Additional Insured: What Comes First, the Policy or the Lease?

A recent New Jersey Appellate Division decision highlighted the importance of the language of the policy over the terms of the lease when it comes to the entitlement of coverage as additional insureds.  On April 29, 2020, the Superior Court of New Jersey, Appellate Division, in Gateway Park, LLC v. Travelers Insurance Company and Stacie Garris, et al., reversed an order granting defendant, Travelers Insurance Company’s (Travelers) motion for reconsideration of an order granting plaintiff summary judgment and denying the defendant’s motion for summary judgment.  

This matter stemmed from a slip and fall accident in January of 2014, when plaintiff, Stacie Garris, fell in a parking lot at an office building owned by the plaintiff, Gateway Park, LLC (Gateway), in which ExamWorks, Inc. (ExamWorks), her temporary employer, was a tenant.  Garris suffered injuries as a result of her accident and filed a personal injury suit against Gateway, ExamWorks, and Gateway’s snow and ice removal contractor, Ground Effects Construction, LLC.

Plaintiff, Gateway, originally sought a declaratory judgment that under its lease with ExamWorks, it was entitled to additional insured coverage under Travelers’ commercial general liability policy issued to ExamWorks.  Gateway and defendant, Travelers, filed cross-motions for summary judgment, with the plaintiff arguing that as an additional insured landlord it was entitled to coverage under the tenant’s insurance policy issued by Travelers.  The court granted the plaintiff’s motion, finding that the plaintiff was an additional insured under Travelers’ policy, and as such, denied defendant’s motion.  

At issue was the difference in the definitions and language set forth in the additional insureds sections of the lease agreement and policy.  The lease agreement defined the “Premises” as the office space that defendant, ExamWorks, leased within Gateway’s building.  The policy, on the other hand, set forth that an additional insured is entitled to coverage for accidents that arise “out of the ownership, maintenance, or use of that part of any premises leased to you [ExamWorks].”

The court found that Garris was employed by ExamWorks, drove to the building leased by Examworks, and fell in the parking lot near the front door as she was walking into work for ExamWorks.  The Court found that despite the defendant’s contentions, the accident arose out of the “use of” the premises, and that the policy’s plain language outweighed the lease’s language.

Following the court’s decision to grant the plaintiff’s motion for summary judgment, Travelers filed a motion to reconsider, which was granted by the court, thus granting summary judgment for the defendant.  The court relied on the lease’s language to define the coverage under the policy.

Plaintiff appealed the court’s decision.  The Appellate Division held that the court erred in granting Traveler’s motion to reconsider and reversed the court’s order.  The Appellate Division, in reaching this decision, found that the language of the insurance policy was clear, and therefore, that the lease agreement should not have been considered.  As such, the Appellate Division reversed the court’s order granting defendant’s motion for reconsideration of the order granting the plaintiff summary judgment and denying the defendant’s motion for summary judgment.

No "Ongoing Storm Defense" in the State of New Jersey

A recent decision from the Appellate Court rejected a defendant’s plea to recognize the ongoing storm defense accepted by many of New Jersey’s neighboring states.  The ongoing storm rule relieves a commercial landowner from any obligation to render its property safe while sleet/snow is falling because it would be both inexpedient and impractical to the commercial landowner.

In this case, a commercial landowner contracted a landscaping company to perform snow and ice removal at the property. Pareja v. Princeton Int'l Props., 2020 N.J. Super. LEXIS 41.  Defendant’s property consisted of a two-floor mixed residential and commercial building as well as a paved parking lot and a concrete driveway apron.  Weather conditions had caused black ice to form on the sloped apron, which caused plaintiff to slip and fall as he walked into the building for work.

Defendants presented a meteorological expert who stated that three winter storms had occurred within a six-day period prior to the plaintiff’s accident in support of a motion for summary judgment.  Each storm was a mix of freezing rain and sleet.  Defendant’s expert explained that any pre-icing treatment would not have been practicable because both salt and sand would not have been effective to treat the areas during these storms.  Further on the day of plaintiff’s fall, the temperature was thirty-two degrees, the sky was overcast, and the wind was blowing five to ten miles per hour.  The court accepted the evidence proposed by defendants, but remained unconvinced.

The court then analyzed other jurisdictions that have both accepted and rejected the ongoing storm defense and their justifications for doing so.  The Court especially was convinced by the opinion of the Supreme Judicial Court of Maine in Budzko v. One City Center Associates Ltd. Partnership, 2001 ME 37, 767 A.2d 310, 314-15 (Me. 2001).  The Court in Budzco held that “[b]usiness owners have a duty to reasonably respond to foreseeable dangers and keep the premises reasonably safe when invitees may be anticipated to enter or leave the premises during a winter storm.” Id.  Slippery conditions resulting from snow and/or ice storm are foreseeable and thus steps should be taken to prevent injuries occurring to persons even while the weather event is occurring.

The Court ultimately held that “a landowner has a duty to take reasonable steps to render a public walkway abutting its property—covered by snow or ice—reasonably safe, even when precipitation is falling.” Id.  Further, the Court stated that the commercial landowner’s liability may arise “only if, after actual or constructive notice, it fails to act in a reasonably prudent manner to remove or reduce the foreseeable hazard.” Id.  This ruling does not impose absolute liability upon the commercial landowner, but instead adds evidence of an ongoing storm as a factor to be considered by the jury at trial 

This serves as a warning to commercial landowners to take steps as to ensure that their premises are free of hazardous conditions.  Further, it will demand snow removal contractors to patrol their assigned properties more closely even during an ongoing storm.  Many external maintenance contracts have conditions for the contractor to act as to snow height or freezing conditions.  It may prove effective to include monitoring conditions to prevent the formation of black ice.  The key factor is what the jury’s impression at trial, and adding more preventative measures may tip the scales to a more favorable verdict.

Georgia Tort Reform

An uptick in nuclear jury verdicts and the expansion of tort liability has earned Georgia a place on the American Tort Reform Association’s Top 10 “Judicial Hellholes” (https://www.judicialhellholes.org/2019-2020/georgia/) for the first time.  Georgia ranks sixth on the organizations 2019-2020 list. 

Earlier this year, and in response to the increase in nuclear verdicts and liability-expanding court decisions, tort reform gained traction in the Georgia Legislature for the first time since 2005 through several Republican-backed bills, including the comprehensive S.B. 415 sponsored by Senate Majority Whip Steve Gooch (R-Dahlonega) and H.B. 1089, sponsored by Rep. Tom McCall (R-Elberton).  The tort reform package was posed to dramatically alter personal injury, medical malpractice, and premises liability litigation in Georgia.  Key measures included in the proposed legislation included: (i) prohibition of “phantom damages,” which are compensatory damages in excess of the medical expenses actually paid; (ii) expansion of legal immunity for premises owners in certain liability actions; (iii) availability of the “seat belt” defense in motor vehicle actions; (iv) required disclosure of payment agreements between insurers and third parties that pay medical bills; (v) bifurcation of liability and damages at trial; and (vi) precluding juries from hearing certain details on the division of monetary damages.

Ultimately, S.B. 415 – the most comprehensive of the tort reform proposals – was tabled on March 12, 2020 after lengthy debate.  S.B. 226, one of the bills to address the seatbelt defense, was tabled as well. On March 13, 2020, the 29th day of the 40 day session, the Georgia General Assembly suspended its 2020 legislative session indefinitely by joint resolution.  Eleven days remain in the legislative session, with the following bills relating to civil litigation still alive:

·       S.B. 374 (www.legis.ga.gov/legislation/en-US/Display/20192020/SB/374)

·       S.B. 390 (www.legis.ga.gov/legislation/en-US/Display/20192020/SB/390)  

·       H.B. 1089 (www.legis.ga.gov/legislation/en-US/Display/20192020/HB/1089)

Of these remaining bills, H.B. 1089 includes the most sweeping tort reform measures.  These proposed changes include prohibiting attorneys from arguing a specific monetary value for pain and suffering or the value of life; requiring separate trials for liability and damages where a plaintiff seeks more than $150,000; prohibiting counsel or a judge from informing the jury that a plaintiff would not be able to recover any damages if they are more than 50% at fault; allowing the use of the “seat belt defense” in motor vehicle actions; eliminating or mitigating the liability of landowners in certain premises liability actions; and capping punitive damage awards in product liability actions.

S.B. 374 proposes certain changes to O.C.G.A. 9-11-67.1, which governs pre-suit settlement offers and agreements for personal injury, bodily injury, and death.  This bill proposes expanding this provision to apply to any offer to settle any tort claim, not just pre-suit demands in motor vehicle actions.  Additionally, the bill proposes additional requirements for the offeror, including the requirement that the offeror provide medical records that relate to the subject of the tort action, including records of any prior injuries or treatment reasonably related to the claimed injury.

While it remains to be seen whether or not these current bills will make it through the legislature, it is evident that the tort reform conversation in Georgia is here to stay.  More frequent nuclear jury verdicts, rising insurance premiums, and recent court decisions expanding liability are quickly creating an unsustainable landscape for civil defendants in Georgia.  Corporate defendants and insurers should keep a close eye on this legislative activity over the coming year.

Expanding the Statute of Limitations for Sexual Assaults

After nearly twenty years of discussed reform, in May of 2019, New Jersey Governor Phil Murphy signed S477/A3648, a bill allowing the victims of sexual assault more time in which to file lawsuits against their abusers.  The bill had previously passed almost unanimously in the State Assembly and Senate before being signed by Governor Murphy and coming into effect on December 1, 2019.  The purpose of the legislation was to expand the current two-year statute of limitations for sexual assault cases to seven years in a majority of cases.  Additionally, the law allows adults who were victims of sexual assault as children the ability to file lawsuits against individuals or institutions, even non-profits, until either the age of fifty-five or until seven years after they “discover” that they have suffered emotional and psychological injuries stemming from their abuse, whichever is later.  Lastly sexual assault victims whose statute of limitations had previously tolled are granted a supplementary two-years in which to file suit. 

This bill was originally proposed following New Jersey’s five Roman Catholic diocese disclosure of approximately two hundred priests accused of sexual abuse.  Moreover, the Boy Scouts of America released a list of approximately fifty former leaders accused of sexual violence against children.   As such, on the first day in which the law came into effect over fifty civil suits were filed against the Catholic Church of New Jersey, the Boy Scouts of America, and other organizations for sexual assault claims dating back decades.   

New Jersey has followed a nationwide trend of states evaluating and reforming their statutes of limitations for sexual assault cases as they work to comprehend the effect of the related trauma and delayed reporting associated with such cases.   In fact, prior to Governor Murphy’s signing of the bill, over eighty percent of states had already altered their statutes of limitations for sexual abuse since 2002.     

This expansion of the statute of limitations and grace period for those whose statute of limitations had already tolled will remarkably increase the amount of sexual assault cases filed throughout New Jersey.  As such, insurers of these entities must be on notice that not only will there be a marked increase in claims, but that claims for which statutes of limitations had tolled and cases have been closed can now be reopened and brought to suit.

Spoliation: Defined and Confined

Recently, a client contacted us regarding an alleged automobile-pedestrian accident which occurred outside of a well-known resort in Florida. Plaintiff, an employee of the resort, brought a lawsuit against our client alleging, amongst other things, negligence. Specifically, Plaintiff claimed that he was pinned between the resort’s golf cart and our client’s vehicle. As a standard measure, we sent a preservation of evidence letter to the resort demanding preservation of surveillance and the golf cart. The resort responded that it had no duty to preserve any evidence.  

 Last month, in Pena v. Bi-Lo Holdings, LLC, a Florida appellate court reviewed a trial court’s decision, wherein it denied the plaintiff’s motion for an adverse inference jury instruction based upon the defendants’ alleged spoliation of evidence. 45 Fla. L.W. D506a (Fla. 3rd DCA 2020) Ultimately, the appellate court affirmed the trial court’s decision. At issue, was a broken bag of rice which plaintiff claimed to have slipped on spilled out grains on the floor of defendant’s supermarket. Prior to filing suit, plaintiff made a preservation demand for surveillance footage but not for the bag of rice. Although defendant failed to preserve the rice, the court found no spoliation. 

“Spoliation [. . .] is a cause of action which holds someone liable for negligently or intentionally destroying material which is needed as evidence in litigation.” See Rockenbach, Spoliation of Evidence: A Double-Edged Sword, Fla. B.J., Nov. 2001, at 34. Although seemingly spelled out in its definition, spoliation has limits and restraints on its scope and applicability. In Pena v. Bi-Lo Holdings, LLC, the court analyzed the standard for assessing spoliation, which includes “[. . .] a three-part threshold inquiry: ‘1) whether the evidence existed at one time, 2) whether the spoliater had a duty to preserve the evidence, and 3) whether the evidence was critical to an opposing party being able to prove its prima facie case or a defense.’” Pena citing Golden Yachts, Inc. v. Hall, 920 So. 2d 777, 781 (Fla. 4th DCA 2006) [31 Fla. L.W. D494a] In review, the court found that 1) the bag of rice existed; 2) defendants had a duty, pursuant to established case law, to preserve all relevant evidence upon notice of potential litigation; and 3) the bag of rice was not critical to plaintiff’s ability to prove its case. Therefore, it found plaintiff’s claim for spoliation unsupported.  

Nevertheless, the court entertained that even if plaintiff had established spoliation, she would have failed to establish any arguable right to an adverse inference. “‘[W]hen a party fails to preserve evidence in its custody [the appropriate sanction] depends on the willfulness or bad faith, if any, of the party responsible for the loss of the evidence, the extent of prejudice suffered by the other party or parties, and what is required to cure the prejudice.’” Id citing Sponco Mfg., Inc. v. Alcover, 656 So. 2d 629, 630 (Fla. 3d DC1995). The court found no willfulness or bad faith in defendants’ failure to preserve the bag of rice. Further, it found plaintiff was not prejudiced.  

This case serves as a necessary reminder of the limits on the scope of a spoliation cause of action. Further, it outlines the burden a party must prove in order for a court to consider the serious award of an adverse jury instruction. In the case of the resort, it is clear that defendants’ preservation demand to the resort has established a duty for the resort to preserve all relevant evidence for the pending litigation. However, an award of an adverse inference later sought by the defendants will remain constrained by the burden of proving the three-part threshold and the appropriate sanctions standard set forth in Pena v. Bi-Lo Holdings, LLC.  

Deposition Appearance: Mandatory or Flexible in New York Federal Courts?

It is well established under Federal law that appearance at a deposition is mandatory, especially after a notice of deposition and/or subpoena. However, in light of the recent outbreak of the coronavirus, it is certainly possible that plaintiffs and possibly other witnesses, may not want to appear at their scheduled in-person deposition. Instead, individuals may want to alter the venue of the deposition and may want to appear via videoconference. Rule 30(b)(4) of the Federal Rules of Civil Procedure provides that a court on motion may order that a deposition be taken “by telephone or other remote means.”  

However, under New York Federal Law, significant discretion is given to determine the site of a deposition and as a general rule, a plaintiff is required to make themselves available for a deposition in the forum where the suit was brought. "Holding a deposition by videoconference is 'frequently a preferred solution to mitigate the burden of a deposition location inconvenient to one or both sides.'" See Alpha Capital Anstalt v. Real Goods Solar, Inc., 323 F.R.D. 179 (S.D.N.Y. 2017). Moreover, Federal Courts have asserted that a video-deposition has minimal prejudice in terms of observing the witness’ behavior or demeanor. 

In Packard v. City of NY, the Court was faced with a similar dilemma where the plaintiff brought the suit in New York, as a New York resident. However, the plaintiff subsequently moved to Taiwan and objected to his deposition location in New York due to his new domicile. As a result, both parties reached an impasse and it was ordered by the Federal Court that a video-deposition was acceptable as long as plaintiff made all necessary arrangements for having his deposition taken in Taiwan and that plaintiff shall bear the additional expenses incurred due to the new deposition venue. Packard v. City of NY, 326 FRD 66 [S.D.N.Y 2018]. 

Given the recent eruption of the coronavirus in the United States, it is noteworthy that video-depositions are equally sufficient as in-person depositions during a chaotic time, as witnessed presently. It is conceivable that courts on the Federal and State level will liberally permit non-appearances and/or rescheduling of in-person depositions to video-depositions due to the aforementioned reasons. As such, we should anticipate that opposing counsel will attempt to schedule video-depositions of plaintiff during the present coronavirus outbreak in place of in-person depositions. However, due to the fact that a witness’ in-person deposition demeanor/behavior is critical to determine the truthfulness and veracity of any alleged claims, we may resist any video-deposition proposal or handle on a case by case basis.