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Archive for November, 2020

Lawfully Constructing or Lawful Construction: A Question for Another Court

Posted on: November 17th, 2020

By: Brittany Kurtz and William H. Catto

The Pennsylvania Superior Court kicked the can down the road on deciding recent contentions regarding the Statute of Repose defense that many general contractors and subcontractors rightfully assert in the voluminous stucco litigation occurring throughout the country and the Commonwealth. The competing interpretations of the Statute of Repose are keeping alive many faulty stucco installation matters, which could otherwise be dismissed based upon the defense. Pennsylvania’s legislature enacted a statue of repose related to new construction which bars recovery against any person lawfully performing or furnishing the design, planning, supervision or observation or construction of any improvement to real property unless brought within twelve (12) years after the completion of construction. 42 Pa. C.S.A. §5536.

In Calabretta v. Guidi Homes, Inc., a builder and seller moved for summary judgment against some of the homeowners on the basis their construction defect claims were barred by the Statute of Repose as the building took place more than twelve years prior. The trial court denied the builder and seller’s motion. The court stated that the current state of law is “somewhat unclear” as to the term “lawfully” within the statute and that a genuine issue of material fact exists as to whether the homes were constructed “lawfully.” The legislature and judiciary have not yet weighed in as to whether the term “lawfully” requires compliance with (1) all prerequisites necessary to obtain municipal permission to engage in various activities mentioned with the statute or (2) all local and state ordinances, regulations, and statutes. Instead of shining a light on this dilemma, the Superior Court determined it lacked jurisdiction to address the question at this time since the denial against some of the homeowners was not clearly separable from the main action nor would trial constitute irreparable harm to the builder and seller as required for a collateral order to be appealable.

Despite the Superior Court not yet addressing directly the meaning of “lawfully,” they did appear to indicate that “lawfully” is a factual determination. The Court points out that regardless of the definition of “lawfully,” evidence is required to demonstrate either the home was built with all appropriate permits in place or the home was built and complied with all building codes, statutes and regulations at the time. The homeowners in this matter produced an expert report which opined the home was not constructed in compliance with certain building codes, thus demonstrating a material issue of fact. 

As stucco litigation in Pennsylvania continues on, it appears the higher courts are not yet ready to provide clear direction as to a strong defense provided by the state’s legislature. 

If you have questions or would like more information, please contact Brittany Kurtz at [email protected] or William Catto at [email protected].

[1] Calabretta v. Guidi Homes, Inc., 2020 Pa. Super. 251 (Pa. Super. Ct. Oct. 19, 2020).

FMG Attorneys File Amicus Brief on Duties of Employer for Criminal Conduct of Employees

Posted on: November 13th, 2020

By: Phil Savrin and Alexia Roney

FMG attorneys Phil Savrin and Alexia Roney authored an amicus brief on behalf of the Georgia Defense Lawyers Association in support of appellees in the companion cases of Johnson v. Avis Rent A Car System, LLC and Smith v. Avis Rent A Car System, LLC on the question of legal duties owed by an employer for criminal conduct of an employee that is outside the scope of employment and away from the business premises. 

In these cases, an employee who stole a vehicle from the rental car lot where he worked ended up in running from the police and ultimately crashing into a brick wall thereby injuring the two plaintiffs. Two separate juries found Avis to be either partially or entirely at fault for damages of $7 million in one case and $47 million in the other case. The Court of Appeals reversed on several grounds including a finding that the trial court should have directed a verdict on the absence of proximate cause as a matter of law. 

The Supreme Court granted plaintiffs’ petitions for writs of certiorari on two questions: (1) whether the employee’s criminal conduct was an intervening proximate cause as a matter of law; and (2) whether the employee acted under “color of employment.” In its amicus brief, GDLA argues that the question of proximate cause is not reached because Avis did not owe a tort duty to plaintiffs in the first place which is a question of law for the court to resolve and not a jury. To hold Avis liable in these circumstances would essentially hold employers to be insurers of their employers’ conduct no matter how remote the injury might be. Similarly, on the second issue, GDLA argues that Avis had no control over the manner in which the employee used the stolen vehicle. As such, stretching the “color of employment” standard to apply would likewise create a duty “to all the world” which the Supreme Court has expressly rejected in previous rulings. 

The case is set for oral argument on December 8, 2020. 

If you have questions or would like more information, please contact Phil Savrin at [email protected] or Alexia Roney at [email protected].

California Assembly Bill 1552 – Near Miss or Cautionary Tale for Insurers?

Posted on: November 11th, 2020

By: Ryan Greenspan

As fear of the novel coronavirus and COVID-19 continues to grip the world, an array of government rules, restrictions, and guidelines have been imposed. Some businesses have been operating at a limited capacity and some have closed outright. In March of this year, California’s governor issued one of the strictest orders in the country, defining what is an “essential” and a “non-essential” business and then ordering all so-called “non-essential” businesses to shut down indefinitely. The governor has since permitted certain businesses to re-open to varying degrees.

Many businesses are now seeking to recoup their losses by making claims under insurance policies that provide for business interruption coverage.

Courts around the country have already weighed in on the applicability of business interruption insurance, but this past summer, California Assembly members James C. Ramos and Monique Limon introduced Assembly Bill 1552 (“AB 1552”). Typically, business interruption insurance is available when the insured can prove direct, physical loss or damage to covered property. AB 1552 was different from other, similar bills introduced in such states as Massachusetts and New York because it would have created a rebuttable presumption that the novel coronavirus was present at a business’s property and resulted indirect, physical damage to or loss of property. Bills introduced in other states would have simply mandated coverage, which would make those bills subject to constitutional challenges from insurers. AB 1552’s rebuttable presumption was an attempt to withstand a constitutional challenge.

On June 26, 2020, AB 1552 passed in the California State Assembly by a 77-0 margin. However, it was unable to garner further support and was pulled from consideration before receiving a vote in the State Senate. With the California Legislature currently in recess until January 2021, there is no chance that such a bill, in any form, will be passed in 2020. 

While insurers operating in California may have dodged a proverbial landmine, the governor’s forced closures continue, and many believe that when the California state legislature reconvenes in 2021, a form of AB 1552 revised to attract Senate support may be introduced. Its significant support in the State Assembly is likely to keep the possibility alive for 2021.

If you have any questions about AB 1552 or business interruption insurance practices in California, please contact Ryan Greenspan at [email protected].

Additional Information:

FMG has formed a Coronavirus Task Force to provide up-to-the-minute information, strategic advice, and practical solutions for our clients.  Our group is an interdisciplinary team of attorneys who can address the multitude of legal issues arising out of the coronavirus pandemic, including issues related to Healthcare, Product Liability, Tort Liability, Data Privacy, and Cyber and Local Governments.  For more information about the Task Force, click here.

You can also contact your FMG relationship partner or email the team with any questions at [email protected].

**DISCLAIMER:  The attorneys at Freeman Mathis & Gary, LLP (“FMG”) have been working hard to produce educational content to address issues arising from the concern over COVID-19.  The webinars and our written material have produced many questions. Some we have been able to answer, but many we cannot without a specific legal engagement.  We can only give legal advice to clients.  Please be aware that your attendance at one of our webinars or receipt of our written material does not establish an attorney-client relationship between you and FMG.  An attorney-client relationship will not exist unless and until an FMG partner expressly and explicitly states IN WRITING that FMG will undertake an attorney-client relationship with you, after ascertaining that the firm does not have any legal conflicts of interest.  As a result, you should not transmit any personal or confidential information to FMG unless we have entered into a formal written agreement with you.  We will continue to produce education content for the public, but we must point out that none of our webinars, articles, blog posts, or other similar material constitutes legal advice, does not create an attorney client relationship and you cannot rely on it as such.  We hope you will continue to take advantage of the conferences and materials that may pertain to your work or interests.**

Prop 51: CA Supreme Court Creates Noteworthy Exception to Reduction or Apportionment of Non-Economic Damages

Posted on: November 10th, 2020

By: Zachary Price

Under Proposition 51, although all defendants in California are liable to a plaintiff for 100% of plaintiff’s economic damages (including such things as medical expenses and lost earnings), defendants are only liable for noneconomic damages (such as physical pain, mental suffering, and emotional distress) in proportion to their fault. In other words, while defendants are jointly liable for economic damages, they are severally liable for noneconomic damages. 

However, in B.B. v. County of Los Angeles (2020) 10 Cal.5th 1, the California Supreme Court has created a noteworthy exception, holding that intentional tort defendants are categorically exempt from the several liability protections of Proposition 51. As a result, regardless of a defendant’s proportion of fault, if that defendant is found liable for an intentional tort, they are responsible for 100% of plaintiff’s noneconomic damages.

In B.B. v. County of Los Angeles, a jury found that a Los Angeles County Sheriff’s Department deputy had committed battery by using unreasonable force to subdue a man when the deputy pressed his knees into the man’s back and neck. The man lost consciousness and died 10 days later. The decedent’s family was awarded $8 million in noneconomic damages. The jury found that the deputy was only 20% responsible for the decedent’s death, with 40% responsibility attributable to other deputies and the remainder to the decedent. However, because the deputy’s liability was based on an intentional tort, the trial court entered judgment against the deputy for 100% of the noneconomic damages.          

The appellate court disagreed with the trial court and reduced the judgment against the deputy in proportion to the jury’s allocation of responsibility.  The matter then proceeded to the California Supreme Court. Resolving a split of authority in the appellate courts, the California Supreme Court held that Proposition 51 does not apply to intentional tortfeasors, making the deputy in question liable for the entirety of the $8 million noneconomic damages award. Specifically, the California Supreme Court held that Civil Code section 1431.2(a), which codified Proposition 51, does not authorize a reduction in the liability of intentional tortfeasors for noneconomic damages based on the extent the negligence of others contributed to the injuries in question. “Others” include plaintiffs, codefendants, injured parties, and nonparties.

The California Supreme Court based its decision on the plain language of section 1431.2, which expressly incorporates “principles of comparative fault.” After a thorough discussion of the history of comparative fault in California, the Supreme Court noted that principles of comparative fault have never required or authorized the reduction of an intentional tortfeasor’s liability based on the acts of others. Because section 1431.2 incorporates those principles, the statute did not allow the deputy to reduce his liability for noneconomic damages based on the acts of the decedent or other deputies.     

The California Supreme Court’s decision in B.B. v. County of Los Angeles will have profound ramifications. Armed with this exception to Proposition 51, expect to see an uptick in cases advancing intentional tort theories by the plaintiffs’ bar, particularly in multi-defendant litigation or cases with defendants known to have deep pockets. To avoid potential application of this exception, defense counsel will need to aggressively challenge intentional torts prior to trial through discovery and motion practice.

If you have questions or would like more information, please contact Zachary Price at [email protected]

Vaccine Breakthrough: Tort Immunity Under PREP Act Spurs Innovation

Posted on: November 9th, 2020

By: Kevin Kenneally

Recent news of possible imminent availability of groundbreaking COVID-19 vaccines has catapulted financial markets and infused optimism for recovery in global economies and the daily lives of people throughout the globe. These pharmacological and biotech advances were made possible in part by guarantees from the United States government that vaccine makers and distributors will not be liable in lawsuits to any vaccine recipient who suffers complications or illness from the immunization.

The pharma industry has often been targeted for class action and mass tort litigation based on state law causes of action for side effects of its new drugs. Most of the those pharmaceuticals go through a rigorous, structured testing and approval process by the U.S. Food and Drug Administration (FDA). In the face of a worldwide pandemic, however, regulators recognized the need to quickly develop an immunization and vaccine program to combat this life-threatening and easily-transmissible virus. The federal government conferred broad immunity to vaccine manufacturers from products liability suits and tort claims for rapidly-developed COVID-19 vaccines and therapeutics. Established principles of federal preemption in the field of pharma litigation will likely prevent injured victims from pursuing state law tort or products liability actions.  

On March 17, 2020, the government issued notice under authority of the longstanding “PREP Act” (the Public Readiness and Emergency Preparedness Act) to grant immunity from litigation for companies developing drugs or vaccines to battle COVID-19. The PREP Act is the existing federal law that governs the nation’s response to public health emergencies. An administrative declaration was issued in response to the COVID-19 pandemic that expanded PREP Act immunity to companies developing coronavirus therapeutics and vaccines. As a result, future claims arising from complications, adverse effects or death caused by a vaccine or a therapeutic manufactured, distributed or sold by a potential defendant will be barred, except in the case of “willful misconduct.”

Individuals who suffer adverse effects, however, will not be left without a monetary remedy as a result of this immunity granted to makers or suppliers of any drug causing harm. The federal program, known as “CIPC” (the Countermeasures Injury Compensation Program), which provides compensation to victims suffering side effects or complications from vaccines has been expanded to include claims arising from COVID-19 therapeutics and vaccines. CIPC permits recovery of death benefits, lost earnings, medical expenses and other damages suffered by the vaccine recipient or surviving family.

Such immunity from litigation exposure is not a new development in the vaccine manufacturing arena. Vaccine manufacturers and pharmacies have long been protected from tort law claims. The National Vaccine Injury Compensation Program (“VICP”) was created in the 1980s when widespread lawsuits against pharma companies and healthcare providers threatened to cause vaccine shortages and reduce vaccination rates as risk management concerns would lead few entities or health care providers to take part in the fight against preventable diseases. Claims under the VICP cannot be filed in local state or federal courts, but must be litigated in the U.S. Court of Federal Claims in Washington, D.C. and claims are administered by the Department of Justice.

If you have any questions please contact Kevin Kenneally at [email protected].