Around the Nation: December 2012

Around the Nation: December 2012

News and updates from CLM state chairs, reps, and committees.

By Bevrlee J. Lips


Spoliation Leads to Dismissal

In Fines v. Ressler Enterprises, Inc., the North Dakota Supreme Court affirmed the district court’s dismissal of a breach of warranty action due to spoliation of evidence. The plaintiff alleged that the company sold and installed defective building siding materials. The plaintiff sent a letter to the installer stating that the siding was to be replaced and would be saved only if the installer agreed to be responsible for the cost of retention. The installer’s counsel responded the same day, demanding that the siding not be removed. The siding was removed and destroyed.

The installer filed a motion arguing that the action should be dismissed because the plaintiff unnecessarily destroyed the evidence without providing sufficient notice to have a third-party expert examine the siding. The district court entered an order dismissing the case. On appeal, the North Dakota Supreme Court upheld the dismissal and ruled that the district court did not abuse its discretion in doing so. The Supreme Court held that not only was the spoliation prejudicial to the defense, but the action of the plaintiff was willful and offensive. The Supreme Court rejected the plaintiff’s argument that having photographs and video of the original siding was enough for the installer to properly defend the case.—From North Dakota State Lead Chair Michael J. Morley


Vendor Confirmed First-Party Claimant

In 2008, the Colorado legislature enacted sections 10-3-1115 and 10-3-1116, which prohibit persons engaged in the business of insurance from unreasonably delaying or denying payment of a claim for benefits “owed to or on behalf of any first-party claimant.” In Kyle W. Larson Enterprises v. Allstate Insurance Company, a roofer contracted with the owners of four homes insured by Allstate. The contractor was given authority by the customers to communicate directly with Allstate regarding their claims. Later, the roofer determined that the agreed-upon repairs were not sufficient for code compliance. When he billed for the overage, Allstate refused the additional repairs since they were outside of the agreed scope, and the roofer filed suit. The trial court ruled that the roofer was not a first-party claimant. The Colorado Court of Appeals later held that a roofing contractor seeking payment under a homeowner’s policy could qualify as a first-party claimant under the “on behalf of” language in the statutes. Certiorari review of this case of first impression is being sought in the Colorado Supreme Court.—From Colorado State Chapter Member Peter Gregory


Change to Appellate Judge Selection Rejected

Missouri voters rejected a proposed constitutional amendment that would have altered the method used to select state appellate court judges. The current plan, which will remain in place, features a nominating commission—made up of three lawyers, three gubernatorial appointees, and a Supreme Court judge—who submits a panel of three judicial finalists to the governor. The failed amendment would have increased gubernatorial appointments to four, replaced the Supreme Court judge with a retired judge who would serve as a non-voting member, and expanded the number of finalists submitted to the governor.—From Missouri State Chapter Co-Chair Paul D. Larimore


Know When to Fold ’Em

In a case reminiscent of the song lyrics from The Gambler, “You got to know when to hold ‘em, know when to fold ‘em,” the New Hampshire Supreme Court ruled that a workers’ compensation settlement obtained the day before the injured worker filed for divorce was property subject to “equitable distribution.”

The plaintiff argued that, because the settlement of nearly $250,000 represented future lost earnings he would obtain after the divorce, it was not property subject to equitable division. The spouse argued that “all tangible and intangible property and assets, real or personal, belonging to either or both parties, whether title to the property is held in the name of either or both parties,” is subject to equitable distribution. Thus, she was entitled to a portion of the workers’ compensation settlement because it was “…property acquired up to the date of a decree of legal separation or divorce.”

The Supreme Court upheld the trial court ruling and held that, even if workers’ compensation proceeds represent future earnings, once received and retained during the marriage, the proceeds become property subject to equitable distribution of marital assets.—From New Hampshire State Lead Chair J. Kirk Trombley


Employee Discharge Date Is Key

In Lawrence v. City of Youngstown, the Ohio Supreme Court ruled that a discharged employee’s 90-day time limit to notify an employer of a workers’ compensation retaliation claim under R.C. 4123.90 is triggered by the date of employment termination, not the date the employee received notice of termination or the date the employee discovered they might have a claim under the anti-retaliation statute, as long as the employer acts within a reasonable time to notify the employee of termination.

Ohio employers should make sure that discharged employees, especially those on leave or suspension at the time of termination, receive prompt notice of termination via face-to-face meeting or certified mail and that they carefully document the steps taken to provide that notice.—From Ohio State Chapter Member Matt Bakota


Drunken Guests Vs. Drunken Patrons

In Juliano v. Simpson, a case centering on social host liability, the Supreme Judicial Court of Massachusetts recently held that a father and daughter were not responsible for an alcohol-related car crash that happened after an underage drinking party occurred in their home. While they did not provide the alcohol, the court was asked to extend duty of care to an underage host who provides a location to consume it. The court found that social hosts can be liable only for injuries caused by an impaired guest if they served the alcohol or made it available.

A new case is testing the scope of that decision. The family of an underage woman killed by a drunk driver claimed that the Juliano decision should not apply to commercial entities. The crash followed hours of drinking at a country music festival sponsored by the Kraft Group (Robert Kraft is the New England Patriots’ owner), a festival with a long history of raucous underage drinking. Summary judgment motions are pending, and the outcome of the case will have a significant impact on the evolution of social host law in Massachusetts.—From Massachusetts State Chapter Co-Chair James Campbell

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

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