Emotional Distress Claims no Longer Require Extreme and Outrageous Conduct

New York’s Appellate Division, First Department recently issued an opinion holding that “extreme and outrageous conduct is no longer an essential element of a cause of action to recover damages for negligent infliction of emotional distress.” See Mabel Johanna Brown et al., Plaintiffs-Respondents-Appellants v. New York Design Center, Inc., Defendant-Appellant-Respondent, Newark Knight Frank Global Management Services, LLC et al., New York State Law Reporting Bureau, (App. Div. March 9, 2023). This decision now follows the recent decisions of the Second, Third and Fourth Departments.

This case arises out of an incident that occurred to Plaintiffs employed in a building owned by the Defendant, New York Design Center (NYDC). In April 2014, an electrician using the men’s restroom noticed a recording camera pointed through the wall and into a stall of the women’s restroom. Graphic videos of women using the bathroom were discovered on the device. Plaintiffs initiated a lawsuit arguing claims of negligence, intentional infliction of emotional distress, negligent infliction of emotional distress and negligent hiring. Several of them testified that they had previously seen the hole prior to the camera’s discovery. A few of them testified that they had complained about the state of the bathroom, including the hole behind the toilet.

The Defendant moved for summary judgment to dismiss the complaint, arguing that the Plaintiffs did not show that the Defendant was on notice of the camera, and they did not suffer any legally compensable injuries. Defendant also argued that its conduct was not outrageous, and Plaintiffs did not fear for their safety.  The Plaintiffs opposed, arguing that NYDC had actual and constructive notice of the hole, and that they testified to “paranoia and/or hypervigilance, many engaging in behavior such as habitually checking vents or looking for other spaces where cameras could be hidden, especially in public restrooms, dressing rooms and hotel rooms.”

On March 22, 2022, the Supreme Court in New York County granted Defendant NYDC’s motion for summary judgment dismissing the negligent infliction of emotional distress claim and denied the motion as to the negligence claim.

On Appeal, the Court revisited prior decisions regarding the showing necessary to sustain a cause of action for negligent infliction of emotional distress. The Court held that contrary to the Defendant’s argument, the Plaintiffs sustained emotional injuries which are a direct result of the breach of duty owed. The direct result of injury here was that the Plaintiffs were humiliated, embarrassed, felt violated, and paranoid which the Court saw as “reasonable fears given that it is not know whether additional videos exist and may be posted on the internet.” The Court reviewed Sheila v. Povich, (11 AD3d 120, 130-131 [1st Dept 2004]) and found that it and other authorities “all rely either directly or indirectly on cases that deal exclusively with intentional infliction of emotional distress or where there are allegations of both.” The Court now holds that “extreme and outrageous conduct is not an essential element of a cause of action to recover damages for negligent infliction of emotional distress.” Moreover, the Court holds that a breach of duty of care resulting directly in emotional harm is compensable when there is a direct emotional injury as a result of the breach, even when there is no physical injury.  

Callahan & Fusco Obtains Venue Transfer in New Jersey

The Superior Court of Middlesex County, New Jersey recently granted a Motion to Transfer Venue brought by Callahan & Fusco on behalf of their client, a Community Association, transferring the underlying matter from the venue where the matter was filed to the venue where the underlying accident occurred. See Appelgate, et al. v. Legacy at Mansfield Meadows Homeowners’ Association, et al.

The underlying personal injury suit arises from an accident that occurred in November 2021, when a female tripped and fell on the curb of a sidewalk within her age-restricted community located in Warren County, New Jersey. As a result of the accident, the female sustained serious and severe injuries. In August 2022, suit was filed in the Superior Court of Middlesex, New Jersey, on behalf of the female against the community association, the property developer, and the property management alleging claims of negligence resulting from the defendants’ failure to properly maintain the exterior concrete sidewalk where the female allegedly fell.

Upon receipt of the Complaint, Callahan & Fusco, on behalf of their client, the Community Association, filed a pre-answer motion requesting the Court to transfer venue in the action from Middlesex County to Warren County.  Pursuant to New Jersey R. 4:3-2(a), venue shall be laid by the plaintiff in the county in which the cause of action arose, or in which any party to the action resides at the time of its commencement. In New Jersey, a plaintiff’s choice of venue is generally not disturbed absent a showing of a compelling reason.

In support of their motion, the Association argued that R. 4:3-2(a) was designed to place litigation at a location convenient to parties and witnesses. (See Doyley v. Schroeter, 191 N.J. Super. 120, 124-26 (Law Div. 1983)). Specifically, to this point, the Association asserted that the action must be transferred to Warren County in the interest of justice as the cause of action arose in Warren County. Moreover, the Association emphasized the fact that a majority of the defendants, including the Association, reside in Warren County, while pointing out that, notwithstanding residency of a co-defendant, the pending action has no nexus to Middlesex County and none of the issues related to the underlying action arose in Middlesex County. The Association further argued that the pending action will require lengthy discovery that may involve relevant witnesses and experts who may be called on to provide testimony as to the alleged accident or condition of the premise, and these witnesses and experts would be inconvenienced if required to travel to Middlesex County from Warren County.

After review of the motion, the Court ruled in favor of the Association, granting their motion, and transferring the underlying action from Middlesex County to Warren County. The Court reasoned that the mere fact that one party to the action resides in Middlesex County was not enough to outweigh the fact that the accident occurred in Warren County and the rest of the other parties, including plaintiff, reside in Warren County. The Court further reasoned that it would go against the best interest of justice to obligate the parties and expert witnesses to travel back and forth between Warren and Middlesex County. Accordingly, the action was transferred to Warren County.

From a defense perspective, Appelgate, teaches us the importance of establishing a strong defensive foundation to handle and manage future litigation strategies that may arise. In New Jersey, like many other states, a motion to transfer the venue of an action is only permitted at the early stages of litigation and before the parties engage in discovery. Therefore, prior to engaging in potentially long discovery, it is crucial to select an experienced defense counsel with a keen eye to the factual details of a claim to be proactive and in a position to handle a claim in the best interest of their client.

Legal Malpractice Model Jury Charges Receive Needed Update in New Jersey

For the first time in 25 years, the New Jersey Supreme Court Committee on Model Civil Jury Charges announced updates to a number of model jury charges, including revisions to the legal malpractice jury charges, see Model Jury Charges (Civil) 5.51A and 5.51B.

In essence, the Model Civil Jury Charges sets the framework to craft jury instructions. Every case brings their own unique facts that both courts and litigants must tailor the model charges to conform to those facts. Accordingly, these Model Civil Jury Charges are only just a starting point of the process of constructing an appropriate charge that adequately explains that law to the jury in the context of the material facts of the case being tried.

But what if that framework is outdated and not aligned with recent case law? The Committee on Model Civil Jury Charges sought to answer this question with an announcement that Legal Malpractice charge 5.51A will undergo significant revisions to include recent case law and additional instructions on duty and negligence. This charge now sets forth the standard of care for attorneys in New Jersey providing services, including attorneys holding themselves out as a specialist or who have been designated by the New Jersey Supreme Court as a “certified attorney” in civil trial law, among other areas. Additionally, this charge addresses the New Jersey Rules of Professional Conduct, guarantees or promises of results by attorneys, and reasonable legal strategies in the context of legal malpractice.

However, practicing attorneys will not see abrupt changes as judges have already been incorporating the latest case law into the instructions they provide to jurors. However, these changes will provide more clarification to trial courts and create a rubric for judges to apply when laying the ground for jury instructions. Issues related to attorney malpractice cases such as the standard of care for lawyers offering themselves as specialists, the role of the Rules of Professional Conduct, promises of results, and reasonable legal strategies, were formerly left to the court to align with case law and explain to jurors, but have now been directly addressed with these changes.

Moreover, the Committee revised and updated the Proximate Cause in Legal Malpractice 5.51B involving Inadequate or Incomplete Legal Advice, a charge that has not seen any updates since January 1997. Specifically, the update now includes recent case law and additional instruction on Proximate Cause in Legal Malpractice. Prior to the revisions, the charge stated that an attorney’s negligence must have been a substantial factor in bringing about harm to the plaintiff and that some harm was foreseeable. These changes come in light of the decision in Gilbert v. Stewart, 247 N.J. 421 (2021). In Gilbert, a plaintiff filed a legal malpractice claim against a defendant attorney for failing to advise of certain risks associated with a plea agreement to outstanding traffic tickets in municipal court. Under those circumstances, the Supreme Court concluded a reasonable jury could find that defendants breach of his professional duty was a substantial factor and thus a proximate cause of plaintiff’s harm. Subsequently, the Committee revised the charge, providing a definition to explaining foreseeability means whether a “similarly situated attorney would anticipate the risk that the attorney’s conduct would cause injury or harm to the attorney’s client.”  

The changes to the malpractice jury charges were just one part of a broader effort to update model jury charges across the board. In the same announcement, charges for violations of New Jersey’s Law Against Discrimination and New Jersey Pregnant Workers Fairness Act were updated to reflect recent changes to case law. It is the expectation and hope that these changes will streamline and modernize the way jury charges work and provide clarity to practitioners.

Vermont Supreme Court Brings a Shipbuilder's COVID-19 Coverage Suit Back to the Surface

The Vermont Supreme Court recently issued an opinion reversing the dismissal of insurance claims seeking coverage for damage the insured argued was caused by COVID-19. See Huntington Ingalls Indus., Inc. et al. v. Ace American Ins. Co. et al., No. 2021-173, 2022 VT 45. The September 2022 ruling goes against the majority of cases in other state and federal courts findings that insureds have failed to adequately allege that COVID-19 can cause direct physical damage or loss that is covered by property insurance policies.
 
Huntington Ingalls Industries, the insured in this case, is the largest military shipbuilder in the United States employing more than 42,000 employees. Huntington purchased an “all risk” property insurance policy in March 2020 from its insurance subsidiary, Huntington Ingalls Industries Risk Management, LLC, which in turn purchased policies from multiple reinsurers to cover its obligations. The subject policy covered all real and personal property “against all risks of direct physical loss or damage to property” and contained a business interruption clause covering “loss due to the necessary interruption of business conducted, whether total or partial caused by physical loss or damage insured herein.” Of note, the policy, however, did not include the standard-form virus exclusion that has been available in the insurance industry since 2006.
 
Not long after the insured purchased the policy, the very first COVID-19 case arose among Huntington’s employees. By September 2020, more than 1,000 employees were infected, and by April 2021, more than 6,000 employees were infected. As a result, Huntington sought coverage from the reinsurers under the reinsurance policies for property damages, business interruption, and other losses suffered as a result of COVID-19, but coverage was denied.
 
Following the coverage denial, Huntington filed suit in the Vermont Superior Court seeking declaratory judgment that they were entitled to coverage under its purchased policy. The Superior Court concluded that Huntington failed to allege facts to support a viable claim for coverage and entered judgment on the pleadings in favor of the reinsurers.
 
Plaintiff, Huntington, then appealed the dismissal to the Vermont Supreme Court. The Supreme Court recognized that the key issues to decide were the interpretation of the phrase “direct physical loss or damage to property” and whether plaintiffs’ facts were sufficient to state a claim for physical loss or damage. The Court found that plaintiffs sufficiently alleged a claim that, if ultimately proven before a trier of fact, would demonstrate coverage under the policy.
 
The Vermont Supreme Court’s decision in this matter is not the first in the U.S. to conclude that COVID-19 business interruption lawsuits should not be dismissed without the development of further evidence, but it is the first decision by a state’s highest court. This decision is a reminder that the liberal pleading standard remains alive and well in Vermont. The decision also paves the way for similar COVID-related claims, especially in Vermont, to advance into discovery, expert witness, and summary judgment stages, which leads to the ramping up of litigation costs. However, it still remains unknown whether the insureds will be able to prove that COVID-19 actually caused “direct physical loss or damage to property,” ultimately triggering coverage.

New Jersey Athlete's Injury Caused by Coach's Decision is Governed by Simple Negligence Standard

In Dennehy v. E. Windsor Reg'l Bd. of Educ., 2022 N.J. LEXIS 978 (Oct. 26, 2022), the New Jersey Supreme Court held that a high school coach’s acts and omissions in deciding to have the team practice in an area adjacent to an ongoing soccer practice, leading to a student being injured, is governed by a simple negligence standard, rather than the heightened standard of recklessness applied in Crawn v. Campo.

On September 9, 2015, then 17-year-old Morgan Dennehy was injured during field hockey practice at Hightstown High School. On said day, field hockey practice was scheduled for 3:45p.m. on a turf field, however, the boys’ soccer team was practicing there until 3:45p.m. At around 3 p.m., field hockey coach, Dezarae Fillmyer, instructed the field hockey players to warm up in an area between athletic fields. During the warm-up, Dennehy was struck at the base of her skull with a soccer ball. Dennehy filed suit against the East Windsor Regional Board of Education, Hightstown High School, and three individuals, including coach Fillmyer. The allegations were that Dennehy sustained injuries as a result of the defendants’ "failure to supervise; prevent potential and foreseeable dangerous conditions; provide appropriate safeguards; and post suitable warnings of potentially dangerous conditions.”

The defendants moved for summary judgment, which was granted by the trial court holding that the plaintiff had to show that the defendants’ acts or omissions rose to the degree of recklessness described in Crawn v. Campo, 136 N.J. 494, 507-08 (1994) and Schick v. Ferolito, 167 N.J. 7, 18-20 (2001). The Appellate Division reversed, holding that a simple negligence standard applied. The New Jersey Supreme Court found that the coach’s acts and omissions alleged in this case are governed by the simple negligence standard.

Both Crawn and Schick involved instances where the parties were actively participating in a recreational activity (in Crawn, the incident occurred during a softball game, and in Schick during golf.) In Crawn, the Court ruled “that the duty of care applicable to participants in informal recreational sports is to avoid the infliction of injury caused by reckless or intentional conduct.” 136 N.J. at 497-98. Later in Schick, the Court held that “the heightened standard of care for causes of action for personal injuries occurring in recreational sports should not depend on which sport is involved and whether it is commonly perceived as a ‘contact’ or ‘noncontact’ sport.” 167 N.J. at 18-19.

The Court found that, unlike Crawn and Schick, in this case, Fillmyer was not a participant in the recreational activity, and even if she was, the plaintiff was not injured by any activity associated with field hockey. In fact, the plaintiff was struck by a soccer ball that came from another field. In this case, the essence of plaintiff’s claim against Fillmyer is based on her choice of location and timing for the informal practice prior to the scheduled one. As the Court noted, “[i]n these and other similar settings, parents have the right to expect that teachers and coaches will exercise reasonable care when in charge of their children and that courts will not immunize a teacher’s negligence by imposing a higher standard of care.”

Florida's Second DCA Addresses Validity and Enforceability of AOB Held by Assessment Services Comapny

Florida’s Second District Court of Appeal recently issued a notable opinion concerning the validity and enforceability of assignments of benefits in the real property insurance context.    Kidwell Grp., LLC v. Am. Integrity Ins. Co., 2022 Fla. App. LEXIS 6316 (Fla. 2d DCA, Sept. 16, 2022). The Kidwell Group, LLC., d/b/a Air Quality Assessors of Florida, (“Air Quality”) appealed a final order dismissing with prejudice its complaint premised on the insurer, American Integrity Insurance Company of Florida’s (“AIIC”), breach of the homeowner insurance policy AIIC issued to Robert and Maureen Mucciaccio. 

In 2017, the Mucciaccios’ property sustained hurricane damage following Hurricane Irma. In 2019, the Mucciaccios assigned their benefits under their insurance policy to Air Quality.  Air Quality submitted its invoices to AIIC. AIIC refused to pay, and Air Quality sued to recover. Air Quality alleged in its complaint that the homeowners "suffered a loss due to water and/or mold, covered perils under the [AIIC] Policy," and Air Quality agreed to provide "reasonable and necessary assessment services to the [homeowners] relating to the loss" in exchange for the assignment of post loss insurance benefits. Air Quality attached the assignment of benefits (“AOB”) to the complaint.

AIIC moved to dismiss Air Quality's complaint, arguing that Air Quality lacked standing to sue because the language in the complaint and the AOB led to the "undisputed conclusion" that the AOB was an "assignment agreement" subject to section 627.7152, Florida Statutes.  AIIC argued that: (i) the AOB did not include the required provisions under section 627.7152(2)(a); and (ii) Air Quality failed to comply with the presuit notice requirement of section 627.7152(9)(a).  The trial court concluded that the AOB that Air Quality obtained from the Mucciaccios was invalid and unenforceable under the statute. 

On appeal, the Second District considered two issues: (1) whether a dispute of fact precluded the trial court from determining that section 627.7152 governed the type of services Air Quality provided under the AOB, which would have made dismissal of Air Quality’s complaint improper; and (2) whether section 627.7152 retroactively applied to this case. 

The Second District noted that the legislature enacted section 627.7152 in May 2019 “to regulate assignment agreements that seek to transfer insurance benefits from the policyholder to a third party.” (citing Total Care Restoration, LLC v. Citizens Prop. Ins. Corp., 337 So. 3d 74, 75-76 (Fla. 4th DCA 2022); and Ch. 2019-57, §§ 1-6, Laws of Fla. (“An assignment agreement that does not comply with subsection (2) is invalid and unenforceable.” § 627.7152(2)(d))).

The Court examined the language of the statute, particularly, the definition of an “assignment agreement,” as set forth in section § 627.7152(1)(b), which states that it is

[A]ny instrument by which post-loss benefits under a residential property insurance policy or commercial property insurance policy, as that term is defined in § 627.0625(1) are assigned or transferred, or acquired in any manner, in whole or in part, to or from a person providing services to protect, repair, restore, or replace property or to mitigate against further damage to the property.

With respect to the first issue on appeal, the Second District affirmed the order of dismissal entered by the trial court and held that the legislature did not exclude assessment services from its definition of “assignment agreement” or add such services to subsection (11)’s exclusion list. See § 627.7152(1)(b) (11), Fla. Stat.

As to the second issue, whether section 627.7152 applied retroactively, the Court also affirmed.  The Second District explained that a statute is applied prospectively, and not retroactively, to a contract where the statute pre-existed the contract. (citing Total Care Restoration, LLC. v. Citizens Prop. Ins. Corp., 337 So. 3d at 76).  The Court noted that, although section 627.7152 was enacted after the insurance policy was issued to the Mucciaccios, it was in effect for several months prior to Air Quality acquiring the AOB.  

This opinion further limits the validity and enforceability of AOBs in Florida, a trend we will continue to monitor.