Monthly Archives: December 2013

United States Supreme Court Rejects Attempt To Upset WCM’s Win In $25 Million Art Loss

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On November 6, 2013, in Renaissance Art Investors, LLC (“RAI”) v. AXA Art Insurance Corp., the United States Supreme Court denied RAI’s petition for a Writ of Certiorari, bringing to a close a coverage battle that stemmed from the collapse of the Salander O’Reilly Art Gallery.

In March 2010, the now infamous art dealer Larry Salander pleaded guilty to a $120 million fraud scheme, admitting to stealing numerous works of art.  Renaissance Art Investors LLC claimed that it was entitled to coverage for Salander’s theft of approximately $25 million in artwork under insurance policies issued by AXA Art Insurance Corporation.

RAI consigned its artwork to Salander, a principal of RAI, and the Salander O’Reilly Galleries LLC, a member of RAI.  Ultimately, Salander and the Gallery betrayed RAI, stealing artwork valued at over $42 million.  RAI made a claim to AXA under its commercial inland marine insurance policies, seeking indemnity for the theft.  Litigation followed and the trial court awarded summary judgment in AXA’s favor, finding that there was no coverage for the loss under AXA’s policies.

In a unanimous decision, the Appellate Division, First Department, that the AXA policies contained unambiguous dishonesty exclusion.  The exclusion precludes coverage for losses arising from the dishonesty of an insured, anyone with an interest in the property, or anyone to whom the covered property is entrusted.  The Court held that this policy exclusion applied to both Salander and the Gallery, who were entrusted with the artwork.

The First Department affirmed the trial court’s decision, holding that as a matter of law, insurance coverage only extends to fortuitous losses, even under all-risk policies.  The Court explained that whether there was a fortuitous loss is a legal question to be resolved by a court.  Applying this standard, the Court held that the fraud perpetrated by Salander and the Gallery, which resulted in the loss, was not fortuitous.

The Court of Appeals (New York’s highest court) refused leave to appeal from the First Department’s unanimous decision.  RAI then sought review from the United States Supreme Court, citing conflicts in authority on procedural and jurisdictural issues.  But the top court in the land rejected RAI’s petition.  And so, WCM’s summary judgment win stands after levels of judicial scrutiny rarely seen in insurance cases.

Trivial Sidewalk Defect Is A Question For The Jury (PA)

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In Shaw v. Thomas Jefferson University and City of Philadelphia, the plaintiff fell on a sidewalk at Thomas Jefferson University.  Shaw filed a complaint against the University and the City of Philadelphia alleging that there was an irregularity and/or unsafe condition in the sidewalk that caused her to fall and injure herself.  During her deposition, Shaw testified that her view of the sidewalk was unobstructed and that she was not looking down at the time of her fall.  She further testified that following her fall she visited the site of the accident to measure the sidewalk and noted that there was a 2 to 2½ inch elevation change from one segment of the sidewalk to the next.

The University and the City both filed motions for summary judgment claiming they were not negligent because, among other things, the sidewalk defect was trivial.  The trial court granted both motions and dismissed all claims against both defendants.  On appeal, Shaw argued that the trial court erred by determining that the defect in the sidewalk was trivial and not a question for the jury.  The appellate court noted that it was well-settled that a sidewalk defect may be so trivial that a court must hold, as a matter of law, that the property owner was not negligent in allowing it to exist; however, it also noted that there was no bright-line rule that can be used to determine “the depth of size of a sidewalk depression necessary to convict an owner of premises of negligence in permitting its continued existence.”  As such, the court agreed with Shaw that summary judgment should not have been granted because no bright-line rule exists for a court to use in determining whether a sidewalk defect is trivial.  The court further held that this was a question that should have been submitted to a jury.

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

Prejudicial Summation Results in Mistrial (NY)

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In Carter v. Antwi, the infant plaintiff was a passenger in a vehicle owned and operated by Merlene and Fred Carter, respectively.  The infant plaintiff allegedly sustained injuries when the vehicle he was in collided with a vehicle that Diana Antwi owned and Jason Sandy operated.  In addition to Antwi and Sandy, Fred Carter was named as a defendant in the resulting lawsuit.

The case eventually went to trial during which Sandy gave direct testimony, but failed to return to court for cross-examination.  Consequently, the court struck Sandy’s testimony, but permitted the parties to read from his deposition transcript.  A key issue arose in that the certified police accident report documented Sandy telling the responding police officer that he did not know the light was red and that he had lost control of his vehicle.  However, Sandy’s deposition testimony contradicted the report.

Prior to closing arguments, Carter settled the case with Antwi and Sandy, both of whom were then absent for the remainder of the trial.  Nevertheless, for purposes of apportionment, the question of Sandy’s negligence was submitted to the jury.   Prior to summations, defense counsel asked the trial judge about addressing Sandy’s stricken testimony and his absence from the balance of the trial.  The judge ruled that he would remind the jury f Sandy’s stricken testimony and that the testimony was stricken because all attorneys did not get to question him.  The judge further admonished the jury not to speculate as to why counsel for Sandy and Antwi were not present for the remainder of the trial.

Despite the judge’s ruling, defense counsel addressed Sandy’s stricken testimony and the absence of both Sandy and his counsel from the courtroom.  Counsel referenced the “empty chairs” and further stated that the police report that reflected Sandy’s contradictory statements was the reason Sandy was no longer in the case.  The judge interrupted summations and admonished defense counsel outside of the jury’s presence.  The plaintiff’s attorney moved for a mistrial due to the prejudicial nature of defense counsel’s summations.  The judge reserved decision and gave a curative instruction regarding the references to Sandy during summations.  The jury ultimately found that Carter was not negligent and plaintiff renewed the motion for a mistrial.

In granting the mistrial, the court admonished counsel for directing the jury to consider a matter that was expressly not to be considered – Sandy and his attorney’s absence from the courtroom – and suggesting that their absence was due to Sandy’s admission of fault in the police accident report.  Despite the curative instruction, the court noted that counsel had implied that a settlement with Sandy was reached due to his admission in the accident report and that this was the reason Sandy and his counsel were not present in the courtroom.  The court ruled that the comments were sufficiently prejudicial to the plaintiffs and that a new trial was warranted.

This decision serves as a warning that there is a fine line between being a zealous advocate for your client and ignoring the court’s express instructions.

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

Purpose For Truck Use Determines Whether Coverage Limit In Safety Regulation Applies (NJ)

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In Allstate Insurance Company v.  Penske Truck Leasing, the court considered whether a registered interstate motor carrier was required to maintain $750,000 in coverage on a truck that was operated by an individual renter for a personal purpose.

Meir Dorfman rented a truck from Penske, a registered interstate motor carrier.  Penske had motor vehicle insurance with a limit of $1 million in coverage through Old Republic.  The Old Republic insurance policy contained a step-down provision for leased vehicles that provided liability coverage as for lessees and renters of covered autos as insureds, but only to the extent and for the limits of liability agreed to under their contractual agreement with Penske.  Dorfman opted for the limited liability coverage that Penske provided in the rental agreement in the amount of $15,000/$30,000.  However, Dorfman failed to purchase supplemental liability coverage and did not have any personal coverage.

While driving the truck in New Jersey, Dorfman was involved in a motor vehicle accident that caused injuries to Carmen Quinones, the driver of the other vehicle, and two passengers in Quinones’ vehicle.  Allstate, Quinones’ automobile carrier, paid PIP benefits to the three occupants of Quinones’ vehicle and the defendants settled the three lawsuits brought by the three injured individuals for a total sum of $30,000.  Allstate then sought reimbursement from Old Republic for the PIP benefits it had paid.

Old Republic claimed that it did not have to reimburse Allstate since Old Republic had exhausted its policy limits.  Allstate argued that since the truck was a registered interstate motor carrier Penske was required to maintain $750,000 in coverage under the Federal Motor Carrier Safety Regulations.  These regulations set the minimum levels of financial responsibility as $750,000 for all for-hire motor carriers of nonhazardous property.

The court found that, since Dorfman was using the truck for personal reasons, was not working as an interstate motor carrier and was not transporting any property for pay, the Federal regulation mandating $750,000 in coverage did not apply.  Accordingly, the court determined that since Old Republic had exhausted its policy limits, Allstate was not entitled to reimbursement of PIP benefits.

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

New Jersey Tolerates Mulligans

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Here, in America, among friends, mulligans are part of the game.  In fact, President Clinton refused to count “do-overs” when calculating his score.  In Scotland, by contrast, a mulligan off the tee, even among friends, is known as “Hitting Three.”

In Schick v. Ferlito, the New Jersey Supreme Court ruled that taking a mulligan when another golfer was in the “line of fire” (and failing to yell fore) constituted “reckless” conduct, and thus liability attached.  In other words, in the context of recreational sports, to constitute a tort, conduct must exceed the level of ordinary negligence.

A recent New Jersey decision, Corino v. Duffy, et. al., seemingly endorsed the free grant of mulligans among playing partners.  Corino suffered a serious eye injury after being struck by a mulligan sliced off the tee box adjoining the fairway on which Corino was playing.  According to Corino, he carefully watched the threesome on the adjoining tee hit their drives.  Unaware that Duffy’s playing partners allowed Duffy to take a mulligan, Corino took dead aim on his iron shot to the green, only to be struck by Duffy’s mulligan.

In light of Schick, Duffy sued the threesome claiming that all three engaged in reckless conduct by allowing a mulligan in the first instance, and then failing to yell fore as Duffy’s shot sliced toward Corino.  As the matter unfolded, Duffy’s playing partners turned against him, claiming that Duffy struck the mulligan that injured plaintiff, and that they had no duty to yell fore.  The trial court agreed.

Reading the Rules of Golf strictly, the court ruled that only the “player” who strikes the errant shot has the duty to yell fore.  Beyond that, the court suggested that only a jury could make a determination of whether Duffy’s failure to yell fore constituted reckless conduct.  Presumably, the court felt that, unlike Schick, Corino was not directly in the “line of fire,” and thus presented a much closer question of fact.

While it’s true that the Rules of Golf impose upon the player the duty to yell fore when an errant shot is struck, the rules also mandate that the ball must be played as it lies.  If Duffy had followed the rules, Corino would have played on without injury.  And that is the irony of New Jersey’s golf jurisprudence.

 

Bikini Top “Emergency” Averts Liability for Fatal Crash (NY)

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In a 3-1 decision, the Appellate Division, Second Department recently upheld a trial court’s decision declining to set aside a defense verdict in favor of a driver who caused a fatal accident after a passenger in her vehicle undid the driver’s bikini top thereby exposing her breasts.

In Pelletier v. Lahm, Brittany Lahm was driving her vehicle on the New York Thruway when her passenger, Brandon Berman, suddenly pulled the strings on Lahm’s bikini top, thereby causing it to fall.  Lahm reacted by taking her hands off the steering wheel for a split second to cover herself.  While her hands were off the steering wheel, the car suddenly veered to the right.  When she tried to correct this, she lost control and the car struck the center guardrail, flipped over and came to rest upside down in the southbound lanes, killing the plaintiff who was also a passenger in Lahm’s car.

After testimony, the court charged the jury on the “emergency doctrine.”  Under New York law, the “emergency doctrine” recognizes that when an actor is faced with a sudden and unexpected circumstance which leaves little or no time for thought, deliberation or consideration, or causes the actor to be reasonably so disturbed that the actor must make a speedy decision without weighing alternative courses of conduct, the actor may not be negligent if the actions taken are reasonable and prudent in the emergency context.

Unexpectedly, the jury came back with a defense verdict in favor of Lahm, finding that her reaction to her bikini top suddenly being undone was reasonable.  The plaintiffs moved to set aside the jury’s verdict and the trial court denied the motion.  In upholding the decision, the Appellate Division found that the trial court properly charged the jury with the emergency doctrine because there was a reasonable view of the evidence supporting the occurrence of a qualifying emergency that was not of Lahm’s doing, which left it in the hands of the jury to determine whether there was an emergency and if so, whether Lahm’s actions were reasonable and prudent.

This case demonstrates the wide latitude with which the emergency doctrine can be used as a defense to negligence.

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

Affidavit Tailored for Summary Judgment Motion Won’t Overcome Prior Testimony

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In Scafe v. Schindler Elevator Corp., elevator doors quickly slammed shut and trapped plaintiff’s hand.  Schindler, the exclusive elevator maintenance contractor moved for summary judgment arguing that it did not have notice of a specific defect with doors slamming.  However, Schindler’s documents contained numerous references to recurring problems, some of which may have inferred prior problems with the doors.  To get around the records, Schindler submitted an employee affidavit in which he claimed he had personal knowledge of inspecting the elevator on the date of the accident, and presumably found no defects.  However, given that the affidavit was improperly tailored to overcome prior deposition testimony, it could not establish defendant’s prima facie entitlement to summary judgment.

The lesson here is that witnesses must be prepared to testify as to specific inspections performed at/around the time of the plaintiff’s accident.  If the appropriate testimony is not elicited during opposing counsel’s deposition, it may be necessary to question your own witness at the conclusion of your opponent’s questioning.

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