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Posts Tagged ‘#Litigation’

In the Land of Insurance Coverage, Specificity is King

Posted on: December 13th, 2018

GA Court of Appeals Finds Insurer Must Cover Millions in Damages Because of Policy Ambiguities

By: Brandon Howard

Whenever a court suspects an insurance policy is “ambiguous,” anxiety strikes the minds of both coverage counsel and insurers alike. For coverage counsel, combating an alleged ambiguous provision of a policy typically occurs on the back-end, after an incident has occurred and the claimant or plaintiff has already made underlying allegations of liability. As a result, coverage counsel can only advise clients or litigate matters within the framework of any given insurance policy’s established language. Yet, as policy issuers, insurers are uniquely positioned to monitor trends in litigation, on the front-end, in an effort to anticipate and revise policy language which may appear ambiguous in light of unique or uncommon facts. By proactively taking on vague policy provisions, a prudent insurer may avoid unanticipated exposure and a public battle over any alleged ambiguities during litigation.

Recently, in Nat’l Union Fire Ins. Co. v. Scapa Dryer Fabrics, Inc., 2018 Ga. App. LEXIS 634 (Ga. Ct. App. Oct. 26, 2018), the Georgia Court of Appeals demonstrated how a pair of ambiguous policy provisions can expose an insurer to millions of dollars in unanticipated liability. In that case, over a period of five years, the primary insurer, National Union, issued commercial general liability policies to an entity selling asbestos-containing dryer felts (Scapa). Three of the policies had $1 million occurrence/aggregate limits, while the last two policies purported to cap the insured’s liability limits for any one occurrence at $7.2 million. Citing the policies’ non-cumulation and limit erosion provisions, National Union argued that its duty to indemnify Scapa was discharged when the Scapa’s liability reached $7.2 million. Scapa, however, argued that both the non-cumulation and limit erosion provisions were ambiguous, thus allowing it to “stack” the limits of each of the primary policies, for a total coverage limit of $17.4 million.

On appeal, the Georgia Court of Appeals held that Scapa was allowed to stack the coverage limits of the five National Union policies because the policies’ non-cumulation clauses were ambiguous. The policies provided that if “[Scapa] has been provided with more than one policy by [National Union] covering the same loss/losses, the limit of liability stated in the schedule of this endorsement is the total limit of [National Union’s] liability for all damages which are payable under such policies. Any loss incurred under this policy shall serve to reduce and shall therefore be deducted from the total limit of [National Union’s] liability.” Confronted with this language, the Court concluded that the non-cumulation provision is ambiguous because “[it] does not indicate whether the limit applies to [each discriminate] policy period only or to the aggregate period under the original and renewed policies.” Construing the policy in favor of the insured, the Court held that the non-cumulation provision did not apply in the aggregate and, therefore, Scapa could stack its policy limits to gain an additional $10.2 million in coverage beyond what National Union contended was due.

On the issue of policy limit erosion, the Court also sided with Scapa. National Union had argued that, under its policies, the liability limits were eroded by the costs expended to defend Scapa against liability. For support, Scapa pointed to the policy, which provides that the limits of liability are reduced by “all expenses incurred by [National Union], . . . in any claim, suit[,] or other action defended by [National Union].” The Court noted, however, that National Union’s limits “[are] eroded only by the total sums that National Union ‘become[s] obligated to pay due to’ any bodily injury or . . . property damage.” The erosion provision, according to the Court, “is ambiguous as to whether such expenses include defense costs National Union is obligated to pay solely as part of its contractual duty to defend (as opposed to those sums it is legally obligated to pay by reason of the liability imposed upon Scapa by law for damages).” Again, construing the policy in favor of the insured, the Court held that National Union’s limits were not eroded by the costs incurred defending Scapa.

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

Economic Resolution of Cases Through An Expedited Jury Trial

Posted on: March 16th, 2018

By: Melina Shahbazian

It is no secret that litigation is time consuming and extremely expensive. Sometimes, depending on the circumstances of the case, the lengthy costly litigation process is the only choice.  Other times, particularly with lesser value cases, the parties have the option of conducting expedited jury trials in civil cases.

California’s expedited jury trial is a consensual, binding jury trial before a reduced jury panel and a judicial officer. (Code Civ. Proc. § 630.01(a).) The trial is heard by eight jurors (instead of twelve), with six votes needed for a verdict. Each side is allowed to exercise up to three peremptory challenges (unless the court permits additional challenges), and is given five hours to put on their case, inclusive of jury selection.

The parties can request an expedited jury trial, by submitting a Consent Order to the court, no later than 30 days before any assigned trial date. (Code Civ. Proc. § 630.03(a); Cal. Rules Ct., Rule 3.1547(a).) The proposed Consent Order must confirm parties’ understanding and agreement to participate in an expedited jury trial, outline the roadmap for the trial, and their agreement to alter any procedures, such as method of presenting evidence, limitation of witnesses, and any agreements on damages. The parties could set a cap for damages by entering into a “High/Low Agreement” prior to trial which specifies a minimum amount of damages that a plaintiff is guaranteed to receive from the defendant, and a maximum amount of damages that the defendant will be liable for, regardless of the ultimate verdict. (CCP § 630.01(b).)

If the parties agree to an expedited jury trial, the verdict is binding and they waive their rights to an appeal. The verdict from an expedited jury trial can only be disregarded in the event of misconduct by a judicial officer or the jury, or corruption or fraud or some bad act that prevents a fair trial. Otherwise, the court will enter a judgment based on the verdict.

The expedited jury trial offers a streamlined method for handling civil actions to promote the speedy and economic resolution of cases and conserve judicial resources. Has it? Only time will tell.

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

Will the Las Vegas Tragedy Change the Hospitality Industry?

Posted on: December 8th, 2017

By: America Vidana

Hundreds of victims of the October 1, 2017 mass shooting in Las Vegas have filed several suits in both California and Nevada courts against Mandalay Bay, MGM Resorts and LiveNation. The victims accused the hotel operator, MGM Resorts International, and its subsidiary, Mandalay Corp, which owns the hotel, of failing to properly monitor the shooter’s activities, train staff members and employ adequate security measures.

Additionally, the lawsuits accused the concert promoter, LiveNation, and the concert venue owner, also MGM, of failing to design, build or mark adequate emergency exits and to properly train and supervise employees in an appropriate plan of action in case of an emergency.

In order to prevail in such cases, a plaintiff must prove that the premises operators were negligent and the incident was reasonably foreseeable. Given the instant facts and the history of lawsuits following mass shootings, this will be an uphill battle for the victims unless they can show Mandalay Bay, MGM Resorts and LiveNation were careless and could have done more to prevent the shooting.

The shooter, 64-year-old Stephen Paddock, was a retired multi-millionaire, who invested in real estate, gambled for fun and had no criminal antecedents. He reportedly was a “high-roller,” who was well-known in the gambling world and frequented casinos such as Mandalay Bay, for weeks at a time. By all accounts, the shooter did not display any unusual or suspicious behavior that may have alerted Mandalay Bay security of a potential threat to safety.

Arguments have been made that Mandalay Bay security should have been more vigilant of the 23 legally purchased guns, including high-caliber assault weapons, the shooter took to his room over the course of three days, or alternatively, that some inspection procedure, whether metal detectors or bag checks, should have been in place to detect such weapons. While Mandalay Bay, in addition to every major Las Vegas casino, spends hundreds of thousands of dollars yearly to catch illegal gamblers, it somehow failed to detect the plethora of artillery being transported through its casino floor. The shooter reportedly also installed cameras in the hallways, and declined room service for several days—bringing into question Mandalay Bay’s policies regarding room service and duration between checking a guest’s room.

Even more damaging to Mandalay Bay, a security guard was allegedly shot several minutes before the mass shooting ensued. Strangely, there was a six-minute lapse in Mandalay Bar’s response time from the initial shooting of the guard to the actual mass shooting. This will likely be one of the bigger issues MGM will face, as this arguably should have provided notice of the danger, and plausibly provided a reasonable opportunity to minimize, if not prevent, the casualties.

However, the litigation trail following mass shootings have largely favored the establishment. Notably, in a similar suit arising out of the Aurora, Colorado theater mass shooting at a showing of The Dark Knight Returns, the court dismissed claims of those injured against the theater because the crime was not foreseeable at the time and because the crime was an intervening and superseding cause of the harm. While not directly applicable in the Ninth Circuit, the court’s rationale and legal principles will surely be persuasive. But being the first such presentation of a case against the hospitality juggernaut, the court’s decision could set new precedent on industry standards for safety and emergency response.

For further information or for further inquiries involving hospitality law, you may contact America Vidana of Freeman Mathis & Gary, LLP, at [email protected].

The Hearsay Exception for Market Reports

Posted on: July 15th, 2016

By:  Ryan Babcock

The hearsay exception for “compiled information” or market reports is an important tool that allows for the admission of such evidence notwithstanding the hearsay rule, but it is generally strictly applied by the courts. For that reason, counsel must carefully consider whether the rule permits the admission of such evidence in developing a trial strategy with respect to the admissibility of certain exhibits.

The hearsay exception for market reports and other compilations is defined as follows by Rule 803(17) of the Federal Rules of Evidence:

Market Reports and Similar Commercial Publications. Market quotations, lists, directories, or other compilations that are generally relied on by the public or by persons in particular occupations.

Most courts find these compilations reliable, and admissible, provided that they are used by the public or a particular profession or occupation (and thus reliability is supported by market forces). In weighing the admissibility of such evidence, courts usually also consider whether the evidence is “necessary,” such as whether it is the only way to determine the truth of the matter at issue, and whether locating the person who made the report would be impossible. Recent state cases in the criminal context drive home this point: People v. Hard, 342 P.3d 572, 575–79 (Colo. App. 2014) (no necessity to rely on drugs.com for evidence that the defendant possessed a particular unprescribed pharmaceutical drug because the state could, but did not, have the drug tested); Hardy v. Florida, 140 So. 3d 1016, 1019–21 (Fla. Dist. Ct. App. 2014) (finding that evidence from the E-FORCSE database should not have been admitted because it was not published—as required by Florida’s evidence rules—and noting that there was no evidence that the information in the database was “reliable,” rather than simply being an investigative

tool); People v. Franzen, 210 Cal. App. 4th 1193, 1209 n.6, 1213–14 (Cal. Ct. App. 2012) (no necessity for database evidence because the state could have subpoenaed the telephone company, and the Entersect website was not shown to be accurate).

Certain statements in a publication or “compilations” would clearly not qualify under the rule. See Danner v. Int’l Freight Sys., 855 F. Supp. 2d 433, 472 & n.53 (D. Md. 2012) (noting that a quote from a popular magazine, without citation, regarding the “increased trophy fee” for a lion obtained in an overseas safari is inadmissible). A federal district court in Texas has rejected efforts to use a LinkedIn profile to determine a person’s location, finding the requisites of reliability and necessity clearly unsatisfied. Personal Audio, LLC v. CBS Corp., No. 2:13-CV-270-JRG-RSP, 2014 U.S. Dist. LEXIS 37089, at *15–16 (E.D. Tex. Mar. 20 2014) (Payne, Mag. J.). And the Fourth Circuit has recently explained that statements in a material safety data sheet would not be sufficiently reliable to be admitted under this exception, inasmuch as the statements were opinion statements, or warnings, made in an effort to limit liability, not factual compilations as such. In re C.R. Bard, Inc., Pelvic Repair Sys. Prods. Liab. Litig., MDL No. 2187, 810 F.3d 913, 923–24 (2016) (such evidence was admissible as non-hearsay to show notice).

In another case, a plaintiff’s attempt to admit certain industry publications and stock analyst reports, in wholesale form, as exhibits was rejected by a federal district court, which explained that courts take a narrow view of the exception, applying it to true compilations, not documents containing narrative and potentially subjective opinion. The court did note that properly redacted exhibits might be admitted at a later date. Bianco v. Globus Med., Inc., No. 2:12-CV-00147-WCB, 2014 U.S. Dist. LEXIS 3430, at *2–7 (E.D. Tex. Jan. 12, 2014).

Counsel should also bear in mind authentication, when there is any question concerning the authenticity of the evidence. In such circumstances, counsel must be prepared to lay a foundation, through live witness testimony or otherwise, that the compilation or market report is properly authenticated. See, e.g., Skyline Potato Co. v. Hi-Land Potato Co., No. CIV 10-0698 JB/RHS, 2013 U.S. Dist. LEXIS 10670, at *21–22 (D.N.M. Jan. 18, 2013) (authentication required as to a document purporting to show the great decline of the price of potatoes). And while the evidence from the compilation may properly get into evidence, that evidence alone may not suffice to overcome summary judgment, especially where the figures given are in the form of a range and the proponent of the compilation offers no additional evidence regarding the fact at issue. See Colvin v. Ameri-National Corp., No. 1 CA-CV 10-0528, 2011 Ariz. App. Unpub. LEXIS 1240, at *9–11 (Ariz. Ct. App. Oct. 4, 2011) (finding Kelley Blue Book admissible but insufficient to establish the valuation of the plaintiff’s Honda, as there was no particular evidence regarding the vehicle’s condition). Alternatively, counsel should consider whether the court might take judicial notice of the compilation at issue. Hines v. Shineski, No. 10-3973, 2012 U.S. App. Vet. Claims LEXIS 1385, at *9 (Vet. Claims App. July 5, 2012) (taking judicial notice of a city directory for 1967–68).

“Originally published in the Spring 2016 Newsletter of the American Bar Association’s Trial Evidence Committee.”

Hearsay Exception for Recorded Recollections: Pitfalls to Avoid

Posted on: July 15th, 2016

By:  Ryan Babcock

Rule 803(5) of the Federal Rules of Evidence operates as an exception to the hearsay rule, provided the requirements governing the rule as to the “recorded recollection” are satisfied. The rule is as follows

Recorded Recollection. A record that: (A) is on a matter the witness once knew about but now cannot recall well enough to testify fully and accurately; (B) was made or adopted by the witness when the matter was fresh in the witness’s memory; and (C) accurately reflects the witness’s knowledge.

If admitted, the record may be read into evidence but may be received as an exhibit only if offered by an adverse party.

While the literal text of the rule might prompt philosophical reflection regarding whether the record complies with subpart (c), and how one might go about proving “accuracy” when the witness does not remember enough about the matter to testify fully and accurately, courts have taken a pragmatic approach in applying the rule. See Priester v. Texas, No. 08-13-00278-CR, 2015 Tex. App. LEXIS 10165, *28–*29 (Tex. Ct. App. 8th Dist. Sept. 30, 2015) (even where a witness displayed an inconsistent or spotty memory, the court allowed the state to read the witness’s prior grand jury testimony into the record, as the witness’s recollection would only be partial).

Still, counsel will not be able to establish a proper foundation when the witness cannot vouch for the accuracy of the statement because she does not remember making it, meaning that it cannot be shown to “accurately reflect[] the witness’s knowledge” at the time the witness offers her testimony. Kubsch v. Neal, 800 F.3d 783, 793–94 (7th Cir. 2015) (applying Indiana law, but describing outcome as consistent with federal evidentiary rules and those applicable in other states).

What about a situation where the witness made a statement to another person, and that other person was the one who took notes of the conversation? Even if it was not contemporaneously “adopted by” the witness, courts have found that it is admissible, provided that the witness testifies that the record is accurate. Bostwick v. Watertown Unified School District, Case No. 13­C-1036, 2015 U.S. Dist. LEXIS 46495 (E.D. Wis. April 9, 2015); see also United States v. Williams, 951 F.2d 853 (7th Cir. 1993). This result appears to be at odds with the express terms of the rule, but many courts have permitted this evidence nonetheless. If the witness is not present to testify at all, however, this hearsay exception will not apply. Arizona v. Havatone, No. 1 CA-CR 14-0223, 2015 Ariz. App. Unpub. LEXIS 1298 at *27 n.7 (Ariz. Ct. App. Oct. 27, 2015) (statement from a deceased witness not admissible).

Counsel should also consult Rule 612 when considering this type of evidence. That rule gives an adverse party certain rights when a writing has been used by a witness to refresh his memory, at or before the party offers the testimony into evidence. For example, counsel can demand to inspect the writing, may cross-examine the witness about it, and may introduce in evidence any other portion that relates to the witness’s testimony.

Notwithstanding the exception to the hearsay rule provided for recorded recollections, another common problem in these types of documents is hearsay within hearsay. This can be important because the really objectionable (or critically important, depending on your circumstances) evidence might still be kept out of trial altogether under that rationale.

“Originally published in the Spring 2016 Newsletter of the American Bar Association’s Trial Evidence Committee.”