Boothby v. D.R. Johnson Lumber Co., ___ Or App ___ (October 9, 2002)

The Employer Liability Act imposes a heightened standard of care on employers and others who are in charge of work involving "risk or danger." An employee injured in a work-related accident generally cannot sue his or her direct employer, and so looks to others involved in the work as possible defendants. In this type of litigation, liability turns on plaintiff’s proof that another party had actual control of the risk-producing activity, retained a right to control or engaged in a "common enterprise" with the direct employer.

In this case, Johnson Lumber contracted with the state of Washington to purchase, cut and remove timber from state lands. Johnson Lumber in turn contracted with Intermountain to do the logging work. Boothby, an employee of Intermountain, was killed when a log loader backed over him. His personal representative sued Johnson Lumber, alleging ELA violations and negligence. The jury returned a verdict for plaintiff. Defendant appealed the denial of its motions for directed verdict on both theories of recovery.

On appeal, Johnson argued that the ELA claim was not factually supported in this case. Plaintiff conceded that Johnson did not actually control Intermountain’s work, but argued that it retained a "right to control" Intermountain’s operations because Johnson’s contract with the state required Johnson to be responsible for all work and equipment. Plaintiff further claimed that Johnson’s contract with Intermountain preserved the right to control because Johnson could declare Intermountain in breach if Intermountain did not comply with requirements relating to safety and the manner of performing the work.

The Court of Appeals, however, agreed with Johnson that its contract with Intermountain gave control over the work to Intermountain. Johnson’s retention of responsibility to the state did not prevent it from delegating performance and control over the injury-producing activity. The court also ruled that the common enterprise test was not factually supported. Finally, the Court of Appeals ruled that there was no evidence to support a claim for negligence. Johnson’s motion for a directed verdict should have been granted.

Takano v. Farmers Insurance Co., ___Or App ___ (October 23, 2002)

Takano, his son, and three other occupants of Takano’s car were injured in an accident with Buss. Buss’s liability limits and Takano’s UIM limits were equal, but the benefits of Buss’s policy were divided among the five claimants in the Takano vehicle. The Takanos sought the difference between their actual recovery and their UIM limits from Takano’s insurer, Farmers. When Farmers refused to pay because there was no "underinsured" situation (the liability and UIM limits being equal), Takano sued.

On appeal, the Court of Appeals ruled that the Takanos were entitled to UIM benefits. The court took note of changes to the UIM statute in 1997 which created conflicting provisions for a multiple claimant situation. The court held, however, that the "conflict is not unresolvable." According to the court, the legislature expressed its intent in the more specific sections pertaining to the multiple claimants/matching limits issue, rather than the more general provision describing when the vehicle is underinsured.

In Young v. Continental Crane & Rigging Co., 183 Or App 563 (September 11, 2002), the Oregon Court of Appeals held that an indemnity provision in a lease agreement was unenforceable because it was inconspicuous. The indemnity provision, printed in light ink, appeared on the reverse of the pink paper of the lease agreement and was difficult to read. The court so ruled even though the front of the lease specifically instructed the signer to read both sides of the document.

In Western Equities, Inc. v. St. Paul, 184 Or App 368 (2002), a real estate broker, Smith, signed an earnest money agreement with the intent of transferring his interest in the property to a third party. After obtaining the property, the third party sued Smith. The Court held that Smith’s insurer had no duty to defend or indemnify Smith because of the "owned property" exclusion, but should have defended and indemnified Smith’s employer.

In Day v. Advanced M&D Sales, Inc., __ Or App __ (October 16, 2002), plaintiff worked for defendant and as an independent contractor. After an injury, plaintiff filed a workers comp claim as an employee of defendant and received benefits. Plaintiff then tried to reverse course and file a lawsuit against defendant arising out of the injury. The Oregon Court of Appeals ruled that plaintiff was estopped from recovering in the lawsuit because he had pursued the workers comp claim.

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Greene v. Young, ___ Wn App ___, 54 P3d 734 (2002)

Cheryl Greene and her young son were abducted by a carjacker. When they drove by a police car, Cheryl opened her door and with her child in her arms, and fell to the ground crying for help. The carjacker sped off, running over Cheryl’s legs. Cheryl’s husband, Mitchell, arrived at the scene while the emergency vehicles were there. He witnessed his wife lying on a stretcher with both legs splinted. She was extremely upset, as was their son, who was screaming uncontrollably.

Mitchell was later diagnosed with posttraumatic stress disorder triggered by his observations. He claimed UIM benefits from his insurer, Allstate. Allstate denied the claim on the grounds that Mitchell did not suffer "bodily injury" and because his injuries did not arise from the use of an uninsured motor vehicle. The trial court agreed and granted summary judgment to Allstate.

The Court of Appeals reversed. The court first held that PTSD accompanied by physical manifestations such as nausea, sweating and headaches is "bodily injury" and, under Washington law, a family member may recover for emotional distress caused by observing a relative in the aftermath of an accident. The court also ruled that use of the vehicle caused Mitchell’s injury. The court said: "We see no reason to restrict causal connection to accident situations where the vehicle actually touches the victim."

Beck v. Farmers, ___ Wn App __, 53 P3d 74 (2002)

A UIM insurer is bound by a judgment or arbitration award against an underinsured tortfeasor if the UIM insurer has a reasonable opportunity to appear in the proceedings and protect its interests. How much information does the insurer need? And is it the claimant’s job to inform the insurer or the insurer’s burden to seek out the information. This case suggests some answers.

Beck and his daughter, Tara, occupied a vehicle rear-ended by Dawson. Farmers, Beck’s insurer, was aware of basic facts about the accident. Beck’s attorney wrote to Farmers about a UIM claim on behalf of Beck, but not Tara. There was also evidence of a brief telephone conversation between the attorney for Dawson and an attorney who had represented Farmers in Beck’s PIP claim.

Tara sued Dawson. Tara and Dawson agreed to arbitrate. Farmers did not participate. The arbitrator awarded substantial damages and Tara demanded that Farmers pay its UIM limits. Tara asserted that Farmers had notice and an opportunity to intervene in the Dawson lawsuit, and having failed to do so, was bound by the result. Farmers argued that it did not have notice of the lawsuit and was not bound. The trial court granted summary judgment to Tara.

The Washington Court of Appeals reversed because the information known by Farmers was not enough. The court noted that Farmers did not know that Dawson had been sued, where the suit was filed, who the parties were or how Farmers could make an appearance. Further, there was not enough information for Farmers to assess whether an appearance by it was needed to protect its interests.

This case suggests that it is the claimant’s job to be sure the insurer gets the appropriate information.

Kamla v. Space Needle Corp., ___Wn 2d ___, 52 P3d 472 (2002)

Kamla worked for Pyro. Defendant hired Pyro to install a fireworks display on the Space Needle. While Kamla was working, one of the elevators moving through his work area snagged his safety line, dragging him into the elevator shaft. Kamla sued defendant as the owner of the job site. The trial court granted defendant’s motion for summary judgment, dismissing all claims because Pyro was an independent contractor. As a general rule, no liability attaches to a landowner for the injuries to the employee of an independent contractor.

In the Washington Supreme Court, Kamla argued that defendant was liable to him under the "retained control" exception to the general rule. The court held that in "retained control" cases, the proper inquiry is whether there is a retention of the right to direct the manner in which the work is performed. General supervision is not enough. In this case, defendant turned the project over to Pyro. It did not interfere with the manner in which Pyro chose to do the work, nor did defendant assume responsibility for worker safety.

The Supreme Court also held that if a job site owner does not retain control over the manner in which an independent contractor completes its work, the owner does not have a duty to ensure WISHA compliance.

Finally, the court concluded that defendant did not breach a duty to Kamla arising out of its status as a landowner. The elevator shafts were open and obvious dangers. Kamla had participated in setting up fireworks on the Space Needle before and was acutely aware of the danger posed by moving elevators. Judgment for defendant was proper.

S.H.C. v. Lu, ___ Wn App ___, 54 P3d 174 (2002)

Plaintiff sued her spiritual leader, Lu, and the religious organization with which Lu practiced, the Ling Shen Ching Tze Temple. Plaintiff alleged that Lu sexually abused her and alleged various claims against the Temple arising out of that abuse. The trial court granted the Temple’s summary judgment motion on all claims against it.

The Court of Appeals refused to consider plaintiff’s negligent supervision and "business invitee" claims because to do so would violate the First Amendment. According to the tenets of the faith, members of the Temple could not criticize or find fault with Lu. If the court were to review the conduct of the Temple in supervising Lu, the court "would necessarily entangle itself in the religious precepts and beliefs" regarding the infallibility of Lu in violation of the First Amendment.

The court also rejected plaintiff’s breach of fiduciary duty claim, holding that there is no "special relationship" between an adult victim of sexual abuse and a religious organization associated with the abuser. In addition, the court rejected all claims based upon any respondeat superior liability. "Neither current Washington case law nor considerations of public policy favors the imposition of respondeat superior or strict liability for an employee’s intentional misconduct."

In Wagg v. Estate of Dunham, __ Wn 2d__, 42 P3d 968 (2002), the court held that a personal injury lawsuit filed against a decedent’s estate within the statute of limitations is exempt from the requirement of a pre-suit claim against the estate if plaintiff intends to satisfy a judgment only from the insurance proceeds.

In Beebe v. Moses, __ Wn App__, 54 P3d 188 (2002), plaintiff, the defendant’s step-father, fell on the stairs leaving defendant’s home after a Tupperware party. The Washington Court of Appeals reversed a verdict in favor of defendant because the jury had been instructed that plaintiff was a social guest. Plaintiff testified that he had been there only because of the Tupperware party. The court held that plaintiff’s status should have been decided by the jury.

In Gustafson v. Mazer, __ Wn App __, 54 P3d 743 (2002) the mother of a child involved in a custody dispute sued the psychologist who prepared a report for the child custody proceeding. The mother claimed that the doctor was negligent and defamed her with her diagnosis. The Court of Appeals ruled that the doctor was immune because her work was part of the custody proceeding.

In Brown v. Labor Ready Northwest, __ Wn App __, 54 P3d 166 (2002), a temporary employee operating a forklift injured the plaintiff, who was working with him. Plaintiff received workers comp benefits from her own employer and sued the temporary employment agency. The court held that the forklift operator was a "borrowed servant," precluding a respondeat superior claim against the temp agency.

In Olivine Corp. v. United Capitol Insurance Co., __ Wn2d __, 52 P3d 494 (2002), the Washington Supreme Court held that cancellation of an insurance policy by a premium finance company is only effective as to the insured which has given it a power of attorney for cancellation. Where another insured had no notice of the cancellation, the policy remained in force as to that insured.

In Coast to Coast Seafood, Inc. v. Assurances Generales De France, __ Wn App __, 50 P3d 663 (2002), plaintiff, a seafood purchaser, failed to carry its burden to prove coverage for losses associated with plaintiff’s receipt of containers filled mostly with ice or substitute seafood. The "unexplained shortage" clause of the marine policy required proof that the loss occurred in transit. Here, the containers were sealed and arrived on different ships on different dates, having traveled through various ports. The bills of lading did not establish the contents of the sealed containers upon leaving the seller’s warehouse. The court held that the facts created an "insurmountable inference" that the loss did not occur during transit.

In a case of first impression under the "promise" provision of Washington’s Health Care Provider Act, the court in Hansen v. Virginia Mason Medical Center, __ Wn App __, 53 P3d 60 (2002) held that a doctor’s statement that her patient was not going to die within a year was not a legally enforceable promise. To be actionable, the practitioner must expressly undertake or commit to a particular outcome or cure through the providing of specific medical services.

In Graff v. Allstate Insurance Co., __ Wn App__ (October 4, 2002), the court ruled that the insured’s tenant committed covered vandalism rather than excluded contamination by manufacturing methamphetamine on the rental premises.

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July/August 2002

In Conant v. Stroup, ___ Or App ___ (August 14, 2002) the court ruled that defendants were not liable for a dog bite plaintiff suffered while jogging on their 50 acre property. The recreational use immunity statute bars claims against landowners who open up their property for recreational use without charging a fee. Plaintiff argued that defendant’s property was not open to the general public, but that she and a few others had an implied invitation to use the road because they had been doing so for several years. The court agreed that the landowner’s invitation must extend to the general public but held that plaintiff was a member of the "general public."

In Jett v. Ford Motor Co., ___ Or App ___ (August 14, 2002), plaintiff’s UPS truck rolled back and pinned her against a loading dock. The Court of Appeals held that the trial court should have allowed evidence from the UPS safety rules for parking trucks. The court ruled that

the safety manual was relevant to the reasonableness of plaintiff’s conduct in exiting the truck without shifting it into "park" and turning off the ignition.

In Maurmann v. Del Morrow Construction, Inc., ___ Or App ___ (June 12, 2002) the court held that a jury verdict that attributes some fault to a party does not preclude that party from seeking indemnity from another party.

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WASHINGTON CASES

Port of Seattle v. Lexington Insurance Co., __ Wn App __, 48 P3d 334 (May 28, 2002)

After testing and assessment of its computer system in 1998, the Port realized that it would incur losses because of Y2K problems. The Port sued its insurers seeking reimbursement for its upgrade expenses. The trial court granted the insurers' motions for summary judgment.

The Court of Appeals affirmed. The court first held that the Y2K problem was not covered as a "computer virus." Because "computer virus" was not defined in the policy, the court applied the common meaning. According to the court, a key feature of a computer virus is that it is self-replicating, an attribute not possessed by the Y2K problem. The court also held that Y2K non-compliance was not covered because it was an "inherent vice" of the computer system.

Finally, the court ruled that the Port could not recover under the "sue and labor" clause. This provision allows reimbursement to the insured for expenses it incurs to prevent or mitigate a loss. This coverage exists only when the action taken will prevent a loss for which the carrier will be liable. Here, the 1998 insurers would not be liable for a loss that would potentially occur at least a year after the policy expired.

INSURER'S DUTY TO DISCLOSE POLICY LIMITS TO CLAIMANT--IT DEPENDS

Smith v. Safeco, __Wn App __, 50 P3d 277 (July 19, 2002)

In an automobile accident, Safeco's insured, Bryce, rear-ended Smith. Neither Smith or her attorney provided any significant information by which Safeco could evaluate Smith's claim. Smith continuously, however, demanded that Safeco disclose Bryce's policy limits. Smith eventually sued Bryce, provided Safeco with a written description of her claim (including claimed special damages exceeding $612,000) and demanded policy limits if less than $1.5 million. Safeco then disclosed that Bryce's limits were $100,000. Smith received an assignment from Bryce and sued Safeco for bad faith in failing to disclose the policy limits earlier.

The Court of Appeals quickly disposed of Smith's claims that Safeco owed her a duty to disclose Bryce's limits, holding that no such duty existed. Regarding the duty to the insured, however, the court held that the facts of the particular case determine whether the insurer must comply with a claimant's pre-filing demand for disclosure of the policy limits. The insurer must disclose limits "if a reasonable person in . . . similar circumstances would believe that disclosure is in the insured's best interest." If a reasonable person did not believe disclosure would help the insured, or could not know after reasonable analysis whether it would help, there is no duty to disclose.

Here, Safeco lacked any reliable information about the value of Smith's claim before the lawsuit was filed. Safeco could not know whether disclosure would help or hurt Bryce's interests and did not, therefore, wrongfully withhold the information. The court also held that an insurer need not contact an insured for permission to disclose every time a claimant so demands.

In Westby v. Gorsuch,__ Wn App __ 50 P3d 284 (July 19, 2002) the swindled seller of items from the Titanic recovered on a jury verdict from the antiques dealer who purchased the material, then sold it for an enormous profit. Although there was conflicting testimony regarding the negotiations over the material, the jury could believe that the dealer told the seller that the material was practically worthless. The court held that plaintiff could rely on defendant’s representation of fact about the worth of the items in deciding to accept the dealer’s offer.

In Minton v. Ralston Purina Co.,__ Wn 2d __, 47 P3d 556 (June 6, 2002), Minton was injured at his job with Interstate when a tank exploded. The tank was installed when the facility was owned by Continental. Before the accident, Interstate and Continental had merged. The court held that, because of the merger, Minton’s only remedy was workers comp.

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