December 2002 |
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In This Issue
Tenth Annual Labor and Employment Law Seminar: March 12, 2003Kegler, Brown, Hill & Ritter will sponsor its tenth annual Labor and Employment Law Seminar on March 12, 2003, at the Fawcett Center in Columbus, Ohio. The seminar, entitled "Selected Issues in Managing Labor and Employee Relations in the Workplace: The Employer's Perspective," will feature presentations on a wide variety of employment related topics and developments. The speakers will also be available for a question and answer session both during and following the seminar. In addition, detailed written materials on each topic will be provided to each person attending the seminar. Contact Ann Krai at Kegler, Brown, Hill & Ritter, (614) 462-5400, to make a reservation. Wallace v. Ohio Department of Commerce, Division of State Fire MarshalThe Erosion of the Public-Duty Rule
The Ohio Supreme Court recently decided that the State may no longer raise the public-duty rule in actions brought against it in the Court of Claims. In Wallace v. Ohio Dept. of Commerce, Div. of State Fire Marshal (September 4, 2002), the Court held that the public-duty rule is incompatible with the express language of the Court of Claims Act (R.C. 2743.02). The act requires that in any action brought against the State in the Court of Claims, the State's liability must be determined "in accordance with the same rules of law applicable to suite between private parties." More specifically, the Ohio Supreme Court held that in actions alleging negligence by the State, the Court of Claims must determine whether a legal duty existed by using the conventional tort principles that would apply if the State were a private individual or entity. The public-duty rule is a common-law doctrine that originated in English common law and was especially applied in actions brought against the sheriff. The rule posits that when a public entity is performing its functions, it owes a duty only to the general public and therefore will not be liable for torts committed against a specific individual. Unless such an individual establishes a "special relationship" between himself and the public entity so that a special duty is owed to the individual, the public-duty rule effectively precludes a private party from maintaining a cause of action against a public officer for breach of a public duty. In Wallace, the plaintiff brought suit in the Court of Claims against the Ohio Dept. of Commerce's Division of the Fire Marshal, alleging negligence in the fire safety inspection of a fireworks store. The lawsuit was filed after several people were killed or injured by a fire in the Ohio River Fireworks store. The fire started when a mentally ill individual entered the store and used a lit cigarette to ignite a stack of fireworks. The store held a valid fireworks wholesaler license issued by the fire marshal. The license was condition upon a mandatory annual fire safety inspection. In addition to the mandatory annual inspection, the Ohio Revised Code authorizes the fire marshal to inspect a licensed wholesaler's premises at any time during the license period. Pursuant to this authorization, in May 1996, the then chief of the fire marshal's code of enforcement bureau issued an interoffice memorandum ordering an inspection of every licensed fireworks facility between then and July 4, 1996. The memorandum further stated that the minimum number of such inspections in that time frame was one. In June 1996, the fire marshal received a tip from a competitor of the Ohio River Fireworks store that the store was selling Class B fireworks to individuals who were not authorized to buy them. In response to the tip, the then assistant chief of the fire marshal's code enforcement bureau organized a "buy bust" to determine whether the violations were occurring at the store. So as not to compromise the sting operation, the then chief and assistant chief directed that any seasonal inspection of the store be postponed. As a result, no seasonal inspection of the Ohio River Fireworks store was performed prior to the fire. Even on the day of the "buy bust," none of the fire marshal agents who were present conducted a fire safety inspection. Unfortunately, the sprinkler system at the store had been turned off so that on the day of the fire it was inoperable — a fact that would have been detected had an inspection previously been performed. The Ohio Supreme Court held that because the decision had been made by the fire marshal to require at least one seasonal inspection prior to July 4, 1996, the state could be held liable for the negligence of the actions of its employees and agents in the performance of such inspection. The Court acknowledged that the Court of Claims Act does not allow the State to be sued for the exercise of its discretionary executive or planning functions that necessarily involve difficult decisions about how to allocate the State's resources. Nonetheless, the Court affirmed its decisions from earlier cases that held that once a decision has been made to perform a certain function, "the State may be held liable, in the same manner as private parties, for the negligent performance of such function." The Court thus rejected the public-duty rule as a bar to the state's liability for negligence in actions brought in the Court of Claims. This decision was a contentious one, decided by a thin margin of 4-3 and resulting in a separate concurring opinion by Justice Douglas that rebuts both the lengthy dissenting opinion of Justice Resnick and the more concise dissenting opinion of Justice Stratton. Nevertheless, the decision serves to further erode the applicability of the public-duty rule in actions against the State and should be heeded by any State entity that decides to undertake a specific function in serving the public. Kegler Brown Attorneys in the NewsStuart Harris has joined the litigation area. Stu graduated from John Marshall Law School in 1992 and since then has had two judicial clerkships. He also has practiced with the Ohio Attorney General's Office. Don Gregory and Stuart Harris wrote the article "Ruling Allows qualitative assessments in bid process" in Business First on December 13, 2002. John Lowe was quoted in the article "Fines climb for firms violating labor rules" in Business First on December 13, 2002. Traci McGuire was quoted in the article "Young lawyers received valuable training on site" in Business First on December 13, 2002. Laurel Beatty and Rasheeda Khan were mentioned in the article "The Lawyers for Justice Program - assisting with domestic violence divorce cases" in The Daily Reporter on November 22, 2002. Don Gregory was quoted in the article "School-facilities outcome OK'd" in The Columbus Dispatch on November 20, 2002. Geoff Stern was quoted in the article "Wholesale marketing of legal services debated before Supreme Court" in The Daily Reporter on November 14, 2002. Laurel Beatty was quoted in the article "Lawsuit could lie under wrappings of holiday cheer" in The Daily Reporter on November 6, 2002. Bob Marotta was recently named incoming chairman of the Pharmaceutical Care Management Association (PCMA) at the organization's annual meeting. Bob has served as Medco Health's long-standing representative to the PCMA Board of Directors. Mike Miller was featured in a live interview for London's BBC radio U.S. Broadcast on October 24, 2002. The segment focused on the mind of the sniper who terrorized rural Ohio ten years ago and how that case related to the sniper team that terrorized the Washington, D.C. area and other parts of the country this past fall. As Franklin County prosecuting attorney during the time that the Ohio sniper struck, Mike was able to offer insight into how the D.C. Area sniper, once caught, might be prosecuted. Tom Metzger was quoted in the article "Overusing overtime can bring problems" in Business First on October 11, 2002. Mike Zatezalo was quoted in the article "Kegler inks 10-year lease, will remain at Cap Square" in Business First on October 11, 2002. Helen Mac Murray wrote the article "Stuck With A Clunker?" that appears in the October 2002 special edition of Columbus Bar Briefs. It discusses how to avoid any pitfalls when purchasing a used car. Tony White was quoted in the article "Increasing diversity presents a welcomed challenge to law firms" in The Daily Reporter on October 4, 2002. On September 26, Michael Zatezalo gave a presentation on Ohio Economic Incentives for Real Estate Developers to the sales professionals of CB Richard Ellis, Inc., at their Columbus offices. Kim Finley was quoted in the article "Confidentiality placed on slippery slope to disclosure" in The Daily Reporter on September 16, 2002. No Duty to Defend if the Underlying Indemnity Clause is Void
In an important case with potential nationwide ramifications, the Second District Court of Appeals in Florida in the case of Barton-Malow Company v. Grunau, et al. issued an Opinion dated November 15, 2002, which found that when a subcontract clause requiring indemnity is void (because of Florida's Anti-Indemnity Statute) that there can also be no duty to defend. The contractor in that case had significant multi-million dollar liability arising from a "sick building." The indemnity provision in the relevant subcontracts was void in view of Florida's Anti-Indemnity Statute. Many states around the country have anti-indemnity statutes which prohibit one party from requiring the other to indemnify them from their own negligence. Even though the general contractor admitted that the anti-indemnity statute made the subcontract clause void in Florida, the general contractor still tried to enforce a duty to defend so that it could recover its million dollar expense for legal fees in defending the underlying case. Subcontractors, including in an amicus brief filed by Kegler, Brown, Hill & Ritter on behalf of the American Subcontractors Association, argued that if the underlying indemnity provision is void then the duty to defend is also unenforceable. Such an interpretation is important to subcontractors in that most of the anti-indemnity statutes around the country deal expressly with "indemnity," but do not specifically mention "defense." The Court ruled that the duty to defend, which was included in the same sentence as the duty to indemnify, was not severable from the indemnity obligation and therefore both the indemnity and defense obligations were unenforceable. Therefore, subcontractors will not have to pay the general contractor's legal fees arising from the "sick building" case. Many other jurisdictions may follow this reasoning as they struggle with this important risk-shifting issue. Beating the Wintertime (Black and) BluesBy Nicole A. Flynn It's that time of year again. The cold weather should serve as a reminder to all of us that snow season can mean "slip and fall" season. Living in Ohio during the winter has its inherent dangers. But for the most part, homeowners, landlords, business owners and those who maintain parking lots and sidewalks can be grateful this holiday season, for Ohio courts have recognized that as Ohioans, we should appreciate the natural risks of ice and snow. Nevertheless, it is always a good idea to maintain a safe premises and to keep your patrons injury-free. There are some simple ways to reduce the risks of liability for another's run-in with the elements. For example, salting the common walkways and parking lots is an effective and inexpensive way of reducing slipperiness; making sure that your walkways and lots are well-lit will help to insure that your patrons, tenants and social guests can see where they are walking — and what they are walking on; and handrails, although often more costly, are an exceptional means of providing balance. Ohio courts have defined what they term "natural" and "unnatural" accumulations of snow and ice. A "natural" accumulation of snow and ice is caused by inclement weather conditions or meteorological forces of nature while an "unnatural" accumulation of snow and ice is artificially-made. The dangers from natural accumulations of snow and ice are ordinarily so obvious and apparent that an owner or occupier of property may reasonably expect that business invitees on the premises will discover those dangers and protect themselves. Before an owner or occupier will be held liable for injuries suffered by another the law requires, at the very least, some evidence of an intervening act by the property owner that perpetuates or aggravates the pre-existing, hazardous presence of ice and snow. So, the real risk of snow and ice related injuries arise from what the courts have termed "unnatural conditions." Unnatural conditions often arise from an accumulation of water. For example, in Tyrrell v. Investment Associates, Inc. (1984), 16 Ohio App.3d 47, the canopy over a drug store's entrance often dripped, creating what the court termed "a nonnatural icy patch. [sic]" The store owner, who neglected to use reasonable care to reduce the risk of injury to his patrons, was found liable. Other examples of unnatural conditions may include an accumulation of water from a dripping roof or run-off from a downspout. Particular attention should be paid to water that drips onto access ramps– which can also create a hazard and result in serious injury. One can imagine the countless ways that an "unnatural accumulation" of snow and ice might result in a "slip and fall." Accordingly, snow and ice removal will help to reduce your risks of liability. However, be aware: If you do remove snow and ice, you must do so with ordinary care. Don't allow your snow removal service to dump the snow by your front door or in an area where you might expect people to walk. Rather, snow and ice should be placed in the least-traversed area and where people will recognize it for what it is — an accumulation of snow and ice. Don't let the cold weather get you down. Snow season doesn't need to be "slip and fall" season. A thorough examination of your premises and a few precautionary measures are all you need to secure a safe and happy snow season! Know Your Creditor Rights: Collecting from a Customer in BankruptcyBy Jean Hinte Suh When overburdened with debt and unable to pay the bills as they come due, a debtor can seek bankruptcy protection. Once the debtor files for bankruptcy, all collection activity, including wage garnishment, repossession, and even noticing termination of a contract that currently exists between the parties, must cease. This relief to the debtor filing for bankruptcy protection is known as the "automatic stay." What does this mean to you as a creditor? You may not take any action that may violate the "automatic stay." Such actions will not advance your position, but rather subject you to severe sanctions. With this in mind, you should not automatically assume that bankruptcy means no chance of collection and an automatic write-off of the debt as a loss. As a practical matter for many, if not most unsecured creditors, bankruptcy will likely cause one or more of the following situations: a delay in collecting funds; a lower percentage of debt that can legally be collected; and in some cases, an elimination of the debt in its entirety by court order ("discharge"). What can you do as a creditor? Again, you should avoid taking any action that may violate the automatic stay. To preserve and pursue your claim, you should immediately contact legal counsel to discuss the nature of your claim against the debtor and determine the legal options available to you. In discussing your case with your legal counsel, you will want to provide the following information that will be included in the bankruptcy notice: the date of filing, the chapter number (7, 9, 11, 12 or 13), the bankruptcy court location, and case number. If you receive the notice by telephone, you should be mindful to ask for this information. Your legal counsel may take one or more of the following steps. Your claim will be asserted in the bankruptcy court; however, depending on the type of claim you have against the debtor, this may include the legal option for you to request the bankruptcy court to grant relief from the automatic stay to pursue your claim outside the bankruptcy proceedings or filing a proof of claim within the bankruptcy proceedings. Further options available to you will depend on your status as a creditor. That is, whether you are a secured creditor, an unsecured creditor, or a party to an executory contract. Your options will also depend upon the type of bankruptcy the debtor has filed (chapter 7, 9, 11, 12 or 13). Generally, if your claim is secured by a lien on property of the debtor or subject to a setoff, you will be considered a secured creditor to the extent of the value of such property. You will be considered an unsecured creditor to the extent that the value of the property or the amount so subject to setoff is less than the amount of your claim. In the event that the value of the collateral exceeds the amount of your claim, your right to such excess will be limited to interest and any reasonable fees, costs, or charges provided for under the agreement giving rise to the claim. If your claim is secured by identifiable property of the debtor, you may be entitled to reclaim or recover such property with the bankruptcy court's approval. Where the only condition under which the debt owed to you was a promise by the debtor to pay, your status is an unsecured creditor. In the priority scheme of payment from the debtor's estate, your claim will be placed below secured creditors. If you are a party to an executory contract (whereby substantial performance remains due by one or both you and the debtor) or an unexpired lease, the trustee or the debtor in possession may assume or reject the agreement with the bankruptcy court's approval. Your legal counsel may seek an order by the bankruptcy court to expedite this determination. If the trustee assumes the executory contract or unexpired lease for which the debtor is in default, the trustee or debtor in possession will need to promptly cure such default, compensate you for any pecuniary loss resulting from the default, and provide adequate assurance of future performance under the contract or lease. If the agreement is rejected, any amounts remaining due will be considered an unsecured claim. There are also certain bankruptcy deadlines that if missed may cause the loss of your claim. Consequently, it is imperative to immediately contact your legal counsel and provide information concerning the bankruptcy and any contracts and documents relating to the debt to protect your legal rights. Directory of Trial LawyersYou can contact our trial lawyers via the Litigation Practice Team web page.
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© 2008, Kegler, Brown, Hill & Ritter Co., LPA.