Massachusetts

Parking in Transit A recent case from Massachusetts's highest court considered the definition of "in transit" while analyzing the application of a Broadened Coverage Endorsement.

In City Fuel Corp. v. National Fire Ins. Co, while a City Fuel truck was parked overnight, one hundred gallons of oil leaked from its tank. 446 Mass. 638 (2006). City Fuel submitted a claim, but National Fire denied coverage based on a pollution exclusion clause in the policy. Id. at 640. Under the exclusion clause, coverage was not available for release of pollutants that were "being transported" or "otherwise in the course of transit." Id. City Fuel had purchased a Broadened Coverage endorsement to cover the release of pollutants that might occur while the oil was being transported. The question, of course, was whether the oil could be considered "in transit" while the truck was parked. The Court held that although the natural meaning of the word implied being in the course of movement, it could also mean any delays incident to movement of goods. The oil in question was still "in transit" because it had not yet arrived at its final destination - the furnaces of its customers.

Rhode Island

Burdens of Proof Rhode Island recently considered an insured's and an insurer's respective burdens of proof at trial. Children's Friend and Service v. St. Paul Fire and Marine Ins. Co. involved an underlying claim for wrongful adoption. 893 A.2d 222 (R.I. 2006). Before adopting their daughter, the parents had made it clear to Children's Friend and Service ("CFS") that they were unable to take a child who would require excessive medical treatment and care. They requested a complete family medical history of their adoptive daughter, but CFS did not provide it to them. The medical history would have highlighted several problem areas making it clear that the adoptive daughter, who had significant mental and emotional problems, would likely require a great deal of care. CFS tendered the matter to St. Paul. St. Paul denied coverage, basing its denial on an endorsement that excluded coverage for "personal injury or property damage arising out of professional services rendered or which should have been rendered for others in the insured's capacity." Id. at 225. CFS claimed that the endorsement was not part of their policy. St. Paul's agent testified that it was St. Paul's normal practice to attach or staple such endorsements to the policies. The trial judge decided that while it was CFS's burden to establish that coverage existed, it was St. Paul's burden to prove that the exclusion applied. The jury found that St. Paul did not meet its burden and returned a verdict for CFS.

New York

Graves Danger In 2005, President Bush signed a new transportation act into law. The Act included an amendment, sponsored by Senator Graves, that purportedly preempts all state statutes allowing vicarious liability for companies that lease or rent cars. Courts in Connecticut, Florida, Maine, Minnesota and Puerto Rico quickly upheld the Graves Amendment's preemption clause. In September 2006, a Queens County, New York Supreme Court held that relieving commercial lessors of vicarious liability under state law exceeded Congress's powers under the Commerce Clause of the United States Constitution. See Graham v. Dunkley, ___ N.Y.S.2d ___, 13 Misc.3d 790, 2006 WL 2596327 (N.Y.Sup.). Graham, unlike the other courts analyzed the power given Congress by the Commerce Clause, as limited by the Tenth Amendment. After reviewing the history of New York's common law on vicarious liability for vehicle owners, and its public policy implications, the Graham court reasoned that the New York vicarious liability law is part of the state's substantive tort law, promulgated pursuant to New York's historic police powers over health, safety and welfare. Under the Court's analysis, the state's substantive tort law has "nothing to do with commerce," and the Graves Amendment "expropriates a substantive area of New York State's civil tort law which is beyond the realm of commerce in the ordinary and usual sense of the word." Id. at 10. The Court ultimately held that the New York vicarious liability statute was a legislative act within the state's inherent authority under the Tenth Amendment, and that the Graves Amendment was an unlawful exercise of Congressional authority.

Changes to the Federal Rules

Electronic Discovery Revisions to the Federal Rules of Civil Procedure took effect December 1, 2006. The Amendments deal directly with how parties control and exchange electronic information. Rules 16(b) and 26(f) - Lawyers must now address electronic discovery at the outset of a case. Rule 16(b)(5) requires that the parties make "provisions for disclosure or discovery of electronically stored information." Rule 26(f) mandates that parties develop a discovery plan during their pre-trial conferences. To satisfy this requirement, attorneys will need a thorough understanding of their client's electronic storage network even at the earliest stages of litigation. Rule 26(b) - This Rule divides electronically stored information into two categories, creating the commonly referenced "two tier" system. The first tier includes information that is "reasonably accessible" to the producing party. It must be produced pursuant to the same rules governing paper discovery. Information classed in the second tier is not reasonably accessible to the responding party. The requesting party must secure a court order before production is required. Rule 37(f) - The so-called "safe harbor" provision, Rule 37(f) is completely new. "Absent exceptional circumstances," the rule states, "a court may not impose sanctions under these rules on a party for failing to provide electronically stored information lost as a result of the routine, good faith operation of an electronic information system". Other modifications - The rules also address the accidental disclosure of electronic discovery, with a procedure set up under 26(b)(5)(B). Geared toward cases with large amounts of electronic discovery, in which reviewing each document for privilege might be too burdensome, the rule provides that within a reasonable amount of time the responding party can assert the attorney-client or work product privilege. The requesting party must then "return, sequester or destroy the privileged information". Rule 33's Option to Produce Business Records has also been amended. Its reference to business records now includes "electronically stored information." Rule 34 dictates the scope and procedure for discovery requests and now explicitly includes electronic discovery.