eNotes: Liability – May 2020

TT&H is available to advise and assist insurers in the handling of COVID-19 claims.

As COVID-19 continues to impact our daily lives, TT&H is aware that insurers are beginning to receive claims relating to the disease, whether for business interruption, liability coverage, workers’ compensation or otherwise.  As always, insurers confronted with such claims can count on TT&H for reliable guidance and advice.  In recent weeks, TT&H has assembled a multi-state team of coverage, general liability, workers’ compensation and employers’ liability attorneys who are prepared to assist with claims relating to COVID-19.  Whether in Pennsylvania, Maryland, New Jersey, Virginia, Ohio, West Virginia or the District of Columbia, TT&H is here to help.  For more information, please contact Kevin McNamara at (717) 237-7132 or kmcnamara@tthlaw.com.

Superior Court holds that Plaintiff waived her appellate claims by failing to state in her post-trial motions how the grounds were preserved in pre-trial proceedings or at trial; and the Trial Court did not abuse its discretion when it denied the Plaintiff’s Motion to preclude evidence of prior and subsequent falls.

Plaintiff Stipanovic brought suit to recover damages for injuries sustained when she fell at a supermarket owned by Defendant ShopRite.  Plaintiff claimed her fall and resulting injuries were caused by Defendant’s negligence in “allowing a rug in the produce section to be bunched up and raised to a degree that it constituted a tripping hazard.”

Plaintiff filed a motion in limine to preclude Defendant from admitting any evidence of her falls prior to the incident, and that she had a history of falling or was accident-prone.  Given that Plaintiff suffers from muscular dystrophy, she asked the Trial Court to preclude Defendant from arguing that she had violated a duty of care to avoid accidents, as she was not using her prescribed arm crutches and wheelchair at the time of the accident.  The Trial Court denied the motion, and the matter was heard by bench trial.  The Trial Court entered an order finding in favor of Defendant.

Plaintiff filed a post-trial motion in which she alleged that the Trial Court improperly considered evidence of her prior falls to conclude that she was fall-prone and should have been using crutches or a wheelchair prescribed at the time of her accident.  Plaintiff accused the Trial Court of lowering Defendant’s duty of care towards handicapped customers and holding Plaintiff to a duty of care as a disabled person to use her prescribed medical devices or be responsible for her injuries.  Plaintiff’s post-trial motion did not characterize her argument as a challenge to the denial of her pre-trial motion in limine.  The Trial Court denied Plaintiff’s post-trial motion.

The Superior Court held that Plaintiff waived her claims by failing to state in her post-trial motions how the grounds were preserved in pre-trial proceedings or at trial.  Even assuming arguendo that the claims were preserved, the Superior Court further held that Plaintiff had not shown that the Trial Court’s decision to admit this evidence resulted in prejudice as the Trial Court specifically found that the mat, upon which Plaintiff fell, was not defective nor hazardous at the time of the accident.  The Trial Court concluded that Plaintiff’s fall was caused by her own actions, and therefore the admission of evidence of her prior falls did not constitute unfair prejudice.

Questions about this case can be directed to Christopher Gallagher, at (215) 564-2928 or cgallagher@tthlaw.com.

Pennsylvania Superior Court
No. 657 MDA 2019
Decided: April 13, 2020

Tort action based upon a contract governed by two-year statute of limitations.

Plaintiff contracted with Defendant to perform certain renovation services.  The work was completed within two months.  Within months of completion, Plaintiff discovered several areas of damage which Plaintiff attributed to Defendant’s work deficiencies.  Twenty-five months after the damage was discovered, Plaintiff commenced her action.  After Plaintiff’s Amended Complaint failed to identify any specific provision of the contract allegedly breached, Defendant filed for judgment on the pleadings based upon the two-year statute of limitations applicable to actions for negligence.  In entering judgment on the pleadings, the Trial Court reasoned that Plaintiff’s action sounded in tort because Plaintiff’s Complaint alleged wrongs committed while performing the contractual obligations and not the failure to perform a promise set forth in the contract itself.

On appeal, Plaintiff relied upon the four-year contract statute of limitations, arguing that her damages were the direct result of Defendant’s failure to perform under the contract as promised.  The Superior Court noted that a negligence claim based on the actions of a contracting party in performing contractual obligations is not viewed as an action on the underlying contract itself, as it is not founded on the breach of any specific executory promises.  The Court ruled that the Complaint did not allege that Defendant failed to perform specific tasks promised in the contract.  Rather, Plaintiff alleged deficiencies in workmanship.  The contract was collateral to these allegations because, while the contract established the relationship between the parties, it did not define a duty allegedly breached.

Holding

The Court affirmed the order of the Trial Court that Plaintiff’s action sounded in tort.  Further, the Court held that suit commenced later than 2 years after the discovery of any damage was not timely to commence the litigation, because the Complaint made clear that the discovery of the damages was within months of completion of the work.

Questions about this case can be directed to James Swartz, III, at (610) 332-7028 or jswartz@tthlaw.com.

Pennsylvania Superior Court
2020 Pa. Super 84
Decided: April 3, 2020

Court upholds summary judgment in favor of insurer, finding that insurer did not have a duty to defend or indemnify where insured’s employees engaged in criminal acts.

Meyer Jabara Hotel is a management company that provides services to the Sheraton University City Hotel, which is owned by the University of Philadelphia.  Kenneth Kapikian was the general manager of the Sheraton Hotel, and Dennis Gagliardi was its chief engineer.  Messrs. Kapikian and Gagliardi were criminally charged with fraud, conspiracy to commit money laundering, and aiding and abetting as it relates to certain business activities they engaged in, such as submitting false invoices and inflating services invoices.  In June 2015, entered guilty pleas to numerous counts of wire fraud and conspiracy to commit money laundering.  Mr. Kapikian and Mr. Gagliardi were ordered to pay restitution to the University in the amount of  $3,039,383 and $4,238,977, respectively.

As it relates to the civil matter, the University demanded payment in the amount of $5,438.784.00 from Meyer Jabara for losses arising from the criminal acts.  Gemini had issued a professional liability insurance policy to Meyer Jabara, and Meyer Jabara accordingly provided insurer, Gemini, with notice of the University’s claim.  Vela Insurance Services, which is the administrator for Gemini, agreed to defend Meyer Jabara subject to a reservation of rights.  Subsequently, the University and Meyer Jabara entered into a settlement agreement, which included a $975,000 advanced indemnity payment, paid from the proceeds of the Gemini insurance policy.  Then, Gemini filed a motion for summary judgment, averring that various provisions of the insurance policy precluded coverage for Meyer Jabara.  The Lower Court granted Gemini’s motion for summary judgment and found that the claim was excluded from coverage under the policy, and that Meyer Jabara must repay the $975,000 to Gemini.  Meyer Jabara appealed.

The Court affirmed the grant of summary judgment in favor of Gemini.  The Court reasoned that Messrs. Gagliardi and Kapikian were employees of Meyer Jabara and committed their wrongful conduct forming the basis of the underlying claim while performing their management responsibilities at the Sheraton Hotel, thereby triggering application of the criminal acts and personal profit exclusions of the policy.  The Court held that as a matter of law, Gemini had no duty to indemnify Meyer Jabara pursuant to the exclusions in the insurance policy.

Questions about this case can be directed to Jillian Denicola, at (570) 825-5653 or jdenicola@tthlaw.com.

Pennsylvania Superior Court
2020 Pa. Super 75
Decided: March 30, 2020

Defendant Attorneys were not entitled to summary judgment after recovering two verdicts for Plaintiffs in successive actions when two different surgical sponges were left inside the Plaintiff from the same surgery, but in different locations, and each sponge was discovered during subsequent surgeries nearly ten years apart.

Plaintiff-wife underwent a C-section in 1993.  After complaining of pain in 1997, she underwent surgery to remove what was thought to be a uterine fibroid, but turned out to be an abscess that enveloped a surgical sponge left in her lower left abdomen during the 1993 surgery.  The 1997 surgery was performed by a different surgeon at the same hospital where the 1993 C-section was performed, and her OB-GYN, who performed the 1993 C-section, was present at the 1997 procedure.  After the 1997 procedure, Plaintiffs filed a medical malpractice action against the surgeon and hospital involved in the 1993 surgery and recovered a $522,000 verdict against those Defendants.

In 1999, Plaintiff-wife had another C-section, performed by a different surgeon at a different hospital than her 1993 C-section.  After complaining of abdominal pain, she underwent surgery in 2006 to remove a foreign body located in her right upper abdomen.  It was then discovered that a second sponge had adhered to her bowel requiring a bowel resection.  This time, and using the same attorneys who successfully handled the first lawsuit, Plaintiffs filed an action against both hospitals and the doctors involved in the 1997 and 1999 surgeries, alleging negligence for failure to remove a sponge during one of the two  surgeries and, in the alternative, not timely discovering and removing it.

During discovery, and more than three years after the 2006 surgery, Plaintiffs’ expert witness opined that the sponge discovered in 2006 came from the 1993 C-section.  Plaintiffs’ attorneys moved to amend their Complaint to assert causes of action against the surgeon and hospital that had been sued for the 1993 surgery.  Despite Defendants’ objection that the amended claims were barred by the two-year statute of limitations, the Court allowed the amendment.  Thereafter, the jury answered special interrogatories and returned a verdict in favor of the Plaintiffs in the amount of $735,000, and against the surgeon and hospital involved in the 1993 surgery.  By its verdict, the jury exonerated those Defendants involved in the 1997 and 1999 surgeries.

On appeal, the Superior Court reversed the Lower Court and held that the claims against the 1993 Defendants were barred by the statute of limitations, but affirmed the verdict in favor of the 1997 and 1999 Defendants.  After Plaintiffs filed their action for legal malpractice, their former attorneys argued that any negligence on their part in failing to timely seek the amendment was not the proximate cause of Plaintiffs’ loss.  They were granted summary judgment based upon the affirmative defenses of res judicata, collateral estoppel, and the one recovery rule.  Plaintiffs appealed.

In a 21-page opinion, the Superior Court held that the affirmative defenses of res judicata, collateral estoppel, and the one recovery rule did not bar the Plaintiffs’ legal malpractice action.  Although the two actions against the same Defendants for the 1993 retained sponges involved similar negligent conduct, they were different causes of action for distinct negligence, injuries and damages.  Moreover, the factual allegations were not the same, different evidence was necessary to prove each case, and compensation was sought for separate and distinct injuries.  Lastly, a new two-year statute of limitations was triggered when the second sponge was discovered during the 2006 surgery and, therefore, a claim for injuries based upon a second retained sponge could not have been litigated almost 10 years earlier.  Accordingly, the Superior Court vacated the Lower Court’s judgment in favor of the Defendant-attorneys and remanded the case.

Questions about this case can be directed to Joe Holko, at (610) 332-7005 or jholko@tthlaw.com.

Pennsylvania Superior Court
2020 Pa. Super. 70
Decided: March 25, 2020

Employees of gun store were immune from slander claim where they made a report to police suggesting customer was in need of psychiatric intervention.

Plaintiff Carolyn Forbes purchased a firearm from Defendant King Shooters Supply in King of Prussia, Pennsylvania, for protection due to several home invasions.  Shortly after making the purchase, Ms. Forbes found that she was unable to unload the firearm and returned to King Shooters Supply for assistance.  Throughout the course of providing service to Ms. Forbes, the store’s employees became concerned about her mental health and so, called the police, suggesting that she was in need of psychiatric intervention.  Three police officers arrived on the scene and asked Ms. Forbes to accompany them to a nearby hospital.  Ms. Forbes was committed on the basis of the hospital’s finding that she was delusional.  The hospital further investigated Ms. Forbes’ claims regarding the home invasions and ultimately determined that they were valid.  Several acquaintances of Ms. Forbes confirmed that she was not delusional.  Accordingly, she was released from the hospital, thirteen days after her admission.

Ms. King filed suit against King Shooters Supply, alleging that its employees’ act of “contacting the police and giving unsupported and untrue allegations of delusional and paranoid behavior was defamatory and harmful.”  Further, she averred that, “[a]s a result of the defamatory statements [made] by the King [Shooter Supply employees], [she] was taken against her will and was held against her will in a mental health facility for thirteen days.”  The Trial Court granted King Shooter Supply’s motion for judgment on the pleadings, finding that the statements made by its employees to police were privileged and could not serve as the basis for Ms. Forbes’ defamation claim.

The Superior Court agreed with the Trial Court’s finding that the statements at issue were entitled to an “absolute privilege” and affirmed.  In so doing, the Court noted that “there is a fundamental societal need for justice to be administered freely and efficiently through the eliciting of speech from parties and witnesses that may be accusatory or otherwise reflect negatively upon another’s character.  Thus, notwithstanding any reputational harm that may ensure, Pennsylvania, like many other jurisdictions, recognizes a judicial privilege providing immunity for communications which are made in the regular course of judicial proceedings and are material to the relief sought.”  Insofar as claims of defamation are concerned, said judicial privilege applies to statements made to police.

Questions about this case can be directed to Sam Dunlop, at (412) 926-1432 or sdunlop@tthlaw.com.

Pennsylvania Superior Court
2020 Pa. Super. 60
Decided: March 13, 2020

Plaintiff’s claim against Defendant was barred by the Longshore and Harbor Workers’ Compensation Act as Defendant was found to be Plaintiff’s employer under the “borrowed servant” doctrine.

Plaintiff, an experienced shipfitter, was employed by MK Industries.  Among other items, MK paid Plaintiff’s salary, provided benefits, and provided workers’ compensation benefits.  Plaintiff’s employment contract with MK prohibited him from claiming benefits from any of MK’s clients, included a one year non-compete clause that included MK’s client’s, and confirmed that Plaintiff understood that he was not an employee of any of MK’s client’s.  MK had a staffing agreement with Defendant to recruit qualified employees for Defendant.  Plaintiff was assigned to work at a facility owned by Defendant to construct barges.  Plaintiff’s hours were set by Defendant, and Defendant’s supervisor’s approved Plaintiff’s overtime requests.  Although Defendant did not instruct Plaintiff how to perform his job, Defendant provided daily assignments.  Defendant could not terminate Plaintiff, but could ask that he be removed from his assignment with the Defendant.  Approximately twenty (20) months after his assignment to Defendant, Plaintiff was injured while on the job.  Plaintiff received workers’ compensation benefits from MK pursuant to the Longshore Harbor Workers’ Compensation Act (LHWCA).  Plaintiff subsequently filed a common law negligence claim against Defendant for failing to maintain safe working conditions.  The Trial Court granted Defendant’s Motion for Summary Judgment on the grounds that Plaintiff’s claim was barred by the LHWCA.  Plaintiff filed a timely appeal.

The LHWCA, which governs workers’ compensation claims for individuals who suffer injury as a result of employment upon navigable waters or qualifying adjacent areas, prohibits an employee from seeking further recovery through tort actions against his employer.  Employers who have “borrowed servants” are also protected by the LHWCA.  When evaluating whether a borrowed servant relationship exists under the LHWCA, the Court is to look at two primary factors: (1) whether the borrowing employer was responsible for the borrowing employee’s working conditions and (2) whether the employment was of such duration that the borrowed employee could be presumed to have acquiesced in the risks of his new employment. The Superior Court noted that the record was clear in that the Defendant was responsible for Plaintiff’s daily working condition.  It also noted that Plaintiff’s continued 20 month employment with Defendant indicated that Plaintiff had acquiesced to the employment relationship with Defendant.  In addition to the two primary factors, the Superior Court also addressed nine “additional considerations” that weighed in favor of finding a borrowed servant relationship.  Accordingly, the Superior Court found no error in the Trial Court’s finding that Plaintiff was Defendant’s employee under the LHWCA and summary judgment was affirmed.

The statute of limitations in an underinsured motorist claim begins to run from the date when the insurer refuses the insured’s request for benefits.

Margaret Shilling sustained injuries in a motor vehicle accident which required treatment from April 2011 to July 2014.  The at-fault party was an underinsured motorist. Shilling received the policy limit from the underinsured motorist and sought to recover $300,000 from her insurer, Nationwide.  In 2015, Shilling sent a formal demand letter for the underinsured motorist benefit under her policy.  One month later, Nationwide informed Shilling that her claim was pending.  The pending status continued months past their initial acknowledgment of the demand.

In September 2016, Shilling filed an action against Nationwide for the unpaid damages.  Nationwide filed a Motion to Dismiss, arguing that Shilling’s claim was time-barred pursuant to the statue of limitations.  On appeal, Nationwide argued the statute of limitations should begin to run when the tortfeasor’s insurance policy is exhausted.  Shilling argued the statute of limitations should begin to run on the date of the insurer’s denial of the benefit.

The Court of Appeals held that the statute of limitations for an underinsured motorist claim begins to run from the date when the insurer breaches the insurance contract through a denial of the insured’s demand for benefits.  The Court of Appeals reasoned that these actions are based on contract and that liability stems from the contractual relationship.  The statute of limitations begins to run in a contract action upon the breach of that contract. The Court declined to find prejudice to insurers due to a potential delay in the commencement of the underinsured benefits process by an Insured, as the insurer is still permitted to protect itself with time limitations for its insured to demand underinsured benefits within its insurance policies, and the application of equitable remedy of laches to belated claims.

New Jersey Supreme Court
No. A-69 September Term 2018, 082262
Decided: April 15, 2020

Supreme Court addresses applicability of New Jersey Tort Claims Act and whether loss of liberty damages are subject to the Act’s “verbal threshold” requirement.

Plaintiff Nieves was represented by a state public defender against criminal charges.  After his conviction, Plaintiff obtained post-conviction relief based on ineffective assistance of trial counsel.  DNA evidence confirmed that Plaintiff was not the perpetrator of the offense, leading to the dismissal of the underlying indictment.  After recovering damages from the state for the time he spent wrongfully imprisoned, Plaintiff filed this legal malpractice action against his trial counsel and the Office of the Public Defender.  Defendants moved for summary judgment, arguing that the New Jersey Tort Claims Act, N.J.S.A. 59:1-1, barred Plaintiff’s claim because he failed to overcome the Act’s verbal threshold.  The Trial Court denied the motion, ruling that the Act and the verbal threshold were inapplicable to Plaintiff’s claim.

The Superior Court of New Jersey, Appellate Division, reversed, ruling that public defenders were public employees entitled to the Act’s defenses and immunities.  The Appellate Division found that Plaintiff had failed to satisfy the verbal threshold.  The Appellate Division further ruled that Plaintiff’s claim for damages for the loss of liberty fell within the Act’s limitation on recovery for pain and suffering.  Plaintiff appealed from the Appellate Division’s judgment, which reversed the Trial Court’s denial of Defendants’ Motion for summary judgment.

On appeal, the New Jersey Supreme Court affirmed the Appellate Division’s judgment.  The Supreme Court agreed that Defendants were entitled to the protections of the Act, as the Office of the Public Defender was an office within the state government, whose head was appointed by the Governor, with the advice and consent of the Senate.  The Supreme Court also noted that public defenders performed the public function of representing indigent clients.  The Supreme Court further agreed with the Appellate Division that Plaintiff failed to overcome the verbal threshold of the Act, because he had not sought any economic damages and because loss of liberty damages were akin to emotional distress damages.

District of Columbia Court of Appeals
No. 16-CV-841
Decided: January 30, 2020

D.C. Court of Appeals applies “automatic companion rule” to find officers acted in good faith, but declines to adopt the rule.

Plaintiffs Ronald and Sharon Jenkins drove to the seafood market located at the Wharf at the Southwest Waterfront in Washington, D.C.  In the parking lot, Mr. Jenkins got into an argument with another driver who had parked in a spot Mr. Jenkins had been waiting for.  The Jenkinses parked elsewhere and went into the market.  Meanwhile, Officer Davis of the D.C. Metropolitan Police Department responded to radio calls reporting a traffic dispute in which “a knife had been pulled.”  At the scene, Davis and other MPD officers interviewed witnesses including the other driver and a minor child who was the driver’s nephew.  The nephew told Officer Davis that he saw Mr. Jenkins pull out a folding pocketknife during the altercation.  The other driver told police that Mr. Jenkins was holding his keys and that he never saw a knife but later changed his story to say that he, too, saw a knife.  An independent witness saw the argument but did not see a knife.

As the Jenkinses returned to their car, MPD officers stopped them and asked Mr. Jenkins if he had pulled the knife on the other driver.  Mr. Jenkins denied possessing or pulling the knife, and Mrs. Jenkins corroborated his account.  The officers ordered Mr. Jenkins out of the car, and Mr. Jenkins consented to a search of his vehicle, which did not yield any weapon.  MPD officers also searched the surrounding area but could not find a knife.  Officer Davis then arrested Mr. Jenkins for assault with a dangerous weapon.  A female officer ordered Mrs. Jenkins out of the car and performed a pat-down search of Mrs. Jenkins and failed to locate a weapon.  Mr. Jenkins was held overnight before the District dismissed the charges against him at his initial hearing.  Mr. and Mrs. Jenkins then sued the District of Columbia and Officer Davis alleging federal civil rights violations, assault, and battery, among other claims.  The Trial Judge entered summary judgment in favor of the Defendants on all claims, finding probable cause, as a matter of law, to arrest Mr. Jenkins and finding that qualified immunity operated to bar Mrs. Jenkins’ claims because no “clearly known right” was violated.  The Jenkinses appealed.

The D.C. Court of Appeals affirmed.  As to Mr. Jenkins’s claims, the Court held that the probable cause issue need not go to a jury because the only conclusion that a jury could reach is that a prudent officer “would have believed that there was at least a fair probability that Mr. Jenkins committed the crime alleged.”  The Court upheld summary judgment on Mrs. Jenkins’ claims against Davis because she could not prove the necessary elements of “bystander liability,” that Davis knew about the female officer’s pat-down of Mrs. Jenkins, had an opportunity to prevent the pat-down, and chose not to do so.  Finally, the Court affirmed summary judgment on Mrs. Jenkins’s assault and battery claims without deciding whether the search of Mrs. Jenkins was lawful.  Mrs. Jenkins argued that D.C. law clearly prohibited the search. The Court found that the officers were entitled to privilege because they may have believed the search was lawful under the “automatic companion rule,” which has been adopted in other jurisdictions.  The Court declined to adopt the rule but held that the officers were protected by privilege in the absence of evidence of bad faith.

Virginia Supreme Court
2020 Va. LEXIS 38
Decided: April 9, 2020

Doctor’s actions in prescribing narcotic pain medication without properly monitoring Decedent supported a claim for punitive damages.

This case began when Plaintiff’s Decedent broke her ankle and sought treatment with Defendant.  Defendant eventually performed three surgeries, prescribing Percocet after the first surgery.  He continued prescribing Percocet over the course of the next three years, ultimately prescribing more than 7,000 Percocet pills.  Defendant knew that Decedent was at an increased risk of developing an addiction to narcotic pain medication due to a history of bipolar depression and alcohol use; however, Defendant never attempted to treat Decedent with nonnarcotic medication.  Rather, Decedent would call Defendant’s office each week for a refill, which Defendant prescribed.

At trial, Defendant acknowledged that it was important to monitor patients who were taking narcotics for signs of abuse and addition; however, he did not examine Decedent during the last 14 months of her life.  Decedent died two days after picking up her last Percocet prescription of an accidental overdose of Percocet, alcohol, and other prescription medications.  Plaintiff brought suit against Defendant seeking, among other things, punitive damages based on prescribing massive amounts of clinically unwarranted, highly addictive, and dangerous narcotic pain medication without examining, evaluating, monitoring Decedent.  Defendant admitted to breaching the applicable standard of care with respect to his care and treatment of Decedent, but argued that Plaintiff’s evidence did not support a claim for punitive damages.  The Trial Court agreed and struck the claim for punitive damages.  Plaintiff appealed.

Pursuant to Va. Code § 8.01-52, punitive damages may be recovered in a wrongful death action for willful or wanton conduct, or such recklessness as evinces a conscious disregard for the safety of others.  The hallmark of punitive damages is the defendant’s consciousness of his act, his awareness of the dangers or probable consequences, and his reckless decision to proceed anyway.  Here, the jury could have reasonably found that Defendant’s actions evinced a reckless disregard for Decedent’s well-being.  Specifically, the evidence could have supported the inference that Defendant wrote Decedent multiple prescriptions for Percocet when he was aware of the increased risk of addiction and that he had not monitored Decedent for signs of abuse or addiction.  Thus, the Trial Court erred by granting the motion to strike the claim for punitive damages.

Questions about this case can be directed to Lacey Conn, at (571) 464-0433 or lconn@tthlaw.com.