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Sharply Divided Court of Appeals Removes Hurdle for Tort Plaintiffs to Gain Summary Judgment:

Ruling on an issue that has divided New York judges and "perplexed courts for some time," a split Court of Appeals ruled that plaintiffs in comparative negligence cases need not bear the "double burden" of disproving their own negligence to win on summary judgment. By Andrew Denney | April 03, 2018 at 05:36 PM

Ruling on an issue that has divided New York judges and "perplexed courts for some time," a split Court of Appeals ruled that plaintiffs in comparative negligence cases need not bear the "double burden" of disproving their own negligence to win on summary judgment. The high court's 4-3 ruling clears up an issue that has bedeviled New York courts for decades, which has resulting in inconsistent case law on the issue of whether plaintiffs have to show that they are free of negligence to succeed on a summary judgment motion when determining a defendant's liability.

Writing for the majority, Judge Paul Feinman said placing the burden on the plaintiff, a New York City sanitation worker injured on the job who sued the city government, to show an absence of fault is inconsistent with a state statute, which since 1975 has directed courts to assess a plaintiff's comparative negligence only at the damages stage. Feinman was joined in the majority by Judges Jenny Rivera, Eugene Fahey and Rowan Wilson.

But, writing for the dissent, Judge Michael Garcia, joined in the minority by Chief Judge Janet DiFiore and Judge Leslie Stein, said the fact that the city's liability was called into question in the case highlights the "unreasonableness" of the approach that his colleagues in the majority took in deciding the case.

"The facts of this case—which two courts have found created an issue of fact as to any liability on the part of defendant—highlight the unfairness of the majority's new rule," Garcia said.

On a snowy day in January 2011, Carlos Rodriguez was working in a Sanitation Department garage in Manhattan outfitting trucks with tire chains and snow plows, court papers state. As one truck was backing in, Rodriguez walked between another vehicle parked behind the reversing truck and a rack of tires. But when the truck driver applied his brakes, the truck skidded on ice, collided with the parked car and pinned Rodriguez against the tire rack.

Rodriguez was hospitalized and had to undergo spinal fusion, as well as a course of steroid injections in his lumbar region and extensive physical therapy. He was rendered permanently disabled and sued the city, alleging that it was negligent for the actions of his co-workers. But the city countered that Rodriguez was negligent because he walked behind a reversing truck.

Rodriguez moved for partial summary judgment, but Manhattan Supreme Court Justice Kathryn Freed denied the motion, finding that Rodriguez's comparative negligence was a triable issue of fact.

Rodriguez appealed the matter to the Appellate Division, First Department, but the five-justice panel that heard the case split 3-2, with the majority finding for the city and ruling that a fairer way to resolve the case would be to let a jury consider each party's negligence at a trial on liability. But the majority also noted that requiring plaintiffs to prove that they are free of fault to prevail on summary judgment is a divisive issue that has produced conflicting rulings between the state's appellate division departments and even among different sets of justices within the First Department.

Before 1975, New York followed the common-law doctrine of contributory negligence as a complete defense, meaning plaintiffs were precluded from recovery if found to be responsible in any way for their injuries. But that year, the New York State Assembly passed Article 14-4, which established New York as a comparative-fault state for tort damages, meaning plaintiffs may recover even in cases where they are more than 50 percent at fault. The statute reduced plaintiff's comparative negligence from a complete defense for defendants to a method of mitigating a plaintiff's damages.

Feinman said the approach the city used in the case is at odds with the language of the statute, which states that a plaintiff's fault in a case "shall not bar recovery," as it would flip the burden of proving the absence of comparative fault from the defendant to the plaintiff.

Joshua Kelner of Kelner & Kelner, who appeared for Rodriguez, said the majority's ruling provides a "blueprint for the courts to follow" when faced with similar scenarios.

"This ruling banishes the vestiges of contributory negligence from the rules of summary judgment," Kelner said. The case was remanded to the First Department to address the issue of liability. Assistant Corporation Counsel Tahirih Sadrieh appeared for the city in the case. A spokesman for the city's Law Department said the city is disappointed with the decision and that it could invite summary judgment in "case after case where they will serve no meaningful purpose" because evidence about the parties' conduct will be presented to the jury regardless.

The ruling also dealt a blow for some representatives of the defense bar.

The Defense Association of New York filed an amicus brief in the case calling on the Court of Appeals to affirm the lower court and deny Rodriguez's summary judgment motion, arguing that removing the requirement for plaintiffs to negate their contributory negligence to win summary judgment is unfair and a drain on judicial resources.

Heather Wiltshire Clement, president of the association, said in an email that it is too soon to determine the ramifications of the high court's decision.

"While we respect the decision of the court, the dissent's opinion appropriately stated 'assessing one party's fault with a preconceived idea of the other party's liability is inherently unfair,'" she said.


Fla update -- damage caps -- Supreme Court strikes down non-economic damage caps in the med mal statute :

The Florida Supreme Court, in a very recent decision, held that the statutory caps on non-economic damages in the medical malpractice cases violates the Equal Protection Clause of the Florida Constitution since, the Court held, the "arbitrary reduction" in compensation without regard to the severity of the injury does not bear a rational relationship to the legislature's stated interest in addressing the "medical malpractice crisis." See North Broward Hospital District v. Kalitan, 42 Fla. L. Weekly at 642c (decided June 8, 2017). This would certainly indicate the Court's slant in how it would approach challenges to caps in other substantive areas.


NY insurance update -- App. court holds that insured's late notice did not excuse carrier's late disclaimer:

The Second Appellate Department (Brooklyn, Queens and Long Island) has just issued an opinion holding that an insured's failure to timely notify the insurer of an action does not relieve the insurer of the obligation to timely disclaim. The time clock for the insurer's disclaimer obligation starts when it first learns of the grounds for a disclaimer, not when the insured notified it of the action. The court stated: "[The] 'failure of an insured to timely notify the insurer of a claim does not excuse the insurer's failure to timely disclaim coverage' . . . . 'The timeliness of an insurer's disclaimer is measured from the point in time when the insurer first learns of the grounds for disclaimer of liability or denial of coverage.' In op­position to the cross motion, [the insured] raised triable issues of fact as to whether the plaintiff [insurer] acquired knowledge of the commencement of the underlying action in April 2012, or, at the latest, October 2012, and thus, whether it timely disclaimed coverage in March 2013, on the basis of, inter alia, late receipt of a copy of the summons and complaint." See Evanston Ins. Co. v. P.S. Bruckel, Inc., 2017 N.Y. Slip Op. 03489 (2nd Dep't, 5-3-17).


Fla insurance update -- subro -- app. court holds that the SOL begins running at time of the occurrence of damage, not time of underlying negligent act that brought it about:

This new decision from the Third District Court of Appeal (Miami-Dade County and the Keys), the court held in this subro action by the insurer against the contractor defendant alleging that the defendant negligently repaired the insured's roof resulting in water intrusion and water damage, that the limitations period commenced at the time of the water damage and not at the time of the underlying negligent repair work. Accordingly, the carrier's subro action that was filed within 4-years of the time of the occurrence of the damage was timely, and the appellate court reversed a decision of the trial court that dismissed the action. See Companion Prop. & Cas. Group v. Built Tops Building Services, Inc., 42 Fla. L. Weekly D1085 (3d DCA, May 10, 2017).


Fla. update -- Supreme Court rejects Daubert standard for admission of expert testimony:

In a very recent opinion, the Florida Supreme Court rejected the Daubert standard for the admissibility of expert testimony on grounds that the standard presented "grave constitutional concerns," which included undermining the right to a jury trial and denying access to the courts. See In re: Amendments to the Florida Evidence Code, 2017 Fla. LEXIS 338 (S. Ct., Feb 16, 2017). As a result, the Frye standard, a far more liberal standard, will govern the admission of expert testimony in Florida. The Florida Legislature actually codified the Daubert standard in Florida by amending Florida Statute section 90.702 in 2013. Chapter 90 of the Florida Statutes makes up the Florida Evidence Code. However, the Florida Constitution vests in the Florida Supreme Court the sole authority to decide matters of practice and procedure in Florida courts, whereas the Legislature has authority over substantive law. The Florida Bar Association, via the influence of the plaintiffs' bar, petitioned the Florida Supreme Court to overturn the 2013 amendment adopting the Daubert standard, arguing that the Legislature exceeded its constitutional authority by attempting to modify state court procedures.

Accordingly, in its recent opinion, the Florida Supreme Court held that the amendment to Florida Statute section 90.702 is unconstitutional, but only "to the extent that it is procedural." However, the Florida Supreme Court previously held that when the Court has "promulgated rules of practice and procedure, and a statute provides a contrary practice or procedure, the statute is unconstitutional to the extent of the conflict." See Abdol v. Bondi, 141 So.3d 529 (Fla. 2014). In the recent opinion, the Florida Supreme Court did not address whether the statute itself (section 90.702) is substantively unconstitutional, finding that such a decision must be left "for a proper case and controversy." Thus, the opinion does leave the door (very slightly) open for a potential argument that the Daubert standard codified in section 90.702 is substantive as to certain types of cases.


NY commercial premises -- slip and fall on tracked-in rainwater -- no legal obligation to put down floor mats:

With regard to any commercial premises risk that you have out there, we have a new and very pro-defendant decision from the Supreme Court, Nassau County. In this case, the Defendant, which operated a bar and restaurant, moved for summary judgment against the Plaintiff, Tappeto's, complaint in this action to recover for personal injuries allegedly sustained at the premises when she slipped and fell. Tappeto testified she was at defendant's premises in the outside area, and walked inside the bar when it began to rain, slipping and falling. She claimed there was nothing laying down on the floor, including mats. Defendant's owner testified that maintenance staff would mop rainwater and other spills, as necessary. Defendant's manager testified a floor mat was placed in front of every door leading to the outside and when it rained there were always mats at entrance ways to every door. The court found defendant demonstrated prima facie entitlement to summary judgment by showing it did not create the condition causing Tappeto's fall, and had no actual or constructive notice of it. The court held that Tappeto failed to raise an issue of fact to warrant denial of the summary judgment motion, but, most significantly, the court noted that even assuming there was no mat, defendant was not legally required to cover the floors with mats. Tappeto's reliance on its expert's affidavit in opposition was insufficient, and, thus, defendant's motion was granted.

This is a pretty significant holding since in almost every case involving rainwater that was tracked into a business premise and the owner or manager testifies that they had maintenance personnel mopping as necessary, the plaintiff gets around that argument by saying that floor mats should have also been put down inside the doors. In this case, the court actually says that placing down floor mats is not legally required. It will be interesting to see what happens with this one on appeal. See Tappeto v. Braccos Clam & Oyster Bar, Inc., Index No. 606071/14 (Sup. Ct., Nassau Co., decided December 12, 2016), printed in New York Law Journal 1202775694285 (Jan. 3, 2017) at *1.



The First Department (Manhattan and Bronx) rejected plaintiff insurer's argument that it was not required to pay the cost of its insured's settle­ment of a class action claim under the Fair Credit Reporting Act (FCRA) because the settlement constituted a penalty (not covered by the policy) rather than compensatory damages. The court stated:

To make out a claim under the FCRA (15 USC § 1681 et seq.), the complaint must allege, inter alia, injury in fact, a "concrete and particularized" and "actual or imminent" "invasion of a legally protected interest," i.e., the statutory right to the fair handling of the plaintiff consumer's credit information ... . The remedy for "willful" failure to comply with a requirement of the statute is "any actual damages sustained by the consumer by the failure or damages of not less than $100 and not more than $1,000," and "such amount of punitive damages as the court may allow," as well as costs and reasonable attorneys' fees ... . Since the consumer must elect the option of either actual or statutory damages, and may also recover punitive damages, it is reasonable to infer, as the motion court did, that the actual and the statutory damages serve the same purpose ... . Moreover, the statute provides separately for a civil penalty (recoverable by the Federal Trade Commission) ... . Plaintiff argues that the limitation of damages to a "willful" violation of the statute evinces a legislative intent to penalize intentional misconduct, rather than compensate for actual damages sustained, but this is not so, since willfulness as a statutory condition of civil liability "cover[s] not only knowing violations of a standard, but reckless ones as well ... ." Thus, it is clear that Congress intended the statutory damages provided for by the FCRA to be compensatory and not a penalty ....

Navigators Ins. Co. v. Sterling Infosystems, Inc., 2016 N.Y. Slip Op. 08941 (1st Dep't., 12-29-16).


Significant new Fla. Supreme Court decision on causation of loss in all-risk policies:

In Sebo v. American Home Assurance Co., which was decided by the Florida Supreme Court just a few days ago, it was held that where the loss to the insured's home was caused by multiple perils, some of which are covered by the policy and some of which are excluded, the applicable theory of recovery is the "concurrent causation" doctrine, not the "efficient proximate cause" doctrine. Under this doctrine, coverage exists where the insured risk is not the prime efficient cause of the loss, but, rather, is only a concurrent cause loss that works in conjunction with other causes to bring about the loss. Here defective construction – an excluded peril – permitted wind driven rainwater intrusion into the insured home. The carrier argued that were it not for the excluded defective construction, there would have been no water intrusion, and, thus, the excluded defective construction was the prime effective cause of the loss. The Court disagreed. It did a review of mostly out-of-state case law to reach its holding that the concurrent causation doctrine shod be the applicable doctrine in Florida in these circumstances. See Sebo v. American Home Assurance Co., 41 Fla. Law Weekly at 582a (decided Dec. 1, 2016).


NY auto negligence -- First Department holds that in order to obtain an SJ against a defendant, plaintiff must also show complete absence of comparative fault:

In this significant new decision, the First Appellate Department (Manhattan and the Bronx), over an extensive two-justice dissent, determined that, where a question of fact has been raised in an accident case about whether plaintiff was comparatively negligent, summary judgment finding defendant liable cannot be granted even when the defendant was clearly negligent. Here, the plaintiff was alleged to have been injured while walking behind a sanitation truck which was backing up. The court succinctly stated its holding as follows:
In this case, we are revisiting a vexing issue regarding comparative fault: whether a plaintiff seeking summary judg­ment on the issue of liability must establish, as a matter of law, that he or she is free from comparative fault. This issue has spawned conflicting decisions between the judicial departments, as well as inconsistent decisions by different panels within this Department. The precedents cited by the dissent have, in fact, acknowledged as much. After a review of the relevant precedents, we believe that the original approach adopted by this Department, as well as that followed in the Second De­partment, which requires a plaintiff to make a prima facie showing of freedom from comparative fault in order to obtain summary judgment on the issue of liability, is the correct one. . . . The issue that arises in the context of a summary judgment motion brought by a plaintiff on the issue of liability is whether, as the dissent posits, the motion should be granted and the issue of contributory negligence considered during the damages portion of the case or where the defendant raises an issue of fact with respect to the plaintiff's negligence and the plaintiff fails to show the absence of negligence on his or her part, the motion must be denied and that issue considered during the liability phase of the trial . . .. [T]he latter is the fairer, and therefore the proper way to proceed.

See Rodriguez v. City of New York, 2016 N.Y. App. Div. LEXIS 5821, Slip Op. 05943 (1st Dept., Sept. 1, 2016).


Fla Products Liability -- app. court holds no claim where product becomes structural improvement to real estate:

This new case from the Florida First District Court of Appeal (controls northern Florida), the plaintiff was allegedly injured when a chair in a movie theater broke. The chair was part of a seating system that was bolted to the floor. The plaintiff sued the contractor who sold it to the theater owner and who installed it. Plaintiff also sued the distributor of the chair system. The court held that there is no strict products liability claim recognized in Florida common law where the product becomes a permanent or structural improvement to real estate. The court said:
Thus, we . . . hold that the seating system was a structural improvement to real property. As the Florida Supreme Court recognized in Easterday v. Masiello, 518 So. 2d 260, 261 (Fla. 1988), "it has long been recognized that the doctrine of strict products liability does not apply to structural improvements to real estate." See also Bernard Schoninger Shopping Centers, Ltd. v. J.P.S. Elastomerics, Corp., 102 F.3d 1173, 1177 (11th Cir. 1997) (applying Florida law to define "improvement to real property" term in statute of limitations as a "valuable addition made to property (usually real estate) or an amelioration in its condition, amounting to more than mere repairs or replacement of waste, costing labor or capital, and intended to enhance its value, beauty or utility or to adapt it for new or further purposes." (quoting Hillsboro Island House Condo. Apartments, Inc. v. Town of Hillsboro Beach, 263 So. 2d 209, 213 (Fla. 1972). . . . Here, we hold that the movie theater seating system was a structural improvement to real property, and, thus, not a product. Based upon the foregoing, we affirm the trial court's order granting Appellees' motions for summary judgment and amended final judgment.

See Simmons v. Rave Motion Pictures Pensacola, L.L.C., 41 Fla. L. Weekly D1939, 2016 Fla. App. LEXIS 12696, at *9 (1st DCA, Aug. 22, 2016).


Update -- Products Liability -- Aviation -- NY Jurisdiction:

The federal court lacks in personam jurisdiction over Airbus in a products liability case for injuries a flight attendant allegedly suffered on a flight from Boston to Washington, D.C., the Eastern District has ruled. Judge Hurley granted a motion to dismiss the case on jurisdictional grounds. The case was brought by flight attendant Mary Jo Merritt. Judge Hurley rejected her argument that Airbus had sufficient contacts in New York to support personal jurisdiction over the company. Merritt was working United Airlines Flight 517 from Logan Airport to Washington Dulles Airport in an Airbus A320S aircraft, which has two side-by-side jump seats for flight attendants. The space under one of the jump seats is where attendants store their emergency demonstration equipment. While Merritt was trying to stow her equipment, a fellow attendant stood up out of the other jump seat, causing it to retract and slam into Merritt's face, breaking her glasses and causing her to fall into a bulkhead. In her suit against Airbus Americas Inc. (AAI) and Airbus S.A.S., Merritt alleged the jump seats were designed in a careless, reckless and negligent manner. Judge Hurley analyzed Airbus' motion to dismiss based on a lack of personal jurisdiction under C.P.L.R. §302(a), New York's "long-arm" statute. Airbus argued that it leased the aircraft to United in France and that it had not availed itself of the privilege of conducting actives in New York, and that there was no "substantial nexus" between the business it transacts in New York and the injuries to Merritt. Judge Hurley said Merritt's contention that Airbus regularly conducts business in New York "is no more than a legal conclusion insufficient on its own to establish jurisdiction." Interestingly, Merritt also contended jurisdiction should not be "limited to state borders," especially "while AAI internet publications and communications now travel at the speed of light to every country on the planet." But, Judge Hurley said "the internet's existence and AAI's use of it to advertise are not sufficient to subject AAI to personal jurisdiction." The judge said Merritt also failed to show a substantial nexus between her claim and AAI's alleged contacts with New York. "Here plaintiff fails to allege where her cause of action arose, other than that the injury occurred sometime between taking off in Boston and landing at [the Washington airport]," Hurley said. "Moreover, she has failed to demonstrate any relationship between her alleged injuries and the state of New York. As a result, she has not met her burden with respect to CPLR § 302(a)(1)."

See Mary Jo Merritt v. Airbus Americas, Inc. and Airbus, S.A.S., 2:15-CV-05937, 2016 U.S. Dist. LEXIS 111572 (E.D.N.Y. Aug. 22, 2016).


Bad faith update -- California :

A California appeals court has just made it harder for insurance companies to defend bad-faith claims. The court's ruling against Mercury Casualty Co. arises from a 2010 collision that left two pedestrian injured. The insured driver who hit plaintiffs, Barickman and McInteer, as they crossed a road in Long Beach, California, in July 2010 was convicted of driving while intoxicated, and along with prison time, was ordered to pay in excess of $150,000 in restitution. In December, Mercury offered to settle the claims for the driver's policy limits of $15,000 per person, and the two plaintiffs agreed. However, in releasing their claims, each added the language, "[t]his does not include court-ordered restitution." Several weeks lapsed as Mercury considered whether it would agree to the additional language. On Jan. 7, 2011, the final deadline for approval, the plaintiffs' attorney walked away from the negotiations, writing to the insurance representative that Mercury had "dilly dallied for months." Subsequent litigation against McDaniel and Mercury resulted in a judgment against Mercury of $3 million, plus interest and legal costs. Mercury was, in the end, required to pay more than $4 million after the Second District Court of Appeal in Los Angeles concluded in a very recent decision that it had unreasonably neglected to follow through on its early settlement offer.

The decision means that an offer to settle for policy limits is not insulation against excess liability. That's quite different from the 2014 Graciano decision, which also involved Mercury, which held that when an insurer timely tenders its full policy limits in a settlement offer, it has "acted in good faith as a matter of law." In Barickman, the court said Mercury was stretching Graciano too far by arguing that its $30,000 settlement offer immunized the company from a bad faith finding. Mercury's position, if accepted, "would mean an insurer that at one point acted in good faith during settlement negotiations has fully discharged its obligations under the implied covenant and has no further responsibility to make reasonable efforts to settle a third party's lawsuit against its insured," the court wrote. This decision obviously offers new potential ammunition to plaintiff attorneys in the context of bad faith-based excess liability in California. See Barickman v. Mercury Cas. Co., 2016 Cal. App. LEXIS 681 (Ca. App., 2d Dist., July 25, 2016).


NY products -- high court explains circumstances where a manufacturer has duty to warn of dangers where its product is used in conjunction with the products of another:

There is a new decision of the Court of Appeals in N.Y. The court was called upon to decide when, if ever, a manufacturer must warn against the danger inherent in using the manufacturer's product together with a product designed and produced by another company. The court held that "consistent with our decision in Rastelli v. Goodyear Tire & Rubber Co., 79 N.Y. 2d 289 (1992), we hold that the manufacturer of a product has a duty to warn of the danger arising from the known and reasonably foreseeable use of its product in combination with a third-party product which, as a matter of design, mechanics or economic necessity, is necessary to enable the manufacturer's product to function as intended." it had no duty to warn the users of its valves of asbestos-related hazards arising from the use of the valves in conjunction with third-party products containing asbestos.

The case involved a manufacturer of valves, Crane Co., that were typically used in conjunction with asbestos gaskets and packing products in the overall final, end-product. The valves themselves contained no asbestos. The Appellate Division (intermediate appellate court in N.Y.) decided that, although Crane had not manufactured, designed or sold the asbestos-containing products that Dummitt, Inc. (a third party manufacturer of the final, end-product) had installed on its valves, Crane had a duty to warn the users of its valves that the use of the valves with third-party asbestos-based products could result in exposure to hazardous asbestos particles. Distinguishing Rastelli, supra, on its facts, the Appellate Division concluded that Crane's specification of asbestos-laden gaskets, packing and insulation, its promotion of the use of such asbestos-based replacement parts "strengthened the connection" between Crane's products and the other manufacturers' asbestos-laden products, and therefore, the Appellate Division ruled, Crane's "substantial interest" in the installation of asbestos-based products on its valves created a duty to warn of the dangers of that practice, quoting Surre v. Foster Wheeler LLC, 831 F Supp. 2d 797, 801 (S.D.N.Y. 2011).

The Court of Appeals agreed, stating:
[W]e engender no comparable unfairness in requiring a manufacturer to issue warnings where, as here, it "substantially participates in the integration of the two products" (Restatement [Third] of Torts § 5 [b]) in a manner consistent with the principles outlined in this decision. In that particular scenario, the manufacturer gains the same knowledge of the peril as it would have acquired via inspection or testing, and there is no reason to relieve the manufacturer of the obligation to provide warnings about that peril to those who might foreseeably use the products together (see Hoffeditz v. AM Gen., LLC [In re Asbestos Products Liability Litigation], 2011 US Dist LEXIS 110282, *10-*11 [EDPA 2011]). Indeed, a company that "substantially participates in the integration" of the two products in a manner that creates the necessity of a hazardous joint use and evinces the requisite intent, knowledge and foreseeability can surely be expected to learn of and warn of the relevant dangers (Restatement [Third] of Torts § 5 [b]).

See NYC Asbestos Litigation, No. 83 & No. 84, New York Law Journal 1202761181692, at *1 (Ct. App., Decided June 28, 2016).


NY coverage -- asbestos coverage and allocation:

The Court of Appeals ruled Tuesday that each excess insurance policy covering Viking Pump and Warren Pumps can be held liable for the entire loss resulting from asbestos claims against the manufacturers, rejecting pro rata allocation and also rejecting the insurers' argument that all of the available primary policies must be exhausted before excess coverage kicks in. See Matter of Viking Pump, No. 59, New York Law Journal 1202756639742, 2016 NY LEXIS 1018 (Ct. App., Decided May 3, 2016).


CA coverage -- equitable contribution to defense costs among primary carriers:

In an equitable contribution action to recover pro rata defense costs between successive primary insurers that had agreed to share indemnification costs under commercial general liability policies to settle certain construction defect claims, while only one insurer had provided a defense, an "other insurance" provision purporting to extinguish the duty to defend when another insurer provided a defense was unenforceable. This decision is particularly interesting because this is the exact opposite of what result in this context in Florida because of the Argonaut rule.

See Certain Underwriters at Lloyds, London v. Arch Specialty Ins. Co., No. C072500, 2016 Cal. App. LEXIS 275, at *1 (Ct. App., Apr. 11, 2016).


NY coverage update -- app. court holds that carrier's failure to properly disclaim coverage under an applicable exclusion cannot be used to create coverage by waiver or estoppel:

In this new decision, the Second Appellate Department (Brooklyn, Queens and Long Island) noted that the loss at issue -- the collapse of a retaining wall caused by run-off water -- was the subject of a policy exclusion, an issue about which there was no dispute. Plaintiff/insured argued the insurer's disclaimer letter was ineffective because it did not identify the precise ground upon which the disclaimer was ultimately based. The Second Department, applying common-law waiver and estoppel principles, rejected the argument, holding that the failure to disclaim based upon an exclusion will not give rise to coverage which does not exist: "[T]he defendants' failure to specifically identify the flood and surface water exclusions in its disclaimer letter must be considered under common-law waiver and/or estoppel principles . . .. Waiver, which is a voluntary and intentional relinquishment of a known right, does not apply here because 'the failure to disclaim based on an exclusion will not give rise to coverage that does not exist' . . .. Under the principles of estoppel, an insurer, though in fact not obligated to provide coverage, may be precluded from denying coverage upon proof that the insurer 'by its conduct, otherwise lulled [the insured] into sleeping on its rights under the insurance contract.' Estoppel requires proof that the insured has suffered prejudice by virtue of the insurer's conduct. Because the plaintiff failed to make the requisite showing of prejudice, there was no basis to estop the defendants from relying on policy exclusions not detailed in their letter disclaiming coverage." See Provencal, LLC v. Tower Ins. Co. of N.Y., 2016 N.Y. Slip Op. 02644 (2nd Dept, decided 4-6-16)


Update -- NY coverage -- 1st Department make it clear that disclaimer not required where there is no coverage in the first instance :

The First Department (controls Manhattan and the Bronx) recently held that the declarations page of defendant's insurance policy described what the policy covered, not exclusions from what otherwise would be covered, and this distinction was crucial because the insurer was late in disclaiming coverage. If the disclaimers had been based upon an exclusion from coverage, the disclaimers would have been invalid as untimely, the court stated. But because the disclaimers were based on the scope of the coverage of the policy in the first instance, the disclaimers were unnecessary. Here it was deemed that injury from falling concrete during demolition of a chimney was outside the scope of the policy, which was limited to: "(1) carpentry — interior; (2) dry wall or wallboard installation; and (3) contractors . . . work in connection with construction, reconstruction, repair or erection of buildings." The court held that a "[d]is- claimer pursuant to section Ins. Law §3420(d) is unnecessary when a claim falls outside the scope of the policy's coverage portion. Under those circumstances, the insurance policy does not contemplate coverage in the first instance, and requiring payment of a claim upon failure to timely disclaim would create coverage where it never existed. By contrast, disclaimer pursuant to section 3420(d) is necessary when denial of coverage is based on a policy exclusion without which the claim would be covered . . .." See Black Bull Contr., LLC v Indian Harbor Ins. Co., 2016 NY Slip Op 00002 (1st Dept., decided 1-5-16).


Update -- Fla Products Liability -- Supreme court adopts consumer expectation test in design defect cases:

In this very recent decision of the Florida Supreme Court, the Court specifically rejected the "risk/utility" test of the Restatement of Torts (Third), and adopted the "consumer expectation" test of the Restatement of Torts (Second) in design defect cases, finding that the consumer expectation test is more in line with the historical purpose of the state's adoption of strict products liability theory – i.e., removing the burden from consumers of having to prove product defect. It noted that the risk/utility test required that a consumer would have the burden to prove the existence of a safer alternative design, and, essentially, the Court felt that this burden did not comport with the historical purpose of strict products liability theory. Nonetheless, while the consumer expectation test did not require that a consumer/plaintiff prove up an alternative safer design, a plaintiff was still free to prove and argue the existence of a safer alternative design, if s/he could do so, as part of the overall proof under the consumer expectation test. See Aubin v. Union Carbide Corp., 40 Fla. Law Weekly 596a (Oct. 26, 2015). This is a very significant decision.


Fla. coverage update -- app. court holds that underlying case be stayed while carrier's DJA proceeds to resolution first:

Another brand new appellate decision following the 2007 Higgins v. State Farm decision, this time holding that the trial court departed from the essential requirements of law by not staying the underlying tort case so that the insurer's DJA could proceed to conclusion, first.  The logic in the case is that it makes more sense to resolve the insurer's duty to indemnify and defend first as it will promote a quicker settlement and it is unfair to require the insurer to defend the entire underlying suit only for it later to be determined that there was no coverage.  See Homeowners Prop. & Cas. Ins. Co. v. Hurchalla, 40 Fla. L. Weekly D1887 (4th DCA, Aug. 12, 2015).  The 4th District Court of Appeals, by the way, pertains to Broward County up to in including Martin County – basically Ft. Lauderdale up to Stuart/Ft. Pierce area.  As you probably know, this result would go the other way in most states and the DJA, not the underlying case, would be stayed.  This can be a great tool to be used here in Florida where you are defending under an ROR with very questionable coverage.  A DJA can be filed and a "Higgins motion" to stay the underlying case can be made.  The case law is quite strong for the insurer on this matter, now. 


Florida bad faith update -- 11th Circuit issues favorable pro-insurer decision in the dangerous claims-handling context of multiple claimants against a minimal policy:

A new case from the 11th Circuit Court of Appeals, applying Florida law, that is very pro-insurer and it is in the context of the complicated and dangerous claims handling scenario where the carrier is confronted with multiple claims as against a minimal policy.  See Mesa v. Clarendon National Ins. Co., 2015 U.S. App. LEXIS 15203 (11th Cir., August 28, 2015).  The case arose out of a car accident resulting in four very serious injuries.  Clarendon Insurance Company had a 10/20 policy covering the at-fault car and its driver.   Once Clarendon received notice of the claim, Clarendon promptly opened a file, assigned an adjustment company to investigate and also assigned a defense attorney.  One particular plaintiff attorney, attorney Friedman out of Miami, promptly demanded the $10,000 limits that would be applicable to his particular client.  After identifying all the potential claimants, the defense attorney wrote a letter to all claimants’ counsel seeking a meeting to try to work-out a global settlement.   Three of the claimants counsel agreed to try to globally settle, but attorney Friedman did not respond and separately filed suit, though he did not serve it right away and did not advise anyone that he had filed.  In the end, Friedman claimed that Clarendon failed to accept his $10,000 settlement demand and was thereby in bad faith.  He proceeded to obtain a $750,000 excess judgment.  His case was largely based upon the Florida law that does, in fact, permit a carrier to pay up to and including the full limits to one particular claimant to the exclusion of the others if that is the prudent thing to do under the circumstances.  See Farinas v. State Farm, 850 So.2d 555 (2003)(holding that a carrier must diligently assess all claims and undertake a claims settlement strategy designed to minimize the maximum amount of potential exposure to the insured even if that means settling with certain claimants, or even one claimant, to the exclusion of others).  Clarendon, on the other hand, argued that it had no duty to indiscriminately accept the single demand of attorney Friedman’s client and that it acted promptly and diligently in offering the aggregate limits and in trying to get all claims resolved for the insured.  It moved for summary judgment.

The district court granted summary judgment for the Clarendon, saying that under all the circumstances, it acted promptly and diligently in trying to resolve the overall set of claims and that no jury could properly conclude that it acted in bad faith, under the circumstances.  The 11th Circuit affirmed the summary judgment.  It noted that Clarendon moved promptly, and, significantly, the court held that Clarendon’s pursuit of a global settlement was consistent with its duty of good faith under Florida law.  Mesa, supra, at 13.  This is a very significant holding since writing a letter to all claimants’ counsel tendering the aggregate limits and seeking to arrange a meeting to try to globally settle is a much easier and safer way to proceed than having to try to pick which claim or claims potentially pose the most liability to the insured and settling those, as Farina suggests must be done.  Note that there will certainly still be situations where the value one claimant so totally dwarfs the others that prudent claims handling would dictate that it should be settled to the exclusion of the others, under the Farinas line of cases.  However, where you have a handful of claimants each seriously injured, or each similarly injured, and a minimal policy, this new Mesa decision gives strong support for just tendering the aggregate limits globally and making prompt efforts to globally settle by reaching out simultaneously to all the claimants’ counsel.

Further, the Mesa court also emphasized that no jury could reasonably find against Clarendon because the standard is bad faith not negligence.  Id. at 14.  This seems an obvious statement of law, but in Florida it actual runs against the gist of the Florida standard jury instruction that applies in a bad-faith-failure-to-settle case, which reads much more like a negligence standard, i.e., whether the insurer should have settled under all the circumstances . . ..   So, when a court as influential as the 11th Circuit makes the statement that the standard is bad faith not negligence, it must be noted for use in future motions for summary judgment.


fed. court holds that statutory bad faith claim asserted in midst of ongoing state court tort case is separately removable :

In this very new decision of the Middle District of Florida, the plaintiff was injured in an auto accident for which injuries she sued the tortfeasor and State Farm which provided Underinsured Motorist coverage to her. The tortfeasor's carrier tendered its $25,000 limits. State Farm would not, after some litigation, tender its UIM limits. The plaintiff after quite a bit of rather protracted litigation, moved to amend her complaint to assert a statutory bad faith claim against State Farm pursuant to Fla. Stat. §624.155, which, as to such a first-party bad faith claims, essentially just codifies the traditional common law standard of "failure to settle when the insurer should have done so under all the circumstances," but makes it applicable to a first-party claim, which was not the case at common law. State Farm made an interesting move; it removed the bad faith claim to the federal court within 30 days of trial court's order permitting the amendment. Plaintiff moved to remand, arguing many things as you would expect under these circumstances, but mainly arguing that removal was improper because the underlying liability and damages were not yet determined, and also that only an entire case could be removed, not a single claim, pointing out that the entire case was not removable because of the presence of in-state defendants and because the case had been going on for more than one year (as you probably know, the removal statute prohibits removal after a case has been pending for one year even if there is otherwise diversity jurisdiction). State Farm argued that the bad faith claim was essentially a separate and new claim against only it; that the other in-state defendants were irrelevant as to the bad faith claim, and that the bad faith claim would have a life of its own well after the resolution of the underlying tort case as to which the other in-state defendants would not be parties. So, State Farm argued that it was entitled to have the bad faith claim litigated in the federal court even though it would be bound by the liability and damages findings made by the state court jury. Interestingly, the district court agreed with State Farm and denied the plaintiff's remand motion. It specifically held that an amendment asserting a statutory bad faith claim is removable. Obviously, this is a very useful thing to do if you have one of Florida's more problematic plaintiff lawyers assert a 624.155 bad faith claim against you in the middle of litigation because he is unhappy with your settlement offers, which happens with some frequency down here. Almost always, you can get the state court judge to stay or abate it – or even dismiss it without prejudice – pending the outcome of the liability and damages part of the case. But it is a whole lot better to remove the bad faith claim to the federal court and then have the federal court stay the bad faith claim pending the outcome of the underlying tort case, or dismiss it without prejudice, so that you've preserved the federal jurisdiction for the ultimate resolution of the bad faith claim – and in Florida this can make a huge difference. In fact, the district court in this new case did, by a separate order, dismiss the bad faith claim against State Farm as premature, but when it is refiled, it will have to be refiled in federal court because it is obviously otherwise removable. This new decision is Thorne v. State Farm Mutual Automobile Ins. Co., 25 Fla. L. Weekly Fed. D117 (M.D. Fla., 2015).


Fla. update -- new appellate decision holds that plaintiff's testimony re: anguish from his dire financial condition caused by accident not relevant:

We have a new, useful appellate decision here in Florida that finally, clearly holds that a plaintiff's testimony about the distress and anguish created by his dire financial condition that was allegedly created by reason of the auto accident – among other things having his house foreclosed upon by his mortgagee bank – is not relevant. That testimony along with testimony as to how long it took the defendant to admit liability in this rear-ender, auto case required a new trial, the Fourth District Court of Appeals (Ft. Lauderdale and West Palm Beach areas) recently held. See Torres-Hutado v. DeSouza, 40 Fla. L. Weekly D891 (Fla. 4th DCA April 15, 2015)


Fla. coverage update -- new decision suggests injury-in-fact is the trigger of CGL policy in latent damage case:

We have a new and potentially very significant new decision from the 11th Circuit federal court of appeals that specifically held that a district court did not err in applying injury-in-fact trigger theory arising out of a Florida construction defect case against an insured homebuilder covered by a Mid-Continent CGL policy. See Carithers v. Mid-Continent Cas. Co., 25 Fla. L. Weekly Fed. C1068 (11th Cir., April 7, 2015). This goes against other, earlier Florida federal cases that seem pretty squarely to have held that manifestation of damage is the trigger of a CGL policy, such as the Auto Owners v. Travelers decision. This new decision noted the uncertainly of Florida state court decisions on the trigger issue, and because of the uncertainty, it held that Mid-Continent had to resolve any doubt in favor of the insured and defend its insured homebuilder. It also expressly agreed with what was essentially an injury-in-fact trigger analysis contained in the old Trizec Properties, Inc. v. Biltmore Construction Co., 767 F.2d 810 (11th Cir. 1985) decision. Interestingly, however, it did not refer the matter to the Florida Supreme Court even though it expressly stated that Florida law is uncertain on the trigger issue, especially in latent defect cases. Accordingly, anyone making an injury-in-fact argument in Florida now has a new and pretty strong decision to cite.


NY auto update -- premature birth claim held to satisfy serious injury threshold:

In this very recent and potentially far-reaching decision from the Bronx Supreme Court (controlled by the First Appellate Department) the defendant, Behnke, moved for summary judgment arguing Rivera did not suffer a "serious injury" under Insurance Law §5102(d), i.e., N.Y.'s no-fault threshold statute. The plaintiff, Rivera, moved for summary judgment on the issue of liability after being rear-ended by Behnke, while 32-weeks pregnant. She had a c-section three days later, claiming the accident caused the premature birth which necessitated the resulting month-long NICU admission for the infant. Rivera was granted summary judgment on liability. On the defendant's ensuing summary judgment motion on the issue as to the premature birth claim, Behnke argued that the "loss of fetus" definition of the serious injury threshold statute was not satisfied because, here, the fetus was born alive. Behnke had an on-point decision from the Second Appellate Department to support this argument. But the Bronx is controlled by the First Appellate Department which has not addressed this issue. In a very long decision that appears to be rather results-oriented, the court stated that rather than having to connect the qualifying serious injury to another category of injury (usually a separate orthopedic injury sustained by the plaintiff mother), the "loss of fetus" category should be sufficient to stand alone as grounds for recovery in a premature birth claim, noting it is "problematic" that what disqualified premature birth from recovery was the fact the fetus was born alive. As Behnke's experts failed to eliminate the accident as the possible cause of the premature birth, Behnke's motion for summary judgment was denied. Thus, the Supreme Court in Bronx County has squarely urged the First Appellate Department to rule contrary to the Second Department on the issue, and if so, there will be automatic conflict-based jurisdiction to the Court of Appeals. See Rivera v. Behnke, 350375/2012, NYLJ 1202722907402 (Sup. Ct., Bronx Co, March 31, 2015).


NY maintains distinction between intentional acts and intentional acts that allegedly cause unintended consequences -- carrier must defend as to the latter even where the insured pleaded guilty to assault:

In this very new decision, the insurer United Services Automobile Association (USAA) sought a declaration it had no duty to defend or indemnify insured, Iannuzzi, in an underlying personal injury suit, moving for summary judgment. Iannuzzi cross-moved for summary judgment. USAA argued as Iannuzzi pleaded guilty to criminal assault with intent to injure another person in connection with the conduct alleged against him in the underlying suit, he was not entitled to indemnity or a defense under his homeowners insurance policy. Iannuzzi argued USAA had a duty to defend and indemnify him as the allegations in the underlying complaint fall within the scope of coverage, without regard to factual issues that may develop. The court ruled, after an examination of the underlying action's complaint, Iannuzzi was entitled to coverage under the policy, noting it alleged Iannuzzi negligently caused injuries, and if the allegations could be proven they would fall within the scope of the policy as a covered occurrence. It stated the Court of Appeals has previously defined an accident as pertaining not only to unintentional, but to intentional events which unintentionally result in injury or death. Thus, USAA was obligated to defend Iannuzzi in the underlying action, but if it had to indemnify Iannuzzi raised an issue of fact to be resolved in that action. See United Services Automobile Assoc. v. Iannuzzi, 150319/14, NYLJ 1202717187148 (Sup. Ct., N.Y. Co., January 21, 2015).

You can access the decision at the following NYLJ link:


Release/exculpatory clause -- very recent favorable Fla Supreme Court opinion:

In this very recent decision of the Supreme court of Florida, it was held that an exculpatory clause/release of liability was not ineffective merely because it failed to contain express language releasing the defendant from liability for his or her own negligence. The case involved a negligence action against “Give Kids the World, Inc.,” a non-profit entity specializing in providing “storybook” vacations for seriously ill children. As part of the application process the injured minor plaintiff’s parents signed a “wish request form” for their disabled child that contained a liability waiver that released the defendant for any cause of action or liability arising out of the fulfillment of the minor’s wish. Needless to say, the minor was injured while participating in the storybook vacation. The intermediate appellate court found the waiver invalid because it did not expressly make it clear that it included liability for the defendant’s own negligence. In fact, it didn’t use the word negligence or negligent. The Supreme Court reversed, finding that such language is not necessary as long as the waiver/release is otherwise clear, as it said this clause was, and that the guiding principal should be giving effect to the intent of the parties. See Sanislo v. Give Kids the World, Inc., 40 Fla. Law Weekly, No. 7 at S79 (decided Feb. 12, 2015).


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