James T. Ferrini
Reported Decisions, Verdicts and Judgments
Representative Cases
Arson/Fraud
Lykos v. American Home Insurance Company
Defending a fire insurer. This U.S. Court of Appeals decision is one of the few in the country in which the court has held an insured claimant guilty of fraud or arson as a matter of law.
The jury had returned a verdict for the plaintiffs, and the courts are reluctant to interfere with a jury’s determination, particularly where a party to a civil suit is charged with misconduct of this nature. This case produced an additional significant point: The court opined that the plaintiffs would not be permitted to exaggerate the extent of loss with an eye towards settling. A design on the part of the insureds to gain a position of advantage in the settlement of a loss through false representation is fraudulent design—even though the insureds may not have intended to ultimately claim more than their just compensation.
Cite: 609 F.2d 314 (7th Cir. 1979), aff’g 452 F. Supp. 533.
Civil Rights
Gramenos v. Jewel Companies, Inc.
Defending a supermarket against a civil rights claim brought by an individual arrested for and acquitted of shoplifting. The Court of Appeals affirmed the District Court’s entry of summary judgment for the defendant.
The court held that plaintiff had not shown a violation of the Constitution or U.S. law requisite to an action pursuant to 28 U.S.C. section 1983 by proof that the arresting officer’s complaint was not properly sworn.
The court also held that there was no conspiracy between the State and Jewel, as is necessary if liability is to be imposed upon a private party on the charge that that party deprived the plaintiff of his constitutional rights. It was not sufficient that the plaintiff proved that the police had arrested everyone Jewel wanted arrested in the past.
The court also held that the plaintiff had not been deprived of his constitutional rights. The police had reasonable cause to arrest the plaintiff, notwithstanding that the police had not conducted interviews of witnesses but had merely accepted the version of the incident proffered by the defendant’s personnel.
Cite: 797 F.2d 432 (7th Cir. 1986).
Class Actions
Kamilewicz v. Bank of Boston
Defending class counsel for legal malpractice who allegedly extracted exorbitant fees from his clients, the plaintiffs in an earlier class action.
The District Court dismissed this second class action, brought by members of the plaintiff class in the earlier action, upon the Rooker-Feldman doctrine. The U.S. Court of Appeals from the Seventh Circuit affirmed. Five circuit judges dissented from the court’s denial of rehearing en banc and wrote a strong dissent urging review by the United States Supreme Court. The Supreme Court denied certiorari.
Cite: 92 F.3d 506 (1996). The opinion dissenting from the denial of the petition for rehearing en banc is reported at 190 F.3d 1348.
Constitutional Rights
Galante v. Steel City National Bank of Chicago
Defending a fire insurer. The Appellate Court held that the plaintiff insureds, by commencing the action to recover fire insurance proceeds, submitted to the jurisdiction of the court and could be compelled to waive their Fifth Amendment privilege against self-incrimination. The plaintiffs thus would have to respond to discovery procedures or have their complaint dismissed.
Cite: 66 Ill. App. 3d 476, 384 N.E.2d 57 (1978).
Contract
Allstate Insurance Co. v. National Tea Co.
Representing a property insurer that provided coverage for fire loss. Subsequent to the destruction of the insured’s supermarket by fire, the insurer brought an action to rescind the policy, asserting that it had been issued on the mistaken belief that the premises had sprinklers.
The Appellate Court rejected the defendant’s argument that recision was unavailable because the insurer was unable to prove that the insured had willfully misrepresented the condition of the premises. The court held that the insurer would not be bound by the language of the contract but that the contract would be held void ab initio. The court held that there had been no “meeting of the minds” among the parties—despite the issuance of the policy.
Cite: 25 Ill. App. 3d 449, 323 N.E.2d 521 (1975).
United Airlines v. Conductron
Representing an airline seeking damages because of the destruction by fire of a flight simulator purchased from the defendant.
The Illinois Appellate Court affirmed the trial court’s entry of summary judgment for the plaintiff for approximately $1.5 million in damages.
The court held that the risk of loss of the product was upon the seller—notwithstanding that both title and possession of the product had passed to the buyer. The decision was based on the plaintiff’s argument that it had not “accepted” the product—that the simulator did not conform to specifications and that the defendant was still making adjustments at the time of the loss.
Cite: 59 Ill. App. 3d 847, 387 N.E.2d 1272 (1979).
Environmental Coverage
Michigan Chemical Corporation v. American Home Insurance
Representing an excess carrier that provided liability coverage to a feed distributor that incurred liability when it commingled a flame retardant containing the toxin polybrominated biphenyl (PBB) with livestock feed and caused a statewide environmental disaster.
The limits of insurance coverage applied on a preoccurrence basis. This means that if there were multiple occurrences, as the insured contended, the limits of coverage ($5 million) would apply repeatedly rather than once. Plaintiff urged that thousands of farms were damaged by the commingling of the flame retardant with the feed. The court resolved the single–multiple occurrence controversy, holding that the number of occurrences would be determined by reference to the cause or causes of the damage and not to the number of resultant injuries or claims. (This severe limitation on the insurer’s obligation was rendered by the same court that had resolved a coverage dispute in an earlier case in a manner that would “maximize coverage.”) Pursuant to the Court of Appeals decision, the District Court ultimately determined that there had been a single occurrence.
Cite: 728 F.2d 374 (6th Cir. 1984), rev’g 530 F. Supp. 147.
ERISA Withdrawal Liability
Central States v. Art Pape Transfer, Inc.
Defending against a claim of control group liability under ERISA. The Court of Appeals held that the plaintiff pension fund’s release of the motor carrier which had withdrawn from the pension fund, incurring the withdrawal liability, served to release the defendant as a related corporation.
Cite: 79 F.3d 651 (7th Cir. 1996).
Insurance
Haugan v. Home Indemnity Company
Representing an amicus curiæ. This frequently cited decision of the South Dakota Supreme Court is substantially responsible for the view now accepted in many jurisdictions that a general liability policy does not insure the insured’s work product or work performance. The court further held that the “contractual liability” section of the policy does not cover the insured’s alleged breach of implied warranties. That coverage contemplates an express contractual assumption of another’s potential liability.
Cite: 86 S.D. 406, 197 N.W.2d 18 (1972).
First National Bank of Chicago v. Fidelity & Casualty Company of New York
Representing an insurer that had issued a flight insurance policy. The U.S. Court of Appeals reversed the District Court and rejected the doctrine of “adhesions” or “reasonable expectations” urged by the claimant under the most compelling circumstances.
The plaintiff decedent, who had failed to comply with conditions of coverage when departing from her original itinerary, had in fact been deprived of the opportunity to study the policy conditions. The normal practice in fact followed by the defendant is that the policy is purchased at an airport terminal and is then mailed to the beneficiaries. Thus, it is not available for review by the named insured. The plaintiff alleged that strict compliance with the policy was unnecessary—that it was sufficient that the decedent “reasonably expected” coverage.
The court rejected the plaintiff’s contention, holding that the policy terms would be enforced as written.
Cite: 428 F.2d 499 (7th Cir. 1970).
J.L. Simmons v. Fidelity & Casualty Company of New York
Defending an insurer that provided contractual liability coverage. Reversing the District Court and distinguishing Illinois authorities supportive of plaintiff’s position, the Court of Appeals held that coverage did not apply to an insured’s obligation of indemnity that was implied from its breach of its construction contract. Contractual liability coverage applies only to the insured’s express indemnity obligations.
Cite: 511 F.2d 87 (7th Cir. 1975).
Municipal Liability
Huey v. Town of Cicero
Defending a town within which the plaintiff decedent, a black youth, was beaten by four white youths. The Illinois Supreme Court upheld the dismissal of the plaintiff’s complaint, holding that a municipality is not liable for its alleged failure to supply general police or fire protection.
The court further held that plaintiff’s allegation that the defendant’s employees knew of the presence of blacks in Cicero and of the possibility of racial disorder did not bring the case within the exception under which a municipality is under a special duty to a particular individual.
Cite: 41 Ill. 2d 361, 243 N.E.2d 214 (1968).
Negligence
Herman v. Hess Oil Virgin Islands Corp.
Defending an oil refinery against claims of several plaintiffs injured in an oil storage tank fire.
The jury absolved the refinery of all liability and found for the personal injury plaintiffs and against a co-defendant. It awarded more than $7 million in compensatory damages and $5 million punitive damages. In addition, the jury found for the refinery against the co-defendant on the refinery’s property damage claim.
The Court of Appeals affirmed, rejecting the co-defendant’s assertions of trial error.
Cite: 524 F.2d 767 (3d Cir. 1975).
Washington v. Atlantic Richfield Co.
Defending the owner and operator of a service station for injuries sustained when firemen responded to an automobile fire at a service station. The Illinois Supreme Court reversed the Appellate Court and imposed significant restrictions upon the landmark decision of Dini v. Naiditch which had proclaimed the “fireman’s doctrine”—that the owner of a premises owes a duty of care to prevent injury to firemen responding to a fire. The Supreme Court held that the duty created by the Dini decision pertains only to causes of injury that are independent of the fire. In other words, the landowner is not liable for his negligence in causing the fire in the first instance.
Cite: 66 Ill. 2d 361 N.E.2d 282 (1977), rev’g 36 Ill. App. 3d 344, 342 N.E.2d 271.
Sports Law
Oswald v. Township High School District
This decision established that willful and wanton misconduct must be shown to sustain an action against a school for injuries arising out of an organized athletic competition.
Cite: 84 Ill. App. 3d 723, 406 N.E.2d 157 (1980).
Subrogation/Loss Recovery
Scott & Fetzer Company v. Montgomery Ward & Company
Representing plaintiffs presenting a subrogation claim. This opinion of the Illinois Supreme Court, which affirmed the Appellate Court’s reversal of the trial court’s dismissal of the plaintiffs’ fire damage claim, marked a significant development in two areas of the law.
The plaintiffs’ property was damaged by a fire that started in an adjoining office. They sought to recover damages from the security company that had installed an allegedly defective fire alarm security system in the adjoining premises. The court denied application of the economic loss doctrine, which precludes recovery in tort when a product defect is qualitative in nature and the resultant harm is a disappointment in the consumer’s expectations. The court also held that a security company owed a duty of due care to the adjoining tenants, notwithstanding that the security company had performed no services for and had no relationship with those tenants and notwithstanding the defendant’s plea that it would be exposed to “unlimited and unknown potential responsibility.”
The defendant was Burns Security Service, and it is believed that this is one of the few instances in which that company has been held liable for damages caused by or related to the failure of a security system. The significance of the case is confirmed by the fact that the defendant procured the help of ADT, another security systems company, which supplied a brief as an amicus curiæ.
Cite: 112 Ill. 2d 378, 493 N.E.2d 1022 (1986), aff’g 129 Ill. App. 3d 1011, 473 N.E.2d 421.
Trial Misconduct
Tierco Maryland, Inc. v. Williams
Maryland’s highest court reversed a multi-million dollar judgment because plaintiffs’ attorney played the “race card.” The court reasoned that the focus of plaintiffs’ case should have been upon establishing defendant’s tortious misconduct and not upon alleged mistreatment of the plaintiffs on the basis of race. If such mistreatment is not properly pled and actionable, it is not relevant and cannot be the focus of the trial.
Cite: 2004 WL 1078135 (Md. 2004)
Unfair/Deceptive Practices in the Business of Insurance
Crawford & Company and Insurance Company of the State of Pennsylvania v. Garcia
Representing an insurer against whom a $6.6 million treble damages award had been entered under the Texas Unfair or Deceptive Practices Act. Mr. Ferrini procured an outright reversal and the entry of judgment for the insurer.
The jury found that defendant committed unfair and deceptive acts in directing the claimant, an employee of the insured, to a physician who refused to certify that she was disabled and unable to work and that as a result she was discharged by her employer. The El Paso Court of Appeals held that, as a matter of law, defendant’s conduct did not constitute unfair and deceptive acts or practices and further that defendant’s conduct was not the producing cause of the termination and plaintiff’s damages.
Cite: 817 S.W.2d 98 (1991).
Wrongful Death
Philippides v. Bernard and Wolverine World Wide, Inc.
The Washington Supreme Court construed that State’s “Child Injury/Death” statute to deny parents, who are not financially dependent upon their adult child, a cause of action for his wrongful death. That which plaintiffs unsuccessfully sought was a new definition of “support” and although the statute broadly provided for “emotional, psychological or financial support” elsewhere, the Court would not engraft that definition upon the statute’s provision for remedies in the event of the death of an adult child.
Cite: 88 P.3d 939 (Wash. 2004)
