Monthly Archives: January 2014

Lease Agreement No Sword or Shield In Personal Injury Claim by Tenant’s Employee (NY)

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When a tenant’s employee gets injured due to an alleged dangerous condition of leased property, there can be a tangled web of who is responsible.  The injured party will collect workers compensation from the employer, but then will often look to the property owner in civil litigation. Whether the owner is liable will turn in large part on what the lease says, in particular with respect to such issues as maintenance responsibilities and indemnification. However, even the lease may not be totally dispositive.

In Echevarria v 158th St. Riverside Dr. Hous. Co., Inc., the plaintiff sued the owner of property for injuries she sustained while attempting the repair of a crack in a terrace door.  She was hit by the door when it closed due to a gust of wind and knocked off of a stool.  Plaintiff was an employee of Gould Services, who leased the unit at issue from an unidentified nonparty to the action.

The owner of the building, Riverside, argued in a summary judgment motion that, pursuant to an occupancy agreement, it had no duty to repair the door. However, the occupancy agreement required Riverside to repair “partitions,” and the Court questioned whether the door could be considered a partition.  Additionally, there was evidence that Riverside had previously made repairs to that same door, suggesting that any provision in the occupancy agreement requiring the unit owner to repair the door might have been modified by the parties’ subsequent course of conduct. Irregardless of the language of the agreement then, Riverside had assumed responsibility to maintain the door.

Riverside also raised an issue as to notice.  However, the Court held that evidence that the plaintiff and her supervisor had reported the crack in the door to Riverside’s maintenance men and security guard about one month prior to the incident created a question of fact that precluded summary judgment.

On the other hand, the First Department granted summary judgment to the plaintiff’s employer on the basis of the workers compensation bar.  New York’s  Workers’ Compensation Law § 11 prohibits most third-party claims for indemnification against an employer for injuries sustained by an employee acting within the scope of employment, except when the employee has sustained a “grave injury,” or when there is a “written contract entered into prior to the accident or occurrence by which the employer had expressly agreed to . . . indemnification of the claimant”

Riverside argued that the occupancy agreement contained such an indemnification clause.  The problem was that the agreement was with Gould Foundation but the plaintiff was an employee of Gould Services.  Although Riverside sued Gould Foundation, it accepted an answer filed on behalf of Gould Services and never contested its relationship to the actual indemnitor.  The Court simply did not buy Riverside’s argument that the agreement was sufficient to bind the employer.  Thus, the appellate court affirmed summary judgment for the employer.

The lesson of the case is that while it is critical to understand the terms of a lease in such a case, the analysis does not end there.  The courts will look to the pattern of behavior of the parties to determine what responsibility each has to maintain the premises.

Special thanks to Johan Obregon for his contribution.

For more information, contact Denise Fontana Ricci at .

Think before you sue… at least about whom you are suing (NY)

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One would think that some basic investigation would be done prior to filing a complaint – if for no reason other than to establish exactly whom to sue.  Apparently the failure to do so in Holtzman v. KTB Athletics SB ™ led ultimately to a dismissal of the action.

In that personal injury litigation, the plaintiff moved for default when the defendant failed to answer.  The motion was granted in Kings Supreme.  The Court then denied the defendant’s motion to vacate the default order as well as its motion to dismiss.

When the Second Department further considered the merits of the motions, it reversed. The appellate court found that not only had the plaintiff failed to demonstrate proper service but also failed to demonstrate that the defendant was a “jural entity amenable to suit.”  The Court did not expand upon why KTB Athletics was not a legal entity subject to process, but for the plaintiff’s purposes, defective service upon a legally unrecognized entity rendered both the default judgment and the complaint defective.

It is no secret that some sue first and ask questions later, but this case opens the possibilities when there is an utter lack of care to correctly identify the legal parties involved in a claim.

Special thanks to Brian Gibbons for his contribution.

For more information, contact Denise Fontana Ricci at .

Neither Ice, Nor Rain, Nor Snow… Will Impart Liability On a Cautious Driver (NJ)

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In this season of ice and snow, the question of whether a driver is responsible for loss of vehicle control due to these conditions is particularly timely.  In fact, the mere fact that an automobile skids on an icy roadway does not infer negligence.  Since negligence may not be presumed and must always be proven, evidence of this alone is not sufficient to support a claim.

In Howell v. Cross-Burgos, New Jersey’s Appellate Division affirmed summary judgment granted to a woman who lost control of her vehicle as she traveled down the middle lane of a highway.  She could not recall how fast she was travelling but did not believe that she had been speeding.  However, when she hit a particularly icy stretch of highway, her vehicle spun out.  It came to rest along the left shoulder of the road without making contact with anything.

The plaintiff came upon the defendant’s vehicle shortly afterwards and stopped to assist her.  He verified that she had no damage to her car and helped her move to the right shoulder of the road.  As they were about to leave the area, another vehicle lost control and sideswiped the defendant’s car.  At this point, the plaintiff began to walk down the road to give warning to other drivers when a truck lost control and hit the plaintiff.

In affirming summary judgment, the court found that there was simply no evidence of negligence on the part of the first driver.  The court recognized that even the most cautious of drivers could lose control due to icy conditions.  Unless there is evidence that the driver failed to take reasonable precautions, negligence cannot be presumed.

Although the plaintiff argued that the rescue doctrine should also implicate the driver, the court found that this doctrine only applies when the initial act that created the peril from which rescue is attempted is caused by negligence.  Here there was no such proof of negligence.

Though it would be nice to stay off the roads when weather threatens, the Court recognizes that it is not possible in our society for everyone to remain home at the slightest threat of bad weather.

For more information contact Denise Fontana Ricci at .

Do Subrogation Clauses Need to Be Strengthened?

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While there are always questions regarding the insured’s willingness to cooperate in a subrogation lawsuit, there has, until now, been little doubt that the subrogation clauses in insurance policies are sufficient to protect an insurer’s interests. This status quo has been called into question by the case of Chubb Custom Insurance Co. v. Space Systems/Loral, LLC, et al., a 9th Circuit case, which the US Supreme Court denied certiorari on earlier this week.

The facts of the case are as follows.

Chubb insured Taube-Koret, a retirement home that was located on polluted land formerly owned by Sun Microsystems Inc., Ford Aerospace & Communications Corp. and others. Taube-Koret, although it did not cause the problem, was ordered to clean up the pollution on the property pursuant to the provisions of the Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). Chubb paid for the cleanup and then attempted to recover the costs from the original polluters under CERCLA Section 107.

A California federal judge dismissed the claims and the 9th Circuit affirmed. The basis for the dismissal was the courts’ conclusion that CERCLA Section 107 does not allow direct subrogation claims and that therefore the only way an insurer can recover its costs via subrogation is under CERCLA Section 112 that requires the claimant (i.e. the insured) to demand compensation from Superfund or a liable party. Because Taube-Koret never personally made such a claim, the dismissal was warranted. The Supreme Court’s instant refusal to hear the case means that the 9th Circuit’s decision is binding.

Why is all of this important? Because, under this case law, to have a viable pollution subrogation claim, an insurer must first instruct its insured to prosecute a claim again the culpable parties, which, of course, means that the insurer cannot have first paid the claim – otherwise there would be no damages. Even if permissible under the wording of a typical insurance policy (which is doubtful), it seems highly unlikely to expect an insured to first attempt (at its own cost) to sue a polluter before its insurance claim is paid. So, thought will have to be given to how policy wording can be changed to remedy this – perhaps (as in crisis management policies) insurer paid legal counsel can be assigned at first reporting to assist with the prosecution?

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

Construction Contracts and Public Nuisance in NY.

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Back in the days when Karen Carpenter was queen of the music world, the New York Counties of Nassau and Suffolk (i.e. Long Island) decided to embark upon a major sewer construction project. Any number of contractors were hired to tear up roads and lay down pipes. The work continued until the mid 1980s, when Michael Jackson was king (amazing how musical tastes can change).

In approximately 2009, the towns where the work was done began to receive complaints that the roads where the pipes had been laid had sunk into the ground and otherwise suffered problems. The townships, including lead plaintiff Oyster Bay, then began a series of lawsuits against any number of defendants. [Full disclosure – we represented one of the defendants in the lawsuits and therefore fully participated in all that you are about to hear (including the Court of Appeals arguments)].

The obvious problem that the townships faced was the statute of limitations, since the work ended many, many years ago. To get around this problem, the townships pleaded a continuing public nuisance cause of action. The trial court dismissed the complaints and the dismissal was twice affirmed by the Second Department, an intermediate court of appeals. NY’s Court of Appeals then took up the case. In a lengthy decision (with a concurring opinion), the Court unanimously affirmed the dismissal. Two issues were addressed by the Court.

First, the Court was asked to determine whether the townships only had six years after “substantial completion” of the work to file a lawsuit. The townships argued that they were not bound to the substantial completion rule because they were not parties to the contract. Five members of the Court of Appeals disagreed with that argument and instead held that because the townships were beneficiaries of the contract, they had six years from “substantial completion” of the work to commence defective construction (and resulting property damage) claims.

Second, the Court, in a case of first impression, had to specify what the elements of a continuing public nuisance are. All members of the Court held that to make out a prima facie case of continuing public nuisance both the acts and the damages must be continuing. Here, the Court ruled that only the damages were alleged to have continued (as the acts were conceded by all parties to have ended in approximately 1986), and thus the tort could not be made out.

This decision is obviously welcome news for contractors and their insurers. If the Court had changed the law through this case, construction defect claims would have effectively been converted into endless long-tail exposure cases.

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

We Spoke Too Soon…

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At the end of the summer, we advised you that American football (is there any other kind?) had been saved. We spoke too soon. The settlement deal has been blocked by a Philadelphia federal court and it now seems likely that the deal will fall apart. If that happens, and discovery goes forward, we imagine that discovery will focus on the issues we highlighted in our Gipper essay. This could be bad news for youth athletic leagues, educational institutions and their insurers as the big stakes NFL litigation will lay out the roadmap for all future litigation. We’ll continue to monitor the situation as it develops.

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

Hurray for the USA!

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We have previously commented on the lack of personal space in London offices. Now there is a new reason to question the efficacy of the open floor model – apparently open floor office “commotion impairs workers’ ability to recall information, and even to do basic arithmetic.” So, yet again, there is scientific proof that the bigger American way is better.

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

Your Car Knows What You Are Doing.

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We often think of privacy breaches in the context of lost, stolen or hacked credit cards. We think of things like the recent Target data breach. What we often forget to think of is things like the location service devices inside our smartphones, or our cars. As this recent NYT article makes clear, car manufacturers are collecting substantial amounts of information about you — they’re just not telling you about it. Legislation is on the way to address the issue, but all this legislation is likely to do is increase the potential for lawsuits. We’re aware of this potential at WCM and it’s why we’ve begun to certify our lawyers as IAPP professionals and have created our Privacy, Cybersecurity and E-Discovery practice group.

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

Lack of Payment Dooms Suit Against Lawyers (PA)

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The relationship between CD Realty and Colliers, Lanard, & Axilbund, soured when CD Realty failed to pay Colliers commission that was due pursuant to an agreement to sell commercial property.  Colliers sued CD Realty, and CD hired the firm Riley Riper Hollin & Colagreco to represent them in this underlying suit.

The firm was unsuccessful in trying to argue that the agency agreement between the parties was unenforceable, and after a bench trial Colliers was awarded $421,933.  Unhappy with the award, CD decided to bring a malpractice action against its lawyers.  Among other claims, CD alleged that its lawyers didn’t adequately discuss its settlement options.

The Court granted summary judgment to the lawyers basing its decision, in part, on the fact that testimony showed Colliers was unwilling to settle the case for lower than the amount of the award.  Instead, the lowest amount it would have taken during settlement was $700,000, which was considerably higher than the award.

In addition, despite its apparent unhappiness with the award, a third party, Silver Lake Office Holdings, paid the judgment without requiring any repayment by CD Realty.  As a result, CD Realty did not actually suffer a loss as a result of their claims, and could not sustain an action against its attorneys.

Thanks to Thalia Staikos for her contribution to this post.

 

Anonymous Art Auction Bidding Can Continue in New York

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We previously posted about  Jenack Inc. v. Rabizadeh, a decision that threatened auction anonymity in New York.

The defendant submitted an absentee winning bid of $400,000 for an antique Russian box to the plaintiff, William J. Jenack Estate Appraisers and Auctions, Inc.  The “clerking sheet” that recorded the transaction identified the consignor of the work by a numeric code, in order to maintain his or her anonymity.  Plaintiff subsequently invoiced defendant, but defendant, for whatever reason, never paid for the antique.

The auction house then sued the winning bidder, and both parties moved for summary judgment, with plaintiff prevailing.  However, on appeal, the Second Department sided with the defendant, finding that the statute of frauds, which requires certain contracts to be in writing, was violated.

New York General Obligations law §5-701, requires, among other things, that a written agreement for goods sold at a public auction list the name of the purchaser and “the name of the person on whose account the sale was made.”  The Appellate Division held that the number on the clerking sheet was insufficient and violated the statute of frauds.  Thus, plaintiff could not enforce the sale, and summary judgment was awarded to the defendant.   Based on this decision, if an auction house wanted to enforce a sale, it needed to reveal the name of the consignor to the purchaser.

The Court Of Appeals recently heard the case, and reversed the Appellate Division.  The Court pointed out that separate writings can be pieced together to satisfy the statute of frauds, finding that the clerking sheet clearly linked up to the absentee bidder form, which spelled out all of the purchaser’s details.  In addition, the Court found that the actual owner/seller does not need to be identified either, because naming the auctioneer, as agent for the seller, was sufficient.  As a result, the statute of frauds and New York’s statute on auctions were satisfied.

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