Insurance Defense Blog

Failure to order complete trial transcript results in dismissal of Virginia appeal of $8.3 million verdict

A simple clerical error -- failing to order the complete trial transcript -- resulted in the dismissal of the Virginia appeal of a $8.3 million verdict and also spawned two other lawsuits.  These events and their consequences are worth reviewing, as many lawyers will have to admit "there but for the grace of God . . . ."

A 17 year old girl sustained severe injuries, including brain injuries, when skiing in Virginia.  Essentially she collided with a snow grading machine that was being driven up the intermediate slope to reach a snow tubing run.  On July 16, 2004, after a week long trial, a jury returned a verdict in the amount of $8.3 million against the resort.  Read the plaintiff's counsel's closing argument: Download Grigg closing argument 

The defendant and its insurer certainly anticipated a possible bad result, as they retained  prominent appellate counsel shortly before the trial had even begun.

An appeal was noted to the Virginia Supreme Court.  Somehow, someway, at least one trial transcript was apparently not timely filed on the appellant's behalf.  For that reason, the Virginia Supreme Court ultimately dismissed the appeal in July 2005.

Subsequently, the insurer of the ski resort filed a legal malpractice suit against the trial defense counsel in the Circuit Court for the City of Richmond in July, 2007.  Shortly thereafter, the case took on political overtones, as it was revealed in a newspaper story that one of the attorneys involved in the failed appeal was under nomination to the U.S. Court of Appeals for the Fourth Circuit.

On September 10, 2008, one of the defendants in the legal malpractice case filed his own suit against the involved insurers and their counsel, for defamation, abuse of process, and conspiracy to injure the plaintiff in his business.  Essentially, he claimed that he had no involvement in the post-trial matters in the skiing accident case, since it was all turned over to appellate counsel.

The latter suit was recently dismissed on Jan. 6, 2009 by U.S. District Court Judge Norman K. Moon, in part due to the absolute litigation privilege and the statute of limitations.

An appeal was taken to the Fourth Circuit concerning the latter ruling.  Apparently while on appeal, a settlement was worked out, and as part of the settlement it was agreed that there would be a vacatur of Judge Moon's opinion.  Judge Moon, however, denied the request for vacatur.Download Spencer-denial of vacatur

Meanwhile, the legal malpractice suit arising from the failed appeal was non-suited on March 30, 2009.

 

 

Defamation per se in Virginia arising from summary of a judicial opinion

In Vaile v. Willick, 2008 U.S. Dist. LEXIS 53619 (W.D. Va. July 14, 2008), a law student's defamation action against two lawyers survived the defendants' motion for summary judgment.

The defendants practiced family law in Nevada, and represented the plaintiff law student's ex-wife.  The defendants represented the ex-wife and their children in a series of lawsuits in state and federal courts in Nevada to recover damages from Vaile's removal of the children from their mother's custody without her consent.

The plaintiff, who was in law school, decided to cease his defense to one of the civil actions in Nevada federal court, and as a result, the federal judge found against him and awarded compensatory damages of $688,500 and attorneys' fees and costs of $272, 255.

One of the defendants subsequently wrote to the plaintiff's law school to advise that had been found guilty of multiple violations of State and Federal law, including kidnapping, passport fraud, felony non-support of children and violation of RICO.  The letter requested the law school to reconsider the plaintiff's fitness for continued enrollment, and attached a copy of the federal court's decision.

When the law school seemingly took no action, the co-defendant, who was an attorney with the same firm, sent a letter to the ABA to inform it of the law school's recalcitrance, repeated the summary of the Nevada decision, and attached a copy of the Nevada opinion.  The letter called for the ABA to rescind the law school's accreditation as a result of the law school's failure to act.

The plaintiff filed an action for defamation, on the grounds that the letters were false and defamatory.

On cross-motions for summary judgment, the plaintiff argued that the letters were sent with malice and an intent to defame.  Plaintiff argued that he has never been convicted of criminal offenses under state or federal law, and the letters were false and defamatory because they suggested that he was.

Defendants argued that the letters were true or at worst, substantially true, do not necessarily suggest a criminal conviction, and that when read as a whole with the attached judicial opinion, cannot be construed as defamatory per se.

The Court found that the letters were defamatory per se, because they impute the commission of a crime upon the plaintiff that he did not commit.  Further, the letters were defamatory per se as a whole because they suggested that the plaintiff is unfit to continue at law school or lacks the integrity to continue in the study of the law or to perform the duties of a lawyer.

The Court found that the absolute privilege to publish matters of public record applied to the letters.  The publication of public records to which everyone has a right of access is absolutely privileged in Virginia.  The privilege is not lost if the record is incorrect or if it contains falsehoods.  The privilege exists so long as the published account of the public record is a fair and substantially accurate account of the public record or proceeding.  If the publication substantially departs from the proceeding or record, then the privilege is lost.

The Court found that the issue whether the letters substantially departed from the Nevada opinion, such that the privilege was lost, is a question left for the jury, because reasonable people could disagree whether the letters are an impartial and accurate account of the opinion.

Impact of Medicare liens on settlements

An article on Medicare Reimbursement Problems was recently published in For the Defense.  One of the authors has a copy of the article posted on his firm website.  The article details the issues, but unfortunately no easy solution is offered.  The authors say that for now, the "only workable solution" is to put money in reserve for the estimated Medicare reimbursement.

The 30 day period for judicial review of a MD WCC award is not extended by three days for mailing

In Chance v. WMATA, No. 240 (In the Court of Special Appeals of Maryland, April 4, 2007), the Court held that the 30 day period to file a petition for judicial review under LE Section 9-737 starts running from the date of the mailing of the Commission's order, and that the 30 day period is NOT extended by Md. Rule 1-203(c)(which provides for a three-day extension to a presribed period within which a party has a right to act when the period commences after service upon the party).

Further, the opinion states that the 30 day period is in the nature of a statute of limitations and thus subject to waiver by failure of a party to raise it in the proper manner. Id., at n. 6.

In short, in a Md WCC matter, the losing party gets 30 days to file the petition for judicial review, and no extra 3 days for mailing. And if the other side makes that mistake and you don't raise it properly, the defense is waived.

Settlements and the Medicare Secondary Payer Act

In this very confusing area, the best overview I have read so far is Dampf, Mediations & Settlements:  Applicability of the Medicare Secondary Payer Act, Louisiana Bar J., Vol. 54, No. 3 (Nov. 2006).  It is available online.

Click here for the current CMS guidelines on Workers Comp Medicare Set Aside Arrangements.

Waiver of defense of lack of personal jurisdiction

In Beyond Systems, Inc. v. Secure Medical, Inc., No. 2793, September Term, 2004, the Maryland Court of Special Appeals held that when the defense of personal jurisdiction has been waived due to failure to raise the defense by motion pursuant to Maryland Rule 2-322(a), the defense cannot be raised thereafter.  Here, although the defendant railed to raise the defense by a preliminary motion, the defendant prevailed on the defense on motion for summary judgment.  The Court held that the defense of lack of personal jurisdiction was waived, and no action by plaintiff was required to preserve the argument of waiver.

This lawsuit appears to have arisen because of spam which the defendant sent to the plaintiff.  The defendant, while raising the lack of personal jurisdiction in its answer, did not raise the lack of personal jurisdiction in a preliminary motion.  The trial court ultimately granted the defendant's motion for summary judgment on lack of personal jurisdiction.

The waiver argument was not raised for the first time until the case was on appeal.  The Court ruled that the plaintiff/appellant did not forfeit its right to rely on that waiver by not raising the issue before the trial court.

Once the defense of lack of personal jurisdiction is waived by failure to file a motion to dismiss based on lack of personal jurisdiction, the defense cannot be resurrected. 

Maryland Court of Appeals Holds That Failure To Renew Motion for Judgment At Close of All of the Evidence Nullifies A Party's Right to File a Motion for JNOV Following An Adverse Jury Verdict

In General Motors Corp. v. Seay, No. 66, Sept. Term 2004, the Court of Appeals of Maryland held that the terms of Maryland Rule 2-532(a) are mandatory and unambiguous.  Under that rule, a party may move for judgment notwithstanding the verdict ONLY if that party made a motion for judgment at the close of all the evidence and only on the grounds advanced in support of the earlier motion.  Thus, verdicts totaling $500,000.00 were reinstated.

Failure to renew the motion for judgment at the close of all of the evidence nullifies a party's right to file a motion for JNOV following an adverse jury verdict.

The problem was that although during the trial, GM made a motion for judgment at the close of the plaintiff's case-in-chief, and again at the close of its own case, it did not renew the motion following the presentation of rebuttal testimony by the plaintiff.

The Court of Appeals noted that the federal circuits are split regarding whether a motion or renewal of a motion for judgment at the close of all the evidence is a mere technicality or a prerequisite to a post-trial motion for judgment.

The Court remanded the case to the trial court, for resolution of plaintiff's undecided claim for punitive damages.  (However, one must wonder what chance the plaintiff has for punitive damages, where the trial court already granted a motion for JNOV.)

What If An Adjuster Asks You To File An Answer For An Insured Who Supposedly Has Been Served, But Who Cannot Be Contacted?

Once in awhile an insurance adjuster may ask counsel to file an answer for an insured who has supposedly been served (or who was served by substituted service on a State official), but it turns out that the insured cannot be located or contacted.  When informed of this, the adjuster may ask counsel to file the answer anyway, to avoid a default -- and the case is one that should be and likely will be settled quickly anyway, the adjuster may add.  What to do?

Although there are probably exceptions, the better approach is not to accept such an assignment. 

1. It may be an ethical violation in your jurisdiction to take legal action on the insured's behalf without the insured's knowledge and consent.  The insurance policy may not constitute advance consent to such action.
2. The insured may not have been properly served, or may have good grounds to challenge service or personal jurisdiction on due process grounds.  Filing an answer will waive those defenses in some jurisdictions, e.g., in Maryland Circuit Court.
3. The complaint, and any presuit claims investigation, may not reflect the true nature and severity of the damages.  Filing an answer may expose the insured to a judgment in excess of insurance coverage, which would make any waiver of defenses a serious matter. 
4. It may be difficult to frame an answer, raising all the appropriate affirmative defenses, without any information from the insured.
5. Under these circumstances, it will be impossible for the insured (your client) to participate in discovery, which will likely result in discovery sanctions, e.g., a default on some or all issues, and/or adverse inference instructions to the jury.  Thus in the end the case may not be defensible anyway.  And that quick settlement?  It's probably not going to happen, at least, not in the range contemplated by the adjuster.
6. Once you enter an appearance and file an answer for the insured, the Court may refuse to allow a subsequent motion to strike your appearance.
7. The insurer may in the future decide to raise coverage defenses, which also could make any waiver of affirmative defenses caused by the unauthorized answer a serious matter.

Untimely Notice to Insured of Breach of Policy Condition Can Result In Waiver of the Policy Defense in Virginia

Under Va. Code § 38.2-2226, in order to disclaim coverage based on an insured’s breach of a policy condition, an insurer has to give notice to the claimant or claimant’s counsel within 45 days after discovery by the insurer of the breach of the condition. Failure to give such notice within 45 days will result in a waiver of the defense. Virginia courts have been strict in applying such waiver. See, e.g., Aetna Casualty & Surety Co. v. Compass & Anchor Club, Inc., 33 Va. Cir. 235 (Feb. 24, 1994).

In other words, under Va. Code § 38.2-2226, an insurer's policy defense based on breach of the cooperation clause can be waived by operation of law if there is failure to give notice to the insured within the statutory time frame. See Morrell v. Nationwide Mut. Fire Inc. Co., 188 F.3d 218 (4^th Cir. 1999)

Traps for the Unwary

I just received a copy of "Traps for the Unwary", 5th Ed., published by the Massachusetts Bar Association (to which I belong), and edited by Kevin G. Kenneally and James E. Harvey, Jr.  I've gotten several of the previous editions and have long admired this work.

The Introduction explains that it is a compilation of some laws that will help attorneys recognize and avoid traps that may be lying in wait for them, and focuses mainly on general civil practice. 

This is an excellent idea, and should be emulated by every Bar association, because there are such pitfalls in every jurisdiction.  I am starting a category for this blog called "Pitfalls for the Unwary" to collect such laws that I come across. I am going to call them pitfalls, as the term "traps" to me implies an intent to catch prey. Maybe if I can gather a sufficient number of local pitfalls, it will be a catalyst for a similar Bar publication in this area. 

Some of the Traps identified in the Mass. Bar Assoc. book are not limited to Massachusetts.  Here is an example:

B. Medicare liens.  Under federal law, the Medicare program is subrogated to claimant's cause of action or rights to recover under workers' compensation, automobile or liability insurance or against self-insurers.  42 U.S.C. 1395y(b), et seq.

See Traps, at p. 51.  This is also noted in a section on settlements:

There may be liens on the recover a plaintiff receives in a personal injury case, for example, workers' compensation . . ., Blue Cross, welfare department, hospitals . . . , and prior attorneys . . . .  Medicare liens on personal injury settlement proceeds are created automatically by regulation and do not require notice to the recipient or to counsel.  42 U.S.C. sec. 1395y(b), et seq.  It is advisable to inform clients of the amount of the liens before settlement, so the clients can calculate their net recovery in order to make an informed decision on accepting the settlement offer.  An attorney who charges a fee for negotiating liens, over the agreed upon contingent fee, may be committing a violation of the Consumer Protection Act against the client.  Doucette v. Kwiat, 392 Mass. 915, 917, 467 N.E.2d 1374 (1984).

Traps, at p. 68.

That's food enough for thought for now.

For more on medicare liens, click here.