Disciplined in Sophisticated Defense and Insurance Litigation

November 12, 2006 | Publication| Subrogating Hurricane Claims

Scott S. Katz, Lee E. Branscome, Ph.D., C.C.M., William C. Charvat, AIA

This article was originally published in the Subrogator, a publication by the National Association of Subrogation Professionals, Winter 2007, Page 37. © Copyright 2007 by NASP. All rights reserved. Republished by Butler with permission from NASP.

The word "hurricane" originates from the Spanish word, "Huracán," for the ancient Mayan "storm god." No doubt the Mayans suffered frequently from Huracán's wrath. But unlike the Mayans, recent storms have led insurers to vigorously pursue subrogated hurricane claims. This article will explore issues associated with the successful pursuit of subrogation claims arising from hurricanes.[1]
 

The Science of Hurricanes

A tropical cyclone is a large storm that develops over warm tropical or subtropical waters. It has a closed circulation of air that rotates counterclockwise in the Northern Hemisphere with a maximum sustained wind speed of at least 74 mph. Hurricanes depend on a warm sea surface to provide energy for their intense rains and high winds.

A hurricane typically has a spiral cloud structure in its outer rain bands that can extend as much as 300 miles from the center. The outer rain bands create short periods of gusty winds and heavy rains. Viewed from space, a hurricane has a central dense overcast of clouds with a hole at the center called the "eye." Within the eye, the winds are generally light, and the rain is minimal or non-existent. The most intense part of a hurricane is found in the "eye wall," a rapidly rotating ring of cumulonimbus clouds immediately surrounding the eye. Areas on land that experience the eye wall are usually the locations with the most destruction.

Wind speeds at any location in a hurricane fluctuate continually. The standard averaging period for wind speed in a tropical cyclone is one minute, commonly referred to as the "sustained wind speed." The standard duration for a gust is three seconds. As a rough rule of thumb, the three-second gust in a hurricane is about 1.25 to 1.30 times the value of the sustained wind speed.

Because frictional drag from the Earth's surface removes energy from a tropical cyclone, wind speed is lowest near the surface and increases with altitude. The standard height for measuring surface wind speed is 10 meters, or about 33 feet. Sustained wind speeds at the top of tall structures can be notably higher.

Maximum sustained wind speed and central pressure are typically used as measures of intensity of a hurricane. The maximum sustained wind speed and central pressure are closely, but not perfectly correlated. Few locations actually experience the maximum sustained wind speed of a hurricane. Therefore, although a region may be affected by a major hurricane, not all locations will necessarily experience hurricane force winds.

Hurricanes are categorized in intensity using the Saffir-Simpson scale. The scale was developed to provide a general expectation of property damage and storm surge caused by a hurricane. The scale is summarized in Table 1. A hurricane is considered "major" if the category ("Cat") is three or higher. Table 1 shows that some hurricanes are far more destructive than others of the same category. The loss of life and property depends greatly on the location of landfall. For example, a Cat 2 making a direct hit on Houston will create much higher property losses than a Cat 4 that makes landfall on the sparsely populated coastline north of Tampa.  

Table 1. Saffir-Simpson Hurricane Intensity Scale


 

Category
(Cat)

Maximum Sustained Wind Speed (mph)

Typical damage & Maximum storm surge

Recent Examples at U.S. Landfall

1

74-95

Damage primarily to vegetation, unanchored mobile homes, poorly constructed signs. Minor pier damage. Surge generally 4-5 feet.

Gaston (2004),


Cindy (2005)

2

96-110

Some roof, door & window damage. Considerable damage to mobile homes, piers, signs & vegetation. Surge generally 6-8 feet.

Frances (2004)

3

111-130

Some structural damage to small residences & utility buildings with minor amount of curtain-wall failures. Large trees blown down. Mobile homes & poorly constructed signs destroyed. Surge generally 9-12 feet.

Ivan (2004),

Jeanne (2004),

Dennis(2005),

Katrina (2005),

Rita (2005),

Wilma (2005)

4

131-155

More extensive curtain-wall failures & some complete roof failures on small residences. Trees & all signs blown down. Complete destruction of mobile homes. Extensive damage to doors and windows. Surge generally 13-18 feet

Charley (2004)

5

156 or higher

Complete roof failure on many residences & industrial buildings. Some complete building failures with small utility buildings blown over or away. All shrubs, trees, & signs blown down. Complete destruction of mobile homes. Severe & extensive window & door damage. Surge generally over 18 feet.

Andrew (1992)

Another important factor is the size of the hurricane. Katrina was a very large, Cat 5 storm while over the Gulf of Mexico. Although Katrina's wind speeds diminished as it approached the coast, its "wind field" was so large that a very powerful storm surge was generated, causing a large area of destruction. In contrast, Dennis, which struck just east of Pensacola, was a much smaller storm and did not have the same widespread destructive effect as Katrina, even though its sustained wind speed was essentially the same as Katrina. Thus, the Saffir-Simpson scale is a useful, but imperfect means of estimating the destructive force of a hurricane.

Although much data is collected on hurricanes, data collection at ground level rarely occurs at a particular location where wind speed information is needed for post-storm analysis and possible litigation. Fortunately, weather radar and satellite observations cover most of a storm, but must be interpreted in conjunction with point measurements of surface wind speed. Knowledge of the structure of hurricanes allows a meteorologist to assemble the data and construct post-storm wind swath maps.

Prior to Hurricane Andrew, most building codes were based on local historical probabilities of "fastest mile" wind speeds at particular locations. However, it became clear to engineers and meteorologists involved in the analysis of winds and wind damage that wind gusts were largely responsible for property damage. The American Society of Civil Engineers consequently revised its minimum design loads for buildings and other structures to be based on three-second gusts that occur with an annual probability of 2% (a once in 50-year event). Building codes have consequently been revised to reflect this change in understanding of how wind damage occurs.

Most importantly for subrogation scenarios, the occurrence of a hurricane, particularly a Category 1 or 2 storm, does not automatically mean that wind speeds exceeded the building code or design loads for a particular structure. Moreover, even major hurricanes, i.e., Cat 3, 4 or 5 storms, do not necessarily produce wind speeds that exceed building code or design loads, especially if the damaged structure is located at the edge of a hurricane's wind field.

The History of Building Codes

Building codes regulate construction by establishing minimum safeguards. They also establish an adequate level of quality and durability for construction materials. This regulation is intended to represent the "minimum requirements" necessary to achieve an acceptable level of protection of public health, safety and general welfare.

The history of building codes dates back to the rein of King Hammurabi in 2200 B.C.E. Law 229 stated: "If a builder has built a house for a man and has not made strong his work, and the house he built has fallen, and he has caused the death of the owner of the house, that builder shall be put to death." This is the ultimate performance code, which "encourages" meeting standards.

George Washington and Thomas Jefferson first encouraged the development of building regulations in the United States. By 1915, American enforcement officials met to discuss building problems. Out of these meetings came the formation of three organizations: BOCA, the Building Officials and Code Administrators, was created in 1915, and represented code officials from eastern and midwestern areas of the United States. ICBO, the International Conference of Building Officials, came into being in 1922, representing code officials in the western United States. The SBCCI, the Southern Building Code Congress International, emerged in 1941 to serve in the southeastern United States.

Three distinct model codes eventually appeared. This caused design and construction criteria to become more standardized. Most jurisdictions adopted one of the model codes. These legacy codes were known as the National Building Code, the Uniform Building Code, and the Standard Building Code.

Due to natural disasters like Hurricane Andrew, a coordinated national model building code became necessary. The International Code Council was consequently formed in 1994, and its International Building Code (IBC) was created without regional limitations. The first edition of the IBC was published in 1997. It was patterned on the three legacy codes. In 2000, the IBC was completed and further development of the legacy codes ceased.

The structural criteria in the legacy codes and the IBC all refer to a supplemental source document for technical design criteria. This document was published by the American National Standards Institute until 1978, when the American Society of Civil Engineers (ASCE) took over future development of wind design criteria with its Technical Committee Number 7. The committee's document has become known as ASCE 7. Today, ASCE plays a major role in the design of structures for wind loads. A thorough understanding of the ASCE criteria, as well as the applicable building codes, is vital to any forensic evaluation of a hurricane loss.

Separating the "Bad" from the "Good" Subro

All subrogation professionals want to quickly separate the "bad subro" from the "good subro." By doing so, the subrogation professional is able to direct her valuable time and resources toward subrogation claims that will effectuate the greatest recoveries in the most cost effective manner. This is especially critical when pursuing subrogation claims arising from hurricane losses.

The "first question" is how large will the "subrogation net" be cast? That is, when confronted with the onslaught of losses arising from the hurricane catastrophe, which losses will be pursued via subrogation, and which ones will not? Subrogation professionals can answer this question from different perspectives. Some subrogation professionals prefer to cast the net wide and deep, preferring to look for every possible subrogation claim that may arise from every reported loss. Others seek to limit the scope of the inquiry, with greater focus on particular losses, usually defined by size and geographical location.

Both strategies have benefits. For instance, some subrogation departments have large staffs, whose efforts can be directed toward a review of "all" subrogation claims that may arise from a hurricane. For these professionals, casting the net "wide" is a logical response. With deep resources, these subrogation professionals are able to turn over every stone, while looking for "good subro." This also allows for the bundling of smaller subrogation claims with an eye toward global settlements.

Most subrogation professionals, however, work in an environment that does not permit a "wide net." They simply do not have the manpower or budgets to pursue every claim. These subrogation professionals need to save costs by not pursuing weak subrogation claims, so that when a strong claim is discovered, resources remain available to properly pursue the claim. Saving costs by not pursuing "bad subro" can be just as important as finding a "good subro" case.

Before the storm strikes, subrogation professionals need to be aware of which approach is consistent with their company's goals. By identifying their approach before the hurricane occurs, subrogation professionals can provide their attorneys, experts, and field adjusters with clear direction, making the effort to find "good subro" easier.

The Forensic Investigation of a Building Failure

The extent of a hurricane loss can be impacted by a man-made event such as improper design, construction or maintenance of a building. To properly determine if a man-made event is wholly or partially responsible for a loss, detailed on-site and historical research needs to be performed.

Site Visit

An on-site investigation needs to be made, preferably before wreckage is removed. Extensive photographic documentation and measurements need to be taken. Building material components should be identified. The goals of the site visit are to determine the sequence of failure; determine the weather pattern that impacted the structure; and obtain a good set of the building plans.

The site investigation team should include, if possible, an experienced architect or structural engineer. A mechanical engineer, electrical engineer, roofing expert, or curtain wall consultant may also be desirable depending on the nature of the failure. In addition, a meteorologist should be involved to establish the force, duration, direction and timing of the hurricane.

Building History Investigation

The forensic investigation includes identifying those parties involved in ownership, design, construction and maintenance of the structure in question. These parties include the owners, architects, engineers, specialty designers, general contractors, construction managers, trade contractors, and material suppliers. Also, building owners can identify any building additions or maintenance that may have impacted the structure.

The regulatory agency issuing building permits often is invaluable. This source can provide the age of building; the drawings, specifications, permits and inspection history; the name of the architect, engineer and contractor; and the applicable building codes. Other parties can be identified depending on the nature of the loss. This includes specialty inspectors that were hired by the owner or architect; the persons or firms providing program management; the threshold inspector; and the parties who handled the soil investigation and foundation design.

Analysis of the Building Design

After the age of the building and the applicable building codes have been determined, and once building construction drawings have been obtained, a detailed analysis needs to be made to determine if the building was properly designed. This includes the building orientation and siting, relationship to flood plains, foundation design, the main structural frame design, the attached components and cladding making up the building enclosure, and specialty areas of concern.

Analysis of the Building Construction

A determination needs to be made if the building was constructed per the permitted drawings, construction documents, and applicable building codes. This is a critical part of the investigation since many building failures are caused by wind magnitudes less than the building codes anticipated. The forensic investigator must identify where errors were made and determine their impact on the loss. Unfortunately, the design, construction and maintenance of a building can be very complex and involve numerous parties, materials and systems. A building's failure can also be compounded by multiple design, construction and maintenance errors. The goal of a forensic investigation is very simply stated, but takes a considerable amount of research to achieve.

Coordinating the Investigation for Litigation Purposes

The investigation of a subrogation case arising from a hurricane loss is not much different than the pursuit of any construction related subrogation case. It is important to promptly gather and document the loss so that, if appropriate, a strong legal claim can be presented. However, there are several important nuances.

First, the public authorities often limit access to locations that have sustained significant storm damage. The public authorities are concerned about security after a catastrophic loss. Thus, subrogation professionals must arrange for access to the loss site.

Before arriving at the loss site, the investigative team should acquire background information concerning the loss. This information can be obtained from newspapers, television, and various Internet sites. Privately retained meteorologists can also provide preliminary evaluations of wind speeds and storm surges. Although early data is not precise, it provides a guidepost about the storm and the expected damage to structures.

An effort should be made to contact individuals who were on site at the time of the storm. These individuals can provide personal accounts of how the storm affected the property. They can explain whether a "mini-tornado" or other weather anomaly occurred, which could explain why one property survived the storm and another catastrophically failed. These "eyewitness" and "ear-witness" accounts also provide gripping testimony that is most persuasive.

The investigation team should take advantage of information that is readily available. Local newspapers will have photographs and anecdotal stories, which can be extremely valuable. The "survivor stories" printed in the newspapers can later be used to support or refute critical fact questions that arise during litigation.

Significant attention should be paid to the acquisition of photographic evidence. If the budget permits, aerial photographs should be taken. Aerial photographs provide "comparative evidence," demonstrating how some buildings survived the storm, whereas other buildings failed. The loss site should also be videotaped to demonstrate the catastrophic failure. Moving pictures are more vivid and captivating than still photographs. News agencies sometimes videotape losses, too. An effort should be made to acquire their footage.

Focus on "structural" failures as opposed to "cosmetic" failures. Most building codes address structural failures to the building envelope. By comparison, "cosmetic" items are not usually addressed in the building code. For example, awnings, sheds, and standard shingles are not considered part of the building's envelope. Therefore, the investigative team, when coordinating the subrogation loss, should identify those structural elements that failed during the hurricane.

It is also extremely important to identify those contractors or design professionals who were potentially responsible for the failure. In depth interviews and document reviews need to occur quickly. This is because of the need to provide reasonably prompt notice to any potential tortfeasors. The goal is to avoid claims of spoilation.

The investigation should address the dates when construction work was performed and the nature of the work. Gather copies of contracts and other records that may address the work that was performed and the terms for the work. The forensic team should visit the Building Department in order to obtain copies of all records that are pertinent to the mechanism of failure.

Questions may arise concerning the general maintenance and condition of the subject building before the loss. These questions should be explored with the insureds and their maintenance personnel. Whenever possible, maintenance records should be collected. All parties will be interested in knowing the condition of the subject building before the loss.

At the end of the day, significant efforts should be made to visit the loss site, document the scene, and communicate with all potential tortfeasors. Once these steps are completed, the handling of the hurricane-related subrogation claim becomes much like any other claim in terms of evidence gathering, preservation and presentation.

Statutes of Repose and Other Bars to Recovery

Similar to any subrogation claim, one must always address the applicability of various "bars" to recovery. For instance, many construction contracts have subrogation waivers. These waivers can also be included in lease agreements and service agreements. One must also explore the possibility of contractual or statutory limitations on liability and damages, as well as judicially created bars to recovery like the "Economic Loss Rule."

However, the most important potential bar to a subrogated hurricane claim is the statute of repose. Generally speaking, statutes of repose address the "outer limit" as to when a legal claim can be made against the tortfeasor for a particular loss. Statutes of repose provide a "window" for when potential claims can be made against contractors and design professionals for errors committed during construction.

Typically, the "window" begins to accrue before the defect is apparent and can drastically reduce the allowable time for filing a legal claim. Statutes of repose, as they apply to hurricane losses, are particularly troublesome because of the infrequency with which hurricanes will strike a specific geographical area. The structure in question is sometimes never tested to its code-mandated failure point until the hurricane actually happens, and the statute of repose has already expired.

Accordingly, it is critical to identify the nature of the claim and the applicable statute of repose. If a claim is outside the window for filing a lawsuit, one can easily dismiss that claim as being "un-subrogatable" and, therefore, a basis exists to move on to the next claim that may have more promising subrogation potential. A complete understanding of a jurisdiction's statute of repose is a pre-condition to the pursuit of any subrogation claim arising from hurricane losses.

Typical Causes of Actions

The legal theories for recovery in a subrogation case arising from a hurricane loss are not much different than any other construction defect litigation. However, for these claims, one must review the ASCE 7 and the applicable building codes to determine the wind speeds for which a particular building in a geographical location is required to withstand.

The best subrogation claims arise from violations of building codes dealing with means and methods for construction. Errors with regard to a design that does not meet the building codes can also be pursued. Such subrogation claims, as a general rule, can be pursued through negligence claims or statutory causes of action, if recognized by the particular jurisdiction where the loss occurred.[2] This assumes that the claim is not barred by the local jurisdiction's application of the Economic Loss Rule.

Often, building codes and other wind standards are part of the contracts issued by contractors and design professionals. For this reason, some of the strongest subrogation claims may be for a breach of contract. Besides, the local jurisdiction's Economic Loss Rule may require that contract claims be pursued, as opposed to tort claims.

More creative approaches should also be explored, especially if there can be facts to warrant such a claim. For instance, it is possible that a contractor or design professional committed "misrepresentation" or "fraud" in some aspect of the construction. The contractor or design professional could have represented that particular construction items would resist hurricanes of some specific wind speed. Further, misrepresentation and fraud claims can often be used to avoid the impact of certain legal bars to recovery.

Likewise, an effort should be made to review warranties that may have been provided to the owner. Roofing manufacturers, for example, typically warrant that they have inspected a roof, and that the roof therefore fulfills the standards necessary for its warranty.

The Act of God Defense

The most important defense to any hurricane claim is the "Act of God" defense. This legal defense is typically used by contractors and design professionals who argue that the loss is the result of an unforeseeable windstorm.

An Act of God has generally been defined as "an accident produced by physical causes which are irresistible or inevitable, such as lightning, storms, perils of the sea, earthquakes, inundations, sudden death, or illness. This expression excludes all idea of human agency."[3] It is critical to understand that if any human error added or contributed to the loss, the Act of God defense does not apply.

Significantly, the applicable building codes define society's reasonable expectations for a structure's strength. The fact that the building codes address particular wind speeds demonstrates that certain wind-related events, i.e., hurricanes, are reasonably expected to occur; and thus, buildings are suppose to withstand certain storms. It is in this context that the Act of God defense becomes a rather weak defense. The bottom line is that the Act of God defense is important in setting reasonable goals for any subrogation recovery arising from a hurricane loss; but it should not act as a serious bar to pursuing subrogation claims arising from wind damages arising from most Cat 1 or 2 hurricanes, as well as those wind losses occurring at the edge of a Cat 3, 4 or 5's wind field.

Judge and Jury Considerations

Subrogation claims arising from hurricanes must be pursued in the same jurisdiction where the loss occurred. Judges and jurors also come from that particular geographical location. They often have strong views concerning the storm and its impact on the local area, which are difficult to overcome. The subrogation professional must never forget that local people are going to decide the merits of the subrogated claim. How they feel about the storm, as well as how they may have weathered the storm, can have a significant impact on the ultimate success of the hurricane subrogation claim.

To counter this bias, the subrogation team should present its claim in the context of "reasonable expectations." Assuming that the geographical area in question did not withstand a catastrophic hurricane well beyond that which was contemplated by the applicable building codes, a forceful case can still be presented. It can be argued that the defendants seek to apply unreasonable expectations. This bias, therefore, should not detract from the pursuit of a subrogated hurricane claim; but it should temper the goals for the amount of the recovery.

Endnotes

1.This article represents a significantly condensed version of a paper presented at the 2006 NASP Annual Conference. The complete paper can be obtained through NASP or the authors.

2.For example, Florida has created a statutory cause of action for violations of its building code. Fla. Stat. § 553.84 (2006)

3.Ga. Stat. § 1-3-3(3) (2006).

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A great subrogation recovery can be defined as one that recovers the largest amount of money in the shortest period of time with the least amount of cost.  Disputes between commercial entities are resolved daily, and not all of them require litigation.  There are many ways to resolve a claim.  Some claims are resolved through informal conversations between two adjusters.  Other times, litigation and trial can be both necessary and unavoidable.  However, in these economic times, most companies want to effectuate recoveries and close files as quickly as possible.

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October 14, 2010 PublicationWorkers' Compensation Lien Pursuant To §440.39(3)(A) Fla. Stat. Limited In Breadth

Under Florida's Workers' Compensation Statute, when an employee is injured in his/her Course and Scope of employment due to the negligence of a third party, the injured worker is able to pursue recovery for his/her injuries from the negligent third party; and the workers' compensation carrier is entitled to assert a lien in the amount of the benefits provided against any settlement or judgment obtained by the injured worker.

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October 14, 2010 Publication2010 Annual Conference Committee Report

NASP's 12th Annual Conference, being held November 7-10 at the Gaylord Resort in Grapevine, Texas IS RIGHT AROUND THE CORNER. Can you believe it is less than two months away?!?! The Grapevine is a world-class facility located just outside Dallas. Just like in years past, this year's Conference will be a topnotch showcase for some of the best educational presentations the industry has to offer, no matter what the forum. There is no greater array of educational programs than the NASP Annual Conference. The entire program for the conference has been selected, and we have tried to limit the number of presentations slightly from year's past so that every attendee has a better chance of attending all of the programs they want, and not having too many "conflicting" presentations to decide upon.

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July 08, 2010 PublicationArbitration of Construction Defect Claims

Arbitration Forums, Inc. and Construction Defects Claim Managers Associations (CDCMA) have begun a new joint project to develop a special arbitration forum related to certain construction defect claims. This joint project is intended to develop awareness that certain types of construction defect claims can be arbitrated through arbitration forums

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July 08, 2010 PublicationFlorida Again Rejects the Sutton Rule

In Florida, like nearly all jurisdictions, an insurer may not pursue subrogation against its own insured. But when a tenant causes damage to its landlord's property, is the tenant treated as a presumptive "co-insured" under the landlord's property insurance policy? The answer, at least in Florida, is "it depends."

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July 08, 2010 PublicationMaryland Court Holds Waiver of Subrogation Contract Language Does Not Bar Recovery After Project Completion and Final Payment

In Hartford Underwriters Insurance Company v. Phoebusa Maryland appellate court ruled that an insurance company's subrogation claim could proceed against a general contractor and subcontractor, despite subrogation waivers in the AlA form construction contract governing the contractors' work. In Phoebus, the plaintiff-insurer issued a property insurance policy to a restaurant's owner subsequent to the restaurant's construction. When a fire damaged the restaurant and it was determined that defective electrical wiring and components caused the fire, the insurer sought recovery from the contractors who performed electrical work during the restaurant's construction.

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July 07, 2010 PublicationFlorida Legislature Increases the Statutory Limits on Liability for Tort Claims Against the State and Its State Agencies

 Historically, in Florida, tort claims against the state and its state agencies have been limited to $100,000 per claim or $200,000 per occurrence. On April 27, 2010, the Florida Governor approved an amendment to Florida Statute §768.28(5) thereby increasing the limit of tort liability for claims against the state and its state agencies. While the act does not take effect until October 1, 2011, claims arising after that date will now be subject to increased limits of $200,000 per claim or $300,000 per occurrence.

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May 24, 2010 PublicationDon't Cut Corners on Proper Notice...It Matters!

This article was originally published in NASP's Subrogator publication, Winter 2010. © 2010.  Reprinted by permission.

Contact the authors for the full version of the article.

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February 01, 2010 PublicationState Specific: North Carolina

This article was originally published in NASP's Subrogator publication, Winter 2010. © 2010.  Reprinted by permission.

Contact the authors for a full version of the article.

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October 29, 2009 PublicationThe Daubert Tango: "Recent Developments In Fire and Explosion Litigation"

In 1923, the Court of Appeals for the District of Columbia, affirming the exclusion of an expert witness at trial, stated:

Just when a scientific principle or discovery crosses the line between the experimental and demonstrable stages is difficult to define. Somewhere in this twilight zone the evidential force of the principle must be recognized, and while courts will go a long way in admitting expert testimony deduced from a well recognized scientific principle or discovery, the thing from which the deduction is made must be sufficiently established to have gained general acceptance in the particular field in which it belongs.

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June 01, 2009 PublicationSpoliation of Evidence - A Summary of Killings v. Enterprise Leasing Company, Inc., 2008 WL 4967412 (Ala. 2008)

In Killings v. Enterprise Leasing Company, Inc.,1 the Alabama Supreme Court recently held that a Plaintiff may proceed with a claim of spoliation against a third party responsible for negligently discarding necessary evidence in an underlying case.

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October 07, 2008 PublicationLanding the Knockout Punch: Contacting Another Party's Current And Former Employees Within the Ropes

Winning litigation requires that you and your counsel land the devastating uppercuts at the key moments in the fight. Big opportunities for critical testimony and evidence exist by pursuing permissible ex parte contacts with another party's current and former employees. The ethical ropes and practical tips for effectively contacting and interviewing such witnesses are discussed below.

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December 03, 2007 PublicationDrowning in Black Water: Water Restoration Contractors' Deviations from Industry Good Practices & Standards of Care Trigger Potential Mold Liabilities

Entry of errant water into a building or other structure can lead to serious mold problems, physical damages and substantial property and business interruption losses. This  article provides a roadmap on developing viable recovery claims against restorative drying contractors who were involved in improper and careless restoration and remediation of water  damaged property. As in any garden-variety tort claim, it is imperative that your counsel appreciate the critical importance of identifying the target contractor's vulnerable liability exposures.

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October 01, 2007 PublicationAlabama Limits Subrogation Rights Under Wrongful Death Statute

The Supreme Court of Alabama recently limited the rights of a workers' compensation insurer seeking to recover medical expenses paid on behalf of a worker who later died as a result of his injuries. Alabama's unique wrongful death statute, which allows for the recovery of punitive damages only, precludes an insurer from recovering medical expenses incurred prior to the worker's death.

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February 01, 2007 PublicationFlorida Legislature AGAIN Changes the Requirements for Making a Construction Defect Claim

Florida Governor Jeb Bush initially approved Senate Bill 1286 on May 23, 2003. The initial version of Chapter 558 of the Florida Statutes (hereinafter identified as "the Statutes") set forth the requirements for making a claim for defects related to the construction of homeowner property. The authors of this article published a summary of the law in the Winter 2003-2004 issue of the Subrogator. In 2005, the Statutes were amended by the Florida Legislature to make compliance more practical for both claimants and contractors. The authors published a summary of these changes in the Spring/Summer 2005 issue of the Subrogator.

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February 01, 2007 PublicationFlorida's Legislature Abolishes Joint and Several Liability

Effective April 26, 2006, the Florida Legislature eliminated the last vestige of joint and several liability.  Florida has now joined the minority of jurisdictions that have completely abolished joint and several liability. Although this move has brought dramatic change and controversy, it was no surprise. The attempt at abolition actually began nearly twenty years ago and has been heavily lobbied by Florida's "Big Businesses." This article will address the impact of the elimination of joint and several liability, and the effect this change in the law will have on subrogation in Florida.

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December 05, 2006 PublicationUnderwriters Laboratories—The Forgotten Island In The Litigation Seas—"Full Of Fruit"—For Bolstering Or Undercutting Product Integrity

Underwriters Laboratories Inc. ("UL") is a nonprofit organization conducting product safety evaluations. UL Marks are on 19 billion products ( www.ul.com ). As of 2005, there are more than 71,000 manufacturers producing UL-certified products and 97 countries where UL customers are located. UL publishes hundreds of safety standards and disseminates safety information globally.

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October 01, 2006 PublicationSomething Old...Something New...: the Availability of "Sentimental Value" Damages in Courts Throughout the United States

"My grandfather's law diploma means the world to me. It was framed and given to me after his death by my family, as I was the only child to become an attorney as well."  These self professed statements of value are heard over and over by subrogation attorneys throughout the United States during painstaking conferences with the insured to determine the value of his or her uninsured losses after a catastrophic loss. Quite simply, attorneys often attempt to assess the "value" of a certain personal items of the insured, when actually, no realistic fair market value exists. Such items are considered "irreplaceable" by the insured, and consist of photographs, family heirlooms, wedding memorabilia, and family documents such as marriage licences. 

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August 01, 2006 PublicationThe Big Daubert Hurdles in Fire & Explosion Litigation

Over a decade has passed since the U.S. Supreme Court's ruling in Daubert v. Merrell Dow Pharmaceuticals, Inc ., 509 U.S. 579 (1993), and it is time to evaluate where we've been, where we are, and where we are headed on the admissibility of expert opinion testimony in fire and explosion cases.

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May 09, 2006 Publication"Top-Dog" Depositions The Hurdles to Overcome

High-level executives are frequently sought to be deposed because of their unique corporate roles for, inter alia, policy making, corporate governance and implementing policy compliance and corrective actions. On a tactical basis, the executive deposition is pursued so that your adversary's "figurehead" directly feels the "hot buttons" of your case, real-time, without layers of filtering and spin. "Top-dog" depositions, commonly called "apex depositions," cover a wide range of executives, including CEOs, presidents and other senior management positions.

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May 01, 2006 PublicationAlternative Ways To Use Evidence Of "Other Conduct" That Would Otherwise Not Be Admitted

In developing your case, as plaintiff or defendant, it is important to appreciate the various alternative ways for opening the door to "other conduct" evidence to prove relevant facts at issue. Below is a synopsis of strategic methods and insights for proffering evidence of character for a non-propensity purpose, habit, subsequent remedial measures and prior occurrences/failures.

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April 01, 2006 PublicationRecent Change in Florida's Spoliation Law

Until 2003, Florida courts recognized an independent tort of spoliation for both first and third party claims. However, that all began to change with the Fourth District Court of Appeal's decision in Martino v. Wal-Mart Stores, Inc., 835 So. 2d 1251 (Fla. 4th DCA 2003). In Martino, the plaintiffs filed a premises liability action against Wal-Mart, alleging that Mrs. Martino was injured while shopping at a Wal-Mart store when her shopping cart collapsed. Later, when Wal-Mart could not produce the shopping cart nor the security video that may have recorded the incident, the plaintiffs added a claim against Wal-Mart for spoliation of evidence. Wal-Mart filed a motion to dismiss the plaintiff's spoliation claim, which the trial court granted.

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October 01, 2005 PublicationFire Department Negligence Not Considered Intervening Cause in Franklin County, Ohio

This case involves a subrogation action following payments made by a commercial property carrier to its insured as a result of a fire that occurred at an insured apartment complex located in Franklin County, Ohio. The fire occurred on January 28, 2003, after one of the tenants in the apartment complex placed hot ashes from his fireplace into a cardboard box, and then left the box unattended inside of his unit. Approximately 30 minutes later, a fire ignited. The tenant quickly called the fire department, who responded and extinguished the fire. The fire damage was confined to the tenant's unit which suffered approximately $10,000 worth of damage.

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May 03, 2005 PublicationHow "What We Learned in Little League" Paves the Way for Winning Litigation!"

As in baseball, whether being the batter, pitcher, or outfielder, successful litigation requires a strong belief and conviction that one has the power to shape reality. Certainly, without the batter's confidence that he or she will hit the ball, irrespective of its speed, twists or turns, few home runs would be made, let alone "singles or doubles"

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April 01, 2005 PublicationNew Amendments to Florida Law For Making Claims Against Contractors For Construction Defects

Florida's Construction Defect Statute, F.S. § 558.001 et seq. ("Construction Defect Statute"), first became effective on May 27, 2003. This law drastically changed how claims for construction defects are to be made by homeowners against contractors in Florida.

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April 01, 2005 PublicationFlorida's "Made Whole" Doctrine: Returning A Portion of the Insured's Deductible Is Permissible – For Now!

Per Florida's Made Whole Doctrine, insurers need only reimburse their insureds to the extent of their insured's legally recoverable loss. In the recent case of Monte De Oca v. State Farm Fire & Casualty Co., ---So.2d---, 2004 WL 2955008 (Fla. 3d DCA 2004), the Third District Court of Appeal supported the partial return of a deductible to an insured based on the insured's comparative negligence. This case is significant because it clarifies that an insurer, in Florida, does not violate the Made Whole Doctrine when the insurer returns only a prorated portion of the deductible to the insured due to the insured's comparative negligence.

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April 01, 2005 PublicationFlorida's Supreme Court Finally Brings Clarity to the Economic Loss Rule

After years of confusing and contradictory rulings, Florida's Supreme Court finally reigned in the scope of the Economic Loss Rule. In Indemnity Ins. Co. v. American Aviation, Inc., 891 So. 2d 532 (Fla. 2004), the Florida Supreme Court cogently limited the Economic Loss Rule. It held that the Economic Loss Rule does not bar a negligence action to recover solely economic damages where the defendant is not a product manufacturer or distributor. The Court also held that the Economic Loss Rule simply does not apply to any situation where there is no privity between the litigants.

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April 01, 2005 PublicationLive . . . From The House Of Subrogation!

 The Hilton Hotel in Austin, Texas will truly be "The House of Subrogation" from November 13 through 16, when over 1,200 subrogation professionals from around the globe assemble for the NASP Annual Conference. And this year's conference is expected to be even bigger, better and more alive than ever before!

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January 01, 2005 PublicationSpoliation of Evidence - Limiting the Duty to Preserve

A summary of Killings v. Enterprise Leasing Company, Inc., 2008 WL 4967412 (Ala. 2008). A recent case from the Supreme Court of Alabama.  In Killings v. Enterprise Leasing Company, Inc.,1 the Alabama Supreme Court recently held that a Plaintiff may proceed with a claim of spoliation against a third party responsible for negligently discarding necessary evidence in an underlying case.

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October 01, 2004 PublicationForcing the Issue: Virginia Courts Begin to Expand Recoveries in Tort Between Parties to a Contract

When subrogating against an adverse party having a contractual relationship with your insured, it is routine to face the argument that your damages are barred by the economic loss rule. Most jurisdictions have carved out an exception to the sometimes harsh results that can flow from the operation of this rule. One such exception is the “other property” exception, which typically allows for tort recovery when the damaged “other property” is not a subject of the contract.
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February 01, 2004 PublicationNew Florida Law Changes Procedure For Making Claims Against Contractors For Construction Defects

Florida Governor Jeb Bush approved Senate Bill No. 1286 (“Bill 1286”), which drastically changes the method for presenting a claim for construction defects. Effective May 27, 2003, Florida homeowners and their subrogees cannot file a construction defect lawsuit without fully complying with new pre-suit requirements.

In Section 1 of Bill 1286, the Florida Legislature states the intent of the new law.

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January 06, 2004 PublicationGoing Toe-to-Toe With Your Opposing Expert

Experts oftentimes make or break cases.  As knowledge and science have grown, so has the range of experts that parties call upon to advocate their cause.  Not only must a party always look to bolster one's own expert case, a party must simultaneously be mindful of the need to undercut your adversary's expert.  As the client, you want to ensure that your assigned counsel appreciates the following practical ways for tackling the opposing expert during the discovery process

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Key Points
Author Additional Authors
  • Lee E. Branscome, Ph.D., C.C.M.
  • William C. Charvat, AIA