PA Court Admits BAC Result Without Corroborative Witness

In Pennsylvania, to guard against undue prejudice in civil cases, evidence of a party’s mere alcohol consumption is inadmissible absent evidence that reasonably shows intoxication. In respect of Blood Alcohol Concentration results, courts found to provide that “[BAC] alone may not be admitted for the purpose of proving intoxication,” but must be accompanied by “other evidence showing the actor’s conduct which suggests intoxication.”  The reasoning was that someone may have alcohol in their system but not be impaired.

This issue was at the forefront of Coughlin v. Massaquoi, where Thomas Coughlin, was killed while walking crossing the street when defendant Ummu Massaquoi crashed into him with her car. Defendant Massaquoi was driving in the left lane of the four-lane road and admitted that she did not see Coughlin prior to the impact. After Coughlin was transported to the hospital and pronounced dead, the autopsy and toxicological testing revealed that Coughlin had a BAC of .313%. Other than this post-mortem BAC result, there was no direct evidence presented to the jury of Coughlin’s intoxication—such as witness testimony that he appeared drunk.  Instead, an expert testified as to impact of that BAC level on an average person.

Although a jury trial found the defendant negligent, it also determined her negligence was not the factual cause of Coughlin’s death. Plaintiff appealed, alleging the court erred by admitting evidence of Coughlin’s BAC without independent, corroborative evidence of his intoxication.

The issue for Pennsylvania’s Supreme Court was whether expert testimony interpreting a BAC result constitutes “other” evidence under Pennsylvania case law, or, if independent eyewitness testimony of intoxication is required before admitting a pedestrian’s BAC. The Court modified the previous standard and held BAC evidence is admissible if the trial court determines that it reasonably establishes a pedestrian’s unfitness to cross the street. The defendant met this standard as she presented an expert who testified to the significant impact a .313% BAC would have on the average person’s coordination, judgment, and self-control—concluding Coughlin was thus unfit to cross the street.

There is no doubt that an important factor in the outcome was the near-poisonous level of alcohol in the pedestrian’s blood, and failing to admit it under such circumstances would have led to a very unfair outcome.

Thanks to Ellis Palividas for his contribution to this post and please write to Mike Bono with any questions.

To Repair or Replace: Damages for Replacement Costs Upheld (PA)

The Pennsylvania Superior Court recently affirmed a damages award that came under appeal after defendants argued that it was not supported by competent evidence.  In 700 EBA v. Weaver’s Glass & Building, No. 1868 MDA 2016, defendants Weaver’s Glass & Building Specialties, Inc. appealed the amount of the damages awarded by the trial court in the underlying non-jury trial, which involved a dispute between Weaver and plaintiffs 700 EBA, LLC, after 700 EBA hired Weaver to furnish and install several windows in one of 700 EBA’s buildings.  After installation, 700 EBA discovered that a majority of windows contained “major window failure” and permitted water to penetrate into the building during periods of heavy rain.  Subsequently, 700 EBA sued Weaver for breach of contract for improperly installing the windows.

Following a bench trial, the trial court ruled in favor of 700 EBA and awarded $67,420.25 in damages, which included the cost of replacing the windows.  Weaver appealed the damages award on the grounds that replacement of the windows was not necessary, and that the problem could be resolved by simply repairing the existing windows, which would cost less than replacing the existing windows with brand new ones.  As evidence in support of their appeal, Weaver cited 700 EBA’s expert testimony that replacement of the windows was not necessary.

On appeal, the court articulated the standard of review applied to challenges of a non-jury verdict – whether the findings of fact of the trial court are supported by competent evidence and whether the trial court committed error in application of the law.  The trial judge’s findings of fact must be given the same weight as if they were found by a jury, however the appellate court has plenary review power to address questions of law.  As to the specific issue of damages, the appellate court stated that the evidence must be considered in the light most favorable to the trial verdict winner, and that appellate courts should defer to the trial court on decisions regarding damages.

In reviewing the award, the appellate court cited an expert report from the window manufacturer that stated that the existing window frames should be removed, as well as expert testimony from a building remediation company and a building consultant who testified that the windows should be replaced.  Additionally, the court cited expert testimony that opined that the plan to replace rather than repair the windows was reasonable, as was the quoted cost estimate.  Thus, the Superior Court ultimately ruled that the trial court did not err in its damages award based on the replacement costs of the windows, and affirmed the award.  This case offers aclear articulation of the standard of review applied by an appellate court when reviewing a damages award,  and illustrates the heightened burden that an appellant must carry.  THanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

 

Plaintiff Fails to Connect Jurisdictional Dots, Prompting Dismissal of Products Case (PA)

On October 10, 2017, the Superior Court of Pennsylvania handed down a decision affirming the dismissal of a case in Lawrence v. Robland International B.V. et al.  The case arises from a workplace injury on May 3, 2013 when plaintiff, Henry Lawrence, injured his hand while using a Robland table saw.  On October 28, 2015, Lawrence and his wife filed a complaint naming fifteen defendants, alleging strict liability, negligence, and breaches of warranty.  Several of the defendants are located in Belgium and the Netherlands.

These foreign defendants filed preliminary objections arguing that the suit should be dismissed for lack of personal jurisdiction.  The court granted their objections the Lawrence’s appealed, raising the issue of whether Pennsylvania courts could exercise jurisdiction over the foreign saw manufacturers.

When looking at personal jurisdiction, one must do so under the due process clause of the Fourteenth Amendment and see whether a defendant has maintained meaningful contacts with the forum.  This jurisdiction comes in the form of either specific or general.  Specific jurisdiction arises when a certain activity, action, or event gives rise to the exact cause of action.  For example, purposefully selling an item in a state which then causes an injury is an event that gives rise to specific jurisdiction.  General jurisdiction arises when either a corporation has its headquarters and/or principal place of business in a forum state or maintains connections with the state that are “so continuous and systematic as to render them essentially at home”.  An example would be that a company sells so many products in a single state that it is essentially at home there, even if none of those products caused an injury.

Upon review, the Superior Court found that the appellants had waived any argument as to general jurisdiction as they conceded that certain defendants did not have “constant and pervasive contacts with Pennsylvania” in their appeal brief.  The court then looked at whether there was specific jurisdiction.  In Pennsylvania, to prove specific jurisdiction one must show that a company’s specifically identified activities are covered under Pennsylvania’s Long-Arm Statute, which grants specific jurisdiction in certain situations.  Once this is shown, once must then prove that jurisdiction is proper under the Constitution’s due process clause by showing it does not offend “traditional notions of fair play and substantial justice”.

Once again, the court found that the appellants had waived their argument because they had skipped the step of showing that specific jurisdiction was proper under Pennsylvania’s Long-Arm Statute and had skipped ahead to the due process analysis.  Because of this, the court stated the record and appellate brief submitted were insufficient and failed to meet the burden of showing jurisdiction.  Plaintiff failed to set up his chess pieces properly, and ended up facing “checkmate.”  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

If You Appear for a “Reasonably Requested” IME, “Nationwide is on Your Side” (PA)

On October 6, 2017, the Superior Court of Pennsylvania affirmed an order entered in the Court of Common Pleas of Jefferson County, compelling Gene Moore  to submit to an independent medical examination at the request of Nationwide Mutual Insurance Company.  The case stems from a motor vehicle accident involving Moore and Amy Shiock.  Shiock was driving a motor vehicle insured through Nationwide, while Moore was riding his bicycle with no such policy.

Following the accident, Moore submitted his medical expenses to Nationwide which were subsequently paid.  Moore also received two months of treatment from Keystone Physical Therapy until he reached his treatment plateau.  Approximately one month after his release from treatment, Moore reported to Pottstown Memorial Medical Center complaining of back pain.  During treatment, Moore indicated to his medical providers that moving furniture triggered his back pain.

Moore attempted to submit his Pottstown Memorial Medical Center medical bills to Nationwide as being related to the motor vehicle accident.  Prior to deciding, Nationwide requested Moore undergo an IME, which he declined.  Thus, Nationwide filed a petition to compel an IME based on the language in the insurance policy which requires injured persons seeking benefits to submit to medical examinations as often as “reasonably requested.”  The trial court ruled in favor of Nationwide basing its decision on the petition, its exhibits, and the statutory language of 75 Pa.C.S. § 1796.

Moore filed a timely appeal arguing: (1) he was not a party to the insurance contract and therefore could not be compelled to submit to an IME; and (2) the policy provision relied upon to compel the IME is void against public policy, as it does not comply with the statutory “good cause” requirement of 75 Pa.C.S. § 1796.  The Superior Court found no issue with the trial courts statutory interpretation or its finding of good cause.  Moore claimed that the trial court specifically relied on Fleming v. CNA Ins. Co. (Pa. Super. Ct. 1991) which was patently false.  The trial court used a multitude of factors including the policy language and 75 Pa.C.S. § 1796 to make its decision.  Further, because the trial court’s decision did not rest upon an interpretation of the Nationwide policy, the court did not need to examine Moore’s claim that the Nationwide policy violates public policy.

Thus, the Superior Court affirmed the trial court’s ruling that Moore was required to submit to an IME under the policy.  It makes sense that a claimant to an insurance policy will necessarily have to comply with the directives of that insurer in order to substantiate his/her claim.   The Court’s decision is consistent with that logic.  Thanks to Garrett Gittler for his contribution to this post.  Please email Brian Gibbons with any questions.

Pennsylvania Court Upholds Unlisted Resident Driver Exclusion As Valid Basis To Disclaim Coverage

The Pennsylvania Superior Court recently upheld a policy’s Unlisted Resident Driver Exclusion.  Specifically, in Safe Auto v. Rene Oriental-Guillermo, the underlying plaintiff was involved in a motor vehicle accident.  Following the accident, the underlying plaintiff sued, among others, the driver of the other car, Dixon, as well as the owner of the other car, Dixon’s boyfriend, Oriental-Guillermo.  Safe Auto insured Oriental-Guillermo.  The Safe Auto policy had an Unlisted Resident Driver Exclusion, which specifically excluded from coverage those individuals who lived with the policyholder, but were not related to the policyholder and whom the policyholder did not specifically list on the policy.  Based on this exclusion, Safe Auto denied coverage, as Dixon was living with Oriental-Guillermo, but was neither related to him nor specifically listed on the policy.

On appeal, the Pennsylvania Superior Court concluded that the Unlisted Resident Driver Exclusion was unambiguous.  The Court also concluded that the Unlisted Resident Driver Exclusion did not violate Pennsylvania Motor Vehicle Financial Responsibility Law (“MVFRL”) nor was it void against public policy.  As such, the Superior Court ultimately concluded the Unlisted Resident Driver Exclusion provided a valid basis to deny coverage.

Often times drivers will attempt to seek coverage under a policy based on a public policy argument that an insurance company must insure every individual who uses an insured’s vehicle unless the insured specifically asked the insurance company not to provide coverage for that driver.  This can lead to unintentional coverage being provided under policies.  However, as this case illustrates, with the inclusion of the Unlisted Resident Driver Exclusion (or a similarly worded exclusion), an insurer can limit the scope of coverage provided under its policies, and limit the potential drivers who may seek coverage under a policy.

Thanks to Colleen Hayes for her contribution to this post.

 

 

Getting What You Need in PA Bad Faith Law.

Yesterday, in the case of Matthew Rancosky, et al. v. Washington National Insurance, et al., the Pennsylvania Supreme Court ruled on what qualifies as insurer bad faith. In Rancosky, the decedent plaintiff purchased a cancer insurance policy as a supplement to her health insurance. Unfortunately, some 11 years after first purchasing this insurance, she was diagnosed with cancer. She battled cancer on and off for several years, but ultimately the insurer denied any additional benefits because of a mistake made by plaintiff’s physician as to when her disability began. The insurer, despite having access to forms, never sought to rectify or clarify the mistake although it had access to the information and was advised of the mistake’s existence.

An §8371 PA bad faith claim was ultimately brought. The trial court found for the insurer, but the appellate court found for the plaintiff. The question before the PA Supreme Court was whether under the Terletsky standard, a PA bad faith claim still turns on evidence that (1) the defendant did not have a reasonable basis for denying benefits under the policy, and (2) that the defendant knew or recklessly disregarded its lack of a reasonable basis in denying the claim.

The Supreme Court has answered that question in the affirmative. In answering that question, the Supreme Court made a few interesting observations. First, the Court noted that the first prong of the Terletsky test is an “objective inquiry into whether a reasonable insurer would have denied payment of the claim under the facts and circumstances presented.”

Second, in respect of the second prong of the Terletsky test (and the part of the opinion that will no doubt generate the most public comment), the Court held that “proof of an insurer’s motive of self-interest or ill-will, while potentially probative of the second prong, is not a mandatory prerequisite to bad faith recovery.” In other words, to prove the “reckless disregard” requirement, the insured need not prove almost intentional insurer misconduct.

Third, and perhaps most significantly, and almost as an aside, the PA Supreme Court also noted that “mere negligence is insufficient for a finding of bad faith under Section 8371.” This part of the opinion runs contrary to some recent federal case law that suggests that a bad faith claim can sound in mere negligence.

To us, the decision is good news for the insurance world. While it might have been nice to have the PA Supreme Court hold that intentional misconduct is a condition precedent to a bad faith claim, reconfirmation of the Terletsky standard and a repudiation of the idea that mere negligence can give rise to a bad faith claim are good, solid developments. As the Rolling Stones sang, you can’t always get what you want, but if you try sometimes, you might find, you get what you need.

For more information about this post please e-mail Bob Cosgrove.

Policy Limit Conundrum or Creative Lawyering? (PA)

Though courts strictly interpret insurance policies with an eye towards finding coverage whenever possible, they will enforce clear and unambiguous policy terms. In Good v. Frankie & Eddie’s Hanover Inn, LLP and RCA Ins. Group on Behalf of State Nat’l Ins. Co., the issue before the Superior Court of Pennsylvania was the interpretation of the limit of coverage offered under a liquor liability coverage part in connection with a wrongful death/survival action.

The insured tavern had served alcohol to a driver who subsequently drove under the influence and crashed into the deceased motorcycle operator. The tavern’s insurance policy included a Liquor Liability Coverage Form, which provided coverage with an “Aggregate Limit” and an “Each Common Cause Limit.”  The form expressly defined the each common cause limit as “the most we will pay for all ‘injury’ sustained by one or more persons or organizations as the result of the selling, serving or furnishing of any alcoholic beverage to any one person.”  The policy’s declarations page did not include this latter term but expressed the applicable liquor liability limits as $500,000 for “Each Occurrence” and $1 million “Aggregate.” The plaintiff took the position that the term “each common cause limit” was ambiguous and not parallel to the declarations page’s “occurrence” language.

During the pendency of the litigation against the tavern, the parties reached a settlement agreement whereby the insurer agreed to pay its $500,000 limit on behalf of its insured with the understanding that a declaratory action would proceed to resolve the limit of coverage issue.

As a result of cross-motions filed by the parties, the trial court found that the policy terms unambiguously expressed the intent of the contracting parties that there would be separate liquor liability limits for Each Common Cause, i.e. claims arising from alcoholic beverage service to one person, and for the Aggregate of all claims made involving service to more than one person. Per the clear terms of the policy, there had to be a distinction between the two limits, and the declarations page, while using different terminology, provided for this in the $500,000 per occurrence limit and the $1 million aggregate limit.

The plaintiff made creative arguments to subvert the clear policy language that the court and appellate court roundly rejected. For example, she argued that the “occurrence” limit simply did not apply because this term was not defined in the liquor liability coverage part.  Alternatively, she argued that “occurrence” is ambiguous without definition and should be read to provide $500,000 per each category of damages (i.e. wrongful death and survival actions).  Finally, she claimed that the phrases “Each Occurrence” and “Each Common Cause” were not interchangeable within the insurance industry.

In affirming the lower court, the appellate court held “the only reasonable conclusion, consistent with the intention of the parties and the reasonable expectations of the insureds, is to apply the “Each Occurrence Limit” as the “Each Common Clause Limit.”

Thanks to Lauren Berenbaum for her contribution.

For more information, contact Denise Fontana Ricci at dricci@wcmlaw.com.

 

Defendant Breached Partnership Agreement, Corporate Veil Pierced (PA)

A plaintiff in Philadelphia recently prevailed in a business dispute with his former real estate partner.  In Bravo v. 2536-38 North Broad Street Associates, C.P. Philadelphia No. 141101464, the defendant was ordered to pay his former business partner over $782,000 as a result of a breach of their partnership agreement by failing to pay the plaintiff money owed under the terms of the limited liability partnership.

According to the judge’s opinion following a bench trial, the parties formed a real estate partnership in 2010. The plaintiff initially joined as a limited partner and purchased a 10% ownership stake in the business, for which he was to receive a 10% cash flow payment from the partnership.  A few months later, the plaintiff invested additional funds in exchange for a 51% ownership stake of the business.  However, subsequently, the plaintiff did not receive his proportion of cash flow payments from the partnership, and the defendant also failed to inform him that there was a lien on one of the partnership’s properties, and that the property was listed for foreclosure sale.

During the time period in which the plaintiff did not receive his proportional disbursements, the judge also found that the defendant had transferred hundreds of thousands of dollars from the partnership to other business entities under the defendant’s control; and that the defendant had paid himself a salary from the partnership.  The defendant claimed that the money was diverted from the partnership in order to maintain his ability to secure a mortgage loan for the partnership, however the judge determined that such diversion of partnership funds was not contained in the partnership agreement between the plaintiff and the defendant.  The judge was similarly un-receptive to the defendant’s claim the plaintiff was not issued cash flow payments because the partnership was unable to obtain a mortgage loan.

Ultimately, the judge determined that the corporate veil should be pierced, since the defendant essentially ignored corporate formalities.  Morover, by failing to pay the plaintiff his proportional share of the partnership’s cash flow, the defendant had breached the partnership agreement.  We surmise that the judge’s findings relied heavily on financial data supporting the plaintiff’s claims of, essentially, theft, which supported the plaintiff’s version of events.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

Evidence of Remedial Measures Inadmissible (PA)

The Superior Court of Pennsylvania recently upheld a lower court’s judgment in favor of the defendant in  Gold v. Plesset Properties.  The case arises out of a slip and fall on July 8, 2011 when plaintiff Debra Gold slipped and fell exiting Plesset Properties Partnership’s (“PPP”) property.  Shortly after the incident, PPP installed skid-resistant adhesive strips to prevent future slipping in the area.

Gold filed a complaint against PPP alleging negligence.  On the eve of trial, PPP filed a motion to exclude any evidence at trial mentioning remedial measures to the property subsequent to the incident, such as the skid-resistant strips.  Gold filed her own motion seeking to preclude PPP’s expert testimony.  The court granted PPP’s motion and denied Gold’s.  The subsequent jury trial found PPP not negligent and Gold appealed.

Gold asserted that the trial court erred in not permitting her to cross-examine a part owner of PPP on subsequent remedial measures.  Generally, in Pennsylvania, evidence of subsequent remedial measures is not admissible to show negligence.  However, it can be admissible for impeachment, to show ownership of a property, or the feasibility of precautionary measures.  The court disagreed with Gold and found there was no basis for impeachment in the matter since the witness did not contradict himself on ownership or the existence of skid-proof strips.

Gold also argued that the court erred in denying her to cross-examine PPP’s expert on subsequent remedial measures.  The court again disagreed with Gold and found that the defense’s expert did not base any of his testimony on the remedial measures, but rather solely the video of the incident.  Gold also argued unfair surprise in that she was unaware that PPP’s expert would testify.  Again, the court denied this argument and cited that Gold was notified the expert would testify a month before trial and was provided with his report in PPP’s pre-trial report 30 days before trial.

This case demonstrates the factor of subsequent remedial measures in cases. It is important for defense counsel to keep an eye on repairs and remedial measures made by clients.  Plaintiff’s counsel will try to use this as evidence that a defendant was negligent, because “why wouldn’t they be negligent if they’re installing remedial measures?”  The rationale behind excluding evidence of subsequent remedial measures is policy-based.  In short, property owners will be less inclined to improve defects, if evidence of those improvements help a plaintiff’s case.

Evidence of such measures present a compelling, but prejudicial argument to a jury, making it all the more important that defense counsel seek to preclude such evidence, and make sure their expert relies on the pre-repair conditions in his findings.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

 

Who’s Behind the Wheel? Unlisted Resident Driver Exclusion Applies (PA)

On September 18, 2017, the Superior Court of Pennsylvania affirmed summary judgement in favor of Safe Auto Insurance Company (“Safe Auto”) in Safe Auto v Oriental Guillermo.  The case stems from a two-car motor vehicle accident in Allentown, Pennsylvania on April 29, 2013.  Rachel Dixon  was driving a car that her boyfriend, Rene Oriental-Guillermo (“Oriental-Guillermo”) owned, and Priscila Jimenez was a passenger in the other vehicle.  Guillermo insured his car through Safe Auto, which had an Unlisted Resident Driver Exclusion, which excluded from coverage those individuals who lived with Oriental-Guillermo, but were not related to him and whom he did not specifically list on the policy.  Here, Dixon lived with Oriental-Guillermo, but was not related to him and was not listed as a driver on his policy.

On May 13, 2015, Safe Auto filed a declaratory judgment action to enforce the Exclusion, and Safe Auto’s a motion for summary judgement was granted by the trial court.  The trial court enforced the Exclusion and held that Safe Auto had no duty to defend or indemnify Dixon.  Priscila Jimenez and Luis Jimenez timely appealed arguing that: (1) the Exclusion does not apply to the facts of the case; and (2) the Exclusion is unenforceable because it violates the Motor Vehicle Financial Responsibility Law, 75 Pa.C.S. 7501 et seq. (“MVFRL”) and public policy of the Commonwealth of Pennsylvania.

The court held that the policy language was unambiguous, and further stated that there is no dispute that Dixon lived with Oriental-Guillermo, is unrelated to him, and he did not list her as an additional driver on the policy.  Thus, the trial court properly found that the exclusion applied and Safe Auto was not obligated to defend Dixon.

Next, the court considered whether the Exclusion violated the public policy expressed in the MVFRL.  Appellants specifically argued that the Exclusion contravenes the MVFRL’s requirement that an owner of a motor vehicle ensure that all drivers of his vehicle are covered by insurance.  The court held that this argument supports the trial courts interpretation of the exception because it places the onus on the owner of the vehicle to ensure that everyone who drives his car have insurance.  There is no provision in the MVFRL that suggests the legislature intended to shift the risk to insurance companies to insure unidentified individuals who live with the insured, but are not related to the insured.

Finally, the court held that the Exclusion does not violate public policy.  Appellants argued that the Exclusion is contrary to the MVFRL by analogizing it to a Named Driver Only Exclusion.  This type of policy allows a policyholder to exclude certain individuals from his or her policy.  But the court ruled that the legislature placed the burden on the insured to make sure that individuals who drive the insured’s vehicle have insurance — the insurance company does not bear that burden.  Thus, the court affirmed the trial court ruling and concluded that Safe Auto was entitled to Summary Judgment. Thanks to Garrett Gittler for his contribution to this post.  Please email Brian Gibbons with any questions.