eNotes: Liability – December 2020
December 01, 2020
VIRGINIA CLIENT ADVISORY
Change made to Virginia Legal Ethics Opinion regarding outsourcing of services by an attorney.
The Virginia State Bar Ethics Committee recently voted unanimously to revise Legal Ethics Opinion 1850, which deals with outsourcing client services. The revised portion of the Legal Ethics Opinion holds that a lawyer may ethically outsource services to an individual not associated with the firm, provided that the lawyer takes these steps:
(1) Rigorously monitors and reviews the work to ensure that the outsourced work meets the lawyer’s requirements of competency, and to avoid aiding a nonlawyer in the unauthorized practice of law;
(2) Preserves the client’s confidences;
(3) Bills for the services appropriately; and
(4) Obtains the client’s informed advance consent to outsourcing the work.
These revisions serve to streamline the analysis, clarifying what an attorney must disclose when they outsource services. Now, it is clear that an attorney who outsources work must obtain the client’s consent to disclose confidential information, and must also adequately explain how fees for those outsourced services are going to be billed to the client. This provision applies whether the individual performing the outsourced work is a lawyer or a non-lawyer. However, it does not apply if the individual performing the outsourced task is an individual who works onsite.
Questions about this advisory can be directed to Mike S. Bliley at (571) 464-0435 or firstname.lastname@example.org.
SIGNIFICANT CASE SUMMARIES
FEDERAL CASE SUMMARY
Essington v. Monroe Cty. Transit Auth.
United States District Court for the Middle District of Pennsylvania
2020 U.S. LEXIS 169534
Decided: September 15, 2020
Section 1983 civil rights claim, by passenger who exited a public transit bus and was struck and killed crossing a Pocono highway, dismissed for failure to state a cause of action.
Plaintiff’s decedent was a resident of “A Pocono Country Place” located on the western side of PA-196. A northbound Monroe County Transit Authority (MCTA) bus servicing the gated community dropped him off on the eastern side of the highway at a designated bus stop at night. Plaintiff’s decedent disembarked using the rear exit, walked behind the bus, and began to cross the highway, when a southbound vehicle struck him in the southbound lane. The Complaint alleged that the driver of the striking vehicle did not see the pedestrian crossing the road at night because of the position of the bus in the northbound lane and the headlights of the bus obstructed his view. MCTA and “A Pocono Place Property Owners Association, Inc.” moved to dismiss the 42 U.S.C. § 1983 claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure.
In order to sustain a Section 1983 claim, plaintiff must establish that defendant, acting under color of law, deprived plaintiff of a right secured by the U.S. Constitution. Here, Plaintiff relied upon the “state-created danger doctrine,” which allows a cause of action against a public actor if the state creates or enhances a danger that deprives the plaintiff of his “due process rights.” The doctrine embodies the principle that the government has an obligation under the 14th Amendment’s Due Process Clause to protect individuals against dangers that the government itself creates. Four elements must be satisfied to pursue an action under the doctrine: (1) the harm was foreseeable and fairly direct; (2) the state actor acted with a degree of culpability that shocks the conscience; (3) a relationship between the state and the plaintiff existed such that the plaintiff was a foreseeable victim of defendant’s acts, or a member of a discrete class of persons subjected to the potential harm brought about by the state’s action, as opposed to a member of the public in general; and (4) the state actor affirmatively used his or her authority in a way that created a danger to the citizen or that rendered the citizen more vulnerable to the danger than had the state not acted at all. In dismissing the Section 1983 claim, the Court held that the 3rd and 4th elements were not satisfied because public transit passengers do not constitute a “discrete class” of potential plaintiffs and MCTA’s decision to place a bus stop across the street from the gated community, as opposed to some other location, was not an affirmative act specifically directed at Plaintiff’s decedent himself.
Questions about this case can be directed to Joseph A. Holko at (610) 332-7005 or email@example.com.
PENNSYLVANIA CASE SUMMARIES
Allen v. Colbert
Pennsylvania Superior Court
No. 3231 EDA 2019, 2020 Pa. Super. Unpub. LEXIS 3544
Decided: November 13, 2020
Plaintiff awarded costs of appeal, including attorneys’ fees, for defense against substantively-meritless appeal brought by Defendant in an effort to delay payment on valid settlement agreement.
Ms. Allen was injured in the course and scope of her employment. Her employer did not have workers’ compensation coverage, but Ms. Allen was able to obtain funds from the Uninsured Employers Guaranty Fund (UGEF). These funds were insufficient to fully compensate Ms. Allen for her injuries, so she filed a civil complaint against her employer in October 2017. The case was ultimately settled by the parties on September 7, 2018. In February 2019, Ms. Allen filed a Motion to enforce the settlement. Her employer challenged some of the release language but did not challenge the settlement. The Court ruled that the employer had four months to pay the settlement or Ms. Allen could return and request a penalty and attorneys’ fees.
Ms. Allen again returned to the court on October 1, 2019 to report that the employer still had not paid the settlement. The employer argued the settlement agreement was not enforceable, because it was immune from suit under the Workers’ Compensation Act (WCA). The Court entered an order finding the settlement agreement was valid and binding. The employer filed a Motion for reconsideration alleging that Ms. Allen had not advised UGEF of the action. The Motion was denied and the employer appealed.
On appeal, the Superior Court determined (1) the employer was not immune from tort liability because it failed to maintain coverage for WCA liability and there was no basis to conclude Ms. Allen would receive a double recovery; (2) the Trial Court had jurisdiction to adjudicate the settlement agreement; and (3) the employer had no standing to raise issues on behalf of UGEF. The Court awarded Ms. Allen costs for the appeal, namely attorney fees, because the employer agreed to settle the claim, promised again and again to pay the settlement, but forced Ms. Allen to appear for multiple enforcement proceedings and then defend a substantively-meritless appeal in an effort to delay payment.
Questions about this case can be directed to Amanda L. Hennessey at (717) 237-7103 or firstname.lastname@example.org.
Kornfeind v. New Werner Holding Co., Inc.
Pennsylvania Superior Court
No. 2398 EDA 2019
Decided: November 9, 2020
Summary Judgment properly entered where Plaintiff uncertain he purchased ladder from particular retailer.
In a product liability and negligence action, Plaintiff claimed that a 28-foot extension ladder either slid or telescoped downward causing him to fall and sustain injuries and rendering him a quadriplegic. Plaintiff sued the manufacturer and a retailer, Home Depot, Inc., where he claimed to have purchased the ladder. At deposition, Plaintiff testified that he wasn’t sure from which of three possible retailers he’d purchased the ladder, but was “almost positive” it was Home Depot. The Trial Court denied Home Depot’s Motion for summary judgment, as well as a Motion for summary judgment from the manufacturer, who sought to apply the Illinois 12-year Statute of Repose via Pennsylvania’s borrowing statute. The Trial Court then denied Defendants’ request to certify the Order as immediately appealable, but following a Petition to the Superior Court, the appeal was allowed to proceed.
On appeal, Home Depot argued that Plaintiff failed to set forth sufficient evidence to demonstrate that he had purchased the ladder from Home Depot, citing Plaintiff’s testimony that he “wasn’t sure” where he bought it, but was “almost positive” that it was Home Depot. The Court noted a Plaintiff cannot survive summary judgment when mere speculation would be required for the jury to find in Plaintiff’s favor. The Superior Court reversed the Lower Court’s ruling on Home Depot’s Motion for summary judgment because the Trial Court had a duty to prevent questions from going to the jury which would require it to reach a verdict based upon conjecture or guess. As for the manufacturer’s Motion, the Court found that it was properly denied as Pennsylvania’s borrowing statute does not apply to statutes of repose, only statutes of limitations.
The Superior Court held that the Trial Court had erred in denying Home Depot’s Motion for summary judgment and therefore reversed the ruling on that Motion. The Superior Court affirmed the denial of summary judgment in favor of the manufacturer because the Illinois statute of repose was inapplicable in this Pennsylvania action.
Questions about this case can be directed to James F. Swartz, III at (610) 332-7028 or email@example.com.
Woullard v. Sanner Concrete & Supply
Pennsylvania Superior Court
2020 Pa. Super. 263
Decided: October 30, 2020
Superior Court reviews proper measure of damages in defective construction litigation.
Homeowners filed a Complaint against various Defendants claiming that each had breached their respective contracts related to the construction of Homeowners’ home and a detached garage. At the Trial Court level, the Homeowners presented claims involving defects in construction attributable to Sanner Concrete and Sanner Masonry, specifically, the defective installation of stone veneer on the exterior of the home and the defective construction of the back porch. The cost to repair the defective construction of the stone veneer was $61,000.00, which was 12% of the home’s $528,000.00 market value. The cost to repair the defective construction of the back porch was $39,700.00, which was 8% of the home’s $528,000.00 market value. The Trial Court found these two repair amounts were not grossly disproportionate on their faces when compared individually to the present market value of the home without the defects created by the Defendants. The Trial Court ordered judgment to the Homeowners for the aforementioned costs of repairs.
On appeal, the Defendants contend that the Trial Court committed an error of law by holding that the weighing of diminution in value against the cost to repair the defects is limited to cases involving a single builder-vendor defendant, and that the Trial Court committed an error by not requiring the Homeowner to present evidence of diminution of value to their property, thereby shifting the burden to the Defendants. Further, the Defendants contend the Trial Court abused its discretion in denying its request for a new trial strictly on the issue of damages thereby foreclosing Defendants’ ability to present evidence of diminution of value.
The Superior Court affirmed the ruling of the Trial Court. The Superior Court held that the two damage awards were not grossly disproportionate on their faces when compared individually to the present market value of the home and the Homeowners were not required to present evidence of diminution in value of the home attributable to the defective construction and that the burden of demonstrating any potential diminution in value shifted to the Defendants who did not present evidence of a diminution in value.
Further, the Trial Curt properly denied Defendants’ request for a new trial limited to damages because they failed to present evidence pertaining to any potential diminution at the Trial Court level and were not entitled a second chance to litigate this claim.
Questions about this case can be directed to Christopher M. Gallagher at (215) 564-2928 or firstname.lastname@example.org. Incoming associate, Matthew R. Gerarde, assisted in the preparation of this case summary.
DiDonato v. Ski Shawnee, Inc.
Pennsylvania Superior Court
2020 P. Super. LEXIS 892, 2020 WL 6280080
Decided: October 27, 2020
Litigant waives arbitration clause of contract where it failed to raise right to arbitration promptly, engaged in discovery, filed pre-trial motions without raising arbitration provision, and waited for adverse rulings on motions, or until case ready for trial before asserting arbitration.
A student enrolled in a private boarding school sustained fatal injuries during a skiing event. Wrongful death and survival actions were brought against the school, the ski coach, and the facility that hosted the event. The school’s enrollment contract contained a provision calling for compulsory arbitration. However, the school did not raise the arbitration clause promptly in the litigation. Instead, after a year of procedural skirmishing and some discovery on a venue issue, the school filed a motion to compel arbitration. The Lower Court granted the Motion in part and it denied it in part. The Superior Court held, however, that the arbitration clause was waived and it set aside the Order compelling some aspects of the case to proceed to arbitration. It upheld the Order to the extent that it denied the motion to compel arbitration of other aspects of the case.
Although as a matter of public policy courts favor the settlement of disputes via arbitration, the right to enforce an arbitration clause can be waived. A party that avails itself of the judicial process by attempting to win favorable rulings from the court before invoking the arbitral remedy waives the right to proceed through arbitration. When deciding whether a party accepted judicial process to constitute waiver of a claim to arbitration, courts assess whether the party: (1) failed to raise the issue of arbitration promptly; (2) engaged in discovery; (3) filed pre-trial motions that do not raise the issue of arbitration; (4) waited for adverse rulings on pre-trial motions before asserting arbitration; or (5) waited until the case is ready for trial before asserting arbitration. In this case, the school waited for over a year to raise arbitration and, during that time, it made a failed attempt at removing the case to federal court, negotiated changes to the complaint, engaged in discovery on a venue issue, and successfully litigated preliminary objections as to venue.
Questions about this case can be directed to Louis C. Long at (412) 926-1424 or email@example.com.
Witherspoon v. McDowell-Wright
Pennsylvania Superior Court
2020 Pa. Super. 254
Decided: October 23, 2020
The death of Defendant-appellee does not render an appeal moot.
Plaintiff Witherspoon filed a complaint against his former paramour, McDowell-Wright, alleging that McDowell-Wright had converted his personal property after his was evicted from their shared residence. Following a two-day non-jury trial, the Trial Court found in favor of Witherspoon in the amount of $7,500. Witherspoon filed a timely appeal seeking reconsideration of the damages award. McDowell-Wright died following the appeal. A suggestion of death was filed by McDowell-Wright’s daughter, but no personal representative was appointed on McDowell-Wright’s behalf as she was proceeding pro-se.
While substitution of a personal representative for that of a deceased party is allowed under the Pennsylvania Rules of Appellate Procedure, the rule is not mandatory. Following Pennsylvania Supreme Court precedent from the case of Shiomos v. Commonwealth State Employees’ Ret. Bd., 626 A.2d 158 (Pa. 1993), the Superior Court concluded that the McDowell-Wright’s death did not render the appeal moot because the outcome of the appeal would have relevance to her estate and Witherspoon’s rights as a purported creditor of her estate. Accordingly, the Superior Court went on to address the merits of the appeal.
Questions about this case can be directed to Brook T. Dirlam at (412) 926-1438 or firstname.lastname@example.org.
Brownlee v. Home Depot U.S.A., Inc.
Pennsylvania Superior Court
No. 3232 EDA 2020
Decided: October 22, 2020
Trial Court erred in failing to instruct jury on factual cause where conflicting evidence as to cause of fall.
Brownlee brought a negligence action against Home Depot for an incident in 2017 when he slipped and fell on a piece of wood that was lying on the floor in the lumber aisle. The Trial Court denied Home Depot’s Motion for Summary Judgment on the issues of “open and obvious” condition and lack of notice and the case proceeded to trial. At trial, Brownlee testified that the area of the fall was near a lumber saw and that three employees were standing in the vicinity before the accident occurred. Home Depot management conceded that employees were trained to detect and correct slipping hazards, there were employees in the vicinity of the fall and the employees failed to detect and/or correct the condition of the floor. Management also confirmed that only Home Depot employees were permitted to use the saw and that the saw was 12-14 feet from the site of the accident. In addition, Home Depot’s medical expert conceded that Brownlee suffered some injury as a result of the fall.
The Trial Court determined that because Home Depot’s expert had admitted that Brownlee suffered some injury, the issue of factual cause should not go to the jury, and the jury instruction as to factual cause was not given. The jury returned a verdict in favor of Brownlee for $510,500. Home Depot appealed arguing among other matters that the court erred in not granting its Motion for Summary Judgment and in not instructing the jury as to factual cause.
The Superior Court determined that it was proper for Home Depot to raise the denial of the Motion for Summary Judgment on appeal. However, the Court disagreed that the Motion for Summary Judgment should have been granted. Rather, the Court agreed with the Trial Court that there was a factual issue as to whether the wood was open and obvious, when Plaintiff testified that he did not see it prior to the fall, and that presence of the three employees near the area of the lumber saw and the fall presented “sufficient evidence” to infer actual or constructive notice. The Superior Court did, however, find the Lower Court committed reversible error by not charging the jury on factual cause. The Superior Court determined that unlike most car accident cases, slip and fall cases are not as clear as it relates to the factual cause of the accident itself, even in a case of admitted injury. The Court recognized that even when a defendant is negligent, a jury could determine that the fall in and of itself was not related to the negligence. Noting that there was conflicting evidence as to whether Brownlee slipped on the wood at all – with Brownlee saying he did, and another witness testifying the wood was not near where he fell – Home Depot should have been permitted to argue that Brownlee failed to prove that the wood was the factual cause of the slip and fall accident in the first instance. The failure to charge the jury on factual cause foreclosed this avenue of defense and required that the judgment be vacated and the case remanded for a new trial.
Questions about this case can be directed to Rebecca Sember-Izsak at (412) 926-1446 or email@example.com.
MARYLAND CASE SUMMARY
Antietam Battlefield KOA v. Hogan
United States District Court for the District of Maryland
Decided: November 18, 2020
Governor Hogan’s coronavirus restrictions upheld in U.S. District Court.
Maryland citizens, business owners, and religious leaders filed an action challenging the constitutionality of a series of Governor Larry Hogan’s Executive Orders pertaining to COVID-19. This was the second time the series of Executive Orders were before the Court. Initially, Plaintiffs had requested injunctive relief which the Court denied. In response, the parties filed an Amended Complaint. Defendants filed a Motion to dismiss the Amended Complaint. Plaintiffs asserted claims of violations of the First, Fifth and Fourteenth Amendments, Commerce Clause and the Maryland Constitution.
Maryland’s executive may implement measures such as quarantines and public health orders to address a public health crisis. To overturn Hogan’s Orders, the Plaintiffs must prove: (1) that the Order has “no real or substantial relation” to protecting public health or (2) that the measure is “beyond all question, a plain, palpable invasion of rights secured by the fundamental law.” While the COVID-19 crisis does not give governments a “blank check” to deprive citizens of constitutional rights, courts will give wide latitude under such circumstances. The Court notes that frequently revised public health measures, as the severity of the crisis ebbs and flows is a signal that the restrictions are narrowly tailored and meeting the demands of the public health crisis.
As to the first prong, the Court finds that the Orders have substantial relations to protecting public health. The Court also finds that Plaintiffs can not satisfy the second prong, thereby dismissing the Complaint. As to the First Amendment claims and Commerce Clause, the Executive Orders are neutral, generally applicable, and relationally related to a legitimate government interest. Thus, a plain and palpable violation is not alleged. As to the Establishment Clause, Hogan’s Order applies to all gatherings of more than ten people, thus no violation is sufficiently pled. The Equal Protection claim fails because the parties could not plead that others similarly situated were receiving different treatment under the Orders. As to the Fifth Amendment, the Plaintiffs’ Complaint fails as no property was taken by the government. Finally, as to the state constitutional claims, the Eleventh Amendment precludes a federal court from granting relief against state officials on the basis of state law. Thus, Plaintiff’s state law claims are also dismissed.
Questions about this case can be directed to Lauren Mistretta Upton at (443) 641-0572 or firstname.lastname@example.org.
DC CASE SUMMARY
Rose’s 1, LLC v. Erie Ins. Exch.
United States District Court for the District of Columbia
2020 D.C. Super. LEXIS 10
Decided: August 6, 2020
Court holds that non-essential business closure orders are not a “direct physical loss” under business interruption insurance.
In March of 2020, the Mayor of the District of Columbia ordered the closure of all non-essential businesses due to the Covid-19 pandemic. Plaintiff, Rose 1, LLC, was forced to close its restaurants in Washington, DC. After the closure, Plaintiff filed a claim with its commercial property insurer. The subject insurance policy included coverage for loss of income from a business interruption that was caused by a direct physical loss. When the insurance claim was denied, Plaintiff filed a declaratory judgment action in the Superior Court for the District of Columbia, which is DC’s jury trial level court. Both parties moved for summary judgment.
The Superior Court held that the closure of restaurants due to the Mayor’s Order was not a direct physical loss under the policy. The Court reasoned that the Order was not a physical loss because it did not physically change the property. The Court granted summary judgment in favor of Erie Insurance Exchange.
Questions about this case can be directed to Charles B. Peoples at (202) 945-9501 or email@example.com.