The issue of provenance in the art world in the context of Nazi restitution can be a thorny one. The Ninth Circuit recently issued a decision which may give actors in this marketplace more certainty. Von Saher v. Norton Simon Museum of Art at Pasadena concerns two 16th Century Dutch masterpieces titled “Adam” and “Eve” by Lucas Cranach the Elder.

The Cranachs were purchased by a Dutch art dealer named Jacques Goudstikker in 1931 and became his firm’s property, but, in May 1940, Goudstikker and his family fled the country ahead of the Nazi invasion. Hermann Göring acquired all of the firm’s works in a forced sale with the help of an accomplice.

Following the war, the Allies returned the works to the Dutch government, which in turn issued a series of decrees setting up a restitution process for those who lost property during the war. The deadline to submit a claim was 1951. With the advice of legal counsel, Goudstikker’s widow formally waived any claim to the Cranachs. The Dutch government ultimately sold the works in 1966 to an individual named Stroganoff to settle a restitution claim of his own. Stroganoff subsequently sold the piece to the Museum in 1971.

Von Saher, Goudstikker’s daughter-in-law attempted to recover the Cranachs and made applications to the Dutch government in 1999 and 2001. However, the Dutch government concluded that, under the rules of the restitution process, Goudstikker’s widow’s informed waiver validated the sale, and converted the works into enemy property. In turn, enemy property became property of the state, who could sell such property as a form of compensation for damages in the war.

Her remedies in Holland exhausted, Von Saher sued in California to recover the Cranachs. After years of litigation, the Ninth Circuit affirmed summary judgment primarily relying on the act of state doctrine, which is a rule of decision requiring that “the acts of foreign sovereigns taken within their own jurisdictions shall be deemed valid.”

Evaluating the processes established and followed by the Dutch government, the Court concluded none of the potential exceptions applied, and it would be improper to declare invalid official acts of the Dutch government in its own territory. As a matter of law, the Dutch government had acquired good title to the Cranachs in 1951 and passed good title to Stroganoff in the 1966 sale.

While each restitution case requires fact-specific analysis, this case provides some helpful predictability. In the event provenance is potentially impacted by Nazi activity, United States Courts are likely to honor title decisions and restitution processes issued by other jurisdictions should such a ruling exist in the subject piece’s history.

Thanks to Nicholas Schaefer for his contribution to this post. Please email Vito A. Pinto by email with any questions.

The New Jersey Supreme Court recently denied a petition for certification in Blessing v. Chiu, effectively upholding the Appellate Division’s per curiam reversal of a trial court order barring the plaintiff’s testimony pursuant to cognitive impacts. In denying the certification, the Appellate Division ruled that the trial judge’s denial of the plaintiff’s right to testify amounted to an abuse of discretion. The result shows the importance of evaluating not only deposition testimony when evaluating liability and damages exposure, but also the deponents themselves.

In this case, the plaintiff (Blessing) underwent an endoscopic procedure in December 2010. The defendant (Dr. Chiu) was acting as an anesthesiologist. During the procedure, the plaintiff’s oxygen saturation rate began to decline. The oxygen saturation rate dropped again, despite the defendant performing procedures intended to alleviate airway obstructions. At some point, the plaintiff went into respiratory arrest, causing him to be deprived of oxygen for approximately eleven minutes. The plaintiff suffered cognitive defects and remains significantly compromised, requiring long-term care.

At trial, plaintiff’s counsel sought to have Blessing testify regarding his inability to perceive and recall ordinary events. During an evidential hearing, the trial judge found that the plaintiff understood the meaning of taking an oath to testify, the importance of telling the truth, and the repercussions of false testimony. The judge nonetheless barred the plaintiff’s testimony, ruling that his inability to recite his age or the year would prejudice a jury over the probative value it was intended to offer. The trial ultimately resulted in a no-cause verdict against the plaintiff.

On appeal, the New Jersey Superior Court Appellate Division ruled the trial judge abused his discretion in barring the plaintiff’s testimony, and reversed and remanded for a new trial. The Court reasoned that since the plaintiff was offered to testify to show the extent of his injuries relating to the alleged negligence, which would have contradicted testimony from defense witnesses to the contrary, the probative value of such testimony would have outweighed its prejudicial nature. The jury would therefore have the opportunity to hear probative testimony from a cognitively-impaired plaintiff.

This case epitomizes the need to evaluate not only a deponent’s testimony, but also the deponents themselves as well as how they will appear before a jury of their peers. Sympathetic witnesses can alter the scope of an entire trial, and must be on the client’s radar when it comes to liability and damages exposure evaluations.

Thanks to Brent Bouma for his contribution to this post. Please email Vito A. Pinto by email with any questions.

The Middle District of Pennsylvania recently ruled that an insurer did not act in bad faith in denying a claim to a woman who was injured while attempting to stop a robbery. In Brenda G. Smerdon and Rene L. Spaulding v. Geico Casualty Company, the Court granted in part and denied in part Geico’s Motion for Summary Judgment against the claims brought against it by Brenda G. Smerdon (“Smerdon”).

The lawsuit arose out of a robbery at Wal-Mart in Mansfield, Tioga County, Pennsylvania on April 30, 2016. The robber demanded cash from an employee and later fled the store towards his car, which was left running in the parking lot. Smerdon, along with five or six other individuals, chased the robber out of the Wal-Mart and into the parking lot in order to thwart the robbery. As the other individuals attempted to restrain the robber, Smerdon climbed into the passenger side of the car in order to retrieve the keys from the ignition. However, the robber was able to enter his vehicle and drive away, causing Smerdon to be run over by the vehicle’s rear tires in the process. Smerdon suffered serious injuries including a traumatic brain injury, skull fracture, right knee injuries, right thigh injuries, right ankle injuries, and left shoulder injuries.

At the time of the incident, Smerdon was insured by an auto insurance policy with Geico that contained an uninsured motorist amendment. Under this amendment, Geico is required to pay damages that Smerdon would be “legally entitled to recover” from the operator of an uninsured motor vehicle. However, when Smerdon made her claim, Geico determined that it was not required to indemnify her under the uninsured motorist policy which stated that she is not legally entitled to recover damages because she voluntarily assumed the risk of her injuries.

As a result of Geico’s denial, Smerdon filed this lawsuit claiming bad faith and breach of contract on the part of the insurer. In response, Geico raised an assumption of the risk defense. Thereafter, both parties filed cross-motions for partial summary judgment.

As to the assumption of the risk defense, Geico argued that Smerdon voluntarily assumed the risk of her injury and was, therefore, not entitled to a recovery. In Pennsylvania, an assumption of the risk defense requires that a party was subjectively aware of a specific risk, voluntarily accepted it, and later acted in spite of that risk, suffering the harm contemplated by that very risk. The Court focused on the requirement of knowledge of a specific risk, rather than a party who is only generally aware that a contemplated action had accompanying risk. In so doing, the Court determined that a reasonable jury could not find that Geico met that burden and dismissed its assumption of the risk defense. Instead, the Court stated that “[t]o the extent Geico questions the reasonableness of Ms. Smerdon’s actions, that is an inquiry resolved through comparative negligence principles, not assumption of the risk.”

Next, the Court turned to the issue of whether Geico acted in bad faith upon denying Smerdon’s claim based on the assumption of the risk defense. Under Pennsylvania law, a plaintiff is required to “present clear and convincing evidence (1) that the insurer did not have a reasonable basis for denying benefits under the policy and (2) that the insurer know of or recklessly disregarded its lack of a reasonable basis.” Ultimately, the Court determined that Geico had a reasonable basis to question coverage as assumption of the risk is a valid defense in Pennsylvania. Additionally, the Court went on to state that the presence or absence of bad faith did not turn on the legal correctness of the basis for an insurer’s denial of an insured’s claim. Put simply, bad legal judgment did not amount to bad faith and the Court denied Smerdon’s claim.

Thanks to Zhanna Dubinsky for her contribution to this post. Please email Vito A. Pinto by email with any questions.

The Supreme Court of Pennsylvania recently issued a decision that will make it easier to file a lawsuit against state government agencies involved in car accidents. In Balentine v Chester Water Authority, the Court considered whether the involuntary movement of a vehicle constitutes an operation of a motor vehicle for purposes of the vehicle liability exception to governmental immunity under 42 Pa.C.S. § 8542(b)(1).

A lawsuit was brought by Victoria Balentine, the widow of Edwin Omar Medina-Flores (“Medina-Flores”), against Chester Water Authority (“CWA”), Charles Mathues (“Mathues”), Wyatt Roland, and Michael Roland. Medina-Flores was a contractor for Metra Industries, which was hired by CWA to rehabilitate a section of its water distribution system. The project encompassed cleaning and lining water mains, including one located on Kerlin Street in Chester, Pennsylvania.

On August 15, 2012, Medina-Flores was working inside of a ditch located near the 1200 block of Kerlin Street. An inspector for CWA, Mathues, parked his CWA vehicle approximately ten to fifteen feet away from the ditch with a portion of the vehicle protruding into the road. At the time, the CWA vehicle’s engine was still running as Mathues stood outside of it. Soon thereafter, another vehicle struck the CWA vehicle, causing it to hit Medina-Flores and pin him inside of the ditch.

Initially, the trial court granted CWA’s motion for summary judgment after determining that the motor vehicle exception to governmental immunity set forth in the Political Subdivision Tort Claims Act did not apply. Rather, the motor vehicle exception to governmental immunity would apply only if such a vehicle was considered “in operation.” As such, a person had to be in the act of driving or moving the vehicle in order for liability to attach. On appeal, a divided Commonwealth Court affirmed the trial court and stated that precedential case law which addressed whether involuntary movement of a vehicle constituted operation for purposes of the governmental immunity exception did not exist. As such, this was an issue of first impression.

Thereafter, the Supreme Court of Pennsylvania granted discretionary review to consider whether the Commonwealth Court erred in affirming the appeal. In so doing, the Court focused on the fundamental question regarding the relationship between “motion” and “operation.” The language in the statute states that the vehicle liability exception to governmental immunity refers only to “operation” and not to “motion.” However, numerous Pennsylvania cases have muddied the definition to require that a vehicle also be in motion.

The Supreme Court of Pennsylvania determined that “operation” did not mean to simply move forward or backwards but also included the decision-making process that is attendant to moving the vehicle. The Court noted that if the legislature intended that recovery was only permissible when the vehicle was in motion, the legislature would not have utilized a word that implies process within the statute. As such, the requirement of motion was never an element of the statute.

Ultimately, the Court held that the vehicle liability exception to governmental immunity applied in this case. The Court stated that “[w]here a government vehicle obstructs a roadway, in whole or in part, we can assume, absent evidence to the contrary, that a government agent operated the vehicle to arrive at that position.” According to the Court, this redefinition of “operation” provides a reasonable standard that comports with the intent of the legislature and does not add the unnecessary requirement of motion. As a result, the order of the Commonwealth Court was reversed and remanded.

Thanks to Zhanna Dubinsky for her contribution to this post. Please email Vito A. Pinto with any questions.

In Brugaletta v. Garcia, the plaintiff sought emergency medical treatment at Chilton Memorial Hospital (“CMH”) and underwent multiple surgeries. Plaintiff’s doctor recorded that plaintiff missed doses of an ordered antibiotic, which plaintiff discovered after her medical records were turned over in discovery. When plaintiff inquired further, CMH admitted it possessed two internal self-critical reports regarding plaintiff’s care – but refused to produce them on the basis of privilege. Plaintiff filed a motion to compel their production, and CMH filed a cross-motion for a protective order.

The New Jersey Patient Safety Act (“PSA”), N.J.S.A. 26:2H-12.23, et seq., sought to enhance patient safety by establishing an environment that mandates the confidential disclosure of the most serious, preventable adverse effects. Once disclosed, hospitals and other licensed healthcare facilities must convene patient safety committees, conduct self-critical peer reviews, and perform Root Cause Analyses to reconstruct and analyze cases to determine “what went wrong.” Serious Preventable Adverse Events (SPAE) must be reported. To encourage disclosures and self-reporting, these reports are protected by an absolute privilege. N.J.S.A. 26:2H-12.25(f). Unsurprisingly, the New Jersey plaintiffs’ bar has sought these internal records ever since.

In Brugaletta, the plaintiffs’ bar secured an initial victory. The trial court heard argument on plaintiff’s motion to compel and CMH’s cross-motion for a protective order and conducted an in camera review of the related incident reports. After the review, the trial court found the reports were correctly classified as self-critical analyses under the PSA. Surprisingly, however, the trial court usurped CMH’s decision that plaintiff’s case did not amount to a SPAE. The trial court fashioned a remedy – the disclosure of a redacted self-critical report – that attempted to honor the privilege but reveal the SPAE to the plaintiff.

The New Jersey Supreme Court agreed with the Appellate Division and ruled the trial court exceeded its authority in declaring a SPAE actually occurred, and in issuing related orders that CMH disclose to plaintiff a redacted version of the self-critical report. According to the Court, the legislature inserted no role for a trial court to play in reviewing the SPAE determination made by a patient safety committee of a health care facility. Additionally, the Court ruled the legislature intended to encase the entire self-critical analysis process in privilege; it is not limited to Serioues Preventable Adverse Events.

Thanks to Brent Bouma for his contribution to this post. Please email Vito A. Pinto with any questions.

On August 22, 2018, in Encompass v Stone Mansion, the United States Court of Appeals for the Third Circuit (“Third Circuit”) filed a precedential decision holding an insurer is permitted to file an action for contribution against a licensee that allegedly serves a visibly intoxicated customer who causes injuries to a third-party. In holding Pennsylvania’s Dram Shop law is designed to protect society from the negligent service of alcohol, the Third Circuit rejected a licensee’s claim that the Dram Shop law precludes an insurer from seeking contribution on behalf of its insured.

The underlying case arose out of a tragic car crash that killed the intoxicated driver, who was allegedly overserved alcohol at Stone Mansion Restaurant Incorporated (“Stone Mansion”), and seriously injured the sole passenger. The passenger sued the driver’s estate for her injuries claiming the accident occurred because the driver had been driving while intoxicated. The driver’s estate then tendered its defense to Encompass Insurance Company (“Encompass”), the vehicle’s liability insurer. Ultimately, Encompass and the passenger entered a settlement agreement, and the passenger released all of her claims against all possible defendants, including Stone Mansion, to Encompass.

Encompass then brought an action in Pennsylvania state court alleging: (1) it stood in the shoes of the insured [the driver’s estate]; (2) Stone Mansion served alcohol to the driver while he was visibly intoxicated; (3) “[u]nder Pennsylvania’s Dram Shop law, a business or individual who serves alcohol to a visibly intoxicated person is legally responsible for any damage that person might cause”; and (4) Stone Mansion, as a joint tortfeasor under the Uniform Contribution Among Tort-feasors Act (“UCATA”), was liable to Encompass for contribution.

Although, Encompass objected, the action was removed to the United States District Court for the Western District of Pennsylvania. Once in District Court, Stone Mansion filed a motion to dismiss the action under Federal Rule of Civil Procedure 12(b)(6) – ultimately, the District Court granted Stone Mansion’s motion with prejudice based on “the plain, unambiguous reading of” Pennsylvania’s Dram Shop law. Encompass appealed.

The Third Circuit faced two issues on appeal: (1) whether the District Court erred in denying Encompass’ motion to remand the matter to the Pennsylvania state trial court; and (2) whether the District Court erred in dismissing the matter.

While the Third Circuit held the case was properly removed to federal court, it ruled the District Court erred in granting Stone Mansion’s motion to dismiss.

Specifically, the Third Circuit held that the UCATA establishes that “[t]he right of contribution exists among joint tort-feasors” and that a “joint tort-feasor who enters into a settlement with the injured person is not entitled to recover contribution from another joint tort-feasor whose liability to the injured person is not extinguished by the settlement.” The Third Circuit determined the Dram Shop law only permitted a third-party to recover for injuries sustained due to a customer of the licensee, if the licensee served alcohol to that customer when the customer was visibly intoxicated. Nevertheless, the Third Circuit noted equity was an important consideration in the matter and that nothing in the Dram Shop law shields licensees from responsibility for contribution among tortfeasors for harm caused to protected third-parties.

Further, while Encompass was not the type of third-party envisioned for protection under the Dram Shop law, the Third Circuit held that because Encompass’ settlement agreement with the passenger extinguished Stone Mansion’s potential liability to the passenger, Encompass was entitled to pursue a claim of contribution against Stone Mansion under UCATA. In finding Encompass presented a distinct claim for contribution under UCATA, it held that the District Court erred in dismissing the case based on the Dram Shop law.

Thanks to Lauren Berenbaum for her contribution to this post. Please email Vito A. Pinto for more information.

The Second Department issued a favorable decision for the defense bar in a recent decision on the case Boland v. North Bellmore Union Free School District. In that case, the lower court granted the defendant’s summary judgment motion as to the negligent training and supervision claims and denied the motion as to the negligent maintenance claims. The Second Department affirmed the lower court’s decision insofar as it granted the defendant’s motion as to the negligent training and supervision claims and reversed the decision insofar as it allowed the negligent maintenance claims to survive. Given how common the circumstances underlying this case are to schools, parks, and camps, the court’s signal that it would not entertain this case could help to dissuade plaintiffs from burdening such institutions and clogging the courts with commonplace accidents.

In Boland, the infant-plaintiff alleged that she was injured when she fell from an “apparatus” in the defendant’s school playground during recess. The child’s mother, as her guardian, brought claims for both negligent training and supervision and negligent maintenance of the playground. The Court found that the defendant established its prima facie case as to the negligent training and supervision claim by submitting evidence which demonstrated that it provided adequate training, adequate supervision, and that the level of training and supervision was not a proximate cause of the incident.

As to the negligent maintenance claim, the Second Department concluded that the defendant stated its prima facie case by submitting evidence to demonstrate that the playground was adequately maintained and that it did not create an unsafe or defective condition. Unfortunately, the decision does not specify of what this evidence consisted. However, the Court went on to explain that the plaintiff’s expert failed to raise a genuine issue of material fact when the expert argued that the ground cover beneath the apparatus was inherently dangerous or defective. The expert argued that the ground cover did not meet standards set by the American Society of Testing Material and Consumer Product Safety Commission. However, the Second Department opined that these standards were guidelines and not mandatory and therefore reversed the lower court to dismiss the negligent maintenance claims as well.

The Second Department’s decision is beneficial to the defense bar, in that it discourages claims arising out of incidents, which undoubtedly occur daily: children falling off of playground equipment. While the opinion does not say so outright, based upon the court’s reasoning, it appears advisable for defendants in such cases to support their arguments with an affidavit from a qualified and experienced expert in the design, construction, and maintenance of playgrounds and playground equipment.

Thanks to Kristina Duffy for her contribution to this post. Please email Vito A. Pinto for more information.