First Department Rules Insurer Must Defend Asbestos Claims (NY)

The First Department recently upheld a trial court decision requiring American Home Assurance Co. (“American Home”) to defend the Port Authority in several underlying asbestos claims in American Home Assur. Co. v Port Auth. of N.Y. & N.J.  In 1966, American Home issued a liability policy to the Port Authority relating to the construction World Trade Center complex, then known as the WTC Hudson Tubes Project.  The policy covered the Port Authority, as well as the site’s contractors and subcontractors, for liability that “arises out of … all operations … during the policy period in connection with the construction of the project.”  In 1975, American Home sent the Port Authority a notice of cancellation, effective February 1976.

Mirroring a nationwide trend, the Port Authority began experiencing a deluge of asbestos-related claims in the 1980s.  American Home defended the Port Authority and several contractors, in thousands of underlying asbestos cases, incurring more than $30 million worth in costs and settlements.  The present litigation began in 2012, when American Home filed a declaratory judgment action contending that the pending asbestos claims did not occur during the policy period. Specifically, they argued that for coverage to be triggered, a diagnosable disease needed to exist during the policy period, which was not the case in the underlying actions.

The trial judge ruled against American Home, holding that “during the policy period” modified the actual project operations, regardless of when the injuries began.  The judge further held that American Home could not rely on a $10 million per occurrence limit for “spray on fireproofing” because the alleged exposures occurred in a variety of ways.  Lastly, the court held that the defense costs were not subject to the policy limit, holding that the policy provided “litigation insurance” which survived the exhaustion of the policy limit.

On appeal, the First Department affirmed the majority of the trial court’s ruling.  The court held that the “plain language” of the policy “means that the policy covers injuries that result from operations that occurred during the policy period.”  Therefore, the policy provided coverage regardless of when the injury was diagnosed.  Further, the court held that the “spray on fireproofing” limit was not applicable because the claims did not arise from a single occurrence under the policy.  Notably, the court held the trial court erred in finding that the duty to defend survives exhaustion of the policy’s liability limit, as “[t]he policy explicitly provides that defense costs are subject to that limit.”  American Home could take solace in the First Department’s final ruling, as the defense costs for the pending asbestos claims could amount to further millions in costs.

Thanks to Doug Giombarrese for his contribution to this post.


Does An Email Exchange Constitute Enforceable Settlement Agreement? (PA)

In Hatchigan v. Kaplin, the Pennsylvania Court of Common Pleas analyzed whether an email exchange resulted in an enforceable settlement agreement.  In brief, the plaintiff filed a lawsuit.  Subsequently, following an exchange of telephone conversations, defense counsel sent an email to the plaintiff offering a settlement amount and also sought a general release and dismissal of the plaintiff’s lawsuit.  Plaintiff’s counsel responded to the email stating “Agreed and accepted.  Plaintiff will end, discontinue, settle accordingly to the defendants’ conditions …”.

In response to the plaintiff’s email, defense counsel drafted a release, noting that the settlement was based on the prior exchange of emails, which the plaintiff signed.  Upon receipt of the signed release, defense counsel requested that plaintiff have his signature notarized.  At which time, the plaintiff advised he no longer agreed to the settlement.  The defendants moved to enforce the settlement.  Ultimately, the court found the agreement to be enforceable.  The court reasoned that in their emails the parties agreed on the essential terms of the settlement, which formed a valid and enforceable contract.

Accordingly, this case reveals that Pennsylvania courts may look to the communications between parties to determine if an enforceable settlement has been reached.

Thanks to Collen Hayes for her contribution to this post.


Does Facebook Friendship Warrant a Judge’s Recusal? (NY)

As social media has become more integrated with our lives over the past twenty years, a myriad of legal issues have come to light ranging from the discoverability of social media records to, now, whether Facebook activity can support a request for judicial recusal.

In Law Offices of Herssein and Herssein PA et al. v. United Services Automobile Association, the Florida Supreme Court ruled 4-3 the mere existence of a Facebook friendship between a judge and an attorney, by itself, is not sufficient to support a demand for recusal.  The Court reasoned judges and attorneys have long diligently exercised discretion in recusal when personal connections exist, and that recusal has always been warranted when the friendship surpasses mere acquaintance.  Mindful of the need to preserve judicial integrity, the Florida high court expanded that social media records could constitute grounds for recusal provided there is ample evidence of social contact between the judge and an attorney or fact witness.

Justice Labarga, who concurred with the majority, penned a short opinion in order to underscore concern over the appearance of judicial impropriety.  While a social media “friendship” may be innocuous, Justice Labarga argued the safest course of action for judges would be to not engage in social media at all, or, failing that, to carefully limit friendships to close friends and family.

The dissent disagreed with the majority’s analogizing of social media and real life friendships, and urged instead a standard prohibiting judges from friending attorneys on social media.   The dissent relied upon a local district court’s decision and the Florida Judicial Ethics Advisory Committee’s opinion recommending staunch regulation of judicial use of social media.  As social media has rapidly become the leading form of communication, the dissent notes many users share ideological musings or newspaper articles.  The mere review of such postings, of which there may be no evidence, could infringe on the impartiality of the judge.  Further, the friend is privy to all sorts of personal information about the judge.  The dissent expressed concern that litigants or their attorneys may seek to curry favor by means of social media and thus determined the reasonable course of action was to either require recusal in all cases in which there is a friend relationship or simply ban judges from social media.

Both the majority and dissent express the same valid concerns, but reach radically different results.  The common overlap, though, is that litigants have the reasonable expectation that any significant personal relationship will be disclosed either for waiver of any conflict or as sua sponte grounds for recusal.  In any case, to the extent no such disclosure was forthcoming, we should be mindful that social media records could map out the extent of an undisclosed relationship and should be used to support a demand for recusal.

Thanks to Chris Soverow for his contribution to this post.

Charitable Organizations in New Jersey Can Play Ball if the Sport is Supervised (NJ)

C.H. v. Rahway Board of Education, a recent decision from the New Jersey Appellate Division, involved a plaintiff-student who got injured while playing in a student-teacher fundraising basketball game.  Plaintiff collided with a teacher during the game when they both jumped up for a rebound.  She injured her knee as a result.

The trial court granted summary judgment to defendants since plaintiff presented no evidence of negligent supervision, nor was there any evidence that the teacher acted recklessly or intentionally.  On appeal, plaintiff argued that the teacher owed her a duty of supervisory care and that there were material fact issues as to whether the teacher acted recklessly.  The court disagreed since plaintiff’s description of the incident showed that the teacher did not act recklessly or intentionally and there was no showing of a breach of the duty to supervise.  Moreover, the game was officiated by a referee, additional supervision was provided by five teachers who did not participate in the game and there were no facts showing the game was being played in a reckless or out of control manner when plaintiff was injured.

This decision is yet another step in New Jersey toward virtually eliminating a host or sponsor’s potential liability for supervised recreational or sporting events involving voluntary participants.

Thanks to Michael Noblett for his contribution to this post.




Hills and Ridges Doctrine (PA)

Winter can be dreadful to some people especially with the accumulation of snow.  In Smith v. Riverside, the Court invoked the hills and ridges doctrine to disclaim liability for a slip and fall.  In Smith, the plaintiff slipped and fell on ice when he walked up the ramp at the entrance to the Riverside Rehabilitation Center.  A severe snowstorm had begun as plaintiff traveled to Riverside and was ongoing at the time of the accident.  The Plaintiff argued that the Defendant negligently allowed snow to accumulate on the property.  The Defendant filed for summary judgment based on the hills and ridges doctrine which is an exception to negligence liability.

In Pennsylvania, to establish a negligence claim the plaintiff must demonstrate: (1) that snow and ice had accumulated on the sidewalk in ridges or elevations of such size and character as to unreasonably obstruct travel and constitute a danger to pedestrians travelling thereon; (2) that the property owner had notice, either actual or constructive, of the existence of such condition; (3) that it was the dangerous accumulation of snow and ice which caused the plaintiff to fall.  Rinaldi v. Levine, 176 A.2d 623, 625 (Pa. 1962).  The hills and ridges doctrine protects the owner or occupier of land from liability for generally slippery conditions resulting from snow and ice where the owner has not permitted the snow and ice to unreasonably accumulate in the ridges or elevations. Harmotta v. Bender, 601 A.2d 837.  The rationale behind the hills and ridges doctrine is that requiring one’s walkways to be always free of snow and ice would impose an impossible burden in light of local climatic conditions during the winter.

The Court found that the hills and ridges doctrine applied because the snowfall was ongoing when the accident occurred, further, because there was no evidence that the Defendant had let the snow unreasonably accumulate.  In the winter months it is important for insureds to evaluate the weather conditions and the condition of their property to invoke this doctrine to escape liability.  Here, the Court was persuaded by the fact that the storm was still ongoing which bolstered the Defendant’s claim that it acted reasonably with regard to snow removal.

Thanks to Malik Pickett for his contribution to this post.

The Olin Litigation Saga Comes to a Close (NY)

Judge Rakoff of the SDNY recently authored the (likely) final chapter of what the Court itself described as “this interminable litigation,” agreeing with Certain Underwriters at Lloyd’s position that the terms of an executed Settlement Agreement with Plaintiff Olin imposed a pro rata allocation upon all implicated London policies, as opposed to joint and several liability.

In Olin Corporation v Certain Underwriters at Lloyds London, Olin, a manufacturing company, operated at site in Morgan Hill, California for forty years, from 1956 to 1996.  The “interminable litigation” involved insurance coverage for the remediation of property damage caused by Olin’s operations.  Underwriters’ had issued excess insurance policies to Olin most of which included the following Condition C:

It is agreed that if any loss covered hereunder is also covered in whole or in part under any other excess Policy issued to the Assured prior to the inception date hereof the limit of liability heron…shall be reduced by any amounts due to the Assured on account of such loss under such prior insurance.

Olin had argued that this provision meant that each policy should be liable up to its limits for all of the property damage as long as some portion of that damage took place during the policy’s effective period.  The Second Circuit agreed with Underwriters, though, and held that an “allocation” approach applied, where each policy provided coverage for only that property damage that could be directly attributed to its policy period.  The parties next litigated how to determine when exactly the property damage occurred.  Again, the Courts sided with Underwriters, finding the damage occurs as long as contamination continues to spread, including by passive “migration of contamination into the soil and groundwater.”

With the method of allocation, and a means to determine the time period of property damage, judicially decided, Olin and Underwriters executed a Settlement Agreement, at issue in the instant litigation.  Specifically at issue, Paragraph D, which provided:

With respect to any future third-party Pollution Claim relating to property damage that is not the subject of a release in this Agreement, the following allocation methods shall be used, (i)….shall be allocated pro rata equally over the entire period of time that nay operations took place on any parts of the real property Olin owned, and (ii)…shall be allocated pro rata equally over the entire period of time that any waste was disposed of or arranged to be disposed of…

Over year following execution of the Settlement Agreement, Olin sought a judicial determination that the Settlement Agreement permitted it to hold insurers jointly and severally liable for property damage that took place after the end of the policy period, if that policy contained Condition C, above.

The SDNY concisely ruled against Olin, agreeing with Underwriters that the express terms of the Settlement Agreement unambiguously evince the parties’ agreement that property damage is to be allocated using a pro rata allocation, and that it unambiguously was meant to override the terms of Condition C in all the applicable policies.

Thanks to Vivian Turetsky for her contribution to this post.

Delay Does Not Equal Default

State laws usually establish time limits for defendants to respond to a complaint.  Failure to adhere allows a plaintiff to file a motion for a default judgment.

In Ruggiero v. Moravian College, plaintiff sued Moravian College based on its failure to accommodate her disability while she was a student.  The complaint was filed on March 23, 2018, and counsel for Moravian College was asked to accept service on April 6, 2018.  On April 11, 2018, counsel for Moravian stated it would accept service, but requested two weeks to determine whether Moravian College’s insurance company would assign him to the case.  Moravian’s insurer stated  it would provide counsel for the case.  Counsel for Moravian then received the complaint on April 25, 2018 and forwarded it to the insurer, under the belief that the insurer was going to assign the case to another law firm.  On July 6, 2018, Plaintiff filed a motion for default after receiving no response to the complaint.  Counsel for Moravian was then assigned to the case on July 9, 2018.

Three factors must be present to grant a motion for default: plaintiff must be prejudiced if default is denied; defendant cannot have a meritorious defense; and default must be the product of defendant’s culpable conduct.  Chamberlain v. Giampapa, 210 F.3d 154 (3d. Cir. 2000).  Plaintiff argued it endured prejudice because of the delay in that  witnesses left their employment at the College, and interest on Plaintiff’s student loan was compounded.  The Court rejected both arguments finding that witnesses would still be available even if they no longer worked at Moravian College, and a future damages award could compensate any accrued interest.  Secondly, the Court found no evidence of a meritorious defense, but did not find that aspect dispositive of the case.  Lastly, the Court found that the defendant did not act culpably because its Counsel relied on the insurer’s statements that it would defend the case.  The Court found that all factors were not fulfilled and denied the motion for default.

This case offers an important lesson for insurance carriers and counsel alike.  There was an almost three-month delay in action on the case after the insurer received the complaint, and the case does not explain what happened on the insurer’s end.  Communication between counsel and insurer is key in ensuring a default motion is not filed.  Fortunately, Moravian’s counsel was proactive in initially contacting the insurer and subsequently forwarding the complaint.  That conduct seemed to inform the Court’s decision to deny the motion for default.

Thanks to Malik Pickett for his contribution to this post.

Does Discovery Rule Toll Statute of Limitations in Pennsylvania Medical Malpractice Suit? It’s up to the Jury.

In Nicolaou v. Martin, plaintiff was bitten by a tick in 2001 and, as a result, sought medical treatment from three different physicians between 2001 and 2008.  All three physicians ordered tests for Lyme disease, but all of the Lyme disease tests came back negative.  After an MRI, Nicolaou’s physicians diagnosed her with multiple sclerosis (“MS”) and prescribed treatment.  As a part of the treatment, Nicolaou saw a nurse practitioner, who, between July 20, 2009 and February 1, 2010, told Nicolaou that she thought she had Lyme disease.  The nurse practitioner had Nicolaou undergo another Lyme disease test, this time from a company called IGeneX, which came back positive on February 12, 2010.

On February 10, 2012, Nicolaou sued the three physicians she had consulted with between 2001 and 2008 for medical malpractice.  The physicians filed motions for summary judgment, asserting that the two-year statute of limitations already expired.  Nicolaou replied that the discovery rule tolled the statute and that she had no reason to know of her Lyme disease until she received the IGenex results on February 12, 2010.  The trial court granted the physicians’ motion.  The Pennsylvania Superior Court affirmed the trial court in a 5-3 decision.  The majority held that reasonable minds would not differ that Nicolaou should have known of her disease and its cause as early as June of 2009, three years before she filed suit.  The three-judge dissent stated that there was a question of fact as to whether Nicolaou acted diligently to determine the cause of her injuries and that it should be submitted to a jury.

The Pennsylvania Supreme Court reversed and adopted the dissent’s reasoning, holding that it was an error of law for the Superior Court to hold as a matter of law that the statute of limitations had not been tolled by the discovery rule in this particular case.  Whether or not Nicolaou should have known or had reason to know that she had Lyme disease and what caused it in 2009 was an issue of fact.  Therefore, it was the province of a jury to determine whether or not the discovery rule applied.

Thanks to Robert Turchick for his contribution to this post.


NJ High Court Moves toward Daubert

The Supreme Court of New Jersey has finally adopted the Daubert factors for assessing the reliability of expert testimony and reaffirmed the trial court’s duty to engage in “rigorous gatekeeping” when adjudicating whether an expert opinion is admissible.

In re: Accutane Litigation involved allegations that the prescription cystic acne medication caused Crohn’s disease.  Despite numerous epidemiological studies finding no association b, plaintiff’s expert gastroenterologist relied on suspect data, animal studies and his own unique theory of biological plausibility to opine that Accutane can, in fact, cause Crohn’s disease. 

 The trial court concluded that there wasno epidemiological evidence establishing a causal link between Accutane and Crohn’s disease, and that plaintiff’s expert report was conclusion driven.  The Appellate Division reversed, concluding that plaintiff’s expert relied on methodologies and data of the type reasonably relied upon by comparable experts which wasthe standard in New Jersey for the admission of expert opinions.  It also held that it owes less deference to the trial court when making a determination on whether to admit or exclude an expert opinion.

New Jersey’s Supreme Court explicitly rejected the Appellate Division’s heightened standard of review and reaffirmed “that the abuse of discretion standard applies in the appellate review of a trial court’s determination to admit or deny scientific expert testimony on the basis of unreliability in civil matters.”

 The Supreme Court made clear that trial courts must “assess both the methodology used by the expert to arrive at an opinion and the underlying data used in the formation of the opinion”. Trial courts are now instructed to consider Daubert’s non-exhaustive list of factors when assessing the reliability of expert testimony:

  1. Whether the scientific theory can be, or at any time has been, tested;
  2. Whether the scientific theory has been subjected to peer review and publication, noting that publication is one form or peer review but is not a “sine qua non”;
  3. Whether there is any known or potential rate of error and whether there exists any standards for maintaining or controlling the technique’s operation; and
  4. Whether there does exist a general acceptance in the scientific community about the scientific theory.

Applying this standard, the Court determined that “the trial court did the type of rigorous gatekeeping that is necessary when faced with a novel theory of causation, particularly one, as here, that flies in the face of consistent findings of no causal association as determined by higher levels of scientific proof.”

Requiring trial courts to take their gatekeeping role seriously in NJ has been long overdue since defense counsel often seek to exclude a plaintiff’s expert report.  It is not uncommon for a report to be stricken, but then reinstated by the appellate division which has used New Jersey’s liberal standard for the admission of expert opinions.  The Supreme Court has now made clear that the trial court’s determination on these issues is owed deference by the trial court, just like any other evidence determination.

Thanks to Michael Noblett for his contribution to this post.


Second Circuit Vacates District Court and Remands Sandy Case  

It has been just over six years since Hurricane Sandy made its devastating landfall in New York and New Jersey, causing nearly $70 billion in damages, but Sandy-related insurance litigation is still steadily making its way through the courts.

In Madelaine Chocolate Novelties Inc v Great Northern Insurance Company., the Second Circuit Court of Appeals recently held that a potential internal ambiguity in the policy mandated that the District Court’s judgment in favor of the insurer be vacated and remanded for further proceedings.  The relevant facts are straightforward:  Madelaine Chocolate suffered significant damage caused by the Sandy “storm surge,” the water pushed onto land by the force of the storm winds.  Madelaine timely submitted its claim to Great Northern for $40 million in property damage, and $13.5 million in extra operational expenses.  Great Northern disclaimed most of the claim on the basis that storm surge damage was excluded from coverage.

The Policy contained a ‘Windstorm Endorsement’ that provided coverage for “wind, wind-driven rain, erosion of soil….regardless of any other cause or event that directly or indirectly: contributes concurrently to; or contributed in any sequence to, the loss or damage…,” an anti-concurrent causation clause (“ACC”).  Great Northern’s disclaimer, upheld by the District Court, was premised on the Policy’s Flood Exclusion, which states that there is no coverage for “waves, tidal water or tidal waves, rising, overflowing…of any..  body of water or watercourse…, regardless of any other cause or event that directly or indirectly contributes concurrently to, or contributes in any sequence to, the loss or damage.”

While the District Court agreed that the Flood Exclusion unambiguously excluded storm surge damage, the Appellate Court disagreed, parsing the lower court’s analysis.  First, the Court ruled that the District Court relied on non-precedential opinions to decide that a storm surge  can be fairly categorized as a “flood,” noting that the cases relied upon did not include endorsements that added an ACC to the definition of covered peril.  Second, the Court found that the District Court’s reliance on several 5th Circuit Katrina cases was also misplaced, as none of the policies at issue in those cases likewise added an ACC to the definition of covered peril insured.

The key question on remand is whether or not the ACC clause in the Windstorm Endorsement conflicts with, or creates an ambiguity, with respect to the Flood Exclusion, reminding the District Court to “be mindful of well-established precedents requiring exclusions to be set out in clear and unmistakable language.”  ACC clauses have been held ambiguous in certain Katrian cases.  As Madelaine Chocolate continues its path through the New York court system, further clarity to these complex coverage questions will continue to inform the way coverage is analyzed, and perhaps how coverage is written, as significant storms become more common.

Thanks to Vivian Turetsky for her contribution to this post.