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Professional liability: 4th Circuit finds insurer required to defend Maryland accounting firm
In Trice, Geary & Myers, LLC v. Camico Mutual Ins. Co., No. 10-1473 (4th Cir. Dec. 22, 2011 (unpublished), an accounting firm appealed the district court's award of summary judgment to their insurer in a declaratory judgment concerning insurance coverage. The 4th Circuit reversed.
The district court had awarded summary judgment to the insurer, finding that it had no duty to defend, on the grounds that all the underlying claims were "in connection with or arising out of" a member of the firm's sale and promotion of annuity plans as an agent or broker of Hartford, and under a Special Exclusion Endorsement, any of the plaintiffs' alleged acts, errors or omissions connected with the plan sales were excluded from coverage.
The 4th Circuit reversed and remanded, on the grounds that the underlying actions alleged that the accounting firm rendered substandard tax and accounting advice. Because these claims raised a potentiality that there is coverage under the professional liability policy, the Court ruled that the insurer's duty to defend was triggered. The Court therefore reversed the district court's award of summary judgment to the insurer, and remanded for further proceedings.
The underlying actions were three actions in which the insured were sued for their alleged recommendation to clients that they create section 412(i) defined benefits plans that would invest in insurance policies written by Hartford Insurance, and informed the clients that the premiums for that insurance would be tax deductible expenditures. These tax deductions were later audited by the IRS and the deductions were disallowed.
The 4th Circuit agreed with the insured's argument that because the insurer's Special Endorsement Exclusion invoked the exclusion for claims "in connection with or arising out of any act, error or omission by any Insured in his/her capacity as an [insurance] agent or broker," the exclusion applies only to claims asserting insurance agent or broker professional liability.
The Court disagreed with the insurer's argument that when the parties to the insurance contract agreed to the "in connection with or arising out of" language in the "Special Exclusion Endorsement", they also agreed that, even if there were several grounds for a claim, coverage would be barred so long as one of the grounds was any insured's having placed or sold an insurance product. Rather, the Court defined the issue as whether the acts, errors, or omissions of the insureds arise out of their capacity as brokers and agents. The Court also disagreed with the insurer's argument that merely "acting" as an agent or broker is itself sufficient to invoke the "Special Exclusion Endorsement." Instead, the Court pointed out that the terms "agent" and "broker" are terms of art under Maryland law, that the burden is on the insurer to prove the applicability of the exclusion, and that the insurer has not proven the principal-agent factors.
The Court also analyzed the complaints in the underlying action, and found that based on an analysis of the four corners of the complaints, contrary to the district court's interpretation, all of the underlying actions asserted that the insureds acted as accountants and tax advisors, and none of them contained allegations which put all of the counts in the underlying actions within the "Special Exclusion Endorsement."
Impact: This decision illustrates that in Maryland, if even a single count of a complaint creates the potentiality of coverage, the insurer must defend the entire complaint, including the counts which fall within policy exclusions. Sometimes it is difficult to determine what causes of action have been plead, depending on how the complaint is written and whether separate causes of action have been set forth in separate counts.
Posted by David B Stratton on 02/06/2012 at 09:21 PM
Insurance •
Maryland •
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Allocation of lead paint poisoning liability under Maryland law
In Pennsylvania Nat. Mut. Cas. Ins. Co. v. Roberts, No. 10-1987 (4th Cir. Feb. 3, 2012), the Court considered an insurer's allocation of liability, under Maryland law, for a $850,000 judgment arising from lead paint poisoning, where the insurer's time on the risk was only a fraction of the plaintiff's exposure to lead paint poisoning. The insurer had sought a declaratory judgment that its allocation was no more than 40%, because it had covered its insured for no more than 40% of the time in which the plaintiff was exposed to lead poisoning.
The district court held that the insurer was only responsible for a portion of the judgment, notwithstanding that its insured was held jointly and severally liable for the entire judgment in the state proceeding. The district court reasoned that in lead paint or "continuous trigger" cases like this, Maryland courts determine an insurer's liability through a "pro-rata allocation by "time on the risk." The 4th Circuit affirmed in part and reversed in part.
On appeal, the plaintiff argued that the insurer was responsible for paying the entire $850,000 judgment in light of the joint and several liability of its insured. The plaintiff argued that the insurer contracted to cover the risk of any judgment for bodily injury by promising to "pay those sums that [the insured] becomes legally obligated to pay as damages because of 'bodily injury.'"
The 4th Circuit rejected this argument, because under the policy, the insurer contracted only "to pay those sums that [the insured] becomes legally obligated to pay as damages because of 'bodily injury' . . . To which this insurance applies." By its own terms, the contract does not cover damages that the insured because legally obligated to pay for injuries that occurred outside of the policy period. Not only was the insurer's coverage restricted to the policy period, it was also limited to premises that the insured owned, rented, or occupied. Thus, the insurer could not be liable for injuries that occurred after the insured sold the property.
The 4th Circuit concluded:
In seeking to impose the entire judgment on . . . [the insurer], [the plaintiff] would have us turn a blind eye to these terms and hold an insurance company liable for risks for which it never contracted and for which it never received premiums. We decline to do so.
The 4th Circuit also relied on Maryland precedent which holds that in lead paint or continuous trigger cases like this, Maryland courts engage in a pro rata time-on-the-risk allocation of liability." Under this method of allocation, each insurer is liable for that period of time in was on the risk compared to the entire period during which damages occurred, and losses will be prorated to the insured for period during which it was uninsured.
The Court emphasized that this rule does not reduce the tort defendant's own joint and several liability for the judgment. Rather, the question here was whether the insurer is liable for the entire judgment, and that question could be answered only be reference to the insurance contract and the application of contract law.
The 4th Circuit ultimately ruled that the insure was only liable for 22months/55 months of time-on-the-risk, or 40% of the $850,000 judgment.
Impact: By providing more certainty concerning the allocation of judgments to the tortfeasors' insurance policies, this opinion should permit disputes concerning such allocation to be resolved more easily.
Posted by David B Stratton on 02/05/2012 at 09:33 PM
Insurance •
Lead Paint Poisoning •
Maryland •
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Maryland upholds use of fair reporting and comment privilege as basis for dismissing defamation suit
In Nicholas A. Piscatelli v. Van Smith, et al., No. 18, Sept. Term 2011 (Jan 23, 2012), the Maryland Court of Appeals affirmed that the reporters published articles in the City Paper, which described Nicholas Piscatelli's possible connection to a double murder in an unflattering light, were within the protective embrace of the fair reporting and fair comment privileges, thereby affirming the ruling from the trial court and Court of Special Appeals.
In 2006 and 2007, Van Smith, authored, and the City Paper published, two articles revisiting the trial of Anthony Jerome Miller for the murders of Jason Convertino and Sean Wisniewski. Piscatelli owned Redwood Trust, a popular nightclub. Convertino managed and procured musical acts for the club. Both articles more than hinted that Piscatelli may have been involved in the murders, even though he was not charged criminally.
The two articles at issue quoted a memorandum from the prosecutor in Miller's murder trial regarding Convertino's mother, Pam Morgan, which was made part of the record, though not admitted into evidence, detailing a conversation she had with a stranger who approached her and told her that Piscatelli was involved in her son's murder. The articles also summarize Piscatelli's testimony from Miller's murder trial. As a witness for the State, Piscatelli testified that Convertino was leaving him to work for a competitor and suspected him of taking larger commissions that he was due while working for him. The prosecutor asked Piscatelli bluntly if he had anything to do with the murder, which he denied. On cross-examination, Miller's attorney insinuated that Piscatelli had motive to kill Convertino.
In Piscatelli's suit for defamation and false light, Smith and City Paper moved for summary judgment arguing that Piscatelli failed to establish that the statements at issue were false and that the fair reporting and fair comment privileges protected any allegedly defamatory material. Piscatelli responded that the accusations that he was involved in the murders were false and abused the fair reporting and fair comment privileges.
As to the fair reporting privilege, the Court reiterated that "The fair reporting privilege is a qualified privilege to report legal and official proceedings that are, in and of themselves, defamatory, so long as the account is fair and substantially accurate". "The privilege arises from the public's interest in having access to information about official proceedings and public meetings". "A defendant abuses his or her fair reporting privilege, not upon a showing of actual malice, but when the defendant's account fails the test of fairness and accuracy." Here, the supplemental discovery memorandum containing Ms. Morgan's account of the conversation with the stranger was part of the Miller criminal case file and was a public record that may be reported without liability for defamation, so long as the report is fair and accurate. Smith's articles included exact quotes from the Morgan memorandum and detailed her recollection which were consistent with the memorandum. Similarly, Smith's articles accurately depicted Piscatelli's trial testimony so as to be a reasonable abbreviation of his entire testimony. Piscatelli conceded as much in his deposition that Smith's summary was accurate. Thus, Smith's statements were reported fairly and accurately and fell within the purview of the fair reporting privilege.
As to the fair comment privilege, Maryland law states that derogatory opinions based on non-defamatory fact, true facts, privileged facts, or facts assumed mutually by the opinion-maker and recipient are privileged. Since the Court concluded that Smith's reporting of the memorandum and Piscatelli's trial testimony were privileged as fair reporting, which was the basis for any opinions, it enabled the readers to judge for themselves the quality of those opinions. "Therefore, what would otherwise have been an allegation of fact becomes merely a comment, or a simple opinion, which the fair comment privilege declaws of its defamatory expression."
In upholding the grant of summary judgment by the trial court and Court of Special Appeals decisions, the Court stated that Piscatelli failed to adduce facts that would be admissible in evidence to demonstrate that Smith and the City Paper's reporting about Miller's murder trial was unfair and inaccurate, which is a burden he bore, in order to present a triable issue for a jury as to whether the fair reporting privilege was abused. Additionally, where Smith and the City Paper expressed simple opinions based on disclosed, privileged statements, those opinions are themselves privileged as fair comment. "Although perhaps an unflattering account of Piscatelli's relationship with Convertino, [Smith's] report was an accurate, fair account of Piscatelli's testimony". "Piscatelli failed to advance any facts to demonstrate otherwise."
Posted by Robert D. Anderson on 01/26/2012 at 06:44 PM
Defenses •
Maryland •
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Minimum contacts analysis for personal jurisdiction over foreign components manufacturer
In Robert Windsor, Jr., et al., v. Spinner Industry Co., Ltd., et al., Civil No. JKB 10-114 (D.Md. Dec. 15, 2011), the U.S. District Court for the District of Maryland analyzed the appropriate standard by which to determine whether a foreign corporation has sufficient minimum contacts in order to assert personal jurisdiction over the defendant under the U.S. Supreme Court's holdings in Asahi Metal Indus, co., v. Superior Court of California, 480 U.S. 102 (2987) and J. McIntyre Machinery, Ltd., v. Nicastro, 131 S.Ct. 2780 (2011).
Plaintiffs brought suit against defendants after the front wheel of Robert Windsor?s bicycle dislodged, causing him and his toddler son, to be thrown to the ground. Plaintiffs alleged that defendants were involved in the design, manufacture, or assembly of the bicycle or its components, the defects of which were the proximate cause of the accident. Defendant, Joy Industrial Company ("Joy"), a Taiwanese company who manufactured the "quick release skewer" mechanism which secures the wheels to the bicycle, moved to dismiss all claims against it on the grounds that it was not subject to personal jurisdiction in Maryland.
Since plaintiffs bear the burden of establishing personal jurisdiction, plaintiffs argued that, even though Joy had no direct contact with Maryland, the nationwide marketing of Joy's products by intermediaries created sufficient minimum contacts to establish personal jurisdiction. Specifically, Joy sold its products to distributors, manufacturers, and trading companies in the U.S., which then market or sell the product in Maryland. Thus, it was foreseeable that Joy's product would be sold in Maryland and Joy availed itself to the forum jurisdiction.
In analyzing whether the Court had specific jurisdiction over a non-resident manufacturer whose only connection to the forum was that its products were sold there by a third-party distributor the Court looked to the U.S. Supreme Court's opinions in Asahi and McIntyre. Unfortunately, neither Asahi nor McIntyre were majority opinions causing ambiguity as to what standard actually applied to determine jurisdiction is these cases.
Without a majority opinion, the District Court sought to find consensus between the plurality and concurring opinions "on the narrowest grounds" to fashion an appropriate standard. In so doing, the Court found that, contrary to the plaintiffs' position, "McIntyre clearly rejects foreseeability as the standard for personal jurisdiction" and instead "specific jurisdiction must arise from a defendant's deliberate connection with the forum state." "Beyond this, however, McIntyre merely affirms that status quo." Consequently, the District Court relied upon the Fourth Circuit Court's precedent on the issue which largely adopted Justice O'Connor's plurality position in Asahi, i.e., a restrictive view that requires a defendant take some deliberate and overt action to target the markets of the forum State. The Fourth Circuit analyzed minimum contacts on the basis of "whether a defendant has created a substantial connection to the forum state by action purposefully directed toward the forum state or otherwise invoking the benefits and protections of the laws of the state," and specifically rejected the notion that a state could assert personal jurisdiction over a defendant merely because the company expected its product would ultimately be sold in the state.
Applied here, the Court found that the facts were insufficient to demonstrate jurisdiction over Joy based solely upon the motions and that the plaintiffs had failed to offer any details regarding the particular chain of distribution that brought the allegedly defective product to Maryland, or that Joy had any "additional contact" evincing intent to serve the Maryland bicycle market in particular. However, there was still a question of whether jurisdiction was proper since the manufacturers and distributors to whom Joy sells its products, not only market their products in Maryland, but maintain established channels of distribution there, suggesting a regular course of sales. Accordingly, the Court held Joy's Motion to Dismiss for lack of personal jurisdiction in abeyance in order to conduct a hearing to determine the extent of Joy's contacts with Maryland.
Posted by Robert D. Anderson on 01/23/2012 at 06:47 PM
Federal Civil Procedure •
Maryland •
Personal Jurisdiction •
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Premises Liability: Maryland Court of Appeals clarifies assumption of risk defense in black ice case
In George Poole v. Coakley Williams Construction, Inc., et al., No. 130 Sept. Term 2010 (Oct. 27, 2011), and Mary Thomas v. Panco Management of Maryland, LLC, No. 133 Sept. Term 2010 (Oct. 31, 2011) the Court of Appeals overruled the Court of Special Appeals decision in Mary Thomas v. Panco Management of Maryland, LLC, et al., 195 Md. App. 245; 6 A.3d 304 (Oct. 1, 2010) and disavowed Allen v. Marriott Worldwide Corp., 183 Md. App. 460, 961 A.2d 1141 (2008), cert. denied, 408 Md. 149, 968 A.2d 1065 (2009), to clarify that in order for a plaintiff to have assumed the risk of his or her injuries as a matter of law, the plaintiff "must" have known that the risk was actually present, not that he or she "would", "should", or "could" have known that the risk "might well be present."
There are three requirements that a defendant must prove to establish the defense of assumption of the risk: (1) that plaintiff had knowledge of the risk of danger; (2) the plaintiff appreciated that risk; and (3) the plaintiff voluntarily confronted the risk of danger. The question of whether the plaintiff had knowledge and appreciation of the particular risk at issue is ordinarily a question for the jury, unless the undisputed evidence and all permissible inferences therefrom clearly establish that the risk of danger was fully known to and understood by the plaintiff.
In both the Poole and Thomas cases, the plaintiffs slipped and fell on "black ice" which is distinguishable from "white ice." White ice, such as snow or ice layer, is visible. On the other hand, black ice, even though common knowledge dictates that ice is slippery, is not perceivable or knowable by its nature until the moment it is encountered and experienced.
In Poole, the plaintiff was walking through the parking lot toward the back entrance of his place of employment when he slipped and fell on "black ice" while wading through a stream of water that created a path through an otherwise icy parking lot. Plaintiff alleged that water was being pumped into the parking lot where he was walking due to construction, resulting in a stream of water an inch deep and between two and three free wide that ran through the lot to a drain. Plaintiff testified that, the day before his injury, there was water and ice in the same general area where he fell and that he had noticed that the area was slippery and even warned a co-worker to be careful. Relying on Allen, the trial court granted summary judgment in favor of the defendants on the basis that the plaintiff had knowledge of the icy conditions in the area and choose to proceed under those conditions, thereby assuming the risk of danger.
In Thomas, Ms. Thomas sued the owner and management company of her apartment complex for personal injuries that arose when she fell on "black ice" on the sidewalk in front of her apartment building and fractured her right leg. The trial court granted judgment for defendants applying the rationale in Allen. On appeal, the Court of Special Appeals affirmed the trial court applying Allen and held that even though Ms. Thomas did not have an alternative safe path from her apartment to her car, she did have a safe alternative course of action, which was to not encounter the known risk at all, such that her decision to leave her apartment constituted voluntarily encountering the risk which satisfied the third and final prong.
In Poole and Thomas, the Court of Appeals reversed the granting of judgment as a matter of law on two grounds: (1) it invaded the province of the jury where there was a disputed question of material fact concerning the plaintiff's knowledge of the risk of danger posed by black ice; and (2) the lower court's reliance on Allen, an outlier case that altered the prior meaning and effect of the knowledge prong of the assumption of the risk test.
The Court of Appeals disavowed the reasoning in Allen, concluding that the constructive knowledge test, with an objective standard borrowed from contributory negligence, improperly invades the province of the jury. Thus, to the extent that Allen suggested that the compilation of facts and inferences, amounting to less than actual knowledge, may be sufficient to impute knowledge to a plaintiff as a matter of law, that case is overruled. Instead, the Court reaffirmed the standard stated in Schroyer v. McNeal, 323 Md. 275, 592 A.2d 1119 (1991), that "the doctrine of assumption of the risk will not be applied [as a matter of law] unless the undisputed evidence and all permissible inferences therefrom clearly establish that the risk of danger was fully known to and understood by the plaintiff." 323 Md. at 283, 592 A.2d at 1123 (emphasis added).
The issue of assumption of the risk rests upon the plaintiff's subjective knowledge. But because the focus is on what the plaintiff actually knew, understood and appreciated, the issue is ordinarily left to the jury to resolve. However, Maryland law has historically suggested that the trial judge apply an "objective standard" when determining the appropriateness of applying the defense as a matter of law. The objective standard language stands for the proposition that there are certain risks which any one of adult age must be taken to appreciate, and, in those cases, a simple denial from plaintiff concerning his or her knowledge of the risk will not be sufficient to avoid judgment for the defendant as a matter of law. Thus, in certain circumstances, "when it is clear that a person of normal intelligence in the position of the plaintiff must have understood the danger, the issue is for the court." Id. These types of dangers, the "certain risks which anyone of adult age must be taken to appreciate" include such things as "the danger of slipping on ice, of falling through unguarded openings or lifting heavy objects . . . and doubtless many others."
The Court noted that in the cases where the Court of Appeals has approved the entry of judgment as a matter of law based upon assumption of the risk, the danger has been one that any person in the plaintiff's position must have understood, meaning either a foreseeable consequence of engaging in an activity, or an otherwise patent or obvious danger. When a risk is a foreseeable consequence of engaging in a particular activity, there is an implied consent to relieve others of liability for injury and assumption of the risk may be established as a matter of law. The primary distinction between Poole and Thomas and the cases in which the Court approved the grant of judgment, was whether the plaintiff encountered "white ice", which is visible, or "black ice", which is not perceivable until the moment of experience. In cases involving black ice, the Court has consistently held that a plaintiff does not consent to waive claims for liability beyond "those risks which might reasonably have been expected to exist."
In Poole and Thomas, the Court found that the record suggested that the presence of black ice was more akin to an "unusual danger", so that consideration by the trier of fact was necessary to determine if it was "assumed or not." Therefore, for a plaintiff to have knowledge of the risk, as a matter of law, there must be undisputed evidence that he or she had actual knowledge of the risk prior to its encounter. Actual knowledge can be proven, for example, by evidence of the particular plaintiff's subjective knowledge of a risk, e.g. previous experience with or sensor perception of the danger, or objective knowledge of a risk that the law deems "so obvious that it could not have been encountered wittingly."
Accordingly, the Court of Appeals held that the trial Courts in Poole and Thomas should not have concluded that the plaintiffs actually knew of the risk of slipping on "black ice" as a matter of law, because it is unclear whether they had subjective knowledge of the risk, nor is the risk one that "a person of normal intelligence" in the positions of plaintiffs "must have understood."
Posted by Robert D. Anderson on 12/19/2011 at 10:33 PM
Defenses •
Maryland •
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Maryland Premises Liability: Nightclub subject to suit for injuries to patron beaten on dance floor
In Troxel v. Iquana Cantina, LLC, No. 820, September Term, 2010 (Md. App. October 3, 2011), plaintiff was a patron at a nightclub, where on a "college night" he was attacked and beaten on the dance floor by several unknown individuals. The Circuit Court granted summary judgment to the defendants, holding that the plaintiff's cause of action was an attempt to impose "dram shop" liability contrary to Maryland law; and that there was insufficient evidence to sustain a negligence claim. The Court of Special Appeals reversed, concluding that while Maryland does not recognize "dram shop" liability, here the plaintiff's cause of action was supported by sufficient evidence of negligence under a premises liability theory to survive the motion for summary judgment.
Dram ship liability is not recognized as a valid cause of action in Maryland. The Court explained at length the difference between dram shop liability and premises liability. A statutory dram shop cause of action requires the following elements: (1) a server of intoxicating beverages; (2) a recipient of alcohol who is either an intoxicated person or a minor; and (3) an injury which is proximately caused by the intoxication. In contrast, a premises liability claim against a tavern keeper has the following elements: (1) the owner controlled a dangerous or defective condition; (2) the owner had knowledge or should have had knowledge of the dangerous condition; and (3) the harm suffered was a foreseeable result of that condition.
The Court found that the gravamen of the amended complaint was that the injury resulted from the defendants' failure to protect patrons from a dangerous condition, and not from the furnishing of alcohol, and that the Circuit Court was incorrect to analyze this as a dram shop action.
Within the State of Maryland, the seminal case addressing duty in a premises liability context is Scott v. Watson, 278 Md. 160 (1976). Expanding on the teachings of Scott, the Court of Special Appeals, in Corinaldi v. Columbia Courtyard, Inc., 162 Md. App. 207 (2005), discussed three scenarios where a landowner would be liable for the criminal acts of a third party on their property. Id. at 25. A landlord would be liable if it has knowledge of: (1) prior similar criminal incidents on his property; (2) prior conduct of the criminals; or (3) events occurring on the premises immediately prior to and leading up to the criminal act, that made imminent harm foreseeable. Id.
In the present case, plaintiff focused solely on the first scenario, prior similar incidents. The Court of Special Appeals found overwhelming evidence that fights routinely occurred on the premises prior to the events that gave rise to this lawsuit. Specifically, the Court of Special Appeals found several acts of violence within the year leading up to the incident giving rise to this case. Id. at 6. Additionally, several security guards swore under oath that fights occurred most nights, and with greater frequency on ?college night,? which was the night plainitff was injured. Id. at 7.
The Court concluded that,
On the question of legal causation, when viewing all facts, and all reasonable inferences drawn from the facts, in a light most favorable to Troxel, the evidence suggests that his injuries were the foreseeable result of a typical night at Iguana Cantina. It was foreseeable from the previous incidents of violence that a large, rowdy crowd might accumulate in Iguana Cantina; that a physical altercation might occur on the dance floor; that it might be difficult to detect a physical altercation without certain security measures in place; and that a person like Troxel might suffer a physical injury as a result of violence inflicted by third persons at the nightclub. A jury could reasonably conclude that these college nights facilitated such an environment of disorder and violence that the injuries sustained by Troxel were foreseeable.
For further information on the law of premises liability in Maryland, the District of Columbia, Virginia, and West Virginia, with regard to the criminal acts of third parties, see Liability of Landowner for Criminal Acts of Third Parties
Posted by Mark H. Kopelman on 11/16/2011 at 05:47 PM
Maryland •
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Confidential Settlements are Discoverable to Determine Joint Tortfeasor Status and Contribution
In Richard Tempel, et al. v. Elena L. Murphy, et al., No. 1199 Sept. Term 2010 (Oct. 28, 2011), the Court of Special Appeals addressed two questions: (1) whether a non-settling defendant has a right to inspect the settling defendants settlement agreements prior to judgment; and (2) whether Plaintiffs' evidence of the decedent's future economic loss is speculative if his retirement age cannot be proven with certainty.
Right to Inspect Settlement Agreements
After learning that co-defendants had settled with plaintiffs, co-defendants Dr. Richard Tempel and his employer, Osler Drive Emergency Physicians Association, requested a copy of the settlement agreements and releases on the basis that they "would significantly impact upon plaintiffs' defense strategy." Plaintiffs also suggested that they were entitled to determine if the release was a joint tortfeasor type release and the amounts paid by the other defendants on the basis that it would "dramatically impact upon defense strategies." The co-defendants refused to provide the releases but stated that they were "standard non-Swigert Joint Tortfeasor Releases" and that the amounts of settlement were not relevant until after a verdict had been rendered against the non-settling defendants to determine the appropriate amount owed by them. Unsatisfied with this response, the non-settling defendants filed a motion to compel production of the settlement agreements. The trial court ruled that the non-settling defendants were absolutely entitled to know what type of release was negotiated so that they could know how to proceed at trial, but denied the plaintiffs from discovering the settlement amounts contained therein.
The Court of Special Appeals cited Rule 2-402(a) for the proposition that:
a party may obtain discovery regarding any matter that is not privileged, including the existence, description, nature, custody, condition, and location of any documents . . . and tangible . . . if the matter sought is relevant to the subject matter involved in the action, whether it relates to the claim or defense of the party seeking discovery or to the claim or defense of any other party. It is not ground for objection that the information sought is already known to or otherwise obtainable by the party seeking discovery or that the information will be inadmissible at the trial if the information sought appears reasonably calculated to lead to the discovery of admissible evidence.
"Absent some fact in a given case that would change the result, the settlement amount contained in a joint tortfeasor release is not relevant at the pre-verdict stage." "Here, the settlement amounts did not, in any way, concern the facts relevant to a determination of [the non-settling defendants] liability or the amount of any damages; thus, they were not relevant at the pre-verdict stage." Even after final judgment, "the settlement would not be evidence relevant to any issue in the case other than the ministerial apportionment of damages." Bullinger. Here, the releases were relevant pre-trial because the nature of the releases would determine whether the non-settling defendants, if liable, would receive an automatic pro rata reduction or whether the joint tortfeasor status of the settling parties would have to be adjudicated. Accordingly, the Court of Special Appeals in affirming the trial court's ruling found that the non-settling defendants were properly provided with the pertinent information at the stage in the proceedings in which the information was relevant.
Sufficiency of Evidence to Determine Economic Loss
As to the second issue, the Appellants argued that the trial court erred by not granting their motion for judgment notwithstanding the verdict "as to the speculative nature of the jury's award for loss of Mr. Murphy's financial support" because plaintiffs' failed to prove this element of their claim." Defendants asserted that the award of $600,000 was "overly speculative" because there was no evidence upon which the jury could have concluded that Mr. Murphy, who died at the age of 59, would have retired at age 66 or 67, rather than 61, 62, or 70.
The evidence at trial was from plaintiffs' economic expert, Dr. Thomas Borzilleri, who testified that his calculations were based upon the decedent's W-2 forms and the Social Security Administration's "growth rates" and the assumption that Mr. Murphy would work until age 66 or 67 using the "Work Life Expectancy" calculation and the U.S. Pension Benefit Guarantee Corporation's "Life Expectancy Table." There was additional testimony from the decedent's family members regarding his work habits, outlook, savings habits and intentions of saving enough money to send his children to college.
The Court of Special Appeals held that the plaintiffs did not have to prove a specific age at which decedent would have retired. The Court also held that the jury could consider the totality of the evidence as to the decedent's age, health, employment, financial situation, and general population statistics (i.e. life expectancy and work life expectancy) provided by Dr. Borzilleri and the testimony from decedent's family members describing the decedent prior to the events which gave rise to the lawsuit, to determine the amount of lost support.
Posted by Robert D. Anderson, Esq. on 11/15/2011 at 05:27 PM
Contribution •
Maryland •
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STATUTORY IMMUNITY FOR PROPERTY OWNERS IN LEAD PAINT CASES HELD UNCONSTITUTIONAL
In Zi'Tashia Jackson, et al, v. The Dackman Company, et al., No. 131, Sept. Term 2008 (Oct. 24, 2011), the Court of Appeals declared that the provisions in the Reduction of Lead Risk in Housing Act (Md. Code Ann. Environment sec. 6-801, et seq.) which grant the owners of certain rental properties, under specified conditions, immunity from personal injury suits based upon a child's or pregnant woman's ingestion of lead were invalid and unconstitutionality under Article 19 of the Maryland Declaration of Rights.
Ms. Jackson, through her mother, filed a lawsuit in the Circuit Court for Baltimore City for negligence and violations of Maryland's Consumer Protection Act claiming that she suffered severe and permanent brain injuries allegedly resulting from her ingestion of lead-based paint at property owned by the defendants. Ms. Jackson was born January 12, 1997 and moved into the defendant's property when she was one year old. Between 1997 and 2000 Ms. Jackson had elevated blood lead levels of 21 ug/dl, 16, ug/dl, 15 ug/dl and 9ug/dl. Her blood lead levels never reached the 25 ug/dl which is the level set forth in sec. 6-828(b) applicable to those years.
Defendant property owners moved for summary judgment on the grounds that they had complied with the Act and were therefore immune from a suit for personal injury under the Act. Plaintiffs opposed the motion on the grounds that the Defendants did not comply with the Act, and even if they did, that various provisions of the Act were unconstitutional under various theories. Ultimately, the Court agreed that the Defendants had complied with the Act and granted summary judgment in Defendants favor.
The Reduction of Lead Risk in Housing Act was enacted in 1994 "to reduce the incidence of childhood lead poisoning, while maintaining the stock of available affordable rental housing." The Court addressed the Act in its entirety but primarily focused on compensation and immunity provisions of the Act and their application.
The Court focused on the Act's alternative remedy to a personal injury suit of a "qualified offer" which is an offer of money by an owner, the owner's agent, or an insurer of the owner, made to a person at risk or to a parent or legal guardian of a person at risk who is a minor (secs. 6-831 through 6-834). A "person at risk" is defined as "a child or a pregnant woman who resides or regularly spends at least 24 hours per week in an affected property" (sec. 6-801(p)). A "qualified offer" is designed to cover some expenses which are incurred on behalf of an affected person at risk. Nevertheless, the maximum amount payable under a qualified offer is only $17,000, and most of this is payable to the providers of medical or other services and not to the person at risk. Under sec. 6-835, the "acceptance of a qualified offer by a person at risk, or by a parent or legal guardian" of a person at risk, "releases all potential liability of the offeror, the offeror's insured or principal." If the qualified offer is rejected, under sec. 6-836 "an owner of an affected property is not liable, for alleged injury or loss caused by ingestion of lead by a person at risk in the affected property." The statutory language dictates that the immunity provisions are intended to be very broad and grant immunity to an owner from personal injury suits if that owner has complied with the Act.
In declaring the immunity provisions to be invalid, the Court relied on Article 19 of the Maryland Declaration of Rights. Article 19 generally protects two rights: (1) a right to a remedy for an jury to one's person or property; (2) a right of access to the courts. Another tenet of Article 19 is that it generally prohibits unreasonable restrictions upon traditional remedies or access to the courts but allows the Legislature to enact reasonable restrictions. Under Article 19 the Court weighed whether the abolition of the common law remedy and substitution of a statutory remedy was reasonable.
The Court opined that immunity granted to defendants under the Act is not a traditional or well-established immunity from personal injury actions and that the substituted remedy under the Act for a permanently brain damaged child, i.e. the maximum of $17,000, is "totally inadequate and unreasonable." The Court noted that the only remedy provided by the Act, in substitution for a personal injury action, is a qualified offer by the property owners which is accepted by a "person at risk, or a parent or legal guardian or a minor who is a person at risk." However, where no qualified offer is made, the plaintiffs have no remedy under the statute.
Since the Act is applied broadly, stating that immunity is "applied to all potential bases of liability for alleged injury of loss to a person caused by the ingestion of lead by a person at risk in an affected property," the Court found that the maximum amount of compensation under a qualified offer is "minuscule" where a child is found to be permanently brain damaged from ingesting lead paint caused by the landlord's negligence. Consequently, the Court found that the remedy which the Act substitutes for a traditional personal injury action results in either no compensation or drastically inadequate compensation.
The Court opined that when no adequate remedy is substituted for the grant of immunity, the statute leaves a negligently injured child without a remedy. Accordingly, the Court held that it cannot "countenance a result that would leave the only innocent victim . . . uncompensated for his or her injuries" and therefore the immunity provisions in the Act or invalid.
Even though the immunity provisions were held to be invalid, the Court found that these provisions were severable from the remainder of the Act. The remaining portions of the Act had a valid purpose and are capable of being executed in accordance with the legislative intent which is to reduce the incidence of childhood lead poisoning, while maintaining the stock of available affordable rental housing.
Posted by Robert D. Anderson, Esq. on 10/31/2011 at 05:39 PM
Lead Paint Poisoning •
Maryland •
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Maryland Act construed to include loss of overtime pay in loss of “wage earning capacity”
In Montgomery County v. Deibler, ___ A.2d. ___ (Md. Oct. 27, 2011), the Maryland Court of Appeals considered the issue whether the term "wage earning capacity" in L.E. sec. 9-615(a)(1) includes the capacity to earn overtime compensation so that the Commission may include such compensation in the determination of whether an employee's wage earning capacity is "less" while temporarily, partially disabled. After a thorough exercise of legislative interpretation, the Court held that overtime pay is included in "wage earning capacity."
Captain Deibler was a firefighter employed by Montgomery County. Due to work-related knee injuries, he was placed on light duty with some reduction of regular hours. However, the County increased his hourly wage and maintained all of his cost of living adjustments and benefits, so that he earned the same amount of base pay as before his injuries. However, Captain Deibler lost the ability to work 11-15 hours per week of overtime. The inability to work overtime cost him over $700 per week.
After a hearing, the Commission ordered that Captain Deibler receive temporary partial disability for the periods when he worked light duty after his injuries. The County petitioned for review by the Circuit Court for Montgomery County, which affirmed. The County then appealed to the Court of Special Appeals, however, the Court of Appeals issued a writ of certiorari before argument.
On appeal, the County argued that the ability to earn overtime is separate from the ability to work. The County argued that overtime is the product of the employer's need, not a reflection of the employee's ability to perform the tasks of a job. The County concluded that Captain Deibler's ability to work did not decrease when his overtime compensation decreased; instead, his ability to perform work to earn his pre-disability base pay remained constant.
The Court disagreed, reasoning that the statutory phrase "wage earning capacity" is concerned with whether a disabled employee has lost any part of the employee's pre-disability to earn a wage. The Court concluded that overtime pay is included in the definition of "wage."
The Court pointed out that this should not result in a windfall for the employee, since the statutory calculation of average weekly wage takes into account the time worked over the 14 weeks prior to injury.
Accordingly, the Court held that "wage", as that term is used in the phrase "wage earning capacity in L.E. sec. 9-615(a), includes compensation paid for overtime hours worked prior to temporary partial disability.
This decision is significant since police and professional firefighters in Montgomery County, and probably throughout Maryland, typically earn substantial amounts of overtime pay, as has been discussed in the local papers. However, this decision will be very significant for any other category of workers whose earnings include substantial overtime pay, such as for example nurses.
Posted by David B. Stratton on 10/31/2011 at 03:54 PM
Maryland •
Workers Compensation •
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Twombly Motion Resolves Civil Rights Claim Arising From Suspicion of Shoplifting
Shoplifting can cause retailers to incur costs far greater than simply the value of the items stolen. Even when the store and its employees act in the utmost good faith, someone accused of shoplifting can turn around and sue the store. These suits sometimes include claims of racial discrimination. Until recently, it was difficult to get these suits dismissed. As a result, retailers could become embroiled in litigation involving an intrusive discovery process and significant defense costs that could last years and unfairly tarnish their reputation. Fortunately, two recent Supreme Court cases have made it much easier to have such cases dismissed with a relatively small amount of time, energy, and cost.
Jordan Coyne & Savits, L.L.P. recently defended a national clothing retailer sued in the U.S. District Court for the District of Maryland by a person who was ejected on suspicion of shoplifting. According to the plaintiff's complaint, he opened his shopping bag near some jeans on display to ascertain whether they matched the shoes in his bag. A store clerk notified the Mall's security guards that the plaintiff was a "suspicious person" who was "likely stealing." The security guards confronted the plaintiff and escorted him from the Mall. He brought a civil rights claim under 42 U.S.C. sec. 1981 against the retailer, the owner of the Mall, and the security guards, asserting that the incident was motivated by racial discrimination, seeking attorney's fees and damages for intentional infliction of emotional distress and invasion of privacy.
Jordan Coyne answered with a Rule 12 motion to dismiss the Complaint for failure to state a claim for relief. Relying on the Supreme Court's recent decisions in Twombly and Iqbal, we argued that the case should be dismissed because the plaintiff had not pled any facts tending to show that the acts were motivated by any intent to discriminate against plaintiff.
The Court agreed and dismissed the case without prejudice. Applying Twombly, the Court ruled that the Complaint did not allege facts sufficient to "state a claim to relief that is plausible on its face." The Court noted that "plaintiff has not alleged facts showing a causal link between his race and his removal, or that any of the defendants intended to discriminate against him because of his race." While the Complaint alleged that the "removal from the Mall was made solely for the reason that the plaintiff was an African-American and was made with malicious and discriminatory intent," this was deemed to be a "mere conclusory statement of the kind that Iqbal rejected." If anything, the plaintiff's factual allegations showed that the merchant's actions were the result of a legitimate belief that the plaintiff was shoplifting. The Court concluded that Plaintiff had "utterly failed to buttress his conclusory allegations with any facts that would support an inference of racial animus" on the part of any of the defendants.
Plaintiff never bothered filing an amended complaint. Consequently, the motion to dismiss resolved the case in months, not years. Moreover, the client did not have to participate in the time-consuming and intrusive discovery process or pay even a token amount in settlement. Perhaps most importantly, the client was able to protect its good reputation by having the Court recognize that, even if the plaintiff's factual allegations were assumed to be true, the removal of the plaintiff from the store was not motivated by racial animus, but rather, was "prompted by the belief that plaintiff's actions were consistent with attempted shoplifting."
Of course, all matters are decided on their own particular facts or merits, and, because each case is different and litigation is inherently unpredictable, the past record is no assurance of reaching a favorable result in any future case. For further information or to discuss the defense of a similar matter, call Steve Schwinn, Esq., at 202-496-2806.
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