Insurers and Businesses Should Always Consider What Options are Available for Insurance Coverage and Recovery of Insurance Assets When Facing a Dispute, Claim or Lawsuit

One of the most important ways insurance companies and businesses can manage their assets and control their liability is to think creatively about insurance and insuring agreements in managing their day-to-day business operations.  Disputes, claims, and yes, lawsuits often arise in the ordinary course of thriving and vibrant businesses.  This is a natural consequence of a successful business managing risk in the process of seeking to maximize profits.

As insurance coverage counsel, I regularly advise businesses and insurance companies as to their defense and indemnity obligations under commercial general liability, errors and omissions, and workers compensation insurance policies, among others.

I have assisted insurance companies and businesses by guiding them through various aspects of coverage, including initial assessment of coverage positions, preparation and drafting of coverage opinions, including preparing related correspondence to the insurers or insureds, and other parties involved, e.g., coverage denials, reservation of rights, etc., and pursuing, where appropriate, declaratory judgment and/or indemnity and subrogation actions with respect to coverage issues.

In this capacity, I have had several significant successes in both state and federal courts in securing judgments for businesses and insurance companies or in forcing agreeable settlements with insureds and other insurance companies.  Some of the cases and issues I have worked on include the following:

 

• Providing coverage analysis and primary litigation support in filing a declaratory judgment action filed in federal court for a major national retail store as to potential coverage and indemnification from an insurer under an “additional insured” provision in a vendor / supplier contract between the store and the manufacturer. I served as primary insurance coverage counsel for the store relating to the underlying case, which was a personal injury / product liability lawsuit against the store involving paralysis of a 15-year old.  The plaintiff jumped into shallow water from a water trampoline manufactured by a company that sold a variety of recreation products in the retailer’s stores throughout the country.  The manufacturer and the retailer had a vendor-supplier agreement in which the manufacturer agreed to add the retailer as an additional insured to its general liability insurance policies, and provide indemnity to it for liability arising out of use of its products.  The insurer had agreed to defend the retailer in the lawsuit in Michigan.    Lawsuits were pending against the manufacturer across the country for injuries suffered due to use of another one of its products.  The manufacturer filed for bankruptcy protection in the 8^th Circuit in Nebraska, after which the insurer pulled out of the defense of the retailer in Michigan.  I prepared a coverage opinion, concluding the insurer was obligated to continue defending the retailer, and I filed a declaratory judgment action in federal court in Michigan despite the bankruptcy stay.  I fended off attempts by the insurer to enforce the bankruptcy stay against the retailer in Michigan, won motions filed for contempt of the stay, and ultimately succeeded in forcing a settlement of the claim on behalf of the retailer for the total amount of the policy limits to which the retailer would have been entitled for coverage of the underlying claims.  This resulted in a $0 payout by the retailer in settlement of the underlying lawsuit in Michigan.

 

• Filing suit against an insurance company in federal court for denial of coverage of an underlying lawsuit involving a shooting at a gas station. The case is Employers Mutual Casualty Company v. Al-Mashadi et al., 2009 WL 2711963.  While the underlying lawsuit was pending in circuit court, I filed the declaratory judgment action in federal court, drafted the summary judgment motion and brief, and argued there was no coverage for the underlying lawsuit and claim arising out of a shooting by an employee of one of his friends when the two were engaged in horseplay with a gun belonging to the gas station’s owner.  After arguing the motion, the district court granted the insurer summary judgment, ruling no coverage was owed by the insurance company in the underlying lawsuit.

 

• Providing emergency litigation and appeal response to a zoning dispute in which an international energy company sought to construct (and did construct) a meteorological testing antenna (MET) a “wind testing tower”, without a proper zoning variance from the insured township. The township’s Zoning Board of Appeals rejected the power company’s appeal for a variance and the power company sued the township.  I stepped in and filed several injunctive motions, including an emergency circuit court appeal to thwart the power company’s efforts to permit the tower to remain as constructed on the property.  The circuit court issued injunctive relief (including an order to tear down the fully constructed tower) and forced the power company to pick up the insurer’s legal fees.

 

• Preparing a coverage opinion and denial of coverage letter in a defective construction / defective product dispute under an occurrence based general liability policy (including products / completed operations hazards coverage). The insured, a cement company, filed suit against contractors and subcontractors, and a city, for failure to pay for delivery of cement.  The defendants filed a counter-suit under various theories and alleged the cement was defective, causing defects in and need for repair to the newly installed sidewalks.  In its ruling in the underlying suit, the trial court concluded the cement met specifications required by the contract and was therefore not defective.  A combination of factors led to the defective sidewalks, but not the delivery by the cement company of a defective product. The weight of authority provides that no “occurrence” arises from the provision of a non-defective product when the manufacturer of that product seeks coverage for damages alleged as the result of incorporation of its product into other work.  Since the insured provided a product that met the specifications required for the municipal sidewalk project there was no “occurrence” and therefore no coverage for the claims in the underlying lawsuit.

 

• Providing a “second look” coverage opinion where in-house coverage counsel concluded there was no coverage for business interruption losses as a result of a large stage collapse and resulting debris field on the floor of the Pontiac Silverdome during summer months when the Silverdome was rented out for various events. The insured supplied the staging, decking and truss grids for the event.  Contractors and subcontractors were employed to erect it.  I analyzed the applicable policy language and concluded coverage was owed on the precise risk involved.  The policy covered “property damage” which included the loss of use of property caused by an occurrence, even if that property had not itself been damaged.  Michigan courts have awarded consequential damages such as “delay damages”, “lost profits”, and “diminution in value and use”, in cases under commercial general liability policies with similar or identical language to the policies covering “occurrences” “because of” “property damage”.  As none of the “business risk” exclusions in the policy applied, and it appeared the stage collapse was not due to the fault of the subcontractors or contractors employed to erect the stage, coverage was arguably owed and the insurer had a duty to defend and potentially indemnify the owner of the Silverdome.

Feel free to call or contact me if your business would like to explore options regarding insurance coverage and recovery.

 

Retail Storeowner’s to Face Challenge on Unsafe Aisle Claim in Premises Liability Suit

The Michigan Court of Appeals has issued a 2-1 published opinion and requested a conflict panel under Michigan Court Rule 7.215(J)(2) to address whether retail store owners owe a duty to keep aisles reasonably safe in a case in which the plaintiff tripped over a protruding end-cap platform.  In Quinto v. Woodward Detroit CVS, et al., the Court of Appeals, bound to follow its own precedent in Kennedy v. Great Atl. & Pacific Tea Co., 274 Mich. App. 710 (2007) per MCR 7.215(J)(1) (precedent established by a Court of Appeals opinion published on or after November 1, 1990 is binding on subsequent panels), nonetheless ruled that “consistent with Supreme Court case law” the merchandise-display aisles of a self-service retail store present particular circumstances such that the “open and obvious” doctrine does not eliminate the duty of the store owner to make those aisles reasonably safe for its customers-invitees.  However, the panel was unable to reverse the trial court’s grant of summary judgment for the store because of the precedential effect of its 2007 opinion in Kennedy.

The plaintiff alleged she tripped and fell on a protruding platform on the end cap display of one of the store’s aisles.  Testimony from the store indicated the platform was empty, not being used at the time, and could have easily been removed.  The plaintiff further testified she was looking up and at the merchandise in the aisles while shopping and therefore did not see the obstruction.

The majority reasoned that no Michigan Supreme Court case had held that the “open and obvious” doctrine would apply to the factual circumstances presented by the case.  The “open and obvious” doctrine is a defense in a premises liability suit that allows the business premises owner to avoid liability where the particular hazard alleged to have been the cause of the plaintiff’s injury was “open and obvious”, and therefore visible to one who takes reasonable care for their surroundings while a business invitee at the premises owner’s establishment.  The majority panel here uses the factual uniqueness of the case and the absence of Michigan Supreme Court precedent applying the “open and obvious” doctrine where “distractions” diverted the plaintiff’s attention away from the hazardous condition, even if “open and obvious”, to conclude it would reverse the trial court’s grant of summary judgment for the store, but for the binding precedent of the Kennedy case.

Kennedy relied on the Supreme Court’s decision in Lugo v. Ameritech, 464 Mich. 512, 519-520 (2001), and held the presence of distractions does not obviate the “open and obvious” doctrine, and therefore, a store owner did not have a duty beyond that of a reasonable store owner to maintain safe aisles.

The dissent, Judge Cavanaugh, would not request a conflict panel resolve the case.  He reasons that the majority would impose a heightened duty of care on self-service retail store owners after concluding that merchandise displays and advertisements cause customers to be so distracted that they cannot reasonably be expected to observe even an open and obvious condition that exists in an aisle while shopping, i.e., a condition that “an average person with ordinary intelligence would have discovered [ ] upon casual inspection.” Hoffner v Lanctoe, 492 Mich 450, 461; 821 NW2d 88 (2012).

It does appear the majority puts form over substance.  The duty a store owner has is to maintain the premises in a reasonably safe condition.  Pallets and other objects of retail merchandise actually blocking the aisles and/or in the aisles are usually open and obvious – like inventory being restocked.  It might be a different story if a single pallet, unoccupied by any merchandise, were left in the middle or at the end of an aisle.  In such a case, the ordinary distractions of a retail merchandise aisle (products and advertisements) might legitimately come into play in obviating even an open and obvious hazardous condition.  This latter principle is the one the majority refers to as being left open by Lugo.

However, it is a stretch to say that the platform in this particular case, which appears to be nothing more than an ordinary physical extension, whether appended or not, to the end of a retail merchant’s aisle display stand is something that would fall into the category of hazards or hazardous conditions blocking, obstructing or otherwise impeding the reasonable pathways through the store’s aisles.  Without this conclusion, one cannot begin to discuss the “open and obvious” defense at all.  It is not an unreasonably dangerous or hazardous condition as it does not implicate the duty to maintain the premises in a reasonably safe condition.

Secondly, even if the protruding shelf extended further than the bulk of the aisle display stand, the majority fails to differentiate it from any other visibly open and obvious hazardous condition, like blue liquid detergent on a white or grey surface, or squashed grapes laying on the floor in the produce section.  The “open and obvious” doctrine applies to the latter situation, as much as it should the former, as noted by Judge Cavanaugh.

Perhaps the question is whether the plaintiff in such a case ultimately testifies that he or she noticed the “condition” either before or after the injury.  If there is no indication the plaintiff noticed or reasonably should have noticed the condition, then the open and obvious defense does not even apply.

However, to forward this case as a vehicle to effect any significant change in the well-established law of premises liability, and, particularly, the open and obvious defense is, as the dissenting Judge points out, misguided.  The facts are far too generic.  If a conflict panel is ultimately convened, it will be interesting to see if the outcome is different.

For more than a century, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.

We are experienced at navigating through all appellate courts to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.

During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

• Yono v. MDOT, ___ Mich. App. ___ (201_), amicus curiae brief to be filed after remand for Michigan Municipal League, et al., by Carson J. Tucker
• Omian v. Chrysler Group, LLC, 495 Mich. 859 (2013), application filed by Carson J. Tucker, Supreme Court remand to Court of Appeals on leave granted
• Ghanam v. John Does, 303 Mich. App. 522 (2013), application to appeal filed in Supreme Court by Carson J. Tucker
• State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
• Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae filed for Michigan Townships Association, Macomb County, Oakland County and Wayne County, et al., by Carson J. Tucker
• Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
• Huddleston v. Trinity Health, et al., 495 Mich. 976 (2014), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
• Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
• Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
• Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
• Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
• McMurtrie v Eaton Corp, 490 Mich 976 (2011)
• Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
• Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
• Stokes v Chrysler, 481 Mich 266 (2008)
• Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
• Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Supreme Court Reverses Court of Appeals’ Ruling Property Owner Maintained Nuisance In Fact and Negligent Nuisance

In an earlier post, I mentioned that the Michigan Supreme Court issued an order in this premises liability case against a commercial property owner directing the Court of Appeals to adopt the dissenting opinion of Judge Murray and reversing the damages award of $223,000 against the property owner.  However, I wrote the Court’s reversal constituted a reversal in toto of the Court of Appeals opinion.  That was incorrect, because the Supreme Court only reversed the Court of Appeals on the negligent nuisance claim, not the public nuisance claim, which continues.

In Veremis v. Gratiot Place LLC, the plaintiff was a passenger in a car involved in a traffic accident at an intersection in a shopping center plaza.  Plaintiff claimed a row of mailboxes and a newspaper stand created a blind spot for motorists entering the intersection, which distracted the driver of the car in which she was riding.

Plaintiffs (the injured passenger and her husband, who brought derivative claims) sued the commercial property owner, lodging claims of premises liability, nuisance, public nuisance, nuisance in fact, and negligent nuisance.

The trial court denied the property owner’s request for a directed verdict on the premises liability and nuisance claims.  A judgment was entered against the property owner for $223,000 for the injuries suffered by plaintiffs in the motor vehicle accident.

In a 2-1 opinion, the Court of Appeals reversed the trial court’s decision denying the property owner’s motion for a directed verdict in its favor on the premises liability claim.  Concluding that the plaintiff was a “licensee” on the property, and that the record showed she and the driver knew or should have known of the danger posed by the obstructions at the intersection, she was not entitled to pursue a claim for damages under a premises liability theory.  The record produced at trial demonstrated the plaintiff’s and the driver’s awareness of the danger at this particular intersection.

As to the nuisance claims, however, the Court of Appeals affirmed, thus upholding the judgment against the property owner.

Judge Murray dissented from that part of the majority opinion concerning plaintiffs’ nuisance claims.  Judge Murray points out that there was no evidence in the record that the obstructions at the intersection posed a general threat to the public at large.  Judge Murray explained there was no other evidence of incidents at the intersection except those that had occurred due to the motorist’s own negligence or error.  This plaintiff admitted to as well.  As to the “negligent nuisance” and “nuisance in fact” claims, Judge Murray noted that the record showed there was no “hidden danger” at the intersection and therefore no duty on the part of the property owner to to warn others.  Since plaintiff had testified she was aware of the dangerous nature of the intersection, her claims failed as a matter of law.

The Supreme Court directs reversal for the reasoning set forth in Judge Murray’s dissent.  This means that the case is effectively reversed in toto, i.e., that judgment for the property owner should enter and the damages award reversed.

Here is the Court’s order:  Veremis.SCT.Order.Reverse.in.Part

For more information about this and other similar cases contact Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.

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Court of Appeals Holds All Three Criteria in MCL 418.161(1)(n) Must Be Met Before a Person Can Be Considered an “Independent Contractor” as “Opposed to an Employee” Under Workers’ Compensation Insurance Policy

In  a published decision released yesterday, Auto Owners Ins Co v. All Star Lawn, et al Auto Owners Ins Co v. All Star Lawn, et al, the Court of Appeals concludes that all three criteria in MCL 418.161(1)(n) of the Workers Disability Compensation Act (WDCA) must be met before a person can be considered an “independent contractor” as opposed to an “employee” subject to the provisions and protections of the WDCA.

MCL 418.161(1) defines, in relevant part, “employee” as:  (l) Every person in the service of another, under any contract of hire, express or implied . . . .  Subsection (1)(n) further provides “Every person performing service in the course of the trade, business, profession, or occupation of an employer at the time of the injury, if the person in relation to this service [1] does not maintain a separate business, [2] does not hold himself or herself out to and render service to the public, and [3] is not an employer subject to [the WDCA]. (brackets added).

The Court holds that since the claimant did not meet all three criteria, he was an employee, rather than an independent contractor and therefore the workers’ compensation insurance carrier was on the risk and the claimant was entitled only to those benefits, as opposed to benefits asserted on claims of liability outside of a workers’ compensation claim, e.g., personal injury claims that could be pursued in circuit court as opposed to in the workers’ compensation agency.   The Court noted that although the claimant met two of the criteria, he could not meet the third, as he could not be considered an “employer” under the act.

The court points out later in its opinion that the criteria are separated by the conjunction “and” rather than the disjunctive “or” and therefore all three criteria are required by the plain language of the statute to be satisfied.

Thus, the general liability insurer did not owe coverage under its policies, as they contained an exclusion if the claimant was covered by workers’ compensation.

This opinion overrules Amerisure Ins Cos v Time Auto Transp, Inc, 196 Mich App 569; 493 N.W.2d 482 (1992), which held that if any of the three criteria were shown the employee could be considered an independent contractor.

This is a conflict resolution case.  In the prior opinion the panel ruled as it did only because prior Court of Appeals precedent (the Amerisure case) required it to do so under Michigan Court Rule (MCR) 7.215(J).  However, the panel requested impaneling a conflict resolution panel by the Court of Appeals to address whether its own holding remains good law in light of Michigan Supreme Court precedent suggesting that a contrary result should now issue. MCR 7.215(J) obligates a Court of Appeals panel to follow precedent in opinions issued by it after November 1, 1990.  MCR 7.205(J)(3) allows the Chief Judge to poll the judges of the Court of Appeals to determine whether the particular question at issue is outcome determinative and warrants convening a special panel to rehear the case for the purposes of resolving the conflict that would have been created but for the provision of subrule (1) (the provision requiring the Court in the issuing opinion to follow prior decisional case law).

This is a favorable decision in instances in which insurers are seeking to absolve their liability policies from the risk, and have the claim sound only under the applicable workers’ compensation insurance policy.  It is not a favorable opinion in instances in which the employer and or workers’ compensation insurance carrier is seeking to prove they do not owe workers’ compensation benefits because the person performing work was allegedly an independent contractor.

Judge Borello, joined by Judge Fort-Hood and Michael J. Kelly, dissents from the majority opinion.  He argues Amerisure should remain good law and that each one of the criteria do not have to be satisfied to consider a person an independent contractor.  Since the Court found the claimant in this case was working for the employer under a contract of hire, did maintain a separate business, and did hold himself out to the public to perform such services, he was an independent contractor.

Judge Borello does not discuss the third criteria, that the claimant must also be considered an “employer” under the act.  That latter term carries with it significant definitional complexity in and of itself under the WDCA and therefore must be analyzed under its own meaning and interpretation.

Practice Note:  The jurisprudential significance of this decision does have a finite shelf life.  The rule enunciated by the Court only applies to cases in which the employment and injury of the individual occurred before January 1, 2013.  Injuries occurring during employment on or after January 1, 2013 are to be considered under a new “test”.  MCL 418.161(1)(n) was amended by 2011 Public Act 266 and now employs the “20-factor test” used by the Internal Revenue Service to determine whether an employer-employee relationship exists in the given case.

If you have any questions about this case and its impact on general liability and workers’ compensation insurance coverage determinations please call Carson J. Tucker, Chair of the Appeals and Legal Research Group at Lacey & Jones, LLP, a Birmingham law firm serving clients since 1912.  Mr. Tucker can be reached at (248) 283-0763.

Throughout its storied history, Lacey & Jones has distinguished itself from other law firms by maintaining a robust Appeals and Legal Research Group.  Effective appellate representation demands different skills than those required by litigation attorneys.  Our appellate attorneys are adept at analyzing the intricacies of each case from an objective and critical perspective.  From reviewing and preparing the lower court record, identifying appealable errors, and developing a strategy to raise issues that will be addressed by appellate courts, our seasoned appellate team is capable of handling the most complex appeals from the application stage to oral advocacy before the highest courts.  Our research abilities and knowledge of current issues in nearly all major subject-matter areas of the law provide our clients with efficient and immediate assistance with complex and high-exposure cases.   We are experienced at navigating through the Michigan Court of Appeals and Supreme Court to shepherd the appeal in the most expeditious fashion possible so that it can be reviewed and quickly ruled upon.  During the last three decades alone, the Appeals and Legal Research Group at Lacey & Jones has been responsible for over 150 published decisions in the Michigan Court of Appeals and Supreme Court, including seminal decisions in workers’ compensation, governmental immunity, employment and labor law, civil rights law and insurance coverage.  Because of its specialized knowledge and focus on appellate law and its recognized expertise, the Appeals and Legal Research Group at Lacey & Jones has been asked to participate as amicus curiae writing briefs for the Supreme Court or as special counsel to the Michigan Attorney General and other governmental entities in some of the most significant cases in the Court of Appeals and Supreme Court.   Below are some of the recent significant cases in which Lacey & Jones, LLP’s Appeals and Legal Research Group has participated.

• State Farm v. MMRMA, ___ Mich App ___ (2013), amicus curiae for Oakland County in support of MMRMA application, by Carson J. Tucker
• Hannay v MDOT, ___ Mich ___ 201_), application granted, amicus curiae to be filed for MTA, et al., by Carson J. Tucker
• Yono v. MDOT, ___ Mich ___ (201_), oral argument on application granted, amicus curiae for Oakland, Macomb and Wayne County filed by Carson J. Tucker in support of the state’s application
• Huddleston v. Trinity Health, et al., ___ Mich ___ (201_), oral argument on application granted, amicus curiae with Lawrence Garcia, Esq., for MDTC
• Ashley, LLC v Pittsfield Twp., 494 Mich 875 (2013), application granted, for Pittsfield Township by Carson J. Tucker (resolved by settlement)
• Bailey v. Schaaf, ___ Mich ___ (2013), amicus curiae for MDTC by Carson J. Tucker
• Atkins v. SMART, 492 Mich 707 (2012), oral argument on application, Court of Appeals case reversed by opinion, Carson J. Tucker
• Hagerty v Manistee, 493 Mich 933 (2013), amicus curiae for Michigan Municipal League, et al., by Carson J. Tucker
• McMurtrie v Eaton Corp, 490 Mich 976 (2011)
• Findley v DaimlerChrysler Corp., 490 Mich 928 (2011)
• Brewer v. AD.Transport Express, Inc, 486 Mich 50 (2010)
• Stokes v Chrysler, 481 Mich 266 (2008)
• Brackett v Focus Hope, Inc, 482 Mich 269 (2008)
• Rakestraw v Gen Dynamics, 469 Mich 220 (2003)

Continuing its tradition of providing highly specialized and unique legal services to an exclusive clientele, Lacey & Jones, LLP, also works with insurance companies and businesses to develop comprehensive insurance coverage strategies for all lines of coverage.  From the simplest review (second look) of an in-house counsel’s coverage determination to complete coverage analysis involving high-exposure, multi-party, multi-jurisdiction, multi-claim events, the firm is capable of assisting its clients in making valuable choices and advising them on the proper course of action.  The firm’s coverage counsel and litigation team is also capable of pursuing coverage determinations and indemnity or subrogation in courts by filing declaratory judgment actions or indemnity and subrogation actions, respectively.

Our attorneys have successfully navigated coverage cases in state and federal courts, involving multiple insurers, multiple claimants and multiple forums to arrive at favorable resolutions for our clients in eight figure exposure cases, including, but not limited to, environmental liability claims, construction claims, professional liability claims, catastrophic personal injury claims, and product liability claims.  Our coverage lawyers speak the language of insurers and understand the intricacies of policy coverage involving multiple insurers, multiple policy forms, and multiple layers and years of coverage.

• • Declaratory Judgment Actions
  • Coverage Analysis and Strategy
  • Property and Casualty Claims
  • General Liability Claims
  • Professional Liability Claims
  • Business Risk
  • Indemnity and Subrogation
  • Product Liability Claims
  • Construction Defect Claims
  • Government and Municipal Liability Claims
  • Workers’ Compensation Claims

Residential Landlords Placed on Notice of Criminal Activity on Premises Liable for Attacks on Tenants and Guests Even Where Attack Takes Place in Open / Public Spaces Adjacent to Apartment / Dwelling

The Michigan Supreme Court ruled today in the case of Bailey v. Schaaf Opinion.07,.30.2013.144055 Opinion, that a residential landlord could be held liable to the guest of a tenant who was randomly attacked by an unknown criminal perpetrator who entered the property.  Tenants and guests at a barbecue held by one of the tenants were made aware of an  unknown individual on the general premises at the apartment complex who was brandishing a weapon and acting in a threatening manner.  A private, contracted security patrol was notified of the perpetrator’s presence and told he was threatening to shoot someone.  The security patrol did not immediately notify the police and the perpetrator shot the plaintiff, who was a guest at the barbecue.  A summary of the background can also be found in my earlier post:  MDTC Article on Bailey v. Schaaf.

The Michigan Court of Appeals ruled there was a “special relationship” between landlords and tenants recognized by Michigan law that imposed a duty on the residential landlord to take reasonable efforts to prevent such attacks by notifying the police after being placed on notice of such a threat.  Since the landlord’s “agents”, the security patrolmen were placed on notice, the Court of Appeals held the plaintiff had stated a valid cause of action.

The Supreme Court affirmed by what is essentially a 6-1 decision.  Justice Young, who also wrote the majority opinion in MacDonald v. PKT, 464 Mich. 322 (2001), authored the opinion and was joined in the result by justices Viviano, Zahra, Kelly, McCormack, and Cavanaugh.  Justices McCormack wrote a clarifying concurrence and Justice Cavanaugh also concurred in the ruling but dissented from part of the majority’s reasoning.

Justice Markman wrote a scathing 36-page dissent in which he criticizes the majority’s “leap” from imposing a duty by and between merchants and their customers (who are allowed access and egress from what is essentially a place held open to the public at large) to imposing a duty upon landlords of residential properties who do not owe such a duty.  Having expressed no logical reason to make this leap of imposing a duty upon merchants to a duty upon landlords, Justice Markman challenges the majority’s method (although not its authority) in changing over 176 years of common-law jurisprudence in Michigan.

All pieces of the opinion are quite thorough and searching.  Justice McCormack refreshingly cites to Calabresi and Posner and maintains that the landlord tenant relationship is bound by a “voluntary market relationship” in which money is exchanged for the promise of shelter.

I authored an amicus brief in this case providing an essential taxonomy of the legal relationships that have, over time, given rise to true special relationships and heightened duties of care by and between participants in such relationships.  Amicus Brief in Bailey v. Schaaf, et al.  One point I made, that the landlord-tenant relationship is not among those types of special relationships at common law that do give rise to a heightened duty because there is not a true surrender of control by a residential tenant over his or her own person and a surrender of that ability to protect himself or herself to that of a landlord seems to have been glossed over.  True “special relationships” involve traditional innkeeper / guests; tavern owners and patrons; common carriers and passengers (although this “special relationship” has been disavowed in Michigan jurisprudence as giving rise to any heightened duty); and other inherently “custodial” relationships wherein a person actually surrenders an ability to control his or her environmental surroundings to an exceptional degree.  Another point I made in the amicus brief is that there is no true justification (other than a shifting of economic responsibility) for transferring liability for random, unpredictable acts of crime in society from the truly responsible party, i.e., the criminal, to someone else who is held liable simply because of his or her orientation in relation to the victim of the criminal act.

Indeed, a residential tenant pays money to “own” what is essentially a conditional freehold interest in property and upon that property it is assumed that he or she can do whatever he or she lawfully wants; conduct governed only by the law and the contract of the parties.  I suppose if he or she wants to pay more for greater protection and that is governed by the contract, then market forces will indeed impose a heightened duty on the landlord who owns properties that are more desirable.  What does this do for the landlords and tenants who are not so situated?  I also pointed out that it is difficult to surmise what precise “duty” exists and how damages can be truly measured.  Assuming, for the purpose of argument, that one has a duty merely to call the police, how can we measure financial liability upon the landlord for what is essentially an intentional, violent assault committed by a criminal legitimately transferred to the landlord who is said to have a “duty”?  The reason for the injury was the intentional criminal act of the perpetrator, not the failure of the landlord to call the police after the fact.  What is the measure of damages?  Under comparative fault principles, should the landlord’s responsibility be deemed “nominal”, the criminal bearing the greatest percentage of true fault?  Perhaps Michigan’s comparative fault statutes will properly orient justice in these cases and allow the juries to allocate percentages of fault.  The Court’s majority opinion here appears to leave open more questions than it set out to answer.

As Justice Markman pointed out in his dissent, the majority does not explain how a private, residential landlord’s relationship with a tenant can be analogous to situations in which merchants are held responsible because they open their property up to the public at large, inviting guests as well as potential criminal perpetrators.

In any event, insurers and residential (and most likely commercial landlords) will have to adequately prepare for the fall-out of this opinion as it is now official that the duties expressed in the Court’s 2001 MacDonald opinion now extend to residential property owners who lease their property to tenants.

I have worked on this issue in many capacities, defending insurers and property owners, and even in seeking subrogation and indemnity from others who may bear a part of the legal burdens of the harm.  It is an ever-evolving body of law and this case is likely to create additional litigation.

2-1 Court of Appeals Opinion Rules Landlord Not Liable to Tenant for Failure to Maintain Common Pathway to Access Trash Disposal

This is an interesting case if only for the colloquy between the majority opinion and Judge Shapiro’s dissent.

The facts are unremarkable. Plaintiff was a residential tenant living in an apartment owned by the defendant.  Several other tenants lived in separate apartments in the same structure.  A common area (driveway / pathway) was accessed by all the tenants to dispose of their trash in trash bins located outside the dwelling.

Plaintiff injured herself when falling upon ice and snow accumulation on the narrow, singular pathway that led to the trash bins.  She filed suit alleging common-law premises liability and a failure to maintain the premises on the part of the landlord under MCL 554.139 (the “fit for its intended use” provision under the Landlord-Tenant Act).

The circuit court granted the landlord’s motion for summary disposition, ruling that the condition was open and obvious under the common-law defense to a premises liability claim, and, further, that the landlord breached no duty under MCL 554.139.

In a 2-1 decision (Whitbeck and Saad in the majority; Shapiro in dissent), the Court of Appeals affirmed.  Affirming the trial court’s disposition of the common-law claim and addressing the statutory claim, the majority held that as long as the common area was reasonably fit for its intended use and purpose, there was no breach under MCL 554.139.  The majority also injected a concept from the common-law open and obvious doctrine, reasoning that in Michigan one can expect common areas open to the elements to be affected by accumulations of snow and ice and ideal conditions for access and use are not to be required.

Judge Shapiro raises some interesting points in his dissent.  First, he points out that the act of which MCL 554.139 is a part is to be “liberally construed” according to the Legislature’s own mandate: MCL554.139(3).  Next, Judge Shapiro argues that the Supreme Court’s decision in Allison v. AEW Capital Mgt. LLP, 481 Mich. 419 (2008), which the majority here viewed as dispositive to deny Plaintiff’s claim, actually contained the important caveat that where a review of the record and facts demonstrates that the common area was reasonably fit for its intended use and/or purpose, then an appellate court can make the determination, but the question is one of “fact” in the first instance, and therefore, should be left to the discretion of the fact-finders, i.e., the jury.  Moreover, Judge Shapiro points out that the question must be considered in light of the legislative mandate to liberally construe the provision, which is, in this case, a liberal or expansive reading of the landlord’s duty to keep the common areas fit for their intended use.  He concludes that it is presumptuous to believe that the Supreme Court would usurp the legislature’s mandates by injecting common law defenses concerning “open and obvious” and “premises liability” into the statutory duties found in the residential Landlord-Tenant Act.

In my judgment, Judge Shapiro has a point.  While the majority of the current Supreme Court is loathe to “liberally” or “strictly” construe any statutory provision, without more, the fact that the Legislature explicitly mandates such construction in my judgment requires precisely such a reading.

If the end result of that means that common law defenses to statutory duties are not available upon a reading of the duty-imposing provision, then this is the way the statute should be interpreted and applied.  As Judge Shapiro concludes: “[r]eaching this conclusion does not mean that [] plaintiff is entitled to a judgment against the defendant; only that under the law established by the Legislature she is entitled to her day in court and to have this factual questions determined by a fact-finder.”

The entire opinion can be read here:  Rousaki v. Souliotis

Court of Appeals Rejects Plaintiff’s Premises Liability Claim and Explains Difference Between “Speculation and Conjecture” and “Reasonable Inference” in Proving Negligence

In this otherwise unremarkable “slip and fall” case, the Court of Appeals neatly illustrates the insufficiency of speculation and conjecture about the cause of an alleged injury suffered by the plaintiff in the defendant’s store.

In Fedrick v. KMart Corp. et al.,  Unpublished Opinion of the Michigan Court of Appeals, released February 14, 2013 (COA Docket No. 307816), the plaintiff alleged she injured herself when she slipped and fell in the automotive supply aisle of the defendant’s retail store.  By way of allegation, she linked the cause of her fall to either (1) a new chemical used by the cleaning company to wax the floor in the aisle making it exceedingly slippery, and/or (2) an unknown substance spilled from one of the many automobile products on the shelves.  Plaintiff presented no linking evidence that either of these circumstances directly caused the alleged slippery condition, and therefore, her alleged fall.

The Court of Appeals correctly affirms the trial court’s dismissal of plaintiff’s case.  Citing to the bellwether decision Skinner v. Square D Co., 445 Mich. 153, 164-165 (1994), the Court of Appeals panel neatly summarizes the requirement that in order for a case to move forward to trial on the basis of allegations, there must be a causal linkage between the alleged catalyst for the incident and the actual happening of that incident, the latter of which serves as the basis for seeking damages.  At pages 2 and 3 of the opinion, the Court cites the language from Skinner, supra, and concludes that while the plaintiff presented “different plausible explanations” for why the floor may have been slippery, i.e., the use of a new cleaning product by U.S. Maintenance [the store’s floor cleaning contractor], or a spill from an automotive product, she presented no evidence to support the conclusion that either of these alleged incidents actually resulted in, i.e., caused, her fall.  There was no evidence presented regarding the chemicals used by the cleaning company and no evidence presented that a foreign substance was on the floor at the time of her alleged fall.

Quoting Skinner, supra, the Court notes:  “[A] conjecture is simply an explanation consistent with known facts or conditions, but not deducible from them as a reasonable inference.  There may be 2 or more plausible explanations as to how an event happened or what produced it; yet, if the evidence is without selective application to any 1 of them, they remain conjectures only….  The crucial factor is that “‘if [the] evidence lends equal support to inconsistent conclusions or is equally consistent with contradictory hypotheses, negligence is not established.”  Slip Op. at 2 (emphasis in original), citing Skinner, supra at 166-167.

Without evidence that the cleaning company actually did use a “new” chemical substance , or evidence (such as staining on plaintiff’s clothing, a report of a clean up at the location after plaintiff’s fall, etc.) that there was in fact a foreign substance on the floor at the time of plaintiff’s fall, which led to a condition of the floor making it any more slippery or hazardous than previously, plaintiff will fail to carry her burden to survive a summary motion brought pursuant to MCR 2.116(C)(10).  See also MCR 2.116(G)(5).