Monthly Archives: October 2006

Rapper Sues National Union Fire Insurance, Claiming Failure To Pay Indemnity Ordered By Court In 2004

Rapper Dwight Myers, who goes by the name Heavy D, is suing his liability insurance carrier, National Union Fire Insurance Co. of Pittsburgh, saying it has failed to pay him indemnity as ordered by a New York court two years ago.  Heavy D requested indemnity for his liability stemming from an event where he and fellow rapper Sean Combs, who has been known by various names including P. Diddy and Puff Daddy, coached opposing sides at a celebrity basketball game at New York’s City College.  A huge crowd showed up, everyone could not fit in the building, and pushing and shoving led to a stampede in which nine people were crushed to death.

Heavy D is seeking $1.5 million from the insurer, including $791,000 in indemnity, $381,000 in interest and a hefty, or Heavy, $324,000 in attorney fees.  Is it just me, or does that sound like a lot of attorney fees for a dispute over the meaning of insurance contract terms that was decided in a bench trial?

Here’s a link to the underlying case of National Union Fire Insurance v. Heavy D, which the New York court provided on a publicly available, easily accessible website, unlike federal courts that provide access to most of their stuff only through the ECF system.  (Scroll down to the fifth paragraph of the link).  The trial court rejected the insurer’s defense that coverage was precluded by the policy’s exclusion for "promoting activities to the extent of contracting with arenas, halls, theaters and other places for theatrical presentations, whereby the business [Heavy D] is holding harmless aforesaid facility." The court found that Heavy D was not the promoter of the event, Sean Combs was, and that the basketball game was not a theatrical presentation like a musical concert or tour.


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Filed under Duty to Indemnify, Liability Policies

Massachusetts Court: Letter To Insurance Company Alleging Inappropriate Touching By Doctor Not Protected By State’s Anti-SLAPP Statute

I’m not partial to cases from Massachusetts, because I always have to stop and look up how to spell Massachusetts.  But Kalter v. Wood, 2006 WL 2959514 (Mass.App.Ct. October 19, 2006) is too good to pass by merely because it was decided in a state I can’t spell.  I tried but was unsuccessful in linking to the case on the court’s website.

The defendant, Anita Wood, simultaneously filed complaints alleging inappropriate touching during treatment by Albert Kalter, a Braintree chiropractor who treated her in May 2004, with the Braintree police department, the Division of Professional Licensure and Blue Cross Blue Shield of Massachusetts.  Kalter sued Wood, seeking damages for alleged libel, intentional interference with advantageous business relationships and intentional infliction of emotional distress.  Wood filed a special motion to dismiss under the state’s anti-SLAPP law. 

SLAPP stands for Strategic Lawsuit Against Public Participation.  Many states enacted these statutes after developers, corporations and others began filing defamation suits against folks who used the media or public forums to oppose their interests.  The Massachusetts law (here is a link to information about it) protects a defendant who petitions a government body.  It allows a defendant to dismiss a lawsuit if a court finds that the claims are based solely upon the defendant’s petitioning activity, statements made in connection with petitioning activity such as media interviews, or  "statements reasonably likely to encourage consideration or review of an issue" by a governmental authority.  The Appeals Court found that, while the letters to the police and state regulators were protected under the anti-SLAPP law, the letter to the insurance company was not.  The court said, over a strong dissent, that a complaint letter to Kalter’s insurer was neither a petition to a government body nor, by itself, likely to encourage government review of an issue, and affirmed the trial court’s denial of Wood’s motion to strike.

UPDATE: Thanks to attorney Robert Ambrogi, who, in the comment below, helped me find the link to the Kalter case.  Here it is.   Robert, one of who three blogs can be linked to here, is obviously more tech-savvy than I.

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Blogging Schedule

Good morning, I’ll be posting around 10 a.m. Pacific Time.

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Spitzer Sues Over Alleged Nefarious Life Insurance Settlement Practices

This story is all over the web this morning.  It’s actually a pretty interesting story.  Here’s a link to the Wall Street Journal (can’t claim I have any idea how long this link will be good for).  Here’s a story by Bloomberg.  This link is to a site that has the look of someplace I would usually avoid, but it appears to have a legit news story that is a very good read and more detailed than the first two I linked to.  

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Luke Debevec Article In The Legal Intelligencer

Thanks to Luke Debevec, of Anderson, Kill & Olick, for writing about Insurance Coverage Law Blog in this article in The Legal Intelligencer.  Besides being a fellow coverage lawyer, Luke is also a blogger, and here’s a link to his blog.  

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Homeowner Claims State Farm Wrongly Induced Statement He Is Satisfied With Katrina Claims Handling

I first became interested in the Katrina coverage lawsuits in Mississippi because they present some pretty fascinating issues, but now that a lot of the legal questions have been decided, it’s interesting to follow the psychological warfare being waged by one of the main plaintiff lawyers.

Check out this story about a homeowner who now claims State Farm fraudulently induced him into signing a statement in support of the insurer’s Katrina claims handling.  The story is a little stingy with details about how exactly State Farm allegedly put one over on him, but his allegation appears to be that he didn’t know the insurer initially evaluated his loss as due to wind, not water.  For those who haven’t been following this, basically wind is covered, flood water is not.  He apparently was paid some $36,000 for a loss of about $1 million.

The story says his home was in Biloxi, but I guess the big unanswered question is this: where in Biloxi was the guy’s house?  Was it 100 yards from the beach?  Unlike most of these Katrina stories where the value of the home is kept confidential from readers like it is part of the recipe for some secret sauce, this story tells us his house is worth at least $1 million.  I don’t know for sure, but my guess would be that value places it fairly close to water.

I have to criticize this story for failing to answer or even ask basic questions.  What exactly did his statement in support of State Farm say, and what were the circumstances under which they asked for it?  When did he get in contact with plaintiff lawyer Dickie Scruggs, or Scruggs with him, and under what circumstances? What exactly does the engineer’s report on his house say?  And again, most importantly, HOW CLOSE IS HIS HOUSE TO THE OCEAN? The answer to that question would help us judge for ourselves whether wind or water damaged his house.  The story’s lead says State Farm "coerced" him, but how he was coerced isn’t stated until far down in the story, apparently because it doesn’t sound very credible: the homeowner claims he signed the statement because he was afraid State Farm would cancel his insurance.  Really? I guess if I felt an insurance company underpaid me by $964,000 on a $1 million claim, I wouldn’t really care if I lost that insurance or not.

I’m not going to tell you that I never wrote a story like this back in my newspaper days.  Deadline pressures and space limitations can force you into all sorts of compromises.  However, it wouldn’t have taken much extra time to find out the answers to these questions, and most of the story is made up of easily replaced filler quotes.  Too often newspaper stories are written with this glib he-said, she-said mentality, and once you get past the initial hullabaloo and start analyzing the story, the writer appears manipulative or lazy, forcing you to divine the real story from clues about what was left out.

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Robot Insurance And The Knocking At The Gate In Macbeth

I was reading this story from Insurance NewsNet about an online insurance business that is using humorous videos as a promotional tool.  One of the video links is to one of the great, great fake commercials from Saturday Night Live, the one with Sam Waterston pitching Old Glory robot insurance: "Robots are everywhere, and they eat old people’s medicine for fuel."  

Using humor as a parenthesis can actually be a very sophisticated technique.  No one has ever made this point better than Thomas De Quincey in one of the greatest and most famous essays in the English language, On The Knocking At The Gate In Macbeth (scroll down a bit when you get to the link).

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When Does Advocacy Pass The Boundaries Of Intellectual Honesty?

I recall that about seven years ago, in a case which featured both tort and contract claims, I was reading an opponent’s brief with a sense of amazement.   The case law and the legal principles seemed so bizarre and unexpected I had to wonder for a minute if I had completely misunderstood the case.  Then I pulled out the Oregon State Bar Tort CLE book to check out some legal principles, and saw what was going on.  Opposing counsel had opened the same book, picked a section, and simply cited every case listed on the page.  Counsel had apparently written her argument and then plugged in some cases from the book.  Didn’t matter that the cases had no relevance to our case, or that they didn’t actually say what counsel claimed, they filled out the page. 

Not more than a couple months later, I was in oral argument for a summary judgment motion in a different case.  Opposing counsel got up and spun what I admit was a very engrossing story, although regrettably, almost none of it was consistent with the facts on record in the case.  I’d like to report that in both cases judges took note, got ticked off and threw down on these lawyers, but that did not happen.  If the judges noticed or cared about getting bad facts or bad law, they kept it a well-hidden secret.

Every lawyer can tell similar tales of folks whose interpretation of "zealous advocacy" includes deviations from basic standards of intellectual honesty.  I was thinking about these and other similar examples recently when I was talking with a colleague about giving coverage advice and running coverage or commercial litigation.  When doing a coverage analysis, of course, there is no margin for fooling yourself, engaging in sloppy thinking or ripping pages from a CLE and pasting them in your opinion.  A coverage opinion is not a piece of advocacy, it is a forthright evaluation of the client’s liability, and it is your own legal opinion, your best opinion.  While often there is no absolute "right" answer, the analysis must be objective and do honor to the process of reason, not merely seek to tell the client what the lawyer thinks the client wants to hear.  In the course of litigation, I sometimes come across coverage opinions that are alarmingly deviant from this model and indulge in partisan argument.  I would no more consider writing a legal opinion like that than I would walk down the street juggling jars of nitroglycerin.

Litigation, whether it is coverage litigation or commercial litigation, has a different model from coverage analysis, but the same fundamental intellectual principles apply.  To me, advocacy is most effective when it is tied to simplicity and honesty, so that the judge or jury can have faith that, even though you represent just one side of the argument, you are trying to be helpful in giving as complete an explanation and analysis of the law and facts as you can.  That’s why in my briefs the section analyzing legal principles is not called "Argument," it is called "Discussion."  Sure, there are examples like the two cases I mentioned where lawyers engaged in flagrant disregard for reality and didn’t pay an immediate price, but counting on luck or inattentive judges is extremely limiting.  In the long run, analysis fulfills its potential and is at its most persuasive only when it remains disciplined.  Paradoxically, you stand a much better chance of winning when it is apparent you won’t say anything to win.

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Blogging Schedule

I’ve been fortunate with this blog to have a lot of dedicated, loyal readers, many of whom visit the site early in the morning, at least early in my time zone.  To you folks, good morning.  I’m slightly delayed today, so I’ll be posting somewhere around 9 a.m. Pacific Time.

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Second Circuit Affirms Jury Verdicts In WTC Insurance Case

You may have heard that the U.S. Second Circuit Court of Appeals last Wednesday decided SR Int. Business Ins. Co. v. World Trade Center Properties, LLC.  To be perfectly honest, the case is more or less a rehash of issues the Second Circuit has covered before in related WTC insurance litigation, and consequently it’s a little dull.  For some reason, the court’s website doesn’t display a direct link to the case, so you have to click on this link, go to "Decisions" in the left-hand column and find it under October 18, 2006. 

The issues in the WTC insurance litigation came down to whether the 9-11 terrorist attacks were one "occurrence" or two.  Silverstein Properties had just signed a 99-year lease with the buildings’ owner, the Port Authority of New York and New Jersey, and was in the process of obtaining property insurance when the attacks happened.  Actual policies had not yet been issued, only insurance binders, or cursory forms with minimal terms stating only that coverage had begun.  The dispute in the litigation was over which policy had actually been agreed to — a policy prepared by Silverstein’s insurance broker, the Willis Agency, or the insurers’ own policies.

Ironically, the definition of "occurrence" in the Willis policy, although written to be pro-policyholder, was more favorable to insurers in these circumstances.  Because the definition grouped related incidents as one occurrence, it normally would lead to lower deductibles for the insured, but in cases where losses exceeded policy limits, as in this case, would favor insurance companies.  The wording of the insurers’ policies would result in two occurrences, and potentially up to $7 billion in coverage.  A jury said most of the insurers agreed to the Willis form, but nine insurers either admitted to being bound by their own forms or the jury found that they were. The court affirmed the jury verdicts.

As long cases go, this one is well-written and is worth a scan for its treatment of the subtleties of contract negotiations and the various definitions of  "occurrence."  For an incredibly superficial account of this case from the Washington Post, read this. Here’s a one-sided story that, predictably for most journalists, focuses not on what the judges said but on some hot air from politicians.

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