December 2014 Case Notes & Comments

“For me, the focus are [the] songs, which really get the audience moving.” ~ Joe Cocker (1944 - 2014)

MONTHLY QUIZ: Due to increased seasonal demand, Santa and Hanukkah Harry hire Abominable Snowman as a delivery driver for the 2011 holiday season. Unfortunately, Abominable Snowman’s driving is abominable and he strikes Grinch’s sled with the Company sleigh. In 2012, Grinch sues Santa, Hanukkah Harry, Abominable Snowman and Company in negligence for his personal injuries arising out of the collision. The 2012 litigation settles for $16,000 and a release is drafted. In the release, Grinch gives up “any and all rights and claims” which he had at that time against Santa, Harry, Snowman and Company, including “any other rights … arising from” the sleigh-sled incident. However, in 2013, Grinch sues Santa, Harry, Snowman and Company - this time to recover money for alleged damages to his sled. Santa, Harry, Snowman and Company move to dismiss, based upon the “clear, concise, and explicit” terms of the release. Grinch argues that the release is ambiguous and that parol evidence and further discovery are needed to determine the parties’ intent.  Is the release ambiguous? Will the court allow parol evidence? You be the judge (Answer below).

WORKERS’ COMPENSATION - PREPONDERANCE OF EVIDENCE BURDEN FOR OCCUPATIONAL DISEASE CLAIM:While on a business trip to Brazil for Employer, Employee was allegedly exposed to Neisseria meningitides and died. Employee’s wife, the special Administrator of Employee’s Estate, presented testimony as to Employee’s travel schedule abroad, including Brazil, and as to his symptoms and worsening medical condition following his return to the United States. Employee’s doctors also provided testimony and evidence. Employer presented evidence suggesting that Employee may have had meningitis before he left for Brazil. Arbitrator denied compensation, finding that Administrator had not proven an exposure that arose out of and in the course of employment. The Commission unanimously reversed the arbitrator’s decision and held that Administrator had proven by a preponderance of the evidence that Employee had contracted meningitis in Brazil. Employer filed an appeal in the Circuit Court, which affirmed the Commission’s award, and Employer appealed. In considering Employer’s appeal, the Appellate Court noted that Employer’s argument was not a legal argument, but rather, one based on the sufficiency of the factual evidence. In an occupational disease case, a claimant has the burden to prove that he suffers from an occupational disease and that there is a causal connection between the disease and his employment. Whether there is a causal connection is a question of fact. The Appellate Court noted that the Occupational Disease Act does not require a direct causal connection, only an opinion from a medical expert that the occupation could have or might havecaused an injury. In affirming the Circuit Court and finding that the award of benefits was not contrary to the manifest weight of the evidence, the Appellate Court reasoned that the chain of events evidence and testimony provided by Administrator and Employee’s physicians suggested a causal connection and was sufficient to prove causation, even if the etiology of the disease was unknown. Award of benefits affirmed. Omron Electronics v. Illinois Workers’ Compensation Commission, et al, 2014 IL App (1st) 130766WC (Nov. 14, 2014).

TCPA: INSURER NOT LIABLE FOR INSURED’S $4.9 MILLION SETTLEMENT:Underlying class action Plaintiffs sued Insured, alleging that Insured sent “blast-fax” advertisements in violation of the Telephone Consumer Protection Act (“TCPA”). Insured tendered the suit to Insurer, which denied coverage based on a “Violation of Statutes Exclusion,” which precluded coverage for liability injury “arising directly or indirectly out of” any act or omission that allegedly violates the TCPA. Thereafter, Insured settled the “blast fax” case for $4.9 million, stipulating that Underlying Plaintiffs would only pursue insurance proceeds and not execute against Insured. One month before the underlying court approved settlement, Underlying Plaintiffs amended their complaint in an effort to bring the action within the insurance coverage by removing reference to the TCPA. Insured’s attorney tendered the amended complaint to Insurer, without informing Insurer that the case had settled. Insurer again denied coverage. Following court approval of the settlement, Underlying Plaintiffs filed their own declaratory judgment action against Insurer, seeking satisfaction of the underlying $4.9 million settlement. Reviewing the underlying amended complaint, the trial court ruled that the pleading from the “blast fax” case was broad enough to allege faxes potentially not covered by the TCPA, or within the Exclusion. On appeal, the court reversed on the grounds that the Exclusion applied to all counts of the amended complaint, even where no TCPA violation was alleged, because the Policy excluded property damage or advertising injury “arising directly or indirectly” out of any action or omission that allegedly violated the TCPA.  “Arising out of,” a phrase which is broadly construed in favor of Insured, required the court to apply a “But for” analysis: “But for” the Insured sending the faxes, there would have been no injury to Underlying Plaintiffs. Accordingly, the broadly drafted exclusion successfully excluded even the non-TCPA counts, and Insurer had no duty to defend under the policy. G.M. Sign, Inc. v. State Farm Fire & Cas. Co.,2014 IL App (2d) 130593 (May 2, 2014).  Compare / see also: Standard Mut. Ins. Co. v. Lay, 2012 IL App (4th) 110527 (Apr. 20, 2012)(agreed-upon TCPA settlement was not insurable as a matter of Illinois law and public policy).

APPRAISAL – CONSIDERATION OF CAUSATION ISSUES APPROPRIATE: Insured Property Owner submitted claim pursuant to its commercial property policy for damage to an apartment complex alleged to have occurred during a high wind event. As part of its investigation, Insurer retained two separate engineers, both of which determined that the buildings displayed only a small amount of wind damage (a covered peril under the policy), while the majority of the damage was the result of wear and tear and/or defective workmanship (both excluded perils). Owner rejected Insurer’s findings and demanded appraisal. Insurer then filed a declaratory action, arguing that appraisal was inappropriate as the dispute involved questions of coverage under the policy, specifically the cause of the damage to the property, and not merely the “amount of loss” as stated in the appraisal condition. Owner moved to dismiss the complaint, arguing both that its appraisal demand was valid, and that completion of the appraisal process was a condition precedent to the filing of suit. In granting Owner’s motion, the District Court noted that, while the parties disagreed as to the scope of the covered loss, there was no dispute that at least some of the damage was covered under the policy. As such, the court reasoned that a determination of the “amount of loss” would necessarily include issues of causation and the presence of such issues would not negate Insured’s contractual right to appraisal. The court further held that the appraisal condition was, at least implicitly, a condition precedent to the filing of suit and dismissed Insurer’s suit, without prejudice, noting that Insurer reserved the right to raise any unresolved issues regarding coverage for specific damage after the appraisal was complete. Philadelphia Indem. Ins. Co. v. WE Pebble Point, 2014 WL 4390944 (S.D.Ind. Sep. 3, 2014).

PREMISES LIABILITY – DISTRACTION EXCEPTION:  Septuagenarian Plaintiff tripped and fell on an admittedly “open and obvious” sidewalk crack in front of an eye clinic which she had visited several times before.  Plaintiff filed suit against the City, alleging a negligent failure to inspect, repair and/or maintain the sidewalk. City moved for summary judgment on the basis that it was not required to foresee and protect Plaintiff against injuries from an open and obvious condition. Though Plaintiff admitted that she had previously noticed the “open and obvious” condition, Plaintiff asserted that the “distraction exception” applied because she was distracted at the time of her fall, looking toward the clinic’s front door and its steps. In Illinois, the “distraction exception” provides that landowners must warn of or guard against even open and obvious dangers if it is reasonably foreseeable that the person will be distracted and not discover the danger. On review, the Illinois Supreme Court stressed that the distraction exception is typically applied when a plaintiff’s attention is distracted for a particular reason (such as to avoid another hazard or to perform some other task which required her attention), and that the distraction was reasonably foreseeable by the defendant. Here, while Plaintiff was admittedly looking in the direction of the clinic rather than at the defective sidewalk, the mere fact that Plaintiff was looking elsewhere was insufficient to constitute a “distraction.” HELD: Summary judgment affirmed, Appellate Court reversed. City had no duty to protect Plaintiff from an open and obvious sidewalk defect.  Virginia Bruns v. The City of Centralia, 2014 IL 116998 (Sept. 18, 2014).

ANSWER TO QUIZ: Santa, Hanukkah Harry, Snowman and Company win, Grinch loses. The terms of the release, which explicitly state that the Grinch gave up “any other rights … arising from” the sleigh-sled incident he had “or may hereafter have”, could only be reasonably interpreted as a release of all claims arising from the 2011 sleigh-sled incident. Since the terms were clear, explicit and unambiguous, the Court enforced the release without looking to any additional evidence. Grinch’s case was properly dismissed. Badette v. Rodriguez, et al. 2014 IL App (1st) 133004 (Dec. 1, 2014).

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