Around the Nation: May 2016

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

By Bevrlee J. Lips


Statute of Repose for Negligent Construction Claims Clarified

The Oregon Supreme Court recently ruled that, in regard to a spec home (a home built on speculation that it will eventually sell), the 10-year period of repose runs from the “date of the act or omission complained of” rather than from the “date of substantial completion.” In Shell v. The Schollander Companies Inc., the plaintiff filed a negligence lawsuit against the defendant alleging windows, siding, and roof installation defects. The court concluded that the claims were barred because the negligent acts or omissions complained of fell outside the 10-year statute of repose. This case is important because it establishes a bright line that the statute of repose for spec homes will run from the date the work was done instead of when the owner purchased the home.—From CLM Member Jack Levy


Noneconomic Damages Cap Upheld in Medical Malpractice Case

The Missouri Supreme Court has upheld Missouri’s noneconomic damages cap in a wrongful death medical malpractice case in Dodson v. Ferrara et al. The court had previously struck down the cap in common law medical malpractice cases as being an unconstitutional infringement on the right to a jury trial. Wrongful death is a statutory cause of action in Missouri, and the court begrudgingly held that the cap does not violate the right to trial by jury, the separation of powers, or equal protection in wrongful death cases. In Dodson, a husband (and his children) sued for the death of his 34-year-old wife following a coronary artery dissection during a catheterization. The jury assessed noneconomic damages of $9 million, which the trial court reduced to $350,000 per the cap. The Missouri Supreme Court affirmed.—From CLM Member Jeffrey J. Brinker


Comparative Fault and Overwhelming Undisputed Evidence

In a case involving a significant brain injury to the plaintiff, the Tennessee Supreme Court recently denied permission to appeal a court of appeals decision affirming a grant of summary judgment in favor of the defendant in a case involving a collision in an intersection. In Hall v. Owens et al., the plaintiff’s expert opined that the defendants’ vehicle was speeding and failed to maintain a proper lookout, and the defendants claimed that the plaintiff had turned left on a red light in front of their vehicle. Based on video footage and other undisputed evidence, no reasonable juror could determine the plaintiff’s fault at less than 50 percent. The court of appeals noted that, while comparative fault is normally a question for the trier of fact, summary judgment may still be appropriate in those situations where reasonable minds could only conclude that the plaintiff’s fault was equal to or greater than the defendant’s.—From CLM Member Jimmy Wright


Court Upholds Ruling That Cyber Data Breach Is Covered by CGL Policy

In Travelers Indemnity Co. of Am. v. Portal Healthcare Solutions LLC, the U.S. Court of Appeals for the 4th Circuit, in a per curiam decision, upheld a federal district court’s grant of summary judgment ordering Travelers to defend its insured against an underlying New York state class action. The class plaintiffs alleged that Portal Healthcare was negligent and violated their privacy rights by failing to prevent the cyber breach of a third-party server that led to the online publication of their hospital records. Travelers thereafter sought a declaratory judgment that the posting did not amount to a covered publication under the subject CGL policies—policies that do not contain exclusions for cyber breach incidents. In opposing Portal Healthcare’s cross-motion for summary judgment on the coverage issue, Travelers offered alternative, competing definitions of the undefined terms “publication,” “publicity,” and “disclosure” in support of its argument that there was no publication. The 4th Circuit, however, affirmed the district court’s opinion that Virginia law required that the terms be given their ordinary meaning. Applying the so-called “eight corners” rule, the district court’s opinion that Travelers had a duty to defend as a matter of law was upheld.—From Northeast Ohio Chapter Secretary Michael C. Brink


Jury Finds in Favor of Ford Motor Company in Wrongful Death Lawsuit

In December 2006, the plaintiff’s decedent was involved in a single-vehicle rollover crash on Interstate 20/59 in Greene County. The plaintiff filed suit against Ford Motor Company alleging that, during the rollover sequence, the decedent’s seat belt unlatched and allowed him to become ejected from his 2003 Ford Explorer Sport Trac. The plaintiff also contended that the vehicle was defective in that it was not equipped with a rollover-activated side air bag Safety Canopy system, which would have prevented his ejection. Ford provided evidence at trial that the decedent’s conduct in operating his vehicle caused the crash and subsequent ejection and also that he was not wearing his seat belt. Furthermore, Ford was the first company in the world to introduce the Safety Canopy technology. Even if this system had been incorporated into the vehicle, it more than likely would not have prevented the decedent’s injury because he was not wearing his seat belt. Seat belts are the most effective way to prevent injuries and deaths in motor vehicle crashes. The trial lasted approximately two and a half weeks, and the jury returned a verdict in favor of Ford after just two hours of deliberation.—From Alabama Chapter Director of Events Joe Duncan R. Kramer, Esq.


Excluding E&O Won’t Preclude D&O

When investors sued a private equity firm over the loss of funds, its liability carriers took refuge under a policy excluding claims involving “professional services,” including investment advice and fund management. Though the trial judge excused them from defending against these class actions, the D.C. Court of Appeals ruled otherwise in Carlyle Investment Management v. Ace American Insurance. Since the investors also raised claims for breach of fiduciary duty, breach of contract, and negligence, the high court did not believe that the exclusion was broad enough to preclude coverage. Thus, while a professional services exclusion may work for certain E&O claims, it does not negate the duty to defend when the suit arguably involves both professional and nonprofessional services.—From CLM Maryland Chapter President Irwin R. Kramer, Esq.


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

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