Monthly Archives: October 2013

Bathroom Surveillance Program Invades Privacy (NJ)

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Technology is supposed to make our lives more efficient, connected, and safer. Yet many new technologies have a darker side as well. The difficulty is deciding when our use of technology has crossed the line and invaded our cherished sense of privacy.

In Soliman v. The Kushner Companies, the New Jersey Appellate Division explored the contours of this brave, new world. In Soliman, the managers of a commercial office building received complaints from their tenants about vandalism and damage that rendered the bathroom facilities unusable. In response, the managers installed video surveillance equipment and concealed cameras inside the bathroom smoke detectors in effort to deter the vandalism and capture evidence against the alleged vandals. The managers claimed that the cameras were only focused on the wash basin areas and it was undisputed that the surveillance program was not made known to anyone entering the bathrooms through signage or otherwise.

A tenant’s employee discovered the monitoring operation when the employee opened a closet door that was inadvertently left ajar and found video monitors displaying live video feeds from the building’s four bathrooms. The police were called and the county prosecutor’s office investigated this discovery. Ultimately no criminal charges were filed related to the video surveillance operation.

Plaintiffs were employees of tenants and their families as well as others who had used the building’s bathrooms. They alleged that the defendants had invaded their privacy as well as intentionally or negligently inflicted emotional distress on them through the sub rosa video surveillance in the bathrooms.

The lower court seemingly accepted the building’s explanation that the monitoring was limited to the wash basin area and dismissed the case. On closer review, the Appellate Division reinstated the counts related to invasion of privacy and punitive damages. In short, the court concluded that “a rational jury could find that shielding the cameras from detection by placing them inside facially innocuous yet ubiquitous safety devices, such as smoke detectors, is more suggestive of a sinister voyeuristic purpose than a good faith attempt at combating vandalism.” A key factual point was the absence of any signs announcing that the area may be under video surveillance, thus undermining the defendants’ professed goal of deterrence and strengthening the plaintiffs’ claims that they had a reasonable expectation of privacy when using the bathroom.

Video surveillance is a powerful tool in the prevention and investigation of crime. However, bathrooms and other traditional areas of privacy are apparently poor venues in which to employ this intrusive tool.

If you have any questions about this post, please email Paul at 

Fraud Cases Against the Knoedler Gallery Move Forward (NY)

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We recently posted about the guilty plea by Glafira Rosales involving the forgeries sold through the Knoedler Gallery.  In a related civil action filed by art collectors, the federal court has recently denied a motion to dismiss the complaints and determined that most of the counts filed against the gallery and a former director, Ann Freedman, can move forward.

The outcome of the motion is not surprising, considering that, when determining a motion to dismiss, all of the allegations must be taken by the Court as if they were true.  And the complaint alleges many serious actions taken and misrepresentations made by the gallery and Freedman regarding the authenticity and provenance of the works in question.

For example, it is claimed that Freedman and the gallery were aware that forensic testing determined that certain paintings obtained by Rosales were forgeries, but that they decided to reject the expert’s conclusions and failed to disclose that information to potential purchasers.  For another work, it is alleged that Freedman and the gallery received a very negative report from the International Foundation for Art Research (IFAR), so the defendants decided to change their story about the origin of the work, and submitted no other works that they obtained from Rosales to IFAR.

The defendants continue to deny all of the allegations, so it will be interesting to see whether plaintiffs can provide any proof to these claims during discovery.  These defendants clearly offer a better chance than Rosales for a potential recovery, but plaintiffs will need strong support for their allegations of wrongdoing.

Please write to Mike Bono if you would like more information.

 

 

No Right to Jury Trial Under NJ Insurance Fraud Protection Act

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In Allstate New Jersey Ins. Co. v. Lajara, the Appellate Court was faced with the question as to whether the Insurance Fraud Protection Act (IFPA) provided the litigants with the right to a jury trial.

The defendants allegedly concocted an elaborate scheme to defraud the plaintiff insurers of millions of dollars in personal injury protection (PIP) benefits through treatment of bogus injuries and staged automobile accidents.  Upon discovering the scheme, the insurers filed suit under the IFPA.  Although the original complaint contained a demand for a jury trial, it was subsequently amended, dropping the demand.  The defendants, however, asserted a right to a jury trial, arguing that, though not expressly stated, the right is implicit under the New Jersey constitution.  The trial court denied defendants’ claim, resulting in appeal.

In upholding the lower court’s decision, the Appellate Court looked to the specific language of the IFPA and the legislative intent.  The Court determined that, as with other statutes, if the legislature had intended to create a right to trial by jury, it would have been included in the Act’s construction.  Importantly, the Court highlighted that the IFPA was designed in part to help insurers control the cost of fraud  — and that jury trials were not necessary to help with that goal.

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

Pending Criminal Case Allows Insurer to Delay Coverage Decision (PA)

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A pending criminal investigation or prosecution often complicates an insurer’s efforts to adjust the related insurance claim, and a Pennsylvania court recently held that a criminal investigation or prosecution could provide a reasonable basis for the delay of a coverage determination.

In Atwood v. State Farm, the plaintiff’s home was insured by State Farm. In February of 2012, federal authorities, led by the Drug Enforcement Agency (DEA) knocked down the door of the plaintiff’s home and the plaintiff and his family temporarily fled to avoid arrest.  During the time that they were absent, the home remained unsecured due to the front door having been knocked down. Multiple thefts and vandalisms occurred within the home, as well as a fire in March of 2012. In May of 2012, plaintiff, his wife and his parents were arrested in Colorado and criminal proceedings were commenced against the plaintiff in the Middle District of Pennsylvania.

The plaintiff made a claim for the damages sustained to his home but State Farm was unable to reach a coverage determination on the claim due to the related criminal proceedings, including a restraining order filed by prosecutor’s regarding disbursement of any insurance proceeds. Plaintiff then sued State Farm, alleging breach of contract and bad faith.

The court noted that to show bad faith, a plaintiff must either demonstrate that the insurer lacked a reasonable basis for denying benefits and knew or recklessly disregarded its lack of reasonable basis. Given that State Farm had not yet reached a determination on the plaintiff’s claims, those standards were not met.

The court further noted that while a plaintiff may also make a claim for bad faith if the insurer does not display a good faith investigation into the claim or fails to communicate with the client, those elements did not exist here because the reason for the insurer’s inaction was a pending criminal proceeding that prohibited the insurer from full access to investigate the property.  As a result, the court granted State Farm’s motion to dismiss.

Thanks to Thalia Staikos for her contribution to this post.  If you would like more information please write to Mike Bono.

Here Illegally? So What.

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In Lopez v. Sunrise One, a jury awarded plaintiff $1,706,714 for future medical expenses with the award intended to compensate plaintiff over 28 years.  Defendant Sunrise moved to set aside the award, contending the court improperly allowed testimony regarding plaintiff’s inability to work and improperly precluded admission of evidence of plaintiff’s immigration status.  The court granted defendants motion regarding future medical expenses, as it found the award was not supported by the evidence in the record. The court, however, reaffirmed its decision to preclude evidence of plaintiff’s immigration status, relying on Angamarca v. New York City Partnership Hous. Dev. Fund Inc., 87 A.D.3d 206 (1st Dep’t 2011). The trial court, following Angamarca, noted that the issue of citizenship lacked probative value as to the jury’s calculation of damages because no evidence was presented that plaintiff was planning to return to his native country or that deportation was imminent, and no additional evidence was proffered regarding the lower cost of future medical care in plaintiff’s native country.

While you can attack future medical expenses on a basic lack of proof, plaintiff’s status as an illegal alien cannot be used to attack an award of future medical expenses — or otherwise.

Thanks to Alison Weintraub for her contribution to this post.  For more information, please email Dennis Wade at .

Court of Appeals Cleans Up Labor Law Claims (NY)

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Labor Law § 240(1) was designed to protect construction workers from unsafe conditions, but plaintiffs’ attorneys often try to have as many claims as possible fall under the strict liability statute. Under Section 240(1), an owner or general contractor faces strict liability when an employee falls from a height while involved “in the erection, demolition, repairing, altering, painting, cleaning or pointing of a building or structure.” 

A source of controversy has been the “cleaning” category, as Labor Law claims have been made, for example, by an office cleaning person who falls from a desk while dusting.  The Court of Appeals recently recognized that the Labor Law is intended to have a limited scope, and provided a four-factor test under which courts can evaluate whether an activity actually constitutes “cleaning” within the meaning of the Labor Law in Jose A. Soto v. J. Crew, Inc., et. al. 

Plaintiff Jose Soto was an employee of a commercial cleaning company that was hired by the clothing store J. Crew to provide janitorial services.  Soto was dusting a six-foot high display shelf in the store when he fell from a four-foot tall ladder.  Soto brought an action against J. Crew and the owner of the building under Labor Law § 240(1). 

The trial court granted the defendants’ motion for summary judgment, ruling that Labor Law § 240(1) does not apply to “routine maintenance,” such as the dusting of a book shelf.  The Appellate Division, First Department affirmed the trial court’s decision.

The Court of Appeals began its decision by setting out the current legal landscape in respect of whether particular conduct qualifies as “cleaning” under the Labor Law.  The Court discussed its 2012 decision in  Dahar v. Holland Ladder & Manufacturing Company (which we examined in a prior post), in which a plaintiff was injured when the ladder he was standing on broke while he was cleaning a seven-foot high wall in a factory.  The Court in Dahar ruled that the statue did not extend so far as to protect an injury sustained while cleaning a product in the course of a manufacturing process. 

The Court then set out a four-factor test for courts to apply when evaluating whether an activity can properly be characterized as “cleaning” under the Labor Law.  The test examines whether a particular task: 1) is routine; 2) requires specialized equipment or expertise; 3) involves elevation risks comparable to typical household maintenance; and 4) aligns with the “core purpose” of the Labor Law which is to protect workers on a construction site.

Applying these factors, the Court found that Soto’s “cleaning” did not fall within the ambit of Labor Law § 240(1), as “[t]he dusting of a six-foot-high display shelf is the type of routine maintenance that occurs frequently in a retail store.”  The Court also noted that the elevation-related risks were comparable to that of a homeowner who is performing home maintenance.

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

Assumption of Risk Stands Strong (NY)

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In Cruz v. Longwood Central School District, the plaintiff was struck in the mouth by a softball thrown by a fellow student while participating in pre-game warm ups with her school’s softball team.  Seconds before being struck, Cruz had shut her eyes and raised her arm as she sneezed.  Cruz and her parents argued that the after-school supervisor’s temporary absence from the athletic field or his alleged lack of training was a proximate cause of Cruz’ injury.  The Second Department rejected these arguments and affirmed the lower court’s dismissal of Cruz’ claim on the basis of her primary assumption of the risk.  In doing so, the court noted that Cruz was struck so quickly that no amount of supervision could have prevented the accident.  The Second Department further upheld the longstanding doctrine of primary assumption of risk, noting Cruz voluntarily participated in the softball warm-up and, in doing so, consented to those injury-causing events, conditions and risks that are inherent in the activity.  Since Cruz was an experienced softball player, she knew the risks inherent in the activity and thereby assumed those risks of being hit by the softball.

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

 

Existence of Contract Alone Insufficient to Trigger Blanket Additional Insured Coverage.

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In Eliou & Scopelitis Steel Fabrication, Inc. v. Scottsdale Insurance Company, Scottsdale moved for summary judgment seeking a declaration that it did not owe defense or indemnification to a purported additional insured.

The general contractor hired Ebenezer to install fabricated steel beams at a construction project. Ebenezer ordered the beams from E&S, and plaintiff, an Ebenezer employee, was injured while unloading the beams from E&S’s truck. The only documents between Ebenezer and E&S with respect to this project were two purchase orders that did not contain additional insured language. Nonetheless, E&S sought additional insured coverage from Ebenezer’s carrier, Scottsdale, on the basis of a general indemnification agreement that was labeled “General Indemnification of Eliou & Scopelitis Steel Fabrication on All Jobs & At All Locations.” The agreement required Ebenezer to carry general liability insurance “whenever working on an Eliou & Scopelitis Steels (sic) Fabrication job site … [and] name Eliou & Scopelitis Steel Fabrication and the developer and/or owner of the subject job site as additional insured for the duration of the job.”

E&S sought additional insured coverage from Scottsdale based on the general agreement, and a blanket endorsement that named as an additional insured, any organization “whom you are required to add as an additional insured on this policy under a written contract, agreement or permit … That person or organization is an additional insured only with respect to liability arising out of … your ongoing operations performed for that additional insured as specified in the written contract, agreement or permit.”

The parties testified that typically, E&S was hired by a developer/owner for steel fabrication, and then E&S hired Ebenezer to install the steel it fabricated. In those situations, Ebenezer was E&S’s subcontractor. However, in this case, the roles were reversed. Ebenezer was hired by the general contractor to install steel beams, and Ebenezer ordered the materials from E&S. As such, the court found that in this case the liability did not arise out of Ebenezer’s “ongoing operations performed for [E&S],” but rather it was E&S who performed ongoing operations (i.e. steel fabrication) for Ebenezer. Accordingly, the court granted Scottsdale’s motion and held that it did not owe defense or indemnification to E&S.

Oftentimes blanket additional insured endorsements provide coverage “as per contract.” However, the specific language of the contract and endorsement must be read together to ascertain whether coverage will be available to the purported additional insured.

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The Hazards Of Walking On A Golf Course (NJ)

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In the recent unreported decision of Joseph Lareau v. Somerset County Park Commission, et al, Lareau filed a complaint for injuries sustained when he slipped and fell on wet indoor/outdoor carpeting while crossing a footbridge on a nearby golf course.  The golf course was only open to paying customers and was closed at the time of the incident.  Lareau was out for a walk on the golf course when the accident occurred.  The defendants made several arguments, including that Lareau was a trespasser on the premises; they did not breach any duty of care towards him to the extent that he was a licensee; and Lareau’s claims were barred under New Jersey’s Landowners Liability Act (LLA).

The trial court found that even if Lareau was a licensee, the defendants were not liable for his accident since there was no evidence that they breached a duty of care by failing to warn of a dangerous condition of which they had actual notice.  Moreover, the court found that the defendants were immune from liability under the LLA, which provides that an owner “owes no duty to keep the premises safe for entry or use by others for sport or recreational activities, or to give warning of any hazardous condition of the land or in connection with the use of any structure or by reason of any activity on such premises to persons entering for such purposes.”

The Appellate Court upheld the lower court’s ruling, noting that the LLA has been interpreted to afford immunity to “rural and semi-rural or open tracts of land”, such as the subject golf course.  The fact that the land has been improved so that it can be used as a golf course is irrelevant because the LLA provides that immunity applies to lands, regardless of whether they are improved or used for commercial purposes.  In conclusion, the court noted that extending immunity to the defendants under the LLA would encourage them to allow members of the general public to continue to have limited access to the course for some recreational use.

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

US Government Shutdown = More Contaminated Food?

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Having spent some of the last week in London (between deposition prep sessions) talking to people about the US (and, yes, with apologies to my partner and friend Mike Bono I did use apocalyptic political language), one question that has come up is — what effect does the shutdown (we’ll leave the debt ceiling discussion for a later post) have on the business I underwrite? Well, at least for the product recall market, it appears that the answer is — “significant.” A chicken related salmonella outbreak has arisen in California and, it appears that, even if the release of contaminated product is not the result of a lack of government funding, the government’s inability to respond may be.

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