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NY update -- bad faith failure to settle/excess liability:

The Third Appellate Department, reversing the Supreme Court (the trial court level in NY), recently held that there was a question of fact whether the defendant liability insurers were in bad faith for failing to settle a multi-million-dollar medical malpractice claim. The facts are interesting but too de­tailed to fully summarize here. To establish bad faith in failing to settle a liability claim, the Court stated that the insured must show that the insurer's conduct constituted a "gross disregard" of the insured's interests. The Court further refined this as being "deliberate or reckless failure to place on equal footing the interests of its insured with its own interests when considering a settlement offer . . .." But, notwithstanding the gross negligence or recklessness standard, which is certainly at least facially an elevated liability standard, the criteria to assess whether this standard has been violated, per this decision, is pretty much just like in the run-of the-mill failure to settle-type excess liability case. This quote from the decision sums it up:

It is necessary to consider all the facts and circumstances in gauging whether an insurer acted in bad faith in addressing settlement. Key factors include the plaintiff's likelihood of success, the potential magnitude of a verdict and the corresponding financial burden on the insured and the information available to the insurer at the time the settlement demand was made. . . . It was clear from the inception of this case that if a jury held [the doctor] accountable, the verdict would exceed the total coverage — and that, indeed, was the [plaintiffs'] settlement position throughout.


See Healthcare Professionals Ins. Co. v. Parentis, 2018 N.Y. Slip Op. 07224, 2018 N.Y. App. Dive. LEXIS 7187 (3rd Dep't Oct. 25, 2018). New York has always been deemed a very difficult place for insureds to show bad faith, at least on failure to settle-type of cases, and with good reason. It's obvious that bad faith attorneys who represent plaintiffs and insureds will greatly welcome this decision.

 

Fla update -- coverage -- new, pro-insured late notice decision from Fl. App. Court:

We have a very new decision from the Fourth District Court of Appeals, which controls Ft. Lauderdale and West Palm areas, that seems to be going out its way to be pro-insured on the late notice prejudice standard. In this late notice action brought by the carrier to void the coverage based upon the insured's failure to appear for a statement three times, the 4th District required a showing of material failure to cooperate that causes substantial prejudice to the insurer. This was odd because the court adopted the language of a 1985 Supreme Court case, Bankers Ins. Group v. Macias, over a much more recent, 2014 Supreme Court decision, State Farm v. Curran. The latter decision only requires that the notice be late and actual prejudice. These were auto liability policies, but the same standard would likely also apply to first party property insurance policies, and this decision sure shows the pro-insured slant of the 4th District. The decision is Barthelemy v. Safeco Ins. Co., 2018 Fla. App. LEXIS 15234; 2018 WL 5291274 (4th DCA Oct. 24th, 2018).

 

Fla. Update -- Fla. Supreme Court rejects the Daubert standard for admissibility of expert opinion testimony:

In a very recent opinion, the Florida Supreme Court unequivocally rejected the Daubert standard for the admissibility of expert testimony. As a result, the Frye standard, a more liberal standard, will govern the admission of expert testimony in Florida state courts. Interestingly, the Florida Legislature had actually codified the Daubert standard by amending Florida Statute §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 Supreme Court has now unequivocally held that the statute is unconstitutional and specifically reaffirmed the Frye standard in Florida state courts – all the more reason to remove to the federal district courts wherever possible. See Delisla v. Crane Co., 43 Fla. L. Weekly 445a (Oct. 15th 2018). Let me know if you want a copy of the decision.

 

Fla. Update -- BAD FIATH -- new. pro-plaintiff decision of Supreme court:

We have a very recent decision from the Florida Supreme Court that is very pro-plaintiff in the area of the traditional "bad faith failure to settle" context where the insurer is defending the insured against a third-party liability claim. As some of you may have been aware, there have been some favorable, pro-defendant bad faith decisions, recently, from the federal courts in Florida, particularly the Middle District. This new decision of the Supreme Court, however, makes it clear that they do not represent the bad faith law in this state and it reaffirms the old Boston Old Colony decision that the law in Florida is really just a negligence standard – i.e., failure to settle when under all the circumstances the carrier ought to have done so – and that there is separate, independent duty on the carrier to promptly undertake good faith efforts to settle without regard to what the insured or the claimant does or even whether there has been a demand. The case is Harvey v. Geico. It is attached. You'll see that the Supreme Court made it very clear that the intermediate appellate court should not have followed the recent federal decisions. So, we are clearly back to the old, very pro-plaintiff bad faith law here in Florida.

 

California update -- Insurance – Supreme Court holds that negligent hiring of employee who intentionally injures third-party = "occurrence" under CGL policy:

The negligent hiring and supervision of an employee who goes on to intentionally injure a third party may constitute an "occurrence" that triggers coverage under a general liability insurance policy, according to Liberty Surplus Insurance v. Ledesma & Meyer Construction Co., 418 P. 3d 400 (2018). A13-year-old plaintiff sued Ledesma & Meyer Construction Co. Inc. (L&M) for its negligent hiring, retention and supervision of an employee that sexually assaulted the plaintiff at one of L&M's projects. During the relevant time period, Liberty Surplus Insurance Corp. issued L&M a commercial general liability policy providing coverage for "bodily injury" caused by an "occurrence." The policy defined "occurrence" as "an accident, including continuous or repeated exposure to substantially the same general harmful conditions." While Liberty defended L&M under a reservation of rights, it also filed a declaratory relief action, seeking a ruling that it had no obligation to defend or indemnify its insured. Liberty asserted, and the district court agreed, that while L&M's alleged negligent hiring, retention and supervision of its employee "set in motion and created the potential for injury, [L&M's acts] were too attenuated from the injury-causing conduct" to trigger coverage. In granting Liberty summary judgment, the district court stated that "California courts have consistently drawn a distinction between the immediate circumstances that inflict injury, and the preceding negligence that sets in motion the chain of events leading to that injury." Further, the district court reasoned that L&M's "supervision and retention are … not the injury causing acts," and that "courts have rejected the argument that the insured's intentional acts of hiring, supervision, and retaining are accidents, simply because the insured did not intend for the injury to occur."

On appeal, the U.S. Court of Appeals for the Ninth Circuit asked California's Supreme Court to decide the issue. In an unequivocal rejection of the district court's ruling and analysis, the unanimous seven-justice California Supreme Court held that the negligent hiring, retention and supervision of an employee who intentionally injures a third party can in fact constitute an accidental "occurrence" that triggers coverage under a general liability insurance policy. The Court emphasized that "the acts of the insured 'must be considered the starting point of the causal series of events," and that "an injury may be the result of more than one cause." Accordingly, "in analyzing the potential for coverage, the focus is properly on the alleged negligence of L&M as the insured employer" and not on the intentional conduct of its employee. The California Supreme Court rejected various decisions relied on by the district court as distinguishable or inapposite –i.e., Merced Mutual Insurance v. Mendez, 2013 Cal. App. 3d 41 (1989); Foremost Insurance v. Eanes, 134 Cal. App. 3d 566 (1982); American Empire Surplus Lines Insurance v. Bay Area Cab Lease, 756 F. Sup. 1287 (N. D. Cal. 1991); State Farm Mutual Automobile Insurance. v. Longden, 197 Cal. App. 3d 226 (1987); and Maples v. Aetna Casualty & Surety, 83 Cal. App. 3d 641 (1978).

In a strongly worded conclusion, the California Supreme Court cautioned that:

Liberty's arguments, if accepted, would leave employers without coverage for claims of negligent hiring, retention, or supervision whenever the employee's conduct is deliberate. Such a result would be inconsistent with California law, which recognizes the cause of action even when the employee acted intentionally. The requirements for liability of this kind are not easily met, but they are well established. Absent an applicable exclusion, employers may legitimately expect coverage for such claims under comprehensive general liability insurance policies, just as they do for other claims of negligence.

Ledesma, 418 P. 3d at 405. The Court, of course, did recognize that coverage can still be precluded with a clear exclusion.

 

Florida update -- Medicaid liens -- inapplicable as to future medical expenses:

There is a new and very important decision from the Florida Supreme Court that holds that Medicaid liens do not apply to a tort plaintiff's recovery for future medical expenses. See Giraldo v. Agency for Health Care Administration, 43 Fla. L. Weekly S279 (June 5, 2018)

 

NY torts -- Appelate court holds that email exchange can constitute an enforceable settlement, but must be careful . . .:

The Second Appellate Department (Brooklyn, Queens and Long Island) very recently determined that the writing and execution requirements for an out-of-court stipulation of settlement could be satisfied by an exchange of emails so as to constitute a binding settlement, but in this particular case, the requirements were not met by an e-mail sent by the defendant in a slip and fall case. The essence of the holding is as follows:

To be enforceable, a stipulation of settlement must conform to the criteria set forth in CPLR 2104 . . .. Where, as in the instant case, counsel for the parties did not enter into a settlement in open court, an "agreement between parties or their attorneys relating to any matter in an action . . . is not binding upon a party unless it is in a writing subscribed by him or his attorney . . .." The plain language of CPLR 2104 requires that "the agreement itself must be in writing, signed by the party (or attorney) to be bound . . .." An email message may be considered "subscribed" as required by CPLR 2104, and, therefore, capable of enforcement, where it "contains all material terms of a settlement and a manifestation of mutual accord, and the party to be charged, or his or her agent, types his or her name under circumstances manifesting an intent that the name be treated as a signature . . .." Here, the email confirming the settlement agreement was sent by counsel for the party seeking to enforce the agreement, [i.e., the defendant]. There is no email subscribed by the plaintiff, who is the party to be charged, or by her former attorney. In the absence of a writing subscribed by the plaintiff or her attorney, the settlement agreement is unenforceable against the plaintiff.


See Kataldo v. Atlantic Chevrolet Cadillac, 2018 N.Y. Slip Op. 03669, 2018 N.Y. App. Div. LEXIS 3656 (2nd Dep't, May 23, 2018). So, a defendant must absolutely sure that all essential terms of the settlement are included in the confirming email and that the plaintiff has responded with an acceptance before going forward with a motion to enforce the putative settlement.

 

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.

 

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