1/15/2015

Around the Nation: January 2015

State news and updates from CLM chapters, reps, and committees.

By Bevrlee J. Lips

CALIFORNIA: Duty to Defend as per California Labor Code Section 2802

California Labor Code Section 2802 requires an employer to indemnify an employee for all expenses or losses incurred by an employee in the performance of his employment duties. What is often in dispute is whether Section 2802 requires the employer to defend the employee. In Douglas v. Los Angeles Herald-Examiner, the court found a duty to defend was implied within the code. However, this is an old case and has not been followed by any California court in the past 15 years. Yet the case has not been specifically overruled despite the fact that a recent case, Carter v. Entercom Sacramento LLC, states that Section 2802 “does not say that an employer must defend an employee.” Thus, the current case law suggests that there is no duty to defend. However, by failing to defend, an employer may be liable for the employee’s attorney fees and other losses as per Section 2802.—From Orange County Chapter Member Robert A. von Esch, Esq.

MISSOURI: Immunity Statute Tested for Propane Retailers

The Fourth Judicial Circuit Court, Nodaway County, recently dismissed a case that involved a serious burn injury related to a propane explosion and fire. Missouri Revised Statute § 323.060 limits the civil liability of a propane retailer for injuries or damages if an individual changes his propane system without putting the propane retailer on notice. The propane industry has been working with legislatures around the country to implement similar limited liability statutes. This appears to be the first dismissal in the country of a case using this type of immunity statute.—From CLM Members John V. McCoy and Matthew R. Rosek

NEW JERSEY: No Vicarious Liability in LLP Despite Lack of Required Insurance

In a legal malpractice case, Mortgage Grader Inc. v. Ward & Olivo LLP, the plaintiff asserted claims against two attorneys who practiced law as a limited liability partnership (LLP). The Superior Court of New Jersey dismissed the direct claims against one partner because he was not liable vicariously for the alleged malpractice of his former partner and the LLP did not revert to a general partnership, notwithstanding the LLP’s failure to maintain professional liability insurance covering the claims in the lawsuit as required by R. 1:21-1C(a)(3). The court further held that the plaintiff failed to comply with New Jersey’s Affidavit of Merit statute by not serving an affidavit of merit on the nonoffending attorney in the LLP or otherwise substantially complying with the statute.—From Northern New Jersey Chapter President Karen Painter Randall

OHIO: Wrongful Discharge in Violation of Public Policy

In a December 2014 decision, one of Ohio’s most important appellate courts bolstered Ohio’s “wrongful discharge in violation of public policy” tort. In Blackburn v. American Dental Centers, the Tenth District Court of Appeals held that Ohio’s general workplace safety statutes evince a clear public policy that prohibits discharging employees for reporting workplace conduct and/or practices that present safety risks to employees or patrons. This decision makes it increasingly risky for an employer to discharge an employee with a history of reporting general workplace safety concerns, including those related to customer safety. It also opens the door to even more litigation against employers. However, another appellate court recently rejected a claim premised on this same theory, which gives hope that this conflict may be resolved more favorably for employers by the Ohio Supreme Court in the near future.—From CLM Member Matt Bakota 

WASHINGTON: Grant of Part of Cross-Motions for Summary Judgment

An insurance policy requirement of a written agreement that a person or organization must be added as an additional insured on the named insured’s policy can be satisfied by evidence of a unilateral or bilateral contract. In the case of City of Bothell v. Berkley Regional Specialty Ins Co., the “written agreement” contingency was met when the city promised to set up a necessary meeting with the contractor (named insured) once it received proof that insurance for the project was available to the city. The contractor satisfied the contingency via an email that read, “I expedited that insurance cert. this morning. I hope this info will reach you quickly and we can meet.” Also in this case, the court found the “intended use” exclusion applied, but because the insurer waited two years to raise this defense after offering other defenses to coverage, none of which had merit, the insurer was found to have acted in bad faith as a matter of law.—From CLM Member Jacquelyn A. Beatty

WISCONSIN: Grant of Part of Cross-Motions for Summary Judgment

In Brandenburg v. Briarwood Forestry Services, the Wisconsin Supreme Court found that a homeowner could be held liable for damages caused by an independent contractor. In this case, a homeowner hired an independent contractor to spray an herbicide on his property. The herbicide damaged numerous trees on the neighboring property. Generally, an employer is not liable for damages from the tort of an independent contractor. The court held that an exception to this general rule applied because spraying the herbicide was an inherently dangerous activity. The herbicide application posed a naturally expected harm, and it was possible to reduce the risk with precautions. The homeowner, therefore, had a duty to exercise ordinary care to prevent the damages. Wisconsin courts had not previously applied this rule regarding independent contractors to homeowners.—From CLM Member Andrew J. Christman



Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

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