Jury Must Decide if Mall Had Notice of Dangerous Wire (PA)

In Brown v. Stroud Mall, the plaintiff was employed as an assistant manager in a shoe store in the Stroud Mall. Following her afternoon shift, the plaintiff walked down a publicly accessible hallway toward the entrance that led to the parking lot. When plaintiff stepped into the hallway, her foot became entangled in a wire strung across the hall.

Afterwards, she began experiencing pain in her right leg and knee, and underwent physical therapy and later surgery. Despite the surgery, the plaintiff continued to experience pain and difficulty walking. Eventually, she quit working due to pain and difficulty walking.

Plaintiff filed suit against the mall, and the defense filed a motion for summary judgment, arguing that plaintiff could not establish that defendants had actual or constructive notice of the wire. Particularly, defendants pointed to the presence of security staff in the hallway within the hour of the incident, and argued that this led to the conclusion that the wire did not exist for such a period of time that it could have been discovered through the exercise of reasonable care.

In deciding the motion for summary judgment, the court noted that reasonable minds could differ as to whether defendants had constructive notice, and denied the motion. The court stated that Stroud Mall was large and the hallway was open to the public. The security personnel routinely patrolled the mall, including the hallway at issue but a jury could determine defendants should have had more security on duty or patrolled more often. Therefore, there was a genuine issue of material fact for the jury to decide on the issue of constructive notice.

Thanks to Alexandra Perry for her contribution to this post and please write to Mike Bono if you would like more information.

PA Court Enforces Settlement Where Policy Limits Demanded And Offered

In Wise v. Hyundai Motor Company, a passenger died in an automobile accident and her estate sued the owner of the car, the driver of the car, and various insurance companies. This lawsuit was originated in Monroe County, Pennsylvania and implicated Pennsylvania law. Of interest here was that the estate of the decedent sent a policy limit demand to the insurance company of the driver and owner of the car (USAA).

USAA’s counsel replied, “offering” the policy limit of $115,000. At no point, in either the letter to USAA’s counsel or the reply, was the word “settlement” used. Plaintiff’s counsel never responded to the policy limit offer. From that point, USAA’s counsel was minimally involved in the matter, as the case primarily focused on products liability against Hyundai.

Four years after the policy limit demand, decedent’s estate settled with the products defendants and subsequently asserted a bad faith claim against USAA for failure to defend the driver and owner of the car, as USAA did not participate in any pre-trial proceedings or offered an expert and thus, arguably, could not assert a defense at trial. Decedent’s estate asserted this is cause for a bad faith claim. USSA, in response, moved to enforce the earlier $115,000 “settlement.”

The court held that, he policy limits were demanded and offered in return, and as such there was a settlement.  Although optimally there would be evidence that plaintiff send a letter accepting the policy limit offer, the course of conduct of the parties can also establish acceptance. The course of conduct showed that USAA had minimally been involved in the litigation after the policy limit offer, did not engage in discovery, and circulated a letter to all counsel stating USAA would not be involved in the litigation as the full policy limits had already been tendered. As such, all parties acted with the belief that settlement had been reached – including the plaintiff and the court therefore agreed to enforce the settlement.

Thanks to Matt Care for his contribution to this post and please write to Mike Bono if you would like further information.

Occasional Missteps in the Process of Reviewing and Litigating UIM Claim do not Constitute Bad Faith Per Se

In the case of Ridolfi v State Farm., Federal Magistrate Judge Carlson of the Middle District granted an insurer’s Motion for Summary Judgment in a UIM bad faith case.

The Plaintiff alleged bad faith based on State Farm Mutual Automobile Insurance Company: (1) allegedly misstating the scope of its coverage; (2) insisting upon a sworn statement from its insured, even though a deposition had previously been completed two; (3) unreasonably delaying its investigation the claim and requiring the production of multiple sets of medical records; and (4) failing to keep Plaintiff fully informed in writing of the progress of her claim.

The court granted summary judgment finding that, “while both parties indulged in occasional missteps in the process of reviewing and litigating this claim, the essentially uncontested evidence does not meet the demanding, concise and exacting legal standards prescribed under Pennsylvania law for a bad faith insurance processing claim.” The court additionally noted that a carrier can be successful in defending against the bad faith claims by showing that there were “red flags” warranting further investigation into the claims presented.   Accordingly, the court found that delay alone does not amount to bad faith.   Rather, the court found that an inference of possible bad faith only arises when time passes as a part of pattern of a knowing or reckless delay in processing a meritorious insurance claim.

With respect to State Auto seeking a sworn statement, the court disagreed with Plaintiff’s argument that no sworn statement was necessary as the insured had been deposed two (2) years earlier in the underlying third party litigation, instead finding nothing wrong with the UIM carrier seeking a sworn statement under oath from the Plaintiff in light of the fact that the medical information discovered to date was incomplete. With respect to State Auto’s violations of the regulatory requirement that a UIM carrier provide 45 day updates on the status of insurance claims, the court recognized that, while violations of this insurance rules can be considered when examining a bad faith claim under §8371, the violations of the regulatory scheme in and of themselves do not amount to a per se violation of the bad faith standard.

Thanks to Hillary Ladov for her contribution to this post.

Continuous Trigger Coverage Expanding in PA or Still Only About Asbestos?

That was the question (effectively) posed before the Commonwealth Court in the case of Pennsylvania Manufacturers’ Association Insurance Company v. Johnson Matthey, et al. In the case (which was brought in the Commonwealth Court because PA’s Department of Environmental Protection was a defendant), Pennsylvania Manufacturers sought a declaration that it did not owe coverage for an environmental contamination lawsuit filed by DEP against Johnson Mathey. In the underlying lawsuit, DEP alleged that from 1951 through to 1969, a Johnson Mathey predecessor company allowed hazardous substances (arising out of the manufacture of alloy tubes) to escape into Chester County, PA. Pennsylvania Manufacturers insured Johnson Mathey from 1969 through to 1971. The contamination was not discovered until 1980 and thus no contamination at the Site was detected during the Policy period.

Pennsylvania Manufacturers, which assumed its insured’s defense under a reservation of rights, argued that for coverage to attach, the property damage must manifest itself during the policy period. The Commonwealth Court agreed with this basic coverage principle and noted that the “trigger of coverage under an “occurrence” insurance policy is ordinarily the first manifestation of the injury that is alleged to have been caused by the insured.” If only the decision had ended there!

However, the court went on to write that under the reasoning of the J.H. France Refractories Co. v. Allstate Insurance Co., 626 A.2d 502 (Pa. 1993) decision (which expanded the trigger of coverage with respect to asbestos bodily injury claims and held that all “occurrence” policies from the date of exposure to the date of first manifestation are triggered), there was no specific reason for continuous trigger coverage to be limited to asbestos cases. The Commonwealth Court wrote that “the justification for the multiple trigger of coverage was not the peculiar nature of asbestos disease, but the long latency of the claim for which coverage was sought.” Applying this reasoning to the facts at bar, the Commonwealth Court held “On the record before us, this case therefore presents the long latency of continuing, undetected injury or damage that supports a trigger of insurance coverage prior to manifestation under the Supreme Court’s decisions in J.H. France Refractories Co. and St. John.”

So, what does this mean for the insurance marketplace? What it means is that there are now, at least, two possible scenarios in which continuous trigger exposure applies in PA – asbestos and environmental pollution. We suspect to see the plaintiff’s bar citing Pennsylvania Manufacturers’ Association Insurance Company v. Johnson Matthey, et al. in other contexts – and our suspicion is that the attack will start in the construction defect arena. Stay tuned for what happens next!

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

Damages Award for Meat Slicer Injury Modestly “Sliced” By Comparative Fault (PA)

A delivery person injured by the blade of a disassembled meat slicer recently received over $1.5 million from a Pennsylvania jury.  In Fuller v. Easton Healthcare Services Group, Plaintiff, a delivery person for a knife-sharpening and appliance service, was picking up a meat slicer that had been loaned to the Easton Health & Rehabilitation Center.  When Plaintiff arrived to retrieve the loaner slicer, an employee of Healthcare Services Group loaded the disassembled slicer onto a cart and wheeled the cart to Plaintiff’s delivery van.

As a result of the slicer’s disassembly, the blade guard to the slicer had been removed and placed on a lower shelf of the cart, underneath the slicer itself.  Subsequently, the employee lost his balance while attempting to load the slicer into Plaintiff’s delivery van, and in her effort to assist the employee, Plaintiff reached over top of the slicer and lacerated her right forearm, severing nine tendons, an artery, and two nerves.  She underwent emergency surgery to reattach the severed nerves and tendons, as well as re-establish blood flow to the severed artery.  Despite physical therapy, Plaintiff needed multiple surgeries to remove nerves from her ankle and implant them into her hand, an index finger amputation, and a fusion of her thumb.

Plaintiff sued Healthcare Services Group alleging that the removal of the blade guard from the slicer, the failure to reassemble the slicer, and the assumption that Plaintiff would notice that the slicer was not reassembled created an unsafe condition that could foreseeably cause harm.  Healthcare Services Group countered that, because it was Plaintiff’s job to retrieve the slicer, defendant was not responsible for placing the blade guard on the slicer, and that Plaintiff’s failure to notice that the blade guard was missing rendered her contributorily negligent.

Ultimately, the jury found that Plaintiff was 13% liable and Healthcare Services Group was 87% liable. Thus, Plaintiff’s damages, which included medical costs, lost earnings, pain and suffering, and a loss of consortium claim by her husband, were only reduced from $1,868,987.25 to $1,627,318.91.  As such, the jury obviously felt the defendant’s handling of the meat slicer was the issue, as opposed to plaintiff’s mishandling.  This case present the danger of a defense strategy of placing all the blame on a likely sympathetic plaintiff.  Thanks to Greg Herrold for his contribution to this post.  Please email Brian Gibbons with any questions.


Sewage “Backup” Deemed Ambiguous, Prompting SJ Denial (PA)

On May 1, the Superior Court of Pennsylvania affirmed a lower court’s decision to deny Erie Insurance Exchange’s (“Erie”) motion for summary judgment in Windows v. Erie Insurance.  The case arises out of raw sewage infiltration into the home of Howard and Eleanor Windows in May 2012.  On May 2, 2013, Erie denied the claim citing a water damage exclusion in the Windows’s homeowner’s policy.  The Windows’s then filed a complaint alleging Erie breached the policy. Erie filed a motion for summary judgment arguing that raw sewage damage was unambiguously excluded from coverage by the water damage exclusion language.  Erie’s motion was denied and it appealed the decision. The policy excluded water damage, which meant, “water or sewage which backs up through sewers or drains or water which enters into and overflows from within a sump pump, sump pump well or any other system designed to remove subsurface water which is drained from the foundation area”. In Pennsylvania, it is for the finder of fact to resolve any ambiguities in a contract, such as an insurance policy, and to determine the parties’ intent in entering into that contract.   When an ambiguity exists, outside evidence is admissible to clarify the ambiguity and the parties’ intent. The court determined that the policy did not define the term “backs up”.  Erie argued that “backs up” entails any water or sewage that enters a premises no matter where it originated.  The alternative definition is that water or sewage “backs up” only when it returns to the premises from which it originated. Because the court found there was no definition of “backs up” in the policy and that there were conflicting definitions of the term found in other case law, it found that Erie subsequently failed to meet is burden for its motion for summary judgment. This case illustrates the importance of clear and unambiguous language in insurance policies.  If an exclusion or other provision in a policy is clearly written with adequate definitions then it can greatly decrease the chance of a court later rewriting a policy or extending coverage to claims a carrier would wish to deny.  Thanks to Peter Cardwell for his contribution to this post.  Please email Brian Gibbons with any questions.

PA Statute Penalizing Lawyers For Frivolous Actions Upheld

The Dragonetti Act, a Pennsylvania statute, creates a cause of action against attorneys for frivolous, vindictive, and vexatious lawsuits.  The statute was recently challenged in Villani v. Seibert,  a land ownership dispute, where the defendants invoke the statute as a counter to what they believed where baseless claims.  The plaintiff and involved counsel moved to dismiss through preliminary objections, arguing that the legislative act intruded upon the Supreme Court’s exclusive authority to regulate attorney conduct involving the practice of law.  The trial court agreed and dismissed the claims.

On appeal, the Supreme Court found that the intent of the statute was to codify a method to compensate “victims of frivolous and abusive litigation, and therefore, has a strong remedial thrust” as opposed to usurping the role of the judicial system in policing attorney conduct. Additionally, the Court found that this was not an attempt to regulate attorney conduct, rather, this is a law of “general application.”

Thanks to Matthew Care for his contribution to this post and please write to Mike Bono for more information.

“Arising Out Of” means “But For” in PA

Many insurance policy conditions and exclusions are triggered by the phrase “arising out of” and the Third Circuit recently ruled on this issue in a case pertaining to asbestos-related claims.  General Refractories Co. v. First State Ins. Co., involved a coverage dispute between General Refractories Co. and Travelers for numerous claims brought by  claimants allegedly injured following exposure to GRC’s asbestos-containing products.

The asbestos exclusion in the Travelers policies excluded coverage for injuries or losses “arising out of” asbestos. GRC noted that prior policies distinguished between claims stemming from direct exposure to asbestos fibers and those arising from exposure to asbestos-containing products. GRC claimed on this basis that the term “asbestos” in its policy referred only to the physical substance in its raw form, which it did not produce and that the exclusion was ambiguous. Travelers argued that the exclusion had only one reasonable interpretation — that claims for injuries related to asbestos in any form were excluded from coverage. The district court agreed with GRC, and the judge determined that the exclusion was ambiguous and must be construed in GRC’s favor.

GRC appealed the ruling to the Third Circuit, who held that the “provision plainly encompasses losses that would not have occurred but for asbestos or which are causally connected to asbestos,” regardless of whether in its raw form or within another product. The court found the exclusion to be unambiguous and enforceable.

Under Pennsylvania law, the term “arising out of” requires “but-for” causation. “But-for” causation does not require a showing that a product proximately caused an injury. Since the losses relating to the underlying asbestos claims would not have occurred but for asbestos, whether raw or within finished products, the exclusion was applicable. Because all of the claims against GRC arose out of asbestos under the “but-for” causation standard, Travelers was not obligated to provide coverage for the claims. As such. the appellate court reversed the district court ruling.

Thanks to Jorgelina Foglietta for her contribution to this post and please write to Mike Bono if you would like further information.

Expert Required for a Battle of the Experts

Oftentimes it is difficult to decipher between normal wear and tear–a non-covered loss–versus damage due to an occurrence.  Experts may be needed to show the difference.

In Fazio v. State Farm Fire & Cas. Co., the insured submitted a claim for property damage following a storm.  The insurer denied claim on the basis that the damage was actually caused by age, wear and tear or improper installation, which was barred from coverage by a policy exclusion.  During discovery, the insurer produced an expert report evidencing its position that the insureds’ loss was caused by age, wear and tear or improper installation – as opposed to weather damage – thus, providing expert evidence that the insureds’ loss fell squarely within one of the policy’s exclusions.  The insureds did not produce any expert reports.

The insurer moved for summary judgment seeking a declaration of no coverage, and the court granted the motion.  In reaching its decision, the court noted that, while the insureds may have presented sufficient information to meet their initial burden that their claim fell within the purview of coverage, the insureds failed to produce any evidence refuting the insurer’s expert report that the insureds’ damage fell within a policy exclusion.  As such, the court concluded there was no coverage since no question of fact existed regarding the cause of the insureds’ loss.

Accordingly, this case illustrates the importance of retaining an expert to opine on the cause of an insured’s loss, as the failure to produce an expert report or rebuttal expert report could result in a court determining there is no question of fact regarding the cause of an insured’s loss – and thus, potentially resulting in a finding of coverage.

Thanks to Colleen Hayes for her contribution to this post.


Snow Removal Contractor Unwittingly Alters the Terms of his Contract and Finds Himself Liable

A Pennsylvania judge’s denial of a snow removal contractor’s motion for summary judgment has interesting implications for premises liability cases in the Commonwealth.  In the case of Reilly v. Main Avenue Realty Development, LP, the court addressed the liability of a snow removal contractor in a premises liability action arising from an alleged fall on an isolated patch of ice on commercial property.  The ice was allegedly created by a dripping overhang near the entrance of a store.

The contract provided that the snow removal contractor was required to treat the premises whenever there was a snow accumulation of one-inch.  However, since the contract’s inception in 2010, the contractor, by admission of his deposition testimony, would treat the premises whenever there was a snowfall, even if it was just a dusting.  In light of this admission, the Court noted that a written agreement may always be modified by subsequent conduct of the parties indicating a new or different intent under the contract, and held that the snow removal contractor was obligated, by his own past behavior, to treat the premises whenever snow fell, regardless of the accumulation.  At the time of the plaintiff’s alleged fall, the snow removal contractor had not treated the premises despite a trace amount of snowfall.

With respect to liability for the plaintiff’s alleged fall on an ice patch caused by a dripping overhand, the Court found that the snow removal contractor was not liable under the contract to treat the dripping overhang.  However, in light of evidence on the record that trace amounts of snow had fallen on the premises, the Court concluded that a question of fact existed because a jury could find that the recent snow triggered a duty on the part of the snow removal contractor to treat the premises.

In this matter, the Court applied tried and true contract principles to deny a motion for summary judgment.  Unbeknownst to many of us, our conduct in the performance of a contract may actually alter the terms of the contract and, ultimately, shift liability.

Thanks to Hillary Ladov for her contribution to this post.