TT&H eNotes: Liability – December 2017

SIGNIFICANT CASE SUMMARIES

PENNSYLVANIA CASE SUMMARIES

Old Republic Ins. Co. v. Stevens

• Pennsylvania Superior Court
• No. 1903 MDA 2016
• Decided: November 14, 2016

The Superior Court upholds precedent that an employee’s sexual misconduct is considered an intentional act that nullifies an insurance company’s duty to defend and indemnify.

Background

In 2013, Alexander sued Stevens (her band director and teacher), Lakeland School District, and Lakeland’s principal and superintendent for injuries she sustained from an alleged sexual assault by Stevens. Old Republic Insurance Company insured Lakeland School District. Old Republic’s policy contained a wrongful act exclusion that precluded insurance coverage for “any wrongful act that [was] committed with an improper purpose or [was] intended to cause loss.” In 2014, Stevens pled guilty to one count of corruption of minors.

Upon learning of the guilty plea, Old Republic forwarded an updated reservation of rights letter to Stevens advising it would not defend or indemnify him and filed a separate declaratory judgment action. In the declaratory judgment action, Old Republic added Alexander as a Defendant, allowing her the opportunity to respond to Old Republic’s claims. After receiving written submissions and hearing oral argument, the Trial Court found Old Republic had no duty to defend or indemnify Stevens.

Holding

The Superior Court affirmed, finding that the Trial Court did not abuse its discretion or commit an error of law. The Court rejected the argument that entry of a final order against Stevens denied Alexander the opportunity to have her rights declared. The Court acknowledged that under Pennsylvania law, Alexander, as an injured party, was considered an “interested party with standing to have her rights declared.” However, because she was an active party to the litigation, she was afforded a full opportunity to be heard and was not deprived of her interests. Additionally, the Court relied upon the well-established “inferred intent rule” that holds “injuries resulting from sexual assault committed on children . . . are intentional as a matter of law.” Because Old Republic’s policy clearly excluded coverage for intentional conduct, the Trial Court correctly determined that Old Republic had no duty to defend Stevens. The Superior Court added that because a question of insurance coverage is an issue of law, there was no need for the Trial Court to await discovery or further proceedings to rule on the matter.

Questions about this case can be directed to Jolee Bovender, at (717) 255-7626 or jmbovender@tthlaw.com.

Shiflett v. Lehigh Valley Health Network, Inc.

• Pennsylvania Superior Court
• No. 2293 EDA 2016
• Decided: November 9, 2017

Plaintiff cannot assert a new theory of liability after the expiration of the statute of limitations, even when the original pleading contained vague, catch-all allegations of negligence.

Background

Plaintiff brought suit against a hospital for medical malpractice. In the original complaint, all Plaintiff’s allegations were based on an incident in which she fell out of her bed and sustained injury. However, the original pleading contained certain vague and generalized allegations of negligence. The hospital filed preliminary objections to those vague and unspecific allegations. In response, Plaintiff filed an amended pleading including some additional facts regarding the falling incident, but again included vague and generalized negligence allegations.

As the case approached trial, well after the expiration of the statute of limitations, Plaintiff was permitted to file a second amended complaint that included new claims based on alleged negligent acts that occurred several days after Plaintiff’s fall. These claims involved different actors and a different type of negligence, e.g. failure to identify worsening symptoms. The case ultimately resulted in a jury verdict against the hospital. The hospital appealed, arguing that the Trial Court erred in permitting Plaintiff to assert the new theory after the expiration of the statute of limitations.

Holding

The Superior Court reversed holding that the Trial Court erred in permitting the Plaintiff to amend the complaint to assert the new theory after the statute of limitations had expired. The test for determining whether a new cause of action has been asserted is whether the “operative facts supporting the claim were changed, not whether the amendment presented a new category of claim or theory of recovery.” Because the facts supporting the new negligence theory were completely different, and they related to alleged negligent acts by different actors days after the original falling event, the Court concluded the claim was time-barred. The Court rejected Plaintiff’s contention that the vague and generalized allegations of negligence in the original pleadings rendered the new negligence claim timely, since the hospital objected to these pleadings, and the allegations of the original pleadings had no factual connection to the new negligence theory.

Questions about this case can be directed to Matt Clayberger, at (717) 237-7150 or mclayberger@tthlaw.com.

Bennicoff v. Lehigh County Agric. Soc’y

• Pennsylvania Superior Court
• No. 420 EDA 2017
• Decided: October 27, 2017

Plaintiff’s Affidavit contradicting her deposition testimony may be disregarded by the Court as not wholly credible and insufficient to create genuine issue of material fact.

Background

Plaintiff and her husband testified at deposition that they parked in a lot predominantly clear of snow and ice. Husband was able to walk from the vehicle to the building without encountering ice. Plaintiff walked 3 to 4 steps before seeing a patch of ice and, believing she would not fall if she stepped on it, voluntarily walked on it and slipped and fell. In response to Defendant’s Motion for summary judgment, Plaintiff filed an Affidavit claiming that their vehicle was surrounded by ice in a way that she could not avoid the ice to get into the building and that there was no safe alternative route.

The Trial Court considered that the doctrine of assumption of risk operates as a counterpart to the possessor’s lack of duty to protect an invitee from those risks. It noted that because the invitee assumes the risk of injury from obvious and avoidable dangers, the possessor owes the invitee no duty to take measures to alleviate those dangers. The Trial Court found that the Plaintiff’s Affidavit was not “wholly credible” where it contradicted her prior testimony in an effort to overcome summary judgment. Summary judgment was entered in favor of the Defendant landowner.

Holding

On appeal, Plaintiffs argued that there were disputed issues of fact concerning whether the Affidavit contradicted Plaintiff-wife’s deposition testimony, whether there was evidence of an alternative safe route, whether her testimony of knowingly stepping on ice was sufficient to prove that the hazard was obvious and avoidable, and whether the “alternate path” is an articulation of the assumption of risk in slip and fall cases. Upon review of the record, the Superior Court affirmed the Trial Court finding that the Plaintiff’s Affidavit was not “wholly credible” and that the Trial Court was within its discretion to disregard the Affidavit in determining whether a genuine issue of material fact existed. On the remaining issues, the Superior Court ruled that the testimony of the Plaintiff and her husband clearly established that Plaintiff had an alternative safe route, because her husband took that route, but Plaintiff chose to voluntarily encounter the icy condition, believing that she would not fall.

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

Kweh v. U.S. Airways

• Pennsylvania Superior Court
• Nos. 1005 EDA 2016 & 1025 EDA 2016
• Decided: October 27, 2017

Superior Court upholds grant of summary judgment to Defendant US Airways because Plaintiff collected workers’ compensation benefits. Superior Court reverses grant of summary judgment to Defendants American Overhead Door and Rytec Corporation because there were disputed issues of fact about whether the condition was open and obvious such that Plaintiff assumed the risk, whether Plaintiff was contributorily negligent pursuant to the Choice of Ways doctrine and whether a baggage door malfunctioned or was defective.

Background

Plaintiff was at his place of employment, US Airways, at the Philadelphia International Airport, to retrieve his laptop computer which he left in his locker. Plaintiff entered the building through the pedestrian door. On the way out, the pedestrian door was blocked by a trash receptacle, so Plaintiff attempted to exit by using an overhead baggage door. The baggage door closed and struck Plaintiff in the head, rendering him unconscious. Plaintiff was treated and missed three weeks of work. Plaintiff received workers’ compensation benefits from Defendant US Airways. Plaintiff brought suit for his injuries against US Airways, Rytec and American Overhead. Rytec designed and manufactured the baggage door while American Overhead maintained the baggage door. All three Defendants filed motions for summary judgment. The Trial Court granted US Airways motion, as it found that Plaintiff was estopped from receiving a negligence award from his employer when he already received workers’ compensation benefits. The Trial Court also granted the motions of Rytec and American Overhead, finding that the baggage door was open and obvious such that Plaintiff assumed the risk, Plaintiff was contributorily negligence pursuant to the Choice of Ways doctrine and the evidence did not reveal that the baggage door malfunctioned or was defective.

Holding

The Superior Court affirmed the grant of summary judgment to US Airways and reversed the grant of summary judgment to Rytec and American Overhead. The Superior Court agreed that Plaintiff was estopped from receiving a negligence award against his employer when he received workers’ compensation benefits because that would be in direct contravention of the stated purpose of the Workers’ Compensation Act. With regard to Rytec and American Overhead, the Superior Court reversed. The Superior Court disagreed with the Trial Court because both Plaintiff and Defendants offered evidence regarding whether the baggage door was open and obvious, whether Plaintiff was contributorily negligent pursuant to the Choice of Ways doctrine, and whether the baggage door malfunctioned or was defective. As there were disputed issues of fact, the Trial Court erred in granting summary judgment in favor of Rytec and American Overhead.

Questions about this case can be directed to Joseph Shields, at (570) 820-0240 or jshields@tthlaw.com.

Anderson v. Pirelli Tire, LLC

• No. 1327 MDA 2017
• Pennsylvania Superior Court
• Decided: October 24, 2017

Superior Court holds that evidence of Plaintiff’s conduct was properly admitted in product liability case.

Background

Plaintiffs’ decedent was a passenger on a motorcycle which crashed due to a tire blow out. Plaintiff sued, among others, the manufacturer of the subject tire (Pirelli). Plaintiffs filed a Motion in Limine to preclude the Defendants from introducing issues concerning Decedent’s negligence in defense of the strict liability claim. Specifically, Plaintiffs sought to exclude evidence regarding the steps taken by the Plaintiffs to ensure their safety on the motorcycle, the air pressure of the tire, and the weight carried on the motorcycle at the time of the accident. The Court denied Plaintiffs’ Motion. The jury returned a defense verdict.

Holding

The Superior Court affirmed the denial of Plaintiffs’ Motion in Limine ruling that evidence of Plaintiffs’ conduct was properly admitted to impeach Plaintiffs’ evidence of being safety conscious. Moreover, the conduct evidence was relevant to causation because it supported a conclusion that had Plaintiffs not ignored evidence of a possible problem with the motorcycle, there would have been no accident and no injuries.

Anderson, which is an unpublished and hence non-precedential opinion, is interesting in that it makes no reference whatsoever to the seminal Pennsylvania Supreme Court product liability case of Tincher v. Omega Flex. Nevertheless, Anderson is a favorable decision for product liability defendants.

Questions about this case can be directed to Kenneth Newman, at (412) 926-1425 or knewman@tthlaw.com.

Century Indem. Co. v. OneBeacon Ins. Co.

• Pennsylvania Superior Court
• 2017 Pa. Super. 328
• Decided: October 17, 2017

Appellate Court affirms award in favor of reinsureds against reinsurer for over $7.5m for defense costs beyond the reinsurer’s policy limits.

Background

OneBeacon, the reinsurer for Century Indemnity and Pacific Employers Insurance Company, paid $11M for asbestos related claims pursuant to the reinsurance policy limits set forth in Facultative reinsurance certificates dating back to 1983 and 1984. Facultative reinsurance reinsures one particular risk. Century’s predecessor issued an Excess Blanket Catastrophe Liability Policy to a subsidiary of Formosa Plastics that provided for $25M in umbrella liability for covered losses. Pacific issued a similar policy to Gould Pumps. Both policies included a “second obligation to provide coverage for defense costs.” One Beacon asserted that it had no obligation to pay for defense costs beyond the policy limits. After a non-jury trial in Philadelphia, Judge Glazer awarded Century defense costs of $4.8M plus $275K in prejudgment interest and Pacific $2.4M plus $152K in prejudgment interest. Judge Glazer ruled that OneBeacon’s certificates were ambiguous and did not make clear that the “Reinsurance Accepted” amount included defense costs up to the limits of the reinsurance policy. OneBeacon appealed from the judgment arguing that the dollar amount listed as the “Reinsurance Accepted” amount constituted the maximum amount OneBeacon had to pay.

Holding

First, the Superior Court reviewed the 2nd Circuit Court of Appeals 1990 “seminal decision” in Bellefonte Reinsurance Co. v. Aetna Cas. & Sur. Co. which held that the “Reinsurance Accepted” amount was an “overall limitation and that the reinsurance certificates were cost-inclusive and capped by that amount.” Secondly, the Superior Court reviewed 8 other decisions from 1993 through 2015 which found Facultative certificates that “clearly and unambiguously” capped expenses under the policy limit and those that did not. In affirming the judgment below, the Superior Court panel agreed, that unlike the certificate in Bellefonte, where the reinsurance was “subject to the terms, conditions and amount of liability set forth herein,” the “subject to” clause in the OneBeacon certificate was “substantially different” and stated that the “reinsurance is “subject to the general conditions set forth on the reverse side.” The reverse side of the OneBeacon certificate did not expressly provide that all of the coverage is subject to the “Reinsurance Accepted” limit or that the entire certificate is “subject to” the ‘Reinsurance Accepted” amount. Accordingly, the Court held that a reasonable interpretation of OneBeacon’s ambiguous reinsurance certificate was that it followed that of the underlying policy. Therefore, the reinsurance policy provided “the same coverage” for expenses as did the underlying policy.

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

Kovacevich v. Regional Produce Cooperative Corp.

• Pennsylvania Superior Court
• 2017 Pa. Super. 322, No. 1774 EDA 2016
• Decided: October 13, 2017

A violation of federal agency “guidance policies,” alone, does not support a cause of action for negligence in Pennsylvania because such policies do not create a legally recognized duty under Pennsylvania law.

Background

Christopher Kovacevich, employee of a produce market tenant, brought a personal injury action against the market’s management company, Regional Produce Cooperative Corp. (RPCC), for negligence. Kovacevich was standing in front of his employer’s leased space inside the market when a co-worker, Ernest Scarlata, approached him from behind while driving a pallet jack. The pallet jack was carrying a tall load of fruit on the vehicle’s fork and Scarlata drove “fork first” into Kovacevich’s back causing serious injuries. Kovacevich’s negligence claim was based on a premises liability theory: RPCC had control over the employees of its tenants in the Market and therefore was responsible for the negligence of Scarlata in operating the pallet jack. Kovacevich specifically claimed that Scarlata did not receive training and certification to operate the pallet jack under an OSHA enforcement policy.

At the close of Kovacevich’s case, the Trial Court entered a non-suit on the claim against RPCC. Kovacevich filed a post-trial motion seeking to remove the non-suit which was subsequently denied. The Trial Court reasoned that the OSHA “controlling employer” policy only concerned OSHA enforcement actions and did not therefore give rise to a legal duty, that even if the policy established a duty it did not control here because the policy only applied to construction, and even if the policy applied, there was insufficient evidence to establish RPCC was a controlling employer under the policy.

Holding

The Court focused its attention on whether the OSHA policy created a duty under Pennsylvania law. In determining the policy did not, the Court reviewed Section 286 of the Second Restatement of Torts to which Pennsylvania courts refer to determine standards of care defined by legislation or regulation. The Court relied on Leonard v. Commonwealth, Dep’t of Transp., 565 Pa. 101 (2001), when it distinguished pronouncements setting standards of care from those that merely describe enforcement policies. It held federal agency guidance documents do not determine rights or obligations or cause legal consequences, because “guidance” is not intended to have binding legal effect. The Court noted that Section 286 of the Second Restatement discusses adoption of standards from legislative enactments or administrative regulation, not guidance documents. A Defendant’s duty, therefore, must be decided without regard to a guidance policy statement.

Questions about this case can be directed to Brad Peiffer, at (717) 237-7106 or bpeiffer@tthlaw.com.

Breslin v. Mountain View Nursing Home, Inc.

• Pennsylvania Superior Court
• 2017 Pa. Super. 308
• Decided: September 28, 2017

Plaintiff’s Amended Complaint stated facts sufficient to establish a claim of corporate negligence, where the five factors set forth in Alhaus v. Cohen weighed in favor of imposing a non-delegable duty of care on Defendant Nursing Home.

Background

Plaintiff, as executrix of decedent’s estate, brought a corporate negligence and vicarious liability action against Mountain View Nursing Home, Inc. (“MVNH”), a nursing home where the decedent was a patient from October 9, 2013 to October 16, 2014 and at which he developed multiple pressure ulcers. Plaintiff’s amended complaint, and in particular, Plaintiff’s claim of corporate negligence, was dismissed by preliminary objection for failing to set forth a valid cause of action.

Holding

The Superior Court found that the Trial Court erred by dismissing Plaintiff’s Amended Complaint. The five-prong analysis set forth in Althaus v. Cohen, 756 A.2d 1166, 1169 (Pa. 2000), which considers: (1) the relationship between the parties; (2) the social utility of the actor’s conduct; (3) the nature of the risk imposed and foreseeability of the harm incurred; (4) the consequences of imposing a duty upon the actor; and (5) the overall public interest in the proposed solution,” weighed in favor of imposing a non-delegable duty of care on MVNH based on the allegations pled in Plaintiff’s Amended Complain and it was error to dismiss Plaintiff’s corporate negligence claim on preliminary objections.

Questions about this case can be directed to Brook Dirlam, at (412) 926-1438 or bdirlam@tthlaw.com.

MARYLAND CASE SUMMARIES

C & B Constr., Inc., v. Dashiell

• Maryland Court of Special Appeals
• September Term 2016, No. 1307
• Decided: November 1, 2017

Maryland Construction Trust Statute applies only to cases in which the Maryland Little Miller Act or Maryland’s mechanic’s lien statute apply.

Background

C & B Construction was a construction subcontractor for general contractor Temco Builders, Inc. on various projects throughout Maryland. Although Temco was paid by the project owners, it failed to pay C & B for the work it performed. C & B filed suit in the Circuit Court for Wicomico County against Temco for breach of contract and against its officers Vice President Jeffrey Dashiell and President Edward J. Maguire, individually, under the Maryland Construction Trust Statute, Md. Ann. Code, Real Property Article, § 9-201, et seq. C & B alleged that Dashiell and Maguire used funds intended for C & B for other purposes, e.g., office expenses and repaying themselves for money they put into Temco. Temco entered into a consent judgment with C & B. Dashiell and Maguire moved to dismiss the case asserting that the Maryland Construction Trust Statute does not apply because the subcontracts were not subject to either the Little Miller Act or the mechanics’ lien statute. The Trial Court granted the motion.

Holding

The Court of Special Appeals upheld the dismissal reasoning that the Construction Trust Statute was designed to protect subcontractors from dishonest practices of general contractors by allowing personal liability for the general contractors officers, directors, and managing agents who knowingly misused funds. However, its language specifically limits its application to projects governed by the Maryland Little Miller Act, Md. Ann. Code, Fin. & Proc. Art., § 17-101 et seq., as well as the Maryland Mechanics’ Lien Statute, Md. Ann. Code, Real Property Article, § 9-102, et seq. Because the Little Miller Act and the Mechanic’s Lien Statute provide remedies not available at common law, the remedies are strictly construed. The purpose of the Construction Trust Statute is to provide subcontractors subject to the strict statutes with additional remedies because the legislature viewed them as a class in need of protection. Therefore, because neither the Maryland Little Miller Act nor the Mechanics’ Lien Statute applied to C & B projects with Temco, it could not seek relief under the Construction Trust Statute.

Questions about this case can be directed to Renita Collins, at (410) 653-0460 or rcollins@tthlaw.com.

Sugarman v. Liles

• Maryland Court of Special Appeals
• September Term, 2016, No. 1460
• Decided: November 1, 2017

Expert testimony that relies on the use of epidemiological studies and medical records is sufficient to provide a causal relationship on the issue of lead exposure.

Background

As a child Chauncey Liles, Jr. resided at a property owned, managed, maintained, operated, and controlled by Ivy Realty and Stanley Sugarman (collectively “Ivy Realty”). Liles believed that he suffered poisoning from lead paint that he was exposed to at the property. Liles filed a Complaint in the Circuit Court for Baltimore City alleging injury and damages caused by lead paint exposure at the property. At trial, the parties stipulated to Ivy Realty’s negligence, that Liles had been exposed to deteriorating paint at the property, and that Liles had elevated lead blood levels due to exposure to lead paint at the property. The only questions for the jury were whether Liles’ lead exposure caused injury, and if so, what, if any damages were incurred. Liles presented expert witnesses who used epidemiological studies as well as Liles’ medical and neurophysiological records to establish a causal relationship between childhood lead exposure and problems with attention and a loss of four IQ points. The experts testified to the amount of money that Liles would have earned in the work force if he had not suffered cognitive issues from the lead paint, as well as to the amount he is earning as a result of his reduced cognitive abilities.

Ivy Realty moved for judgment. It argued that the expert testimony was speculative and lacked a factual basis to support causation and damages. The Defendants’ motion was denied and the jury found in favor of Liles in the amount of $1,277,610. Defendants appealed. The issues before the Court of Special Appeals included: 1) was there sufficient evidence to submit the case to the jury on whether Mr. Liles’ lead exposure caused injury, and 2) was there sufficient evidence to submit the case to the jury on whether any injury caused by the lead exposure resulted in damages.

Holding

The Court held that the Circuit Court properly denied Defendants’ Motion for Judgment. It explained that there was sufficient evidence to submit the case to a jury on whether Mr. Liles’ lead exposure caused his injury and, if so, whether such injury resulted in damages. In so holding, the Court explained that the use of epidemiological studies are an accepted source to show a causal relationship between childhood lead exposure and attention problems. It also held that the studies, in conjunction with Mr. Liles’ medical records, presented a sufficient factual basis for an expert to opine on the cognitive deficits that led to problems with attention. Furthermore, the Court affirmed prior Maryland cases that upheld the use of the Lanphear Study as a basis for calculating IQ loss for plaintiffs in lead paint cases. It explained that a jury could accept or reject that Mr. Liles’ lead exposure caused cognitive deficits.

Questions about this case can be directed to Salvatore Cardile, at (410) 653-0460 or scardile@tthlaw.com.

NEW JERSEY CASE SUMMARIES

Scardillo v. Innaccone

• New Jersey Superior Court, Appellate Division
• No. A-0847-16T2
• Decided: November 15, 2017

A contractor, who allegedly fails to complete work, will not be responsible for injuries sustained by a homeowner who then undertakes the work without evidence of proximate cause.

Background

Plaintiff Scardillo filed an action for personal injuries against Defendant PM Contractors, who she hired to install a new fence. Defendant Innaccone, the adjoining property owner asked Plaintiff about removal of the old fence. Plaintiff inquired from PM Contractors about the old fence, but without immediate success. Plaintiff then “took matters into her own hands” and with permission of Defendant Innaccone entered the adjoining property for purpose of removing the fence where she stepped into a hole injuring herself. In her Complaint, Plaintiff alleged Defendant PM Contractors was responsible for her injuries because she would not have entered the neighboring property but for PM Contractors’ failure to remove the old fence. Defendant PM Contractors moved for summary judgment which was granted.

Holding

In affirming the Trial Court’s decision, the Superior Court noted Plaintiff failed to establish that PM Contractors’ alleged wrongdoing proximately caused her injuries, noting there was no allegation that the hole in Innaccone’s property was the result of PM’s performance of the contract to install the new fence.

Questions about this case can be directed to Paraskevoula Mamounas, at (610) 332-7029 or pmamounas@tthlaw.com.

Quintinal v. Liebenzell Mission of USA

• New Jersey Superior Court, Appellate Division
• No. A-5499-15T1
• Decided: November 9, 2017

A qualifying organization does not lose its statutory immunity merely because it charges for its services.

Background

Plaintiff Quintinal filed an action for personal injuries against Defendant Liebenzell Mission of USA, a 501(c)3 tax exempt, not-for-profit corporation, organized to promote Christianity. Defendant operates a 150-acre retreat in Morris County, which it makes available to churches and other non-profit groups for a fee. Plaintiff was attending a three-day conference at the retreat center sponsored by the church she attended. Plaintiff paid $120 to attend the retreat, $6 of which was allocated for costs of insurance. While leaving a “religious conference” at the center, Plaintiff slipped on snow and ice on a ramp leading out of the building, injuring herself. Defendant moved for summary judgment contending it was entitled to immunity pursuant to the Charitable Immunity Act. The Trial Court granted the motion. Plaintiff appealed arguing Defendant deviated from its stated purpose by charging a $6 fee for insurance, that there was a “dispute as to what type and amounts of income Defendant received in order to operate,” and that Plaintiff was not a beneficiary because “Defendant was not promoting [its] objectives as a religious retreat at the time of the injury.”

Holding

In affirming the Trial Court’s decision, the Superior Court noted Plaintiff failed to establish any evidence “that [Defendant]…was a profit-making organization with any aim other than a ‘dominant motive’ of charity by providing a place for low-cost religious and personal reflection.” “A qualifying organization does not lose its statutory immunity merely because it charges money for its services.” With respect to whether Plaintiff was a beneficiary, the Superior Court agreed with the Trial Court’s application of the two-part test enunciated in DeVries v. Habitat for Humanity: “(1) did the injury occur while the organization was engaged in charitable works, and (2) was the injured party a direct recipient of those works.” Using the test in DeVries, the Trial Court correctly concluded there could be no genuine dispute that Plaintiff accepted the invitation of her church “to attend the retreat, to use [Defendant’s] facilities and to attend services or conferences during the retreat.”

Questions about this case can be directed to Paraskevoula Mamounas, at (610) 332-7029 or pmamounas@tthlaw.com.

Choi v. The Prof’l Golfers Ass’n

• New Jersey Superior Court, Appellate Division
• No. A-5375-15T2, 2017 WL 5076470
• Decided: November 1, 2017

Superior Court affirms grant of summary judgment on the basis that no evidence established the PGA owed a duty of care to the injured minor.

Background

E.K., a minor, was struck in the mouth by a golf club swung by another minor child while attending a golf camp at the Hunterdon County YMCA. Plaintiffs, E.K.’s parents, filed suit against the YMCA; Chris Nallen, the professional golfer hired as an instructor at the camp; the New Jersey Professional Golfers Association, Inc. (NJPGA); the New Jersey Golf Foundation, Inc. (NJ Golf Foundation); and the PGA.

Plaintiffs alleged that E.K. would not have been injured, but for the negligent supervision of the campers. Plaintiff also alleged that Nallen was a member, official, agent, servant, or independent contractor of the PGA, that the PGA had a duty to ensure Nallen would properly supervise the Golf Camp, and that the PGA was an independent contractor of the YMCA. The PGA filed its motion for summary judgment, arguing it owed no duty of care to E.K., and the motion was granted by the Lower Court.

Holding

The Superior Court affirmed the grant of summary judgment in favor of the PGA. The record indicated Nallen was hired by the NJ Golf Foundation as an independent contractor to run the YMCA’s Golf Camp. Plaintiffs failed to offer any evidence that Nallen was in a master-servant relationship with the PGA. Moreover, the PGA did not hold Nallen out as its agent or employee. There was also no evidence the PGA was involved in any aspect of the planning or administration of the YMCA’s camp, let alone consented to the use of its logo on the Camp’s brochure. Thus, the Court held that Plaintiffs failed to present any evidence to show a duty of care owed on the part of the PGA.

Questions about this case can be directed to Michael Bishop, at (610) 332-7009 or mbishop@tthlaw.com.

DC CASE SUMMARY

Truesdale v. Mountain Prods., Inc.

• United States District Court for the District of Columbia
• No. 1:17-cv-557 (CKK)
• Decided: November 22, 2017

Plaintiffs are exempted from DC’s Workers’ Compensation Act’s limitations on indemnification where they can demonstrate express or implied indemnity agreements with the Defendant.

Background

The matter before the Court was a motion to dismiss two third-party complaints. This case arose from the death of a worker on the construction of a concert stage. The worker’s daughter filed negligence actions against two of the businesses involved in the construction project, Mountain Productions and It’s My Party, Inc. (“IMP”). Mountain and IMP brought third party actions against the employer, Conder, for indemnity. Conder argued that under the Workers’ Compensation Act, it was already exclusively liable to the worker and his estate, which would bar the daughter from suing Conder directly. Furthermore, this exclusion would bar indemnity claims against Conder.

Mountain and IMP each asserted a right to indemnification from Conder due to an exemption from the exclusionary provisions of the Act. The DC Court of Appeals held previously that the Act’s exclusionary provision does not apply to express indemnification agreements or implied indemnification in certain special relationships. IMP argued express indemnity based on an verbal agreement with Conder, and implied indemnity based its extended business relationship with Conder during which IMP had relied on Conder’s expertise, advice, supervision, and oversight, and because Conder had made IMP an additional insured on its liability policy. Mountain argued express indemnity based on a third-party beneficiary theory because, unlike IMP, it did not have a direct contractual relationship with Conder, and argued implied indemnity based on a special relationship created by the daily interactions between Conder and Mountain.

Holding

The Court found that IMP’s arguments regarding express indemnity based on a verbal agreement were sufficient to survive a motion to dismiss, in the absence of authority requiring written indemnity agreements, based on the longstanding business relationship between IMP and Conder, and Conder’s inclusion of IMP as an additional insured on its liability policy. Mountain’s arguments, however, did not survive the motion to dismiss, as Mountain failed to plausibly allege that it was an intended third party beneficiary of IMP and Conder’s contract, and its pleadings lacked facts to show that a special relationship existed between Mountain and Conder in a manner similar to the relationship alleged by IMP.

Questions about this case can be directed to Collin Shannon, at (202) 945-9504 or cshannon@tthlaw.com.

VIRGINIA CASE SUMMARY

Appalachian Reg’l Healthcare v. Cunningham

• Virginia Supreme Court
• No. 161767
• Decided: November 22, 2017

A group of hospitals could not recover legal fees and costs from an insolvent insurer because the relevant contract documents did not provide for such recovery.

Background

In the 1970s and 1980s a group of Kentucky hospitals created two self-insured trusts to cover hospitals and other healthcare providers, one which provided workers’ compensation and employers’ liability coverage, and the second which provided professional and general liability coverage. In 1997, the trusts entered into contracts merging them into Reciprocal of America (“ROA”), an insurer. With each contract, the parties included an indemnification agreement in which ROA agreed to indemnify the trusts for certain liabilities and expenses. In 2003, ROA was placed into receivership, and was thereafter found insolvent and ordered to be liquidated. The deputy receiver filed an application with the Virginia State Corporation Commission (“SCC”) requesting authority to continue paying workers’ compensation claims that ROA had assumed because the claims were likely to be denied by the Kentucky state guaranty associations.

The hospitals entered into this Virginia case to support the deputy receiver’s position. The Hearing Examiner found that the claims assumed by ROA were entitled to second priority behind secured creditors pursuant to the Virginia Code, and the Virginia SCC adopted this finding. Concurrently with the Virginia case, the hospitals filed a case in Kentucky seeking a declaratory judgment stating that due to ROA’s insolvency, the Kentucky Insurance Guaranty Association was responsible for the claims ROA assumed. The Court ruled in favor of the hospitals on the basis that the contracts ROA and the trusts had entered were novations which made ROA the sole source of coverage for the claims it assumed. After prevailing in both courts, the hospitals filed a claim for their legal fees and costs with the SCC, but were found to have no contractual right to recover such fees and costs.

Holding

The Supreme Court affirmed the SCC’s decision. The Court found that based on the plain meaning of “defend against any claim” and the definition of “damages” expressly stated by the agreements between the trusts and ROA, ROA was responsible for indemnifying the trusts only when the trusts were defending themselves against a claim for damages made by another party. In both the Virginia and Kentucky cases, the hospitals voluntarily intervened, and were not defending themselves. ROA’s indemnity could be no greater than that of the trusts before the assumption contract, and neither trust had any obligation to pay legal fees and costs to its insureds in the event the trust liquidated and the insured filed claims seeking coverage with the state insurance guaranty association. Therefore, based on the language of the contracts, the hospitals were entitled only to the coverage which they had received prior to the assumption, and nothing more.

Questions about this case can be directed to Collin Shannon, at (202) 945-9504 or cshannon@tthlaw.com.