Case Updates Archive

The Third Appellate District Court of Appeal has issued a decision in which it found that an indemnitee defense clause contained within a general liability insurance policy affords the indemnitee mere status as an incidental third party beneficiary, and that such an indemnitee lacks standing to sue the carrier to provide a defense. LaBarbera et al. v. Security National Insurance Company, C093414 (Super. Ct. No. 34-2019-oo248873-CU-IC--GDS).

COVID-19 business interruption claims have surged nationally since the beginning of the pandemic. The majority of these claims have been unsuccessful for policyholders. However, in Cajun Conti LLC v. Certain Underwriters at Lloyds, 2023 La. LEXIS 563 (La. Mar. 17, 2023), the Louisiana Fourth Circuit Court of Appeals found that COVID-19 constituted "a direct physical loss of or damage to" the insured's New Orleans restaurant. The insurer appealed the Fourth Circuit’s ruling to the Louisiana Supreme Court, who reversed and affirmed what most courts around the country have held – COVID-19 does not constitute physical loss or damage triggering insurance coverage.

In Williamson v. Evans Nail and Spa Corp., 2023 IL. App. (1st) 220084, the appellate court reversed the trial court's order granting summary judgment for the defendant-nail salon finding that plaintiff provided sufficient evidence to create an issue of fact on whether the failure of the defendant to provide: (1) a handrail was in violation of a local ordinance and (2) a sufficient slip resistant mat surrounding a pedicure pedestal created an unreasonably dangerous condition. The appellate court determined that the plaintiff had brought sufficient evidence to create a fact question regarding proximate cause in her slip and fall litigation.

Gig companies, Uber and Postmates, successfully obtained a revival of their claim in federal court alleging that California A.B. 5 unfairly disadvantages app-based ride and delivery services. The U.S. Court of Appeals in Olsen v. State of California, No. 21-55757, 2023 WL 2544853, at *2 (9th Cir. Mar. 17, 2023). found that the plaintiffs "plausibly alleged" that the main motivation behind A.B. 5 in the California legislature was to disadvantage companies like Uber, Postmates and similar gig-based businesses in violation of equal protection. 

In Hoffmann v. Young, et. al, (2022) 13 Cal.5th 1257, the California Supreme Court held that a teen's parents were liable for injuries sustained by a guest while riding a motorcycle on the motocross track built on their property. The court found that the exception to the recreational immunity defense (Civil Code Section 846(a)) does not apply when the injured party was expressly invited by an agent of the landowner whom the landowner has properly authorized to extend invitations to enter the land on their behalf.

In Brianna Garza and Mario Garza v. Matthew Perry and American Family Insurance Company, No. 83377-4-I, the Washington Court of Appeals determined that an insurance company could not intervene in an action intending to nullify a settlement agreement involving a covenant judgment. The court denied the insurer's attempt to nullify the covenant judgment settlement because it was not a party to the agreement, and upheld the lower court's approval of the agreement through a reasonableness hearing.

In the case of River's Side at Washington Sq. Homeowners Assn. v. Superior Court, 3d. Cir. No.C095860 (2023), a homeowners association successfully argued that it had standing to sue for construction defects on behalf of individual unit owners. Under the Right to Repair Act, homeowner associations do not have standing to sue on behalf of members for construction defects within individual units, but may sue for defects in the common areas. In this case the court distinguished between claims brought under the Right to Repair Act and claims for breach of contract or fraud. If those claims qualify as representative actions, then the association may have standing to sue for issues in the common areas as well as the individual units pursuant to section 382 of the California Civil Code.

In the case of Tufield Corporation v. Beverly Hills Gateway, Case No. B314862 (2022), the court got back to basics in this landlord-tenant dispute. It found that a lease exceeding 99 years is void under the law as a suppression of California public policy encouraging the free exchange and development of land. The primary issue on appeal is whether a lease that violates Civil Code section 718 is void or voidable and is essentially an issue of first impression. The court held that the part of the lease exceeding 99 years was void.

What happens when an injury doesn't surface until fifty years later? The case of Ramirez v. Avon Products, Inc. (2023) Los Angeles County Super. Ct. No. 20STCV22671 Case No. JCCP 4674, discusses this conundrum. It analyzes how courts have dealt with the issue of witness testimony where few at the corporation ever had personal knowledge of policies and procedures regarding the disputed claim at the time the incident took place. Testimony of the "Person Most Knowledgeable” does not earn businesses a pass on the hearsay rules.

Under fee-shifting statutes, a trial judge must award fees to the prevailing party regardless if the prevailing party will actually be responsible for paying the fees. In Cell-Crete v. Federal Insurance Co. (2022) WL 4103354, the surety on a construction project argued that it was owed attorney fees and costs under the fee-shifting statute even though it did not actually pay any of the fees or costs. The Court of Appeals agreed and reversed the trial court's order to deny the surety's requests for those fees.

In Regan Heating and Air Conditioning, Inc. v. Arbella Protection Insurance Company, Inc., No. 2020-170-Appeal (Jan. 27, 2023), the Rhode Island Supreme Court, on the facts before it, expanded the obligations of insurers to examine potential policy ambiguities. In short, the Court found that "diversity of judicial thought" as to the meaning of insurance policy language is "proof positive of ambiguity." The implications for insurers are unclear at the moment, but at least on these facts – whether oil was a "pollutant" and thus losses arising from an oil spill were excluded – the Court has now determined that insurance policy contract language may be considered ambiguous where its treatment differs across various jurisdictions. This decision may now impose a duty on insurers to examine how other states treat relevant policy language before making coverage decisions.

Insurance companies may not automatically be off the hook when it comes to coverage for resulting damages stemming from faulty construction. In Gardens Condo v. Farmers Ins. Exch., No. 83678-1-I (Wash. Ct. App. Dec. 19, 2022), the court found that a resulting loss clause in an all-risk insurance policy may provide a condominium complex insurance coverage from damages caused to units by faulty construction of the roof. The resulting damages were covered perils and thus, potentially covered by the policy.

In a pivotal decision, the National Labor Relations Board in Thryv, Inc. and International Brotherhood of Electrical Workers, Local 1269 Cases 20-CA-250250 and 20-CA-251105, appears to have expanded the potential exposure for employers in actions brought claiming violations of the National Labor Relations Act (NLRA). Signaling a shift from prior agency interpretation, the National Labor Relations Board (NLRB) has now said that the NLRA's "make whole remedy" requires employers in violation of the law to compensate affected employees for all "direct or foreseeable pecuniary harms" suffered as a result of the respondent's unfair labor practices.

In the case of Norg v. City of Seattle, No. 100100-2 (Wash. 2023), the Supreme Court of Washington answered the question of whether the public duty doctrine insulates the City of Seattle from liability for a 911 response to the wrong address. The Court held that the City was not protected by the public duty doctrine where the harm was particularized and not related to general public duty.

Though attempts to contractually waive an employee's right to sue pursuant to the California Labor Code Private Attorneys General Act (PAGA) typically fail in court, a narrow, but important exception to this rule are collective bargaining agreements involving construction workers. In Oswald v. Murray Plumbing & Heating Corp., No.B312736, 2022 Cal. App. Lexis 752 (Ct. App. Sep. 2, 2022), the Court of Appeal found that because the collective bargaining agreement at issue addressed wage and hour provisions, working conditions, and grievance procedures, and specifically mandated arbitration of disputes regarding Labor Code violations, the denial of the plaintiff's right to sue under PAGA was warranted. Consequently, the Court of Appeal found that all employment claims, including those claims under PAGA, should have been submitted to arbitration for resolution in accordance with the provisions of the collective bargaining agreement.

In the case of Gulf Coast Center v. Curry, Case No. 20-0856 (Tex. 2022), the Supreme Court of Texas found that courts may not render a judgment that exceeds the statutory damage cap under the Texas Torts Claims Act and a plaintiff seeking recovery under the Act has the burden to prove which cap applies. The plaintiff failed to demonstrate that the trial court had jurisdiction to render a judgment exceeding the minimum statutory cap. The Texas Supreme Court reduced the $216,000 judgment finding that the Act requires lower courts to cap damages when the defendant is a local government or governmental unit, even if the issue wasn't brought during trial.

The Texas Supreme Court handed down an opinion on January 27, 2023 in Taylor Morrison of Texas, Inc. v. Skufca. A trial court denied a motion to compel arbitration that involved breach of contract claims brought by Jack and Erin Skufca, along with their minor children alleging construction defects with their new home. The Court of Appeals upheld the denial. In reversing, the Texas Supreme Court held "that the Skufcas' petition, which did not distinguish between the parents' claims and the children's claims, unambiguously reflects the children as joining their parents in asserting the breach-of-contract claim and that the children therefore may be compelled to arbitrate."

In Venema v. Moser Builders, Inc., 2370 EDA 2021 (Pa. Super. Ct. Aug. 29, 2022), the Superior Court held that the Statute of Repose was not tolled by repairs made several years after the certificate of occupancy was issued. Homeowners are not entitled to unilaterally dictate an extended window to file suit because a builder complies with the agreement in good faith and makes repairs years after the original purchase date.

The court in De Leon v. Juanita's Foods, Inc., No. B315394 (Cal. Ct. App., Nov. 23. 2022) made it clear that if a business or employer fails to pay its arbitration fees on time, it will be found in material breach of the arbitration agreement. Juanita's Foods paid its arbitration fees a few days late and despite its assurances that payment was coming and a subsequent payment in fact made, the court held that it was in material breach and refused to consider any other factors to mitigate the late payment. Following clear precedent, the clear language of the statute, and stated legislative intent, the court found that Code of Civil Procedure sections 1281.97 and 1281.98 provide a bright line rule that courts must follow to the letter.

In a case of first impression, the New Jersey Supreme Court in Norman International, Inc., and Richfield Window Coverings, LLC d/b/a Niem Made (USA), Inc. v. Admiral Insurance Company, 251 NJ 538 (2022) enforced a Designated New York Counties Exclusion included in a commercial general liability insurance policy issued by Admiral Insurance Company ("Admiral"). In so holding, the Supreme Court found that the policy's broad and unambiguous language did not require a causal relationship to trigger the exclusion. Rather, any claim "in any way connected with" the insured's operations in an excluded county fell within the exclusion. Additionally, Admiral had no duty to defend a claim that it was not obligated to indemnify. The determination of whether Admiral had a duty to defend was not determined solely by the allegations of the complaint. Instead Admiral relied upon facts adduced during discovery indicating that in certain instances an insurer may use extrinsic evidence to deny a defense to its insured. The Supreme Court recommended that going forward, in similar situations, courts should indicate when an issue requires consideration of facts beyond the complaint.

A New York City eviction court denied a motion for summary judgment, ruling that a tenant in a polyamorous relationship with the lease holder was entitled to the same eviction protections as those in two-person relationships. In its denial of summary judgment, the court found that the holdover tenant may be entitled to take the lease in his name after the death of his partner. What could the recognition of polyamorous relationships mean not only for property disputes in the future, but for employers and insurance carriers moving forward?

Washington state courts favor enforcing contractual arbitration clauses, and will strictly enforce an LLC operating agreement to arbitrate claims, including derivative claims, where agreement language is broad enough to include the same. Moreover, a contractual arbitration clause will be enforced absent evidence clearly indicating waiver of an intention to arbitrate.

Determining appropriate policy limits is no easy task. On one the hand, an insured has motivation to keep its retentions, deductibles and premiums down to a reasonable level. On the other hand, that fiscal interest is balanced against the security found in high policy limits designed to protect against a potential serious claim that requires a large payout. Often clients rely on the advice of a broker to help them select appropriate limits and policy terms. When claims come in the door, and the limits are insufficient to cover the damages, the broker may find themselves in the crosshairs of an angry client liable for damages not covered by their policy - and open the door for claims of professional negligence against the broker. Whether an insurer is obligated to defend and indemnify the broker against a claim of professional negligence is a question of policy interpretation recently addressed by the Ninth Circuit in Bliss Sequoia Ins. & Risk Advisors v. Allied Prop. & Cas. Ins. Co., No. 20-35890 (9th Cir. Oct. 27, 2022).

Courts must abide by the terms of arbitration agreements that invoke the governance of the Federal Arbitration Act (FAA), or contain a clearly written delegation clause. Terms that provide for an arbitrator to decide threshold issues may not be sidestepped or ignored by state courts. This is true even if the district court finds that the subject of the dispute is not within the scope of the arbitration agreement.

King County alleged that a judge was openly hostile to an attorney during a jury trial that resulted in the jury having negative feelings toward the defense. The court ruled that the audio recordings were not subject to disclosure as public records. The lack of transparency and accountability could make for a troublesome precedent.

An Illinois appellate court recently held that a patient's medical privacy rights were violated after the attorneys who secured him a $4.2 million verdict released details of his condition and medical history in the media after the trial concluded.

In quite a scolding for defense counsel, the court in Shapell Socal Rental Properties, LLC v. Chico's FAS, Inc., found on appeal that attorneys have both an ethical and statutory duty to notify opposing counsel of an intent to seek a default. The fact that one party failed to pay rent and pushed the envelope due to COVID closures did not change the obligation of professionalism between legal teams.

The Supreme Court of Washington found that the interruption of a dental office's business operations, caused by the COVID-19 shutdown and restrictions, did not constitute a physical loss under the property insurance policy. Although the dentists' argument that they should succeed under the "loss of functionality" theory was considered by the court, it still found in favor of the insurer because the dental office premises were not physically harmed and, in fact, the office was still functional and being used for emergency dental procedures. The policy also contained a virus exclusion. The efficient proximate causation theory did not assist the plaintiffs because the initial peril in the causation chain (the COVID-19 virus) was excluded under the policy.

New Orleans restaurant wins ground-breaking case in which an appellate court ruled that shut-downs and partial closures due to COVID-19 particles invading a restaurant's physical space may constitute direct physical loss sufficient to trigger coverage under an all-risks insurance policy that did not contain a virus exclusion.

When a property insurer pays for losses under a first-party property insurance policy, they are often paid at actual cash value. Actual cash value is calculated by taking the replacement cost, i.e., the amount it would cost to repair or replace an item of similar kind and quality, less depreciation, i.e., the decrease in the property’s value because of use, wear, obsolescence, or age. For an insurer, this often begs the question, what costs are depreciated when calculating actual cash value?

In a recurring issue of statewide importance, the Supreme Court of Arizona in Zambrano v. M & RC II, LLC, No. CV-21-0205-PR (Sept. 28, 2022) decided that it is against public policy to waive or disclaim the implied warranty of workmanship and habitability in a purchase agreement with a homebuyer. This rule extends to circumstances in which a builder simultaneously provides express warranties providing similar protections.

If a lawyer is not licensed in California but practices law as part of a team of licensed California lawyers, is this enough to invalidate the arbitration agreement between the client and California law firm? That question was squarely answered by California’s Fifth Appellate District in its recent decision in Brawerman v. Loeb & Loeb, LLP. 297 Cal.Rptr.3d ----, 81 Cal.App.5th 1106, 2022 WL 3053302, 2022 Daily Journal D.A.R. 8347. The work performed by an unlicensed attorney that is completed in conjunction with a team of properly qualified attorneys does not invalidate the retainer agreement as a whole, the court concluded. Any allegedly “illegal” work performed by the unlicensed attorney can be severed from the work performed by licensed counsel, thereby allowing the agreement between the parties to be preserved. Since the retainer agreement was not inherently illegal in its inception, its provisions, including the arbitration agreement, can withstand an alleged partial illegality. See, Birbrower, Montalbano, Condon & Frank v. Superior Court (1998) 17 Cal.4th 119 (Birbrower).

A Hollywood producer was not held vicariously liable for the negligent activities of his personal chef in supplying the entourage's executive assistant with drugs and alcohol that contributed to her demise. The court reasoned that the rendezvous between the chef and the assistant took place after hours, in a private bungalow and was not related to the chef's scope of employment.

The exact moment a statute of limitations begins to run is not always black and white. In a case where water and mud were directed onto a property by an adjacent property’s construction project the Texas Court of Appeals, basing its holding on accrual of nuisance claims rather than accrual of a negligence action, found that the two-year statute of limitations did not accrue until property damage occurred, even though plaintiff knew at a much earlier date that the condition might cause property damage.

This case underscores the importance of interrogatory answers, and attempts to be evasive can come back to bite. In the case of Field v. U.S. Bank National Assn. as Trustee, etc., et al. (2022) 79 Cal.App.5th 703, the California Court of Appeals addressed the issue of evasive discovery responses where a plaintiff who filed a wrongful foreclosure claim could not change a deliberately evasive interrogatory answer in an effort to defeat a motion for summary judgment filed against her by the defense.

A commercial general liability (CGL) insurance policy that contains a requirement that the loss occur and be reported by the policyholder within the same policy year, and does not include retroactive coverage was in violation of Washington public policy. In Preferred Contractors Ins. Co. v. Baker & Son Construction, Inc., 2022 Wash. LEXIS 426(Aug. 11 2022), the court looked to RCW 18.27.050 which provides that registered contractors bear financial responsibility for bodily injuries and death, and found that a denial of coverage a policy stemming from a wrongful death on a construction site was contrary to the statutorily-supported public policy of protecting the public.

In Khalil v. Williams, et al., the Supreme Court of Pennsylvania held that attorneys who may have engaged in fraud in connection with the execution of a release may not shield themselves from potential liability based on the Court’s holding in Muhammad v. Strassbruger, McKenna, Shilobad & Gutnick, 587 A.2d 1346 (Pa. 1991) which stands for the proposition that attorneys cannot be liable on legal malpractice claims when clients change their minds about the sufficiency of a negotiated settlement.

The insured was not entitled to recovery under a professional errors and omissions policy for a loss resulting from a hacking incident. Considering both North Carolina and Pennsylvania law, the court found that coverage was barred by the insurance policy's unauthorized computer use exclusion as well as the insured's failure to comply with the condition to obtain insurer consent before finalizing all settlements. Constr. Fin. Admin. Servs. LLC v. Fed. Ins. Co., No. 2:19-CV-00020, Doc. 63 (E.D. Pa. June 9, 2022).

In Viking River Cruises v. Moriana, B297327 (Cal. App. Sep. 18, 2020), the issue before the court was whether a pre-dispute arbitration agreement under the Federal Arbitration Act ("FAA") purporting to require arbitration of any such claim is valid. The decision effectively invalidates longstanding California law precluding arbitration of any Private Attorneys General Act (PAGA) claim, and will have massive positive repercussions in favor of employers.

Schools must take reasonable steps to protect their students from foreseeable injury inflicted by third parties. A trip to Starbucks after track practice did not relieve the school of its duty to a student when she returned to school and was stabbed on campus. The school had a "special relationship" with the student under the law and owed her a heightened duty of care while she was present on campus during open hours.

The Arizona Supreme Court ruled that treating physicians who have personal and direct knowledge of the patient in question and who testify as to the standard of care, diagnosis, and treatment for that patient are not considered experts for purposes of the One Expert Rule. Further, the One Expert Rule's purpose is to reduce costs in presenting multiple expert witnesses rather than combating cumulative evidence, which is already addressed by Rule 403 of the Arizona Rules of Evidence.

People suffer injuries on other people's property all the time, but the responsibility to keep them safe may be legally delegated to an independent contractor. In this influential Washington court decision, Eylander v. Prologis Targeted U.S. Logistics Fund, No. 82834-7-I (Wash. Ct. App. Jul. 18, 2022), the court ruled that a landowner must take reasonable steps to ensure the safety of an independent contractor's employees on their property, but may delegate that duty if they exercise reasonable care to ensure that the independent contractor will protect their own employees against known or obvious dangers.

A mother's claim against the City of Peoria for an incident resulting in the death of her son was not invalidated due to the inclusion of a shortened settlement window in her notice of claim. The Arizona Supreme Court in James v. City of Peoria, No. CV-21-0125-PR (Ariz. Jul. 18, 2022), found that a notice of claim otherwise in compliance with A.R.S. §12-821.01 is not invalid because it attempts to set a deadline for settlement prior to the sixty-day period outlined by the statute. The action was a legal nullity.

In another defining decision regarding ostensible agency, the Court of Appeal in De Valle v. Doctors Med. Ctr. of Modesto, No. F082099 (Cal. Ct. App. Jul. 6, 2022) found in favor of a defendant hospital. Based upon this recent decision, a patient’s claim for injuries against a hospital based upon ostensible agency for negligent surgery performed by an independent contractor will fail when it is demonstrated that the patient had a pre-existing relationship with the physician, that such physician scheduled the surgery and selected the hospital where the surgery would be performed, and that the patient should have reasonably known that the hospital was simply the venue for the surgery.

A gym member's claim of negligence, gross negligence and premises liability was shot down by the court when it found that she signed a release of claims as part of her membership agreement. A slip and fall in the gym's sauna as a result of a burnt out light bulb did not rise to the level of gross negligence to subject the club to liability.

A court invalidated an arbitration agreement as unconscionable and adhesive where it was presented to an employee as a condition of employment. The agreement was found procedurally unconscionable because the employee spoke Spanish and was only provided documentation in English, without any offer of translation or assistance in understanding the document. The agreement was also found substantively unconscionable because it permitted the arbitrator to shift all attorney's fees and costs to the employee in the event the employee was the losing party and severely limited discovery.

Washington’s Court of Appeals held an owner of land who did not exercise control over the manner of work on a worksite was not vicariously liable for the death of an employee of one of its general contractors. The decision handed down on June 21, 2022, in Farris, et al. v. The Port Blakely Company, et al. is instructive on common law and regulatory scheme establishing the line dividing responsibility between landowners and contractors performing works of improvement.

The standard statute of limitations for a party to bring a personal injury or wrongful death actions is two years. There are, however, circumstances in which the statute of limitations for such causes of action are extended. The victim of a felony in California, for example, has an extended statute of limitations in which to bring an action for personal injury or wrongful death against the person convicted of that felony. (Code Civ. Proc., § 340.3) In Cardenas v. Horizon, the California Court of Appeal made a notable ruling limiting the extended statute of limitations, holding such an extension does not apply to the convicted felon's employer. The Court further held that Labor Code section 2802, which allows an employee to be indemnified by his or her employer, does not apply to third parties in this circumstance.

The California Court of Appeal ruled that a general liability policy does not provide coverage to a homeowner who grades a neighbors' property because of a mistaken understanding of the property lines. The homeowner’s policy contained standard language creating coverage for property damage caused by an “occurrence,” which the policy defined as an “accident.” The insurer did not have a duty to defend the policyholder because a mistake as to property lines did not qualify as an accident and trigger coverage under the policy.

The Texas Supreme Court found in In re UPS Ground Freight, 65 Tex. Sup. Ct. J. 1532 (Tex. June 17, 2022) [20-0827] that a discovery request in a wrongful death action compelling production of the drug tests and other personal information of uninvolved UPS drivers was overbroad and prohibited by federal law.