Articles Posted in General Legal News

Dr. Roger Herrin, upset that he had to share money with those who were injured in a car wreck that also  took his son’s life, paid the $500,000 he owed in quarters.   7,500 hundred pounds of quarters.  Why quarters?  "Because I couldn’t do it in pennies," Herrin reportedly said.

There has been lots of press about this event, but none of it gave me a clear picture of the legal dispute that gave rise to Herrin acting in such a fashion.  Here is what my research revealed:

In what all would agree was a tragic event, Herrin’s 15-year old son was killed and three other people were injured in an intersection wreck in 2001.   The at-fault driver had $100,000 in applicable liability insurance limits; this sum was paid into court.  No agreement could be reached on how to divide the $100,000, so the trial judge decided the value of each individual case and divided the money pro rata.  The Herrin death case was given the greatest value – a little over $10,000,000, just over 90% of the total damages the judge found to be present (almost $11,000,000 for all plaintiffs.)

Herrin filed a separate lawsuit against various companies he claimed had uninsured motorist coverage applicable to his son’s death.  It was determined that there was $5,500,000 in such coverage available. This coverage was available only to Herrin and not to the other occupants of the vehicle.  Herrin later settled his UM claim against his own carrier for $1,650,000.  There is no public information available that I have found that reveals why the case was settled for this amount.

That left the UM coverage on the host vehicle – the vehicle in which Herrin’s son and the other people were riding at the time of the accident.  After litigation which included an appeal to the Illinois Court of Appeals, the UM coverage on that vehicle was determined to be $900,000.

The trial judge then attempted to divide the $900,000 under his or her view of Illinois law.  The judge ultimately determined that Herrin was entitled to about two-thirds (a little over $667K) of the money.  An appeal followed.

In Columbia Mut. Ins. Co. v. Herrin, 965 N.E.2d 422 (Ill.App. 5 Dist. 2012), the Illinois Court of Appeals ruled that the trial judge did not follow Illinois law in dividing the host car’s uninsured motorist proceeds. The controlling case on point in Illinois is Janes v. Western States Ins. Co., 783 N.E.2d  37 (Ill. 2001).  This case holds that when dividing up a limited amount of UM insurance coverage, the trial judge has to first take into account the amount that each individual received from his or her own UM carrier. This result worked to the detriment of Herrin; recall that he had $5,500,000 of UM coverage applicable to the claim (and settled that claim for $1,650,000).

The court then looked to how the trial judge valued the claims in the original trial which sought to divide the $100,000 in available liability insurance.  The court noted that the four claimants’ (other than Herrin) claims were valued at $955,552.31, an amount less than what Herrin received from his own UM insurance carrier.  Thus, the court determined that under the Janes case, Herrin did not have a right to any of the UM coverage available to the occupants of the host car. (There was a dispute about whether the $1.65M or the $5.5M should be used to determine if Herrin could recover any monies, but the court did not reach the issue, noting that both numbers were greater than the value of all of the other cases; and thus it was unnecessary to determine which number should be used.)

There was also a dispute over whether the true value of each claim should have been determined in arbitration rather than by the trial court.  The court affirmed the use of the trial judge’s values for division of the $100,000 liability case for the distribution of the $800,000 in UM monies.

The intermediate court remanded the case for further proceedings.  The Illinois Supreme Court refused to hear the case. 979 N.E.2d 877 (Ill. 2012).

In summary, the Court of Appeals determined that, under Illinois law, Herrin had no right to any part of the $900,000 of UM money because he had already received. $1.65M from his own UM carrier, and that amount – which exceeded the damages suffered by the other victims – left him unable to receive any money from the UM coverage for the host car.  (The result would be different in Tennessee, but different states approach this issue differently.)

So, how did Herrin end up having to pay $500,000?  Because Herrin obtained a court order getting the funds paid by the UM carrier and (temporarily) allocated by the trial court for his son’s claim into the estate of his son while the appeal was pending.  (No bond was posted on this amount.) He then distributed that money to his late son’s family while the appeal was pending.   When the appeal on the UM issue was lost, he was (appropriately) ordered to pay the money he distributed  back to the clerk of the trial court for the benefit of the people who were legally entitled to it.   In re Estate of Herrin, 2012 WL 7069953 (Ill. App. Dist. 5 Nov. 26, 2012). 

Apparently, some sort of settlement was reached with the other passengers and Herrin was permitted to pay only $500,000 out of the $677,851.06 that the estate actually received from the host driver’s UM policy.  Thus, Herrin (or members of his family) got to keep $177,851.06 that the Illinois Court of Appeals said did not belong to him.  (At least one newspaper article refers to  "confidentiality agreements," so I assume that a deal to let Herrin keep part of the money to avoid future litigation is what was settled.)

No doubt that Herrin is still hurting over the loss of his son – who wouldn’t be?.  And no doubt that it would hurt to have to pay $500,000 out of pocket to cover the risk Herrin took when he disbursed money to others that was not finally determined to belong to his son’s estate.  One can understand that he might disagree with Illinois UM law.  And one can understand why Herrin might be second-guessing his decision to settle with his own UM insurer for $1.65M when there was $5.5M available and the loss was so huge.

But paying what you owe in quarters? 

That is just plain childish.

 

 

 

 

 Tennessee personal injury lawyers know that the Tennessee General Assembly is a far different place than it used to be.  The Legislature is determined to change the rules of tort litigation for the benefit of defendants and those who would be defendants. 

What follows is a second list of legislation enacted during the 2012 session that has been signed by the Governor and is available on the Tennessee Secretary of State’s website.  I previously wrote a post about 2012 legislation of interest to Tennessee personal injury lawyers that was available on May 4.

 

  • Public Chapter 884:  purports to wipe out the liability of car dealerships for loaning cars to certain customers who have proof of insurance.
  • Public Chapter 902:  addresses when punitive damages may be awarded in Tennessee
  • Public Chapter 907:  prohibits children as passengers on motorcycles unless their legs can reach the foot-pegs.
  • Public Chapter 913:  creates a rebuttable presumption that those who sign insurance policy application have read it and  that when premium is paid all policyholders accept coverage as stated in policy or amendments thereto.
  • Public Chapter 922:  sets forth duty of landowners to those who are determined to be "trespassers".
  • Public Chapter 926:  sets up statutory scheme to permit defense counsel in health care liability actions to have ex parte communications with plaintiff’s health care providers.
  • Public Chapter 998:  authorizes clerks of court to set up electronic filing system and charge filing fees.
  • Public Chapter 1046:  sets up a statutory scheme requiring courts to make loser of Rule 12 motions pay opposing party’s fees and costs under certain circumstances.
  • Public Chapter 1108:  requires police officers determine whether physical barriers are present at the scene of an accident.

The increased efforts by the Legislature to codify tort law will mean that tort lawyers will be looking to statutory law to determine whether there are limits imposed on the common law or new defenses.  This is a pretty significant change for lawyers – historically, most tort law was common law.  

As mentioned yesterday, the Tennessee Administrative Office of the Courts has released the 2009-2010 Annual Report of the Judiciary.  The Report Contains statistical data about our court system.

Today we look at information about tort cases that were filed or tried in state court in Tennessee.  "Tort cases" includes medical malpractice cases.

There were 10,469 tort cases filed in Tennessee in the year ending June 30, 2010.  This is down about 6% from two years earlier – in the year ended June 30, 2008, there were 11,171 filings. 

There were 588 tort cases tried in the year ended June 30, 2010.  Only 263 of those cases were jury trials.  Forty-two percent of cases that were tried (247 cases) were tried in Shelby, Davidson, Knox and Hamilton counties.  Monetary awards were given in less than forty percent  of the cases that went to trial (229 of out 588 cases tried).  Damages were awarded in 118 of the 247 cases tried in the largest four counties.

I will share more data from the Report tomorrow.

ABA Journal.com  reports that  "in 1996, a Delaware hospital conducted an internal investigation of a pediatrician accused of inappropriate conduct with young patients and concluded he had done nothing wrong. Hence, administrators reportedly never informed the state’s medical disciplinary board or law enforcement authorities of the allegations."

Now, the hospital is fearing bankruptcy because the doctor has been charged with rape and sexual abuse of over 100 children, 18 of whom have filed lawsuits.  The doctor has been indicted on over 400 counts of child sex abuse.  The name of the doctor is Earl Bradley, who is alleged to have videotaped some of his misconduct. 

The hospital is Beebe Medical Center, a 210-bed facility in Lewes, Delaware.   State law requires hospitals to report suspected professional misconduct to the state medical board.  The hospital apparently did not do so.

I obviously don’t know what actually happened here, but if the hospital had information about alleged sexual abuse and did not report it as required by law it deserves to be sued.  The reporting requirements exist for a reason, and the failure to follow them should give rise to a negligence per se claim. 

 

What is the principle place of business for a corporation for purposes of determining whether a federal court has diversity jurisdiction under 42 U.S.C. Sec. 1332(c)(1)?   Well, what you thought you knew is no longer the law.

The United States Supreme Court ruled yesterday that the phrase

"principal place of business’ is best read asreferring to the place where a corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place that Courts of Appeals have called the corporation’s “nerve center.” And in practice it should normally be the place where the corporation maintains its head-quarters—provided that the headquarters is the actual center of direction, control, and coordination, i.e., the “nerve center,” and not simply an office where the corpora-tion holds its board meetings (for example, attended by directors and officers who have traveled there for the occasion).

The Court also explained that

The burden of persuasion for establishing diversity jurisdiction, of course, remains on the party asserting it. Kokkonen v. Guardian Life Ins. Co. of America, 511 U. S. 375, 377 (1994); McNutt v. General Motors Acceptance Corp., 298 U. S. 178, 189 (1936); see also 13E Wright & Miller §3602.1, at 119. When challenged on allegations ofjurisdictional facts, the parties must support their allega-tions by competent proof. McNutt, supra, at 189; 15 Moore’s §102.14, at 102–32 to 102–32.1. And when faced with such a challenge, we reject suggestions such as,for example, the one made by petitioner that the mere filing of a form like the Securities and Exchange Commission’s Form 10–K listing a corporation’s “principal execu-tive offices” would, without more, be sufficient proof toestablish a corporation’s “nerve center.” See, e.g., SEC Form 10–K, online at http://www.sec.gov/about/forms/ form10-k.pdf. (as visited Feb. 19, 2010, and available in Clerk of Court’s case file). Cf. Dimmitt & Owens Finan-cial, Inc. v. United States, 787 F. 2d 1186, 1190–1192 (CA71986) (distinguishing “principal executive office” in the taxlien context, see 26 U. S. C. §6323(f)(2), from “principal place of business” under 28 U. S. C. §1332(c)). Such possibilities would readily permit jurisdictional manipulation,thereby subverting a major reason for the insertion of the ‘principal place of business” language in the diversity statute.’  If the record reveals attempts at jurisdictional manipulation—for example, that the alleged ‘nerve center’ is nothing morethan a mail drop box, a bare office with a computer, or the location ofan annual executive retreat—the courts should instead take as the ‘nerve center’ the place of actual direction, control, and coordination, in the absence of such manipulation.

You can read the opinion in Hertz v. Friend,  No. 08-1107  (USSC 2/23/10) here.

Yep.  That is what Richard Fields is doing.  He is the chief executive of Juridica Capital Management, an organization which runs a fund that invests in one side of a lawsuit in exchange for a share of any winnings.  The company invests in commercial litigation.

This article in the New York Times reports that a unit of Credit Suisse and Juris Capital have a similar business model, as do several unnamed hedge funds.

Juridica has $200 Million available, with an average investment of $7.5 million.

Are you offended?  You shouldn’t be.   These companies can level the playing field in commercial litigation.  All too often those with meritorious claims cannot bring those claims because they lack the financial resources to do so.  And saying that such firms encourage frivolous litigation is like saying the presence of liability insurance for defendants encourages frivolous defenses. 

And you wouldn’t say that, would you?

Thanks to Litigation and Trial for writing about the New York Times article.

A defense firm has been threatened with severe sanctions for allegedly engaging in a pattern of fraudulently removing cases from state court to federal court in Louisiana.  Sanctions on the table?  Not only a financial penalty but also also barring members of the firm from practicing in federal court.

Here is a copy of the federal judge’s memorandum opinion in the case.  The opinion certainly makes it appear that the judge has done his homework and is, shall I say, extremely irritated.

This article explains the lengths to which the firm is going to avoid sanctions.

Notice that some of the cases mentioned in the Memorandum Opinion are over seven years old.  Sanctions are been repeatedly ordered against the firm, yet is appears that improper removals continued.

This matter demonstrate the need for lawyers who compare notes about common adversaries.  Lawyers who act inappropriately don’t just do it once – they do it repeatedly.  Judges often assume the conduct is a momentary lapse, and refuse to act decisively to shut it down.  So it continues, and if anything it gets worse.  A pattern must be established, and documented, before a judge will even consider decisive action. 

The Tennessee Supreme Court has adopted several changes to the rules of civil procedure, evidence and appellate procedure.  By orders dated earlier this month, the Court adopted the recommendations of the Rules Commission about the changes that were necessary.

The changes now go to the General Assembly for its review, where they can be passed or defeated but not amended.  Of course, the Court can always withdraw one or more rules if passage of the entire package is threatened by a rule change the Legislature does not like.

Here are the relevant orders.

The major changes:

TRCP 23.08 – provides for the disposition of residual funds after a class action case.

TRCP 34.03 – provides for the production of documents and things and inspection of property of non-parties.

TRCP 52.01 – provides that a trial judge must make findings of fact and conclusions of law in a non-jury case.

TRCP 65.03 – provides that ordinarily there must be notice to adverse party before getting a TRO.

TRE 703 – provides that data relied upon by experts that is otherwise inadmissible cannot be disclosed to jury absent a TRE 403-type weighing by the judge.

TRE 803(26) – provides for the admissibility, as substantive proof, of certain prior inconsistent statements.

In addition, there is a whole new set of e-discovery rules.

I am at a meeting of the Members Consultative Group of the Restatement of the Law Third Torts: Liability for Physical and Emotional Harm sponsored by the American Law Institute.  The meeting is being held in Austin, Texas at the University of Texas Law School.  We are discussing "Duty of Land Possessors."

Last night we had dinner at the Mansion at Judge’s Hill and I had the pleasure of sitting with Victor Schwartz, an editor of the torts case book that most of us used in law school and an active tort reformer.  (Indeed, he is General Counsel to the American Tort Reform Association.)  We had a wonderful conversation, agreeing on more things than both of us expected and politely disagreeing on other points.  Victor has a great sense of humor and  a real gift of imitating the voices of many political figures. 

This morning we are debating the duty, if any, of landowner’s and possessors to trespassers and the exceptions to the historic general rule of no liability.  I am enjoying the debate immensely – a lot of thought has been given to the issue by the drafters and the members who are present are raising some excellent points.