Author Archives: Nicole Y. Brown

Bad Faith Different From Bad Judgment (NY)

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In the recent decision of General Motors Acceptance Corp. v. New York Central Mutual Fire Ins. Co., New York’s First Department reversed the lower court’s decision that denied the underlying general liability carrier’s motion for summary judgment.  The underlying action involved injuries sustained in a motor vehicle accident in which a judgment was entered in excess of the primary policy limits.  The underlying defendant and its excess carrier sued the general liability carrier for acting in bad faith based on its refusal to settle the claim for the full policy amount.  The insured and excess carrier argued that this refusal constituted reckless and gross disregard for the excess insurer’s rights and a failure to acknowledge the injured plaintiff’s potential damages.

The First Department, however, reasoned that the general liability carrier had not acted in bad faith because it had conducted a full investigation that included obtaining the opinions of four independent medical consultants and the use of experienced counsel for the damages trial.  The carrier also reviewed voluminous medical records that contradicted the findings of the injured plaintiff’s treating physicians and highlighted that the injuries were primarily pre-existing.  In sum, the court concluded that while the carrier’s actions may not have been prudent, it did not act in bad faith as the record showed that the carrier did not believe that the plaintiff sustained a serious injury that was causally related to the accident.  Therefore, the carrier did not breach its duty of good faith by making a decision that ultimately may have been a mistake in judgment.

Thanks to Moya O’Connor for her contributions to this post.  For more information, please contact Nicole Y. Brown at .

NJ Dealership Hit With Punitive Damages For Failing To Detect Bald Tires

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In the recent unreported decision of Ceasar v. Flemington Car and Truck Company, New Jersey’s Appellate Court upheld the trial court’s award of punitive damages to the plaintiffs who were injured in a motor vehicle accident.  Plaintiff Carla Cesar was driving a 2004 Chevy Trailblazer when the right tire blew out, causing the vehicle to roll over multiple times.  All occupants of the vehicle suffered personal injuries.  The plaintiffs filed suit against the dealership where the car was purchased and maintained.  During the discovery process, it was revealed that the dealership had inspected the vehicle prior to the accident, failed to detect a bald spot on the tire and failed to recommend that the tires be replaced.  The jury determined that the dealership acted with reckless disregard for the safety of others and awarded $5.5 million in punitive damages.  The trial court reduced the award of punitive damages to $3 million.

The car dealership appealed, arguing that punitive damages should have not been awarded and that the award was excessive. The Appellate Court upheld the trial court’s decision, finding that the jury was permitted to award punitive damages since the dealership’s failure to detect a bald spot could reasonably constitute wanton and willful disregard for the high probability of injury.  The court also upheld the amount of the award, finding that the dealership’s behavior was reprehensible.

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

Why Does the Definition of “Interior Stairs” Matter in New York City?

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In Rondon v. Victoria’s Secret Stores, LLC, Victoria’s Secret appealed a trial verdict that found it negligent and apportioned it 75% liability.  At issue was whether the set of stairs that the plaintiff tripped on were interior stairs.  On appeal, Victoria’s Secret argued that the plaintiff’s accident was not caused by a defective staircase as the subject staircase had an acceptable height differential between the first and second stairs and was in compliance with NYC Administrative Code section 27-735 that regulates interior stairs.

The First Department disagreed, finding that the NYC Administrative Code defined interior stairs as stairs within a building that serve as a required exit.  The stairs that the plaintiff tripped over descended from the mezzanine to the lobby of the building and did not serve as an exit to the outside.  So while the subject stairs allowed for exit from the Victoria’s Secret store, they did not exit the building itself and were not subject to the mandates of section 27-735.  Since these were not an interior staircase, the National Fire Protection Association Life Safety Code applied and provides that the tolerance between the largest and smallest tread cannot exceed 3/8 of an inch.  As the differential on the subject stairs was 1/2 an inch, the verdict establishing the defendant’s negligence was permitted to stand.

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

PA Court Interprets Gist Of The Action Doctrine

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A Pennsylvania court has held that an insured’s fraud claim against its insurer based on the same facts as its breach of contract claim was barred by the gist of the action doctrine.  In Havice v. Erie Ins. Co., the plaintiff initially filed a complaint following her insurer’s refusal to pay for damages to her roof after a hail storm.  The plaintiff’s complaint alleged a breach of contract claim as well as claims based on fraud and deceit after her insurer determined that there was no damage to her roof despite numerous contractor estimates.

In response to the plaintiff’s complaint, the insurer filed preliminary objections arguing that the plaintiff’s fraud claim was barred by the gist of the action doctrine.  In its analysis, the court noted that the gist of the action doctrine was established to maintain the difference between breach of contract and tort claims.  Further, the court noted that the doctrine foreclosed tort claims that arose solely from a contractual relationship between the parties, any duties alleged to have been breached arising from a contract, liability that stemmed from a contract, and any claims that were dependent on the success of a breach of contract claim.

Based on the foregoing, the court determined that the plaintiff’s fraud claim was barred by the gist of the action doctrine because any alleged misrepresentations committed by the insurer were committed in an attempt to avoid its obligations under the insurance policy and that the significance of those misrepresentations was dependent on a showing of a breach of the insurance policy by the insurer.  Nevertheless, the court noted, that the plaintiff was entitled to punitive damages if she could establish the insurer’s misrepresentations were made in bad faith.

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

Continued Expansion of Labor Law 240 Liability

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Earlier this year, we reported on the First Department’s ever expanding Labor Law 240 liability based largely on a plaintiff’s ability to show foreseeability in accidents that do not involve a scaffold or gravity related falls.  The court recently again addressed this issue in Hettich v. 125 East 50th Street Co., LLC a case in which Hettich was inside a dumbwaiter working to replace its controller when the hoist cable broke causing the dumbwaiter to plummet 40 feet.  In denying all parties summary judgment, the court concluded that the ultimate cause of Hettich’s injury was a dangerous condition on the defendants’ property, namely, the malfunctioning hoist cable and not the manner in which Hettich performed his work based on evidence that the breaking strength of the cable was roughly seven times the combined weight of the dumbwaiter with Hettich inside.  The court concluded that if the hoist cable had been functioning properly it would not have snapped.  In reaching its decision, the court cited to our previously reported case, Garcia v. Neighborhood Housing Dev. Fund. Co., Inc., for its holding that a plaintiff in a case involving collapse of a permanent structure must establish that the collapse was foreseeable.  Notably absent from the court’s opinion in Hettich is any reference to the trial court’s conclusion that the record shows that the possibility of the hoist cable breaking was not considered a foreseeable risk with this particular dumbwaiter.  Thus, just how far Garcia expands Labor Law 240 liability remains to be seen.

Thanks to Alicia Sklar for her contribution to this post.  For more information, please contact Nicole Y. Brown at .

PA Court Interprets Notice Requirement

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Citizens Insurance Company brought a declaratory judgment action against its insured Gerald Ung seeking a declaration that it was not obligated to defend and indemnify Ung’s son under the issued homeowner’s policy for an underlying civil action in which the plaintiff claimed injuries after Ung’s son shot him.  Citizens argued that there was no coverage under the policy because of Ung’s untimely notice of the complaint; the claims did not constitute an occurrence; and the intended or expected exclusion was a bar to coverage.

In response to Citizen’s notice argument, the court concluded that performance of the notice provision only required Ung to substantial comply and any failure to notify needed to be substantial and material.  The court ultimately determined that Ung’s son was not aware that his parents had a homeowner’s policy or that the policy would cover him.  Despite this, the court determined that Citizen was not prejudiced by the delay as it had failed to sufficiently plead how it was prejudiced or how the delay had deprived it of an opportunity for appellate review if an adverse decision was reached in the underlying action.

Additionally, with respect to Citizen’s lack of occurrence/intended or expected exclusion arguments, the court determined that summary judgment could not be granted on this basis as the underlying complaint alleged negligence as well as intentional acts.  Thus, Ung’s son’s negligent acts may have been covered by the policy, thereby triggering Citizen’s obligation to defend.

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

Wrong Way Cyclist May Still Recover (NY)

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It seems unfair that someone who was traveling the wrong way on a one-way street should be allowed to recover for alleged injuries if he gets into an accident, but that was not the case in Espiritu v. Shuttle Express Coach, Inc.

Espiritu was riding his bicycle the wrong way on a one-way street when he was struck at the intersection by a Shuttle Express bus that Michael Wright was driving.  There was a construction fence around 85 Adams Street located on the northeast corner of the intersection that both Espiritu and Wright testified blocked their view of the intersection.

At the close of discovery, the defendants moved to dismiss the complaint and the lower court granted the motion ruling that Espiritu’s negligence was the sole proximate cause of the accident because he was traveling the wrong way on a one-way street.  In reversing the lower court, the Second Department noted that even though Espiritu was negligent in that he violated the Vehicle and Traffic Law, there can be more than one proximate cause of an accident.  Since the defendants failed to establish that Wright was free from any comparative fault, there were questions of fact as to whether Wright failed to see what was there to be seen through the proper use of his senses, failed to exercise due care, or was traveling at a reasonable and prudent speed.  Similarly, there were questions of fact as to the negligent placement of the fence.  Thus, despite the obvious negligence on Espiritu’s part, he could still present his case to a jury.

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

Waiver of Liability Unenforceable For Kettlebell Injury (NY)

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While participating in an instructional kettlebell course presented by KettleBell Concepts, Inc. at a Hilton hotel, Eric Gallant was injured when a kettlebell struck him in the back of the head.  Before starting the course, Gallant had signed a waiver in which he agreed to “assume and accept full responsibility for any and all injuries or damages that may occur…and forever fully release, remise, indemnify, and agree to defend and hold harmless [defendants]…from any and all causes of actions, costs, damages, expenses, and liability whatsoever.”  Despite this, Gallant sued Hilton Hotels, KettleBell and its instructor.

At the close of discovery, the defendants moved for summary judgment arguing, primarily, that Gallant’s action was barred because he had waived all liability.  In opposition, Gallant argued that the waiver did not express in unequivocal terms the parties’ intention to relieve the defendants of liability for their own negligence.

The court examined the waiver that Gallant signed and noted that the law frowns upon contracts that intend to exculpate a party from the consequences of its own negligence and to the extent that such agreements purport to exempt liability for willful or grossly negligent acts the courts have viewed them as void.  The court further noted that in order for this waiver to be clear and unequivocal, it must plainly appear that the limitation of liability extends only to negligence of the party attempting to shed ordinary responsibility.  The court ultimately ruled that the waiver was unenforceable.

As an aside, the court noted that the defendants had available to them the defense of assumption of risk as Gallant assumed the risk of attending a course in which he knew people would be swinging kettlebells.  The defendants, however, failed to raise this defense at the outset and only did so for the first time in their reply papers.  While a valid defense, the court was not required to consider this late argument.

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

Delay Damages Awarded In Connection With Future Medical Expenses (PA)

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In Roth v. Ross, the Pennsylvania Superior Court addressed the issue of whether delay damages could be awarded in connection with future medical expenses.  If requested in a civil case, delay damages can be added to a compensatory damages award, the effect of which is to encourage early settlement and to compensate the plaintiff for any delay in receiving a monetary award.

Roth sought monetary relief for damages sustained following a motor vehicle accident and commenced suit against the opposing driver and the driver’s insurer seeking damages that included past and future medical expenses, lost wages, lost earning capacity and emotional distress.  The court ultimately awarded Roth damages for past pain and suffering and future medical expenses.

Following the verdict, Roth filed a motion for the inclusion of delay damages pursuant to Pa. R.C.P. 238.  The trial court granted the motion with respect to past pain and suffering, but denied delay damages for future medical expenses reasoning that Roth had failed to provide sufficient case law that future medical expenses fell within the definition of bodily injury under Rule 238.

Roth appealed arguing that a plain reading of Rule 238 established that she was entitled to delay damages for future medical expenses.  On appeal, the Pennsylvania Superior Court agreed and specifically rejected the lower court’s basis for denial of the delay damages.  The Superior Court stated that the correct inquiry in determining if delay damages should be awarded is whether future medical expenses constitute monetary relief for bodily injury.  The court held that future medical expenses did, in fact, constitute such relief, and thus, Roth plaintiff was entitled to delay damages for these expenses.

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

Undefined Policy Term Not Ambiguous (NJ)

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Undefined phrases in insurance policies can lead to confusion and ambiguity.  The court dealt with this issue in Lubik v. Harleysville Insurance Company and ruled in favor of the carrier.

Lubik owned unit 800 in a condominium complex and water from unit 100 leaked into his causing $60,000 in damages.  Lubik had a Perils Insured Against policy that covered specified damage to his residence.  According to the policy, coverage did not include loss caused by accidental discharge or overflow that occurred off the “described location,” but the policy did not define this term.

Lubik filed a claim with Harleysville seeking coverage for the water damage and Harleysville denied coverage stating that the water came from off the “described location.”  Harleysville eventually moved for summary judgment on this issue and the trial court granted the motion finding that the described location in the clause of the Perils Insured Against section clearly, only referred to Lubik’s specific unit.  Lubik appealed arguing that described location means the entire condominium building.  The appellate court ruled that the clause was not ambiguous and that summary judgment was appropriate since Lubik did not meet his burden of proving that the claim was within the basic terms of his policy.

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