CLOSE X
RSS Feed LinkedIn Instagram Twitter Facebook
Search:
FMG Law Blog Line

Archive for the ‘Tort and Catastrophic Loss’ Category

Georgia Court of Appeals Provides Guideline for Drafting Enforceable Exculpatory Clauses in Georgia

Posted on: April 23rd, 2019

By: Bart Gary and Jake Carroll

Exculpatory clauses are terms in a contract that shift the risk of loss to the other party or a third-party, or attempt to limit one’s obligations under a contract. A typical exculpatory clause is a “limitation of liability” provision, which is commonly used in agreements for services—especially professional services, rendered by accountants, architect, engineers and consultants.

Attempts to limit one’s liability to agreed amounts are sometimes challenged in court on the ground that they violate “public policy,” but are nevertheless generally enforceable in Georgia, provided such clauses are “explicit, prominent, clear and unambiguous.”

While these requirements have been addressed in prior appellate decisions, in Warren Averett, LLC v. Landcastle Acquisition Corp.[1] the Georgia Court of Appeals discussed in detail the “prominence” requirement for limitation of liability clauses in a contract for accounting services. The Court observed that a number of factors are considered when evaluating the enforceability of an exculpatory clause or limitation of liability clause:

  • Font. The clause should not be in the same font size used throughout the contract. It should be “capitalized, italicized, or set in bold type for emphasis.”
  • Setoff. The clause should be set off in a separate section that specifically addressed liability or recoverable damages, with a bold, underlined, capitalized or italicized specific heading, such as “Limitation of Liability” or “DAMAGES.”
  • Location. The clause should be in a prominent place within the contract to emphasize the importance of the clause’s limitation on recoverable damages, such as being adjacent to another similarly significant provision or being next to the parties’ signature lines.[2]

These factors should be used as a guide for parties when drafting and negotiating contracts with exculpatory clauses. For example, in construction contracts, the parties should pay close attention to the font and location of indemnity and no-damage-for-delay clauses. In commercial and professional services contracts, common exculpatory clauses that merit close scrutiny address indemnity, limitation of lability, waivers of certain types of damages, and insurance terms.

Finally, while the opinion is helpful as concerns what is not prominent, it does not offer a clear statement of what is prominent. For example, does the font need to be bold, capitalized, and italicized, or will one choice work? In light of the Warrant Averett decision, it would seem that the more factors met, the less risk the clause is found unenforceable.

If you have questions regarding this decision, or any other contract drafting questions, please contact Bart Gary at [email protected] and Jake Carroll at [email protected]. Mr. Gary and Mr. Carroll practice construction and commercial law as members of Freeman Mathis & Gary’s Construction LawCommercial Litigation, and Tort and Catastrophic Loss practice groups as well as representing business and commercial entities in a wide range of disputes and corporate matters involving breach of contract, business torts, and products liability claims.

[1] Warren Averett, LLC v. Landcastle Acquisition Corp., 2019 Ga. App. LEXIS 178, Case no. A18A2117, March 13, 2019. (physical precedent only). Because one judge of the three-judge panel concurred in the judgment, the opinion is limited, physical precedent.
[2] 2019 Ga. App. LEXIS 178 at 9-10 (emphasis by the Court) (internal citations omitted).

The Power Of Animations Outside The Movie Theater

Posted on: March 15th, 2019

By: Matthew Jones

The use of animations in the courtroom is becoming more and more popular given the ruling in the case People v. Duenas (2012) 55 Cal.4th 1. The Duenas court equated animations to demonstrative evidence, specifically stating “a computer animation is demonstrative evidence offered to help a jury understand expert testimony or other substantive evidence…” The basis for this ruling is that animations do not draw conclusions and are not exact simulations of the subject accident being portrayed. To the contrary, animations are an attempt to recreate a scene or process based on the evidence presented.

Animations can be a powerful tool during trial to provide a visual aid to the jury of an expert’s opinion on an issue or just to offer a visual observation of how the subject accident occurred. For proper use of the animation, the Duenas court identified instructions that should be presented to the jury. The scope of these instructions are that the animation is not a film of what actually occurred or an exact re-creation of the subject accident, and that the animation is simply a guide as to the party’s version of events based upon interpretation of the evidence.

FMG’s in-house litigation team has utilized numerous animations over the years with great success, including a recent wrongful death action in Los Angeles County. Liability was hotly contested and Plaintiffs demanded over $15 million at trial. The jury came back with a defense verdict in only forty-five minutes.

If you have any questions or would like more information, please contact Matthew Jones at [email protected].

Serving That Whiskey Might Be Risky – Liability Of Social Hosts In DUI Accidents

Posted on: February 15th, 2019

By: Stacey Bavafa

Under California Civil Code Section 1714, social hosts and other third parties may be held to be partially liable in the event of a drunk driving accident depending on the circumstances that led up to the accident. Under Sec. 1714, everyone is responsible for the result of his or her willful acts, but also for injuries sustained by another by a want of ordinary care or skill in the management of his or her property or person.

California courts have held that the furnishing of alcoholic beverages is not the proximate cause of injuries resulting from intoxication, but rather that the consumption of alcoholic beverages is the proximate cause of injuries inflicted upon another by an intoxicated person. Vesley v. Sager (1971) 6 Cal.3d 153; Bernhard v. Harrah’s Club (1976) 16 Cal.3d 313; and Coulter v. Superior Court (1978) 21 Cal.3d 144.

Therefore, social hosts who provide alcoholic beverages to a person may not be held legally accountable for damages suffered by the intoxicated person, or for damages the intoxicated person inflicts on another person resulting from the consumption of alcoholic beverages. In other words, if John Doe had 5 glasses of whiskey at a bar and ends up swerving in and out of his lane due to his inebriated state, and hits another vehicle causing injury to a third person, the bar who provided John Doe the 5 glasses of whiskey will not be required to pay for damages sustained by the third party.

There are however, two exceptions to the rule outlined above:

If an adult, including a parent or guardian, who knowingly serves alcoholic beverages at his or her residence to a person whom he or she knows, or should have known, to be under 21 years of age, the adult may be held liable for actions the minor takes as a result of the consumption of alcohol.

Further, if a business sells alcohol to an obviously intoxicated minor, in such that a reasonable person would be able to tell the minor was intoxicated, the business may face liability for harm arising out of the minor’s actions.

In the case of the underaged drinker, both the underaged drinker and the person who was harmed by the actions of the underaged drinker can file a civil claim against the social host or business to obtain recovery of his or her medical bills, property damage, pain and suffering, loss of income, and legal fees.

If you have any questions or would like more information, please contact Stacey Bavafa at (213) 615-7026 or [email protected].

Waiving the Right to Remove State Court Actions

Posted on: February 13th, 2019

By: Justine Baakman

Boilerplate Demands for Relief in Pennsylvania Complaint Alone Sufficient to Support an Amount in Controversy Exceeding $75,000

The Eastern District Court of Pennsylvania recently held that one may waive the right to removal to federal court even when there exists uncertainty as to whether the amount in controversy exceeds the $75,000.00 threshold for diversity citizenship. In Hutchinson v. State Farm Fire & Casualty, on January 17, 2018, the plaintiffs filed a breach of contract suit against the defendant in Pennsylvania state court. In their state action, the plaintiffs sought minimal damages totaling approximately $25,000.00 for specific costs relating to property damage they allege to have suffered. Despite those specifically-pled damages, the complaint included the nearly always pled boilerplate demands in Pennsylvania complaints for compensatory and punitive damages along with interest and attorneys’ fees against the defendant. Moreover, the plaintiffs filed their state court action in the Pennsylvania major trial division, thereby acknowledging the potential for the damages they sought to exceed the Pennsylvania compulsory arbitration cap of $50,000.00.

About three months following initiation of the state action, in April 2018, the defendant served the plaintiffs with requests for admission seeking an admission that the plaintiffs damages either exceeded or did not exceed the $75,000.00 threshold for removal. About one month later, in May 2019, the plaintiffs served their responses to those requests for admission. Although the plaintiffs admitted that their actual damages fell well below the $75,000.00 threshold, they indicated that once punitive damages, interest, and attorneys’ fees were accounted for, “their total damages could very well exceed $75,000.00.”

About one month later, in June 2018, the defendant removed the matter to the Eastern District Court of Pennsylvania. Shortly thereafter, the plaintiffs moved to remand the matter back to state court. The basis for that remand was the defendant’s untimely removal. In support of their request for remand, the plaintiffs argued that the defendant had known since initiation of the action in January 2018 that the amount in controversy exceeded $75,000.00. In arguing so, the plaintiffs focused on the boilerplate language in the complaint wherein they sought punitive damages, interest, and attorneys’ fees. In arguing against remand, the defendant focused on the boilerplate language of the relief sought in the complaint. Specifically, the defendant argued it was not legally certain that the damages the plaintiffs sought exceeded the $75,000.00 threshold until the plaintiffs answered its requests for admission. The Eastern District Court of Pennsylvania ultimately remanded the matter back to state court for the defendant’s failure to timely remove the action.

The impact of the Eastern District Court of Pennsylvania’s ruling on removal of state court actions is yet to be seen. It certainly leaves open the possibility that nearly all state court complaints in Pennsylvania could support a reasonable finding that the amount in controversy exceeds the $75,000.00 threshold for removal based on diversity of citizenship. And, more importantly, that failure to remove Pennsylvania state court actions – most of which are initiated via complaints seeking similar boilerplate relief as was at issue in the Hutchinson matter – within thirty (30) days of service of the complaint could result in waiver of the right to remove.

For additional information related to this topic and for advice regarding how to navigate removal of Pennsylvania state court actions, including torts, products liability, and catastrophic loss litigation, you may contact Justine Baakman at 267-908-7882 or [email protected]

A Series of Particular Events: Foreseeability and the First Circuit

Posted on: February 6th, 2019

By: Thomas Hay

A three-judge panel on the First Circuit denied Omni Hotel’s petition for review of their decision to overturn a lower court ruling that awarded summary judgment to Omni and reinstated a negligence charge filed by a man who was beaten, and his arm broken by a group of individuals in Omni Hotel’s Providence, Rhode Island hotel lobby. The First Circuit held that the development of a particular sequence of events can, without more, render future harm foreseeable.

The First Circuit’s opinion effectively broadened the duty of care imposed on hotels to protect guests and members of the public against spontaneous criminal conduct by a third party.

The plaintiff lived in a condominium complex adjoining the hotel. He had access to and regularly used the hotel’s services and amenities. On the night in question, hotel security had evicted from the premises a group of youths whose partying had caused a disturbance. Some of the evicted group returned outside the hotel with a case of beer and attempted to pick a fight with a passer-by which was seen by the hotel’s valet. A number of the group would later reenter the hotel’s lobby and proceed to beat the plaintiff resulting in the breaking of his arm.

While the lower court found that Omni had a special relationship to the plaintiff, as the “possessor of land that holds the land open to the public/member of the public,” on the issue of foreseeability, the lower court found that the hotel did not have a legal duty to protect the plaintiff from an attack spontaneously committed by third parties. Additionally, the lower court found it unforeseeable that the specific rowdy and later evicted group would spontaneously attack the plaintiff.

In the First Circuit’s review of the case, Omni cited Rhode Island cases that pertained to a “past occurrences” theory of foreseeability, whereas the plaintiff cited cases that illustrated a “sequence of events” theory of foreseeability. The First Circuit ultimately agreed with the plaintiff, saying that while it may not have been foreseeable that the group would assault the plaintiff at the time of their eviction, the attack was foreseeable by the time the group had returned and tried to pick a fight with the passer-by.

The First Circuit stated that the development of a particular sequence of events can, without more, render future harm foreseeable. According to Omni, this decision imposes an undue burden on businesses, “which will now unnecessarily face the prospect of a jury trial every time anyone is injured on their premises.”

While the implications of this case as it pertains to the liability of business owners and injuries that occur on their premises goes to be seen, hotels in the First Circuit should be wary of omitting to assist any guest or even member of the public from the actions of aggressive third parties.

If you have any questions or would like more information, please contact Thomas Hay at [email protected].

 

Mu v. Omni Hotels Management Corp., 885 F.3d 52 (1st Cir. 2018)
Mu v. Omni Hotels Management Corp., 882 F.3d 1 (1st Cir. 2018)