No Coverage? No Whey! (PA)

Former executives of a whey protein supplier accused by Land O’Lakes of selling product tainted with urine byproduct received a favorable judgment that also saw a declaration of no coverage for the supplier’s insurers.

In November 2014, Land O’Lakes filed suit in the U.S. District Court for the Eastern District of Wisconsin, alleging that Packerland Whey Products Inc. secretly spiked its whey with urea, a nitrogen-heavy compound found in urine, in order to boost the protein content of the whey.  Land O’Lakes purchased the whey fur use in its animal feed.   Land O’Lakes claimed it paid more than $15 million from 2006 through 2012 for the whey.  The dairy manufacturer averred that it had a variety of problems related to the whey concentrate over the years, but that Packerland’s executives deliberately concealed the urea scheme until December 2012.

In September 2015, the four insurers of the Packerland executives, First Mercury Insurance Co., Rural Mutual Insurance Co., Indian Harbor Insurance Co., and Regent Insurance Co, filed motions for summary judgment, requesting a declaration of no coverage and relieving them of their duty to defend the executives under insurance policies issued for various coverage periods between 2005 and 2013.  The insurers each claimed that no coverage existed because the alleged use of urea was not an accidental “occurrence”, nor did the use of urea result in “property damage”, as defined by the policies.

The Court agreed with both coverage arguments, ruling that no coverage was owed.  The Court reasoned that the Land O’Lakes’ complaint against the executives clearly alleged that they intentionally made false representations to the whey buyer with the hope of trying to sell more product, thus precluding coverage.  Moreover, even if the executives were correct that Land O’Lakes’ complaint alleged a negligent misrepresentation claim, it would still not trigger a duty to defend because under Wisconsin law, negligent misrepresentation does not constitute a covered occurrence.  With respect to the issue of property damage, the Court found that use of urea did not result in “property damage”, and if any damage occurred, it was to Land O’Lakes final animal feed product to which the allegedly tainted whey was added, not the whey product itself.

The Court also agreed with Packerland’s argument that Land O’Lakes lacked standing for its fraud or Racketeer Influenced and Corrupt Organizations Act claims because the company itself acknowledged that it wasn’t seeking damages based on lost or diminished profits, and held that showing of an an actual injury was necessary for Land O’Lakes to sustain those claims.

Thanks to Hillary Ladov for her contribution.  Please email Brian Gibbons with any questions.

 

Absentee Landlord and Absentee Defendant (PA)

On July 27, 2016, a judge in the Philadelphia Court of Common Pleas recently found against a landlord in a premises liability case for $225,203.  The case arises out of an incident that occurred on December 22, 2014 when the plaintiff, Janet McHugh, was trying to take her trash out to the alley through the building’s unfinished basement.

When McHugh opened the basement door toward, it became caught on wires hanging from the basement’s ceiling.  The wires caught on the drywall and a 30-lb electrical box, tearing both off the wall.  The drywall fell on McHugh’s head and neck and the electrical box landed on her upper-body.

McHugh alleged that the landlord, Philip Carter Jr., was making the repairs himself and had allowed the dangerous conditions to exist.  To prove this, McHugh presented an engineering expert asserting numerous building code and safety regulation violations.  These included no drywall ceiling in the basement, exposed framing and wiring, drywall not being properly affixed, hanging wires, and inadequate anchoring.

The plaintiff complained of pain in her neck and weakness in her left arm and hand.  A subsequent CT scan and MRI confirmed disc instability and she was diagnosed with a cervical strain and sprain.  She underwent surgery on December 24, 2014 on some of her discs and then had physical therapy for two months thereafter.  McHugh also presented a medical expert who stated that her injuries were related to the accident and that she suffered a permanent injury.  The expert also stated that she will require lifelong epidural injections and that her discs are at risk of a breakdown.

Carter did not answer the complaint and a default judgment was entered against him.  The case proceeded to a bench trial on damages at which Carter represented himself pro se, presented no experts of his own, and simply maintained that McHugh sustained no injury in the incident.

This case emphasizes the simple fact of how necessary it is to actually present a defense.  When a defendant either does not have insurance or chooses not to cooperate with their defense, the end result can be a personal judgment, which can be nearly impossible to escape in the future.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

Pennsylvania Court Holds Employer Need Not Force Employee to Seek Immediate Medical Attention

A Pennsylvania affirmed a jury’s defense verdict that an employer-defendant was not negligent when it did not force an employee to seek medical attention for a heart attack.

In Jackson v Conrail, plaintiff described feeling “something” in his chest, so his Conrail co-workers drove him back to headquarters. The plaintiff declined numerous offers to be taken to a medical facility and instead asked to be taken home. He independently sought medical attention, underwent surgery, and never returned to work. The plaintiff sued his employer two years later for negligence. The matter went to trial and the jury rendered a defense verdict.

On appeal, the plaintiff argued the finding that Conrail was not negligent was against the weight of the evidence. Upon review, the Court reiterated that: “The issue of negligence is one for juries to determine according to their finding of whether an employer’s conduct measures up to what a reasonable and prudent person would have done under the same circumstances.” The Court reasoned that certain evidence the jury heard regarding the plaintiff’s conduct and Conrail’s conduct justified the jury’s finding that Conrail acted reasonably. Specifically, the Court cited evidence that the plaintiff clearly verbalized that he thought he pulled a muscle or was getting sick, and believed he would be fine – he did not verbalize any belief that he was having a heart attack. Conrail employees provided the plaintiff aspirin and repeatedly asked if he wanted to be taken to a hospital or have an ambulance called. The plaintiff refused these repeated offers and clearly communicated that he wanted to go home. The Court also cited the absence of any evidence that would have indicated to Conrail employees that the plaintiff was, in fact, having a heart attack.

This decision suggests that a clear record establishing an employer’s positive conduct and good behavior can yield large payoffs throughout litigation, and especially at trial.

Thanks to Rachel Freedman for her contribution to this post.

Pennsylvania Out-Of-Possession Landlord Has No Duty Absent Exceptions

The general rule in Pennsylvania is that an out of possession landlord does not owe a duty to business invitees when it leases premises to another.  There are some exceptions.

In Vasilik v Voipoch, LLC, plaintiff slipped and fell in a stairwell with no handrails.  After discovery, defendant moved for summary judgment arguing that as an out-of-possession landlord it owed no duty to plaintiff.  In opposition, plaintiff argued that defendant was responsible for any defect that existed at the time a lease was signed.  The court noted that generally, out-of-possession landlords are not liable for defective conditions that prior to the inception a lease.  However, there were exceptions to the rule.  For example, if the landlord retained control over the premises or negligently made repairs.  In analyzing the potential exceptions, the court found that the entire property was leased to the tenant, including the stairwell, thus the landlord did not retain control over the stairwell. As to repairs, though the landlord had made repairs to other parts of the building, it never performed repairs in the stairwell.  As such, there was no exception to the general rule, and the out-of-possession landlord was not liable for the defective conditions in this matter.

This case illustrates the importance of conducting discovery to develop sufficient evidence to enable a party to carry its burden of proof and prevail on a motion (or to successfully defeat an opponent’s motion for its lack of evidence).

Thanks to Collen Hayes for her contribution to this post.

From Food Trucks to Demo Trucks (PA)

In the ongoing saga of the Philadelphia Salvation Army building collapse, a pair of summary judgment motions (Berkley 1 and Berkley 2) was filed this week urging the court to void coverage for an amateur demolition contractor.  On June 5, 2013, a building undergoing demolition collapsed onto the neighboring Salvation Army Thrift Store in Center City, Philadelphia.  The store was open at the time of the collapse.  As a result, seven people died and thirteen were injured.

Since then, nearly one dozen lawsuits have been filed in relation to the collapse.  In the matter of Berkley Assurance Co. v. Campbell, et al. docket no. 130800129, Philadelphia Court of Commpn Pleas, Berkley unsuccessfully attempted to void insurance coverage for its insured – the demolition contractor – on the basis that the policy had been cancelled prior to the disaster due to nonpayment by Campbell.  The Philadelphia Court of Common Pleas rejected this argument.

Now, Berkley is trying again to void coverage, this time arguing that Campbell obtained the policy through fraud.  More specifically, Campbell covered up a lack of major construction experience by painting a picture of a stable, long-standing, large demolition company with significant experience in contracting for and conducting demolition activities.  In reality, Campbell only had a few men working for him and had virtually no experience or expertise in commercial demolition work.  In fact, Campbell’s last job was operating a food truck.  In addition, Berkley is renewing its motion that the policy was cancelled due to Campbell’s failure to pay the first premium installment.

How the court rules on these summary judgment motions will be instructive.  Presently, for an insurer to carry burden of proving misrepresentation in Pennsylvania, it must show that the representation was false, that subject matter was material to risk, and that the applicant knew it to be false and made representation in bad faith.  See AG Allebach Inc v Hurley, 540 A.2d 289 (Pa. Super. 1988).  Should the insurer establish a material misrepresentation, the remedy is rescission of the policy.  Such a harsh penalty should deter insurance fraud; however, as many insurers know, fraudulent answers and material misrepresentations are an all too common occurrence these days.   Thanks to Hillary Ladov for her contribution to this post.  Please email Brian Gibbons with any questions.

Coverage Issues Further Complicate Penn State Scandal

Pennsylvania Manufacturer’s Association Insurance  Co. (“PMA”) filed a motion recently in the Philadelphia Court of Common Pleas seeking to bar Penn State University from introducing evidence on why it settled allegedly time-barred claims.  The motion stems from a declaratory action PMA filed against Penn State seeking a judgment on whether it had to provide coverage on a $90 million settlement the school paid to abuse victims in the recent Jerry Sandusky scandal.  PMA is alleging that the potential time-barred claims are blocked by the statute of limitations as it applies to abuse claims.  These claims make up $4 million of the settlement.

PMA argues that it did not consent to the settlements entered into by Penn State and that in order to carry its burden, the school must show that the un-consented to settlements were reasonable.  PMA then stated that during depositions, school officials refused to discuss or elaborate on specifics, making it impossible for its lawyers to determine whether the school sought to toss out or validate time-barred claims.  Because Penn State refused to provide discovery on these claims, PMA is requesting that the school be preclude from introducing any evidence on the subject at trial.

This case highlights the already complicated realm of coverage can become even more so when mixed with multi-million dollar high-publicity cases like the Penn State abuse scandal.  It also stresses the importance of monitoring statutes of limitation, as they can both hurt and help one’s case.  Finally, this case also brings up the important issue of providing adequate discovery and cooperating with the other side so as to avoid adverse motions in the future, as Penn State is now facing.  As if the Sandusky situation at Penn State required further complication…. Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

Governmental Standards Not Necessarily A Safe Haven For Products Liability Claim (PA)

Is evidence of a product’s adherence to governmental standards admissible in strict liability cases in Pennsylvania?  Short answer, maybe.

The Pennsylvania Superior Court was faced with this issue in Webb v. Volvo Cars of North America.  In Webb, a tangled logic examined whether such evidence, which might be admissible with respect to a negligence claim, should be permitted in an action based in solely in strict liability.  Seemingly at odds were  the Supreme Court decision of Tichner  v. Omega Flex, Inc. that Volvo argued would permit such evidence and plaintiff’s reliance upon Lewis v.  Coffing Heist Division and Gaudio v. Ford Motor Co. that would prohibit it.

In Webb, the trial court allowed evidence that the defendant’s product design adhered to governmental standards.  The jury returned a defense verdict, and the plaintiff appealed.  The Pennsylvania Superior Court concluded that the trial court erred by not instructing the jury to disregard the governmental standards evidence and granted the plaintiff a new trial.

So does this ruling mean that the introduction of the evidence was improper?  It would seem that the Court addressed that issue, right?  Well not exactly.  The issue was whether or not the Pennsylvania Supreme Court overruled Lewis and Gaudio, the cases that prohibited the admission of governmental standards evidence, with its decision in Tincher v. Omega Flex.  The Webb Court left the “admission” question on the table.  That said, until the issue reaches the Pennsylvania Supreme Court it seems that defendants should continue to inform juries of how their products were produced in accord with those standards created by the state and federal government.

Thanks to Marcus Washington for his contribution.

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

Workers Compensation No Cover For Insurer For Intentional Distress Claim (PA)

The Pennsylvania Supreme Court recently refused to review a Superior Court ruling that a tort claim for intentional infliction of emotional distress is not barred by the workers’ compensation exclusion in the Pennsylvania workplace injury statute.

In Charlton v. PMA Insurance Group, Plaintiff Matthew Charlton worked for a company called PMA. He was injured in a workplace accident and subsequently suffered physical and emotional injuries. Charlton brought a Workman’s Compensation Claim, and PMA provided physical and psychiatric treatment to Charlton. During this treatment, Charlton revealed childhood sexual abuse. Notes from the original counseling session made their way into the hands of a senior PMA account claims representative, who told Charlton that PMA would no longer pay for “something that happened to you as a child”, and requested that Charlton settle the Workman’s Compensation Claim. Charlton suffered anxiety, humiliation, and fear that his abuse would be disclosed if he failed to settle the claim, and so he filed a claim for intentional infliction of emotional distress against PMA. PMA argued that under the worker’s compensation exclusion, the Worker’s Compensation Act barred any tort action flowing from a work-related injury.

The Pennsylvania Superior Court sided with Charlton, ruling that a tort claim for the intentional infliction of emotional distress should not be barred under the worker’s compensation exclusion. The court agreed that employers are generally immune from tort action. However, the court noted that the claim falls outside the purview of the Worker’s Compensation Act since it alleges injuries arising from Charlton’s prior abuse, not the injuries from the ongoing worker’s compensation claim. By requesting damages for pain and suffering, treatment costs, and future wages, Charlton characterized the claim as one outside the scope of a work-related injury, and thereby outside the scope of any tort exclusions within the Worker’s Compensation Act.

The Supreme Court justices denied allocator, refusing to review the Superior Court’s ruling, and this matter is now expected to go to mediation.

Thanks to Melanie Brother for her contribution.

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

PA Appeals Court Holds that Damages for Dragonetti Violations Must be Proven – Not Presumed

Pennsylvania statute 42 Pa.C.S.A. § 8351 provides for a cause of action, also known as a Dragonetti action, allowing the defendant in a lawsuit to file suit against a plaintiff for abuse of civil proceedings when litigation is filed frivolously.  On June 24, 2016, the Pennsylvania Superior Court issued an opinion clarifying the issue of damages for a Dragonetti violation  in Miller v. St. Luke’s University Health Network.

In Miller, the original lawsuit stemmed from the arrest and conviction of one of St. Luke’s nurses, Charles Cullen (“Cullen”), who admitted to killing patients while acting in his capacity as a nurse for St. Luke’s. The families of two patients that were allegedly killed by Cullen sued St. Luke’s for wrongful death.  Ultimately, the two lawsuits were dismissed on summary judgment.  Thereafter, St. Luke’s filed a Dragonetti action against the two families of the patients, alleging both abuse of process and civil conspiracy.  St. Luke’s, however, voluntarily dismissed this Dragonetti action after two years of litigation.

Following the voluntary dismissal of St. Luke’s Dragonetti action against the two families, the two families turned around and filed their own Dragonetti action against St. Luke’s, alleging that it did not have probable cause to file its Dragonetti action against the two families and that it was filed for an improper purpose.  On July 1, 2014, a Lehigh County Court of Common Pleas jury found that St. Luke’s did not have probable cause to bring the Dragonetti action against the two patients’ families.  The jury, however, while finding St. Luke’s violated 42 Pa.C.S.A. § 8351, did not award any damages to the two families.  Both St. Luke’s and the families appealed, giving rise to the Pennsylvania Superior Court’s June 24, 2016 opinion.

On appeal, the families argued that if a violation of 42 Pa.C.S.A. § 8351 is found, then damages should be presumed otherwise a finding of such a violation would amount to just a “paper judgment.”  Conversely, St. Luke’s argued that 42 Pa.C.S.A. § 8351 requires a plaintiff to prove both liability and damages separately.  Moreover, St. Luke’s argued that while § 8353 states that a plaintiff is entitled to damages, § 8354 places the burden on the plaintiff to prove that she actually suffered damages.  Ultimately, the Pennsylvania Superior Court decided in favor of St. Luke’s, ruling that in a Dragonetti action, damages must be proven – not presumed.

Thanks to Erin Connolly for her contribution.

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

Trying to Claim Your Boss is Doing Two Things At Once? Think Again. (PA)

On June 29, 2016 the PA Superior Court dismissed the appeal by underlying plaintiff Neidert from an order granting compulsory non-suit to underlying defendant Albert Charlie III.  Neidert sued Charlie when he was injured while working at Riley’s Pub.  Charlie owns the business and also owned the building where Riley’s Pub is located.  Neidert sought damages on the theory that Charlie is not exempt under the Workers’ Compensation Act because he was acting in a “dual capacity” with respect to his ownership of the building.  Neidert claimed that as the building owner, Charlie owed him a separate duty to ensure the building was safe.

Charlie moved for summary judgement after he was served with the complaint and was denied.  At trial however, Charlie made an oral motion for compulsory nonsuit, which was granted.  The issue on appeal, among others, was whether the dual capacity exception applied. The Superior Court noted that this doctrine has only been applied in one case and the exception is extremely narrow and that it “does not apply where the employee’s compensable injury occurred while he was actually engaged in the performance of his job”.

This case is useful in understanding truly how narrow the dual capacity exemption is interpreted.  It will serve as a model for future suits and can be used to defeat such claims by plaintiffs.  Thanks to Remy Cahn for her contribution to this post, and please email Brian Gibbons with any questions.