Subrogation Unit’s Success Continues
July 26, 2010
100% Recovery in Arbitration
In July, 2010, CM Partner Robert A. Stern (New York/New Jersey) obtained a significant victory at Arbitration. The Arbitrators awarded CM’s client 100% of the damages sought.
The Insured operated a tanning salon. The neighboring business was a nail salon. In June, 2008, the City shut-off the water supply to the nail salon at 9:30 a.m. for routine maintenance. The nail salon continued to operate the entire day and closed at 6:00 p.m. Around midnight, the water supply was restored. A faucet in the nail salon was left in the on position and as a result, water flooded the nail salon, eventually spreading to the Insured’s property. The running water was not discovered until 9:30 a.m. the next morning. The Insured spoke to the owner of the nail salon who originally stated that an employee must have left a faucet open.
Mr. Stern along with Clausen Miller P.C. attorneys prepared the Arbitration papers and argued the case to the Arbitrators. It was argued the nail salon was on notice of disruption to the water supply. Further, knowing the water supply had been stopped, the nail salon had a duty to ensure that all the sinks in the salon were properly secured to ensure that the resulting flood did not occur. Contrary to the salon’s original position that an employee left a faucet on, the salon argued that a customer left the faucet in the on position without the salon’s knowledge and, therefore, the nail salon was not liable. It was argued it was irrelevant as to whether an employee or customer left the faucet on, either way, as the nail salon had notice of the water disruption, it had a duty to ensure that all the faucets were in the off position.
The Arbitrators agreed that the salon had a duty to ensure that the faucets were in the off position regardless of who may have negligently opened the faucets. As a result, the Arbitration Panel awarded CM’s client all of its damages plus the Insured’s deductible. If you have questions regarding Arbitration or Subrogation issues, please feel free to e-mail Robert (rstern@clausen.com) or call him (212-805-3900).
Six Figure Post-Mediation Settlement
CM Partner Robert A. Stern (New York/New Jersey) was retained to investigate the shut-down of a Generator. The Generator was one of many at the Insured’s Massachusetts Power Generating Plant. nvestigation uncovered that the Generator was re-built by Defendant approximately 30 days before the loss, and according to the expert, incorrectly re-built which resulted in the failure. The only damages, mid six figures, were economic in nature and repair costs of the Generator (no property was damaged).
This seemed like a great case, until further investigation developed that: the Insured refused a safety device which would have prevented the loss; the Insured was having problems with the Generator for a few days prior to the loss and refused to shut-down the Generator for inspection; almost ¼ of the damages were related to the on-going dispute between the Insured and its carrier on coverage (while they were fighting, the Insured was incurring economic loss); and after Defendant requested to inspect the Generator and before the Insured allowed Defendant into the Premises, the Insured melted the Generator and sold it for scrap. If this was not bad enough, the Contract between the Insured and Defendant stated that Defendant’s warranty (loss was within warranty period) only provided liability to the extent of the Generator’s repair costs (approximately $100,000.00). Also, this matter involved the Economic Loss Doctrine; thus, arguably, with no contributory negligence or spoliation by Insured, best day in Court was limited by the Contract terms.
Despite the problems, Mr. Stern continued to press and argue all the positive points for recovery. The parties went to a mediation. Mr. Stern strongly believed that if he left the mediation without settlement, he could negotiate a better settlement for the client. With the client’s permission, Mr. Stern left the mediation with no settlement. Negotiations continued between counsel and the case settled well north of the Contract limitation provision amount.
If you have questions regarding Mediation or Subrogation issues, please feel free to e-mail Robert (rstern@clausen.com) or call him (212-805-3900).
