Recent Case Notes from Jordan Coyne & Savits, LLP
The materials contained on this web site have been prepared by Jordan Coyne & Savits L.L.P. for informational purposes only, and should not be considered as legal advice as to any specific matter or transaction. Readers should consult a knowledgeable attorney, licensed in their home State, for advice. These materials may not reflect the most current legal developments, verdicts or settlements. The descriptions of the resolutions of certain matters should in no way be taken as an indication of future results; litigation is inherently unpredictable.Subscribe in a reader
Posted by David B. Stratton on 01/06/2011 at 04:51 PM
Virginia Supreme Court affirms jury verdict of $200,000 in malicious prosecution case
In O'Connor v. Tice, No. 091941 (Va. Jan. 13, 2011), the Court affirmed a jury verdict for malicious prosecution. The jury awarded $200,000 for malicious prosecution over a dispute concerning about $2300. The plaintiff was a contractor who had been hired to paint a commercial building, and was paid an advance of about $2300 to begin work. Subsequently, a dispute arose with the building's owner as to damage done to the roof during the work. The contractor said he was told not to come back, and the owner said that the contractor denied damaging the roof, and said he was quitting the job and keeping the deposit.
Subsequently, a county sheriff who had not been told that the contractor had completed a portion of the job, suggested that the contractor might have committed construction fraud. The owner subsequently pursued a construction fraud claim, despite being contacted by the contractor's attorney who suggested it was only a civil matter, and who provided the address where the contractor could be served with a warrant in debt. The owner brought a file to the county sheriff that did not include the letter from the contractor's attorney.
Subsequently, based on incomplete information, the county sheriff presented a criminal warrant of construction fraud to the magistrate, who found probable cause and issued a warrent for the contractor's arrest. The contractor was arrested the next day. At a preliminary hearing two months later, the criminal warrant was dismissed for lack of probable cause.
The following day, the contractor filed a malicious prosecution action against the sheriff and the owner. The case proceeded to trial against the owner, resulting in a $200,000 verdict for the contractor.
On appeal, the owner argued that the evidence was insufficient for the jury to find that probable cause did not exist, and that it was the sheriff who initiated the prosecution.
The owner argued that he only reported suspected wrongdoing and cooperated as a witness.
The Court rejected those arguments, stating:
By writing the 15-day letter, warning Tice of criminal consequences should he fail to pay them the money they had sought by their warrant in debt, the O'Connors clearly availed themselves of a criminal process in order to collect a civil debt. See Lee, 219 Va. at 27, 244 S.E.2d at 759 ("The institution of a criminal prosecution not for the purpose of bringing an offender to justice, but for the primary purpose of using it as a means to collect a debt, is for an improper purpose and therefore malicious.")
The Court held that the owner could not rely on the advice of counsel defense because reasonable minds could disagree whether the owner made a full, correct, and honest disclosure of all material facts.
Likewise, the Court found that the facts were disputed because the contractor testified that the parties could not agree on who damaged the owner's roof, that the contractor had performed more than one-third of the work on the contract, and that the owner agreed with the contractor's proposal to keep his deposit and leave the job. The jury could reasonably have concluded that the contractor had intended to fulfill his contract obligations and that the owner could not reasonably belief he had been defrauded.
Posted by David B. Stratton on 01/23/2011 at 09:49 PM
Virginia Supreme Court reaffirms innocent victim of horseplay doctrine in workers compensation law
In Simms v. Ruby Tuesday, Inc., No. 091762 (Va. Jan. 13, 2011), the Court considered the issue whether the actual risk test analysis articulated in Hilton v. Martin materially changed the "innocent victim of horseplay" doctrine under Virginia's workers compensation law. After reviewing the history and policy of the horseplay doctrine, the Court held that the doctrine had not been changed by Hilton v. Martin.
In Hilton v. Martin, the claimant was severely injured when a co-worker turned on the power to a manual cardiac defibrillator, adjusted its energy to 150 joules, and touched the defibrillator paddles to her left shoulder and left breast, while simultaneously activating them. The claimant died of electrocution and cardiac arrest. This was not horseplay in the Court's view. Rather, Hilton v. Martin was analyzed as a workplace assault.
In Simms, the claimant had been pelted with ice particles in a playful manner, and dislocated his shoulder when he raised his arm to block the ice. The Court adopted the reasoning of Judge Cardozo in Leonbruno v. Champlain Silk Mills, and distinguished horseplay encountered in the workplace from an assault.
In deciding Hilton, it was not our intention to scuttle the horseplay doctrine, or to impose any additional burden of proof upon claimants found to be the innocent victims of workplace horseplay. The analysis stated in Hilton, regarding the actual risk test, is applicable in worker's compensation matters concerning an assault, not those involving an innocent victim of horseplay.
Posted by David B. Stratton on 01/21/2011 at 02:43 AM
Virginia Supreme Court reverses $1,750,000 jury verdict due to errors in admitting expert testimony
In CNH America, LLC v. Smith, No. 091991 (Va. Jan. 13, 2011), the Court reversed a jury verdict of $1,750,000 in a product defect case, on the grounds that the plaintiff's expert testimony was not based on an adequate foundation. The Court remanded the case for a full retrial on the merits.
The plaintiff had been injured when a hose on his newly-purchased disc mower exploded and injected burning hydraulic fluid into his hand. The injuries required five surgeries, including the partial amputation of the middle finger on his right hand.
The plaintiff filed suit against the manufacturer and dealer of the mower, alleging negligence, strict liability, failure to warn, and breach of express and/or implied warranties.
On appeal, the Virginia Supreme Court found both of the plaintiff's liability experts had testified based on inadequate foundation. One expert based his opinion that the hose had a manufacturing defect solely on the failure of the hose itself. The Court held that it was insufficient for this expert to base his opinion upon the premise that because the hose failed, it was the result of a manufacturing defect. Further, the expert admitted that he failed to perform tests that could have determined whether the hose had the defect.
The second expert admitted that he was not an expert in the hydraulic systems of mowers and had no experience in the design or manufacture of mowers or any other agricultural equipment. The Court noted that "An expert's qualifications must correlate to the opinions for which the expert is being offered. . . . the fact that a person is a qualified expert in one field does not make him an expert in another field, even if they are closely related." Further, the trial court ruled that the second expert's testimony was to be restricted to hydraulic systems generally and was not supposed to include opinions specifically about the particular mower at issue. Yet, that expert's testimony went far beyond the trial court's limitations.
David B. Stratton
on 01/20/2011 at 02:23 AM
Expert Witness Issues
Surety must arbitrate disputes based on contract incorporated by reference in bonds
In Developers Surety and Indemnity Co. v. Resurrection Baptist Church, Case No. RWT 10cv1224 (D. Md. Dec. 1, 2010), the Court held that the surety must arbitrate disputes related to performance bonds where the performance bonds specifically incorporated by reference construction contracts containing an arbitration clause. In so holding, the district court followed precedent in the First, Second, Fifth, Sixth and Eleventh Circuits.
In addition, the Court found that the surety is equitably estopped from refusing to arbitrate its disputes with the co-obligees under the performance bonds. The Fourth Circuit has held in a non-surety context that a nonsignatory is estopped from refusing to comply with an arbitration clause when it receives a direct benefit from a contract containing an arbitration clause. Here, the surety asserted claims against the co-obligors for breach of the building contract, but simultaneously sought to avoid enforcement of the arbitration clause in the same contract.
The Court also rejected the surety's argument that arbitration was waived because the opposing parties had filed their answers, asserted crossclaim and counter-claims, and engaged in some discovery. The Court, following Fourth Circuit precedent, observed that absent a showing of prejudice, a court will not find waiver where the parties seeking to arbitrate merely answered pleadings and engaged in minimal discovery. Thus, the Court held that defendants did not waive their right to insist upon arbitration of this dispute.
Posted by David B. Stratton on 01/19/2011 at 06:59 PM
No immediate right in D.C. to appeal an order compelling arbitration and staying the lawsuit
In Stuart v. Walker , No. 09-CV-900 (D.C. Oct. 28, 2010), the Court held that a trial court's order granting a motion to compel fee arbitration and to stay the case, was not a final judgment and therefore, was not immediately appealable.
In this case, the plaintiff, who is an attorney, brought suit to recover attorney's fees from her former client. The former client then moved to compel fee arbitration under D.C. Bar Rule XIII, which mandates binding arbitration of all attorney-client fee disputes in D.C. The trial court granted the motion and stayed the case pending an arbitral award. The attorney than appealed.
The Court held that it did not have jurisdiction to hear the appeal as it was taken from a non-final order, and the Court's jurisdiction is limited to review of final orders of the Superior court.
The Court reasoned that while an order compelling arbitration that dismissed the action would be an appealable final order, in this case there was no final appealable order since the action was only stayed.
The Court also held that an amendment to D.C. Code sec. 16-4427(a) that purported to make orders granting a motion to compel arbitration immediately appealable was invalid. That was because the D.C. Council does not have authority to pass laws enlarging the Court of Appeals' jurisdiction.
Posted by David B. Stratton on 01/19/2011 at 04:06 AM
District of Columbia
Fourth Circuit affirms summary judgment on Title VII claims
In Bonds v. Leavitt, No. 09-2179 (4th Cir. Jan. 3, 2011) the Fourth Circuit affirmed the District Court's award of summary judgment to the defendant employer for three Title VII claims. (Note: the Court reversed the dismissal of the federal whistle blowing statute claims which are not addressed here.) The employment relationship appears to have been soured, in large part, by a dispute about the medical ethics of immortalizing cell lines taken from children who were subjects of a sickle cell study.
The employee attempted to assert a Title VII claim on the basis that she was retaliated against for opposing actions by the employer that allegedly infringed upon the rights of minority patients participating in a clinical trial. The Court ruled that even if the employee was attempting to prevent the employer from participating in allegedly discriminatory acts, the acts did not constitute unlawful employment practices. The Court stated that Title VII is not a general bad acts statute and affirmed summary judgment on the claim.
The employee also asserted a hostile work environment claim alleging that she was harassed. The claim was dismissed because the actions she alleged were harassing, such as her dismissal, were taken in response to performance issues and were not due to her race or gender. The Court upheld the dismissal.
Finally the Court affirmed the award of summary judgment on the Title VII claims because the Employee failed to demonstrate that the reasons for her dismissal were pretextual. The employee was not able to produce evidence to challenge the employer's non-discriminatory explanation for its decision to terminate her employment.
Posted by Sara A. Corle on 01/17/2011 at 11:43 PM
Legal and tax malpractice summary judgment reversed by D.C. Court of Appeals
In Pair v. Queen, No. 08-CV-1646 (D.C. Aug. 26, 2010), the Court reversed the trial court's award of summary judgment to the attorney who allegedly was responsible for a million dollar tax bill from the IRS.
The relationship between the Pairs and Mr. Queen broke down after Mr. Queen informed appellants that the District of Columbia and the IRS had assessed penalties and interest charges against the estate totaling more than a million dollars. The Pairs allege that they learned the estate's tax returns had been improperly prepared and had been filed almost a year and a half late.
The former clients were both the personal representatives of the estate, and beneficiaries of the estate.
The trial court awarded summary judgment on the attorney malpractice claim. Relying on United States v. Boyle, 469 U.S. 241 (1985), the trial court reasoned that because the plaintiffs were personal representatives of the estate, and as such had a non-delegable duty to the IRS to timely file the tax returns, they were also negligent and did not have standing to bring a lawsuit against someone who joined them in the negligence. The trial court found that the contributory negligence of the personal representatives was a complete bar to the attorney malpractice action.
The trial court dismissed the accountant malpractice count on the same grounds, and also on the grounds that there was no privity between the personal representatives and the accountant.
The D.C. Court of Appeals brusquely reversed these rulings. The Court held that:
Appellants argue, and we agree, that the trial court erred, as a matter of law, in applying United States v. Boyle to bar the Pairs' claims for malpractice and breach of fiduciary duty. The question at issue in Boyle was "whether a taxpayer's reliance on an attorney to prepare and file a tax return constitutes `reasonable cause' under ? 6651 (a)(1) of the Internal Revenue Code, so as to defeat a statutory penalty incurred because of a late filing." Boyle, 469 U.S. at 242. Boyle concerned the duties an estate and its representative owed to the IRS. By contrast, the Pairs' claims of malpractice concern the duties a professional owes to a client.
Mr. Queen's dual status as a personal representative and as attorney for the estate has, understandably, led to some confusion in analyzing the complaint. The Pairs are not seeking to excuse "[t]he failure to make a timely filing of a tax return . . . by [their] reliance on an agent." Boyle, 469 U.S. at 252 (holding that the executor's reliance on the estate attorney to file the return did not constitute "reasonable cause" for the failure to file a timely return). Instead, they are seeking "compensatory and consequential damages" through a malpractice claim. Importantly, nothing in Boyle suggests that a taxpayer's non-delegable duty to the IRS relieves a professional from liability for negligent failure to perform the duties for which an estate has employed him.
The Court of Appeals also held that the trial court had erred in its finding that contributory negligence barred the claims. The Court pointed out that in a 1993 decision, it had recognized that there was a difference between the non-delegable duty of a personal representative to file tax returns with the IRS, and the delegation that occurs when the personal representative reasonably relies on expert advice concerning substantive questions of tax law, such as whether liability exists in the first instance.
Moreover, the Court stated that it is not clear that the personal representatives would be without recourse even if the penalties derived solely from the late filing of the tax returns.
No one contests that the estate suffered substantial penalties as a result of both improper preparation and late filing of the estate tax returns. However, the trial court did not determine whether "the failure to file timely returns was  due to a lack of diligence or dereliction of duty on the part of [the Pairs] with regard to ascertaining and meeting filing deadlines, [or] rather due to [their reasonable] reliance on [professionals'] erroneous advice and assistance regarding substantive issues."
The Court held that on the record before it, a finding of contributory negligence per se could not be sustained.
With regard to the accountant malpractice claim, the Court held as follows:
We have already concluded that the court erred, as a matter of law, by relying on Boyle to bar the malpractice claims. Moreover, further factual inquiry is required to clarify the roles of Mr. Smith and Mr. Tolliver. The exact nature of their relationship to Mr. Queen is not clear from the present record, and it is important to remember that Mr. Queen was wearing two hats. A key question (perhaps not susceptible of a clear answer) is whether he engaged Mr. Smith and Mr. Tolliver while acting as a personal representative of the estate or solely in his capacity as the estate's attorney.
Posted by David B. Stratton on 01/15/2011 at 02:41 PM
District of Columbia
Undocumented Workers Are Covered by D.C. Workers Compensation Act
In Asylum co. v. D.C. Depart. of Employment Services, No. 08-AA-1158 (D.C. Dec. 23, 2010), the Court of Appeals considered an issue of first impression in D.C.: whether a worker who is an undocumented alien is covered under the District of Columbia Workers' Compensation Act.
The Court affirmed the Compensation Review Board's judgment that based on the plain meaning of the language of the Act and the legislative intent, an undocumented or illegal alien is an "employee" as defined in the Act. The Court observed that:
we have little difficulty agreeing with the CRB's conclusion. It is consistent with the language of the Act, specifically, D.C. Code ? 32-1501 (9) (2001), which excepts certain specified categories of workers from the definition of "employee," but otherwise sets out a broad definition that neither excludes undocumented aliens nor makes a worker's immigration status relevant. See Report on Bill 3-106 at 10 (referring to the legislation's "all[-]inclusive delineation of coverage"). As the CRB recognized, the Council has made repeated amendments to the definitional section of the Act, including amendments to the provision defining the term "employee."
The Court followed the reasoning of precedent from Connecticut, which stated that:
declining to treat contracts of employment with undocumented aliens as "contracts" within the meaning of the workers' compensation statute would provide unscrupulous employers with a financial incentive to hire undocumented workers, while "including employment agreements between illegal aliens and their employers within the purview of `contracts of service' . . . would accord with, rather than contravene, the public policy Congress espoused when [IRCA] was enacted."
The Court also considered and rejected the argument that IRCA preempted the D.C. Workers Compensation Act.
In reaching its decision, the Court in a footnote acknowledged a pragmatic reason for according undocumented workers rights under the Workers Compensation Act: if the undocumented workers cannot recover under the Act, then they would be able to file tort suits to recover damages. Among other authorities, the Court cited to a leading treatise on this point:
Larson's Workers' Compensation Law, supra, ? 66.03[c] ("Given that illegal aliens are entitled to access to the courts and have the ability to file both contract and tort claims, it would seem illogical to bar illegal alien workers from seeking compensation benefits long considered a substitute for damages").
Posted by David B. Stratton on 01/14/2011 at 01:45 PM
District of Columbia
Fourth Circuit affirms award of summary judgment to defense in employment discrimination case
In Mascone v. American Physical Society, Inc., the Fourth Circuit affirmed the District Court's award of summary judgment to the defendant, and the District Court's denial of the plaintiff's motion for reconsideration.
The Court affirmed summary judgment on the wrongful termination claim, finding that the plaintiff failed to demonstrate that the employer used a forbidden consideration with respect to any employment practice. Further, she failed to show that the employer's proferred reasons for her dismissal were pretextual.
Further, the Court affirmed summary judgment on the plaintiff's pre-termination, gender-based disparate treatment claim. The plaintiff could not establish a prima facie case because she could not show that the other employee in question was similarly situated.
The Court rejected the plaintiff's mixed-motive claim under Title VII, because the plaintiff did not show that the protected trait actually motivated the employer's decision.
Finally, the Court affirmed the award of summary judgment on the plaintiff's retaliation claim. The plaintiff hired a firm to contact the employer pretending to be a potential employer. Plaintiff contended that she was given negative references in retaliation for engaging in protected activity. The Court found that plaintiff could not prove dissemination of false reference information that a prospective employer would view as material to its hiring decision.
Deborah Murrell Whelihan, Esq., of Jordan Coyne & Savits, LLP, represented the defendant in this matter.
Posted by David B. Stratton on 01/13/2011 at 04:15 PM
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