(1) Premises Liability
Liability for Criminal Conduct of Third Parties

Paliometros v. Loyola, Sup. Ct., opinion by Daniels, J. (one judge dissenting), filed August 13, 2007 (PICS No. 07-1219).

Plaintiff claimed that she was sexually assaulted while at a fraternity party held at defendant’s motor lodge. The owners of the lodge were not at the motel while the party was being held. Underage guests attended the party, and alcohol was consumed. Plaintiff recovered $548,000, defendant’s post-trial motions were denied, and defendant appealed, essentially arguing that it did not owe a duty to the plaintiff.

The Superior Court panel, in a 2-1 vote, affirmed, citing § 344 of the Restatement (Second) of Torts, which provides that a possessor of land held open to the public for business purposes may be liable for physical harm caused by third parties and by the possessor’s failure to discover that harmful acts are likely to occur or to warn invitees. The court majority concluded that because the defendant knew that a fraternity party was being held at which there was likely to be underage drinking, it owed plaintiff a duty to exercise reasonable care by having some supervisory personnel physically present on the premises to monitor both the premises and the conduct occurring. However, as noted in the dissent, the plaintiff did not prove that defendant should have reasonably anticipated that a sexual assault would occur at the party. The dissent also observed that the assault occurred in an unoccupied room rented by the fraternity and not at the party itself.

(2) This case can only be classified under chutzpah:

Holt v. Navarro, Sup. Ct., opinion by Gantman, J., filed August 16, 2007 (PICS No. 07-1243).

After experiencing a schizophrenic episode, plaintiff escaped from an ambulance during transfer from one psychiatric institution to another. After his escape, he attempted to hijack a car but was subdued and arrested by the car’s owner, an off-duty police officer. He was thereafter convicted of robbery and simple assault and sentenced to seven years probation. (At his criminal trial, plaintiff’s insanity defense was rejected.)

Plaintiff then sued, among others, the ambulance company, alleging its negligence in transporting him led to his conviction, which in turn led to reduced earning potential. The jury returned a verdict for the plaintiff, and the court (Judge Eugene Maier) denied defendant’s post-trial motions.

Fortunately, upon appeal sanity returned, and the Superior Court reversed, holding as a matter of law and public policy that the plaintiff’s recovery was barred because he could not be allowed to benefit from his own criminal acts. Furthermore, the court held that the plaintiff’s own actions, not the ambulance company’s lack of care, were the superceding proximate cause of the plaintiff’s arrest and conviction.

(3) Indemnity
Pass-through Indemnity Clauses

INTRODUCTION: A pass-through indemnity clause is one where, for example, a general contractor who agrees to indemnify the owner of a construction site for damages arising out of the general contractor’s work, then enters into a subcontract whereby the subcontractor not only has to indemnify the general contractor for claims arising out of the subcontractor’s work, but also to indemnify the general contractor for any claims for which the general contractor is liable to the owner. In short, the subcontractor assumes the general contractor’s indemnity obligations to the owner.

Integrated Project Services v. HMS Interiors, Sup. Ct., opinion by Bender, J., filed August 16, 2007 (PICS No. 07-1244).

An employee of subcontractor (SC) was injured on the construction site and instituted a tort
action against both the owner and the general contractor (GC). The Workers Compensation Act barred any claim by him against SC, his employer.

The GC brought an action against the SC for a declaratory judgment that the SC had the duty to indemnity the GC for any damages it had to pay to the worker. In the meantime, the worker obtained a verdict against the owner, and the court in turn found that the GC was liable for 80 percent of that award because of its contractual indemnity of the owner for the GC’s own negligence. However, in the declaratory judgment action, the court granted the SC’s motion for judgment on the pleadings and held that the indemnity obligation of the GC could not pass through to SC.

On appeal, the Superior Court affirmed. The court reiterated prior law that pass-through provisions that purport to hold an indemnitor, such as the SC, responsible for the indemnitee’s negligence must be clear, specific, and unequivocal. The court found that the contract in question was at best ambiguous.

Note that since the GC was seeking indemnity against the plaintiff’s employer, its subcontract would have to contain language by which the SC waived its workers compensation defense as to the indemnity claim. However, even if the GC were seeking indemnity for a claim by someone not an employee of the SC, the clear, specific, and unequivocal standard would be applicable.

(4) Denial of Coverage
Resident Relative

Erie Ins. Exchange v. Weryha, Sup. Ct., opinion by Tamilia, J., filed 8/20/07 (PICS No. 07-1261).

Decedent was struck by a car and killed. His parents submitted an underinsured motorist claim with Erie under father’s policy. Erie denied the claim on the basis that the decedent was not a named insured or a resident as defined in the father’s policy. (Father and mother were separated, and the decedent lived with the mother.) The trial court granted summary judgment to Erie, and the parents appealed. The policy covered relatives who are defined as persons who are resident in the insured’s household and related by blood, marriage, or adoption. Resident is defined as one who physically lives with the named insured in the named insured’s household. The Superior Court found that these terms were not ambiguous and that a child of separated or divorced parents can be a relative of one of those only if that child physically lives with that parent. The issue of where a child physically lives is very factually intensive, and the court noted that it might be possible to live with both separated parents. However, in the case at hand the decedent had neither the qualitative nor quantitative conduct with the father to be a resident in his household.

Father also asserted that he had spoken with his insurance agent about the separation and changed his coverage and that the agent therefore had a duty to inform him if the separation would limit his children’s coverage. The failure to do so violated his reasonable expectations. The court rejected this argument, as the relevant issues were the decedent’s living situation, not the father’s. Further, the court found that there was no evidence that the agent learned that the decedent would not live with the father and that, finally, the agent could not be expected to make the legal inferences necessary to support the duty that the parents claimed he owed.