and the time the accident occurred.  Finally, the Court noted that, once minimal security precautions against reasonably foreseeable criminal acts are in place—such as a working lock, liability can only be imposed if the landlord fails to timely repair any apparent defects.

Special thanks to Georgia Stagias for her contribution.

For more information, contact Denise Fontana Ricci at .

 

Dennis Wade Addresses Social Media In Claim And Defense Litigation for New York State Bar

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On October 10, 2013, Dennis is a presenter at the New York State Bar Association program entitled Law School For Insurance Professionals.  Dennis will be addressing Social Media In Claim Investigations And Defense Litigation.  Dennis’s submission is entitled:  A Carnival For the Skeptic: Using Social Media In Claim And Defense Litigation.  The brochure for the program is attached.  Dennis recruited Jill Huntley Taylor, Ph.D., a jury consultant and social media expert to help drive his presentation.

If you have any questions about the program or the materials, please call or email Dennis.