CM Report of Recent Decisions (2006v1)
2006 Volume 1
A summary of significant recent developments in the law focusing on substantive issues of litigation and featuring analysis and commentary on special points of interest.
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Articles in this report
"Top-Dog" Depositions -- The Hurdles to Overcome
High-level executives are frequently sought to be deposed because of their unique corporate roles for, inter alia, policy making, corporate governance and implementing policy compliance and corrective actions. On a tactical basis, the executive deposition is pursued so that your adversary’s “figurehead” directly feels the “hot buttons” of your case, real-time, without layers of filtering and spin. “Top-dog” depositions, commonly called “apex depositions,” cover a wide range of executives, including CEOs, presidents, and other senior management positions.
Alternative Ways to Use Evidence of "Other Conduct" that Would Otherwise Not be Admitted
In developing your case, as plaintiff or defendant, it is important to appreciate the various alternative ways for opening the door to “other conduct” evidence to prove relevant facts at issue. Below is a synopsis of strategic methods and insights for proffering evidence of character for a non-propensity purpose, habit, subsequent remedial measures and prior occurrences/failures.
Arizona Federal Court Finds "Earth Movement" Exclusion Not Ambiguous and Not Limited to "Acts of God"
In Holy Trinity Greek Orthodox Church v. Church Mutual Ins. Co., 2006 WL 18488 (D. Ariz.), the court assessed whether an “earth movement” exclusion in the plaintiff church’s property insurance policy precluded coverage for damage to the building’s slab caused by a broken water pipe.
California Court Finds Exculpatory Clause Does Not Apply to Gross Negligence
The Janeway decision contradicts the view that under California law there is never a need to separate gross negligence from ordinary negligence in non-statutory tort cases. We will continue to monitor and report on further developments in this area.
California Court Holds That Insured's Voluntary Withdrawal of a Claim Precluded Causes of Action for Breach of Contract and Bad Faith
The California Court of Appeal for the Second District recently held that where an insured voluntarily withdraws a claim less than 45 days after first giving notice of the claim, the insurer cannot be held liable for breach of contract or extra-contractual damages for not performing any further investigation and closing its file. 1231 Euclid Homeowners Ass'n v. State Farm Fire and Casualty Co., 2006 WL 147487 (Cal. App. 2006).
Creative Lawyering Can Avoid Pitfalls in Bonding Judgments to Stay Execution Pending Appeal
The scenario is familiar. Defendant has just been hit with a judgment in excess of policy limits. The trial record has error that may lead to reversal on appeal, but plaintiff is taking steps to execute on the judgment to squeeze settlement on plaintiff’s terms. Defendant’s carrier cannot bond the entire judgment, otherwise it will be liable for the excess amount. What should the insured and carrier do to obtain a stay of execution pending appeal?
Developments in Welding Rod Wars: Mixed Verdicts and Adverse News for Insurers on Total Polution Exclusion
Approximately 11,000 welding rod cases are currently pending in state and federal courts nationwide, and whether that number will continue to grow or begin to recede may be answered in the coming year. Plaintiffs recently scored wins in Illinois and New York, only to be followed by a defense verdict in Illinois on virtually the same evidence. New York’s appellate division affirmed a ruling linking welding rod fumes to mesothelioma and cancer claims. Yet challenges to plaintiffs’ medical experts in the federal multi-district litigation in Ohio may take a similar turn as that culminating in Judge Jack’s opinion in the silica cases. So, exactly what is the state of the science on causation? And how serious are the medical monitoring claims?
Google Adwords: Marketing Genius or Trademark Infringement?
In April 2004, Google’s Adwords underwent a policy change. Until then Google had respected trademark owner’s requests to not offer their marks up for sponsorship. Since the policy change, Google has seen its revenues continue to grow at a healthy rate.
Jones Act Not a Bar to Employer's Suit Against Seaman for Property Damage
In Withhart v. Otto Candies, L.L.C., 431 F.3d 840 (5th Cir. 2005), the Fifth Circuit, in a case of first impression in the federal courts, held that a shipowner-employer may assert causes of action for negligence and indemnity against a seaman-employee for property damage caused by the seaman-employee’s negligence.
No Coverage for Gradual Environmental Contamination Under "Accident Based" Manuscript Policies with Qualified Pollution Exclusion Type Language
An aircraft company sought coverage from its commercial general liability (CGL) policies for pollution related liability totaling hundreds of millions of dollars. The court, finding that the manuscript policy language only covered accident based damage, affirmed judgment for the insurers. Lockheed Corp. v. Continental Ins. Co. et al, 2005 WL 3110933 (Cal. App. 2005).
Ohio Court of Appeals in Case of First Impression Finds that Damages from Contractor's Delay Not Based on an "Accident" or "Occurrence" and Excluded from Coverage
In Westfield Ins. Co. v. Coastal Group, Inc., 2006 WL 120041 (Ohio App. 9th Dist.), the Ohio Court of Appeals held that damages resulting from a construction contractor’s delay were not an “accident” and therefore did not involve an “occurrence” under a CGL policy. The court further held that the “Impaired property” exclusion in the policy similarly precluded coverage for a contractor delay claim.
Pending Illinois Legislation to Curtail Inflated Non-Economic Damages Jury Awards: The Full and Fair Non-Economic Damages Act
The Illinois Legislature is currently considering passage of an act designed to rein in increasingly inflated non-economic damages awards. The Full and Fair Non-Economic Damages Act1, based on national model legislation by the same name, was prompted by concerns that such inflated awards are due to improper consideration of a defendant’s wrongdoing. The problem stems from the fact that non-economic damages are highly subjective in nature. Juries are not given concrete standards by which to assess damages for intangible injuries like “pain and suffering.” As a result, juries often focus on a defendant’s “guilt” and other evidence irrelevant to the purpose of compensatory damages.
Products-Completed Operations Exclusion Bars Coverage for Municipal Lawsuits Against a Gun Manufacturer
Beginning in 1999, numerous municipalities filed lawsuits against handgun manufacturers and other entities in the firearms industry, seeking injunctive relief and compensation for expenses incurred as a result of gun violence in their communities. The municipalities alleged that the firearms industry failed to make guns safe and prevent foreseeable misuse, failed to warn about the dangers of guns and distributed guns in excess of the legitimate demand, thereby fostering an illegal firearms market. The lawsuits alleged theories such as public and private nuisance, negligence, failure to warn and false advertising.
Recent Caselaw Affecting Insurance Broker Liability: A Not so "Semi-Charmed Life" for Brokers
Under Third Eye Blind, the absence of desired coverage is not necessarily required to maintain a negligence and/or breach of contract claim against an insurance broker. The insured may also pursue claims against a broker where the broker’s alleged failure to properly advise the insured concerning certain policy exclusions created a potential coverage gap allowing the insurer to legitimately contest the insured’s desired coverage.
Rejecting Well-Established Maritime Law Precedent, Illinois Supreme Court Holds That Defendant May Demand Jury Trial in Jones Act Case
In Bowman v. Am. River Transp. Co., 838 N.E.2d 949, 2005 AMC 2584 (Ill. 2005), plaintiff filed suit in Illinois state court for injuries suffered while working as a deckhand for defendant. Plaintiff asserted causes of action for negligence under the Jones Act (46 U.S.C. App. § 688), unseaworthiness, and maintenance and cure. Defendant filed a timely request for a jury trial, which was stricken on plaintiff’s motion brought on the ground that only the plaintiff in a Jones Act case may demand a jury trial -- not the defendant. The appellate court affirmed.
Two-Year Suit Limitation for UM Claims Unreasonable Under the Circumstances
In Faeth v. State Farm Mutual Automobile Ins. Co., 707 N.W.2d 328 (Iowa), the Iowa Supreme Court held that a two year limitation on the filing of suit against an insurer for uninsured motorist (“UM”) benefits was unreasonable where the tortfeasor was a self-insured that became insolvent after the expiration of the two years.
Washington Appellate Court Holds That an Insurer's Denial of Coverage Did Not Harm an Insured Who Was Protected by Bankruptcy
In Werlinger v. Clarendon National Ins. Co., 120 P.3d 593 (Wash. App.), a Washington appellate court held that an insurer (Clarendon) was not liable for bad faith or violation of Washington’s Consumer Protection Act because its insured (Michael Warner) was not harmed by Clarendon’s actions. Warner did not suffer harm because his personal liability was not in issue; he and his wife were both protected by Chapter 7 bankruptcy laws.
Wisconsin Has No Statute of Limitations Applicable to Claims of a Developmentally Disabled Child Against Health Care Providers
In Haferman v. St. Clare Healthcare Foundation, 707 N.W.2d 853 (Wis.), a majority of the Wisconsin Supreme Court holds that Wisconsin has no statute of limitations applicable to the injury claims of a developmentally disabled child against a health care provider.
