ContractsProf Blog

Limerick of the Week: Majestic Realty

This may not be the best Limerick I've ever composed, but I think it among my most useful.  It pretty much sums up the case and states the relevant exception to the rule that parties are generally not liable for the torts of their independent contractors.  The Limerick leaves out the court's interesting discussion of another exception -- hiring an incompetent  -- but that's dictum.

For those of you unfamiliar with the case, it involved the demolition of a building in a built-up area in Paterson, New Jersey.  The crane operator apparently swung his wrecking ball in the wrong direction, knocking the building to be demolished onto an adjacent building and causing damage.  When asked for a  explanation of his wrecking technique, the crane operator said, "I goofed."  The liability of the City of Paterson, which hired Toti, turned on whether demolition in a built-up area constituted nuisance per se, that is an "inherently dangerous activity," a question that need to be determined on remand.

Majestic Realty Assoc. v. Toti Contracting Co.

"I goofed," said the crane operator
And unwitting tort perpetrator.
The city must pay
If it's nuisance per se
To wreck first and ask questions later.

[Jeremy Telman]

It Depends What You Mean By “Occupying” The Vehicle

Insurance disputes often provide the most interesting interpretation issues. Take for example this recent appellate case out of New York’s Third Department.

Plaintiff truck driver was struck by a hit-and-run driver while standing on the street in the City of Albany after unloading construction equipment from the tractor-trailer owned by his employer and insured by defendant American Home Assurance Company. Plaintiff filed a supplementary uninsured/underinsured motorist claim with American Home Assurance Co. (American) and also with defendant Nationwide Mutual Insurance Co. (Nationwide), which was his insurer. American denied the claim asserting that plaintiff was not covered by its policy because he was not "occupying" the vehicle at the time of the accident. Nationwide contended that plaintiff was covered by American and that its coverage was thus secondary.

The pertinent endorsement in American's policy provided coverage for an individual "occupying" a covered vehicle. The term "occupying" was further defined in American's policy to include "in, upon, entering into, or exiting from a motor vehicle.” The interpretation of the term “occupying” has apparently resulted in differing tests in various jurisdictions.

On cross-motions for summary judgment, the trial court determined that plaintiff was "occupying" the vehicle and, accordingly, among other things, declared that plaintiff’s injury came with in the coverage of American’s policy. American appealed. The appellate court reversed, holding that plaintiff was not occupying the vehicle at the time of the accident. The court reasoned:

Here, plaintiff was off-loading a 44,000 pound, 50-to-55 foot-long boom lift from a 70-foot tractor-trailer. The procedure involved many steps, including setting out safety cones, unchaining the boom lift, folding out and inserting pins in the jib, inspecting the basket, lowering the trailer, backing the machine off the trailer, and securing and extending axle shifts. Plaintiff had completed these steps, which he testified at his deposition typically took 20 to 30 minutes. He further testified that, after removing and readying the boom lift, he next trains the person renting it on the proper operation of the equipment, a procedure he estimated to take 30 to 35 minutes. He recalled during his testimony that, in the current situation, he had been training the person who was going to operate the equipment for 10 to 15 minutes when the accident occurred. Although the tractor-trailer reportedly remained running during the entire time and plaintiff's affidavit sets forth a more condensed time frame than his deposition for his activities at the site, it is inescapable that he was no longer vehicle-oriented. His absence from the vehicle was not intended to be brief and, at the time of the accident, he was engaged in instructing the lessee about the operation of the delivered equipment. Under such circumstances, he was no longer "occupying" his employer's vehicle.

Because American did not cover plaintiff, this meant that Nationwide was on the hook.

Faragon v. American Home Assur. Co., --- N.Y.S.2d ----, 2008 WL 2278093 N.Y.A.D. 3 Dept. (June 5, 2008).

[Meredith R. Miller]

Contracts Prof Snubbed in New Collection of Limericks

Limericks seem to be in the news a lot lately. 

As reported in the Washington Times, Ernest W. LeFever has just published Liberating the Limerick, which includes 230 representative examples of the undersigned's preferred poetic form, contributed by over fifty writers, not including the undersigned. Those of you interested in purchasing the book can find it available for purchase here.  You may note that the book has been criticized on the Amazon website for its principles of selection, although the exclusion from the collection of the works of the author of the (still unpublished) collection, Limericks for Lawyers, is not a part of the criticism. 

Thanks so very much to my colleague, Zachary Calo, who took time off from work on his seventh doctoral dissertation (which is really remarkable when you consider that he is only 23 years old) to send me cheering news of the revival of interest in the Limerick.

[Jeremy Telman]

The Newest Investment Vehicle: "Personal Seat Licenses"?

How are football franchises managing to raise money for their new stadiums? Well, if the local city and state legislators won't pony up tax dollars, one option is to sell "personal seat licenses" ("PSLs") to well-healed and die-hard fans. The Jets are apparently contemplating whether to issue such licenses when they move into their new billion dollar stadium in 2010. Unlike season tickets, the Jets would license the rights to the seats. The licenses seem to have a perpetual duration (or, at least, certainly last beyond one season) and may carry a $30,000 price tag. The NY Post explains:

The most expensive package is for lower level seats, where the Jets would charge $5,000 up front, then $5,000 a year for five years in PSL fees. The season ticket itself would cost $1,650 a year. The cheapest option is in the upper level corner, where seats cost $200 down, $200 a year for five years and $1,000 a year for the ticket itself.

Plus, the license is transferrable, which could turn out to be a wise investment:

PSLs have also proven to be a wise investment for deep-pocketed fans. For example, the Panthers - whose seat licenses were sold in 1996 for between $600 and $5,400 each - are currently selling PSLs for $3,000 to $20,000 on Internet auction site eBay.

I am not much of a sports fan, so please forgive any ignorance reflected in this post, but that is a pretty good ROI.

[Meredith R. Miller

Duke Football Wins!!!

At left is the Wallace Wade Stadium, home to the Duke Blue Devil football team and site of the 1942 Rose Bowl.  These days, Duke isn't really thinking Rose Bowl.  Or any bowl really.  According to the Louisville Courrier-Journal, Duke football has achieved a record of 6-45 in its last five seaons, which may be why Duke opted out of a contract to play the University of Louisville football team in 2007, 2008, and 2009.

According to press reports, the two teams agreed to play four times, but after the 2002 game, in which Duke football came in a distant second, Duke opted out of the remaining games.  The contract called for damages of $150,000 unless Louisville could line up a game against an opponent "of similar stature."  Duke's lawyers persuaded the court that Duke's team is so bad that any college football team would qualify as "of similar stature" and the court threw out Louisville's $450,000 breach of contract claim.

HT: Stetson's James W. Fox, Jr.

[Jeremy Telman]

Judge Demeans Himself: Composes Legal Limerick

For some reason, my co-blogger Meredith Miller thinks I ought to be the one to blog about an opinion recently issued by Judge Berle M. Schiller of the U.S. District Court in Philadelphia.  The full report on the case is available for subscribers to the New York Lawyer here.  The rest of you will have to do with my synopsis of the report.

The case, Sullivan v. Limerick Golf Club Inc., involved a brawl at the Golf Club's bar, the Sand Trap.  Plaintiff Sullivan alleged that the club was liable because it served his alleged assailant drinks after the latter was already visibly intoxicated.  The club tardily moved to implead the allaged assailant in violation of F.R.C.P. 14, leading the Judge to quip:

"Unfortunately for Limerick, their sub-par performance occurred in the pleading stage of this case and not on the golf course."  Already drunk with his own wit, the judge then summarized his holding as follows:

With arguments hard to resist,
The movant correctly insists,
His joinder was tardy,
And so the third-party
Complaint is hereby dismissed.

In my view, this opinion sets a bad precedent.

[Jeremy Telman]

Would You Really Want Credit for this Idea?

Corey Feldman and Corey Haim are out of the spotlight, but that's nothing a little car-wreck-reality-tv can't temporarily fix (see, e.g., VH1's Surreal Life). The two former childhood stars have been sued for $1 million in L.A. Superior Court based on claims of breach of contract, unjust enrichment, unfair competition and fraud.

Feldman and Haim allegedly agreed to star in a reality show with writers David Pullano, Matthew Odgers and Jeff McCarthy. The show, entitled "The Two Coreys," would focus on their attempts to regain the spotlight. But, before the writers could pitch the show to TV networks, the Coreys allegedly sold the show to A&E without the writers.

As you might imagine, the show is apparently "hard to watch." While some may have only "vaguely heard of the show", the lawsuit does bring it some publicity. And, with a sleeper reality tv concept like this (apparently it just started its second season), it seems that any publicity is, well, good publicity.

[Meredith R. Miller]

Change in Reporting Relationship Entitles Ex-President/CEO to Severance Payments

A trial judge in New York recently granted plaintiff C. Richard Stafford summary judgment, holding that his former employer breached his employment contract by failing to make severance payments.

Scientia Health Group, Inc., is a venture capital firm that invested in the medical and biotech fields. In the spring of 2002, Dr. Samuel Waksal (yes, of IMClone/Martha Stewart fame), then Scientia's executive chairman, recruited Stafford to become president of Scientia. In June 2002, Stafford and Scientia entered into an Executive Employment Agreement, which provided the terms of Stafford's employment as president and chief operating officer of Scientia. Under the Agreement, Stafford was to "report to the Chairman of the Company," and he had "primary authority for the day-to-day financial administration and operations of the Company."

Under the Agreement, Stafford was entitled to a healthy severance payment in the event that he terminated "his employment for Good Reason or the Company terminates [his] employment without Cause." This provision also entitled Stafford "to continue to participate in all health, life and disability insurance plans in which he participated immediately prior to the Date of Termination," during the period that he was entitled to receive severance. The Agreement defined "Good Reason" as any of the following, without Stafford's "express written consent":

(i) [Stafford] shall not have the title or reporting relationship as set forth in Section 1.2 hereof;

(ii) the assignment to [Stafford] of any duties that are materially inconsistent with, or a substantial alteration in the nature or status of, [Stafford's] position, authority or responsibilities or the conditions of his employment;

(iii) the failure of the Company to pay [Stafford] any compensation or provide other benefits as specified in Section 2 or 5 of this Agreement . . . .

In July 2002, Waksal resigned as chairman of Scientia. Scientia did not appoint a replacement for Waksal. In February 2003, Stafford tendered his resignation, purportedly for "Good Reason" under the Agreement. The trial granted Stafford summary judgment, holding that the change in reporting relationship constituted "good reason" for Stafford's resignation and entitled him to severance payments under the Agreement.

This is only a brief recap of a larger picture: here's a summary from the NYLJ.

Stafford v. Scienta Health Group, 600666/03 (Supreme Court, New York County, June 9, 2008).

[Meredith R. Miller]