Appellate Law & Practice

CA1: moody teens, ERISA, and shortening the limitations period

Island View Residential Treatment Center et al v. Blue Cross Blue Shield of Massachusetts, 08-1287.  Okay, before I begin, I gotta get something off my chest: I am sorry for what I said about the people that are both partners at large firms at furries.  Even though my words might have been taken that way, I didn’t mean to imply that there is an inherent incompatibility between being “Really Yiffy” and being a “managing partner.”  Really.  If dressing up like a sexy fox helps with business development, who am I to second-guess you?  So, stop emailing me!  And stop emailing me pictures of you dressed up like a chimpmunk from your work account! Maybe ATL cares more than I do.

Sorry, where was I?  Furries.. Oh yes.  Moody teens and insurance.  That is all the First Circuit cares about these days.

CA1: declaratory judgments not that preclusive

Andrew Robinson v. Hartford Fire, No. 08-1255.  This is an insurance coverage dispute.  It would be interesting if this area of practice had more dedicated lawyers, but everyone I meet in it seems obsessed with non-law stuff and does not seem to actually have any passion for the law.  Some of them don't even read every Supreme Court case as they come out which means they are not real lawyers and lack detail orientation. 

I have not met any of these lawyers, so I don't know how devoted them are to the law or not.  Whatever the case, the solo practitioner that I never heard of did a better job at convincing the court of the merits of his clients' position than some firm with a lot of names that I never heard of.  Therefore, the solo has more detail orientation and hence is more moral. 

Anyway, here goes.  The insured party had some units.  The neighbor discharged some lead-laden dust into the units.  The insured party demanded coverage from its insurer, and the insurer said that the dust was excluded from coverage.  The insurer went to state court and got a declaratory judgment in its favor.

I put more below the fold.  Yes you can.

CA1: a Checkbook is not a payment under ERISA

Mogel v. UNUM Life Insurance, No. 08-1334.  This is an ERISA case.  It holds that “security accounts” that were established to fund death benefits are not separate accounts and therefore UNUM’s ERISA-based fiduciary duty applies.  UNUM claims that it complied with its fiduciary duties by “delivering a checkbook” (with small limits on the amount of the checks that could be written).  This seems pretty obvious, but it is a reversal of the District Court.

CA1: First speaks on material misrepresentation

Commonwealth Land v. IDC Properties, No. 08-1130 affirms a grant of a declaratory judgment declaring some title insurance void because of “material misrepresentations.”  At trial, there was no showing of fraudulent intent, but some showing of omission without specific questions being asked.  Applying Rhode Island law, the First holds that “we need not decide how the Rhode Island courts would resolve a bare non-disclosure issue because it is clear that a half-truth or failure to speak when necessary to qualify misleading prior statements does amount to a misrepresentation.”

CA1: No E&O coverage for falsified credit reports

New Fed Mortgage Cor v. National Union Fire Insurance Company, No. 07-2762.  This case is timely.  As you know, many of our clients have caused the downfall of civilization as we know it.  Anyway, New Fed is a residential mortgage broker.  Amongst other things, it provides the lenders with the credit reports of its customers.  One of their brokers falsified credit reports.  As you know, mortgages are resold and incorrect credit information has far-reaching effects (in this case $233,052.75 worth of them.  (But somehow people don’t seem to care when the market is good.)  National Union writes its errors and commissions policy.

Anyway, the First looks at the policy and sees that there is an exclusion for employee dishonesty.  It rejects the notion that because New Fed itself didn’t intend to harm the lender it should be covered.  And, like, “duh” of course there is no duty to defend.  Strangely, “The district court's decision rested on an unrelated policy exclusion, which we need not consider here.” 

CA1: Claim preclusion in ERISA suit

Herman v. Meiselman, No. 07-2753 affirms the dismissal of an ERISA lawsuit on claim preclusion grounds.  The First says that the current group of claims are pretty much the same as the cross-claims in the earlier lawsuit.  (“The factual basis for these counts was formed in the same time period and from the same essential dispute as the prior action: the employment relationship, the profit-sharing plan and the parties' differences over them, as well as the validity of the Release given by Meiselman in the First Action.”)

The prior history of this case (and our commentary) can be found here:

• Indianapolis Life Ins. Co. v. Herman, 204 Fed. App'x 908, 910 (1stCir. 2006) (per curiam) (our coverage here); and
• Indianapolis Life Ins. Co. v. Herman, 516F.3d 5, 11 (1st Cir. 2008) (our coverage here)

CA1: is it a warranty provision and is it breached? (and a Bottomry book)

ING Insurance SA v. Pagan-Sanchez, No. 07-1709 (8/21/08). A guy gets his boat insured.  He doesn’t seem to take care of it too well, and they don’t put fire extinguishers where they should.  It gets wrecked.  His insurers seek a declaratory judgment saying that they don’t have to pay. 

The dispute resolves around the language of the contract and the provisions of the contract dealing with maintenance and fire extinguishers are “warranty” provisions, the breach of which by the insured party is a breach of the contract.  The First says that they are.  The first says that the “prevailing view” is that performance under a maritime insurance contract is excused if the insured parties breach the warranty. The First admits that there is no Puerto Rican law on the subject. 

Strangely, the First condemns counsel for the insurers for talking too much about New York law.  But what really seems to be going on is that counsel for the insurers, during the litigation consented to the substantive law of Puerto Rico, even though the language of the contract includes a provision naming New York as the “choice of law.”  So, the First says, “We are not certain that counsel, as a matter of litigation strategy, may vary the express terms of a choice of law clause.”  So, we know that is an open issue in the First.

If you have enjoyed reading about this case (as an ethical and detail-oriented lawyer would), you may enjoy James Allan Park, A System of the Law of Marine Insurances: With Three Chapters on Bottomry, on Insurances on Lives, and on Insurances Against Fire, available on Google Books here. 

Welcome Insurance Coverage Law in Massachusetts

A big welcome to blogosphere to the ambiguously-named “Insurance Coverage Law in Massachusetts.”

This blog is neat, because not only does it cover an area of law that is almost as neat as the law of rape and “Disturbing the Peace” but it also provides directions about how to read an insurance policy.  It is written by Nina Kallen.  The most interesting post of general interest is: Change In Citation Rule Can Have A Big Impact.  This is an opportunity to expound on something that some folks have been thinking about recently.

This post, explains how the Massachusetts Courts, by virtue of a “Thou Shalt not Cite Unpublished Opinions” rule worked a substantive changes in the law of insurance coverage.  But, believe it or not I have a few thoughts on these rules.

1. A “Thou Shalt not Cite” rule can only apply to a court that is bound by either the same rules, or derives its rule-making authority from the same source.  So, for example, no Federal Court can ever force a state court to adhere to its “Thou Shalt not Cite” rule.  Indeed, no litigant need follow such rules.  (In light of R. 32.1" It is now a moot point whether the FRAP can bind a District Court.  Based on the plain language of Fed. R. App. P. 1, I don't think they can or do in light (except insofar as filing a Notice of Appeal or something like that) but some people, without explanation have insisted otherwise.)
2. There is an ongoing debate as to whether “Thou Shalt not Cite” rules are even constitutional.  In the wake of the E-Government Act, nobody can seriously claim that litigants don’t have access to unpublished opinions.  Of course, demanding that a litigant provide a copy of an unpublished opinion is fair game.
3. Even though the Federal Courts have eliminated the “Thou Shalt not Cite” rules (thanks, Howard) some state courts adhere to them.  There is an ongoing debate as to whether such rules are unconstitutional as a First Amendment matter, or, on a greater level, whether they are unconstitutional as state and federal constitutions enshrine incorporate stare decisis into their structure, and therefore any rule-making authority can’t be used to weasel out of that doctrine.

CA1: another ERISA standing case

Evans v. Akers, 07-1140 (7/18/08).  This is an ERISA case.  I will read it in more detail later.  But it comes down to this holding:

hold that former employees who allege that fiduciary breaches reduced their lump-sum distribution from a defined contribution plan have standing to sue as "participants" under [§ 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2)].

The appellees argue that the plaintiffs are not seeking “benefits” but “damages.”  The First figures that “the full ‘benefit’ to which the participant is entitled by a defined contribution plan is ‘the value of [her] account unencumbered by any fiduciary impropriety.’”  Then, they justify their conclusion with a bunch of cites to other circuits and policy reasons.  So, whatever the case, the plaintiffs have standing and the District Court has jurisdiction. 

The backstory involves the fact that the plan invested in the employer, W.R. Grace’s stock.  This stock wasn’t doing too well because of the asbestos-related product-liability litigation. 

CA1: fishing disaster ends in insurance disaster

AGA Fishing Group v. Brown & Brown, Inc., No. 07-2408.  This is a post-judgment insurance-coverage dispute which ends with the choice words “AGA presents no facts evincing a duty on Defendants’ part to ensure that AGA was adequately covered, we affirm.”  It notes that depending on economic conditions, fishermen (some of whom have not been to law school) make over $100,000 per year.  Because these guys are making adequate salaries, should suffer debilitating injuries, the potential for liability increases.  So, one of the fishermen was injured.  Unfortunately, the guys that owned the fishing boat didn’t carry enough insurance for his damages and they had to sell the boat.  They sued the agent for not recommending enough insurance (it would have cost $5,000 to upgrade the policy from $1,000,000 to $5,000,000.)  Alas, in Massachusetts  “There is no general duty of an insurance agent to ensure that the insurance policies procured by him provide coverage that is adequate for the needs of the insured.”  So, the plaintiffs (the ex-boat-owners) argue “special circumstances” (such as their lack of education), but because they can’t really show how the agent was always making recommendation as to insurance this fails.