New Discovery Rules in Utah may Streamline Your Subrogation Case
The Utah Supreme Court recently approved a number of amendments to the Utah Rules of Civil Procedure which limit discovery in civil actions. The amendments became effective for all cases filed after November 1, 2011.
The purpose of the amendments are to allow discovery in proportion to: needs of the case; amount in controversy; complexity of the case; the parties’ resources; the importance of the issues; the importance of the discovery in resolving the issues – U.R.C.P. 26(b)(2)(A); the likely benefits of the proposed discovery outweigh the burden or expense - R.26(b)(2)(B); the discovery is consistent with the overall case management and will further the just, speedy and inexpensive determination of the case – R.26(b)(2)(C); the discovery is not unreasonably cumulative or duplicative – R.26(b)(2)(D); the information cannot be obtained from another source that is more convenient, less burdensome or less expensive – R.26(b)(2)(E); and the party seeking discovery has not had sufficient opportunity to obtain the information by discovery or otherwise, taking into account the party’s relative access to the information – R.26(b)(2)(F).
The new rules establish 3 tiers of cases based on the damages pled and set limits for standard discovery for each tier:
|
Tier |
Amount of Damages |
Total Fact Deposition Hours |
Rule 33 Interrogatories including all discrete subparts |
Rule 34 Requests for Production |
Rule 36 Requests for Admission |
Days to Complete Standard Fact Discovery |
|
1 |
$50,000 or less |
3 |
0 |
5 |
5 |
120 |
|
2 |
More than $50,000 and less than $300,000 or non-monetary relief |
15 |
10 |
10 |
10 |
180 |
|
3 |
$300,000 or more |
30 |
20 |
20 |
20 |
210 |
To obtain discovery beyond these standard limits, the parties may stipulate or a party may file a motion explaining why the extraordinary discovery is necessary. However, the stipulation or motion must be filed before the close of standard discovery and after reaching the limits of standard discovery. R.26(c).
Finally, the standard discovery and new rules on initial disclosures eliminate the need for case management orders, discovery plans and attorney planning conferences and those requirements have been removed from the rules. R.26(f).
Plaintiff’s Initial Disclosures are required to be served within 14 days after the service of the first answer to the complaint. The Defendant must serve its Initial Disclosures within 28 days after Plaintiff’s first disclosures or after Defendant’s appearance in the case, whichever is later.
With respect to experts, within 7 days after the close of fact discovery, Plaintiff must disclose: (i) the expert’s curriculum vitae identifying the expert’s qualifications, publications, and prior testimony; (ii) compensation information; (iii) a brief summary of the opinions the expert will offer; and (iv) a complete copy of the expert’s file for the case.
Within 7 days after this disclosure, the party opposing the retained expert may elect either a deposition or a written report from the expert. A deposition is limited to four hours. The report or deposition must be completed within 28 days after the election is made. Designation of Defendant’s experts follows a similar schedule.
This is a brief summary of the changes to the discovery rules in Utah. From a subrogation perspective, the new rules should streamline discovery and move subrogation cases more quickly toward resolution or trial.
**Many thanks to Leslie Hulburt for her assistance in preparing this blog post.
Practitioners and judges frequently use the terms subrogation and contribution interchangeably. This is legally incorrect and, as one insurance company recently learned, the distinction between the two concepts can be fatal.
Fine art losses come in many shapes and sizes. Oftentimes, fine art is a relatively small piece of a homeowner's or commercial property claim. Occasionally, however, the art represents the vast majority of a claim. You may have heard of the story in 2006 about casino mogul, Steve Wynn, who accidentally poked a hole in his own Picasso painting, "La Reve", which he had previously agreed to sell to another collector for $139 million. Post-conservation, Wynn decided to keep the painting..jpg)
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We are pleased to announce that this “Subrogation & Recovery Law Blog” has been nominated as a candidate for the LexisNexis Top 50 Insurance Blogs of 2011. Each year, LexisNexis honors a select group of blogs that it believes sets the standard for a particular industry. If you have enjoyed this blog, and would like to support this nomination, please feel free to take a moment to
Don't look now, but the Texas Legislature may be back up to its old tricks. That's right, "tort reform" has once again become a hot topic in Texas. On March 14, 2011, two separate bills were introduced in the state Senate and the state house of Representatives that could fundamentally alter civil litigation in Texas (yet again). The bills (referred to as S.B. 13 and H.B. 274, respectively) effectively creates a "loser pays" system to address what the legislature believes to a continuing "lawsuit crisis" in Texas. Governor Rick Perry has expressed his support of a loser pays tort reform initiative, and has publicly commented that he is fully committed to ensuring that the bills make their way through the legislative process.
Residential construction defects are common occurrences in Illinois where numerous homes and condominiums quickly went up before the housing bubble burst. Illinois' expansion of the economic loss doctrine has made alleging tort theories against builders and vendors (those that sell) of houses very difficult. Nonetheless, there may be express or contractual warranties from the builder providing an avenue of recovery. In the event those express warranties have expired, Illinois implied warranty of habitability can play a pivotal role in pursuing recovery from builders and vendors of homes.
Many states have enacted laws requiring homeowners, with claims of construction defects, to follow certain procedures prior to filing a lawsuit against a builder. The procedures generally require that before a homeowner initiates construction defect litigation, it must notify the builder of the claims, allow the builder an opportunity to remedy the defects, pay the homeowner for the cost of repairs, and/or participate in some form of dispute resolution. If the builder fails to respond to the notice, or the process does not resolve the claims, then the homeowner may proceed with the lawsuit.
Too often, media outlets will assign adjectives to winter weather that lead us to believe it was of an intensity observed only once in a decade, century or lifetime. Rather, it is more often the case that these are average storms for the season and the region. The winds, temperatures and precipitation levels usually are not outliers but instead are within the standard deviation of a winter storm for that region. It is more likely than not, for example, that the amount of snow on the roof which caused it to collapse was actually within the “factor of safety” in the roof’s design specification or local building codes.
On February 4, 2011, the Nebraska Supreme Court, in the case of
On January 20, 2011 the U.S. Consumer Product Safety Commission (“CPSC”) announced a voluntary
On March 11, 2011, the Consumer Product Safety Commission (“CPSC”) will officially launch a new website which offers a forum for consumers to register complaints about product-related safety issues. The database, located at
Further, manufacturers and companies are withholding vital information until the requesting party either executes a confidentiality agreement or seeks an order from the Court compelling the production of this information.
The U.S. Court of Appeals for the Ninth Circuit has recently issued an opinion holding that a subrogating insurer can sue a defendant for negligence for damage to property even though the subrogating insurer and the defendant were not in privity of contract. This opinion provides guidance on privity of contract as well as
The 
In a decision consistent with other jurisdictions, the Washington State Court of Appeals held that if an insurer denies coverage and its insured settles with the tortfeasor, the insurer's subrogation rights can be terminated by that settlement. Further, the settlement does not breach the policy's impairment of recovery rights provision. Vision One LLC v. RSUI, --- P.3d --- (October 19, 2010, Division II)
Most commercial and residential properties using natural gas have gas riser pipes which connect the primary distribution service line to the natural gas meter. Although the gas riser connects the utility’s distribution line to the utility’s meter, these risers are typically installed by a sub-contracting plumber during original construction. For this reason, the riser often belongs to the property owner, not the utility.
On September 17, 2010 Lennox International, Inc. sent a letter to all of its constituent regional organizations as well as its licensed dealers, installers and repair technicians placing a “Product Hold” on a series of residential air conditioning units. According to the letter, Lennox air conditioning units manufactured between July 1, 2010 and September 16, 2010 starting with serial numbers 1910G, 1910J, 5810G, and 5810J represent a serious fire hazard during installation. As part of the standard installation, the suction lines on the units must be brazed. Due to the configuration of the suction lines, one of the refrigerant valves can overheat and crack from the heat generated by the brazing. As a result, refrigerant escapes and the oil in the refrigerant can ignite. There are several reported cases of the fire spreading to the home causing significant property damage. It is believed that Lennox has not issued a full recall of these units because it is trying to develop a fix for the problem so that units that have been released into the supply chain can still be utilized at a later date.
solutions in residential sprinkler systems. The subject incident involved a grease fire in a kitchen where a sprinkler system with a reported 71.2% concentration of antifreeze deployed. The fire resulted in a single fatality and serious injury to another individual.
Subrogating the discarded cigarette case can burn out quickly or really catch fire. If your insured caused it, subrogation may be a problem. But when a defendant causes it, potential subrogation, right? Perhaps. Take, for example, the case of a store clerk who throws a discarded cigarette on the pine needles that serve as a landscaping bed outside the building while on a smoking break. The clerk works for a business that runs a store. You insure the neighboring building. Clear winner against the clerk’s employer?
On September 17, 2010 Lowe’s Home Centers, Inc. settled a class action lawsuit brought in the United States District Court for the Western District of North Carolina by consumers who contracted with Lowe’s for the installation of clothes dryers in their homes and businesses. The lawsuit alleged that the “skilled, trained, experienced [and] equipped” installation technicians employed by Lowe’s used metal foil ducts to vent the dryers, in clear contravention of the dryer manufacturers’ instructions. The operative complaint cited a warning specifically instructing consumers and installers “[d]o not use a metal foil vent” and further cautioning “[f]ailure to follow these instructions can result in death or fire.” This warning was included with the clothes dryers installed by Lowe’s—either on the dryer itself or in the product instruction manual—and was uniformly ignored by the Lowe’s installers.
If you live in the southwest, then you have probably looked into different ways to keep your house or business cooler without raising you air conditioning bills. One solution which has increased in popularity over the past couple of years is the installation of a reflective radiant barrier. Radiant barriers can be used in residential, commercial, and industrial buildings.
Following up on our report of July 9, 2010, Cozen O'Connor has learned that the
In response to the growth of the wind turbine industry, insurance carriers have introduced a number of insurance products tailored to this industry. Principal coverages include protection of those individuals responsible for the design, construction, erection, commissioning and testing of wind turbines. Coverage can also be provided for all risks of loss, destruction or damage to the wind turbines or the property where the wind turbines are erected. Policies also exists for business interruption or loss of profits should the wind turbines stop operating, as well as for protection of the wind turbines while in transit. Finally, it is not uncommon to see policies related to environmental "clean up" costs, or protection for all equipment, tools and personal effects of those contractors responsible for erecting wind turbines.
On December 1, 2010, Federal Rule of Civil Procedure 26 will be amended to exempt draft expert reports and certain categories of attorney/expert communication from discovery. In practice, this amendment will liberalize the communications your attorney can have with your testifying expert and reduce expenses that are incurred to comply with the Rule as it is currently written.
The subrogating carrier of a unit owner or condominium association to pursue subrogation against another condominium unit owner, renter and/or member of the household of the unit varies by jurisdiction.
You have a fire loss at a commercial premise, and the insured's tenant is clearly at fault for the same. Is there subrogation? Not so fast, preparing that demand or settlement brief may be premature as there may be language in the lease precluding subrogation against the tenant. In a trilogy of cases, the Supreme Court of Canada set forth the legal principles which may act to bar a subrogated claim in the context of a commercial tenancy. In Cummer-Yonge Investments Ltd. v. Agnew Surpass Shoe Stores Ltd., [1976] 2 S.C.R. 221 and Smith v. T. Eaton Co., [1978] 2 S.C.R. 749, the subject leases contained a covenant from the landlord to insure the property against loss from fire. The Supreme Court of Canada held that the covenant established that the landlord had intended to eliminate any right of action against the tenant. Since the insurer is in no better position than the insured as against the third party, the subrogated claim was dismissed. In Ross Southwood Tire Ltd. v. Pyrotech Products Ltd., [1976] 2 S.C.R. 35, the lease required the tenant to pay part of the cost of the property insurance secured by the landlord. The Supreme Court of Canada held that since the tenant contributed to the cost of the policy, the landlord and tenant were essentially joint insureds and the subrogated claim could not proceed.
PTAC fires are causing a recent stir in apartment complexes and hotels. What is a PTAC, you ask? PTAC's are Packaged Terminal Air Conditioners/Heat Pumps. They are
The lesson of the Essex case is simple. In order to preserve equitable subrogation and/or indemnity rights, the insurer must carefully craft all settlement documents and releases. The court will not attempt to glean what amounts are made on behalf of the insured, as opposed to bad faith or fraud claims. The Essex case reiterates the most basic tenet of subrogation-you can only stand in the shoes of your insured for payments made on its behalf.
claim to opposing counsel or at trial. Insurance policies provide for actual cash value and replacement cost value and, with limited exceptions, the law provides for cost to repair or replace unless it exceeds fair market value. A typical claim will usually involve hundreds of individuals items purchased over a number of years that all have to be accounted for and properly priced.
On July 13, 2010, the Appellate Court of Connecticut affirmed a $664,373.02 verdict issued by a trial court sitting non-jury in 2007.
Subrogation professionals should be aware of a recent opinion in New York where computer fire modeling utilized by the defendant's expert was held to be inadmissible. In Santos v. State Farm Fire & Casualty Co., No. 000790/07 (N.Y.Sup. Ct. Jun. 28, 2010), a trial court held that the defendant had not presented sufficient evidence that computer fire modeling was generally accepted as reliable in the fire investigation community.
On June 7, 2010, in a unanimous decision, the United State Supreme Court reversed the Eleventh Circuit in
A California court recently held that an insurer had a duty to preserve an allegedly defective tire for use as evidence in the insured's product liability case. Cooper v. State Farm Mutual Auto. Ins. Co., 177 Cal.App.4th 876 (2009, 4th Dist., Div. 2). Plaintiff Bryan Cooper, an insured of State Farm, was involved in a single car accident allegedly caused by tread separation of a tire. State Farm acquired possession of the vehicle and tire after the claim was paid to Plaintiff. State Farm's expert concluded that the tire was defectively manufactured. State Farm notified plaintiff of its expert opinion and promised Plaintiff it would retain the tire. Plaintiff sued the tire manufacturer. Before Plaintiff's litigation against the manufacturer was resolved, State Farm disposed of the car and tire.
The recent California Appellate Court decision of Interstate Fire & Casualty Insurance Company v. Cleveland Wrecking Company (2010) 182 Cal.App.4th 23, illustrates that under the right circumstances, a liability insurer can subrogate against a third party to recover amounts paid to resolve a first party personal injury claim. The case involved a construction site personal injury claim by an employee of Subcontractor A. The employee filed a personal injury claim against General Contractor and Subcontractor B. Both Subcontractor A and Subcontractor B had contracts with General Contractor, requiring each subcontractor to defend and indemnify General Contractor for any claims arising out of the subcontractor’s operations, and required each subcontractor to name General Contractor as an additional insured under their general liability insurance policy. Subcontractor A procured the liability insurance and named General Contractor as an additional insured. Subcontractor B did not. General Contractor tendered its defense to both subcontractors. Subcontractor A and its insurer, Interstate, accepted the tender. Subcontractor B rejected the tender. Ultimately, General Contractor, through Interstate, as well as Subcontractor B, resolved their claims with the injured employee and filed good faith settlement motions approving the settlements which, under California law, barred any claims for equitable contribution. Thereafter, Interstate filed a subrogation action against Subcontractor B, claiming Subcontractor B breached its contract with Interstate’s additional insured, (General Contractor), by failing to defend and indemnify General Contractor for the claims brought by Subcontractor A’s employee. The trial court dismissed Interstate’s complaint determining Interstate had no rights of subrogation against Subcontractor B, as Subcontractor B’s alleged breach of the contract did not cause any damage to the General Contractor, and the good faith settlement barred any claims of negligence against Subcontractor B for causing the loss.
The Third District Court of Appeal of Florida recently brought us closer to clarity on Florida's approach to when a landlord's insurer can sue a tenant. State Farm of Florida Ins. Co. v. Loo, 2010 WL 445945 (Fla. 3d DCA Feb. 10, 2010). For the most part, jurisdictions adopt one of three approaches in this context:
and discussion in this type of forum.
luck.
In 




In Fireman’s Insurance Company v. Fire-Free Chimney Sweeps, Inc.,
Cozen O’Connor attorneys successfully argued in the Delaware Superior Court that the adoption of a National Fire Protection Association standard by an administrative agency defined the standard of care for work performed by a chimney sweep. The Court accepted the argument advanced on behalf of a subrogating insurance carrier for a condominium association that a chimney sweep hired by the association to “clean and inspect” chimney flues was required to perform a full Level 1 inspection of the entire chimney and fireplace systems pursuant to NFPA 211.
The chimney sweep was hired by the association to clean and inspect the chimneys that were utilized by the 294 unit owners in the condominium complex. NFPA 211 mandates cleaning of chimneys and flues, including the evaluation of the appliance which is attached to the chimney, in order to insure that the entire system is safe and operational. One of the unit owners had replaced the original fireplace doors with an after-market set of doors which effectively blocked the flow of air around the prefabricated fireplace. This prevented the fireplace from properly cooling while it was in operation and resulted in the ignition of combustible wood members surrounding the fireplace. The after-market doors had been installed by this unit owner prior to the time that the chimney sweep company performed its cleaning and inspection.
The separate contract between the insurer and the mortgagee remains in force even when the policy itself has been voided by an act, neglect, omission or misrepresentation attributable to the mortgagor, owner or occupant of the property. Thus, when the insured mortgagor voids the policy, for example, by doing something that materially changes the policy risk, the Standard Mortgage Clause protects the mortgagee by maintaining the insurance of the mortgagee’s interest in force. The insurer must pay the mortgagee’s loss to the extent of the policy limits even when the mortgagor has voided the policy.
Publicized failures of acetal plumbing parts were seen in the 1980s. Acetal was used to fabricate fittings incorporated into residential water supply piping made of Polybutylene ("PB"). Homes across the country were suffering PB water system failures, causing water losses. Class action litigation ensued, with one of the largest in US history (Cox v. Shell Oil Co., et. al) settling for $950 million. A cause of the PB piping failures was degradation of the acetal fittings, which led to fracture and water release..jpg)

There are two primary causes of these failures. Acetal has been recognized within the plastics industry since as early as the 1950's to be sensitive to
In Georgia, it is well known that actions for injury to real and personal property caused by any person furnishing the design or construction of an improvement to the property must be filed within eight (8) years after the substantial completion of the improvement. O.C.G.A. §9-3-51(a). Further, an improvement to real property has been defined as a fixed alteration to the real property. Mullis v. Southern Co. Services, Inc., 250 Ga. App. 90, 296 S.E.2d 579 (1982). The Courts have held that if a component is an essential and integral part of the improvement to which it belongs, then it is itself an improvement to real property.
As was previously reported, New York Governor Paterson has signed a bill which purports to eliminate the alleged windfall of double recoveries to plaintiffs which were alleged to have resulted from the common-law Collateral Source Rule, which enabled collateral source payors, including subrogating insurers, to recover their losses as part of the damages claimed by injured insureds. This bill does not impact property damage subrogation claims, which was made clear beyond peradventure by a memorandum prepared by one of the previous sponsoring committees. The language of the prior sponsor's memo is as follows:
by representatives of the plaintiffs' personal injury bar, who also questioned the need for the proposed amendment. All affected constituencies were united in their opposition to this unnecessary rule change, noting that there already are existing procedural mechanisms to allow parties to move for consolidation of related claims, or not, depending upon the circumstances of each case.
Where the subrogating insurer and insured both have recovery claims and are competing for a limited amount of available money from a defendant, issues arise as to who is entitled to recovery, and/or how the recovery should be divided. These issues fall within the realm of the “made whole rule”, which generally provides, that under certain circumstances (i.e. limited assets of a wrongdoing defendant, non participation of the subrogating insurer in recovery lawsuit), the insured is entitled to be “made whole” for uninsured damages from the wrongdoing defendant, before the subrogating carrier can recover from the insured (via a lien or policy provisions) or from the defendant who caused the injury.
Claimants in the In Re Katrina Canal Breaches Consolidated Litigation advanced essentially two claims. The first claim concerned the levee breaches. In January 2008, the Court ruled that the ACOE was immune from suits based on the levee breaches because of the immunity provided by the Flood Control Act of 1928, 33 U.S.C. § 702(c), which provides that "no liability of any kind shall attach to or rest upon the United States for any damage from or by any floods or flood waters at any place." After the January 2008 decision, only the MRGO claims remained.
In
Insurance carriers have incurred more than a billion dollars in damages arising from the California wildfires over the past few years. The causes of these fires include arson, discarded cigarettes and failed utility equipment owned or operated by government entities or
The Sword: A plaintiff need only prove the necessary elements of the cause of action to prevail
In Canada, the right of subrogation is a product of the common law, although it may be modified by statute or contract. Unlike in the United States, Canadian common law provides that an insurer may sue only in the name of the insured in relation to a subrogated claim .That rationale has its roots in the need to provide a process by which the insurer would be able to exercise its subrogated rights. Historically, insureds were required to take all steps within their power to reduce a loss for which they had received indemnity, including exercising legal remedies against third parties. Since those remedies were personal to the insured, however, they could only be exercised in the name of the insured as a matter of procedural law. The common law did not provide a method whereby a person could be compelled to commence an action against another; therefore insurers had to apply to the Chancery Court to compel an insured to allow his or her name to be used for legal proceedings against third persons in order to reduce the loss.
The tenet still holds true today, and is illustrated by an exception to the rule discussed in the Ontario Court of Appeal case of
Michigan appeared to join those states barring a landlord's subrogee from suing a tenant in the case of New Hampshire Insurance Group v. Labombard, 155 Mich. App 369, 375 (1986). There, the court held that a tenant is an implied co-insured in every lease, unless “expressly and unequivocal’ stated otherwise. But recent decisions give a new lease on life to recovery opportunities for insurers of landlords. In Laurel Woods Apartments v. Roumayah, 274 Mich. App. 631 (2007), the owner sued a tenant for a kitchen fire. The court held that the trial court erred when it granted defendant’s motion for summary disposition based on the Labombard decision, because defendant was contractually liable for the damages. The lease was found to shift the burden to the tenant for property damage caused to the premises. The court also rejected the argument that the lease’s failure to require the tenant to insure the premises precluded the landlord’s recovery. The Court of Appeals distinguished between negligence and contract claims, stating the following:
On October 28, 2008, the Michigan Court of Appeals extended this decision to subrogation. In an unpublished decision,
Effective October 1, 2009, North Carolina's statute of repose for claims for defective products will be increased from six to twelve years for actions that accrue on or after October 1, 2009. N .C .G .S.
Keep in mind that North Carolina still has a fairly short six year statute of repose for improvements to real property. So, if your house fire was due to defective original wiring in the garage and not the defective vehicle, you would have only a six year repose period that applies to your claim. Like the example with the car, you might need to bring suit before the running of the limitation period if the six year repose period for the structure will run before the three year limitation period to bring suit expires."
As subrogation professionals, we see spoliation of evidence typically used as a defense by defendants who claim they did not get a chance to examine certain evidence. But sometimes we face the problem of a third party, sometimes the insured or its public adjuster or sometimes another insurance carrier, that is blocking access to evidence vital to the subrogation investigation. How do we deal with it? Aside from considering the particular problems unique to each individual case, the first step is communication with the would-be spoliator. That person should be made clearly aware of your need to examine the evidence and the consequences for blocking access. At the same time, it is important not to be overly aggressive and risk angering that person to the point of sabotage.
In recent years, technology and the internet ha
