The Tyra Law Firm, P.C.
Quarterly Newsletter
Summer 2014
Volume 7, Issue 4
“TRIAL BY AMBUSH” –
WHEN CAN YOU DO IT?
by Jerry M. Padgett
Inside this issue:
Assumed Risk at Baseball
Game
4
Exculpatory Clause in Lease
5
“Going and Coming” Rule of
Respondeat Superior
5
Insurance Coverage for
Worksite Accidents
6
Mitigation of Damages For
Breach of Contract
6
CONTACT INFORMATION
The Tyra Law Firm, P.C.
355 Indiana Avenue, Suite 150
Indianapolis, Indiana 46204
Phone: 317.636.1304
Fax:
317.636.1343
Website: www.tyralaw.net
E-mail: [email protected]
In Geico General Ins. Co. v.
Laura Coyne, et al. (Indiana
Court of Appeals, April 17,
2014), Cheryl O’Malia was injured in an automobile accident, which included multiple
vertebrae fractures. Cheryl submitted an underinsured motorist claim to her auto carrier,
Geico. Cheryl’s husband, Dr.
James O’Malia, also submitted
an underinsured motorist claim for loss of consortium.
Shortly before the trial was to begin, Geico’s counsel discovered on the Florida Department of Health’s public website that
James’ medical license had been under investigation, in part for writing forged prescriptions for his wife. In fact, James had been arrested
in Florida and charged with multiple counts of obtaining controlled
substances by fraud. James later pleaded nolo contendere to five of the
criminal charges. His Florida medical license was also placed on probation for three years.
Despite learning of this information before the trial began,
Geico’s counsel did not inform the O’Malias’ counsel about it. For
that matter, the O’Malias did not disclose this information to their
own counsel. During the trial, though, James testified his family
would have been just a regular American family trying to do the best
they could to get by if the accident had not occurred. On crossexamination, Geico’s counsel asked James if there was anything else
happening in their lives that most families are not dealing with, and
James testified there was not.
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At this point, Geico’s counsel asked James whether he had been charged with thirteen counts of obtaining
controlled substances by fraud. Counsel for the O’Malias
immediately objected and requested a mistrial. When
asked by the trial court why this information had not
been disclosed before trial, Geico’s counsel stated they
looked for every conceivable way in which that information either had been requested through discovery requests or otherwise they were required to disclose it, and
found none. Geico’s counsel also pointed out that they
felt they had no obligation to share their potential crossexamination questions with opposing counsel just as they
did not expect opposing counsel to share their crossexamination questions of Geico’s witnesses.
The trial court denied the request for a mistrial,
but limited Geico’s ability to ask about the Florida criminal issues only to establish there was a conviction for impeachment purposes. The jury ultimately found for Cheryl on her claim, but James was not awarded any damages
for his loss of consortium claim.
The O’Malias moved for a new trial and for attorney’s fees. The trial court denied the request for a new
trial, but granted the motion for attorney’s fees for the
time and expense associated with the O’Malias’ motion
for new trial on the grounds that Geico had litigated in
bad faith.
On appeal, Geico argued the trial court created a
conflict when it found a duty to disclose existed under
the Rules of Professional Conduct, even though there was
no such duty within the Rules of Trial Procedure. Geico
also pointed out that not disclosing information already
known by the opposing party that is not otherwise subject
to a disclosure requirement cannot serve as a basis for
finding they litigated in bad faith. Furthermore, Geico
again argued it had researched whether there was anything that required the disclosure of the information at
issue, and found nothing.
The Court of Appeals addressed two prior decisions in which the issue of gamesmanship between plaintiff’s counsel and defense counsel were addressed: Smith
v. Johnston and Outback Steakhouse of Fla. v. Markley.
Smith involved a medical malpractice claim filed
against Dr. Smith before the Indiana Department of Insurance (a prerequisite to filing an actual lawsuit in
court). The medical review panel found in favor of Dr.
Smith, and subsequently plaintiff’s counsel sent a settle-
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ment demand letter to defense counsel. After a month
passed with no response, plaintiff’s counsel initiated a
lawsuit against Dr. Smith, and served Dr. Smith with a
summons at his office by certified mail. One of Dr.
Smith’s nurses signed for the summons. However, the
attorney who represented Dr. Smith before the medical
review panel never filed an appearance in the lawsuit.
After six weeks passed, plaintiff moved for a default
judgment.
The issue in Smith, though, was that plaintiff’s
counsel never communicated with counsel for Dr.
Smith after issuing the settlement demand letter, including never notifying them of newly-filed suit or the pending default judgment motion. Not knowing this, the
trial court entered the default judgment against Dr.
Smith, and a copy of the judgment was served at Dr.
Smith’s office. Six days later, counsel for Dr. Smith entered their appearance and moved to set aside the default judgment.
The case ultimately went up to the Indiana Supreme Court, which found plaintiff’s counsel committed misconduct under the Indiana Trial Rules by failing
to notify Dr. Smith’s counsel of the lawsuit or the motion for default judgment, especially given the fact she
knew before filing the lawsuit who represented Dr.
Smith. The Supreme Court found plaintiff’s counsel
was misleading and found her behavior to be prejudicial
to the administration of justice.
In Markley, the plaintiffs were injured by a
drunk driver who had been drinking at an Outback
Steakhouse restaurant. After the plaintiffs sued Outback Steakhouse, counsel for Outback served plaintiffs
with written discovery requests. One of the requests
included an interrogatory asking plaintiffs to identify
each person that plaintiffs knew of that could support
their claim that the driver had been visibly intoxicated.
Plaintiffs identified several people, but did not identify
the waitress. Outback took the deposition of the waitress, and she testified the driver was not visibly intoxicated while at the restaurant.
The case went to trial, where Outback named
the waitress as a witness but the plaintiffs did not. After
an unrelated mistrial, a second trial occurred. During
the opening statements, counsel for Outback told the
jury they would hear from the waitress who would testify the driver had not been visibly intoxicated. During
the first week of the trial, and while plaintiffs were still
Volume 7, Issue 4
presenting their case-in-chief, the waitress contacted plaintiffs’ counsel and said she had lied in her deposition and
that she planned to testify at trial that the driver was visibly
intoxicated. However, plaintiffs’ counsel did not tell counsel
for Outback what the waitress had said, nor did he say that
he had even met with the waitress. Plaintiffs’ counsel also
did not supplement the written discovery responses to add
the waitress as someone with knowledge that the driver was
visibly intoxicated. At trial, the waitress testified the driver
was visibly intoxicated, and the jury found in favor of the
plaintiffs.
Page 3
get an easy default judgment when at the same time he
does not notify the defense attorney who had been handling related matters prior to the filing of the lawsuit that
a lawsuit was being filed. While Smith does not go so far
as to say that the plaintiff’s counsel must also provide a
courtesy copy of the suit to a pre-suit claim representative
before pursuing a default judgment, no doubt the Smith
rationale has prompted many plaintiff’s counsel to do
that.
Regarding “trial by ambush,” the foremost consideration is whether the opponent requested this category of information in the discovery process. Even if you
obtained the information after your initial discovery responses, Indiana Trial Rule 26(E) provides specific procedures for amendment or supplementation of discovery
responses (amendment when you discover the original
response was incorrect or incomplete; supplementation
for additional information that has since developed, such
as additional medical care provided to the plaintiff since
the original discovery responses).
Outback moved for a new trial, and conducted discovery based on the reason for the change in the waitress’
testimony, but the trial court denied all post-trial relief
sought by Outback. Ultimately, the case ended up before
the Indiana Supreme Court, which noted that violations of
the discovery rules, either intentional or unintentional,
could serve as a basis for misconduct. As to the facts of that
case, the Supreme Court found plaintiffs’ failure to disclose
the information known about the change in the waitress’
testimony was a negligent, if not intentional, violation of
As illustrated in Markley, failure to amend or suptheir duty under the trial rules to timely supplement their
responses. The effect of this, according to the Supreme plement discovery responses when you learn of new information within the scope of previous discovery requests (in
Court, prejudiced Outback’s defense of the case.
that case, a diametrically opposite response to a key depoAfter its review of these two decisions, the Court of sition question) is most likely to result in sanctions for
Appeals stated that because Geico’s counsel made the show- “trial by ambush.”
ing that it had proactively researched whether there was any
On the other hand, as seen in Geico, and as we
duty to disclose the information, it could not be said that the
have
often
seen in our practice, it is often the case that
decision not to disclose was dishonest or out of ill will toward the other party, which are requirements for finding bad plaintiff’s counsel simply does not ask for many categories
faith. The Court also found the decision not to disclose the of information and documentation. And of the inforinformation about the Florida conviction was not prejudicial mation and documentation we produce, in some instancto the administration of justice when James know about the es the plaintiff’s counsel does not review it or grasp its
information already and the information was publically avail- meaning. In either of those instances, it is not our duty
to help opposing counsel prepare for trial. Indeed, it is
able on the internet.
our obligation to our client to use the information to our
Therefore, the Court concluded Geico did not liti- best advantage, which often is to pull it out during crossgate in bad faith when it was under no duty to disclose the examination of the plaintiff, or a key witness for the plaininformation, and reversed the trial court.
tiff.
KeyPoints: The Geico decision, along with Smith
and Markley, illustrate the balancing act between fairness to
your opponent in trial preparation, and being able to effectively present your case at trial to your client’s best advantage.
Looking beyond strategic and tactical considerations, there is a kind of moral imperative involved. As
illustrated in Geico, when a plaintiff or one of plaintiff’s
witnesses is trying to pull a fast one on the jury, even to
the point of committing perjury, we have every right to
confront them in an unvarnished fashion with the truth
The Smith decision illustrates a concern about fundacontradicting their testimony.
mental fairness: that is, a plaintiff should not be allowed to
Page 4
Another lesson underscored by the Geico decision is
the importance of the client being as candid as possible with
their attorneys. In Geico, the O’Malias had not even disclosed
to their own attorney what had happened regarding the criminal charges in Florida. We have been involved in similar situations in the past where information about our own client
becomes known, for instance, during the course of the client’s deposition when it should have been information provided to us well beforehand. Anything and everything that
may be damaging to the defense of the case is imperative for
defense counsel to know to fully be able to address should
plaintiff’s counsel try to spring anything on them.
Finally, this brings up a related question: should disclosure of highly-useful information be saved for trial? Or
should this information be used in mediation or other settlement negotiations? That must be decided on a case-by-case
basis. Generally, we are more likely to keep such key information off the mediation table if 1) we can legitimately do so
because plaintiff’s counsel has never asked for it in discovery,
and we do not otherwise have an obligation to disclose it; 2)
the information is not so devastating and incontrovertible
that any sane plaintiff would know to cut their losses and conclude the case for whatever they can get; 3) the parties are so
far apart in settlement positions and so unlikely to close the
gap that disclosing the information is not likely to result in a
settlement; and 4) the personality types of the plaintiff and/or
plaintiff’s counsel are such that the disclosure is not likely to
get them to back down.
ASSUMED RISK AT BASEBALL GAME
South Shore Baseball, LLC, et al. v. Juanita DeJesus
Indiana Supreme Court, June 27, 2014
Juanita DeJesus went to a South Shore RailCats
game. On her ticket there was a warning that cautioned spectators about the risk of being injured by thrown or batted
balls, and there was also a statement that the ticket holder
assumed all risks incident to the game. DeJesus’s seat was just
outside of the protective netting behind home plate. At the
end of the aisle where her seat was, there was a sign that said
“Please Be Aware Of Objects Leaving The Playing Field.”
During the game, she also heard the announcer warn the fans
to watch out for objects leaving the field of play.
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A batter hit a pop-up foul ball. DeJesus saw the
batter hit the ball, she looked up to see where the ball
had gone, and as she did that, the ball hit her in the
face. DeJesus suffered several fractured facial bones and
permanent blindness in her left eye. DeJesus sued
South Shore Baseball for negligence, claiming it failed to
extend the protective netting far enough along the foul
ball line. She later amended her complaint to include a
premises liability claim. The Defendants moved for
summary judgment, which the trial court denied. The
issue was certified for interlocutory appeal, the Court of
Appeals reversed, and the Supreme Court granted transfer.
The Supreme Court held that the Defendants
were entitled to summary judgment, however it declined
to adopt “The Baseball Rule,” which states that a ballpark operator who “provides screening behind home
plate sufficient to meet ordinary demand for protected
seating has fulfilled its duty with respect to screening
and cannot be subjected to liability for injuries resulting
to a spectator by an object leaving the playing field.”
In addressing the premises liability claim, the
Court held that DeJesus had presented no evidence as to
one of the elements of a premises liability claim: the possessor of land should expect that invitees will not discover or realize the danger, or will fail to protect themselves
against it. Since there was a warning on her ticket, a
sign near DeJesus’s seat, and an announcement made
over the loudspeaker, South Shore had no reason to
believe DeJesus did not realize the danger or would not
protect herself against it. Since this element was
absent, her premises liability claim failed and summary judgment was appropriate.
In the negligence claim, DeJesus alleged that
South Shore assumed a duty to protect her from
foul balls when it erected the protective netting at
the stadium. The Court held that, even assuming
that South Shore did assume such a duty, DeJesus
did not allege an increased risk of harm had the
netting not been erected or reliance on the netting
for her protection. In her deposition DeJesus admitted to seeing foul balls enter the stands before
and to knowing that there was a chance that a ball
could come her way. By failing to allege essential
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Page 5
elements, the Defendants were entitled to summary judgment on the negligence claim.
KeyPoint: (1) Indiana does not follow “The Baseball Rule”; (2) sufficient warning of invitees of a potential
danger will likely defeat a claim for premises liability.
Elizabeth H. Steele
[email protected]
EXCULPATORY CLAUSE IN LEASE
Hi-Tec Properties, LLC v. Brittany Murphy, et al.
Indiana Court of Appeals, July 21, 2014
Brittany Murphy and Jay Frazier moved into an
apartment building owned by Hi-Tec in Plymouth, Indiana.
Some of the apartments were below-grade and had dehumidifiers to remove moisture from the air. Brittany and Jay
moved into one of the below-grade units, and signed a lease
that contained an exculpatory clause for any damages
caused by mold. After moving in, Brittany paid the rent
with the help of her parents, and Jay paid some when he
could.
The month after moving in, Brittany began to not
feel well, and she and Jay each discovered mold in their
bedrooms. Jay wrote a letter to Hi-Tec alerting them to the
mold, and Hi-Tec agreed to move Brittany and Jay to an
above-grade apartment. During the move to the new apartment, some of Brittany’s personal belongings had to be
thrown away and others had to be cleaned as a result of the
mold. Brittany continued to not feel well for a few
months, but eventually did recover from the mold exposure.
Brittany, her parents, and Jay brought suit against
Hi-Tec, alleging negligence, fraud, and breach of contract.
The trial court determined that the exculpatory clause in
the lease concerning mold was void as against public policy.
A jury trial was held and Hi-Tec was found to be 100% at
fault. The jury awarded $10,000 in damages to Brittany
and each of her parents, as well as $15,000 in punitive
damages to Brittany.
The Court of Appeals upheld the trial court’s
holding that the exculpatory clause was void. The Court
had previously held that landlords should be liable for
their own negligence as a way to encourage them to
meet the duties of reasonable care imposed on them by
law for the protection of society.
The Court also upheld the denial of the motion
to correct errors in regard to comparative fault and punitive and compensatory damages awards to Brittany. The
damages awards to Brittany’s parents, however, were
reversed. The Court held that the parents suffered no
actual damages in regards to injuries and losses sustained by their daughter; the only damages suffered by
the parents were the $2360 paid to help Brittany with
the rent.
KeyPoints: (1) Exculpatory clauses in leases immunizing landlords from their own negligence are void
against public policy; (2) Parents generally cannot recover damages for injuries and losses sustained by their
adult children.
Elizabeth H. Steele
[email protected]
“GOING AND COMING” RULE
OF RESPONDEAT SUPERIOR
Phyllis Dodson, as Special Admin’r of the Estate of Eboni
Dodson v. Curt D. Carlson, et al.
Indiana Court of Appeals, July 25, 2014
An employee of Seven Corners, Curt Carlson,
had a business meeting at the Renaissance Hotel over
dinner and drinks. He had four beers and two glasses of
wine over the course of the meeting, during which he
was considered the “point man.” The owner of Seven
Corners was also at the meeting and he purchased the
alcohol. On his way home, Carlson struck a disabled
vehicle on the side of the interstate and killed the driver.
Carlson registered a .12 on an alcohol breath test machine and was arrested on suspicion of operating a vehicle while intoxicated.
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Page 6
The driver’s estate brought a wrongful death and negligence action against Carlson, the hotel, and Seven Corners.
Part of the case alleged that Seven Corners was liable for
Carlson’s actions under a theory of respondeat superior. The
trial court entered summary judgment in favor of Seven Corners, and the estate appealed.
On appeal, the driver’s estate argued that an employee can be found to be acting within the scope of his employment while driving. The estate contended that Carlson was
“engaged in a task incidental to his employment” at the time
of the accident. The Court, however, did not agree, and held
that the “going and coming” rule applied to this situation.
The “going and coming” rule says that “an employee on his
way to work is normally not in the employment of the corporation,” and the Court held that that was the situation in this
case. Summary judgment in favor of Carlson’s employer, Seven Corners, was affirmed.
Key Point: An employer is generally not liable for
the acts of its employees when the employee is driving to or
from work unless there is evidence that the employee is engaged in a task incidental to his employment.
Elizabeth H. Steele
[email protected]
INSURANCE COVERAGE FOR
WORKSITE ACCIDENTS
West Bend Mut. Ins. Co., et al. v. MacDougall Pierce Const.,
Inc., et al.
Indiana Court of Appeals, June 10, 2014
have no tort liability under the principle of worker’s
comp exclusivity.
The Court of Appeals affirmed the summary
judgment rulings of the trial court that (1) the subcontractor is contractually liable to defend and indemnify
the general contractor against Wethington’s claims; (2)
the subcontractor’s liability carrier is obligated to defend
and indemnify the general contractor and the premises
owner, and that obligation is primary over those parties’
own liability coverage.
KeyPoint: Hold-harmless clauses are very common in construction subcontracts. Subcontractors and
their liability carriers need to be aware that Indiana
courts will enforce such clauses against the subcontractor and its liability carrier for injuries to the subcontractor’s own employees. Worker’s comp exclusivity affords
the subcontractor no protection against this exposure.
[Also, in a coverage decision concerning toxicwaste liability, the Indiana Court of Appeals held on
June 4, 2014 that the property purchaser’s carrier has
coverage notwithstanding the contractual-liability exclusion in the liability policy, holding “Today we join those
jurisdictions who have held that contractual liability exclusions in CGL policies bar coverage not for liability
incurred by a contract breach but, rather, for liability
assumed from a third party, which seems to be the majority position by a wide margin.” Indiana Ins. Co. v. Kopetsky. While this broadens the carrier’s potential exposure, it does simplify the coverage issues in the many
instances in which the insured is sued under theories of
both negligence and contractual breach.]
Kevin C. Tyra
[email protected]
Wethington, an employee of a construction subcontractor, was injured on the work site. He sued various parties,
including his employer’s general contractor and the premises
owner.
The facts of the case, the identification of all the parties and their carriers, and the contractual and policy recitations, would take up too much space. But the case illustrates
some key points we see fairly frequently in our practice, and
which are useful for claims professionals to keep in mind.
The bottom line is that the worker’s employer and the employer’s liability carrier ended up getting stuck for pretty
much every other defendant’s exposure, even though one
would think that the injured worker’s own employer would
MITIGATION OF DAMAGES
FOR BREACH OF CONTRACT
Gayle Fischer v. Michael Heymann, et al.
Indiana Supreme Court, July 17, 2014
The Heymanns agreed to purchase a condominium from Fischer. The purchase agreement authorized
Page 7
the Heymanns to terminate the agreement if Fischer refused
to fix any major defects discovered during the inspection.
However, the right to terminate did not apply if Fischer refused to perform routine maintenance or make minor repairs.
Subsequently, the Heymanns asked Fischer to repair an electrical problem discovered during the inspection. The Heymanns classified this as a major defect and conditioned their
purchase on Fischer repairing the problem within a particular
deadline. When the deadline passed and the repairs had not
been made, the Heymanns provided Fischer with a mutual
release. Fischer, however, refused to sign the release and sued
the Heymanns for specific performance.
The issue of whether the electrical problem constituted a “major defect” went to trial, and eventually went up on
appeal. There, the Court of Appeals found the Heymanns
were unreasonable in claiming there was a major defect, and
reversed and remanded for a new trial.
On remand, the trial court found Fischer failed to
mitigate her damages when she failed to accept an offer to
purchase the condo during the course of the litigation, which
would have significantly reduced the damages Fischer was
claiming. As such, the trial court found Fischer was only entitled to about 30% of her claimed damages. The case was appealed a second time, and the Court of Appeals agreed with
the Heymanns and found that Fischer could have avoided all
of her claimed damages if she had just made the repairs within the time frame they had requested. As such, the Court of
Appeals reduced Fischer’s recovery to $117, which was the
amount of the repair bill for the electrical problem. The Indiana Supreme Court granted transfer, and affirmed the trial
court’s findings.
In particular, the Supreme Court stated the trial
court acted within its discretion in deciding that Fischer acted
reasonably in not responding to the Heymanns’ breach. Specifically, Fischer was not bound by a sole option to mitigate
her damages by responding to the Heymanns’ demand to
make the repairs when the Heymanns’ demand itself constituted a breach.
However, the Supreme Court also agreed with the
trial court’s decision that Fischer did not act reasonably when
she rejected a third-party’s offer to purchase her condominium during the early phases of litigation. The trial court
found Fischer made an unreasonably high counteroffer,
which led to Fischer holding on to the condominium for several additional years.
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KeyPoint: When a contract has been breached,
the reasonableness of the non-breaching party’s actions
in response to the breach will be evaluated to determine
whether the claimed damages were properly mitigated.
Jerry M. Padgett
[email protected]
New Indiana Supreme Court Chief Justice
In August, the Judicial Nominating Commission selected Associate Justice Loretta Rush to become the
Chief Justice of the Supreme Court. The previous Chief Justice, Brent Dickson, we resume his role as an Associate
Justice on the Court until he retires in 2016.
Chief Justice Rush has experienced a remarkably quick rise from the bench of Tippecanoe Superior Court,
which she occupied until her elevation to Associate Justice in 2012. The switch between Justice Dickson and Justice
Rush should not make a noticeable difference in the decisions of the Supreme Court, as the two have similar slightly
pro-plaintiff inclinations. What will be more interesting is when Justice Dickson retires in two years, with the likelihood of a somewhat more neutral or pro-defense replacement.
The Tyra Law Firm, P.C.
355 Indiana Avenue, Suite 150
Indianapolis, Indiana 46204