Around the Nation: June 2016
State news and updates from CLM chapters, reps, and committees.
Social Host Liquor Liability and Dram Shop Limitations
In Baker v. Croslin, the Oregon Supreme Court held that there may be circumstances under which a social host who makes alcohol available to guests may be liable for injuries caused by that intoxicated guest. Under Oregon’s Dram Shop statute, a social host can be liable for having “served or provided” alcohol to a visibly intoxicated guest. According to the court, liability under the statute turns on the extent to which the social host controls the supply of alcohol and how that control is exercised. Once it is “readily observable” that the guest shows signs of visible intoxication, then the social host has a duty to deny the guest further alcoholic drinks. However, the court makes it clear that a social host does not have a duty to continuously monitor a guest’s level of intoxication. Additionally, “provided” may include situations where the guest pays for part of the alcohol by giving money to the host or if the host leaves out a jar for guests to contribute to the cost of the party. Lastly, the harm must be foreseeable.—From CLM Member Jack Levy
Caesars Battles for Owner’s Right to Evict Patrons Social Host Liquor Liability and Dram Shop Limitations
In Slade v. Caesars Entertainment Corp. et al., the Nevada Supreme Court was asked to consider whether common law principles referenced in NRS 463.0129(3)(a) permit gaming establishments to exclude from their premises any person for any reason. Caesars Entertainment Corp. owns and operates a number of casinos throughout the U.S., including casinos in Tunica, Mississippi. The appellant received a letter from Harrah’s Tunica Hotel and Casino notifying him that he had been evicted and that the eviction would be enforced at all Caesars properties. Later, the appellant was interested in attending a convention at Paris Las Vegas, a casino owned and operated by Caesars, but was informed that the eviction would be enforced. The appellant filed a complaint alleging a breach of the duty of public access and that, pursuant to NRS 463.0129(1)(e), Caesars could not exclude him without cause. Caesars filed a motion to dismiss pursuant to NRS 463.0129(3)(a), which allows a gaming establishment “to exclude any person from gaming activities or eject any person from the premises of the establishment for any reason,” which was granted, prompting the appeal. The Nevada Supreme Court saw this as an issue of first impression to determine the breadth of an owner’s common law right to evict patrons and determined that, pursuant to NRS 463.0129, “gaming establishments generally have the right to exclude any person from their premises; however, the reason for the exclusion must not be discriminatory or unlawful.” The district court’s decision granting Caesars’ motion to dismiss was upheld.—From Nevada Chapter Vice President Gina M. Mushmeche, Esq.
No Defense Reimbursements
In a ruling strongly favoring policyholders, the Alaska Supreme Court has reaffirmed the insurer’s obligation to provide independent counsel when reserving rights. Alaska has long had a reputation as a pro-insured state, but the court’s recent decision in Attorneys Liability Protection Society Inc. (ALPS) v. Ingaldson Fitzgerald PC cements it. In ALPS, the insurer sought to recover fees paid defending under a reservation of rights. Noting the history of Alaska independent counsel law, the court rejected the insurer’s effort to recover defense costs paid for a defense under reservation of rights, even where there was no possibility of coverage. Under Alaska statute AS 21.89.100, the determinative event giving rise to the insurer’s duty to pay independent counsel is not the “possibility or impossibility of coverage, but the objective act of the insurer taken when reserving its position as to coverage.”—From CLM Member Thomas A. Matthews
Subject Matter Exclusion Unambiguously Bars Coverage for Damages Awarded for Child Abuse
In a case of first impression, the Ohio Supreme Court in World Harvest Church v. Grange Mutual Casualty Company was asked to consider the scope of a CGL policy’s “subject matter exclusion” addressing claims for injuries arising out of abuse or molestation. As background, a jury verdict and seven-figure damages award against an insured church, based on vicarious liability for its employee’s corporal punishment of a two-and-a-half-year-old boy, was upheld on appeal. After settling the claims, the church sued Grange for coverage under the CGL policy, asserting that Grange had improperly refused to indemnify it for the underlying judgment. A trial court agreed and entered a summary judgment in favor of the insured, which was upheld on appeal. The church argued at the appellate level that the subject matter exclusion was limited in its application to damages awarded for an insured’s direct liability, not for those damages awarded based upon a vicarious liability claim. In a discretionary appeal, the Ohio Supreme Court reversed the appellate court and held that coverage was excluded, concluding that to hold otherwise “would require rewriting the policy language,” since the exclusion’s language was unambiguous, i.e., “it cover[ed] actual or threatened abuse or molestation by anyone.”—From Northeast Ohio Chapter Secretary Michael C. Brink
Medical Bill Subsidies and Possible Effects Still in Question Under ACA
In United States House of Representatives v. Burwell, et al., Judge Rosemary Collyer ruled on May 12 that the Obama administration is unconstitutionally subsidizing medical bills for millions of people without congressional approval or authority. “Congress authorized reduced cost-sharing but did not appropriate monies for it,” Collyer said in her 38-page ruling. “Congress is the only source for such an appropriation, and no public money can be spent without one.” The issue relates to approximately $175 billion paid to insurance companies participating under the Patient Protection and Affordable Care Act (ACA) so the carriers can reduce insureds’ costs. House Republicans brought the challenge, and the opinion is seen by them as a win. The opinion does not immediately go into effect, and the administration will appeal the decision.—From CLM Member James C. Wright
Controversial Return to Hourly Attorney Fees
The Florida Supreme Court issued an opinion in Castellanos v. Next Door Company that challenged the attorney fee provision under Florida Statute § 440.34 on constitutional grounds. In its decision, it revived hourly fees for claimant’s attorneys. It was the conclusion of the court that the statute is unconstitutional based upon violation of due process. The claimant can pursue hourly fees again by presenting evidence that the attorney is entitled to a fee that deviates from the fee schedule. This decision brings a renewed focus on timely response and provision of benefits within 30 days of the filing of a petition for benefits to avoid exposure to hourly fees. An uptick in the amount of discovery that the claimant attorney initiates is anticipated to inflate their fees.—From CLM Member Courtney C. Bahe, Esq.