CM Report of Recent Decisions (2002v1)
2002 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.
Articles in this report
In Rohm and Haas Co. v. Continental Casualty Co., 781 A.2d 1172 (2001), the Pennsylvania Supreme Court affirmed an appellate decision which vacated and remanded a trial judge’s decision granting insured (“Rohm”)’s motions for judgment notwithstanding the verdict (JNOV). A jury had ruled in favor of CGL “excess” liability insurers (“Insurers”) on their claims that Rohm violated the “known loss doctrine” and had certain knowledge of damage or injury for which there would be legal liability, as well as failed to disclose and deliberately concealed material information with the intent to deceive Insurers in connection with obtaining excess policies over the course of many years.
Choosing a Trial Firm Upon Consideration of the Firm's Appellate Practice
At Clausen Miller, trial counsel does not handle the appeal. The firm recognizes that a case on appeal is altogether different from a case at trial, that effective presentation upon appeal requires a blend of forensic and analytical talents not necessarily honed in trial practice, and that there is advantage in having experienced appellate specialists look with fresh eyes to identify winning legal issues.
The New York Court of Appeals, addressing consolidated appeals, has held that losses from environmental injury claims involving decades of commercial activities and numerous sites cannot be aggregated as a single “disaster and/or casualty” for purposes of recovery under certain reinsurance treaties. Travelers Cas. & Surety Co. v. Certain Underwriters at Lloyds of London, 734 N.Y.S.2d 531 (N.Y.). The high court further found that the “follow the fortunes” clauses within the reinsurance treaties could not be used to override the definition of a covered “loss” within the treaties themselves.
Federal Court in Arizona Upholds Insurance Policy Exclusion for Mold
Cooper v. American Family Mutual Ins. Co., 2002 WL 169276 (D. Ariz. Jan. 25, 2002), the United States District Court for the District of Arizona denied insurance coverage under the exclusion for “smog, rust, corrosion, frost, condensation, mold, wet or dry rot...” in a homeowner’s policy. The Cooper court stated that the mold exclusion displayed “simplicity and clarity,” and was rightfully followed by the insurer.
Health Insurer Learns That if Law is at the Heart of the Matter, Equity Grants No Relief
Long thought deceased by many a lawyer, the distinction between law and equity has received new life by virtue of Congress’ enactment of the Employee Retirement Income Security Act of 1974 (ERISA). So ruled the United States Supreme Court in Great-West Life & Annuity Ins. Co. v. Knudson, 122 S. Ct. 708 (2002). The case has serious implications for health insurance and other carriers who pursue their claims for reimbursement against insureds, wrongdoers injuring or causing damage to insureds, or custodians of tort suit recoveries. On a 5-4 vote, the Court held that while ERISA’s § 502(a)(3) purports to allow actions to recover when seeking traditionally equitable relief, it grants no remedy when seeking legal relief.
Illinois Supreme Court Puts the Squeeze on Not-For-Profit Corporations Claiming Immunity By Strictly Construing the Definition of a "Local Public Entity"
The purpose of the Illinois Local Governmental and Governmental Tort Immunity Act (Act) is “to protect local public entities and public employees from liability arising from the operation of government.” (745 ILCS 10/1-101.1). As a result, any organization deemed a “local public entity” as that term is defined by the Act may be able to claim any one of a number of specifically enumerated immunities in order to stave off a plaintiff’s lawsuit.
New Jersey Appellate Court Finds Estoppel in Two Recent Insurance Cases
The New Jersey appellate court has issued estoppel rulings against insurers in two recent cases: Pasha v. Rosemount Memorial Park, Inc., 781 A.2d 1119 (N.J. App.), and Charter Oak Fire Ins. Co. v. State Farm Mutual Automobile Ins. Co., 782 A.2d 452 (N.J. App.).
New Jersey Supreme Court Holds Intent Presumed for "Particularly Reprehensible" Conduct Such as Stabbing In Fight
The New Jersey Supreme Court holds that where an insured’s conduct is particularly reprehensible, such as stabbing another person during a fight, intent may be presumed as a matter of law, without further inquiry into whether the insured intended to cause the actual injury that resulted. Even absent such exceptional circumstances, further inquiry may still be unnecessary if the actual injury inflicted was an inherently probable consequence of the insured’s conduct. Harleysville Ins. Co. v. Garitta, 785 A.2d 913 (N.J.).
In Volume 1 - 2001 of CM Report of Recent Decisions, we reported that the New York Appellate Division - First Department in N.X. v. Cabrini Medical Center, 2001 WL 41198 (N.Y. App. Div. Jan. 18, 2001), held that a hospital may not be held vicariously liable for a sexual assault committed by a surgical resident on a patient recovering from surgery under the pretext of a gynecological pelvic exam. The First Department found that the assault was not within the scope of the resident’s employment, and that nurses attending to a nearby patient at the time of the assault had no duty to prevent it.
Second District Holds That Docked Riverboat Casino Is Not a Vessel Under the Jones Act
The Jones Act allows a “seaman” to recover in tort for injuries received “in the course of his employment.” 46 U.S.C.A. §688 (2002). Since riverboat casinos are no longer required to cruise by law in Illinois, many riverboat casino operators have moored their riverboats to land, installed land-based utility lines, and begun operating their gaming facilities dockside. In Grobe v. Hollywood Casinos-Aurora, 759 N.E.2d 154 (Ill. App. 2d Dist.), the Illinois Appellate Court, Second District, held that the Jones Act did not apply to an employee of one such casino. As the first Illinois case to address “seaman” status under the Jones Act, Grobe will have a substantial impact on future Illinois Jones Act cases.
Supreme Court Holds That OSHA Can Regulate Working Conditions on Uninspected Vessels
For some time, marine operators have seen ever increasing efforts by OSHA to enforce its own regulations on commercial vessels. The Fifth Circuit Court of Appeals, among other courts, has challenged OSHA’s authority in the maritime industry, recognizing the difficulty (and often impracticability) of enforcing OSHA’s regulations on ships. The Supreme Court has now “opened the door” to OSHA regulation of uninspected vessels.
The Public Policy Defense: A Potential "Sleeping Giant" in D&O Coverages Disputes
At a time when many corporations are facing financial difficulties or third-party claims seeking financial restitution for corporate wrongdoing, this article discusses two recent decisions by the U.S. Court of Appeals for the Seventh Circuit sustaining a carrier’s denial of coverage under a D&O insurance policy. Both decisions reflect the view that the perceived availability of insurance coverage may encourage corporate wrongdoing and that a finding that a D&O policy provides coverage for certain wrongful conduct may be inconsistent with public policy.
