Inside. Adjusters May Be Liable for Defamation. Volume 3, Issue 4 December 2006

Transcription

1 Volume 3, Issue 4 December 2006 Adjusters May Be Liable for Defamation by: Allyson C. Kitchel On November 3, 2006, in Tronfeld v. Nationwide Mutual Ins. Co., 272 Va. 709 (2006), the Virginia Supreme Court ruled that an insurance adjuster may be liable for defamation for telling an insured that he would be better off dealing with the adjuster directly and not dealing with an attorney who just takes people s money. In February 2005, a Nationwide adjuster met with its insured to discuss an injury sustained during a car accident. During that meeting, the insured mentioned that he was considering retaining Richmond attorney Jay Tronfeld. The adjuster made several statements in response: (1) Jay Tronfeld just takes people s money, and (2) clients of Jay Tronfeld would receive more money [for their claims] if they had not hired Jay and had dealt with the adjuster [directly]. Mr. Tronfeld filed a defamation suit in the Circuit Court of the City of Petersburg, alleging that the adjuster had impugned him in his professional capacity in violation of Virginia law. The circuit court dismissed the suit, finding that the insurance adjuster s statements were merely expressions of opinion. The Supreme Court overturned the circuit court s decision. While the Court did not address whether the adjuster had actually defamed Mr. Tronfeld, it did determine that whether the adjuster s statements were defamatory or not was a question to be determined by a jury. In Virginia, defamatory words include [t]hose which impute to a person unfitness to perform the duties of an office or employment of profit, or want of integrity in the discharge of the duties of such an office or employment or [t]hose which prejudice such person in his or her profession or trade. Applying this standard, the Supreme Court found that if the adjuster s statements impugned Mr. Tronfeld in his profession or trade, and are not protected as statements of mere opinion, the circuit court erred in dismissing the suit. The Court concluded that the adjuster s statements are actionable. Whether or not a statement is an expression of opinion is determined by looking at whether the statement is capable of being proven true or false. A statement that is capable of disproof by evidence cannot be an opinion and may give rise to a defamation claim. The Court found that stating that an attorney just takes people s money is a statement that can be proven true or false. Mr. Tronfeld could prove that he does not just take people s money by proffering evidence of a situation in which a settlement he obtained exceeded a previous offer from an insurance company. As such, the adjuster s comments were not the expression of an opinion because they could be Inside proven false. The case was remanded Funnies...7 to the circuit court Landmark Products Liability Case... 4 and may proceed Firm Lobbies for Procedural Changes...5 to trial next year. Out-of-State Owners May Be Liable...6 This case serves as a reminder to all of Second Non-Suits w/o Notice... 3 us to be mindful of Will the Colossus Fall?... 8 what we say. Worker s Compensation...2

2 Workers Compensation Corner By: Benjamin J. Trichilo, Esquire EMPLOYER S FAILURE TO FILE ACCIDENT REPORT EXTENDS STATUTE OF LIMITATIONS Any employer in the Commonwealth of Virginia that regularly employs three (3) or more employees is obligated to provide Workers Compensation coverage. When a work-related injury occurs, and the employer becomes aware of that injury, it is obligated to file an accident report with the Virginia Workers Compensation Commission within ten (10) days. Failure to comply subjects the employer to a civil penalty of not more than $ Willful violations can be punished by a fine of up to $5, As a practical matter the Virginia Workers Compensation Commission does not often assess fines for violations. Many employers are unaware of the statutory requirement, and have difficulty complying with the ten-day filing provision. There are other consequences for failing to file the report. Normally, a worker has two (2) years from the date of injury to file a claim for benefits. That period is extended if the employer does not file the accident report, and the employee is prejudiced by the employer s failure. An example is provided by the relatively recent case of Foust v. Central Virginia Training Center, VWC File No (September 6, 2006). The claimant in that case sustained a work-related injury, but filed her claim more than two years later. The employer asserted a statute of limitations defense, but that defense was denied. The Virginia Workers Compensation Commission held that the employer prejudiced the employee s rights by not filing the accident report. If the report had been filed, then the Commission would have mailed to the Claimant a packet of information advising her of her obligation to file a timely claim. The claimant said she was unaware of the filing requirement, but would have complied if she had known. This case conveys a very important message. Even though the employer was not fined for failing to file the report, its omission renders it liable for a claim that otherwise would have been barred. JURISDICTION STATUTE MEANS WHAT IT SAYS Uninsured Employer s Fund v. Gabriel, 2006 Va. LEXIS 98 (November 3, 2006), interpreted the Virginia statute requiring every employer who regularly employs three or more employees to obtain Workers Compensation insurance. The corporation was incorporated in Virginia and consisted of three regular employees: Ned Preble, Richard Gabriel and Ann Gabriel. The company operated a consulting business from Massachusetts and Virginia. Richard and Ann Gabriel resided in Virginia, while Preble resided in Massachusetts. Richard Gabriel was traveling on an airplane for a meeting with a client on September 11, 2001, when his plane was hijacked by terrorists and crashed into the Pentagon. A Virginia Workers Compensation claim was filed by his estate. The Commission held that even though Preble did not regularly work in the Commonwealth of Virginia, he was considered an employee for jurisdiction purposes because he was an officer of a Virginia corporation. The Court of Appeals agreed. On appeal, the Virginia Supreme Court reversed. The Court held that the statute means what it says, and that there is no presumption that an officer of a Virginia corporation regularly works in Virginia, even when that person does not. In other words the Court held that it was error for the Virginia Workers Compensation Commission, and Court of Appeals, to add language to the jurisdiction statute that did not exist. This case is important because it makes it clear that the focus must be upon employees that actually work in Virginia, and not merely whether the company or corporation is incorporated in Virginia. Although Preble worked for a Virginia corporation, he did not regularly work in this jurisdiction. Because the company regularly employed only two individuals in the Commonwealth, the Commission lacked jurisdiction. 2 TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C.

3 HOW MANY NON-SUITS MAY A PLAINTIFF TAKE - YOU MIGHT BE SURPRISED? By: Heather K. Bardot, Esquire In Virginia, you can often hear a defendant or his counsel complain about Virginia Code This section provides, in relevant part: A. A party shall not be allowed to suffer a nonsuit as to any cause of action or claim, or any other party to the proceeding, unless he does so before a motion to strike the evidence has been sustained or before the jury retires from the bar or before the action has been submitted to the court for decision. After a nonsuit no new proceeding on the same cause of action or against the same party shall be had in any court other than that in which the nonsuit was taken, unless that court is without jurisdiction, or not a proper venue, or other good cause is shown for proceeding in another court, or when such new proceeding is instituted in a federal court. If after a nonsuit an improper venue is chosen, the court shall not dismiss the matter but shall transfer it to the proper venue upon motion of any party. In effect, by allowing a plaintiff to dismiss a case for any reason and then re-file the case, what this section does is extend the time during which a plaintiff may pursue a claim against a defendant. From the defendant s perspective, this code section greatly increases costs and inconvenience, and it may also result in loss of witnesses or recollection of important facts. The only saving grace of Virginia Code is (was) paragraph B, which provides: Only one nonsuit may be taken to a cause of action or against the same party to the proceeding, as a matter of right, although the court may allow additional nonsuits or counsel may stipulate to additional nonsuits. The court, in the event additional nonsuits are allowed, may assess costs and reasonable attorneys' fees against the nonsuiting party. Because of the limitations contained in paragraph B, and the courts disdain for second non-suits, both plaintiffs and defendants have long operated under the assumption that a second non-suit will not be allowed except under extraordinary circumstances. Not necessarily so says the Supreme Court of Virginia. In Janvier v. Arminio, D.P.M., 272 Va. 353, 634 S.E.2d 754 (2006), the Virginia Supreme Court was asked to rule upon whether an order granting the plaintiff a second non-suit without prejudice was void ab initio where the order did not alert the court to the fact that plaintiff was seeking a second non-suit and the plaintiff failed to give notice to defendants of her intent to request a discretionary non-suit in order to allow the defendants to oppose it. The trial court, in considering the issue, concluded that since a second non-suit is discretionary, all affected parties should be heard before a court exercises its discretion. Javier, 272 Va. at 361. The trial court went on to state that, [a] contrary notion is antithetical to any sense of fair play and substantial justice. Javier, 272 Va. at 367. The Virginia Supreme Court agreed with the trial court s concerns, recognizing, itself, that justice is best served when a trial judge called upon to exercise discretion has the benefit of hearing the positions of all parties potentially affected as a result of the exercise of that discretion. Id. Nonetheless, the Virginia Supreme Court reversed the trial court, holding the second non-suit valid. The rationale of the Court was that since Virginia Code does not expressly require notice to be given to a party who has not yet been served before a request for second non-suit, the courts are powerless to impose such a requirement. All may not be lost, however. In ruling, the Virginia Supreme Court expressly invited the General Assembly to amend Virginia Code to provide a requirement for notice or the exercise of due diligence to give notice to a defendant when a plaintiff seeks a second or subsequent non-suit. Unless and until that occurs, defendants are unlikely to get notice of requests for second non-suits, thereby allowing a sly plaintiff to potentially non-suit his case time and again. In certain instances, there may be ways to combat this sort of abuse, and we would be happy to discuss any particular cases which arise. (703) Fax (703)

4 Baker v. Poolservice Co.: Virginia Supreme Court decides landmark case on Virginia products liability law. By: John D. McGavin, Esquire 4 On November 3, 2006, the Virginia Supreme Court decided the case of The Estate of Baker v. Poolservice Co., 272 Va. 677 (2006). The case arose out of a tragic drowning in a hot tub of a seven year-old girl. The child was trapped in the hot tub and was unable to escape because the powerful suction of the hot tub held her under water. The incident occurred at a graduation party at a home in Fairfax, Virginia. The child was the granddaughter of the former Secretary of State, James Baker. The family pursued a case against the manufacturer of the hot tub and settled that case in a confidential settlement. The family also pursued the pool maintenance company, Poolservice Company. The claim against Poolservice was based upon a theory that Poolservice had a duty to retrofit the hot tub and a duty to warn any users of the hot tub of potential dangers with the manufacturer s design. Poolservice was defended by John D. McGavin and Melissa H. Katz of Trichilo, Bancroft, McGavin, Horvath & Judkins. The complaints regarding the design relate to the use of a single drain. Also, the design was allegedly defective because the drain cover was convex and not concave. The use of the single drain means that if a child covers the drain cover and sits on it, it can create tremendous force and pressure which holds the child. If there is a second drain, then the pressure upon blocking the drain is not so severe and does not create a potential risk. The drain cover design is critical because if the cover is convex, it prevents a child s body from sealing around the drain and becoming entrapped. The claim against Poolservice alleged that the dangers of the design by the manufacturer were well-known in the industry and should have been the subject of a warning or a change by the maintenance company. Poolservice was called out to do work on the hot tub a few days before the incident occurred. The work included restoring the hot tub to its normal functional capacity as designed by the manufacturer. The plaintiff conceded that the work was done properly by the pool maintenance company, but argued that the duty to warn of these dangerous conditions imposed a requirement that Poolservice notify the property owner and all users of these risks from the inherent design flaws. The trial court dismissed the case on a demurrer. On appeal, the Virginia Supreme Court affirmed and held that no duty is imposed upon a repairman to warn of defects in design by a manufacturer especially when the repairman restores the product to the originally designed manufacturer s specifications. This is a case of first impression under Virginia law and will become a significant case in all future product liability actions in which the repairman is named as an additional defendant along with the manufacturer. The case has attained national interest in addition to the obvious legal implications. The matter has been discussed on Larry King Live and has been the subject of considerable discussion in Congress. The outcome of the case in no way diminishes the tragedy of the situation. However, regarding a repairman, the decision is the correct statement of the law because the duty to design and to warn of defects in the design rests with the manufacturer. Otherwise, every pool service repairman would have the duty to establish manufacturing specifications. There would be wide-ranging differences of opinion across the country regarding what those specifications should be and what warnings should be given. Ultimately, that duty rests with the manufacturer and the repairman must follow the manufacturer s specifications. It remains the duty of the manufacturer and any regulating body, whether that be governmental, state or industry to establish the standards. Please contact John McGavin or Melissa Katz if you have any questions about the court s decision. We would also be happy to provide you a copy of the Opinion at your convenience. You can also find the Opinion at the web site for the Virginia Supreme Court. ( TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C.

5 Firm s Attorneys Lobby for Procedural Changes to Virginia Law John McGavin and Michael Lowell have co-authored an article that has been accepted for publication in the Journal of Civil Litigation. In the article, the authors identify aspects of Virginia s law that should be changed to provide a more efficient and fair system. There are three basic problems that the authors have identified. First, in the case of Parker v. Elco Elevator Corporation, the Virginia Supreme Court held that there could be no pretrial challenge to a potential expert witness opinions or qualifications. There are many harmful implications from this rule. A trial judge ruling on the admissibility of expert opinion will be doing so in the context of the jury trial, rather than on a motion with briefs and prior notice. The court will not have careful time for reflection on the issues, which is particularly troublesome since a determination on the expert s opinion often requires consideration of complex matters. This system is also costly. By the time the court decides on the expert s admissibility, the litigants will already have incurred all of the costs associated with going to trial, including the costs of having the expert and any rebuttal expert on hand. The potential risk of a jury being persuaded by an inadmissible opinion is also high. During opening statement, counsel are permitted to preview the testimony which they expect to present. This opening statement would likely include a preview of the expert s expected opinion. Even if the opinion is subsequently deemed inadmissible by the court the jury has heard the opinion from counsel. The second aspect of Virginia law that the authors identified as problematic is the prohibition on the use of depositions to support summary judgment. The effect of this prohibition is that summary judgment is rarely granted, instead most cases either settle or go to a jury verdict. Relying on empirical data and research collected by a distinguished law professor, the authors note that no other jurisdiction in the United States bars the use of depositions to support summary judgment. In fact, throughout the country, depositions are the primary discovery mechanism used to support summary judgment. The tools available to Virginia litigants, interrogatories, pleadings, and party admissions, are largely ineffective in practice (to support summary judgment) because the responses are prepared by an attorney. The third aspect of Virginia law is the courts unwillingness to grant motions to strike the evidence. A motion to strike the evidence is made at the close of a party s case when it appears that no prima facie case has been established. It is the policy of the courts to deny motions to strike the evidence, or to take them under advisement, and allow the jury to rule on the case. Then, if the court believes the jury has erred, the court can set aside the verdict. The rule grows out of concerns for judicial economy, but may result in the opposite. The rule can also prejudice defendants because other precedent requires the court to consider evidence put on by the defendant in ruling on a motion to strike the evidence taken under advisement prior to the defendant s case in chief. The authors argue for a more engaged judiciary with a gatekeeping function more like the role of trial judges under the federal system. Such a system would keep the playing field level for litigants and may result in a decrease in litigation costs to the parties and the courts. 5 (703) Fax (703)

6 OUT-OF-STATE OWNERS MAY BE VICARIOUSLY LIABLE FOR ACCIDENT By: Dawn E. Boyce, Esquire In September, the Virginia Supreme Court addressed whether or not statutory provisions of other states can be a basis for liability of a non-resident vehicle owner for a Virginia accident. The issue before the court, in Dreher v. Budget Rent-A-Car System, Inc., 272 Va. 390 (2006), was which state s law applied to a determination of a vehicle owner s liability for the acts of a negligent driver. The issue turned on whether the statute imposing liability was a matter of tort or of contract. If the former, Virginia s substantive law the place of accident -- would apply. If the latter, the place of contracting (ownership) would apply. Dreher involved two personal injury actions: one by a driver and the other a passenger. Plaintiffs were Virginia residents. The defendant driver was operating a rental vehicle owned by Budget Rent-A-Car System, pursuant to a written contractual agreement entered into in New York. New York statute provides that an owner of a vehicle is responsible for the negligence of its operator and is required to have insurance to cover such liability. In their lawsuits, the plaintiffs alleged that pursuant to statute, Budget Rent-A-Car System was liable for the acts of its driver. Budget demurred to the Complaint. The circuit court dismissed the case with prejudice, finding that the plaintiff could not recover against the owner for the negligence of the driver, under the circumstances of the case. On appeal, the Virginia Supreme Court reversed. The Court acknowledged that under Virginia substantive law, an automobile owner is generally not vicariously liable for the negligence of another, but concluded New York law applied to the determination of liability. In reaching its conclusion, the court rejected a Fourth Circuit case addressing a similar issue. The Supreme Court found that the New York statute resembled a contractual provision imposed by statute designed to regulate the relationship between a vehicle owner and an individual, for the protection of innocent victims of automobile accidents. Accordingly, the court applied Virginia choice of law principles for contracts and held that New York law was determinative. The court further held that the principle of comity supported the result reached. Comity is the application of rights created by another state s statutes, if not contrary to the public policy of Virginia. Even though Virginia does not traditionally recognize the liability imposed by the New York statute, the statute s application does not offend Virginia s public policy. The Dreher case may have an impact on personal injury cases in Virginia, where there is a non-resident owner. The case opens the door for the naming of additional defendants, if the owner s jurisdiction establishes vicarious liability by statute, and a basis for suit against out-of-state rental companies. 6 TRICHILO, BANCROFT, MCGAVIN, HORVATH & JUDKINS, P.C.

7 Happy New Year! from all of us at Trichilo, Bancroft, McGavin, Horvath & Judkins Funnies Litigation Report TM Quarterly Publication Published by: Trichilo, Bancroft, McGavin, Horvath & Judkins, P.C University Drive Fairfax, Virginia fax Letters to the Editor: Melissa H. Katz, Esquire 2006 All Rights Reserved (703) Fax (703)

8 WILL THE COLOSSUS FALL? By: Benjamin J. Trichilo, Esquire To you, O Sun, the people of Dorian Rhodes set up this bronze statue reaching to Olympus when they had pacified the waves of war and crowned their city with the spoils taken from the enemy. Not only over the sea but also on land did they kindle thelovely torch of freedom. Dedicatory inscription of the Colossus The above tribute was written about one of the wonders of the Ancient World: The Colossus of Rhodes. This mighty edifice stood astride the harbor of Rhodes in Ancient Greece for more than half a century. It was so magnificent that even after it was destroyed by an earthquake, Pliny the Elder said, But even lying on the ground, it is a marvel. The Colossus of Rhodes is an ancient mystery. In our modern, technology-driven world, there is a new colossus. Not one composed of granite, marble and bronze, but one borne of the technology age. This colossus does not guide ships into harbors, but instead, is the guiding light for insurance settlements. This colossus is called, Colossus, Claims Outcome Advisor, and Injury I.Q., and is a software program owned and licensed by Computer Sciences Corporation, Insurance Services Office, Inc., ISO Claims Services, Inc. and ClaimIQ. Those parties have been joined with several insurance companies (Allstate, Encompass, Acadia, Berkley, Great River, Union and Union Standard Lloyds) in a class-action suit pending in Arkansas. The complaint alleges civil conspiracy, breach of contract, breach of the covenant of good faith and fair dealing, bad faith, unjust enrichment, fraud and constructive fraud. The plaintiffs allege that the software defendants conspired with the insurance defendants to use the software program to reduce the amount of money paid on bodily injury claims. Hensley v. Computer Sciences Corporation, et al., Case No. 05-CV-4034 (W.D. Arkansas) (Memorandum Opinion and Order dated October 28, 2005). The alleged conspiracy contains the following characteristics: (1) Uniform policies among the insurance companies regarding use of the software program; (2) Sharing of information between the insurance companies and software companies about the use and operation of the software program; (3) Secrecy Agreements between the insurance companies and software companies; and (4) Adoption of reciprocal, non-disclosure policies. Will the new Colossus fall? The ancient Colossus met its end due to natural disaster. The future fate and legacy of the new Colossus rests, at least for now, with our judicial system. 8 Trichilo, Bancroft, McGavin, Horvath & Judkins, P.C University Drive Post Office Box 22 Fairfax, Virginia Standing L- R: Benjamin J. Trichilo, Melissa H. Katz, Michael E. Thorsen, Dawn E. Boyce Steven W. Bancroft PRESORTED STANDARD U.S. POSTAGE PAID FAIRFAX, VA Permit No Seated L- R: Heather K. Bardot, John D. McGavin, Julia B. Judkins, Stephen A. Horvath