March 2014 Case Notes & Comments

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MONTHLY QUIZ: Defendant-Landowners of house and 75-acre farm rent house to Tenants. Pets are not allowed in the house per the lease, but Landowners allow Tenants to keep their Dog in the barn - even though the barn is not part of the lease. Dog lives and sleeps inside the barn and is let out by Tenants, who provide all care for Dog, including feeding, grooming, training and veterinary bills. Plaintiff is riding his motorcycle on a trail by the farm, when Dog runs into Plaintiff's path, causing him to lose control and sustain injuries. Plaintiff sues Landowners, arguing that under the Illinois Animal Control Act (Act), 510 ILCS 5/1 et seq., Landowners qualify as Dog's owners because they harbored Dog in their barn, an area over which they have exclusive control. Landowners move to dismiss. Does allowing Dog to live and sleep in the barn establish the requisite care, custody or control so as to give rise to liability as owners under the Act? Are Landowners "owners" under the Act because they knowingly permitted Dog to remain in the barn? You be the judge. (Answer below)

U.S. SUPREME COURT DEFINES LIMITS TO EXERCISE OF GENERAL JURISDICTION: Federal Courts can exercise general jurisdiction over a foreign entity if their affiliations with the state are so "continuous and systematic" as to render them essentially at home in the forum. Plaintiffs, 22 Argentinian residents, filed suit against a German automobile Manufacturer in a California Federal District Court, under Federal, California and Argentina law, for conduct that occurred entirely in Argentina. Plaintiffs argued, among other things, that the conduct of Manufacturer's wholly-owned U.S. Subsidiary, an importer and Delaware corporation that ultimately purchased and distributed Manufacturer's vehicles throughout the U.S. and California, subjected Manufacturer to California's general jurisdiction. However, even assuming Subsidiary was at home in California and that Subsidiary's contacts were imputable to Manufacturer, there was still be no basis to subject Manufacturer to the general jurisdiction in California, said the Supreme Court. The paradigm all-purpose forums for general jurisdiction are a corporation's place of incorporation and principal place of business. Neither Manufacturer nor Subsidiary was incorporated in California, nor did either entity have its principal place of business there. In light of the above, Court strengthened the view that general jurisdiction should typically be limited to the jurisdiction where the company is at home. Daimler AG v. Barbara Bauman et al., 134 S.Ct. 746 (U.S. S.Ct. Jan. 14, 2014).

: Police officer at the Atlanta, Georgia airport seized cash from Nevada residents who were en route back to Las Vegas, Nevada. The Georgia police officer kept the cash even after determining that it did not come from drug activity. The Nevada residents sued the Defendant/ Police Officer in federal court in Nevada. The U.S. Supreme Court ruled that the Nevada federal court lacked personal jurisdiction over Georgia Defendant/Police Officer. The alleged tortious conduct in Georgia may have harmed the Nevada residents, but Defendant/ Police Officer had no other contacts with Nevada, and Plaintiffs/Nevada residents' contacts with Nevada are not "decisive in determining whether the Defendant's due process rights are violated." It is not enough that a tortfeasor may have harmed someone who resides in the forum - he must have contact with the forum itself, not simply with the plaintiffs. Walden v. Fiore, 134 S.Ct. 1115 (U.S. S.Ct., Feb. 25, 2014) So the Nevada residents will have to sue the Georgia police officer in Georgia.

DUTY TO DEFEND BASED UPON ARGUABLY INDIRECT SERVICES TO "THIRD-PARTIES": Parent Company and its Subsidiaries provided professional services, including the valuation of various types of assets, and making loans. Parent Company's professional liability policy covered liability arising from providing "Professional Services to a third party". Parent Company and its Subsidiaries were sued by Third Parties in several lawsuits for alleged fraud, breach of contract and negligent misrepresentation. Insurer refused to defend Parent Company or its Subsidiaries in the underlying actions on the ground that Subsidiaries provided services to one another and Parent, but not "a third party." Parent Company and its Subsidiaries filed a declaratory action against the primary and excess Insurer, arguing that Third-Parties were the intended beneficiaries of the professional services provided to the Parent Company by the Subsidiaries. The court ruled in favor of Parent Company and its Subsidiaries and against the Insurer on this issue. Since the underlying actions alleged that Subsidiaries performed appraisal services with the knowledge and intent that Third-Parties would rely on them, the duty to defend was triggered. Hilco Trading, LLC v. Liberty Surplus Insurance Corp., 2014 IL App (1st) 123503 (1st Dist. Mar. 17, 2014).

PLAINTIFF FAILED TO STATE CAUSE OF ACTION AGAINST INSURER FOR BREACH OF THE DUTY TO SETTLE: Plaintiff was injured in auto accident with Insured and sued Insured Driver for negligence. Insurer defended in accordance with the terms of Insured's auto liability policy, which had an indemnity limit of $20,000 per person. Plaintiff made and Insurer rejected a policy-limit settlement demand. At trial, jury awarded Plaintiff $47,951.15, plus costs, and Insured assigned her rights under the policy to Plaintiff. Plaintiff then sued Insurer for bad faith, and Insurer moved to dismiss the complaint under Section 5/2-615 for failing to state a cause of action. Plaintiff alleged that prior to trial, Insurer knew of a reasonable probability of liability against Insured; knew of Plaintiff's $74,000.00 workers' comp lien and $23,000 in medical bills; and that Insurer failed to negotiate in good faith and keep Insured's interests equal to its own. The Appellate Court held Illinois' pleading standard requires pleading of facts "which show that liability is at least more likely than not, but not necessarily a certainty." The Appellate Court found that Plaintiff sufficiently pled facts to establish a reasonable probability of recovery in excess of the policy limits, even though Plaintiff failed to allege how or when Insurer became aware of the potential for damages to exceed the policy limits. But Plaintiff failed to plead facts to that would establish a reasonable probability, as opposed to possibility, of liability in the underlying case. Therefore, the Appellate Court affirmed the dismissal of Plaintiff's complaint, holding that Plaintiff failed to properly allege a cause of action for breach of the duty to settle. Powell v. American Service Insurance Company, 2014 IL App (1st) 123643 (1st Dist. Feb. 18, 2014)..

ANSWER: Landowners win, Plaintiff loses. The Act defines "owner," in part, as "any person ... who keeps or harbors an animal or who ... knowingly permits a dog to remain on any premises occupied by him." (510 ILCS 5/2.16) Though the terms keeps or harbors are not defined, Landowners are not considered owners of Dog merely because they allowed Tenants to keep Dog in the barn. Further, as they did not possess, nor have the right to care for or control Dog, Landowners were not owners within the meaning of the Act. Grant of summary judgment in favor of Landowners affirmed. Whitten v. Luck, 2014 IL App (5th) 120513 (5th Dist. Mar. 13, 2014)

Case Notes & Comments is intended for general information purposes and is not intended to serve as legal advice. For legal questions, or if you would like additional information as to how applicable law may relate to specific facts or circumstances, please contact the Leahy, Eisenberg & Fraenkel, Ltd. attorney with whom you regularly work, or Roland Keske or at (312) 368-4554.