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Around the Nation: September 2016

State news and updates from CLM chapters, reps, and committees.

September 21, 2016 Photo

LOUISIANA: Flooding in Parishes and the Courts

One week and 6.9 trillion gallons of rain in southern Louisiana has resulted in the largest natural disaster in the United States since Hurricane Sandy in 2012. While paling in comparison to the losses sustained by over 40,000 households, courts in Louisiana have been immobilized as well. On Aug. 15, 2016, Governor John Edwards issued an executive order suspending deadlines in all courts for legal, administrative, and regulatory proceedings, including the suspension of legal deadlines until Friday, Sept. 9, 2016. The order was amended on Aug. 17, 2016, limiting the suspension to 27 parishes impacted by the flooding, lifting the suspension in all other parishes. Most affected residents do not have flood insurance, so it will take plenty of time and assistance for things to get back to normal. Donations can be made by visiting redcross.org, calling 1-800-RED CROSS, or texting the word LAFLOODS to 90999 to make a $10 donation.—From CLM Member Matthew D. Moghis

MASSACHUSETTS: New Case Expands Mode of Operation Premises Liability 

The Supreme Judicial Court has expanded premises liability to include a broader definition of “mode of operation,” which relieves plaintiffs from having to prove actual or constructive notice of conditions. In Bowers v. P. Wiles Inc., the court found that “where the manner of operation of a business creates a reasonably foreseeable risk of a hazardous condition, the approach permits a plaintiff to recover for injuries resulting from such conditions if the plaintiff establishes that the business did not take all ‘adequate steps’ reasonably necessary under the circumstances to protect patrons against that risk.” In the aftermath of the Bowers decision, Massachusetts retail businesses should reexamine their operations in view of this expanded risk of liability. Summary judgments will be harder to obtain in cases where mode of operation applies.—From CLM Member Bruce H. Raymond

NEBRASKA: No Property Damage Where No Physical Damage Exists

In Drake-Williams Steel v. Continental Casualty Co., improperly fabricated steel rebar by a fabricator that had reduced reinforcing capacity was incorporated into the construction of concrete pile caps that would form supports for the Pinnacle Bank Arena. Several of the pile caps had to be modified in order to conform to the required specifications of the contract. Insurers refused to reimburse Drake-Williams Steel Inc. for costs incurred to modify these compromised pile caps. Insurers claimed that the cost of the remedial measures did not fall under coverage of the policies. The Nebraska Supreme Court held that the costs for which Drake-Williams Steel sought reimbursement were not derived from any physical damage to the pile caps or their temporary loss of use. There was no property damage and, thus, no coverage under the CGL policies.—From CLM Omaha Chapter President Lisa Purcell

NEVADA: Casinos Adjust to Restrictive Ruling on Noncompetes

In Golden Road Motor Inn Inc. v. Sumona Islam, the Nevada Supreme Court was asked to consider (1) whether a noncompete agreement is reasonable and enforceable, (2) whether an alteration of electronic information amounts to conversion, and (3) whether one gaming establishment misappropriated another gaming establishment’s trade secrets. Islam, a casino host, agreed to refrain from employment with gaming establishments within 150 miles of Atlantis. She became dissatisfied and, while looking for other employment, altered and copied customer information. Islam began working for Grand Sierra, which used the information to market those customers. As to the noncompete agreement, the district court was affirmed because the type of work prohibited was unreasonable, extended too far, and proposed an undue hardship. The court further concluded that, because the work exclusion term was unreasonable, the agreement was unenforceable. As to the conversion claim, because Atlantis was able to quickly restore the information, the Supreme Court affirmed the claim denial. It also affirmed the finding of nonliability for the misappropriation of trade secrets claim for failure to demonstrate that Grand Sierra knew the information was obtained by improper means.—From CLM Nevada Chapter Vice President Gina M. Mushmeche, Esq.

OREGON: Insurance Implications for Ruling in Construction Defect Claims

In Goodwin v. Kingsmen Plastering Inc., the Oregon Supreme Court held that the catch-all two-year statute of limitations applies to negligence claims for construction defects. The court considered whether the six-year statute for “injury to any interest of another in real property” should apply but ultimately concluded that it applies only to claims affecting the land, such as trespass or waste. This landmark ruling has the potential of reducing the legal exposure to construction defect claims, especially those brought by second or subsequent owners of buildings. Claims of breach of contract brought by original owners remain subject to a six-year statute of limitations.—From CLM Member Jack Levy

SOUTH CAROLINA: Missed Timing Ends Up Costing Over $1 Million 

In Urena v. Nationwide Insurance Company, the court addressed an insurer’s failure to strictly comply with a timed demand. This action arose out of an automobile accident for which Nationwide had liability coverage, and it was determined that liability was clear and damages would exceed the policy limits. On Feb. 16, 2012, the plaintiff’s counsel faxed a letter to a Nationwide claims professional requesting payment of the policy limits by the close of business the next day. A different claims professional was asked to respond but was not aware of the deadline. A check was mailed, but it was received on Feb. 21, 2012. Urena’s counsel returned the check because it had not been timely received. The court found that Nationwide’s actions were negligent, and it was liable for an excess verdict of $1,150,000. The court’s decision was based largely on the fact that there were no impediments to complying with the deadline. The decision is somewhat fact specific with little guidance as to what is reasonable in responding to a demand. However, it sends a message that “substantial” compliance with a timed demand may not be enough.—From South Carolina Chapter Director of Education Doug Baxter

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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.  blips@claimsadvisor.com

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