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.

First Department Sustains Multi-Million Pre-Impact Terror Awards Following Crane Collapse (NY)

In Matter of 91st St. Crane Collapse Litigation, the First Department recently upheld a multi-million dollar jury award for pre-impact terror, potentially altering the landscape of such awards in the future.  At the very least, this decision will alter how plaintiffs litigate pre-impact terror.  (There were also significant awards for conscious pain and suffering, and punitive damages, which we will not address in this post.)

The case arose from two consolidated wrongful death actions following a catastrophic crane collapse on East 91st Street in Manhattan on May 30, 2008, which killed the crane operator, Donald Leo, and another construction worker, Kurtaj.

The crane  was 205 feet high, had four main components: a tower, a cab, a boom, and a counterweight assembly. The counterweight assembly and boom rested on a turntable, which allowed the whole crane to rotate. During the trial, which lasted almost a year, evidence came forth that prior to bringing the crane to the site, a bearing ring in the turntable developed a crack and required replacement. Plaintiff NY Crane, at the direction of its owner, Plaintiff James Lomma, chose to replace this key part of the crane using a Chinese company that it found through a Google search, instead of a more expensive, but reputable American company. Even after the Chinese company expressed doubt that it could correctly assemble the bearing ring, plaintiff’s chose to move forward. Before the crane could be used again, the new bearing had to be certified by the New York City Department of Buildings. Lomma and NY Crane contacted a number of engineers, all of whom refused to certify that the bearing was safe. Despite this, Lomma, who was not an engineer, self-certified the part and expedited the DOB process so that the crane could go back to work.

According to the Court, the plaintiffs’ deaths “arose from a series of calculated decisions made by Lomma over a period of months, during which time Lomma placed profit over the safety of construction workers and the public, despite having multiple opportunities to change course.” On May 30, 2008, the bearing ring failed. At approximately 8:00 a.m., the crane began to tip backwards, causing the boom to flip and strike the building across the street. Witnesses testified that they saw Leo, the crane’s operator, visibly panicked inside the cab as the crane tipped backwards, bounced off another building, and then ultimately fell to the ground. They testified that they saw him praying and trying to brace himself against the cab glass as he plummeted toward the ground. Similarly, witnessed testified that Kurtaj, who was on the ground, saw the crane falling toward him and yelled to his coworkers, “Run, run, the crane is coming down.”

Medical testimony showed that both Leo and Kurtaj were aware of their impending deaths, and that neither of their deaths were immediate. Based on Kurtaj’s defensive wounds, a medical expert testified that he tried to protect himself with his arms from falling debris. Rescue workers testified that Kurtaj was alive and conscious while trapped under the wreckage, and that he was heard screaming and in obvious pain. He had also been doused in diesel fuel, causing him to vomit and choke on noxious fumes and smoke. He was taken to the emergency room, where he died approximately four hours after his initial injury. Similarly, witnesses and EMS technicians testified that Leo was alive, with his eyes open and shaking, when they found him in the rubble. Rescue workers determined that his time of death was approximately 15 minutes after the accident.

A Manhattan jury awarded the decedents of plaintiff Leo $7.5 million for pre-impact terror, $8 million for pain and suffering and $24 million in punitive damages. The jury awarded the decedents of plaintiff Kurtaj 7.5 million for pre-impact terror, $24 million for pain and suffering, and $24 million in punitive damages. On appeal, a unanimous First Department slashed those awards, but still awarded $2.5 Million and $2 Million in pre-impact terror to Leo and Kurtaj, respectively. Decedents of plaintiff Leo ultimately received $5.5 million for pain and suffering and $8 million in punitive damages, while decedents of plaintiff Kurtaj received $7.5 million for pain and suffering and $9.5 million in punitive damages.

Even with these reduced awards, these are some of the largest pre-impact terror awards ever awarded in the State. Given the defendants’ actions, it is possible that these huge pre-impact terror were actualyl designed to punish Lomma’s “calculated decisions” that ultimately lead to the collapse.   In other words, the jury may have rendered a “punitive” pre-impact terror award here.  And even through the Court reduced the award, J. Webber nevertheless awarded more significant pre-impact terror damages than we commonly see.

Plaintiff’s attorneys in New York will almost certainly make concerted efforts to present specific evidence of pre-impact terror in wrongful death cases.  In this case, there was very specific evidence of the actions of both decedents after the accident, supporting their respective fears of impending death.  While every wrongful death case will not have such specific testimony (in fact, most do not) we expect all plaintiffs in wrongful death cases to cite this decision to support their sustainable damages claims in New York.  Thanks to Evan King 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.

 

Failure to Call, as Trial Witness, Attorney Present at EUO results in award to Insured-Plaintiff (NY)

In Pierre J. Renelique MD, P.C. v Travelers Ins. Co., Kings County Civil Court recently examined whether a defendant-insurer owed first party benefits to a claimant, after the insurer disclaimed coverage due to a claimant’s failure to appear for an EUO.

The Court found that here, the defendant-insurer failed to prove that plaintiff’s assignor failed to attend the scheduled Examination Under Oath EUO.

At a bench trial in Kings County, the insurer-defendant contended that the assignor of the plaintiff, failed to attend any of the several scheduled Examinations Under Oath impeding their ability to investigate the matter.  In order to establish this defense, the defendant must have shown that not only were the EUO requests timely made to the assignor, but that the assignor failed to appear.  Each of these elements must be met by someone with personal knowledge.

Defendant produced as a witness, an attorney who oversaw EUO scheduling and the EUO process for the firm representing the defendant in this matter.  The attorney testified as to the office procedure regarding the scheduling of EUO’s and the procedure followed when an assignor failed to appear for an EUO.  The attorney testified that she mailed out each EUO request to the assignor according to office procedure and she based the requests upon attorney affirmations that the assignor failed to appear for the EUO.  The Court credited her testimony regarding the preparation and mailing of the letters scheduling the EUO but found that the witness had no personal knowledge of the assignor’s actual failure to appear.  Despite the fact that she testified that she reviewed affirmations from attorneys at the EUO who swore that assignor failed to appear, the Court found this failed to meet the threshold for personal knowledge.  Accordingly, Judgment was awarded in favor of the plaintiff.

The Court’s ruling demonstrates importance of laying a complete and proper foundation for establishing all the elements of the defense.  Had the defense called someone present at the EUO’s, or perhaps, produced a certified transcript of the EUO, documenting the assignor’s failure to appear, the insurer may have prevailed.  Thanks to Patrick Burns for his contribution to this post.  Please email Brian Gibbons with any questions.

Plaintiff’s Slip and Fall Case Doesn’t Hold Water (PA)

A Plaintiff was denied recovery in a slip and fall case when a jury concluded that he failed to prove that a water leak caused his injuries.  In Bowman v. Giant Eagle, C.P. Allegheny No. GD-14-016640, the plaintiff sued a Giant Eagle grocery store in Pittsburgh, claiming that he slipped on liquid near a water fountain, adjacent to the entrance to the men’s room.  The plaintiff alleged that Giant Eagle was negligent in allowing the dangerous condition to exist.

In support of his claim, the plaintiff alleged that an employee at the store had walked by the accumulation of water at the time the accident occurred, but did not address the issue.  The plaintiff also claimed that the water fountain was leaking and that the store had failed to repair the leak.

The plaintiff sustained multiple fractures to his right leg, underwent surgery and had hardware implanted.  The plaintiff later participated in physical therapy over the course of a few months, and eventually underwent a second surgery to remove some of the hardware.  The plaintiff sought damages for medical costs as well as past and future pain and suffering.

Giant Eagle did not dispute the plaintiff’s injuries or his treatment, but did argue that there was no evidence to support the plaintiff’s claim that the water fountain had been leaking.  Giant Eagle cited a store manager’s incident report that found no water on the floor and no leaking from the fountain in support of its defense.  Ultimately,  the jury found that Giant Eagle was negligent, but that its negligence was not a factual cause of any harm to the plaintiff.  This case serves as an ever-important reminder that plaintiffs bear the ultimate burden of proving each and every element of their case, and that an effective defense will force plaintiffs to carry this burden at every step of the litigation process.  Just because a defendant may have been negligent does not equate to proximately causing a plaintiff’s injury.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.

 

GC’s Right of Supervision Over Subcontractor Work is Key to Determination (PA)

On July 19, 2017, the Superior Court of Pennsylvania affirmed an order denying a motion to remove the entry of nonsuit as to Appellee Patrick Smiley, Jr. (“Smiley”), following a jury trial that resulted in a $501,107.41 verdict against  Fairman’s Roof & Trusses, Inc. (“Fairman’s”).

Smiley filed the underlying suit against Fairman’s after Fairman’s delivered bent trusses to a construction site where Smiley was the general contractor.  These bent trusses were installed by Chris Fisher Construction (“Fisher”) and led to the collapse of a partially constructed pole barn.  The collapse left Brian Baird trapped beneath four trusses and seriously injured him.  Smiley alleged that Fairman’s breached their contract and warranty by delivering bent trusses.

Fairman’s also filed a complaint to join Fisher as an additional defendant.  In January 2013, Brian Baird and his wife commenced a separate civil action against Smiley and Fairman’s for products liability, negligent design, premises liability, negligence, and loss of consortium.  Smiley also filed a cross-claim against Fisher alleging that Fisher was solely liable for the claims asserted by Appellants or was required to indemnify Smiley pursuant to an alleged indemnification agreement between the parties.

The trial court bifurcated the appellants’ claims against Fisher from all claims of liability against Smiley and Fairman’s.  In the trial against Smiley and Fairman’s, the trial court granted Smiley’s oral motion for nonsuit.  The jury then returned a verdict in Appellants’ favor and against Fairman’s in the amount of $501,107.41.  Appellants filed an appeal contending that the entry of nonsuit in favor of Smiley was improper prior to the presentation of evidence by all defendants.  The Superior Court disagreed stating that Fairman’s indicated on the record that it was not taking a position on Smiley’s oral motion for nonsuit.  Thus, Fairman’s lack of opposition suggested it did not intend to present evidence as to Smiley’s liability as part of its defense.  In addition, Appellants had the opportunity to develop a case for liability during their case-in-chief which they failed to do.

The court adhered to the general rule in Pennsylvania that a contractor is not liable for injuries resulting from work entrusted to a subcontractor unless the general contractor retained control or right of supervision over the performance of the work.  Here, Smiley had hired Fisher based on Fisher’s experience in building pole barns and delegated the task of construction and supplying labor to him.  Further, Smiley did not visit the job site and never made an attempt to supervise Fisher’s construction work.  Thus, Fisher was in total control of the project and therefore Smiley was not responsible for the actions of Fisher.

As a result, the Superior Court found no abuse of discretion or error of law by the trial court in entering nonsuit in Smiley’s favor.  Thanks to Garrett Gittler for his contribution to this post.  Please email Brian Gibbons with any questions.

 

Mason Found to Fabricate Scaffolding Accident (NY)

The Queens County Supreme Court recently tried a case in which plaintiff alleged he fell off a scaffolding, injuring himself in Klimowicz v. Powell Cove Associates LLC et al.

The plaintiff in Klimowicz was a mason and allegedly injured his right shoulder when, while building a brick wall and standing on an elevated scaffold at a construction site, fell through an opening in the scaffold

Plaintiff sued the premises’ owner and two related entities alleging state labor law violations, believing he fell because two boards had been removed from the scaffold’s platform, and because he was not provided the proper safety equipment as required under the statute.

As a result of the accident plaintiff suffered injuries including two arthroscopic surgeries on his shoulder, several courses of physical therapy, residual arthritic pain in shoulder with weakness and diminished range of motion.   Plaintiff ultimately demanded $1,000,000 for both past and future pain and suffering.

The matter went before a bifurcated jury trial, with the issue of liability being first heard by the jury.  The defense attorneys argued that plaintiff completely fabricated the incident to recover for injuries suffered at an independent incident unrelated to the scaffolding.  Defense Counsel noted that during a workers compensation hearing, plaintiff stated his injuries occurred while he was moving building materials.  Defense counsel also noted that in plaintiff’s medical records, plaintiff indicated the injuries occurred while plaintiff was pulling up a heavy plank.   In addition, plaintiff did not immediately report the incident after it was alleged to have happened but waited over a month.

The underlying workers’ compensation file, and persistence by defense counsel and their claim representative, helped to uncover the inconsistencies in plaintiff’s account. Ultimately, the jury rendered a defense verdict, finding that the defendants were not liable for plaintiff’s accident.   Thanks to Patrick Burns for his contribution to this post. Please email Brian Gibbons with any questions.

$38.5 Million Punitive Damage Award Barred By Statute of Limitations (PA)

The Pennsylvania Superior Court recently addressed the $38.5 million punitive damages jury verdict in Wilson v. U.S. Security Associates (2015) – the highest award in Philadelphia in 2015.  In 2010, two factory workers were fatally shot and a third seriously injured at the Kraft-Nabisco factory in North Philly. The defendant security firm was found negligent by a jury when two security guards abandoned their post in fear when they saw an armed woman – a suspended Kraft worker who returned to the company looking for revenge.

The issue on appeal was the trial court’s decision to allow the plaintiffs—mid-trial—to reinstate a claim for punitive damages which was withdrawn by stipulation in exchange for a withdrawal of preliminary objections two years earlier. And by the time plaintiffs sought to introduce the punitive damages claim, the statute of limitations had expired.

The plaintiffs argued that the claim was merely an amendment to the ad damnum clause—the section of the complaint outlining damages—not a new claim; and as such there was no statute of limitations issue. Unpersuaded, the court held that to prove punitive damages, the plaintiffs must prove “reckless, outrageous, intentional and/or wanton” conduct, which is an extra element and not merely an amendment to an existing claim.

After finding punitive damages to be a claim instead of an amendment, the court moved to its statute of limitations analysis. Plaintiffs’ stipulation in exchange for the defense withdrawing their preliminary objections removed the claim from the complaint. Accordingly, the complaint must be read without the punitive damages claim. If the claim is not in the original complaint, the statute of limitations was never tolled by filing the complaint and the statute ran from 2010. Therefore, when the plaintiffs sought to reintroduce the claim at trial in 2015, the statute of limitations had already expired. To support this conclusion, the court looked to the settled law of voluntary nonsuits—voluntarily withdrawing an entire lawsuit. In voluntary nonsuits, the original complaint is treated as if it never existed; the statute of limitations is not tolled. The court reasoned there is “no legal basis on which the strategic withdrawal of one significant cause of action, punitive damages, should be treated differently than our settled controlling authority treats the withdrawal of an entire lawsuit.”

And thus Wilson v. U.S. Security Associates was stripped of its accolade of Philadelphia Court of Common Pleas’ largest 2015 award.

Thanks to Ellis Palividas for his contribution to this post and please write to Mike Bono if you would like more information.

Late Notice to Defendant Prompts Denial of Plaintiff’s Spoliation Motion (NY)

The Suffolk County Supreme Court recently denied plaintiff’s motion seeking sanctions and an adverse inference against a defendant due to spoliation of a videotape of the subject incident in Fischetti v. Savnio’s Hideaway.

The claim arose in November 2014, from a slip and fall at defendant’s restaurant.  Plaintiff, a patron, fell down the front steps while leaving the restaurant and fractured her shin and wrist.  Plaintiff bought suit against defendant, restaurant, alleging that insufficient lighting and signage caused plaintiff falling down the steps.

At the time of plaintiff’s fall, the restaurant had 9 surveillance cameras situated around the premises, one of which captured the accident scene.  Approximately 90 days post incident, plaintiff sent defendant a “notice letter” of the suit, and requested all information be forwarded to defendant’s insurance carrier.

During the course of discovery, plaintiff demanded disclosure of the video footage.  Defendant was unable to provide the surveillance footage as their surveillance system, per its programming, automatically recorded over the incident after two weeks.  Plaintiff then sought sanctions alleging that defendant negligently allowed for the destruction of the video.

The Court found that although the surveillance footage is highly relevant to plaintiff’s case, a defendant who destroys documents in good faith and pursuant to normal business practice should not be sanctioned unless the defendant is on notice that the evidence might be needed for future litigation.  Here, there was insufficient notice, as by the time plaintiff put defendant on notice, the video had already been destroyed. The Court went on to state that the “notice letter” sent by plaintiff, was insufficient as it neither cites the subject video nor requests the video to be preserved.

The Court’s ruling demonstrates the necessity of not only being specific in your demand letters, but of moving as quickly as possible at the inception of a cause of action,  to locate and preserve save any surveillance footage that may exist.  Thanks to Patrick Burns for his contribution to this post.  Please email Brian Gibbons with any questions.

Fixing a Hole – First Department Reverses Defense Verdict in Sinkhole Case (NY)

In Gonzalez v City of New York, (2017 NY Slip Op 05180), the First Department recently held that a Bronx trial court’s erroneous evidentiary decisions improperly resulted in a directed verdict for the defense.

Plaintiff alleges he was injured when he fell into a sinkhole while walking across a public street in the Bronx, and that the area immediately surrounding the sinkhole was mushy and wet. Further, there was evidence showing that two weeks prior to his accident, a nearby water main burst. The City repaired the water main and then third-party defendant Halcyon Construction Corp. back-filled the hole. At trial, plaintiff claimed the repair work by the City and Halcyon resulted in the sinkhole.

At trial, the court precluded plaintiff from introducing photographs of the sinkhole into evidence. As those photographs were taken two weeks after the plaintiff’s alleged accident, the court found that they did not fairly and accurately depict the actual site. Plaintiff also tried to introduce the City’s road and highway specifications, arguing that because the specifications were incorporated into the contract between the City and Halcyon, they were relevant to defendants’ negligence. Again, the court precluded the plaintiff’s evidence, finding that the plaintiff failed to demonstrate that the specifications were anything other than “inadmissible internal rules, which would improperly create a standard of care higher than the one imposed by the common law.”

At the end of plaintiff’s case-in-chief, both the City and Halcyon moved for a directed verdict. The court found that there was insufficient evidence to find that either entity created the sinkhole, so it granted both motions. The plaintiff then moved to set aside the directed verdict, arguing that the court erred in precluding admissible evidence.  Not surprisingly, the trial court denied the plaintiff’s motion.

On appeal, the First Department held that the trial court erred in precluding plaintiff’s photographs of the accident site, even though they were taken two weeks after the accident. Of note, the First Department found that the plaintiff authenticated the photographs at his deposition, and other testimony at trial could have explained whether and to what extent the photographs depicted the accident site. Essentially, by precluding the photographs, the plaintiff was unable to show the jury the hole that he allegedly fell into. Further, the First Department held that the trial court erred in precluding the plaintiff from introducing the City’s road and highway specifications that were incorporated into its contract with Halcyon. As they applied both to the direct defendant (the City) and the third-party defendant (Halcyon), the First Department found that the specifications were admissible as potential evidence of the defendants’ negligence. As the trial court precluded the very evidence that plaintiff needed to argue the defendants’ negligence – the basis upon which the trial court granted the directed verdict – the First Department reversed the directed verdict.  Thanks to Evan King for his contribution to this post.  Please email Brian Gibbons with any questions.