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LIABILITY LAW |
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FALL 2009
FALL 2009 MASS. SJC ISSUES LANDMARK DECISION ON ALLOCATION OF INSURANCE COVERAGE IN ENVIRONMENTAL CASES The Supreme Judicial Court has issued a decision that addresses important issues that arise when a claim involves damages that occur over several policy periods. See Boston Gas Co. v. Century Indem. Co., 454 Mass. 337 (2009). The court adopted the “pro rata” approach which allocates coverage according to the time that each insurer was on the risk. The insured, Boston Gas, operated a manufactured gas plant (“MPG”) in Everett from 1908 until about 1969. Boston Gas was strictly liable for environmental contamination that the MPG plant caused. Over the years, Boston Gas had liability insurance with several insurers, including Century. Century issued “occurrence” policies that applied above to “ultimate net loss” above a self-insured retention that Boston Gas was required to pay. Some of the policies were not available but the parties did not dispute that the policies were occurrence based. The policy limits and self-insured retentions varied over the years. Boston Gas sued Century in federal court, and the federal appellate court certified some questions to the state Supreme Judicial Court regarding the coverage dispute. The first question required the court to decide how “to allocate liability for long-term environmental contamination where a *348 policyholder sues one of its CGL insurers that provided coverage for the risk (was ‘on the risk’) for only a portion of the time during which the contamination took place.” The court explained that other courts have adopted two different approaches to the issue. Under the joint and several approach, an insurer on the risk for any portion of the time when the loss occurred “is jointly and severally obligated to respond in full, up to its policy limits, for the loss”, even if part of the loss occurred outside the insurer’s policy period. Under a pro rata approach, an insurer is only liable for a share of the loss “proportionate to the damage suffered during that policy's term.” The insured is required to contribute for those periods where it had no insurance or insufficient insurance. The court concluded that the pro rata approach was the most reasonable interpretation of the policies. The court explained that the policies only provided coverage for damage that occurred during the policy period. As a result, “[t]he most reasonable reading of these provisions is that the Century policies provided coverage for that portion of Boston Gas's liability attributable to the quantum of property damage occurring during a given policy period.” The court concluded that “[a]ny reasonable insured purchasing a series of occurrence-based policies would have understood that each policy covered it only for property damage occurring during the policy year.” The court also reasoned that it was fair to require the insured to pay for damage that occurred during times when the insured did not have coverage Having adopted the pro-rata approach, the court then had to decide on a method for allocating coverage. The court adopted the time on the risk method, explaining that “[u]nder this allocation method, ‘each triggered policy bears a share of the total damages [up to its policy limit] proportionate to the number of years it was on the risk [the numerator], relative to the total number of years of triggered coverage [the denominator].’” (citation omitted) The court then had to consider how the self-insured retention would be calculated. The court decided that the insured should only have to pay a prorated share of the self [- insured retention for each applicable year. In other words, “Boston Gas must satisfy only a prorated amount of its per occurrence self-insured retention for each triggered policy period, to be prorated on the same basis as Century’s liability. Thus, if the pollution in this case had occurred over the course of a decade, then one-tenth of the total cleanup cost would be apportioned to each policy year and Boston Gas would be responsible for one-tenth of its applicable self-insured retention for each year.” The court summarized its approach by concluding that if possible, the amount of damage to be allocated to each policy period should be determined based on the amount of damage that actually occurred in each period. If such an allocation is not possible, losses should be allocated using a time on the risk method:
The insured is responsible for any periods in which it did not have insurance, even if such insurance was not available at the time. In Massachusetts Property Ins. Underwriting Ass'n v. Gallagher, 75 Mass.App.Ct. 58, (2009), the Appeals Court held that a controlled substances exclusion in a homeowners’ policy negated coverage for a claim arising out of a drug overdose. MPIUA issued a homeowners’ policy to John Scaduto which included an exclusion which negated coverage for bodily injury:
Scaduto had a prescription for propoxyphene. He allegedly left the drug in a place that was accessible to eighteen year old Stephen McMaster. McMaster took an overdose of the medication and died. His estate filed suit against Scaduto, and the MPIUA took the position that the controlled substances exclusion negated coverage. The Appeals Court agreed, concluding that McMaster’s use of the drug fit within the exclusion. The court rejected the estate’s argument that the exception in the exclusion for “the legitimate use of prescription drugs by a person following the orders of a licensed physician” applied in this case. Although Scaduto’s use of the prescription was legitimate, the exception did not apply because McMaster’s overdose was not a legitimate use of prescription drugs.) Mass. SJC To Reconsider Natural Accumulation Rule n Snow ands Ice Cases The SJC has granted further appellate review in Papadopoulos v. Target Corp.,74 Mass.App.Ct. 1104 (2009) a case in which the defendants obtained summary judgment relying on the natural accumulation rule. Under this rule, a landowner is not liable for injuries that result from a natural accumulation of snow or ice. In this case, the bodily injured plaintiff slipped and fell on ice in a store parking lot. The lot had been plowed and the plaintiff fell on ice that had “either fallen off the snow pile or was created by run-off from the pile.” The Appeals Court affirmed a summary judgment in favor of the defendants, relying on the natural accumulation rule. The plaintiffs applied for further appellate review and the SJC granted the application. The SJC ordered the parties to brief "the question whether, in a premises liability action involving snow and ice, the distinction between natural and unnatural accumulations of snow and ice should continue to be a factor under Massachusetts law in determining whether a property owner or other person responsible for maintaining property has been negligent." The order shows that the court is going to reconsider the natural accumulation rule. The SJC will not issue a decision in this case until 2010, so the order creates uncertainty for pending cases involving snow and ice. MASS. SJC REINSTATES LIQUOR LIABILITY CLAIM AGAINST LIVERY SERVICE Reversing an order granting a motion for summary judgment, the Supreme Judicial Court has held that a company that furnished transportation to people attending a bachelor party could be liable where the company brought an intoxicated patron back to his car, and he was subsequently involved in an accident while driving under the influence. See Commerce Ins. Co. v. Ultimate Livery Service, Inc.,452 Mass. 639 (2008) MASS. SJC REINSTATES LIQUOR LIABILITY CLAIM AGAINST LIVERY SERVICE Reversing an order granting a motion for summary judgment, the Supreme Judicial Court has held that a company that furnished transportation to people attending a bachelor party could be liable where the company brought an intoxicated patron back to his car, and he was subsequently involved in an accident while driving under the influence. See Commerce Ins. Co. v. Ultimate Livery Service, Inc.,452 Mass. 639 (2008) MAY 2009
MAY 2009 MASS. SJC REINSTATES LIQUOR LIABILITY CLAIM AGAINST LIVERY SERVICE Reversing an order granting a motion for summary judgment, the Supreme Judicial Court has held that a company that furnished transportation to people attending a bachelor party could be liable where the company brought an intoxicated patron back to his car, and he was subsequently involved in an accident while driving under the influence. See Commerce Ins. Co. v. Ultimate Livery Service, Inc.,452 Mass. 639 (2008) A group of men hired Ultimate Livery Service (“Ultimate”) to provide transportation in a van from a sports bar in South Boston to a bachelor party and back. Ultimate’s owner expected that patrons at these types of events would become intoxicated. After the party, Ultimate’s driver drove the group back to the sports bar. One of the men, William Powers, then drove a vehicle, even though he was intoxicated. Powers was then involved in an accident, injuring several people and killing another. The court concluded that there was insufficient evidence to support a typical social host liquor liability claim because there was no evidence that Powers drank alcohol furnished by Ultimate. The court held, however, that “in the circumstances of this case, that the tort defendants owed a duty of reasonable care to avoid discharging a passenger, who they knew, or should have known, was intoxicated and likely to drive an automobile.” A jury could conclude that Ultimate reasonably could have foreseen that an accident would occur. The court emphasized that the Ultimate driver took the men to a liquor store so that they could buy alcohol, knew or should have known that Powers was intoxicated, and allowed Powers to drink in the van. The court also held that a commercial auto policy issued to Ultimate provided coverage for the claims. The court reasoned that the claims did arise out of the use of the van within the meaning of the auto policy, even though the van itself was not involved in the collision. By contrast, a business owner’s policy did not provide coverage. The auto exclusion in that policy applied because “the injury arose out of the use of Ultimate’s van…” MASS. SJC: WORKERS’ COMP. ACT BARS DEATH CLAIM EVEN IF NO WORKERS’ COMP. BENEFITS AVAILABLE The Supreme Judicial Court has held that the Workers’ Compensation Act bars a wrongful death claim against an employer, even if no workers’ compensation benefits were available because the decedent did not have any dependents. See Saab v. Massachusetts CVS Pharmacy, LLC, 452 Mass. 564 (2008). The decedent was killed in the course of his employment while he was trying to apprehend a shoplifter. The suspect stabbed the decedent in the neck, causing fatal injuries. The decedent had no dependents but his parents filed a wrongful death action against CVS. Since the decedent had no dependents, no one collected any workers’ compensation benefits. Nevertheless, the SJC held that the Workers’ Compensation Act barred the claim. The court reasoned that the workers’ compensation act barred a common law action because the “decedent “was an employee who suffered a ‘personal injury’ that arose ‘out of and in the course of his employment’”, even if no one would actually receive workers’ compensation benefits as a result of his death. Jackie’s Law: Excavation and Trench Safety Effective January 1, 2009, Massachusetts General Laws chapter 82A and 520 Code of Massachusetts Regulations 14.00 (a/k/a “Jackie’s Law”) provide new regulation of the digging of trenches in the Commonwealth and impose penalties for non-conforming excavators. Jackie’s Law was enacted in response to the death of 4-year-old Jackie Moore in 1999 at an unsecured construction site. Jackie Moore was killed when she crawled into a trench which then collapsed on top of her. At the time of the accident, no regulations relative to unattended trenches existed in the Commonwealth of Massachusetts for the General Public. Excavators must now obtain a permit in order to dig a trench, as defined by Jackie’s Law. A “trench” is defined as “an excavation which is narrow in relation to its length, made below the surface ground in excess of 3 feet below grade and the depth of which is, in general, greater than the width, but the width of the trench, as measured at the bottom, is no greater than 15 feet.” See 520 C.M.R. 14.02. However, it should be noted that Jackie’s Law applies only to “construction related excavations.” M.G.L. c. 82A, § 1. An “excavator” is broadly defined, including companies, government agencies, joint ventures, and even individuals. See 520 C.M.R. 14.02. An exposed trench must always be attended by a “competent person” who is capable of identifying hazards and is authorized to take measures to eliminate them. Id. The statute’s definition of a competent person is taken directly from OSHA’s regulations. If an excavator is in violation of Jackie’s Law, the local municipality may shut down the work site immediately and hire a police detail or backfill, barricade or cover the trench, all at the cost of the excavator. See 520 C.M.R. 14.05. The worksite may not operate again until the entity ordering the shutdown has inspected the worksite and has determined that the General Public’s safety is not at issue. Id. OCTOBER 2008
OCTOBER 2008 MASSACHUSETTS SUPREME JUDICIAL COURT RECOGNIZES "LOSS OF CHANCE" IN MEDICAL MALPRACTICE CASES. In a pair of decisions that expand the potential reach of medical malpractice claims, the Massachusetts SJC has adopted the “loss of chance” doctrine for claims brought under the wrongful death statute, M.G.L. c. 229, §§ 2 and 6. The court held in Matsuyama v. Birnbaum, 452 Mass. 1 (2008), that an estate may recover damages by proving that a physician’s negligence reduced or eliminated the decedent’s chances of survival, even if the physician’s negligence was not the proximate cause of the decedent’s death. The court noted that the prior “all or nothing” rule unfairly precluded liability any time there was less than a 50-percent chance of survival. In noting that a substantial number of states have adopted similar loss of chance doctrines, the court reasoned that “... progress in medical science now makes it possible, at least with regard to certain medical conditions, to estimate a patient's probability of survival to a reasonable degree of medical certainty.” In Matsuyama, the court set out the specific formula for calculation of damages: 1) Calculate the full amount of damages caused by the death; 2) Calculate the patient’s chance of survival just before the malpractice; 3) Calculate the chance of survival that resulted from the malpractice; 4) Subtract amount in Step 3 from Step 2; and 5) Multiply Step 1 by the percentage in Step 4. The court indicated that expert testimony would be required in order to ascertain what measure of a more favorable outcome was medically appropriate and to determine what statistical rates of survival applied in each circumstance. In the companion case, Renzi v. Paredes, 452 Mass. 38 (2008), the SJC held that loss of chance damages are recoverable where the defendant’s negligence reduced chances of survival from greater than 50% to less than 50% (as compared to the plaintiff in Matsuyama, where the chance of survival started at less than 50%). The SJC also clarified that a jury may award damages based on whether a defendant is liable either for wrongful death or for causing a loss of a chance to survive, but not both. MA SJC: PLAINTIFF WHO ALLEGES LEGAL MALPRACTICE IN CRIMINAL DEFENSE MUST PROVE ACTUAL INNOCENCE. The Supreme Judicial Court has ruled that a plaintiff who alleges that lawyers were negligent in representing him in a criminal case must prove that he was actually innocent in order to recover from the lawyers in the legal malpractice action. See Correia v. Faqan, 452 Mass. 77 (2008). In this case, two criminal defense lawyers represented the plaintiff, Correia, in a federal criminal case in which the government alleged that Correia intentionally burned down a commercial building. Initially, Correa was convicted, but the federal criminal trial judge granted a motion for a new trial. The judge ruled that Correia’s criminal defense counsel, Fagan and Brown, had provided ineffective assistance of counsel by failing to establish that Correia did not have a fire alarm on the premises, by not mounting an effective attack on the government’s evidence regarding the cause of the fire, by failing to introduce favorable evidence regarding an insurance company investigation of the fire, and by failing to rebut misleading evidence from the prosecution regarding Correia’s finances. At the second trial, Correia was acquitted. He then brought a legal malpractice action against Fagan and Brown. The SJC explained that, in order to prevail, Correia had to prove, by a preponderance of the evidence, both that Fagan and Brown’s negligence caused him to be convicted, and also that he was actually innocent of the charges against him. In this case, Fagan and Brown were not entitled to summary judgment because there was a question of fact whether Correia was actually innocent. JUNE 2008
MASSACHUSETTS APPEALS COURT RULES THE MEDICAL MALPRACTICE STATUTES OF REPOSE DO NOT APPLY TO FRAUD CLAIM Massachusetts has two statutes of repose for medical malpractice claims. These statutes place an absolute time limit on the bringing of certain claims. Thus, G.L. c. 231, § 6D (which governs claims of minors) states, in part, that ‘in no event shall any such action be commenced more than seven years after occurrence of the act or omission which is the alleged cause of the injury upon which such action is based except where the action is based upon the leaving of a foreign object in the body.” Likewise, G.L. c. 260, § 4 has a similar provision applicable to adults. In Chace v. Curan, 71 Mass. App. Ct. 258 (2008), the court held that these statutes do not apply to fraud claims. The plaintiffs alleged that negligence during the minor plaintiff’s delivery caused him to suffer severe injuries. The plaintiffs asserted that a doctor and nurse prepared medical records that were inaccurate because they did not disclose that the minor plaintiff was deprived of oxygen for several minutes after he was born. Based on this omission, the plaintiffs asserted claims for fraudulent concealment and intentional misrepresentation. The court held that the statutes of repose did not apply to those clams. To prove those claims, the plaintiffs would have to show that the defendants made false representations of material fact and that the plaintiffs relied to their detriment on those representations by not filing a medical malpractice action earlier. Thus, the claims focused on the alleged effort to conceal facts, rather than the quality of the treatment itself. Given this focus, the statutes of repose did not apply. |
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