Michael J. Rust - Law Blog

City of Atlanta and Contractors Held Responsible for Failing to Make Sure Subcontractor had Sufficient Insurance

2011-10-14T16:03:00.001-04:00

On October 5, 2011, in Estate of Mack Pitts v. City of Atlanta, the Georgia Court of Appeals ruled that the City of Atlanta (“the City”) and various construction companies associated with a construction project at the Atlanta airport were liable to the Estate of Mack Pitts, deceased, because the City and the contractors failed to make sure that a subcontractor which was responsible for the death of Mr. Pitts had sufficient insurance to cover a wrongful death verdict obtained against the subcontractor.

In June of 2007, Mack Pitts was killed while working on a construction project at the Atlanta airport when he was struck by a vehicle driven by an employee of A & G Trucking, Inc. (“A & G”). Mr. Pitts’ Estate obtained a wrongful death judgment against A & G and its driver in the amount of $5.75 million. A & G only had insurance coverage of $1 million. The Estate then sued the City and the contractors claiming that it failed to enforce a contractual provision requiring A & G to have $10 million in coverage. The Estate claimed that all of the defendants breached a contractual duty to require A & G to carry a minimum of $10 million in automobile liability insurance to work on the project. The trial court granted summary judgment to the defendants and the Court of Appeals disagreed. Instead, the Court of Appeals found that summary judgment should be granted to the Estate on its claim for breach of contract.

The City had contracted with various construction companies which acted as a joint venture regarding the project. In the main contract between the City and the joint venture, the general contractor would serve as a construction manager for the project and was authorized to enter into subcontracts. The general contractor was obligated to require any subcontractor to assume all of the obligations to the City under the main contract. The contract contains what is commonly known as OCIP (“Owner’s Controlled Insurance Program”). The purpose of the OCIP was to provide one master insurance program providing coverage with high limits for all the participants. The main contract required that the named insureds complied with all requirements of the OCIP which require the contractor to provide, at its own expense, automobile, bodily injury, and property damage liability coverage of no less than $10 million. The subcontractors agreed to be bound by the terms of the main contract.

The claims of the Estate were for breach of contract. The Estate claimed that Mr. Pitts and the Estate were third party beneficiaries of the main contract. The Court of Appeals agreed and found that although Mr. Pitts was not specifically named as a beneficiary in either the main contract or the subcontracts it was the intention of those contracts to provide one master insurance program that will benefit all participants involved in the project. Ms. Pitts was a participant in the project.

One of the defendants’ arguments in response was that the Estate’s claims were barred by the statutory immunity afforded under the Workers’ Compensation Act. However, even though the Estate’s claims arose out of a tort injury, the Court of Appeals found that the Act did not preclude the estate from proceeding against the third parties because the claims against the third parties were based upon breach of contract. The injury for which the Estate sought damages was not the physical injury itself, according to the Court, but was the loss of access to insurance coverage brought about by the defendants’ alleged breach of contract.

It was unquestioned that A & G did not have the minimum automobile liability insurance of $10 million when it worked on the project. The contract obligated all subcontractors to bind all lower tier subcontractors to the obligations of the main contract. This was not done. Therefore, according to the Court of Appeals, the undisputed evidence showed that the defendants breached their contractual duties regarding the OCIP by allowing A & G to work on the construction project without the required minimum coverage.

It is important to note that the Court of Appeals based its opinion on the very specific language of the contract and the OCIP which required coverage for “all participants involved in the project.” Had that language not been in the contracts it is questionable whether the Court would have reached this ruling. For future reference, in large construction projects involving an OCIP, all parties should closely review the contracts to determine whether this language exists within the contracts and whether they want it to exist. If that language is present, extra effort should be undertaken to confirm that all subcontractors on all levels have appropriate insurance coverage.

Please call me if you have any questions.
Michael

No Indemnification for Contractor in Default

2011-09-30T15:26:00.002-04:00

On September 30, 2011, in U.S. Lawns, Inc. v. Cutting Edge Landscaping, LLC, the Georgia Court of Appeals declined to enforce an indemnification clause because the contractor seeking indemnification settled the underlying claim only after it had gone into default.

U.S. Lawns, Inc. (“U.S. Lawns”) contracted to provide landscaping services to Bank of America in Macon, Georgia. U.S. Lawns then subcontracted its landscaping duties to Cutting Edge Landscaping, LLC (“Cutting Edge”). The subcontract between U.S. Lawns and Cutting Edge contained an indemnification provision.

In July of 2007, Gloria Freeman filed a negligence suit against Bank of America, U.S. Lawns and Cutting Edge alleging that she injured herself when she stepped in a hole on the premises of the bank. U.S. Lawns was served with the Complaint and Summons and but failed to file an Answer and went into default. U.S. Lawns filed a motion to open the default which was denied. Thereafter, U.S. Lawns negotiated a settlement with Ms. Freeman and then filed a lawsuit against Cutting Edge seeking indemnification for the amounts paid to Ms. Freeman. Both the trial court and Court of Appeals found that U.S. Lawns was not entitled to indemnification against Cutting Edge.

Generally, the fact that an indemnitee has settled or comprised an underlying tort action brought by an injured party does not bar the indemnitee from pursuing a claim for indemnification from a third party indemnitor. However, if the indemnitee who settles the underlying tort action has an available defense which would have defeated the action but fails to assert it, no indemnification can be recovered. The burden of proof in this situation is on the indemnitee (U.S. Lawns in this case) to come forward with evidence to reflect that it could have been held liable in the underlying tort action had the case not been settled.

U.S. Lawns had an available defense which would have defeated Ms. Freeman’s claims. The contract between U.S. Lawns and Bank of America reflected that the repair of holes such as the one that Ms. Freeman fell into was not part of U.S. Lawns or Cutting Edge’s contractual duties. There was also no evidence indicating that the hole was caused by U.S. Lawns or Cutting Edge. U.S. Lawns could have successfully defended itself in the Freeman action on the basis that neither it nor its subcontractor, Cutting Edge, had any legal duty to repair the hole in the curb where Freeman was injured. By letting itself go into default, U.S. Lawns failed to assert this defense.

U.S. Lawns also argued that Cutting Edge had a contractual duty to defend U.S. Lawns and therefore Cutting Edge was responsible for the fact that U.S. Lawns went into default. The Court of Appeals was not persuaded by this argument because U.S. Lawns never notified Cutting Edge that it expected Cutting Edge to file an Answer on its behalf. The Court found an implied duty for U.S. Lawns to timely notify Cutting Edge that it had been served with a Complaint that fell within the indemnification provision and that it expected a response to the Complaint to be filed on its behalf. The default and subsequent settlement with Freeman were not the fault of Cutting Edge, according to the Court.

Also, the Court wrote that when U.S. Lawns went into default and by reason of that default failed to assert a defense that would have defeated the lawsuit, the liability brought about by the default did not “arise out of” and was not related to Cutting Edge’s performance, but instead arose from U.S. Lawn’s own conduct in allowing the default and failing to assert a meritorious defense.

This case reinforces that a party seeking indemnification should immediately notify the indemnitor of its expectations. Of course, filing an Answer to a lawsuit is always the best practice.

Please let me know if you would like a copy of this Opinion.
Michael

Construction Project Indemnification Upheld

2011-09-02T10:21:00.003-04:00

In JNJ Foundation Specialists, Inc. v. D.R. Horton, Inc., decided July 28, 2011, the Georgia Court of Appeals upheld an indemnification agreement in a construction contract and found that a contractor was required to indemnify a project developer even though the contractor’s work did not necessarily cause the injury which brought the claim about. According to the Court of Appeals, the term arising out of in the contract did not require a finding that the subcontractor’s actions directly or proximately caused the injury.

JNJ Foundation Specialist, Inc. (“JNJ”) contracted with D.R. Horton, a developer, to pour entry sidewalks for a subdivision. Plaintiff Gary Hall was driving near the front of the subdivision when he saw construction barrels in the middle of the travel lane. Hall stopped his vehicle and was rear-ended by another vehicle. Hall sued D.R. Horton alleging that Horton was negligent in entrusting operation of the construction site to a John Doe which had failed to adequately mark the lane closure and created a hazard. D.R. Horton answered the complaint and filed a third-party complaint against JNJ and its insurer, Columbia National Insurance Company (“Columbia National”). D.R. Horton alleged that JNJ was liable for refusing to provide a defense and indemnification pursuant to the construction contract entered into between JNJ and D.R. Horton. The trial judge granted summary judgment for D.R. Horton and found that, contractually, JNJ was liable for indemnification. The Court of Appeals agreed.

JNJ argued that the indemnification agreement did not apply because: (a) there was no evidence that JNJ placed the construction barrels in the roadway; (b) there was no evidence that the barrel placement was the direct and proximate cause of Hall’s injury; and (c) the complaint did not allege facts that came within the scope of JNJ’s work. The contract provided that JNJ had a duty to defend and indemnify D.R. Horton for any claims "in any way occurring, incident to, arising out of, or in connection with . . . the work performed or to be performed by contractor or contractor’s personnel, agents, suppliers, or permitted subcontractors." JNJ argued that there was no evidence that Hall’s injury arose out of its work.

Under Georgia law, the phrase “arising out of” in indemnification provisions does not mean proximate cause in the strict legal sense nor does it require a finding that the injury was directly caused by the indemnitor's actions. According to the Court “almost any causal connection or relationship will do.” Because there was evidence that JNJ placed the construction barrels in the roadway and was working in the area and pouring concrete around the time of the accident, Hall’s claim either arose out of or was connected in some way to JNJ’s work. Therefore, JNJ had a duty to defend and to indemnify D.R. Horton pursuant to its contract.

The Court of Appeals also rejected Columbia National’s argument that it had not received notice of the claim “as soon as practicable” from D.R. Horton and found that a jury question exists as to whether Columbia National has been prejudiced by late notice of the lawsuit by D.R. Horton.

This case provides good arguments for any owner or contractor seeking to enforce a broad indemnification agreement. Any involvement of the subcontractor whatsoever in the portion of the project giving rise to an injury might bring about the duty to indemnify. Subcontractors should take the time to carefully review their contracts to make sure they are aware of the potential scope of their indemnification.

Please let me know if you have any questions or would like a copy of the opinion. Have a great Labor Day. Michael.

Jury Instruction Allowing Apportionment of Fault Against a Non-Party Criminal Approved in Premises Liability Case

2011-08-09T07:23:00.005-04:00

On July 14, 2011, the Georgia Court of Appeals agreed that a DeKalb County Judge had properly instructed a jury in a premises liability case involving a murder that it was allowed to apportion fault against the murderer. In Pacheco v. Regal Cinemas, Inc., the Court affirmed the jury verdict in favor of the defendants in a case which was won at trial and on appeal by my partner, Matt Moffett.

On September 29, 2006, 21 year-old Jesus Silencio was walking through the parking lot of a DeKalb County movie theater when a truck stopped near him and several individuals verbally communicating gang affiliations confronted Silencio and began punching and hitting him with a bat. During the altercation, Silencio was fatally shot and the individuals fled. Silencio’s family filed a wrongful death action against Regal Cinemas, Inc. and a security company, Perfections Management Solutions, LLC, alleging that negligent security led to Silencio’s death.

At trial, the Judge instructed the jury that they were allowed to apportion fault against the criminal perpetrator. The case resulted in a jury verdict in favor of the defendants so there was no actual apportionment against the murderer but the DeKalb County jury would have been allowed to do so under the Judge’s instruction.

The plaintiffs argued that the Judge’s instruction was inappropriate and relied on several out-of-state decisions which refused to apply apportionment principles where the defendants were alleged to have been negligent in failing to keep the premises safe from allegedly foreseeable intentional conduct. The Court of Appeals declined to adopt those rulings and noted that in the Florida case relied upon by the plaintiffs there was an express provision in the statute which made it inapplicable where the case was “based upon an intentional act.” The Georgia statute has no such exclusionary provision.

It should be noted that the Court of Appeals found that the plaintiffs at various points during the trial had failed to properly preserve their objections. However, this case is good authoriy for the principle that in a premises liability case arising out of a criminal act, i.e., an assault, murder, rape, etc., the jury should be allowed to apportion fault against the criminal who committed the act.

Please call me if you have any questions or would like a copy of the opinion. I congratulate Matt, who was assisted by Wayne Melnick, on this great result.
Michael

Convenience Stores May Be Liable For Sale of Alcohol Under Dram Shop Act

2011-07-06T15:41:00.003-04:00

Yesterday, the Georgia Supreme Court decided that Georgia’s dram shop act applies when a convenience store sells closed or packaged containers of alcohol not intended for consumption on the premises to a noticeably intoxicated person. This 6-1 ruling overturned a Court of Appeals finding that, as a matter of law, convenience stores could not be liable for the sale of packaged and closed containers of alcohol. Flores v. Exprezit! Stores 98-Georgia.

This case arose out of motor vehicle collision in which six people were killed and several were injured. Approximately four hours before the collision, the driver of one of the vehicles, Billy Joe Grundell, drove with a passenger to a convenience store. Grundell was noticeably intoxicated when he entered the store and purchased a 12-pack of beer. Grundell and his passenger drove off and consumed the beer. Later, Grundell crossed the centerline of a highway and ran head-on into a van going the opposite direction. Grundell’s blood alcohol level at time of the accident was 0.181, twice the legal limit. After the injured passengers brought suit under the dram shop act against the owner of the convenience store, Exprezit! Stores 98-Georgia, LLC (“Exprezit!”), the trial Judge granted summary judgment to Exprezit! and the Court of Appeals agreed.

The Georgia dram shop act provides that a person who sells, furnishes, or serves alcoholic beverages to a person who is in a state of noticeable intoxication, knowing that such person will soon be driving a motor vehicle, may become liable for injury or damage caused by or resulting from the intoxication of that person. Other States, in their dram shop acts, have expressly exempted convenience stores from liability. The Georgia statute, however, does not provide for any express exemption.

In creating an exemption for convenience stores, the Court of Appeals had applied the reasoning of the Georgia Supreme Court in its 2005 decision exempting airlines from liability under the dram shop act. In a lawsuit against Delta, the Supreme Court found that airline passengers generally do not have direct and immediate access to their vehicles after they deplane and the airline has no way of knowing whether any of its passengers will “soon” be operating a vehicle as opposed to remaining at the airport or departing by some other means of transportation. The Court of Appeals found, and Exprezit! argued, that like airlines, convenience stores have no way of knowing if their customers will soon be driving a motor vehicle. Exprezit! also argued that unlike taverns, bars and restaurants, where customers consume alcoholic beverages on the premises, convenience stores are limited in their ability to discern whether their customers are noticeably intoxicated. The Supreme disagreed.

According to the Supreme Court, when a convenience store sells alcoholic beverages to a customer it often has an opportunity to observe how the customer arrived and, conversely, the manner in which he will depart. Therefore, a convenience store may very well know if a customer will soon be driving a motor vehicle. The convenience store seller also has, according the Court, an opportunity to observe the customer to determine if he appears to be noticeably intoxicated.

The issue of what the convenience store operator knows insofar as the level of intoxication of the customer and whether the customer is driving will now always involve a factual determination. Only in cases where the facts are clear that the convenience store had no knowledge, and could have had no knowledge, that the patron was driving or where there is no evidence that the patron was “noticeably intoxicated” will summary judgment be granted to a convenience store in a dram shop case. The focus, according the Supreme Court, is on the convenience store’s knowledge as to whether its customer was noticeably intoxicated and would be driving soon. "If a convenience store sells alcohol to such a customer, it is foreseeable that the customer will drive while intoxicated and injure an innocent third party and if the plaintiff can prove that such sale of alcohol was a proximate cause of any injuries the convenience store will be held liable."

One unfortunate result of this opinion is that a convenience store cashier now is in the same position as a bartender serving alcohol over the counter in a bar. Both must exercise their judgment as to who is intoxicated and whether or not he or she is driving. Convenience stores should all now closely review their policies on the sale of alcoholic beverages.

Please let me know if you have any questions or would like a copy of this opinion.
Michael

Expert Causation Testimony Required in Toxic Tort Case

2011-06-21T14:18:00.002-04:00

In a recent case, the Georgia Court of Appeals has ruled that the plaintiffs must come forward with expert testimony to prove that their medical issues were caused by carbon monoxide poisoning. This proof was especially necessary because another toxic substance, mold, was found in the plaintiff’s home. Seymour Electric and Air Conditioning Serv., Inc. v. Statom (decided May 26, 2011).

Willie and Betty Statom sued Seymour Electrical and Air Conditioning Service, Inc. for negligence alleging that they were injured by carbon monoxide poisoning from a gas furnace that was improperly installed and repaired. Seymour installed a new furnace in the Statoms’ home in May of 2007 and during a service call in July 2008, Seymour failed to convert a replacement valve nozzle from its factory setting for natural gas to the setting for propane gas, which was being used by the Statoms. The failure to properly convert the nozzle led to incomplete combustion inside the furnace which resulted in soot and carbon monoxide.

After the initial installation of the furnace, but before the faulty replacement of the valve nozzle, the Statoms began experiencing a variety of medical problems, including headaches, nausea, burning throats, burning eyes, stomach pain, fatigue, and memory loss. Mrs. Statom was hospitalized for three days and missed at least a month of work. The Statoms moved out of their house for approximately six months while efforts were made to identify and correct any problems that might be causing their symptoms.

During the course of the investigation to determine potential environmental hazards, mold was discovered in the house and some consultants believe that it was the cause of the Statoms’ symptoms. A service technician with a different heating and air conditioning company discovered the replacement valve nozzle issue in November of 2008.

In December of 2008 the Statoms moved back into their house and their symptoms subsided. They then sued Seymour contending that their medical symptoms had been the result of carbon monoxide poisoning and sought damages for physical and emotional injury. Seymour moved for summary judgment, arguing among other things that there was no evidence of causation. The trial court denied the motion but the Court of Appeals felt otherwise.

Seymour was negligent in its installation of the furnace and its subsequent replacement of the valve nozzle. The issue was whether there was any competent evidence that Seymour’s negligence caused the Statoms’ medical symptoms. Although the Statoms sought medical attention for their symptoms, they failed to come forward with any evidence that a physician ever tested them for carbon monoxide poisoning or diagnosed them as having that condition. There was no expert medical testimony establishing a causal link between their medical symptoms and their alleged exposure to carbon monoxide. Rather, the Statoms simply argued that a jury could “infer” that the carbon monoxide from the furnace caused their medical symptoms because the dangers associated with its inhalation are well known.

According to the Court of Appeals, this “inference” was not enough. While expert testimony is unnecessary to establish causation in many negligence cases, some cases raise issues that can be resolved by a jury only with the assistance of experts with specialized medical knowledge. This is one of those cases as are many toxic tort cases. Medical evidence was especially necessary in this case because of the possibility of another cause for the Plaintiffs’ symptoms: mold.

In any toxic tort case plaintiffs will need to have medical testimony that the substance which they contend caused their injury did, in fact, do so. Remember also that the physician or expert providing that testimony must be qualified to do so and must have a proper foundation for his or her opinion.

Please let me know if you would like a copy of the opinion.
Michael

Florida Wrongful Death Law Violates Public Policy of Georgia

2011-06-14T14:44:00.001-04:00

On May 27, 2011 in Carroll Fulmer Logistics Corp. v. Hines the Georgia Court of Appeals ruled that Florida’s wrongful death law violates the public policy of the State of Georgia and should not be applied to a lawsuit pending in Georgia but based on an occurrence which took place in Florida.

Travis Hardaway was killed when the tractor-trailer he was driving on Interstate 10 in Jacksonville, Florida struck the rear of the tractor-trailer driven by Clifford Pauldo in the course of his employment for Carroll Fulmer Logistics Corp. (“CFL”). Hardaway died shortly after the collision from burns and smoke inhalation when, as a result of the collision, the driver’s compartment of his tractor-trailer burst into flames. Both drivers were Georgia residents. Hardaway’s Estate brought a wrongful death action in Georgia against Pauldo and CFL. Generally, under Georgia law, because the incident giving rise to the lawsuit occurred in Florida, the substantive law of Florida would apply. However, Georgia recognizes a public policy exception to this rule. Under the exception, even if the tort occurred in another state, Georgia Courts will not apply the other state’s substantive law if that law contravenes the public policy of Georgia.

Florida and Georgia have substantially different wrongful death laws. In Georgia, a survivor has the right to recover the full value of the life of the deceased without deducting for any of the necessary or personal expenses of the deceased had he or she lived. Damages are measured from the deceased’s point of view and there is no recovery for damages in Georgia for mental or emotional suffering experienced by the deceased’s survivors as a result of the wrongful death. That is not the case in Florida. Under the Florida Wrongful Death Act, survivors have the right to recover damages suffered by the survivor, not by the deceased, as a result of the deceased’s injury and death. The Court of Appeals found that this was a significant enough difference so that application of Florida law would violate the public policy of the State of Georgia and therefore Florida wrongful death law should not apply.

This ruling can be used in any case involving a wrongful death action filed in Georgia but where the occurrence took place in another state. If the other state’s wrongful death laws are significantly different than Georgia’s, then Georgia courts are likely to apply Georgia law. This case also shows a willingness on the part of the Court of Appeals to examine closely all laws of other states to determine if they differ substantially from Georgia’s laws and not to blindly apply another state’s law in Georgia courts.

Please call me if you have any questions or would like a copy of the opinion.
Michael

Employee On The Way To Work Is Not In The Scope Of Employment

2011-06-06T13:58:00.004-04:00

On May 19, 2011, in Farzaneh v. Merit Construction Company, Inc., the Georgia Court of Appeals again rejected arguments that an employee driving in his personal vehicle on the way to a job site was acting in the course and scope of employment when he was involved in an accident.

David Redic was driving to a construction site in his own truck when he struck and severally injured Farzaneh, a pedestrian crossing the street. Farzaneh sued Redic’s employer, Merit Construction Company (“Merit”), seeking to recover damages for his injuries. The trial court granted Merit’s motion for summary judgment concluding that the evidence showed that Redic was not acting in the course and scope of his employment when he injured Farzaneh and, therefore, Merit could not be held liable under the doctrine of respondeat superior. The Court of Appeals agreed.

Merit performs build-outs of commercial and retail office space and has numerous “field employees,” i.e., laborers who work at assigned job sites. Merit does not have a central office where its field employees report at the beginning of the work day. Redic was assigned to a specific job site in Atlanta at the time of the accident and was due at the site at 6:00 a.m. Shortly before that time, the accident occurred.

Redic had previously purchased the truck from Merit at a discount but it had been paid off and was titled in Redic’s name. Redic, not Merit, paid for insurance on the truck. Merit did not perform any maintenance on the truck after it was sold. In his truck at the time of the accident, Redic had a Merit issued “direct connect” cellular telephone and a Merit issued power screw gun. He did not make or receive any calls on the phone prior to or at time of the collision. Redic was not bringing any equipment or supplies to the job site for other Merit employees.

Georgia courts have established that an employee on the way to work is not in the course of his employment but rather is engaged in a personal activity. If, however, the employer owns the vehicle driven by the employee, a presumption arises that the employee was acting in the course and scope of his employment and the burden shifts to the employer to rebut it through uncontradicted evidence showing that the employee was not acting on behalf of the employer. That presumption did not arise in this case but based on these facts even if Redic had been driving a truck owned by Merit, summary judgment would likely have been granted.

Farzaneh argued that the “direct connect” phone and tool in the truck and the fact that Redic might have received a vehicle allowance as part of his compensation created “special circumstances.” This argument was rejected. The Georgia courts have previously found that the fact that an employee is “on call” and driving a truck “loaded with parts and materials” does not create liability for the employer; the fact that an employee receives a vehicle stipend does not create liability; the fact that an employee is driving a truck with a two-way radio installed for communicating to an employer and containing parts and tools for use of other employees does not create liability; and the fact that an employee has a beeper does not create liability.

Farzaneh also argued that when Redic was hired by Merit, Redic completed an insurance form indicating that he was an “authorized driver.” The Court was not persuaded that this created any liability on behalf of Merit for the accident.
Finally, Farzaneh relied on workers’ compensation cases in arguing that Merit should be held vicariously liability for the injuries caused by Redic. Several years ago the Court of Appeals rejected this argument in a case of mine, Gassaway v. Precon, and found that the laws governing workers compensation and negligence are different and an employee can be said to be within the scope of employment for workers’ compensation purposes and not within the scope of employment for negligence purposes.

This opinion is another in a long line of cases indicating the Court of Appeals’ reluctance to establish liability for an employee driving to and from work, especially when the employee is in his personal vehicle. In most such cases, the employer should be able to obtain summary judgment.

Please let me know if you would like a copy of the opinion.
Michael.

Court of Appeals Rules on When Late Notice of a Claim Voids Coverage

2011-05-23T14:13:00.003-04:00

On April 28, 2011, in Forshee v. Employers Mutual Casualty Company, the Georgia Court of Appeals found that a fact question existed as to whether Employers Mutual received timely notice of a claim arising out of a slip and fall at an insured convenience store. The Court overruled the trial court’s finding that the insured had not provided timely notice and decided that the issue was a factual dispute that a jury must decide. In its opinion, the Court established the standard to be considered by a trial court in a late notice case.

Johnny and Elizabeth Forshee own and operate a Chevron service station and convenience store. In November of 2007, a woman fell at the store and two years later she filed a lawsuit against the Forshees for injuries that she sustained as a result of the fall. The Forshees tendered the lawsuit to Employers Mutual which defended under a reservation of rights. The Forshees gave Employers Mutual no notice of the fall until after they were sued in November of 2009. Employers Mutual, while the personal injury lawsuit was pending, filed a declaratory judgment action against the Forshees, alleging that they failed to timely notify Employers Mutual of the fall and, for that reason, Employers Mutual owed them no defense or coverage in connection with the personal injury lawsuit. The trial court hearing the declaratory judgment action agreed and found that Employers Mutual had no duty to defend or indemnify the Forshees.

The Forshees were aware of the fall which occurred outside of the store. Mr. Forshee saw the woman on the ground and went outside and asked if she was hurt or needed medical assistance. He went back into the store to get the woman a drink and when he returned the woman was seated in a car and refused his offer to call for medical assistance, telling him instead that she intended to go home. She did mention that she was hurt. Mr. Forshee never ascertained the identity of the woman who fell and the Forshees did not see, speak with, or hear anything about the woman or her companion for nearly two years after the fall.

Suit was filed by the injured claimant only days before the statute of limitations expired. Attached to the Complaint were copies of medical records showing that on the day she fell at the Forshees’ store, she was treated for a broken arm at a hospital in Alabama. The trial court believed that the Forshees had a duty, pursuant to their Employers Mutual’s policy, to notify Employers Mutual of the fall even though they did not know the identity of the person harmed and that the Forshees had failed to comply with that duty, thereby voiding coverage under the Employers Mutual’s policy.

Under Georgia law, when an insurance policy includes a notice requirement as a condition precedent to coverage and when the insured fails to timely comply with the notice requirement, the insurer is not obligated to provide a defense. However, an insured is not required to foresee every possible claim, no matter how remote, that might arise from an event and give notice of it to its insurer. Instead, the law only requires an insured "to act reasonably under the circumstances." If a reasonable and ordinarily prudent person would conclude that an event forms no basis for a possible claim, the failure to give notice of the event is justified and is no bar to coverage. In most cases, according to Georgia appellate courts, the reasonableness of a failure to give notice is a question of fact.

In examining whether an accident or incident would require an insured to provide notice to its insurer, the Court wrote that relevant circumstances include the nature of the event, the extent to which it would appear to a reasonable person in the circumstances of the insured that injuries or property damage resulted from the event, and the apparent severity of any such injuries or damages. Courts should also consider whether anyone gave an indication that he or she intended to hold the insured responsible for the event and resulting injuries, and the extent to which the insured acknowledged the likelihood that a claim could arise from the event.

The trial court in this case focused only on the severity of the injury. The Court of Appeals found that the trial court failed to “eliminate the distorting effects of hindsight” when it based its determination of reasonableness on how severe the injury turned out to be rather than how severe it would have appeared to Mr. Forshee on the day of the incident. Therefore, the case was sent back down to the trial court for a trial on the issue of the reasonableness of Mr. and Mrs. Forshee’s conduct based upon what they knew at the time of the fall.

This opinion reinforces that questions of late notice will more than likely be factual questions to be decided by a trier of fact, meaning either a jury or a judge in a bench trial. In these types of cases it will be difficult for an insurer to obtain summary judgment on the basis of late notice.

Please call me if you would like a copy of the opinion.
Michael

Divided Court of Appeals Applies Assumption of Risk to Nine-Year-Old

2011-04-14T11:28:00.003-04:00

On March 30, 2011, a divided Georgia Court of Appeals upheld the trial court’s grant of summary judgment to a playground equipment design company in a suit filed on behalf of a 9-year-old boy who sustained serious injuries when he fell off the “Infant Maze” in a Gwinnett County park. The majority of the court believed that the young man, Steven Kane, "appreciated the obvious risk of falling that is associated with climbing to high places and voluntarily assumed that risk as he admitted he knew the dangers associated with climbing things, he did not think his mother would have wanted him to climb the Infant Maze, he knew that the structure was for younger children and not intended for climbing, the hardness of the panel onto which he fell was obvious to a child who had recently climbed atop it, and, while he testified that he did not think a fall was likely, he did not deny the truth that a fall and injuries were possible."

Defendant Landscape Structures, Inc. designed the playground equipment from which Steven fell for children between the ages of approximately eighteen months and three years. The Infant Maze was located at Mountain Park, and Steven and his parents, sister and 13-year-old brother were attending a softball game when Steven and his brother visited the playground. Steven and his brother testified that children between the ages of nine and twelve years often climbed on top of the Infant Maze and, on the day of his injury, several children were sitting atop the structure and jumping off of it. Steven’s brother testified that Steven had tried unsuccessfully to climb it on two prior occasions. In any event, Steven knew that the Infant Maze was not designed for children of his age and was “for little kids.” He also said that his mother would “probably not” approve of him climbing it. In fact his mother had warned him about the danger associated with climbing various things, including structures that are not as high as the roof of the Infant Maze. Steven’s parents testified that they would not have allowed their children to climb atop the Infant Maze if they had known that they were doing so. The expert witness who testified on behalf of Steven also admitted that Steven "had some awareness of the fact that [climbing to the roof of the Infant Maze] was something that wasn’t intended by the manufacturer."

The majority of the Court found that Steven had assumed the risk of falling from the Infant Maze and that Landscape Structures had met its burden of showing that: (1) [Steven] had some actual knowledge of the danger; (2) he understood and appreciated the risks associated with the danger; and (3) he voluntarily exposed himself to the danger. The Court believed Steven was aware of the specific particular risk of harm associated with the activity that proximately caused his injury, a requirement for showing assumption of risk.

Although the law does not expect children always to appreciate dangers to the same extent as adults, Georgia courts have recognized that children as old as Steven are quite capable of appreciating certain obvious dangers. For more than fifty years, the Georgia courts consistently have held that the danger associated with climbing, or jumping from, an elevated place is so obvious that a young child can be found as a matter of law to sufficiently appreciate the danger, at least in the absence of evidence of a special circumstance that renders the child unable to appreciate the danger.

Two Judges dissented from this opinion, Judge Barnes and Judge Adams, relying upon an earlier decision of the Court of Appeals in which the Court affirmed a jury verdict in favor of a nine-year-child who was struck by a truck as she crossed a driveway. In that case, at trial, the court had refused to charge the jury on assumption of risk. The majority, however, found that this earlier opinion was distinguishable because the child in the prior case appreciated that running into a street or driveway sometimes poses a danger of being struck by traffic when, and only when, there is a traffic operating upon the street or driveway and the child was not aware that traffic was moving upon it when she was struck. According to the majority, gravity, unlike traffic on a quiet street or driveway, is always present, and so, unlike a quiet street or driveway that only sometimes poses a danger to pedestrians of being struck by traffic, climbing something always poses a danger of falling from it.

Please let me know if you would like a copy of this opinion.
Michael

Court of Appeals Agrees That a Manufacturer Does Not Have a Duty to Warn of Obvious and Avoidable Dangers

2011-04-01T15:32:00.001-04:00

On March 17, 2011, the Georgia Court of Appeals in Kelly v. Hedwin Co.¸ affirmed the principle that a manufacturer has no duty to warn of a product-connected danger which is obvious and generally known. The Court upheld the granting of summary judgment to Hedwin Corporation (“Hedwin”) in this products liability lawsuit.

Plaintiff Ernie Kelly, a hospital employee, cleaned up formaldehyde spilled by a nurse from a five-gallon plastic storage container originally manufactured by Hedwin. Mr. Kelly, a clinical engineer at the hospital, was at home one evening when he received an emergency call from hospital staff informing him that a chemical spill had occurred. Mr. Kelly replied that the hospital’s “Environmental Services” personnel should clean up the spill, and the nurse explained that they had refused to do so. Mr. Kelly told the nurse he would come to the hospital, and upon arrival, he observed a large spill of liquid on the floor. He could smell strong fumes, and before he began cleaning, he was told that the spill was embalming fluid containing formaldehyde. Mr. Kelly then helped other staff clean up the spill with mops and buckets. He did not wear a mask, and he experienced coughing and restricted breathing as he cleaned.

The nurse who spilled the liquid testified in a deposition that it came from a five-gallon collapsible plastic cube regularly used at the hospital to store and dispense embalming fluid. The cube had a mouth on one side such that a full cube could be rotated up to substitute a spigot for the cap with which it was shipped and the cube could be rotated down to dispense the liquid from the spigot. The nurse also testified that the spigot was apparently not fastened tightly, and as soon as she touched the spigot, it fell off and liquid poured rapidly out of the open mouth of the cube.

Hedwin manufactured the empty container only. It did not sell formaldehyde, fill the container with formaldehyde, package or label the filled container, or sell the formaldehyde-filled container to the hospital. Hedwin did not manufacture or install the spigot on the container. The filled container had been provided to the hospital by a separate entity, Cardinal Health, which was also sued.

Mr. Kelly made claims against Hedwin for both failure to warn and negligent design. The trial court granted summary judgment to Hedwin on these issues. On the failure to warn argument, the Court of Appeals found that “there is no duty resting upon a manufacturer or seller to warn of a product-connected danger which is obvious or generally known.” It is both obvious and generally known, according to the Court, that a poorly capped container placed on its side will spill large amounts of liquid regardless of design, and it is undisputed that the spill occurred because a hospital employee failed to properly replace or install the spigot.

With regard to the negligent design claim, the Court employed a balancing test whereby the risks inherent in a product design are weighed against the utility or benefit derived from the product. Mr. Kelly submitted an Affidavit from an expert who opined that a container used to dispense a hazardous liquid should not be of a design where there is a “potential to spill all the contents in a very short time if the valve were to come off.” The Court was not impressed with this testimony. Because Hedwin did not manufacture, design, or label the outer cardboard packaging of the formaldehyde product shipped to the hospital and Hedwin did not choose the dispensing method (the spigot), Hedwin’s design was appropriate and was not defective. Also, the fact that an improperly capped container left on its side will readily spill its contents is an obvious danger of which any hospital employee should have been aware and which could have been avoided.

This case should, along with the prior decisions relied on by the Court, support the argument in product liability cases that open and obvious dangers associated with products, even in spite of adverse expert testimony, do not require consideration by a jury.

Please call me if you would like a copy of this opinion.
Michael

Supreme Court Will Not Rule on Apportionment Issue

2011-03-14T08:09:00.003-04:00

The litigation saga of Sarvis v. Cavalier Convenience, Inc., has ended in a settlement and the request for review by the Georgia Supreme Court of the apportionment issue involved in Sarvis was withdrawn on February 24th, 2011. As you may recall from my January 28, 2011 blog, the Supreme Court had agreed to rule on the following issue:

Did the Court of Appeals correctly construe OCGA § 51-12-33 to require a trier of fact to apportion an award of damages among multiple defendants when the plaintiff is not at fault?

In July of 2010, the Georgia Court of Appeals answered that question in favor of the defendant in Sarvis and found that apportionment is required even when the plaintiff bears no fault. The Sarvis case arose out of an auto accident involving a drunk driver. Sarvis sued the driver and the convenience store where alcohol had been purchased by the driver. The trial court ruled that there would be no apportionment of damages amongst the defendants because there was no argument that Sarvis was negligent.

The settlement of Sarvis means that for the time being the Court of Appeals’ decision, which is favorable for defendants, stands. Because the Supreme Court has shown an interest in this issue, however, it is likely that soon another similar case will make its way to the Court

Please call me if you have any questions.
Michael

Georgia Supreme Court Rules that Negligent Workmanship Can be An “Occurrence” Under Commercial General Liability Policy

2011-03-07T13:28:00.003-05:00

In its November 2009 Opinion, the Georgia Court of Appeals wrote that “what constitutes property damage and an occurrence in the realm of construction defect claims against an insured general contractor for the acts and/or omissions of its subcontractors are perhaps the most litigated insurance issues over the last several years.” Today, March 7, 2011, the Georgia Supreme Court weighed in on that issue and agreed with the Court of Appeals that faulty or negligent workmanship on a jobsite may constitute an “occurrence” under a standard commercial general liability (CGL) policy. American Empire Surplus Lines Insurance Company v. Hathaway Development Company, Inc.

Hathaway Development Company (“Hathaway”), a general contractor, sued its plumbing subcontractor, Whisnant Contracting, Inc. (“Whisnant”), for negligent work at three jobsites, seeking to recover the costs of repairs caused by Whisnant’s faulty workmanship. The costs went beyond those required to fix Whisnant’s plumbing mistakes per se; rather they were costs associated with water and weather damage to surrounding property. Hathaway sued Whisnant which failed to answer and after entry of a default judgment against Whisnant, Hathaway sought payment from Whisnant’s insurer, American Empire Surplus Lines Insurance Company (“American Empire”).

American Empire denied liability, asserting that Hathaway’s claim was not covered under Whisnant’s CGL policy because it did not arise out of an “occurrence,” defined under the policy as “accident, including continuous or repeated exposure to substantially the same, general harmless conditions.” American Empire argued that Whisnant’s negligent workmanship could not be deemed an “accident.” The trial court agreed and granted summary judgment to American Empire but the Georgia Court of Appeals reversed and found that because Whisnant’s faulty workmanship caused damage to the surrounding properties, the acts of Whisnant constituted “occurrences” under the policy. Last year, the Georgia Supreme Court agreed to review this decision.

The standard CGL policy provides insurance coverage for damages resulting from an “occurrence.” As mentioned above, the policy defines an occurrence as an “accident.” However, the term “accident” is not defined in the standard CGL policy. Georgia case law has traditionally defined an accident as “an event happening without any human agency, or, if happening through such agency, an event which, under circumstances, is unusual and not expected by the person to whom it happens . . . [I]n its common signification the word means an unexpected happening without intention or design.” American Empire contended that because Whisnant intended to perform its work, it could not be deemed an “unexpected happening.” The Supreme Court rejected this argument and found that “a deliberate act, performed negligently, is an accident if the effect is not the intended or expected result; that is, the result would have been different had the deliberate act been performed correctly.”

The Supreme Court’s decision, with on only one dissent, closes the door on insurers’ argument that faulty or negligent workmanship cannot be an “occurrence.” However, this case does not address the standard “business risk” and other exclusions under a CGL policy which may also come into play in these circumstances. Depending on the specific facts of each case, the policy should be closely reviewed in any situation in which there is damage flowing from the work of an insured contractor.

Please let me know if you would like a copy of this decision.
Michael

Court of Appeals Affirms $5M Wrongful Death Award

2011-03-01T11:22:00.003-05:00

On February 15, 2011, the Georgia Court of Appeals affirmed a Fulton County jury’s award of $715K to Stacey Camacho’s estate on its claim of pain and suffering and over $5M to Camacho’s surviving spouse on his claim for wrongful death. The Defendant,while drunk, ran a red light and hit the car Camacho was driving, killing her and injuring her young son. Liability was admitted at trial and the only issue was the value of the life of Ms. Camacho and the claim of her estate for pain and suffering.

The interesting legal issue on appeal was whether the pain and suffering award was supported by the evidence. Defendant argued that there was testimony that Camacho was unconscious immediately after the collision and therefore the amount of damages awarded was unwarranted. The police officer testified that when he arrived at the scene there was a doctor talking to Camacho. When the officer saw her, Camacho “was bleeding from her mouth, her head and ear area.” “She was basically trying to say something. I remember the blood coming out of her mouth and her fighting for her life. And apparently, she was more concerned about her child . . . you could see her eyes rolling towards the back . . . and you could hear the child screaming in the back in the car seat.” The officer testified further “It’s stuck in the back of my head, that picture of her just sitting there just trying to talk, I guess, gurgling blood and looking back towards her kid. I’ve worked a lot of wrecks; none of them ever bothered like this one has.”

Defendant argued that two of the eyewitnesses testified that Camacho was unconscious when they saw her immediately after the accident and, therefore, the amount of the jury’s verdict was unwarranted because Camacho was either completely unconscious or conscious for only a short period of time (ie. no "conscious pain and suffering"). The Court of Appeals rejected this argument and found that unless the jury’s verdict was so fragrantly excessive or inadequate in light of the evidence as to create a clear implication of bias, prejudice, or gross mistake by the jurors, it should be upheld. In a previous Court of Appeals decision from 2002, the Court had affirmed a $2,584,000. award for funeral expenses and pain and suffering when the medical evidence showed that death occurred within one or two minutes after an impact and the decedent may have lost consciousness prior to that.

This case has two hallmarks of a dangerous case to take to trial. The testimony of the Officer and the fact that a child was in the car and was screaming creates an extreme amount of sympathy for the decedent and her husband and child who survived her. Also, even though he admitted liability, there would be no sympathy for the drunk driver defendant. The jury’s award of almost $6M did not include any punitive damages, however, the size of the jury’s award suggests that it was angry. An angry jury is always a dangerous jury. It should be noted that the defense lawyer who tried this case is an excellent trial lawyer and I am sure he did the best that he could with this difficult case under the circumstances.

Please let me know if you would like a copy of the opinion. Also, please follow me on twitter. @rustmichaelj.

Thanks,
Michael

Supreme Court Agrees to Rule on Apportionment Issue

2011-01-28T12:23:00.003-05:00

On January 18, 2011, the Georgia Supreme Court granted certiorari in Sarvis v. Cavalier Convenience, Inc. which will require the Court to weigh in on the apportionment statute which was passed as part of the Tort Reform Act of 2005. In its Order granting cert., the Court did not indicate that it will rule on the overall constitutionality of the entire statute but, instead, stated that the Court was particularly concerned with the following issue:

Did the Court of Appeals correctly construe OCGA § 51-12-33 to require a trier of fact to apportion an award of damages among multiple defendants when the plaintiff is not at fault?

As you may recall, in July of 2010, the Georgia Court of Appeals answered that question in favor of the defendant in Sarvis and found that apportionment is required even when the plaintiff bears no fault. The Sarvis case arose out of an auto accident involving a drunk driver. Sarvis sued the driver and the convenience store where alcohol had been purchased by the driver. The trial court ruled that there would be no apportionment of damages amongst the defendants because there was no argument that Sarvis was negligent.

In Sarvis, the Court of Appeals determined that it was the Georgia Legislature’s clear intent in enacting the apportionment statute to require damages to be apportioned among persons who are liable according to the percentage of fault of each person. The Court focused on the phrase “if any” in the statute (“the total amount of damages to be awarded, if any, shall after reduction of damages pursuant to subsection (a) of the this Code section, if any, apportion its award of damages) to indicate that the legislature took into account the possibility that the plaintiff might not be found to be negligent. Sarvis argued that the language in subsection (a) of the statute, which was held over from the old statute, required apportionment only when the plaintiff is found to some degree responsible for his or her own injury or damages. Under the old law a jury was allowed, but not required, to apportion fault only when the plaintiff was also found negligent.

The Supreme Court’s decision in this case will be crucial in determining whether joint and several liability has truly been eliminated, as was the intention of the Georgia legislator in 2005. I expect briefs to be filed in the next several months and oral argument scheduled for late winter or early spring. A decision will most likely not be forthcoming before this summer. In the meantime, we will continue to argue that the Sarvis case was correctly decided and is binding on trial courts.

Please call me if you have any questions.
Michael

Ruling Against Insurer Regarding the Duty to Defend in an Assault and Battery Case

2011-01-26T12:28:00.004-05:00

On January 25, 2011, the Georgia Court of Appeals ruled, in Landmark Insurance Company v. Khan, that Landmark had breached its duty to defend its insured, an Atlanta strip club, in a premises liability suit brought by Jamil Kahn. Landmark argued that Kahn’s injuries arose out of an assault and battery which was excluded under the policy. The Court of Appeals disagreed.

Kahn was visiting the Atlanta “nightclub” Flashers in November of 2006 when he was shot in the parking lot. Kahn had been inside the club for approximately 45 minutes and as he was leaving and walking to his car, he saw two individuals exit the club behind him. One of the individuals shot at him with a firearm, hitting Kahn six times in the chest and back. Kahn filed a premises liability suit against Flashers, alleging that Flashers had negligently failed to provide adequate security for its invitees. In addition, Kahn asserted a cause of action for assault and battery, alleging that an employee or employees of Flashers either ordered or directed the assault on him or actually shot him six times. According to the complaint, the employee or employees were acting as agents of Flashers within the course of Flashers’ business and, thus, Flashers was responsible for their actions under the doctrine of respondeat superior.

Landmark insured Flashers which tendered the lawsuit to Landmark and asked Landmark to defend the club. Landmark denied coverage and notified Flashers that it would not defend it against Kahn’s claims because the claims were not covered under Flashers’ insurance policy. Specifically, Landmark took the position that the policy only covered an assault and battery if it was committed by a Flashers employee while the employee was trying to protect persons or property. According to Landmark’s investigation into the shooting, the person who shot Kahn did not fall within that description and, therefore, the assault was not covered by the policy.

In Kahn’s suit against Flashers, the trial court ultimately entered an Order striking Flashers’ Answer and entered a default judgment against the club awarding Kahn over $2.3 million. In exchange for Kahn’s promise not to execute the judgment against Flashers’ assets, Flashers assigned to Kahn all of its causes of action against Landmark arising out of the incident, including claims based upon Landmark’s failure to defend Flashers and its failure to provide insurance coverage. Kahn then filed a lawsuit against Landmark, asserting claims for the breach of its duty to defend, bad faith refusal to defend or settle, and breach of contract. Landmark filed a motion to dismiss the complaint and Kahn moved for partial summary judgment as to Landmark’s liability on its claim for breach of duty to defend. The trial court granted Kahn’s motion for partial summary judgment and denied Landmark’s motion to dismiss. These rulings were appealed to the Georgia Court of Appeals which affirmed the decision of the trial court.

Landmark argued that Kahn’s underlying personal injury claim against Flashers did not specifically allege that the assault and/or battery was committed by Flashers’ employees while they were protecting persons and/or property and therefore were not covered by the insurance policy. The Court of Appeals restated long standing Georgia law to the effect that an insurer’s duty to defend is determined by comparing the allegations of the complaint with the provisions of the policy and that, in construing the policy of insurance, any ambiguities are strictly construed against the insurer and any exclusion from coverage sought to be invoked by the insurer is likewise strictly construed. If the facts as alleged in the complaint even arguably bring the occurrence within the policy’s coverage, the insurer has a duty to defend the action. To avoid the duty to defend, the lawsuit must unambiguously exclude coverage under the policy. Doubt as to liability and an insurer’s duty to defend should be resolved in favor of the insured. The insurer is obligated to defend where the allegations of the complaint against the insured are ambiguous or incomplete with respect to the issue of insurance coverage.

The Court of Appeals agreed with Landmark that the policy excluded any claims for assault and battery unless the assault and battery was committed by a Flashers employee or agent while trying to protect persons and/or property. In his lawsuit Kahn had specifically asserted that Flashers' employee or employees either shot him six times or ordered someone to shoot him. Although the underlying lawsuit did not specially allege that Flashers’ employees were acting to protect persons or property the Court of Appeals and the trial court concluded that the allegations of the complaint did not reveal, with certainty, that Kahn would not be entitled to relief under any state of provable facts asserted in the complaint.

The Court of Appeals also pointed out that if Landmark was uncertain whether the language of Mr. Kahn’s complaint triggered its duty to defend, it could have defended the case under a reservation of rights, requested a stay of the underlying case, and filed a declaratory action to determine its obligation to provide a defense.

Certainly, based upon this decision, the Court of Appeals' suggestion that Landmark should have provided a defense and filed a declaratory judgment action would have been the better course. By failing to defend, Landmark may be saddled with the default judgment of $2.3 million. This case will now be sent back to the trial court with a ruling in Mr. Kahn’s favor that, as a matter law, Landmark has breached its contract with Flashers by failing to defend. A jury will be left to determine damages against Landmark. This is certainly not an enviable position for an insurer.

For what it's worth, I think this case employs a very broad definition of the duty to defend and seems to go beyond existing case law in placing the duty on an insurer to try to interpret ambiguities in a complaint to try to predict covered claims. I will be interested to see if the Supreme Court agrees to review this issue.

Please let me know if you would like a copy of this decision.
Michael

Court of Appeals Eliminates Cross-Claims for Contribution and Set-Offs for Settlements

2010-12-01T09:11:00.007-05:00

As you will remember, back in July of this year the Georgia Court of Appeals ruled that O.C.G.A. § 51-12-33, part of the Tort Reform Act of 2005, required a jury to apportion its award of damages among multiple defendants even when the plaintiff was not at fault. On November 23, 2010 in McReynolds v. Krebs, the Court of Appeals found that the statute did away with cross-claims for contribution and set-offs of settlement amounts paid by other parties to the plaintiff.

Lisa Krebs was riding as a front seat passenger in a Chevy Trailblazer when her vehicle was struck by a car being driven by Carmen McReynolds. The impact caused the Trailblazer to roll over and land in a ditch, seriously injuring Ms. Krebs. Ms. Krebs sued McReynolds and General Motors, alleging that the vehicle’s lack of crash-worthiness contributed to her injuries. McReynolds answered and filed a cross-claim against GM for, among other things, set-off and contribution.

Before trial, GM settled with Krebs and agreed that the terms would be confidential. McReynolds filed motions attempting to have GM divulge the terms of the settlement arguing that in the event she was found liable for Krebs’ injuries, she would be entitled to either contribution from GM or set-off in the amount of GM’s settlement. This was clearly the law prior to 2005.

GM moved to dismiss McReynolds’ cross-claim on the basis that O.C.G.A. § 51-12-33 had abolished joint and several liability in Georgia and that, therefore, McReynolds had no right to a cross-claim for contribution. GM also argued that McReynolds had no right to a set-off because, pursuant to § 51-12-33, each party was only responsible to the plaintiff to the extent of its own percentage of fault.

At trial, McReynolds presented no evidence of GM’s potential liability other than the allegations in Krebs’ complaint and the jury awarded $1,246,000.42 against McReynolds. The trial court agreed that McReynolds’ cross-claim should be dismissed and that McReynolds was not entitled to a set-off for any amount paid by GM.

The Court of Appeals agreed and wrote that § 51-12-33 did away with claims of contribution. The Court of Appeals also found no basis for a set-off given that the statute requires each liable party to pay its own percentage share of fault and McReynolds presented no evidence regarding GM’s alleged fault.

There are several practical lessons to be learned from this Opinion. First, cross-claims for common law contribution are no longer appropriate in the post joint and several liability world. More importantly, however, is that a defendant seeking to apportion fault against either another defendant or a non-party must prove fault. McReynolds, in seeking to have a jury apportion damages against GM, was required to prove that GM was at fault just as the plaintiff would have been required to prove that GM was at fault. This most likely would have required McReynolds to present expert testimony as to the lack of crash-worthiness of the vehicle.

Please let me know if you have any questions or would like a copy of this opinion.

Michael

A Win for Our Client in a Wrongful Death Case Involving a Franchisor/Franchisee Relationship

2010-11-18T11:48:00.002-05:00

On November 16, 2010, the Georgia Court of Appeals affirmed, without opinion, the decision of Judge Alford J. Dempsey, Jr. of the Superior Court of Fulton County granting summary judgment to our client, Pilot Air Freight Corp. (“Pilot”) in a wrongful death lawsuit arising out of the unfortunate death of Richard Hall, Jr., who was crushed to death by a pizza oven. Pam Webb and I represent Pilot. Judge Dempsey and the Court of Appeals correctly, we believe, ruled that Pilot, acting as a franchisor, was not liable for the alleged negligence of its franchisee or an independant contractor hired by the franchisee.

Pilot is engaged in the air freight forwarding business and has established a nationwide system of franchisees. Kerry Rockford ("Rockford") is a franchisee of Pilot in the Atlanta area. On July 13, 2007, a pizza oven being delivered to a Papa John’s restaurant in Woodstock, Georgia fell on Richard Hall while being unloaded from a truck, causing Mr. Hall’s death. Rockford had the contract to deliver the ovens in Georgia but had hired an independent contractor, T.J. Hodges Freight Services (“Hodges”), for the job.

The plaintiff, the widow of Mr. Hall, contended that Pilot was liable for the actions of Rockford and Hodges under Federal Motor Carrier Safety Regulations and Georgia law regarding franchisor/franchisee relationships. Judge Dempsey ruled that Federal Motor Carrier Safety Regulations were inapplicable because the regulations exclude incidents occurring during the unloading of cargo. The Judge and Court of Appeals also ruled that Pilot was not vicariously liable for the actions of Rockford or Hodges because Pilot had not exercised sufficient control over its franchisee to create an agency relationship.

The Plaintiff argued that the fact that Pilot’s name and logo were displayed and used in Rockford’s office and on employee uniforms created the perception with customers that they were dealing with Pilot and a reasonable reliance on that fact. According to Judge Dempsey, however, this was insufficient evidence that Pilot was holding Rockford or Hodges out as its agent(s). Even if Hodges was wearing a Pilot uniform while delivering the ovens, “use of the franchisor’s name is inherent in any franchise agreement and is insufficient to raise a question of fact with respect to liability where the evidence demonstrates that the franchisor and franchisee are distinct and independent entities and that no agency exists.” Also, there was no evidence that Richard Hall relied on an agency relationship and would have refused to work if he was aware that Pilot was not the carrier designated to deliver the ovens.

Please let me know if you would like a copy of Judge Dempsey’s opinion. The Court of Appeals adopted his opinion and did not issue its own published opinion.

Michael

Insurer Loses Subrogation Case Based on Voluntary Payment Doctrine

2010-11-12T14:48:00.004-05:00

On November 10, 2010, the Georgia Court of Appeals ruled in favor of an HVAC contractor which had been sued by Southern Mutual Church Insurance Company (“Southern Mutual”) in a subrogation case. The Court found that Southern Mutual’s claims against the contractor were barred because Southern Mutual had made a voluntary payment to its insured which, pursuant to the terms of its own policy, it did not owe. Because Southern Mutual did not owe the money paid to its insured it could not subrogate against the contractor for those sums.

In 2004, the Church of Greater Works, Inc. (“Church”) hired ARS Mechanical, LLC (“ARS”) to install an air conditioning system at the Church. Several holes for air ducts were made in the roof of the Church by ARS and allegedly improper (or no) flashing was used around the holes. When it rained, the Church flooded causing in excess of $150,000 in property damage. Southern Mutual insured the Church and in inspecting the property determined that the holes made by ARS were unprotected and un-flashed thereby causing the leakage.

Southern Mutual made a payment to the Church for its loss even though, later, the claims adjustor for Southern Mutual admitted in his deposition that there was no provision that covered the loss and that Southern Mutual had made a voluntary payment so that the Church could go ahead and make its repairs.

Southern Mutual obtained a subrogation agreement from the Church and filed suit against ARS seeking damages for property damage, negligence, and breach of contract. The trial court granted summary judgment to ARS based on the voluntary payment doctrine and the Court of Appeals agreed.

According to the Court, the party seeking to recover payment bares the burden of showing that the voluntary payment doctrine does not apply. The general rule is that an insurer’s voluntary payment to its insured does not give rise to a right of subrogation. No indemnity claim exists when the party seeking indemnity was not legally obligated to make payment. Because Southern Mutual admitted, through its adjustor, that this loss was not covered and that it had made a mistake in paying the claim, it had no right of subrogation against the contractor.

In bringing any subrogation claim make sure that there is no argument that the claim was excluded under the policy. In defending any subrogation claim make sure to examine the insurance policy closely to determine that the amounts being claimed were actually owed under the policy.

Please let me know if you would like a copy of this decision.
Michael

A Good Decision for Property Owners When Construction Accidents Occur

2010-11-02T16:41:00.002-04:00

On October 18, 2010, the Georgia Court of Appeals ruled in Ramcke v. Georgia Power Co. in favor of the property owner of a construction project in a suit brought by a worker injured on the project. In this decision, the Court found that a property owner who retains a general contractor and relinquishes control of the property is not liable for injuries to workers during the construction process.

Robert Podorsky died as a result of injuries he suffered when he was struck by construction machinery while working as an invitee of a contractor hired by Georgia Power to perform work on a construction project at Plant Bowen. Podorsky’s administrator and estate sued Georgia Power and several related companies alleging that they were liable for Podorsky’s wrongful death, pain and suffering, and other damages because as owners or occupiers of the Plant Bowen premises, they negligently failed to comply with a duty imposed by O.C.G.A. § 51-3-1 to keep the project premises safe for invitees. The case went to a trial and the trial judge granted a directed verdict in favor of Georgia Power.

On appeal, the Court of Appeals agreed. Although there was evidence that Georgia Power and Southern Company Services (acting as Georgia Power’s agent) owned the project premises or had employees or agents on the premises, the trial court did not err by directing a verdict in their favor because, where a property owner or occupier surrenders temporary possession and control of the property to an independent contractor to perform work on the property, the owner/occupier is generally not liable for injuries sustained on the property by the contractor’s invitees due to unsafe working conditions on the premises which the owner/occupier had no right to control. The general rule is that the independent contractor has the duty to keep the work premises safe and the owner/occupier has no such duty. The primary exception is where the owner/occupier hires a contractor to perform work on the premises and retains the right to direct or control the time and manner of executing the work or interferes and assumes control so as to create a relation of master/servant.

The contract entered into with regard to the Plant Bowen Project provided that the general contractor would furnish all labor, materials and supervision on the project in accordance with the project specifications and would work as an independent contractor, controlling and directing the project work. The contract also provided that Georgia Power had no right to direct or to control the project work. There was evidence that Georgia Power, acting through Southern Company Services, exercised the right to require that the general contractor comply with the contract provisions but there was no evidence that any of those provisions gave Georgia Power or Southern Company Services the right to direct or control the time and manner of the work.

The facts of this case fit most typical construction projects in which the owner retains a general contractor and turns the premises and control of the work over to that contractor. Unless the owner does something to interfere with the work or to assume control of it, this case should be helpful in allowing owners to escape liability for injuries to construction workers employed on the project.

Please let me know if you would like a copy of this opinion.

Michael

Fulton County Jury Awards $4.3M in Slip and Fall

2010-10-21T11:26:00.002-04:00

According to the Fulton County Daily Report, a Fulton County jury last month awarded $4.3M to a woman injured when she slipped on a concrete ramp leading to the entrance of a Sports Authority Store. As a result of the fall, the plaintiff suffered a fractured hip and had subsequent back surgery for an injured spinal disc. Her medical expenses were $138,000 and no lost wages were claimed.

In light of the plaintiff’s injuries, this seems like an outlier verdict. Our firm tries a lot of cases in Fulton County and our experience over the last several years is that Fulton County juries have gotten more and more conservative. Fulton County is no longer known as the plaintiff friendly venue that it once was. Basically, I find Fulton County jurors to be overall intelligent and reasonable in their consideration of cases.

So why then did an intelligent and reasonable jury award $4.3M to a woman who had suffered a fractured hip and had a $138,000 in medical expenses with no lost wages? Without knowing more about the case, it would be mere speculation on my part to guess at why the jury did what it did. However, in the Fulton County Daily Report’s article there were several factors that may have led to the large verdict and which are the kind of factors you should always consider in going to trial.

The plaintiff tripped and fell on a sloping concrete ramp leading from the parking lot to the front of the store. The difference in elevation between the slope and sidewalk was not marked until the day after the plaintiff’s fall, when the store manager painted the ramp yellow to make it more visible. I am sure that the defendant, Sports Authority, attempted to keep this information from the jury on the basis that marking the ramp was a “subsequent remedial measure.” I do not know the Judge’s ruling on the issue but clearly if this was allowed into evidence it would have indicated to the jury that Sports Authority was or should have been aware of a problem with the ramp.

More importantly, apparently the jury was allowed to hear that there were two prior falls on the same ramp one of which resulted in a lawsuit which was settled. After those falls, the store still did nothing to examine or the correct the ramp. The plaintiff presented testimony from the two prior accident victims as well as an expert who testified that the failure to paint the ramp was in violation of the Georgia Accessibility Code.

Most likely, these factors inflamed the jury and made them angry. An angry jury is a dangerous thing. Neither the plaintiff nor the defense in this case apparently appreciated the potential of the case inasmuch as the last settlement was $375,000 and the last offer was, according to the Daily Report, $5,000.

The jury did not ignore the potential negligence of the plaintiff. The actual verdict was $5M which was reduced because the plaintiff was deemed 14% responsible for the accident.

None of this verdict, apparently, was for punitive damages. It is clearly, however, punitive in nature. Juries generally do not like punitive damages and know that many times punitive damages are appealed. They obviously felt great sympathy for the plaintiff and anger at the Sports Authority for failure to correct a condition on which it was on notice.

In taking cases to trial we all should appreciate and try to put ourselves in the position of the juror and ask ourselves if the conduct of our clients will be perceived as reasonable. In cases where a client has made a mistake, it is sometimes better to acknowledge the mistake and address how the client has made sure that mistake will not happen again than to deny their mistake occurred. “Deny, deny, deny” is not always the best defense.

Please let me know if you would like a copy of the article about the case from the Daily Report or have any questions.

Michael

DeKalb County Judges Allow Apportionment Against Criminal Assailant in Premises Liability Case

2010-09-07T13:29:00.002-04:00

Last July the Georgia Court of Appeals in Cavalier Convenience, Inc. v. Sarvis found that the apportionment statute (O.C.G.A. § 51-12-33) enacted as part of the Tort Reform Act of 2005 required allocation of damages among multiple defendants and non-parties who are found liable even when the plaintiff is not at fault (for a more detailed analysis of Sarvis see my blog entry of July 13, 2010). Based on the Sarvis decision, two DeKalb County Judges recently allowed apportionment against two criminals in a premises liability trial in which an apartment complex had been sued as a result of a criminal assault and murder. The result was startling in that the jury apportioned 95% fault against the criminal defendants and only 5% against the apartment complex.

According to a description of the case provided by the Fulton County Daily Report, Wesley Hagan had been shot in the head and killed during an apartment robbery at the Standard Oaks Apartment in Tucker in 2005. The apartment complex, owned and managed by Miles Property, was sued on the basis that the complex had not provided sufficient security in order to prevent this criminal assault. There apparently was evidence of prior criminal acts at the apartment complex.

Judge Edward Carriere, Jr, who has now retired, originally declined to allow the jury to apportion damages against the criminal assailants. However, after Sarvis was decided, Judge Carriere reversed himself and agreed to allow such apportionment. Judge Al Wong, who conducted the trial, also allowed for apportionment against the criminal assailants. The jury verdict form from this case provided as follows:

VERDICT
We, the jury, find in favor of the Plaintiff
We award general damages of pain and suffering in the amount of $0.00
We award damages for the full value of life for the wrongful death of claim of $184,192.16

We, the jury, assign the percentage of fault as follows:
5%-Defendant
5%- Criminal Derrick Port
90%- Criminal Jarvis Floyd

This application of Sarvis is extremely important in any premises liability case involving a crime, whether it be murder, rape, or assault. Now, a jury should be allowed to apportion fault as to the criminal who actually caused the injury. I fully expect this decision to be appealed but, for the time being, hopefully other trial courts will follow DeKalb County’s lead in allowing apportionment against the parties who directly caused the injuries in these types of cases.

Please contact me 404-870-7375 or mrust@grsmb.com if you have any questions at all about this ruling.

Court of Appeals Win for the Defendant in a Trip and Fall Case

2010-08-03T14:43:00.004-04:00

Sadly, several weeks ago Judge Debra Bernes of the Georgia Court of Appeals passed away. In what must be one of her last opinions, on July 15, 2010, Judge Bernes authored a trip and fall/premises liability opinion which resulted in a rare summary judgment win for the defendant. In recent years, both the Georgia Supreme Court and Court of Appeals have been leaning in the direction of finding questions of fact in premises liability cases. Brown v. Host/Taco Joint Venture.

David Brown filed suit against Host/Taco Joint Venture (hereinafter “Taco”) to recover for injuries he sustained when he slipped and fell on a grease spot while dining in Taco’s restaurant. Mr. Brown visited Taco’s restaurant to dine with several of his friends and, after being served, his cell phone rang and he left the table to answer the call. As Brown walked down the hallway away from his table he slipped and fell on a grease spot that was on the floor. Brown claimed that he did not see the grease spot until after his fall.

Taco filed a motion for summary judgment which was granted by the trial court. Taco’s on-duty manager stated that the restaurant’s inspection policy required her, the busers, and servers to continuously inspect the floors and to look for any potential hazards or foreign subjects. If a potential hazard was observed, the policy required that it be cleaned immediately. If the potential hazard required mopping, the manager was required to stand at the location of the hazard until a wet floor sign was placed in the area. According to the manager, in accordance with this policy, she inspected the floors of the dinning area every 15 minutes and inspected the area where Brown fell approximately 15 minutes prior thereto. At that time, the floor was clean and dry. Although there were servers in the area, none of them had noticed the grease spot nor was there any evidence that the grease had been brought to the server’s attention.

The Court of Appeals reiterated that in a case in which the defendant lacks actual knowledge of a hazard, the plaintiff has the burden of establishing constructive knowledge by showing either that (1) a restaurant employee was in the immediate area of the hazard and could have easily seen the substance or (2) the alleged hazard remained on the floor long enough that ordinary diligence by the restaurant employees should have discovered it. Brown failed to present any evidence showing that Taco had constructive knowledge of the hazard using these criteria.

Brown admitted that the grease spot on the floor was not easily visible to him prior to the fall which contradicted his claim that Taco’s employees could have easily seen and removed it. Brown failed to present any evidence to show how long the grease spot had been on the floor or that the grease spot had remained on the floor long enough that upon exercise of ordinary diligence the restaurant employees should have discovered and removed it.

Although a proprietor has a duty to inspect premises to discover possible dangerous conditions and to take reasonable precautions to protect an invitee from foreseeable dangers on the premises, it is well settled in Georgia law that a proprietor is under no duty to patrol the premises continuously in the absence of facts showing that the premises are unusually dangerous. There was no evidence that Taco was unusually dangerous. In cases where a proprietor has shown that an inspection occurred within a brief period prior to an invitee’s fall, the courts have held in the past that the inspection and procedure was adequate as a matter of law. The Court of Appeals has established that inspections conducted every 15 minutes are reasonable.

For any restaurant or business owner it is important to have clear procedures in place for inspections of floor areas where patrons might be expected to traverse. The Court of Appeals has indicated that any inspection period of 15 minutes of less will be found to be reasonable absent any attenuating circumstances.

Please let me know if you would like a copy of this opinion.

Michael

Supreme Court Rules for Defendants in Bizarre Case Regarding the Necessity of Expert Testimony

2010-07-22T14:37:00.003-04:00

On July 12, 2010, a divided Georiga Supreme Court affirmed the granting of summary judgment to the defendants in a wrongful death lawsuit which the Court described as “unusual.” The Court agreed that summary judgment was appropriate because the plaintiffs, who were claiming negligent failure to render aid, had failed to provide medical expert testimony to support their claims. Cowart v. Widener.

Defendant Nathan Widener was a truck driver employed by United Transportation, Inc. (“UTI”). His brother-in-law, Roby Cowart, had fallen on hard times. Mr. Cowart was unemployed, had no money, and had been living out of his car. Widener and his wife had been feeding and clothing him. Mr. Cowart suffered from a number of health problems, including esophagitis caused by gastric acid coming into contact with his esophagus. As a result, Cowart experienced oozing of blood in his throat and it was not unusual for him to cough up small amounts of blood.

Widener was planning to leave for a delivery trip to Ohio when Cowart asked if he could come along. Cowart stated that he felt good although Widener noticed him coughing up small amounts of blood. As the two men traveled north on Interstate 75 near the Kentucky-Tennessee border, Cowart told Widener that his “throat was closing in on him” and that he was spitting up blood. Widener told Cowart that he looked ill, but Cowart said he was feeling fine, that he wanted to lay down in the sleeper compartment, and not to bother him. Cowart then went into the sleeper compartment, closed the curtain separating it from the front of the cab, laid down in the bottom bunk and died.

Widener noticed that Cowart was dead approximately 3 hours later when he began to smell an extremely foul odor from the sleeper cab. He pulled over at a truck stop and called his wife, Cowart’s sister, who was a nurse, and asked her what he should do. She told him to check and see if Cowart was alive. Widener confirmed that Cowart had no pulse and was not breathing and was dead. Widener then returned to the driver’s seat and continued on his route to Ohio. He later explained that he was concerned about how his brother-in-law’s dead body would get back to Georgia if he did not bring it with him in the truck when he returned home.

In Ohio, Widener was involved in a minor collision at a rest stop and an Ohio Patrol Officer noticed that Widener was nervous and kept glancing toward the sleeper compartment. The officer asked him to open it, telling him jokingly that she needed “to make sure he didn’t have any dead bodies back there.” Widener responded, “Well, my brother-in-law is back there, but I don’t think he is dead.” The officer discovered the body, which was in fact dead, and Cowart was taken to a morgue at a local hospital.

The coroner who examined the body concluded that Cowart’s death likely resulted from natural causes and that no autopsy would be performed unless requested. Cowart’s sister did not request an autopsy and the cause of death was listed as “exsanguination” after two hours of “gastrointestinal hemorrhage” resulting from years of peptic ulcer disease. The two hour figure was an approximation based on when Widener said he last saw Cowart alive and the coroner’s estimate of how long Cowart had been dead when he examined the body. The coroner testified that a person hemorrhaging internally can be asleep and not realize what is happening.

Cowart’s estate filed a wrongful death suit against Widener, UTI and UTI’s insurance carrier under the theory that Widener negligently or intentionally deprived Cowart of necessary medical attention thereby causing his death and that UTI was vicariously liable for Widener’s actions. The trial court granted summary judgment to all of the defendants and the Court of Appeals agreed.

The Supreme Court’s opinion deals with the necessity of expert testimony and establishes that in a case involving common knowledge and experience there is no requirement that expert testimony must be produced by a plaintiff in order to prevail at trial. However, where “medical questions” relating to causation are involved, plaintiffs must come forward with expert evidence to survive a defense motion for summary judgment.

The majority of the Supreme Court also explained what it meant by a “medical question.” A “medical question” describes situations where the existence of a causal link between the defendant’s conduct and the plaintiff’s injuries cannot be determined from common knowledge and experience and instead requires the assistance of experts with specialized medical knowledge. In common language, a “medical” question is any question “of or connected with the practice or study of medicine.”

This does not mean that any issue involving medicine requires expert testimony. Most medical questions relating to causation are perfectly capable, according to the Court, of resolution by ordinary people using their common knowledge and experience without the need for expert testimony. For example, in a wrongful death case based on the theory that the defendant proximately caused the decedent’s death by stabbing her in the gut, the plaintiff is not required, in response to a motion for summary judgment, to come forward with expert testimony explaining in medical terms precisely how the wound lead to her death. However, where the link between a defendant’s actions and the plaintiff’s injury is beyond common knowledge and experience, such as in a toxic tort case, expert testimony is necessary.

The Supreme Court found that this was such a case and that expert testimony was necessary to provide evidence that Widener caused Cowart’s death by failing to render aid or seek assistance for Cowart. The Court saw no evidence in the record indicating that Widener should have realized that there was anything unusual about Cowart until he smelled the foul odor coming from his sleeper cab.

Three Judges dissented from this opinion and found that the deposition testimony of Widener itself presented triable issues of material fact for a jury. The dissent described Widener’s actions in continuing to drive while his brother-in-law was sick as “Ohio or bust.”

Please let me know if you would like a copy of this opinion.
Michael.

Court of Appeals Answers Apportionment Question in Favor of Defendants

2010-07-13T13:45:00.002-04:00

As part of the Tort Reform Act of 2005, the Georgia Legislature passed O.C.G.A. § 51-12-33 which requires apportionment of damages among multiple defendants and non-parties who are found liable, thereby avoiding the onerous effect of joint and several liability. In response, plaintiffs have been arguing that the statute does not allow for apportionment unless the plaintiff is also found to be at fault. In Cavalier Convenience, Inc. v. Sarvis, decided July 9, 2010, the Georgia Court of Appeals found that appointment is required even when the plaintiff bares no fault.

Christopher Sarvis and Jeremi Bath were involved in a car wreck in 2006. Bath was allegedly intoxicated at the time of the collision. Sarvis sued Bath, Cavalier Convenience, Inc. and Ken’s Supermarkets, Inc. alleging that Bath was negligent and that Cavalier and Ken’s Supermarket had unlawfully sold intoxicating beverages to Bath.

Prior to trial, Sarvis filed a motion seeking to preclude the issue of apportionment from being argued or submitted to the jury. The defendants argued that apportionment is mandated where multiple defendants are found liable. Sarvis claimed that the statute requires apportionment only in those cases in which the plaintiff is also found to have been responsible to some degree for the injuries claimed and pointed out that there was no allegation that Sarvis was a fault. The trial court agreed with Sarvis and entered an order prohibiting any mention to the jury of apportionment of damages. Cavalier and Ken’s Supermarket were allowed to appeal to the Georgia Court of Appeals which found that the trial court was wrong.

The Court of Appeals determined that it was the Georgia Legislature’s clear intent in enacting the apportionment statute to require damages to be apportioned among persons who are liable according to the percentage of fault of each person. The Court focused on the phrase “if any” in the statute (“the total amount of damages to be awarded, if any, shall after reduction of damages pursuant to subsection (a) of the this Code section, if any, apportion its award of damages) to indicate that the legislature took into account the possibility that the plaintiff might not be found to be negligent. Sarvis argued that the language in subsection (a) of the statute, which was held over from the old statute, required apportionment only when the plaintiff is found to some degree responsible for his or her own injury or damages. As you may recall, under the old law a jury was allowed, but not required, to apportion fault only when the plaintiff was also found negligent.

It is certain that Sarvis will seek to appeal this ruling to the Georgia Supreme Court. I will be sure to let everyone know if the Supreme Court agrees to hear this case but because it relies heavily on legislative interpretation and is of great interest to tort lawyers in Georgia, I expect there is a much better than average chance that the Supreme Court will take a look at it. There are also other challenges to the apportionment statue looming, including the argument that apportionment is not allowed against non-parties if there is only one defendant.

For the time being, however, in any case in which there are multiple defendants, apportionment is required among those defendants and non-parties found to be at fault whether the plaintiff is negligent or not.

Please let me know if you would like a copy of the decision.
Michael

Supreme Court Agrees that Expert Should Not Have Been Allowed to Testify in Bridge Construction Case

2010-07-07T15:08:00.004-04:00

On June 28, 2010, in Hamilton-King v. HNTB Georgia, the Georgia Supreme Court reversed a Court of Appeals’ decision and agreed with the trial judge's determination that an expert engineer who had been offered by the plaintiffs in a lawsuit arising out of a tragic traffic accident at a bridge construction site did not provide sufficient scientific or other support for his opinions and therefore should not have been allowed to testify. The Supreme Court also agreed with the trial court that because the expert’s opinions were appropriately disallowed, summary judgment should have been granted to the defendant construction companies.

Lakeisha Hamilton-King and her brother Justin Hamilton were injured when they were struck by a van in a bridge construction zone on Interstate 95 in South Georgia. Their brother Johnny was killed in the same accident. All three had exited their vehicle after they were involved in a separate collision and their car became disabled on the bridge. The police officers who stopped to assist displayed their emergency signals and attempted to slow traffic traveling onto the bridge where Lakeisha, Justin, and Johnny were standing. The van which struck the three siblings was allegedly traveling at close to 70 mph on the darkened interstate highway and did not slow down as it approached. Justin and Lakeisha, the plaintiffs, sued HNTB, the designer of the bridge widening project, and Seaboard Construction Company (“Seaboard”), the general contractor, for negligence, alleging that HNTB and Seaboard failed to include shoulders in their traffic control plan and failed to implement proper lighting in the bridge construction zone.

Prior to trial, HNTB and Seaboard filed motions to exclude expert testimony presented by the plaintiffs’ engineer expert, Jerome Thomas. The trial judge granted their motion and excluded Mr. Thomas’ testimony and, because there was no admissible expert testimony establishing the standard of care and breach of that standard, granted summary judgment to the defendants. The Georgia Court of Appeals reversed the decision of the trial court and found that the trial judge had abused his discretion by excluding Mr. Thomas’ testimony based on a “too rigid” application of Daubert v. Merrell Dow Pharmaceuticals, the leading United States Supreme Court case identifying certain factors relevant in determining the reliability of expert testimony. Fortunately, the Georgia Supreme Court disagreed.

The Supreme Court reinforced the principle that the trial judge’s decision as to whether to allow expert testimony to be presented to a jury should not be disturbed by an appellate court unless there has been a “manifest abuse of discretion.” The trial court acts as a “gate keeper” in assessing both an expert’s qualifications to testify in a particular area and the relevancy and reliability of that testimony.

Because there are many types of experts and many different kinds of expertise, the Supreme Court agreed that the test of reliability is a flexible one, although the trial judge should consider many factors, including whether a theory or technique can be tested, whether it has been subjected to peer review and publication, the known or potential rate of error for the theory or technique, the general degree of acceptance in the relevant scientific or professional community, and the expert’s range of experience and training.

The Supreme Court believed that the trial judge in this case had performed a careful review of Mr. Thomas’ deposition testimony and the documents upon which he relied in determining that Mr. Thomas, although qualified to testify as an engineering expert, failed to provide any indication of the principles and methods he used in reaching his conclusions that the defendants should have included shoulders and temporary lighting in the construction traffic control plan.

Mr. Thomas admitted that he had never before designed, reviewed or evaluated a construction plan for a similar bridge construction project and had never been qualified as an expert in any case involving bridge construction design. He could not cite a single instance in his years of experience where a construction plan called for shoulders or lighting during construction. He conceded that the Manual on Uniform Traffic Control Devices, the basic standard in the industry for traffic control, did not require shoulders or lighting on the subject bridge and that nothing in the standards promulgated by the American Association of State Highway and Transportation Officials required lighting or shoulders during construction. Mr. Thomas could not cite any other publication, standard, statute, or regulation, federal or state, which set forth an industry standard requiring the use of shoulders or lighting on this bridge construction project. In other words, Mr. Thomas’ testimony was based entirely on his personal “engineering judgment.”

This opinion provides excellent guidance for any trial judge questioning his or her authority to exclude expert testimony and provides a road map for how to challenge expert testimony. The Supreme Court has made it very clear that it is a trial judge’s duty to be a gate keeper and to make sure that only reliable and valid expert testimony is presented to a jury.

Please let me know if you would like a copy of this opinion.
Michael

Court of Appeals Upholds $11 Million Judgment and Adopts “Doctrine of Statutory Employment” For Trucking Companies.

2010-06-21T14:54:00.005-04:00

On June 2, 2010 in PN Express, Inc v. Zegel, the Georgia Court of Appeals affirmed a judgment in the amount of $11,499,740. from the State Court of DeKalb County against trucking company, PN Express, Inc. The Court relied on the “doctrine of statutory employment” based on Federal Motor Carrier Regulations and also found that the jury was correctly instructed regarding spoliation of evidence. Inspite of the February 2005 tort reform statutes, the Court agreed that the jury should not have been allowed to assess fault against another potentially liable party because PN Express was vicariously liable for the negligence of that party.

On May 11, 2007, a loaded tractor trailer owned and driven by Mike Surlina crashed into an automobile occupied by the Zegel family resulting in severe and permanent injuries to all three occupants. At the time of the crash, Mr. Surlina’s tractor trailer bore the logo and DOT numbers of PN Express, an Illinois based motor common carrier. PN Express claimed that Mr. Surlina had been hired after the date of the accident and was an independent contactor at the time the collision occurred. PN Express was unable, however, to produce Mr. Surlina’s driver file to verify his hiring date.

The Court of Appeals ruled that there was sufficient evidence for a jury to conclude that there was an oral lease agreement between PN Express and Mr. Surlina at the time of the accident, primarily based on Mr. Surlina’s admission that such a lease was in effect and on testimony that Mr. Surlina’s truck carried the PN Express logo. Additionally, Mr. Surlina and PN Express were in constant telephone contact with each other during the trip on which the accident occurred. The fact that the driver file could not be produced lead to an appropriate charge, according to the Court, of spoliation of evidence meaning that the absence of the file was to be construed by the jury against PN Express.

The Court also found that the jury was appropriately instructed on the “doctrine of statutory employment” and that Federal Motor Carrier Regulations required PN Express, as a motor carrier utilizing leased or rented equipment such as the tractor trailer involved in the accident, to “have exclusive possession, control, and use of the equipment for the duration of the lease." According to the Court, "the lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.” Under this regulatory scheme, “the motor carrier is fully responsible to the public for the operation of its leased vehicles, regardless of whether the vehicles are used in the scope of the carrier business.” The doctrine creates strict vicarious liability upon the lessee motor carrier.

Finally, at trial PN Express sought to let the jury allow apportionment of the verdict against a non-party, Patterson Freight Company (“Patterson”), which was the broker for the load in question. PN Express argued that under O.C.G.A. § 51-12-33, (the apportionment statute) the jury should have been allowed to consider that Patterson directed and controlled Mr. Surlina or negligently supervised him. The Court declined to allow apportionment as to Patterson on the basis that PN Express’ liability was vicarious or derivative. In other words, PN Express was liable for Mr. Surlina’s and Patterson’s negligence for the reasons discussed above. Although there was no Georgia case law on this issue (there is now) other states have determined that comparative false statutes do not apply where the defendant’s liability is derivative. Since PN Express’ liability for the accident was purely vicarious in nature for the acts of Mr. Surlina himself, rather than joint and several, the comparative false statute would not apply. Quite frankly, this part of the opinion was confusing and not explained particularly well. While PN Express was certainly found liable for the negligence of Mr. Surlina that should not necessarily mean that it is also vicariously liable for the negligence of Patterson.

This opinion is very friendly for the plaintiffs in trucking cases and there are many issues in it that may find their way to the Georgia Supreme Court. Please let me know if you would like a copy of this opinion.

Michael

Court of Appeals Defines Which Workers Are Considered “Employees” on a Construction Site

2010-06-10T15:05:00.003-04:00

The Georgia Court of Appeals, in a case decided May 17, 2010, has provided guidance to contractors working on a construction site as to which workers are considered “employees.” This is often a matter of some confusion because of the high number of leased and temporary workers involved in a typical construction job.

In Boatwright v. Old Dominion Ins. Co., the Court of Appeals found that summary judgment had been properly granted to Old Dominion in a declaratory judgment action in which Old Dominion had denied coverage for injuries occuring to Danny Boatwright while Mr. Boatwright was working on a construction site. Coverage was denied on the basis that Mr. Boatwright was an employee of Old Dominion’s insured, Kan Do Construction, Inc. (“Kan Do”) and injuries to Kan Do's employees were excluded from coverage. Mr. Boatwright contended that he should not be considered an employee because Kan Do issued him an IRS form 1099 (rather than form W-2); Kan Do considered all of its workers to be “self employees;” and Kan Do did not withhold taxes from their paychecks or provide insurance for the workers.

The Court was more interested, however, in whether Kan Do exercised sufficient control over Mr. Boatwright’s work so that it should be considered his employer. Kan Do provided the necessary tools and material for Mr. Boatwright’s work, other than Mr. Boatwright’s own hammer, measuring tape and tool belt. Mr. Boatwright was required to perform such work as instructed by Kan Do’s foreman, who was his immediate supervisor and who responsible for insuring that the work of Mr. Boatwright and other workers was being performed in the manner desired by Kan Do. Mr. Boatwright himself described his work as: “I just helped [the foreman]. Whatever [the foreman] told me to do, if I knowed how to do it, I would do it; and if I didn’t, he would show me.” Also, Mr. Boatwright testified that he had never operated his own business and workers in Mr. Boatwright’s position were subject to discharge by Kan Do.

Kan Do’s mere claim that its worker was an independent contractor was not conclusive of the worker’s status, according to the Court, and such decisions alone did not create a jury issue on the worker’s status as an employee or independent contractor in the face of undisputed evidence that the employer on a construction site assumes the right to control the time, manner, and method of executing the work. The right to control the time means the employer has assumed the right to control the person’s actual hours of work. The right to control the manner and method means the employer has assumed the right to tell the person how to perform all details of the job, including the tools he should use and the procedures he should follow.

In other words, just calling an employee an independant contractor or even reporting to the IRS that a worker is self employed does not make it so. A court examining the relationship will look beyond these labels and will pay more attention to the amount of control exercised by the contractor over the worker.

Let me know if you would like a copy of this case.

Michael

Supreme Court Approves of Private Communications Between Defense Counsel and Plaintiffs' Treating Physicians

2010-06-09T13:12:00.003-04:00

On June 1, 2010, the Georgia Supreme Court, in Baker v. Wellstar Health Systems, Inc., provided specific guidelines allowing for private, or ex parte, communications between counsel for the defendant and a personal injury plaintiff’s treating physicians in accordance with the Health Insurance Portability and Accountability Act of 1996 (HIPAA).

The Supreme Court has now clarified its 2008 ruling in Moreland v. Austin, in which the Court ruled that HIPAA preempts Georgia law with regard to ex parte communications between defense counsel and plaintiffs' prior treating physicians because HIPAA affords patients more control over their medical records when it comes to informal contacts between litigants and physicians.

Before HIPAA, the Georgia law had always been that a plaintiff waives his/her right to privacy with regard to medical records that are relevant to a medical condition the plaintiff placed in issue in a civil lawsuit. Therefore, once a plaintiff put his/her medical condition in issue, the defendant could seek plaintiff’s otherwise privileged health information by formal discovery or informally, by communicating orally with a plaintiff’s physician.

In Baker, the Supreme Court found that HIPAA does not address the propriety of ex parte interviews and neither its text nor its regulations authorize or prohibit these interviews. Therefore, ex parte interviews may be conducted under HIPAA if the procedural requirements for protecting information disclosed during these interviews had been satisfied.

The road map now given by the Supreme Court for allowing such interviews is for defense counsel to request a qualified protective order from the trial court which: a) prohibits the parties from using or disclosing the protected health information for any purpose other than the litigation or proceeding for which such information was requested; and b) requires the return to the medical provider or destruction of the protected health information (including all copies made) at the end of the litigation. In any case in which an interview of this type is sought, the plaintiff would not likely have a valid argument against such interviews simply on the basis that it invades his or her privacy.

Let me know if you would like a copy of the opinion.
Michael

Insurer Must Pay Seven Figure Settlement for Which There Was No Coverage Because of Failure to Properly Reserve Rights

2010-05-04T10:17:00.007-04:00

In World Harvest Church, Inc. v. Guideone Mutual Insurance Company, decided May 3, 2010, the Georgia Supreme Court ruled that Guideone was responsible for $1,000,000. because Guideone had not properly reserved its rights to deny coverage and provided a defense to its insured, World Harvest Church, Inc. (“the Church”), for over 10 months. This was true even though both sides agreed that the claims against the Church in the underlying case did not come within the terms of the policy.

The underlying lawsuit arose out of contributions to the Church from two gentlemen who had operated a huge Ponzi scheme. A Receiver appointed by the Securities and Exchange Commission demanded that the Church return $1,800,000. in donations and initially brought suit against the Church in Illinois, claiming fraudulent transfer and unjust enrichment. Guideone, the Church’s commercial general liability insurer, was informed of the lawsuit and a sister company of Guideone responded with a written reservation of rights denying liability. Guideone ultimately concluded that the policy did not cover the Illinois action.

The Illinois case was dismissed for lack of personal jurisdiction and was refiled in the United States District Court for the Northern District of Georgia. When Guideone received the refiled lawsuit, it did not reissue a reservation of rights letter. Instead, the claims handler testified that he told the insured that “we didn’t see coverage but we would have to evaluate what we have currently to see if there would be coverage issues.” Guideone then assumed the defense of the lawsuit for over 10 months. When there was only a month remaining in the discovery period in the lawsuit, Guideone informed the Church that it would stop defending the action in 30 days because there was no coverage. The Church then hired its own lawyers, summary judgment was granted to the Receiver, and a judgment in the amount of $1,800,000 was awarded against the Church. The Church later settled with the Receiver for $1,000,000 and then sued Guideone.

The Georgia Supreme Court, answering certified questions from the United States Court of Appeals for the 11th Circuit, found that a reservation of rights does not necessarily have to be in writing; however, the adjustor’s statement that he “did not see coverage” was not sufficient to fairly inform the insured of the insurer’s position. At a minimum, a reservation of rights must “fairly inform the insured that, notwithstanding [the insurer's] defense of the action, it disclaims liability and does not waive the defenses available to it against the insured.” The reservation of rights should also inform the insured of the specific basis for the insurer’s reservations about coverage. The reservation of rights must be unambiguous in order to be effective.

The Georgia Supreme Court decided that the prior reservation of rights in the Illinois lawsuit, considered in conjunction with the adjustor’s statement in the Georgia case, was, at best, ambiguous because the Illinois reservation of rights came from a “sister company” of the insurer.

The Supreme Court also discussed whether prejudice was required to be shown by the insured and whether prejudice was, in fact, shown in order to determine whether there was a waiver or estoppel of coverage defenses. In examining Georgia law and the law of other States, the Court wrote that when an insurer provides a defense to an insured and then withdraws that defense, “prejudice to the insured . . . is conclusively presumed . . . the loss of the right of the insured to control and manage the defense is, in itself, prejudice to the insured.”

According to the Georgia Supreme Court, where an insurer assumes and conducts an initial defense without effectively notifying the insured that it is doing so with a reservation of rights, the insurer is deemed estopped from asserting the defense of non-coverage regardless of whether the insured can actually show prejudice.

Guideone must now pay a $1,000,000 settlement that it never would have owed if its rights had been properly reserved. In drafting a reservation of rights letter or determining whether to contest coverage and when to contest coverage this case should definitely be reviewed.

Please let me know if you would like a copy of this decision.

Michael Rust

Doctrine of “Avoidable Consequences” Leads to Summary Judgment for Defendants

2010-04-29T15:26:00.001-04:00

In Weston v. Dun Transportation, decided April 21, 2010, the Georgia Court of Appeals relied on the doctrine of avoidable consequences to affirm the granting of summary judgment to the defendants in a wrongful death case in which the deceased had pulled out into an intersection in front of a tractor trailer.

Janet Weston, the decedent, was approaching an intersection in Glynn County that she was very familiar with. The intersection was a “two way” stop with through traffic proceeding on Georgia State Route 303. Ms. Weston had negotiated this intersection multiple times over several years and she understood she was required to yield the right-of-way to any traffic on SR 303, which often included logging trucks and other heavy vehicles traveling at or above the posted speed limit of 55 mph.

When she approached the intersection on the day of the accident, Ms. Weston’s view was apparently blocked by a parked front end loader which had been left on the side of the road by defendant Dewey Harper. The loader had suffered mechanical difficulties and defendant Yancey Brothers, Inc. had previously performed repairs on the loader. The driver and owner of the tractor trailer which struck Ms. Weston were also defendants.

A witness driving behind Ms. Weston testified that Ms. Weston came to a complete stop at the stop sign, realized that the loader obstructed her view of traffic, slowly inched forward to get a better view, saw that the tractor trailer was bearing down on her and, believing that her car's front end was too far into the lane of the tractor trailer to avoid a collision, suddenly accelerated in hopes of getting out of its way. It was undisputed that Ms. Weston could have reached her destination by reversing course and taking another route.

The Court of Appeals wrote that, under the doctrine of avoidable consequences, “the plaintiff's negligence in failing to avoid the consequences of the defendants' negligence is deemed the sole proximate cause of the injuries sustained and, therefore, is a complete bar to recovery, unless the defendant wilfully and wantonly inflicted the injuries.” Although the issue of whether a plaintiff exercised due diligence for her own safety is ordinarily reserved for a jury, in some cases it may be summarily adjudicated “where [the plaintiff's] knowledge of the risk is clear and palpable.”

The Court of Appeals believed that this was such a case. In other cases in which defendants may be negligent but the plaintiff, exercising ordinary care, could have avoided that negligence, this doctrine should be raised as an affirmative defense and may be, under the right circumstances, a basis for obtaining summary judgment.

Please call me if you would like a copy of the opinion.

Michael

Failure of Insured to Consent to Settlement Eliminates Right of Subrogation

2010-04-19T16:20:00.004-04:00

On April 6, 2010 in Mandato & Associates, Inc. v. Sepulveda Masonry, the Georgia Court of Appeals ruled that the failure of an insured to explicitly consent to a property damage settlement eliminated the right of the insurer to pursue subrogation.

Mandato arose out of a claim for negligent construction. Builders Insurance Group (“Builders”) sued four subcontractors to recover $325,000 it had paid in settlement of a claim brought against its insured, a general contractor. Builders claimed that the subcontractors negligently performed their subcontracts in building a residence.

The underlying settlement came about when the homeowner, the general contractor and Builders participated in a mediation and afterward agreed to settle for $325,000. Both Builders and the general contractor signed off on a document confirming acceptance of an offer by the homeowner. Builders paid the settlement and received a release of all claims against the general contractor and then filed its claims against the subcontractors.

The Court of Appeals found that O.C.G.A. § 33-7-12(a) allows an insurer, acting as an independent contractor, to settle claims. As an independent contractor, however, the insurance company has no right of subrogation because it did not make a payment as an agent of the insured under the policy. The Court ruled that even though the general contractor had signed the agreement accepting the settlement amount proposed by the homeowner this did not constitute evidence of the general contractor’s written consent to Builders’ settlement payment to the homeowner.

If you are prosecuting a subrogation case make sure that you have a signed acknowledgment of the insured to the settlement of the underlying case. A signed subrogation agreement would also be helpful. If you are defending a subrogation case, make sure to explore the issue of the insured’s explicit consent to the claim. Many lawyers, as a matter of course, include language in a release agreement indicating that the insurer acts as an independent contractor. Where subrogation is anticipated, this language should not be put in the release and the insured should be asked to sign the release acknowledging their consent to settlement and to subrogation.

Please call me if you have any questions or would like a copy of the case.
Michael

Specificity is Required for Indemnification Agreements

2010-04-13T13:17:00.004-04:00

In Jiminez v. Gilbane Building Co., decided March 25, 2010, the Georgia Court of Appeals ruled that an indemnification agreement signed by a subcontractor in connection with his work on a construction project was unenforceable because it was too vague.

Jose Jiminez was a plumber who entered into a subcontract with Gill Plumbing which had been retained by a general contractor to perform work on a dormitory at Georgia Southern University. A pipe burst causing almost $1,000,000.00 in damages. Gill Plumbing claimed that Jiminez was required to indemnify Gill for any claims made against Gill as a result of the plumbing work.

The contract and insurance indemnity agreement signed by Jiminez was written in the past tense, indicating that work had already been performed, when it had not, and did not set out specifically who was the “subcontractor” and who was the “contractor” under the agreement. Because there were various contractors on the job, the Court of Appeals found that the contract was nonspecific as to whom Jiminez promised to indemnify.

The Court wrote that “the words of a contract of indemnification must be construed strictly against the indemnitee” and that “the test of an enforceable contract is whether it is expressed in language sufficiently plain and explicit to convey what the parties agreed upon." Applying these rules, the Court decided that the agreement signed by Jiminez was not sufficiently explicit and therefore was unenforceable as a matter of law.

The take away message from this case is that indemnification agreements should not be used generically and should be specifically tailored to each construction project. Otherwise, the party seeking indemnification runs the risk that the agreement will be found unenforceable.

Please let me know if you would like a copy of this opinion.

Michael

Northern District of Georgia finds no duty to defend in declaratory judgment action dealing with Self-Funded Retention provision of CGL Policy

2010-04-02T17:00:00.006-04:00

In a case Chris Ziegler, Pam Webb and I won for one of our clients, on Tuesday, March 30, 2010, Judge Horace Ward of the United States District Court for the Northern District of Georgia ruled for the insurer in the case of Georgia-Pacific, LLC v. United States Fidelity & Guaranty Company. The insured, Georgia Pacific, had filed a declaratory judgment action claiming the insurer owed defense costs prior to the exhaustion of a Self-Funded Retention Endorsement (SFR) of a CGL policy. The Court denied Georgia Pacific's motion for partial summary judgment and granted the insurer’s motion for summary judgment, finding that an SFR that (1) expressly deletes language from the CGL policy providing for the payment of defense costs and (2) conditions payment of defense costs on the insured’s liability to pay damages beyond the amount of the SFR “clearly and unambiguously . . . [releases the insurer from] provid[ing] defense costs unless and until its liability to pay damages – beyond the amount of the SFR – under the policies has been established.”

Georgia Pacific argued that because the policy did not define “damages”, and common usage of the term “damages” includes defense costs, the insurer is obligated to pay defense costs under the CGL policy. To the contrary, the Court found that adopting Georgia Pacific's interpretation of the term “damages” would effectively eliminate the language of the SFR that provides for the conditional payment of “claims expenses,” including litigation costs and attorney’s fees, from the SFR endorsement.

Also, the Court found that none of the underlying Complaints filed against the insured contained allegations of liability for which coverage was provided under the policy. In three underlying lawsuits, the plaintiffs alleged (1) failure to pay for products delivered to the insured, (2) misrepresentation regarding the amount of products that were delivered, (3) preference of vendors other than the plaintiffs by the insured, (4) that the insured induced certain expenditures by the plaintiffs in reliance on a contract, (5) violation of a Mississippi statute relating to trusts and combines in restraint of trade, and (6) slander.

In reviewing the allegations in order to determine whether coverage was implicated, the Court found that none of the first 5 allegations listed above fell within the policies’ coverage or asserted a claim of negligence entitling the plaintiffs to recover damages for mental anguish and anxiety.

Regarding the third allegation, Georgia Pacific argued that the allegation that Georgia Pacific preferred certain vendors over others was tantamount to a "discrimination" claim, which is covered under the CGL policy. While the Court agreed that “discrimination” was not defined under the policy, it found that “the only reasonable interpretation of “discrimination” . . . is a traditional civil rights claim of discrimination ."

Finally, the Court found that the slander claim was barred by the applicable statute of limitations and therefore no duty to defend was triggered by that claim, even if covered.

Let me know f you would like a copy of this opinion.

Michael

Georgia Supreme Court Agrees That “On Call” Does Not Equal “On The Job.”

2010-03-30T11:38:00.002-04:00

On March 29, 2010, the Georgia Supreme Court, in a close 4-3 decision, found that simply because an employee was “on call” did not mean that the employee was acting in the course and scope of his/her employment at the time of an automobile collision. In so ruing, the Supreme Court affirmed the decision of the Court of Appeals and the trial court which had granted summary judgment to the employer.

In Hicks v. Heard, et.al, Jessica Heard was the daughter of the vice president and co-owner of the Mark Heard Fuel Company (“Company”) and a part-time employee of the Company engaged to perform clerical work on an “as needed” basis. For her personal and work-related use, Jessica drove a sport utility vehicle which was owned by the Company. Jessica was involved in an automobile accident while driving home from school and was sued, along with the Company.

Jessica was unquestionably on the personal mission of returning home after finishing an exam at school at the time of the accident. She testified, however, that she was “on call” because she was subject to being called to work at any time.

The Supreme Court applied the burden of proof framework which has long been in place for determining whether an employee of a company who has been issued a company vehicle is “on the job” at the time of an accident. The fact that Jessica was employed by the Company and was driving a vehicle owned by the Company at the time of the accident raised a presumption that Jessica was in the scope of her employment at the time of the collision. The Company then rebutted this presumption by providing uncontradicted testimony that Jessica was not acting within the scope of her employment at the time of the accident. The burden of proof then shifted back to the plaintiff who countered with evidence that Jessica was “on call” at the time of the accident, which was merely circumstantial evidence that Jessica was acting in the scope of her employment. The Supreme Court found that this circumstantial evidence was insufficient to support a verdict that Jessica was acting in the course and scope of her employment.

Three Justices strongly dissented from this opinion and believed that the fact that Jessica was “on call” should have created a question for a jury.

Please let me know if you would like a copy of this opinion.

Michael

Georgia Court of Appeals Rules That Defective Workmanship May Be An “Occurrence” Under a CGL Policy, But Excluded As a “Business Risk”

2010-03-29T13:45:00.010-04:00

On March 26, 2010, the Georgia Court of Appeals in QBE Insurance Company v. Couch Pipeline & Grading, Inc., following the trend of recent Georgia appellate decisions interpreting commercial liability insurance polices, found that claims regarding defective workmanship may be an “occurrence” but still excluded from coverage.

Couch Pipeline & Grading, Inc. (“Couch”) contracted to perform grading and pipe work during the construction of an office building. QBE issued a commercial liability insurance policy providing coverage to Couch. The company that hired Couch alleged that some of the grading work was defective and that the soil building pad had not been compacted to the required compaction ratio. When Couch was sued over this issue, QBE filed this declaratory judgment action. The trial court denied QBE’s motion for summary judgment and the Court of Appeals agreed to review the case and reversed the trial court’s decision.

QBE argued that the claims did not arise from an “occurrence” as defined in the policy because the alleged negligence of Couch was not “an accident, including continuous or repeated exposure to substantially the same general harmful conditions,” as the policy defined an “occurrence.” Following recent precedent, the Court of Appeals rejected that argument and found that defective workmanship which was not “intentionally defective” could be construed as an accident and therefore could be an occurrence under the policy. However, the Court of Appeals found that QBE was entitled to summary judgment because the work was excluded pursuant to the “business risk” exclusions for defective workmanship under the policy.

Please email me if you would like a copy of this decision.

Michael

The Georgia Supreme Court Clarifies Rules for Cancellation of an Automobile Insurance Policy

2010-03-24T10:58:00.011-04:00

In Reynolds v. Infinity Gen. Ins. Co. f/n/a Coventry Ins. Co., decided March 15, 2010, the Georgia Supreme Court, in answering a certified question from the 11th Circuit Court of Appeals, clarified the rules for cancellation of an automobile insurance policy in Georgia.

In Reynolds, the insurer denied coverage for an automobile accident which occurred on August 2, 2006 involving the insured’s son and which took the lives of two passengers. On July 10, 2006, the insurer, Infinity, had sent out a cancellation notice indicating that in accordance with the terms and conditions of the policy, the policy would cease providing coverage as of the cancellation date of July 25, 2006. The header on the notice stated “CANCELLATION NOTICE, NON-PAYMENT OF PREMIUM” and the cancellation date of July 25, 2006, was set out in a small box at the top of the notice and again in another small box at the bottom of the notice. The notice, however, also contained payment options and a detachable payment stub to be returned in the event a premium payment was remitted.

The insured argued that because the notice also contained a payment option it was ambiguous and could not be construed as a clear notice of cancellation of the policy.

The question asked by the 11th Circuit was:

"Is a notice of cancellation, properly given after the premium is past due, ineffective because it provides an opportunity for the insured to keep the policy in force by paying the past-due premium within the statutory ten-day period?"

The answer given by the Georgia Supreme Court is “no.”

Interestingly, three Justices of the Supreme Court, relying on their interpretation of existing Georgia law, disagreed and found that the notice was ambiguous simply because it provided for a payment option.

Please call me if you have any question or would like a copy of this decision.

-Michael

Georgia Supreme Court overturns damages limits in malpractice cases

2010-03-22T16:33:00.000-04:00

On Monday March 22, 2010, the Georgia Supreme Court, in the case of Atlanta Oculoplastic Surgery, P.C. v. Nestlehutt, et. al., found that the noneconomic damages limits contained in O.C.G.A. § 51-13-1 are unconstitutional. As you probably know, O.C.G.A. § 51-13.1 provided for a $350,000 cap on noneconomic damages in medical malpractice cases and was part of the 2005 tort reform effort by the Georgia Legislature. This opinion, written by Justice Hunstein, is in stark contrast to the two decisions of last week upholding the constitutionality of the offer of judgment statute and also upholding the tort reform statute allowing for higher level of proof required in order to bring a malpractice claim against an emergency room physician.

Essentially, Justice Hunstein, with all Justices concurring, but with Justices Carley, Hines, and Nahmias concurring specially, found that the limitation on noneconomic damages violates the right to trial by jury established by the Georgia Constitution. The Court found that the Georgia Constitution and common law adopted through the Constitution established that the amount of damages sustained by plaintiff is an issue of fact to be determined by a jury. By requiring a Court to reduce a noneconomic damages award determined by a jury that exceeds the statutory limit, the statute nullifies the jury’s findings of fact regarding damages and thereby undermines the jury’s basic function. Therefore, the caps infringe on the parties’ constitutional rights.

The Supreme Court distinguished other statutes which provide for damages limitations, specifically, the limitation on punitive damages set out in O.C.G.A. § 51-12-5.1(c) since punitive damages are not awarded as compensation to a plaintiff but solely to punish, penalize, or deter a defendant.

Additionally, the Supreme Court found that, because the statute was unconstitutional, it is deemed to be wholly void and of no force and effect from the date it was enacted.

Based upon the three opinions we have received within the last week it is difficult to determine how the Supreme Court will view other challenges to tort reform statutes which are making their way into the appellant courts. Most importantly for most of you, will be the appellant court’s determination as to the application of the statute intending to do away with joint and several liability. I will be sure to keep you updated as to developments with regard to this statute.

E-mail me if you would like a copy of this opinion.

Welcome to my blog

2010-03-22T16:28:00.002-04:00

Welcome to my first blog regarding recent case law.

Coincidentally, the Georgia Supreme Court issued a significant ruling today regarding tort reform. Please look for that in my first post.

Please e-mail me if you have any suggestions or questions.

-Michael