May 2012 Case Notes & Comments

“The road to success is always under construction” ~ Lily Tomlin

MONTHLY QUIZ - EVIDENCE: Plaintiff and Defendant are involved in an auto accident in the parking lot of a gas station. At trial, the judge admits the following evidence: (1) A post-occurrence photograph introduced by Defendant that accurately depicted the parking lot’s layout, but does not accurately depict the location of the subject vehicles at the time of the accident; and (2) A statement by Plaintiff to the investigating police officer that her back was hurting, but that it was the result of a prior injury. The jury finds in favor of Defendant. Plaintiff appeals. Query: Should the jury verdict for Defendant stand, or did the trial judge commit reversible error?  You be the judge.  (Answer below)

 

TCPA PENALTY OF $500 PER FAX EQUALS PUNITIVE DAMAGES, INSURER NOT LIABLE FOR INSURED’S $1 MIL-PLUS SETTLEMENT: The insured was sued for violating the Telephone Consumer Protection Act (“TCPA”), which imposes a fine of $500 per fax. Insurer defended Insured under a reservation of rights, and filed a declaratory suit to determine its coverage under its policies. Agent opted for independent counsel, settled with Plaintiffs for more than $1 million and then assigned its rights against Insurer in exchange for a promise by Plaintiffs not to execute against Agent’s property or assets other than its policy with Insurer. In the declaratory action, Insurer argued that it had no duty to defend and no duty to satisfy the stipulated judgment because the $500 statutory rate for TCPA violations was equivalent to punitive damages. Trial Court agreed, holding that any amount of damage in excess of actual damages constitutes punitive damages. Accordingly, the agreed-upon settlement was not insurable as a matter of Illinois law and public policy, and therefore not recoverable from Insurer. HELD: Affirmed. Standard Mut. Ins. Co. v. Lay, 2012 IL App (4th) 110527 (Apr. 20, 2012)

 

VERDICT AGAINST NURSING HOME UPHELD: Nursing Home Patient falls, breaks his hip, and later dies.  His estate sues Nursing Home.  Evidence at trial is that a pre-admission evaluation was not communicated to Patient’s caregivers, there were gaps in supervision, and a nonfunctioning call button in Patient’s room. Jury was instructed that the Nursing Home Care Act provides that “[a]n owner, licensee, administrator, employee or agent of a facility shall not abuse or neglect a resident.” The Fifth District upheld a jury verdict for Patient’s estate as supported by the evidence. Graves v. Rosewood Care Center, Inc. of Edwardsville, 2012 IL App (5th) 100033 (Apr. 11, 2012)

 

TARGETED TENDERS NOT ALLOWED TO CHRONOLOGICALLY CONSECUTIVE INSURERS: Insured School District faced three suits alleging damages stemming from mold exposure from 1981 through 2001, and tendered its defense to multiple insurers that had covered the Insured consecutively over the time period.  Several insurers then “settled” their defense obligations with Insured, and Insured agreed to “de-activate” the tender to those insurers, leaving only one tender active.  The remaining insurer sued, alleging Insured violated insurance contract by entering into secret settlements with other insurers and tendering the defense to only one insurer.  Illinois is one of only three states that allow an insured to target its tender to one insurer over other chronologically concurrent insurers.  The Illinois Appellate Court declined to extend that rule to chronologically consecutive insurers, and found the de-activation of tenders to the other insurers improper.  Illinois School District Agency v. The St. Charles Community Unit School District 303, 2012 Ill.App. (1st) 100088 (Mar. 30, 2012).

 

PART-TIME POSITION OF MAYOR, WITH NO SALARY, IS EXCLUDED FROM COVERAGE AS BUSINESS PURSUIT: Mayor of Municipality was sued for allegedly providing residents with contaminated drinking water. The office of mayor is a part-time position with an annual salary from $1,000 to $6,000, and he donated his entire annual salary back to Municipality every year. Mayor’s homeowner’s Insurer refused to defend and filed a declaratory action based upon the “business pursuits” exclusion, which defined a “business pursuit” as a “trade, profession or occupation”.  In the declaratory judgment case, the trial court ruled for the Mayor, but the Appellate Court reversed and ruled for the Insurer, finding that the “very nature” of the position of mayor was an “occupation”, in which Mayor participated on a “continuous and regular” basis. Appellate Court also found the amount of compensation and the part-time nature of the position irrelevant.Metropolitan Prop. & Cas. Ins. Co. v. Stranczek, 2012 IL App (1st) 103760 (Mar. 30, 2012)

 

ANSWER TO QUIZ: The appellate court held that the trial judge was wrong on both issues, and ordered a new trial. (1) Photograph:  The Appellate Court held that the probative value in depicting the layout of the scene was outweighed by the prejudice to Plaintiff in admitting a photo that did not accurately portray the location of the vehicles at the time of the car accident in the parking lot. (2) Statement to police officer:  If a defendant wishes to introduce evidence that the plaintiff has suffered a prior injury, whether to the “same part of the body” or not, the defendant must introduce expert evidence demonstrating why the prior injury is relevant to causation, damages, or some other issue of consequence. As Defendant did not offer any expert testimony connecting the injuries, the trial court had abused its discretion in allowing the police officer to testify to Plaintiff’s statement. Johnson v. Bailey, 2012 Ill. App. (3rd) 102641 (Mar. 30. 2012)

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