Court Orders New Trial Based on Improper Conduct of Trial Justice

In Porcelli v. Northern Westchester Hospital Center, the plaintiffs sued Dr. Tsai and Northern Westchester Hospital Center for alleged medical malpractice after their infant daughter developed respiratory problems and a pharyngeal tear when Dr. Tsai inserted an endotracheal tube to check for the presence of meconium after the birth. The court dismissed the claim against the hospital pursuant to CPLR 4401, and the jury returned a verdict for Dr. Tsai. However, the Second Department reversed and granted a new trial on the issue of liability against Dr. Tsai, because of the excessive intervention and improper conduct by the trial justice. The court held that the trial justice "unnecessarily injected personality issues into the case" and "demonstrated a propensity to interrupt, patronize, and admonish the plaintiff’s counsel." For example, among other things, the trial justice likened plaintiff’s council to "a leech on a horse" in the presence of the jury. As a result, the court concluded the jury could not have considered the issues at trial in an unprejudiced and fair manner, and ordered a new trial against Dr. Tsai. In addition, the Court reinstated the claim against the hospital for vicarious liability because the hospital’s 4401 motion did not request dismissal of the vicarious liability claim. Since the Court reinstated the cause of action against Dr. Tsai, the Court reinstated the vicarious liability claim against the Hospital.

 

   

Court Finds Repeated Acts of Molestation Constitute Separate Occurrences Under Insurance Policies

In Roman Catholic Diocese of Brooklyn v. National Union Fire Insurance Co. of Pittsburgh, PA., a declaratory judgment action, the Court of Appeals addressed four insurance coverage issues raised by repeated instances of sexual molestation of one child by a Queens priest from August 1996 to May 2002.  In doing so, the Court of Appeals issued three opinions and Judge Lippman took no part.  The result was Judge Rivera writing for a three-judge plurality, Judge Smith issuing a concurrence in the outcome, and Judge Graffeo issuing a partial concurrence and partial dissent.  Judges Smith and Graffeo, writing separately, joined the plurality on only two of the four issues, leaving the remainder without precedential weight.

The Diocese brought this action to recover from its insurers after settling the child’s molestation claims for $2 million and “additional consideration.”  The principal dispute concerned a $250,000 self-insured retention (“SIR”) applicable to each occurrence and to each of multiple policies.  The parties contested (1) whether defenses concerning the SIR or allocation among the policies and insurers were waived when they were not mentioned in a disclaimer letter; (2) whether the claims of molestation should be considered a single occurrence or multiple occurrences; (3) how many SIRs the Diocese would need to exhaust; and (4) whether the Diocese could recover on a joint and several basis or pro rata among the insurers.

First, the Court of Appeals considered the argument that National Union waived its defense of the self-insured retention because it was not mentioned in a disclaimer letter.  The Court disposed of the argument, holding that National Union was not obligated to raise the SIR issue in its disclaimer letter because it was a limit on liability and not an exclusion.  This part of the plurality’s opinion essentially confirmed earlier Court of Appeals case law that coverage cannot be created by estoppel.  Judges Smith and Graffeo joined this part of the opinion.

Second, the plurality reasoned that the claims of molestation were multiple occurrences rather than a single occurrence under the policy.  Judge Rivera wrote that the Court applies the “unfortunate event” test when the policies themselves do not indicate an intent to aggregate separate incidents into a single occurrence.  In that test, the Court looks to whether the claims share a close “temporal and spatial relationship” and whether the claims were part of a “singular causal continuum.”  The plurality noted throughout its opinion that the claims of molestation were distinct, spanned six years, and occurred in various and unique locations such as the rectory, a vehicle, as well as more than one home.  Thus, the claims did not share a close temporal and spatial relationship, and they were not part of a singular causal continuum.  Judges Smith and Graffeo disagreed, leaving the plurality short of the four votes needed to create precedent for finding repeated instances of sexual misconduct as multiple occurrences.

Third, the plurality decided that the Diocese would be required to exhaust a SIR for each occurrence under an implicated policy.  Looking to the policy, the plurality noted that a SIR “shall apply separately to each occurrence” and only to “occurrences covered under [the] policy” (alteration in original).  Judge Graffeo, arguing that there was only a single occurrence under the policy, concluded that the Diocese needed to exhaust only a single SIR, regardless of the number of policy periods through which that occurrence carried.  Judge Smith, also arguing for a single occurrence, concluded however that a SIR should be exhausted for each policy year in which the single occurrence and injury continued. 

Summing up the number of SIRs to be applied, Judge Smith put it succinctly: “To clarify the point, imagine a case where a priest committed twenty acts of abuse of one victim over five years, and five one-year policies were successively in force, each with a self-insured retention.  How many retentions are to be applied?  The plurality’s logic gives the answer twenty.  Judge Graffeo would say one.  The Ninth and Fifth Circuits would say five, and I think they are correct.”  As none of the opinions garnered the required four votes, this opinion also lacks precedential weight.

Fourth, and finally, the Court unanimously agreed that the Diocese could not recover for the repeated claims of molestation by proceeding against one insurer on a joint and several theory of liability.  Under such a theory, the insured could recover against one insurer and the insurer could then proceed against remaining insurers.  The plurality, joined by Judges Smith and Graffeo, instead decided that the proper means of recovery would be to allocate the losses pro rata.

Court Of Appeals Grants Leave In Products Liability Action

On April 30, 2013, the Court of Appeals granted leave in Hoover v. New Holland North America, Inc., a products liability action involving an alleged design defect.  In Hoover, the sixteen year old plaintiff suffered an above-the-elbow amputation because her coat became tangled on a bolt protruding from a driveline that connected a tractor to an implement used to dig post holes.  The device had been designed with a plastic shield that covered the protruding bolt.  Notably, however, the plastic shield had been removed from the device by its owner (not the plaintiffs) because the shield was “damaged beyond repair during use.”

The jury found that a design defect caused the plaintiff's injuries, and the Appellate Division, Fourth Department affirmed.  The Fourth Department noted that there was sufficient evidence that the protruding bolt was an entanglement hazard and that there were design alternatives that would reduce or eliminate the hazard at only a nominal increase in cost.  The court also rejected defense arguments that the verdict was against the weight of the evidence or that there was insufficient evidence of causation.

With respect to the owner’s removal of the plastic shield, the Fourth Department noted that a manufacturer will not be liable when a safely designed and produced product is substantially altered or modified by a third party.  Nevertheless, the Fourth Department wrote that a modification defeats such a claim only where the modification made a safe product defective and caused the injuries. In that vein, the Fourth Department acknowledged that the device was designed with a plastic shield, but noted that there was sufficient evidence that the shield “could be damaged by normal use or foreseeable misuse.”  Given the evidence concerning the bolt and the shield, the Fourth Department held that “plaintiffs presented sufficient evidence that the digger was defectively designed, and we further conclude that they presented sufficient evidence that [the owner’s] removal of the damaged gearbox shield did not constitute a substantial modification.”

This Week At The Court Of Appeals

J. P. Morgan Securities Inc. v. Vigilant Insurance Co.:

The plaintiffs commenced this insurance coverage action after their insurers disclaimed coverage for more than $200 million in damages related to an underlying SEC investigation, settlement, and shareholder lawsuits.  The claimed damages stem from allegations that the plaintiffs facilitated late trading in violation of various securities laws.  As a result of the investigation, the plaintiffs agreed to pay $160 million as “disgorgement” in a settlement that neither admitted nor denied the SEC’s findings.  The $160 million itself allegedly represented disgorgement of an estimated $20 million in fees and commissions and $140 million of profits that customers made on illegal trades.

The defendant insurers provided professional liability policies covering loss incurred from “any Wrongful Act,” which included settlements and compensatory damages but not fines or penalties imposed by law or costs that are legally uninsurable.  The policies also excluded claims based upon or arising out of the insured “gaining in fact any personal profit or advantage to which [it] was not legally entitled.”   The insurers disclaimed, claiming the disgorgement was not an insurable loss and was excluded from coverage.

In response to the complaint, the insurers moved to dismiss the action under CPLR 3211 (a)(1) & (7), claiming there was documentary evidence precluding recovery, highlighting the SEC findings, or that the pleadings failed to state a claim.  The trial court denied the motion to dismiss and the defendants appealed.  The Appellate Division, First Department, reversed and dismissed the complaint, holding that the “disgorgement of ill-gotten gains . . . does not constitute an insurable loss.”  The First Department wrote that wrongdoers should not be permitted to shift the cost to an insurer and “retain the proceeds of his or her illegal acts.”  The plaintiffs argue, among other things, that the disgorgement is a covered loss because it did not receive ill-gotten gains and was not unjustly enriched.

Oral argument will be Wednesday, May 1, 2013. The Court streams oral arguments online. To watch live, you can visit the New York Court of Appeals website on Wednesday around 3:30 p.m. and click on the “Oral Arguments Webcast” link on the right-hand side of the page.

This Week At The Court Of Appeals

Wild v. Catholic Health System:

In this medical malpractice action, the Court of Appeals will have the first opportunity in almost forty years to address the rule about loss of a chance of a better outcome.  At Mercy Hospital, the plaintiff’s decedent had difficulty breathing and emergency room doctors decided to insert a breathing tube.  The doctors unsuccessfully attempted to intubate the decedent multiple times before inserting the tube properly.  The decedent suffered a perforated esophagus that was not diagnosed until days later.  When eventually diagnosed, the damage was irreparable and the plaintiff needed a permanent feeding tube.

The trial court gave a “lost chance” instruction based on the theory that had the perforated esophagus been timely diagnosed, the perforation might have been fixed by immediate surgery.  The instruction at issue allowed the jury to find for the plaintiff where “the defendant’s actions or omissions deprived Mrs. Horn of a substantial possibility of avoiding the consequence of having a permanent feeding tube.  The instruction noted that “to be substantial, [the chance of avoiding the need for a permanent feeding tube] does not have to be more likely than not and it does not have to be more than 50 percent, but it has to be more than slight.”  The defense will argue in the Court of Appeals, among other things, that this instruction improperly reduced the plaintiff’s burden for proving causation to “more than a slight chance.”

The Appellate Division, Fourth Department, had partially rejected that argument, noting that the instruction was partly in error but that the error was harmless.  The Fourth Department held that the lost chance instruction was appropriate for the plaintiff’s failure to diagnose the perforation but was not appropriate for creating the perforation.  In the Fourth Department’s view, though, the finding of negligent intubation “necessarily entailed a finding of proximate cause,” making the causation instruction harmless as to the intubation.

Oral argument will be Wednesday, April 24, 2013. The Court streams oral arguments online. To watch them live, you can visit the New York Court of Appeals website on Wednesday after 2:00 p.m. and click on the “Oral Arguments Webcast” link on the right-hand side of the page.

First Department Dismisses a $5.5 Million Medical Malpractice Verdict

Disclaimer: This is an MLN case

In Bustos v. Lenox Hill Hospital, the jury determined that the defendant Hospital departed from accepted practice in connection with (1) the dosage of an epidural block administered during plaintiff’s delivery of her infant child and (2) the maneuvers performed on plaintiff during the delivery.  The jury also concluded that such departures from accepted practice caused the plaintiff’s claimed injury, which consisted of a 9.5 centimeter pubic symphysis diastasis, and awarded plaintiffs $5.5 million ($4.5 million for her past and future pain and suffering and $1 million for her husband’s loss of services).  The Supreme Court denied the Hospital’s motion to set aside the jury’s verdict. 

Based upon the insufficiency of the expert testimony proffered by the plaintiffs, the First Department unanimously reversed the trial court’s Order, and directed that the plaintiffs’ complaint be dismissed.  With respect to the alleged departure from accepted practice in connection with the epidural dosage, the Court concluded that the plaintiffs’ “own expert conceded that the dosage was standard and appropriate.”  Concerning the birthing maneuvers, the Court noted that the “only testimony plaintiffs’ expert gave as to the alleged deviation from the accepted standard of medical care in the performance of the birthing maneuvers was that the maneuvers ‘were excessive and caused th[e] injuries’ and deviated from the appropriate standard of care.”  Noting that the plaintiffs’ expert failed to “explain or in any other way support his opinion,” the Court concluded that the opinion “was speculative and conclusory and without probative force.”

Governor Cuomo Nominates First Department's Justice Abdus-Salaam for Court of Appeals

Governor Andrew Cuomo has announced his nomination of Appellate Division, First Department, Associate Justice Sheila Abdus-Salaam to the New York State Court of Appeals.  Here is the link to the Governor's press release.  The Senate now has thirty days to confirm or reject the appointment.