Around the Nation: May 2013

News and updates from CLM state chairs, reps, and committees.

May 21, 2013 Photo


Supreme Court Holds on Noneconomic Damages

In Price v. High Pointe Oil Company, a Clinton County Court awarded $100,000 to Ms. Price for noneconomic damages for the mental anguish, emotional distress, and psychological injuries she sustained when High Pointe negligently pumped 400 gallons of fuel oil into her basement. In Michigan, one cannot get noneconomic damages for mental anguish, emotional distress, and psychological injuries for loss of personal property. The carrier’s first appeal failed; however, the Court of Appeals reversed the decision.

The issue in this case is whether noneconomic damages are recoverable for the negligent destruction of real property, which no Michigan case has ever allowed. Rather, the common law has long provided the appropriate measure of damages in cases involving the negligent destruction of property is simply the cost of replacement or repair of the property. The Supreme Court held and remanded the case to the trial court for entry of summary disposition in High Pointe’s favor—leaving a very clear opinion concerning real property.—From Michigan State Chapter Co-Chair Bonnie Hayward



Arbitration Clause Unenforceable

In State of Washington Dept. of Transportation v. James River Ins. Co., the Washington Supreme Court affirmed a decision of the trial court to refuse enforcement of the arbitration clause in an insurance policy. Non-admitted insurer James River sought to enforce the clause and compel arbitration in a coverage suit. The WSDOT argued that the clause violated a Washington statute that prohibits insurance contracts from “depriving the courts of this state of the jurisdiction of action against the insurer.” The WSDOT also argued that the McCarran-Ferguson Act shielded this state statute from preemption by the Federal Arbitration Act. The court agreed and invalidated the arbitration provision.—From Washington State Chapter Co-Chair Jacquelyn A. Beatty



Mandatory New Rules Affecting Cases Involving $100,000 or Less

In March, Texas implemented new rules for civil procedure. Accordingly, all original pleadings must now include a statement of damages sought. In those cases where the aggregate monetary relief is $100,000 or less, the lawsuit will be subject to the mandatory expedited process of Rule 169. Pursuant to this new rule, discovery will be severely limited, and each “side” will only be allowed five hours to try the case. In addition, objections to expert testimony are limited, and the trial court can no longer order the parties to mediate. To date, these new rules also will apply retroactively to pending cases. The new rules do not affect cases governed by the family code, property code, tax code, or Chapter 74.—From Texas State Chapter Co-Chair and Greater Dallas Chapter President Nichol Bunn



Bringing Back Eminent Domain

Governor Bentley recently signed into law the Major 21st Century Manufacturing Zone Act, which allows local officials to condemn private property and turn it over to private developers. The new law was billed as giving cities a tool to create tax increment districts for companies willing to invest more than $100 million for sites larger than 250 acres.

      The language is from the state’s original 1987 tax increment finance law and does not mention eminent domain. However, officials now can condemn property they deem “blighted”—the statutory definition of the term is so subjective that it could fit nearly any property with deteriorating structures, inadequate street layout, faulty lot layout, obsolete platting, and excessive vacant land.

Alabama’s statutes contained some of the best protections in the nation for property owners; property couldn’t be seized for private development unless it posed a genuine threat to human health and safety. The new law makes Alabama the second state to renege on strong eminent domain reform.—From Alabama State Chapter Co-Chair Cathy J. Hester



No-Fault Ruling Ignores Harm of Fraud

The office of Insurance Commissioner Kevin McCarty filed an appeal to stop a temporary injunction of certain provisions of the 2012 no-fault reform law (HB 119). The 2nd Circuit Court of Leon County ruled that the law would cause irreparable harm to medical providers and could deny accident victims treatment and, thus, the law could be deemed unconstitutional.

The Coalition Against Insurance Fraud expressed disappointment. “The court opinion ignores the irreparable harm that crooked medical providers inflict on honest drivers and the no-fault system’s integrity,” says Dennis Jay, executive director of the anti-fraud coalition. “Higher courts are likely to overturn the stay….Its constitutional validity has a strong basis.”

The law took effect Jan. 1 and caps chiropractic and physical-therapy treatments at $2,500. Neither can bill for the full $10,000 limit in PIP benefits. Massage and acupuncture therapists can’t bill for PIP-related treatments at all. Lawmakers enacted the reforms to curb fraud and abuse by medical providers that are driving up auto premiums.—From CLM Fellow Dennis Jay, Coalition Against Insurance Fraud



Contribution in Negligence Cases Not Completely Dead

As part of Georgia tort reform legislation passed in 2005, many believed the right of contribution among joint tortfeasors was abolished. Those beliefs changed as a result of Zurich Amer. Ins. Co. v. Heard, in which the Court of Appeals held that contribution in negligence cases is not entirely dead. In Heard, the hotel owner settled claims against the general contractor and designers. The general contractor then sued the designers to recover in contribution and indemnity. In reversing the trial court, the appeals court provided that the contribution claim was viable because joint liability and the right of contribution no longer exist only when damages have been apportioned by the trier of fact pursuant to OCGA §51-12-33. However, the statute does not abolish the right of contribution between settling joint tortfeasors when there has been no apportionment of damages by a trier of fact. Accordingly, settlements of negligence cases must account for the potential for contribution claims by or against a settling party who is or may be a joint tortfeasor.—From Georgia State Chapter Member Scott Rees

About The Authors
Bevrlee J. Lips

Bevrlee J. Lips was managing editor of Claims Management magazine (now CLM Magazine) from January 2012 until March 2017.

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