Declarations and Exclusions

Litigants on the Grass Alas¹

The case itself is not all that exciting -- except perhaps as an example of a court showing exemplary patience with some litigants dragging out the process -- but it has proven impossible to resist quoting this opening paragraph, in which the Court of Appeal invokes Gertrude Stein:

Attorney fees are permitted when authorized by contract, statute or law. A city ordinance allows the city to collect attorney fees incurred in foreclosing a lien on real property. Just as ‘. . . a rose is a rose . . . .’ so is an ordinance a statute when it permits recovery of attorney fees.

What would Alice B. Toklas say?

The decision in City of Santa Paula v. Narula (December 17, 2003), Case No. Crim B160389, can be found at these links in PDF and Word formats.

¹ Homage to Gertrude Stein’s Four Saints in Three Acts.

Shooting Spree Update: 9th Circuit's Decision on Gun Manufacturer Liability Continues to Draw Criticism

On November 20, we reported on the 9th Circuit's decision permitting a claim against gun manufacturers arising from the infamous Jewish Community Center shootings. That decision continues to inspire comment and to draw criticism.

Today, Walter Olson of Overlawyered links to an extended discussion of the Constitutional and federalism issues raised by the case by law-and-baseball (!?!) weblogger, Dan McLaughlin: Gunning For Interstate Commerce. Dan is particularly troubled by the Court's permitting the manufacturers to be pursued and, possibly, punished in California when all of the firearms involved were obtained in the more loosely-regulated state of Washington. Well worth reading, especially as it ties in to the U.S. Supreme Court's recent revisitation of the law of punitive damages (on which we reported most recently here).

Los Angeles Area CPCU All Industry Day, November 4, 2003

Caution: Shameless self-promotion follows . . . .

Readers who find themselves in the Los Angeles area next Tuesday, November 4, might consider attending the annual All Industry Day sponsored by the Los Angeles area chapters of the CPCU [Chartered Property Casualty Underwriter] Society. The editor/author of this site will be speaking in the afternoon on the subject of "Punitive Damages: What Insurance Professionals Need to Know."

Other educational programs -- all of which have been approved for Continuing Education credit by the California Department of Insurance -- include Cargo & Transportation Insurance, the Terrorism Risk & Insurance Act, workplace violence and corporate ethics under the Sarbanes Oxley act. A luncheon is included, honoring the local recipients of the CPCU designation. Registration and information available through the link above.

Creative Risk Management . . . With Extra Whipped Cream

A Seattle restaurant, the 5 Spot, now "requires" customers to sign a liability waiver before they are permitted to order an epic dessert called The Bulge. The Washington Post reports:

'I will not impose any of sort of obesity-related lawsuit against the 5 Spot or consider any similar type of frivolous legislation created by a hungry trial lawyer,' the release says. After a diner signs it, a waiter hauls out a sugarcoated, deep-fried, ice cream-swaddled, caramel-drizzled, whipped-cream-anointed banana.

'We thought, what can we do to illustrate how stupid it is to make restaurants responsible for monitoring the eating habits of Americans?' said Peter Levy, co-owner of the 5 Spot. 'We came up with the most fattening and delicious dessert we could think of.'

The particular object of the 5 Spot's mockery is George Washington University law professor John F. Banzhaf III, a successful anti-tobacco litigator now spearheading anti-obesity litigation such as the suits against McDonald's restaurants recently dismissed in New York. While it is easy and tempting for many (including your Decs and Excs scribe) to deride Professor Banzhaf and his theories, the potential for expanded liability is still real. Indeed, the Post story includes this troubling item:

Insurance companies, too, are worried. European insurance companies have reportedly begun warning restaurants to assess their social responsibility in the food and drink they serve.

Food for thought, as they say.

[Link to Post article via Reason magazine's weblog, Hit & Run.]

Molding a Consensus -- Pollution Exclusions and Mold Claims

Washington D.C.'s Dave Stratton on his Insurance Defense Blog provides a link to an in-depth article by Los Angeles attorney Jacqueline M. Jauregui on the interaction between mold claims and pollution exclusions. Here are the introductory paragraphs from that article:

Whether mold is a pollutant presents a question of considerable and pressing interest both to insurers and insureds who must deal with general policy forms that lack a mold exclusion but otherwise exclude pollution. Similarly, it poses coverage issues when insurers or insureds must deal with carriers who have incorporated specific pollution coverage without reference to mold losses. The frequency and cost of claims involving species of molds such as stachybotrys chartarum have become so high that insurers with both types of contracts need some certainty on this issue. Unfortunately, common parlance points in one direction while published opinions interpreting the pollution exclusion seem to suggest another. This anomaly creates tremendous uncertainty about the relationship between mold and pollution coverage and pollution exclusions.

To date, only two opinions, have evaluated the question whether mold is a pollutant. Both were decided in federal court at the district court level but both reached different conclusions. Thus, there is scant guidance from the courts on this issue.

With abundant footnotes, the article concludes that mold probably ought to be treated as a contaminant, but that courts may be hesitant as a practical matter to adopt that position. This is a costly issue for insurers, and one that is sure to generate further discussion.

September 11 -- The Litigation Expands

Business Insurance magazine is reporting on the filing of a suit by Insurers against the alleged conspirators responsible for the hijackings and attacks of September 11, 2001.

The suit is believed to be the first filed by insurers against parties allegedly responsible for the attacks on the World Trade Center and Pentagon, according to Sean P. Carter, a lawyer with Cozen O’Connor in Philadelphia, representing the insurers. Two similar suits filed by victims of the attacks are pending in federal courts in New York and Washington, and the insurers’ complaint may ultimately be consolidated with one of both of these, he said.

The insurers’ suit was filed Wednesday in U.S. District Court in New York by units of Chubb Corp., Zurich Financial Services Group, OneBeacon Insurance Group, Crum & Forster Corp. and Munich Re Group. So far, these insurers have paid $2.23 billion in property losses and about $500 million in workers compensation losses stemming from the terrorist attacks, according to the suit and Mr. Carter.

More than 500 individuals, entities and governments are named among the defendants.

Meanwhile, a federal judge in New York has allowed suits by September 11 survivors and families to proceed:

Victims of the Sept. 11, 2001, terrorist attacks may proceed with lawsuits against airlines, the owner and operator of the World Trade Center and other defendants, a federal judge has ruled.

U.S. District Judge Alvin K. Hellerstein on Thursday denied motions to dismiss complaints against United Air Lines Inc. and American Airlines Inc.; WTC owner The Port Authority of New York & New Jersey and leaseholder World Trade Center Properties L.L.C.; and Boeing Co., which manufactured the jets that the hijackers crashed into the Pentagon and a field near Shanksville, Pa.

About 70 plaintiffs charge in a series of consolidated lawsuits that the airlines failed to stop the hijackers from boarding the planes, that the Port Authority failed to provide safe escape routes and adequate fireproofing in the WTC and that Boeing failed to design secure cockpit doors on its aircraft.

A number of commentators have been critical of the survivors' lawsuits, proment among them Gregg Easterbrook of The New Republic in a piece entitled Grief Does Not Justify Greed.

Commentary -- Lawyers vs. Lawyers

I am usually sympathetic at root to the complaints of the insurance industry and risk managers over what is perceived as excessive litigation: too many lawsuits are filed on too many tenuous theories, with the resulting costs being spread throughout the economy. (Just today, to take a single example, a U.S. District Court judge dismissed yet another class action suit against McDonald's over the restaurant's claimed contributions to its customers' obesity. The plaintiff's attorneys insist more suits will be forthcoming.) Nevertheless, this editorial by Paul Winston in Business Insurance magazine strikes me as taking an unreasonable position.

Winston suggests a simple cause for the increase in litigation and litigation costs: too many lawyers.

Think about it. For many years, lawyers were considered one of the most desirable professions in our society. There was great prestige in having a child attend law school and become an attorney (unlike, say, an English major). Millions of law degrees were conferred and millions of lawyers found themselves looking for billable hours and contingency fees.

While the complex workings of society, business and government offer plenty of work for many lawyers, others have to work hard to drum up business and make a living. It's no different for butchers, bakers or candlestick makers. If there is not enough business to be had, they must hustle to make some or go hungry.

Fair enough, as far as it goes: there really are an astonishing number of attorneys out there, and new ones are entering the market at a phenomenal rate. In the two decades since I entered the profession, California alone has admitted over 100,000 new attorneys. Even allowing for attrition in the existing ranks of the profession, and the fact that a significant portion of that total reprents attorneys who do not handle litigation, that is quite a crowd of advocates.

Winston's proposed solution -- as a means to ""thin the legal herd a bit" -- is to encourage lawyers to spend more time suing other lawyers!

If the threat of litigation and the resulting high cost of coverage is enough to drive doctors away from risky pursuits, if not medicine altogether, what would it take to similarly make lawyering less attractive? A dose of their own medicine is what.

With the proliferation of so many lawsuits, surely there is a willing body of disgruntled plaintiffs willing and eager to sue their lawyers for a bad outcome, or exorbitant billings. I'm sure there's even the potential for several class action lawsuits over current legal practices.

With enough of these lawsuits, insurers are bound to jack up the cost of lawyers' professional liability insurance. This would make attorneys think twice about some of their more speculative endeavors, and drive others to pursue less costly legal work, or new professions entirely.

Very clever, very clever indeed. Unfortunately, this solution is no solution at all. For starters, professional liability premiums for attorneys have already gone through the roof, as have premiums for most other professionals. As with any other business, attorneys can simply raise their rates to absorb this new cost.

Moreover, attorneys have not created today's hyper-expansive liabilities on their own: they have had the able assistance of courts and legislatures that have combined to create opportunity after opportunity for lawsuits. The most innocent error can be deemed an "unfair practice" or an offense to some "right" or other and lead inevitably to the courthouse door. The answer to every perceived ill -- from business practices to social behavior to our relations with our pets -- is a new statute or a new precedent. Lawyers may take a hand in creating some of these new opportunities to sue, but more often they simply capitalize on the opportunities created for them by others. One man's excessive litigation is another man's healthy abundance of legal remedies.

Sadly there is no simple answer or magic bullet to be had. Unless and until there is a fundamental shift in our nation's public philosophy -- away from the courts as cure-alls and toward the recognition that not every "wrong" warrants legal action -- it is unfair to place the blame on the legal profession. While it often makes sense to fight fire with more fire, fighting litigation with more litigation will only exacerbate the problem it seeks to solve.

[These opinions have been cross-posted to the author's personal/political/culture weblog,A Fool in the Forest.]

Follow-Up: ADA Litigation Closes Century Old Stockton Restaurant

In the immediately preceding post, I discussed a new appellate case finding there was no insurance coverage available to respond to a claim under the Americans with Disabilities Act in which the disabled plaintiff alleged that the design of the premises prevented him from accessing the restroom with his wheelchair. Today, Walter Olson's invaluable site, Overlawyered, reports on the consequences of a similar suit: "Access suit closes landmark Calif. eatery". No mention whether insurance was a consideration in the defendant restaurant's decision to close rather than fight the suit.

The post includes links to numerous other instances of high-profile ADA claims, including a suggestion that the offices of the plaintiff's attorney in the Stockton case on which Overlawyered is reporting are themselves out of compliance with the ADA.

[This post was updated 9/3/03 to add the indvertently omitted final clause of the final sentence. Thanks to Walter Olson for bringing that to my attention, and for the link back.]

A Valuable Safety Tip

From Dave Stratton's Insurance Defense Blog, an important piece of advice for appellate attorneys in general and appellate insurance coverage attorneys in particular: always include a copy of the policy you are arguing about in the record on appeal, because The Appellate Court Can't Construe What It Can't Read.

Reminder to California Litigators: Increased Fees Take Effect 8/18/03

ATTENTION LITIGATORS: Remember that Monday, August 18, is the effective date for the major court filing fee increases included in the new California budget. The increases were previously blogged here.

That earlier post links to the Judicial Council's listing of the new fees; each county will have its own local adjustments, so be sure to check the particular fee schedule for the county in which you are filing.