Subrogation Suit Over Laundromat Fire Goes up in Flames (PA)

In Charlie v. Erie Insurance Exchange, the Pennsylvania Superior Court dealt with the important issue of the respective duties of a business invitee and its customer within the context of negligence claims against a bartender and his employer for causing a laundromat fire.

A fire occurred in Egypt Laundromat after a bartender from a local restaurant and pub placed several of the restaurant’s cotton rags in a dryer.  Once placed in the dryer, the rags, used to clean up spilled drinks and spilled grease, spontaneously combusted, causing a fire.  Erie filed a subrogation suit against the bartender and the restaurant, claiming that the bartender was negligent in drying the greasy rags in the scope of his employment, specifically by not taking the rags out of the dryer earlier.

The trial court granted the restaurant’s motion for summary judgment, finding that the bartender had no duty to prevent spontaneous combustion. The trial court analyzed the factors enumerated in Althaus v. Cohen to determine whether a duty existed. These factors include the relationship between the parties, the social utility of the activity, the nature and forseeability of the risk, and the consequences of imposing a duty upon the actor. Ultimately, the court noted that no duty existed because the defendants were business invitees to the laundromat, and the ability for the defendants to clean rags in a public Laundromat has a social value that outweighs any burden this places on the Laundromat. Further, the court noted that the possibility of rags spontaneously combusting was not a foreseeable risk as spontaneous combustion is, by its very nature, not foreseeable. And finally, the court held that imposition of the plaintiff’s proposed mandates, including requiring the use of a commercial restaurant laundry service to clean oil soaked rags, was not feasible.

Erie appealed, claiming that the trial court incorrectly labeled the defendants business invitees. Alternatively, Erie argued that the defendants were “bailees” due to the mutual benefit the laundromat and defendants received from the use of the establishment. On the basis of such a relationship, Erie claimed that the defendants owed a duty of ordinary care to the laundromat as the “bailor.”

The Superior Court rejected Erie’s argument that the trial court’s erroneous categorization of the relationship created a basis for reversing the court’s position on the basis of a duty. The Superior Court noted that all factors had to be weighed when determining whether to impose a new affirmative duty on an actor. Furthermore, the Superior Court noted that the trial court was, in fact, correct in its categorization of the relationship between the appellant and appellees, as the bailor-bailee relationship that the appellant proposed typically would require a contract between the two parties.  As such, the court affirmed the trial court’s decision to grant the defendants motion for summary judgment.

Thanks to Nicole Pedi for her contribution to this post.  Please write to Mike Bono for more information.

Necessary Pleadings Required For A DJ Complaint (PA)

In Kofsky v. Unum Life Ins. Co. of America, Kofsky filed a declaratory judgment action against his insurer and broker alleging that the defendants unilaterally canceled his insurance policy on an undetermined date without prior notice, despite his premium payment and request that his policy be reinstated.  Kofsky sought damages based on fraud, breach of fiduciary duty and bad faith.

The fraud claim was dismissed as Kofsky failed to meet the heightened pleading standards of the Federal Rules and the court refused to relax the standards as the necessary factual information was not within the defendants’ control.  The court noted that there was no reason that Kofsky could not have identified in his complaint the misrepresentations that he alleged were made to him by the defendants.

The court also dismissed his breach of fiduciary claim as Kofsky failed to plead any facts in support of such a claim.  In reaching its determination, the court refused to adopt Kofsky’s argument that his claims for breach of the duty of good faith and fair dealing could act as a basis for his breach of fiduciary claim and noted that under Pennsylvania law, a breach of fiduciary claim could not be based on such things.

Finally, the court dismissed the bad faith claim against the broker, ruling that bad faith claims could only be brought against an insurer and not an insurance broker.  However, Kofsky’s claim against his insurer was allowed to proceed, because if the court accepted the allegations in the complaint as true, then the insurance company’s cancelation of the policy despite payment of the premium could constitute bad faith.

Thanks to Colleen Hayes for her contribution to this post.  For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.

No Strict Liability for Medical Expenses from Dog Bites (PA)

In Pennsylvania, 3 P.S. § 459-502(b)(1) of “Dog Law” provides the following for bite victims: “Any cost to the victim for medical treatment resulting from an attacking or biting dog must be paid fully by the owner or keepers of the dog. The Commonwealth shall not be liable for medical treatment costs to the victim.” The question becomes whether the statute imposes strict liability on dog owners for medical expenses resulting from dog bites.

In Warner v. Campbell, the plaintiff filed suit in the Court of Common Pleas of Lycoming County after he was bitten by the defendants’ dog. The defendants filed preliminary objections to count III of the amended complaint which sought a claim for medical expenses resulting from the dog bite based on the Pennsylvania statute—that according to the plaintiff—imposed strict liability for those expenses.

The court relied on Rosenberry v. Evans and statutory interpretation in making its decision. The court reasoned that while the statute appears to provide a claim for strict liability on its face, the court in Rosenberry found that proof of the owner’s negligence is required to succeed in a cause of action against dog owners for injuries sustained by their dogs. In other words, Pennsylvania does not impose absolute or strict liability upon dog owners for dog bites.

The court also reasoned that the statute is worded to make clear that while the Commonwealth will pay detention costs when the dog’s owner is unknown, the Commonwealth is not responsible for medical expenses to the victim. Additionally, sections 531 and 532 of the statute provide a private causes of action to owners of sheep for damages resulting from dogs “chasing or worrying sheep.” The court held that since the legislature did not provide a similar cause of action for victims of dog bites, the legislature did not intend to do so. As a result, the court sustained the defendants’ preliminary objections and dismissed count III of the amended complaint based on strict liability.

Thanks to Eric Clendening for his contribution for this post.  If you have any questions, please email Paul at pclark@wcmlaw.com.

 

“Hills and Ridges” Doctrine Levels Lawsuit (PA)

In Pennsylvania, liability is ordinarily not created just because a sidewalk is slippery. Conversely, liability will be imposed when there is a dangerous slippery condition that has remained for an unreasonable amount of time.

Stobodzian v. PNC Financial Services Group, et al., arose out of a February 12, 2010 slip and fall that occurred in a PNC Bank parking lot following a substantial snowfall. The plaintiff’s complaint alleged that he slipped on snow/ice while lawfully on the premises of PNC Bank. The plaintiff joined a number of defendants including PNC Bank and those responsible for the snowplowing at the time of the plaintiff’s slip and fall.

At the conclusion of the two-day trial, the jury was charged with a “hills and ridges” instruction, which describes an owner’s duty of care regarding snow/ice on a walking surface. A “hills and ridges” instruction is only appropriate when the general slippery condition results from an “entirely natural accumulation of snow/ice”. Thus, in order for this plaintiff to be awarded damages, the jury must find three essential elements: (1) that ice and snow had accumulated on the walking surface in ridges or elevations that unreasonably obstructed travel and were a danger to persons traveling on the walk; (2) that the defendant property owner knew or should have known of the existence of such conditions; and (3) that it was the dangerous accumulation of ice and snow that caused the plaintiff to fall. Ultimately, the jury determined that none of the defendants were negligent and awarded the plaintiff no damages.

On appeal, the plaintiff raised one issue: the “hills and ridges” jury instruction should not been given. Specifically, the plaintiff argued that the trial court erred in giving the instruction because the snow/ice that the plaintiff slipped on was the result of an “artificial condition created by human intervention”. To support his argument, the plaintiff relied on the fact that vehicles pulling into PNC Bank’s parking lot would drag snow in with them. The Superior Court, however, affirmed the trial court’s use of the “hills and ridges” instruction, adhering to Pennsylvania’s long-standing doctrine used to protect land owners from liability where the owner has not permitted the snow/ice to accumulate.

Thanks to Erin Connolly for her contribution to this post. If you have any questions, please email Paul at pclark@wcmlaw.com.

Liability for Property Owners May Creep Farther in PA

In Pennsylvania, a business owner is traditionally only liable for injuries that occur on their property. A recent United States District Court case has thrown that assumption into question by considering whether business owners are also liable for incidents that do not occur on their property, but that begin on their property.

In Paynton v. Spuds, LLC., the plaintiff was eating at Spuds restaurant in Kutztown, Pennsylvania. During the night Paynton and his friends were subjected to threatening behavior from other patrons.  Paynton left the restaurant because of the perceived danger and was assaulted outside by the threatening customers who had followed him.

The plaintiff later sued Spuds claiming they were liable because the incident began on their property, a novel question under Pennsylvania law. The plaintiff offered a series of appellate decisions from other jurisdictions (New Jersey Superior Court, Iowa Court of Appeals, and the 7th Circuit) where a party was found liable for a multitude of events involving conduct occurring both on and off the defendant’s land.

The Defendants argued that under Pennsylvania law, the liability of a business owner is strictly limited to circumstances where an injury occurs on land that it owns and filed a motion for summary judgment, but the District Judge, in a memorandum decision, denied the motion, finding that Spuds might owe a duty as a matter of law because of a potential nexus between events that occurred on the defendants’ premises and the subsequent assault that occurred almost immediately outside its door. This denial leaves open the possibility that a business owner’s liability in Pennsylvania may soon be expanded to include events that occur both on and off the defendant’s land.

Thanks to Joseph Connor for his contribution to this post.  Please write to Mike Bono for more information.

No Punitives For Playground Personal Injury (PA)

In Saul v. Spring Valley Fitness, Inc., a Pennsylvania trial court analyzed the sufficiency of the plaintiff’s evidence with respect to her claim for punitive damages.

Saul was a member of Spring Valley Fitness, an exercise facility that provided a playground for its members’ children to play, while the parents worked out.  Saul claimed that while she was exercising, her child was injured on the playground when she fell from some equipment and broke her arm.  Saul contended that SVF did not provide her with verbal or written warning about the inherent dangers of the playground, despite the fact that a week before another child had injured himself on the same playground.

Saul sued for damages under a negligence theory and also alleged that SVF’s behavior was reckless and, as such, warranted the award of punitive damages.  In support of her claim for punitive damages, Saul offered an expert report that opined that the playground was a gross deviation from the reasonable and prudent standards of care and that the child’s injuries were directly related to SVF’s reckless indifference.  Coupled with the fact that two accidents had occurred within a short time period, Saul claimed that was entitled to punitive damages.

In determining whether Saul was entitled to punitive damages, the court noted that she would need to establish that SVF acted in an outrageous fashion either due to an evil motive or due to a reckless, willful or wanton indifference to others.  Further, the court defined reckless behavior as conduct that creates an unreasonable risk of physical harm to another and such risk is substantially greater than the standard used to prove basic negligence; however, a showing of gross negligence is insufficient and would not result in punitive damages.  Ultimately, the court concluded that SVF’s alleged failure to supervise, evidenced by the two accidents did not constitute reckless behavior.  The evidence that Saul offered merely established that SVF was inept and likely committed gross negligence.  Therefore, Saul was not entitled to punitive damages.

Thanks to Colleen Hayes for her contribution to this post.  For more information, please contact Nicole Y. Brown at nbrown@wcmlaw.com.

USPS Not Reliable? Mailbox Rule Eroded by 3rd Circuit (PA)

It used to be that the United States Postal Service was so reliable that if a litigant attested to sending a salient piece of evidence by mail, it was presumed to have been received by the other party, known as the “mailbox rule”.  However, recently the Third Circuit recognized the difficulty of this position for a defendant—requiring him or her to prove a negative.

 

In Lupyan v. Corinthian Colleges, the Third Circuit reversed a decision by the U.S. District Court for the Western District of Pennsylvania granting summary judgment for the plaintiff’s employer in a FMLA case.  Lupyan had sued Corinthian for interference with her FMLA rights on the basis that it never sent her a letter confirming her leave for depression fell under FMLA.  Corithian, in its motion for summary judgment, included four affidavits from mailroom and human resources staff noting that the requisite letter had been sent.  The Western District thereby granted the motion because the college was afforded the benefit of the presumption of the receipt of properly mailed letters under the “mailbox rule,” and, thus, it was Lupyan’s responsibility to prove she did not receive the letter.

 

The Third Circuit overturned this decision noting that the presumption under the mailbox rule is a very weak presumption, especially today where letters can be easily certified or tracked, or proof of receipt obtained.  In these circumstances, the mailbox rule presumption was insufficient to establish receipt of the letter as a matter of law.  The court also noted the extreme difficulty faced by individual parties who are required under the rule to “prove a negative”—by establishing that they did not receive the disputed mail. Thus, it appears the Third Circuit has struck another blow the viability of this longstanding common law rule, thereby implying that it is largely insufficient as an evidentiary strategy.

 

This case serves as a useful reminder that all important letters and filing should always be attached to a tracking number to ensure proof of service.

Thanks to Remy Cahn for her contribution.

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

 

Liquidation Terminates Insurer’s Obligations under Insurance Policy (PA)

The Pennsylvania Supreme Court recently determined that an insolvent insurer’s obligations to its insureds terminate no later than 30 days after it enters liquidation regardless of whether the policies were cancelled prior to the liquidation date.  The issue arose in the context of claims for service contract reimbursement insurance policies.  In Warrantech Consumer Products Services, Inc. v. Reliance Ins. Co. in Liquidation, the plaintiff sought to hold the liquidated insurer liable for reimbursement for various proofs of claim.

By way of background, Warrantech Consumer Products Services, Inc. (“Warrantech”) was insured under various insurance policies issued by Reliance Insurance Company (“Reliance”).  The insurance policies also provided that Reliance would indemnify Warrantech for claims during the policy periods even after the cancellation of the Reliance policies.  Reliance cancelled coverage in 2000, but was still responsible for any of Warrantech’s claims occurring in 1999 and 2000.  Accordingly, pursuant to the policies and indemnification agreements, Warrantech submitted various claims to Reliance seeking reimbursements, which Reliance agreed to pay.  Reliance, however, was placed in liquidation on October 3, 2001 and, subsequently, November 2, 2001 was set as the statutory cancellation of coverage date pursuant to 40 P.S. § 221.21 of the Insurance Department Act.  As a result, Reliance ceased making reimbursements to Warrantech after this date, giving rise to the litigation.

The Commonwealth Court held that § 221.21 operated to relieve Reliance of all liability to indemnify Warrantech for claims arising after November 2, 2011.  Further, the Commonwealth Court noted that the plain language of § 221.21 states that coverage under all insurance policies with “risks in effect” at the time of liquidation only remains for a period of thirty days after the entry of liquidation.  Lastly, the Commonwealth Court valued Warrantech’s claims against Reliance at zero.  Accordingly, Warrantech appealed.

On appeal, Warrantech’s primary argument, among others, was that the Commonwealth Court misapplied § 221.21 because it only applies to insurance policies “in effect” at the time of liquidation.  Warrantech urged the Court to interpret this term to apply only to those policies with active policy periods.  It reasoned that because Reliance’s policies were cancelled in 2000, they should be exempt.

In order make sense of the meaning and purpose of § 221.21, the Supreme Court read § 221.21 and § 221.20(d), Liquidation Orders, together.  The Supreme Court found the best reading of § 221.21 to be that “all insurance in effect” means any insurance policy that continues to provide coverage to its policyholders as of the date of the liquidation order.  The Supreme Court noted that the purpose of the thirty day period is to allow all of the insureds of the liquidated insurer to obtain replacement insurance.  On this basis, the Supreme Court affirmed the Commonwealth Court’s holding and relieved Reliance of all liability to indemnify Warrantech notwithstanding Reliance’s agreement in the insurance policy to extend coverage for claims arising out of the 1999-2000 policy period.

Thanks to Erin Connolly for her contribution.

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

No Punitive Damages For Cell Phone Talking Driver (PA)

In Pennsylvania, it is illegal to use your cell phone while driving to send texts, emails, or messages of any kind. While discouraged, it is not illegal to make phone calls while driving. The question becomes whether distracted driving while using a cell phone amounts to negligent or reckless behavior.

In Pietrulewicz v. Gil, the defendant was talking on her cell phone and failed to yield to oncoming traffic. She collided with plaintiff’s motorcycle rendering both vehicles damaged and the plaintiff injured. Defendant filed preliminary objections to strike the prayer for punitive damages. Punitive damages require a plaintiff’s intent to be malicious or reckless. Defendant admitted that she was talking on her cell phone while driving but denied acting recklessly. Plaintiff claimed that distracted driving while talking on a cell phone was per se reckless. The court held that absent well-pleaded allegations of recklessness, cell phone use while driving is not per se reckless, and accordingly, a plaintiff is not entitled to punitive damages.

The court relied on two cases in reaching its decision: Xander v. Kiss, 2012 WL 168326 (Northampton County CCP) and Piester v. Hickey, 2012 WL 935789 (E.D. Pa.). In Xander, with almost identical facts to the case at hand, the court held that punitive damages were inappropriate absent additional allegations that the driver acted recklessly (e.g. speeding, running a red light). In Piester, the court held that punitive damages are not recoverable when the sole basis in support is that the defendant was using his or her cell phone while driving.

Overall, Pennsylvania courts have reasoned that distracted driving while using a cell phone can amount to negligence if it causes a traffic accident. However, absent allegations of speeding, ignoring traffic signals, or conduct that demonstrates a reckless indifference to the rights of others, punitive damages are not recoverable.

Thanks to Eric Clendening for his contribution.

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

Eastern District Chips Away at 402(a) in Medical Device Cases

Recently, the United States District Court for the Eastern District of Pennsylvania continued the federal courts’ test of Section 402(a) of the Restatement (Second) of Torts by concluding that allegations of manufacturing defects in medical devices and products are barred under Pennsylvania law.

In the case of Terrell v. Davol, Inc.., the plaintiff brought suit against the manufacturers of a medical mesh designed to aid in the treatment of hernias when it was discovered that the device was the cause of a severe gastrointestinal disorder.  In her suit, the plaintiff specifically alleged that the manufacturers were, among other things, strictly liable for certain alleged manufacturing defects in the mesh.  However, relying on longstanding Pennsylvania precedent barring strict liability claims against prescription drug manufacturers, the defendants moved to dismiss the plaintiff’s Section 402(a) claims for strict liability arguing that she could only recover if the production of the mesh was actually negligent.

In ultimately siding with the defendants and granting the motion to dismiss, Judge Joel H. Slomsky found that while Pennsylvania’s traditional interpretation of Section 402(a) has all but solidified strict liability for product manufacturers, an exception has been carved out for the makers of medications and medical devices.  Specifically, Judge Slomsky explained that Pennsylvania has adopted the reasoning of Hahn v. Richter in the context of medical devices to bar strict liability claims because the punitive effect would undermine the public’s access to potentially life-saving products.  Yet, Judge Slomsky went beyond the traditional principles of Hahn to more precisely conclude that Pennsylvania law even bars strict liability claims regarding manufacturing errors in the product at issue.  Instead, Judge Slomsky reasoned that the principles in Hahn implicitly operate to require a showing of negligence in the design or manufacture of a medical product before the plaintiff can recover as a matter of law.

While a subtle counter to Pennsylvania’s extreme products liability regime, the Court’s decision in Terrell reaffirms the evolving notion that modern products cases incorporate ordinary negligence principles by implying that liability should correlate with social utility.  In so holding, Terrell places further pressure on the Pennsylvania Supreme Court to finally decide the direction of products liability in the Commonwealth vis-à-vis the Restatement (Second) of Torts.

Thanks to Adam Gomez for his contribution to this post.  For more information, please email Paul Clark at pclark@wcmlaw.com.